BorgWarner Reports Strong Third Quarter 2025 Results

Returned $136 million to Stockholders During Third Quarter

Announces Increased 2025 Guidance

AUBURN HILLS, Mich., Oct. 30, 2025 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA) today reported third quarter results and increased 2025 guidance.

Third Quarter Results and Business Update

New Business Awards Across Portfolio

The Company secured multiple new business awards that are expected to support its long-term profitable growth, these include the following:

Foundational Awards

eProduct Awards

Third Quarter Highlights (continuing operations basis):

Financial Results (continuing operations basis):

The Company believes the following table is useful in highlighting non-comparable items that impacted its U.S. GAAP net earnings per diluted share. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for the periods presented. The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations and related tax effects.

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

Earnings per diluted share

$ 0.73

$ 1.08

$ 2.48

$ 3.40

Non-comparable items:

Accelerated depreciation

0.19

0.10

0.28

0.13

Restructuring expense

0.10

0.07

0.26

0.21

Impairment charges

—

0.16

—

Legal settlement

0.18

—

0.18

—

Costs to exit charging business

—

0.14

—

Chief Executive Officer ("CEO") transition compensation

0.02

—

0.05

—

Write-off of customer incentive asset

—

0.03

—

Adjustments associated with Spin-Off related balances

0.04

0.01

0.03

0.06

Loss on sale of assets

0.01

—

0.02

—

Merger and acquisition expense, net

—

(0.02)

0.02

—

Loss on sale of businesses

0.01

0.03

0.01

0.02

Insurance recovery

(0.07)

—

(0.07)

—

Unrealized gain on equity securities

(0.01)

—

Commercial contract settlement

—

0.02

—

0.06

Collective bargaining agreement ratification bonus

—

0.01

—

0.01

Gain on debt extinguishment

—

(0.01)

—

(0.01)

Tax adjustments

—

(0.23)

(0.06)

(0.65)

Other non-comparable items

0.04

0.05

0.07

Adjusted earnings per diluted share

$ 1.24

$ 1.09

$ 3.57

$ 3.30

Net sales were $3,591 million for the third quarter 2025, an increase of approximately 4.1% compared with the third quarter 2024. This increase was primarily due to higher market production volumes and light vehicle eProduct sales growth, partially offset by lower battery and charging sales and downtime at one of the Company's European customers due to a cyber related shutdown. Net earnings for the third quarter 2025, were $158 million, or $0.73 per diluted share, compared with net earnings of $242 million, or $1.08 per diluted share for the third quarter 2024. Adjusted net earnings per diluted share for the third quarter 2025, were $1.24, up approximately 14% from adjusted net earnings per diluted share of $1.09 for the third quarter 2024. Adjusted net earnings for the third quarter 2025, excluded net non-comparable items of $(0.51) per diluted share, while adjusted net earnings for the third quarter 2024, excluded net non-comparable items of $(0.01) per diluted share. These and other non-comparable items are listed in the table above, which is provided by the Company for comparison with other results and the most directly comparable U.S. GAAP measures. The increase in adjusted net earnings per diluted share was primarily due to higher adjusted operating income and the impact of a lower share count.

Full Year 2025 Guidance Update: The Company has increased its 2025 full year margin, EPS and free cash flow guidance, and narrowed its net sales outlook. The Company expects net sales to be in the range of $14.1 billion to $14.3 billion in 2025, compared with 2024 sales of approximately $14.1 billion. The change from the Company's previous forecast range of $14.0 billion to $14.4 billion is a result of higher industry production expectations and the favorable impacts of foreign exchange, partially offset by customer production disruptions in North America and Europe. The Company expects its weighted light and commercial vehicle markets to be in the range of down 1% to approximately flat in 2025. This is an increase from the Company's prior range of down 2.5% to down 0.5%. The Company's sales guidance implies a year-over-year change in organic sales of down 1% to approximately flat or in line with estimated market production. Stronger foreign currencies primarily due to the Euro are expected to result in an increase in sales of $30 million compared to the Company's previous guidance.

The Company expects its U.S. GAAP operating margin to be in the range of 7.8% to 7.9% in 2025. Excluding the impact of non-comparable items and the add back of intangible asset amortization expense, adjusted operating margin is expected to be in the range of 10.3% to 10.5%. The increase compared to the Company's previous adjusted operating margin range of 10.1% to 10.3% is due to strong year-to-date results and on-going cost performance measures. Net earnings are expected to be within the range of $3.52 to $3.63 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to increase and be in the range of $4.60 to $4.75 per diluted share, compared to the Company's previous adjusted net earnings range of $4.45 to $4.65 per diluted share. Full-year operating cash flow is expected to be in the range of $1,434 million to $1,484 million, and free cash flow is expected to be in the range of $850 million to $950 million, which is a $150 million increase from prior guidance.

At 9:30 a.m. ET today, a brief conference call concerning third quarter 2025 results and guidance will be webcast at: https://www.borgwarner.com/investors. Additionally, an earnings call presentation will be available at https://www.borgwarner.com/investors.

For more than 130 years, BorgWarner has been a transformative global product leader bringing successful mobility innovation to market. With a focus on sustainability, we're helping to build a cleaner, healthier, safer future for all.

Forward Looking Statements: This press release may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management's current outlook, expectations, estimates and projections. Words such as "anticipates," "believes," "continues," "could," "designed," "effect," "estimates," "evaluates," "expects," "forecasts," "goal," "guidance," "initiative," "intends," "may," "outlook," "plans," "potential," "predicts," "project," "pursue," "seek," "should," "target," "when," "will," "would," and variations of such words and similar expressions are intended to identify such forward-looking statements. Further, all statements, other than statements of historical fact, contained or incorporated by reference in this press release that we expect or anticipate will or may occur in the future regarding our financial position, business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success and other such matters, are forward-looking statements. Accounting estimates, such as those described under the heading "Critical Accounting Policies and Estimates" in Item 7 of our most recently filed Annual Report on Form 10-K ("Form 10-K"), are inherently forward-looking. All forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. Forward-looking statements are not guarantees of performance, and the Company's actual results may differ materially from those expressed, projected or implied in or by the forward-looking statements.

You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Forward-looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. These risks and uncertainties, among others, include: supply disruptions impacting us or our customers, commodity availability and pricing, and an inability to achieve expected levels of recoverability in commercial negotiations with customers concerning these costs; competitive challenges from existing and new competitors, including original equipment manufacturer ("OEM") customers; the challenges associated with rapidly changing technologies, and our ability to innovate in response; the difficulty in forecasting demand for electric vehicles and our electric vehicles revenue growth; potential disruptions in the global economy caused by wars or other geopolitical conflicts; the ability to identify targets and consummate acquisitions on acceptable terms; failure to realize the expected benefits of acquisitions on a timely basis; the possibility that our 2023 tax-free spin-off of our former Fuel Systems and Aftermarket segments into a separate publicly traded company will not achieve its intended benefits; the failure to promptly and effectively integrate acquired businesses; the potential for unknown or inestimable liabilities relating to the acquired businesses; impacts of our exit of the charging business; our dependence on automotive and truck production, which is highly cyclical and subject to disruptions; our reliance on major OEM customers; impacts of any future strikes involving any of our OEM customers and any actions such OEM customers take in response; fluctuations in interest rates and foreign currency exchange rates; our dependence on information systems; the uncertainty of the global economic environment; the uncertainty surrounding global trade policies including tariffs and export restrictions, and their impacts on the Company, its customers and suppliers and the economies in which the Company operates; the outcome of existing or any future legal proceedings, including litigation with respect to various claims, or governmental investigations, including related litigation; future changes in laws and regulations, including, by way of example, taxes and tariffs, in the countries in which we operate; impacts from any potential future acquisition or disposition transactions; and the other risks noted in reports that we file with the Securities and Exchange Commission, including Item 1A, "Risk Factors" in our most recently filed Form 10-K and/or Quarterly Report on Form 10-Q. We do not undertake any obligation to update or announce publicly any updates to or revisions to any of the forward-looking statements in this press release to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements.

BorgWarner Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in millions, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

Net sales

$ 3,591

$ 3,449

$ 10,744

$ 10,647

Cost of sales

2,927

2,813

8,801

8,682

Gross profit

664

636

1,943

1,965

Gross margin

18.5 %

18.4 %

18.1 %

18.5 %

Selling, general and administrative expenses

341

340

973

1,010

Restructuring expense

Other operating expense, net

Impairment charges

—

Operating income

248

270

774

862

Equity in affiliates' earnings, net of tax

(11)

(6)

(29)

(23)

Unrealized gain on equity securities

(1)

(2)

—

Interest expense, net

Other postretirement expense

Earnings from continuing operations before income

taxes and noncontrolling interest

$ 248

$ 270

$ 764

$ 858

Provision for income taxes

188

Net earnings from continuing operations

173

257

576

814

Net earnings from continuing operations attributable to noncontrolling interest

Net earnings from continuing operations attributable to BorgWarner Inc.

$ 158

$ 242

$ 539

$ 770

BorgWarner Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in millions)

September 30,

2025

December 31,

2024

ASSETS

Cash, cash equivalents and restricted cash

$ 2,172

$ 2,094

Receivables, net

3,260

2,843

Inventories

1,231

1,251

Prepayments and other current assets

315

333

Total current assets

6,978

6,521

Property, plant and equipment, net

3,478

3,575

Other non-current assets

4,040

3,897

Total assets

$ 14,496

$ 13,993

LIABILITIES AND EQUITY

Short-term debt

$ 6

$ 398

Accounts payable

2,101

2,032

Other current liabilities

1,296

1,216

Total current liabilities

3,403

3,646

Long-term debt

3,894

3,763

Other non-current liabilities

1,049

878

Total liabilities

8,346

8,287

Total BorgWarner Inc. stockholders' equity

5,989

5,532

Noncontrolling interest

161

174

Total equity

6,150

5,706

Total liabilities and equity

$ 14,496

$ 13,993

BorgWarner Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in millions)

Nine Months Ended September 30,

2025

2024

OPERATING ACTIVITIES OF CONTINUING OPERATIONS

Net cash provided by operating activities from continuing operations

$ 1,029

$ 700

INVESTING ACTIVITIES OF CONTINUING OPERATIONS

Capital expenditures, including tooling outlays

(307)

(510)

Customer advances related to capital expenditures

—

Insurance proceeds received for damage to property, plant and equipment

—

Proceeds from settlement of net investment hedges, net

Payments for investments in equity securities, net

—

(7)

Proceeds from the sale of business, net

Proceeds from asset disposals and other, net

Net cash used in investing activities from continuing operations

(246)

(460)

FINANCING ACTIVITIES OF CONTINUING OPERATIONS

Payments of notes payable

(5)

—

Additions to debt

—

1,000

Payments for debt issuance costs

—

(9)

Repayments of debt, including current portion

(406)

(175)

Payments for purchase of treasury stock

(210)

(401)

Payments for stock-based compensation items

(22)

(23)

Payments for businesses acquired, net of cash acquired

—

(4)

Payments for contingent consideration

(4)

(1)

Dividends paid to BorgWarner stockholders

(84)

(74)

Dividends paid to noncontrolling stockholders

(22)

(63)

Net cash (used in) provided by financing activities from continuing operations

(753)

250

CASH FLOWS FROM DISCONTINUED OPERATIONS

Operating activities of discontinued operations

—

(27)

Net cash used in discontinued operations

—

(27)

Effect of exchange rate changes on cash

Net increase in cash, cash equivalents and restricted cash

466

Cash and cash equivalents at beginning of year

2,094

1,534

Cash, cash equivalents and restricted cash of continuing operations at end of period

$ 2,172

$ 2,000

Supplemental Information (Unaudited)

(in millions)

Nine Months Ended September 30,

2025

2024

Depreciation and tooling amortization

$ 504

$ 444

Intangible asset amortization

$ 49

$ 51

Non-GAAP Financial Measures

This press release contains information about the Company's financial results that is not presented in accordance with U.S. GAAP. Such non-GAAP financial measures are reconciled to their closest U.S. GAAP financial measures below and in the Financial Results table above. The provision of these comparable U.S. GAAP financial measures for 2025 is not intended to indicate that the Company is explicitly or implicitly providing projections on those U.S. GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this press release and the adjustments that management can reasonably predict.

Management believes that these non-GAAP financial measures are useful to management, investors and banking institutions in their analyses of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes.

Non-GAAP financial measures are not and should not be considered a substitute for any U.S. GAAP measure. Additionally, because not all companies use identical calculations, the non-GAAP financial measures as presented by the Company may not be comparable to similarly titled measures reported by other companies.

Adjusted Operating Income and Adjusted Operating Margin

The Company defines adjusted operating income as operating income adjusted to exclude the impact of restructuring expense, merger, acquisition and divestiture expense, intangible asset amortization expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations. Adjusted operating margin is defined as adjusted operating income divided by net sales.

Adjusted Net Earnings

The Company defines adjusted net earnings as net earnings attributable to the Company, adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations and related tax effects. The impact of intangible asset amortization expense continues to be included in adjusted net earnings.

Adjusted Earnings per Diluted Share

The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations and related tax effects. The impact of intangible asset amortization expense continues to be included in adjusted earnings per share.

Free Cash Flow

The Company defines free cash flow as net cash provided by operating activities minus capital expenditures, net of customer advances related to capital expenditures. The Company believes this measure is useful to both management and investors in evaluating the Company's ability to service and repay its debt.

Organic Net Sales Change

The Company defines organic net sales changes as net sales change year-over-year excluding the estimated impact of foreign exchange ("FX") and net mergers, acquisitions and divestitures.

Adjusted Operating Income and Adjusted Operating Margin (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

2025

2024

2025

2024

Net sales

$ 3,591

$ 3,449

$ 10,744

$ 10,647

Operating income

$ 248

$ 270

$ 774

$ 862

Operating margin

6.9 %

7.8 %

7.2 %

8.1 %

Non-comparable items:

Accelerated depreciation

$ 60

$ 27

$ 81

$ 35

Restructuring expense

Intangible asset amortization expense

Impairment charges

—

Legal settlement

—

Costs to exit charging business

—

Chief Executive Officer ("CEO") transition compensation

—

Write-off of customer incentive asset

—

Adjustments associated with Spin-Off related balances

Loss on sale of assets

—

Merger and acquisition expense, net

(5)

—

Loss on sale of businesses

Insurance recovery

(21)

—

(21)

—

Commercial contract settlement

—

Collective bargaining agreement ratification bonus

—

Other non-comparable items

Adjusted operating income

$ 385

$ 350

$ 1,110

$ 1,065

Adjusted operating margin

10.7 %

10.1 %

10.3 %

10.0 %

Free Cash Flow Reconciliation (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

2025

2024

2025

2024

Net cash provided by operating activities from continuing operations

$ 368

$ 356

$ 1,029

$ 700

Capital expenditures, including tooling outlays

(111)

(155)

(307)

(510)

Customer advances related to capital expenditures

—

Free cash flow

$ 266

$ 201

$ 738

$ 190

Third Quarter 2025 Organic Net Sales Change (Unaudited)

(in millions)

Q3 2024

Net Sales

Organic

Net Sales

Change

Q3 2025

Net Sales

Organic

Net Sales

Change %

Turbos & Thermal Technologies

$ 1,386

$ 38

$ 13

$ 1,437

0.9 %

Drivetrain & Morse Systems

1,365

1,452

5.1 %

PowerDrive Systems

512

582

11.9 %

Battery & Charging Systems

197

(70)

132

(35.5) %

Inter-segment eliminations

(11)

—

(1)

(12)

9.1 %

Net sales

$ 3,449

$ 69

$ 73

$ 3,591

2.1 %

Year to Date 2025 Organic Net Sales Change (Unaudited)

(in millions)

Q3 2024

YTD Net

Sales

Organic

Net Sales

Change

Q3 2025

YTD Net

Sales

Organic

Net Sales

Change %

Turbos & Thermal Technologies

$ 4,475

$ 24

$ (127)

$ 4,372

(2.8) %

Drivetrain & Morse Systems

4,226

4,242

— %

PowerDrive Systems

1,412

307

1,724

21.7 %

Battery & Charging Systems

567

(132)

441

(23.3) %

Inter-segment eliminations

(33)

—

(2)

(35)

6.1 %

Total

$ 10,647

$ 50

$ 47

$ 10,744

0.4 %

Adjusted Operating Income and Adjusted Operating Margin Guidance Reconciliation (Unaudited)

Full-Year 2025 Guidance

(in millions)

Low

High

Net sales

$ 14,100

$ 14,300

Operating income

$ 1,104

$ 1,134

Operating margin

7.8 %

7.9 %

Non-comparable items:

Accelerated depreciation

$ 81

Restructuring expense

Intangible asset amortization

Impairment charges

Legal settlement

Costs to exit charging business

Chief Executive Officer ("CEO") transition compensation

Write-off of customer incentive asset

Adjustment associated with Spin-Off related balances

Loss on sale of assets

Merger and acquisition expense, net

Loss on sale of business

Insurance recovery

(21)

Other non-comparable items

Adjusted operating income

$ 1,455

$ 1,495

Adjusted operating margin

10.3 %

10.5 %

Adjusted Earnings Per Diluted Share Guidance Reconciliation (Unaudited)

Full-Year 2025 Guidance

Low

High

Earnings per Diluted Share

$ 3.52

$ 3.63

Non-comparable items:

Accelerated depreciation

$ 0.28

Restructuring expense

0.25

0.29

Legal settlement

0.18

Impairment charges

0.16

Costs to exit charging business

0.14

Chief Executive Officer ("CEO") transition compensation

0.05

Write-off of customer incentive asset

0.03

Adjustment associated with Spin-Off related balances

0.03

Loss on sale of assets

0.02

Merger and acquisition expense, net

0.02

Loss on sale of businesses

0.01

Unrealized gain on equity securities

(0.01)

Insurance recovery

(0.07)

Tax adjustments

(0.06)

Other non-comparable items

0.05

Adjusted Earnings per Diluted Share

$ 4.60

$ 4.75

Free Cash Flow Guidance Reconciliation (Unaudited)

Full-Year 2025 Guidance

(in millions)

Low

High

Net cash provided by operating activities from continuing operations

$ 1,434

$ 1,484

Capital expenditures, including tooling outlays

(600)

(550)

Customer advances related to capital expenditures

Free cash flow

$ 850

$ 950

Full Year 2025 Organic Net Sales Change Guidance Reconciliation From Continuing Operations (Unaudited)

(in millions)

FY 2024 Net

Sales

Organic Net

Sales

Change

FY 2025 Net

Sales

Organic Net

Sales

Change %

LV/CV

Weighted

Market %

Outgrowth %

Low

$ 14,086

$ 170

$ (156)

$ 14,100

(1.1) %

(1.0) %

(0.1) %

High

$ 14,086

$ 170

$ 44

$ 14,300

0.3 %

— %

0.3 %

Full Year 2025 Estimated Year-Over-Year Change in Production (Unaudited)

North America

Europe

China

Total

Light vehicle

(3)% to (1.5)%

(3)% to (1)%

6% to 7%

1.5% to 2.5%

Commercial vehicle

~(21)%

~2.5%

~8%

~0%

BorgWarner-Weighted

(6)% to (4.5)%

(2)% to (0.5)%

6% to 7%

(1)% to 0%

SOURCE BorgWarner