On July 31, 2024, BorgWarner Inc (BWA, Financial) released its 8-K filing reporting its second quarter 2024 results. BorgWarner, a Tier I auto-parts supplier, operates through three segments: Air Management, Drivetrain & Battery Systems, and ePropulsion. The company's largest customers are Ford and Volkswagen, contributing 14% and 11% of 2023 revenue, respectively. Geographically, Europe accounted for 36% of 2023 revenue, while Asia and North America were 34% and 29% apiece.
Performance Overview
BorgWarner reported U.S. GAAP net sales of $3,603 million for Q2 2024, a 2% decrease compared to $3,671 million in Q2 2023. The decline was primarily due to lower market production volumes and the negative impact of foreign currencies. Despite this, the company achieved U.S. GAAP net earnings of $0.97 per diluted share, surpassing the analyst estimate of $0.96 per share. Adjusted net earnings per diluted share were $1.19, up from $1.06 in Q2 2023.
Financial Achievements
BorgWarner's adjusted operating margin for Q2 2024 was 10.4%, translating to a U.S. GAAP operating margin of 8.2%. The company generated $462 million in net cash from operating activities and $297 million in free cash flow. These achievements underscore BorgWarner's strong cost controls and technology-focused portfolio, which are crucial in the competitive Vehicles & Parts industry.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $3,603 million | $3,671 million |
| Net Earnings per Diluted Share | $0.97 | $0.97 |
| Adjusted Net Earnings per Diluted Share | $1.19 | $1.06 |
| Operating Income | $297 million | $333 million |
Balance Sheet and Cash Flow
As of June 30, 2024, BorgWarner reported total assets of $14,108 million, with cash and cash equivalents of $1,288 million. The company's total liabilities stood at $7,823 million, while total equity was $6,285 million. Net cash provided by operating activities for the first six months of 2024 was $344 million, and free cash flow was $297 million.
Guidance and Future Outlook
BorgWarner has updated its full-year 2024 guidance, expecting net sales to be in the range of $14.1 billion to $14.4 billion, down from the previous guidance of $14.4 billion to $14.9 billion. The company anticipates adjusted net earnings per diluted share to be between $3.95 and $4.15, up from the prior guidance of $3.80 to $4.15. The company also plans to repurchase $300 million of its outstanding shares in the second half of 2024.
Commentary
"BorgWarner achieved an adjusted operating margin performance of 10.4% during the second quarter, which equated to a U.S. GAAP operating margin of 8.2%. The Company also generated net cash provided by operating activities of $462 million and $297 million in free cash flow, despite a modest decline in the Company’s weighted light and commercial vehicle markets."
For more detailed insights and the complete earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from BorgWarner Inc for further details.
