BorgWarner Inc (BWA, Financial) released its 8-K filing on February 6, 2025, detailing its fourth quarter and full-year 2024 financial results. BorgWarner is a leading supplier of turbo and thermal management technologies, drivetrain systems, powerdrive systems, and battery and charging systems, primarily serving automotive original equipment manufacturers. The company is transitioning towards becoming an electric vehicle-centric parts supplier, with a significant portion of its revenue still derived from combustion vehicle products.

Fourth Quarter 2024 Highlights

BorgWarner reported U.S. GAAP net sales of $3,439 million for the fourth quarter of 2024, a 2.4% decrease compared to the same period in 2023. The company faced a net loss of $(1.84) per diluted share, primarily due to $646 million in goodwill and fixed asset impairment charges. However, adjusted net earnings were $1.01 per diluted share, surpassing the analyst estimate of $0.89.

The adjusted operating margin stood at 10.2%, while the U.S. GAAP operating margin was negative at (9.2)%. Despite a challenging market environment with a 4% decline in vehicle markets, BorgWarner generated $682 million in net cash from operating activities, resulting in $539 million in free cash flow.

Full-Year 2024 Performance

For the full year, BorgWarner's net sales were $14,086 million, a slight decrease of 0.8% from 2023. The company reported U.S. GAAP net earnings of $1.63 per diluted share, with adjusted net earnings at $4.32 per diluted share, exceeding the annual estimate of $4.20. The adjusted operating income was $1,417 million, representing 10.1% of net sales.

Financial Achievements and Challenges

BorgWarner's financial achievements include securing multiple new business awards, which are expected to support long-term growth. These include contracts for Variable Cam Timing systems, turbocharger programs, transfer cases, and eMotors with major OEMs. However, the company faces challenges such as impairment charges and a decline in industry production, impacting its financial performance.

Income Statement and Key Metrics

The income statement reveals a gross profit of $683 million for Q4 2024, with a gross margin of 19.9%. Selling, general, and administrative expenses were $340 million. The balance sheet shows total assets of $13,993 million, with cash and cash equivalents increasing to $2,094 million by year-end.

Analysis and Outlook

BorgWarner's performance reflects its strategic shift towards electric vehicle components, despite current market challenges. The company's ability to secure new contracts and maintain a strong cash flow position is crucial for its transition. The guidance for 2025 indicates expectations for continued sales growth and a stable adjusted operating margin above 10%.

BorgWarner expects to deliver continued sales outgrowth, an adjusted operating margin above 10%, and strong free cash flow in 2025, despite the Company’s expectation that its weighted light and commercial vehicle markets will be down 1% to 3% in 2025."

For more detailed insights and analysis, visit the full earnings report on the SEC website.

Explore the complete 8-K earnings release (here) from BorgWarner Inc for further details.