BorgWarner BWA reported adjusted earnings of $1.01 per share for the fourth quarter of 2024, which surpassed the Zacks Consensus Estimate of 92 cents and increased from 90 cents recorded in the prior-year quarter. Better-than-expected bottom line from all segments apart from Drivetrain & Morse systems unit drove the outperformance.

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The automotive equipment supplier reported net sales of $3.44 billion, which missed the Zacks Consensus Estimate of $3.49 billion. The top line also declined 2.36% year over year.

Segmental Performance

Effective July 1, 2024, BorgWarner reorganized its business units and management structure to better support its Changing Forward strategy. It now has four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems (formerly known as ePropulsion), and Battery and Charging Systems.

Turbos & Thermal Technologies: Net sales totaled $1.41 billion in the reported quarter compared with $1.44 billion in the year-ago period. The figure beat the Zacks Consensus Estimate by 2.32%. Adjusted operating income of $223 million increased from $214 million recorded in the year-ago quarter and beat the consensus mark by 12.98%.

Drivetrain & Morse Systems: Net sales totaled $1.35 billion in the reported quarter compared with $1.40 billion in the year-ago period. The figure missed the Zacks Consensus Estimate by 1.09%. Adjusted operating income of $240 million decreased from $258 million recorded in the year-ago period and missed the consensus mark by 3.58%.

PowerDrive Systems: Sales from the segment were $525 million, which declined from $542 million a year ago. The figure beat the Zacks Consensus Estimate by 0.39%. The segment incurred an adjusted operating loss of $14 million, narrower than an operating loss of $16 million in the corresponding period of 2023 and the consensus mark of $25.8 million.

Battery & Charging Systems: Sales from the segment were $162 million, which increased from $151 million a year ago. The figure missed the Zacks Consensus Estimate by 31.11%. The segment incurred an adjusted operating loss of $14 million, narrower than an operating loss of $40 million in the corresponding period of 2023 as well as the consensus mark of $16 million.

Financial Position

As of Dec. 31, 2024, BorgWarner had $2.09 billion in cash/cash equivalents/restricted cash compared with $1.53 billion as of Dec. 31, 2023. As of the end of fourth-quarter 2024, long-term debt was $3.76 billion, up from $3.71 billion recorded as of Dec. 31, 2023.

Net cash from operating activities from continuing operations was $682 million in the quarter under review. Capital expenditures and free cash flow totaled $161 million and $539 million, respectively.

BWA’s 2025 Guidance

For full-year 2025, the company now anticipates net sales in the band of $13.4-$14 billion compared with $14.1 billion in 2024.

Adjusted operating margin is expected in the band of 9.1-9.2%. Adjusted earnings are estimated in the range of $4.05-$4.40 per share. The operating cash flow is forecasted in the range of $1.33-$1.38 billion. Free cash flow is projected in the band of $650-$750 million.

BWA’s Zacks Rank & Key Picks

BorgWarner currently carries a Zacks Rank #3 (Hold). 

Some better-ranked players in the auto space are General Motors GM, Garrett Motion GTX and Yamaha Motor Co. YMHAY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for GM’s 2025 and 2026 EPS has moved north by 5.58% and 7.91%, respectively, over the past 30 days.

The Zacks Consensus Estimate for GTX’s 2025 EPS has moved up by a cent over the past 30 days.

The Zacks Consensus Estimate for YMHAY’s 2025 EPS has moved up by a cent over the past 60 days.

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