BWA

AUBURN HILLS, Mich., Aug. 17, 2026 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA) (the "Company") today announced the expiration and final results of its previously announced tender offers (the "Tender Offers"), to purchase for cash the debt securities issued by the Company referred to below (collectively, the "Notes," and each a "Series"), in each case upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 10, 2026 (the "Offer to Purchase") and any related documents (collectively with the Offer to Purchase, the "Tender Offer Documents"). In addition, the Company today announced that it had increased the Waterfall Cap for the Offers to $730,000,000, excluding the Accrued Interest Payment (as defined below), subject to the proration and the application of the Acceptance Priority Levels set forth in the table below and the Offer to Purchase. The Company increased the amount of 4.950% Notes accepted for payment in the Offers by 2% of the outstanding 4.950% Notes, as further described in the Acceptance Priority Procedures set forth in the Offer to Purchase, without amending or extending the Offer. Capitalized terms used but not defined in this press release have the meanings given to them in the Offer to Purchase. The Tender Offers expired at 5:00 p.m., New York City time, on August 14, 2026 (the "Expiration Date"). Withdrawal rights for the Tender Offers expired at the Expiration Date, and accordingly, Notes validly tendered in the Tender Offers may no longer be withdrawn except where additional withdrawal rights are required by law. At the Expiration Date, according to information provided by Global Bondholder Services Corporation, the tender and information agent for the Tender Offers, the aggregate principal amount of each series of Notes validly tendered and not validly withdrawn pursuant to the Tender Offers and the aggregate principal amount of each series of Notes accepted for purchase, are set forth in the table below. The Tender Consideration was determined at 3:00 p.m., New York City time, on August 14, 2026. The Company's obligation to complete a Tender Offer with respect to the Notes validly tendered is conditioned on the satisfaction or waiver of conditions described in the Offer to Purchase. For the Notes accepted for purchase, all conditions to the Tender Offer with respect to such Notes were satisfied or waived on or prior to the Expiration Date. On the applicable Settlement Date, Holders whose Notes have been accepted for purchase will also receive an Accrued Interest Payment. The Notes validly tendered but not accepted for purchase will be returned promptly to the tendering Holders in accordance with the Offer to Purchase. Information Relating to the Tender Offers Barclays Capital Inc. and PNC Capital Markets LLC served as the dealer managers for the Tender Offers. Investors with questions regarding the Tender Offers may contact Barclays Capital Inc. at (212) 528-7581 or toll-free at (800) 438-3242, or email [email protected], or PNC Capital Markets LLC at (212) 878-8946 or toll-free at (833) 715-3537, or email [email protected]. Global Bondholder Services Corporation served as the tender and information agent for the Tender Offers and can be contacted at (212) 430-3774 or toll-free at (855) 654-2015. The Offer to Purchase may be accessed at the following web address: https://www.gbsc-usa.com/borgwarner/. This press release shall not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities. The Tender Offers were made only pursuant to the Offer to Purchase and only to such persons and in such jurisdictions as is permitted under applicable law. About BorgWarner 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 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 release that we expect or anticipate will or may occur in the future regarding our financial position, including our guidance for full year 2026, our business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and profitable growth of our business and operations, plans, references to future success, including the anticipated benefits of our new business awards 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 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: the success of our portfolio strategy; 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; conditions in the automotive industry; competitive challenges from existing and new competitors, including original equipment manufacturer ("OEM") customers; the challenges associated with rapidly changing technologies, including artificial intelligence, and our ability to innovate in response; the difficulty in forecasting demand for electric vehicles and our electric vehicles revenue growth; potential future changes in laws and regulations, including, by way of example, taxes and tariffs, in the countries in which we operate; 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 tax 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 impact on the Company, its customers and its suppliers; the outcome of existing or any future legal proceedings, including litigation with respect to various claims, or governmental investigations, including related litigation; impacts from any potential future acquisition or disposition transactions; and the other risks discussed in reports that we file with the Securities and Exchange Commission, including in Item 1A. "Risk Factors" in our most recently filed Annual Report on 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 release to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements. View original content to download multimedia:https://www.prnewswire.com/news-releases/borgwarner-announces-final-results-and-upsize-of-its-cash-tender-offers-for-its-senior-notes-302852457.html

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 9:30 a.m. ET Vice President of Investor Relations - Patrick Nolan Chief Executive Officer - Joseph Fadool Executive Vice President and Chief Financial Officer - Craig Aaron Operator: Good morning. My name is Nick, and I will be your conference specialist. At this time, I would like to welcome everyone to the BorgWarner 2026 Second Quarter Results Conference Call. [Operator Instructions] I would now like to turn the call over to Patrick Nolan, Vice President of Investor Relations. Mr. Nolan, you may begin your conference. Patrick Nolan: Thank you, Nick. Good morning, everyone, and thank you for joining us today. We issued our earnings release earlier this morning. It's posted on our website, borgwarner.com, both on our home page and on our Investor Relations homepage. With regard to our Investor Relations calendar, we will be attending investor conferences between now and our next earnings release. Please see the Events section of our Investor Relations homepage for a full list. Before we begin, I need to inform you that during this call, we may make forward-looking statements, which involve risks and uncertainties as detailed in our 10-K. Our actual results may differ significantly from the matters discussed today. In addition, during today's presentation, we'll highlight certain non-GAAP measures in order to provide a clearer picture of how the core business performed and for comparison purposes with prior periods. When you hear us say adjusted, that means excluding noncomparable items. When you hear us say organic, that means excluding the impact of FX and net M&A. We will also refer to our incremental margin performance. Our incremental margin is defined as the organic change in our adjusted operating income divided by the organic change in our sales. We will also refer to our growth compared to our market. When you hear us say market, that means the change in light vehicle production weighted for our geographic exposure. Please note that we posted today's earnings call presentation to the IR page of our website. We encourage you to follow along with these slides during our discussion. With that, I'm happy to turn the call over to Joe. Joseph Fadool: Thank you, Pat, and good morning, everyone. I'm pleased to share our results for the second quarter of 2026 and provide an overall company update, starting on Slide 5. I want to begin by thanking our employees, customers and suppliers for all of their trust, efforts and continued support. In the quarter, we achieved sales of over $3.6 billion. Excluding the decline in our Battery Energy Systems segment, our organic net sales were up modestly year-over-year, outperforming the decline in market production, primarily due to strong North American transfer case volumes. Our adjusted operating margin, adjusted earnings per share and cash flow performance was strong in the quarter. The company continued to operate at a very high level and delivered 100 basis points of adjusted margin expansion and 17% of earnings per share growth in a relatively flat year-over-year sales environment. This outstanding result was once again driven by our focus on cost controls across our business. I'm excited to report that our strong award activity continued into the second quarter. Today, I'll highlight 7 new business awards across our foundational and eProducts portfolios. These wins represent only a portion of the awards secured during the quarter, but I believe they underscore the strength of our technology-focused portfolio, our deep customer relationships and the global demand for our efficient powertrain technologies around the globe. Equally exciting is the progress we've made in the quarter in taking meaningful steps in our product readiness across our data center and other industrial markets portfolio. I will share a detailed update in a few moments. Lastly, we remain focused on efficient deployment of capital to drive shareholder value. In the quarter, we returned approximately $134 million to shareholders through share repurchases and payment of a cash dividend. Additionally, our Board of Directors approved a $1 billion increase to our current share repurchase authorization, increasing our authorization to $1.35 billion or approximately 10% of BorgWarner's market cap. These actions demonstrate our confidence in the long-term cash-generating ability of our business and our focus on driving shareholder value through a balanced capital allocation approach. As I look back on the second quarter and the first half of 2026, I'm very proud of our team and our results. Once again, we executed at a very high level, which I believe puts the company in a strong position to achieve our full year sales, margin, EPS and free cash flow guidance. Our strong first half performance has also allowed the company to increase our second half 2026 industrial R&D investment to accelerate our product readiness. We are doing this while delivering on our full year 2026 financial commitments. Turning to Slide 6. I'd like to highlight 7 recent product awards that demonstrate both the competitiveness of our technology and our ability to support our customers' powertrain needs in key markets. Let's start with our foundational product awards. First, BorgWarner has been awarded a new eTurbo program with a major European OEM for an advanced hybrid passenger car application, further strengthening BorgWarner's leading position in electrified boosting technologies. Production is scheduled to begin in 2029. I believe BorgWarner's eTurbo innovation and leadership remains a core technology underpinning the industrial power generation product line, leveraging our automotive scale to disrupt the data center market. Second, BorgWarner has secured new business with a Chinese OEM to supply our torque-on-demand case with mechanical lock for a newly developed full-size SUV in China. We have built a 20-year relationship with this customer, and we're proud to continue supplying our all-wheel drive technology for their newest SUV. Start of production is planned for the fourth quarter of 2026. Third, BorgWarner continues to expand its variable cam timing business with new program awards in Europe and China. These programs include a program life extension and significant volume increase for a leading European premium OEM's V6 engine family. And a complex win for a major Chinese OEM's 1.5-liter turbocharged gasoline engine family, replacing the previous incumbent supplier. These awards underscore the long-term competitiveness of our VCT portfolio across both hybrid and combustion engines. Switching now to our recent eProduct awards. First, BorgWarner has secured a new integrated drive module award with a global OEM. This iDM features BorgWarner's latest 3-in-1 integrated coaxial drive system, combining an advanced eMotor, gearbox and fully integrated Gen4 inverter in a compact high-performance package. I believe this award reflects BorgWarner's continued commitment to delivering advanced electrified drive solutions through the strength of our global technology portfolio and localized capabilities. Production is expected to begin in 2027. Second, BorgWarner has secured a major extension of 2 high-volume, high-voltage inverter programs with a major European OEM. These awards cover updated inverter designs for both plug-in hybrid and 800-volt battery electric vehicle applications, building on a trusted partnership in power electronics. I believe that extending several high-volume programs at the same time confirms BorgWarner's leading position in power electronics and the strength of our technology, in-house expertise and customer focus. Evolving our inverters generation by generation together with our customers for both hybrid and fully electric applications is how we build trusted long-term partnerships with the world's leading OEMs. Production is expected to begin in 2029. Importantly, all the eProduct awards I just highlighted include BorgWarner's inverter technology, and it speaks to the world-class technology leadership and scale BorgWarner has as high-powered inverters. This expertise has been developed over decades of engineering effort and represent our product leadership in this area. Our automotive inverter competence is another great example of a world-class technology that BorgWarner can use as we continue to advance our product readiness to capture additional growth vectors outside of our core automotive markets. As I will discuss in a moment, the world is in need for more power and our highly efficient inverter is a solution that solves this growing problem. Next, on Slide 7, I would like to discuss the acceleration of our product readiness across our data center and other industrial markets portfolio. Let's discuss with an update on our turbine generator launch progress. I'm very pleased with the advancements that we've made over the past quarter. First, I'm excited to share that our testing has confirmed that we have achieved CARB-level emission standards. I view this as an important milestone as we continue to expect our turbine generator to provide a lower emission solution relative to competing technologies. Our UL compliance process continues to progress well. UL component certification is expected to start in September, and our component level evidence books have already been submitted. Construction of the final assembly plant is quickly moving forward with the footprint largely complete. We expect our capital equipment installation to begin in the third quarter. And overall, I'm excited and pleased with the team's progress, which will position us well to meet the strong interest that we continue to see from end customers, including multiple hyperscalers. Turning next to our Battery Energy Storage system. Our energy storage solutions are intended to support a range of use cases in data center environments. We continue to position our Battery Energy Storage solutions to support data center, AI and mechanical loads. Our product scope spans the entire energy power time requirement spectrum, offering high-energy, long-duration and/or high-power, short-duration solutions. We are working to widen our portfolio, which includes DC blocks, uninterruptible power supplies, high-power racks and controls. Our solutions are modular, scalable and cell-chemistry independent. Customer validation and UL compliance is advancing, and we expect to be production ready in 2027. Our quoting activity for our Battery Energy Storage systems continues, and I look forward to providing you with additional updates later this year. Turning to our microgrid inverter offerings. Initial customer feedback has been extremely positive. We believe that we have the right value proposition, including U.S. manufacturing and supply chain. Our automotive supply chain is increasingly being viewed as a differentiator and our decades-long experience in highly engineered, high-voltage power dense and liquid cooled power electronics is recognized and confirmed by potential customers. Four customers now have BorgWarner samples and discussions with other potential customers are underway. With feedback already we received, we are quickly moving to develop Gen2 designs. While we continue to see the move toward 800 volts supporting our entry into this market, we have now begun to develop a high-power portfolio spanning applications ranging from 400 volts to 1,500 volts as we see potential for volumes across this spectrum. I look forward to progressing toward customer quoting later this year. To summarize, I believe there are 3 key takeaways from today's call. First, BorgWarner's second quarter results were outstanding. Our sales remained strong at over $3.6 billion. Our adjusted operating margin expanded 100 basis points and adjusted EPS grew by 17% to the second quarter of 2025. Additionally, we increased our full year adjusted EPS guidance, reflecting our continued focus on growing the earnings power of the company. Second, we announced 7 new business awards across our portfolio in the quarter, which we believe further demonstrates our focus on product leadership and the need for our highly engineered solutions across combustion, hybrid and BEV architectures. Third, we further improved our product readiness across our data center and other industrial markets portfolio. We see strong customer demand and are confident that our mechanical and electronic core competencies will enable us to successfully capture growth outside of our core automotive market. This confidence in our strong first half 2026 performance has allowed us to increase our second half industrial R&D spending to further accelerate our industrial product readiness. And finally, we took meaningful steps to return capital to shareholders during the second quarter with approximately $134 million returned through our cash dividend and share repurchases. Additionally, the $1 billion increase to our share repurchase authorization and $1.35 billion total authorization demonstrates our commitment to following a disciplined approach of consistently returning cash to shareholders to create value. Overall, I believe our year-to-date results illustrate the strength of our team, our product portfolio and the long-term earnings power of our business. I'm excited to continue our positive momentum into the second half of 2026. With that, I will turn the call over to Craig. Craig Aaron: Thank you, Joe, and good morning, everyone. I'm excited to share the details of our second quarter financials by turning to Slide 8 for a look at our year-over-year sales walk. Last year's Q2 sales were just over $3.6 billion. In the second quarter of this year, stronger foreign currencies drove a year-over-year increase in sales of $54 million. And you can see the sales headwind from our battery business, which drove a year-over-year decrease in sales of $62 million. The remaining organic sales increase of $18 million, 0.5% was modestly ahead of the decline in light vehicle market production for the quarter. This increase was primarily driven by transfer case outgrowth in North America. Ultimately, sales were relatively flat year-over-year and remained strong at over $3.6 billion. Turning to Slide 9. You can see our earnings and cash flow performance for the quarter. Our second quarter adjusted operating income was $413 million, equating to a strong 11.3% adjusted operating margin. That compares to adjusted operating income of $373 million or a 10.3% adjusted operating margin from a year ago. The exit of our charging business in 2025 increased operating income by $7 million year-over-year. Excluding this benefit and FX impacts, adjusted operating income increased $28 million on $44 million of lower sales. This strong year-over-year performance benefited from ongoing cost reduction actions that our teams continue to take across our business. Equally exciting was every business unit expanded operating margins in the quarter and lower corporate costs provided an additional tailwind to our strong results. Our adjusted EPS was up [indiscernible] or 17% compared to a year ago as a result of higher adjusted operating income and the impact of approximately $650 million in share repurchases or approximately 5% of our market capitalization over the past 4 quarters. And finally, we generated free cash flow of $492 million in the second quarter, which supported $250 million in share repurchases and $70 million in dividend payments in the first half of 2026. I believe this once again demonstrates our focus on creating value with our consistent and strong free cash flow. Now let's turn to Slide 10 and take a look at our full year 2026 outlook. We are maintaining our full year sales, adjusted operating margin and free cash flow guidance. However, we are increasing our full year adjusted EPS guidance based on our share repurchases in the first half of 2026. We continue to project total 2026 sales in the range of $14.0 billion to $14.3 billion compared to $14.3 billion in 2025. Starting with foreign currencies, our guidance now assumes an expected full year sales benefit of $175 million compared to 2025 due to the strengthening of the euro and the renminbi versus the U.S. dollar. This benefit is modestly lower than our previous guidance. We continue to expect our weighted end markets to be flat to down 3% for the year. We expect our light vehicle business, which comprises over 80% of our sales to perform broadly in line with our weighted light vehicle market, consistent with how we performed in the first half of 2026. However, we expect a sales decline in our battery business due to the lack of North American incentives and weaker European demand. We now expect this decline to represent roughly a 170 basis point headwind to our year-over-year sales growth. Based on these assumptions, we expect our 2026 organic sales change to be down 3.5% to down 1.5% year-over-year, which is roughly in line with our market and consistent with our previous outlook. Now let's switch to margin. We continue to expect our full year adjusted operating margin to be in the range of 10.7% to 10.9% compared to our 2025 adjusted operating margin of 10.7%. On a year-over-year basis, we expect the exit of our charging business to drive a 10 basis point improvement in adjusted operating margin. Excluding this benefit, the low end of our margin outlook contemplates the business delivering a full year decremental conversion in the low double digits. At the high end, our outlook assumes we largely offset the impact of the organic sales decline through further cost controls similar to what we delivered in the first half of 2026. Our strong first half performance is enabling the company to increase our planned industrial R&D spending while maintaining our full year adjusted operating margins and guidance commitment. We continue to see strong customer interest in our growing industrial portfolio and believe BorgWarner's mechanical and electronic powertrain core competencies fit extremely well to serve the needs of a high-power industrial market. Given these factors, we are leaning forward and accelerating our R&D spending on these products by investing an incremental $10 million to $15 million to support our future growth. This is a great testament of the BorgWarner team's ability to execute at a high level in the short term to support our long-term sustainable sales growth in a growing market. Importantly, we are making this R&D investment while maintaining our full year margin guidance. Based on this sales and margin outlook, we are now expecting full year adjusted EPS in the range of $5.05 to $5.30 per diluted share, which is an increase compared to our initial guidance range of $5 to $5.20 per diluted share. This increase is primarily due to the share repurchases completed during the first half of 2026. The midpoint of this adjusted EPS guidance represents approximately a 5% increase versus our 2025 adjusted EPS and once again demonstrates our focus on consistently driving earnings expansion despite lower industry production. And finally, we continue to expect full year free cash flow to be in the range of $900 million to $1.1 billion, building off a strong 2025. With that -- that's our 2026 outlook. Now let's turn to Slide 11 and discuss our recently increased share repurchase authorization. As Joe highlighted in his opening remarks, we repurchased approximately $100 million in BorgWarner stock during the second quarter. This takes our share repurchases over the last 4 quarters to approximately $650 million and leaves $350 million remaining under our prior share repurchase authorization. Our Board of Directors approved an increase of up to $1 billion through 2029. When combined with the $350 million remaining under our prior authorization, management has the ability to repurchase up to $1.35 billion of the company's outstanding shares or just over 10% of our current market cap. I believe this authorization increase demonstrates the confidence we have in the long-term cash-generating strength of our business and our focus on driving shareholder value through a balanced capital allocation approach that rewards shareholders. So let me summarize my financial remarks. Overall, we were very pleased with our second quarter results. Our light vehicle sales performance was modestly stronger than industry production. We achieved a 100 basis point adjusted operating margin improvement and a 17% adjusted earnings per share increase on relatively flat reported sales. And our strong free cash flow performance supported a cash return of approximately $134 million to shareholders in the quarter. Our Q2 performance once again demonstrates the BorgWarner team's ability to deliver strong financial results in a declining production environment. We believe this increased share repurchase authorization by our Board of Directors demonstrates our long-term confidence in the cash-generating ability of our business. As we look ahead to the balance of 2026, we intend to remain focused on expanding the earnings power of the company. At the midpoint of our guidance, we expect another year of adjusted operating margin expansion and adjusted earnings per share growth despite our expectations that market volumes and battery sales will decline in 2026 and an incremental $10 million to $15 million investment in industrial R&D to accelerate our long-term sales growth. And finally, with another year of anticipated strong free cash flow of $1 billion at the midpoint of our guidance, we expect to continue to deploy capital in a balanced approach that rewards shareholders by continuing to focus on near-term execution, growing the long-term earnings power of the company through organic and inorganic investments. And following a balanced deployment of our capital, we believe BorgWarner will create significant shareholder value for many years to come. With that, I'd like to turn the call back over to Pat. Patrick Nolan: Thank you, Craig. Nick, we're ready to open it up for questions. Operator: [Operator Instructions] The first question will come from Chris McNally with Evercore. Chris McNally: Joe, could you maybe provide a little more color on some of the quoting progress you discussed for the AI initiatives? I think in particular, maybe you could give like a really quick 101 on Borg, Endeavour and TurboCell relationship, I think given most of us are keeping Claude kind of busy mapping out the different public entities such as Edged, which was also recently in the news. So one of the questions I think that would be great to answer is, will Borg announce every smaller DC win within the relationship? Or is it likely to batch them together as they become material? And then a follow-up. Joseph Fadool: Yes. Chris, so as I mentioned in the remarks, we're really pleased with the progress we've made in the second quarter, and we remain on track, starting with the TG. So as you know, we're launching that next year in 2027. And a couple of data points here on that business. First of all, the customer interest remains really strong, including multiple hyperscalers. And as you know, Endeavour, that is their value in this relationship. So we're really pleased with that. We achieved the CARB-level emissions, which is really a differentiator for us compared to what's out there. And then the UL compliance is in process. So from where I stand, we're on track to deliver. With regard to the Endeavour relationship, it continues to grow and get stronger as time passes on. We won't decide do we announce every individual event. We try to share the important events and milestones with the investors. And then with the recent news on Endeavour and their partner, Koch, we're also aware of it. It's not unusual that these financial partners are constantly out raising money for the data center growth, which is out there. But we don't think it materially changes anything between us and our relationship with Endeavour. The partnership is stronger than ever. We see a great fit between our companies and also how we see the future of the world. If anything, this adds credibility to Endeavour. It adds credibility to their Edged data center business that they're a fantastic player, and we're just happy to be partnered with them. Chris McNally: That's great. I agree. And I think the hyperscale wins obviously would be material by themselves. And -- so then just the quick follow-up is on the BESS side. You reiterated start of production '27. The quoting continues. I think you even shared in your prepared remarks, more to share later this year, which is great, and I imagine aligns with RFP timing. Is there any order of magnitude for what a typical contract or win size may be that you could give sort of rule of thumb? I know no contract is the same, but anything rule of thumb because we're trying to start to think about what an average contract could be there? Joseph Fadool: Yes. I wouldn't say there's any type of rule of thumb. Every data center project is bespoke. What we find is important is that our TG and TurboCell solution, our battery business and our power conversion all play a very important role in these future data centers. So any award in the battery space with a hyperscaler obviously, would be substantial. We continue to see a strong pipeline of quoting. We're progressing our product offering here. In fact, we're expanding the range of products that we're offering. So I'm really pleased with the progress we're making here, and we'll likely share more updates later this year. Operator: The next question will come from Colin Langan with Wells Fargo. Colin Langan: Just a follow-up on the turbine generator. I think in the past, you commented that you'd consider announcing adding more capacity in the second half of this year. Is that still the plan? I mean any thoughts on the need to add more capacity given the customer interest? And if you do decide, how quickly can that new capacity come online? Joseph Fadool: Yes. Colin, so we do continue to see strong demand, as we had mentioned. So we're really encouraged by that. And as we've shared with you, we do anticipate we're going to have to make a decision in the second half of this year on capacity and also decide is that capacity going to serve this market or maybe a different market, which we're also active with our partner, Endeavour. So no decisions made yet, but I am encouraged by the demand side of the equation, so more to come. Colin Langan: Got it. And just one question on the results today. I mean if I look at -- your sales were up just $10 million, EBITDA up $40 million. That's quite a strong conversion. Even if I take batteries out, it's up $40 million on $70 million in sales. What is driving this extremely high sort of -- or strong conversion on growth? And I think you mentioned strong cost controls sort of possibly continuing in the second half would be the upper end of guidance. What are those cost controls? And why wouldn't they continue since you have a couple of quarters of that under your belt? Craig Aaron: Thanks, Colin, for the question. It was great execution on all fronts across our business. 11.3% margin in the quarter, up 100 basis points. When you break down that 100 basis point improvement year-over-year, 60 basis points came from strong performance from our foundational businesses, TTT and DMS, great job by those teams. We had 20 basis points of enhancement through BES, the restructuring actions that they've taken in 2025 and 2026 as well as the exit of the charging business. And the final 20 basis points came from strong cost controls. What I was most excited about was, we expanded margins in every business unit, and I was equally happy that corporate provided a nice tailwind. It was just strong execution across the board. Operator: The next question will come from Luke Junk with Baird. Luke Junk: Joe, curious to double-click on one of your comments in the script around inverter efficiency. Just hoping you could speak a little more to what you see as the company's inverter efficiency, especially potential future applications that could stem from that? Do you have an ambition to expand the portfolio further there? And in terms of scope, maybe if you could just remind us also of some of the markers for efficiency that you outlined at the '23 Investor Day, I think you outlined a path to kind of industry-leading levels for automotive. Joseph Fadool: Yes. So thanks for the question, Luke. So when you think about efficiency, why is that, especially on the industrial side, power is the constraint. So any improvement in efficiency is important. We continue to see efficiency gains as we develop next-gen inverters, sometimes that comes from the silicon and silicon carbide technology. Often, it comes from our proprietary power module, which we produce and develop ourselves. And a lot of that just has to do with how you cool the device as you're driving a lot of power through it. So efficiency numbers from generation to generation, they tend to vary. But similar to the fuel economy improvements, you tend to see a few basis points or even a few hundred basis points at times with major steps forward, so... Luke Junk: Yes. And then just in terms of the investment scope, I think if I think microgrid inverter, I mean, there certainly could be other places in the gray space or even getting more into the transformation of power. Just how should we think about the scope of opportunities that you might be looking at in inverter type things? Joseph Fadool: So our leading product to the market is likely going to be a microgrid-tie type of inverter. So tying together power gen, with all the other power sources and possibly even the grid, which, of course, is outside the building. So that's what we're leading with. But we see other possible opportunities here. So on the grid side, we've started to expand our range. We were leading with 800 volts, and it's likely that will be the first award, but we've expanded the range from 400 volts to 1,500 volts. And then secondly, our team is evaluating other opportunities in the gray space and inside the building. As you know, with the next-generation NVIDIA chipsets, there's a high demand for power at the rack level, and this plays very well into the work we do on the automotive side. Luke Junk: And then for my follow-up, Joe, could you just maybe give us some additional color on the new products on your website that you briefly touched on in the script, things like UPS, battery backup units and similar, is this sort of what the incremental R&D that you're putting in the back half of the year is pointing to? Joseph Fadool: So those incremental products are some of the examples when we talk about expanding the portfolio, whether it's energy storage, like you mentioned on battery backup or some of the new power conversion products, which I just mentioned. And those are the areas where the $10 million to $15 million incremental R&D are to support. So we're really excited about that. A year ago, we weren't even talking about these products. And if you can imagine the progress our teams have made, especially in the first and second quarter, I'm just extremely pleased with that. So excited to see what comes with this additional investment. Operator: The next question will come from Joseph Spak with UBS. Joseph Spak: So you came in about almost $40 million higher this quarter. You're raising R&D you said by 10 to 15. So the other in OI is basically flat, so -- for the full year. So the other 25 to 30, is that just some higher costs? Maybe you could just talk about that. And then just with this higher level of R&D, should we think of this as a more sustained pace into the future? Or is it something of a pull forward because you see some of these emerging opportunities that you alluded to in your prepared remarks? Craig Aaron: Yes. Thanks for the question. So I think it would be helpful to walk you first half to second half, revenue and then operating income or margin. When you think about sales, sales in the first half came in just under $7.2 billion. The midpoint of our guide puts us right around $7 billion from a top line perspective. We have 3 headwinds first half to second half. First is the battery decline, that's about $60 million. FX is a headwind, it's about $80 million, and the rest is industry production. We're assuming modest decline in industry production about 1%. That again takes us to $7 billion in revenue at the midpoint. On those lower revenues, we're decrementing at 15% call it, mid-teens. And then we're leaning forward with that $10 million to $15 million in industrial R&D. If you were to exclude that step-up in R&D, our margin would be at 10.8%. That's effectively in line with first half. If you include industrial R&D at the midpoint, we're at 10.6%. So from our perspective, this makes a lot of sense, and we're excited to invest that extra $10 million to $15 million to enhance our portfolio. Joseph Fadool: And Joe, I can answer the question on sustained investment. So from my standpoint, these opportunities are what's driving the R&D investment. So as we continue to see more opportunities in the industrial space, we're going to go after them. These products, keep in mind, they take probably 18 to 24 months to develop in general. So when we start investing, you can expect to have some level of sustained spending. But I think we know that BorgWarner is pretty efficient with how we spend our R&D and it's, in this case, focused on really attractive growth. Craig Aaron: And Joe, maybe just one other comment. We got to step back and think about we're executing in the short term. We're still expanding margins. We're still expanding EPS. We're still generating a significant amount of free cash flow. And at the same time, we're investing in our long term in a high-growth market. It's a great time to be at BorgWarner. Joseph Spak: Yes. No, absolutely. Second question, maybe just sort of turning back to the automotive business. One of the things that has clearly come a little bit more into focus is some of the vehicles being exported from China and similarly, some of the maybe European luxury programs into China. Can you remind us like what you think your exposure is to, I guess, China export business as a percent of your overall China business? And then have you seen any impact from some reduced demand of, let's say, legacy European vehicles in China? Joseph Fadool: So maybe to frame that a bit. So China is about 20% of BorgWarner's global sales. We don't break out local versus export. I mean, quite frankly, we don't know when they're exporting a vehicle or not. So that's not something we really break out. What we are feeling good about is that position, that strong position we have in China has led to some tailwinds as they export more to the other markets. So the Chinese OEMs had an amazing first half in terms of export, and we don't see any reason why that won't continue. With regard to the European luxury carmakers, we really don't see a big issue in mix. A lot of that just comes down to our customer diversity when a few are up, others are down. Most of that tends to just kind of wash out. So that's what we see at this point. Operator: The next question will come from Andrew Percoco with Morgan Stanley. Andrew Percoco: Great. I want to come back to some of the comments you made on the turbine generator product and the hyperscaler interest that you're seeing. Can you just provide some context on whether they're looking at this product on a primary power basis or a backup power basis? And also, if you can provide any insight in terms of if the economics look any different from your perspective on your side on whether or not they end up using a prime versus backup? Joseph Fadool: Yes. James, so our turbine generator can serve in both primary and backup. In fact, when we started this project a few years ago, we thought the majority of applications would be in backup. I would say, in the last 12 months, that's flopped, and we see more of them in prime use. So I think that just speaks to the speed to compute and the shortage of power generation in general. So this TurboCell unit using BorgWarner TG serves equally well and both of those are very low emissions, lower noise than some of our competitors. And its speed to market is really important. So we're excited about it. In terms of the economics, I would just say, overall, we're very pleased with the terms and the agreement that we have with Endeavour across of all use cases. Andrew Percoco: Okay. That's helpful. And you mentioned time to power, obviously being probably more important at this point than just cost of power. So as you scale production in 2027 -- like what's your targeted order to kind of delivery conversion time line? Like what are you trying to advertise to the customers that are talking to you about taking delivery of this product? Joseph Fadool: Yes. So we've announced we're installing 2 gigawatts of capacity and in the initial year, which is next year, about $300 million of revenue. So we are quoting through Endeavour lead times to deliver these units. I would say it's another advantage we have in the system. I mean think about it this way, we're standing up materially automotive production and supply chain in an environment that's probably not used to that type of speed. So -- we feel this is also a competitive advantage for us. So the order time is well within the lead times of our capacity and the capacity of our suppliers. Andrew Percoco: So you're talking about like potentially less than 6 months from when you -- when someone places an order to when you can deliver? Is that a fair way to think about it, once you have capacity? Joseph Fadool: Yes, I would say we haven't really disclosed our lead times, and we're not going to talk about that. But I would say the main focus right now is on launching the unit in 2026, and we'll share more as we get into 2027 with regard to your questions. Operator: The next question will come from James Picariello with BNP Paribas. James Picariello: So I know Koch Industries has already been mentioned amid the recent news flow of Koch potentially looking to sell its stake in Edged at a $15 billion valuation maybe. But my question is, I know it's all speculation at this point, but within the contractual relationship you have with Edged by way of TurboCell, are there any change in control triggers involved? Anything that could affect the $300 million plus in revenue that you have slated for next year? Joseph Fadool: Yes. So there's nothing in our agreement that triggers change in control. You have to keep in mind that there are several Edged legal entities. The one that we directly deal with is 100% owned by Endeavour. That's not what's being spoken about. It's more about what we understand how Koch can raise additional money to support the growth that's coming. So again, we don't see this as a material issue. We're just excited to be partnered with Endeavour and their Edged business unit. And we just think it adds great credibility to what they're doing if partners like Koch and others are out there raising money to fund their projects. James Picariello: Yes. No, for sure. I totally agree. And then on battery systems, losses through the first half only totaled $4 million. I know there are charging exit and battery plant consolidation savings in play. But like if we scrub for those, the underlying performance is still far and away better than the company's targeted mid-teens decremental. Can you just shed some light on what's driving that? And just directionally, how we should be thinking about the first half to second half bridge for this particular segment? Craig Aaron: Sure. So really pleased with BES and their performance. They've taken a lot of restructuring actions both in 2025 and continue to take actions in 2026 to get that cost structure right. On top of that, you mentioned that, we have the benefit of the exit of our charging business last year that's benefiting our financials this year. Ultimately, as you walk from first half to second half, we would expect to manage it in that mid-teens decremental conversion to us that success, and that's what we're focused on executing. James Picariello: Mid-teens decremental half over half? Craig Aaron: Half over half. Operator: The next question will come from Emmanuel Rosner with Wolfe Research. Emmanuel Rosner: My first question, you've been obviously announcing a real significant amount of awards pretty consistently every quarter, another sort of like 7 today. Any way to help us frame what this could do for your growth over market on a go-forward basis and the timing of it? Can we expect it to be already positive in 2027? And where could it trend sort of like over time as you launch a lot of these businesses? Joseph Fadool: Sure. So what I am pleased with and you referenced it, is this booking strength that we've had over the last 2 years, and it's been across all of our product lines. So I do expect these bookings to support improvement in our objective in outgrowth across portfolio in 2027. And then, of course, we announced the $300 million of new growth associated with the industrial business. So overall, Craig and I are pleased with the progress we're making, and we'll share more early next year on 2027. Emmanuel Rosner: But if it starts even longer term without being specific on 2027, like -- and does that enable you to go back to historical levels of growth over market? Joseph Fadool: Yes. So Emmanuel, what we've clearly stated is Craig and I are not pleased with the current outgrowth that the company is witnessing. And that is why we adjusted the strategy to drive growth across the entire portfolio. So as you can probably imagine, these strong bookings that we've had over the last 2 years, they take time to come to production. But we're clearly expecting that they're going to improve the outgrowth of the company. And as those volumes move through launch and into peak volumes, we're anticipating those improvements will continue to come. So we'll share more in 2027, but I think that probably gives you a good idea of where we're headed. Emmanuel Rosner: Yes. And then on the industrial side, can you help us dimension the inverter -- size of the opportunity for you, not so much in terms of addressable market, but more in terms of how much capacity you're planning to have, right? Because for the turbines, you kind of know the initial capacity that's put in the ground. On the energy storage side, I think your capacity is essentially the available one from some of your battery pack earlier investments. So we kind of have an order of size, but I'm not super clear on the inverter side, what you have in terms of facilities, in terms of investment and capacity. Joseph Fadool: So we haven't announced any capacity availability or what we plan to install. I mean, frankly, we're going to move to quoting at the end of this year. That will be what we use to kind of gauge how do we leverage the existing capacity investment versus where we may need new capacity. One of the things we're really excited about with, especially our grid tie inverters, is their majority is designed in the U.S. We make plans of U.S. manufacturing even. So we've got a lot of opportunity on that product line. But it's early days in terms of quoting, and I'm sure we'll be in a position to share more in 2027. Operator: The next question will come from Dan Levy with Barclays. Dan Levy: I wanted to start with a question on capital allocation. And I know that you, in your release, issued a new $1 billion buyback authorization to even buying back a fair amount of stock. How are you thinking about your capital allocation program in light of this new growth opportunity that you had in light of the multiple that is better? I know you've talked about stepping up the spend a little bit, but that doesn't -- it seems fairly modest. Is there more that can be done on accelerating spend, be it R&D or CapEx that would then accelerate the growth opportunity? Is there any M&A that can be done? Just how are you thinking about spending accelerating the industrial opportunity? Craig Aaron: Yes. Thanks, Dan. As I step back, what are Joe -- and what are we focused on? And we're focused on growing the earnings power of the company. And we want to create value with our cash. That's the ultimate goal. And we're always balancing inorganic opportunities, organic opportunities, share repurchases. We review it every quarter to make sure that we're creating value quarter after quarter. When I take a look back over the past year, we repurchased $650 million, it's 5% of our market cap. That was success for us over the past 4 quarters. We're excited that we have the flexibility from our Board of Directors with another $1.35 billion. That represents 10% of our market cap approximately. It gives us a lot of flexibility. And I think it also shows the confidence we have in the future cash-generating ability of our business. But ultimately, our goal is to drive the earnings power of the company, and we're going to use every lever at our disposal to do just that. Joseph Fadool: And maybe to add a little bit, we will always prioritize these organic investments as we see growth opportunities, both on the R&D side and the CapEx side. Dan Levy: But from a tech perspective, on the new growth opportunities, do you have everything you need in-house? Or is there something you still need to acquire to sort of beef up the portfolio from a tech perspective? Joseph Fadool: I mean I think we're moving from a position of strength. When I look at our portfolio, especially that we've invested and grown over the last 10 years, these 3 new product lines for industrial are able to leverage a lot of that competence. Now there may be opportunities through inorganic growth that we want to continue to strengthen the current portfolio or improve our market position. So in terms of M&A, we're sticking to the 3 criteria, which, again, is leverage the core competence of the company as the first priority. The second is making sure it's near-term accretive. And then third, that we don't overpay and we pay a fair value for any asset. So we continue to look inside mobility and outside. But I would say we've really raised the hurdle in terms of any decision we're going to make. Dan Levy: Okay. As a follow-up, I wanted to ask about your battery storage opportunity. From some of the other players, we've heard a lot about the importance of having access to domestic LFP supply, which gives you the right chemistry, but also gives you ITC and PTC compliance. It looks here like your focus in battery storage is more on data centers. I know you've talked about being chemistry agnostic. But to what extent does having access to LFP matter? And to what extent does PTC and ITC eligibility matter as you're building out the business case for battery storage? Joseph Fadool: So I think the way to see our energy storage first is we want to leverage the existing technology and capacity we have in especially in our Seneca plant. So that's our first priority. But we have always and we continue to work with other cell types and cell supply manufacturers. So LFP is included in that, sodium ion is included in that. I think it's one of the great advantages of being cell agnostic is, we have a lot of competence in how to integrate these cells, package them, control them and cell DMS and ship them as a unit. So we do anticipate that we will require some of those other cell technologies on a go-forward basis, and we continue to invest in how we bring those to market and with which partner. Operator: The next question will be coming from Alex Perry with Bank of America. Alexander Perry: Just for the core auto business, I wanted to follow up. So how the organic sales was slightly lowered -- the sort of low end of the range of production? Maybe just talk to us sort of what you're seeing in schedules. And particularly, I wanted to circle back on China. It's been a more challenging market for most of the supplier group so far. Maybe talk to us what you're seeing in customer schedules there and maybe versus Europe and North America? Joseph Fadool: Yes. So starting on a global level, production range has largely remained unchanged in our view. We still see schedules holding up as we expected. I would say there are some small regional changes in China, likely to be down 4% to 7%. Europe down slightly. A little bit wider range, I would say, in North America between up 1.5% and down 2.5% to 3%. So there is a little bit of volatility still, especially in the pass car side, but overall, not big changes. I think what people are recognizing is the strength of the Chinese OEM exporting from China. They have very strong exports in the first half. So if you play that forward, you can imagine they're going to be exporting anywhere from, I don't know, 9 million to 11 million units, which would be a big year-over-year increase. For us, it doesn't change much. We're very strong with these leading Chinese OEMs and our customer diversity more or less washes out some of those mix issues that maybe others see in their business. Alexander Perry: Really helpful. And then just another follow-up on the power gen. Any sort of sense on how fast you can scale the power gen sales with the existing capacity? So I think you're sort of earmarking $300 million for next year. What can that sort of scale to over time? And then any sort of help or sense in sizing the sort of EBIT contribution as we start to build out our models here? Joseph Fadool: Yes. I would first say we're very focused. Our teams are very focused on a successful launch. So -- we have announced $300 million of revenue, which we're very comfortable with next year. But right now, we're focused on executing flawlessly and doing everything we need to and supporting our suppliers and doing the same. We haven't shared any ratios of revenue to capacity. That might be something we do in the future. But we don't see really demand as a constraint or our ability to scale as a constraint. It really comes down to are we hitting our quality milestones and our operational milestones to be able to serve those requirements that we see out there. Operator: We have time for one final question, and that question comes from Rajat Gupta with JPMorgan. Rajat Gupta: I just wanted to follow up some of the hyperscaler opportunity. You mentioned earlier that the award in the battery space will be substantial. I'm curious like without a rule of thumb, can you frame the range of outcomes? What comes first with that kind of an award? Is it the turbine? Is it the storage system? Is it inverter? I'm just curious like how the sequencing will work and impact just the capacity decision? And I have a quick follow-up. Joseph Fadool: Yes. Maybe for clarity's sake, the turbine generator, that's a product that we have developed and are supported by Endeavour. We go to market through Endeavour. On the battery side or energy storage side and the power conversion side, we can serve the entire market. With regard to sequencing, we expect to lead with turbine generator. Obviously, we've announced that it's the most developed product, and we're launching that with clear customer next year. We do expect to see some battery awards this year, as we've shared in the past. And then I would say the power conversion is a little bit behind that. And that's mainly due to the development is a little bit behind the energy storage side. So that's why we've shared -- we'll start to close that towards the end of this year. So hopefully, that's helpful. Rajat Gupta: Yes. No, that's helpful. And then just on like the 2027 start of production, $300 million. What are the remaining gating factors to that start of production? It seems like everything so far has been tracking per plan. I'm curious like what are the next final 1 or 2 steps before the shipments? Joseph Fadool: Sure. So we announced a couple of the milestones, which we're really pleased with the progress we've been making to date. There's additional milestones, how are we doing against our qualification testing to show that we meet all the requirements we need to. There's reliability testing. There's the ramp-up of production to make sure we're hitting our quality and cycle time as we expect. So those are some of the things we're looking at internally to gauge our success and where do we have to adjust. But this part of the process is well known to BorgWarner. We conduct over -- I can't even imagine hundreds, let's just say, hundreds of launches a year. So this part of the product development and launch phase, we're very familiar with. So it's just a lot of work and focus on execution and adjusting where you need to, where you find issues. So really pleased with the progress to date. Patrick Nolan: With that, I'd like to thank everyone for their questions today. If you have any additional follow-ups, feel free to reach out to me or my team. With that, Nick, you can go ahead and conclude today's call. Operator: This concludes the BorgWarner 2026 Second Quarter Results Conference Call. You may now disconnect. Before you buy stock in BorgWarner, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and BorgWarner wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved 100 basis points of adjusted margin expansion despite a flat sales environment, driven by aggressive cost controls and operational efficiency across all business units. Outperformed declining market production in the core automotive segment, primarily due to strong demand for North American transfer case volumes. Successfully secured 7 new business awards across foundational and eProducts portfolios, including a major European eTurbo program and high-voltage inverter extensions. Leveraged automotive scale and power electronics expertise to disrupt the data center market, focusing on turbine generators and microgrid inverters. Attributed strong earnings per share growth of 17% to a combination of improved operating income and disciplined share repurchases totaling approximately $650 million over four quarters. Maintained a balanced capital allocation strategy, returning $134 million to shareholders in Q2 while increasing the share repurchase authorization to $1.35 billion. Increased second-half 2026 industrial R&D investment by $10 million to $15 million to accelerate product readiness for data center and industrial markets. Anticipates 2027 launch of the turbine generator product line with an initial revenue target of $300 million and 2 gigawatts of planned capacity. Expects to make a critical capacity expansion decision in the second half of 2026 to meet strong demand from hyperscalers and other industrial customers. Projecting Battery Energy Storage systems to be production-ready by 2027, with quoting activity for DC blocks and UPS solutions currently underway. Guidance assumes a 170 basis point headwind from the battery business due to the lack of North American incentives and weakening European demand. The exit of the charging business in 2025 provided a $7 million year-over-year benefit to operating income and a 10 basis point margin tailwind. Battery Energy Systems segment continues to face headwinds, though restructuring actions and plant consolidations have mitigated the impact on overall margins. Foreign currency fluctuations are expected to provide a $175 million full-year sales benefit, a modest downward revision from previous estimates. Identified power constraints in data centers as a primary market driver, positioning the company's high-efficiency inverters as a critical solution for next-gen AI chipsets. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed the partnership with Endeavour remains strong despite external financial news, noting that recent funding activities add credibility to the data center business. Testing has confirmed the turbine generator meets CARB-level emission standards, which management views as a key differentiator for hyperscaler customers. Management noted a significant shift over the last 12 months where the majority of customer interest has moved from backup power to primary power applications. This shift is driven by global shortages in power generation and the urgent need for 'speed to compute' in the AI sector. BorgWarner is developing a high-power portfolio spanning 400 volts to 1,500 volts to capture volumes across the microgrid and industrial spectrum. The company is leveraging its automotive supply chain and liquid-cooled power electronics expertise to compete against traditional industrial suppliers. Management acknowledged they are not satisfied with current outgrowth levels and expect the strong bookings from the last two years to drive improved performance starting in 2027. The strategy involves driving growth across the entire portfolio, including foundational combustion products and new industrial vectors.

BorgWarner Inc. BWA reported second-quarter 2026 adjusted earnings of $1.42 per share, which rose 17.4% year over year. The figure beat the Zacks Consensus Estimate of $1.26 by 12.7%. Net sales increased 0.3% to $3.65 billion and surpassed the consensus mark of $3.58 billion by 1.8%. Strong cost controls supported profitability despite lower industry production and weakness in the Battery Energy Systems business. Adjusted operating margin expanded 100 basis points to 11.3%, while organic sales declined 1.2%. Gross profit rose to $721 million from $640 million in the year-ago quarter. Gross margin improved to 19.8% from 17.6%, reflecting lower cost of sales and disciplined operating execution. Adjusted operating income increased to $413 million from $373 million. BWA currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote Turbos & Thermal Technologies sales declined 2.6% year over year to $1.44 billion amid lower industry production. Organic sales fell 4.3%. Segment adjusted operating income slipped to $225 million from $227 million. Drivetrain & Morse Systems revenues increased 1.8% to $1.5 billion, aided by strong North American transfer-case volumes. Adjusted operating income rose to $277 million from $260 million, supported by higher sales and operating execution. PowerDrive Systems sales grew 14.5% to $665 million, including organic growth of 11.7%. Its adjusted operating loss narrowed to $29 million from $33 million, driven by higher sales. Battery Energy Systems revenues plunged 37.1% to $100 million due to weaker European demand and the absence of North American incentives. However, the segment’s adjusted operating loss narrowed to $2 million from $12 million, helped by restructuring actions and savings from the charging-business exit. BorgWarner announced seven awards spanning combustion, hybrid and electric-vehicle technologies. These included an eTurbo program for a European automaker, a torque-on-demand transfer case for a Chinese SUV and two variable cam timing programs. The company also secured an integrated drive module award using its next-generation three-in-one system. Two high-volume inverter program extensions cover plug-in hybrid and 800-volt battery-electric applications. Production for the announced programs is scheduled to begin between late 2026 and 2029. The company noted progress in data-center and industrial applications. Testing of its turbine generator achieved California Air Resources Board-level emissions standards, while component certification work is expected to begin in September. BorgWarner continues to target a 2027 launch and had previously outlined roughly $300 million of turbine-generator revenues for that year. Customer interest includes multiple hyperscalers, and management expects to decide during the second half of 2026 whether additional capacity is needed. BorgWarner is also developing energy-storage systems, microgrid inverters and power-conversion products. Four customers have received inverter samples, and the company is expanding its portfolio from 400 volts to 1,500 volts. It plans to invest an additional $10-$15 million in industrial research and development during the second half. BWA raised its full-year adjusted earnings guidance to $5.05-$5.30 per share from $5-$5.20. The company maintained its sales outlook of $14-$14.3 billion and adjusted operating margin forecast of 10.7%-10.9%. Organic revenues are expected to decline 1.5%-3.5%, including an anticipated $250 million reduction in Battery Energy Systems sales. Second-quarter operating cash flow totaled $586 million, while free cash flow was $492 million. For 2026, the company continues to expect operating cash flow of $1.6-$1.7 billion and free cash flow of $900 million-$1.1 billion. BorgWarner returned about $134 million to shareholders during the quarter through repurchases and dividends. Its board increased the share repurchase authorization by $1 billion, bringing total available authorization to approximately $1.35 billion through 2029. Cash and equivalents were $2.45 billion as of June 30, 2026. General Motors GM reported second-quarter 2026 adjusted earnings of $3.57 per share, up 41.3% year over year. The figure beat the Zacks Consensus Estimate of $3.13 by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate of $46.56 billion by 3.15%. General Motors raised its full-year adjusted EBIT guidance to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected at $12-$14 per share, up from the prior range of $11.50-$13.50. Tesla, Inc. TSLA reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%. Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. Ford F reported second-quarter 2026 adjusted earnings of 42 cents per share, beating the Zacks Consensus Estimate of 33 cents by 27.27%. Earnings rose 13.5% from 37 cents a year ago. Automotive revenues of $44.89 billion fell 4.4% year over year and missed the consensus mark of $45.72 billion by 1.81%. Ford’s consolidated second-quarter revenues came in at $48.3 billion, down 3.7% year over year. The company raised its full-year adjusted EBIT outlook to $10-$11 billion from $8.5-$10.5 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BorgWarner Inc. (BWA) : Free Stock Analysis Report Ford Motor Company (F) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

BorgWarner Inc. BWA used its Q2 2026 earnings call to stress margin expansion, higher full-year earnings guidance and faster investment in data-center power products. Management said cost discipline is funding growth without weakening current-year commitments. Adjusted earnings of $1.42 per share topped the Zacks Consensus Estimate of $1.26. Revenues of $3.65 billion also exceeded the $3.58 billion estimate, while adjusted operating margin rose 100 basis points to 11.3%. BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote President and chief executive officer Joseph Fadool said the company delivered strong profitability despite nearly flat sales and lower industry production. Excluding Battery Energy Systems, organic sales increased modestly. Executive vice president and chief financial officer (CFO) Craig Aaron raised 2026 adjusted earnings guidance to $5.05-$5.30 per share from $5.00-$5.20, mainly reflecting first-half share repurchases. Sales guidance remains $14.0-$14.3 billion, adjusted operating margin remains 10.7%-10.9%, and free cash flow remains $900 million-$1.1 billion. The CFO said adjusted operating income reached $413 million, up from $373 million, even as organic sales declined 1.2%. Every business unit expanded margins. A Wells Fargo analyst questioned the strong conversion. Aaron said 60 basis points of the margin gain came from foundational businesses, 20 from Battery Energy Systems restructuring and the charging exit, and 20 from corporate cost controls. Management expects lower second-half revenues because of battery weakness, currency and production declines. Excluding added industrial research spending, Aaron said second-half margin would be about 10.8%. Joseph Fadool said BorgWarner will add $10 million-$15 million of industrial research and development spending in the second half. The investment targets turbine generators, battery storage and power conversion. The turbine generator achieved CARB-level emissions performance, while component certification is expected to begin in September. Capital-equipment installation is planned for the third quarter. Fadool said interest remains strong, including from multiple hyperscalers. BorgWarner targets production in 2027 and has outlined approximately $300 million of first-year revenues. An Evercore ISI analyst asked about quoting activity and contract size. Joseph Fadool declined to provide a standard award value because data-center projects are tailored to customers. Battery storage systems remain on track for production readiness in 2027. The offering includes direct-current blocks, uninterruptible power supplies, high-power racks and controls. Four customers have microgrid-inverter samples. BorgWarner plans to begin quoting later in 2026 and is developing products spanning 400 volts to 1,500 volts. Joseph Fadool highlighted seven awards across combustion, hybrid and electric-vehicle applications, including an eTurbo program, transfer cases, variable cam timing, an integrated drive module and two inverter extensions. A Wolfe Research analyst asked when the awards would improve growth relative to vehicle production. Fadool said bookings secured over two years should support better growth in 2027. China represents about 20% of sales. Fadool said Chinese automaker exports are a tailwind, while customer diversity limits the impact of weaker European luxury demand in China. Craig Aaron said BorgWarner generated $492 million of second-quarter free cash flow and returned about $134 million through repurchases and dividends. The board increased the repurchase authorization by $1 billion, bringing total capacity to approximately $1.35 billion through 2029, slightly more than 10% of the market capitalization cited on the call. Aaron said capital allocation will balance organic investment, acquisitions and repurchases. Joseph Fadool said organic spending will take priority when attractive growth opportunities emerge. Management’s tone combined confidence in cost control with urgency around industrial development. BorgWarner is investing more while preserving its sales, margin and cash flow commitments. Priorities include executing the turbine-generator launch, advancing storage and inverter products, converting automotive awards into outgrowth, and sustaining earnings expansion in a softer production environment. BWA carries a Zacks Rank #4 (Sell), alongside an A Value Score, A Growth Score, B Momentum Score and A VGM Score. The Style Scores indicate favorable valuation, growth and momentum characteristics. Under the Zacks framework, Style Scores complement rather than override the Rank. The current Rank reflects an unfavorable earnings-estimate revision trend, though it can change as analysts revise estimates after the reported results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BorgWarner Inc. (BWA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

BorgWarner (BWA) came out with quarterly earnings of $1.42 per share, beating the Zacks Consensus Estimate of $1.26 per share. This compares to earnings of $1.21 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +12.70%. A quarter ago, it was expected that this auto parts supplier would post earnings of $1.16 per share when it actually produced earnings of $1.24, delivering a surprise of +6.9%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. BorgWarner, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $3.65 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.77%. This compares to year-ago revenues of $3.64 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. BorgWarner shares have added about 39.9% since the beginning of the year versus the S&P 500's gain of 13%. While BorgWarner has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for BorgWarner was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.28 on $3.56 billion in revenues for the coming quarter and $5.16 on $14.19 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Strattec Security (STRT), is yet to report results for the quarter ended June 2026. This maker of automotive locks and keys is expected to post quarterly earnings of $1.29 per share in its upcoming report, which represents a year-over-year change of -37.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Strattec Security's revenues are expected to be $146.54 million, down 3.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BorgWarner Inc. (BWA) : Free Stock Analysis Report Strattec Security Corporation (STRT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

AUBURN HILLS, Mich., Aug. 5, 2026 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA) today reported second quarter results for 2026. Second Quarter Results and Business Update BorgWarner's (the "Company") U.S. GAAP net sales increased approximately 0.3%, while organic net sales decreased approximately 1.2%, year-over-year compared with the second quarter of 2025. Excluding the decline in Battery Energy Systems segment sales of approximately $60 million, the Company's organic net sales were up modestly year-over-year. The Company achieved a U.S. GAAP operating margin of 10.1% during the second quarter of 2026, or an increase of 220 basis points, compared with the second quarter of 2025. The Company achieved an adjusted operating margin of 11.3%, or an increase of 100 basis points, compared with the second quarter of 2025. The Company's continued focus on cost controls allowed it to deliver strong performance despite a lower industry production environment. The Company repurchased approximately $100 million of its outstanding shares and paid a $34 million cash dividend to its shareholders during the second quarter of 2026. The Company's Board of Directors authorized an increase to its share repurchase program of $1 billion, bringing the Company's total authorization to approximately $1.35 billion, which is intended to allow management to repurchase the Company's outstanding shares through 2029. The Company continued to make progress in its product readiness across its portfolio offerings for the data center and industrial markets. The Company plans to increase 2026 R&D spending to accelerate these future growth opportunities. New Business Awards Across Portfolio The Company secured multiple new business awards that are expected to support its long-term profitable growth, including the following: New eTurbo award with a major European OEM for an advanced hybrid passenger car application. Production is expected to begin in 2029. Torque-on-demand with mechanical lock transfer case award with a Chinese OEM for a newly developed, full-size SUV. Production is expected to begin in the fourth quarter of 2026. Two variable cam timing awards. These include a conquest award with a major Chinese OEM and a program life extension award with a leading European premium OEM. Production is expected to begin in 2026 and 2027, respectively. Integrated Drive Modules (iDM) award with a global OEM. This program utilizes the Company's next-generation iDM technology, setting a new benchmark in performance, efficiency and system integration. Production is expected to begin in 2027. Two high-volume inverter extension awards with a major European OEM for plug-in hybrid and 800V battery-electric vehicles. Production is expected to begin in 2029. Second Quarter Highlights: U.S. GAAP net sales of $3,648 million, an increase of approximately 0.3% compared with the second quarter of 2025. U.S. GAAP net earnings of $1.34 per diluted share. U.S. GAAP operating income of $370 million, or 10.1% of net sales. Net cash provided by operating activities of $586 million. Financial Results: 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. Net sales were $3,648 million for the second quarter of 2026, an increase of approximately 0.3% compared with the second quarter of 2025. This increase was due to stronger foreign currencies compared to the U.S. dollar, partially offset by declining market production volumes and lower Battery Energy Systems segment sales. Net earnings for the second quarter of 2026 were $277 million, compared with net earnings of $224 million for the second quarter of 2025. Net earnings per share for the second quarter of 2026 were $1.34 per diluted share, up 30.1% from $1.03 per diluted share for the second quarter of 2025. Adjusted net earnings per diluted share for the second quarter of 2026 were $1.42, up 17.4% from adjusted net earnings per diluted share of $1.21 for the second quarter of 2025. Adjusted net earnings for the second quarter of 2026 excluded net non-comparable items of $(0.08) per diluted share, while adjusted net earnings for the second quarter of 2025 excluded net non-comparable items of $(0.18) 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 as a result of 2025 and 2026 share repurchases. Full Year 2026 Guidance Update: The Company increased its 2026 full year adjusted earnings per share guidance, while maintaining its sales, adjusted operating margin and cash flow expectations. At the mid-point of its 2026 guidance, the Company expects to deliver another year of adjusted operating margin improvement and adjusted earnings per share growth despite the Company's expectation that its weighted light vehicle markets will be down 3% to approximately flat and a decline in the Company's Battery Energy Systems segment sales. Net sales are expected to be in the range of $14.0 billion to $14.3 billion in 2026, compared with 2025 net sales of approximately $14.3 billion. The Company's net sales guidance implies a year-over-year change in organic net sales of down 3.5% to down 1.5%. The Company's net sales guidance includes an expected year-over-year sales decline of approximately $250 million in the Company's Battery Energy Systems segment, which represents approximately a 1.7% headwind to organic net sales growth in 2026. Foreign currencies are expected to result in a year-over-year increase in sales of approximately $175 million primarily due to the strengthening of the Euro and Chinese Renminbi against the U.S. dollar. U.S. GAAP operating margin is expected to be in the range of 9.6% to 9.8% in 2026. 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 10.7% to 10.9%. U.S. GAAP net earnings are expected to be within the range of $4.72 to $4.94 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be in the range of $5.05 to $5.30 per diluted share, compared to the Company's previous adjusted net earnings range of $5.00 to $5.20 per diluted share. The increase is due to the impact of the Company's share repurchases during the first half of 2026. Full year operating cash flow is expected to be in the range of $1,600 million to $1,700 million, while free cash flow is expected to be in the range of $900 million to $1,100 million. At 9:30 a.m. ET today, a brief conference call concerning second quarter 2026 results and full year 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 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 release that we expect or anticipate will or may occur in the future regarding our financial position, including our guidance for full year 2026, our business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and profitable growth of our business and operations, plans, references to future success, including the anticipated benefits of increased investments in research and development, our new business awards 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 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: the success of our portfolio strategy; 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; conditions in the automotive industry; competitive challenges from existing and new competitors, including original equipment manufacturer ("OEM") customers; the challenges associated with rapidly changing technologies, including artificial intelligence, and our ability to innovate in response; the difficulty in forecasting demand for electric vehicles and our electric vehicles revenue growth; potential future changes in laws and regulations, including, by way of example, taxes and tariffs, in the countries in which we operate; 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 tax 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 any potential refund recovery of tariffs imposed under the International Emergency Economic Powers Act) and export restrictions and their impact on the Company, its customers and its suppliers; the outcome of existing or any future legal proceedings, including litigation with respect to various claims, or governmental investigations, including related litigation; impacts from any potential future acquisition or disposition transactions; and the other risks discussed in reports that we file with the Securities and Exchange Commission, including in 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 release to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements. 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 2026 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. View original content to download multimedia:https://www.prnewswire.com/news-releases/borgwarner-reports-strong-second-quarter-2026-results-increases-2026-adjusted-eps-guidance-and-share-repurchase-authorization-by-1-billion-and-announces-7-awards-across-portfolio-to-support-long-term-profitable-growth-302842807.html

For the quarter ended June 2026, BorgWarner (BWA) reported revenue of $3.65 billion, up 0.3% over the same period last year. EPS came in at $1.42, compared to $1.21 in the year-ago quarter. The reported revenue represents a surprise of +1.77% over the Zacks Consensus Estimate of $3.58 billion. With the consensus EPS estimate being $1.26, the EPS surprise was +12.7%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how BorgWarner performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Sales- Turbos & Thermal Technologies: $1.44 billion versus $1.44 billion estimated by two analysts on average. Compared to the year-ago quarter, this number represents a -2.6% change. Net Sales- Drivetrain & Morse Systems: $1.46 billion versus $1.45 billion estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +1.8% change. Net Sales- Inter-segment eliminations: $-14 million versus $-14.48 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +16.7% change. Net Sales- Battery & Charging Systems: $100 million versus the two-analyst average estimate of $95.89 million. The reported number represents a year-over-year change of -37.1%. Net Sales- PowerDrive Systems: $665 million compared to the $598.36 million average estimate based on two analysts. The reported number represents a change of +14.5% year over year. Adjusted Operating Income (Loss)- Turbos & Thermal Technologies: $225 million versus the two-analyst average estimate of $222.12 million. Adjusted Operating Income (Loss)- Battery & Charging Systems: $-2 million versus $-11.81 million estimated by two analysts on average. Adjusted Operating Income (Loss)- PowerDrive Systems: $-29 million compared to the $-24.96 million average estimate based on two analysts. Adjusted Operating Income (Loss)- Drivetrain & Morse Systems: $277 million versus the two-analyst average estimate of $271.58 million. View all Key Company Metrics for BorgWarner here>>> Shares of BorgWarner have returned -1.6% over the past month versus the Zacks S&P 500 composite's +3.5% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BorgWarner Inc. (BWA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research