BorgWarner Inc. (BWA) Bundle
A Brief History of BorgWarner Inc.
Founding and Early Years
BorgWarner Inc. was founded in 1928, initially as a manufacturer of automotive parts. The company quickly established itself as a leader in drivetrain technologies and turbocharging systems.
Significant Acquisitions
Over the years, BorgWarner has expanded its capabilities through various acquisitions. Notable acquisitions include:
- In 2012, BorgWarner acquired the turbocharger business of the automotive division of the German manufacturer, Beru AG.
- In 2018, BorgWarner purchased Delphi Technologies for $3.3 billion, enhancing its capabilities in electrification and powertrain technologies.
- In March 2023, BorgWarner acquired the electric vehicle solution business of Hubei Surpass Sun Electric, for approximately ¥288 million ($42 million).
Spin-Off of PHINIA
On July 3, 2023, BorgWarner completed the spin-off of its Fuel Systems and Aftermarket segments, forming an independent company named PHINIA, Inc., which began trading on the NYSE under the symbol "PHIN". Each shareholder received one share of PHINIA for every five shares of BorgWarner held.
Recent Financial Performance
As of September 30, 2024, BorgWarner reported the following financial highlights:
Period | Net Sales (in millions) | Net Earnings (in millions) | Earnings per Share (diluted) |
---|---|---|---|
Q3 2024 | $3,449 | $234 | $1.08 |
Q3 2023 | $3,622 | $50 | $0.21 |
9M 2024 | $10,647 | $743 | $3.28 |
9M 2023 | $10,676 | $471 | $2.01 |
Segment Performance
For the nine months ended September 30, 2024, BorgWarner's reportable segments performed as follows:
Segment | Net Sales (in millions) | Adjusted Operating Income (in millions) | Margin (%) |
---|---|---|---|
Turbos & Thermal Technologies | $4,475 | $654 | 14.6 |
Drivetrain & Morse Systems | $4,226 | $770 | 18.2 |
PowerDrive Systems | $1,412 | ($130) | (9.2) |
Battery & Charging Systems | $567 | ($33) | (5.8) |
Liquidity and Capital Resources
As of September 30, 2024, BorgWarner maintained a strong liquidity position with:
- Cash and cash equivalents of $2,000 million.
- An undrawn revolving credit facility of $2,000 million.
The company had no outstanding borrowings under its $2 billion multi-currency revolving credit facility as of the same date.
Recent Challenges and Developments
On September 26, 2024, a hurricane impacted operations at BorgWarner's facility in North Carolina, with estimated damages expected to be under $10 million. The plant resumed limited production shortly after the event.
A Who Owns BorgWarner Inc. (BWA)
Major Shareholders
As of 2024, BorgWarner Inc. (BWA) has a diverse ownership structure, primarily composed of institutional investors, mutual funds, and individual shareholders. The largest shareholders include:
Shareholder | Ownership Percentage | Number of Shares (in millions) |
---|---|---|
Vanguard Group Inc. | 8.7% | 19.5 |
BlackRock Inc. | 8.3% | 18.7 |
State Street Corporation | 4.1% | 9.3 |
Invesco Ltd. | 3.2% | 7.2 |
Wellington Management Group LLP | 3.0% | 6.8 |
Stock Performance
As of September 30, 2024, BorgWarner's stock price was approximately $40.56, reflecting a year-to-date performance increase of 12.4% compared to the previous year. The market capitalization of BorgWarner Inc. stood at approximately $9.1 billion, with a total of 224.5 million shares outstanding.
Recent Changes in Ownership
In 2024, BorgWarner underwent a significant change due to the spin-off of its Fuel Systems and Aftermarket segments into a new entity called PHINIA, Inc. This move has resulted in a redistribution of shares among existing shareholders.
Financial Metric | Value (in millions) |
---|---|
Net Earnings (Q3 2024) | $249 |
Net Earnings Attributable to BorgWarner Inc. | $234 |
Net Sales (Nine Months Ended September 30, 2024) | $10,647 |
Cost of Sales (Nine Months Ended September 30, 2024) | $8,682 |
Gross Profit (Nine Months Ended September 30, 2024) | $1,965 |
Dividends and Earnings
In 2024, BorgWarner declared dividends amounting to $0.22 per share, leading to a total dividend payout of approximately $163 million. The company reported earnings per share (EPS) of $3.40 for the nine months ended September 30, 2024.
Ownership Trends
Institutional ownership of BorgWarner has increased over the past year, with significant investments from major asset management firms. The trend indicates a robust confidence in BorgWarner's strategic direction and financial performance, particularly after the successful spin-off.
Noncontrolling Interests
As of September 30, 2024, BorgWarner's noncontrolling interests accounted for $196 million, reflecting the company’s strategic investments and partnerships.
Equity Metric | Value (in millions) |
---|---|
Total Stockholders' Equity | $6,352 |
Total Liabilities and Equity | $15,137 |
BorgWarner Inc. (BWA) Mission Statement
BorgWarner Inc. is a global leader in clean and efficient technology solutions for combustion, hybrid, and electric vehicles. The company is committed to delivering innovative products that enhance vehicle performance, propulsion efficiency, stability, and air quality.
Core Values and Focus Areas
- Innovation: Continuously developing advanced technologies to improve vehicle efficiency and reduce emissions.
- Sustainability: Striving for environmentally friendly solutions that contribute to a cleaner planet.
- Customer Orientation: Committed to meeting the needs of customers by providing high-quality products and services.
- Integrity: Upholding strong ethical standards in all business practices.
- Collaboration: Fostering teamwork and partnerships to achieve mutual success.
Financial Performance Overview
As of September 30, 2024, BorgWarner reported:
Financial Metric | 2024 (9 months) | 2023 (9 months) |
---|---|---|
Net Sales | $10,647 million | $10,676 million |
Gross Profit | $1,965 million | $1,909 million |
Net Earnings | $743 million | $471 million |
Earnings Per Share (Diluted) | $3.40 | $2.06 |
Adjusted Operating Income | $1,261 million | $1,210 million |
Segment Performance
BorgWarner operates through several segments, each contributing to the overall mission of enhancing vehicle efficiency and sustainability. Below is a summary of segment performance for the nine months ended September 30, 2024:
Segment | Net Sales (in millions) | Adjusted Operating Income (in millions) | Operating Margin (%) |
---|---|---|---|
Turbos & Thermal Technologies | $4,475 | $654 | 14.6% |
Drivetrain & Morse Systems | $4,226 | $770 | 18.2% |
PowerDrive Systems | $1,412 | ($130) | (9.2%) |
Battery & Charging Systems | $567 | ($33) | (5.8%) |
Strategic Initiatives
In June 2023, BorgWarner announced its Charging Forward strategy, focusing on profitability and growth in eProducts while maximizing its Foundational products portfolio. During the nine months ended September 30, 2024, eProducts revenue was approximately $1,721 million, representing 16% of total revenue, up from 14% in the same period of 2023.
Liquidity and Capital Resources
As of September 30, 2024, BorgWarner maintained a strong liquidity position with:
Liquidity Metric | Amount (in millions) |
---|---|
Cash and Cash Equivalents | $2,000 |
Undrawn Revolving Credit Facility | $2,000 |
Total Liquidity | $4,000 |
On October 17, 2024, BorgWarner announced the redemption of the remaining outstanding balance of $343 million on its senior notes due in October 2025.
Recent Developments
On September 19, 2024, BorgWarner initiated a lawsuit against PHINIA to recover approximately $120 million in VAT refunds that PHINIA has received or expects to receive from governmental agencies, which were related to the Spin-Off of its Fuel Systems and Aftermarket segments completed in July 2023.
The company continues to assess the impact of a hurricane that affected its facility in North Carolina on September 26, 2024, with expected losses to be less than $10 million, covered by insurance policies.
How BorgWarner Inc. (BWA) Works
Business Overview
BorgWarner Inc. operates as a global leader in advanced automotive technology, focusing on powertrain solutions. The company is structured into four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems, and Battery & Charging Systems. As of 2024, BorgWarner continues to adapt to changing market dynamics, emphasizing electric vehicle (EV) technologies alongside traditional combustion engine components.
Financial Performance
For the nine months ended September 30, 2024, BorgWarner reported the following financial metrics:
Metric | 2024 (in millions) | 2023 (in millions) |
---|---|---|
Net Sales | $10,647 | $10,676 |
Gross Profit | $1,965 | $1,909 |
Operating Income | $862 | $879 |
Net Earnings | $787 | $520 |
Earnings per Share (diluted) | $3.40 | $2.06 |
Segment Performance
Each segment's performance is critical to understanding BorgWarner's operational dynamics. The following table summarizes net sales and adjusted operating income for each segment for the nine months ended September 30, 2024:
Segment | Net Sales (in millions) | Segment Adjusted Operating Income (in millions) | Operating Margin (%) |
---|---|---|---|
Turbos & Thermal Technologies | $4,475 | $654 | 14.6% |
Drivetrain & Morse Systems | $4,226 | $770 | 18.2% |
PowerDrive Systems | $1,412 | ($130) | (9.2%) |
Battery & Charging Systems | $567 | ($33) | (5.8%) |
Market Trends and Challenges
The automotive industry is undergoing a significant transformation, with a shift towards electrification. BorgWarner's eProducts revenue was approximately $1,721 million for the nine months ended September 30, 2024, representing 16% of total revenue, up from 14% in the previous year. This growth reflects increased demand for electric vehicle components and systems.
However, the company faces challenges, including:
- Decreased demand for light vehicle foundational products, impacting PowerDrive Systems.
- Currency fluctuations affecting sales, particularly the weakening of the Chinese Renminbi and Korean Won.
- Increased R&D investments to support new product developments in the electric vehicle segment.
Cost Structure and Efficiency
BorgWarner's cost of sales for the nine months ended September 30, 2024, was $8,682 million, representing 81.5% of net sales, slightly down from 82.1% in 2023. The gross margin improved to 18.5%, up from 17.9% year-over-year.
SG&A expenses were $566 million, accounting for 5.3% of net sales, which is an increase from 5.1% in the previous year. Effective management of restructuring expenses, which totaled $65 million, has been a focus area for maintaining operational efficiency.
Liquidity and Capital Resources
BorgWarner maintains robust liquidity, with cash and cash equivalents amounting to $2,000 million as of September 30, 2024. The company has a $2 billion multi-currency revolving credit facility, with no outstanding borrowings, ensuring flexibility for investments and operational needs.
As of September 30, 2024, the company had a strong position regarding its covenants under the credit facility, indicating solid financial health and operational stability moving forward.
Recent Developments
In June 2023, BorgWarner completed a spin-off of its Fuel Systems and Aftermarket segments, creating PHINIA, Inc. This strategic move is aimed at focusing on core competencies in powertrain technologies while allowing PHINIA to operate independently.
Additionally, legal proceedings have emerged regarding VAT refunds from the spin-off, with BorgWarner seeking approximately $120 million from PHINIA. This reflects ongoing complexities in managing post-spin-off financial agreements.
How BorgWarner Inc. (BWA) Makes Money
Revenue Segments
BorgWarner Inc. generates revenue through various product segments, primarily focusing on automotive components. As of September 30, 2024, the company reported the following net sales by segment:
Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | Change (%) |
---|---|---|---|
Foundational Products | $2,810 | $3,050 | -7.9% |
eProducts | $639 | $572 | 11.7% |
Total | $3,449 | $3,622 | -5.0% |
Cost Structure
The cost of sales for BorgWarner during Q3 2024 was $2,813 million, reflecting a cost of sales percentage of 81.6%. This compares to $2,970 million and 82.0% for Q3 2023, indicating a slight improvement in gross margin to 18.4% from 18.0% year-over-year.
Geographical Revenue Breakdown
Revenue is also segmented by geographical regions. For Q3 2024, the distribution was as follows:
Region | Net Sales (in millions) |
---|---|
North America | $932 |
Europe | $1,258 |
Asia | $1,196 |
Other | $63 |
Total | $3,449 |
Adjusted Operating Income
The Adjusted Operating Income for the segments in the nine months ending September 30, 2024, was reported as follows:
Segment | Net Sales (in millions) | Adjusted Operating Income (in millions) | Margin (%) |
---|---|---|---|
Turbos & Thermal Technologies | $4,475 | $654 | 14.6% |
Drivetrain & Morse Systems | $4,226 | $770 | 18.2% |
PowerDrive Systems | $1,412 | ($130) | (9.2)% |
Battery & Charging Systems | $567 | ($33) | (5.8)% |
Research and Development Investments
Research and Development (R&D) costs for the nine months ended September 30, 2024, totaled $566 million, representing 5.3% of net sales compared to $541 million and 5.1% in the same period of 2023.
Net Earnings and Earnings Per Share
Net earnings attributable to BorgWarner Inc. for the nine months ended September 30, 2024, were $743 million, or $3.40 per diluted share, compared to $471 million, or $2.06 per diluted share in 2023.
Cash Flow and Liquidity
Net cash provided by operating activities from continuing operations was $700 million for the nine months ended September 30, 2024, up from $510 million in the same period of 2023.
Restructuring and Strategic Initiatives
BorgWarner initiated a restructuring plan with expected annual savings ranging from $80 million to $90 million by 2027, primarily targeting its Foundational products segment. Additionally, a $75 million restructuring plan was announced for the PowerDrive Systems segment in June 2024.
Liquidity Position
As of September 30, 2024, BorgWarner's liquidity comprised $2 billion in cash and cash equivalents and an undrawn revolving credit facility of $2 billion. The company maintains compliance with all covenants under its credit facility.
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Article updated on 8 Nov 2024
Resources:
- BorgWarner Inc. (BWA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of BorgWarner Inc. (BWA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View BorgWarner Inc. (BWA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.