NEW YORK - BorgWarner Inc. (NYSE:BWA) reported a second-quarter adjusted EPS of $1.19, surpassing analyst expectations by $0.18, as the company tightened cost controls and benefited from a lower effective tax rate and reduced share count.
However, the automotive parts supplier fell short of revenue forecasts, posting $3.6 billion against the anticipated $3.69 billion, a 2% decline from the same quarter last year. The stock responded positively, climbing 2% as investors digested the mixed results.
The company's adjusted operating margin for the quarter was a robust 10.4%, translating to a U.S. GAAP operating margin of 8.2%. BorgWarner's performance was bolstered by strong cost management, which helped offset modest declines in light and commercial vehicle markets. The quarter also saw a healthy $297 million in free cash flow and a $462 million net cash provided by operating activities.
Looking ahead, BorgWarner has revised its full-year guidance, now expecting adjusted EPS to range between $3.95 and $4.15, which is below the analyst consensus of $4.07. Revenue projections for the year have also been trimmed to $14.1-$14.4 billion, falling short of the expected $14.73 billion. This downward revision is primarily attributed to lower market production forecasts, weaker foreign currencies, and a slowdown in eProduct sales growth.
Despite the reduced sales outlook, BorgWarner's CEO expressed confidence, stating, "Our strong cost controls and technology-focused portfolio continue to drive margin performance, enabling us to navigate a challenging market environment effectively."
The company also plans to repurchase $300 million of its shares in the second half of 2024, following a $577 million buyback since the fourth quarter of 2023.
For the full year, BorgWarner anticipates organic sales growth of 0.5% to 2.5%, with eProduct sales expected to hit the lower end of the $2.5 billion to $2.8 billion range, up from $2.0 billion in 2023. Adjusted operating margin is forecasted to be between 9.6% and 9.8%, reflecting a 30 basis point increase from prior guidance.
The company also expects annual cost savings of about $100 million by 2026 due to the restructuring of its ePropulsion segment.
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