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BorgWarner (BWA) Beats on Q3 Earnings, Dims '21 Projections

BorgWarner Inc. BWA reported adjusted earnings of 80 cents per share for third-quarter 2021, declining from 88 cents recorded in the prior-year period. The bottom line, however, beat the Zacks Consensus Estimate of 66 cents. Higher-than-anticipated revenues from Air Management and Aftermarket segments resulted in the outperformance.

This automotive equipment supplier reported net sales of $3,416 million, outpacing the Zacks Consensus Estimate of $3,342 million. Further, the top-line figure grew 34.8% year over year, thanks to the Delphi Technologies buyout and increased demand for products.

BorgWarner Inc. Price, Consensus and EPS Surprise

BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote

Segmental Performance

Air Management: Net sales totaled $1,671 million for the reported quarter compared with $1,476 million registered in the year-ago period. The sales figure also topped the Zacks Consensus Estimate of $1,621 million. Adjusted EBIT of $214 million outpaced the consensus mark of $197 million but declined from $225 million recorded in third-quarter 2020.

e-Propulsion & Drivetrain: Sales from the segment came in at $1,223 million, up from $1,075 million in third-quarter 2020. The sales figure, however, fell short of the Zacks Consensus Estimate of $1,233 million. The segment generated an adjusted EBIT of $85 million for third-quarter 2021 compared with $131 million recorded in the corresponding period of 2020. The metric also lagged the consensus mark of $110 million.

Fuel Injection: Sales and adjusted EBIT from the segment totaled $420 million and $37 million, respectively. The sales figure marginally missed the Zacks Consensus Estimate of $421 million.

Aftermarket: Sales and adjusted EBIT from the segment totaled $227 million and $29 million, respectively. The sales figure outpaced the Zacks Consensus Estimate of $191 million.

Financial Position

As of Sep 30, 2021, BorgWarner — whose peers include Magna International MGAMeritor MTOR and Autoliv ALV — had $1,507 million in cash compared with $1,650 million on Dec 31, 2020. For the September-end quarter, long-term debt was $4,288 million, up from $3,738 million recorded on Dec 31, 2020. Net cash provided by operating activities was $142 million for the third quarter. Investment in capital expenditure, including tooling outlays, was $152 million. Free cash flow was a negative $10 million for the third quarter of 2021.

View Altered

For full-year 2021, the Zacks Rank #5 (Strong Sell) company now anticipates net sales within $14.4-$14.7 billion, down from the previous guided range of $15.2-$15.6 billion. Adjusted operating margin and net earnings are expected in the band of 9.6-10% and $3.65-$3.95 per share, lower than the earlier guidance of 10.2-10.5% and $4.15-$4.40, respectively. Free cash flow is projected in the band of $600-$700 million versus the prior guided range of $800-$900 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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