Borgwarner 2025 Q3 Earnings Beats Estimates, Raises Guidance Despite EPS Decline

BorgWarner (BWA) reported Q3 2025 earnings that exceeded expectations, with adjusted EPS of $1.24 beating the $1.16 estimate. The company raised full-year guidance for sales, margins, and EPS, citing strong execution and cost controls. However, net income declined 30.5% year-over-year, reflecting margin pressures and segment-specific challenges.

Revenue

BorgWarner’s total revenue rose 4.1% to $3.59 billion in Q3 2025, driven by growth in foundational segments. Turbos & Thermal Technologies led with $1.44 billion, while Drivetrain & Morse Systems contributed $1.45 billion. PowerDrive Systems added $582 million, though Battery & Charging Systems lagged at $132 million. Inter-segment eliminations reduced net sales by $12 million, underscoring structural adjustments within the business.

Earnings/Net Income

The company’s EPS fell 28.8% to $0.74 in Q3 2025 from $1.04 in Q3 2024, while net income dropped to $173 million (30.5% decline). Despite beating earnings estimates, the EPS contraction highlights margin compression, particularly in battery and charging systems.

Post-Earnings Price Action Review

BorgWarner’s stock surged 6.39% on the day of the earnings release, with a 0.98% weekly gain and 0.41% monthly rise. However, a 3-year backtest of post-earnings performance is infeasible due to insufficient quarterly revenue growth data. Recent short-term gains, such as a 3.42% pre-market jump in Q3 2025, suggest positive sentiment, but long-term sustainability remains uncertain. The stock’s 34.7% year-to-date rebound aligns with improved guidance but faces valuation risks amid reliance on combustion engine markets. <visualization dataurl="https://cdn.ainvest.com/news/visual/visual_components/viz_zou5q0cp.json"></visualization>

CEO Commentary

CEO Joseph Fadool emphasized a 6.9% U.S. GAAP operating margin and 10.7% adjusted margin, achieved through cost discipline and sales growth. Shareholder returns totaled $136 million, including $100 million in buybacks and a $36 million dividend. Strategic priorities include expanding electrification projects, such as the 7-in-1 iDM for Chinese OEMs and dual inverter programs with Great Wall Motor.

Guidance

BorgWarner raised 2025 guidance, projecting net sales of $14.1–14.3 billion, adjusted EPS of $4.60–4.75, and free cash flow of $850–950 million. Operating margins are expected to reach 7.8–7.9% (adjusted 10.3–10.5%), reflecting favorable foreign exchange and production gains, partially offset by North American and European disruptions.

Additional News

BorgWarner expanded collaborations with Great Wall Motor, securing two new dual inverter programs for 2026 production, and signed contracts with Chery for advanced AWD systems starting in 2027. The company returned $136 million to shareholders in Q3, including $100 million in share repurchases, while advancing electrification initiatives like its 7-in-1 integrated drive module. These moves underscore its dual focus on traditional powertrain leadership and electrification growth.

<img src="https://cdn.ainvest.com/aigc/hxcmp/images/compress-aime_generated_1761926255993.jpg.png" style="max-width:100%;">