Borgwarner 2025 Q2 Earnings EPS Declines 23.3%

Borgwarner (BWA) reported its fiscal 2025 Q2 earnings on Jul 30th, 2025. The company missed expectations with a 1% year-over-year revenue increase, but reported a significant decline in EPS. Borgwarner raised its full-year guidance, expecting net sales of $14.0-14.4 billion, adjusted operating margin of 10.1-10.3%, and adjusted EPS of $4.45-4.65, indicating optimism for future performance despite current challenges.

Revenue
Borgwarner's total revenue saw a modest increase of 1.0% in 2025 Q2, reaching $3.64 billion compared to $3.60 billion in 2024 Q2. The Turbos & Thermal Technologies segment generated $1.48 billion, while Drivetrain & Morse Systems accounted for $1.43 billion. PowerDrive Systems contributed $581 million and Battery & Charging Systems added $159 million. After accounting for inter-segment eliminations of $12 million, the company's net sales stood at $3.64 billion.

Earnings/Net Income
Borgwarner's earnings per share (EPS) dropped by 23.3% to $1.02 in 2025 Q2 from $1.33 in 2024 Q2, accompanied by a 26.8% decline in net income to $232 million from $317 million the previous year. The EPS reflected a weaker performance compared to last year.

Price Action
The stock price of Borgwarner edged down 1.99% during the latest trading day, dropped 5.47% during the most recent full trading week, and edged up 2.74% month-to-date.

Post-Earnings Price Action Review
BorgWarner's strategy of purchasing shares following a quarter with increased revenue demonstrated moderate returns but failed to outperform the market. The strategy achieved a compound annual growth rate (CAGR) of 3.53%, trailing the benchmark by 68.79%. Despite the low risk indicated by a maximum drawdown of 0.00% and a Sharpe ratio of 0.11, the returns remained modest, appealing to investors prioritizing stability. This approach underscores the importance of balancing risk with potential gains, particularly in a fluctuating market environment. While the company's revenue growth offers positive signals, the strategy's underperformance highlights the challenges of achieving competitive returns solely based on quarterly revenue increases.

CEO Commentary
BorgWarner Inc. CEO expressed satisfaction with the company’s performance, highlighting a solid operating margin of 7.9% and an adjusted operating margin of 10.3%. Despite a challenging environment with tariffs impacting results, the CEO noted a 31% increase in light vehicle eProduct sales, reflecting successful cost controls and strategic focus. The CEO emphasized the importance of recent share repurchases and dividend increases as part of a balanced capital allocation strategy aimed at driving long-term shareholder value, indicating a positive outlook on the company’s growth trajectory and market positioning.

Guidance
BorgWarner expects continued growth, reinforced by securing multiple new business awards across its product portfolio. The company projects production to begin on several key contracts from 2025 to 2028, with an emphasis on hybrid and electric vehicle technologies. The Board of Directors has authorized an increase in the share repurchase program to $1 billion through 2028, alongside a 55% increase in the quarterly cash dividend. BorgWarner anticipates that these strategic initiatives will support robust, profitable growth throughout 2025 and beyond.

Additional News
Recently, BorgWarner declared a significant 55% increase in its quarterly dividend, reflecting confidence in its sustainable cash generation. The company also expanded its share repurchase program to $1 billion, aiming to enhance shareholder value through strategic capital allocation. BorgWarner secured multiple new business awards, including contracts for turbochargers for hybrid applications with major global OEMs, demonstrating its competitive stance in foundational technologies. Additionally, the company won contracts for eProduct segments such as electric motors and high-voltage coolant heaters, positioning itself strongly in the electrification landscape. These developments highlight BorgWarner's strategic moves to balance traditional propulsion systems with next-generation electrification solutions.