BorgWarner (BWA) Q3 Earnings call transcript Oct 31, 2024

BorgWarner, a leading global technology provider for the automotive industry, recently reported its third quarter results for 2024, showcasing a robust performance that outperformed market production. The company's strategic focus on cost controls and operational efficiency, coupled with its diversified product portfolio, has enabled it to navigate the challenging market conditions and generate strong financial results.

Financial Highlights

In the third quarter, BorgWarner reported organic sales of over $3.4 billion, representing a modest outperformance compared to a 6% decline in its market. The company's strong operational performance was highlighted by a 10.1% adjusted operating margin, which was 50 basis points higher than the previous year. This success was underpinned by a focus on cost controls across the business and the continued benefits of restructuring actions announced in July.

BorgWarner's strong cash generation in the third quarter allowed it to accelerate its share repurchase plan, repurchasing $400 million of its stock. The company's financial resilience is a testament to its ability to manage costs and maintain profitability in a volatile market environment.

Strategic Business Wins

During the quarter, BorgWarner secured multiple new product awards, further solidifying its position in both foundational and eProduct markets. These awards include extensions on two transfer cases for full-size pickups, high-voltage coolant heater business wins in Asia, and the delivery of turbochargers for GM's Corvette ZR1 sports car platform. These strategic wins underscore BorgWarner's technological leadership and its ability to capitalize on market trends, particularly in the electric vehicle segment.

Looking Ahead

Looking forward, BorgWarner remains focused on its formula for success, which includes securing business opportunities that will allow it to grow faster than market production. The company's long-term strategy is centered around its expertise in propulsion efficiency, both for combustion fuel efficiency and electrons efficiency for hybrid or battery electric vehicles. With a focus on managing costs and preserving its long-term profitable growth, BorgWarner is well-positioned to continue delivering strong sales performance and generating free cash flow.

Conclusion

BorgWarner's third quarter results demonstrate its resilience and adaptability in the face of market challenges. The company's strategic focus on cost controls, operational efficiency, and product innovation has positioned it for long-term success. As the automotive industry continues to evolve, BorgWarner's diverse product portfolio and technological leadership will enable it to capitalize on growth opportunities and maintain its competitive edge.