Why Automotive Supplier BorgWarner's Shares Are Diving Today

BorgWarner Inc BWA shares are trading lower by around 11% after it reported Q3 FY23 earnings.

Sales grew 12% Y/Y to $3.62 billion, missing the consensus of $3.67 billion. Organic revenue grew 11% Y/Y in the quarter, on increased demand for the products and recoveries from customers of material cost inflation.

Gross profit rose to $652 million from $607 million; gross margin contracted to 18.0% from 18.8% a year ago.

Adjusted operating income stood at $349 million vs. $305 million a year ago, with the margin expanding to 9.6% from 9.5% a year ago.

Adjusted EPS of $0.98, beating the analyst consensus of $0.94.

The company held cash and equivalents of $949 million as of September 30, 2023. 

Outlook: BWA lowered the FY23 sales outlook to $14.1 billion - $14.3 billion (from $14.2 billion-$14.6 billion) on a continuing operations basis vs. the consensus of $14.82 billion. 

The company revised FY23 adjusted EPS from continuing operations to $3.60-$3.80 from $3.50-$3.85 vs. consensus of $3.92.

The company projects an operating cash flow of $1.200 billion-$1.250 billion and an FCF of $400 million- $450 million in FY23.

The acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions, Drivetek, and SSE are expected to increase year-over-year sales by around $63 million. 

Also Read: BorgWarner, STMicroelectronics Partner On SiC Technology In Viper Power Module For Volvo Cars' Next-Gen EVs

Price Action: BWA shares are down 11.24% at $32.94 on the last check Thursday.