Why Automotive And e-Mobility Supplier BorgWarner's Shares Are Jumping Today

BorgWarner Inc BWA shares are trading higher after a better-than-expected second-quarter FY24 adjusted EPS and new contracts.

The company reported a second-quarter FY24 sales decline of 2% year-on-year to $3.603 billion, missing the analyst consensus estimate of $3.706 billion.

The revenue decline was primarily due to declining market production volumes and the negative impact of foreign currencies.

Net sales from the Air Management segment decreased 2.6% Y/Y, Drivetrain & Battery Systems Segment gained 7.1% and ePropulsion dropped 18%.

Adjusted EPS of $1.19 beat the analyst consensus of $1.01.

Gross profit rose 0.7% to $685 million, and gross margin expanded 50 basis points to 19%.

The operating margin was 8.2%, and the operating income decreased 10.8% Y/Y to $333 million.

BorgWarner held $1.3 billion in cash and equivalents as of June-end. Net cash provided by operating activities for the quarter amounted to $462 million, with a free cash flow of $297 million.

Outlook: BorgWarner lowered FY24 sales guidance from $14.4 billion – $14.9 billion to $14.1 billion – $14.4 billion versus the Street view of $14.73 billion.

BorgWarner reduced the mid-point net sales guidance by $400 million primarily due to a lower market production outlook, weaker foreign currencies and slower year-over-year growth in eProduct sales.

The company updated FY24 adjusted EPS outlook from $3.80 – $4.15 to $3.95 – $4.15, against the consensus of $4.07.

BorgWarner intends to repurchase $300 million of the company’s outstanding shares during the second half of 2024. 

BorgWarner sees operating margin for the full year in the range of 8.2% to 8.3%. 

The company has secured exhaust gas recirculation (EGR) cooler contracts with a prominent, North America based commercial vehicle (CV) customer to boost thermal management product business.

Also, BorgWarner has secured contracts to supply its electric cross differential (eXD) to three major OEMs, including GAC Motor, a Global East Asian OEM, and a Global OEM based in Europe.

Price Action: BWA shares are trading higher by 8.07% at $35.07 on the last check Wednesday.

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