BorgWarner posts adjusted earnings of $1.39 per share, beats expectations despite lower sales
Key Facts
BorgWarner reported third-quarter 2026 results on Oct. 29, posting adjusted earnings of $1.39 per share, beating the analyst consensus of $1.26 by $0.13. Sales, meanwhile, were $3.49 billion, below the market estimate of $3.5 billion. The results showed diluted GAAP earnings of $1.08 per share, up 47.9% from $0.73 a year earlier. Net sales were $3.487 billion, down 2.9% year over year. The company said the decline was primarily driven by lower industry production volumes and lower battery systems sales.
Year over year, adjusted earnings per share rose 12.1%, from $1.24 in the third quarter of 2025 to $1.39, while diluted GAAP earnings increased from $0.73 to $1.08. Organic sales, excluding the impact of foreign currencies, fell 3.1% from the year-earlier period. Sales indicators also differed from the second quarter of 2026, when reported sales rose 0.3% year over year despite a 1.2% decline in organic sales. Reported sales thus shifted from slight growth in the second quarter to a contraction in the third. BorgWarner said its continued focus on cost control helped it deliver strong performance despite lower industry production.
Adjusted operating margin rose to 10.9%, up 20 basis points from the third quarter of 2025. Cash from operating activities was $320 million, while free cash flow totaled $195 million during the quarter. The company also reduced total debt by $864 million through a debt tender offer and early redemption. These figures show earnings and cash flow performance in a quarter marked by lower sales. The company said cost control enabled it to maintain strong performance amid lower industrial production.
The company expects the weighted light-vehicle market to decline between 1% and 2% in 2026. It also expects battery systems sales to fall by about $250 million year over year, while foreign currencies are expected to add about $250 million to sales. That puts weaker production and battery sales against an expected supportive effect from currencies. The company had attributed the third-quarter sales decline to lower industry production volumes and battery systems sales. Its announcement also included a program award for electric motors with a major Chinese hybrid vehicle manufacturer, with production expected to begin in 2026.
BorgWarner narrowed its 2026 net sales outlook to $14.0–$14.2 billion, from $14.0–$14.3 billion previously, lowering the top end of the range. The new range compares with sales of about $14.3 billion in 2025. At the same time, the company raised its adjusted earnings-per-share outlook to $5.20–$5.35, from $5.05–$5.30 previously. It attributed the higher earnings forecast to share repurchases and a lower expected annual tax rate. The company said the repurchases and lower tax rate support its adjusted earnings outlook despite the narrower sales range.
In premarket trading on Oct. 29, the company's shares rose 0.13% after the results were announced, according to an Investing.com report. The stock had closed at $55.93 on Oct. 28, compared with a $55.73 close in the previous session. BorgWarner's call on third-quarter results and the full-year outlook was scheduled for Oct. 29, from 09:30 to 10:30 a.m. Eastern time. The call gave the company an opportunity to present its quarterly results and annual outlook on the day of the announcement. The results leave investors weighing adjusted earnings that beat expectations against sales that fell short of analyst estimates.