BorgWarner Reports Strong Third Quarter 2026 Results
BORGWARNER INC (BWA) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Immediate Release Contact: Patrick Nolan 248.754.0884 BorgWarner Reports Strong Third Quarter 2026 Results Increases 2026 Adjusted EPS Guidance Announces 9 Awards Across Portfolio to Support Long-Term Profitable Growth Auburn Hills, Michigan, October 29, 2026 – BorgW
How this was made
The 30-second read
Why it matters
The earnings beat and raised EPS guidance may attract short‑term buying, while the sales guidance contraction could temper longer‑term optimism.
Market read
The release provides fresh earnings data and guidance for a large‑cap supplier, likely influencing its stock and peers in the automotive sector.
What to watch
Potential headwinds from a down 2% light‑vehicle market and a 1.7% sales decline in the Battery Energy Systems segment.
BorgWarner Reports Strong Third Quarter 2026 Results, Increases 2026 Adjusted EPS Guidance and Announces 9 Awards Across Portfolio
Third-quarter adjusted earnings per diluted share increased 12.1% and adjusted operating margin expanded by 20 basis points despite a 3.1% organic net-sales decline. The company raised adjusted earnings guidance, maintained cash-flow guidance and returned capital, while lower production volumes and a sharp Battery Energy Systems decline remained material headwinds.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net salesGAAP | $3.49B | – | decrease of approximately 2.9% |
| Q3 2026 organic net sales changenon-GAAP | (3.1)% | – | (3.1)% |
| Q3 2026 gross profitGAAP | $662M | – | – |
| Q3 2026 gross marginGAAP | 19.0% | – | – |
| Q3 2026 operating incomeGAAP | $302M | – | – |
| Q3 2026 operating marginGAAP | 8.7% | – | increase of 180 basis points |
| Q3 2026 adjusted operating incomenon-GAAP | $381M | – | – |
| Q3 2026 adjusted operating marginnon-GAAP | 10.9% | – | increase of 20 basis points |
| Q3 2026 net earningsGAAP | $233M | – | – |
| Q3 2026 net earnings attributable to BorgWarner Inc.GAAP | $221M | – | – |
| Q3 2026 diluted earnings per share attributable to BorgWarner Inc.GAAP | $1.08 | – | increase of 47.9% |
| Q3 2026 adjusted earnings per diluted sharenon-GAAP | $1.39 | – | increase of 12.1% |
| Q3 2026 net cash provided by operating activitiesGAAP | $320M | – | – |
| Q3 2026 free cash flownon-GAAP | $195M | – | – |
| Nine Months Ended September 30, 2026 net salesGAAP | $10.67B | – | – |
| Nine Months Ended September 30, 2026 gross profitGAAP | $2.06B | – | – |
| Nine Months Ended September 30, 2026 gross marginGAAP | 19.3% | – | – |
| Nine Months Ended September 30, 2026 operating incomeGAAP | $1.01B | – | – |
| Nine Months Ended September 30, 2026 operating marginGAAP | 9.4% | – | – |
| Nine Months Ended September 30, 2026 adjusted operating incomenon-GAAP | $1.17B | – | – |
| Nine Months Ended September 30, 2026 adjusted operating marginnon-GAAP | 10.9% | – | – |
| Nine Months Ended September 30, 2026 net earningsGAAP | $779M | – | – |
| Nine Months Ended September 30, 2026 net earnings attributable to BorgWarner Inc.GAAP | $740M | – | – |
| Nine Months Ended September 30, 2026 diluted earnings per share attributable to BorgWarner Inc.GAAP | $3.59 | – | – |
| Nine Months Ended September 30, 2026 adjusted earnings per diluted sharenon-GAAP | $4.05 | – | – |
| Nine Months Ended September 30, 2026 net cash provided by operating activitiesGAAP | $1.06B | – | – |
| Nine Months Ended September 30, 2026 free cash flownon-GAAP | $700M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Turbos & Thermal Technologies Q3 2026Organic net sales change was $(63) million; FX was $(2) million. | $1.37B | – | (4.4)% organic net sales change |
| Drivetrain & Morse Systems Q3 2026Organic net sales change was $(107) million; FX was $1 million. | $1.35B | – | (7.4)% organic net sales change |
| PowerDrive Systems Q3 2026Organic net sales change was $114 million; FX was $9 million. | $705M | – | 19.6% organic net sales change |
| Battery Energy Systems Q3 2026Organic net sales change was $(54) million; FX was —. | $78M | – | (40.9)% organic net sales change |
| Turbos & Thermal Technologies Nine Months Ended September 30, 2026Organic net sales change was $(228) million; FX was $103 million. | $4.25B | – | (5.2)% organic net sales change |
| Drivetrain & Morse Systems Nine Months Ended September 30, 2026Organic net sales change was $(80) million; FX was $61 million. | $4.22B | – | (1.9)% organic net sales change |
| PowerDrive Systems Nine Months Ended September 30, 2026Organic net sales change was $177 million; FX was $56 million. | $1.96B | – | 10.3% organic net sales change |
| Battery Energy Systems Nine Months Ended September 30, 2026Organic net sales change was $(170) million; FX was $9 million. | $280M | – | (38.5)% organic net sales change |
Full Year 2026 Guidance outlook
- Revenue$14.0 billion to $14.2 billion
- NoteU.S. GAAP operating margin: 9.3% to 9.6%.
- NoteAdjusted operating margin: 10.7% to 10.9%.
- NoteU.S. GAAP net earnings: $4.65 to $4.84 per diluted share.
- NoteAdjusted net earnings: $5.20 to $5.35 per diluted share.
- NoteNet cash provided by operating activities: $1,600 million to $1,700 million.
- NoteCapital expenditures, including tooling outlays: $(700) million to $(600) million.
- NoteFree cash flow: $900 million to $1,100 million.
- NoteOrganic net sales change including BES: down 4% to down 2.5%.
- NoteExpected year-over-year Battery Energy Systems sales decline: approximately $250 million.
- NoteExpected foreign-currency year-over-year increase in sales: approximately $250 million.
- NoteBorgWarner weighted total light vehicle market: down 2% to down 1%.
- NoteIndustrial R&D investment: $10 million to $15 million.
Capital returns
- The Company repurchased approximately $175 million of its outstanding shares during the third quarter of 2026.
- The Company paid a $35 million cash dividend to its shareholders during the third quarter of 2026.
- Nine Months Ended September 30, 2026 payments for purchase of treasury stock were $(425) million, compared with $(210) million.
- Nine Months Ended September 30, 2026 dividends paid to BorgWarner stockholders were $(104) million, compared with $(84) million.
What drove it
- The net-sales decrease was primarily driven by declining market production volumes and lower Battery Energy Systems segment sales.
- Cost controls supported performance despite a lower industry production environment.
- The increase in adjusted net earnings per diluted share was primarily due to a lower full year effective tax rate and a lower share count resulting from share repurchases in 2025 and 2026.
- The company continued progress in product readiness for data center and industrial markets and accelerated quoting activity for industrial solutions.
- The company announced nine awards across its foundational and eProduct portfolios, with production expected to begin between 2026 and 2029.
Concerns
- Q3 2026 organic net sales decreased 3.1%.
- Battery Energy Systems Q3 2026 organic net sales change was (40.9)%.
- Full-year 2026 guidance includes an expected year-over-year Battery Energy Systems sales decline of approximately $250 million.
- BorgWarner expects its weighted light vehicle market to be down 2% to down 1%.
- The net-sales guidance range was narrowed because of lower industry production expectations at the high end of the previous guidance.
- Full-year guidance includes a $10 million to $15 million industrial R&D investment.
What to watch
- Delivery against full-year net-sales guidance of $14.0 billion to $14.2 billion and organic net-sales change guidance of down 4% to down 2.5%.
- Battery Energy Systems sales trajectory against the expected approximately $250 million year-over-year decline.
- Adjusted operating margin delivery within the 10.7% to 10.9% guidance range.
- Cash conversion against operating cash flow guidance of $1,600 million to $1,700 million and free cash flow guidance of $900 million to $1,100 million.
- Production starts and commercialization of the announced awards, which are expected to begin between 2026 and 2029.
Balance sheet and cash flow
- Cash, cash equivalents and restricted cash at September 30, 2026: $1,583 million; December 31, 2025: $2,313 million.
- Short-term debt at September 30, 2026: $1,106 million; December 31, 2025: $5 million.
- Long-term debt at September 30, 2026: $1,901 million; December 31, 2025: $3,894 million.
- The Company reduced its gross debt balance by $864 million during the third quarter of 2026 through a debt tender and make-whole redemption.
- Nine Months Ended September 30, 2026 capital expenditures, including tooling outlays: $(364) million, compared with $(307) million.
- Nine Months Ended September 30, 2026 repayments of debt, including current portion: $(864) million, compared with $(406) million.
- Nine Months Ended September 30, 2026 net decrease in cash, cash equivalents and restricted cash: $(730) million, compared with a $78 million increase.
Analysis
BorgWarner reported Q3 2026 net sales of $3,487 million, down approximately 2.9%, with organic net sales down 3.1%. The decline was primarily driven by declining market production volumes and lower Battery Energy Systems sales. PowerDrive Systems was the portfolio growth offset, with a 19.6% organic net sales increase, while Turbos & Thermal Technologies, Drivetrain & Morse Systems and Battery Energy Systems recorded organic declines of (4.4)%, (7.4)% and (40.9)%, respectively.
Profitability improved despite the sales contraction. U.S. GAAP operating margin rose 180 basis points to 8.7%, while adjusted operating margin increased 20 basis points to 10.9%. U.S. GAAP diluted earnings per share increased 47.9% to $1.08, and adjusted earnings per diluted share increased 12.1% to $1.39. The company attributed adjusted EPS growth primarily to a lower full year effective tax rate and a lower share count resulting from 2025 and 2026 share repurchases.
Cash generation moderated in the quarter, with operating cash flow of $320 million and free cash flow of $195 million, compared with $368 million and $266 million, respectively. The company reduced gross debt by $864 million during Q3 through a debt tender and make-whole redemption. It also repurchased approximately $175 million of shares and paid a $35 million cash dividend. At September 30, 2026, cash, cash equivalents and restricted cash were $1,583 million, while short-term and long-term debt were $1,106 million and $1,901 million.
For full year 2026, BorgWarner narrowed net-sales guidance to $14.0 billion to $14.2 billion from its previous $14.0 billion to $14.3 billion forecast, citing lower industry production expectations at the prior range's high end. It increased adjusted EPS guidance to $5.20 to $5.35 from $5.05 to $5.30, due to expected share repurchase impacts and a decline in its full year effective tax rate. Operating cash flow guidance of $1,600 million to $1,700 million and free cash flow guidance of $900 million to $1,100 million were described as consistent with previous guidance.
Not in the filing
stated, not guessed- Previous outlook section was not provided; therefore, no actual-versus-prior-guidance comparisons are included.
- Quarter-over-quarter comparisons for reported financial metrics were not provided.
- Full-year 2026 gross-margin guidance was not provided.
- Full-year 2026 operating-expense guidance was not provided.
- Full-year 2026 tax-rate guidance was not provided.
- Named executive quotes were not provided.
- Segment adjusted operating income or loss was reported in the filing but is not represented in the required Segment schema, which only provides a revenue field. Q3 2026 segment adjusted operating income or loss was $201 million for Turbos & Thermal Technologies, $250 million for Drivetrain & Morse Systems, $(5) million for PowerDrive Systems and $(3) million for Battery Energy Systems. Nine Months Ended September 30, 2026 segment adjusted operating income or loss was $640 million, $787 million, $(70) million and $(7) million, respectively. Prior-year values were also reported in the filing.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
BorgWarner is a major automotive supplier with exposure to powertrain and electrification technologies.
Ticker impact
BorgWarner reported Q3 2026 results and raised its adjusted EPS guidance while narrowing net sales guidance range.
upward pressure as the market prices in the raised EPS guidance and share repurchase activity
The company increased adjusted EPS guidance and highlighted strong operating margins, debt reduction and share buybacks, which are typically viewed favorably by investors.
Market effects
Positive earnings and guidance may lift the automotive supplier sector and related industrial markets.
U.S. market may see modest gains in industrial and automotive stocks following the release.
Limited to markets with exposure to automotive supply chains.
Counterpoint
The narrowed sales guidance and modest revenue decline could signal underlying demand weakness, suggesting caution.
Key entities
- CompanyBorgWarner Inc.
Automotive supplier reporting Q3 2026 results.
