second quarter of 2026
Filed Aug 5, 2026BorgWarner Reports Strong Second Quarter 2026 Results Increases 2026 Adjusted EPS Guidance and Share Repurchase Authorization By $1 Billion Announces 7 Awards Across Portfolio to Support Long-Term Profitable Growth
Reported sales growth was modest and organic sales declined, but operating-margin expansion, higher GAAP and adjusted EPS, strong cash generation, expanded repurchase authorization and increased adjusted EPS guidance supported a solid quarter.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $3,648 million | – | increased approximately 0.3% |
| Organic net salesother | decreased 1.2% | – | decreased 1.2% |
| Net earningsGAAP | $277 million | – | – |
| Net earnings per diluted shareGAAP | $1.34 per diluted share | – | up 30.1% |
| Adjusted net earnings per diluted sharenon-GAAP | $1.42 per diluted share | – | up 17.4% |
| Operating incomeGAAP | $370 million | – | – |
| Operating marginGAAP | 10.1% of net sales | – | increase of 220 basis points |
| Adjusted operating incomenon-GAAP | $413 million | – | – |
| Adjusted operating marginnon-GAAP | 11.3% of net sales | – | increase of 100 basis points |
| Net cash provided by operating activitiesGAAP | $586 million | – | – |
| Free cash flownon-GAAP | $492 million | – | – |
| Earnings per diluted share, six months ended June 30, 2026GAAP | $2.50 | – | – |
| Adjusted earnings per diluted share, six months ended June 30, 2026non-GAAP | $2.66 | – | – |
| Restructuring expense per diluted share, three months ended June 30, 2026other | 0.07 | – | – |
| Accelerated depreciation per diluted share, three months ended June 30, 2026other | 0.03 | – | – |
| Unrealized gain on equity securities per diluted share, three months ended June 30, 2026other | (0.02) | – | – |
| Tax adjustments per diluted share, three months ended June 30, 2026other | (0.01) | – | – |
| Other non-comparable items per diluted share, three months ended June 30, 2026other | 0.01 | – | – |
| Restructuring expense per diluted share, six months ended June 30, 2026other | 0.13 | – | – |
| Accelerated depreciation per diluted share, six months ended June 30, 2026other | 0.03 | – | – |
| Adjustments associated with Spin-Off related balances per diluted share, six months ended June 30, 2026other | 0.01 | – | – |
| Impairment charges per diluted share, six months ended June 30, 2026other | — | – | – |
| Write-off of customer incentive asset per diluted share, six months ended June 30, 2026other | — | – | – |
| Costs to exit charging business per diluted share, six months ended June 30, 2026other | 0.02 | – | – |
| Chief Executive Officer transition compensation per diluted share, six months ended June 30, 2026other | — | – | – |
| Loss on sale of assets per diluted share, six months ended June 30, 2026other | — | – | – |
| Merger and acquisition expense, net per diluted share, six months ended June 30, 2026other | (0.01) | – | – |
| Unrealized gain on equity securities per diluted share, six months ended June 30, 2026other | (0.01) | – | – |
| Tax adjustments per diluted share, six months ended June 30, 2026other | — | – | – |
| Other non-comparable items per diluted share, six months ended June 30, 2026other | 0.01 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Battery Energy SystemsLower Battery Energy Systems segment sales were cited as an offset to stronger foreign currencies and as a factor in the organic-sales decline. | decline of approximately $60 million | – | approximately $60 million decline |
Full Year 2026 outlook
- Revenue$14.0 billion to $14.3 billion
- Note2026 net sales of approximately $14.3 billion in 2025
- Noteyear-over-year change in organic net sales of down 3.5% to down 1.5%
- Noteexpected year-over-year sales decline of approximately $250 million in the Company’s Battery Energy Systems segment
- Noteapproximately a 1.7% headwind to organic net sales growth in 2026
- Noteyear-over-year increase in sales of approximately $175 million primarily due to the strengthening of the Euro and Chinese Renminbi against the U.S. dollar
- NoteU.S. GAAP operating margin of 9.6% to 9.8%
- Noteadjusted operating margin of 10.7% to 10.9%
- NoteU.S. GAAP net earnings of $4.72 to $4.94 per diluted share
- Noteadjusted net earnings of $5.05 to $5.30 per diluted share
- NoteFull year operating cash flow of $1,600 million to $1,700 million
- Notefree cash flow of $900 million to $1,100 million
- Noteweighted light vehicle markets down 3% to approximately flat
Capital returns
- Repurchased approximately $100 million of its outstanding shares during the second quarter of 2026.
- Paid a $34 million cash dividend to its shareholders during the second quarter of 2026.
- Board of Directors authorized an increase to its share repurchase program of $1 billion, bringing total authorization to approximately $1.35 billion.
- The share repurchase authorization is intended to allow management to repurchase outstanding shares through 2029.
What drove it
- Stronger foreign currencies compared with the U.S. dollar supported net sales.
- Declining market production volumes and lower Battery Energy Systems segment sales partially offset currency support.
- Cost controls supported operating-margin expansion despite a lower industry production environment.
- Higher adjusted operating income and a lower share count resulting from 2025 and 2026 share repurchases drove the increase in adjusted net earnings per share.
- The Company secured seven awards across eTurbo, transfer cases, variable cam timing, Integrated Drive Modules and inverter extensions.
- The Company plans to increase 2026 R&D spending to accelerate data center and industrial market opportunities.
Concerns
- Organic net sales decreased 1.2% year-over-year.
- The Company expects weighted light vehicle markets to be down 3% to approximately flat.
- Guidance includes an expected year-over-year sales decline of approximately $250 million in the Battery Energy Systems segment.
- Full-year organic net sales guidance implies a decline of down 3.5% to down 1.5%.
What to watch
- Delivery against full-year net sales guidance of $14.0 billion to $14.3 billion.
- Execution on adjusted operating margin guidance of 10.7% to 10.9%.
- Battery Energy Systems sales performance relative to the expected approximately $250 million year-over-year decline.
- Progress on product readiness and increased R&D spending for data center and industrial markets.
- Production timing for new awards expected to begin from the fourth quarter of 2026 through 2029.
- Use of the approximately $1.35 billion share-repurchase authorization through 2029.
Balance sheet and cash flow
- Net cash provided by operating activities of $586 million.
- Free cash flow of $492 million.
- Full year operating cash flow is expected to be in the range of $1,600 million to $1,700 million.
- Free cash flow is expected to be in the range of $900 million to $1,100 million.
Analysis
BorgWarner reported $3,648 million of U.S. GAAP net sales for the second quarter of 2026, up approximately 0.3% year-over-year, while organic net sales decreased 1.2%. Stronger foreign currencies supported reported sales, but declining market production volumes and lower Battery Energy Systems sales offset that benefit. Excluding the approximately $60 million decline in Battery Energy Systems segment sales, the Company said organic net sales were up modestly year-over-year.
Profitability improved materially despite the softer volume environment. U.S. GAAP operating income was $370 million and operating margin was 10.1% of net sales, an increase of 220 basis points. Adjusted operating income was $413 million and adjusted operating margin was 11.3% of net sales, an increase of 100 basis points. The Company attributed the performance to continued cost controls.
GAAP net earnings rose to $277 million from $224 million, and GAAP diluted EPS increased to $1.34 from $1.03. Adjusted diluted EPS was $1.42, up 17.4% from $1.21. The Company said the adjusted EPS increase was primarily due to higher adjusted operating income and a lower share count resulting from 2025 and 2026 share repurchases. Cash generation was strong, with net cash provided by operating activities of $586 million and free cash flow of $492 million.
Capital allocation remained shareholder focused. BorgWarner repurchased approximately $100 million of shares and paid a $34 million cash dividend during the quarter. The Board added $1 billion to the repurchase program, bringing total authorization to approximately $1.35 billion through 2029. The Company raised adjusted EPS guidance to $5.05 to $5.30 per diluted share, citing the impact of first-half share repurchases, while maintaining sales, adjusted operating margin and cash-flow expectations.
The full-year outlook continues to anticipate difficult underlying demand conditions. Net sales are guided to $14.0 billion to $14.3 billion, with organic sales down 3.5% to down 1.5%, weighted light vehicle markets down 3% to approximately flat, and an expected approximately $250 million Battery Energy Systems sales decline. Management nevertheless expects adjusted operating margin of 10.7% to 10.9% and is increasing R&D spending for data center and industrial opportunities. Seven new business awards provide a stated foundation for longer-term portfolio growth, with production expected to begin between the fourth quarter of 2026 and 2029.
Not in the filing
stated, not guessed- Prior-year net sales amount for the second quarter of 2025.
- Prior-quarter comparisons for net sales, earnings, margins, operating income, operating cash flow and free cash flow.
- Gross profit and gross margin.
- Operating expenses.
- Effective tax rate.
- Cash balance, debt balance and net debt.
- Segment revenue and segment profitability for segments other than the stated Battery Energy Systems sales decline.
- Battery Energy Systems segment revenue for the second quarter of 2026 and second quarter of 2025.
- Prior-year comparisons for operating income, adjusted operating income, operating cash flow and free cash flow.
- Named executive quotes.
- Previous-outlook document for comparison with actual reported results.
AlphaAI 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.