BorgWarner Raises 2026 Adjusted Earnings Outlook

The Tip Desk · August 5, 2026 · 3 min read

The company lifted full-year adjusted earnings guidance to $5.05–$5.30 a share after second-quarter adjusted earnings of $1.42 a share.

BorgWarner Inc. (BWA) raised its 2026 adjusted earnings outlook after a second quarter in which organic sales stopped falling as sharply as they had in the first quarter and the U.S. GAAP operating margin flipped from a year-earlier decline to a gain.

The automotive supplier reported second-quarter U.S. GAAP net sales of $3,648 million, up about 0.3% from a year earlier. Organic net sales, which exclude foreign-currency effects, fell 1.2%, a milder contraction than the 4.2% organic drop in the first quarter. Excluding an approximately $60 million decline in Battery Energy Systems, organic sales were up modestly.

U.S. GAAP operating margin was 10.1%, up 220 basis points from 7.9% in the second quarter of 2025, after a 280-basis-point year-over-year decline in the first quarter. Adjusted operating margin was 11.3%, up 100 basis points from 10.3%. The result reflected cost controls in a lower industry production environment.

Net earnings were $277 million, or $1.34 a share, up 30.1% from $1.03 a share. Adjusted net earnings were $1.42 a share, up 17.4% from $1.21, after a 12% adjusted increase in the first quarter. The adjusted gain reflected higher adjusted operating income and a lower share count from 2025 and 2026 repurchases.

PowerDrive Systems net sales were $665 million, with organic sales up 11.7% from $581 million a year earlier. Battery Energy Systems sales were $100 million, down 39.0% organically from $159 million. Turbos & Thermal Technologies sales were $1,442 million, with organic sales down 4.3% from $1,481 million. Drivetrain & Morse Systems sales were $1,455 million, with organic sales up 1.0% from $1,429 million.

Segment adjusted operating income was $471 million. Drivetrain & Morse Systems contributed $277 million, Turbos & Thermal Technologies $225 million, PowerDrive Systems a $29 million loss, and Battery Energy Systems a $2 million loss.

Net cash provided by operating activities was $586 million. Free cash flow was $492 million. The company repurchased about $100 million of shares and paid a $34 million cash dividend. Cash and cash equivalents were $2,448 million at June 30.

The board authorized an additional $1 billion of share repurchases, bringing total authorization to about $1.35 billion, intended to allow buybacks through 2029.

The company increased 2026 full-year adjusted earnings guidance to $5.05 to $5.30 a share from a prior $5.00 to $5.20 range, citing first-half share repurchases. It kept 2026 net sales at $14.0 billion to $14.3 billion, adjusted operating margin at 10.7% to 10.9%, and free cash flow at $900 million to $1,100 million. U.S. GAAP net earnings are expected at $4.72 to $4.94 a share.

At the midpoint of that guidance, the company expects another year of adjusted operating margin improvement and adjusted earnings growth even as weighted light-vehicle markets are expected to be down 3% to about flat and Battery Energy Systems sales decline. Net sales guidance implies organic sales down 3.5% to down 1.5%, including an expected $250 million year-over-year drop in Battery Energy Systems. Foreign currencies are expected to add about $175 million to sales.

The company announced seven new awards, including an eTurbo hybrid award with a major European OEM for production in 2029, a torque-on-demand transfer case with a Chinese OEM for a full-size SUV with production in the fourth quarter of 2026, two variable cam timing awards, an integrated drive module award with a global OEM for 2027, and two high-volume inverter extensions with a major European OEM for plug-in hybrid and 800-volt battery-electric vehicles with production in 2029. The company plans to increase 2026 research and development spending to accelerate data-center and industrial product readiness.