Key Highlights

  • Adjusted earnings per share of USD 1.39 topped the consensus estimate of USD 1.25, rising 12% from a year earlier.
  • Net sales of USD 3.49 billion fell 3% year over year, just under the USD 3.50 billion consensus estimate.
  • Light vehicle eProduct sales climbed 33% to USD 630 million, and adjusted margin widened 20 basis points to 10.9%.
  • Full year adjusted EPS guidance moved up to USD 5.20 to USD 5.35 from USD 5.05 to USD 5.30.

BorgWarner Inc. (NYSE:BWA) reported third quarter 2026 adjusted earnings per share of USD 1.39, above the consensus estimate of USD 1.25 and up USD 0.15, or 12%, from the prior year quarter. GAAP diluted earnings per share were USD 1.08 versus USD 0.73 a year earlier. Net sales of USD 3,487 million declined 3% from USD 3,591 million and came in slightly below the consensus estimate of USD 3.50 billion.

Chief Executive Officer Joe Fadool credited cost control. The sales decline had three parts: a USD 54 million drop in the Battery Energy Systems segment, an organic decrease of USD 58 million, or 1.6%, roughly in line with light vehicle production, and a USD 8 million currency gain.

Margins, eProducts and Cash Returns

Adjusted operating income was USD 381 million, a margin of 10.9%, compared with USD 385 million and 10.7% a year ago. Gross margin rose to 19.0% from 18.5%, and selling, general and administrative expense fell to USD 310 million from USD 341 million. Restructuring expense rose to USD 50 million from USD 23 million, including USD 25 million for a voluntary separation program. GAAP operating income was USD 302 million versus USD 248 million.

Light vehicle eProduct sales of USD 630 million rose 33%, mainly on growth in Europe. Free cash flow was USD 195 million, which supported USD 175 million of share repurchases and USD 35 million of dividends. Management said the roughly USD 210 million returned was over 100% of free cash flow, and that planned fourth quarter buybacks would take 2026 returns above USD 700 million.

Guidance and Industrial Build Out

Full year net sales guidance now stands at USD 14.0 billion to USD 14.2 billion, narrowed from USD 14.0 billion to USD 14.3 billion, with weighted end markets projected down 1% to 2%. Adjusted operating margin guidance of 10.7% to 10.9% was kept, and free cash flow guidance remains USD 900 million to USD 1.1 billion. The EPS increase came from buybacks and a lower tax rate outlook, and organic sales are projected down 2.5% to 4%, with the battery business a headwind of about 170 basis points.

For the fourth quarter, the chief financial officer outlined revenue near USD 3.43 billion, against a USD 3.55 billion average in the first three quarters, with a mid teens decremental margin and USD 10 million of industrial research spending. On industrial products, the turbine generator final assembly plant in North Carolina is built, equipment installation is scheduled for December, and production trials are targeted by year end. Management said it projects about USD 300 million of turbine generator revenue in 2027.

Milestones and Figures to Follow

Several dated items frame the next report. Turbine generator production trials are targeted by year end, and system UL certification is underway. The microgrid inverter has shipped samples to seven customers, with UL certification targeted for early 2027, and battery energy storage is described as production ready in 2027. On the numbers, fourth quarter revenue near USD 3.43 billion and the USD 5.20 to USD 5.35 EPS range are the reference points.