BorgWarner Inc.
BWA
reported adjusted earnings of $1.05 per share in first-quarter 2022, declining from $1.21 recorded in the prior-year quarter. The bottom line, however, beat the Zacks Consensus Estimate of 80 cents per share. Higher-than-anticipated revenues across all segments resulted in the outperformance. The automotive equipment supplier reported net sales of $3,874 million, outpacing the Zacks Consensus Estimate of $3,639.8 million. The top line, however, declined 3.4% year over year.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. price-consensus-eps-surprise-chart
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BorgWarner Inc. Quote
Segmental Performance
Air Management
: Net sales totaled $1,931 million in the reported quarter compared with $2,011 million in the year-ago period. The sales figure, however, topped the Zacks Consensus Estimate of $1,862 million. Adjusted EBIT of $257 million declined from $329 million recorded in the year-ago quarter but topped the consensus metric of $239 million.
e-Propulsion & Drivetrain
: Sales from the segment were $1,390 million, down from $1,466 million a year ago. The sales figure, however, beat the Zacks Consensus Estimate of $1,350 million. The segment generated an adjusted EBIT of $119 million compared with $149 million in the corresponding period of 2021. The figure outpaced the consensus metric of $83 million.
Fuel Injection
: Sales from the segment totaled $472 million, down from $475 million generated in the year-ago quarter. The metric, however, surpassed the consensus estimate of $451 million. The segment generated an adjusted EBIT of $52 million, up from $34 million recorded in the corresponding period of 2021.
Aftermarket
: Sales from the segment totaled $205 million, up from $197 million in the year-ago quarter. The figure outpaced the Zacks Consensus Estimate of $201 million. The segment generated an adjusted EBIT of $24 million, up from $21 million.
Financial Position
As of Mar 31, 2022, BorgWarner had $1,501 million in cash equivalents compared with $1,841 million on Dec 31, 2021. In the March quarter, long-term debt was $4,223 million, down from $4,261 million recorded on Dec 31, 2021.
Net cash provided by operating activities was $116 million in the quarter under review. Capital expenditure and negative FCF totaled $177 million and $61 million, respectively.
2022 Projections
For full-year 2022 the company anticipates net sales within $15.5-$16 billion, indicating a decrease from the previous range of $15.9-$16.5 billion. Importantly, BorgWarner continues to envision electric vehicle revenues of more than $800 million for 2022, doubling from 2021 levels.
Adjusted operating margin is expected in the band of 9.8-10.2%, down from the earlier range of 10.2-10.7%. Adjusted net earnings are estimated to be within $3.9-$4.25, up from $3.71-$4.19 expected earlier. Free cash flow is projected in the band of $650-$750 million, down from the previous forecast of $700-$800 million.
Recent Contract Wins
Along with its earnings release, BorgWarner announced winning the first OEM business for its flexible battery management system technology.
It has also been selected to provide high-voltage hairpin eMotors for a reputed electric vehicle brand in China and is expected to start mass production in 2023.
Also, it will supply a leading Chinese OEM with a dual Inverter to be used in hybrid vehicles scheduled for launch in 2023. This bolsters its leadership position in China’s hybrid transmission and hybrid inverter market.
On account of its new businesses announced to date, BorgWarner believes it is on track to achieve more than $3.3 billion of electric vehicle revenues by 2025.
Zacks Rank & Key Picks
BWA currently carries a Zacks Rank #4 (Sell).
Better-ranked players in the auto space include
BRP Group, Inc.
DOOO
, sporting a Zacks Rank #1 (Strong Buy) and
Dorman Products
DORM
and
Tesla Inc.
TSLA
, each carrying a Zacks Rank #2 (Buy), currently. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.
BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 8.5% over the past year.
Dorman Products has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been marginally revised 0.7% upwards in the past 60 days.
Dorman Products’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. DORM pulled off a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 2.1% over the past year.
Tesla has an expected earnings growth rate of 66.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 18.7% upward in the past 60 days.
Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 41.27%, on average. The stock has gained 35.5% over the past year.
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