BWA Q1 2026 Earnings Call Summary

Sales: $3.5 billion, a decline of approximately 3% year-over-year, primarily due to a drop in the Battery Energy Systems segment.
Adjusted Operating Margin: 10.5%, up from 10.0% in Q1 2025, driven by cost control measures.
Adjusted EPS: Increased by 12% to $1.13, supported by share repurchases totaling over $650 million in the past year.
Free Cash Flow: Generated $13 million, a $48 million improvement from the previous year.

New Business Awards: Secured 12 awards in Q1, including contracts for electric motors, turbochargers, and drivetrain technologies, indicating strong demand for BorgWarner's products.
Product Development: Progressing on turbine generator for industrial markets, with production expected to start in 2027. The company is also expanding its portfolio to include battery energy storage systems and microgrid inverters.
Market Focus: Emphasizing growth in the data center and industrial markets, leveraging existing automotive capabilities.

2026 Sales Guidance: Maintained at $14.0 billion to $14.3 billion, with expectations of organic sales decline of 3.5% to 1.5% year-over-year, excluding battery sales.
Adjusted Operating Margin: Expected to range from 10.7% to 10.9%, with a focus on maintaining cost controls.
Adjusted EPS Guidance: Projected between $5.00 and $5.20, representing a 4% increase over 2025.
Free Cash Flow: Anticipated to be between $900 million and $1.1 billion for the year.

Market Decline: Organic net sales down 3% year-over-year, reflecting the overall decline in light vehicle production.
Battery Business Challenges: Anticipated decline in battery sales due to lack of North American incentives and weaker European demand, posing a 150 basis point headwind to overall sales growth.
Economic Uncertainty: Ongoing inflationary pressures and a challenging market environment may impact future performance.

Battery Energy Storage: The company is leveraging its commercial vehicle battery expertise to enter the stationary energy storage market, with a strong quoting pipeline.
Power Generation Synergies: There is potential synergy between the turbine generator and battery storage products, as both address power availability issues.
Capital Allocation: BorgWarner remains focused on organic growth but is open to evaluating M&A opportunities that align with its strategic goals.
Supply Chain Confidence: The company expressed confidence in managing supply chain constraints for the turbine generator, leveraging existing automotive supply networks.
China Market Outlook: The company remains optimistic about growth in China, despite recent market fluctuations, citing strong export performance and ongoing business wins.

This summary encapsulates the key points from BorgWarner's Q1 2026 earnings call, highlighting both achievements and challenges faced by the company.

BWA — BorgWarner Inc.