BorgWarner Raises 2026 Profit Outlook as Adjusted EPS Climbs 12%

BorgWarner raised its 2026 adjusted earnings outlook on Thursday after a third quarter in which cost controls and a lower share count lifted profit even as sales slipped on weaker auto production.

The auto parts maker now expects full-year adjusted earnings of $5.20 to $5.35 a share, up from its previous range of $5.05 to $5.30, according to the earnings release it filed with an 8-K on Thursday. BorgWarner attributed the increase to the expected impact of its share repurchases and a lower full-year effective tax rate.

Earnings up, sales down

Third-quarter net sales fell about 2.9% to $3.487 billion, and organic sales, which strip out currency effects, declined 3.1%. The company blamed declining market production volumes and lower sales in its Battery Energy Systems segment.

Profit moved the other way. Net earnings rose to $221 million, or $1.08 a diluted share, from $158 million, or 73 cents, a year earlier, a 47.9% gain per share. Adjusted earnings rose 12.1% to $1.39 a share from $1.24.

The GAAP operating margin widened 180 basis points to 8.7%, and the adjusted operating margin edged up 20 basis points to 10.9%. BorgWarner said its "continued focus on cost controls" allowed it to deliver strong performance "despite a lower industry production environment."

Debt cut and buybacks

The company reduced gross debt by $864 million during the quarter through a debt tender and make-whole redemption. It also repurchased about $175 million of its shares and paid a $35 million cash dividend.

Operating cash flow was $320 million, and free cash flow was $195 million.

New awards span engines and electrification

BorgWarner listed nine new business awards. They include an engine control module for a global automaker's new internal combustion pickup truck platform, with production expected to begin in 2029, and three turbocharger awards for light-vehicle gasoline platforms in South America and Europe.

On the electrified side, it won its first aluminum-wire eMotor program with a major Chinese automaker for hybrid vehicles, three more eMotor awards with automakers in China, and a high-voltage inverter award for a global automaker's next-generation battery-electric vehicles. The company also said it accelerated quoting activity for its industrial solutions as it prepares products for data center and industrial markets.

Sales outlook narrowed at the top

BorgWarner narrowed its 2026 net sales forecast to $14.0 billion to $14.2 billion from $14.0 billion to $14.3 billion, citing lower industry production expectations. That compares with 2025 net sales of about $14.3 billion and implies organic sales down 2.5% to 4%.

The forecast includes an expected sales decline of about $250 million in Battery Energy Systems, offset by an expected currency benefit of about $250 million. BorgWarner assumes its weighted light-vehicle market will be down 1% to 2% this year.

It expects an adjusted operating margin of 10.7% to 10.9% and kept its free cash flow outlook of $900 million to $1.1 billion unchanged.

Sources

1. BorgWarner Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 29, 2026 (accession 0000908255-26-000060)

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