BorgWarner Earnings: Solid Revenue Growth, but Currency and Acquisitions Ding Margin

Narrow-moat-rated BorgWarner reported first-quarter earnings per share before special items of $1.09, just $0.01 shy of FactSet consensus and $0.04 better than last year. Revenue rose 8% to $4.2 billion from $3.9 billion a year ago when the chip shortage was worse and 1% above consensus. Excluding negative currency, divestitures, and acquisitions, organic revenue rose 12%, outperforming a 7% increase in global light-vehicle production weighted to BorgWarner's customer base, by 5 percentage points on new business and customer cost recoveries. We maintain our investment thesis that BorgWarner revenue increases at above-market rates as its products reduce emissions and support vehicle electrification.