BorgWarner Earnings: Solid Revenue Growth and Margin Expansion as Chip Shortage Alleviates

Narrow-moat-rated BorgWarner reported second-quarter earnings per share before special items of $1.35, $0.30 better than the $1.05 FactSet consensus and $0.30 above last year. Revenue rose 20% to $4.5 billion from $3.8 billion a year ago, when the chip shortage was worse and above consensus by 4%. Organic revenue rose 22%, outperforming a 15% increase in global light-vehicle production weighted to BorgWarner's customer base, by 7 percentage points on new business and customer cost recoveries. We maintain our investment thesis that BorgWarner revenue increases at above-market rates due to high electrification growth.