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BorgWarner Inc BWA

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BorgWarner Q3 Results Take Chip Crunch Hit, Lowers 2021 Guidance; Maintaining $69 FVE

Richard Hilgert Senior Equity Analyst

Analyst Note

| Richard Hilgert |

Narrow-moat rated BorgWarner reported third-quarter earnings per share before special items of $0.80, beating the $0.72 FactSet consensus estimate by $0.08 but $0.08 lower than the $0.88 reported last year. Consolidated revenue jumped almost 35% to $3.4 billion, compared with $2.5 billion reported in the COVID-19-pummeled year-ago period. Thanks to the chip crunch hit, organic revenue excluding the Delphi acquisition and currency effect declined 7%, outperforming a 22% plunge in global light vehicle production by 15 percentage points. We maintain our investment thesis that BorgWarner will increase revenue at above-market rates as automakers rely on its products that support reduced emissions and vehicle electrification.

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Company Profile

Business Description

BorgWarner is a Tier I auto-parts supplier with four operating segments. The air management group makes turbochargers, e-boosters, e-turbos, timing systems, emissions systems, thermal systems, gasoline ignition technology, powertrain sensors, cabin heaters, battery heaters, and battery charging. The e-propulsion and drivetrain group produces e-motors, power electronics, control modules, software, automatic transmission components, and torque management products. The two remaining operating segments are the eponymous fuel injector and aftermarket groups. The company's largest customers are Ford and Volkswagen at 13% and 11% of 2020 revenue, respectively. Geographically, Europe accounted for 35% of 2020 revenue, while Asia was 34% and North America was 30%.

3850 Hamlin Road
Auburn Hills, MI, 48326
T +1 248 754-9200
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 49,700