BorgWarner Inc.
05/06/2026 | Press release | Distributed by Public on 05/06/2026 11:34
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
BorgWarner Inc. (collectively with its consolidated subsidiaries, the "Company" or "BorgWarner") is a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles. BorgWarner's products help improve vehicle performance, propulsion efficiency, stability and air quality. The Company manufactures and sells these products worldwide, primarily to original equipment manufacturers ("OEMs") of light vehicles (passenger cars, sport-utility vehicles, vans and light trucks). The Company's products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). The Company also manufactures and sells its products to certain tier one vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The Company operates manufacturing facilities serving customers in Europe, the Americas and Asia and is an original equipment supplier to nearly every major automotive OEM in the world.
BorgWarner Strategy
The Company's current strategy is to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles. This entails growing its product portfolio through organic investments and technology-focused acquisitions. The Company's balanced portfolio is particularly critical as the automotive industry continues to see electric vehicle adoption volatility across different regions. During the three months ended March 31, 2026 and 2025, the Company's revenue from eProducts, which include all products utilized on or for electric vehicles ("EVs") plus those same products and components that are included in hybrid powertrains whose underlying technologies are adaptable or applicable to those used in or for EVs, was approximately $597 million and $637 million, respectively, or 17% and 18% of the Company's total revenue, respectively.
Lawsuit Against PHINIA
On September 19, 2024, the Company commenced a lawsuit against PHINIA, Inc. ("PHINIA"), seeking to recover from PHINIA approximately $120 million of value added tax ("VAT") refunds that PHINIA received or expected to receive from governmental agencies as well as damages and interest. These refunds consisted of VAT paid by the Company in periods prior to or directly related to the spin-off ("Spin-Off") that established PHINIA as an independent company. PHINIA responded to the lawsuit and also asserted counterclaims against the Company. On October 15, 2025, the Company entered into a settlement agreement (the "Settlement Agreement") with PHINIA, pursuant to which PHINIA agreed to pay the Company $78 million, resolving the lawsuit and certain other matters relating to the Spin-Off. In connection with the Settlement Agreement, the Company and PHINIA also entered into an amended and restated tax matters agreement that, among other things, limits the Company's responsibility to certain defined tax obligations. During the year ended December 31, 2025, the Company recorded a net charge of $40 million, for the reduction of VAT-related receivables, the elimination of certain Company liabilities under the amended and restated tax matters agreement and related legal fees. As of March 31, 2026, after giving effect to the Settlement Agreement and the $52 million received in total, the Company had assets related to these VAT refunds of approximately $26 million in Receivables, net in the Company's Condensed Consolidated Balance Sheet, which is due no later than December 1, 2026.Refer toPart 1, Item 1 of this report for more information.
Portfolio Actions
In February 2025, the Company made the decision to exit its charging business within the reportable segment formerly called Battery & Charging Systems. Production operations ceased during the second quarter of 2025. This decision was made following the Company's continuing evaluation of its product portfolio and future investments. This action was expected to create a more focused portfolio and eliminate approximately $30 million of annualized adjusted operating losses by 2026. In the first quarter of 2026, as a result of the aforementioned disposition, this reportable segment was renamed Battery Energy Systems. The name change reflects the segment's revised focus after the divestiture. The change did not impact the composition of the segment or require recasting of prior period segment results. Prior periods continue to be presented as previously reported. Refer to Note 3, "Acquisitions and Dispositions," to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.
In February 2025, the Company also made the decision to consolidate its North American battery systems business, which is expected to align the business' cost structure to current market dynamics. This action is expected to result in annual cost savings of approximately $20 million by 2026.
Acquisitions
Acquisitions have been an integral component of the Company's growth and value creation strategy. Refer to Note 3, "Acquisitions and Dispositions," to the Consolidated Financial Statements in Part 1, Item 1 of this report for more information, including a summary of recent acquisitions.
Key Trends and Economic Factors
Economic Conditions. The Company's financial performance depends on conditions in the global automotive industry. Automotive and truck production is cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit and consumer spending and preferences. Government policies, such as the imposition of, termination or invalidation of or other changes in tariffs (including retaliatory tariffs), or the commencement or termination of consumer tax incentives, such as EV tax credits and programs to invest in infrastructure, including EV charging stations, may affect consumer preferences. Economic declines or impacts of tariffs that result in a material reduction in automotive or truck production would have an adverse effect on the Company's sales. The weighted average market production, as estimated by the Company for the three months ended March 31, 2026, was down approximately 3% from the three months ended March 31, 2025. Weighted average market production reflects light and commercial vehicle production as reported by S&P Global, weighted for the Company's geographic exposure, as estimated by the Company.
Tariff Refund Recovery. The Company is actively pursuing refund recovery of certain tariffs the Company paid that the U.S. government levied under the International Emergency Economic Powers Act and subsequently invalidated by the U.S. Supreme Court on February 20, 2026. The availability, amount and timing of such refunds is uncertain and subject to further developments.
Commodities and Other Inflationary Impacts. During 2025, prices for commodities showed a lower level of volatility in comparison to what the Company had experienced from the beginning of 2021. The Company currently expects commodity prices and other input costs to show a higher level of volatility in 2026 compared to 2025. Commodity markets are influenced by geopolitical instability, which can contribute to supply chain fragmentation, higher logistics costs and increased price across energy, metals and other critical inputs.
Outlook
The Company expects global industry production to be flat to down modestly year-over-year in 2026. In particular, the Company expects a negative sales impact from declining sales in the Company's Battery Energy Systems reportable segment. As a result, at the mid-point of its outlook, the Company expects total sales in 2026 to decline year-over-year, excluding the impact of foreign currencies.
The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to enhance its product leadership strategy. There are several trends that are driving the Company's long-term growth that management expects to continue, including adoption of product offerings for electrified vehicles and increasingly stringent global emissions standards that support demand for the Company's products that drive vehicle efficiency as well as power generation industrial solutions growth. The Company expects its power generation industrial solutions growth to be approximately $300 million in 2027.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2026 vs. Three Months Ended March 31, 2025
The following table presents a summary of our operating results:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (in millions, except per share data) | 2026 | 2025 | |||||||||||||||||||||
| Net sales | % of net sales | % of net sales | |||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,433 | 40.6 | % | $ | 1,454 | 41.4 | % | |||||||||||||||
| Drivetrain & Morse Systems | 1,422 | 40.2 | 1,361 | 38.7 | |||||||||||||||||||
| PowerDrive Systems | 587 | 16.6 | 561 | 16.0 | |||||||||||||||||||
| Battery Energy Systems | 102 | 2.9 | 150 | 4.3 | |||||||||||||||||||
| Inter-segment eliminations | (11) | (0.3) | (11) | (0.3) | |||||||||||||||||||
| Total net sales | 3,533 | 100.0 | 3,515 | 100.0 | |||||||||||||||||||
| Cost of sales | 2,856 | 80.8 | 2,876 | 81.8 | |||||||||||||||||||
| Gross profit | 677 | 19.2 | 639 | 18.2 | |||||||||||||||||||
| Selling, general and administrative expenses - R&D, net | 177 | 5.0 | 182 | 5.2 | |||||||||||||||||||
| Selling, general and administrative expenses - Other | 151 | 4.3 | 133 | 3.8 | |||||||||||||||||||
| Restructuring expense | 18 | 0.5 | 31 | 0.9 | |||||||||||||||||||
| Other operating (income) expense, net | (5) | (0.1) | 17 | 0.5 | |||||||||||||||||||
| Impairment charges | - | - | 39 | 1.1 | |||||||||||||||||||
| Operating income | 336 | 9.5 | 237 | 6.7 | |||||||||||||||||||
| Equity in affiliates' earnings, net of tax | (6) | (0.2) | (10) | (0.3) | |||||||||||||||||||
|
Unrealized loss on equity securities
|
1 | - | - | - | |||||||||||||||||||
| Interest expense, net | 11 | 0.3 | 12 | 0.3 | |||||||||||||||||||
| Other postretirement expense | 2 | 0.1 | 3 | 0.1 | |||||||||||||||||||
| Earnings before income taxes and noncontrolling interest | 328 | 9.3 | 232 | 6.6 | |||||||||||||||||||
| Provision for income taxes | 73 | 2.1 | 61 | 1.7 | |||||||||||||||||||
| Net earnings | 255 | 7.2 | 171 | 4.9 | |||||||||||||||||||
| Net earnings attributable to noncontrolling interest | 13 | 0.4 | 14 | 0.4 | |||||||||||||||||||
| Net earnings attributable to BorgWarner Inc. | $ | 242 | 6.8 | % | $ | 157 | 4.5 | % | |||||||||||||||
| Earnings per share - diluted | $ | 1.16 | $ | 0.72 | |||||||||||||||||||
Net sales
Net sales for the three months ended March 31, 2026 totaled $3,533 million, an increase of $18 million, or 1%, compared to the three months ended March 31, 2025. The change in net sales for the three months ended March 31, 2026 was primarily driven by the following:
•Fluctuations in foreign currencies resulted in a year-over-year increase in sales of approximately $167 million, primarily due to the strengthening of the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar.
•Customer recoveries relating to tariffs increased sales by approximately $32 million.
•Unfavorable volume, mix and net new business decreased sales by approximately $181 million, primarily due a decrease of approximately 3% in the weighted average market production as estimated by the Company and a decrease in the Battery Energy Systems reportable segment.
Cost of sales and gross profit
Cost of sales and cost of sales as a percentage of net sales were $2,856 million and 80.8%, respectively, during the three months ended March 31, 2026, compared to $2,876 million and 81.8%, respectively, during the three months ended March 31, 2025. The change in cost of sales for the three months ended March 31, 2026 was primarily driven by the following:
•Purchasing savings and unfavorable volume, mix and net new business, decreased cost of sales by approximately $148 million.
•Cost of sales also decreased by restructuring savings, manufacturing efficiencies and reduced depreciation.
•Fluctuations in foreign currencies resulted in a year-over-year increase in cost of sales of approximately $138 million, primarily due to the strengthening of the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar.
•Tariff expense increased cost of sales by approximately $27 million.
Gross profit and gross margin were $677 million and 19.2%, respectively, during the three months ended March 31, 2026, compared to $639 million and 18.2%, respectively, during the three months ended March 31, 2025. The increase in gross margin was primarily due to the factors discussed above.
Selling, general and administrative expenses ("SG&A")
SG&A for the three months ended March 31, 2026 was $328 million as compared to $315 million for the three months ended March 31, 2025. SG&A as a percentage of net sales was 9.3% and 9.0% for the three months ended March 31, 2026 and 2025, respectively. The change in SG&A was primarily due to fluctuations in foreign currencies, which was primarily due to the strengthening of the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar.
Restructuring expense was $18 million and $31 million for the three months ended March 31, 2026 and 2025, respectively, primarily related to employee termination benefits. Refer to Note 5, "Restructuring," to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.
In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs primarily in its Foundational products businesses. During the three months ended March 31, 2025, the Company recorded $8 million of restructuring costs related to this plan. The actions under this plan are complete. The resulting gross savings related to this plan are expected to be in the range of at least $80 million to $90 million annually by 2027 and are being utilized to sustain overall operating margin profile and cost competitiveness.
In June 2024, the Company approved an approximately $75 million restructuring plan to address the cost structure in its PowerDrive Systems reportable segment due to electric vehicle adoption volatility across different regions, which could include realignment of the segment's manufacturing footprint. During the three months ended March 31, 2026, the Company recorded a revision of previous estimates of $1 million and during the three months ended March 31, 2025, the Company recorded $16 million of restructuring costs related to this plan. The resulting annual cost savings related to this plan are expected to be approximately $100 million by 2026.
During the three months ended March 31, 2026 and 2025, the Company recorded $19 million and $7 million, respectively, of restructuring costs for individually approved restructuring actions.
Nearly all of the restructuring charges are expected to be cash expenditures, funded by cash on hand.
Other operating (income) expense, net was $5 million of income and $17 million of expense for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2025, the Company recorded charges of $19 million related to the exit of its charging business within its Battery Energy Systems reportable segment. Refer to Note 3, "Acquisitions and Dispositions," to the Condensed Consolidated Financial Statements in Item 1 of this report for more information.
Other operating (income) expense, net is primarily comprised of items included within the subtitle "Non-comparable items impacting the Company's per diluted share and net earnings" below.
Impairment charges was $39 million for the three months ended March 31, 2025. The Company recorded impairments of intangible assets, goodwill and fixed assets related to the exit of its charging business within its Battery Energy Systems reportable segment. Refer to Note 3, "Acquisitions and Dispositions," to the Condensed Consolidated Financial Statements in Item 1 of this report for more information. The Company did not recognize any impairment charge for the three months ended March 31, 2026.
Equity in affiliates' earnings, net of tax was $6 million and $10 million for the three months ended March 31, 2026 and 2025, respectively. This line item is driven by the results of the Company's unconsolidated joint ventures.
Interest expense, net was $11 million and $12 million for the three months ended March 31, 2026 and 2025, respectively. Interest expense, net was relatively flat for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.
Provision for income taxes was $73 million for the three months ended March 31, 2026, resulting in an effective rate of 22%. This is compared to $61 million, or an effective rate of 26%, for the three months ended March 31, 2025. During the three months ended March 31, 2026, the Company's effective tax rate did not differ materially from the estimated annual effective tax rate. During the three months ended March 31, 2025, the Company recorded a discrete tax expense of $4 million related to net changes to valuation allowances, a discrete tax benefit of $3 million related to the exit of the charging business and a discrete tax expense of $2 million related to various changes in filing positions for prior years.
Non-comparable items impacting the Company's earnings per diluted share
The Company's earnings per diluted share were $1.16 and $0.72 for the three months ended March 31, 2026 and 2025, respectively. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for each of the periods then ended. The Company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share:
| Three Months Ended March 31, | |||||||||||
| Non-comparable items: | 2026 | 2025 | |||||||||
| Restructuring expense | $ | (0.06) | $ | (0.11) | |||||||
| Adjustments associated with Spin-Off related balances | (0.01) | 0.01 | |||||||||
| Unrealized loss on equity securities | (0.01) | - | |||||||||
| Impairment charges | - | (0.15) | |||||||||
| Costs to exit charging business | - | (0.11) | |||||||||
| Merger and acquisition expense, net | 0.01 | (0.01) | |||||||||
| Tax adjustments | (0.01) | (0.01) | |||||||||
| Other non-comparable items | - | (0.01) | |||||||||
| Total impact of non-comparable items per share - diluted | $ | (0.08) | $ | (0.39) | |||||||
Results by Reportable Segment
The Company discloses segment information under four reportable segments, consistent with the way operating results are evaluated by management: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems and Battery Energy Systems. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems.
Segment Adjusted Operating Income (Loss) is the measure of segment income or loss used by the Company. Segment Adjusted Operating Income (Loss) is comprised of operating income adjusted for restructuring, merger, acquisition and divestiture expense, intangible asset amortization expense, impairment charges and other items not reflective of ongoing operating income or loss. The Company believes Segment Adjusted Operating Income (Loss) is most reflective of the operational profitability or loss of its reportable segments.
The following tables present net sales and Segment Adjusted Operating Income (Loss) for the Company's reportable segments:
Three Months Ended March 31, 2026 vs. Three Months Ended March 31, 2025
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||
| (in millions) | Net sales | Segment Adjusted Operating Income (Loss) | % margin | Net sales | Segment Adjusted Operating Income (Loss) | % margin | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,433 | $ | 214 | 14.9 | % | $ | 1,454 | $ | 235 | 16.2 | % | |||||||||||||||||||||||
| Drivetrain & Morse Systems | 1,422 | 260 | 18.3 | % | 1,361 | 243 | 17.9 | % | |||||||||||||||||||||||||||
| PowerDrive Systems | 587 | (36) | (6.1) | % | 561 | (43) | (7.7) | % | |||||||||||||||||||||||||||
| Battery Energy Systems | 102 | (2) | (2.0) | % | 150 | (22) | (14.7) | % | |||||||||||||||||||||||||||
| Inter-segment eliminations | (11) | - | (11) | - | |||||||||||||||||||||||||||||||
| Totals for reportable segments | $ | 3,533 | $ | 436 | $ | 3,515 | $ | 413 | |||||||||||||||||||||||||||
The Turbos & Thermal Technologies segment's net sales decreased $21 million, or 1%, and Segment Adjusted Operating Income decreased $21 million from the three months ended March 31, 2025. Unfavorable volume, mix and net new business resulted in a decrease in net sales by approximately $115 million due to lower volumes in Europe. This was partially offset by the impact of foreign currencies, which resulted in a year-over-year increase in net sales of approximately $81 million due to a strengthening in the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar and $13 million of customer recoveries relating to tariffs. Segment Adjusted Operating margin was 14.9% for the three months ended March 31, 2026, compared to 16.2% during the three months ended March 31, 2025. The Segment Adjusted Operating margin decreased due to lower sales partially offset by supply chain savings.
The Drivetrain & Morse Systems segment's net sales increased $61 million, or 4%, and Segment Adjusted Operating Income increased $17 million from the three months ended March 31, 2025. Foreign currencies resulted in a year-over-year increase in net sales of approximately $49 million due to the strengthening in the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar. Additionally, customer recoveries relating to tariffs increased net sales by approximately $17 million. This was partially offset by unfavorable volume, mix and net new business of approximately $5 million due to lower volumes in China offset by strong volumes in North America. Segment Adjusted Operating margin was 18.3% for the three months ended March 31, 2026, compared to 17.9% during the three months ended March 31, 2025. The Segment Adjusted Operating margin increased primarily due to manufacturing efficiencies and supply chain savings.
The PowerDrive Systems segment's net sales increased $26 million, or 5%, and Segment Adjusted Operating Loss decreased $7 million from the three months ended March 31, 2025. Foreign currencies resulted in a year-over-year increase in net sales of approximately $31 million due to the strengthening in the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar. This was partially offset by unfavorable volume, mix and net new business of approximately $5 million due to lower volumes in China. Segment Adjusted Operating margin was (6.1)% for the three months ended March 31, 2026, compared to (7.7)% during the three months ended March 31, 2025. The Segment Adjusted Operating margin increased primarily due to restructuring and supply chain savings, partially offset by launch related costs.
The Battery Energy Systems segment's net sales decreased $48 million, or 32%, and Segment Adjusted Operating Loss decreased $20 million from the three months ended March 31, 2025. Unfavorable volume, mix and net new business decreased net sales by approximately $54 million primarily due to lower battery pack volumes.This decrease was partially offset by the impact of foreign currencies, which resulted in a year-over-year increase in net sales of approximately $6 million due to the strengthening in the Euro, relative to the U.S. Dollar. Segment Adjusted Operating margin was (2.0)% for the three months ended March 31, 2026, compared to (14.7)% during the three months ended March 31, 2025. The Segment Adjusted Operating margin increased primarily due to the exit of the charging business and restructuring savings.
FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY
The Company maintains various liquidity sources, including cash and cash equivalents and the undrawn portion of its multi-currency revolving credit agreement. As of March 31, 2026, the Company had liquidity of $4.1 billion, comprised of cash and cash equivalent balances of $2.1 billion and an undrawn multi-currency revolving credit facility of $2.0 billion. As of March 31, 2026, the Company was in full compliance with its covenants under the revolving credit facility and had full access to the undrawn amount under the revolving credit facility. Given the Company's strong liquidity position, management believes that it will have sufficient liquidity and will maintain compliance with all covenants under the revolving credit facility through at least the next 12 months.
The Company's $2.0 billion multi-currency revolving credit facility includes a feature that allows the facility to be increased by $1.0 billion with bank group approval. This facility matures in September 2028. The credit facility agreement contains customary events of default and one key financial covenant, which is a debt-to-EBITDA ("Earnings Before Interest, Taxes, Depreciation and Amortization") ratio. The Company was in compliance with the financial covenant at March 31, 2026. At March 31, 2026 and December 31, 2025, the Company had no outstanding borrowings under this facility.
As of March 31, 2026, cash balances of $1.2 billion were held by the Company's subsidiaries outside the United States. Cash and cash equivalents held by these subsidiaries are used to fund foreign operational activities and future investments, including acquisitions. The majority of cash and cash equivalents held outside the United States is available for repatriation. The Company uses its U.S. liquidity primarily for various corporate purposes, including but not limited to debt service, share repurchases, dividend distributions, acquisitions and other corporate expenses.
The Company's commercial paper program allows the Company to issue up to $2.0 billion of short-term, unsecured commercial paper notes under the limits of its multi-currency revolving credit facility. Under this program, the Company may issue notes from time to time and use the proceeds for general corporate purposes. The Company had no outstanding borrowings under this program as of March 31, 2026 and December 31, 2025.
The total current combined borrowing capacity under the multi-currency revolving credit facility and commercial paper program cannot exceed $2.0 billion.
In addition, the Company's universal shelf registration statement filed with the U.S. Securities and Exchange Commission provides the Company with the ability to issue various debt and equity securities subject to market conditions.
On each of February 5, 2026 and April 29, 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock. The dividend declared in the first quarter was paid on March 16, 2026, and the dividend declared in the second quarter will be paid on June 15, 2026.
From a credit quality perspective, the Company has a Baa1 from Moody's and BBB+ from Fitch Ratings and Standard & Poor's. The current outlook from each of Standard & Poor's, Moody's and Fitch Ratings is stable. None of the Company's debt agreements requires accelerated repayment in the event of a downgrade in credit ratings.
Cash Flows
Operating Activities
| Three Months Ended March 31, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net earnings | $ | 255 | $ | 171 | |||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and tooling amortization | 129 | 138 | |||||||||
| Intangible asset amortization | 16 | 17 | |||||||||
| Restructuring expense, net of cash paid | 5 | 21 | |||||||||
| Stock-based compensation expense | 10 | 14 | |||||||||
| Loss on sale of businesses | - | 1 | |||||||||
| Impairment charges | - | 39 | |||||||||
| Costs to exit charging business | - | 26 | |||||||||
| Deferred income tax benefit | (14) | (24) | |||||||||
| Unrealized loss on equity securities | 1 | - | |||||||||
| Other non-cash adjustments | (5) | 1 | |||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities | 142 | 233 | |||||||||
| Retirement plan contributions | 3 | (7) | |||||||||
| Changes in assets and liabilities, excluding effects of acquisitions, divestitures and foreign currency translation adjustments: | |||||||||||
| Receivables | (146) | (255) | |||||||||
| Inventories | (5) | 61 | |||||||||
| Accounts payable and accrued expenses | (45) | (141) | |||||||||
| Other assets and liabilities | (52) | 20 | |||||||||
| Net cash provided by operating activities | $ | 152 | $ | 82 | |||||||
Net cash provided by operating activities was $152 million during the three months ended March 31, 2026 compared to $82 million for the three months ended March 31, 2025. The increase for the three months ended March 31, 2026 was primarily due to changes in working capital.
Investing Activities
| Three Months Ended March 31, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Capital expenditures, including tooling outlays | $ | (143) | $ | (119) | |||||||
| Customer advances related to capital expenditures | 4 | 2 | |||||||||
| Proceeds from settlement of net investment hedges, net | 9 | 12 | |||||||||
| Proceeds from asset disposals and other, net | - | 11 | |||||||||
| Net cash used in investing activities | $ | (130) | $ | (94) | |||||||
Net cash used in investing activities was $130 million during the three months ended March 31, 2026 compared to $94 million during the three months ended March 31, 2025. As a percentage of sales, capital expenditures, net of customer advances, were 3.9% and 3.3% for the three months ended March 31, 2026 and 2025, respectively. The year-over-year increase in capital expenditures was primarily driven higher eProduct and power generation industrial solutions investments.
Financing Activities
| Three Months Ended March 31, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Payments of notes payable | $ | - | $ | (5) | |||||||
| Repayments of debt, including current portion | (2) | (346) | |||||||||
| Payments for purchase of treasury stock | (150) | - | |||||||||
| Payments for stock-based compensation items | (28) | (18) | |||||||||
| Payment for business acquired, net of cash acquired | (3) | - | |||||||||
| Dividends paid to BorgWarner stockholders | (35) | (24) | |||||||||
| Dividends paid to noncontrolling stockholders | - | (4) | |||||||||
| Net cash used in financing activities | $ | (218) | $ | (397) | |||||||
Net cash used in financing activities was $218 million during the three months ended March 31, 2026 compared to $397 million during the three months ended March 31, 2025. Net cash used in financing activities during the three months ended March 31, 2026 was primarily related to $150 million of BorgWarner share repurchases and $35 million in dividends paid to the Company's stockholders. Net cash used in financing activities during the three months ended March 31, 2025, was primarily related to $346 million of debt repayments associated with the maturity of the Company's 3.375% senior notes on March 15, 2025, and $24 million in dividends paid to the Company's stockholders.
CONTINGENCIES
Refer to Note 20, "Contingencies," to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information regarding contingencies.
New Accounting Pronouncements
Refer to Note 2, "New Accounting Pronouncements," to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for a detailed description of new applicable accounting pronouncements.
BorgWarner Inc. published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 06, 2026 at 17:34 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]