NYSE:BWA
BORGWARNER INC
A leading global supplier of powertrain and electrification components serving automotive manufacturers worldwide with a strategic pivot toward electric vehicles.
Key Metrics
Investment Thesis
Bull Case
BorgWarner offers exposure to the growing electric vehicle market with a diversified portfolio that cushions it against cyclical downturns in traditional ICE vehicles. The company's strong free cash flow generation supports consistent capital returns through buybacks and dividends, signaling management confidence in future growth. Strategic acquisitions or organic innovation in thermal management could unlock new revenue streams as OEMs prioritize efficiency over pure range.
Bear Case
Declining net income trends from $1.03B to $335M over five years suggest the company is struggling to pass on input cost inflation to customers. The heavy reliance on a few large automotive clients creates concentration risk, and the shift to EV components may temporarily depress margins during the transition period. High levels of long-term debt at $3.89B limit flexibility for further aggressive expansion or R&D spending without diluting shareholders.
About BORGWARNER INC
BorgWarner Inc. designs and manufactures powertrain components, electrification systems, and thermal management solutions primarily serving the global automotive industry. The company operates through segments focused on engine and transmission systems, turbocharging technologies, and hybrid/electric vehicle components across North America, Europe, and Asia. With a diverse product portfolio, it supports traditional internal combustion engines while accelerating its transition to zero-emission mobility solutions.
Analysis
Management Discussion
While the company reported a net profit of $335M in 2025, this represents a decline from $399M in 2024 and $1.03B in 2022, reflecting the ongoing challenges of margin compression and strategic restructuring costs. Operating cash flow remains robust at $1.65B, allowing significant share repurchases of $508M and dividends of $119M despite a drop in revenue growth to roughly flat levels. The shift from high-margin engine components to lower-margin electrification parts is likely pressuring profitability while the company rebuilds its balance sheet after years of investment.
Industry Overview
The automotive aftermarket is highly competitive with low barriers to entry but high barriers to customer retention and technology development. Industry leaders are consolidating portfolios to focus on high-growth areas like electrification and autonomous driving while exiting legacy low-margin segments. Success now depends on rapid technological adaptation to meet stringent global emissions regulations and supply chain disruptions.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $15.80B | $14.20B | $14.09B | $14.32B |
| Cost of Revenue | $12.70B | $11.63B | $11.44B | $11.64B |
| Gross Profit | $3.10B | $2.57B | $2.65B | $2.67B |
| Operating Expenses | $1.73B | $1.41B | $2.10B | $2.14B |
| Operating Income | $1.37B | $1.16B | $546.0M | $536.0M |
| R&D | $786.0M | $717.0M | $736.0M | $710.0M |
| G&A | $1.61B | $1.32B | $1.35B | $1.30B |
| Stock-Based Comp | $75.0M | $58.0M | $62.0M | $66.0M |
| D&A | $721.0M | $582.0M | $673.0M | $719.0M |
| Depreciation | $624.0M | $515.0M | $604.0M | $653.0M |
| Amortization | $97.0M | $67.0M | $69.0M | $66.0M |
| Other OpEx | $-669.0M | $-625.0M | $16.0M | $124.0M |
| Non-Operating Income | $-56.0M | $-169.0M | $-7.0M | $-12.0M |
| Interest Income | $26.0M | $35.0M | $54.0M | $60.0M |
| Pre-Tax Income | $1.32B | $991.0M | $539.0M | $524.0M |
| Income Tax | $292.0M | $289.0M | $111.0M | $189.0M |
| Continuing Ops | $1.03B | $702.0M | $428.0M | $335.0M |
| Discontinued Ops | $0 | $-7.0M | $-29.0M | $0 |
| Net Income | $1.03B | $695.0M | $399.0M | $335.0M |
| Minority Interest | $82.0M | $0 | $0 | $0 |
| Net to Common | $944.0M | $695.0M | $399.0M | $335.0M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $6.62B | $6.22B | $6.52B | $6.79B |
| Inventory | $1.69B | $1.31B | $1.25B | $1.21B |
| Prepaid Expenses | $269.0M | $261.0M | $333.0M | $313.0M |
| Other Current Assets | $4.66B | $4.64B | $4.94B | $5.28B |
| Long-Term Assets | $10.38B | $8.24B | $7.47B | $6.97B |
| Intangibles | $1.05B | $564.0M | $474.0M | $394.0M |
| Goodwill | $3.40B | $3.01B | $2.36B | $2.06B |
| Operating Leases | $199.0M | $143.0M | $177.0M | $151.0M |
| Other LT Assets | $5.66B | $4.45B | $4.39B | $4.32B |
| Total Assets | $16.99B | $14.45B | $13.99B | $13.77B |
| Current Liabilities | $4.24B | $3.77B | $3.65B | $3.28B |
| Accounts Payable | $2.68B | — | — | — |
| Current Debt | $4.0M | $3.0M | $337.0M | $2.0M |
| Current Leases | $42.0M | $37.0M | $38.0M | $36.0M |
| Deferred Revenue | $16.0M | $18.0M | $13.0M | — |
| Taxes Payable | $142.0M | $103.0M | $115.0M | $113.0M |
| Other Current Liab | $1.33B | $3.61B | $3.14B | $3.13B |
| Long-Term Liabilities | $5.25B | $4.62B | $4.64B | $4.87B |
| Long-Term Debt | $4.17B | $3.71B | $3.76B | $3.89B |
| LT Operating Leases | $166.0M | $112.0M | $144.0M | $122.0M |
| Other LT Liab | $852.0M | $718.0M | $646.0M | $773.0M |
| Total Liabilities | $9.49B | $8.39B | $8.29B | $8.15B |
| Shareholders' Equity | $7.51B | $6.07B | $5.71B | $5.61B |
| Paid-In Capital | $2.67B | $2.69B | $2.67B | $2.68B |
| Retained Earnings | $7.45B | $6.15B | $6.41B | $6.57B |
| AOCI | $-876.0M | $-828.0M | $-1.02B | $-799.0M |
| Total L&E | $16.99B | $14.45B | $13.99B | $13.77B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $1.03B | $695.0M | $399.0M | $335.0M |
| Non-Cash Adjustments | $-788.0M | $-230.0M | $1.25B | $1.59B |
| Working Capital Changes | $1.33B | $847.0M | $-300.0M | $-281.0M |
| Cash from Operations | $1.57B | $1.31B | $1.35B | $1.65B |
| Cash from Investing | $-1.42B | $-679.0M | $-603.0M | $-368.0M |
| Debt Issuances | $5.0M | $18.0M | $1.01B | — |
| Debt Repayments | $13.0M | $451.0M | $525.0M | $409.0M |
| Share Buybacks | $240.0M | $177.0M | $402.0M | $508.0M |
| Dividends Paid | $161.0M | $130.0M | $98.0M | $119.0M |
| Cash from Financing | $-567.0M | $-437.0M | $-167.0M | $-1.12B |
| FX Effect | $-90.0M | $0 | $-22.0M | $55.0M |
| Net Change in Cash | $-506.0M | $196.0M | $560.0M | $219.0M |
| Beginning Cash | $1.84B | $1.34B | $1.53B | $2.09B |
| Ending Cash | $1.34B | $1.53B | $2.09B | $2.31B |
Frequently Asked Questions
How does BORGWARNER INC make money?
The company derives revenue from four primary segments: Engine Systems providing intake and exhaust components, Turbocharging delivering forced induction technologies for efficiency, Electrification offering battery cooling and hybrid systems, and Thermal Management managing heat in powertrains and cabins. Revenue streams are heavily weighted toward manufacturing high-volume parts for global OEMs rather than end-consumer sales.
What are the main risks for BWA?
Fluctuations in global steel, aluminum, and rare earth metal prices significantly impact margins due to low pricing power in a commoditized supply chain. Economic downturns or reduced consumer demand for vehicles can lead to order cancellations and inventory buildup, as evidenced by recent inventory changes. Intense competition from lower-cost Asian suppliers and internal OEM vertical integration pressures profit margins. Regulatory shifts toward stricter emissions standards require continuous heavy capital investment in R&D to maintain relevance.
What is BWA's competitive advantage?
BorgWarner leverages a massive global footprint with strategic manufacturing hubs close to key automotive supply chains to reduce logistics costs. Its early investment in electrification technologies positions it as a preferred partner for OEMs transitioning to zero-emission vehicles, reducing the need for customers to switch suppliers. The company maintains strong long-term relationships with major automakers through exclusive contracts and co-development programs that create high switching costs.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.