BorgWarner Inc. Misses Revenue Expectations and Cuts Sales Outlook

Shares of BorgWarner Inc. took a tumble on Thursday as the automotive-products maker fell short of its third-quarter revenue expectations and downgraded its full-year outlook for sales of electric-vehicle products.

Revised 2023 eProduct Sales Outlook

During the post-earnings conference call with analysts, Chief Executive Frédéric Lissalde revealed that they are reducing their 2023 eProduct sales outlook by approximately $300 million. The main reasons for the adjustment are delays in production and lower predicted volume ramp-ups from their customers.

As a result, BorgWarner now expects 2023 eProduct sales to increase by 40% compared to the previous year. This figure is lower than the previous guidance, which implied growth of around 53% to 60% with sales ranging from $2.3 billion to $2.4 billion.

Stock Performance

The news had a significant impact on BorgWarner's stock price, causing it to drop by 13.1% to close at a one-year low of $32.26. This decline made it the biggest decliner among the S&P 500 index's components on that day. In fact, it was the largest single-day percentage selloff since October 15, 2008, when the stock plummeted by 13.7%.

Revised 2025 eProduct Sales Guidance

Looking ahead, BorgWarner also adjusted its 2025 eProduct sales guidance to a range of $4.5 billion to $5 billion. This revision is lower than the previously estimated $5.6 billion. The company anticipates ongoing challenges in electric-vehicle production, which may persist for the next couple of years.

Q3 Financial Results

For the third quarter, BorgWarner reported a significant decline in net income, dropping to $50 million, or 21 cents per share, from $273 million, or $1.15 per share, in the same period last year.

However, when excluding nonrecurring items, such as $77 million in noncomparable expenses, the adjusted earnings per share rose to 98 cents, surpassing the FactSet consensus of 94 cents.

Although sales saw a growth of 12.3% to reach $3.62 billion, they fell short of the FactSet consensus of $3.67 billion.

Year-to-Date Performance

BorgWarner's stock has faced challenges this year, with an 8.9% decrease in its value compared to the broader S&P 500 index, which has seen a positive increase of 12.5%.

Overall, BorgWarner's recent performance reflects the obstacles it is facing in the electric-vehicle market. Despite the setbacks, the company remains committed to its long-term vision for growth and innovation.