BorgWarner (BWA) Q3 2026 earnings summary

Executive summary

• Q3 net sales were $3.487B, down 2.9% reported and 3.1% organically YoY; adjusted operating margin rose 20 bps to 10.9%, and adjusted diluted EPS increased 12.1% to $1.39.

• GAAP operating margin rose 180 bps to 8.7%; net earnings were $221M versus $158M a year ago.

• Nine awards and advancing data-center and industrial product readiness supported longer-term growth; FY26 adjusted EPS guidance increased to $5.20–$5.35.

Financial highlights

• Net sales were $3,487M versus $3,591M; adjusted operating income was $381M versus $385M, with adjusted margin of 10.9% versus 10.7%.

• GAAP operating income was $302M versus $248M; adjusted diluted EPS was $1.39 versus $1.24, while GAAP diluted EPS was $1.08 versus $0.73.

• Gross margin was 19.0%, up from 18.5%; Q3 SG&A was $310M versus $341M.

• Operating cash flow was $320M and free cash flow was $195M, versus $368M and $266M, respectively, a year ago.

• Nine-month sales were $10.668B versus $10.744B; operating income was $1.008B versus $774M, and adjusted diluted EPS was $4.05 versus $3.57.

Outlook and guidance

• FY26 net sales guidance is $14.0B–$14.2B; organic sales are expected to decline 4%–2.5%, revised from down 3.5%–1.5%.

• Adjusted operating margin guidance remains 10.7%–10.9%; adjusted diluted EPS guidance increased to $5.20–$5.35 from $5.05–$5.30.

• FY26 free cash flow guidance remains $900M–$1.1B, with operating cash flow of $1.6B–$1.7B and capex of $600M–$700M.

• Battery Energy Systems sales are expected to decline $250M, a 1.7-point organic growth headwind; FX is expected to add $250M to sales.

• Weighted light-vehicle markets are expected to decline 1%–2% in 2026; power-generation industrial solutions sales are projected at $300M in 2027.