BorgWarner Shares Gain On Q2 Results, Acquires Rhombus Energy Solutions

BorgWarner Shares Gain On Q2 Results, Acquires Rhombus Energy Solutions
  • BorgWarner Inc BWA reported second-quarter FY22 sales, flat year-on-year at $3.76 billion, beating the consensus of $3.70 billion.
  • Nets sales by segments: Air Management $1.97 billion (+2.1% Y/Y); e-Propulsion & Drivetrain $1.27 billion (+3.5% Y/Y); Fuel Systems $516 million (-11.3% Y/Y) and Aftermarket $312 million (-6% Y/Y).
  • Adjusted EPS was $1.05, beating the consensus of $0.85.
  • The gross margin declined 140 bps to 18.9%.
  • The operating income declined by 14.2% Y/Y to $272 million, and the margin contracted by 120 bps to 7.2%.
  • BorgWarner's net cash provided by operating activities year-to-date was $332 million, compared to $622 million a year ago. Free cash flow was $1 million.
  • BWA held $1.4 billion in cash and equivalents as of June 30, 2022.
  • Separately, BorgWarner announced that it had acquired Rhombus Energy Solutions for up to $185 million, funded primarily with cash balances.
  • Headquartered in San Diego, California, Rhombus offers V2G and Underwriters Laboratory-certified charging. Rhombus supplies its patented technology to EV OEMs, including Proterra and charging and grid service providers.
  • "The technology that Rhombus brings expands BorgWarner's electric vehicle portfolio in North America and complements our existing European charging business. This transaction supports our Charging Forward strategy and strengthens our electric vehicle positioning as we look to power the entire propulsion system from grid to wheels," commented CEO Frédéric Lissalde.
  • FY22 Outlook: BorgWarner affirmed its sales outlook of $15.5 billion - $16 billion versus the consensus of $15.63 billion.
  • The company expects adjusted EPS of $4.00 - $4.40 per (prior view $3.90 - $4.25) against the consensus of $4.05.
  • It sees an FY22 operating margin of 8.4% - 8.8% (prior view 8.5% – 9%) and an adjusted operating margin of 9.8% to 10.2% (unchanged).
  • Full-year operating cash flow of $1.5 billion - $1.55 billion, while free cash flow is expected of $650 million - $750 million.
  • Price Action: BWA shares are trading higher by 3.36% at $39.85 on the last check Wednesday.

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