BorgWarner Inc.

Second-quarter 2026 sales were over $3.6 billion. Organic net sales rose 0.5% year over year, or $18 million, offsetting a $62 million battery business headwind and benefiting from $54 million of FX. Adjusted operating income was $413 million versus $373 million a year ago, and adjusted operating margin was 11.3% versus 10.3%. Adjusted EPS increased 17% year over year. Free cash flow was $492 million. For 2026, management kept sales guidance at $14.0 billion to $14.3 billion, adjusted operating margin at 10.7% to 10.9%, and free cash flow at $900 million to $1.1 billion, while raising adjusted EPS guidance to $5.05 to $5.30 from $5.00 to $5.20. The outlook assumes full-year organic sales down 3.5% to down 1.5%, a $175 million FX benefit, and a roughly 170 basis point battery headwind.

Joe Fadool said the quarter showed BorgWarner executing at a very high level despite a relatively flat sales environment, with cost controls driving margin and EPS growth. He emphasized that 7 new awards, especially across eProducts and foundational powertrain technologies, reinforce the company’s technology position and long-term growth opportunities. He also framed the industrial/data center push as a meaningful new growth vector, saying product readiness is improving and customer interest remains strong.

Craig Aaron highlighted the year-over-year bridge: FX added $54 million to sales, the battery business reduced sales by $62 million, and organic sales rose $18 million. He said adjusted operating income was $413 million and margin was 11.3%, with the 100 basis point improvement driven by foundational businesses, BES restructuring and charging exit benefits, plus cost controls. He also said free cash flow was $492 million in Q2, the company repurchased about $100 million of stock in the quarter, and the board increased buyback authorization to $1.35 billion. On guidance, he kept margin and cash flow ranges intact, raised EPS only because of repurchases, and said the company is adding $10 million to $15 million of industrial R&D while still targeting 10.7% to 10.9% margin.

Analysts focused heavily on the new data center / AI opportunity, especially the turbine generator, battery storage, and inverter products, along with capacity timing and customer adoption. Management said the turbine generator has achieved CARB-level emissions, UL work is progressing, and interest from multiple hyperscalers is strong; they still expect to make a capacity decision in the second half of the year. On battery storage and inverter products, they said quoting is ongoing, the products are still early, and no rule-of-thumb contract size or capacity plan was given. Several questions also probed China export exposure, industrial R&D spending, and the buyback, with management stressing customer diversity, disciplined capital allocation, and that the new $1.35 billion repurchase authorization supports shareholder returns.