BorgWarner Inc ( BWA ) shares are trading higher after a better-than-expected second-quarter FY24 adjusted EPS and new contracts.

The company reported a second-quarter FY24 sales decline of 2% year-on-year to $3.603 billion, missing the analyst consensus estimate of $3.706 billion.

The revenue decline was primarily due to declining market production volumes and the negative impact of foreign currencies.

Net sales from the Air Management segment decreased 2.6% Y/Y, Drivetrain & Battery Systems Segment gained 7.1% and ePropulsion dropped 18%.

Adjusted EPS of $1.19 beat the analyst consensus of $1.01.

Gross profit rose 0.7% to $685 million, and gross margin expanded 50 basis points to 19%.

The operating margin was 8.2%, and the operating income decreased 10.8% Y/Y to $333 million.

BorgWarner ( BWA ) held $1.3 billion in cash and equivalents as of June-end. Net cash provided by operating activities for the quarter amounted to $462 million, with a free cash flow of $297 million.

Outlook: BorgWarner ( BWA ) lowered FY24 sales guidance from $14.4 billion – $14.9 billion to $14.1 billion – $14.4 billion versus the Street view of $14.73 billion.

BorgWarner ( BWA ) reduced the mid-point net sales guidance by $400 million primarily due to a lower market production outlook, weaker foreign currencies and slower year-over-year growth in eProduct sales.

The company updated FY24 adjusted EPS outlook from $3.80 – $4.15 to $3.95 – $4.15, against the consensus of $4.07.

BorgWarner ( BWA ) intends to repurchase $300 million of the company’s outstanding shares during the second half of 2024. 

BorgWarner ( BWA ) sees operating margin for the full year in the range of 8.2% to 8.3%. 

The company has secured exhaust gas recirculation (EGR) cooler contracts with a prominent, North America based commercial vehicle (CV) customer to boost thermal management product business.

Also, BorgWarner ( BWA ) has secured contracts to supply its electric cross differential (eXD) to three major OEMs, including GAC Motor, a Global East Asian OEM, and a Global OEM based in Europe.

Price Action: BWA shares are trading higher by 8.07% at $35.07 on the last check Wednesday.