BORGWARNER INC
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 31, 2025
BWA$48.81+2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000908255-25-000019
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-31.
0000908255-25-000032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 86 previous paragraphs and 134 current paragraphs.
46 unchanged; 36 reworded; 38 added; 4 removed; 0 previous and 14 current paragraphs rearranged.
Tables are not compared: 6 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (38)
Current report
North Carolina Facility Hurricane
Current report
On September 26, 2024, a hurricane made landfall in North Carolina disrupting operations at the Company’s facility in Arden, North Carolina (the “Arden Plant”). The Arden Plant was largely untouched, but the Company experienced some loss or damage to the Company’s assets amounting to less than $10 million. The Arden plant resumed full operations during the fourth quarter of 2024. The Company’s insurance policies (less applicable deductibles) are expected to cover the repair or replacement of the Company’s assets that incurred loss or damage and provide coverage for interruption to its business, including lost profits, and reimbursement for other expenses and costs that were incurred related to the damages and losses sustained. During the three and six months ended June 30, 2025, the Company recorded committed insurance recoveries of approximately $9 million, which is included in Cost of sales on the Condensed Consolidated Statements of Operations, and approximately $5 million remains uncollected as of June 30, 2025, and is recorded in Receivables, net on the Condensed Consolidated Balance Sheet.
Current report
•Fluctuations in foreign currencies resulted in a year-over-year increase in sales of approximately $66 million, primarily due to the strengthening of the Euro, Thai Baht and British Pound, partially offset by the weakening of the Korean Won and Brazilian Real, in each case relative to the U.S. Dollar.
Current report
•Favorable volume, mix and net new business, including light vehicle eProduct sales, partially offset by unfavorable customer pricing, decreased sales by approximately $40 million. The weighted average market production as estimated by the Company was down approximately 1% from the three months ended June 30, 2024.
Current report
•Tariff customer recoveries increased sales by approximately $9 million.
Current report
•Fluctuations in foreign currencies resulted in a year-over-year increase in cost of sales of approximately $55 million, primarily due to the strengthening of the Euro, Thai Baht and British Pound, partially offset by the weakening of the Korean Won and Brazilian Real, in each case relative to the U.S. Dollar.
Current report
•Favorable volume, mix and net new business partially offset by purchasing savings, increased cost of sales by approximately $5 million.
Current report
•Tariff expense incurred partially offset by customer recoveries, increased cost of sales by approximately $15 million.
Current report
•Fluctuations in foreign currencies resulted in a year-over-year decrease in SG&A costs of approximately $24 million , primarily due to the strengthening of the Euro, Thai Baht and British Pound, partially offset by the weakening of the Korean Won and Brazilian Real, in each case relative to the U.S. Dollar.
Current report
Other operating expense, net was expense of $14 million and $22 million for the three months ended June 30, 2025 and 2024, respectively. The change in Other operating expense, net was primarily due to:
Current report
•During the three months ended June 30, 2025, the Company recorded charges of $6 million related to duplicative compensation.
Current report
•During the three months ended June 30, 2025, the Company recorded a loss of $5 million related to the sale of equipment from a closed facility in North America.
Current report
•During the three months ended June 30, 2025 and 2024, the Company recorded expense of approximately $2 million and $11 million, respectively, primarily for adjustments to net amounts owed to the Company related to the tax matters agreement between the Company and PHINIA.
Current report
•During the three months ended June 30, 2024, the Company recorded a loss of approximately $15 million related to the settlement of a commercial contract assumed in its 2023 acquisition of the electric hybrid systems business segment of Eldor Corporation.
Current report
Impairment chargeswas $3 million for the three months ended June 30, 2025. The Company recorded impairments of fixed assets related to the consolidation of the Company’s North American battery systems business footprint within the Battery & Charging Systems reportable segment.
Current report
Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024
Current report
Net sales
Current report
Net sales for the six months ended June 30, 2025 totaled $7,153 million, a decrease of $45 million, compared to the six months ended June 30, 2024. The change in net sales for the six months ended June 30, 2025 was primarily driven by the following:
Current report
•Favorable volume, mix and net new business, including light vehicle eProduct sales, partially offset by a unfavorable customer pricing, decreased sales by approximately $35 million. The weighted average market production as estimated by the Company was down approximately 2% from the six months ended June 30, 2024.
Current report
•Tariff customer recoveries increased sales by approximately $9 million.
Current report
Cost of sales and cost of sales as a percentage of net sales were $5,874 million and 82.1%, respectively, during the six months ended June 30, 2025, compared to $5,869 million and 81.5%, respectively, during the six months ended June 30, 2024. The change in cost of sales for the six months ended June 30, 2025 was primarily driven by the following:
Current report
•Tariff expense incurred partially offset by customer recoveries, increased cost of sales by approximately $21 million.
Current report
SG&A for the six months ended June 30, 2025 was $632 million as compared to $670 million for the six months ended June 30, 2024. SG&A as a percentage of net sales was 8.8% and 9.3% for the six months ended June 30, 2025 and 2024, respectively. The change in SG&A was primarily attributable to:
Current report
•Fluctuations in foreign currencies resulted in a year-over-year decrease in SG&A costs of approximately $21 million, primarily due to the strengthening of the Euro, Thai Baht and British Pound, partially offset by the weakening of the Korean Won and Brazilian Real, in each case relative to the U.S. Dollar.
Current report
Other operating expense, net was an expense of $31 million and $23 million for the six months ended June 30, 2025 and 2024, respectively. The change in Other operating expense, net was primarily due to:
Current report
•During the six months ended June 30, 2025, the Company recorded charges of $6 million related to duplicative compensation.
Current report
•During the six months ended June 30, 2025, the Company recorded a loss of $5 million related to the sale of equipment from a closed facility in North America.
Current report
•During the six months ended June 30, 2025 and 2024, the Company recorded income of $1 million and expense of approximately $11 million, respectively, primarily for adjustments to net amounts owed to the Company related to the tax matters agreement between the Company and PHINIA .
Current report
•During the six months ended June 30, 2025 and 2024, the Company recorded merger and acquisition expense of $2 million and $5 million, respectively, primarily related to professional fees associated with specific acquisition initiatives.
Current report
•During the six months ended June 30, 2025 and 2024, the Company recorded a loss of $1 million and gain of $3 million, respectively, on the sale of business that related to the recognition of earn-outs on prior dispositions.
Current report
•During the six months ended June 30, 2024, the Company recorded a loss of approximately $15 million related to the settlement of a commercial contract assumed in its 2023 acquisition of the electric hybrid systems business segment of Eldor Corporation.
Current report
Interest expense, net was $24 million and $13 million for the six months ended June 30, 2025 and 2024, respectively. This increase was primarily due to higher debt levels following the Company’s issuance of $1 billion of notes in August 2024.
Current report
The Drivetrain & Morse Systems segment’s net sales decreased $13 million, or 1%, and Segment Adjusted Operating Income decreased $6 million from the three months ended June 30, 2024. The decrease in net sales was primarily due to a $36 million decrease due to lower industry production and an increase of $23 million due to a strengthening in the Euro and Thai Baht, in each case relative to the U.S. Dollar. Segment Adjusted Operating Margin was 18.2% for the three months ended June 30, 2025, compared to 18.4% during the three months ended June 30, 2024. The Segment Adjusted Operating Income decreased primarily due to net tariff expenses.
Current report
Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024
Current report
The Turbos & Thermal Technologies segment’s net sales decreased $154 million, or 5% and Segment Adjusted Operating Income increased $10 million from the six months ended June 30, 2024. Foreign currencies resulted in a year-over-year decrease in net sales of approximately $14 million primarily due to the weakening of the Brazilian Real and Korean Won, partially offset by the strengthening of the Euro and British Pound, in each case relative to the U.S. Dollar. The decrease excluding the impact of foreign currencies was primarily due to approximately $140 million of volume, mix and net new business driven by a decline in market production. Segment Adjusted Operating Margin was 15.7% for the six months ended June 30, 2025, compared to 14.6% during the six months ended June 30, 2024. The Segment Adjusted Operating Income increased primarily due to supply chain savings, manufacturing efficiencies, committed insurance recoveries and restructuring savings, partially offset by lower sales and net tariff expenses.
Current report
The Drivetrain & Morse Systems segment’s net sales decreased $71 million, or 2%, and Segment Adjusted Operating Income decreased $16 million from the six months ended June 30, 2024. The decrease in net sales was primarily due to approximately $69 million of volume, mix and net new business driven by a decline in market production. Segment Adjusted Operating Margin was 18.0% for the six months ended June 30, 2025, compared to 18.1% during the six months ended June 30, 2024. The Segment Adjusted Operating Income decreased primarily due to net tariff expenses.
Current report
The PowerDrive Systems segment’s net sales increased $242 million, or 27%, and Segment Adjusted Operating Loss decreased $35 million from the six months ended June 30, 2024. The increase in net sales was primarily due to approximately $246 million of volume, mix and net new business driven by eProducts growth in China and Europe. Segment Adjusted Operating Margin was (6.7)% for the six months ended June 30, 2025, compared to (12.3)% during the six months ended June 30, 2024. The Segment Adjusted Operating Loss decreased primarily due to higher sales, supply chain and restructuring savings.
Current report
The Battery & Charging Systems segment’s net sales decreased $61 million, or 16%, and Segment Adjusted Operating Loss increased $9 million from the six months ended June 30, 2024. The decrease in net sales was primarily due to approximately $43 million of volume, mix and net new business and the exit of the charging business. Additionally, normal contractual customer commodity pass-through arrangements decreased net sales by $19 million. Segment Adjusted Operating Margin was (11.0)% for the six months ended June 30, 2025, compared to (6.8)% during the six months ended June 30, 2024.The Segment Adjusted Operating Loss increased primarily due to lower sales and higher depreciation costs, partially offset by restructuring savings.
Removed paragraphs (4)
Previous report
•Favorable volume, mix and net new business increased sales by approximately $5 million primarily due to higher eProduct sales. The weighted average market production as estimated by the Company was down approximately 4% from the three months ended March 31, 2024.
Previous report
•Tariff expense incurred but not recovered increased cost of sales by approximately $6 million.
Previous report
Unrealized loss on equity and debt securities was $2 million for the three months ended March 31, 2024, respectively. This line item reflects the net unrealized gains or losses recognized due to valuing the Company’s investments at fair value.
Previous report
The Drivetrain & Morse Systems segment’s net sales decreased $58 million, or 4%, and Segment Adjusted Operating Income decreased $10 million from the three months ended March 31, 2024. The decrease in net sales was primarily due to a $33 million decline in weighted average market production and $25 million due to a weakening in the Korean Won and Euro, in each case relative to the U.S. Dollar. Segment Adjusted Operating Margin was 17.9% for the three months ended March 31, 2025, compared to 17.8% during the three months ended March 31, 2024. The Segment Adjusted Operating Income decreased primarily due to lower sales and reduced customer recoveries, partially offset by supply chain savings and manufacturing efficiencies.
Reworded paragraphs (36)
Previous wording
The Company’s current strategy is to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles. This entails growing its product portfolio through organic investments and technology-focused acquisitions. The Company’s balanced portfolio is particularly critical as the automotive industry continues to see electric vehicle adoption volatility across different regions. During the three months ended March 31, 2025 and 2024, the Company’s eProducts revenue was approximately $637 million and $506 million respectively, or 18% and 14% of its total revenue, respectively.
Current wording
The Company’s current strategy is to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles. This entails growing its product portfolio through organic investments and technology-focused acquisitions. The Company’s balanced portfolio is particularly critical as the automotive industry continues to see electric vehicle adoption volatility across different regions. During the three months ended June 30, 2025 and 2024, the Company’s eProducts revenue was approximately $658 million and $576 million respectively, or 18% and 16% of its total revenue, respectively. During the six months ended June 30, 2025 and 2024, the Company’s eProducts revenue was approximately $1,295 million and $1,082 million, respectively, or 18% and 15% of its total revenue, respectively.
Previous wording
On September 19, 2024, the Company commenced a lawsuit against PHINIA, seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA has received or expects to receive from governmental agencies as well as damages and interest, which PHINIA has refused to pay to the Company. These refunds consist of VAT paid by the Company in periods prior to or directly related to the Spin-Off through which the Company established PHINIA as an independent company. Prior to the initiation of the lawsuit, PHINIA had paid certain VAT refund amounts to the Company. The Company asserts PHINIA’s obligation to pay the Company these VAT refunds and related amounts is plainly set forth in a binding tax matters agreement between the Company and PHINIA, which the parties agreed to prior to the Spin-Off. As of March 31, 2025, the Company had an asset related to these VAT refunds of approximately $120 million, which is included in Receivables, net on the Condensed Consolidated Balance Sheet. Because the Company is unable to predict the timing of collection of these VAT refunds from PHINIA or the applicable governmental agencies, the Company has not included these amounts in its 2025 free cash flow guidance.
Current wording
On September 19, 2024, the Company commenced a lawsuit Delaware Superior Court against PHINIA, seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA has received or expects to receive from governmental agencies as well as damages and interest, which PHINIA has refused to pay to the Company. These refunds consist of VAT paid by the Company in periods prior to or directly related to the Spin-Off through which the Company established PHINIA as an independent company. Prior to the initiation of the lawsuit, PHINIA had paid certain VAT refund amounts to the Company. The Company asserts PHINIA’s obligation to pay the Company these VAT refunds and related amounts is plainly set forth in a binding tax matters agreement between the Company and PHINIA, which the parties agreed to prior to the Spin-Off. PHINIA has responded to the lawsuit and has also asserted counterclaims against the Company. On April 10, 2025, the Delaware Superior Court denied the Company’s motion to dismiss the counterclaims. As of June 30, 2025, the Company had an asset related to these VAT refunds of approximately $120 million, which is included in Receivables, net on the Condensed Consolidated Balance Sheet. Because the Company is unable to predict the timing of collection of these VAT refunds from PHINIA or the applicable governmental agencies, the Company has not included these amounts in its 2025 free cash flow guidance.
Previous wording
In February 2025, the Company made the decision to exit its charging business within the Battery & Charging Systems reportable segment. The exit is expected to be substantially completed during the second quarter of 2025. This decision was made following the Company’s continuing evaluation of its product portfolio and future investments. This action is expected to create a more focused portfolio and eliminate approximately $30 million of annualized adjusted operating losses by 2026. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements for more information.
Current wording
In February 2025, the Company made the decision to exit its charging business within the Battery & Charging Systems reportable segment. Production operations ceased during the second quarter of 2025. This decision was made following the Company’s continuing evaluation of its product portfolio and future investments. This action was expected to create a more focused portfolio and eliminate approximately $30 million of annualized adjusted operating losses by 2026. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements for more information.
Previous wording
Economic Conditions. The Company’s financial performance depends on conditions in the global automotive industry. Automotive and truck production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit and consumer spending and preferences. Government policies, such as the imposition, termination or other changes in tariffs (including retaliatory tariffs), the commencement or termination of consumer tax incentives, such as EV tax credits, and programs to invest in infrastructure, including EV charging stations, may affect consumer preferences. Economic declines or impacts of tariffs that result in a material reduction in automotive or truck production would have an adverse effect on our sales. During the three months ended March 31, 2025, the Company recorded $6 million of tariff expense incurred but not recovered. The weighted average market production, as estimated by the Company for the three months ended March 31, 2025, was down approximately 4% from the three months ended March 31, 2024. Weighted average market production reflects light and commercial vehicle production as reported by S&P Global, weighted for the Company’s geographic exposure, as estimated by the Company.
Current wording
Economic Conditions. The Company’s financial performance depends on conditions in the global automotive industry. Automotive and truck production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit and consumer spending and preferences. Government policies, such as the imposition, termination or other changes in tariffs (including retaliatory tariffs), the commencement or termination of consumer tax incentives, such as EV tax credits, and programs to invest in infrastructure, including EV charging stations, may affect consumer preferences. Economic declines or impacts of tariffs that result in a material reduction in automotive or truck production would have an adverse effect on our sales. The weighted average market production, as estimated by the Company for the six months ended June 30, 2025, was down approximately 2% from the six months ended June 30, 2024. Weighted average market production reflects light and commercial vehicle production as reported by S&P Global, weighted for the Company’s geographic exposure, as estimated by the Company.
Previous wording
The Company expects global industry production to decrease year-over-year in 2025. However, the Company expects net new business-related sales growth and cost recovery actions to mitigate the impact of the change in industry production outlook. As a result, the Company expects sales to be flat to down modestly in 2025, excluding the impact of foreign currencies. While the outlook incorporates tariffs known as of the date of this filing, to the extent current tariffs and retaliatory tariffs by the United States and other countries change, industry production and demand for the Company’s products could decrease, which could adversely impact the Company’s 2025 sales outlook.
Current wording
The Company expects global industry production to decrease year-over-year in 2025. However, the Company expects net new business-related sales growth and cost recovery actions to mitigate the impact of the change in industry production outlook on the Company’s sales. As a result, at the mid-point of its outlook, the Company expects sales to be roughly flat year-over-year, excluding the impact of foreign currencies. While the outlook incorporates tariffs known as of the date of this filing, to the extent current tariffs and retaliatory tariffs by the United States and other countries increase, industry production and demand for the Company’s products could decrease, which could adversely impact the Company’s 2025 sales outlook.
Previous wording
Net sales for the three months ended March 31, 2025 totaled $3,515 million, a decrease of $80 million, or 2%, compared to the three months ended March 31, 2024. The change in net sales for the three months ended March 31, 2025 was primarily driven by the following:
Current wording
Net sales for the three months ended June 30, 2025 totaled $3,638 million, an increase of $35 million, or 1%, compared to the three months ended June 30, 2024. The change in net sales for the three months ended June 30, 2025 was primarily driven by the following:
Previous wording
Cost of sales and cost of sales as a percentage of net sales were $2,876 million and 81.8%, respectively, during the three months ended March 31, 2025, compared to $2,951 million and 82.1%, respectively, during the three months ended March 31, 2024. The change in cost of sales for the three months ended March 31, 2025 was primarily driven by the following:
Current wording
Cost of sales and cost of sales as a percentage of net sales were $2,998 million and 82.4%, respectively, during the three months ended June 30, 2025, compared to $2,918 million and 81.0%, respectively, during the three months ended June 30, 2024. The change in cost of sales for the three months ended June 30, 2025 was primarily driven by the following:
Previous wording
Gross profit and gross margin were $639 million and 18.2%, respectively, during the three months ended March 31, 2025, compared to $644 million and 17.9%, respectively, during the three months ended March 31, 2024. The increase in gross margin was primarily due to the factors discussed above.
Current wording
Gross profit and gross margin were $640 million and 17.6%, respectively, during the three months ended June 30, 2025, compared to $685 million and 19.0%, respectively, during the three months ended June 30, 2024. The decrease in gross margin was primarily due to the factors discussed above.
Previous wording
SG&A for the three months ended March 31, 2025 was $315 million as compared to $329 million for the three months ended March 31, 2024. SG&A as a percentage of net sales was 9.0% and 9.2% for the three months ended March 31, 2025 and 2024, respectively. The change in SG&A was primarily attributable to:
Current wording
SG&A for the three months ended June 30, 2025 was $317 million as compared to $341 million for the three months ended June 30, 2024. SG&A as a percentage of net sales was 8.7% and 9.5% for the three months ended June 30, 2025 and 2024, respectively. The change in SG&A was primarily attributable to:
Previous wording
•Research and Development (“R&D”) costs decreased by $5 million. R&D costs, net of customer reimbursements, were 5.2% of net sales for the three months ended March 31, 2025 and 2024.
Current wording
•Research and Development (“R&D”) costs decreased by $7 million. R&D costs, net of customer reimbursements, were 5.0% of net sales for the three months ended June 30, 2025 and 2024.
Previous wording
Restructuring expense was $31 million and $19 million for the three months ended March 31, 2025 and 2024, respectively, primarily related to employee termination benefits. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Item 1 of this report for more information.
Current wording
Restructuring expense was $17 million and $25 million for the three months ended June 30, 2025 and 2024, respectively, primarily related to employee termination benefits. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.
Previous wording
In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs primarily in its Foundational products businesses. During the three months ended March 31, 2025 and 2024, the Company recorded $8 million and $19 million, respectively, of restructuring costs related to this plan. The resulting gross savings related to this plan are expected to be in the range of at least $80 million to $90 million annually by 2027 and are being utilized to sustain overall operating margin profile and cost competitiveness.
Current wording
In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs primarily in its Foundational products businesses. During the three months ended June 30, 2024, the Company recorded $15 million of restructuring costs related to this plan. The actions under this plan are complete. The resulting gross savings related to this plan are expected to be in the range of at least $80 million to $90 million annually by 2027 and are being utilized to sustain overall operating margin profile and cost competitiveness.
Previous wording
In June 2024, the Company announced a $75 million restructuring plan to address the cost structure in its PowerDrive Systems segment due to increased market volatility, which could include realignment of the segment’s manufacturing footprint. During the three months ended March 31, 2025, the Company recorded $16 million of restructuring charges related to this plan. The resulting annual cost savings related to this plan are expected to be approximately $100 million by 2026.
Current wording
In June 2024, the Company announced a $75 million restructuring plan to address the cost structure in its PowerDrive Systems segment due to increased market volatility, which could include realignment of the segment’s manufacturing footprint. During the three months ended June 30, 2025 and 2024, the Company recorded $1 million and $10 million, respectively, of restructuring charges related to this plan. The resulting annual cost savings related to this plan are expected to be in the range of at least $100 million to $120 million by 2026.
Previous wording
During the three months ended March 31, 2025, the Company recorded $7 million of restructuring costs for individually approved restructuring actions that primarily related to the consolidation of the North American battery systems business footprint and the exit of its charging business as more fully described in Note 3, “Acquisitions and Dispositions.”
Current wording
During the three months ended June 30, 2025, the Company recorded $16 million of restructuring costs for individually approved restructuring actions.
Previous wording
Impairment chargeswas $39 million for the three months ended March 31, 2025. The Company recorded impairments of intangible assets, goodwill and fixed assets related to the planned exit of its charging business within the Battery & Charging Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Item 1 of this report for more information.
Current wording
•During the three months ended June 30, 2025, the Company recorded charges of $4 million related to the exit of the charging business within the Battery & Charging Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.
Previous wording
Equity in affiliates’ earnings, net of tax was $10 million and $5 million for the three months ended March 31, 2025 and 2024, respectively. This line item is driven by the results of the Company’s unconsolidated joint ventures.
Current wording
Equity in affiliates’ earnings, net of tax was $8 million and $12 million for the three months ended June 30, 2025 and 2024, respectively. This line item is driven by the results of the Company’s unconsolidated joint ventures.
Previous wording
Interest expense, net was $12 million and $5 million for the three months ended March 31, 2025 and 2024, respectively. This increase was primarily due to higher debt levels following the Company’s $1 billion notes issuance in August 2024.
Current wording
Interest expense, net was $12 million and $8 million for the three months ended June 30, 2025 and 2024, respectively. This increase was primarily due to higher debt levels following the Company’s issuance of $1 billion of notes in August 2024.
Previous wording
Provision for income taxes was $61 million for the three months ended March 31, 2025, resulting in an effective rate of 26%. This is compared to $62 million, or an effective rate of 21%, for the three months ended March 31, 2024. During the three months ended March 31, 2025, the Company recorded a discrete tax expense of $4 million related to net changes to valuation allowances, a discrete tax benefit of $3 million related to the exit of the charging business and a discrete tax expense of $2 million related to various changes in filing positions for prior years. During the three months ended March 31, 2024, the Company recorded a discrete tax benefit of $1 million related to various changes in filing positions for prior years.
Current wording
Provision (benefit) for income taxes was a provision of $52 million for the three months ended June 30, 2025, resulting in an effective rate of 18%. This is compared to a benefit of $31 million, or an effective rate of (10)%, for the three months ended June 30, 2024. During the three months ended June 30, 2025, the Company recorded a discrete tax benefit of $6 million related to various changes in filing positions for prior years and a discrete tax benefit of $3 million related to the exit of the charging business. During the three months ended June 30, 2024, the Company recorded a discrete tax benefit of $89 million related to a reduction in certain unrecognized tax benefits and accrued interest for matters where the statute of limitations lapsed. In addition, the Company recorded a discrete tax benefit of $4 million related to net changes to valuation allowances.
Previous wording
•Fluctuations in foreign currencies resulted in a year-over-year decrease in sales of approximately $85 million, primarily due to the weakening of the Euro, Korean Won and Brazilian Real, in each case relative to the U.S. Dollar.
Current wording
•Fluctuations in foreign currencies resulted in a year-over-year decrease in sales of approximately $19 million, primarily due to the weakening of the Korean Won and Brazilian Real, partially offset by the strengthening of the Euro and Thai Baht, in each case relative to the U.S. Dollar.
Previous wording
•Fluctuations in foreign currencies resulted in a year-over-year decrease in cost of sales of approximately $69 million, primarily due to the weakening of the Euro, Korean Won and Brazilian Real, in each case relative to the U.S. Dollar.
Current wording
•Fluctuations in foreign currencies resulted in a year-over-year decrease in cost of sales of approximately $14 million, primarily due to the weakening of the Korean Won and Brazilian Real, partially offset by the strengthening of the Euro and Thai Baht, in each case relative to the U.S. Dollar.
Previous wording
•Purchasing savings, partially offset by higher sales volume, mix and net new business, decreased cost of sales by approximately $13 million.
Current wording
•Purchasing savings, partially offset by favorable sales volume, mix and net new business, decreased cost of sales by approximately $8 million.
Previous wording
•Employee-related costs decreased by $16 million primarily related to incentive compensation.
Current wording
•Employee-related costs decreased by $8 million primarily related to incentive compensation.
Previous wording
Other operating expense, net was expense of $17 million and $1 million for the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025, the Company recorded charges of $19 million related to the planned exit of its charging business within the Battery & Charging Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Item 1 of this report for more information.
Current wording
•During the six months ended June 30, 2025, the Company recorded charges of $23 million related to the exit of its charging business within the Battery & Charging Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.
Previous wording
The Company’s earnings per diluted share were $0.72 and $0.93 for the three months ended March 31, 2025 and 2024, respectively. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for each of the periods then ended. The Company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share:
Current wording
The Company’s earnings per diluted share were $1.03 and $1.39 for the three months ended June 30, 2025 and 2024, respectively and $1.75 and $2.32 six months ended June 30, 2025 and 2024, respectively. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for each of the periods then ended. The Company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share:
Previous wording
The Turbos & Thermal Technologies segment’s net sales decreased $120 million, or 8%, and Segment Adjusted Operating Income increased $7 million from the three months ended March 31, 2024. The decrease in net sales was primarily due to a $76 million decline in weighted average market production and $44 million due to a weakening in the Euro, Brazilian Real and Korean Won, in each case relative to the U.S. Dollar, partially offset by high voltage heater growth in Europe. Segment Adjusted Operating Margin was 16.2% for the three months ended March 31, 2025, compared to 14.5% during the three months ended March 31, 2024. The Segment Adjusted Operating Income increased primarily due to supply chain savings, manufacturing efficiencies and restructuring savings.
Current wording
The Turbos & Thermal Technologies segment’s net sales decreased $34 million, or 2%, and Segment Adjusted Operating Income increased $3 million from the three months ended June 30, 2024. The decrease in net sales was primarily due to a $64 million decrease due to a decline in market production and an increase of $30 million due to a strengthening in the Euro and British Pound, in each case relative to the U.S. Dollar. Segment Adjusted Operating Margin was 15.3% for the three months ended June 30, 2025, compared to 14.8% during the three months ended June 30, 2024. The Segment Adjusted Operating Income increased primarily due to supply chain savings, manufacturing efficiencies, committed insurance recoveries and restructuring savings, partially offset by lower sales and net tariff expenses.
Previous wording
The PowerDrive Systems segment’s net sales increased $125 million, or 29%, and Segment Adjusted Operating Loss decreased $19 million from the three months ended March 31, 2024. The increase in net sales was primarily due to a $137 million increase driven by strong eProducts growth across all regions and offset by a $12 million decrease due to a weakening in the Korean Won and Euro, in each case relative to the U.S. Dollar. Segment Adjusted Operating Margin was (7.7)% for the three months ended March 31, 2025, compared to (14.2)% during the three months ended March 31, 2024. The Segment Adjusted Operating Loss decreased primarily due to higher sales, supply chain and restructuring savings.
Current wording
The PowerDrive Systems segment’s net sales increased $117 million, or 25%, and Segment Adjusted Operating Loss decreased $16 million from the three months ended June 30, 2024. The increase in net sales was primarily due to a $109 million increase driven by eProducts growth in China and Europe and $8 million due to a strengthening in the Euro, partially offset by the weakening in the Korean Won, in each case relative to the U.S. Dollar. Segment Adjusted Operating Margin was (5.7)% for the three months ended June 30, 2025, compared to (10.6)% during the three months ended June 30, 2024. The Segment Adjusted Operating Loss decreased primarily due to higher sales, supply chain and restructuring savings.
Previous wording
The Battery & Charging Systems segment’s net sales decreased $27 million, or 15%, and Segment Adjusted Operating Loss increased $7 million from the three months ended March 31, 2024. The decrease in net sales was primarily due to a $14 million decrease driven by lower battery cell prices and $4 million due to a weakening in the Euro relative to the U.S. Dollar. Additionally, normal customer commodity pass-through arrangements decreased net sales by $9 million. Segment Adjusted Operating Margin was (14.7)% for the three months ended March 31, 2025, compared to (8.5)% during the three months ended March 31, 2024. The Segment Adjusted Operating Loss increased primarily due to lower sales and higher depreciation costs.
Current wording
The Battery & Charging Systems segment’s net sales decreased $34 million, or 18%, and Segment Adjusted Operating Loss increased $2 million from the three months ended June 30, 2024. The decrease in net sales was primarily due to a $29 million decrease driven by volume, mix and net new business and the exit of the charging business, partially offset by an increase of $5 million due to a strengthening in the Euro relative to the U.S. Dollar. Additionally, normal customer commodity pass-through arrangements decreased net sales by $10 million. Segment Adjusted Operating Margin was (7.5)% for the three months ended June 30, 2025, compared to (5.2)% during the three months ended June 30, 2024. The Segment Adjusted Operating Loss increased primarily due to lower sales and higher depreciation costs, partially offset by restructuring savings.
Previous wording
The Company maintains various liquidity sources, including cash and cash equivalents and the unused portion of its multi-currency revolving credit agreement. As of March 31, 2025, the Company had liquidity of $3,707 million, comprised of cash, cash equivalent and restricted cash balances of $1,707 million and an undrawn multi-currency revolving credit facility of $2,000 million.
Current wording
The Company maintains various liquidity sources, including cash and cash equivalents and the unused portion of its multi-currency revolving credit agreement. As of June 30, 2025, the Company had liquidity of $4,041 million, comprised of cash, cash equivalent and restricted cash balances of $2,041 million and an undrawn multi-currency revolving credit facility of $2,000 million.
Previous wording
As of March 31, 2025, cash balances of $987 million were held by the Company’s subsidiaries outside the United States. Cash and cash equivalents held by these subsidiaries are used to fund foreign operational activities and future investments, including acquisitions. The majority of cash and cash equivalents held outside the United States is available for repatriation. The Company uses its U.S. liquidity primarily for various corporate purposes, including but not limited to debt service, share repurchases, dividend distributions, acquisitions and other corporate expenses.
Current wording
As of June 30, 2025, cash balances of $948 million were held by the Company’s subsidiaries outside the United States. Cash and cash equivalents held by these subsidiaries are used to fund foreign operational activities and future investments, including acquisitions. The majority of cash and cash equivalents held outside the United States is available for repatriation. The Company uses its U.S. liquidity primarily for various corporate purposes, including but not limited to debt service, share repurchases, dividend distributions, acquisitions and other corporate expenses.
Previous wording
On February 6, 2025 and April 30, 2025, the Company’s Board of Directors declared quarterly cash dividends of $0.11 per share of common stock, respectively. The dividend declared in the first quarter was paid on March 17, 2025, and the dividend declared in the second quarter will be paid on June 16, 2025.
Current wording
On February 6, 2025 and April 30, 2025, the Company’s Board of Directors declared quarterly cash dividends of $0.11 per share of common stock, respectively. The dividends declared in the first quarter and second quarter were paid on March 17, 2025 and June 16, 2025, respectively. On July 30, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock, which is an increase of $0.06 per share from its previous quarter’s dividend. The dividend declared in the third quarter will be paid on September 15, 2025.
Previous wording
Net cash provided by operating activities was $82 million for the three months ended March 31, 2025 compared to net cash used in operating activities of $118 million for the three months ended March 31, 2024. The increase for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 was primarily due to higher net earnings adjusted for non-cash charges and changes in working capital.
Current wording
Net cash provided by operating activities was $661 million for the six months ended June 30, 2025 compared to $344 million for the six months ended June 30, 2024. The increase for the six months ended June 30, 2025 compared with the six months ended June 30, 2024 was was primarily due to higher net earnings adjusted for non-cash charges and changes in working capital..
Previous wording
Net cash used in investing activities was $94 million during the first three months of 2025 compared to $175 million during the first three months of 2024. As a percentage of sales, capital expenditures were 3.4% and 5.3% for the three months ended March 31, 2025 and 2024, respectively. The year-over-year reduction in capital expenditures was primarily due to lower eProduct investments.
Current wording
Net cash used in investing activities was $158 million during the six months of 2025 compared to $313 million during the six months of 2024. As a percentage of sales, capital expenditures were 2.7% and 4.9% for the six months ended June 30, 2025 and 2024, respectively. The year-over-year decline in capital expenditures reflects a disciplined approach to capital allocation.
Previous wording
Net cash used in financing activities was $397 million during the first three months of 2025 compared to net cash used in financing activities of $183 million during the first three months of 2024. Net cash used in financing activities during the three months ended March 31, 2025 was primarily related to $346 million of debt repayments associated with the maturity of the Company’s 3.375% senior notes on March 15, 2025, and $24 million in dividends paid to the Company’s stockholders.
Current wording
Net cash used in financing activities was $606 million during the six months of 2025 compared to $242 million during the six months of 2024. Net cash used in financing activities during the six months ended June 30, 2025 was primarily related to $403 million of debt repayments associated with the maturity of the Company’s 3.375% senior notes on March 15, 2025 and other short-term borrowings.
Previous wording
On September 19, 2024, the Company commenced a lawsuit against PHINIA, seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA has received or expects to receive from governmental agencies as well as damages and interest, which PHINIA has refused to pay to the Company. These refunds consist of VAT paid by the Company in periods prior to or directly related to the Spin-Off through which the Company established PHINIA as an independent company. Prior to the initiation of the lawsuit, PHINIA had paid certain VAT refund amounts to the Company. The Company asserts PHINIA’s obligation to pay the Company these VAT refunds and related amounts is plainly set forth in a binding tax matters agreement between the Company and PHINIA, which the parties agreed to prior to the Spin-Off. As of March 31, 2025, the Company had an asset related to these VAT refunds of approximately $120 million, which is included in Receivables, net on the Condensed Consolidated Balance Sheet.
Current wording
On September 19, 2024, the Company commenced a lawsuit in Delaware Superior Court against PHINIA, seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA has received or expects to receive from governmental agencies as well as damages and interest, which PHINIA has refused to pay to the Company. These refunds consist of VAT paid by the Company in periods prior to or directly related to the Spin-Off through which the Company established PHINIA as an independent company. Prior to the initiation of the lawsuit, PHINIA had paid certain VAT refund amounts to the Company. The Company asserts PHINIA’s obligation to pay the Company these VAT refunds and related amounts is plainly set forth in a binding tax matters agreement between the Company and PHINIA, which the parties agreed to prior to the Spin-Off. PHINIA has responded to the lawsuit and has also asserted counterclaims against the Company. On April 10, 2025, the Delaware Superior Court denied the Company’s motion to dismiss the counterclaims. As of June 30, 2025, the Company had an asset related to these VAT refunds of approximately $120 million, which is included in Receivables, net on the Condensed Consolidated Balance Sheet.
Previous wording
Refer to Note 20, “Contingencies,” to the Condensed Consolidated Financial Statements in Item 1 of this report for further details and information respecting to the Company’s environmental liability.
Current wording
Refer to Note 20, “Contingencies,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for further details and information respecting to the Company’s environmental liability.
Previous wording
Refer to Note 2, “New Accounting Pronouncements,” to the Condensed Consolidated Financial Statements in Item 1 of this report for a detailed description of new applicable accounting pronouncements.
Current wording
Refer to Note 2, “New Accounting Pronouncements,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for a detailed description of new applicable accounting pronouncements.
Rearranged current paragraphs (14)
Current report — wording carried from elsewhere
•Employee-related costs increased by $9 million primarily related to incentive compensation.
Current report — wording carried from elsewhere
Other operating expense, net is primarily comprised of items included within the subtitle “Non-comparable items impacting the Company’s per diluted share and net earnings” below.
Current report — wording carried from elsewhere
The following table presents a summary of our operating results:
Current report — wording carried from elsewhere
Cost of sales and gross profit
Current report — wording carried from elsewhere
Gross profit and gross margin were $1,279 million and 17.9%, respectively, during the six months ended June 30, 2025, compared to $1,329 million and 18.5%, respectively, during the six months ended June 30, 2024. The decrease in gross margin was primarily due to the factors discussed above.
Current report — wording carried from elsewhere
Selling, general and administrative expenses (“SG&A”)
Current report — wording carried from elsewhere
•Research and Development (“R&D”) costs decreased by $12 million. R&D costs, net of customer reimbursements, were 5.1% and 5.2% of net sales for the six months ended June 30, 2025 and 2024, respectively.
Current report — wording carried from elsewhere
Restructuring expense was $48 million and $44 million for the six months ended June 30, 2025 and 2024, respectively, primarily related to employee termination benefits. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.
Current report — wording carried from elsewhere
In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs primarily in its Foundational products businesses. During the six months ended June 30, 2025 and 2024, the Company recorded $8 million and $34 million, respectively, of restructuring costs related to this plan. The actions under this plan are complete.
Current report — wording carried from elsewhere
In June 2024, the Company announced a $75 million restructuring plan to address the cost structure in its PowerDrive Systems segment. During the six months ended June 30, 2025 and 2024, the Company recorded $17 million and $10 million of restructuring charges related to this plan.
Current report — wording carried from elsewhere
During the six months ended June 30, 2025, the Company recorded $23 million, of restructuring costs for individually approved restructuring actions.
Current report — wording carried from elsewhere
Impairment chargeswas $42 million for the six months ended June 30, 2025. The Company recorded impairments of intangible assets, goodwill and fixed assets related to the planned exit of its charging business and the consolidation of the Company’s North American battery systems business footprint within the Battery & Charging Systems reportable segment.
Current report — wording carried from elsewhere
Equity in affiliates’ earnings, net of tax was $18 million and $17 million the six months ended June 30, 2025 and 2024. This line item is driven by the results of the Company’s unconsolidated joint ventures.
Current report — wording carried from elsewhere
Provision for income taxes was $113 million for the six months ended June 30, 2025, resulting in an effective rate of 22%. This compared to $31 million, or an effective rate of 5%, for the six months ended June 30, 2024. During the six months ended June 30, 2025, the Company recorded a discrete tax expense of $4 million related to net change to valuation allowances, a discrete tax benefit of $6 million related to the exit of the charging business and a discrete tax benefit of $4 million related to various change in filing positions for prior years. During the six months ended June 30, 2024, the Company recorded a discrete tax benefit of $89 million related to a reduction in certain unrecognized tax benefits and accrued interest for matters where the statute of limitations lapsed. In addition, the Company recorded a discrete tax benefit of $4 million related to net changes to valuation allowances.