BorgWarner Inc. is a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles. The Company manufactures and sells these products worldwide, primarily to original equipment manufacturers (OEMs) of light vehicles, commercial vehicles, and off-highway vehicles, and also sells to certain tier one vehicle systems suppliers and into the aftermarket. The Company operates manufacturing facilities serving customers in Europe, the Americas and Asia and is an original equipment supplier to nearly every major automotive OEM in the world. The automotive industry is increasingly focused on improved vehicle efficiency and reduced emissions, including the development of hybrid and electric vehicles, largely as a result of changing consumer preferences and increasingly stringent global regulatory requirements related to climate change. The Company's balanced portfolio is particularly critical as the automotive industry continues to see electric vehicle adoption volatility across different regions.

The Company's reportable segments compete worldwide with a number of other manufacturers and distributors. The Company's major non-OEM competitors are Robert Bosch GmbH, Denso Corporation, Garrett Motion, Hitachi, Ltd., Magna Powertrain (an operating unit of Magna International Inc.), Valeo, Schaeffler Group and Contemporary Amperex Technology Co., Limited. The Company also competes with certain start-ups in electrification. In addition, a number of the Company's major OEM customers manufacture, for their own use and for others, products that compete with the Company's products. Technological innovation, application engineering development, quality, price, delivery and program launch support are the primary methods of competition. Sales to the Company's top ten customers represented 71% of sales for the year ended December 31, 2025 ¹.

The Company generates revenue by manufacturing and selling products worldwide, primarily to OEMs. Revenue is recognized when performance obligations under the terms of a contract are satisfied, which generally occurs with the transfer of control of the products. For most products, transfer of control occurs upon shipment or delivery; however, a limited number of customer arrangements for highly customized products with no alternative use provide the Company with the right to payment during the production process. The Company's worldwide sales in 2025 to Volkswagen and Ford constituted approximately 13% ² and 12% ³ of its 2025 consolidated net sales, respectively. During the year ended December 31, 2025, approximately 82% ⁴ of the Company's net sales were for light-vehicle applications; approximately 10% ⁵ were for commercial-vehicle applications; approximately 5% ⁶ were for off-highway vehicle applications; and approximately 3% ⁷ were to distributors of aftermarket replacement parts.

The Company discloses segment information under four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems and Battery & Charging Systems. Turbos & Thermal Technologies develops and manufactures products to improve fuel economy, reduce emissions and enhance performance, including turbochargers, eBoosters, eTurbos, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, cabin heaters, battery heaters and battery cooling systems. Sales of turbochargers for light vehicles represented approximately 21% ⁸, 21% ⁹ and 22% ¹⁰ of the Company's net sales for the years ended December 31, 2025, 2024 and 2023, respectively. Drivetrain & Morse Systems' technologies include hydraulic controls, friction and mechanical clutch products for automatic transmissions, torque-management products, chain systems and variable camshaft phasing products. PowerDrive Systems' products and technologies include power electronics such as inverters, onboard chargers, DC/DC converters and combination boxes, rotating electric machines including eMotors and generators, fully integrated drive modules (iDM), and electronic controls such as engine control units, transmission control units, battery management systems, propulsion controllers and domain controllers. Battery & Charging Systems' products drive electrified propulsion by providing high-performance lithium-ion battery systems for electrified bus, truck- and off-highway applications, including a nickel manganese cobalt battery pack product line and lithium iron phosphate battery packs.

During the years ended December 31, 2025, 2024 and 2023, the Company's revenue from eProducts, which include all products utilized on or for electric vehicles (EVs) plus those same products and components that are included in hybrid powertrains whose underlying technologies are adaptable or applicable to those used in or for EVs, was approximately $2.6 billion ¹¹, $2.3 billion ¹² and $2.0 billion ¹³, respectively, or 18% ¹⁴, 17% ¹⁵ and 14% ¹⁶ of its total revenue, respectively. The Company's revenue from Foundational products, which include all products utilized on internal combustion engines plus those same products and components that are also included in hybrid powertrains, was approximately $11.7 billion ¹⁷, $11.8 billion ¹⁸ and $12.2 billion ¹⁹, respectively, or 82% ²⁰, 83% ²¹ and 86% ²² of its total revenue, respectively. Net sales for the year ended December 31, 2025 for Turbos & Thermal Technologies were $5,772 million ²³, for Drivetrain & Morse Systems were $5,654 million ²⁴, for PowerDrive Systems were $2,347 million ²⁵, and for Battery & Charging Systems were $590 million ²⁶.

In February 2025, the Company made the decision to exit its charging business within the Battery & Charging Systems reportable segment, with production operations ceasing during the second quarter of 2025. This action is expected to eliminate approximately $30 million ²⁷ of annualized adjusted operating losses by 2026. The Company also made the decision to consolidate its North American battery systems business, which is expected to result in annual cost savings of approximately $20 million ²⁸ by 2026. In June 2024, the Company announced a $75 million ²⁹ restructuring plan to address the cost structure in its PowerDrive Systems segment. In 2023, the Company announced a $130 million to $150 million ³⁰ restructuring plan to address structural cost primarily in its Foundational products businesses. In July 2025, the Company's Board of Directors authorized the purchase of up to $1 billion ³¹ of the Company's common stock, which replaced the previous authorization. As of December 31, 2025, the Company had repurchased $400 million ³² of common stock under this authorization. During 2025, the Company paid cash dividends to its stockholders of $0.56 ³³ per share. On October 15, 2025, the Company entered into a settlement agreement with PHINIA, pursuant to which PHINIA agreed to pay the Company $78 million ³⁴, resolving a lawsuit and certain other matters relating to the spin-off.

Net sales for the year ended December 31, 2025 totaled $14,316 million ³⁵, an increase of $230 million ³⁶, or 2% ³⁷, from the year ended December 31, 2024. Net earnings attributable to BorgWarner Inc. were $277 million ³⁸ for the year ended December 31, 2025, compared to $338 million ³⁹ for the year ended December 31, 2024. Earnings per share from continuing operations — diluted was $1.28 ⁴⁰ for the year ended December 31, 2025, compared to $1.63 ⁴¹ for the year ended December 31, 2024. Net cash provided by operating activities from continuing operations was $1,648 million ⁴² for the year ended December 31, 2025, compared to $1,382 million ⁴³ for the year ended December 31, 2024.

The Company expects global industry production to be flat to down modestly year-over-year in 2026. The Company expects a negative sales impact from declining sales in the Company's Battery & Charging Systems segment. As a result, at the mid-point of its outlook, the Company expects total sales in 2026 to decline year-over-year, excluding the impact of foreign currencies.

The Company's strategy is to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles, entailing growing its product portfolio through organic investments and technology-focused acquisitions. The Company expects to continue to pursue business ventures, acquisitions, and strategic alliances that leverage its technology capabilities and enhance its customer base, geographic representation, and scale to complement its current businesses. The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to enhance its product leadership strategy. There are several trends driving the Company's long-term growth that management expects to continue, including adoption of product offerings for electrified vehicles and increasingly stringent global emissions standards that support demand for the Company's products that drive vehicle efficiency.

The Company expects to continue to pursue business ventures, acquisitions, and strategic alliances that leverage its technology capabilities and enhance its customer base, geographic representation, and scale to complement its current businesses. The Company regularly evaluates potential growth opportunities. Acquisitions have been an integral component of the Company's growth and value creation strategy.

The resulting gross savings related to the 2023 restructuring plan are expected to be in the range of at least $80 million to $90 million ⁴⁴ annually by 2027 and are being utilized to sustain overall operating margin profile and cost competitiveness. The resulting annual cost savings related to the 2024 PowerDrive Systems restructuring plan are expected to be approximately $100 million ⁴⁵ by 2026. The exit of the charging business is expected to eliminate approximately $30 million ⁴⁶ of annualized adjusted operating losses by 2026. The consolidation of the North American battery systems business is expected to result in annual cost savings of approximately $20 million ⁴⁷ by 2026.

The Company expects commodities and other costs to be relatively flat in 2026. However, the Company has experienced impacts from commodity pricing, inflation and tariffs over the last several years. Volatility in these areas and other factors could cause actual costs to be materially higher than expected in 2026. For 2026, the Company believes there will be continued inflationary pressures in certain raw materials, labor and energy. While the Company believes inflation will decrease in some areas, it does not expect to see deflation, which means that it expects supplier costs to remain elevated relative to prior years.

The Company expects to contribute approximately $25 million ⁴⁸ into its defined benefit pension plans during 2026. Of the $25 million ⁴⁹ in projected 2026 contributions, $8 million ⁵⁰ are contractually obligated, while any remaining payments would be discretionary. The Company's capital expenditure plans are not explicitly guided for 2026, but capital expenditures were 3.3% ⁵¹ of sales for the year ended December 31, 2025. The Company's Board of Directors authorized the purchase of up to $1 billion ⁵² of the Company's common stock, which expires on December 31, 2028. As of December 31, 2025, the Company had repurchased $400 million ⁵³ of common stock under this authorization. While the Company currently expects that quarterly cash dividends will continue to be paid in the future at levels comparable to recent historical levels, the dividend policy is subject to review and change at the discretion of the Board of Directors.

The Company faces structural headwinds including conditions in the global automotive industry, which is cyclical and sensitive to general economic conditions, geopolitical and trade-related issues and other factors. The Company continues to face volatile costs of commodities used in the production of its products and elevated levels of inflation. The Company is under substantial pressure from OEMs to reduce the prices of its products, and its ability to pass through increased raw material or other inflationary costs to its OEM customers is limited, with cost recovery often less than 100% and often on a delayed basis. The Company also faces risks related to the evolution of the automotive industry, including the development of hybrid and electric vehicles and advanced driver-assistance technologies, and increased competition from entrants outside the traditional automotive industry.

The Company is subject to risks related to its international operations, as for 2025, approximately 84% ⁵⁴ of its consolidated net sales were outside the U.S. The Company's results could be affected by changes in trade, monetary and fiscal policies, trade restrictions or prohibitions, fluctuations in foreign currency exchange rates, and other factors. The Company faces risks related to changes in administrative policy on the part of the U.S. or other countries, including the imposition of or increases in tariffs. In 2025, the U.S. announced significant tariffs on imports from a broad range of countries, and the Company imported approximately $918 million ⁵⁵ in value to the U.S., with approximately 68% ⁵⁶ of that value originating in Mexico, approximately 9% ⁵⁷ originating in Canada and approximately 6% ⁵⁸ originating in South Korea. The Company's business in China is subject to aggressive competition and is sensitive to economic, political, and market conditions, and for 2025, approximately 21% ⁵⁹ of its consolidated net sales were attributable to China.

Management's message emphasizes the Company's strategy to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles, 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. Management expects global industry production to be flat to down modestly year-over-year in 2026 and expects total sales in 2026 to decline year-over-year, excluding the impact of foreign currencies, at the mid-point of its outlook. The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to enhance its product leadership strategy. Key strategic priorities include driving growth through eProducts, continuing focus on Foundational products, and pursuing business ventures, acquisitions, and strategic alliances that leverage technology capabilities and enhance customer base, geographic representation, and scale.

Net sales for the year ended December 31, 2025 were $14,316 million ⁶³, compared to $14,086 million ⁶⁴ for the year ended December 31, 2024. Net earnings from continuing operations were $335 million ⁶⁵ for 2025, compared to $428 million ⁶⁶ for 2024. Net earnings attributable to BorgWarner Inc. were $277 million ⁶⁷ for 2025, compared to $338 million ⁶⁸ for 2024. Diluted earnings per share from continuing operations were $1.28 ⁶⁹ for 2025, compared to $1.63 ⁷⁰ for 2024. Operating income was $536 million ⁷¹ for 2025, compared to $546 million ⁷² for 2024. Gross profit was $2,674 million ⁷³ for 2025, compared to $2,648 million ⁷⁴ for 2024, with gross margin of 18.7% ⁷⁵ and 18.8% ⁷⁶, respectively. Net cash provided by operating activities from continuing operations was $1,648 million ⁷⁷ for 2025, compared to $1,382 million ⁷⁸ for 2024. As of December 31, 2025, the Company had cash and cash equivalents of $2,313 million ⁷⁹ and total debt (notes payable and other short-term debt plus long-term debt) of $3,899 million ⁸⁰. Impairment charges were $624 million ⁸¹ for 2025, compared to $646 million ⁸² for 2024, which included goodwill impairment of $423 million ⁸³ related to Battery & Charging Systems in 2025 and $577 million ⁸⁴ primarily related to PowerDrive Systems and Battery & Charging Systems in 2024. The provision for income taxes was $189 million ⁸⁵ for 2025, resulting in an effective tax rate of 36% ⁸⁶, compared to $111 million ⁸⁷, or an effective rate of 21% ⁸⁸, for 2024. Segment Adjusted Operating Income for Turbos & Thermal Technologies was $879 million ⁸⁹ with a 15.2% ⁹⁰ margin, for Drivetrain & Morse Systems was $1,041 million ⁹¹ with an 18.4% ⁹² margin, for PowerDrive Systems was a loss of $83 million ⁹³ with a (3.5)% ⁹⁴ margin, and for Battery & Charging Systems was a loss of $39 million ⁹⁵ with a (6.6)% ⁹⁶ margin.

The Company's portfolio strategy may prove unsuccessful due to factors including failure to develop new products, technology changes, or slower-than-expected adoption of electric vehicles, which could result in failure to realize expected returns on significant investments made to grow eProducts. The Company faces strong competition from larger competitors, vertically integrated OEM customers, and well-funded start-ups, with price, quality, and technological innovation as primary competitive factors. The Company is under substantial pressure from OEMs to reduce prices, and its ability to pass through increased raw material or other inflationary costs is limited, with cost recovery often less than 100% and often on a delayed basis. The Company's business in China is subject to aggressive competition and is sensitive to economic, political, and market conditions, and for 2025, approximately 21% ⁶⁰ of its consolidated net sales were attributable to China. The Company's goodwill and indefinite-lived intangible assets represent a significant portion of total assets, and impairment charges, such as the $423 million ⁶¹ goodwill impairment at Battery & Charging Systems in 2025 and $577 million ⁶² in 2024, could have a material adverse impact.