BorgWarner sees slight uptick in Q2 revenue

DETROIT — BorgWarner Inc. saw a slight increase in revenue and a slip in net income amid its acquisition of Rhombus Energy Solutions for $130 million, the auto supplier said in its second-quarter earnings report Wednesday.

In a statement, the company said it paid the initial $130 million for the electric vehicle charging provider at closing and will pay $55 million in the form of contingent payments over the next three years.

"We believe that we can leverage the local knowledge and footprint of Rhombus to complement our existing ... charging capability to accelerate organic growth," BorgWarner CEO Frederic Lissalde said in a Wednesday morning phone call to investors. "We plan to leverage both synergies across product quality engineering, supply chain manufacturing and global sales. We also see potential synergies with battery system customers."

Lissalde said the company anticipates the acquisition will add $10 million in revenue in the final two quarters of 2022. He said the purchase will strengthen BorgWarner's electric mobility capabilities and make progress on its Charging Forward Strategy, which calls for EV revenue to make up approximately 45 percent of total revenue by 2030.

The company based in Auburn Hills, Mich., said net sales remained relatively stagnant from the same period last year, with revenue rising by just 0.03 percent to $3.76 billion. The company said in a statement that "excluding the impact of foreign currencies, the 2022 acquisition of Santroll's light vehicle eMotor business and the 2021 divestiture of the Water Valley, Mississippi business, organic sales were up 7% compared with second quarter 2021."

BorgWarner also saw its net earnings fall by 13 percent to $216 million. Second-quarter operating income fell by over 14 percent to $272 million from last year.

The company's individual business units saw varied changes throughout the quarter. Revenue for the air management system unit rose about 2 percent to $1.7 billion, and revenue for e-Populsion & Drivetrain rose by 3.5 percent to $1.27 billion. Fuel Systems sales fell by over 11 percent to $516 million, and Aftermarket sales fell by over 6 percent to $312 million.

Shares of BorgWarner were up 3.3 percent to $39.83 in early morning trading Wednesday.

BorgWarner ranks No. 15 on the Automotive News list of the top 100 global suppliers, with nearly $14 billion in sales to global automakers in 2021.