AUBURN HILLS, Mich. - BorgWarner Inc. (NYSE: NYSE:BWA), a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles, has finalized its tender offers to repurchase its outstanding 3.375% and 5.000% Senior Notes due in 2025. The offers, part of the company's financial strategy, were concluded on the evening of Tuesday.
The tender process, which began on August 7, 2024, invited note holders to sell their securities back to the company for cash. By the expiration time, BorgWarner reported that approximately 13.26% of the 3.375% Notes and 14.32% of the 5.000% Notes had been tendered. The company has confirmed that it will accept all notes tendered by the deadline and expects to make payment on August 16, 2024, subject to certain conditions outlined in the tender offer documents.
The tender offers were managed by BofA Securities, Inc., Citigroup Global Markets Inc., and Wells Fargo Securities, LLC, with Global Bondholder Services Corporation acting as the tender and information agent.
BorgWarner, with over 130 years of industry experience, has been at the forefront of automotive innovation, focusing on the transition to eMobility as part of its commitment to a cleaner and safer future.
Investors and market watchers will note that the tender offers align with BorgWarner’s financial strategies and its ongoing efforts to optimize its capital structure. These moves are consistent with the company's approach to financial management and reflect its commitment to maintaining a strong balance sheet.
BorgWarner Inc. has made several significant financial moves. The company has issued $1 billion in senior notes, with $500 million in 4.950% senior notes due in 2029 and $500 million in 5.400% senior notes due in 2034, as reported in a recent Securities and Exchange Commission filing.
Additionally, BorgWarner has launched tender offers for these existing notes, which are not subject to a minimum tender condition. The company has set the purchase price of the 3.375% Senior Notes at $992.38 per $1,000 principal amount and the 5.000% Senior Notes at $1,006.66 per $1,000 principal amount.
BofA Securities, Inc., Citigroup Global Markets Inc., and Wells Fargo Securities, LLC are acting as the dealer managers for these tender offers.
In terms of earnings, BorgWarner reported strong Q2 financial results, with sales reaching $3.6 billion. The company has also announced a significant restructuring within its ePropulsion segment, aiming for annual cost savings of around $100 million by 2026. Despite reducing its total sales projections for 2024, BorgWarner has increased its full-year margin outlook and plans to repurchase $300 million of its stock in the latter half of the year.
InvestingPro Insights
As BorgWarner Inc. (NYSE: BWA) completes its tender offers, a closer look at the company's financials through InvestingPro provides a clearer picture of its current market position. With a market capitalization of $7.26 billion and a price-to-earnings (P/E) ratio of 10.27, BorgWarner appears to be valued at a level that may interest value-oriented investors. The adjusted P/E ratio for the last twelve months as of Q2 2024 stands at an even more attractive 7.94, potentially signaling an undervalued stock.
InvestingPro data also reveals a revenue growth of 5.48% for the last twelve months as of Q2 2024, indicating a steady increase in the company's sales. This is coupled with a gross profit margin of 18.41%, which, despite being identified by an InvestingPro Tip as a point of weakness, still demonstrates the company's ability to retain a significant portion of its sales revenue after accounting for the cost of goods sold.
Another InvestingPro Tip highlights BorgWarner's ability to maintain dividend payments for 12 consecutive years, underlining its commitment to shareholder returns. This is further supported by a dividend yield of 1.38% as of the latest data, making it a potential consideration for income-focused investors.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, including insights on the company's cash flows and liquidity. For instance, BorgWarner's liquid assets exceed its short-term obligations, which suggests financial stability. Moreover, the company's cash flows can sufficiently cover interest payments, providing reassurance about its debt service capabilities.
It's worth noting that while some analysts have revised their earnings expectations downwards for the upcoming period, others predict that BorgWarner will remain profitable this year, as confirmed by the company's profitability over the last twelve months.
For those interested in exploring further, InvestingPro offers more tips and a comprehensive analysis of BorgWarner's financial health and future outlook. Visit https://www.investing.com/pro/BWA to discover the full range of insights and metrics available.
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