INTRODUCTION BorgWarner Inc. (collectively with its consolidated subsidiaries, the “Company” or “BorgWarner”) is a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles. BorgWarner’s products help improve vehicle performance, propulsion efficiency, stability and air quality. The Company manufactures and sells these products worldwide, primarily to original equipment manufacturers (“OEMs”) of light vehicles (passenger cars, sport-utility vehicles, vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). The Company also manufactures and sells its products to certain tier one vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. 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. BorgWarner Strategy 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, 2026 and 2025, 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 $663 million and $658 million, respectively, or 18% of the Company’s total revenue. During the six months ended June 30, 2026 and 2025, the Company’s eProduct revenue was approximately $1,260 million and $1,295 million, respectively, or 18% and of its total revenue. Lawsuit Against PHINIA On September 19, 2024, the Company commenced a lawsuit against PHINIA, Inc. (“PHINIA”), seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA received or expected to receive from governmental agencies as well as damages and interest. On October 15, 2025, the Company entered into a settlement agreement with PHINIA, pursuant to which PHINIA agreed to pay the Company $78 million. As of June 30, 2026, the Company had assets related to these VAT refunds of approximately $23 million in Receivables, net in the Company’s Condensed Consolidated Balance Sheet, which is due no later than December 1, 2026. Refer to Part 1, Item 1 of this report for more information. Portfolio Actions In February 2025, the Company made the decision to exit its charging business within the reportable segment formerly called Battery & Charging Systems. 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 the end of 2026. In the first quarter of 2026, as a result of the aforementioned disposition, this reportable segment was renamed Battery Energy Systems. The name change reflects the segment’s revised focus after the divestiture. The change did not impact the composition of the segment or require recasting of prior period segment results. Prior periods continue to be presented as previously reported. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information. 41 Table of Contents In February 2025, the Company also made the decision to consolidate its North American battery systems business, which is expected to align the business’ cost structure to current market dynamics. This action was expected to result in annual cost savings of approximately $20 million by the end of 2026. Acquisitions Acquisitions have been an integral component of the Company’s growth and value creation strategy. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information, including a summary of recent acquisitions. Key Trends and Economic Factors Economic Conditions. The Company’s financial performance depends on conditions in the global automotive industry. Automotive and truck production is 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 of, termination or invalidation of or other changes in tariffs (including retaliatory tariffs), or 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 the Company’s sales. The weighted average market production, as estimated by the Company for the six months ended June 30, 2026, was down approximately 1% from the six months ended June 30, 2025. Weighted average market production reflects light vehicle production as reported by S&P Global, weighted for the Company’s geographic exposure, as estimated by the Company. Tariff Refund Recovery. The Company continues to actively pursue the refund recovery of certain tariffs paid to the U.S. government, which were levied under the International Emergency Economic Powers Act and subsequently invalidated by the U.S. Supreme Court on February 20, 2026. Following this ruling, the Company has submitted, and expects to continue to submit, tariff recovery claims through the U.S. Customs and Border Protection (“CBP”) portal. While the Company has begun to receive, and may continue to receive, refunds of such tariffs, the ultimate recoverability, timing and amount of any such refund amounts remain uncertain and subject to CBP review and further legal, regulatory and administrative developments. As a result, the Company has not recognized a refund receivable as of June 30, 2026, as there remains significant uncertainty regarding the availability, amount and timing of such refunds. The Company will continue to monitor the refund process for further developments. Commodities and Other Inflationary Impacts. During 2025, prices for commodities showed a lower level of volatility in comparison to what the Company had experienced from the beginning of 2021. The Company currently expects commodity prices and other input costs to show a higher level of volatility in 2026 compared to 2025. Commodity markets are influenced by geopolitical instability, which can contribute to supply chain fragmentation, higher logistics costs and increased price across energy, metals and other critical inputs. Outlook The Company expects global industry production to be flat to down 3% year-over-year in 2026. In particular, the Company expects a negative sales impact from declining sales in the Company’s Battery Energy Systems reportable 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 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 42 Table of Contents several trends that are 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 as well as power generation industrial solutions growth. The Company expects its power generation industrial solutions sales to be approximately $300 million in 2027. RESULTS OF OPERATIONS Three Months Ended June 30, 2026 vs. Three Months Ended June 30, 2025 The following table presents a summary of our operating results: Three Months Ended June 30, (in millions, except per share data) 2026 2025 Net sales % of net sales % of net sales Turbos & Thermal Technologies $ 1,442 39.5 % $ 1,481 40.7 % Drivetrain & Morse Systems 1,455 39.9 1,429 39.3 PowerDrive Systems 665 18.2 581 16.0 Battery Energy Systems 100 2.7 159 4.4 Inter-segment eliminations (14) (0.3) (12) (0.3) Total net sales 3,648 100.0 3,638 100.0 Cost of sales 2,927 80.2 2,998 82.4 Gross profit 721 19.8 640 17.6 Selling, general and administrative expenses - R&D, net 176 4.8 182 5.0 Selling, general and administrative expenses - Other 155 4.3 135 3.7 Restructuring expense 21 0.6 17 0.5 Other operating (income) expense, net (1) — 14 0.4 Impairment charges — — 3 0.1 Operating income 370 10.1 289 7.9 Equity in affiliates’ earnings, net of tax (10) (0.3) (8) (0.2) Unrealized gain on equity securities (4) (0.1) (1) — Interest expense, net 10 0.3 12 0.3 Other postretirement expense 2 — 2 0.1 Earnings before income taxes and noncontrolling interest 372 10.2 284 7.8 Provision for income taxes 81 2.2 52 1.4 Net earnings 291 8.0 232 6.4 Net earnings attributable to noncontrolling interest 14 0.4 8 0.2 Net earnings attributable to BorgWarner Inc. $ 277 7.6 % $ 224 6.2 % Earnings per share — diluted $ 1.34 $ 1.03 43 Table of Contents Net sales Net sales for the three months ended June 30, 2026 totaled $3,648 million, an increase of $10 million, which was relatively flat compared to the three months ended June 30, 2025. The change in net sales for the three months ended June 30, 2026 was primarily driven by the following: •Fluctuations in foreign currencies resulted in a year-over-year increase in sales of approximately $54 million, primarily due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. •Customer recoveries relating to tariffs increased sales by approximately $11 million. •Unfavorable volume, mix and net new business decreased sales by approximately $55 million, primarily due to a decrease of approximately 1% in the weighted average market production as estimated by the Company and a decrease in the Battery Energy Systems reportable segment. Cost of sales and gross profit Cost of sales and cost of sales as a percentage of net sales were $2,927 million and 80.2%, respectively, during the three months ended June 30, 2026, compared to $2,998 million and 82.4%, respectively, during the three months ended June 30, 2025. The change in cost of sales for the three months ended June 30, 2026 was primarily driven by the following: •Purchasing savings and unfavorable volume, mix and net new business, decreased cost of sales by approximately $85 million. •Cost of sales also decreased by restructuring savings and reduced depreciation. •Fluctuations in foreign currencies resulted in a year-over-year increase in cost of sales of approximately $44 million, primarily due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. Gross profit and gross margin were $721 million and 19.8%, respectively, during the three months ended June 30, 2026, compared to $640 million and 17.6%, respectively, during the three months ended June 30, 2025. The increase in gross margin was primarily due to the factors discussed above. Selling, general and administrative expenses (“SG&A”) SG&A for the three months ended June 30, 2026 was $331 million as compared to $317 million for the three months ended June 30, 2025. SG&A as a percentage of net sales was 9.1% and 8.7% for the three months ended June 30, 2026 and 2025, respectively. The change in SG&A was primarily due to fluctuations in foreign currencies resulting in an unfavorable impact of approximately $17 million, which was partially offset by changes in R&D costs of $6 million. Restructuring expense was $21 million and $17 million for the three months ended June 30, 2026 and 2025, respectively, related to employee termination benefits primarily for individually approved restructuring actions. Nearly all of the restructuring charges are expected to be cash expenditures, funded by cash on hand. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information. Other operating (income) expense, net was $1 million of income and $14 million of expense for the three months ended June 30, 2026 and 2025, respectively. The change in Other operating (income) expense, net was primarily due to: •During the three months ended June 30, 2025, the Company recorded charges of $6 million related to duplicative compensation, a loss of $5 million related to the sale of equipment from a closed facility in North America and charges of $4 million related to the exit of its charging business within its Battery Energy Systems reportable segment, which were not recurring in the three months ended June 30, 2026. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Item 1 of this report for more information. 44 Table of Contents Other operating (income) 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. Equity in affiliates’ earnings, net of tax was $10 million and $8 million for the three months ended June 30, 2026 and 2025, respectively. This line item is driven by the results of the Company’s unconsolidated joint ventures. Interest expense, net was $10 million and $12 million for the three months ended June 30, 2026 and 2025, respectively. Interest expense, net was relatively flat for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Provision for income taxes was $81 million for the three months ended June 30, 2026, resulting in an effective rate of 22%. This is compared to $52 million, or an effective rate of 18%, for the three months ended June 30, 2025. During the three months ended June 30, 2026, the Company’s effective tax rate was consistent with the Company’s estimated annual effective tax rate. 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. 45 Table of Contents Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025 The following table presents a summary of our operating results: Six Months Ended June 30, (in millions, except per share data) 2026 2025 Net sales % of net sales % of net sales Turbos & Thermal Technologies $ 2,875 40.0 % $ 2,935 41.0 % Drivetrain & Morse Systems 2,877 40.1 2,790 39.0 PowerDrive Systems 1,252 17.4 1,142 16.0 Battery Energy Systems 202 2.8 309 4.3 Inter-segment eliminations (25) (0.3) (23) (0.3) Total net sales 7,181 100.0 7,153 100.0 Cost of sales 5,783 80.5 5,874 82.1 Gross profit 1,398 19.5 1,279 17.9 Selling, general and administrative expenses - R&D, net 353 4.9 364 5.1 Selling, general and administrative expenses - Other 306 4.3 268 3.7 Restructuring expense 39 0.5 48 0.7 Other operating (income) expense, net (6) — 31 0.4 Impairment charges — — 42 0.6 Operating income 706 9.8 526 7.4 Equity in affiliates’ earnings, net of tax (16) (0.2) (18) (0.3) Unrealized gain on equity securities (3) — (1) — Interest expense, net 21 0.3 24 0.3 Other postretirement expense 4 — 5 0.1 Earnings before income taxes and noncontrolling interest 700 9.7 516 7.2 Provision for income taxes 154 2.1 113 1.6 Net earnings 546 7.6 403 5.6 Net earnings attributable to noncontrolling interest 27 0.4 22 0.3 Net earnings attributable to BorgWarner Inc. $ 519 7.2 % $ 381 5.3 % Earnings per share — diluted $ 2.50 $ 1.75 Net sales Net sales for the six months ended June 30, 2026 totaled $7,181 million, an increase of $28 million, which was relatively flat compared to the six months ended June 30, 2025. The change in net sales for the six months ended June 30, 2026 was primarily driven by the following: •Fluctuations in foreign currencies resulted in a year-over-year increase in sales of approximately $221 million, primarily due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. •Customer recoveries relating to tariffs increased sales by approximately $43 million. •Unfavorable volume, mix and net new business decreased sales by approximately $236 million primarily due to a decrease of approximately 1% in the weighted average market production as estimated by the Company and a decrease in the Battery Energy Systems reportable segment. 46 Table of Contents Cost of sales and gross profit Cost of sales and cost of sales as a percentage of net sales were $5,783 million and 80.5%, respectively, during the six months ended June 30, 2026, compared to $5,874 million and 82.1%, respectively, during the six months ended June 30, 2025. The change in cost of sales for the six months ended June 30, 2026 was primarily driven by the following: •Purchasing savings and unfavorable volume, mix and net new business decreased cost of sales by approximately $233 million. •Cost of sales also decreased by restructuring savings, manufacturing efficiencies and reduced depreciation. •Fluctuations in foreign currencies resulted in a year-over-year increase in cost of sales of approximately $182 million, primarily due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. •Tariff expense increased cost of sales by approximately $29 million. Gross profit and gross margin were $1,398 million and 19.5%, respectively, during the six months ended June 30, 2026, compared to $1,279 million and 17.9%, respectively, during the six months ended June 30, 2025. The increase in gross margin was primarily due to the factors discussed above. Selling, general and administrative expenses (“SG&A”) SG&A for the six months ended June 30, 2026 was $659 million as compared to $632 million for the six months ended June 30, 2025. SG&A as a percentage of net sales was 9.2% and 8.8% for the six months ended June 30, 2026 and 2025, respectively. The change in SG&A was primarily due to fluctuations in foreign currencies resulting in an unfavorable impact of approximately $29 million, which was partially offset by changes in R&D costs of $10 million. Restructuring expense was $39 million and $48 million for the six months ended June 30, 2026 and 2025, respectively, primarily related to employee termination benefits for individually approved restructuring actions. Nearly all of the restructuring charges are expected to be cash expenditures. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information. Other operating (income) expense, net was $6 million of income and $31 million of expense for the six months ended June 30, 2026 and 2025, respectively. The change in Other operating (income) expense, net was primarily due to: •During the six months ended June 30, 2026, the Company recorded $6 million of income comprised of individually insignificant items. •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 Energy Systems reportable segment, charges of $6 million related to duplicative compensation and a loss of $5 million related to the sale of equipment from a closed facility in North America, which were not recurring in the six months ended June 30, 2026. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information. Other operating (income) expense, net is primarily comprised of items included within the subtitle “Non-comparable items impacting the Company’s earnings per diluted share and net earnings” below. Impairment charges were $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 Energy Systems reportable segment. 47 Table of Contents Equity in affiliates’ earnings, net of tax was $16 million and $18 million the six months ended June 30, 2026 and 2025, respectively. This line item is driven by the results of the Company’s unconsolidated joint ventures. Interest expense, net was $21 million and $24 million for the six months ended June 30, 2026 and 2025, respectively. Interest expense, net was relatively flat for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Provision for income taxes was $154 million and $113 million for the six months ended June 30, 2026 and 2025, respectively, resulting in an effective rate of 22% for the six months ended June 30, 2026 and 2025. During the six months ended June 30, 2026, the Company's effective tax rate was consistent with the Company’s estimated annual effective tax rate. During the six months ended June 30, 2025, the Company recorded a discrete tax expense of $4 million related to net changes 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 changes in filing positions for prior years. Non-comparable items impacting the Company’s earnings per diluted share The Company’s earnings per diluted share were $1.34 and $1.03 for the three months ended June 30, 2026 and 2025, respectively and $2.50 and $1.75 for the six months ended June 30, 2026 and 2025, 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: Three Months Ended June 30, Six Months Ended June 30, Non-comparable items: 2026 2025 2026 2025 Restructuring expense $ (0.07) $ (0.06) $ (0.13) $ (0.17) Accelerated depreciation (0.03) (0.08) (0.03) (0.08) Adjustments associated with Spin-Off related balances — (0.01) (0.01) 0.01 Impairment charges — (0.01) — (0.16) Write-off of customer incentive asset — (0.03) — (0.03) Costs to exit charging business — (0.02) — (0.13) Chief Executive Officer ("CEO") transition compensation — (0.03) — (0.03) Loss on sale of assets — (0.02) — (0.02) Merger and acquisition expense, net — — 0.01 (0.01) Unrealized gain on equity securities 0.02 — 0.01 — Tax adjustments 0.01 0.08 — 0.06 Other non-comparable items (0.01) — (0.01) (0.01) Total impact of non-comparable items per share - diluted $ (0.08) $ (0.18) $ (0.16) $ (0.57) Results by Reportable Segment The Company discloses segment information under four reportable segments, consistent with the way operating results are evaluated by management: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems and Battery Energy Systems. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems. 48 Table of Contents Segment Adjusted Operating Income (Loss) is the measure of segment income or loss used by the Company. Segment Adjusted Operating Income (Loss) is comprised of operating income adjusted for restructuring, merger, acquisition and divestiture expense, intangible asset amortization expense, impairment charges and other items not reflective of ongoing operating income or loss. The Company believes Segment Adjusted Operating Income (Loss) is most reflective of the operational profitability or loss of its reportable segments. The following tables present net sales and Segment Adjusted Operating Income (Loss) for the Company’s reportable segments: Three Months Ended June 30, 2026 vs. Three Months Ended June 30, 2025 Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 (in millions) Net sales Segment Adjusted Operating Income (Loss) % margin Net sales Segment Adjusted Operating Income (Loss) % margin Turbos & Thermal Technologies $ 1,442 $ 225 15.6 % $ 1,481 $ 227 15.3 % Drivetrain & Morse Systems 1,455 277 19.0 % 1,429 260 18.2 % PowerDrive Systems 665 (29) (4.4) % 581 (33) (5.7) % Battery Energy Systems 100 (2) (2.0) % 159 (12) (7.5) % Inter-segment eliminations (14) — (12) — Totals for reportable segments $ 3,648 $ 471 $ 3,638 $ 442 The Turbos & Thermal Technologies segment’s net sales decreased $39 million, or 3%, and Segment Adjusted Operating Income decreased $2 million from the three months ended June 30, 2025. Unfavorable volume, mix and net new business resulted in a decrease in net sales of approximately $66 million due to lower sales in Europe. This was partially offset by the impact of foreign currencies, which resulted in a year-over-year increase in net sales of approximately $24 million due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar, and $3 million of customer recoveries relating to tariffs. Segment Adjusted Operating margin was 15.6% for the three months ended June 30, 2026, compared to 15.3% during the three months ended June 30, 2025. The Segment Adjusted Operating margin increased due to supply chain savings and other cost actions, partially offset by lower sales. The Drivetrain & Morse Systems segment’s net sales increased $26 million, or 2%, and Segment Adjusted Operating Income increased $17 million from the three months ended June 30, 2025. Foreign currencies resulted in a year-over-year increase in net sales of approximately $11 million due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. Favorable volume, mix and net new business increased net sales by approximately $10 million due to strong volumes in North America partially offset by lower volumes in China and broader Asia. Additionally, customer recoveries relating to tariffs increased net sales by approximately $5 million. Segment Adjusted Operating margin was 19.0% for the three months ended June 30, 2026, compared to 18.2% during the three months ended June 30, 2025. The Segment Adjusted Operating margin increased primarily due to manufacturing efficiencies, supply chain savings and lower net tariff expenses. The PowerDrive Systems segment’s net sales increased $84 million, or 14%, and Segment Adjusted Operating Loss decreased $4 million from the three months ended June 30, 2025. Favorable volume, mix and net new business increased net sales by approximately $67 million due to higher sales in Europe and customer recoveries. Additionally, foreign currencies resulted in a year-over-year increase in net sales of approximately $16 million due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. Segment 49 Table of Contents Adjusted Operating margin was (4.4)% for the three months ended June 30, 2026, compared to (5.7)% during the three months ended June 30, 2025. The Segment Adjusted Operating margin loss decreased primarily due to customer recoveries and restructuring savings, partially offset by higher manufacturing costs. The Battery Energy Systems segment’s net sales decreased $59 million, or 37%, and Segment Adjusted Operating Loss decreased $10 million from the three months ended June 30, 2025. Unfavorable volume, mix and net new business decreased net sales by approximately $64 million primarily due to lower battery pack sales. This decrease was partially offset by the impact of foreign currencies, which resulted in a year-over-year increase in net sales of approximately $3 million due to a strengthening of the Euro, relative to the U.S. Dollar. Segment Adjusted Operating margin was (2.0)% for the three months ended June 30, 2026, compared to (7.5)% during the three months ended June 30, 2025. The Segment Adjusted Operating margin loss decreased primarily due to the exit of the charging business and restructuring savings. Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (in millions) Net sales Segment Adjusted Operating Income (Loss) % margin Net sales Segment Adjusted Operating Income (Loss) % margin Turbos & Thermal Technologies $ 2,875 $ 439 15.3 % $ 2,935 $ 462 15.7 % Drivetrain & Morse Systems 2,877 537 18.7 % 2,790 503 18.0 % PowerDrive Systems 1,252 (65) (5.2) % 1,142 (76) (6.7) % Battery Energy Systems 202 (4) (2.0) % 309 (34) (11.0) % Inter-segment eliminations (25) — (23) — Totals for reportable segments $ 7,181 $ 907 $ 7,153 $ 855 The Turbos & Thermal Technologies segment’s net sales decreased $60 million, or 2%, and Segment Adjusted Operating Income decreased $23 million from the six months ended June 30, 2025. Unfavorable volume, mix and net new business resulted in a decrease in net sales by approximately $181 million due to lower sales in Europe. This was partially offset by the impact of foreign currencies of approximately $105 million due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S Dollar, and $16 million of customer recoveries relating to tariffs. Segment Adjusted Operating margin was 15.3% for the six months ended June 30, 2026, compared to 15.7% during the six months ended June 30, 2025. The Segment Adjusted Operating margin decreased due to lower sales, partially offset by supply chain savings and other cost actions. The Drivetrain & Morse Systems segment’s net sales increased $87 million, or 3%, and Segment Adjusted Operating Income increased $34 million from the six months ended June 30, 2025. Foreign currencies resulted in a year-over-year increase in net sales of approximately $60 million primarily due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. Customer recoveries relating to tariffs increased net sales by approximately $22 million. Favorable volume, mix and net new business increased net sales by approximately $5 million due to strong volumes in North America partially offset by lower volumes in China and broader Asia. Segment Adjusted Operating margin was 18.7% for the six months ended June 30, 2026, compared to 18.0% during the six months ended June 30, 2025. The Segment Adjusted Operating margin increased primarily due to manufacturing efficiencies, supply chain savings and lower net tariff expenses. 50 Table of Contents The PowerDrive Systems segment’s net sales increased $110 million, or 10%, and Segment Adjusted Operating Loss decreased $11 million from the six months ended June 30, 2025. Favorable volume, mix and net new business increased net sales by approximately $62 million due to higher sales in Europe and customer recoveries, partially offset by lower volumes in China. Additionally, foreign currencies resulted in a year-over-year increase in net sales of approximately $47 million primarily due to a strengthening of the Euro and Chinese Renminbi, partially offset by a weakening of the Korean Won, in each case relative to the U.S. Dollar. Segment Adjusted Operating margin was (5.2)% for the six months ended June 30, 2026, compared to (6.7)% during the six months ended June 30, 2025. The Segment Adjusted Operating margin loss decreased primarily due to customer recoveries and restructuring and supply chain savings, partially offset by launch- related costs and higher manufacturing costs. The Battery Energy Systems segment’s net sales decreased $107 million, or 35%, and Segment Adjusted Operating Loss decreased $30 million from the six months ended June 30, 2025. Unfavorable volume, mix and net new business decreased net sales by approximately $120 million primarily due to lower battery pack sales. This decrease was partially offset by the impact of foreign currencies of approximately $9 million due to a strengthening of the Euro relative to the U.S. Dollar. Segment Adjusted Operating margin was (2.0)% for the six months ended June 30, 2026, compared to (11.0)% during the six months ended June 30, 2025. The Segment Adjusted Operating margin loss decreased primarily due to the exit of the charging business and restructuring savings. FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY The Company maintains various liquidity sources, including cash and cash equivalents and the undrawn portion of its multi-currency revolving credit agreement. As of June 30, 2026, the Company had liquidity of $4.4 billion, comprised of cash and cash equivalent balances of $2.4 billion and an undrawn multi-currency revolving credit facility of $2.0 billion. As of June 30, 2026, the Company was in full compliance with its covenants under the revolving credit facility and had full access to the undrawn amount under the revolving credit facility. Given the Company’s strong liquidity position, management believes that it will have sufficient liquidity and will maintain compliance with all covenants under the revolving credit facility through at least the next 12 months. The Company’s $2.0 billion multi-currency revolving credit facility includes a feature that allows the facility to be increased by $1.0 billion with bank group approval. This facility matures in September 2028. The credit facility agreement contains customary events of default and one key financial covenant, which is a debt-to-EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) ratio. The Company was in compliance with the financial covenant at June 30, 2026. At June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings under this facility. As of June 30, 2026, cash balances of $1.4 billion were held by the Company’s subsidiaries outside of 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. The Company’s commercial paper program allows the Company to issue up to $2.0 billion of short-term, unsecured commercial paper notes under the limits of its multi-currency revolving credit facility. Under this program, the Company may issue notes from time to time and use the proceeds for general corporate purposes. The Company had no outstanding borrowings under this program as of June 30, 2026 and December 31, 2025. 51 Table of Contents The total current combined borrowing capacity under the multi-currency revolving credit facility and commercial paper program cannot exceed $2.0 billion. In addition, the Company’s universal shelf registration statement filed with the U.S. Securities and Exchange Commission provides the Company with the ability to issue various debt and equity securities subject to market conditions. On each of February 5, 2026, April 29, 2026 and July 30, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock. The dividends declared in the first quarter and second quarter were paid on March 16, 2026, and June 15, 2026, respectively. The dividend declared in the third quarter will be paid on September 15, 2026. From a credit quality perspective, the Company has a Baa1 from Moody’s and BBB+ from Fitch Ratings and Standard & Poor’s. The current outlook from each of Standard & Poor’s, Moody’s and Fitch Ratings is stable. None of the Company's debt agreements requires accelerated repayment in the event of a downgrade in credit ratings. Cash Flows Operating Activities Six Months Ended June 30, (in millions) 2026 2025 OPERATING ACTIVITIES Net earnings $ 546 $ 403 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and tooling amortization 264 301 Intangible asset amortization 30 33 Restructuring expense, net of cash paid 11 23 Stock-based compensation expense 26 33 Loss on sale of assets — 5 Loss on sale of businesses — 1 Impairment charges — 42 Costs to exit charging business — 32 Deferred income tax benefit (32) (40) Unrealized gain on equity securities (3) (1) Other non-cash adjustments (2) — Adjustments to reconcile net earnings to net cash provided by operating activities 294 429 Retirement plan contributions (11) (13) Changes in assets and liabilities, excluding effects of acquisitions, divestitures and foreign currency translation adjustments: Receivables (118) (201) Inventories (43) 96 Accounts payable and accrued expenses 97 (91) Other assets and liabilities (27) 38 Net cash provided by operating activities $ 738 $ 661 Net cash provided by operating activities was $738 million during the six months ended June 30, 2026 compared to $661 million for the six months ended June 30, 2025. The increase for the six months ended June 30, 2026 was primarily due to stronger accounts receivable and payable performance. 52 Table of Contents Investing Activities Six Months Ended June 30, (in millions) 2026 2025 INVESTING ACTIVITIES Capital expenditures, including tooling outlays $ (239) $ (196) Customer advances related to capital expenditures 6 7 Proceeds from settlement of net investment hedges, net 9 8 Payments for investments in equity securities (2) — Proceeds from the sale of business, net — 7 Proceeds from asset disposals and other, net 1 16 Net cash used in investing activities $ (225) $ (158) Net cash used in investing activities was $225 million during the six months ended June 30, 2026 compared to $158 million during the six months ended June 30, 2025. As a percentage of sales, capital expenditures, net of customer advances, were 3.2% and 2.6% for the six months ended June 30, 2026 and 2025, respectively. The year-over-year increase in capital expenditures was primarily driven by higher eProduct and power generation industrial solutions investments. Financing Activities Six Months Ended June 30, (in millions) 2026 2025 FINANCING ACTIVITIES Payments of notes payable $ — $ (5) Repayments of debt, including current portion (3) (403) Payments for purchase of treasury stock (250) (108) Payments for excise tax on purchase of treasury stock (5) — Payments for stock-based compensation items (28) (18) Payment for business acquired, net of cash acquired (3) — Payments for contingent consideration — (4) Dividends paid to BorgWarner stockholders (69) (48) Dividends paid to noncontrolling stockholders (10) (20) Net cash used in financing activities $ (368) $ (606) Net cash used in financing activities was $368 million during the six months ended June 30, 2026 compared to $606 million during the six months ended June 30, 2025. Net cash used in financing activities during the six months ended June 30, 2026 was primarily related to $250 million of BorgWarner share repurchases and $69 million in dividends paid to the Company’s stockholders. 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, $108 million of BorgWarner share repurchases and $48 million in dividends paid to the Company’s stockholders. CONTINGENCIES Refer to Note 20, “Contingencies,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information regarding contingencies. 53 Table of Contents New Accounting Pronouncements 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.