Craig Aaron
Executive Vice President and Chief Financial Officer at BorgWarner
Thank you, Fred, and good morning, everyone. Before I dive into the financials, I'd like to provide a quick overview of our third quarter results. First, we reported just over $3.4 billion in sales, which was down approximately 5% versus prior year, excluding FX and M&A. This was slightly above market production in the quarter, which was down approximately 6% so we saw modest sales outgrowth in the quarter of approximately 50 basis points, which was primarily driven by European battery growth. Second, we had strong margin performance in the quarter at 10.1%. This was driven by solid operational performance, the continued benefit of restructuring actions we announced in July, our continued focus on cost controls across the business and customer recoveries.
Third, we had strong free cash flow in the quarter of $201 million, which allowed us to accelerate our second half $300 million share repurchase plan. Importantly, we delivered this result while also continuing to organically invest in our business to support our focus on long-term profitable growth. Now let's turn to slide eight for a look at our year-over-year sales walk for Q3. Last year's Q3 sales from continuing operations were just over $3.6 billion. You can see that the weakening U.S. dollar drove a year-over-year increase in sales of $4 million.Then you can see a decrease in organic sales of approximately 5% which was 50 basis points above market production, primarily due to strong European battery growth. And finally, the acquisition of Eldor added $9 million of sales year-over-year. The sum of all this was just over $3.4 billion of sales in Q3.
Turning to slide nine, you can see our earnings and cash flow performance for the quarter. Our third quarter adjusted operating income was $350 million, equating to a strong 10.1% margin. That compares to adjusted operating income from continuing operations of $349 million or a 9.6% margin from a year ago. On a comparable basis, adjusted operating income increased $15 million and $186 million of lower sales. This is a great result and reflects our ability to deliver profitability despite a declining production environment. This performance was partially helped by $24 million of favorable items related to customer recoveries for eProducts program volume shortfalls and the benefit of our PowerDrive Systems restructuring that we announced in July.
The net impact of Eldor was a $14 million drag on operating income year-over-year. Our adjusted EPS from continuing operations was up $0.11 compared to a year ago as a result of strong adjusted operating income, a decline in our effective tax rate and the impact of $300 million in share repurchases during the quarter. And finally, free cash flow from continuing operations was $201 million during the third quarter, which was up $165 million from a year ago, as a result of strong working capital and capital expenditure performance. Now let's take a look at our full year outlook on slide 10. We are projecting total 2024 sales in the range of $14.0 billion to $14.2 billion, which is a reduction from our prior guidance of $14.1 million to $14.4 billion.
This reduction is due to a lower market production outlook and modestly lower eProducts sales. Despite the sales reduction, we expect the company to outgrow market production by 200 to 300 basis points, which once again demonstrates the resiliency of our technology-focused portfolio that we believe is positioned to outgrow market production. Starting with foreign currencies. Our guidance now assumes an expected full year sales headwind from weaker foreign currencies of $20 million compared to 2023. Within this guidance, our full year end market assumption has been reduced to down 3% to 3.5% versus down 2% to 3% previously. Finally, the Eldor and SSE acquisitions are expected to add approximately $30 million to 2024 sales. Based on our updated outlook, we expect our organic sales change to be flat to down 1.5% year-over-year or outgrowth above industry production of 200 to 300 basis points.
Now let's switch to margin. We are increasing our full year margin outlook to 9.8% to 10.0% from our prior guidance of 9.6% to 9.8%. This is based on our year-to-date performance and continued benefits of our PowerDrive Systems restructuring that we announced in July. This expected margin increase demonstrates the resiliency of our technology-focused portfolio and our ability to drive profitability in very challenging end markets. Our implied fourth quarter outlook assumes that our boat business delivers a mid-teens decremental conversion compared to our average year-to-date results, excluding the benefits of third quarter volume-related eProducts customer recoveries and second quarter stock forfeitures related to a senior executive retirement.
We view this mid-teens decremental conversion as strong underlying performance given the anticipated 5% to 7% year-over-year decline in market production during the fourth quarter of 2024. Based on the sales and margin outlook, we're expecting full year adjusted EPS in the range of $4.15 to $4.30 per diluted share. This 4% EPS increase compared to our prior outlook is being driven by the impact of our strong third quarter results, a lower share count due to the third quarter execution of our share repurchase plan and a reduction in our full year effective tax rate. We continue to expect full year free cash flow to be in a range of $475 million to $575 million. Our ability to increase our margin and EPS guidance during a challenging production environment demonstrates our focus on managing costs in order to hold our prior guidance absolute income dollars, and we're doing this despite a significant reduction in global industry volumes.
Now let's turn to slide 11 and take a look at how we will deploy our expected $475 million to $575 million in 2024 free cash flow. As I just highlighted, we expect another strong year of free cash flow generation. At the midpoint of our guidance, we expect to generate $525 million in free cash flow. It is important to note that $475 million of this cash flow has already been deployed to shareholders with $400 million of shares repurchased and $75 million of dividends already paid through the end of the third quarter. If we assume that we will declare and pay our consistent quarterly dividend in the fourth quarter, almost all of our expected free cash flow will be deployed to shareholders in 2024.
We believe our ability to return capital to shareholders while also investing in the business demonstrates the underlying strength of the company and the importance of maintaining a strong balance sheet that allows us to invest in our long-term profitable growth and follow a balanced capital allocation approach that reward shareholders. So let me summarize my financial remarks. Overall, we delivered a strong third quarter with sales outperformance compared to industry production.
We delivered a very strong 10.1% margin, which was 50 basis points higher than 2023 and the second quarter in a row with a margin above 10%. Additionally, we generated $201 million in free cash flow, which allowed us to accelerate our second half $300 million share repurchase plan. And we did this despite challenging market production in the quarter. This once again shows the resiliency of our technology-focused portfolio that we believe is positioned to outgrow industry production and deliver strong profitability and free cash flow. We are proud to be increasing our margin and EPS outlook for the second time this year despite a declining industry volume [Technical Issues]
Connie, can you hear us?