Slide 1: Q2 2022 Earnings Call Presentation
August 3, 2022 Q2 2022 — Earnings Call Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management’s current outlook, expectations, estimates and projections. Words such as “anticipates,” “believes,” “continues,” “cou
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains information about BorgWarner’s financial results that is not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest GAAP financial mea
Slide 4: Agenda
Agenda Fred Lissalde Chief Executive Officer Kevin Nowlan Chief Financial Officer Q&A 4
Slide 5: Delivering Near-term Commitments While Enhancing Future Positioning
Delivering Near-term Commitments While Enhancing Future Positioning ▪ Strong organic revenue Net Sales Adj. EPS* Free Cash Flow* performance vs. market Organic Sales* Increase of ~7% ▪ Margin impacted by eProducts R&D, material cost inflation and 11.2% 9.3% Adj. Op Margin* Adj. Op Margin* production
Slide 6: Charging Forward Aligns Our Business and Sustainability Strategy
Charging Forward Aligns Our Business and Sustainability Strategy New 2022 Sustainability Report shows our accomplishments and focus CREATE A CLEANER, LIVE THE BORGWARNER PARTNER WITH AND MORE ENERGY-EFFICIENT WORLD BELIEFS REPORT TO STAKEHOLDERS 88% revenue from clean and Power to Evolve training pr
Slide 7: eHybrid Portfolio Expected to Grow
eHybrid Portfolio Expected to Grow Estimated Booked eHybrid Sales $ in billions ~$1.1B Dual Inverter eMotor Other eProducts HV Coolant Heaters ~$0.7B Motors & PX Modules P3 Drive Module HV Coolant Heater eHybrid Product Details ▪ eHybrid products bridge to EVs for many OEMs Inverters ▪ Advanced hybr
Slide 8: Multiple Awards Across Electric Vehicle Products
Multiple Awards Across Electric Vehicle Products High-voltage Coolant Commercial Vehicle Iperion-120 Fast Charging Heaters Battery System Station Awards with an established Award with a European Award with an Italian global automotive OEM & commercial vehicle OEM service provider Route220 an emergin
Slide 9: Acquisition of Rhombus Energy Solutions Expands EV Growth Opportunities
Acquisition of Rhombus Energy Solutions Expands EV Growth Opportunities BorgWarner to accelerate the charging business, leveraging the local knowledge and footprint of Rhombus Energy Solutions and BorgWarner’s pre-existing business ▪ Focuses on high-value DC fast-charging (DCFC) Estimated Revenue ($
Slide 10: Progress Report
Progress Report EV Organic Sales M&A Dispositions in 2025 by 2025 by 2025 Current ~$2.9B Booked Status Charging $2.5B $2.0B $3.5B Forward Goals Goal Add’l M&A Reached $1.2B Add’l $3.3B Dispositions AKASOL, $0.8B Santroll & Rhombus $0.2B Completed 10
Slide 11: BorgWarner Q2 2022 Net Sales Walk
BorgWarner Q2 2022 Net Sales Walk $ in millions ▪ Global vehicle markets down ~1% year over year Q2 2021 net sales $3,758 Disposition $47 ▪ Organic sales* increased ~7%, with pro forma impact** strong performance in North Q2 2021 pro forma net sales* $3,711 America FX $(221) ▪ North America – Produc
Slide 12: BorgWarner Financial Results & Adj. Operating Income
BorgWarner Financial Results & Adj. Operating Income $ in millions Q2 2021 adj. operating (in millions, except per share income* $421 Three months ended amounts) GAAP & Non-GAAP June 30, Disposition Financial Information 2021 2022 pro forma impact** $(4) Sales $3,758 $3,759 Q2 2021 pro forma adj. op
Slide 13: 2022 Market Expectations Have Moderated
2022 Market Expectations Have Moderated LV Units in millions BorgWarner Global North America Europe China Market FY’21 FY’22 Actual Est. FY’21 FY’22 FY’21 FY’22 FY’21 FY’22 78.8 to 81.2 Actual Est. Actual Est. Actual Est. 77.2 24.6 24.1 to 24.7 16.0 to 16.7 14.5 to 14.8 15.9 13.0 BorgWarner Estimate
Slide 14: 2022 Expected Outlook and Considerations
2022 Expected Outlook and Considerations $ in millions Full-year Net Sales Outlook Market & Earnings Outlook Considerations 2021 net sales $14,838 Prior Guidance 2022 Outlook Disposition Global light $(177) 78.3M to 80.9M 78.8M to 81.2M pro forma impact** vehicle production 10.9% Pro forma 2021 pro
Slide 15: Thank You
August 3, 2022 Q2 2022 Earnings Call Presentation — THANK YOU
Slide 16: Appendix
AP |> E N D [IX x BorgWarner
Slide 17: 2022 Planning Assumptions
2022 Planning Assumptions ▪ CapEx $800 to $850 million ▪ Adjusted tax rate for ongoing operations 27% 17
Slide 18: BorgWarner Global Production Outlook (2022 vs. 2021)
BorgWarner Global Production Outlook (2022 vs. 2021) Actual & Estimated Production Totals (in Millions of Units) North America Europe China Total 2021 2022 2021 2022 2021 2022 2021 2022 Light Vehicle 13.0 14.5 to 14.8 15.9 16.0 to 16.7 24.6 24.1 to 24.7 77.2 78.8 to 81.2 Commercial Vehicle 0.5 ~0.6
Slide 19: Second Quarter and Year-to-Date Reconciliation to US GAAP
Second Quarter and Year-to-Date Reconciliation to US GAAP Adjusted Operating Income and Operating Margin In 2021 and prior, the Company defined adjusted operating income as operating income adjusted to exclude the impact of restructuring expense, merger, acquisition and divestiture expense, other ne
Slide 20: Second Quarter and Year-to-Date Reconciliation to US GAAP
Second Quarter and Year-to-Date Reconciliation to US GAAP Adjusted Earnings Per Diluted Share The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expens
Slide 21: Second Quarter and Year-to-Date Organic Net Sales Change
Second Quarter and Year-to-Date Organic Net Sales Change Organic Net Sales Change BorgWarner net sales change year over year excluding the estimated impact of foreign exchange (FX) the 2022 acquisition of Santroll’s light vehicle eMotor business and the 2021 divestiture of the Water Valley, Mississi
Slide 22: FY'21 Adj. Operating Income and Margin Reconciliation to US GAAP
FY’21 Adj. Operating Income and Adj. Operating Margin Reconciliation to US GAAP Year Ended $ in millions December 31, 2021 Sales $ 14,838 Pro forma disposition impact (177) Pro forma sales $ 14,661 Operating income $ 1,151 Operating margin 7.8% Non-comparable items: Restructuring expense 163 Custome
Slide 23: FY'22 Adj. Operating Income and Margin Guidance Reconciliation
FY’22 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP 23
Slide 24: FY'22 Adj. EPS Guidance Reconciliation to US GAAP
FY’22 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP 24
Slide 25: FY'22 Organic Net Sales Change Guidance Reconciliation
FY’22 Organic Net Sales Change Guidance Reconciliation Organic Net Sales Change BorgWarner net sales change year over year excluding the estimated impact of foreign exchange (FX), the 2022 acquisitions of Santroll’s light vehicle eMotor business and Rhombus Energy Solutions as well as the 2021 dives
Slide 26: Q2'22, YTD'22 and FY'22 Free Cash Flow Reconciliation
Q2’22, YTD’22 and FY’22 Free Cash Flow Reconciliation to US GAAP The Company defines free cash flow as net cash provided by operating activities minus capital expenditures, including tooling outlays. The measure is useful to both management and investors in evaluating the Company’s ability to servic
Slide 27: Key Definitions
Key Definitions The terms below are commonly used by management and investors in assessing ongoing financial performance: Organic Net Sales Change. BorgWarner net sales change year over year excluding the estimated impact of foreign exchange (FX), the 2022 acquisitions of Santroll’s light vehicle eM