Slide 1: Earnings Call Presentation Q4 2020
Earnings Call Presentation Q4 2020 February 11, 2021
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 © BorgWarner Inc. 4
Slide 5: 2020 Finishes Strong, Well Positioned for the Future
2020 Finishes Strong, Well Positioned for the Future ▪ Organic revenue and outgrowth Net Sales Adj. EPS* Free Cash Flow* ahead of expectations Outgrowth Ahead of Guidance Solid Year Despite Global Pandemic Above High End of Guidance Range ▪ Decremental margin in line with 12.1% Adj. 9.7% Adj. expect
Slide 6: 800-volt Electric Motor for Global CV Customer
800-volt Electric Motor for Global CV Customer 800-volt Electric Motor ▪ Award with a large global commercial vehicle (CV) EV customer launching in 2024 ▪ Multi-faceted platform will support the manufacturer’s goal of a common electric drivetrain ▪ Customer can significantly reduce charging time whi
Slide 7: 400-Volt SiC Inverter for Major European OEM
400-Volt SiC Inverter for Major European OEM 400-Volt Inverter ▪ Partnering with a major European OEM on next-generation BEVs expected to launch in 2022 ▪ Leading market trend of 400V Si to SiC upgrade to extend EV mileages with minimum design impact ▪ Downstream integration capability helps to secu
Slide 8: Key European Inverter Wins Provide Scale
Key European Inverter Wins Provide Scale BorgWarner Competitive Advantage Inverters for 3 Key European OEM Programs ▪ Efficient speed to market with products ~1.1M covering 400V SiC, 800V SiC, 48V ▪ Proprietary inverter power module design ▪ Vertical integration ▪ Power modules, integrated circuit d
Slide 9: Integration on Track – Moving Forward as One BorgWarner
Integration on Track – Moving Forward as One BorgWarner $ in millions Q4 2020 Sales & Adj. Operating Margin Cumulative Cost Synergies 9.6% Adj. Op Margin* 3.8% to 5.0% Adj. SiC Inverters Op Margin* $1,120 $90 $950 to $1,000 $15 Guidance Actual 2020 Mid-point 2021 Estimate GDi systems Delphi Technolo
Slide 10: Investor Day 2021
Investor Day 2021 ▪ Date: Tuesday, March 23, 2021 ▪ Time: 9:00AM – 11:30AM EDT ▪ Where: Virtual broadcast from BorgWarner WHQ ▪ Will feature presentations by senior leadership followed by Q&A © BorgWarner Inc. 10
Slide 11: Summary of 2020 Results and 2021 Outlook
Summary of 2020 Results and 2021 Outlook Free Cash Flow* ▪ Delivered strong outgrowth and free cash ($ in millions) flow in 2020 $743 $800 to $900 ▪ Strong free cash flow expected to continue, enabling investments to support growth FY 2020 FY 2021 Est. Electric ▪ Expect medium-term outgrowth to be i
Slide 12: BorgWarner Q4 2020 Net Sales Walk
BorgWarner Q4 2020 Net Sales Walk $ in millions ▪ Global light vehicle markets up Q4 2019 net sales $2,559 ~1.6% year over year FX $88 ▪ Organic sales grew ~6.2%, driven by outgrowth in China and strong China Market Impact and pricing $(6) commercial vehicle performance Backlog $165 ▪ China – Dual c
Slide 13: BorgWarner Financial Results & Adj. Operating Income
BorgWarner Financial Results & Adj. Operating Income $ in millions Q4 2019 adj. operating $340 Three months ended (in millions, except per share amounts) income* December 31, GAAP & Non-GAAP Financials 2019 2020 Sales $2,559 $3,926 FX $6 Adj. operating income* $340 $448 Adj. operating margin 13.3% 1
Slide 14: Expect Global Markets to Rebound in 2021
Expect Global Markets to Rebound in 2021 BorgWarner Global Market North America Europe China FY’20 FY’21 Actual Est. 11% to 14% FY’20 FY’21 FY’20 FY’21 FY’20 FY’21 Actual Est. Actual Est. Actual Est. 22% to 25% 11% to 14% 0.5% -2% to 1% -16.0% -21.5% -21.0% Note: FY’20 Actuals are BorgWarner-weighte
Slide 15: 2021 Expected Sales Walk and Guidance
2021 Expected Sales Walk and Guidance $ in millions Full-year Net Sales Outlook Net Sales Highlights 2020 net sales $10,165 ▪ Global BWA LV/CV markets up ~11% to ~14% ▪ ~100 to ~300 basis points of outgrowth Delphi Technologies $2,628 pro forma impact Earnings and FCF Highlights 2020 pro forma incl.
Slide 16: Mid-Term Outgrowth Expectations Remain Intact
Mid-Term Outgrowth Expectations Remain Intact $ in millions Expected Light-duty Diesel Sales for Legacy 2021 to 2024 LV/CV Net Backlog & Aftermarket Growth Delphi Technologies Portfolio North Europe Overcoming diesel America 20% 25% headwind $2,800 $370 to $630 ROW 10% 2020 2021 2022 2023 2024 2021
Slide 17: Thank you!
Thank you! © BorgWarner Inc. 17
Slide 18: Appendix
Appendix © BorgWarner Inc. 18
Slide 19: 2021 Planning Assumptions
2021 Planning Assumptions ▪ CapEx $650 to $700 million ▪ R&D spending ~5% of sales ▪ Tax rate for ongoing operations ~32% © BorgWarner Inc. 19
Slide 20: Pro Forma 2020 Quarterly Sales and Adj. Operating Income (Unaudited)
Pro Forma 2020 Quarterly Sales and Adj. Operating Income (Unaudited) On October 1, 2020 BorgWarner completed its acquisition of Delphi Technologies PLC (Delphi Technologies). The 2020 pro forma unaudited quarterly financial information included herein includes the pro forma combined results of BorgW
Slide 21: BorgWarner Weighted Market Estimates
BorgWarner Weighted Market Estimates FY'20 FY-21 Est. LV Range -20.1% 22% to 25% North America CV Range -30.1% 25.5% to 28.5% LV Range -21.6% 11% to 14% Europe CV Range -16.9% 7.5% to 10.5% LV Range -4.2% 3% to 6% China CV Range 26.5% -30% to -33% Weighted LV Range -16.8% 12.5% to 15.5% Weighted CV
Slide 22: Fourth Quarter and Year-to-Date Reconciliation to US GAAP
Fourth Quarter and Year-to-Date Reconciliation to US GAAP Adjusted Operating Income and Adjusted Operating Margin The Company defines adjusted operating income as operating income adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expens
Slide 23: Fourth Quarter and Year-to-Date Reconciliation to US GAAP
Fourth 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 24: FY'21 Adj. Operating Income and Adj Operating Margin
FY’21 Adj. Operating Income and Adj Operating Margin Reconciliation to US GAAP Full Year 2021 Guidance Low High Net Sales $ 14,700 $ 15,300 Operating income $ 1,260 $ 1,450 Operating margin 8.6% 9.5% Non-comparable items Restructuring expense $ 200 $ 150 Merger, acquisition and divestiture expense 1
Slide 25: FY'21 Adj. Earnings per Diluted Share Reconciliation to US GAAP
FY’21 Adj. Earnings per Diluted Share Reconciliation to US GAAP Full Year 2021 Guidance Low High Earnings per diluted share $ 3.23 $ 3.77 Non-comparable items: Restructuring and other expense 0.58 0.44 Merger, acquisition and divestiture expense 0.04 0.04 Adjusted earnings per diluted share $ 3.85 $
Slide 26: FY'20 and FY'21 Free Cash Flow Reconciliation to US GAAP
FY’20 and FY’21 Free Cash Flow to 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 service and
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) and net M&A. ▪ Market. For 2020, light vehicle prod