Slide 1: Q2 2024 Earnings Call Presentation
Q2 2024 Earnings Call Presentation July 31, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains 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,” “could,
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 ► Craig Aaron Chief Financial Officer ► Q&A 4
Slide 5: Strong Cost Performance in Second Quarter, Positioned for Long-term Success
Strong Cost Performance in Second Quarter, Positioned for Long-term Success $ in millions, except EPS ▪ Flat organic sales despite lower Net Sales Adj. EPS* Free Cash Flow* production environment Organic Sales* Decrease of ~0.3% ▪ Additional program awards in both 10.1% 10.4% Foundational and eProdu
Slide 6: 2024 Sustainability Report Highlights
2024 Sustainability Report Highlights Innovating Products for Acting on Our Investing in People Cleaner Mobility Commitments ▪ 87% of 2023 revenue from ▪ 32% reduction in scope 1 ▪ Expanded trainings to EV and emissions-reducing and 2 since 2021 help our ICE engineers hybrid and combustion transitio
Slide 7: Awards Across Technology-Focused Portfolio
Awards Across Technology-Focused Portfolio Commercial Vehicle Exhaust Gas Electric Cross Differentials (eXD) High-Voltage eFans Recirculation (EGR) Coolers ▪ Award with three OEMs, including GAC ▪ Award with major global commercial ▪ Award with a North America-based CV Motor, an East Asian OEM and a
Slide 8: New Structure Drives Synergies, Increases Go To Market Strategy and Reporting Transparency
New Structure Drives Synergies, Increases Go To Market Strategy and Reporting Transparency Previous Business Unit Structure New Business Unit Structure* Emissions, Thermal & Turbo Systems Turbos & Thermal Technologies Products: Turbos, Thermal Systems, Cabin Heaters & Others No Changes PowerDrive Sy
Slide 9: Q2 2024 Net Sales Walk
Q2 2024 Net Sales Walk $ in millions ▪ Organic sales* relatively flat driven by: Q2 2023 net sales $3,671 ▪ Europe – Outperformance due to growth in battery systems and other FX $(62) eProducts ▪ China – Lower volumes on existing EV Organic net sales change* $(12) program and declining Foundational
Slide 10: Financial Results & Adj. Operating Income
Financial Results & Adj. Operating Income $ in millions ($ in millions, except per Q2 2023 adj. operating share amounts) Three months ended $372 income* Non-GAAP Financial June 30, Information (Continuing 2024 2023 Operations) FX $(9) Net sales $3,603 $3,671 Organic change, productivity, Adj. operat
Slide 11: 2024 Outlook and Other Items
2024 Outlook and Other Items $ in millions, except EPS Full-year Net Sales Outlook ($M) Market & Earnings Outlook Current Prior Guidance 9.6% 2024 Outlook 2023 net sales Adj. Operating Margin* $14,198 Organic growth* 2% to 5% 0.5% to 2.5% FX $(175) Adj. operating margin* 9.2% to 9.6% 9.6% to 9.8% Or
Slide 12: ePropulsion Restructuring Actions Underway
ePropulsion Restructuring Actions Underway Estimated Restructuring ▪ Restructuring actions began in June 2024 Cost Savings ▪ Focused within North America and China ~$100M ▪ Includes headcount and non-headcount savings ▪ Estimated cumulative cash restructuring costs of ~$75M from 2024-2026 $20 to $30
Slide 13: Thank You
July 31, 2024 Q2 2024 Earnings Call Presentation THANK YOU
Slide 14: Appendix
APPENDIX BORGWARNER
Slide 15: 2024 Planning Assumptions
2024 Planning Assumptions ▪ CapEx $800-$850 million ▪ Adjusted tax rate for ongoing operations ~24% 15
Slide 16: 2024 Light Vehicle Market Expectations
2024 Light Vehicle Market Expectations LV Units in millions BorgWarner Global Market North America Europe China FY’23 FY’24 Actual Est. 90.5 88.6 to 89.0 Electric Electric ~12% FY’23 FY’24 FY’23 FY’24 FY’23 FY’24 ~13% Actual Est. Actual Est. Actual Est. Hybrid ~20% Hybrid ~24% 28.6 to 29.0 28.8 Comb
Slide 17: BorgWarner Global Production Outlook (2024 vs. 2023)
BorgWarner Global Production Outlook (2024 vs. 2023) Actual & Estimated Production Totals (in Millions of Units) North America Europe China Total 2023 2024 2023 2024 2023 2024 2023 2024 Light Vehicle 15.7 15.7 to 15.9 18.0 17.0 to 17.2 28.8 28.6 to 29.0 90.5 88.6 to 89.0 Commercial Vehicle 0.7 ~0.6
Slide 18: Second Quarter & YTD Reconciliation to US GAAP
Second Quarter & YTD Reconciliation to US GAAP Adjusted Operating Income and Operating Margin The Company defines adjusted operating income as operating income adjusted to exclude the impact of restructuring expense, merger, acquisition and divestiture expense, intangible asset amortization expense,
Slide 19: Second Quarter & YTD Reconciliation to US GAAP
Second Quarter & YTD 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 expenses, discont
Slide 20: Second Quarter & YTD Organic Net Sales Change
Second Quarter & YTD Organic Net Sales Change Organic Net Sales Change The Company defines organic net sales changes as net sales change year over year excluding the estimated impact of foreign exchange (FX) and the acquisitions of the smart grid and smart energy businesses of Hubei Surpass Sun Elec
Slide 21: Full Year 2024 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation
Full Year 2024 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP 21
Slide 22: Full Year 2024 Adj. Earnings per Diluted Share Guidance Reconciliation
Full Year 2024 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP 22
Slide 23: Full Year 2024 Estimated Organic Net Sales Change Guidance and Outgrowth Reconciliation
Full Year 2024 Estimated Organic Net Sales Change Guidance and Outgrowth Reconciliation Organic Net Sales Change BorgWarner net sales change year over year excluding the estimated impact of foreign exchange (FX) and the acquisitions of the electric vehicle solution, smart grid and smart energy busin
Slide 24: Free Cash Flow Reconciliations
Q2 & YTD 2024, Q2 & YTD 2023 & Full Year 2024 Free Cash Flow Reconciliations 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 Comp
Slide 25: Key Definitions
Key Definitions The terms below are commonly used by management and investors in assessing ongoing financial performance: Organic Net Sales Change. The Company defines organic net sales changes as net sales change year over year excluding the estimated impact of foreign exchange (FX) and the acquisi