Slide 1: Q4 & FY 2022 Earnings Call Presentation
February 9, 2023 Q4 & FY 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: Eventful 2022 Builds Upon Charging Forward Pillars
Eventful 2022 Builds Upon Charging Forward Pillars ▪ Delivered organic growth at Net Sales Adj. EPS* Free Cash Flow* high end of guidance with solid Organic Sales* Increase of ~14% margin performance 10.9% 10.1% Adj. Op Margin* Adj. Op Margin* ▪ Generated record full-year free $4.60 cash flow $846 $
Slide 6: Science Based Targets to Reduce Scope 1, 2, 3 Emissions Submitted to SBTi
Science Based Targets to Reduce Scope 1, 2, 3 Emissions “Well-Below 2°C” Submitted to SBTi Our Science Based Target Initiative (SBTi) roadmap Targets for reduced greenhouse gas Scope 1 & 2 emissions across our • Operations: Identify and assess plant-level efficiency opportunities value chain • Energ
Slide 7: Planned Separation of Fuel Systems & Aftermarket Segments Would Advance Charging Forward
Planned Separation of Fuel Systems & Aftermarket Segments Would Advance Charging Forward Creating Two Leading, Focused Companies BorgWarner NewCo Leader in Fuel Systems Management Leader in Electrification with Focused ICE Business and Aftermarket Technology 2022 Sales 2022 Sales $12.5B $3.3B ◼ Focu
Slide 8: Continued Expansion Across Electrified Vehicle Products
Continued Expansion Across Electrified Vehicle Products HV Intercell Battery Cooling Plates 800V SiC Inverters ▪ Award for a major German vehicle ▪ Award for a major global OEM expected to manufacturer expected to launch in 2025 in launch in 2025 the U.S. and European markets ▪ Expected to build upo
Slide 9: Progressing Toward Our Targets
Progressing Toward Our Targets EV Organic Sales M&A Dispositions in 2025 by 2025 by 2025 Current ~$3.0B(1) Booked Status Post Charging Forward $2.5B $2.0B $3.5B Intended Goals Separation $3.3B $1.3B AKASOL, Santroll, Rhombus, SSE(2) & Drivetek $0.2B AKASOL Tracking Executing Separation Already Excee
Slide 10: BorgWarner Q4 2022 Net Sales Walk
BorgWarner Q4 2022 Net Sales Walk $ in millions ▪ Global vehicle markets up ~1% year over year Q4 2021 net sales $3,655 Disposition $40 ▪ Organic sales* increased ~21%, pro forma impact** supported by strong growth over Q4 2021 pro forma net sales* $3,615 market and customer pricing actions FX $(307
Slide 11: BorgWarner Financial Results & Adj. Operating Income
BorgWarner Financial Results & Adj. Operating Income $ in millions Q4 2021 adj. operating (in millions, except per share income* $398 Three months ended amounts) GAAP & Non-GAAP December 31, Disposition Financial Information 2021 2022 pro forma impact** $(4) Sales $3,655 $4,108 Q4 2021 pro forma adj
Slide 12: 2023 Market Expectations Have Moderated
2023 Market Expectations Have Moderated LV Units in millions BorgWarner Global North America Europe China Market FY’22 FY’23 Actual Est. FY’22 FY’23 FY’22 FY’23 FY’22 FY’23 82.0 81.8 to 84.4 Actual Est. Actual Est. Actual Est. 26.1 25.8 to 26.4 15.7 15.4 to 16.0 14.3 14.5 to 15.1 BorgWarner Estimate
Slide 13: 2023 Expected Outlook and Other Items
2023 Expected Outlook and Other Items $ in millions Full-year Net Sales Outlook Market & Earnings Outlook 2022 Actual 2023 Outlook 10.1% 2022 net sales Adj. Operating Margin* $15,801 Organic growth* 14% 7% to 12% FX $(285) EV sales $870M $1.5B to $1.8B Organic net sales $60M to $70M $1,149 $1,949 eP
Slide 14: Thank You
February 9, 2023 Q4 & FY 2022 Earnings Call Presentation — THANK YOU
Slide 15: Appendix
AP |> E N D [IX x BorgWarner
Slide 16: 2022 Planning Assumptions
2022 Planning Assumptions ▪ CapEx $850 to $900 million ▪ Adjusted tax rate for ongoing operations 25% 16
Slide 17: BorgWarner Global Production Outlook (2023 vs. 2022)
BorgWarner Global Production Outlook (2023 vs. 2022) Actual & Estimated Production Totals (in Millions of Units) North America Europe China Total 2022 2023 2022 2023 2022 2023 2022 2023 Light Vehicle 14.3 14.5 to 15.1 15.7 15.4 to 16.0 26.1 25.8 to 26.4 82.0 81.8 to 84.4 Commercial Vehicle 0.6 ~0.6
Slide 18: Quarterly & Full-Year 2021 Recast Segment Information
Quarterly & Full-Year 2021 Recast Segment Information In the first quarter of 2022, the Company announced that the starter and alternator business, previously reported in its e-Propulsion & Drivetrain segment, would transition to the Aftermarket segment. The Company also announced in 2022 that the c
Slide 19: Quarterly & Full-Year 2022 Recast Segment Information
Quarterly & Full-Year 2022 Recast Segment Information In the first quarter of 2022, the Company announced that the starter and alternator business, previously reported in its e-Propulsion & Drivetrain segment, would transition to the Aftermarket segment. The Company also announced in 2022 that the c
Slide 20: Fourth Quarter and Full-Year Reconciliation to US GAAP
Fourth Quarter and Full-Year 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 net e
Slide 21: Fourth Quarter and Full-Year Reconciliation: Adjusted EPS
Fourth Quarter and Full-Year 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,
Slide 22: Fourth Quarter and Full-Year Organic Net Sales Change
Fourth Quarter and Full-Year 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 acquisitions of Santroll’s light vehicle eMotor business and Rhombus Energy Solutions as well as the 2021 divest
Slide 23: FY'21 Pro Forma Adj. Operating Income and Margin Reconciliation
FY’21 Pro Forma Adj. Operating Income and Adj. Operating Margin Reconciliation to US GAAP 23
Slide 24: FY'23 Adj. Operating Income and Margin Guidance Reconciliation
FY’23 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP 24
Slide 25: FY'23 Adj. EPS Guidance Reconciliation
FY’23 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP 25
Slide 26: FY'23 Organic Net Sales Change Guidance Reconciliation
FY’23 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. 26
Slide 27: Q4'22, FY'22 and FY'23 Free Cash Flow Reconciliation
Q4’22, FY’22 and FY’23 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 service
Slide 28: 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