Slide 1: Earnings Call Presentation Q3 2021
Earnings Call Presentation Q3 2021 1 November 3, 2021 © BorgWarner Inc. 1
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: Managing Near Term, While Securing Future Growth
Managing Near Term, While Securing Future Growth ▪ New business and mix benefits Net Sales Adj. EPS* Free Cash Flow* partially mitigated the impact of Organic Sales lower industry production Decrease of ~7% 11.0% 9.1% ▪ Margin and free cash flow Pro Forma Adj. Op Margin* Adj. Op Margin* performance
Slide 6: Moderating 2021 Light Vehicle Industry Expectations
Moderating 2021 Light Vehicle Industry Expectations Millions of LV units Quarterly LV Production Numbers Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 23.6 20.5 20.6 18.7 18.9 17.8 16.5 17.3 12.6 74.5M Units 73.1M to 74.7M Units Q4'21 High Scenario Q4'21 Low Scenario Note: 2020 & 2021 actuals and
Slide 7: Two Additional Awards for High-voltage SiC Inverters
Two Additional Awards for High-voltage SiC Inverters High-voltage SiC Inverters 800V SiC Inverters ▪ Award for North American inverter program with a ▪ Award for European inverter with a German OEM, Global OEM, expected to launch in 2024 expected to launch in early 2025 ▪ Largest inverter award to d
Slide 8: Positioned to be #1 Non-Captive Inverter Producer by 2025
Positioned to be #1 Non-Captive Inverter Producer by 2025 Product Highlights Estimated Booked Inverter Volumes ▪ Efficient speed to market with products covering 400V SiC, 800V SiC ▪ Proprietary inverter power module design ~0.6M Hybrid ▪ Vertical integration ▪ Power modules, integrated circuit deve
Slide 9: BorgWarner Q3 2021 Net Sales Walk
BorgWarner Q3 2021 Net Sales Walk $ in millions Q3 2020 net sales $2,534 ▪ Global vehicle markets down ~22% year over year Delphi Technologies impact $1,054 Q3 2020 proforma incl. $3,588 ▪ Organic sales decreased ~7%, with Delphi Technologies* strong relative performance in all FX $56 major regions
Slide 10: BorgWarner Financial Results & Adj. Operating Income
BorgWarner Financial Results & Adj. Operating Income $ in millions Q3 2020 adj. operating income** $317 Three months ended (in millions, except per share amounts) GAAP & Non-GAAP Financials September 30, Delphi Technologies $79 2020 2021 pro forma impact Q3 2020 pro forma incl. Sales $2,534 $3,416 D
Slide 11: 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 ▪ Organic growth of 8.5% to 11% Delphi Technologies $2,627 pro forma impact Earnings and FCF Highlights 2020 pro forma incl. 8.3% Pro forma Delphi Technologies* Adj. Operating
Slide 12: 2022 Initial Outlook and Priorities
2022 Initial Outlook and Priorities Revenue & Earnings Outlook Considerations Strategic Priorities 2021 2022 ▪ Continue to secure additional EV Ongoing Market awards for components and LV Production 73.1M to 74.7M Challenges systems Outgrowth ~10% Difficult Comparison ▪ Execute additional M&A to YOY
Slide 13: 2025 Organic EV Revenue Target Already >90% Booked
2025 Organic EV Revenue Target Already >90% Booked Booked Electric Vehicle Revenue ▪ Well on our way to $2.5+ billion of ~$2.5B >90% organic EV revenue in 2025, in line with ~$2.3B Booked Project Charging Forward Other HV Coolant ▪ Wins coming across all major regions Heaters with leading OEMs iDM/e
Slide 14: Thank you!
Thank you! 14 © BorgWarner Inc. 14
Slide 15: Appendix
Appendix © BorgWarner Inc. 15
Slide 16: 2021 Planning Assumptions
2021 Planning Assumptions ▪ CapEx $675 to $700 million ▪ R&D spending ~$725 million ▪ Tax rate for ongoing operations ~30% © BorgWarner Inc. 16
Slide 17: Pro Forma Description
Pro Forma Description 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 BorgWarner and Delphi Technologies for periods prior
Slide 18: Pro Forma 2020 Quarterly Sales and Adj. Operating Income (Unaudited)
Pro Forma 2020 Quarterly Sales and Adj. Operating Income (Unaudited) Pro forma Pro forma Pro forma As Reported Pro forma Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Air Management Net sales $ 1,683 $ 961 $ 1,750 $ 1,942 $ 6,336 Adj. EBIT 241 34 278 301 854 Adj. EBIT Margin 14.3% 3.5% 15.9% 15.5% 13.5% e
Slide 19: BorgWarner Global Production Outlook (2021 vs. 2020)
BorgWarner Global Production Outlook (2021 vs. 2020) Estimated Production Totals (in Millions of Units) North America Europe China Total 2020 2021 2020 2021 2020 2021 2020 2021 Light Vehicle 13.0 12.6 to 13.0 16.6 15.6 to 16.0 23.4 22.6 to 23.0 74.6 73.1 to 74.7 Commercial Vehicle 0.5 0.5 0.5 0.5 2.
Slide 20: Third Quarter and Year-to-Date Reconciliation to US GAAP
Third 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 expense
Slide 21: Third Quarter and Year-to-Date Reconciliation to US GAAP
Third 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 expense
Slide 22: Third Quarter Organic Net Sales Change
Third Quarter Organic Net Sales Change Organic Net Sales Change BorgWarner net sales change year over year excluding the estimated impact of foreign exchange (FX) and net M&A. Q3 2020 Delphi Technologies Q3 2021 Market Impact, Q3 2020 Net Pro Forma AKASOL Pricing & Q3 2021 Net Organic Net $ in milli
Slide 23: FY'21 Adj. Operating Income and Adj. Operating Margin
FY’21 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP Full Year 2021 Guidance $ in millions Low High Net Sales $ 14,400 $ 14,700 Operating income $ 1,140 $ 1,280 Operating margin 7.9% 8.7% Non-comparable items Restructuring expense $ 200 $ 150 Merger, acquisition a
Slide 24: FY'21 Adj. Earnings per Diluted Share Guidance
FY’21 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP Full Year 2021 Guidance Low High Earnings per diluted share $ 2.07 $ 2.55 Non-comparable items: Restructuring expense 0.72 0.54 Merger, acquisition and divestiture expense 0.14 0.14 Loss on sale 0.02 0.02 Net gain on insurance
Slide 25: Q3'21, YTD'21 and FY'21 Free Cash Flow Reconciliation to US GAAP
Q3’21, YTD’21 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 ser
Slide 26: 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. Light and commercial vehicle