Slide 1: Earnings Call Presentation Q4 and FY 2021
Earnings Call Presentation Q4 and FY 2021 1 February 15, 2022 © 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: Solid 2021 Finish, Progress on All Charging Forward Pillars
Solid 2021 Finish, Progress on All Charging Forward Pillars ▪ Strong full-year revenue and Net Sales Adj. EPS* Free Cash Flow* margin performance Organic Sales Increase of ~12% ▪ Solid free cash flow performance 8.3% 10.3% includes Q4 warranty impact Pro Forma Adj. Adj. Op Margin* Op Margin* $4.15 $
Slide 6: New Awards for Advanced CV Propulsion Products
New Awards for Advanced CV Propulsion Products Hydrogen Injection Systems High Voltage eFan System ▪ Award with a top global manufacturer of construction ▪ Award with major European commercial vehicle OEM equipment expected to launch in 2024 for battery electric heavy-duty long-haul trucks expected
Slide 7: New EV Awards for North American Market
New EV Awards for North American Market Generator Inverter Third Generation Battery System ▪ Award with major global OEM expected to launch in ▪ Award with GILLIG, a leading North American bus 2024 manufacturer, expected to launch in 2023 ▪ Used in a range extension system to charge the main ▪ Devel
Slide 8: New 800V Awards for China EV Market
New 800V Awards for China EV Market 800V SiC Inverter 800V Integrated Drive Module ▪ Award with a leading Chinese OEM expected to launch ▪ Award with a Chinese luxury NEV brand expected to in 2023 launch in 2023 ▪ Includes inverters for single front, and both single & dual ▪ Includes electric motor,
Slide 9: Pending Acquisition of Santroll's Light Vehicle eMotor Business
Pending Acquisition of Santroll’s Light Vehicle eMotor Business Would strengthen BorgWarner’s electric propulsion systems leadership ▪ eMotor remains an important element of BorgWarner’s electric vehicle growth strategy Estimated Revenue ($ in Millions) ▪ Santroll’s light vehicle eMotor business is
Slide 10: Progress Report
Progress Report EV Organic Sales M&A Dispositions in 2025 by 2025 by 2025 Current $2.7B Booked Status Charging $2.0B $3.5B Forward Goals Goal $1.3B Add’l M&A Add’l Reached to $2.5B Dispositions $1.4B $0.6B AKASOL & Targeted by to Santroll $0.8B End of 2022 $0.7B (pending) $0.2B Completed © BorgWarne
Slide 11: BorgWarner Q4 2021 Net Sales Walk
BorgWarner Q4 2021 Net Sales Walk $ in millions ▪ Global vehicle markets down ~15% Q4 2020 net sales $3,926 year over year FX $(49) ▪ Organic sales decreased ~7%, with positive relative performance in all Market Impact and net pricing $(513) major regions ▪ North America – Vehicle mix and Backlog, m
Slide 12: BorgWarner Financial Results & Adj. Operating Income
BorgWarner Financial Results & Adj. Operating Income $ in millions Q4 2020 adj. operating Three months ended $448 (in millions, except per share amounts) income* GAAP & Non-GAAP Financials December 31, 2020 2021 FX $0 Sales $3,926 $3,655 Adj. operating income* $448 $375 Market impact, pricing, Adj.
Slide 13: Expect Global Markets Improvement in 2022
Expect Global Markets Improvement in 2022 LV Units in millions BorgWarner Global Market North America Europe China FY’21 FY’22 Actual Est. 78.4 to 81.6 FY’21 FY’22 FY’21 FY’22 FY’21 FY’22 76.4 Est. Actual Est. Actual Actual Est. 24.3 23.3 to 24.2 17.7 to 18.3 14.5 to 14.9 15.7 13.0 BorgWarner Estima
Slide 14: Updating Adjusted Operating Margin Definition for 2022
Updating Adjusted Operating Margin Definition for 2022 ▪ Adjusted operating income will now exclude the impact of intangible asset ($ in millions) 2019 2020 2021 amortization expense Adjusted operating margin* as previously reported 12.1% 9.7% 10.3% ▪ Change is intended to improve year- Intangible a
Slide 15: 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 2021 Actual 2022 Outlook Disposition Global light vehicle pro forma impact $(177) 76.4M 78.4M to 81.6M production 2021 pro forma sales 10.9% Pro forma Ad
Slide 16: Thank you!
Thank you! 16 © BorgWarner Inc. 16
Slide 17: Appendix
Appendix © BorgWarner Inc. 17
Slide 18: 2022 Planning Assumptions
2022 Planning Assumptions ▪ CapEx $850 to $900 million ▪ Adjusted tax rate for ongoing operations ~28% © BorgWarner Inc. 18
Slide 19: 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 prio
Slide 20: Pro Forma 2020 Quarterly Sales and Adj. Operating Income
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 21: 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 14.9 15.7 17.7 to 18.3 24.3 23.3 to 24.2 76.4 78.4 to 81.6 Commercial Vehicle 0.6 ~0.7
Slide 22: 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 23: Fourth Quarter and Full Year Reconciliation to US GAAP
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 24: 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) and net M&A. Q4 2021 Market Impact, Q4 2020 Net AKASOL Pricing & Q4 2021 Net Organic Net $ in millions Sales FX Impact Oth
Slide 25: Historical Data for Adjusted Operating Income Update
Historical Data for Adjusted Operating Income Update 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 expenses, discontinued operations, and other gains
Slide 26: FY'22 Adj. Operating Income and Adj. Operating Margin
FY’22 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP Full Year 2022 Guidance $ in millions Low High Net Sales $ 15,900 $ 16,500 Operating income $ 1,391 $ 1,556 Operating margin 8.7% 9.4% Intangible asset amortization expense 94 94 Non-comparable items Restructuri
Slide 27: FY'22 Adj. Earnings per Diluted Share Guidance
FY’22 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP Full Year 2022 Guidance Low High Earnings per diluted share $ 3.71 $ 4.19 Non-comparable items: Restructuring expense 0.33 0.33 Merger, acquisition and divestiture expense 0.11 0.08 Adjusted earnings per diluted share $ 4.15 $
Slide 28: Q4'21, FY'21 and FY'22 Free Cash Flow Reconciliation
Q4’21, FY’21 and FY’22 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 serv
Slide 29: 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