Borgwarner Inc. · NYSE:BWA
Borgwarner — Q1 2023 Earnings Presentation
27 slides from Borgwarner's earnings presentation, May 4, 2023
Slide 1: Q1 2023 Earnings Call Presentation
May 4, 2023 Q1 2023 — Earnings Call Presentation
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 Kevin Nowlan Chief Financial Officer Q&A 4
Slide 5: Adj. EPS Higher on Strong Organic Growth, Charging Forward Progress Continues
Adj. EPS Higher on Strong Organic Growth, Charging Forward Progress Continues ▪ Delivered double-digit organic Net Sales Adj. EPS* Free Cash Flow* sales growth Organic Sales* Increase of ~12% ▪ Margin impacted by cost inflation, lower China production 10.0% 9.5% Adj. Op Margin* Adj. Op Margin* $(61)
Slide 6: Continued Expansion Across Electrified Vehicle Products
Continued Expansion Across Electrified Vehicle Products DC Fast Chargers HV eFans HV Hairpin eMotors ▪ Award with Pontiac, ▪ Award with global CV OEM ▪ Award with Chinese Michigan School District to for European and North manufacturer expected to support school bus fleet American markets launch in A
Slide 7: Battery Pack Business Growth Accelerating
Battery Pack Business Growth Accelerating Battery Pack Sales - Acquisition Business Case vs. Current Estimate $ in millions $1,000 $1,000 $600 2023 2025 2030 Acquisition Business Case Current Estimate Battery Packs ▪ Award with a global Seneca, SC Plant Expansion to Result in 3 GWh of ▪ Sales expect
Slide 8: Santroll Acquisition Ahead of Initial Expectations
Santroll Acquisition Ahead of Initial Expectations Acquisition Business Case vs. Current Estimate $400.00 $ in millions 15% Product Customer ~10% 10% 800V eMotor Award with leading EV brand in China $350.00 ~3% 5% ~1% $300.00 ~0% ~$250 0% 800V eMotor Award with premium sports car brand in Europe $25
Slide 9: Q1 2023 Net Sales Walk
Q1 2023 Net Sales Walk $ in millions ▪ Global vehicle markets up ~7% year over year Q1 2022 net sales $3,874 ▪ Organic sales* increased ~12%, FX $(162) driven by growth in Europe and North America offset by reductions in China Organic net sales change* $446 − Europe – Battery pack and exhaust gas re
Slide 10: Financial Results & Adj. Operating Income
Financial Results & Adj. Operating Income $ in millions Q1 2022 adj. operating (in millions, except per share $389 amounts) Three months ended income* GAAP & Non-GAAP March 31, Financial Information 2022 2023 FX $(18) Sales $3,874 $4,180 Organic change, R&D and performance $32 Adj. operating income*
Slide 11: 2023 Market Expectations Modestly Changed
2023 Market Expectations Modestly Changed 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 82.3 82.0 to 84.8 Actual Est. Actual Est. Actual Est. 26.2 25.1 to 26.2 15.8 15.8 to 16.3 14.3 14.4 to 15.0 BorgWarner Estima
Slide 12: 2023 Outlook and Other Items
2023 Outlook and Other Items $ in millions Full-year Net Sales Outlook Market & Earnings Outlook 10.1% Prior Guidance 2023 Outlook 2022 net sales Adj. Operating Margin* $15,801 Organic growth* 7% to 12% 7.5% to 12.5% FX $55 EV sales $1.5B to $1.8B $1.5B to $1.8B eProduct sales** --- $2.3B to $2.6B O
Slide 13: ePropulsion Segment Disclosure Provides Insight into eProduct Profitability
ePropulsion Segment Disclosure Provides Insight into eProduct Profitability ▪ ePropulsion Financial Profile Estimated 2023 ePropulsion Profitability − Expected 2023 net sales ~$2.5B to $2.7B $200 Sales 20.0% − eProducts expected to comprise ~65% of $750M to $850M 2023 net segment sales $150 − 2022 R
Slide 14: Thank You
May 4, 2023 Q1 2023 Earnings Call Presentation — THANK YOU
Slide 15: Appendix
AP |> E N D [IX x BorgWarner
Slide 16: 2023 Planning Assumptions
2023 Planning Assumptions ▪ CapEx $850 to $900 million ▪ Adjusted tax rate for ongoing operations 25% to 26% 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 14.4 to 15.0 15.8 15.8 to 16.3 26.2 25.1 to 26.2 82.3 82.0 to 84.8 Commercial Vehicle 0.6 ~0.6
Slide 18: Quarterly & Full-Year 2022 Recast Segment Information
Quarterly & Full-Year 2022 Recast Segment Information In the first quarter of 2023, the Company elected to disaggregate the former e-Propulsion & Drivetrain reporting segment into two separate reporting segments of Drivetrain & Battery Systems and ePropulsion. The Drivetrain & Battery Systems segmen
Slide 19: First Quarter Reconciliation to US GAAP
First Quarter 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, other
Slide 20: First Quarter Reconciliation to US GAAP
First Quarter 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, discontinued o
Slide 21: First Quarter Organic Net Sales Change
First 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 the 2022 acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions and Drivetek. 21
Slide 22: 2022 Adj. Operating Income and Adj. Operating Margin Reconciliation to US GAAP
2022 Adj. Operating Income and Adj. Operating Margin 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, intang
Slide 23: 2023 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP
2023 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation to US GAAP 23
Slide 24: 2023 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP
2023 Adj. Earnings per Diluted Share Guidance Reconciliation to US GAAP 24
Slide 25: 2023 Organic Net Sales Change Guidance Reconciliation
2023 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) and the acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions, Drivetek and the electric vehi
Slide 26: Q1 2023, Q1 2022 and Full Year 2023 Free Cash Flow Reconciliation to US GAAP
Q1 2023, Q1 2022 and Full Year 2023 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 abili
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), the acquisitions of Santroll’s light vehicle eMotor