Borgwarner Inc. · NYSE:BWA
Borgwarner — Merger or Acquisition (February 2020)
24 slides from Borgwarner's merger presentation, Feb 24, 2020
Slide 1: BorgWarner to Acquire Delphi Technologies: Strengthens Propulsion Systems Leadership
BorgWarner to Acquire Delphi Technologies: Strengthens Propulsion Systems Leadership February 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This communication may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that reflect, when made, Delphi Technologies’ or BorgWarner’s respective current views with respect to future events, including the proposed trans
Slide 3: A Propulsion Systems Leader, Well Positioned for the Future
A Propulsion Systems Leader, Well Positioned for the Future BorgWarner’s acquisition of Delphi Technologies will strengthen its propulsion systems leadership ✔▪ Reinforces leadership in electrified propulsion systems ✔▪ Increases electronics and power electronics scale, technology, talent and adds t
Slide 4: Delphi Technologies Overview
Delphi Technologies Overview Sales Mix by Business Deep expertise in Expect Powertrain to (1) Electrification with remain a highly profitable Electronics Aftermarket differentiated power business providing a wide 19% 18% electronics and software range of engine and fuel capabilities handling compone
Slide 5: Delphi Technologies Electronics Overview
Delphi Technologies Electronics Overview 18% 2019 Power Electronics ECUs ▪ ~25% of electronics business ▪ Broad range of ECUs and systems & from power electronics software integration capabilities HV Inverters Engine Controller ▪ Broad high voltage power ▪ High level of vertical integration electron
Slide 6: Delphi Technologies Business Overview (Cont'd)
Delphi Technologies Business Overview (Cont’d) 19% 2019 2019 Powertrain Products Aftermarket 26% ▪ Wide range of engine and fuel ▪ Broad product portfolio spanning handing components to help across passenger and commercial monitor, control, and optimize vehicles, heavy commercial vehicles, powertrai
Slide 7: Delphi Technologies Business Overview (Cont'd)
Delphi Technologies Business Overview (Cont’d) 2019 2019 Light Vehicle Fuel Injection 23% Commercial Vehicle Diesel Injection ▪ GDi growth driven by advanced ▪ Strong profitability and cash generation 14% emission standards and decline of enabled by low cost global light vehicle diesel in Europe man
Slide 8: Compelling transaction for Delphi Technologies' stakeholders
Compelling transaction for Delphi Technologies’ stakeholders Combination allows Delphi Technologies to become part of a pioneering propulsion technologies company with enhanced scale and unique capabilities Delphi Technologies’ shareholders receive ability to benefit from future upside and enhanced
Slide 9: Strengthens Scale and Expertise in Electrification
Strengthens Scale and Expertise in Electrification Mechanical, clutching, Award-winning motors Leadership in power and hydraulic controls provide industry electronics, software, expertise leading technology and controls eGearDrive® Electric Drive High Voltage Integrated Drive Module Transmission Mot
Slide 10: Journey to Advanced Propulsion and Electrification
Journey to Advanced Propulsion and Electrification Complementing Organic Growth with Acquisitions Launched electric drive Launched 48-volt eBooster® Developed groundbreaking Won contract to supply P2 on- Won first eTurboTM award with Unveiled fully integrated drive module (eDM) electrically driven c
Slide 11: Evolution of Combustion, Hybrid, and Electric (C-H-E) Mix
Evolution of Combustion, Hybrid, and Electric (“C-H-E”) Mix 2023 Light Vehicle Market (Units) 2023 Light Vehicle Net Sales Mix 8% 6% 12% 8% 25% 30% 29% 29% Electric Hybrid Combustion 67% 64% 59% 63% IHS1 BWA1 DLPH2 Pro Forma3 BWA Consistent with BorgWarner’s stated C-H-E propulsion strategy Source:
Slide 12: Strengthens Combustion Leadership
Strengthens Combustion Leadership so so Boosting Exhaust Gas Fuel Assembly / Engine / Transmission Technologies Management Delivery Controllers Air Path, Mechanical, and All Fuel Injection and Wheel Drive Electronics Representative Examples © BorgWarner Inc. 12
Slide 13: Enhances Market Balance
Enhances Market Balance End Market Mix (2019 Preliminary Sales) Geographic Mix (2019 Preliminary Sales) RoW Aftermarket Asia Pacific 2% 9% 27% Europe Commerical 39% 16% Vehicle OEM Light 75% Vehicle 32% OEM North America $14.5 billion pro forma revenue provides enhanced end market exposure to commer
Slide 14: Adds Scale and Capabilities Across Propulsion Portfolio
Adds Scale and Capabilities Across Propulsion Portfolio ▪ Broad portfolio of combustion ▪ Broad portfolio of hybrid ▪ Broad portfolio of electric ▪ Broad portfolio of technologies technologies technologies combustion, hybrid, and electric technologies ▪ Ability to leverage operational ▪ Unique hybri
Slide 15: Transaction Summary
Transaction Summary ▪ In a 100% stock transaction, Delphi Technologies’ shareholders will receive a fixed exchange ratio of 0.4534x BorgWarner shares per each of their existing Delphi Technologies shares at closing ▪ Implied purchase price of $17.39 per Delphi Technologies share (1) ▪ $1.5 billion i
Slide 16: Pro Forma Financial Outlook
Pro Forma Financial Outlook Pro Forma Avg. Annual Market Outgrowth (2021E-2023E) • Continued mid-term industry ~5% outgrowth ~4.5% ~3% • Significant long-term revenue synergy potential focused on electrified vehicles Pro Forma Adj. Margin Outlook Pro Forma with Synergies 12.1% • Sustained top tier m
Slide 17: Potential Revenue Synergies Support Long-term Outgrowth
Potential Revenue Synergies Support Long-term Outgrowth Opportunities Focused Pursuit Opportunities Light Vehicle Customers Products BEV iDM >$1.3B Customer A P4 iDM ▪ Represents top 15 HV P2 Customer B Motor + Inverter opportunities identified jointly HV P4 during due diligence Customer C BEV iDM P
Slide 18: Cost Savings Support Meaningful EPS Accretion
Cost Savings Support Meaningful EPS Accretion Cost Synergies Driven by Meaningful EPS Accretion SG&A and Procurement Savings ($ in millions) $125 Adj. GAAP Excl. Amort. of $0.50 Intangibles(1) SG&A $0.31 $0.11 Procurement ($0.07) 2021E 2022E 2023E 2021E 2022E Long-Term Revenue Synergies Provide New
Slide 19: Estimated Free Cash Flow Growth Timing
Estimated Free Cash Flow Growth Timing ($ in billions) Relatively Flat Earnings, Restructuring >$0.9B Savings & Synergies Δ in Cash Restructuring Cost Earnings, ~$0.7B Cash Restructuring Restructuring Savings & Cost Synergies 2020 FCF 2021 FCF 2022 FCF © BorgWarner Inc. 19
Slide 20: $1 Billion Share Repurchase Program
$1 Billion Share Repurchase Program 2014-2018 Accumulated Capital New Share Repurchase Program Deployment Mix(1) ▪ Consistent with existing capital allocation strategy Dividends 19% ▪ To be executed over the next M&A Activity three years 48% Share Repurchases ▪ Demonstrates confidence in 33% long-te
Slide 21: A Propulsion Systems Leader, Well Positioned for the Future
A Propulsion Systems Leader, Well Positioned for the Future BorgWarner’s acquisition of Delphi Technologies will strengthen its propulsion systems leadership ✔▪ Reinforces leadership in electrified propulsion systems ✔▪ Increases power electronics scale, technology, talent and adds to system capabil
Slide 22: BorgWarner
x BorgWarner
Slide 23: Combined Capabilities Across Propulsion Types
Combined Capabilities Across Propulsion Types Boosting All Wheel Drive & Engine Timing Technologies Cross Axle Systems Systems High Voltage Battery eGearDrive® Battery Module ® P2 Hybrid Modules eBooster electrically Integrated Belt On / Off Axis / Coolant Heater Transmission driven compressor Alter
Slide 24: Additional Information and Where to Find It
Additional Information and Where to Find It This presentation may be deemed solicitation material in respect of the proposed acquisition of Delphi Technologies by BorgWarner (the “proposed transaction”). In connection with the proposed transaction, Delphi Technologies will file with the Securities a