BorgWarner Inc. · NYSE:BWA
BorgWarner — Q4 2017 Earnings Presentation
23 slides from BorgWarner's earnings presentation, Feb 8, 2018
Slide 1: Earnings Call Presentation Q4 2017
Earnings Call Presentation Q4 2017 February 8, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements contained in, or incorporated by reference into this presentation, future filings by us with the Securities and Exchange Commission (“SEC”), and oral statements made by, or with the approval of, our authorized personnel, that relate to our future performance or futur
Slide 3: Reconciliation to US GAAP
Reconciliation to US GAAP Q4 2016 to Q4 2017 Asset Non-US GAAP Impairment & Asbestos Intangible (Excluding non- $ in millions, except per share data US GAAP Loss on Restructuring M&A IBNR Asset Tax Reform Other Tax comparable Items, (Reported) Divestiture Expense Expense Expense Impairment Adjustmen
Slide 4: Agenda
Agenda James Verrier – President and Chief Executive Officer 2017 Year in Review Macro Outlook and Industry Perspective Recent Product Announcements 2018 Outlook / Emissions Update Ron Hundzinski – Chief Financial Officer Q4 2017 Results 2018 Guidance Tax Update Q&A © BorgWarner Inc. 4
Slide 5: Industry Perspective & Company Update
Industry Perspective & Company Update James Verrier, President & Chief Executive Officer February 8, 2018
Slide 6: Strong Execution in 2017
Strong Execution in 2017 Exceeded high-end of 2017 revenue guidance Significant launches and wins across Combustion-Hybrid-Electric Finalized purchase of Sevcon Shared 2020 revenue outlook of $11.5B - $11.8B with continued margin improvement © BorgWarner Inc. 6
Slide 7: $2.0 Billion - $2.4 Billion of Backlog thru 2020
$2.0 Billion - $2.4 Billion of Backlog thru 2020 50% 45% 5% 50% of Backlog Related to Hybrid and Electric Propulsion 2018-2020 Backlog as of January 17, 2018 Note: Excludes Sevcon © BorgWarner Inc. 7
Slide 8: Macro Outlook & Industry Perspective
Macro Outlook & Industry Perspective Overall Market Outlook Stable Technology Trends 2018 / 2019 – Significant Industry Hybrid and Electric Program Awards Expected © BorgWarner Inc. 8
Slide 9: Recent Product Announcements
Recent Product Announcements On Axis P2 Module HVH250 electric AWD Coupling for comprehensive motor and with integrated development contract with a Chinese automaker. eGearDrive® ECU and software transmission for Volvo’s new XC40 for the initial launch of the compact SUV. FUSO eCanter truck. © BorgW
Slide 10: 2018 Outlook
2018 Outlook Full-year 2018 Outlook 2018 Organic Growth and Operating Margin Guidance Maintained EPS Range Increased To $4.25 - $4.35 First Quarter 2018 Outlook Maintain Organic Growth Outlook of 3.0% - 5.5% Multiple Timing Headwinds vs. Full-year Outlook © BorgWarner Inc. 10
Slide 11: Earnings Review & Financial Outlook
Earnings Review & Financial Outlook Ron Hundzinski, Executive Vice President & Chief Financial Officer February 8, 2018
Slide 12: BorgWarner Net Sales
BorgWarner Net Sales Q4 2016 to Q4 2017, $ in millions Organic Sales Growth of 10.2% © BorgWarner Inc. 12
Slide 13: BorgWarner Operating Income
BorgWarner Operating Income* Q4 2016 to Q4 2017, $ in millions 16% incremental margin 12.6% 12.7% Margin Margin * Operating income as shown on this slide is non-US GAAP. See reconciliation to US GAAP © BorgWarner Inc. 13
Slide 14: Engine Segment Net Sales & Adjusted EBIT
Engine Segment Net Sales & Adjusted EBIT Q4 2016 to Q4 2017, $ in millions $73 $117 8.4%* $1,578 $1,387 Q4 2016 net sales Market growth, price and net new FX Q4 2017 net sales business $7 $8 6% incremental $266 $251 margin 18.1% 16.9% Margin Margin Q4 2016 adjusted EBIT Market growth, price, net new
Slide 15: Drivetrain Segment Net Sales & Adjusted EBIT
Drivetrain Segment Net Sales & Adjusted EBIT Q4 2016 to Q4 2017, $ in millions $30 $19 $113 $(23) $1,004 $1,023 $883 $861 13.1%* Q4 2016 net sales 2016 Remy 2016 Proforma Market growth, FX Q4 2017 sales pre- Sevcon Q4 2017 net sales including Remy AM Aftermarket Impact price and net new Sevcon busin
Slide 16: U.S. Tax Cuts and Jobs Act Update
U.S. Tax Cuts and Jobs Act Update $ in millions Q4 2017 US Tax Charge Detail Total Transition Tax (Net Toll Tax) $105 Taxes - Foreign Earnings Remittances 94 Deferred Tax Asset Reval 64 Other 11 Total Tax Expense Impact $274 Go forward Effective Tax Rate ~28% Cash tax rate remains in the low 20% ran
Slide 17: 2018 Full Year Guidance
2018 Full Year Guidance © BorgWarner Inc. 17
Slide 18: Organic Sales Growth of 5.0% - 7.0%
Organic Sales Growth of 5.0% - 7.0% $ in millions © BorgWarner Inc. 18
Slide 19: Operating Margins Modestly Improve
Operating Margins Modestly Improve $ in millions 12.6% - 12.7% 12.4% Margin Margin © BorgWarner Inc. 19
Slide 20: 2018 Guidance – Other Items
2018 Guidance – Other Items EPS Guidance $4.25 - $4.35 Free Cash Flow $525 - $575 million CapEx $575 - $625 million Share Repurchases ~$100 million R&D Spending ~4% of sales Tax Rate ~28% $ / Euro Exchange Rate $1.18 / $170M © BorgWarner Inc. 20
Slide 21: 2018 First Quarter Guidance
2018 First Quarter Guidance © BorgWarner Inc. 21
Slide 22: Q1 2018 Guidance
Q1 2018 Guidance Sales Guidance Range $2.59B - $2.65B Organic Growth 3.0% - 5.5% EPS Range $0.99 - $1.03 Sevcon Impact ($0.02) Tax Rate ~28% $ / Euro FX Rate & Impact $1.18 / $100M © BorgWarner Inc. 22
Slide 23: Thank you!
Thank you! © BorgWarner Inc. 23