Borgwarner Inc. · NYSE:BWA
Borgwarner — Merger or Acquisition (October 2020)
17 slides from Borgwarner's merger presentation, October 2020
Slide 1: BorgWarner Completes Acquisition of Delphi Technologies
BorgWarner Completes Acquisition of Delphi Technologies: Strengthens Propulsion Systems Leadership October 2020
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: 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 to
Slide 4: Delphi Technologies Overview
Delphi Technologies Overview Sales Mix by Products ▪ Broad high voltage power electronics Aftermarket Electronics portfolio to serve most emerging xEV 19% 18% architectures 14% Light Vehicle Diesel ▪ ECU products bring scale in purchasing, 2019 Powertrain 26% capacity and customer reach Products 9%
Slide 5: Strengthens Scale and Expertise in Electrification
Strengthens Scale and Expertise in Electrification Representative iDM Example Mechanical, clutching, and Award-winning motors provide Leadership in power electronics, hydraulic controls expertise industry leading technology software, and controls eGearDrive® Transmission Electric Drive Motor High Vo
Slide 6: Potential Revenue Synergies Support Long-term Outgrowth
Potential Revenue Synergies Support Long-term Outgrowth Focused Pursuit Opportunities Light Vehicle Customers Products Customer A P2 >$1.4B BEV iDM BEV iDM ▪ Represents top 17 identified Customer B BEV iDM opportunities BEV iDM Customer C BEV iDM ▪ Projected awards over next Customer D BEV iDM 12 to
Slide 7: Enhanced End-Market and Geographic Exposure
Enhanced End-Market and Geographic Exposure ▪ Increased end-market exposure to commercial vehicle and aftermarket Aftermarket Pro Forma Light Vehicle 9% ▪ Complementary commercial vehicle portfolio End- 74% with revenue growth opportunities Market 17% Commercial Mix Vehicle & Industrial ▪ Combined a
Slide 8: Final Transaction Closing Capital Flows
Final Transaction Closing Capital Flows Equity Exchange ▪ Exchanged ~$1.5bn BorgWarner shares for Delphi Technologies’ common stock ▪ Repaid ~$0.9bn Delphi Technologies’ term Debt Paydown loan and revolver as planned, which was funded by Q2 bond issuance ▪ Completed ~$0.8bn exchange offering for Obl
Slide 9: Believe Balance Sheet Strength Remains a Competitive Advantage
Believe Balance Sheet Strength Remains a Competitive Advantage LTM Gross Leverage Ratio ▪ Leverage temporarily elevated due to COVID-19 impact on Q2 EBITDA Q2’2020 Pro Forma ▪ Adjusted pro forma leverage is more ▪ After debt paydowns 3.0x ▪ Q1 2020 LTM EBITDA consistent with historical leverage prof
Slide 10: Driving Cost Synergies Above Initial Guidance
Driving Cost Synergies Above Initial Guidance Targeted Cost Synergies Driven by SG&A and Procurement Savings ($ in millions) SG&A Targeting ~$175 million of cost Procurement synergies which is above initial guidance of $125 million ▪ Additional SG&A and procurement synergies identified over past eig
Slide 11: Sustaining Top-Quartile Margin Performance
Sustaining Top-Quartile Margin Performance Pro Forma Adj. Margin Outlook Meaningful EPS Accretion Expected ▪ BorgWarner expects to remain among the strongest, most profitable companies in Pro Forma our industry 12.1% >11%(1) 7.2% 2019 Adjusted 2019 Adjusted Pro Forma with Operating Margin(2) Operati
Slide 12: Financial Benefits Remain Compelling
Financial Benefits Remain Compelling Meaningful Adj. EPS Accretion Expected ▪ Adjusted EPS accretion in line with prior Adj. GAAP (1) expectations ▪ Supports previously announced $1 billion Excl. Amort. of Intangibles(2) share repurchase program (1) Represents expected accretion to Adjusted EPS. A f
Slide 13: Appendix
Appendix x BorgWarner
Slide 14: Pro Forma LTM Gross Leverage Ratio Reconciliation
Pro Forma LTM Gross Leverage Ratio Reconciliation ($ in millions) Less Delphi Subtotal After Q2’2020 Delphi Q2’2020 Combined Less Sept. 2020 Technologies Term Adjust to Q1’2020 Adjusted Pro Description Q2’2020 BorgWarner (1) Adjusted Debt (4) Technologies Pro Forma Debt Maturity Loan and Revolver LT
Slide 15: BorgWarner LTM Adj. EBITDA Reconciliation
BorgWarner LTM Adj. EBITDA Reconciliation ($ in millions) Three Months Three Months Three Months Three Months Three Months LTM Adj. EBITDA Ended BorgWarner Ended June 30, September 30, Ended December Ended March 31, Ended June 30, Ended June 30, 2019 31, 2019 2020 2020 2020 2019 Operating (loss) inc
Slide 16: Delphi Technologies LTM Adj. EBITDA Reconciliation
Delphi Technologies LTM Adj. EBITDA Reconciliation ($ in millions) Three Months Three Months Three Months Three Months Three Months LTM Adj. EBITDA Ended Delphi Technologies Ended June 30, September 30, Ended December Ended March 31, Ended June 30, Ended June 30, 2019 31, 2019 2020 2020 2020 2019 Op
Slide 17: Adj. Operating Income Reconciliations
Adj. Operating Income Reconciliations ($ in millions) Twelve Twelve Months Ended Months Ended BorgWarner December 31, Delphi Technologies December 31, 2019 2019 Sales $ 10,168 Sales $ 4,361 Operating income $ 1,303 Operating income $ 141 Operating margin % 12.8% Operating margin % 3.2% Non-comparabl