Borgwarner Inc. · NYSE:BWA

Borgwarner — Q3 2018 Earnings Presentation

21 slides from Borgwarner's earnings presentation, Oct 25, 2018

  1. Slide 1: Earnings Call Presentation Q3 2018

    Earnings Call Presentation Q3 2018

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement Statements in 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,” “continu

  3. Slide 3: Reconciliation to US GAAP

    Reconciliation to US GAAP Q3 2017 to Q3 2018 Non-US GAAP $ in millions, except per share data Restructuring CEO Stock (Excluding non- US GAAP & Other Awards M&A Other Tax comparable Items, (Reported) Expense Modification Expense Adjustments including M&A) 2018 Q3 Sales $2,478.5 $2,478.5 Gross Profit

  4. Slide 4: Agenda

    Agenda ▪ Fred Lissalde – Chief Executive Officer ▪ Industry Perspective ▪ Q3’18 Recap / 2018 Outlook ▪ Recent Announcements / Investor Day Recap ▪ Ron Hundzinski – Chief Financial Officer ▪ Q3 2018 Results ▪ 2018 Full Year Guidance / Q4 2018 Guidance ▪ Q&A © BorgWarner Inc. 4

  5. Slide 5: Q3'18 Recap / 2018 Outlook

    Q3’18 Recap / 2018 Outlook Fred Lissalde, President & Chief Executive Officer October 25, 2018

  6. Slide 6: Industry Perspective

    Industry Perspective ▪ Q3 Light Vehicle Industry Volumes Weaker, Growth Over Market Remains Robust ▪ Expect Modestly Declining Full-year Industry Volumes ▪ Outgrowth of Market Continues Based on Strong Demand for BorgWarner Products © BorgWarner Inc. 6

  7. Slide 7: Q3'18 Recap and 2018 Outlook

    Q3’18 Recap and 2018 Outlook ▪ Solid Q3 2018 Results Despite Challenging Industry Volumes ▪ Organic Growth of 3.6% ▪ Adjusted EPS of $1.00 ▪ Full-year 2018 Outlook ▪ Organic Growth Guidance of 4.5% - 5.5%, 500bps+ over market ▪ EPS Guidance of $4.35 - $4.40 © BorgWarner Inc. 7

  8. Slide 8: Recent Product Announcements

    Recent Product Announcements Electric Drive P2 On-Axis Hybrid High-Voltage High-Voltage Module (eDM) Module Coolant Heater Cabin Heater for New Electric Vehicles for two Leading Chinese for two New Electric For NIO ES8 Electric from Great Wall Motors. automakers. Vehicles, one located in SUV. Europe

  9. Slide 9: Investor Day Recap

    Investor Day Recap ▪ $14 billion Revenue Outlook ▪ Overweight Hybrid and Electric by 2023 ▪ $1 billion Free Cash Flow Outlook ▪ Electrification Accelerates Opportunities © BorgWarner Inc. 9

  10. Slide 10: Earnings Review & Financial Outlook

    Earnings Review & Financial Outlook Ron Hundzinski, Executive Vice President and Chief Financial Officer October 25, 2018

  11. Slide 11: BorgWarner Net Sales

    BorgWarner Net Sales Q3 2017 to Q3 2018, $ in millions Organic Sales Growth of 3.6% © BorgWarner Inc. 11

  12. Slide 12: BorgWarner Operating Income

    BorgWarner Operating Income* Q3 2017 to Q3 2018, $ in millions 7% incremental margin 12.3% 11.8% Margin Margin * Operating income as shown on this slide is non-US GAAP. See reconciliation to US GAAP © BorgWarner Inc. 12

  13. Slide 13: Engine Segment Net Sales & Adjusted EBIT

    Engine Segment Net Sales & Adjusted EBIT Q3 2017 to Q3 2018, $ in millions $32 $0 $6 $1,506 2.1%* $1,510 ($29) $1,510 $1,516 Q3 2017 net sales Market growth, price and FX Q3 2018 sales pre-Sevcon Sevcon Q3 2018 net sales net new business $5 $238 17% incremental $238 ($5) $238 $238 margin $0 15.8% 15

  14. Slide 14: Drivetrain Segment Net Sales & Adjusted EBIT

    Drivetrain Segment Net Sales & Adjusted EBIT Q3 2017 to Q3 2018, $ in millions $58 $0 $13 $964 ($16) $964 $977 $922 6.3%* Q3 2017 net sales Market growth, price and FX Q3 2018 sales pre-Sevcon Sevcon Q3 2018 net sales net new business $2 $111 4% incremental $112 ($2) $112 $108 margin ($4) 12.1% 11.0

  15. Slide 15: 2018 Full Year Guidance

    2018 Full Year Guidance © BorgWarner Inc. 15

  16. Slide 16: Organic Sales Growth of ~4.5% - 5.5%

    Organic Sales Growth of ~4.5% - 5.5% $ in millions © BorgWarner Inc. 16

  17. Slide 17: Operating Margins Flattish YOY

    Operating Margins Flattish YOY $ in millions 12.3% - 12.4% 12.4% Margin Margin © BorgWarner Inc. 17

  18. Slide 18: 2018 Guidance – Other Items

    2018 Guidance – Other Items ▪ EPS Guidance $4.35 - $4.40 ▪ Free Cash Flow $550 - $575 million ▪ CapEx $575 - $625 million ▪ Share Repurchases $150+ million ▪ R&D Spending ~4% of sales ▪ Tax Rate Low 26% range ▪ FY’18 FX Revenue Impact ~$192M © BorgWarner Inc. 18

  19. Slide 19: 2018 Fourth Quarter Guidance

    2018 Fourth Quarter Guidance © BorgWarner Inc. 19

  20. Slide 20: Q4 2018 Guidance

    Q4 2018 Guidance ▪ Sales Guidance Range $2.53B - $2.63B ▪ Organic Growth 1.0% - 4.5% ▪ EPS Range $1.07 - $1.12 ▪ Tax Rate Low 26% range ▪ $ / Euro FX Rate & Impact $1.15 / ($75)M © BorgWarner Inc. 20

  21. Slide 21: Thank you!

    Thank you! © BorgWarner Inc. 21

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