Borgwarner Inc. · NYSE:BWA
Borgwarner — Q2 2023 Earnings Presentation
28 slides from Borgwarner's earnings presentation, Aug 2, 2023
Slide 1: Q2 2023 Earnings Call Presentation
Q2 2023 Earnings Call Presentation August 2, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act (the “Act”) that are based on management's current outlook, expectations, estimates and projections. Words such as “anticipates,” “believes,” “continu
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: Charging Forward 2027 Established, Strong Progress in Second Quarter
Charging Forward 2027 Established, Strong Progress in Second Quarter ▪ Delivered double-digit organic sales Pro Forma, excluding PHINIA growth Net Sales Adj. EPS* Free Cash Flow* ▪ Strong margin performance Organic Sales* Increase of ~22% supported by conversion on sales 8.5% 10.1% and customer pric
Slide 6: Established 2027 Targets
Established 2027 Targets eProduct 2027 STRATEGY $10B+ in eProduct sales by 2027 Growth eProduct eProduct Adj. Operating Margin Profitability ~7% by 2027 eProduct eProduct Maximize Growth Profitability Foundational Value Maximize Maintain double-digit margins Foundational for Foundational products Va
Slide 7: Pending Acquisition of Electric Hybrid Systems (EHS) Business Segment of Eldor Corporation
Pending Acquisition of Electric Hybrid Systems (EHS) Business Segment of Eldor Corporation Strategic Rationale Estimated Sales (€ in Millions) ► Complementary product portfolio with integrated high-voltage boxes, DC/DC converters and integrated high-voltage ~€250M boxes and on-board chargers (OBCs)
Slide 8: onsemi Agreement Further Improves Supply Resilience
onsemi Agreement Further Improves Supply Resilience “onsemi’s continuous and strategic Viper investment in ramping SiC manufacturing Switch onsemi capacity across its end-to-end supply chain gives us confidence in our ability to support the increasing demand for our solutions, now and in the future…
Slide 9: Key Wins Drive Charging Forward 2027 Pillars
Key Wins Drive Charging Forward 2027 Pillars Integrated Drive Modules Inverters + eMotors High-Voltage Coolant • Award with leading Chinese • Award with major East Asian Heaters domestic OEM, expected to OEM to supply the • Award with global supplier for launch in 2024 automaker’s new electric use o
Slide 10: Q2 2023 Net Sales Walk
Q2 2023 Net Sales Walk $ in millions ▪ Organic sales* increased ~22% Q2 2022 net sales $3,759 supported by the following: PHINIA Disposition $(740) ▪ Global weighted vehicle markets up pro forma impact** ~15% year over year Q2 2022 pro forma $3,019 net sales* ▪ Customer recoveries of material cost i
Slide 11: Pro Forma Financial Results & Adj. Operating Income
Pro Forma Financial Results & Adj. Operating Income $ in millions Q2 2022 adj. operating (in millions, except per share income* $348 Three months ended amounts) Non-GAAP Financial June 30, PHINIA Disposition pro forma impact** $(90) Information 2022 2023 Q2 2022 pro forma $258 Net Sales $3,019 $3,67
Slide 12: 2023 Outlook and Other Items
2023 Outlook and Other Items Full-year Net Sales Outlook Market & Earnings Outlook Prior Guidance 2023 Outlook 2022 net sales $15,801 PHINIA Disposition Organic growth* 10% to 15% 13% to 16% $3,234 pro forma impact 9.4% Pro Forma eProduct sales** $2.3B to $2.6B $2.3B to $2.4B 2022 pro forma sales $1
Slide 13: Anticipated ePropulsion Profitability on Track
Anticipated ePropulsion Profitability on Track ePropulsion Segment Performance & Outlook ePropulsion Product Examples ▪ Sales and margins improved vs. Q1 2023 − Driven in part by Q2 customer recoveries of first half material cost inflation from suppliers ▪ Believe we remain on track for positive Int
Slide 14: Thank You
August 2, 2023 Q2 2023 Earnings Call Presentation THANK YOU
Slide 15: Appendix
APPENDIX BORGWARNER
Slide 16: Financial Results Including PHINIA
Financial Results Including PHINIA Net Sales Adj. EPS* Free Cash Flow* 9.3% 10.5% Adj. Op Margin* Adj. Op Margin* $4,520 $1.35 $849 $3,759 (PHINIA) $0.30 $1.05 (PHINIA) $740 (PHINIA) $0.31 (PHINIA) $62 $3,671 $1.05 $3,019 $38 $0.74 Q2 2022 Q2 2023 Q2 2022 Q2 2023 Q2 2022 Q2 2023 *Organic sales, adj.
Slide 17: 2023 Planning Assumptions
2023 Planning Assumptions ▪ CapEx $750 to $800 million ▪ Adjusted tax rate for ongoing operations 25% to 26% 17
Slide 18: 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 14.7 to 15.2 15.8 16.6 to 17.0 26.2 25.4 to 25.9 82.3 82.8 to 85.5 Commercial Vehicle 0.6 ~0.7
Slide 19: 2022 BorgWarner Excluding PHINIA Spin-Off Pro Forma Historical Information
2022 BorgWarner Excluding PHINIA Spin-Off Pro Forma Historical Information On July 3, 2023, BorgWarner completed the previously announced spin-off of its Fuel Systems and Aftermarket segments in a transaction intended to qualify as tax-free to the Company’s stockholders for U.S. federal income tax p
Slide 20: Q1 & Q2 2023 BorgWarner Excluding PHINIA Spin-Off Pro Forma Historical Information
Q1 & Q2 2023 BorgWarner Excluding PHINIA Spin-Off Pro Forma Historical Information On July 3, 2023, BorgWarner completed the previously announced spin-off of its Fuel Systems and Aftermarket segments in a transaction intended to qualify as tax-free to the Company’s stockholders for U.S. federal inco
Slide 21: Second Quarter & YTD Reconciliation to US GAAP
Second Quarter & YTD 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,
Slide 22: Second Quarter & YTD Reconciliation to US GAAP
Second Quarter & YTD 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, discont
Slide 23: Second Quarter & YTD Organic Net Sales Change
Second Quarter & YTD 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, Drivetek and the electric vehicle
Slide 24: 2023 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation
2023 Adj. Operating Income and Adj. Operating Margin Guidance Reconciliation From Continuing Operations 24
Slide 25: 2023 Adj. Earnings per Diluted Share Guidance Reconciliation
2023 Adj. Earnings per Diluted Share Guidance Reconciliation From Continuing Operations 25
Slide 26: 2023 Organic Net Sales Change Guidance Reconciliation
2023 Organic Net Sales Change Guidance Reconciliation From Continuing Operations 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, Dri
Slide 27: Free Cash Flow Reconciliation From Continuing Operations
Q2 2023, Q2 2022 & Full-Year 2023 Free Cash Flow Reconciliation From Continuing Operations 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 C
Slide 28: 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