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BORGWARNER WINS TWO ADDITIONAL INVERTER AWARDS, PROVIDES CHARGING FORWARD UPDATE AND REPORTS THIRD QUARTER RESULTS

Auburn Hills, Michigan, November 3, 2021 – BorgWarner Inc. (NYSE: BWA) today reported third quarter results.

 

New Program Awards and Charging Forward Highlights:

  • The Company secured an award for a North American inverter program with a Global OEM, expected to launch in 2024.
  • This high-voltage silicon carbide inverter program is the company’s largest inverter award to date in terms of expected annual revenue. The business award also marks the company’s first major silicon-carbide-based (SiC) inverter win for the North American market.
  • The Company also announced an 800V SiC inverter award with a German OEM, expected to launch in early 2025.
  • This award expands existing 400V inverter business with this German OEM by adding 800V technology.
  • Including these two announcements, the Company has now booked electric vehicle programs with annual revenue expected to be approximately $2.3 billion in 2025.
  • This booked business represents more than 90% of the company’s targeted organic electric vehicle revenue of $2.5 billion by 2025 per its Charging Forward initiative.

Third Quarter Highlights:

  • U.S. GAAP net sales of $3,416 million, up 35% compared with third quarter 2020.
  • Excluding the impact of foreign currencies and the net pro forma impact of acquisitions and divestitures, organic sales were down 7% compared with third quarter 2020.
  • U.S. GAAP net earnings of $0.40 per diluted share.
  • Excluding the $(0.40) per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $0.80 per diluted share.
  • U.S. GAAP operating income of $253 million, or 7.4% of net sales.
  • Excluding the $58 million of pretax expenses related to non-comparable items, adjusted operating income was $311 million. Excluding the impact of non comparable items, adjusted operating income was 9.1% of net sales.
  • Net cash provided by operating activities of $142 million.
  • Free cash flow was $(10) million.
 
 

Financial Results:

The Company believes the following table is useful in highlighting non-comparable items that impacted its U.S. GAAP net 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, discontinued operations, other gains and losses not reflective of the Company’s ongoing operations, and related tax effects.

 

Net sales were $3,416 million for the third quarter 2021, up 35% from $2,534 million for the third quarter 2020, as the acquisition of Delphi Technologies and increased demand for the Company’s products more than offset the decline in industry production. Net earnings for the third quarter 2021 were $96 million, or $0.40 per diluted share, compared with net earnings of $111 million, or $0.53 per diluted share, for the
third quarter 2020. Adjusted net earnings per diluted share for the third quarter 2021 were $0.80, down from an adjusted net earnings per diluted share of $0.88 for the third quarter 2020. Adjusted net earnings for the third quarter 2021 excluded net non-comparable items of $(0.40) per diluted share. Adjusted net earnings for the third quarter 2020 excluded net non-comparable items of $(0.35) per diluted share.
These items are listed in the table above, which is provided by the Company for comparison with other results and the most directly comparable U.S. GAAP measures. The decrease in adjusted net earnings was primarily due to the impact of the decline in industry production, higher commodity costs, and the AKASOL AG (“AKASOL”) acquisition. The impact of foreign currencies increased net sales by approximately $56 million and increased adjusted operating income by approximately $9 million for third
quarter 2021, compared with the third quarter 2020.

 

Full Year 2021 Guidance:

For the full-year 2021, net sales are expected to be in the range of $14.4 billion to $14.7 billion, under the assumption that the semiconductor supply issues do not worsen and there are no additional production disruptions arising from COVID-19. This implies a year-over-year increase in organic sales of 8.5% to 11%. The Company expects its weighted light and commercial vehicle markets to be in the range of down approximately 2.5% to flat in 2021. The acquisition of AKASOL is expected to increase year-over-year sales by approximately $70 million. Foreign currencies are expected to result in a year-over-year increase in sales of approximately $425 million primarily due to the strengthening of the Euro, Chinese Renminbi and Korean Won against the U.S. dollar.

Operating margin for the full year is expected to be in the range of 7.9% to 8.7%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 9.6% to 10.0%. Net earnings for the full year are expected to be within a range of $2.07 to $2.55 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $3.65 to $3.95 per diluted share. Full-year operating cash flow is expected to be in the range of $1,275 million to $1,400 million, while free cash flow is expected to be in the range of $600 million to $700 million.

At 9:30 a.m. ET today, a brief conference call concerning third quarter 2021 results and guidance will be webcast here. Additionally, an earnings call presentation will be available here.
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