BorgWarner Reports Full Year 2024 Results, Expects to Deliver Continued Sales Outgrowth, an Adjusted Operating Margin Above 10% and Strong Free Cash Flow in 2025

Auburn Hills, Michigan, February 6, 2025 – BorgWarner Inc. (NYSE: BWA) today reported fourth quarter and full-year results and provided 2025 guidance.

Fourth Quarter 2024 and 2025 Guidance Highlights

• BorgWarner achieved an adjusted operating margin of 10.2% during the fourth quarter, which equated to a U.S. GAAP operating margin of (9.2)%, which includes $646 million of goodwill and fixed asset impairment charges recorded during the fourth quarter in our PowerDrive Systems and Battery and Charging Systems business units. The Company also generated net cash provided by operating activities of $682 million or $539 million in free cash flow, despite an approximately 4% decline in the Company’s weighted light and commercial vehicle markets.
• BorgWarner expects to deliver continued sales outgrowth, an adjusted operating margin above 10% and strong free cash flow in 2025, despite the Company’s expectation that its weighted light and commercial vehicle markets will be down 1% to 3% in 2025. The Company’s guidance implies a year-over-year change in organic sales of down 2% to up 2%.
  

New Business Update

The Company secured multiple new business awards that are expected to support its future long-term profitable growth including the following:

• A Variable Cam Timing (VCT) systems award for multiple next-generation hybrid and gasoline engines with a major East Asian OEM. This business is expected to launch in the first quarter of 2026.
• Extension of four turbocharger programs with a major North American OEM for I4 and V6 engine platforms for their midsized and large SUVs as well as truck platforms. This business is expected to launch in 2026.
• An award to supply two types of transfer cases to SAIC Maxus for use in export vehicles. Both products are designed by BorgWarner’s China R&D team and will be manufactured in China, with mass production expected to launch in 2026.
• Four eMotors awards with three leading Chinese OEMs to be used on plug-in hybrids, range-extended hybrids and electric vehicle platforms. These four programs are expected to launch in 2025 and 2026.
  

Fourth Quarter Highlights (continuing operations basis):

• U.S. GAAP net sales of $3,439 million, a decrease of 2.4% compared with fourth quarter 2023.
• Excluding the impact of foreign currencies and the net impact of net M&A, organic sales were down (1.6)% compared with fourth quarter 2023.
• U.S. GAAP net loss of $(1.84) per diluted share.
• Excluding the $2.85 of net losses per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $1.01 per diluted share.
• U.S. GAAP operating loss of $(316) million, or (9.2)% of net sales.
• Excluding $668 million of net pretax expense related to non-comparable items, adjusted operating income was $352 million, or 10.2% of net sales.
• Net cash provided by operating activities of $682 million.
• Free cash flow of $539 million.
  

Full Year Highlights (continuing operations basis):

• U.S. GAAP net sales of $14,086 million, a decrease of 0.8% when compared with 2023.
• Excluding the impact of foreign currencies and the net impact of M&A, organic sales were down (0.2)% compared with 2023.
• U.S. GAAP net earnings of $1.63 per diluted share.
• Excluding $2.69 of net losses per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $4.32 per diluted share.
• U.S. GAAP operating income of $546 million, or 3.9% of net sales.
• Excluding $871 million of net pretax expense related to non-comparable items, adjusted operating income was $1,417 million, or 10.1% of net sales.
• Net cash provided by operating activities of $1,382 million.
• Free cash flow of $729 million.

Results (continuing operations basis):

The Company believes the following table is useful in highlighting non-comparable items that impacted its GAAP net earnings per diluted share. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for the periods presented. 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 $3,439 million for the fourth quarter 2024, a decrease of 2.4% from $3,522 million for the fourth quarter 2023, primarily due to lower industry production compared to prior year, partially offset by increased demand for the Company’s products. Net loss for the fourth quarter 2024 was $(403) million, or $(1.84) per diluted share, compared with net earnings of $149 million, or $0.64 per diluted share, for the fourth quarter 2023. Adjusted net earnings per diluted share for the fourth quarter 2024 were $1.01, up from adjusted net earnings per diluted share of $0.90 for the fourth quarter 2023. Adjusted net earnings for the fourth quarter 2024 excluded net non-comparable items of $(2.85) per diluted share, while adjusted net earnings for the fourth quarter 2023 excluded net non-comparable items of $(0.26) per diluted share. Non-comparable items include $646 million of goodwill and fixed asset impairment charges recorded during the fourth quarter in our PowerDrive Systems and Battery and Charging Systems business units. These and other non-comparable 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 increase in adjusted net earnings per diluted share was primarily due to the impact of higher adjusted operating income and the impact of our share repurchases during 2024, partially offset by a higher effective tax rate.

Full Year 2025 Guidance: The Company has provided 2025 full year guidance. Net sales are expected to be in the range of $13.4 billion to $14.0 billion in 2025, compared with 2024 sales of $14.1 billion. The Company expects its weighted light and commercial vehicle markets to be in the range of down 3.0% to down 1.0% in 2025. The Company’s sales guidance implies a year-over-year change in organic sales of down 2% to up 2%, or estimated outgrowth above market production of approximately 100 to 300 basis points. Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $410 million primarily due to the weakening of the Euro, Chinese Renminbi and the Korean Won against the U.S. dollar.

Operating margin is expected to be in the range of 9.1% to 9.2% in 2025. Excluding the impact of noncomparable items and the add back of intangible asset amortization expense, adjusted operating margin is expected to be in the range of 10.0% to 10.2%. Net earnings are expected to be within a range of $3.84 to $4.12 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $4.05 to $4.40 per diluted share. Full-year operating cash flow is expected to be in the range of $1,325 million to $1,375 million, while free cash flow is expected to be in the range of $650 million to $750 million.

At 9:30 a.m. ET today, a brief conference call concerning fourth quarter and full year 2024 results and
2025 guidance will be webcast at: https://www.borgwarner.com/investors. Additionally, an earnings call
presentation will be available at https://www.borgwarner.com/investors.