BorgWarner Reports Full Year 2022 Results Ahead of Guidance, Expects 2023 Electric Vehicle Sales of $1.5 Billion to $1.8 Billion

Auburn Hills, Michigan, February 9, 2023 – BorgWarner Inc. (NYSE: BWA) today reported 2022 fourth quarter and full-year results.

Charging Forward Update:

• Based on new business awards and actions announced to date, BorgWarner believes it is already on track to achieve approximately $4.3 billion of electric vehicle sales by 2025. The Company also expects its 2023 electric vehicle sales to grow to $1.5 billion to $1.8 billion, up significantly from $870 million in 2022.
• In December, BorgWarner announced its intention to execute a tax-free spin-off of its Fuel Systems and Aftermarket segments into a separate, publicly traded company (NewCo). The Company expects that the intended separation would better allow BorgWarner to focus resources on attractive organic and inorganic opportunities that position it to deliver and even exceed the goals underlying “Charging Forward.”
• BorgWarner announced its commitment to reduce its absolute Scope 3 emissions by at least 25% by 2031 from a 2021 baseline. This Scope 3 target, along with BorgWarner’s previously announced target to achieve 85% absolute Scope 1 and Scope 2 emissions reduction by 2030 (from a 2021 baseline), were formally submitted for validation to the Science Based Target initiative (SBTi) in December 2022.
• BorgWarner is building upon its previously awarded 400V inverter business by now supplying 800V silicon carbide based (SiC) inverters to a major global OEM. Start of production is expected in 2025.
• BorgWarner will supply a major German vehicle manufacturer for the Europe and the U.S. markets with innovative battery cooling plates destined for the carmaker’s next generation of electric vehicles.

Fourth Quarter Highlights:

• U.S. GAAP net sales of $4,108 million, an increase of 12.4% compared with fourth quarter 2021.
• Excluding the impact of foreign currencies and the net impact of net MD&A, organic sales were up 21.3% compared with fourth quarter 2021.
• U.S. GAAP net earnings of $1.09 per diluted share.
• Excluding the $0.17 of net losses per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $1.26 per diluted share.
• U.S. GAAP operating income of $361 million, or 8.8% of net sales.
• Excluding $67 million of net pretax expense related to non-comparable items adjusted operating income was $428 million, or 10.4% of net sales.
• Net cash provided by operating activities of $890 million.
• Free cash flow of $678 million.

Full Year Highlights:

• U.S. GAAP net sales of $15,801 million, an increase of 6.5% when compared with 2021.
• Excluding the impact of foreign currencies and the net impact of MD&A, organic sales were up 14.0% compared with 2021.
• U.S. GAAP net earnings of $3.99 per diluted share.
• Excluding $0.61 of net losses per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $4.60 per diluted share.
• U.S. GAAP operating income of $1,374 million, or 8.7% of net sales.
• Excluding $229 million of net pretax expense related to non-comparable items, adjusted operating income was $1,603 million, or 10.1% of net sales.
• Net cash provided by operating activities of $1,569 million.
• Free cash flow of $846 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 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 then ended. 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.