第99.1展示文本
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博格华纳报告2024年第三季度业绩
增加全年调整后的营业利润率和每股收益指导
完成40000万美元股份回购计划
密歇根州奥本山市，2024年10月31日 - 玻格华纳公司（纽交所：BWA）今日公布了第三季度业绩。
第三季度和2024年指引更新
•博格华纳在第三季度取得了10.1%的调整后营业利润率，对应美国通用会计准则下的营业利润率为7.8%。尽管公司权重轻型和商用车市场下降了5.6％，但公司也产生了净现金流量从营业活动中提供了35600万美元，或20100万美元的自由现金流。
•公司将其全年调整后的营业利润率指引的中位数提高了20个基点，并将其调整后的每股盈利指引提高了约0.18美元，或每股稀释4%。这一增长是由强劲的第三季度运营业绩、持续的成本控制、较低的有效税率以及公司第三季度的股票回购推动的。由于市场生产前景不佳，公司将全年中点净销售指引减少了15000万美元。
•博格华纳在第三季度完成了回购公司30000万美元的流通股份。博格华纳目前已在2024年回购了40000万美元的流通股份。
新业务更新
该公司获得了多个新的业务奖项，预计将支撑其未来长期的盈利增长，包括：
•为一家北美汽车制造商的下一代全尺寸皮卡车生产两个传动箱部件的大奖。该业务计划于2027年和2028年推出。
•与中国电动汽车OEm、韩国OEm和日本OEm共获得三项高电压特斯拉-冷却液加热器奖。预计分别于2025年、2025年和2028年启动这项业务。
•一项通用汽车涡轮增压器奖，用于它们的Corvette ZR1体育车平台。预计这将是市场上最大的乘用车双涡轮增压器。
第三季度亮点（持续经营基础）：
•根据2023年第三季度，美国通用会计准则的净销售额为344900万美元，较去年同期下降约5%。
◦控制支出，同时继续在我们认为对长期成功至关重要的领域进行投资。除外外币影响和净并购影响，与2023年第三季度相比，有机销售下降了5.1%。
•每股摊薄盈利为1.08美元的美国通用会计准则净收益。
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◦控制支出，同时继续在我们认为对长期成功至关重要的领域进行投资。除与非可比项目相关的每股摊薄净收益$(0.01)（详见下表），调整后的每股摊薄净收益为$1.09。
•美国通用会计准则营业收入为27000万美元，占净销售额的7.8%。
除去8000万美元相关的预税费用，经调整后的营业收入为35000万美元，占净销售额的10.1%。
•经营活动产生的净现金流量为35600万美元。
◦ 自由现金流为20100万美元。
财务成果（持续经营基础）：
公司认为以下表格有助于突出影响其美国通用会计准则稀释每股净收益的不可比因素。下面所述的不可比项目是在税后使用相应的有效税率离散计算的，并使用呈现期间的稀释每股加权平均股数。公司将调整后的每股稀释收益定义为经调整以消除重组费用、并购和剥离费用、其他净费用、中止营运、不反映公司持续经营的其他收入和损失以及相关税效果。
| 截至9月30日的三个月 | 截至9月30日的九个月 | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| 每股稀释收益 | $ | 1.08 | $ | 0.37 | $ | 3.40 | $ | 2.06 | |||||||||||||||
| 不可比较的项目： | |||||||||||||||||||||||
| 重组费用 | 0.07 | 0.17 | 0.21 | 0.21 | |||||||||||||||||||
| 加速折旧 | 0.10 | — | 0.13 | 0.01 | |||||||||||||||||||
| 商业合同结算 | 0.02 | — | 0.06 | — | |||||||||||||||||||
| 与拆股有关的余额调整 | 0.01 | — | 0.06 | — | |||||||||||||||||||
| 出售企业的损益 | 0.03 | — | 0.02 | (0.02) | |||||||||||||||||||
| 集体谈判协议批准奖金 | 0.01 | — | 0.01 | — | |||||||||||||||||||
| 债务清偿盈利 | (0.01) | (0.09) | (0.01) | (0.09) | |||||||||||||||||||
| 兼并和收购支出，净额 | (0.02) | 0.01 | — | 0.07 | |||||||||||||||||||
| 资产减值和租赁修改 | — | — | — | 0.03 | |||||||||||||||||||
| 资产出售获利 | — | (0.03) | — | (0.04) | |||||||||||||||||||
| 股权和债务证券未实现和已实现的损益 | (0.01) | 0.32 | — | 0.55 | |||||||||||||||||||
| Spin-Off的企业协同效应 | — | — | — | 0.03 | |||||||||||||||||||
| 税务调整 | (0.23) | 0.18 | (0.65) | — | |||||||||||||||||||
| 其他不可比较的项目 | 0.04 | 0.05 | 0.07 | 0.03 | |||||||||||||||||||
| 根据调整后的摊薄股数计算的每股调整后收益 | $ | 1.09 | $ | 0.98 | $ | 3.30 | $ | 2.84 | |||||||||||||||
2024年第三季度净销售额为344900万美元，相比2023年同期下降约5%，主要是由于市场产量下降。2024年第三季度净收入为24200万美元，每股摊薄收益为1.08美元，相比2023年第三季度的净收入为8700万美元，每股摊薄收益为0.37美元。2024年第三季度每股摊薄调整后净收益为1.09美元，高于2023年第三季度的调整后每股摊薄净收益为0.98美元。2024年第三季度调整后净收益不包括每股摊薄净非可比项目-(0.01)美元，而2023年第三季度调整后净收益不包括净不可比项目
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每摊薄股份$(0.61)。 这些项目列在上面的表格中，由公司提供，以便与其他结果和最直接可比的美国通用会计准则措施进行比较。 调整后的每摊薄股份净收益增长主要是由于强劲的运营业绩，持续的成本控制，客户回报，较低的有效税率以及公司的股份回购。
2024年整年业务指引： 公司已更新2024年全年销售、毛利和每股收益指引。2024年净销售预计在140亿美元至142亿美元区间内，相比公司之前的指引为141亿美元至144亿美元，以及2023年销售额约为142亿美元。公司预计其轻型商用车市场将在2024年同比下降3.5%至3%，与公司先前的下滑3%至下滑2%的指引相比有所下降。公司的销售指引暗示着有机销售额同比约下降（1.5)%至持平，或预估产量高于市场大约200至300个基点。公司预计2024年电子产品销售额约为24亿美元，高于2023年的约20亿美元。预计外币将导致销售额同比减少约2000万美元，主要由于欧元走强，部分抵消了韩元和人民币对美元贬值的影响。预计收购SSE和Eldor Corporation的Electric Hybrid Systems业务部门将使销售额同比增加约3000万美元。
全年营业利润率预计在8.1%至8.2%的区间内。排除非可比项目的影响，调整后的营业利润率预计在9.8%至10.0%的区间内，高于公司先前的指导范围为9.6%至9.8%。预计每股摊薄收益将在$4.17至$4.28的区间内。排除非可比项目的影响，调整后的每股摊薄收益预计在$4.15至$4.30的区间内，高于公司先前的指导范围为$3.95至$4.15。全年经营现金流预计在$132500万至$137500万的区间内，而自由现金流预计在$47500万至$57500万的区间内。
At 9:30 a.m. ET today, a brief conference call concerning third quarter 2024 results and guidance will be webcast at: https://www.borgwarner.com/investors. Additionally, an earnings call presentation will be available at https://www.borgwarner.com/investors.
For more than 130 years, BorgWarner Inc. (NYSE: BWA) has been a transformative global product leader bringing successful mobility innovation to market. Today, we’re accelerating the world’s transition to eMobility -- to help build a cleaner, healthier, safer future for all.
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Forward Looking Statements: This release 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,” “continues,” “could,” “designed,” “effect,” “estimates,” “evaluates,” “expects,” “forecasts,” “goal,” “guidance,” “initiative,” “intends,” “may,” “outlook,” “plans,” “potential,” “predicts,” “project,” “pursue,” “seek,” “should ,” “target,” “when,” “will,” “would,” and variations of such words and similar expressions are intended to identify such
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forward-looking statements. Further, all statements, other than statements of historical fact, contained or incorporated by reference in this release that we expect or anticipate will or may occur in the future regarding our financial position, business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success and other such matters, are forward-looking statements. Accounting estimates, such as those described under the heading “Critical Accounting Policies and Estimates” in Item 7 of our most recently filed Annual Report on Form 10-K (“Form 10-K”), are inherently forward-looking. All forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. Forward-looking statements are not guarantees of performance, and the Company’s actual results may differ materially from those expressed, projected or implied in or by the forward-looking statements.
You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. Forward-looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. These risks and uncertainties, among others, include: supply disruptions impacting us or our customers, commodity availability and pricing, and an inability to achieve expected levels of recoverability in commercial negotiations with customers concerning these costs; competitive challenges from existing and new competitors, including original equipment manufacturer (“OEM”) customers; the challenges associated with rapidly changing technologies, particularly as they relate to electric vehicles, and our ability to innovate in response; the difficulty in forecasting demand for electric vehicles and our electric vehicles revenue growth; potential disruptions in the global economy caused by wars or other geopolitical conflicts; the ability to identify targets and consummate acquisitions on acceptable terms; failure to realize the expected benefits of acquisitions on a timely basis; the possibility that our 2023 tax-free spin-off of our former Fuel Systems and Aftermarket segments into a separate publicly traded company will not achieve its intended benefits; the failure to promptly and effectively integrate acquired businesses; the potential for unknown or inestimable liabilities relating to the acquired businesses; our dependence on automotive and truck production, which is highly cyclical and subject to disruptions; our reliance on major OEM customers; impacts of any future strikes involving any of our OEM customers and any actions such OEM customers take in response; fluctuations in interest rates and foreign currency exchange rates; our dependence on information systems; the uncertainty of the global economic environment; the outcome of existing or any future legal proceedings, including litigation with respect to various claims, or governmental investigations, including related litigation; future changes in laws and regulations, including, by way of example, taxes and tariffs, in the countries in which we operate; impacts from any potential future acquisition or disposition transactions; and the other risks noted in reports that we file with the Securities and Exchange Commission, including Item 1A, “Risk Factors” in our most recently filed Form 10-K and/or Quarterly Report on Form 10-Q. We do not undertake any obligation to update or announce publicly any updates to or revisions to any of the forward-looking statements in this release to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements.
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| BorgWarner Inc. | |||||||||||||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net sales | $ | 3,449 | $ | 3,622 | $ | 10,647 | $ | 10,676 | |||||||||||||||
| Cost of sales | 2,813 | 2,970 | 8,682 | 8,767 | |||||||||||||||||||
| Gross profit | 636 | 652 | 1,965 | 1,909 | |||||||||||||||||||
| Gross margin | 18.4 | % | 18.0 | % | 18.5 | % | 17.9 | % | |||||||||||||||
| Selling, general and administrative expenses | 340 | 330 | 1,010 | 963 | |||||||||||||||||||
| Restructuring expense | 21 | 56 | 65 | 68 | |||||||||||||||||||
| Other operating expense (income), net | 5 | (6) | 28 | (1) | |||||||||||||||||||
| Operating income | 270 | 272 | 862 | 879 | |||||||||||||||||||
| Equity in affiliates’ earnings, net of tax | (6) | (10) | (23) | (23) | |||||||||||||||||||
| Unrealized and realized (gain) loss on equity and debt securities | (2) | 60 | — | 129 | |||||||||||||||||||
| Interest expense (income), net | 4 | (19) | 17 | 3 | |||||||||||||||||||
| Other postretirement expense | 4 | 3 | 10 | 8 | |||||||||||||||||||
| Earnings from continuing operations before income taxes and noncontrolling interest | 270 | 238 | 858 | 762 | |||||||||||||||||||
| Provision for income taxes | 13 | 133 | 44 | 230 | |||||||||||||||||||
| Net earnings from continuing operations | 257 | 105 | 814 | 532 | |||||||||||||||||||
| Net loss from discontinued operations | (8) | (37) | (27) | (12) | |||||||||||||||||||
| Net earnings | 249 | 68 | 787 | 520 | |||||||||||||||||||
| Net earnings from continuing operations attributable to noncontrolling interest | 15 | 18 | 44 | 49 | |||||||||||||||||||
| Net earnings attributable to BorgWarner Inc. | $ | 234 | $ | 50 | $ | 743 | $ | 471 | |||||||||||||||
| Amounts attributable to BorgWarner Inc.: | |||||||||||||||||||||||
| Net earnings from continuing operations | $ | 242 | $ | 87 | $ | 770 | $ | 483 | |||||||||||||||
| Net loss from discontinued operations | (8) | (37) | (27) | (12) | |||||||||||||||||||
| Net earnings attributable to BorgWarner Inc. | $ | 234 | $ | 50 | $ | 743 | $ | 471 | |||||||||||||||
| Earnings per share from continuing operations — basic | $ | 1.08 | $ | 0.37 | $ | 3.41 | $ | 2.07 | |||||||||||||||
| Loss per share from discontinued operations — basic | (0.04) | (0.16) | (0.12) | (0.05) | |||||||||||||||||||
| Earnings per share attributable to BorgWarner Inc. — basic | $ | 1.04 | $ | 0.21 | $ | 3.29 | $ | 2.02 | |||||||||||||||
| Earnings per share from continuing operations — diluted | $ | 1.08 | $ | 0.37 | $ | 3.40 | $ | 2.06 | |||||||||||||||
| Loss per share from discontinued operations — diluted | (0.04) | (0.16) | (0.12) | (0.05) | |||||||||||||||||||
| Earnings per share attributable to BorgWarner Inc. — diluted | $ | 1.04 | $ | 0.21 | $ | 3.28 | $ | 2.01 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 223.1 | 233.4 | 225.7 | 233.2 | |||||||||||||||||||
| Diluted | 224.5 | 235.3 | 226.8 | 234.6 | |||||||||||||||||||
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| BorgWarner Inc. | |||||||||||||||||||||||
| Net Sales by Reportable Segment (Unaudited)* | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,386 | $ | 1,474 | $ | 4,475 | $ | 4,570 | |||||||||||||||
| Drivetrain & Morse Systems | 1,365 | 1,449 | 4,226 | 4,146 | |||||||||||||||||||
| PowerDrive Systems | 512 | 571 | 1,412 | 1,624 | |||||||||||||||||||
| Battery & Charging Systems | 197 | 146 | 567 | 395 | |||||||||||||||||||
| Inter-segment eliminations | (11) | (18) | (33) | (59) | |||||||||||||||||||
| Net sales | $ | 3,449 | $ | 3,622 | $ | 10,647 | $ | 10,676 | |||||||||||||||
| Segment Adjusted Operating Income (Loss) (Unaudited)* | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 202 | $ | 214 | $ | 654 | $ | 660 | |||||||||||||||
| Drivetrain & Morse Systems | 251 | 253 | 770 | 700 | |||||||||||||||||||
| PowerDrive Systems | (19) | (20) | (130) | (74) | |||||||||||||||||||
| Battery & Charging Systems | (8) | (26) | (33) | (76) | |||||||||||||||||||
| Segment Adjusted Operating Income | 426 | 421 | 1,261 | 1,210 | |||||||||||||||||||
| Corporate, including stock-based compensation | 76 | 72 | 196 | 194 | |||||||||||||||||||
| Restructuring expense | 21 | 56 | 65 | 68 | |||||||||||||||||||
| Intangible asset amortization expense | 17 | 17 | 51 | 51 | |||||||||||||||||||
| Accelerated depreciation | 27 | 1 | 35 | 4 | |||||||||||||||||||
| Commercial contract settlement | — | — | 15 | — | |||||||||||||||||||
| Adjustments associated with Spin-Off related balances | 3 | — | 14 | — | |||||||||||||||||||
| Collective bargaining agreement ratification bonus | 4 | — | 4 | — | |||||||||||||||||||
| Loss (gain) on sale of businesses | 6 | — | 3 | (5) | |||||||||||||||||||
| Merger and acquisition expense, net | (5) | 2 | — | 18 | |||||||||||||||||||
| Asset impairment and lease modification | — | 2 | — | 11 | |||||||||||||||||||
| Gain on sale of assets | — | (7) | — | (13) | |||||||||||||||||||
| Other non-comparable items | 7 | 6 | 16 | 3 | |||||||||||||||||||
| Equity in affiliates’ earnings, net of tax | (6) | (10) | (23) | (23) | |||||||||||||||||||
| Unrealized and realized (gain) loss on equity and debt securities | (2) | 60 | — | 129 | |||||||||||||||||||
| Interest expense (income), net | 4 | (19) | 17 | 3 | |||||||||||||||||||
| Other postretirement expense | 4 | 3 | 10 | 8 | |||||||||||||||||||
| Earnings from continuing operations before income taxes and noncontrolling interest | $ | 270 | $ | 238 | $ | 858 | $ | 762 | |||||||||||||||
____________________________
| * | Effective July 1, 2024, the Company implemented a new business unit and management structure designed to further enhance the execution of the Company’s Charging Forward strategy. The Company now reports its results in the following four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems (formerly ePropulsion) and Battery & Charging Systems. The reportable segment disclosures have been updated accordingly which included recasting prior period information for the new reporting structure. | |||||||||||||
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| BorgWarner Inc. | |||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||
| (in millions) | |||||||||||
| September 30, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,000 | $ | 1,534 | |||||||
| Receivables, net | 3,215 | 3,109 | |||||||||
| Inventories, net | 1,366 | 1,313 | |||||||||
| Prepayments and other current assets | 275 | 261 | |||||||||
| Total current assets | 6,856 | 6,217 | |||||||||
| Property, plant and equipment, net | 3,814 | 3,783 | |||||||||
| Other non-current assets | 4,467 | 4,453 | |||||||||
| Total assets | $ | 15,137 | $ | 14,453 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Short-term debt | $ | 398 | $ | 73 | |||||||
| Accounts payable | 2,176 | 2,546 | |||||||||
| Other current liabilities | 1,144 | 1,148 | |||||||||
| Total current liabilities | 3,718 | 3,767 | |||||||||
| Long-term debt | 4,195 | 3,707 | |||||||||
| Other non-current liabilities | 872 | 913 | |||||||||
| Total liabilities | 8,785 | 8,387 | |||||||||
| Total BorgWarner Inc. stockholders’ equity | 6,156 | 5,828 | |||||||||
| Noncontrolling interest | 196 | 238 | |||||||||
| Total equity | 6,352 | 6,066 | |||||||||
| Total liabilities and equity | $ | 15,137 | $ | 14,453 | |||||||
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| BorgWarner Inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||
| (in millions) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| OPERATING ACTIVITIES OF CONTINUING OPERATIONS | |||||||||||
| Net cash provided by operating activities from continuing operations | $ | 700 | $ | 510 | |||||||
| INVESTING ACTIVITIES OF CONTINUING OPERATIONS | |||||||||||
| Capital expenditures, including tooling outlays | (510) | (624) | |||||||||
| Payments for businesses acquired, net of cash acquired | — | (31) | |||||||||
| Proceeds from settlement of net investment hedges, net | 46 | 25 | |||||||||
| (Payments for) proceeds from investments in equity and debt securities, net | (7) | 63 | |||||||||
| Proceeds from the sale of business, net | 8 | — | |||||||||
| Proceeds from asset disposals and other, net | 3 | 29 | |||||||||
| Net cash used in investing activities from continuing operations | (460) | (538) | |||||||||
| FINANCING ACTIVITIES OF CONTINUING OPERATIONS | |||||||||||
| Net increase in notes payable | — | 3 | |||||||||
| Additions to debt | 1,000 | 4 | |||||||||
| Payments for debt issuance costs | (9) | (3) | |||||||||
| Repayments of debt, including current portion | (175) | (444) | |||||||||
| Payments for purchase of treasury stock | (401) | — | |||||||||
| Payments for stock-based compensation items | (23) | (25) | |||||||||
| Payments for businesses acquired, net of cash acquired | (4) | — | |||||||||
| Payments for contingent consideration | (1) | (23) | |||||||||
| Purchase of noncontrolling interest | — | (15) | |||||||||
| Net distribution from PHINIA | — | 401 | |||||||||
| Dividends paid to BorgWarner stockholders | (74) | (105) | |||||||||
| Dividends paid to noncontrolling stockholders | (63) | (71) | |||||||||
| Net cash provided by (used in) financing activities from continuing operations | 250 | (278) | |||||||||
| CASH FLOWS FROM DISCONTINUED OPERATIONS | |||||||||||
| Operating activities of discontinued operations | (27) | (66) | |||||||||
| Investing activities of discontinued operations | — | (86) | |||||||||
| Financing activities of discontinued operations | — | 84 | |||||||||
| Net cash used in discontinued operations | (27) | (68) | |||||||||
| Effect of exchange rate changes on cash | 3 | (15) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 466 | (389) | |||||||||
| Cash and cash equivalents at beginning of year | 1,534 | 1,338 | |||||||||
| Cash and cash equivalents at end of period | $ | 2,000 | $ | 949 | |||||||
| Less: Cash and cash equivalents of discontinued operations at end of period | $ | — | $ | — | |||||||
| Cash and cash equivalents of continuing operations at end of period | $ | 2,000 | $ | 949 | |||||||
| Supplemental Information (Unaudited) | |||||||||||
| (in millions) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Depreciation and tooling amortization | $ | 444 | $ | 376 | |||||||
| Intangible asset amortization | $ | 51 | $ | 51 | |||||||
8
Non-GAAP Financial Measures
This press release 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 measures below and in the Financial Results table above. The provision of these comparable GAAP financial measures for 2024 is not intended to indicate that BorgWarner is explicitly or implicitly providing projections on those GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this press release and the adjustments that management can reasonably predict.
Management believes that these non-GAAP financial measures are useful to management, investors, and banking institutions in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes.
Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, because not all companies use identical calculations, the non-GAAP financial measures as presented by BorgWarner may not be comparable to similarly titled measures reported by other companies.
Adjusted Operating Income and Adjusted 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, other net expenses, discontinued operations, and other gains and losses not reflective of the Company’s ongoing operations. Adjusted operating margin is defined as adjusted operating income divided by net sales.
Adjusted Net Earnings
The Company defines adjusted net earnings as net earnings attributable to BorgWarner Inc. adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations, and other gains and losses not reflective of the Company’s ongoing operations, and related tax effects. The impact of intangible asset amortization expense will continue to be included in adjusted net earnings.
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, discontinued operations, other gains and losses not reflective of the Company’s ongoing operations, and related tax effects. The impact of intangible asset amortization expense continues to be included in adjusted earnings per share.
Free Cash Flow
The Company defines free cash flow as net cash provided by operating activities minus capital expenditures and is useful to both management and investors in evaluating the Company’s ability to service and repay its debt.
9
Organic Net Sales Change
The Company defines organic net sales changes as net sales change year-over-year excluding the estimated impact of foreign exchange (FX) and the acquisitions of the smart grid and smart energy businesses of Hubei Surpass Sun Electric and the Electric Hybrid Systems business segment of Eldor Corporation.
Outgrowth
The Company defines outgrowth as organic net sales change versus the year-over-year change in light and commercial vehicle production weighted for the Company’s geographic exposure, as estimated by the Company.
| Adjusted Operating Income and Adjusted Operating Margin (Unaudited) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net sales | $ | 3,449 | $ | 3,622 | $ | 10,647 | $ | 10,676 | |||||||||||||||
| Operating income | $ | 270 | $ | 272 | $ | 862 | $ | 879 | |||||||||||||||
| Operating margin | 7.8 | % | 7.5 | % | 8.1 | % | 8.2 | % | |||||||||||||||
| Non-comparable items: | |||||||||||||||||||||||
| Restructuring expense | $ | 21 | $ | 56 | $ | 65 | $ | 68 | |||||||||||||||
| Intangible asset amortization expense | 17 | 17 | 51 | 51 | |||||||||||||||||||
| Accelerated depreciation | 27 | 1 | 35 | 4 | |||||||||||||||||||
| Commercial contract settlement | — | — | 15 | — | |||||||||||||||||||
| Adjustments associated with Spin-Off related balances | 3 | — | 14 | — | |||||||||||||||||||
| Collective bargaining agreement ratification bonus | 4 | — | 4 | — | |||||||||||||||||||
| Loss (gain) on sale of businesses | 6 | — | 3 | (5) | |||||||||||||||||||
| Merger and acquisition expense, net | (5) | 2 | — | 18 | |||||||||||||||||||
| Asset impairment and lease modification | — | 2 | — | 11 | |||||||||||||||||||
| Gain on sale of assets | — | (7) | — | (13) | |||||||||||||||||||
| Corporate synergy from Spin-Off | — | — | — | 10 | |||||||||||||||||||
| Other non-comparable items | 7 | 6 | 16 | 3 | |||||||||||||||||||
| Adjusted operating income | $ | 350 | $ | 349 | $ | 1,065 | $ | 1,026 | |||||||||||||||
| Adjusted operating margin | 10.1 | % | 9.6 | % | 10.0 | % | 9.6 | % | |||||||||||||||
| Free Cash Flow Reconciliation (Unaudited) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 356 | $ | 221 | $ | 700 | $ | 510 | |||||||||||||||
| Capital expenditures, including tooling outlays | (155) | (185) | (510) | (624) | |||||||||||||||||||
| Free cash flow | $ | 201 | $ | 36 | $ | 190 | $ | (114) | |||||||||||||||
10
| Third Quarter 2024 Organic Net Sales Change (Unaudited) | |||||||||||||||||||||||||||||||||||
| (in millions) | Q3 2023 Net Sales | FX | Acquisition Impact | Organic Net Sales Change | Q3 2024 Net Sales | Organic Net Sales Change % | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,474 | $ | (1) | $ | — | $ | (87) | $ | 1,386 | (5.9)% | ||||||||||||||||||||||||
| Drivetrain & Morse Systems | 1,449 | 2 | — | (86) | 1,365 | (5.9)% | |||||||||||||||||||||||||||||
| PowerDrive Systems | 571 | 2 | 9 | (70) | 512 | (12.3)% | |||||||||||||||||||||||||||||
| Battery & Charging Systems | 146 | 1 | — | 50 | 197 | 34.2% | |||||||||||||||||||||||||||||
| Inter-segment eliminations | (18) | — | — | 7 | (11) | (38.9)% | |||||||||||||||||||||||||||||
| Net sales | $ | 3,622 | $ | 4 | $ | 9 | $ | (186) | $ | 3,449 | (5.1)% | ||||||||||||||||||||||||
Year to Date 2024 Organic Net Sales Change (Unaudited) | |||||||||||||||||||||||||||||||||||
| (in millions) | Q3 2023 YTD Net Sales | FX | Acquisition Impact | Organic Net Sales Change | Q3 2024 YTD Net Sales | Organic Net Sales Change % | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 4,570 | $ | (21) | $ | — | $ | (74) | $ | 4,475 | (1.6)% | ||||||||||||||||||||||||
| Drivetrain & Morse Systems | 4,146 | (52) | — | 132 | 4,226 | 3.2% | |||||||||||||||||||||||||||||
| PowerDrive Systems | 1,624 | (17) | 21 | (216) | 1,412 | (13.3)% | |||||||||||||||||||||||||||||
| Battery & Charging Systems | 395 | — | 5 | 167 | 567 | 42.3% | |||||||||||||||||||||||||||||
| Inter-segment eliminations | (59) | — | — | 26 | (33) | (44.1)% | |||||||||||||||||||||||||||||
| Total | $ | 10,676 | $ | (90) | $ | 26 | $ | 35 | $ | 10,647 | 0.3% | ||||||||||||||||||||||||
| Adjusted Operating Income and Adjusted Operating Margin Guidance Reconciliation (Unaudited) | |||||||||||
Full-Year 2024 Guidance | |||||||||||
| (in millions) | Low | High | |||||||||
| Net sales | $ | 14,000 | $ | 14,200 | |||||||
| Operating income | 1,128 | 1,158 | |||||||||
| Operating margin | 8.1 | % | 8.2 | % | |||||||
| Non-comparable items: | |||||||||||
| Restructuring expense | $ | 90 | $ | 100 | |||||||
| Intangible asset amortization expense | 70 | 70 | |||||||||
| Accelerated depreciation | 35 | 35 | |||||||||
| Commercial contract settlement | 15 | 15 | |||||||||
| Adjustments associated with Spin-Off related balances | 14 | 14 | |||||||||
| Collective bargaining agreement ratification bonus | 4 | 4 | |||||||||
| Loss on sale of businesses | 3 | 3 | |||||||||
| Other non-comparable items | 16 | 16 | |||||||||
| Adjusted operating income | $ | 1,375 | $ | 1,415 | |||||||
| Adjusted operating margin | 9.8 | % | 10.0 | % | |||||||
11
| Adjusted Earnings Per Diluted Share Guidance Reconciliation (Unaudited) | |||||||||||
Full-Year 2024 Guidance | |||||||||||
| Low | High | ||||||||||
| Earnings per Diluted Share from Continuing Operations | $ | 4.17 | $ | 4.28 | |||||||
| Non-comparable items: | |||||||||||
| Restructuring expense | 0.29 | 0.33 | |||||||||
| Accelerated depreciation | 0.13 | 0.13 | |||||||||
| Commercial contract settlement | 0.06 | 0.06 | |||||||||
| Adjustments associated with Spin-Off related balances | 0.06 | 0.06 | |||||||||
| Loss on sale of businesses | 0.02 | 0.02 | |||||||||
| Collective bargaining agreement ratification bonus | 0.01 | 0.01 | |||||||||
| Gain on debt extinguishment | (0.01) | (0.01) | |||||||||
| Tax adjustments | (0.65) | (0.65) | |||||||||
| Other non-comparable items | 0.07 | 0.07 | |||||||||
| Adjusted Earnings per Diluted Share from Continuing Operations | $ | 4.15 | $ | 4.30 | |||||||
| Free Cash Flow Guidance Reconciliation (Unaudited) | |||||||||||
Full-Year 2024 Guidance | |||||||||||
| (in millions) | Low | High | |||||||||
| Net cash provided by operating activities | $ | 1,325 | $ | 1,375 | |||||||
| Capital expenditures, including tooling outlays | (850) | (800) | |||||||||
| Free cash flow | $ | 475 | $ | 575 | |||||||
| Full Year 2024 Estimated Organic Net Sales Change Guidance and Outgrowth Reconciliation From Continuing Operations (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | FY 2023 Net Sales | FX | FY 2024 Acquisition Impact | Organic Net Sales Change | FY 2024 Net Sales | Organic Net Sales Change % | LV/CV Weighted Market | Outgrowth | |||||||||||||||||||||||||||||||||||||||
| Low | $ | 14,198 | $ | (20) | $ | 30 | $ | (208) | $ | 14,000 | (1.5)% | (3.5)% | 2.0% | ||||||||||||||||||||||||||||||||||
| High | $ | 14,198 | $ | (20) | $ | 30 | $ | (8) | $ | 14,200 | (0.1)% | (3.0)% | 2.9% | ||||||||||||||||||||||||||||||||||
| Full Year 2024 Estimated Year-Over-Year Change in Production (Unaudited) | ||||||||||||||||||||||||||
| North America | Europe | China | Total | |||||||||||||||||||||||
| Light vehicle | (1.5)% to (0.5)% | (5.5)% to (5)% | 1% to 1.5% | (2.5)% to (2)% | ||||||||||||||||||||||
| Commercial vehicle | ~(4.5)% | ~(15)% | ~2% | ~(2.5)% | ||||||||||||||||||||||
| BorgWarner-Weighted | (2)% to (1)% | (7)% to (6.5)% | 1 to 1.5% | (3.5)% to (3)% | ||||||||||||||||||||||
12
Recast Reportable Segment Information
Effective July 1, 2024, the Company implemented a new business unit and management structure designed to further enhance the execution of the Company’s Charging Forward strategy. The Company now reports its results in the following four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems (formerly ePropulsion) and Battery & Charging Systems. The reportable segment disclosures have been updated accordingly which included recasting prior period information for the new reporting structure. For informational purposes only, in the following tables, the Company has recast the quarterly segment information for fiscal 2024 and 2023 to align with this presentation.
| BorgWarner Reportable Segment Information (Unaudited) | |||||||||||
| 2024 | |||||||||||
| (in millions) | Three Months Ended March 31, 2024 | Three Months Ended June 30, 2024 | |||||||||
| Revenue | |||||||||||
| Turbos & Thermal Technologies | $ | 1,574 | $ | 1,515 | |||||||
| Drivetrain & Morse Systems | 1,419 | 1,442 | |||||||||
| PowerDrive Systems | 436 | 464 | |||||||||
| Battery & Charging Systems | 177 | 193 | |||||||||
| Inter-segment eliminations | (11) | (11) | |||||||||
| Net Sales | $ | 3,595 | $ | 3,603 | |||||||
| Cost of sales | 2,951 | 2,918 | |||||||||
| Gross Profit | 644 | 685 | |||||||||
| Gross Margin | 17.9 | % | 19.0 | % | |||||||
| Selling, general and administrative expenses | 329 | 341 | |||||||||
| Restructuring expense | 19 | 25 | |||||||||
| Other operating expense, net | 1 | 22 | |||||||||
| Operating income | 295 | 297 | |||||||||
| Non-comparable items | 44 | 79 | |||||||||
| Adjusted Operating Income (Loss) | |||||||||||
| Turbos & Thermal Technologies | $ | 228 | $ | 224 | |||||||
| Drivetrain & Morse Systems | 253 | 266 | |||||||||
| PowerDrive Systems | (62) | (49) | |||||||||
| Battery & Charging Systems | (15) | (10) | |||||||||
| Corporate & Non-Operating | (65) | (55) | |||||||||
| Adjusted Operating Income | $ | 339 | $ | 376 | |||||||
13
| BorgWarner Reportable Segment Information (Unaudited) | |||||||||||||||||||||||||||||
| 2023 | |||||||||||||||||||||||||||||
| (in millions) | Three Months Ended March 31, 2023 | Three Months Ended June 30, 2023 | Three Months Ended September 30, 2023 | Three Months Ended December 31, 2023 | Year Ended December 31, 2023 | ||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,541 | $ | 1,555 | $ | 1,474 | $ | 1,442 | $ | 6,012 | |||||||||||||||||||
| Drivetrain & Morse Systems | 1,266 | 1,431 | 1,449 | 1,403 | 5,549 | ||||||||||||||||||||||||
| PowerDrive Systems | 487 | 566 | 571 | 542 | 2,166 | ||||||||||||||||||||||||
| Battery & Charging Systems | 110 | 139 | 146 | 151 | 546 | ||||||||||||||||||||||||
| Inter-segment eliminations | (21) | (20) | (18) | (16) | (75) | ||||||||||||||||||||||||
| Net Sales | $ | 3,383 | $ | 3,671 | $ | 3,622 | $ | 3,522 | $ | 14,198 | |||||||||||||||||||
| Cost of sales | 2,806 | 2,991 | 2,970 | 2,863 | 11,630 | ||||||||||||||||||||||||
| Gross Profit | 577 | 680 | 652 | 659 | 2,568 | ||||||||||||||||||||||||
| Gross Margin | 17.1 | % | 18.5 | % | 18.0 | % | 18.7 | % | 18.1 | % | |||||||||||||||||||
| Selling, general and administrative expenses | 299 | 334 | 330 | 353 | 1,316 | ||||||||||||||||||||||||
| Restructuring expense | 3 | 9 | 56 | 11 | 79 | ||||||||||||||||||||||||
| Other operating expense (income), net | 1 | 4 | (6) | 14 | 13 | ||||||||||||||||||||||||
| Operating income | 274 | 333 | 272 | 281 | 1,160 | ||||||||||||||||||||||||
| Non-comparable items | 31 | 39 | 77 | 51 | 198 | ||||||||||||||||||||||||
| Adjusted Operating Income (Loss) | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 218 | $ | 228 | $ | 214 | $ | 214 | $ | 874 | |||||||||||||||||||
| Drivetrain & Morse Systems | 201 | 246 | 253 | 258 | 958 | ||||||||||||||||||||||||
| PowerDrive Systems | (35) | (19) | (20) | (16) | (90) | ||||||||||||||||||||||||
| Battery & Charging Systems | (23) | (27) | (26) | (40) | (116) | ||||||||||||||||||||||||
| Corporate & Non-Operating | (56) | (56) | (72) | (84) | (268) | ||||||||||||||||||||||||
| Adjusted Operating Income | $ | 305 | $ | 372 | $ | 349 | $ | 332 | $ | 1,358 | |||||||||||||||||||
14