Charging Forward Update:
Second Quarter Highlights:
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 $3,759 million for the second quarter 2022, roughly flat compared with $3,758 million for the second quarter 2021. Net earnings for the second quarter 2022 were $216 million, or $0.91 per diluted share, compared with net earnings of $247 million, or $1.03 per diluted share, for the second quarter 2021. Adjusted net earnings per diluted share for the second quarter 2022 were $1.05, down from adjusted net earnings per diluted share of $1.08 for the second quarter 2021. Adjusted net earnings for the second quarter 2022 excluded net non-comparable items of $(0.14) per diluted share. Adjusted net earnings for the second quarter 2021 excluded net non-comparable items of $(0.05) 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 higher net R&D investment the impacts of production shutdowns in China and net material cost inflation, partially offset by lower income tax expense.
Full Year 2022 Guidance:
The Company has affirmed its full year sales, margin and cash flow guidance, while increasing its EPS guidance. Net sales are expected to be in the range of $15.5 billion to $16.0 billion, compared with 2021 sales of $14.8 billion. This implies a year-over-year increase in organic sales of 11% to 14%. The Company expects its weighted light and commercial vehicle markets to increase in the range of approximately 2.5% to 5.0% in 2022. Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $820 million primarily due to the weakening of the Euro, the Korean Won and Chinese Renminbi against the U.S. dollar. The acquisitions of Santroll’s light vehicle eMotor business and Rhombus Energy Solutions are expected to increase year-over-year sales by an aggregate of approximately $45 million to $55 million. The divestiture of the Water Valley, Mississippi business will decrease year-over-year sales by approximately $177 million.
Operating margin for the full year is expected to be in the range of 8.4% to 8.8%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 9.8% to 10.2%. Net earnings are expected to be within a range of $3.40 to $3.80 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $4.00 to $4.40 per diluted share. Full-year operating cash flow is expected to be in the range of $1,500 million to $1,550 million, while free cash flow is expected to be in the range of $650 million to $750 million.
At 9:00 a.m. ET today, a brief conference call concerning second quarter 2022 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.