Auburn Hills, Michigan, May 4, 2023 – BorgWarner Inc. (NYSE: BWA) today reported first quarter results.
Charging Forward Update:
First 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 $4,180 million for the first quarter 2023, an increase of 8% compared with $3,874 million for the first quarter 2022. Net earnings for the first quarter 2023 were $217 million, or $0.93 per diluted share, compared with net earnings of $200 million, or $0.84 per diluted share, for the first quarter 2022. Adjusted net earnings per diluted share for the first quarter 2023 were $1.09, up from adjusted net earnings per diluted share of $1.05 for the first quarter 2022. Adjusted net earnings for the first quarter 2023 excluded net non-comparable items of $(0.16) per diluted share. Adjusted net earnings for the first quarter 2022 excluded net non-comparable items of $(0.21) 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 increase in adjusted net earnings was primarily due to the benefit of higher sales, partially offset by inflationary impacts on cost, higher R&D investment in the Company’s electrification portfolio and the impact of lower industry production in China.
Full Year 2023 Guidance:
The Company has updated full year sales, margin and EPS guidance. Net sales are expected to be in the range of $17.1 billion to $17.9 billion, compared with 2022 sales of $15.8 billion. This implies a year-over-year increase in organic sales of 7.5% to 12.5%. The Company expects its weighted light and commercial vehicle markets to increase in the range of approximately 0% to 3% in 2023. Foreign currencies are expected to result in a year-over-year increase in sales of approximately $55 million primarily due to the strengthening of the Euro against the U.S. dollar, partially offset by the weakening of the Chinese Renminbi against the U.S. dollar. The acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions, Drivetek and the electric vehicle solution, smart grid and smart energy businesses of Hubei Surpass Sun Electric are expected to increase year-over-year sales by an aggregate of approximately $70 million.
Operating margin for the full year is expected to be in the range of 8.7% to 9.0%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 10.0% to 10.4%. Net earnings are expected to be within a range of $3.87 to $4.24 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $4.60 to $5.15 per diluted share. Full-year operating cash flow is expected to be in the range of $1,400 million to $1,550 million, while free cash flow is expected to be in the range of $550 million to $650 million.
At 9:30 a.m. ET today, a brief conference call concerning first quarter 2023 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.