BorgWarner Reports First Quarter 2024 Results and Increases Full-Year EPS Guidance Announces Additional Share Repurchase Authorization

Auburn Hills, Michigan, May 2, 2024 – BorgWarner Inc. (NYSE: BWA) today reported first quarter results.

Charging Forward Update:

• BorgWarner has solidified two high voltage hairpin (HVH) eMotor business wins with XPeng, a leading Chinese Smart EV manufacturer, for use on two upcoming SUV models. The contracts include BorgWarner’s advanced oil-cooling 800V eMotor systems, comprised of stator and rotor components. Start of production is planned for 2025.
• BorgWarner has secured contracts with Polestar and a major European OEM to supply electric Torque Vectoring Disconnect (eTVD) systems for battery electric vehicles (BEVs). BorgWarner’s eTVD is part of the Company’s electric Torque Management System (eTMS), which helps improve BEV traction and safety. BorgWarner’s eTVD is currently in production for the Polestar 3 SUV. Production for the major European OEM is expected to begin later in 2024.
• BorgWarner repurchased approximately $100 million of its outstanding shares during the first quarter.
• BorgWarner announced that its Board of Directors has authorized an additional share repurchase program of up to $500 million to be executed over the next three years. Combined with the $267 million remaining under the Company’s prior authorization, BorgWarner has authorization to repurchase up to $767 million of its outstanding shares.
  

First Quarter Highlights (continuing operations basis):

• U.S. GAAP net sales of $3,595 million, an increase of 6% compared with first quarter 2023.
• Excluding the impact of foreign currencies and the net impact of net M&A, organic sales were up 7% compared with first quarter 2023.
• U.S. GAAP net earnings of $0.93 per diluted share.
• Excluding $(0.10) of net losses per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $1.03 per diluted share.
• U.S. GAAP operating income of $295 million, or 8.2% of net sales.
• Excluding $44 million of pretax expenses related to non-comparable items, adjusted operating income was $339 million, or 9.4% of net sales.
• Net cash used in operating activities of $118 million.
• Free cash flow of $(308) million.
  
  

Financial Results (continuing operations basis):

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 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 $3,595 million for the first quarter 2024, an increase of 6% compared with net sales of $3,383 million for the first quarter 2023, primarily due to increased demand for the Company’s products, partially offset by the negative impact of foreign currencies. Net earnings for the first quarter 2024 were $213 million, or $0.93 per diluted share, compared with net earnings of $168 million, or $0.72 per diluted share, for the first quarter 2023. Adjusted net earnings per diluted share for the first quarter 2024 were $1.03, up from adjusted net earnings per diluted share of $0.81 for the first quarter 2023. Adjusted net earnings for the first quarter 2024 excluded net non-comparable items of $(0.10) per diluted share, while adjusted net earnings for the first quarter 2023 excluded net non-comparable items of $(0.09) 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 per diluted share was primarily due to the benefit of higher sales, a lower effective tax rate and a lower share count.

Full Year 2024 Guidance: The Company has maintained full year sales and margin guidance, while EPS guidance has increased. Net sales for 2024 are expected to be in the range of $14.4 billion to $14.9 billion, compared with 2023 sales of approximately $14.2 billion. This implies a year-over-year increase in organic sales of 2% to 5%. The Company expects its 2024 eProduct sales to be $2.5 billion to $2.8 billion, up from approximately $2.0 billion in 2023. Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $100 million primarily due to the weakening of the Chinese Renminbi and Korean Won against the U.S. dollar. The Company expects its weighted light and commercial vehicle markets to be in the range of down 2.5% to roughly flat in 2024. The acquisitions of SSE and the Electric Hybrid Systems business segment of Eldor Corporation are expected to increase year-over-year sales by approximately $30 million.

Operating margin for the full year is expected to be in the range of 8.2% to 8.5%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 9.2% to 9.6%. Net earnings are expected to be within a range of $3.54 to $3.86 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $3.80 to $4.15 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 $475 million to $575 million.

At 9:30 a.m. ET today, a brief conference call concerning first 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.