AUBURN HILLS, Mich.,
Aug. 4, 2021 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported second quarter
results.
Second Quarter Highlights:
- U.S. GAAP net sales of $3,758
million, up 164% compared with second quarter 2020.
-
- Excluding the impact of foreign currencies and the net impact
of acquisitions and divestitures, organic sales were up 72%
compared with second quarter 2020.
- U.S. GAAP net earnings of $1.03
per diluted share.
-
- Excluding the $0.05 per diluted
share related to non-comparable items (detailed in the table
below), adjusted net earnings were $1.08 per diluted share.
- U.S. GAAP operating income of $317
million, or 8.4% of net sales.
-
- Excluding the $84 million of
pretax expenses related to non-comparable items, adjusted operating
income was $401 million. Excluding
the impact of non-comparable items, adjusted operating income was
10.7% of net sales.
- Net cash provided by operating activities of $280 million.
-
- Free cash flow was $133
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 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.
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Earnings (loss)
per diluted share
|
$
|
1.03
|
|
|
$
|
(0.47)
|
|
|
$
|
1.30
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Restructuring
expense
|
0.19
|
|
|
0.15
|
|
|
0.31
|
|
|
0.21
|
|
Merger, acquisition
and divestiture expense
|
0.06
|
|
|
0.10
|
|
|
0.10
|
|
|
0.20
|
|
Loss on
sale
|
0.03
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
Asset
impairments
|
—
|
|
|
0.08
|
|
|
—
|
|
|
0.08
|
|
Net gain on insurance
recovery for property damage
|
—
|
|
|
(0.02)
|
|
|
—
|
|
|
(0.02)
|
|
Unrealized loss on
equity securities
|
0.01
|
|
|
—
|
|
|
0.88
|
|
|
0.04
|
|
Loss on debt
extinguishment
|
0.06
|
|
|
—
|
|
|
0.06
|
|
|
—
|
|
Delayed draw term loan
cancellation
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
Tax
adjustments
|
(0.30)
|
|
|
0.01
|
|
|
(0.38)
|
|
|
(0.05)
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
(loss) per diluted share
|
$
|
1.08
|
|
|
$
|
(0.14)
|
|
|
$
|
2.30
|
|
|
$
|
0.62
|
|
Net sales were $3,758 million for
the second quarter 2021, up 164% from $1,426
million for the second quarter 2020, due to the recovery of
global markets from the negative effects of COVID-19 on 2020
production, the acquisition of Delphi Technologies and increased
demand for the Company's products. Net earnings for the second
quarter 2021 were $247 million, or
$1.03 per diluted share, compared
with a net loss of $(98) million, or
$(0.47) per diluted share, for the
second quarter 2020. Adjusted net earnings per diluted share
for the second quarter 2021 were $1.08, up from an adjusted net loss per diluted
share of $(0.14) for the second
quarter 2020. Adjusted net earnings for the second quarter 2021
excluded net non-comparable items of $(0.05) per diluted share. Adjusted net loss for
the second quarter 2020 excluded net non-comparable items of
$(0.33) 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 impact of higher sales, and
earnings from the acquisition of Delphi Technologies. The impact of
foreign currencies increased net sales by approximately
$217 million and increased adjusted
operating income by approximately $30
million for second quarter 2021, compared with the second
quarter 2020.
For the first six months of 2021, net sales were $7,767 million, up 110% from $3,705 million for the first six months of 2020,
due to the recovery of global markets from the negative effects of
COVID-19 on 2020 production, the acquisition of Delphi Technologies
and increased demand for the Company's products. Net earnings for
the first six months of 2021 were $312
million, or $1.30 per diluted
share, compared with $31 million, or
$0.15 per diluted share, for the
first six months of 2020. Adjusted net earnings per share for
the first six months of 2021 were $2.30, up from $0.62 for the first six months of 2020. Adjusted
net earnings for the first six months of 2021 excluded net
non-comparable items of $(1.00) per
diluted share. Adjusted net earnings for the first six months of
2020 excluded net non-comparable items of $(0.47) 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 net earnings was primarily due to the
impact of higher sales, and earnings from the acquisition of Delphi
Technologies. The impact of foreign currencies increased net sales
by approximately $411 million and
increased net earnings by approximately $55
million for the first six months of 2021, compared with the
first six months of 2020.
Net cash provided by operating activities was $622 million for the first six months of 2021,
compared with $327 million for the
first six months of 2020. Net cash used in investing activities
increased to $1,099 million during
the first six months of 2021 from $147
million during the first six months of 2020. This increase
in cash used in investing activities was primarily due to cash
outflows related to the 2021 acquisition of AKASOL and higher
capital expenditures. Compared with the end of 2020, balance sheet
debt at the end of the second quarter 2021 increased $574 million, while cash and cash equivalents
decreased by $97 million.
Air Management Segment Results: The Air Management
segment net sales were $1,854 million
during the second quarter 2021, compared with $826 million during the second quarter 2020.
Excluding the impact of foreign currencies but including the
estimated growth in Delphi Technologies-related revenue over pro
forma 2020 Delphi Technologies revenue, organic sales were up 82%
from the prior year. Adjusted earnings before interest, income
taxes and non-controlling interest ("Adj. EBIT") were $277 million, or 14.9% of sales, during the
second quarter 2021, compared to $28
million, or 3.4% of sales, in the prior year. The increase
in Adj. EBIT was primarily due to the impact of higher sales and
savings arising from the Company's restructuring initiatives.
e-Propulsion & Drivetrain Segment
Results: e-Propulsion & Drivetrain segment net sales
were $1,337 million during the second
quarter 2021, compared with $607
million during the second quarter 2020. Excluding the impact
of foreign currencies but including the estimated growth in Delphi
Technologies-related revenue over pro forma 2020 Delphi
Technologies revenue, organic sales were up 68% from the prior
year. Adj. EBIT was $132 million, or
9.9% of sales, during the second quarter 2021, compared to
$1 million, or 0.2% of sales, in the
prior year. The increase in Adj. EBIT was primarily due to the
impact of higher sales.
Fuel Injection Segment Results: The Fuel Injection
segment's net sales and Adj. EBIT in the second quarter 2021 were
$480 million and $38 million, respectively. Excluding the impact
of foreign currencies but including the estimated growth in Delphi
Technologies-related revenue over pro forma 2020 Delphi
Technologies revenue, organic sales were up 78%. The Adj. EBIT
margin was 7.9% in the second quarter 2021. This is a new segment
following the Delphi Technologies acquisition.
Aftermarket Segment Results: The Aftermarket
segment's net sales and Adj. EBIT in the second quarter 2021 were
$226 million and $32 million, respectively. Excluding the impact
of foreign currencies but including the estimated growth in Delphi
Technologies-related revenue over pro forma 2020 Delphi
Technologies revenue, organic sales were up 69%. The Adj. EBIT
margin was 14.2% in the second quarter 2021. This is a new segment
following the Delphi Technologies acquisition.
Full Year 2021 Guidance: For the full-year 2021, net
sales are expected to be in the range of $15.2 billion to $15.6 billion, under the assumption that
there are no additional production disruptions arising from
COVID-19. This implies a year-over-year increase in organic sales
of 14% to 17%. The Company expects its weighted light and
commercial vehicle markets to increase in the range of
approximately 8.5% to 11.0% in 2021. The acquisition of AKASOL AG
is expected to increase year-over-year sales by approximately
$75 million. Foreign currencies are
expected to result in a year-over-year increase in sales of
approximately $520 million primarily due to the strengthening
of the Euro, Chinese Renminbi and Korean Won against the U.S.
dollar.
Operating margin for the full year is expected to be in the
range of 8.7% to 9.3%. Excluding the impact of non-comparable
items, adjusted operating margin is expected to be in the range of
10.2% to 10.5%. Net earnings for the full year are expected
to be within a range of $2.80 to
$3.21 per diluted share. Excluding
the impact of non-comparable items, adjusted net earnings are
expected to be within a range of $4.15 to $4.40 per
diluted share. Full-year operating cash flow is expected to be in
the range of $1,525 million to
$1,675 million, while free cash flow
is expected to be in the range of $800
million to $900 million.
At 9:00 a.m. ET today, a brief
conference call concerning second quarter 2021 results and guidance
will be webcast at:
http://www.borgwarner.com/en/Investors/default.aspx.
Additionally, an earnings call presentation will be available at
http://www.borgwarner.com/en/Investors/default.aspx.
BorgWarner Inc. (NYSE: BWA) is a global product leader in
delivering innovative and sustainable mobility solutions for the
vehicle market. Building on its original equipment expertise,
BorgWarner also brings market leading product and service solutions
to the global aftermarket. With manufacturing and technical
facilities in 96 locations in 23 countries, the company employs
approximately 50,000 people worldwide. For more information, please
visit borgwarner.com.
Forward-Looking Statements: This press 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
forward-looking statements. Further, all statements, other than
statements of historical fact contained or incorporated by
reference in this press 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 Annual Report on Form 10-K for the year
ended December 31, 2020 ("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 press 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:
the difficulty in forecasting demand for electric vehicles and our
EV revenue growth to 2030; the ability to identify targets and
consummate acquisitions on acceptable terms; failure to realize the
expected benefits of acquisitions; the ability to identify
appropriate combustion portfolio businesses for disposition and
consummate planned dispositions on acceptable terms; competitive
challenges from existing and new competitors including OEM
customers; the challenges associated with rapidly-changing
technologies, particularly as relates to electric vehicles, and our
ability to innovate in response; uncertainties regarding the extent
and duration of impacts of matters associated with the
COVID-19/coronavirus pandemic, including additional production
disruptions; the failure to realize the expected benefits of the
acquisition of Delphi Technologies PLC that the Company completed
on October 1, 2020; the failure to
realize the expected benefits of the acquisition of AKASOL AG that
the Company completed on June 4, 2021
or a delay in the ability to realize those benefits; the failure to
successfully execute on a timely basis our taking private strategy
with respect to AKASOL; the failure to promptly and effectively
integrate acquired businesses; the potential for unknown or
inestimable liabilities relating to acquired businesses; our
dependence on automotive and truck production, both of which are
highly cyclical and subject to disruptions; our reliance on major
OEM customers; commodities availability and pricing; supply
disruptions impacting the Company or the Company's customers, such
as the current shortage of semi-conductors that has impacted OEM
customers and the Company; fluctuations in interest rates and
foreign currency exchange rates; availability of credit; our
dependence on key management; 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; future changes in laws
and regulations, including, by way of example, tariffs, in the
countries in which we operate; impacts from any potential future
acquisition or divestiture transactions; and the other risks,
including, by way of example, pandemics and quarantines, noted in
reports that we file with the Securities and Exchange Commission,
including Item 1A, "Risk Factors" in our most recently-filed Annual
Report on 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
press release to reflect any change in our expectations or any
change in events, conditions, circumstances, or assumptions
underlying the statements.
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
(in millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales
|
$
|
3,758
|
|
|
$
|
1,426
|
|
|
$
|
7,767
|
|
|
$
|
3,705
|
|
Cost of
sales
|
2,996
|
|
|
1,252
|
|
|
6,187
|
|
|
3,084
|
|
Gross
profit
|
762
|
|
|
174
|
|
|
1,580
|
|
|
621
|
|
Gross
margin
|
20.3
|
%
|
|
12.2
|
%
|
|
20.3
|
%
|
|
16.8
|
%
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
364
|
|
|
184
|
|
|
741
|
|
|
397
|
|
Other operating
expense, net
|
81
|
|
|
68
|
|
|
119
|
|
|
104
|
|
Operating income
(loss)
|
317
|
|
|
(78)
|
|
|
720
|
|
|
120
|
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(16)
|
|
|
(2)
|
|
|
(28)
|
|
|
(7)
|
|
Unrealized loss on
equity securities
|
4
|
|
|
—
|
|
|
276
|
|
|
9
|
|
Interest
income
|
(3)
|
|
|
(3)
|
|
|
(6)
|
|
|
(5)
|
|
Interest
expense
|
42
|
|
|
18
|
|
|
63
|
|
|
30
|
|
Other postretirement
income
|
(12)
|
|
|
(1)
|
|
|
(23)
|
|
|
(3)
|
|
Earnings (loss) before
income taxes and noncontrolling interest
|
302
|
|
|
(90)
|
|
|
438
|
|
|
96
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
28
|
|
|
(6)
|
|
|
70
|
|
|
43
|
|
Net earnings
(loss)
|
274
|
|
|
(84)
|
|
|
368
|
|
|
53
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to noncontrolling interest, net of tax
|
27
|
|
|
14
|
|
|
56
|
|
|
22
|
|
Net earnings (loss)
attributable to BorgWarner Inc.
|
$
|
247
|
|
|
$
|
(98)
|
|
|
$
|
312
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share of common stock
|
$
|
1.03
|
|
|
$
|
(0.47)
|
|
|
$
|
1.30
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
239.6
|
|
|
206.0
|
|
|
239.0
|
|
|
206.4
|
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Air
Management
|
$
|
1,854
|
|
|
$
|
826
|
|
|
$
|
3,865
|
|
|
$
|
2,260
|
|
e-Propulsion &
Drivetrain
|
1,337
|
|
|
607
|
|
|
2,803
|
|
|
1,467
|
|
Fuel
Injection
|
480
|
|
|
—
|
|
|
955
|
|
|
—
|
|
Aftermarket
|
226
|
|
|
—
|
|
|
423
|
|
|
—
|
|
Inter-segment
eliminations
|
(139)
|
|
|
(7)
|
|
|
(279)
|
|
|
(22)
|
|
Net sales
|
$
|
3,758
|
|
|
$
|
1,426
|
|
|
$
|
7,767
|
|
|
$
|
3,705
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Income Taxes and Noncontrolling Interest ("Adj.
EBIT") (Unaudited)
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Air
Management
|
$
|
277
|
|
|
$
|
28
|
|
|
$
|
599
|
|
|
$
|
236
|
|
e-Propulsion &
Drivetrain
|
132
|
|
|
1
|
|
|
269
|
|
|
64
|
|
Fuel
Injection
|
38
|
|
|
—
|
|
|
71
|
|
|
—
|
|
Aftermarket
|
32
|
|
|
—
|
|
|
53
|
|
|
—
|
|
Segment Adjusted
EBIT
|
479
|
|
|
29
|
|
|
992
|
|
|
300
|
|
Corporate, including
stock-based compensation
|
78
|
|
|
38
|
|
|
147
|
|
|
75
|
|
Restructuring
expense
|
62
|
|
|
37
|
|
|
92
|
|
|
52
|
|
Merger, acquisition
and divestiture expense
|
15
|
|
|
21
|
|
|
28
|
|
|
42
|
|
Loss on
sale
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Asset
impairments
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
Net gain on insurance
recovery for property damage
|
—
|
|
|
(6)
|
|
|
(2)
|
|
|
(6)
|
|
Equity in affiliates'
earnings, net of tax
|
(16)
|
|
|
(2)
|
|
|
(28)
|
|
|
(7)
|
|
Unrealized loss on
equity securities
|
4
|
|
|
—
|
|
|
276
|
|
|
9
|
|
Interest
income
|
(3)
|
|
|
(3)
|
|
|
(6)
|
|
|
(5)
|
|
Interest
expense
|
42
|
|
|
18
|
|
|
63
|
|
|
30
|
|
Other postretirement
income
|
(12)
|
|
|
(1)
|
|
|
(23)
|
|
|
(3)
|
|
Earnings (loss) before
income taxes and noncontrolling interest
|
302
|
|
|
(90)
|
|
|
438
|
|
|
96
|
|
Provision (benefit)
for income taxes
|
28
|
|
|
(6)
|
|
|
70
|
|
|
43
|
|
Net earnings
(loss)
|
274
|
|
|
(84)
|
|
|
368
|
|
|
53
|
|
Net earnings
attributable to noncontrolling interest, net of tax
|
27
|
|
|
14
|
|
|
56
|
|
|
22
|
|
Net earnings (loss)
attributable to BorgWarner Inc.
|
$
|
247
|
|
|
$
|
(98)
|
|
|
$
|
312
|
|
|
$
|
31
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
|
June 30,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
1,553
|
|
|
$
|
1,650
|
|
Restricted
cash
|
15
|
|
|
—
|
|
Receivables,
net
|
3,063
|
|
|
2,919
|
|
Inventories,
net
|
1,567
|
|
|
1,286
|
|
Prepayments and other
current assets
|
339
|
|
|
312
|
|
Total current
assets
|
6,537
|
|
|
6,167
|
|
|
|
|
|
Property, plant and
equipment, net
|
4,535
|
|
|
4,591
|
|
Other non-current
assets
|
5,791
|
|
|
5,271
|
|
Total
assets
|
$
|
16,863
|
|
|
$
|
16,029
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Notes payable and
other short-term debt
|
$
|
13
|
|
|
$
|
49
|
|
Accounts
payable
|
2,367
|
|
|
2,352
|
|
Other current
liabilities
|
1,482
|
|
|
1,409
|
|
Total current
liabilities
|
3,862
|
|
|
3,810
|
|
|
|
|
|
Long-term
debt
|
4,348
|
|
|
3,738
|
|
Other non-current
liabilities
|
1,631
|
|
|
1,757
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
6,649
|
|
|
6,428
|
|
Noncontrolling
interest
|
373
|
|
|
296
|
|
Total
equity
|
7,022
|
|
|
6,724
|
|
Total liabilities and
equity
|
$
|
16,863
|
|
|
$
|
16,029
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
millions)
|
|
|
|
|
Six Months Ended June
30,
|
|
2021
|
|
2020
|
OPERATING
|
|
|
|
Net cash provided by
operating activities
|
$
|
622
|
|
|
$
|
327
|
|
INVESTING
|
|
|
|
Capital expenditures,
including tooling outlays
|
(342)
|
|
|
(171)
|
|
Capital expenditures
for damage to property, plant and equipment
|
(2)
|
|
|
—
|
|
Insurance proceeds
received for damage to property, plant and equipment
|
—
|
|
|
22
|
|
Payments for
businesses acquired, net of cash and restricted cash
acquired
|
(759)
|
|
|
(2)
|
|
Proceeds from
settlement of net investment hedges, net
|
11
|
|
|
6
|
|
Payments for
investments in equity securities and other, net
|
(7)
|
|
|
(2)
|
|
Net cash used in
investing activities
|
(1,099)
|
|
|
(147)
|
|
|
|
|
|
FINANCING
|
|
|
|
Net decrease in notes
payable
|
(6)
|
|
|
—
|
|
Additions to
debt
|
1,229
|
|
|
1,143
|
|
Payments for debt
issuance costs
|
(10)
|
|
|
(10)
|
|
Repayments of debt,
including current portion
|
(671)
|
|
|
(35)
|
|
Payments for
stock-based compensation items
|
(14)
|
|
|
(13)
|
|
Purchase of
noncontrolling interest
|
(33)
|
|
|
—
|
|
Dividends paid to
BorgWarner stockholders
|
(81)
|
|
|
(70)
|
|
Dividends paid to
noncontrolling stockholders
|
(5)
|
|
|
(16)
|
|
Net cash provided by
financing activities
|
409
|
|
|
999
|
|
Effect of exchange
rate changes on cash
|
(14)
|
|
|
(8)
|
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
(82)
|
|
|
1,171
|
|
Cash and cash
equivalents at beginning of year
|
1,650
|
|
|
832
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
1,568
|
|
|
$
|
2,003
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
(in
millions)
|
|
|
|
|
Six Months Ended June
30,
|
|
2021
|
|
2020
|
Depreciation and
amortization
|
$
|
390
|
|
|
$
|
224
|
|
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 2021 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 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. Adjusted operating
margin is defined as adjusted operating income divided by net
sales.
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.
Free Cash Flow
The Company defines free cash flow as
net cash provided by operating activities minus capital
expenditures, including tooling outlays. It is useful to both
management and investors in evaluating the Company's ability to
service and repay its debt.
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 net M&A.
Adjusted Operating
Income (loss) and Adjusted Operating Margin
(Unaudited)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales
|
$
|
3,758
|
|
|
$
|
1,426
|
|
|
$
|
7,767
|
|
|
$
|
3,705
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
317
|
|
|
$
|
(78)
|
|
|
$
|
720
|
|
|
$
|
120
|
|
Operating
margin
|
8.4
|
%
|
|
(5.5)
|
%
|
|
9.3
|
%
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Restructuring
expense
|
$
|
62
|
|
|
$
|
37
|
|
|
$
|
92
|
|
|
$
|
52
|
|
Merger, acquisition
and divestiture expense
|
15
|
|
|
21
|
|
|
28
|
|
|
42
|
|
Loss on
sale
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Asset
impairments
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
Net gain on insurance
recovery for property damage
|
—
|
|
|
(6)
|
|
|
(2)
|
|
|
(6)
|
|
Adjusted operating
income (loss)
|
$
|
401
|
|
|
$
|
(9)
|
|
|
$
|
845
|
|
|
$
|
225
|
|
Adjusted operating
margin
|
10.7
|
%
|
|
(0.6)
|
%
|
|
10.9
|
%
|
|
6.1
|
%
|
|
|
Free Cash Flow
Reconciliation (Unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided by
operating activities
|
$
|
280
|
|
|
$
|
64
|
|
|
$
|
622
|
|
|
$
|
327
|
|
Capital expenditures,
including tooling outlays
|
(147)
|
|
|
(54)
|
|
|
(342)
|
|
|
(171)
|
|
Free cash
flow
|
$
|
133
|
|
|
$
|
10
|
|
|
$
|
280
|
|
|
$
|
156
|
|
Second Quarter
2021 Organic Net Sales Change (Unaudited)
|
|
|
(in
millions)
|
Q2 2020 Net
Sales
|
|
FX
|
|
Q2 2020 Delphi
Technologies Pro Forma Impact
|
|
Market Impact,
Pricing & Other
|
|
Q2 2021 Net
Sales
|
|
Organic Net Sales
Change
|
Air
Management
|
$
|
826
|
|
$
|
105
|
|
$
|
135
|
|
$
|
788
|
|
$
|
1,854
|
|
82.0%
|
e-Propulsion &
Drivetrain
|
607
|
|
68
|
|
150
|
|
512
|
|
1,337
|
|
67.6%
|
Fuel
Injection
|
—
|
|
36
|
|
250
|
|
194
|
|
480
|
|
77.6%
|
Aftermarket
|
—
|
|
8
|
|
129
|
|
89
|
|
226
|
|
69.0%
|
Inter-segment
eliminations
|
(7)
|
|
—
|
|
(36)
|
|
(96)
|
|
(139)
|
|
—
|
Total
|
$
|
1,426
|
|
$
|
217
|
|
$
|
628
|
|
$
|
1,487
|
|
$
|
3,758
|
|
72.4%
|
Year to Date
2021 Organic Net Sales Change (Unaudited)
|
|
|
(in
millions)
|
Q2 2020 YTD Net
Sales
|
|
FX
|
|
Q2 2020 YTD Delphi
Technologies Pro Forma Impact
|
|
Market Impact,
Pricing & Other
|
|
Q2 2021 YTD Net
Sales
|
|
Organic Net Sales
Change
|
Air
Management
|
$
|
2,260
|
|
|
$
|
203
|
|
$
|
384
|
|
$
|
1,018
|
|
$
|
3,865
|
|
38.5%
|
e-Propulsion &
Drivetrain
|
1,467
|
|
|
131
|
|
322
|
|
883
|
|
2,803
|
|
49.4%
|
Fuel
Injection
|
—
|
|
|
65
|
|
661
|
|
229
|
|
955
|
|
34.6%
|
Aftermarket
|
—
|
|
|
12
|
|
303
|
|
108
|
|
423
|
|
35.6%
|
Inter-segment
eliminations
|
(22)
|
|
|
—
|
|
(97)
|
|
(160)
|
|
(279)
|
|
—
|
Total
|
$
|
3,705
|
|
$
|
411
|
|
$
|
1,573
|
|
$
|
2,078
|
|
$
|
7,767
|
|
39.4%
|
Adjusted Operating
Income and Adjusted Operating Margin Guidance Reconciliation
(Unaudited)
|
|
Full-Year 2021
Guidance
|
(in
millions)
|
Low
|
|
High
|
Net sales
|
$
|
15,200
|
|
|
$
|
15,600
|
|
|
|
|
|
Operating
income
|
1,317
|
|
|
1,452
|
|
Operating
margin
|
8.7
|
%
|
|
9.3
|
%
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
$
|
200
|
|
|
$
|
150
|
|
Merger, acquisition
and divestiture expense
|
28
|
|
|
28
|
|
Loss on
sale
|
7
|
|
|
7
|
|
Net gain on insurance
recovery for property
damage
|
(2)
|
|
|
(2)
|
|
Adjusted operating
income
|
$
|
1,550
|
|
|
$
|
1,635
|
|
Adjusted operating
margin
|
10.2
|
%
|
|
10.5
|
%
|
Adjusted Earnings
Per Diluted Share Guidance Reconciliation
(Unaudited)
|
|
Full-Year 2021
Guidance
|
|
Low
|
|
High
|
Earnings per
Diluted Share
|
$
|
2.80
|
|
|
$
|
3.21
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
0.66
|
|
|
0.50
|
|
Merger, acquisition
and divestiture expense
|
0.10
|
|
|
0.10
|
|
Loss on
sale
|
0.03
|
|
|
0.03
|
|
Loss on debt
extinguishment
|
0.06
|
|
|
0.06
|
|
YTD 2021 unrealized
loss on equity
securities
|
0.88
|
|
|
0.88
|
|
Tax
adjustments
|
(0.38)
|
|
|
(0.38)
|
|
|
|
|
|
Adjusted Earnings
per Diluted Share
|
$
|
4.15
|
|
|
$
|
4.40
|
|
Free Cash Flow
Guidance Reconciliation (Unaudited)
|
|
|
|
|
|
|
Full Year 2021
Guidance
|
(in
millions)
|
|
Low
|
|
High
|
Net cash provided by
operating activities
|
|
$
|
1,525
|
|
$
|
1,675
|
Capital expenditures,
including tooling
outlays
|
|
(725)
|
|
(775)
|
Free cash
flow
|
|
$
|
800
|
|
$
|
900
|
Pro Forma Financial Information
On October 1, 2020 BorgWarner completed its
acquisition of Delphi Technologies PLC (Delphi Technologies). The
2020 pro forma unaudited quarterly financial information included
herein includes the pro forma combined results of BorgWarner and
Delphi Technologies for periods prior to October 1, 2020. The pro forma financial
information for the three months ended March
31, 2020 and June 30, 2020 has
been derived from the unaudited consolidated financial statements
included in BorgWarner's and Delphi Technologies' Quarterly Reports
on Form 10-Q for the three and six months ended June 30, 2020. The pro forma financial
information for the three months ended September 30, 2020 has been derived from the
unaudited consolidated financial statements included in
BorgWarner's Quarterly Report on Form 10-Q for the three months
ended September 30, 2020 and from the
books and records of Delphi Technologies for the same period. The
pro forma financial information does not give effect to the
transaction on periods prior to October 1,
2020 and is not necessarily indicative of either the actual
consolidated results had the acquisition of Delphi Technologies
occurred on January 1, 2020 or of
future operating results.
Pro Forma
Quarterly Net Sales and Adjusted Operating Income
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Pro forma Q1
2020
|
|
Pro forma Q2
2020
|
|
Pro forma Q3
2020
|
|
As Reported Q4
2020
|
|
Pro forma FY
2020
|
Air
Management
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
1,683
|
|
$
|
961
|
|
$
|
1,750
|
|
$
|
1,942
|
|
$
|
6,336
|
Adjusted
EBIT
|
241
|
|
34
|
|
278
|
|
301
|
|
854
|
Adjusted EBIT
Margin
|
14.3%
|
|
3.5%
|
|
15.9%
|
|
15.5%
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
|
e-Propulsion &
Drivetrain
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
1,032
|
|
$
|
757
|
|
$
|
1,305
|
|
$
|
1,447
|
|
$
|
4,541
|
Adjusted
EBIT
|
64
|
|
(4)
|
|
148
|
|
164
|
|
372
|
Adjusted EBIT
Margin
|
6.2%
|
|
(0.5)%
|
|
11.3%
|
|
11.3%
|
|
8.2%
|
|
|
|
|
|
|
|
|
|
|
Fuel
Injection
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
411
|
|
$
|
250
|
|
$
|
410
|
|
$
|
479
|
|
$
|
1,550
|
Adjusted
EBIT
|
20
|
|
(28)
|
|
31
|
|
39
|
|
62
|
Adjusted EBIT
Margin
|
4.9%
|
|
(11.2)%
|
|
7.6%
|
|
8.1%
|
|
4.0%
|
|
|
|
|
|
|
|
|
|
|
Aftermarket
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
174
|
|
$
|
129
|
|
$
|
195
|
|
$
|
194
|
|
$
|
692
|
Adjusted
EBIT
|
15
|
|
6
|
|
18
|
|
22
|
|
61
|
Adjusted EBIT
Margin
|
8.6%
|
|
4.7%
|
|
9.2%
|
|
11.3%
|
|
8.8%
|
|
|
|
|
|
|
|
|
|
|
Inter-segment
eliminations
|
$
|
(76)
|
|
$
|
(43)
|
|
$
|
(72)
|
|
$
|
(136)
|
|
$
|
(327)
|
Corporate
expenses
|
$
|
(66)
|
|
$
|
(60)
|
|
$
|
(79)
|
|
$
|
(78)
|
|
$
|
(283)
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
Total net
sales
|
$
|
3,224
|
|
$
|
2,054
|
|
$
|
3,588
|
|
$
|
3,926
|
|
$
|
12,792
|
Total adjusted
operating income (loss)
|
274
|
|
(52)
|
|
396
|
|
448
|
|
1,066
|
Total adjusted
operating income margin
|
8.5%
|
|
(2.5)%
|
|
11.0%
|
|
11.4%
|
|
8.3%
|
|
|
|
|
|
|
|
|
|
|
Key Definitions
The terms below are commonly used by
management and investors in assessing ongoing financial
performance.
Market: Light and commercial vehicle production weighted for
BorgWarner's geographic exposure as estimated by BorgWarner.
Outgrowth: "Organic Net Sales Change" excluding Aftermarket
segment vs. year-over-year change in "Market".
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SOURCE BorgWarner