AUBURN HILLS, Mich.,
Feb. 8, 2024 /PRNewswire/ --
BorgWarner Inc. (NYSE: BWA) today reported fourth quarter and
full-year results.
Charging Forward Update:
- BorgWarner has announced a strategic relationship agreement
with FinDreams Battery, a subsidiary of BYD Company Limited. Under
this agreement, BorgWarner will be the only non-OEM localized
manufacturer, unaffiliated with FinDreams Battery, with rights to
localize LFP battery packs for commercial vehicles utilizing
FinDreams Battery blade cells in Europe, the Americas, and select regions of
Asia Pacific.
- BorgWarner has announced a joint venture with Shaanxi Fast Auto
Drive Group to develop a high-voltage inverter application for the
Chinese electric commercial vehicle market. This high-voltage
inverter for commercial vehicles is expected to strengthen
BorgWarner's commercial vehicle product portfolio.
- BorgWarner has completed its acquisition of the Electric Hybrid
Systems business segment of Eldor Corporation ("Eldor"). The
acquisition is an important complement to the ePropulsion
portfolio, especially as it relates to expansion in high-voltage
power electronics beyond the inverter.
- BorgWarner announced multiple new eProduct awards including:
- A contract with a major global OEM to extend its existing
business supplying 400V high voltage coolant heaters (HVCH) for the
automaker's battery-electric light-vehicle platforms, specifically
truck and SUV programs.
- A contract with Xpeng Motors, a leading Chinese Smart EV
company to supply its eMotor rotor and stator for the X9 MPV as
well as XPeng's next electric B-class sedan.
- A contract with a major Chinese OEM to supply its 90kW boost
dual inverter on a series of the automaker's plug-in hybrid (PHEV)
and range extended (REEV) electric vehicle passenger car
platforms.
Fourth Quarter Highlights (continuing operations
basis):
- U.S. GAAP net sales of $3,522
million, an increase of 6.2% compared with fourth quarter
2022.
- Excluding the impact of foreign currencies and the net impact
of net M&A, organic sales were up 4.4% compared with fourth
quarter 2022.
- U.S. GAAP net earnings of $0.64
per diluted share.
- Excluding the $0.26 of net losses
per diluted share related to non-comparable items (detailed in the
table below), adjusted net earnings were $0.90 per diluted share.
- U.S. GAAP operating income of $281
million, or 8.0% of net sales.
- Excluding $51 million of net
pretax expense related to non-comparable items, adjusted operating
income was $332 million, or 9.4% of
net sales.
- Net cash provided by operating activities of $887 million.
- Free cash flow of $679
million.
Full Year Highlights (continuing operations basis):
- U.S. GAAP net sales of $14,198
million, an increase of 12.4% when compared with 2022.
- Excluding the impact of foreign currencies and the net impact
of M&A, organic sales were up 12.5% compared with
2022.
- U.S. GAAP net earnings of $2.70
per diluted share.
- Excluding $1.05 of net losses per
diluted share related to non-comparable items (detailed in the
table below), adjusted net earnings were $3.75 per diluted share.
- U.S. GAAP operating income of $1,160
million, or 8.2% of net sales.
- Excluding $198 million of net
pretax expense related to non-comparable items, adjusted operating
income was $1,358 million, or 9.6% of
net sales.
- Net cash provided by operating activities of $1,397 million.
- Free cash flow of $565
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.
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Earnings per diluted
share
|
$
0.64
|
|
$
0.73
|
|
$
2.70
|
|
$
2.69
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Merger and acquisition
expense, net
|
0.01
|
|
(0.01)
|
|
0.09
|
|
0.03
|
Restructuring
expense
|
0.04
|
|
(0.02)
|
|
0.24
|
|
0.15
|
Asset impairments and
lease modification
|
0.07
|
|
0.13
|
|
0.10
|
|
0.13
|
Gain on debt
extinguishment
|
—
|
|
—
|
|
(0.09)
|
|
—
|
Loss (gain) on sale of
business
|
—
|
|
0.01
|
|
(0.02)
|
|
(0.04)
|
Gain on sale of
assets
|
—
|
|
—
|
|
(0.04)
|
|
—
|
Other non-comparable
items
|
0.01
|
|
—
|
|
0.07
|
|
—
|
Realized and
unrealized loss on debt and equity securities
|
0.18
|
|
0.14
|
|
0.73
|
|
0.25
|
Corporate synergy from
spin-off
|
—
|
|
0.02
|
|
0.02
|
|
0.06
|
Tax
adjustments
|
(0.05)
|
|
(0.06)
|
|
(0.05)
|
|
(0.10)
|
|
|
|
|
|
|
|
|
Adjusted earnings
per diluted share
|
$
0.90
|
|
$
0.94
|
|
$
3.75
|
|
$
3.17
|
Net sales were $3,522 million for
the fourth quarter 2023, an increase of 6.2% from $3,317 million for the fourth quarter 2022,
primarily due to increased demand for the Company's products and
higher industry production compared to the prior year. Net earnings
for the fourth quarter 2023 were $149
million, or $0.64 per diluted
share, compared with net earnings of $172
million, or $0.73 per diluted
share, for the fourth quarter 2022. Adjusted net earnings per
diluted share for the fourth quarter 2023 were $0.90, down from adjusted net earnings per
diluted share of $0.94 for the fourth
quarter 2022. Adjusted net earnings for the fourth quarter 2023
excluded net non-comparable items of $(0.26) per diluted share, while adjusted net
earnings for the fourth 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. Adjusted net earnings per diluted
share was flat, primarily due to the impact of higher adjusted
operating income, which was offset by a higher effective tax
rate.
Full Year 2024 Guidance: The Company has provided 2024
full year guidance. Net sales are expected to be in the range of
$14.4 billion to $14.9 billion, compared with 2023 sales of
$14.2 billion. This implies a
year-over-year organic increase in sales of 1% 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. The Company expects its weighted light and commercial vehicle
markets to be in the range of down (2.5)% to roughly flat in 2024.
Foreign currencies are expected to have a minimal year-over-year
impact on full-year 2024 sales.
Operating margin is expected to be in the range of 8.5% to 8.9%.
Excluding the impact of non-comparable items and the add back of
intangible asset amortization expense, adjusted operating margin is
expected to be in the range of 9.2% to 9.6%. This guidance includes
an expected negative adjusted operating income impact due to the
acquisition of the electric hybrid systems business segment of
Eldor Corporation. Excluding the impact of the Eldor acquisition,
adjusted operating margin is expected to be in the range of 9.6% to
9.9%. Net earnings are expected to be within a range of
$3.56 to $3.88 per diluted share. Excluding the impact of
non-comparable items, adjusted net earnings are expected to be
within a range of $3.65 to
$4.00 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 fourth quarter and full year 2023
results and 2024 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.
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 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 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:
supply disruptions impacting us or our customers, such as the
current shortage of semiconductor chips that has impacted original
equipment manufacturer ("OEM") customers and their suppliers,
including us; 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 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; disruptions in the global economy caused by wars, including
the wars in Ukraine and the
Middle East; 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 recently-completed tax-free
spin-off of our former Fuel Systems and Aftermarket segments into a
separate publicly traded company will not achieve its intended
benefits for us; 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; the
impact of any future strikes involving some 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 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
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$ 3,522
|
|
$ 3,317
|
|
$
14,198
|
|
$
12,635
|
Cost of
sales
|
2,863
|
|
2,678
|
|
11,630
|
|
10,266
|
Gross
profit
|
659
|
|
639
|
|
2,568
|
|
2,369
|
Gross
margin
|
18.7 %
|
|
19.3 %
|
|
18.1 %
|
|
18.7 %
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
353
|
|
339
|
|
1,316
|
|
1,290
|
Restructuring
expense
|
11
|
|
6
|
|
79
|
|
48
|
Other operating
expense, net
|
14
|
|
29
|
|
13
|
|
22
|
Operating
income
|
281
|
|
265
|
|
1,160
|
|
1,009
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(7)
|
|
(7)
|
|
(30)
|
|
(28)
|
Realized and unrealized
loss on debt and equity securities
|
45
|
|
46
|
|
174
|
|
73
|
Interest expense,
net
|
7
|
|
10
|
|
10
|
|
51
|
Other postretirement
expense
|
7
|
|
2
|
|
15
|
|
—
|
Earnings from
continuing operations before income taxes and
noncontrolling interest
|
229
|
|
214
|
|
991
|
|
913
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
59
|
|
18
|
|
289
|
|
195
|
Net earnings from
continuing operations
|
175
|
|
196
|
|
702
|
|
718
|
Net earnings (loss)
from discontinued operations
|
5
|
|
82
|
|
(7)
|
|
308
|
Net earnings
|
175
|
|
278
|
|
702
|
|
1,026
|
Net earnings from
continuing operations attributable to the noncontrolling
interest, net of tax
|
21
|
|
24
|
|
70
|
|
82
|
Net earnings
attributable to BorgWarner Inc.
|
$
154
|
|
$
254
|
|
$
625
|
|
$
944
|
|
|
|
|
|
|
|
|
Amounts attributable to
BorgWarner Inc.:
|
|
|
|
|
|
|
|
Net earnings from
continuing operations
|
149
|
|
172
|
|
632
|
|
636
|
Net earnings (loss)
from discontinued operations
|
5
|
|
82
|
|
(7)
|
|
308
|
Net earnings
attributable to BorgWarner Inc.
|
$
154
|
|
$
254
|
|
$
625
|
|
$
944
|
|
|
|
|
|
|
|
|
Earnings per share from
continuing operations — diluted
|
0.64
|
|
0.73
|
|
2.70
|
|
2.69
|
Earnings per share from
discontinued operations — diluted
|
0.02
|
|
0.36
|
|
(0.03)
|
|
1.30
|
Earnings per share
attributable to BorgWarner Inc. — diluted
|
$ 0.66
|
|
$ 1.09
|
|
$ 2.67
|
|
$ 3.99
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding — diluted
|
233.6
|
|
234.5
|
|
234.4
|
|
236.8
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales by Reporting
Segment (Unaudited)
|
|
|
|
|
|
|
(in
millions)
|
Three Months
Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Air
Management
|
$ 1,882
|
|
$ 1,809
|
|
$ 7,833
|
|
$ 7,137
|
Drivetrain &
Battery Systems
|
1,130
|
|
990
|
|
4,348
|
|
3,735
|
ePropulsion
|
542
|
|
545
|
|
2,166
|
|
1,906
|
Inter-segment
eliminations
|
(32)
|
|
(27)
|
|
(149)
|
|
(143)
|
Net sales
|
$ 3,522
|
|
$ 3,317
|
|
$
14,198
|
|
$
12,635
|
|
|
|
|
|
|
|
|
Segment Adjusted
Operating Income (Loss) (Unaudited)
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Air
Management
|
$
287
|
|
$
280
|
|
$ 1,171
|
|
$ 1,073
|
Drivetrain &
Battery Systems
|
145
|
|
119
|
|
545
|
|
449
|
ePropulsion
|
(16)
|
|
1
|
|
(90)
|
|
(88)
|
Segment Adjusted
Operating Income
|
416
|
|
400
|
|
1,626
|
|
1,434
|
Corporate, including
stock-based compensation
|
84
|
|
84
|
|
278
|
|
282
|
Restructuring
expense
|
11
|
|
6
|
|
79
|
|
48
|
Intangible asset
amortization
|
16
|
|
17
|
|
67
|
|
69
|
Merger and acquisition
expense, net
|
1
|
|
(4)
|
|
23
|
|
9
|
Asset impairments and
lease modifications
|
18
|
|
30
|
|
29
|
|
30
|
Loss (gain) on sale of
business
|
—
|
|
2
|
|
(5)
|
|
(13)
|
Gain on sale of
assets
|
—
|
|
—
|
|
(13)
|
|
—
|
Other non-comparable
items
|
5
|
|
—
|
|
8
|
|
—
|
Equity in affiliates'
earnings, net of tax
|
(7)
|
|
(7)
|
|
(30)
|
|
(28)
|
Realized and unrealized
loss on debt and equity securities
|
45
|
|
46
|
|
174
|
|
73
|
Interest expense,
net
|
7
|
|
10
|
|
10
|
|
51
|
Other postretirement
expense (income)
|
7
|
|
2
|
|
15
|
|
—
|
Earnings from
continuing operations before income taxes and
noncontrolling interest
|
229
|
|
214
|
|
991
|
|
913
|
Provision for income
taxes
|
59
|
|
18
|
|
289
|
|
195
|
Net earnings from
continuing operations
|
170
|
|
196
|
|
702
|
|
718
|
Net earnings from
continuing operations attributable to the noncontrolling
interest, net of tax
|
21
|
|
24
|
|
70
|
|
82
|
Net earnings from
continuing operations attributable to BorgWarner
Inc.
|
$
149
|
|
$
172
|
|
$
632
|
|
$
636
|
BorgWarner
Inc.
|
|
|
|
Condensed Consolidated
Balance Sheets (Unaudited)
|
(in
millions)
|
|
|
|
|
December 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Cash, cash equivalents
and restricted cash
|
$
1,534
|
|
$
1,083
|
Receivables,
net
|
3,109
|
|
2,471
|
Inventories,
net
|
1,313
|
|
1,217
|
Prepayments and other
current assets
|
261
|
|
230
|
Current assets of
discontinued operations
|
—
|
|
1,616
|
Total current
assets
|
6,217
|
|
6,617
|
|
|
|
|
Property, plant and
equipment, net
|
3,783
|
|
3,426
|
Other non-current
assets
|
4,453
|
|
4,905
|
Non-current assets of
discontinued operations
|
—
|
|
2,046
|
Total
assets
|
$
14,453
|
|
$
16,994
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Notes payable and other
short-term debt
|
$
73
|
|
$
60
|
Accounts
payable
|
2,546
|
|
2,146
|
Other current
liabilities
|
1,148
|
|
1,084
|
Current liabilities of
discontinued operations
|
—
|
|
946
|
Total current
liabilities
|
3,767
|
|
4,236
|
|
|
|
|
Long-term
debt
|
3,707
|
|
4,140
|
Other non-current
liabilities
|
913
|
|
1,110
|
Non-current liabilities
of discontinued operations
|
—
|
|
295
|
Total
liabilities
|
8,387
|
|
9,486
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
5,828
|
|
7,224
|
Noncontrolling
interest
|
238
|
|
284
|
Total
equity
|
6,066
|
|
7,508
|
Total liabilities and
equity
|
$
14,453
|
|
$
16,994
|
BorgWarner
Inc.
|
|
|
|
Condensed Consolidated
Statements of Cash Flows (Unaudited)
|
(in
millions)
|
Year Ended
|
|
December 31,
|
|
2023
|
|
2022
|
OPERATING ACTIVITIES
OF CONTINUING OPERATIONS
|
|
|
|
Net cash provided by
operating activities from continuing operations
|
$
1,397
|
|
$
1,180
|
INVESTING ACTIVITIES
OF CONTINUING OPERATIONS
|
|
|
|
Capital expenditures,
including tooling outlays
|
(832)
|
|
(622)
|
Payments for businesses
acquired, net of cash and restricted cash acquired
|
(109)
|
|
(312)
|
Proceeds from
settlement of net investment hedges, net
|
25
|
|
40
|
Proceeds from (payments
for) investments in debt and equity securities, net
|
284
|
|
(473)
|
Proceeds from sale of
businesses, net of cash divested
|
9
|
|
27
|
Proceeds from asset
disposals and other, net
|
30
|
|
20
|
Net cash used in
investing activities from continuing operations
|
(593)
|
|
(1,320)
|
FINANCING ACTIVITIES
OF CONTINUING OPERATIONS
|
|
|
|
Additions to
debt
|
18
|
|
5
|
Repayments of debt,
including current portion
|
(451)
|
|
(13)
|
Payments for debt
issuance costs
|
(3)
|
|
—
|
Payments for purchase
of treasury stock
|
(177)
|
|
(240)
|
Payments for
stock-based compensation items
|
(25)
|
|
(18)
|
Payments for contingent
consideration
|
(23)
|
|
—
|
Purchase of
noncontrolling interest
|
(15)
|
|
(56)
|
Net distribution from
PHINIA
|
401
|
|
—
|
Dividends paid to
BorgWarner stockholders
|
(130)
|
|
(161)
|
Dividends paid to
noncontrolling stockholders
|
(116)
|
|
(81)
|
Net cash used in
financing activities from continuing operations
|
(521)
|
|
(564)
|
CASH FLOWS FROM
DISCONTINUED OPERATIONS
|
|
|
|
Operating activities of
discontinued operations
|
(85)
|
|
390
|
Investing activities of
discontinued operations
|
(86)
|
|
(99)
|
Financing activities of
discontinued operations
|
84
|
|
(3)
|
Net cash (used in)
provided by discontinued operations
|
(87)
|
|
288
|
Effect of exchange rate
changes on cash
|
—
|
|
(90)
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
196
|
|
(506)
|
Cash, cash equivalents
and restricted cash at beginning of year
|
1,338
|
|
1,844
|
Cash, cash equivalents
and restricted cash at end of year
|
$
1,534
|
|
$
1,338
|
Less: Cash, cash
equivalents and restricted cash of discontinued operations at end
of year
|
$
—
|
|
$
255
|
Cash, cash equivalents
and restricted cash of continuing operations at end of
year
|
$
1,534
|
|
$
1,083
|
|
|
|
|
Supplemental Financial
Information (Unaudited)
|
|
|
|
(in
millions)
|
Year Ended
|
|
December 31,
|
|
2023
|
|
2022
|
Depreciation and
tooling amortization
|
$
515
|
|
$
483
|
Intangible asset
amortization
|
$
67
|
|
$
69
|
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 continues 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, and 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 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 the acquisitions of Santroll's light vehicle
eMotor business, Rhombus Energy Solutions, Drivetek, the electric
vehicle solution, smart grid and smart energy businesses of Hubei
Surpass Sun Electric and the Electric Hybrid Systems business
segment of Eldor Corporation.
Adjusted Operating
Income and Adjusted Operating Margin (Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
(in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
3,522
|
|
$
3,317
|
|
$ 14,198
|
|
$ 12,635
|
|
|
|
|
|
|
|
|
Operating
income
|
281
|
|
265
|
|
1,160
|
|
1,009
|
Operating
margin
|
8.0 %
|
|
8.0 %
|
|
8.2 %
|
|
8.0 %
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Restructuring
expense
|
$
11
|
|
$
6
|
|
$
79
|
|
$
48
|
Intangible asset
amortization
|
16
|
|
17
|
|
67
|
|
69
|
Merger and acquisition
expense, net
|
1
|
|
(4)
|
|
23
|
|
9
|
Asset impairments and
lease modifications
|
18
|
|
30
|
|
29
|
|
30
|
Loss (gain) on sale of
business
|
—
|
|
2
|
|
(5)
|
|
(13)
|
Gain on sale of
assets
|
—
|
|
—
|
|
(13)
|
|
—
|
Corporate synergy from
spin-off
|
—
|
|
5
|
|
10
|
|
20
|
Other non-comparable
items
|
5
|
|
—
|
|
8
|
|
—
|
Net non-comparable
items
|
$
51
|
|
$
56
|
|
$ 198
|
|
$ 163
|
|
|
|
|
|
|
|
|
Adjusted operating
income
|
$ 332
|
|
$ 321
|
|
$
1,358
|
|
$
1,172
|
Adjusted operating
margin
|
9.4 %
|
|
9.7 %
|
|
9.6 %
|
|
9.3 %
|
Free Cash Flow
Reconciliation (Unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
(in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
operating activities from continuing operations
|
$
887
|
|
$
628
|
|
$ 1,397
|
|
$ 1,180
|
Capital expenditures,
including tooling outlays
|
(208)
|
|
(195)
|
|
(832)
|
|
(622)
|
Free cash
flow
|
$
679
|
|
$
433
|
|
$
565
|
|
$
558
|
Fourth Quarter 2023
Organic Net Sales Change (Unaudited)
|
|
|
(in
millions)
|
Q4 2022 Net
Sales
|
|
FX
|
|
Acquisition
Impact
|
|
Organic Net
Sales Change
|
|
Q4 2023 Net
Sales
|
|
Organic Net
Sales Change
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
1,809
|
|
$
38
|
|
$
2
|
|
$
33
|
|
$
1,882
|
|
1.8 %
|
Drivetrain &
Battery Systems
|
990
|
|
14
|
|
—
|
|
126
|
|
1,130
|
|
12.7 %
|
ePropulsion
|
545
|
|
3
|
|
3
|
|
(9)
|
|
542
|
|
(1.7) %
|
Inter-segment
eliminations
|
(27)
|
|
—
|
|
—
|
|
(5)
|
|
(32)
|
|
18.5 %
|
Net sales
|
$
3,317
|
|
$
55
|
|
$
5
|
|
$
145
|
|
$
3,522
|
|
4.4 %
|
Full Year 2023
Organic Net Sales Change (Unaudited)
|
|
|
(in
millions)
|
2022
Net Sales
|
|
FX
|
|
Acquisition
Impact
|
|
Organic Net
Sales Change
|
|
2023
Net Sales
|
|
Organic Net
Sales Change
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
7,137
|
|
$
(6)
|
|
$
25
|
|
$
677
|
|
$
7,833
|
|
9.5 %
|
Drivetrain &
Battery Systems
|
3,735
|
|
(17)
|
|
—
|
|
630
|
|
4,348
|
|
16.9 %
|
ePropulsion
|
1,906
|
|
(43)
|
|
28
|
|
275
|
|
2,166
|
|
14.4 %
|
Inter-segment
eliminations
|
(143)
|
|
—
|
|
—
|
|
(6)
|
|
(149)
|
|
4.2 %
|
Net sales
|
$
12,635
|
|
$
(66)
|
|
$
53
|
|
$
1,576
|
|
$
14,198
|
|
12.5 %
|
Adjusted Operating
Income and Adjusted Operating Margin Guidance Reconciliation
(Unaudited)
|
|
|
|
|
Full-Year 2024
Guidance
|
(in
millions)
|
Low
|
|
High
|
Net sales
|
$
14,400
|
|
$
14,900
|
|
|
|
|
Operating
income
|
$
1,225
|
|
$
1,320
|
Operating
margin
|
8.5 %
|
|
8.9 %
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
$
30
|
|
$
40
|
Intangible asset
amortization
|
70
|
|
70
|
Adjusted operating
income
|
$
1,325
|
|
$
1,430
|
Adjusted operating
margin
|
9.2 %
|
|
9.6 %
|
|
|
|
|
Eldor acquisition
impact
|
$
60
|
|
$
45
|
Adjusted operating
income excluding Eldor acquisition impact
|
$
1,385
|
|
$
1,475
|
Adjusted operating
margin excluding Eldor acquisition impact
|
9.6 %
|
|
9.9 %
|
Adjusted Earnings
Per Diluted Share Guidance Reconciliation
(Unaudited)
|
|
|
|
|
Full-Year 2024
Guidance
|
|
Low
|
|
High
|
Earnings per Diluted
Share
|
$
3.56
|
|
$
3.88
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
0.09
|
|
0.12
|
Adjusted Earnings
per Diluted Share
|
$
3.65
|
|
$
4.00
|
Free Cash Flow
Guidance Reconciliation From Continuing Operations
(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
Organic Net Sales Change Guidance Reconciliation
(Unaudited)
|
|
|
(in
millions)
|
FY 2023 Net
Sales
|
|
FX
|
|
FY 2024
Acquisition
Impact
|
|
Organic Net
Sales
Change
|
|
FY 2024 Net
Sales
|
|
Organic Net
Sales
Change %
|
Low
|
$ 14,198
|
|
$
—
|
|
$
44
|
|
$
158
|
|
$ 14,400
|
|
1.1 %
|
High
|
$ 14,198
|
|
$
—
|
|
$
44
|
|
$
658
|
|
$ 14,900
|
|
4.6 %
|
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SOURCE BorgWarner