第99.1展示文本
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博格華納報告2024年第三季度業績
增加全年調整後的營業利潤率和每股收益指導
完成40000萬美元股份回購計劃
密歇根州奧本山市，2024年10月31日 - 玻格華納公司（紐交所：BWA）今日公佈了第三季度業績。
第三季度和2024年指引更新
•博格華納在第三季度取得了10.1%的調整後營業利潤率，對應美國通用會計準則下的營業利潤率爲7.8%。儘管公司權重輕型和商用車市場下降了5.6％，但公司也產生了淨現金流量從營業活動中提供了35600萬美元，或20100萬美元的自由現金流。
•公司將其全年調整後的營業利潤率指引的中位數提高了20個點子，並將其調整後的每股盈利指引提高了約0.18美元，或每股稀釋4%。這一增長是由強勁的第三季度運營業績、持續的成本控制、較低的有效稅率以及公司第三季度的股票回購推動的。由於市場生產前景不佳，公司將全年中點淨銷售指引減少了15000萬美元。
•博格華納在第三季度完成了回購公司30000萬美元的流通股份。博格華納目前已在2024年回購了40000萬美元的流通股份。
新業務更新
該公司獲得了多個新的業務獎項，預計將支撐其未來長期的盈利增長，包括：
•爲一家北美汽車製造商的下一代全尺寸皮卡車生產兩個傳動箱部件的大獎。該業務計劃於2027年和2028年推出。
•與中國電動汽車OEm、韓國OEm和日本OEm共獲得三項高電壓特斯拉-冷卻液加熱器獎。預計分別於2025年、2025年和2028年啓動這項業務。
•一項通用汽車渦輪增壓器獎，用於它們的Corvette ZR1體育車平台。預計這將是市場上最大的乘用車雙渦輪增壓器。
第三季度亮點（持續經營基礎）：
•根據2023年第三季度，美國通用會計準則的淨銷售額爲344900萬美元，較去年同期下降約5%。
◦控制支出，同時繼續在我們認爲對長期成功至關重要的領域進行投資。除外外幣影響和淨併購影響，與2023年第三季度相比，有機銷售下降了5.1%。
•每股攤薄盈利爲1.08美元的美國通用會計準則淨收益。
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◦控制支出，同時繼續在我們認爲對長期成功至關重要的領域進行投資。除與非可比項目相關的每股攤薄淨收益$(0.01)（詳見下表），調整後的每股攤薄淨收益爲$1.09。
•美國通用會計準則營業收入爲27000萬美元，佔淨銷售額的7.8%。
除去8000萬美元相關的預稅費用，經調整後的營業收入爲35000萬美元，佔淨銷售額的10.1%。
•經營活動產生的淨現金流量爲35600萬美元。
◦ 自由現金流爲20100萬美元。
財務成果（持續經營基礎）：
公司認爲以下表格有助於突出影響其美國通用會計準則稀釋每股淨收益的不可比因素。下面所述的不可比項目是在稅後使用相應的有效稅率離散計算的，並使用呈現期間的稀釋每股加權平均股數。公司將調整後的每股稀釋收益定義爲經調整以消除重組費用、併購和剝離費用、其他淨費用、中止營運、不反映公司持續經營的其他收入和損失以及相關稅效果。
| 截至9月30日的三個月 | 截至9月30日的九個月 | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| 每股稀釋收益 | $ | 1.08 | $ | 0.37 | $ | 3.40 | $ | 2.06 | |||||||||||||||
| 不可比較的項目： | |||||||||||||||||||||||
| 重組費用 | 0.07 | 0.17 | 0.21 | 0.21 | |||||||||||||||||||
| 加速折舊 | 0.10 | — | 0.13 | 0.01 | |||||||||||||||||||
| 商業合同結算 | 0.02 | — | 0.06 | — | |||||||||||||||||||
| 與拆股有關的餘額調整 | 0.01 | — | 0.06 | — | |||||||||||||||||||
| 出售企業的損益 | 0.03 | — | 0.02 | (0.02) | |||||||||||||||||||
| 集體談判協議批准獎金 | 0.01 | — | 0.01 | — | |||||||||||||||||||
| 債務清償盈利 | (0.01) | (0.09) | (0.01) | (0.09) | |||||||||||||||||||
| 兼併和收購支出，淨額 | (0.02) | 0.01 | — | 0.07 | |||||||||||||||||||
| 資產減值和租賃修改 | — | — | — | 0.03 | |||||||||||||||||||
| 資產出售獲利 | — | (0.03) | — | (0.04) | |||||||||||||||||||
| 股權和債務證券未實現和已實現的損益 | (0.01) | 0.32 | — | 0.55 | |||||||||||||||||||
| Spin-Off的企業協同效應 | — | — | — | 0.03 | |||||||||||||||||||
| 稅務調整 | (0.23) | 0.18 | (0.65) | — | |||||||||||||||||||
| 其他不可比較的項目 | 0.04 | 0.05 | 0.07 | 0.03 | |||||||||||||||||||
| 根據調整後的攤薄股數計算的每股調整後收益 | $ | 1.09 | $ | 0.98 | $ | 3.30 | $ | 2.84 | |||||||||||||||
2024年第三季度淨銷售額爲344900萬美元，相比2023年同期下降約5%，主要是由於市場產量下降。2024年第三季度淨收入爲24200萬美元，每股攤薄收益爲1.08美元，相比2023年第三季度的淨收入爲8700萬美元，每股攤薄收益爲0.37美元。2024年第三季度每股攤薄調整後淨收益爲1.09美元，高於2023年第三季度的調整後每股攤薄淨收益爲0.98美元。2024年第三季度調整後淨收益不包括每股攤薄淨非可比項目-(0.01)美元，而2023年第三季度調整後淨收益不包括淨不可比項目
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每攤薄股份$(0.61)。 這些項目列在上面的表格中，由公司提供，以便與其他結果和最直接可比的美國通用會計準則措施進行比較。 調整後的每攤薄股份淨收益增長主要是由於強勁的運營業績，持續的成本控制，客戶回報，較低的有效稅率以及公司的股份回購。
2024年整年業務指引： 公司已更新2024年全年銷售、毛利和每股收益指引。2024年淨銷售預計在140億美元至142億美元區間內，相比公司之前的指引爲141億美元至144億美元，以及2023年銷售額約爲142億美元。公司預計其輕型商用車市場將在2024年同比下降3.5%至3%，與公司先前的下滑3%至下滑2%的指引相比有所下降。公司的銷售指引暗示着有機銷售額同比約下降（1.5)%至持平，或預估產量高於市場大約200至300個點子。公司預計2024年電子產品銷售額約爲24億美元，高於2023年的約20億美元。預計外幣將導致銷售額同比減少約2000萬美元，主要由於歐元走強，部分抵消了韓元和人民幣對美元貶值的影響。預計收購SSE和Eldor Corporation的Electric Hybrid Systems業務部門將使銷售額同比增加約3000萬美元。
全年營業利潤率預計在8.1%至8.2%的區間內。排除非可比項目的影響，調整後的營業利潤率預計在9.8%至10.0%的區間內，高於公司先前的指導範圍爲9.6%至9.8%。預計每股攤薄收益將在$4.17至$4.28的區間內。排除非可比項目的影響，調整後的每股攤薄收益預計在$4.15至$4.30的區間內，高於公司先前的指導範圍爲$3.95至$4.15。全年經營現金流預計在$132500萬至$137500萬的區間內，而自由現金流預計在$47500萬至$57500萬的區間內。
At 9:30 a.m. ET today, a brief conference call concerning third 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.
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.
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Forward Looking Statements: This 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
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forward-looking statements. Further, all statements, other than statements of historical fact, contained or incorporated by reference in this 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 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, 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 original equipment manufacturer (“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; potential disruptions in the global economy caused by wars or other geopolitical conflicts; 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 2023 tax-free spin-off of our former Fuel Systems and Aftermarket segments into a separate publicly traded company will not achieve its intended benefits; 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; impacts of any future strikes involving any 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 release to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements.
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| BorgWarner Inc. | |||||||||||||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net sales | $ | 3,449 | $ | 3,622 | $ | 10,647 | $ | 10,676 | |||||||||||||||
| Cost of sales | 2,813 | 2,970 | 8,682 | 8,767 | |||||||||||||||||||
| Gross profit | 636 | 652 | 1,965 | 1,909 | |||||||||||||||||||
| Gross margin | 18.4 | % | 18.0 | % | 18.5 | % | 17.9 | % | |||||||||||||||
| Selling, general and administrative expenses | 340 | 330 | 1,010 | 963 | |||||||||||||||||||
| Restructuring expense | 21 | 56 | 65 | 68 | |||||||||||||||||||
| Other operating expense (income), net | 5 | (6) | 28 | (1) | |||||||||||||||||||
| Operating income | 270 | 272 | 862 | 879 | |||||||||||||||||||
| Equity in affiliates’ earnings, net of tax | (6) | (10) | (23) | (23) | |||||||||||||||||||
| Unrealized and realized (gain) loss on equity and debt securities | (2) | 60 | — | 129 | |||||||||||||||||||
| Interest expense (income), net | 4 | (19) | 17 | 3 | |||||||||||||||||||
| Other postretirement expense | 4 | 3 | 10 | 8 | |||||||||||||||||||
| Earnings from continuing operations before income taxes and noncontrolling interest | 270 | 238 | 858 | 762 | |||||||||||||||||||
| Provision for income taxes | 13 | 133 | 44 | 230 | |||||||||||||||||||
| Net earnings from continuing operations | 257 | 105 | 814 | 532 | |||||||||||||||||||
| Net loss from discontinued operations | (8) | (37) | (27) | (12) | |||||||||||||||||||
| Net earnings | 249 | 68 | 787 | 520 | |||||||||||||||||||
| Net earnings from continuing operations attributable to noncontrolling interest | 15 | 18 | 44 | 49 | |||||||||||||||||||
| Net earnings attributable to BorgWarner Inc. | $ | 234 | $ | 50 | $ | 743 | $ | 471 | |||||||||||||||
| Amounts attributable to BorgWarner Inc.: | |||||||||||||||||||||||
| Net earnings from continuing operations | $ | 242 | $ | 87 | $ | 770 | $ | 483 | |||||||||||||||
| Net loss from discontinued operations | (8) | (37) | (27) | (12) | |||||||||||||||||||
| Net earnings attributable to BorgWarner Inc. | $ | 234 | $ | 50 | $ | 743 | $ | 471 | |||||||||||||||
| Earnings per share from continuing operations — basic | $ | 1.08 | $ | 0.37 | $ | 3.41 | $ | 2.07 | |||||||||||||||
| Loss per share from discontinued operations — basic | (0.04) | (0.16) | (0.12) | (0.05) | |||||||||||||||||||
| Earnings per share attributable to BorgWarner Inc. — basic | $ | 1.04 | $ | 0.21 | $ | 3.29 | $ | 2.02 | |||||||||||||||
| Earnings per share from continuing operations — diluted | $ | 1.08 | $ | 0.37 | $ | 3.40 | $ | 2.06 | |||||||||||||||
| Loss per share from discontinued operations — diluted | (0.04) | (0.16) | (0.12) | (0.05) | |||||||||||||||||||
| Earnings per share attributable to BorgWarner Inc. — diluted | $ | 1.04 | $ | 0.21 | $ | 3.28 | $ | 2.01 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 223.1 | 233.4 | 225.7 | 233.2 | |||||||||||||||||||
| Diluted | 224.5 | 235.3 | 226.8 | 234.6 | |||||||||||||||||||
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| BorgWarner Inc. | |||||||||||||||||||||||
| Net Sales by Reportable Segment (Unaudited)* | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,386 | $ | 1,474 | $ | 4,475 | $ | 4,570 | |||||||||||||||
| Drivetrain & Morse Systems | 1,365 | 1,449 | 4,226 | 4,146 | |||||||||||||||||||
| PowerDrive Systems | 512 | 571 | 1,412 | 1,624 | |||||||||||||||||||
| Battery & Charging Systems | 197 | 146 | 567 | 395 | |||||||||||||||||||
| Inter-segment eliminations | (11) | (18) | (33) | (59) | |||||||||||||||||||
| Net sales | $ | 3,449 | $ | 3,622 | $ | 10,647 | $ | 10,676 | |||||||||||||||
| Segment Adjusted Operating Income (Loss) (Unaudited)* | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 202 | $ | 214 | $ | 654 | $ | 660 | |||||||||||||||
| Drivetrain & Morse Systems | 251 | 253 | 770 | 700 | |||||||||||||||||||
| PowerDrive Systems | (19) | (20) | (130) | (74) | |||||||||||||||||||
| Battery & Charging Systems | (8) | (26) | (33) | (76) | |||||||||||||||||||
| Segment Adjusted Operating Income | 426 | 421 | 1,261 | 1,210 | |||||||||||||||||||
| Corporate, including stock-based compensation | 76 | 72 | 196 | 194 | |||||||||||||||||||
| Restructuring expense | 21 | 56 | 65 | 68 | |||||||||||||||||||
| Intangible asset amortization expense | 17 | 17 | 51 | 51 | |||||||||||||||||||
| Accelerated depreciation | 27 | 1 | 35 | 4 | |||||||||||||||||||
| Commercial contract settlement | — | — | 15 | — | |||||||||||||||||||
| Adjustments associated with Spin-Off related balances | 3 | — | 14 | — | |||||||||||||||||||
| Collective bargaining agreement ratification bonus | 4 | — | 4 | — | |||||||||||||||||||
| Loss (gain) on sale of businesses | 6 | — | 3 | (5) | |||||||||||||||||||
| Merger and acquisition expense, net | (5) | 2 | — | 18 | |||||||||||||||||||
| Asset impairment and lease modification | — | 2 | — | 11 | |||||||||||||||||||
| Gain on sale of assets | — | (7) | — | (13) | |||||||||||||||||||
| Other non-comparable items | 7 | 6 | 16 | 3 | |||||||||||||||||||
| Equity in affiliates’ earnings, net of tax | (6) | (10) | (23) | (23) | |||||||||||||||||||
| Unrealized and realized (gain) loss on equity and debt securities | (2) | 60 | — | 129 | |||||||||||||||||||
| Interest expense (income), net | 4 | (19) | 17 | 3 | |||||||||||||||||||
| Other postretirement expense | 4 | 3 | 10 | 8 | |||||||||||||||||||
| Earnings from continuing operations before income taxes and noncontrolling interest | $ | 270 | $ | 238 | $ | 858 | $ | 762 | |||||||||||||||
____________________________
| * | Effective July 1, 2024, the Company implemented a new business unit and management structure designed to further enhance the execution of the Company’s Charging Forward strategy. The Company now reports its results in the following four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems (formerly ePropulsion) and Battery & Charging Systems. The reportable segment disclosures have been updated accordingly which included recasting prior period information for the new reporting structure. | |||||||||||||
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| BorgWarner Inc. | |||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | |||||||||||
| (in millions) | |||||||||||
| September 30, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 2,000 | $ | 1,534 | |||||||
| Receivables, net | 3,215 | 3,109 | |||||||||
| Inventories, net | 1,366 | 1,313 | |||||||||
| Prepayments and other current assets | 275 | 261 | |||||||||
| Total current assets | 6,856 | 6,217 | |||||||||
| Property, plant and equipment, net | 3,814 | 3,783 | |||||||||
| Other non-current assets | 4,467 | 4,453 | |||||||||
| Total assets | $ | 15,137 | $ | 14,453 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Short-term debt | $ | 398 | $ | 73 | |||||||
| Accounts payable | 2,176 | 2,546 | |||||||||
| Other current liabilities | 1,144 | 1,148 | |||||||||
| Total current liabilities | 3,718 | 3,767 | |||||||||
| Long-term debt | 4,195 | 3,707 | |||||||||
| Other non-current liabilities | 872 | 913 | |||||||||
| Total liabilities | 8,785 | 8,387 | |||||||||
| Total BorgWarner Inc. stockholders’ equity | 6,156 | 5,828 | |||||||||
| Noncontrolling interest | 196 | 238 | |||||||||
| Total equity | 6,352 | 6,066 | |||||||||
| Total liabilities and equity | $ | 15,137 | $ | 14,453 | |||||||
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| BorgWarner Inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||
| (in millions) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| OPERATING ACTIVITIES OF CONTINUING OPERATIONS | |||||||||||
| Net cash provided by operating activities from continuing operations | $ | 700 | $ | 510 | |||||||
| INVESTING ACTIVITIES OF CONTINUING OPERATIONS | |||||||||||
| Capital expenditures, including tooling outlays | (510) | (624) | |||||||||
| Payments for businesses acquired, net of cash acquired | — | (31) | |||||||||
| Proceeds from settlement of net investment hedges, net | 46 | 25 | |||||||||
| (Payments for) proceeds from investments in equity and debt securities, net | (7) | 63 | |||||||||
| Proceeds from the sale of business, net | 8 | — | |||||||||
| Proceeds from asset disposals and other, net | 3 | 29 | |||||||||
| Net cash used in investing activities from continuing operations | (460) | (538) | |||||||||
| FINANCING ACTIVITIES OF CONTINUING OPERATIONS | |||||||||||
| Net increase in notes payable | — | 3 | |||||||||
| Additions to debt | 1,000 | 4 | |||||||||
| Payments for debt issuance costs | (9) | (3) | |||||||||
| Repayments of debt, including current portion | (175) | (444) | |||||||||
| Payments for purchase of treasury stock | (401) | — | |||||||||
| Payments for stock-based compensation items | (23) | (25) | |||||||||
| Payments for businesses acquired, net of cash acquired | (4) | — | |||||||||
| Payments for contingent consideration | (1) | (23) | |||||||||
| Purchase of noncontrolling interest | — | (15) | |||||||||
| Net distribution from PHINIA | — | 401 | |||||||||
| Dividends paid to BorgWarner stockholders | (74) | (105) | |||||||||
| Dividends paid to noncontrolling stockholders | (63) | (71) | |||||||||
| Net cash provided by (used in) financing activities from continuing operations | 250 | (278) | |||||||||
| CASH FLOWS FROM DISCONTINUED OPERATIONS | |||||||||||
| Operating activities of discontinued operations | (27) | (66) | |||||||||
| Investing activities of discontinued operations | — | (86) | |||||||||
| Financing activities of discontinued operations | — | 84 | |||||||||
| Net cash used in discontinued operations | (27) | (68) | |||||||||
| Effect of exchange rate changes on cash | 3 | (15) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 466 | (389) | |||||||||
| Cash and cash equivalents at beginning of year | 1,534 | 1,338 | |||||||||
| Cash and cash equivalents at end of period | $ | 2,000 | $ | 949 | |||||||
| Less: Cash and cash equivalents of discontinued operations at end of period | $ | — | $ | — | |||||||
| Cash and cash equivalents of continuing operations at end of period | $ | 2,000 | $ | 949 | |||||||
| Supplemental Information (Unaudited) | |||||||||||
| (in millions) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Depreciation and tooling amortization | $ | 444 | $ | 376 | |||||||
| Intangible asset amortization | $ | 51 | $ | 51 | |||||||
8
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 will continue 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, 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 is useful to both management and investors in evaluating the Company’s ability to service and repay its debt.
9
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 the smart grid and smart energy businesses of Hubei Surpass Sun Electric and the Electric Hybrid Systems business segment of Eldor Corporation.
Outgrowth
The Company defines outgrowth as organic net sales change versus the year-over-year change in light and commercial vehicle production weighted for the Company’s geographic exposure, as estimated by the Company.
| Adjusted Operating Income and Adjusted Operating Margin (Unaudited) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net sales | $ | 3,449 | $ | 3,622 | $ | 10,647 | $ | 10,676 | |||||||||||||||
| Operating income | $ | 270 | $ | 272 | $ | 862 | $ | 879 | |||||||||||||||
| Operating margin | 7.8 | % | 7.5 | % | 8.1 | % | 8.2 | % | |||||||||||||||
| Non-comparable items: | |||||||||||||||||||||||
| Restructuring expense | $ | 21 | $ | 56 | $ | 65 | $ | 68 | |||||||||||||||
| Intangible asset amortization expense | 17 | 17 | 51 | 51 | |||||||||||||||||||
| Accelerated depreciation | 27 | 1 | 35 | 4 | |||||||||||||||||||
| Commercial contract settlement | — | — | 15 | — | |||||||||||||||||||
| Adjustments associated with Spin-Off related balances | 3 | — | 14 | — | |||||||||||||||||||
| Collective bargaining agreement ratification bonus | 4 | — | 4 | — | |||||||||||||||||||
| Loss (gain) on sale of businesses | 6 | — | 3 | (5) | |||||||||||||||||||
| Merger and acquisition expense, net | (5) | 2 | — | 18 | |||||||||||||||||||
| Asset impairment and lease modification | — | 2 | — | 11 | |||||||||||||||||||
| Gain on sale of assets | — | (7) | — | (13) | |||||||||||||||||||
| Corporate synergy from Spin-Off | — | — | — | 10 | |||||||||||||||||||
| Other non-comparable items | 7 | 6 | 16 | 3 | |||||||||||||||||||
| Adjusted operating income | $ | 350 | $ | 349 | $ | 1,065 | $ | 1,026 | |||||||||||||||
| Adjusted operating margin | 10.1 | % | 9.6 | % | 10.0 | % | 9.6 | % | |||||||||||||||
| Free Cash Flow Reconciliation (Unaudited) | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 356 | $ | 221 | $ | 700 | $ | 510 | |||||||||||||||
| Capital expenditures, including tooling outlays | (155) | (185) | (510) | (624) | |||||||||||||||||||
| Free cash flow | $ | 201 | $ | 36 | $ | 190 | $ | (114) | |||||||||||||||
10
| Third Quarter 2024 Organic Net Sales Change (Unaudited) | |||||||||||||||||||||||||||||||||||
| (in millions) | Q3 2023 Net Sales | FX | Acquisition Impact | Organic Net Sales Change | Q3 2024 Net Sales | Organic Net Sales Change % | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,474 | $ | (1) | $ | — | $ | (87) | $ | 1,386 | (5.9)% | ||||||||||||||||||||||||
| Drivetrain & Morse Systems | 1,449 | 2 | — | (86) | 1,365 | (5.9)% | |||||||||||||||||||||||||||||
| PowerDrive Systems | 571 | 2 | 9 | (70) | 512 | (12.3)% | |||||||||||||||||||||||||||||
| Battery & Charging Systems | 146 | 1 | — | 50 | 197 | 34.2% | |||||||||||||||||||||||||||||
| Inter-segment eliminations | (18) | — | — | 7 | (11) | (38.9)% | |||||||||||||||||||||||||||||
| Net sales | $ | 3,622 | $ | 4 | $ | 9 | $ | (186) | $ | 3,449 | (5.1)% | ||||||||||||||||||||||||
Year to Date 2024 Organic Net Sales Change (Unaudited) | |||||||||||||||||||||||||||||||||||
| (in millions) | Q3 2023 YTD Net Sales | FX | Acquisition Impact | Organic Net Sales Change | Q3 2024 YTD Net Sales | Organic Net Sales Change % | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 4,570 | $ | (21) | $ | — | $ | (74) | $ | 4,475 | (1.6)% | ||||||||||||||||||||||||
| Drivetrain & Morse Systems | 4,146 | (52) | — | 132 | 4,226 | 3.2% | |||||||||||||||||||||||||||||
| PowerDrive Systems | 1,624 | (17) | 21 | (216) | 1,412 | (13.3)% | |||||||||||||||||||||||||||||
| Battery & Charging Systems | 395 | — | 5 | 167 | 567 | 42.3% | |||||||||||||||||||||||||||||
| Inter-segment eliminations | (59) | — | — | 26 | (33) | (44.1)% | |||||||||||||||||||||||||||||
| Total | $ | 10,676 | $ | (90) | $ | 26 | $ | 35 | $ | 10,647 | 0.3% | ||||||||||||||||||||||||
| Adjusted Operating Income and Adjusted Operating Margin Guidance Reconciliation (Unaudited) | |||||||||||
Full-Year 2024 Guidance | |||||||||||
| (in millions) | Low | High | |||||||||
| Net sales | $ | 14,000 | $ | 14,200 | |||||||
| Operating income | 1,128 | 1,158 | |||||||||
| Operating margin | 8.1 | % | 8.2 | % | |||||||
| Non-comparable items: | |||||||||||
| Restructuring expense | $ | 90 | $ | 100 | |||||||
| Intangible asset amortization expense | 70 | 70 | |||||||||
| Accelerated depreciation | 35 | 35 | |||||||||
| Commercial contract settlement | 15 | 15 | |||||||||
| Adjustments associated with Spin-Off related balances | 14 | 14 | |||||||||
| Collective bargaining agreement ratification bonus | 4 | 4 | |||||||||
| Loss on sale of businesses | 3 | 3 | |||||||||
| Other non-comparable items | 16 | 16 | |||||||||
| Adjusted operating income | $ | 1,375 | $ | 1,415 | |||||||
| Adjusted operating margin | 9.8 | % | 10.0 | % | |||||||
11
| Adjusted Earnings Per Diluted Share Guidance Reconciliation (Unaudited) | |||||||||||
Full-Year 2024 Guidance | |||||||||||
| Low | High | ||||||||||
| Earnings per Diluted Share from Continuing Operations | $ | 4.17 | $ | 4.28 | |||||||
| Non-comparable items: | |||||||||||
| Restructuring expense | 0.29 | 0.33 | |||||||||
| Accelerated depreciation | 0.13 | 0.13 | |||||||||
| Commercial contract settlement | 0.06 | 0.06 | |||||||||
| Adjustments associated with Spin-Off related balances | 0.06 | 0.06 | |||||||||
| Loss on sale of businesses | 0.02 | 0.02 | |||||||||
| Collective bargaining agreement ratification bonus | 0.01 | 0.01 | |||||||||
| Gain on debt extinguishment | (0.01) | (0.01) | |||||||||
| Tax adjustments | (0.65) | (0.65) | |||||||||
| Other non-comparable items | 0.07 | 0.07 | |||||||||
| Adjusted Earnings per Diluted Share from Continuing Operations | $ | 4.15 | $ | 4.30 | |||||||
| Free Cash Flow Guidance Reconciliation (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 Estimated Organic Net Sales Change Guidance and Outgrowth Reconciliation From Continuing Operations (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | FY 2023 Net Sales | FX | FY 2024 Acquisition Impact | Organic Net Sales Change | FY 2024 Net Sales | Organic Net Sales Change % | LV/CV Weighted Market | Outgrowth | |||||||||||||||||||||||||||||||||||||||
| Low | $ | 14,198 | $ | (20) | $ | 30 | $ | (208) | $ | 14,000 | (1.5)% | (3.5)% | 2.0% | ||||||||||||||||||||||||||||||||||
| High | $ | 14,198 | $ | (20) | $ | 30 | $ | (8) | $ | 14,200 | (0.1)% | (3.0)% | 2.9% | ||||||||||||||||||||||||||||||||||
| Full Year 2024 Estimated Year-Over-Year Change in Production (Unaudited) | ||||||||||||||||||||||||||
| North America | Europe | China | Total | |||||||||||||||||||||||
| Light vehicle | (1.5)% to (0.5)% | (5.5)% to (5)% | 1% to 1.5% | (2.5)% to (2)% | ||||||||||||||||||||||
| Commercial vehicle | ~(4.5)% | ~(15)% | ~2% | ~(2.5)% | ||||||||||||||||||||||
| BorgWarner-Weighted | (2)% to (1)% | (7)% to (6.5)% | 1 to 1.5% | (3.5)% to (3)% | ||||||||||||||||||||||
12
Recast Reportable Segment Information
Effective July 1, 2024, the Company implemented a new business unit and management structure designed to further enhance the execution of the Company’s Charging Forward strategy. The Company now reports its results in the following four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems (formerly ePropulsion) and Battery & Charging Systems. The reportable segment disclosures have been updated accordingly which included recasting prior period information for the new reporting structure. For informational purposes only, in the following tables, the Company has recast the quarterly segment information for fiscal 2024 and 2023 to align with this presentation.
| BorgWarner Reportable Segment Information (Unaudited) | |||||||||||
| 2024 | |||||||||||
| (in millions) | Three Months Ended March 31, 2024 | Three Months Ended June 30, 2024 | |||||||||
| Revenue | |||||||||||
| Turbos & Thermal Technologies | $ | 1,574 | $ | 1,515 | |||||||
| Drivetrain & Morse Systems | 1,419 | 1,442 | |||||||||
| PowerDrive Systems | 436 | 464 | |||||||||
| Battery & Charging Systems | 177 | 193 | |||||||||
| Inter-segment eliminations | (11) | (11) | |||||||||
| Net Sales | $ | 3,595 | $ | 3,603 | |||||||
| Cost of sales | 2,951 | 2,918 | |||||||||
| Gross Profit | 644 | 685 | |||||||||
| Gross Margin | 17.9 | % | 19.0 | % | |||||||
| Selling, general and administrative expenses | 329 | 341 | |||||||||
| Restructuring expense | 19 | 25 | |||||||||
| Other operating expense, net | 1 | 22 | |||||||||
| Operating income | 295 | 297 | |||||||||
| Non-comparable items | 44 | 79 | |||||||||
| Adjusted Operating Income (Loss) | |||||||||||
| Turbos & Thermal Technologies | $ | 228 | $ | 224 | |||||||
| Drivetrain & Morse Systems | 253 | 266 | |||||||||
| PowerDrive Systems | (62) | (49) | |||||||||
| Battery & Charging Systems | (15) | (10) | |||||||||
| Corporate & Non-Operating | (65) | (55) | |||||||||
| Adjusted Operating Income | $ | 339 | $ | 376 | |||||||
13
| BorgWarner Reportable Segment Information (Unaudited) | |||||||||||||||||||||||||||||
| 2023 | |||||||||||||||||||||||||||||
| (in millions) | Three Months Ended March 31, 2023 | Three Months Ended June 30, 2023 | Three Months Ended September 30, 2023 | Three Months Ended December 31, 2023 | Year Ended December 31, 2023 | ||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 1,541 | $ | 1,555 | $ | 1,474 | $ | 1,442 | $ | 6,012 | |||||||||||||||||||
| Drivetrain & Morse Systems | 1,266 | 1,431 | 1,449 | 1,403 | 5,549 | ||||||||||||||||||||||||
| PowerDrive Systems | 487 | 566 | 571 | 542 | 2,166 | ||||||||||||||||||||||||
| Battery & Charging Systems | 110 | 139 | 146 | 151 | 546 | ||||||||||||||||||||||||
| Inter-segment eliminations | (21) | (20) | (18) | (16) | (75) | ||||||||||||||||||||||||
| Net Sales | $ | 3,383 | $ | 3,671 | $ | 3,622 | $ | 3,522 | $ | 14,198 | |||||||||||||||||||
| Cost of sales | 2,806 | 2,991 | 2,970 | 2,863 | 11,630 | ||||||||||||||||||||||||
| Gross Profit | 577 | 680 | 652 | 659 | 2,568 | ||||||||||||||||||||||||
| Gross Margin | 17.1 | % | 18.5 | % | 18.0 | % | 18.7 | % | 18.1 | % | |||||||||||||||||||
| Selling, general and administrative expenses | 299 | 334 | 330 | 353 | 1,316 | ||||||||||||||||||||||||
| Restructuring expense | 3 | 9 | 56 | 11 | 79 | ||||||||||||||||||||||||
| Other operating expense (income), net | 1 | 4 | (6) | 14 | 13 | ||||||||||||||||||||||||
| Operating income | 274 | 333 | 272 | 281 | 1,160 | ||||||||||||||||||||||||
| Non-comparable items | 31 | 39 | 77 | 51 | 198 | ||||||||||||||||||||||||
| Adjusted Operating Income (Loss) | |||||||||||||||||||||||||||||
| Turbos & Thermal Technologies | $ | 218 | $ | 228 | $ | 214 | $ | 214 | $ | 874 | |||||||||||||||||||
| Drivetrain & Morse Systems | 201 | 246 | 253 | 258 | 958 | ||||||||||||||||||||||||
| PowerDrive Systems | (35) | (19) | (20) | (16) | (90) | ||||||||||||||||||||||||
| Battery & Charging Systems | (23) | (27) | (26) | (40) | (116) | ||||||||||||||||||||||||
| Corporate & Non-Operating | (56) | (56) | (72) | (84) | (268) | ||||||||||||||||||||||||
| Adjusted Operating Income | $ | 305 | $ | 372 | $ | 349 | $ | 332 | $ | 1,358 | |||||||||||||||||||
14