BorgWarner Reports Third Quarter 2024 Results; Increases Full-Year Adjusted Operating Margin and EPS Guidance; Completes $400 Million Share Repurchase Plan
BorgWarner (NYSE: BWA) reported Q3 2024 results with net sales of $3,449 million, down 5% year-over-year. The company achieved an adjusted operating margin of 10.1% and generated $356 million in operating cash flow. Despite a 5.6% decline in vehicle markets, earnings per share reached $1.08. BorgWarner increased its full-year adjusted operating margin guidance by 20 basis points and adjusted EPS guidance by 4%. The company completed a $400 million share repurchase program in 2024, with $300 million executed in Q3. Notable new business wins include transfer case awards and high-voltage coolant heater contracts.
BorgWarner (NYSE: BWA) ha riportato i risultati del terzo trimestre 2024 con vendite nette di 3.449 milioni di dollari, in calo del 5% rispetto all’anno precedente. L'azienda ha raggiunto un margine operativo rettificato del 10,1% e ha generato 356 milioni di dollari di flusso di cassa operativo. Nonostante un declino del 5,6% nei mercati automobilistici, l'utile per azione ha raggiunto 1,08 dollari. BorgWarner ha aumentato le previsioni per il margine operativo rettificato dell’anno intero di 20 punti base e le previsioni per l’utile per azione rettificato del 4%. L'azienda ha completato un programma di riacquisto di azioni di 400 milioni di dollari nel 2024, con 300 milioni di dollari eseguiti nel terzo trimestre. Tra i nuovi contratti significativi vi sono premi per casi di trasmissione e contratti per riscaldatori di refrigerante ad alta tensione.
BorgWarner (NYSE: BWA) reportó los resultados del tercer trimestre de 2024 con ventas netas de 3,449 millones de dólares, lo que representa una disminución del 5% con respecto al año anterior. La compañía logró un margen operativo ajustado del 10.1% y generó 356 millones de dólares en flujo de caja operativo. A pesar de una caída del 5.6% en los mercados de vehículos, las ganancias por acción alcanzaron 1.08 dólares. BorgWarner incrementó su guía de margen operativo ajustado para todo el año en 20 puntos básicos y su guía de ganancias por acción ajustadas en un 4%. La compañía finalizó un programa de recompra de acciones por 400 millones de dólares en 2024, con 300 millones de dólares ejecutados en el tercer trimestre. Entre las nuevas empresas ganadoras se incluyen premios por cajas de transferencia y contratos para calentadores de refrigerante de alta tensión.
BorgWarner (NYSE: BWA)는 2024년 3분기 실적을 발표하며 순매출 34억 4,900만 달러를 기록했으며, 이는 전년 대비 5% 감소한 수치입니다. 회사는 조정된 운영 마진 10.1%을 달성했으며 3억 5,600만 달러의 운영 현금을 생성했습니다. 차량 시장에서 5.6%의 감소에도 불구하고 주당 순이익은 1.08달러에 도달했습니다. BorgWarner는 연간 조정된 운영 마진 가이던스를 20bp 상향 조정하고 조정된 EPS 가이던스를 4% 증가시켰습니다. 이 회사는 2024년 4억 달러 규모의 자사주 매입 프로그램을 완료했으며, 3분기에는 3억 달러를 실행했습니다. 주요 신규 사업 수주에는 변속기 수여 및 고전압 냉각수 히터 계약이 포함됩니다.
BorgWarner (NYSE: BWA) a publié les résultats du troisième trimestre 2024 avec des ventes nettes de 3,449 millions de dollars, en baisse de 5 % par rapport à l'année précédente. L'entreprise a atteint un marge opérationnelle ajustée de 10,1% et a généré 356 millions de dollars de flux de trésorerie opérationnel. Malgré une baisse de 5,6 % du marché des véhicules, le bénéfice par action a atteint 1,08 dollar. BorgWarner a relevé ses prévisions de marge opérationnelle ajustée pour l'année complète de 20 points de base et celles du bénéfice par action ajusté de 4 %. L’entreprise a achevé un programme de rachat d’actions de 400 millions de dollars en 2024, avec 300 millions de dollars exécutés au troisième trimestre. Parmi les nouvelles activités notables figurent des prix pour des boîtiers de transfert et des contrats pour des chauffages de liquide de refroidissement haute tension.
BorgWarner (NYSE: BWA) hat die Ergebnisse für das 3. Quartal 2024 mit Nettoumsätzen von 3.449 Millionen US-Dollar veröffentlicht, was einem Rückgang von 5% im Jahresvergleich entspricht. Das Unternehmen erreichte eine bereinigte operative Marge von 10,1% und generierte 356 Millionen US-Dollar an operativem Cashflow. Trotz eines Rückgangs von 5,6% im Fahrzeugmarkt betrug der Gewinn pro Aktie 1,08 US-Dollar. BorgWarner erhöhte seine Prognose für die bereinigte operative Marge für das Gesamtjahr um 20 Basispunkte und die Prognose für den bereinigten EPS um 4%. Das Unternehmen schloss ein 400 Millionen USD Aktienrückkaufprogramm im Jahr 2024 ab, wobei 300 Millionen USD im 3. Quartal ausgeführt wurden. Zu den bemerkenswerten Neuaufträgen gehören Auszeichnungen für Transferkästen und Verträge über Hochvolt-Kühlmittelheizer.
- Adjusted operating margin improved to 10.1%
- Generated $356 million in operating cash flow and $201 million in free cash flow
- Increased full-year adjusted EPS guidance by $0.18 (4%)
- Completed $400 million share repurchase program
- Secured multiple new business awards for future growth
- Q3 adjusted EPS increased to $1.09 from $0.98 year-over-year
- Net sales declined 5% to $3,449 million
- Organic sales declined 5.1% year-over-year
- Reduced full-year net sales guidance by $150 million
- Weighted light and commercial vehicle markets declined 5.6%
Insights
The Q3 results demonstrate resilience despite market headwinds. Key highlights include:
- Adjusted operating margin of
10.1% despite5.6% market decline - Strong free cash flow of
$201 million - Completed
$400 million share repurchase program
The market dynamics reveal important trends. Despite industry-wide production declines, BWA's ability to secure new business across traditional and electric segments demonstrates strong market positioning. The transfer case awards for next-gen pickup trucks and high-voltage coolant heater contracts highlight dual-track growth strategy. The projected
Third Quarter and 2024 Guidance Update
- BorgWarner achieved an adjusted operating margin of
10.1% during the third quarter, which equated to aU.S. GAAP operating margin of7.8% . The Company also generated net cash provided by operating activities of or$356 million in free cash flow, despite a$201 million 5.6% decline in the Company's weighted light and commercial vehicle markets. - The Company increased the midpoint of its full year adjusted operating margin guidance by 20 basis points and adjusted earnings per share guidance by approximately
or$0.18 4% per diluted share. This increase is being driven by strong third quarter operational performance, continued cost controls, a lower effective tax rate, and the Company's third quarter share repurchases. The Company reduced its full year mid-point net sales guidance by primarily due to a lower market production outlook.$150 million - BorgWarner completed the repurchase of
of the Company's outstanding shares during the third quarter. BorgWarner has now repurchased$300 million of its outstanding shares during 2024.$400 million
New Business Update
The Company secured multiple new business awards that are expected to support its future long-term profitable growth including:
- Two transfer case awards with a major North American OEM for their next generation full-size pickup trucks. This business is expected to launch in 2027 and 2028.
- Three high-voltage coolant heater awards with a Chinese electric vehicle OEM, a Korean OEM and a Japanese OEM. This business is expected to launch in 2025, 2025 and 2028, respectively.
- A General Motors turbocharger award for use on their Corvette ZR1 sports car platform. This is expected to be the largest passenger car twin turbochargers on the market.
Third Quarter Highlights (continuing operations basis):
U.S. GAAP net sales of , a decrease of approximately$3,449 million 5% compared with third quarter 2023.- Excluding the impact of foreign currencies and the impact of net M&A, organic sales declined
5.1% compared with third quarter 2023.
- Excluding the impact of foreign currencies and the impact of net M&A, organic sales declined
U.S. GAAP net earnings of per diluted share.$1.08 - Excluding
of net gains per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were$(0.01) per diluted share.$1.09
- Excluding
U.S. GAAP operating income of , or$270 million 7.8% of net sales.- Excluding
of pretax expenses related to non-comparable items, adjusted operating income was$80 million , or$350 million 10.1% of net sales.
- Excluding
- Net cash provided by operating activities of
.$356 million - Free cash flow of
.$201 million
- Free cash flow of
Financial Results (continuing operations basis):
The Company believes the following table is useful in highlighting non-comparable items that impacted its
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Earnings per diluted share | $ 1.08 | $ 0.37 | $ 3.40 | $ 2.06 | |||
Non-comparable items: | |||||||
Restructuring expense | 0.07 | 0.17 | 0.21 | 0.21 | |||
Accelerated depreciation | 0.10 | — | 0.13 | 0.01 | |||
Commercial contract settlement | 0.02 | — | 0.06 | — | |||
Adjustments associated with Spin-Off related balances | 0.01 | — | 0.06 | — | |||
Loss (gain) on sale of businesses | 0.03 | — | 0.02 | (0.02) | |||
Collective bargaining agreement ratification bonus | 0.01 | — | 0.01 | — | |||
Gain on debt extinguishment | (0.01) | (0.09) | (0.01) | (0.09) | |||
Merger and acquisition expense, net | (0.02) | 0.01 | — | 0.07 | |||
Asset impairment and lease modification | — | — | — | 0.03 | |||
Gain on sale of assets | — | (0.03) | — | (0.04) | |||
Unrealized and realized (gain) loss on equity and debt securities | (0.01) | 0.32 | — | 0.55 | |||
Corporate synergy from Spin-Off | — | — | — | 0.03 | |||
Tax adjustments | (0.23) | 0.18 | (0.65) | — | |||
Other non-comparable items | 0.04 | 0.05 | 0.07 | 0.03 | |||
Adjusted earnings per diluted share | $ 1.09 | $ 0.98 | $ 3.30 | $ 2.84 |
Net sales were
Full Year 2024 Guidance: The Company has updated full year sales, margin, and EPS guidance. Net sales for 2024 are expected to be in the range of
Operating margin for the full year is expected to be in the range of
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.
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 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.
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 |
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. |
BorgWarner Inc. | |||
Condensed Consolidated Balance Sheets (Unaudited) | |||
(in millions) | |||
September 30, | December 31, | ||
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 |
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 |
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
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.
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) |
Third Quarter 2024 Organic Net Sales Change (Unaudited) | |||||||||||
(in millions) | Q3 2023 | FX | Acquisition | Organic | Q3 2024 | Organic | |||||
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 | FX | Acquisition | Organic | Q3 2024 | Organic | |||||
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 | $ (90) | $ 26 | $ 35 | 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 % | |
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 | FX | FY 2024 | Organic Net | FY 2024 Net | Organic Net | LV/CV | 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) | ||||||||
Total | ||||||||
Light vehicle | (1.5)% to (0.5)% | (5.5)% to (5)% | (2.5)% to (2)% | |||||
Commercial vehicle | ~(4.5)% | ~(15)% | ~ | ~(2.5)% | ||||
BorgWarner-Weighted | (2)% to (1)% | (7)% to (6.5)% | 1 to | (3.5)% to (3)% |
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 | Three Months | |
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 |
BorgWarner Reportable Segment Information (Unaudited) | |||||||||
2023 | |||||||||
(in millions) | Three Months | Three Months | Three Months | Three Months | Year Ended | ||||
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 |
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SOURCE BorgWarner
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