AUBURN HILLS, Mich.,
Feb. 15, 2022 /PRNewswire/ --
BorgWarner Inc. (NYSE: BWA) today reported 2021 fourth quarter and
full-year results.
New Program Awards and Charging Forward Highlights:
- BorgWarner's 2022 electric vehicle revenue is expected to grow
to more than $800 million, which is
more than double what it was in 2021. Based on new business awards
and actions announced to date, the Company believes it is already
on track to achieve more than $3.3
billion of electric vehicle revenue by 2025.
- BorgWarner has secured a contract with a Chinese luxury new
energy vehicle (NEV) brand to supply its new integrated drive
module (iDM) equipped with its compact 800V silicon carbide (SiC)
inverter and hairpin electric motor, expected to launch in
2023.
- BorgWarner also announced an 800V SiC inverter award with a
major Chinese OEM, expected to launch in early 2023.
- BorgWarner secured an award for a North American generator
inverter program with a major global OEM, expected to launch in
2024.
- BorgWarner will supply GILLIG, a leading manufacturer of
heavy-duty transit buses in North
America, with the third generation of its battery systems,
expected to launch in 2023.
- BorgWarner announced the acquisition of Santroll's light
vehicle eMotor business in China
for up to ¥1.4 billion.
- BorgWarner sold its Water Valley,
Mississippi facility to Atar Capital.
Fourth Quarter Highlights:
- U.S. GAAP net sales of $3,655
million, down 6.9% compared with fourth quarter 2020.
-
- Excluding the impact of foreign currencies and the net proforma
impact of acquisitions and divestitures, organic sales were down
6.5% compared with fourth quarter 2020.
- U.S. GAAP net earnings of $129
million, or $0.54 per diluted
share.
-
- Excluding the $0.52 per diluted
share related to non-comparable items (detailed in the table
below), adj. net earnings were $1.06
per diluted share.
- U.S. GAAP operating income of $178
million, or 4.9% of net sales.
-
- Excluding the $197 million of net
pretax impacts related to non-comparable items, adj. operating
income was $375 million, or 10.3% of
net sales.
- Net cash provided by operating activities of $542 million.
-
- Free cash flow of $370
million.
Full Year Highlights:
- U.S. GAAP net sales of $14,838
million, up 46.0% when compared with 2020.
-
- Excluding the impact of foreign currencies and the net proforma
impact of acquisitions and divestitures, organic sales were up
12.2% compared with 2020.
- U.S. GAAP net earnings of $537
million, or $2.24 per diluted
share.
-
- Excluding $1.91 per diluted share
related to non-comparable items (detailed in the table below),
adjusted net earnings were $4.15 per
diluted share.
- U.S. GAAP operating income of $1,151
million, or 7.8% of net sales.
-
- Excluding the $380 million of net
pretax impacts related to non-comparable items, adjusted operating
income was $1,531 million, or 10.3%
of net sales.
- Net cash provided by operating activities of $1,306 million.
-
- Free cash flow of $640
million.
Financial Results:
The Company believes the following
table is useful in highlighting non-comparable items that impacted
its U.S. GAAP net earnings per diluted share. The 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 then
ended. 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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Earnings per
diluted share
|
$
0.54
|
|
$
1.52
|
|
$
2.24
|
|
$
2.34
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Restructuring
expense
|
0.07
|
|
0.53
|
|
0.58
|
|
0.86
|
Customer warranty
settlement
|
0.26
|
|
—
|
|
0.26
|
|
—
|
Merger, acquisition
and divestiture expense
|
0.05
|
|
0.13
|
|
0.19
|
|
0.38
|
Loss on sales of
businesses
|
0.11
|
|
—
|
|
0.13
|
|
—
|
Asset impairments and
lease modifications
|
0.05
|
|
—
|
|
0.05
|
|
0.08
|
Net gain on insurance
recovery for property damage
|
—
|
|
—
|
|
(0.01)
|
|
(0.04)
|
Unrealized loss (gain)
on equity securities
|
0.08
|
|
(1.26)
|
|
1.15
|
|
(1.36)
|
Loss on debt
extinguishment
|
—
|
|
—
|
|
0.06
|
|
—
|
Intangible asset
accelerated amortization
|
—
|
|
0.13
|
|
—
|
|
0.14
|
Amortization of
inventory fair value adjustment
|
—
|
|
0.09
|
|
—
|
|
0.10
|
Delayed-draw term loan
cancellation
|
—
|
|
—
|
|
—
|
|
0.01
|
Pension settlement
loss
|
—
|
|
0.02
|
|
—
|
|
0.02
|
Tax
adjustments
|
(0.10)
|
|
0.02
|
|
(0.50)
|
|
0.23
|
|
|
|
|
|
|
|
|
Adjusted earnings
per diluted share
|
$
1.06
|
|
$
1.18
|
|
$
4.15
|
|
$
2.76
|
Net sales were $3,655 million for
the fourth quarter 2021, down 6.9% from $3,926 million for the fourth quarter 2020 as the
decline in industry production more than offset increased demand
for the Company's products. Net earnings for the fourth quarter
2021 were $129 million, or
$0.54 per diluted share, compared
with net earnings of $358 million, or
$1.52 per diluted share, for the
fourth quarter 2020. Adjusted net earnings for the fourth quarter
2021 were $255 million, or
$1.06 per diluted share, compared to
adjusted net earnings of $279
million, or $1.18 per diluted
share, for the fourth quarter 2020. Adjusted net earnings for the
fourth quarter 2021 excluded net non-comparable items of
$(0.52) per diluted share. Adjusted
net earnings for the fourth quarter 2020 excluded net
non-comparable items of $0.34 per
diluted share. These items are listed in the table above, which is
provided by the Company for comparison with other results and the
most directly comparable U.S. GAAP measures. The decrease in
adjusted net earnings per diluted share was primarily due to the
impact of the decline in industry production, higher commodity
costs, and the AKASOL AG ("AKASOL") acquisition.
Full Year 2022 Guidance: The Company has provided 2022
full year guidance. Net sales are expected to be in the range of
$15.9 billion to $16.5 billion, compared with 2021 sales of
$14.8 billion. This implies a
year-over-year organic increase in sales of 10% to 14%. The Company
expects its weighted light and commercial vehicle markets to
increase in the range of approximately 6% to 9% in 2022. Foreign
currencies are expected to result in a year-over-year decrease in
sales of approximately $220 million,
primarily due to the weakening of the Euro and Korean Won net of
the strengthening of the Chinese Renminbi against the U.S. dollar.
The divestiture of the Water Valley,
Mississippi business will decrease year-over-year sales by
approximately $177 million.
Operating margin is expected to be in the range of 8.7% to 9.4%.
Beginning in 2022, the Company is updating its definition of
adjusted operating income and adjusted operating margin to add back
intangible asset amortization expense. 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 10.2% to 10.7%. Net earnings are expected to be
within a range of $3.71 to
$4.19 per diluted share. Excluding
the impact of non-comparable items, adjusted net earnings are
expected to be within a range of $4.15 to $4.60 per
diluted share. Full-year operating cash flow is expected to be in
the range of $1,600 million to
$1,650 million, while free cash flow
is expected to be in the range of $700
million to $800 million.
At 9:30 a.m. ET today, a brief
conference call concerning fourth quarter and full year 2021
results and 2022 guidance will be webcast at:
http://www.borgwarner.com/en/Investors/default.aspx. Additionally,
an earnings call presentation will be available at
http://www.borgwarner.com/en/Investors/default.aspx.
BorgWarner Inc. (NYSE: BWA) is a global product leader in clean
and efficient technology solutions for combustion, hybrid and
electric vehicles. Building on its original equipment expertise,
BorgWarner also brings market leading product and service solutions
to the global aftermarket. With manufacturing and technical
facilities in 93 locations in 22 countries, the Company employs
approximately 49,000 worldwide. For more information, please visit
borgwarner.com.
Forward-Looking Statements: This press release may
contain forward-looking statements as contemplated by the 1995
Private Securities Litigation Reform Act that are based on
management's current outlook, expectations, estimates and
projections. Words such as "anticipates," "believes," "continues,"
"could," "designed," "effect," "estimates," "evaluates," "expects,"
"forecasts," "goal," "guidance," "initiative," "intends," "may,"
"outlook," "plans," "potential," "predicts," "project," "pursue,"
"seek," "should," "target," "when," "will," "would," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. Further, all statements, other than
statements of historical fact contained or incorporated by
reference in this press release that we expect or anticipate will
or may occur in the future regarding our financial position,
business strategy and measures to implement that strategy,
including changes to operations, competitive strengths, goals,
expansion and growth of our business and operations, plans,
references to future success and other such matters, are
forward-looking statements. Accounting estimates, such as those
described under the heading "Critical Accounting Policies and
Estimates" in Item 7 of our 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; commodities availability and pricing; competitive
challenges from existing and new competitors including OEM
customers; the challenges associated with rapidly-changing
technologies, particularly as relates to electric vehicles, and our
ability to innovate in response; uncertainties regarding the extent
and duration of impacts of matters associated with the COVID-19
pandemic, including additional production disruptions; the
difficulty in forecasting demand for electric vehicles and our
electric vehicles revenue growth; the possibility that the proposed
acquisition of Santroll's light vehicle eMotor business will not be
consummated; the ability to identify targets and consummate
acquisitions on acceptable terms; failure to realize the expected
benefits of acquisitions on a timely basis including our recent
acquisition of AKASOL AG and our 2020 acquisition of Delphi
Technologies PLC; the ability to identify appropriate combustion
portfolio businesses for disposition and consummate planned
dispositions on acceptable terms; 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, both
of which are highly cyclical and subject to disruptions; our
reliance on major OEM customers; 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; 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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales
|
$
3,655
|
|
$
3,926
|
|
$
14,838
|
|
$
10,165
|
Cost of
sales
|
3,030
|
|
3,154
|
|
11,983
|
|
8,255
|
Gross
profit
|
625
|
|
772
|
|
2,855
|
|
1,910
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
376
|
|
350
|
|
1,460
|
|
951
|
Restructuring
expense
|
20
|
|
131
|
|
163
|
|
203
|
Other operating
expense, net
|
51
|
|
77
|
|
81
|
|
138
|
Operating
income
|
178
|
|
214
|
|
1,151
|
|
618
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(8)
|
|
(8)
|
|
(48)
|
|
(18)
|
Unrealized loss
(gain) on equity securities
|
25
|
|
(391)
|
|
362
|
|
(382)
|
Interest expense,
net
|
18
|
|
19
|
|
93
|
|
61
|
Other postretirement
income, net
|
(12)
|
|
(2)
|
|
(45)
|
|
(7)
|
Earnings before income
taxes and noncontrolling interest
|
155
|
|
596
|
|
789
|
|
964
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
1
|
|
211
|
|
150
|
|
397
|
Net
earnings
|
154
|
|
385
|
|
639
|
|
567
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
25
|
|
27
|
|
102
|
|
67
|
Net earnings
attributable to BorgWarner Inc.
|
$
129
|
|
$
358
|
|
$
537
|
|
$
500
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to BorgWarner Inc. — diluted
|
$
0.54
|
|
$
1.52
|
|
$
2.24
|
|
$
2.34
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
240.2
|
|
236.0
|
|
239.5
|
|
214.0
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
|
|
|
(in
millions)
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Air
Management
|
$
1,762
|
|
$
1,942
|
|
$
7,298
|
|
$
5,678
|
e-Propulsion &
Drivetrain
|
1,352
|
|
1,447
|
|
5,378
|
|
3,989
|
Fuel
Injection
|
451
|
|
479
|
|
1,826
|
|
479
|
Aftermarket
|
203
|
|
194
|
|
853
|
|
194
|
Inter-segment
eliminations
|
(113)
|
|
(136)
|
|
(517)
|
|
(175)
|
Net sales
|
$
3,655
|
|
$
3,926
|
|
$
14,838
|
|
$
10,165
|
|
|
|
|
|
|
|
|
Segment Adjusted
Earnings Before Interest, Income Taxes and Noncontrolling Interest
("Segment Adj. EBIT") (Unaudited)
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Air
Management
|
$
257
|
|
$
301
|
|
$
1,070
|
|
$
762
|
e-Propulsion &
Drivetrain
|
132
|
|
164
|
|
486
|
|
359
|
Fuel
Injection
|
62
|
|
39
|
|
170
|
|
39
|
Aftermarket
|
25
|
|
22
|
|
107
|
|
22
|
Segment Adjusted
EBIT
|
476
|
|
526
|
|
1,833
|
|
1,182
|
Corporate, including
stock-based compensation
|
101
|
|
78
|
|
302
|
|
192
|
Restructuring
expense
|
20
|
|
131
|
|
163
|
|
203
|
Customer warranty
settlement
|
124
|
|
—
|
|
124
|
|
—
|
Merger, acquisition
and divestiture expense
|
14
|
|
38
|
|
50
|
|
96
|
Loss on sales of
businesses
|
22
|
|
—
|
|
29
|
|
—
|
Asset impairments and
lease modifications
|
17
|
|
—
|
|
17
|
|
17
|
Net gain on insurance
recovery for property damage
|
—
|
|
—
|
|
(3)
|
|
(9)
|
Intangible asset
accelerated amortization
|
—
|
|
38
|
|
—
|
|
38
|
Amortization of
inventory step-up
|
—
|
|
27
|
|
—
|
|
27
|
Equity in affiliates'
earnings, net of tax
|
(8)
|
|
(8)
|
|
(48)
|
|
(18)
|
Unrealized loss
(gain) on equity securities
|
25
|
|
(391)
|
|
362
|
|
(382)
|
Interest expense,
net
|
18
|
|
19
|
|
93
|
|
61
|
Other postretirement
income, net
|
(12)
|
|
(2)
|
|
(45)
|
|
(7)
|
Earnings before income
taxes and noncontrolling interest
|
155
|
|
596
|
|
789
|
|
964
|
Provision for income
taxes
|
1
|
|
211
|
|
150
|
|
397
|
Net
earnings
|
154
|
|
385
|
|
639
|
|
567
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
25
|
|
27
|
|
102
|
|
67
|
Net earnings
attributable to BorgWarner Inc.
|
$
129
|
|
$
358
|
|
$
537
|
|
$
500
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
millions)
|
|
|
|
|
December 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
1,841
|
|
$
1,650
|
Restricted
cash
|
3
|
|
—
|
Receivables,
net
|
2,898
|
|
2,919
|
Inventories,
net
|
1,534
|
|
1,286
|
Prepayments and other
current assets
|
321
|
|
312
|
Total current
assets
|
6,597
|
|
6,167
|
|
|
|
|
Property, plant and
equipment, net
|
4,395
|
|
4,591
|
Other non-current
assets
|
5,583
|
|
5,271
|
Total
assets
|
$
16,575
|
|
$
16,029
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Notes payable and
other short-term debt
|
$
66
|
|
$
49
|
Accounts
payable
|
2,276
|
|
2,352
|
Other current
liabilities
|
1,456
|
|
1,409
|
Total current
liabilities
|
3,798
|
|
3,810
|
|
|
|
|
Long-term
debt
|
4,261
|
|
3,738
|
Other non-current
liabilities
|
1,254
|
|
1,757
|
Total
liabilities
|
9,313
|
|
9,305
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
6,948
|
|
6,428
|
Noncontrolling
interest
|
314
|
|
296
|
Total
equity
|
7,262
|
|
6,724
|
Total liabilities and
equity
|
$
16,575
|
|
$
16,029
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
millions)
|
Year Ended
|
|
December
31,
|
|
2021
|
|
2020
|
OPERATING
|
|
|
|
Net cash provided by
operating activities
|
$
1,306
|
|
$
1,184
|
INVESTING
|
|
|
|
Capital expenditures,
including tooling outlays
|
(666)
|
|
(441)
|
Capital expenditures
for damage to property, plant and equipment
|
(2)
|
|
(20)
|
Insurance proceeds
received for damage to property, plant and equipment
|
5
|
|
20
|
Payments for
businesses acquired, net of cash and restricted cash
acquired
|
(759)
|
|
(449)
|
Proceeds from sale of
businesses, net of cash divested
|
22
|
|
—
|
Proceeds from
settlement of net investment hedges, net
|
11
|
|
10
|
(Payments for)
proceeds from other investing activities
|
(6)
|
|
14
|
Net cash used in
investing activities
|
(1,395)
|
|
(866)
|
FINANCING
|
|
|
|
Net (decrease)
increase in notes payable
|
(8)
|
|
8
|
Additions to
debt
|
1,286
|
|
1,178
|
Repayments of debt,
including current portion
|
(699)
|
|
(331)
|
Payments for debt
issuance costs
|
(11)
|
|
(10)
|
Payments for purchase
of treasury stock
|
—
|
|
(216)
|
Payments for
stock-based compensation items
|
(15)
|
|
(13)
|
(Purchase of) capital
contribution from noncontrolling interest
|
(33)
|
|
4
|
Dividends paid to
BorgWarner stockholders
|
(162)
|
|
(146)
|
Dividends paid to
noncontrolling stockholders
|
(72)
|
|
(37)
|
Net cash provided by
financing activities
|
286
|
|
437
|
Effect of exchange
rate changes on cash
|
(3)
|
|
63
|
Net increase in cash
and cash equivalents
|
194
|
|
818
|
Cash and cash
equivalents at beginning of year
|
1,650
|
|
832
|
Cash, cash
equivalents and restricted cash at end of year
|
$
1,844
|
|
$
1,650
|
|
|
|
|
|
|
|
|
Supplemental
Financial Information (Unaudited)
|
|
|
|
(in
millions)
|
Year Ended
|
|
December
31,
|
|
2021
|
|
2020
|
Depreciation and
tooling amortization
|
$
684
|
|
$
479
|
Intangible asset
amortization expense
|
$
88
|
|
$
89
|
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 2022 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
In 2021 and prior, the Company defined adjusted
operating income as operating income adjusted to exclude 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. Beginning in the first quarter of 2022, the Company is
updating its definition of adjusted operating income and adjusted
operating margin to add back intangible asset amortization expense.
The updated definition of adjusted operating income is
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, 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 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 net M&A.
Adjusted Operating
Income and Adjusted Operating Margin (Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
(in
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales
|
$
3,655
|
|
$
3,926
|
|
$ 14,838
|
|
$ 10,165
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
625
|
|
$
772
|
|
$
2,855
|
|
$
1,910
|
Gross
margin
|
17.1%
|
|
19.7%
|
|
19.2%
|
|
18.8%
|
|
|
|
|
|
|
|
|
Operating
income
|
178
|
|
214
|
|
1,151
|
|
618
|
Operating
margin
|
4.9%
|
|
5.5%
|
|
7.8%
|
|
6.1%
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Restructuring
expense
|
$
20
|
|
$
131
|
|
$
163
|
|
$
203
|
Customer warranty
settlement
|
124
|
|
—
|
|
124
|
|
—
|
Merger, acquisition
and divestiture expense
|
14
|
|
38
|
|
50
|
|
96
|
Loss on sales of
businesses
|
22
|
|
—
|
|
29
|
|
—
|
Asset impairments and
lease modifications
|
17
|
|
—
|
|
17
|
|
17
|
Net gain on insurance
recovery for property damage
|
—
|
|
—
|
|
(3)
|
|
(9)
|
Intangible asset
accelerated amortization
|
—
|
|
38
|
|
—
|
|
38
|
Amortization of
inventory step-up
|
—
|
|
27
|
|
—
|
|
27
|
Net non-comparable
items
|
$
197
|
|
$
234
|
|
$
380
|
|
$
372
|
|
|
|
|
|
|
|
|
Adjusted operating
income
|
$
375
|
|
$
448
|
|
$
1,531
|
|
$
990
|
Adjusted operating
margin
|
10.3%
|
|
11.4%
|
|
10.3%
|
|
9.7%
|
Adjusted Net
Earnings (Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended
December
31,
|
(in
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net earnings
attributable to BorgWarner Inc.
|
$
129
|
|
$
358
|
|
$
537
|
|
$
500
|
|
|
|
|
|
|
|
|
Non-comparable
items*:
|
|
|
|
|
|
|
|
Restructuring
expense
|
16
|
|
126
|
|
140
|
|
185
|
Customer warranty
settlement
|
64
|
|
—
|
|
64
|
|
—
|
Merger, acquisition
and divestiture expense
|
13
|
|
31
|
|
45
|
|
81
|
Loss on sales of
businesses
|
25
|
|
—
|
|
31
|
|
—
|
Asset impairments and
lease modifications
|
12
|
|
—
|
|
12
|
|
17
|
Net gain on insurance
recovery for property damage
|
—
|
|
—
|
|
(2)
|
|
(7)
|
Unrealized loss (gain)
on equity securities
|
20
|
|
(298)
|
|
276
|
|
(291)
|
Loss on debt
extinguishment
|
—
|
|
—
|
|
15
|
|
—
|
Intangible asset
accelerated amortization
|
—
|
|
31
|
|
—
|
|
31
|
Amortization of
inventory fair value adjustment
|
—
|
|
21
|
|
—
|
|
21
|
Delayed-draw term loan
cancellation
|
—
|
|
—
|
|
—
|
|
2
|
Pension settlement
loss
|
—
|
|
4
|
|
—
|
|
4
|
Tax
adjustments
|
(24)
|
|
6
|
|
(124)
|
|
48
|
|
|
|
|
|
|
|
|
Adjusted net
earnings
|
$
255
|
|
$
279
|
|
$
994
|
|
$
591
|
|
|
|
|
|
|
|
|
* The non-comparable
items presented above are calculated after tax using the
corresponding effective tax rate discrete to
each item.
|
Free Cash Flow
Reconciliation (Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December
31,
|
(in
millions)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided by
operating activities
|
$
542
|
|
$
376
|
|
$
1,306
|
|
$
1,184
|
Capital expenditures,
including tooling outlays
|
(172)
|
|
$
(179)
|
|
(666)
|
|
(441)
|
Free cash
flow
|
$
370
|
|
$
197
|
|
$
640
|
|
$
743
|
Fourth Quarter
2021 Organic Net Sales Change (Unaudited)
|
|
|
(in
millions)
|
Q4 2020
Net Sales
|
|
FX
|
|
Q4 2021
AKASOL
Impact
|
|
Market Impact,
Pricing & Other
|
|
Q4 2021
Net Sales
|
|
Organic
Net Sales
Change
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
1,942
|
|
$
(36)
|
|
$
34
|
|
$
(178)
|
|
$
1,762
|
|
(9.2)%
|
e-Propulsion &
Drivetrain
|
1,447
|
|
(3)
|
|
—
|
|
(92)
|
|
1,352
|
|
(6.4)%
|
Fuel
Injection
|
479
|
|
(2)
|
|
—
|
|
(26)
|
|
451
|
|
(5.4)%
|
Aftermarket
|
194
|
|
(8)
|
|
—
|
|
17
|
|
203
|
|
8.8%
|
Inter-segment
eliminations
|
(136)
|
|
—
|
|
—
|
|
23
|
|
(113)
|
|
—
|
Total net
sales
|
$
3,926
|
|
$
(49)
|
|
$
34
|
|
$
(256)
|
|
$
3,655
|
|
(6.5)%
|
Full Year 2021
Organic Net Sales Change (Unaudited)
|
|
|
(in
millions)
|
2020 Net
Sales
|
|
FX
|
|
Delphi
Technologies
Pro Forma
Impact*
|
|
AKASOL
Impact
|
|
Market Impact,
Pricing & Other
|
|
2021 Net
Sales
|
|
Organic
Net Sales
Change
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
5,678
|
|
$
185
|
|
$
658
|
|
$
67
|
|
$
710
|
|
$
7,298
|
|
11.2%
|
e-Propulsion &
Drivetrain
|
3,989
|
|
153
|
|
552
|
|
—
|
|
684
|
|
5,378
|
|
15.1%
|
Fuel
Injection
|
479
|
|
75
|
|
1,071
|
|
—
|
|
201
|
|
1,826
|
|
13.0%
|
Aftermarket
|
194
|
|
5
|
|
498
|
|
—
|
|
156
|
|
853
|
|
22.5%
|
Inter-segment
eliminations
|
(175)
|
|
—
|
|
(152)
|
|
—
|
|
(190)
|
|
(517)
|
|
—
|
Total net
sales
|
$
10,165
|
|
$
418
|
|
$
2,627
|
|
$
67
|
|
$
1,561
|
|
$
14,838
|
|
12.2%
|
*From January to
September 2020 only
|
Adjusted Operating
Income and Adjusted Operating Margin Guidance Reconciliation
(Unaudited)
|
|
|
|
|
Full-Year 2022
Guidance
|
(in
millions)
|
Low
|
|
High
|
Net sales
|
$
15,900
|
|
$
16,500
|
|
|
|
|
Operating
income
|
1,391
|
|
1,556
|
Operating
margin
|
8.7%
|
|
9.4%
|
|
|
|
|
Intangible asset
amortization expense
|
$
94
|
|
$
94
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
$
100
|
|
$
100
|
Merger, acquisition
and divestiture expense
|
30
|
|
20
|
Adjusted operating
income (updated definition)
|
$
1,615
|
|
$
1,770
|
Adjusted operating
margin (updated definition)
|
10.2%
|
|
10.7%
|
Adjusted Earnings
Per Diluted Share Guidance Reconciliation
(Unaudited)
|
|
|
|
|
Full-Year 2022
Guidance
|
|
Low
|
|
High
|
Earnings per
Diluted Share
|
$
3.71
|
|
$
4.19
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
0.33
|
|
0.33
|
Merger, acquisition
& divestiture expense
|
0.11
|
|
0.08
|
Adjusted earnings per
diluted share
|
$
4.15
|
|
$
4.60
|
Free Cash Flow
Guidance Reconciliation (Unaudited)
|
|
|
|
|
Full-Year 2022
Guidance
|
(in
millions)
|
Low
|
|
High
|
Net cash provided by
operating activities
|
$
1,600
|
|
$
1,650
|
Capital expenditures,
including tooling outlays
|
(900)
|
|
(850)
|
Free cash
flow
|
$
700
|
|
$
800
|
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SOURCE BorgWarner