For more than 130 years, BorgWarner has been a transformative global product leader bringing successful mobility innovation to market. With a focus on sustainability, we're helping to 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," ...

Core Insights - BorgWarner has been recognized on Newsweek's list of Most Trustworthy Companies in America for the second consecutive year, highlighting its commitment to trust and transparency [1][2][6] - The company improved its ranking within the Automotive & Components industry category, placing in the top 10 for 2025 [2][6] Survey Methodology - The Most Trustworthy Companies in America 2025 list was based on a survey of 25,000 U.S. residents, evaluating companies on three pillars of trust: customer, employee, and investor trust, which accounted for 80% of the evaluation [7] - An additional 20% of the evaluation was derived from social listening analysis, which gathered 304,000 mentions about the companies from various internet segments, rated by sentiment, virality, and reach [7] Company Background - BorgWarner has over 130 years of experience as a global product leader in mobility innovation, focusing on sustainability to contribute to a cleaner and safer future [4]

Core Viewpoint - Goldman Sachs analyst Mark Delaney upgraded BorgWarner Inc. from Neutral to Buy, with a price forecast of $34, highlighting its favorable positioning in the market and limited risk from tariffs [1]. Group 1: Market Positioning - BorgWarner has a below-average level of U.S. imports, indicating limited risk from ongoing or future tariffs [1]. - Approximately 20% of BorgWarner's total revenue comes from China, with about 75% tied to domestic Chinese original equipment manufacturers (OEMs) [2]. - BorgWarner's hybrid and internal combustion engine products are expected to have a longer runway, supported by a broad portfolio that includes products for all powertrain types [3]. Group 2: Product Development and Growth - The company has several upcoming product launches with domestic Chinese auto OEMs, which will strengthen its foothold in this key market [3]. - Higher content per vehicle opportunities in both hybrid and battery electric vehicles are expected to benefit BorgWarner from the rising share of hybrid volumes in the near to medium term [4]. - Although the eProduct division is currently operating at a loss, ongoing restructuring efforts and long-term growth prospects are anticipated to help the company move toward profitability [4]. Group 3: Stock Performance - BWA shares closed lower by 4.54% to $25.67 on Thursday, reflecting market reactions to recent developments [4].

Group 1 - BorgWarner Inc. is currently facing challenges within the automotive industry, particularly due to Trump's 25% tariff on automotive imports, which is impacting car manufacturers and auto parts suppliers [1] - The direct impact of the tariff on BorgWarner appears to be relatively small, indicating some resilience in the company's operations amidst industry turmoil [1] Group 2 - The investment philosophy highlighted focuses on identifying mispriced securities by understanding the financial drivers of a company, often revealed through a DCF model valuation [1] - This investment approach is flexible and does not confine investors to traditional categories such as value, dividend, or growth investing, but rather assesses all prospects of a stock to evaluate risk-to-reward [1]

Company Overview - BorgWarner Inc. has been a transformative global product leader for over 130 years, focusing on mobility innovation [1] - The company is currently accelerating the transition to eMobility, aiming to contribute to a cleaner, healthier, and safer future [1] Upcoming Events - BorgWarner will hold its 2025 First Quarter Results Conference Call on May 7, 2025, at 9:30 am Eastern Time [2] - The conference call will be accessible live over the Internet via the company's investor relations website [2]

Group 1 - Investors in BorgWarner Inc. should monitor the stock closely due to significant activity in the options market, particularly the March 21, 2025 $20 Call, which has high implied volatility [1] - Implied volatility indicates the market's expectation of future movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a rally or sell-off [2] - BorgWarner currently holds a Zacks Rank 3 (Hold) in the Automotive - Original Equipment industry, which is in the bottom 39% of the Zacks Industry Rank, with no analysts increasing earnings estimates for the current quarter and two analysts lowering their estimates, resulting in a decrease of the Zacks Consensus Estimate from $1.12 to $0.97 per share [3] Group 2 - The high implied volatility for BorgWarner may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay, hoping the underlying stock does not move as much as expected by expiration [4]

Company Recognition - BorgWarner has been awarded on the Forbes list of America's Best Employers 2025 for the sixth time, highlighting its commitment to employee satisfaction and workplace excellence [1][3] - The recognition reflects BorgWarner's dedication to creating a supportive and empowering workplace, emphasizing that employee well-being is central to the company's success [3] Evaluation Process - The selection for America's Best Employers 2025 involved an independent survey of over 217,000 U.S. employees from companies with at least 1,000 employees, considering over 6.5 million employer evaluations [2] - The final score was based on personal evaluations from employees and public evaluations from friends, family, and industry peers, with a higher weighting on personal evaluations [2] Company Philosophy - BorgWarner's Chief Human Resources Officer stated that the award reflects the company's philosophy that when employees thrive, the company thrives, reinforcing its commitment to nurturing talent and celebrating diversity [3] - The recognition positions BorgWarner as a leader in employee satisfaction and sets a new standard for workplace excellence in the industry [3] Company Background - BorgWarner has over 130 years of experience as a global product leader in mobility innovation, focusing on sustainability and contributing to a cleaner, healthier, and safer future [5]

Core Viewpoint - BorgWarner reported strong adjusted earnings for Q4 2024, exceeding expectations, but net sales fell short of estimates, indicating mixed performance across segments [1][2]. Financial Performance - Adjusted earnings per share for Q4 2024 were $1.01, surpassing the Zacks Consensus Estimate of 92 cents and increasing from 90 cents in the prior year [1]. - Net sales for the quarter were $3.44 billion, missing the Zacks Consensus Estimate of $3.49 billion and reflecting a year-over-year decline of 2.36% [2]. Segmental Performance - **Turbos & Thermal Technologies**: Net sales were $1.41 billion, slightly down from $1.44 billion year-over-year, but beat estimates by 2.32%. Adjusted operating income rose to $223 million from $214 million, exceeding consensus by 12.98% [4]. - **Drivetrain & Morse Systems**: Net sales totaled $1.35 billion, down from $1.40 billion year-over-year, missing estimates by 1.09%. Adjusted operating income decreased to $240 million from $258 million, falling short of consensus by 3.58% [5]. - **PowerDrive Systems**: Sales were $525 million, down from $542 million a year ago, but beat estimates by 0.39%. The segment reported an adjusted operating loss of $14 million, an improvement from a loss of $16 million in the prior year [6]. - **Battery & Charging Systems**: Sales increased to $162 million from $151 million year-over-year, but missed estimates by 31.11%. The segment incurred an adjusted operating loss of $14 million, narrower than a loss of $40 million in the previous year [7]. Financial Position - As of December 31, 2024, BorgWarner had $2.09 billion in cash and equivalents, up from $1.53 billion a year earlier. Long-term debt increased to $3.76 billion from $3.71 billion [8]. - Net cash from operating activities was $682 million for the quarter, with capital expenditures at $161 million and free cash flow totaling $539 million [8]. 2025 Guidance - For full-year 2025, BorgWarner anticipates net sales between $13.4 billion and $14 billion, down from $14.1 billion in 2024. Adjusted operating margin is expected to be between 9.1% and 9.2%, with adjusted earnings projected at $4.05 to $4.40 per share [9]. - Operating cash flow is forecasted to be between $1.33 billion and $1.38 billion, while free cash flow is projected to be between $650 million and $750 million [9].

BorgWarner Inc. (NYSE:BWA) Q4 2024 Earnings Conference Call February 6, 2025 9:30 AM ET Company Participants Patrick Nolan - Vice President-Investor Relations Frédéric Lissalde - President and Chief Executive Officer Joseph Fadool - Executive Vice President and Chief Operating Officer Craig Aaron - Executive Vice President and Chief Financial Officer Conference Call Participants John Murphy - Bank of America ML Colin Langan - Wells Fargo Ryan Brinkman - JPMorgan Luke Young - Baird Joe Spak - UBS Edison Yu - ...

Revenue and Sales Performance - BorgWarner's eProduct revenue for 2024 was approximately $2.3 billion, representing 17% of total revenue, up from 12% in 2022[18]. - Foundational products revenue for 2024 was approximately $11.8 billion, accounting for 83% of total revenue, down from 88% in 2022[18]. - Net sales for the year ended December 31, 2024, were $14.086 billion, a slight decrease from $14.198 billion in 2023[24]. - The Turbos & Thermal Technologies segment generated $5.887 billion in sales for 2024, while the Battery & Charging Systems segment saw an increase to $729 million from $546 million in 2023[24]. - Approximately 16% of BorgWarner's net sales were generated in the United States, with 84% from international markets in 2024[41]. - Sales to the top ten customers represented 67% of total sales for the year ended December 31, 2024, with Ford and Volkswagen being the largest customers[42]. - The Company reported net sales of $14,086 million for the year ended December 31, 2024, a decrease of $112 million, or 1%, from 2023[182]. Financial Position and Investments - The Company completed a spin-off of its Fuel Systems and Aftermarket segments on July 3, 2023, creating an independent public company, PHINIA, Inc.[19]. - In November 2023, the Company's Board authorized the repurchase of up to $544 million of common stock, which was later increased to $767 million in April 2024[159]. - As of December 31, 2024, the Company had repurchased $400 million of its stock during the year, excluding related fees and taxes[159]. - The Company recorded impairment charges of $646 million in 2024, primarily related to goodwill in the PowerDrive Systems and Battery & Charging Systems segments[190]. - The Company may incur additional restructuring charges as it seeks to improve profitability and optimize its product portfolio, with uncertain outcomes regarding anticipated savings[128]. Research and Development - The Company's gross R&D expenditures for the year ended December 31, 2024, were $872 million, an increase from $856 million in 2023 and $787 million in 2022[50]. - Net R&D expenditures for 2024 were $736 million, representing 5.2% of net sales, compared to 5.1% in 2023 and 5.5% in 2022[50]. - Research and development costs were 5.2% of net sales in 2024, up from 5.1% in 2023, reflecting increased investment in eProducts[189]. Workforce and Employment - The Company employs a total workforce of 38,300, with 11,300 in the Americas, 12,300 in Asia, and 14,700 in Europe[58]. - The annual voluntary employee turnover rate for 2024 was 9.7%, with 7.8% for salaried employees and 10.8% for hourly employees[59]. - Approximately 13.3% of the Company's U.S. workforce is unionized, with a collective bargaining agreement expiring in September 2028[60]. Market and Competitive Environment - The company faces strong competition from both established manufacturers and well-funded start-ups, which may have greater operational and financial flexibility[88]. - OEM customers are under pressure to reduce costs, leading to expectations of annual price reductions, which could adversely affect the company's profit margins[92]. - Conditions in the global automotive industry are cyclical and sensitive to economic factors, impacting sales to OEMs[87]. - The automotive industry is shifting towards hybrid and electric vehicles, and failure to innovate in this area could negatively impact the company's operations[89]. Risks and Challenges - The Company anticipates continued inflationary pressures in raw materials, labor, and energy for 2025, expecting supplier costs to remain elevated[63]. - The company is exposed to risks associated with fluctuating commodity prices, which can affect operating margins and availability of raw materials[93]. - The company is subject to potential governmental investigations related to vehicle emissions standards, which could result in fines or product recalls[91]. - The spin-off of PHINIA Inc. may not achieve anticipated benefits and could expose the company to additional risks, including potential tax liabilities[85]. - A lawsuit against PHINIA seeks approximately $120 million in VAT refunds, which could lead to future liabilities for the company[86]. Corporate Governance and Leadership - Frederic B. Lissalde will retire as President and CEO effective February 6, 2025, with Joseph F. Fadool appointed as his successor[72]. - The Company’s cybersecurity program is managed by the CIO, who reports to the Audit Committee twice a year, ensuring ongoing updates on cybersecurity risks and incidents[144]. - The Company has updated its indirect Purchase Order Terms and Conditions to include supplier cybersecurity incident notification requirements effective January 1, 2025[142]. Segment Performance - Segment Adjusted Operating Income for Turbos & Thermal Technologies was $877 million with a margin of 14.9% in 2024, compared to $874 million and 14.5% in 2023, despite a 2% decrease in net sales[208]. - Drivetrain & Morse Systems saw a 1% increase in net sales to $5,577 million and a Segment Adjusted Operating Income increase of $52 million, with a margin of 18.1% in 2024, up from 17.3% in 2023[209]. - PowerDrive Systems experienced an 11% decrease in net sales to $1,937 million, with Segment Adjusted Operating Loss increasing to $(144) million in 2024, compared to $(90) million in 2023[210]. - Battery & Charging Systems net sales increased by 34% to $729 million, with Segment Adjusted Operating Loss decreasing to $(47) million in 2024, compared to $(116) million in 2023[212].