BorgWarner(US:BWA)2025-02-06 18:19Revenue 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].