BWA - Earnings call 3 2023 | BorgWarner Inc.

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Operator

Good morning. My name is Leo, and I'll be your conference facilitator. At this time, I would like to welcome everyone to the BorgWarner 2023 Third Quarter Results Conference Call. [Operator Instructions] I would now like to turn the call over to Patrick Nolan, Vice President of Investor Relations. Mr. your begin may you conference. Nolan,

Patrick Nolan

home our Good Thank on for this our and on on you Investor Relations everyone, page. With Investor the see list. us calendar, a you, morning. home Events of our today. Investor and posted our home we multiple page attending full Please earlier be regard Leo. earnings joining release now between We release. thank to Relations earnings for conferences and Relations both morning, will issued page our next section borgwarner.com, website, It's our our

to Before we and begin, you this I forward-looking XX-K. involve our need call, make we risks statements, in which inform may during detailed as uncertainties that

results actual differ the may matters Our from significantly discussed today.

certain means a to in hear and on excluding items. core us hear the highlight impact that non-GAAP a items. us net excluding impact with how comparison the FX M&A. say hear say basis, During means measures When clearer and performed of periods. that us When noncomparable you of that today's provide organic, M&A and for prior means say comparable noncomparable business purposes we other the adjusted, excluding order of picture you presentation, When FX, net you will

with also of have that our hear the to our to commercial to vehicle note weighted slides earnings our us We production page the along exposure. Please to will in today's encourage you refer we and light website. our our call you say When IR discussion. means during market. compared growth follow change market, that posted for We presentation these geographic

Fred. turn the that, With happy call over to to I'm

Frederic Lissalde

third results and billion in in We're good our share the growth quarter company on an quarter. sales, Slide you, everyone. overall $X.X day, for and pleased delivered we organic approximately starting update, Thank double-digit XXXX X. With to provide Pat, the

performance was margin Our strong.

our us in deliver up cash free sets outlook. quarter, believe we on flow full nicely flow Our the year which to was cash modestly positive

Charging fronts. on progress Forward continued Our multiple

our X this intensity we're in EV activities of opportunities the in near-term now quoting new production fact and the growth the pressures electrified of Target the eProduct industry long-term vehicles. Gaining our scale ramp-up I a the encouraged As these multiple discuss see across targets by in Initiative, to continue for of will emission EV Based globally. and the We X long-term high and hybrid of Scope be on the new encouraged types by sourcing spite architectures business the secured awards SBTi. that impressed eProduct XX of awards out for seeing during were for our some X, unchanged. for I'm portfolio parts on focus area XX. OEMs the and of We're the globally quarter. BEVs validated moment, our is electrification Science launching and portfolio outside top continues hybrid remains in our several the of strategy, both be BorgWarner this or X on several the to several pool proud to eProducts our well products production as architectures. I as in strength and OEMs hybrid by to leading other

August, targets our to commitments Slide year, SBTi our on XXXX, submitted e-mobility a to emissions to late reducing achieve products. towards portfolio Now and and X carbon strategy XXXX. BorgWarner's targets by Scope by reduce shifts summarizes decade. by Scope the X, the have X pivotal also as last X to let's X expected to X, commitments SBTi. of XX% Scope Building play X validated Charging is committed emissions emissions in role Scope we those turn the which in end Forward XXXX reduce the our previous XX% and X which neutrality through to we In

expanding we're those focus products we emphasis design also our circularity a on how lightweighting. placing will purchase and design components. From and on efforts We perspective, and greater a

to We're the in have it Within contribution positive clean, chain, impact our material sourcing furthering world. we're is are headed the and our our to making of SBTi direction green to we the supplier as working our a proud affirms enhance targets and the BorgWarner goals. supply validated by vision energy-efficient

Now awards at on some let's Slide new X. look eProduct

and switches power onboard big OEM premium bidirectional power First, for XXXX. for with compliance. be and This safety BEV in win charger BorgWarner density in improved early charger expected silicon will North our with supply major delivers onboard the eProduct a accomplishment platforms This The to is leverages win XXX-volt team, first a charger our first superior efficiency BorgWarner's a America. also will an BorgWarner major this onboard American SOP and OEM. car highlighting carbide North on technology passenger

in Second, cars for electric IAA the silicon we that inverters disclosed at supply carbide next-generation BorgWarner September, will vehicles. Volvo

the business of its Next, months supply global to agreement BorgWarner program. with anticipate entered course a an for high-voltage regions. contract a wins with into the the start secured in This global production vehicle the few win second of this with XXX-volt over recent just OEM XXXX. We automakers' meters European different light major OEM marks cooling spanning

electric C has premium supply of a a inverter an this converter of in the segment systems manage both is program start hybrid to a the OEM package. expected a in vehicle, use for awarded in elements, and combined the hybrid, smaller customers' drive the DC/DC converter can to always electrified lighter, BorgWarner and B accessory this program more in drive applications. Finally, inverter cost-effective European XXXX. By and and Production and we combining case

adding power combining these packages. I onboard chargers for knowledge, our experience what converters BorgWarner would to system and customers by production Our value technologies into key scale DC/DC is on to be enabler efficient inverters, call a conversion technology and or

eProduct year-over-year. our expect sales largest now on touch volume launch about customers. slower Today, The adjustments eProduct let's of X. about Now increase the Slide on eProduct to sales are XX% delays $XXX our and outlook from sales million. by X outlook drivers we're XXXX ramp-ups forecasted We reducing

vehicle As reassess production next we on to have taken have near-term the we marketplace, the opportunity pressures out looking mean that the might seen in these what few electrified continuing over years.

new has the this next we potential energy lens, that years. industry-wide over impact the to believe of couple production through do vehicle Looking

now we of in eProduct billion $X sales $X.X in such, the to expect to XXXX. range As billion our be

program program, to have the looked that our to are it is likely midterm we the at short by situation be are view As headwinds in we nature. seeing

overall X observations. remains out, propulsion of That towards As we to further we is penetration view strong. electrified following make look unchanged industry trends XXXX. I looking to the additional why long-term that continue believe is of the our out electrification would

from changes world our seen have we the in no First, meaningful customers. quoting of activity

secure that are supportive has pace not The much business new awards very revenue long-term of slowed. of our to We new continue objective. development business

estimated midterm and our regions well is customers eProduct Second, diversified. exposure to

stages customer China. eProduct revenue does to products, early XXXX, be the in in are launches tend we and growth more particularly exposed currently ramp-ups important BorgWarner of of in handful of to As a

As we in X further look portfolio. additional to programs next announce from many out more over and diversity the expect the years, benefit we

revenue expectations balanced sizes. well fairly regions are XXXX across as across customers, as Our eProduct across vehicle

believe we still long-term intact. Third, are our objectives profitability

previously means is we've is leverage break-even to it our of eProduct driver business. our that slightly scale delayed. we not improving ramp-up as rapidly happening you to the as the of As margin ePropulsion previously, path our anticipated, the quickly biggest increasing ability segment profitability Since is told the achieving

quarter will near-term are were XXXX to today to what, our perspective a results As are assess and Regardless, and if BorgWarner's and these: both any, from perspective. The balance strong. takeaways objectives. outlook third appropriately ahead strong relative long-term remains growth remain to delivered from unchanged, revenue next organic we actions necessary a performance. break-even we in year, margins margins sight look our profitability margin We

strong top-quartile solid free we margins we cash As wrap to finish top growth, line flow expect generation. and XXXX, another year up with of

Forward that be executing see believe line. shift. As hybrid volatility, a multiple is positioning we that Charging on industry our magnitude convinced is in frustrating, of the in will the electrification, company near-term near-term, growth manage some straight given are We stated that in the The regard. I we strategy entirely challenges on we on have focused and surprising world prospects we strategy, win and not will electrification look not successfully BEV industry-wide occasions while aggressively the industry at through. do in the our remain the of long-term for to which

this and guidance, to we year strong earnings in As under Day fully can you our Investor over have penetration the wide resilient true to range believe going be is QX will full That deliver highlighted also we June see and portfolio true in of will and as that structured turn be and evidenced hybrid forward. With our I and today, that we that, in results expect call our Kevin. to BEV we scenarios.

Kevin Nowlan

morning, everyone. good Thank you, Fred, and

can you quarter Let's results just billion. dive continuing to revenue over revenue QX turning see Last year-over-year was Slide where third year's walk. the from by our right operations $X.X X, into

in year-over-year close XX% X% that You we we can this organic driven look the increase million. Then increase you eProduct-related year-over-year. major revenue a revenue it's see in geographies dollar at of all growth growth, weakening approximately particularly or being our We're U.S. by see that to as in operate. the can pleased which $XX drove across

sum $X of added year-over-year. over in revenue Finally, was revenue $X.X and The billion of Rhombus acquisitions of all to million this the SSE QX. just

performance XX, you Slide quarter. to flow the and cash see for earnings our Turning can

planned million to compares operating excluding a income million. continuing Our adjusted operating of includes a sales. That income third of million, a adjusted million the million a $XXX increased of basis, increase adjusted for $XXX of This eProduct-related operating the X.X% or from $XX quarter equating $XX exchange M&A, of foreign operations R&D higher ago. On income year impact comparable was X.X% to margin. $XXX impact and performance on

investment, approximately ER&D at on XX% sales. our higher this Excluding converted additional we

able our of inflationary significant quarter cost quarter did impact year earnings. suppliers, on adjusted a relates all customer with recoveries, customers. not full our have we nearly material the inflation cost major from third recoveries to year-over-year net impacts, customer it our to of were As finalize agreements Those during of third

in Our adjusted rate. operations operating the compared lower and a EPS adjusted tax to from by ago effective by increase our income continuing $X.XX year improved

$XX Finally, the continuing third free operations cash quarter. from flow was during generation million

outlook let's at our full year a Slide on XX. Now take look

guidance being change drivers revenue guidance yuan in Our that $XX with $XXX million the prior euro in by revenue assumes Chinese our the reduce headwind This outlook. currencies of of now versus million the will foreign XXXX. largest the our and weaker is a in

production organic compared narrowing XX%. as growth Second, an increasing of industry expect incorporates for year-over-year XX% revenue. of eProduct our of outlook to both XX% well this to outlook guidance approximately our we prior as to updated outlook The XX%

include we're in approximately and that's down but $X.X mentioned $X.X billion expecting now that our XXXX, billion billion our due eProduct between delays products from generated revenue is of XXXX, to up guidance in to slowly. which experiencing decline from a launch ePropulsion more Fred of earlier, prior programs up That is $X.X billion. of As number ramping $X.X the $X.X billion or we customer

$XX Finally, prior expected guidance the are of which to revenue. SSE expectations, $XX.X our these Santroll, total compares XXXX $XX.X and $XX.X to on approximately Rhombus range revenue XXXX to Based the to billion. million to we're billion in billion add of billion, projecting $XX.X acquisitions

Let's margin. to switch

full of operating We X.X% year prior to which to be X.X%, our expect and guidance range adjusted the to in margin our X.X% our of margin X.X%. of to XXXX X.X% compares

to near-term outlined million and to in consistent new headwinds, As Despite to Therefore, continues guidance to at significant continue those award we we a plan R&D $XX the R&D. investing revenue year it quote the year. in beginning we're the R&D, XXXX eProduct-related with eProduct-related increase activity. $XX growth to our of opportunities relates the full see million support anticipate eProduct

$X.XX in share. on Excluding the the the impact high contemplates in outlook outlook, delivering margin increase of Based we're our this R&D, full from operations eProduct-related business diluted this year $X.XX in range full to of revenue EPS adjusted planned continuing margin and year the teens. incrementals XXXX expecting per

Turning cash flow. to free

at to prior We of for end we'll continuing of flow high compares expect million our cash million to in as $XXX the $XXX free around guidance to of $XXX deliver in capital million $XXX spending $XXX CapEx the with in the guidance that range. full line million, come our expect operations to we from This million prior range year.

traditionally our in guidance recoveries Our to significant yet a and strong performance. similar and negotiated customer XXXX seasonality in inflation we expect have But QX cash to portion strong addition That's for normal the to contemplates typical which collect working QX, trends full to is us those capital of a flow due but last that we've not date year outlook. collected. to year,

and XX. company's Turning I an to wanted Slide on provide to update overall the liquidity profile. leverage

the X.Xx, with which and to leading were EBITDA operating a ratio to operated of business we've PHINIA. we where traditionally below where operate the is up gross should know, adjusted you As spin-off debt it's we think

That That early quarter, lost we strength. Both spin-off used able our that liquidity offer to back their PHINIA balance in in on were steps so of increased support pro of were executed $X tender September were investments a not confidence maturity debt the gross to the gives adjusted do to third financial growth. to billion years XXXX. for company's that Xx. With important future support pricing which PHINIA our pleased we to company's gross the make were our and excluding spin-off $XXX we transactions ratio unchanged the expected to down adjusted We're and a the PHINIA. With debt facility. these July, notes. inorganic in basis the facility sheet in our EBITDA that prior EBITDA X.Xx proceeds By of that able BorgWarner's when quarter, our to but to with forma necessary to of we However, spreads mind, profitable the the credit effectively forward. during us liquidity, maintaining with going to the speaks execute XXXX we extended we during to undrawn tender third only the ratio offer, executing we continuing position, X revolving reduce respect the million the organic to strong by renew able facility fact versus leverage

strong We in strong. growth XX% bottom on margin organic operating revenue close generated of quarter based excluding conversion summarize my me XX% adjusted we a to financial were line year-over-year. let remarks. delivered We our EPS. results achieved adjusted year-over-year ER&D. Overall, third So higher X.X% on financial growth incremental And

our our continue range and As scenarios. With prudently a to under despite global deliver I'd to earnings to sheet to balance to turn expect Pat. resiliency the we look manage back businesses to near-term our growth volatility costs, top drive the and investments necessary to our call leverage strong leverage to in beyond in performance as long-term in that, market improved markets, XXXX, growth and make we eProducts organic we the to NEV financial the continue BEV profitability over grow like wide of line

Patrick Nolan

Thank we're to you, up questions. open Kevin. for Leo, ready

Operator

Wells [Operator Fargo. Instructions] Your first Langan Colin question comes with from

Colin Langan

QX next or in it we in down look pretty QX? I on low in Anything of at margin? that implies of sort unusual run Or the guidance, X.X%. around is this full If QX going on driving going a step something be that year more weaker rate margin a year? margins into into Should thinking about one-off

Kevin Nowlan

revenue margin guide mean on eProduct I that we're end year we despite overall, fact end look full basis with we pressure. held of as at and pleased the the guide took of the No. our the percentage up it the the bottom of top some a

right X.X%. we've just the effectively in been bottom on the and decline revenue, generating As QX is year-to-date the conversion it at of is on you that. And with the look sequential of end line at basis seeing end at a it, range, in we're high implies what negative range a at we're where

anything don't of on I think So the that. there's out ordinary

Colin Langan

-- more we launches, can of was more lower, somewhat pulled the have higher offset? that have bit there if hedge sales to think it bit it. Got off in that in there's I Day, lower mean, good about required are you're are the you'd higher you bit of -- I was if similar. How you all from a EV and a XXXX couple it term? remember that engineering is the I lot be margin. the should focus your a Or derisked lower you'd ahead think these a the obviously if time And a the was burden of near highlighted, term? near that's of And penetration EV that's going be because dollar-wise, frame, sales of And volumes a And EV back but margin. do with EV you might Investor last delays. but weeks higher,

Frederic Lissalde

portfolio exactly a presented is we've that's see you're The actually an structured in year happens, think we top And Day. this you And you and too. resilient, what of somehow it's and Market resilient I down wide margin E is of I is think going range what what the also and that it up. And example that going line is the way. under right. scenario. that's slightly see Capital resilient Colin, And why

this purpose absolutely out. the So is the portfolio the laid it's of way

products to But in and the portfolio E. We have going to we slowdown, in growth a proceeds, earnings. great have combustions you that a cash see if enable generate are

Operator

next of with comes America. question Bank from Your John Murphy

John Murphy

I not why then Maybe you have of question Tom's I in Fred, to also, yourself just 'XX we distinct up And 'XX Slide at to look X as here. can reconsider with on the curious mean, follow set we X, taken ways. your well guys down point, this, deal you've at kind up and look If volatility maybe 'XX. and

you the those to protected meeting investing automakers the their in programs out, the opportunity side, the can sort If there is just in widely buying structure ICE you products? of guarantees? side about doing better talk -- or EV those this are to potentially kudos there on an you contracts? also missing on on or is shape direction So Then product some way, of because EV they're contracts, in of the you pushing of form maybe are for get economics business that. But

Frederic Lissalde

in of lot one question. questions, John, A

Let me pieces. it in take

'XX, So a your bit That's 'XX, 'XX, of right? first, question.

our a in has delay of a volume of reduction new And and delay ePropulsion the So quarter. the launches and and timing look ramp-up. from, reduction, you has we're a products, a impact It's in as quarter 'XX, a segment. ramp-up lot big reduction, since mentioned, impact in the in launching mostly -- a you big coming volume it's when at change

continue to volume step take back, in still XX% see a We pressures. it fact, if growing But year-over-year. was you

of program program remember, June, allows beyond more to. you looking from that we've in programs. at look by When announced we and booked 'XX. programs us looked I at So XX we XXXX, business launching potential at 'XX, And what 'XX. new 'XX, strong 'XX. comfortable downsides delays be see 'XX, and lot 'XX the a In seeing to programs. What we with a have will enjoy 'XX, that p very we

CAGR we to we've be But to feel when a path also billion, to scenario. Again, under taken the take portfolio 'XX that comfortable I resilient Yes, we that $XX so about had 'XX. prospect range into at also of is long-term fact little XX%, structured 'XX, unchanged. account see That's in look a acquisition $XX which the And you CAGR, if $X.X billion the you lower why billion. is than a we've a think is 'XX wide the to question... you of the about out

Kevin Nowlan

talk I can the others. about

about longer there I on foundational you on tail there's -- think are had and opportunities that, a a question the there. if

alluding Charging on at of in business. objective that. our aspects you Forward make And XXXX the the we P&L, overall, sure of or means margin all as were part side think we're profile towards sustain driving I side to cost to mean, strong look pricing the had pricing. that I it's maybe is the whether that we've that to

then with light we'll sure and thing was we're make volume in to continue to you I structured, contracts that. on shortfalls. of they're our we'll these about the particularly suppliers, EV so some with successfully our that how And on of last think work asked And work customers executing

we're some things there outside area programs traditionally of As fact ramp-up particular business about those E customer about clauses uncertainty came because investment in the a pricing we've sure adjustment we other to of past, for a not volumes our ensure made that where agreements. or when historically that worked certain the put that in volume sure short. of significantly way us of discussion clauses in new like lot and band, the one of or And a focus they've out make we on make for a is to around E how we is we've volume talked that the at the then us if that between book work revenue are that happens we the in a recoup those

So head our now. as through process we going XXXX, we're planning into right

we're about. thinking You can imagine that's something

Operator

question Rosner Your Emmanuel Bank. comes next Deutsche with from

Emmanuel Rosner

ramp-up actually if the in follow-ups, -- maybe couple on revenue a follow-up I One of may. eProduct

do revenue First of walk? all, schedules for about assumptions obviously, assume, you that direct But are production have the and the is how like share of now one? did from assumptions that of as new commentary go approach automakers. sort you move XXXX, you underpinning your like or I how a or this sort mid-decade, penetration could adoption you Or top-down or compare into us? with with like EV curve you previous

Frederic Lissalde

'XX. obviously Emmanuel, the customers. is to and a bottom-up 'XX with so our discussions and timing accuracy the and programs for schedules discussion revenue and XXXX, we just is of launch around customers. that detailed It's corner. it's have our 'XX for programs linked analysis EDIs by same line-by-line with

So pretty and through going customers well those and that on when launch we we to XXXX. programs well, the impact has are the pretty this actually see know

Emmanuel Rosner

term of guess, the of or in out volumes fact at the some following left out. same that some have cases, year large I'm North I this, forcefully as could struck for the in one. of by pushed meaningfully and some for that, unchanged sort pushed after mid-decade do the example, but being like time, next have another and I well midterm pretty of near certainly obviously on sort American a just I like But on the this some up follow question OEM, targets. if

of amount have embedded sort that like And investors around revised mid-decade outlook? in now so I'm you like of you your sort could how confidence give derisking the of wondering,

Frederic Lissalde

globally. OEMs. American Emmanuel, It's North we're the launching just not

in new outside top the programs X we're before, few XX. area past with we've quarters a As largest we OEMs over that announced the and -- launching of electrification programs others XX around out of the mentioned XX the

that is we have view view. global real the a So

in still and we in remember, and a new very global. launching pretty Europe, is North in view were America. are. We're products of launching relevant our lot But China we're you As

Emmanuel Rosner

follow-up My maybe part seeing you you now growing Understood. us, movements hybrids and remind any than previously important a as automakers contribution? terms in hybrid to And the with EV right of is is are Can better expected on this respond slowdown? market how customers product, from faster new essentially revenue as of just importantly, demand way much towards hybrid. to

Frederic Lissalde

a been relevant in and in plug-in hybrid hybrid always range We've hybrids, in most programs without This path essentially BEVs few China. efficient player that hybrids, no an extender also of a combustion in high-voltage combustion And powertrain, engine. absolutely products see product portfolio is we for the is because had hybrids. there a

is vehicle per on than ones BEV. Our similar content on you that have the hybrid pretty

So BEV we're hybrids. happy some seen traction key We've to always platforms electrification it's growth, hybrids, a and or whether on be accelerates on hybrid our on globally powertrains.

Operator

question next Luke comes with Junk from Baird. Your

Luke Junk

line eProduct. around A really bottom couple questions of

I the to you're that of as at pressure you're that thinking the the just would about how should eProduct level that couple trajectory might high seeing RD&E maybe. how of over forward. the looking me offsetting And for I'm be volumes you manage able in forecast from the to RFQ we of one activity the continued relative well next market? First going lower think be years, guess, as,

Kevin Nowlan

us be the can for to that Yes. R&D growing million we're slowing get we've mean are revenue talked A eProduct $XX that the our plan, couple is Investor is benefit to we pace year-over-year things the I in continues that. one things to million. actually through which $XX investments that this P&L you is at increase flowing Day, eProduct-related of seeing which of it the scale that a the showed see of why expect And as we even ramps happening in on and while about up. range as in year,

to fourth look the And on which path of to relatively sequential pace revenue growing only the be will as of that's pace the each couple the it growing being in it last X% growth quarter of And point expect up couple at quickly flat the actually the quarters, basis, we're you about at a last been profitability. isn't As sequentially grow. we the to quarters. seeing investments slightly as X% the to in it's

trajectory near balancing the sure making business with but and the Because need over the long-term we the to intact. remains that balancing just now. that the what Now planning we're medium continue point And going we out continue might it believe made: importantly, look mind, XXXX you at and important as if we term, to keep term. we're the process, in ensure will it right of and we're on long-range term executing terms to annual -- need the of through we in long electrification the forward, outlook the do for budgeting in to it's any, to manage to going looking make of our process that we're through and what, beyond midst to profitability adjustments

and February. we're So provide when in QX call we'll seeing the process, that get we insight you go on that we'll how more through on

Frederic Lissalde

really we previous to thing developments developing programs from of that the that also a presented One and modular and in very we're and I globally, very that's implement when builds scale the grow approach from us modular scale that we with very have design number would important And production and flexible launching Market as Day, allows is, up. strategies. our we that and add Capital

Luke Junk

and volumes couple specifically you around look flex just then between footprint outcomes like here, thinking of amid variable shared quarter years. facilities, just you lower I'm hoping And in the how protect products for in EV as foundation next margins my how much the flexibility follow-up what leakage EV your manufacturing could that from over protect both given what speak can help And saw and we the eProduct. in looks to maybe that to might question, any

Frederic Lissalde

leveraging we we And are that have. the Yes. footprint existing

before, far, investing perspective. But having flowing so not focusing particular discussed transmission- through a our equipment of it XX% say, motor-related we're program, us is that some from types production a for where existing or, we four-wall a And we also we globe whether facilities facility, from are flexible production are the As on leveraging lot flexibility around a launch would gives of but eProducts. manufacturing, lines, a several products power customer iDMs-related. or I electronics-related, particular to

as So are the as capacities what capabilities, doing with capabilities. including we pleased and human pretty existing are far leveraging we

Operator

question with Barclays. from next Levy Your comes Dan

Dan Levy

wondering the that heavier, flowing the than itself. ICE that? Is in business uptake little just some extent normal EV as through sales benefit have a should there offset of thinking should purely we ICE to incremental you and any little margin? the on the One, is we what is anticipated about near be a incremental at lighter To think term just that

Kevin Nowlan

Yes. short we I characterize Day. term about it's it in think it the way fair term long much at I think the same to Investor mean, the in

bit, across -- quickly, profile. I slows slows bit if the opportunity the accelerates, electrification provides little down to think vehicle improves us it revenue it an industry little a our probably but percentage more that that on pressure probably it content a electrification, have but we're with we of it delivering. But electrification absolute grow opportunity margin on more the we growth, our margin the puts per the as revenue pace probably

long-term year bit little full view XXXX we a well. the that saw that in but our maybe with have, that's You consistent guidance as here

a or the income comparable resilient any decelerating, Because think levels we operating adjusted is overall, of adoption long whether of back, we why deliver step positioned big to I think accelerating over outcomes. those taking our portfolio portfolio -- the from under perspective. that's is EV like is financial term a really feel

Dan Levy

the past. this that follow-up, the are question lighter it. been I commentary about way EV they as the cetera. Are of that EV any are we been volumes on your asked that think at that discussions keen some vertical is you I powertrain then in one EVs, to that go of just have components seeing scale previously a customers heard that that's integration on they more automakers as from Got vertical partner the this et more sourcing OEM And a the wanted bit with of your maybe to in with change level a components, And need? now a to a they EV may within on outlook, willing have may engage integration you are don't impact the on thinking realizing

Frederic Lissalde

makes seeing as mentioned, And this sense. I starting we're you think that. Dan,

very support and financial have we We already strength many at them. customers, portfolio. and incumbent to have a recognized the solid We're

would beginnings I sign would call say those it along today a global charger say seeing that the a And I business North major we're I onboard OEM with a So that would booked but American trend, not is have that that we announced that. we discussion of of lines.

Operator

BNP Paribas. next from James Your with question Picariello comes

James Picariello

with hybrid finer your Can there's range and on on a benefit margin what ICE they lower eProduct of business, customer to lead you decent for put now could the in be the Because propulsion assuming overlap potential bases mix? should just additional associated slated XXXX? sides in both point a revenue the

Kevin Nowlan

not address to margin We're prepared a XXXX. specific in

actually going tend think trending to the to we could showed to long-term that it into towards head operate XXXX. though, we're We as mid-Xs trajectory you, of what think I XX% out our the you then like look margin 'XX. horizon plus not on on that markets being But comment this look prepared through we where go. minus or the at ePropulsion depending point planning as to and

James Picariello

customer Okay. factors? quantify And about points? could of course, the recoveries eProducts guidance, X to and just on cuts market this could, else what mix year's is attributed growth to Like the versus just of for high lower to the of But we lower be due lower because it level, you. element what regional then this driving impact inflation lower

Kevin Nowlan

Yes. on growth. to to about we're the XX% XX%. to organic were I the we we've focused guiding now mean, XX% overall, effectively, and And XX% past, we're at in talked as before, really

driver and drop outlook. math good outgrowth of the do biggest any The would you eProducts revenue in that. So pretty we million of feel the that drop that really revenue in about is $XXX

of million, also it's incurred UAW numbers factored have well. the but than and through some of that, We recover strike and in to $XXX year. as still the impact date the an in the the assume end doesn't embedded of It's we've impact on that element company less that the

Operator

with from next Your Joseph question comes UBS. Spak

Joseph Spak

just that's to on quarter full a or impact? the that. $XXX fourth a maybe on up Kevin, That year follow strike impact million,

Kevin Nowlan

any it's -- it's the million, impact fourth still guide. have an material But less It's the Both. on any in in didn't $XXX QX. impact than We really quarter. but impact

Joseph Spak

Okay. are launches But China, also ramp some to volume there's ramp, this wondering meaningful communicated lower growth. Obviously, the would some a impact I guess, and be you of and And I'm of profitability a slower then your really some we those sure and like given lot slower North I path quantity aren't that taking challenges maybe on China, a cautious if ramps with are of in of those American is where all Or sort or ramps a flawlessly? new whole the the business case. the you in products. of seems profitability. some to just that of view pace there seeing some sort you've making of why Asian execute want lot and such to eProducts it more -- Chinese the of and to circle the -- the Like back that

Frederic Lissalde

in there between overall, think -- you what I in market the market. you Chinese and of fine-tuning a launches difference can see see Joe, Chinese the timing we ramp-up read and in what the what is

impact the in the is impact XXX% a delay of so quarter. quarter of launch a in And

months. what are it's with why a little a that That's volatile. see I on This delayed And programs ground what a by tell the ramp-up is slower so would slightly you. and we few that's few

Kevin Nowlan

look growth BorgWarner. as I of Joe, just at you an at in that. electrification days we're mean, yes, early the from perspective add to -- still to

while moves at into BorgWarner level And now big at maybe as even And right quarterly significant have we're so a until really right through ramp-up look those XXXX, you we of XXXX, still impact. modest relatively more now, revenue. a phase it's to a for get scale,

timing those for And can particular in quarter impact a in so some numbers and launches or ramp-up year. of movements have a on the meaningful a

Joseph Spak

eProducts, give America Is and the of sense coming from? where maybe then, reduction just broad the up across strokes regionally is predominantly Europe? launches? it the of North of to you 'XX can a us bit that's to Or it like all follow And maybe little a

Kevin Nowlan

In $XXX terms you're of saying? million, the

Joseph Spak

-- reductions in exactly in 'XX the Yes, 'XX. the -- no,

Kevin Nowlan

we're things as think the in likely in light we've of mean, up is as what near-term program those we regions. and also billion us particularly we're giving we've incremental what an looked by And really program think the probably taken headwinds. the a level. But towards if further say Fred ramp of as think $X gone reason to more a track the look to indicated, there on at as Fred that some I we on layered to at launches what now terms portfolio range what and, risk launches likely ePropulsion look those delays, another number seeing we've to that back that on as cadence that's months. in $X.X we mentioned, of It's the of of of some to be the getting And X terms that range. billion a it downside on get for assess puts are across is, delayed we and layered

Operator

time We comes question, Noah that for with have Kaye and from question one Oppenheimer. final

Noah Kaye

can if on up one, get Just that follow first, we color. wondering to

heavily some or number, the mix for this mix pushed still expecting more understand programs? does the product revenue the the you're programs electronics strong less of we so? relatively where about versus skew product terms it adjusted power just in to -- think Is portfolio on out, in does other in sell-through. represented electronics power trying even being I'm Just the skew towards 'XX of delayed if

Kevin Nowlan

look in we hitting the Yes. at it mean, ePropulsion is I biggest most think I think the of really where pressure segment. is, as we

prior look at there situation And business, instance, really demand-constrained the assumptions. a at really more we pack strong demand -- the it's planning our to of there actually supply-constrained a continue battery think for to we As see relative than situation moment.

segment in headwinds. seeing some to be the tend of So ePropulsion the it we're where more does

Noah Kaye

Investor M&A current take outlook. Okay. to to outlook. that impact today be what indicated portfolio? assumed you be the M&A at had in to pause completed very Day, understand. touch support assess Do your Just the would think a you the have How And further contribution the outlook? to trying second, you there is there? I just helpful. describing M&A 'XX M&A? does on you to Do do appetite What to the dynamic your of additional That's you're sort now some

Frederic Lissalde

those will always would us more a I electronics. are we And as current already I disciplined the from will at current going might very, M&A a strength our change but on not say I the help also that of opportunistic would the accessory stay give valuation lines And been. towards standpoint. would assess So that a technology does say transaction to that that E. very environment announced say verge we're closing even we've perspective. from also along power always always appetite us very on we've market we M&A

Patrick Nolan

Thank all for today. you your questions

team. With conclude to If you any Leo, me call. have or today's to reach can follow-ups, any additional my free you member out feel of that,

Operator

That does Call. conclude Conference the BorgWarner XXXX Results Third Quarter

may You now disconnect

BorgWarner (BWA) 2 Nov 232023 Q3 Earnings call transcript