BorgWarner Expects 2023 eProduct Sales of $2.3B to $2.6B

BorgWarner Expects 2023 eProduct Sales of $2.3B to $2.6B

First quarter net sales were $4,180 million for the first quarter 2023, an increase of 8% compared with $3,874 million for the first quarter 2022.

BorgWarner Inc. has released its first quarter results and reports that it continues to expect its 2023 electric vehicle sales to grow to $1.5 billion to $1.8 billion, up significantly from $870 million in 2022. Additionally, the company expects 2023 eProduct sales for hybrid vehicles to be approximately $800 million. As a result, the company’s total 2023 eProduct sales are expected to be $2.3 billion to $2.6 billion.

BorgWarner announced its plan to expand its Seneca, South Carolina, production facility, which is expected to result in 3GWh of annual U.S. battery module capacity. This investment will contribute to the growth of the company’s battery module and pack production in the U.S.

BorgWarner has been selected by a global power technology company to supply battery packs for a series of electric buses. Production has already begun.

BorgWarner has been selected to provide eMotors to a leading automotive manufacturer in China. The eMotors will be used in the Chinese automaker’s Dedicated Hybrid Transmission and Range Extended Electric Vehicles, with mass production expected to start in August 2023.

BorgWarner has been selected by a global commercial vehicle manufacturer to provide eFans for battery-electric trucks in both the North American and European markets, with production expected to begin in 2025.

BorgWarner announced a program win to provide DC fast chargers to the Pontiac, Michigan, school district in support of its electric school buses.

First Quarter Highlights

  • U.S. GAAP net sales of $4,180 million, an increase of 8% compared with first quarter 2022.
  • Excluding the impact of foreign currencies and the acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions and Drivetek, organic sales were up 12% compared with the first quarter 2022.
  • U.S. GAAP net earnings of $0.93 per diluted share.
  • Excluding $(0.16) per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $1.09 per diluted share.
  • U.S. GAAP operating income of $340 million, or 8.1% of net sales.
  • Excluding $56 million of pretax expenses related to non-comparable items, adjusted operating income was $396 million, or 9.5% of net sales.
  • Net cash used in operating activities of $12 million.
  • Free cash flow was $(290) million.

Financial Results

Net sales were $4,180 million for the first quarter 2023, an increase of 8% compared with $3,874 million for the first quarter 2022. Net earnings for the first quarter 2023 were $217 million, or $0.93 per diluted share, compared with net earnings of $200 million, or $0.84 per diluted share, for the first quarter 2022. Adjusted net earnings per diluted share for the first quarter 2023 were $1.09, up from adjusted net earnings per diluted share of $1.05 for the first quarter 2022. Adjusted net earnings for the first quarter 2023 excluded net non-comparable items of $(0.16) per diluted share. Adjusted net earnings for the first quarter 2022 excluded net non-comparable items of $(0.21) 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 increase in adjusted net earnings was primarily due to the benefit of higher sales, partially offset by inflationary impacts on cost, higher R&D investment in the company’s electrification portfolio and the impact of lower industry production in China.

Full Year 2023 Guidance: The company has updated full year sales, margin and EPS guidance. Net sales are expected to be in the range of $17.1 billion to $17.9 billion, compared with 2022 sales of $15.8 billion. This implies a year-over-year increase in organic sales of 7.5% to 12.5%. The company expects its weighted light and commercial vehicle markets to increase in the range of approximately 0% to 3% in 2023. Foreign currencies are expected to result in a year-over-year increase in sales of approximately $55 million primarily due to the strengthening of the Euro against the U.S. dollar, partially offset by the weakening of the Chinese Renminbi against the U.S. dollar. The acquisitions of Santroll’s light vehicle eMotor business, Rhombus Energy Solutions, Drivetek and the electric vehicle solution, smart grid and smart energy businesses of Hubei Surpass Sun Electric are expected to increase year-over-year sales by an aggregate of approximately $70 million.

Operating margin for the full year is expected to be in the range of 8.7% to 9.0%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 10.0% to 10.4%. Net earnings are expected to be within a range of $3.87 to $4.24 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $4.60 to $5.15 per diluted share. Full-year operating cash flow is expected to be in the range of $1,400 million to $1,550 million, while free cash flow is expected to be in the range of $550 million to $650 million.

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