BorgWarner said it expects its net new business backlog to drive a compound annual organic growth rate of 5 to 7 percent from 2017 through 2020, compared to compound annual industry growth of 0 to 1 percent over the same time period. BorgWarner notes that the growth rate is impacted by the following:

• Net new business within a range of $650 million to $730 million in 2018, $675 million to $800 million in 2019 and $700 million to $825 million in 2020
• Based on these assumptions, the company’s 2020 revenue outlook is $11.5 billion to $11.8 billion
• Asia, the Americas and Europe are expected to account for approximately 41 percent, 38 percent and 21 percent, respectively, of the total net new business backlog over the three-year period
• Approximately 30 percent is expected in China.
• The net new business backlog represents growth across all propulsion architectures with combustion, hybrid and electric vehicles expected to account for approximately 50 percent, 45 percent and 5 percent, respectively, of the total net new business backlog over the three-year period.

Full Year 2018 Guidance

The company also provided its initial guidance for full year 2018:

• Net sales of $10.4 billion to $10.6 billion, implying organic sales growth of 5 to 7 percent compared with expected 2017 net sales of $9.79 billion
• Foreign currencies are expected to increase sales by $75 million, primarily due to the appreciation of the Euro
• The purchase of Sevcon is expected to increase sales by $45 million
• Excluding the impact of stronger foreign currencies and the acquisition of Sevcon, net sales growth is expected to be 5 percent to 7 percent
• Operating income as a percentage of net sales of 12.6 percent to 12.7 percent compared to 12.5 percent in 2017
• The acquisition of Sevcon is expected to decrease margins by approximately 10 basis points
• Net earnings of $4.15 to $4.25 per diluted share
• The acquisition of Sevcon is expected to be (6 cents) dilutive to EPS. Excluding this impact, guidance implies a 10 percent to 12.5 percent year-over-year improvement in EPS
• Effective tax rate of approximately 29 percent, exclusive of any impact of the new U.S. tax act
• Free cash flow within a range of $500 million to $550 million
• Share repurchases of approximately $100 million

First Quarter 2018 Guidance

The company also provided guidance for first quarter 2018:

• Organic net sales growth of 3 to 5.5 percent compared with first quarter 2017 net sales of $2.41 billion
• Foreign currencies are expected to increase sales by $70 million, or +2.9 percent.
• The acquisition of Sevcon is expected to increase revenue by $15 million
• Net earnings of 97 cents to $1.01 per diluted share