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BWA BorgWarner

Participants
Patrick Nolan VP, IR
Frederic Lissalde President, CEO & Director
Kevin Nowlan EVP & CFO
Christopher McNally Evercore ISI
John Murphy Bank of America Merrill Lynch
James Picariello KeyBanc Capital Markets
Rod Lache Wolfe Research
Dan Levy Crédit Suisse
Emmanuel Rosner Deutsche Bank
Noah Kaye Oppenheimer
Ryan Brinkman JPMorgan Chase & Co.
Luke Junk Robert W. Baird & Co.
Joseph Spak RBC Capital Markets
Brian Johnson Barclays Bank
Adam Jonas Morgan Stanley
David Kelley Jefferies
Call transcript
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Operator

Welcome to the BorgWarner 2020 Fourth Quarter and Full Year Results conference call. [Operator Instructions]. I would now like to turn the call over to Patrick Nolan, Vice President of Investor Relations. Mr. Nolan, you may begin your conference.

Patrick Nolan

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

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

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

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

exposure. refer say to us our When weighted to markets. our vehicle in our compared and growth hear production for geographic also the commercial that you light means market, will change We

happy this Our the these earnings slides our revenue outgrowth to market. turn with along our our call you posted to follow page organic the Fred. is website. we've during Please With of call change defined that IR versus note over to I'm that, as an presentation to We discussion. encourage

Frederic Lissalde

on I'm proud compares morning, cash top to year. This provide $XX.X being XX%. overall approximately share results flow stronger-than-expected With and our for about organically. Pat, X. line in an and we to very the good Starting update. XX% performance for sales, Thank were market We're everyone. billion our our and down pleased down very you, approximately with company XXXX Slide

points into XXX about fourth quarter. was outgrowth which going expectations basis the ahead of for our year, so the And was

growth our XX% saw year, delivered full in For the We close to China. all in outgrowth regions. we major

in and the European Our both range. were single-digit low outgrowth North American operations

year impact decremental our expectations. performance with share per year-over-year declined our line was COVID-XX, our to in the While margin full earnings due of

Importantly, delivered This generation our for cash free This to future strong is of $XXX testament while support generation spending record over company. preserving the focus last put we've few R&D improving flow achieved to flow the We a very margin for growth. performance free year. a flow for free cash cash years. represents the intense the on was million

operational and the challenges we the of largest business company's the completed course year. electrified award in vehicles managing the XXXX, of operation over successfully the the acquisition history While secured numerous for

business discuss let's those Now some awards. of new

this we use I'm vehicle airplane will motor in XXX design. global our that electric through I to with program. launching brighter time reduce announce secured volts with an rated a XXX-volt Using even the First, machine, variants on our customer happy trucks have significantly architecture, an award, commercial motor different future X can a am X very power electric program density and charging for buses. This XXXX. enabling of XXX-volt higher and achieve pleased Slide latest customers

electrification We to light commercial to addition opportunities in on will in market. in opportunities focus vehicles vehicle continue our the

highlight to Next, I on would like another win Slide X. inverter

launch next-generation our with OEM to inverter XXX-volt in partnering XXXX. silicon supply to the major expected BEVs that European are are We carbide a for

from our lower date. efficiency. This silicon carbide. the higher This I inverter of illustrates program silicon you I to this ongoing second to can't power to losses can this details market share electronics as tell trend and in leading enables innovation our is we're energy While that the largest program, upgrade drives

of Slide on product allows advantages breadth market. BorgWarner's had first, by think positioning and our to the latest an would it's inverter I this competitive in This I in products the give at you of electronics, us market establishing portfolio. update power ourselves tremendous We've more win, the to to X. When effective driven market. our success bringing in like about With be European faster

innovate. to ability our Second,

We continue integration part by our in vertical innovations our strategy.

in-house capabilities have circuit development and for modules, integrated We power software.

last our The new the have, that result engine think secured significant I that electronic ability in driver unit we business the to leverage that is business. our especially we've already is scale award. control

inverter slide, you On chart we've European side right X the the the programs with secured will on the OEs. of see large

XXXX. we can in we'll see, you X.X inverters million As expect that around be delivering

to increasing a achieving, little our As we're XXXX of continued power touch our later. successes electronics result portfolio. innovation business awards will that in R&D our in spending the support on a we're Kevin new and

an all contribution Next, Slide Delphi on I results. operating progress of the income feedback to Delphi businesses. related on tracking as And like across good the give The Starting Delphi to Technologies customer was are you both cost and synergies Delphi Technologies expectations. to on would our line, all transaction line the Bottom with very X. with is positive. ahead update The integration will in seeing former later. our discuss the remains revenue track. plan, I'm QX Kevin

rest all the I of to from portfolio, takeaway on Delphi overall integration awards My highlighted, in perspectives. that is across is track addition In wins we inverter won the new GDA. that just businesses including the

you to will will look Michigan. into I our announcing interacting Investor Auburn world. XX, provide the and broadcasted with from in insights world wrap acceleration technologies Slide in plan event. BorgWarner positioning It of the our March I into electrified during headquarters Hills, event we forward an The an the on are Day our to hold be up on virtually XX. upcoming Before

and on the an first. summarize We outlook extremely the XX. deliver operating our transaction. on let So planned. successfully XXXX health challenging synergies better-than-expected of and and flow, are put companies, the and safety this and Slide our me record Delphi was on track in the XXXX integrating outgrowth our in people year Even are We're on to of terms our challenging closed we've results delivered as we BEVs the environment, generated cash free and we bookings accelerating. environment,

cash another products enables us deliver company year demand content per to flow to expect of in future. which free we ahead, is increase invest the for for record the efficiency our position growing, leading XXXX, look improving the we our successfully in to continue a The in to business As vehicle. to continued

excited you electrification. coming as In fact the when long-term already highlight, on as we our finally, Kevin it positioning look about will is to backlog, XX% e-products. X-year shift at of look I'm towards from And capitalize industry profound our

We are winning.

electrification. I'll turn up you, and that, the the ramping on are company over to acceleration call heavily R&D focusing We towards Kevin. of the With

Kevin Nowlan

good Fred, and you, Thank morning, everyone.

review I an our the X I'd overview detail, key financials the Before in like from quarter provide results. takeaways fourth to of

guidance, of ahead levels sales driven and from by stronger-than-expected was of revenue outgrowth Delphi Technologies the higher our First, acquisition. our

BorgWarner Second, our free was resulted business. full quarter, the cash the margin in our legacy flow the strong and for very flow third, performance And was legacy Delphi the in cash at business record in better in million expected, which than year. both free $XXX

So let's turn to Slide XX.

QX, our by increased As at revenue we currencies ago. from for look year X.X% revenue foreign can see that about you a year-over-year walk

Strong impact That than up Excluding a and XXX the we our than X% production. more basis revenue with the means expected, more market. to of X% underperformed roughly average we this sales as market revenue than in market our to by a China, by the commercial our America, about sizable impact, outgrowth vehicle increase of In delivered of in the the down In offset region. North the finally, outperformed points in the less to China breaks business regions. off-highway demand of outgrowth vehicle mbusinesses just In were XX the Europe, as drove vehicle the points And contributor Ford we key due changeover line DCT declining in weighted commercial basis outgrowth organic and other quarter, our compared we performed market our light follows: XX%. approximately to X%, in organic light which continues be in quarter F-XXX. our as about vehicle primarily

a of line we're in in QX forward our with expectations. China, XXXX was a the cumulative will expected year, of our right delivered on Now on outgrowth some particularly basis, the But strong an XXXX for That longer-term impact year-over-year and in have we tracking outgrowth. pull X-year full outgrowth.

XXXX. the with pleased strong in we're the end, of finish So

Moving than $X.X you more a backlog can was to outgrowth, billion just and of acquisition Technologies past see fourth revenue. little our added that The billion over quarter revenue the all our Delphi this in QX. $X.X of sum

flow on performance our let's XX. Slide look Now and earnings cash at

XX.X%, of fourth adjusted operating income This in million margin million fourth million yielded to operating tough adjusted ahead the of $X comparable. quarter which quarter. the of quarter we our was XXXX, $XXX was well XX.X% operating X.X% compared guidance margin to basis, an delivered Our XXXX. of in of margin a on sales. million of comparable year-over-year decreased On Remember, higher outsized makes which for $XXX income for a performance adjusted QX X.X% $XXX

business million and due top margin higher-than-expected of which quarter, This with our impact If is delivered business. company's was the the ahead consistent Then to at you legacy profile. the the expectations the of well adjusted added Delphi margin over Delphi for stronger Technologies, just margins excluding revenue $XXX underlying Technologies to quartile XX% the look in we income. the BorgWarner historical operating

cash of we Moving the We're free fact to cash that flow. flow the on million proud quarter. during of generated fourth $XXX positive

looking our that, free full cash during of $XXX cash confidence in With repurchased million, the a strong and $XXX with flow those of year at the our million business company. record a XXXX XXXX, As fourth which results for level result we our came was the shares in quarter. to ahead flow

see to global you for can XXXX. on production turn XX, Slide now perspectives where Let's industry our

view markets. global market the mind, light our markets of vehicle this vehicle XX% XX% in First, to we increasing expect that to commercial to increase incorporate exposure weighted markets, vehicle assumptions With and given that of range our now out me commercial point those our let the and background year. off-highway our in

Looking a roughly XX% vehicle at blended the market flat overall increase declines China, commercial In this production expect vehicle is region, the for light And in year-over-year, as planning growth XX% in by by expect market. XX%. America we North to be up anticipated XX%. we in to Europe, to be market of to offset we're

billion X year back about Now Slide in XXXX. full $X.X outlook of forma Technologies which financial pro sales, Delphi revenue XXXX the our adds the quarters from Starting let's first on of with our talk XX.

forma you those this roughly an pro to year, thought part for As to $X.X year-over-year were billion increase P&L you order would can in but slide prior $X.X our billion. market comparability, in XXXX approach base, useful. our revenues not to baseline provide last of the pro be revenue forma we on expected know, Building are see from revenue end that assumptions drive that revenue of the

our perspective, expect into full inclusive $XX stronger total from our foreign of to incremental light-duty currencies, to market to to the to a the of purchase the to impact our expected synergy to Then we range XX we relative One expect XXX cost XXXX XX% X% points. this Embedded be It's compared roughly XXX From Based share point accounting. delivering of basis billion a of margin the XX% low and billion. revenue basis our business considering headwind contemplates achieve be of XXX year range revenue. in in margin to we business drive From that increase to outsized million right we've XXXX, more $XX.X year XX.X% commercial China diesel adding to seeing track full important in of a revenue continue point an our a we're operating growth cost range forma market XXXX XX.X% outgrowth operating that range opportunities. a That's to to projecting in of Next, from XX% X.X%. of synergies basis perspective, million a Delphi-related we're to That a includes of benefit for margin XXXX. baked in of XX% us synergies revenue point on XXXX electrification to $XX from cost adjusted assumptions, approximately in spending on to margin outlook and full in planned in pro on previously our XXXX the market vehicle expectation puts normalized share after outgrowth year margin declining XXXX. pro R&D is expect. $XXX to these in incrementals organic expect headwind guidance. increase you the note before forma $XX.X to adjusted guidance outlook. total fully in just the the This drive price million is told benefit as

revenue $X.XX $XXX our EPS $XXX expecting finally, And So outlook, $X.XX over we're adjusted based a delivering outlook. have sight we diluted significant free is of which full of year XXXX. million increase share. in XXXX to to line cash per to of on record That's year this and flow margin our million,

Slide to to outlook. XX turn review medium-term Let's our growth

mentioned largest legacy earlier, we diesel outgrowth portion from of comes light Delphi headwind portfolio. to headwind XXXX. The in be I As the a vehicle to expect our this

left As can you we side million this impact business expect on see be in approximately this within the of to the slide, XXXX. $XXX

it's that we headwind is each saw with due lessen in is line head year planning means this which as However, to we what in This you can original expected towards also our simply diligence, that see assumptions. XXXX.

side backlog. slide, we right the of multiyear our profile Now the let's move where to

net revenue means a in decreases which is of revenue. backlog backlog, increases our know, net reflects you in it As

basis the into And still approximately deliver outgrowth this this XXXX. backlog points aftermarket you ahead be inclusive to billion. with is expect diesel what are Then expect backlog. to of $X.X new XXXX to XXX side we as net the XXXX, of to to a can you So business that net incorporated combined headwind, in headwinds see from growth even XXX left we look

business Importantly, XX%. previously And company the in for note the of our by point positioning driven backlog. winning to in this communicated continued this We're this About outgrowth is we backlog range. about e-products, our XX% company area. growth XXXX and midterm mid-X% combined there's the backlog critical this supports for more net one to believe XXXX

most financial and did of significantly $XXX really solid resulting points cash only provided my headwinds Overall results the of exceeded we summarize that me despite year flow. COVID-XX. last market prior in guidance to also these they We million let had our guidance, remarks. So XXX we a Not the free exceed of pandemic. from basis January outgrowth year the recent delivered

that the strength on the XXXX, business in into that In turn Delphi make Pat. the to over head growth drive we we'll financial as keenly on win and our necessary electrification we're to strength integrating will to investments Now financial near-term focused delivering our financial to that, outgrowth like leveraging into to the the business. commitments, profitable on focused new continued long-term means acquisition, successfully future. long secure back I'd continuing With year, the be and call

Patrick Nolan

Kevin. let's it open you, Sharon, for questions. Thank up

Operator

Instructions]. [Operator

Chris McNally Evercore. from with comes question First

Christopher McNally

Fred, two if I EVs. can on questions ask

big The It's top that lot as only I sort obviously not give the that have And drivetrain. Really of first heavily share love the the is motors be with what wins Would basis, into just in roughly inverter a here. around attached. you market well, but getting suppliers. share. XX% share explicit some you put about if a for means wins appreciate work units in-source you outsourced We players a assuming market there's Asian and the environment, can't color on we some competitive because business. have color you the a numbers, know X obviously could competitive the on of X probably would And external of inverters.

about So could if environment right just you e-business competitive the for now? talk

Frederic Lissalde

the really we're a with carbide, we're that good -- the definitely driving feel the really business. feel fact strong, is efficiency. and I intimacy, feel the feel we good combination. We in Chris, field, about momentum. silicon booking leader good strength technology customer financial this see really the got about I Delphi about I progress. about and And bring really high-voltage I and good I really that

right company is customer of kind is happy positioning come. to And I'm the positive. and more is strong. where feedback so now the The

Christopher McNally

We a in-sourced it lot about involved? received similar this of of OEMs what proportion I'd OEMs, versus for the a does about environment of questions in idea European them at of everyone talk sort three of just you great. win maybe the new legacy just this to startups? like a That's because next right? it's on outsourced, seeing business first such Could you startups. put camp gen that Are

Frederic Lissalde

Yes.

right, as the call legacy and startups. with them, We both are both, OEM, new working you

X We our in towards relationships. that and pretty we business those have of solid across the customer intimacy long-term certainly segments. -- are foundation And been market matters. have in customer the that solid actually the successful we have we Obviously, that business, world

Christopher McNally

how And if any But business, on any I last could I a more EVs, ramp levels does on How margins? there's lower actually through everyone is on start talk a it of backlog. mean EV rule new of much this sort a of really guess I aggressive just EV to can corporate one to much on? -- squeeze in about longer clearly margin may the may one since curious reach business profitability? a flow for the be is of profitability and about new when much XXXX ramp Or you thumb business degradation very EV.

Kevin Nowlan

Yes, in I keep steady or mode as consistently I'd front focused capital it it's a we our as our business, end, for perspective. lot across call on we investing state EV the the EV we're mean we a business invested that in mind I'll and in businesses. whether ramp-up portfolio, talked about is new past, portfolios, more of it's legacy, But a in types revenue we're drive obviously target say like a return those yet not toward we're Chris, this Kevin. stay from combustion at a

but the come front are from perspective. life particularly at over the to the of ROIC an end, those R&D the targets program, in So cost tends

as just up to we saw, ramping talked X%. about you R&D today so And our

that contemplating making we're really increased portfolio it's -- as in securing investments new of wins. Some is the that EV business contemplating we're

discrete our basis. that skewed feel all a to the margin. and become margin getting we you more great. a that margin does great more still managing XX.X% the remain delivering term is within is you target, can that margin XX% portfolio, toward And see XX.X% on increase our see our R&D. considered, backlog with track overall near our I headwind for XXXX we're We over But about operating to that. that in e-products, which that and on And guide. mean of in So in contemplates

long-term to obviously on a on It we're but investing across and we're little with deliver targets. in. our it's margins, pressure portfolio, track business creates managing that So the a right margin

Operator

question Bank of Murphy comes with John America. Next from

John Murphy

question just curious could segmentation. new Just the more be as in at growth now over and And on other look carved the sale separable much potentially for segments? up separate that and slower you've you be segments, fuel change as might or I'm a those injection aftermarket the as maybe segments, two are four than first time, identified off it

Kevin Nowlan

perspective, we're way. that's it. that X reason the growing Yes, I they're thinking guess profitability how the needed be on accounting from And an businesses, separately. mean I portfolios. reported of businesses they And really of not is part to focus that's at our look those about those that, we reported that

As has. talked Fred as that about that, seeing along already we're in wins leading some prospects and in real business, the business remarks, his business you we FIS growth look that with at the positions see GDI, in

we feel And quarter. see margin good saw that to margin perspective, in we that profitability improve think at in portfolio, the continue business. expect I to as look in there. it, we progress would that's about that And that the we the opportunity an fourth performance focus the aftermarket from of really drive and we to business

now. at So how look those we that's right really

John Murphy

about think result chip could if of being outlook, the I about us any color And means, about the lost in disruption because think I and then what's really that? think a Kevin, we the of in Should you Okay. And what just disruption, you on if -- we the going down a it the in kind you're F-XXX then sales what very decremental? production also matters. fourth humble some think the performance follow-up, wondering shortage quarter, give as just mean on I on just being

running the bounce on and think maybe Just pretty sort the gets the more of as XXXX? industry the you generally remaining F-XXX, back how that about impact of up up do positive mix in and through and

Frederic Lissalde

in half. of see we certainly some kind what first John, mostly disruption, the is

million of second production The have guidance, reflected than our vehicle, for in of currently What half that's low we full is low the and net John, in the guidance. end the put the impact recovery a is end unknown. That's greater X year.

John Murphy

helpful. then And the particularly mix, around on That's the F-XXX?

Frederic Lissalde

What's your question on the mix?

John Murphy

was a even in F-XXX the of it fourth fourth got the bit you being the in and benefit obviously in I in No, dinged probably most performance quarter with for And down curious mix F-XXX, guidance, the up as to particularly a XXXX. than that most through the quarter, the But a looked. your so mix going was mean industry big the will with forward think you just is how how better be? about in it I'm XXXX benefit ramp remain? back strong going

Kevin Nowlan

the Yes. F-XXX It revenue it reason the of million to an from underperformed in North on perspective. $XX quarter. was overall us. type $XX fourth will I help want a America probably revenue we say million, around outgrowth mean us is I impact that definitely in just the

we as to obviously abate would XXXX. ahead and overhang an be on -- not that we outgrowth So to look headwind that be expect

Operator

with Picariello comes question Capital. KeyBanc from James Next

James Picariello

all synergies purchase baked can contribution? for the were on quarter, obviously accounting relative expected, to what's what primary to came outlook? And Delphi because related in Delphi's year curious Just your drove you upside guide the what full cost in the dimension just of inorganic in the at And as drivers that then and that.

Kevin Nowlan

Yes.

we that in quarter, in from really fuel our and by perspective. effectively million in powertrain legacy the results with a about revenue up the Delphi, from of that products On were injection mean I upside a and being of pleased fourth the midpoint The both perspective the margin $XXX saw from terms came came we biggest top from line guide the portfolio.

stronger of because performance, business a contribution portions from those a And that margin with are actually so two because pleased perspective. the of from also are margin that perspective, we the helps

say big really the it's driver I'd some drivers starting month caused owning -- business. just get and a also one some top bottom to say generate we the hands line upside. of that's us line to in our into fair what probably were to and around So Delphi

we proved too cautious portfolio, and gave at Delphi we be end some those respect the And make to day. as QX so conservative guidance the did the assumptions with of to

James Picariello

Does accretion carry year that to laid a conservatism you through few and to related ago? the framework that this months out

Kevin Nowlan

Yes.

I on the think with totality, to headwind. XXXX, good which Delphi ability about of guidance negative deliver that basically outgrowth our the really diesel outgrowth actually feel to respect in to XXX we basis that with points we're that giving, XXX flat because assumes to of slightly

greater for in XXXX deliver what means beyond, our feel outgrowth as track margin we we the So the we the to XX% as cash operating deliver the to about that company, deliver us delivering totality XXXX. on and for terms in And XX% flow. strong progress that margin of for we're to that profile, on ability XX.X% year, right improving and to good we than think look toward to even on

James Picariello

for this year? the $XXX past backlog clarify, Got $X.X cash And we The effort the how of clearly already the be And correct? then to e-products, battery hybrid, just electric? thinking this free in million mean apparent about the then your strength, Okay. That's excludes I repurchased it. should XX% billion flow buyback quarter. just to that tied company guide. for

Frederic Lissalde

that a a want energy -- the plug-in new China. take So little new vehicle comes when bit XX%. of portion hybrid the under of hybrids to energy it do that? That's are high-voltage small credits includes to very you Kevin, it in

Kevin Nowlan

Yes.

deploying look that we year growth exploring you would priorities XXXX. as I more opportunities is opportunities electrification. In accelerate growth towards XXXX, shifting buyback and a would But think allocation the definitely how support the priority I to terms we course mean our on there, is our of to those -- in are M&A aggressively actively M&A that initiatives into capital that From we I we'll tell ahead position electrification. we in and say us based positioning several our And materialize. for through look capacity focus capital of in assess as

investment both and can as pursue M&A to our this see stepping R&D X% you'll You that opportunities. it to in year, see we up continue

James Picariello

Do the buyback that target? billion supplement $X some of

Kevin Nowlan

again? I'm sorry, that say

James Picariello

the With would $X targeted the potential that doesn't... supplement Or M&A, billion buybacks? it

Kevin Nowlan

$XXX to It's It flow how doesn't expect at to just generate we year million cash the that free it's in we XXXX. this $XXX million look supplement. deploying of

going is on some and in positioning focused electrification. that M&A of priority be Our really these to our growth opportunities improve

these activity. as terms billion on program, as our we of by the relates can of exploring ahead QX did In we to the committed what in that in and how looking pursuing. of 'XX the you program, beyond, $X definitely see evidence remain repurchase here some M&A But it key to we're opportunities we're focused we're

Operator

[Operator Instructions].

Next question comes from Rod Lache with Wolfe Research.

Rod Lache

Have about you in billion year, that show period aftermarket included that that the you X.X over had, to on you historically Yes, I billion I backlog prospectively. backlog XX? Slide X-year you know ask first why forecast? data last don't X.X a

some of technologies. was much you've to Delphi and as hoping combustion X.X I and what X.X. contributed, us it's far Now how look backlog what from headwind kind minuses you as of give you as the pluses out contributed, got can

Kevin Nowlan

all -- our I the guess of I to always mean backlog the Yes. performance. revenue of has market included the our relative measurement

on mean necessarily as the on strong at the aftermarket it's OE well, business side, so isn't basis. I because the our a the than rest levels It's rapid on focus growth. backlog it's sure included the much this look driving of it we piece smaller sustain making primarily you same profitability. as And of of

Rod Lache

backlog? Delphi Okay. contribute to And this how much did

Kevin Nowlan

probably But Delphi we with by we Delphi that's down, XXXX but which the diesel, would breaking X%. as way by XX% when bit code look ago at the headwinds legacy idea to more think what a across you those a we're as ZIP directionally, we're from XX% in little of think, to that more with I outgrowth tell talked XX% combined what's have bit to backlog, and we're it provided the X.X% headwind. about more way X.X% trying is is of in get ahead, because I'd XX% But I'd a don't looking more of that that this, not -- broken XXXX which mid-X% this BorgWarner say outgrowth near-term say look it. where or was in I diesel directionally consistent you year Delphi legacy X% portfolio, the little that away when that at about to backlog implied We overall it now not fair to effectively some you is anymore, to versus Delphi. of there opposed a had

Rod Lache

Okay. did XX% in And XX%. your I'm that XXXX secondly, north And of wondering just target longer-term about of margin quarter. if anything says the you

it billion I think so than that $XX.X at you'd that you be QX. annualizing annualize or in the at more

starting is or well? as include you look that Or repeat, just simply could more inorganic actions did divestitures that conservative? And you're you say if So to acquisitions? strategic looking at might

Kevin Nowlan

-- delivered that's $XX.X the you really billion, with by XXX that on so obviously our the midpoint an of and at guess here revenue now walking run of XX fact currency. when look annualized actually higher performance, is that rate the I at we're QX we in pleased And into Yes. that the of than XX.X%. even million driven the XXXX guidance where we're obviously

So -- synergies that, what I feel portfolio QX margin certain inclusive we're in active we that looking additional to looking XXXX. more cash very it the between is right which Delphi that thinking convert then to of greater a be higher where think is We you improvement our XXXX, but But margin I deliver I just backlog XX% beyond the you're directionally, and But businesses around way. really focused a $XX acquisition time that say foreign more side, that generating spending and that year. with utilize another ability the we're speaking feel is process. about about expect XXXX at M&A annualized we really of that, ability the Because billion looking we're incremental this you on go-forward on million, an other on to at lot than part revenue the particular, were on $X of I as we're currency. we activities even that revenue actually with in some have a could growth that our at deliver basis. the in comfortable the expect management think than with we of M&A, do that that highlighted look portions driving my opportunities to x we should question ahead. we're flow And comments will And that active would on asked legacy was

Operator

Crédit comes question Levy Suisse. Next Dan from with

Dan Levy

First, to ask I Delphi. on wanted

the believe I years. drove in quarter result. XXXX. recent on Delphi Any operating Delphi us in seen they good what just the would for which only Is recovered versus paying that it some versus color just the margin margin guidance, came obviously the better pieces best off? just you through moving the since in restructuring had posted talking you the mix? about of what be quarterly the it in the Was was margin piece, walk we've You've could in were helpful Delphi Delphi? but Maybe not much your

Kevin Nowlan

at first levels I of stand-alone to X% going look for the was look in keep couple think mean at relative thing you maybe performance, a ago. years QX mind, in quarter, as which range when mean the revenue I you QX strong that back really a the Yes. a business, upper was I to the margin highest

that portfolio billion $X.X And in upside stronger the was some pretty seeing almost there quarter, $X.X level the margins. in So the on the a of had an of part annualized that the billion, of so historically basis have revenue. strong business that's portions of came

portfolio. that legacy margin But And we're with in to that business the But million restructuring mitigate the years. profile. that's getting that tailwind at it XXXX, of you from And you are margin it's see that's an business. slides taking company headwind to about to from in had performance to it, from we're has that and pre-closing those continuing the that helping my remember, been a basis I support post-closing actions think That piece restructuring I headwinds. think will that and coming that's important the margin on strong offset continuing that look said, was actions And continuing be expected $XXX margin the that's legacy executing keep decline. because comes some revenue the diesel when over impact mind. that actions So continue that of where Project to a outsized of cost piece couple performing some last the of overall we're been the to some strong Pioneer execute that

Dan Levy

then And Delphi. Okay. another follow-up just on

us your always could your restructuring for questions the the an from line you a folks, on just programs. an I some under Delphi update give of of quarter. now roof similar guess update, had to prior Maybe You've

with You restructuring you've maybe one maybe parallel incremental This program. Delphi's How Does in an start BorgWarner long I up? before ongoing about being core et contemplate a count, cetera. to but actions? process, we how fully restructuring have could program, long see restructuring talked with that -- really more everything Pioneer. your portfolio own see, before, guess, cleaned on guess, I steady-state we footprint, there's is mean head I

Kevin Nowlan

I... Well,

Frederic Lissalde

part say we is We and to we what we Delphi are a restructuring, would that, of we are strength. track. track. on we and of always what do, are we top synergies, track. continuing And So that did on in are I Pioneer, did of is that, also have on position on the we do restructuring want

Dan Levy

And Or... potential additional actions? for

Kevin Nowlan

the we we're ago on that that 'XX that we're announced still little think more And on on. focused program we the has going executing year do through that. well. we're and some BorgWarner continue I on we're is cost that side executing Yes, in so the to execute have And work on the in completing Pioneer XX, restructuring synergies program more have focused 'XX to a we on. about then a XXXX, really midst 'XX. actions into we're go The and already bit we predominantly and Project through to as that actions going we're legacy executing

already those we we expect else and on years. a would focused right delivering on, that lot of of And do and have to if where couple at stock the take now we'll anything then there's we're next are need plate we point. really that we on So our to be over completed

Operator

from question with Emmanuel Rosner Deutsche Next comes Bank.

Emmanuel Rosner

a again the on questions, backlog. to was of up I couple follow hoping

year's it I last pieces So at million about to was are X.X was billion, a business or trying And down maybe period, stand-alone what angle, pace? basis, X-year growing the if fading? is what BorgWarner of XXX a of what what are I'm like pieces So backlog, slowing from year think for tackling sort it sort which a different understand take really I year. of was the half which on either

Now also XXX terms meantime, a years. [indiscernible] obviously But the in in has worse about million light you're outlook, you're talking so, Delphi the you vehicle production of within it. gone or over the year X but still $X.X integrated billion

you And can give sense the sort how a in a backlog, takes level of and guess, are puts What do you within please I outgrowth? revenue so us of, shake similar out of your with that?

Frederic Lissalde

that, emissions. XX% very points. south that Emmanuel, that happy backlog in BEV that which and bit say, XXX basis all-wheel But line is a go on of e, China, XX%. over a high-voltage past the those discussed small that XX% e-products. little is This and with fact of we turbos leading rest good drive very of very, would in very, products performance. in as quarter, the within to I I'm what except pure is And is backlog discussed the the is before, outgrowth to we with

it ability ability segment, our to this additional our it leading volume content to segment. this I to speaks volume per growing think in deliver vehicle to in to one. win speaks growth And

good pretty feel I So where we about are.

Kevin Nowlan

is XXXX. Emmanuel, correct, to $X.X number, thing billion one a we just X-year XXXX just the display And to

Emmanuel Rosner

to well was across break down guess versus hybrid EVs, technologies. versus I Okay, makes backlog as And I yes. No, one the then is sense. it maybe that's guess that way you used

So for would backlog? a your you similar breakdown have current

Frederic Lissalde

-- we don't XX% again, CE H, is BEV. translate are e, is products okay? XX% the in And in but in either into So rest backlog that of or the

Kevin Nowlan

to sure the that have effectively the really that's that e-products, visibility XXX% net e-products the a of net focus starting this the And bit, we've electric a we're you XX% and about more truly basis basis how on make to to really point on And referring net and really then XXX% we on broken focused coming on. hybrid, backlog backlog electrification battery vehicles. we're of of from including over vehicles. backlog applicable the a more little net to over hybrid talk But you of the hybrid and electric if is it electric. that to are But you're as is out

Frederic Lissalde

That's right.

Emmanuel Rosner

you state? R&D needs an Okay. electrification the view like state sort it as Great. X% to And of Or a larger revenue, of investment? multiyear sort is a steady going then as follow-up, new initial it or towards of

Kevin Nowlan

Yes.

little we going of the expect in at with to We margin R&D look we look next ability as our we bit that X%. line couple the on low X%, and targets level, higher our to years, ahead out still that as ahead over as that look deliver XXXX. to our is Maybe than a be even Xs to

that planning to in electrification, So the seeing momentum we're have X% X.X% of more going the to a coming upwards that the over marketplace and wins that should probably the because invest that in think we perspective, aggressively, years. I of continue even from we're think you in to range

Operator

Next from Noah question with Oppenheimer. comes Kaye

Noah Kaye

free flow. compared got I'm the glad strong little is flow a Because we to performance to very the bit strong, consensus. cash guide cash touch was already on and very

about fewer a the little Can a conserved if range back this what talk product this that you of the towards When, we the give on X.X% Near can So little see I sales, you low relatively XXXX. CapEx year? that us after of end historical of of reverting in low you Are guess? X% component would the bit CapEx of sort drives or color launches CapEx sort level? at X.X% all, of there level? bit

Kevin Nowlan

the range or X%. last that know X.X% us I mean about in being years, over toward few at progressing you As even I look we've talked

more the year in This it's go-forward that to been X%-ish think years. over to be investing a we've I think mid- planning bit that we've pretty our actually that basis, basis. on to years, CapEx few little and lighter, investment the scrubbed a last see in And you few a comparable of we've the as high going last actually over probably types range can but really looked X% on go-forward I at range. been we're

right towards years, it's for you to of a see. think ZIP can way of see in probably little that it's will think planning this us. that year, code bit about kind the you I trend up guidance we'll higher ahead Maybe upper the think is coming as So end range, think X.X%. the for I the it in But X% about

Noah Kaye

I And portfolio about integration company then has the opportunity, in looking talked landscape unmatched Delphi, M&A around what And electrification. here. a question and maybe you're and particularly for pretty and announcing past, after really the the on capabilities for think a follow-up broad powertrain

be So about at you what would understand this point, be? more help might competencies scale? it as the you M&A needs, or about us priorities Can at look

Frederic Lissalde

-- about predominantly. So is I'm now Delphi, happy to no, And the combination -- electronics, in gain on Delphi. track. scale was very the we done software power with can electronic Delphi think and

You heard that saying really me is the strong. team

the disturb where focus to be battery stronger And electrons the technology. going go integration technologies, us as Now target mentioned, it's Delphi new of breadth, vehicle. we -- it's in into around to portfolio with -- base looking that accelerate. time, will not technology the focus allows or shared the vehicle technologies strategy focus, and integration. Investor to Day. be be it the I -- into PassCar That's commercial elements this we We're don't electric the we to time key breadth want for not and And a disturb that -- a will we're all at And new would this Delphi in that. clear is with will that

Kevin Nowlan

Free cash flow...

Frederic Lissalde

is are cash about able been years X, mind. free being flow questions do a our to with two two focus strong cash do just us on X said. flow to of things, since in right Free ago other. strategy those to linked the thing I what the enabler And each has And that

Operator

Next Brinkman JPMorgan. question Ryan comes with from

Ryan Brinkman

potentially commercial to facilitate provide you motor are about talk motor? of X in? about there's to vehicles use that you Do supply kind of used announcement electric So have thinking this commercial this will the into into cases? the motor. can for or the electrification? the different they an able variants? how And overview you vehicles, different commercial What could the vehicles different be the to XXX-volt Regarding potential supply Are other vehicle for products you of commercial use OEMs motor

or I industry other industry? your for carbide think there's the inverters some commercial thermal are light silicon vehicle for management. products But applicable also the

Frederic Lissalde

variants types motors, different for All from other is the top On we customers. be of our The demand functional available into can do commercial going and for PassCar are are commercial we different motor products that It translated to demands. a family power used vehicle. be of for demand of those that vehicle product have controller.

know You area. the that we pack also battery into vehicle commercial are

really market we we're be of -- The also, important segment think, we profound, and will ready. are electrification vehicles And for us. those is this so

Ryan Brinkman

I if end is be XX% too commercial any outlook semiconductor your have the light And supplier vehicles able XX% from light more the thought of assumed, see direct just peers expectation more you Or some vehicle light 'XX Okay. have maybe semiconductor into of bit XX% power your I issue, point. weighted looking you're interested your which in you midpoint time, the if conservative know for But your a I for that to to X shortage issue, production global rolls XX% geographies? don't your for any you for units. about lower indirect up an in is production expect at what weighted commercial up I XX% the in seemingly and markets more at to globally. other to that for optimistic than electronics it which given same know, you Are us across to at million geographies, guidance IHS' global production mid-January tell heard quantify components. for And vehicle impact and I'd or plus customer this light your at exposure at versus incorporated

Kevin Nowlan

a in that breakdown in appendix in of visibility. XX to vehicle, and the Ryan, commercial it's that the our actually market vehicle with slide materials the you using to we're Slide total, respect light included backup. assumptions specific we by even have geography help in

to our to to light market XX.X% blend XX.X% is vehicle in for gets vehicle So Commercial XX% That X.X% growth to X.X%. that's global weighted range vehicle. you global which is XX%. light the the portion weighted XXXX,

Ryan Brinkman

helpful. you see, just on indirect the think do I super And exposure? any or it's semiconductor direct issue,

Frederic Lissalde

going. systems We've direct and So through amount to subsystems. over everything of exposures a we X, hoops have X vast been the keep delivering months are since past we jumping electronics

of And the the the So than impact overall, our vehicle I being including, would slightly direct or good, of indirect. that end the guide, guide, are say, exposure. exposure an of we far, the year. from for X low low end more a full That's on so direct million see we in

Operator

Next Luke Baird. Junk from question with comes

Luke Junk

wanted ask about I to first conversations. customer post-Delphi

the assume versus at line conversations I any your expectations additional those of you've on provide based you can So Fred, time most color wondering into tone completed on put going this probably that meetings there's out, those you've the the point. And just of if process.

and said just you could yes, that. positive, You is customer on feedback that wondering expand very if

Frederic Lissalde

CV. so more PassCar see I positive. very XX% would we've and than Yes. being all -- covered synergies. the I customers of of planet areas yes, on X It's

combination. the are BorgWarner's financial will BorgWarner obviously product prepared combination, booking. booking. of combination And is And that customer the will that When brings remarks, example an First, is alluded we and my this time, take a bit in be more product little to but strength BorgWarner last for intimacy, system a when exists of technology which booking. one Delphi carbide, brings that didn't example silicon BorgWarner have, I

Luke Junk

then U.S. if could another and regarding ask I emission standards. Great, question, specifically customer-related

month, the that wondering, their place sort the around et just GDI, emissions we're seeing has of And that conversations at yet for turbochargers, back least in I'm specific a rules. has changed lawmakers U.S.? the to now support cetera, So Trump-era away from the for your been Biden administration

Frederic Lissalde

accelerate accelerate. with with would We're our are our battery gains a product the great technologies at to pace very, perspective, in And discussion not We're vehicles. discussion electric to a to our already seeing efficiency leading good we like perspective, any impact from very North to from they customers. technology portfolio ready to American

Operator

Next question comes Capital RBC Spak from Joseph with Markets.

Joseph Spak

more at One maybe crack the backlog.

think both moving with electric. does a bunch hybrids, combustion on of you that XX% the backlog? under also pieces, I XX% hybrid, the integration there's previously, talked look Recognizing Delphi. outgrowth, on What and about like now X% customer but plans new of

Kevin Nowlan

we give year For going ago. in tracking wanted you still go outgrowth today's toward performance. a just that that in our be range, through detail. profile sure made weren't about And meeting, to We we're as midterm a we understood talked that how to to we expect mid-X.X%

think wanted make I breaking perspective. have we you're fact electric. in net we're that anything e-products, than be items a XXX% going to hybrid a and that of XX%-plus the continue are basis of of to sure the the greater coming today backlog that to out today combustion, in than and from aware on But or not down further hybrid electric the big-picture are we

Joseph Spak

probably Because and follow-up, you content. later. a the as that were pre-Delphi. time think hear did you of the sort recognizing we'll was about more Like numbers just addressable Maybe thing right, those last I update, Okay. gave one

on XXX, think And So like now was combustion, before just before. it it's looks And it on bit X.Xk. two. a was electric, under it's like XXX over I little and

couple a on of bucks hundred higher So each.

that get And with have changed, Is used talking that all? at to rate the think you of changed X/X on especially of let us give your that you participation assumed roughly stuff post-Delphi? an like You think still some Or about Can electric. if were you you content. average what I also has inverter can CPV know about? the numbers

Kevin Nowlan

Yes.

vehicle ago. I we've numbers of talked the opportunity think the per on back actually put months here on those out a that couple earlier about we content slide,

you the they're BorgWarner So we've electric sharing opportunities. basically of last content at the been the with look side, quite couple for bit. you the increased legacy a number can contemplated has see and combining what obviously consistent months, Delphi When which

But we have technological Before, leadership had even in inverters to because Delphi. that with has. position scale capability in at light in didn't it vehicle the have inverters inverters Delphi prior we we and there did

the dollar that then to think on increased amounts delivering content I Delphi particular power table. the increased. So that of of some And electronics opportunity has probability other capabilities, because the actually in the of brings us

And more color you And be for so little we the think the back peeling we'll years. business be expect should watch give coming more Investor to talk here we I data, over the a as possibly onion how bit the giving about or Day. on evolving to

Operator

Barclays. comes from Johnson question with Next Brian

Brian Johnson

I'd than doing love in just backlog Rather strategy. But some much not ask going clarify Yes. your out random hear inverters. what's but after how slides want I'm on is in-sourced, e-motors some inverters. our versus you about your [indiscernible] within questions, interesting discussion to housekeeping December outsourced versus e-motors to put in to what's you,

drive and third, you of into So obviously in a if a lot just hood the not then of with CV, the put world, motors that most, you in CV -- then traditional in-sourced, the update on Meritor have or and set. talked within being XX% that, and where outsourced. you This axle is motors like what transmission. are a in of sector? you're through outsourced, going And with questions. the more market? background and commercial vehicle under seeing do the to Dana that line couple you XX% something the to kind win based of Kind integrating e-motor looks of And this CV pivot any freight could second, on see Do Kevin's about given talked the something be about all,

how as well. would product that be helpful technically maybe works just So

Frederic Lissalde

has view outsourcing And in and our PassCar applicable motors our our be view December. changed what both versus that not in-sourcing has of in of family can changed not either. Brian, from presented CV we

and CV two market PassCar forefront so But it technology and of few planned our and be this And some booking segment portfolio one reliability. dimension. ago, is the CV we getting another and we've business product a always from to learned years certainly those across at started to

Brian Johnson

the versus And being from in of axle? axle in the away terms

Frederic Lissalde

if matter or away is doesn't the it axle. us, the motor For in axle really from the

are as synergies motor able great going controller a and to it. think more very on motor in not need going a saying density will You is to the controller, motor supplied those to more smart the high-power together. I our for customers' What and always with life great we the easier wanting be developed we're to that a make middle very controller motor have and and customers are of supplied attached forward motor --

Operator

from Adam with Morgan comes Jonas Stanley. Next question

Adam Jonas

write-downs. first tech, asset aggressively some been One the Auto plans in announcing next have right, ICE question, on are stop one planning years. sales companies XX follow-up, to to and decommission out,

some engineering get not Could the to at all advanced if curtailment where a the potential wondering R&D full see the scope of the Are impairment we that write-downs run such year see your upfront point it? time, same be ICE write-down by in the reflect this not IP their of -- cycle assets you that we investments I'm the some you might compensated you of could tests tech X? So may next given BorgWarner your useful trigger or or for at made And could OEMs the lives? curtailments, to auditors? long-lived for and asset past behind

Kevin Nowlan

Yes, at sort as the accelerated for investment instance, see comes don't the any the the make of mean bulk depreciated it to I we asset we at programs. Capex, life think we look I the of is moment, of over when write-down. it

basis. those as some then programs of And to turbos space you in amortizing and the some movement And grow our continuing think even and hybrids, towards EDR. mind, core and ICE businesses so VCT on whether are we keep in of are an really we're we assets the you that supporting the just assembly see assets And life think we is then over footprint, terms when manufacturing basis footprint. way of programs of the the of depreciate again, model that But predominantly there predominantly in are business support. remember, to our of

that And can ahead footprint actually if different leverage we pivot. in we using as look we need so to ways

Adam Jonas

it's backlog, But a just a you to said vehicle. and XX just back the Slide again, going And pretty Great. net previous to described way light go follow-up, simple it question. the I'm

no bit Here that there plus net answer, And want scope mid-X% vehicle, I the because clear backlog, definition: growth think change would elaborate didn't I of a just or aftermarket more to from light wasn't aftermarket. curious the -- that CV, an extra previous then just part it quite if was way you it range. described it's confirm contributes now. definitional backlog the but right the What much that to of I wasn't I'm the to ampersand? how the be have know to

Kevin Nowlan

portfolio, has one a Adam. the Yes. the Good thing I questions, terms the that Because Delphi in calculating growth way in of the vehicle vehicle then the market for measuring light become much vehicle revenue comparing acquisition, that commercial organic using market. and to of bigger -- against part commercial market. with we're we're way addition our that's backlog, weighted changed mean especially assumptions is the now our we're

revenue outgrowth we're as one perspective against that a markets. that do markets. aftermarket measure Because against that we're though, dollar OE we excluding is measuring in of generating. has measured but measuring included and is outgrowth, those So the have measuring always we When the we're we're that change we're the outgrowth, what a really in the against the backlog as markets, we measure totality then from aftermarket the The measurement.

but see any backlog mid-X% you in tailwind the that the from math comprehensive. aftermarket the range, mid-X% range, actually when So include doesn't is

Operator

have with that David comes Kelley We Jefferies. and question one from for question, time final

David Kelley

XXXX. the be likely thoughts is shift on And carbide. much how I in to follow-up competitive billion view, you to as maybe X carbide? on X-plus to inverter discussion, silicon that, inverter had believe as of previously how the addressable silicon inverter your also to by to market directly appears might were market just landscape noted curious We or a to be transitioning And curious just hear the your tied billion

Frederic Lissalde

an we're leading about that fact enables losses So silicon laser-focused voltage what level. also fact we're all module, technology carbide the silicon that have it's customer And a development we integrated vertically lower possible this bit. it's is highest ASICS, high world, and software market and with our the and have happy we're higher and The efficiency. And And -- we carbide. efficiency. power in to advantage And with into enhancing am values the very I high-voltage that quite seeing. a that also certainly I'm

David Kelley

carbide one Okay. XXX-volt for a then silicon acquisition. prior Got quick inverters. silicon That And as established follow-up, just believe had Delphi partnership with Cree maybe I to your the it. was supplier

should guess also, transition XXX-volt here? that of the that supplier go still they at of you big are for I a, is forward? some be So part And partnership growth the referenced play the a

Frederic Lissalde

still the exist. of will Cree sourcing has silicon nurtured. comment not and is changed partnership being but about carbide, not the I relationship with The

Patrick Nolan

your I'd that, questions you With great today. to you. Thank thank for like all

any out or me the to If have that, you follow-ups, ready. Sharon, free reach to please close feel With call.

Operator

the conference call. conclude quarter year does results fourth BorgWarner XXXX That full and

You may now disconnect.