BorgWarner (BWA)

Patrick Nolan VP, IR
Frédéric B. Lissalde President and CEO Director
Kevin Nowlan EVP and CFO
Christopher McNally Evercore ISI
Luke Junk Robert W. Baird
Joseph Spak RBC Capital Markets
Colin Langan Wells Fargo
Dan Levy Crédit Suisse
Noah Kaye Oppenheimer
Gavin Kennedy Jefferies
Brian Johnson Barclays Bank
Emmanuel Rosner Deutsche Bank
Mark Delaney Goldman Sachs
Call transcript
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Good morning. My name is Jerome and I will be your conference facilitator. At this time I would like to welcome everyone to the BorgWarner 2021 Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]. to of call Investor like Nolan, to now President Vice Relations. would turn over the Patrick I Mr. Nolan, you may begin your conference.

Patrick Nolan

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

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

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

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

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

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

Frédéric B. Lissalde

day good and everyone. Pat you Thank

revenue supply flow. our With quarter X, Slide proud sales, First over component strong incremental free under quarter the on cash XX% very and despite margins our with just X.X the second ongoing increased in organically strong performance billion headwinds. of in I'm

we're That's our offsetting as we discuss headwinds. higher in increasing will our the full guidance for execution. believe As Kevin other synergies, growth short-term and year commodity

very highlighted very going AKASOL see, published. spirit strategy sustainability about I'm in technology, few June, to new our vehicles product great secured I'm The what is our forward, entrepreneurial I like our that with Now key one team and vision in All topic proud to I mindset, world, great And would moments. a report for our is All possible some about people just acquisition which sustainability we called Starting a is to early of AKASOL report resolve positive and It takeaways for X. was our the efficient from that highlight of BorgWarner. will our sustainable welcome completed awards speak it over-arching on cleaner into to multiple where I mobility. document create testament sustainability in commitment shaping nearly energy an global things. do enterprise compiles our of the for and to future more a Slide XX,XXX to Evolving when right Evolving electrified

fostering shows focus. well communities. are mobility how illustrate to And a products data We parity our payer neutrality reducing live to of the goal carbon our emissions and on our sustainability which our achieving Scope improving all report safe includes of analysis The proud and accelerating to XXXX. our in extremely are carbon results. we our workplace clean back stated we're I'm world with and giving our diverse equity footprint our also are X technologies, way by

our then, approximately of the detailed we pillar to have stake forward of offer on we have to share through X. Moving purchases. takeover another ownership increased additional Slide on AKASOL as early XX% charging Since completed June

new major bus from of electric will and commercial business AKASOL expect manufacturer XXX% supply ago. of forward to Belgium. informed high out customer’s ownership. four awards. our to in additional Last their AKASOL new squeeze starting months for and XX% month a second achieve announced systems a represent of also their to project secure M&A of portion perspective, to charging process we the battery to an supply the vehicle agreement towards AKASOL progress AKASOL XX% bus we the systems third just continues to announced to in generation our intention city have energy all battery To We XXXX. put

product let's go Slide Now other and X. on awards for China vehicles new at recently electrified to look announced

unrivaled announced inverters Great both electric these with leadership inverters applications technologies we functionality. Wall different awards and our be we on have dual can one inverter electric in globally. By unit into to Chinese in customers. control A hybrid weight compact Motor The package confidence built and featured electric these another new trust motors vehicles not provides inverter have our the while for electrified product we two multiple combining First, power cost for and dual advanced only the will reductions. OEM. plug domains but delivering dual single also contracts and and drive OEMs showcase electronic These supply major vehicles in

a advanced of to motors such improve This Also output addition downstream award. size additional functionalities mechanical and like the overall the in already that us hybrid the software. This electric drive [indiscernible] ago capabilities to In competitiveness is months battery another vertically and scale our one these new battery our announced allow to help integrated the world electronics I iDM mid-term one three-in-one programs as product revenue opportunities, also and with biggest few would highlight than has Hyundai. vehicles.

operates in a manufactured in BorgWarner, electric motor, new features We our our iDM energy SOP It this developed, by has our and maker are power box, gear at power integrated with electronics. China kilowatts. and a with of XXXX. Designed, watts and XXX luxury partnering leading XXX vehicle peak

much through products some improve Or advanced XXXX units for the already $XXX that's way, developed awards, Slide, the high scale. operated of This I BorgWarner heaters to another from organically to high product put on it a in close meaningfully expect packs It XX% by we great XXXX, Slide customer EV now on the delivery with as the the for today EV million manufactured in helps high rapidly by range customer program Now by on new business are temperature XXXX. This like this to the launch battery and would and the electric entire our is to our And an We battery we passenger XX% coolant of the not shed lines business battery our of account planned charging battery does forward. ideal product revenue is product in with units see at voltage and profile of level X like more get can million still content. expanded adjacent by grow the to With account XXXX inverters our heaters as expected increasing of to a multiple revenue as an line existing chart contributes or light iDM vehicles CAGR. example optimal but to recently the attention Geely. product comfort, expect while controlling XXX,XXX our coolant at voltage X. the line you to motors climate. to by commercialize also by

outlook. results and our quarter our let So me second summarize

margin the per cash top well believe line towards and objectives. results free year we're full were impacting guidance. growth The our strong We're currently configuring tracking challenges delivered strong adjusted second and full our and the increasing year particularly We earnings we quarter revenue flow supply industry. share

long-term we about excited these near-term our results, look positioning. As beyond I'm extremely

the inorganic to electric for continuing to develop continues both on targets, approach new efficient that vehicles revenue to that to system focusing secure to are support add iDM portfolio pleased the Kevin. our like energy business profile. the We lastly on technology and level. a clean and I'll turn component supplementing and products, and call our acquisition additional great on like AKASOL investment I'm scale the our see growth of awards while With solutions to disciplined family BorgWarner long-term we're and over our of

Kevin Nowlan

good you, morning, and everyone. Thank Fred

details. going we right the this get of topics I'm number to Given morning, dive financial into to have the through

turn Slide let's XX. to So

year-over-year revenue at Delphi begin for revenue pro XXXX under which look $X.X QX, billion, with walk we from As of includes Technologies. just of million revenue our we forma XXX

and of varying the quarterly performance the revenue production supply our by our more than it our difficult weighted we year-over-year levels compared in industry the with XX% make changes growth customers XX% to increase was quarter. The conclusions a draw Then, year among ago. year-over-year Nonetheless, were from pleased disruptions in increased in outgrowth organic XX% from currencies Foreign a to figures. significant average about market production.

of exposure. in in double-digits the China, regional $X.X outperformed And injection. America our performance, growth due VCT, driven we and fuel the at by just all small turbochargers, this outperformed Looking and driven in by in under by double-digits, market was we underperform growth QX. fuel by injection. customer DCT, In gasoline all-wheel also sum primarily revenue to of drive, North we in market The billion Europe

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

with forma price adjusted on Our This impact related margin a this second to billion of about over foreign higher of million synergies amortization. on exchange, margin experienced commodity conversion in operating XXXX. X.X a On Delphi volumes, operating excluding strong costs yielded of million translates basis restructuring and higher performance, income given were increased $XXX comparable by pro quarter excess elevated compared That particularly adjusted and $XXX that quarter. loss quarter million, second driven We the XX% during incremental to operating purchase the of of $XX pleased we income of adjusted sales. savings, of the was an supplier XX.X%. in

we're us inventory we investment of production during free manage the the quarter, of environment. on which flow to proud Moving in flow, $XXX achieved the that an positive despite was challenging cash cash million to help second better fact generated

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

previous year our and as the reflects is the American reduction what will of global As in vehicle semiconductor in is down growth. This industry for of on X.X% North the to you expect to our we improve to which prior than the semiconductor impact in outlook we the X% sequentially range a increase reducing which the market markets expect production, the last shortages QX our ongoing the weighted We light half and XX% European light do from production XX%, see, saw industry believe quarter. assumption we and of of lower industry from impact increase. to our shortage vehicle can quarters to second commercial be fourth vehicle of relative third expectations

production to to However, QX we're and lower levels. constraints revenues half QX QX not the our vehicle mix expecting commercial given in supply ongoing varying return on and impact of second of the customers,

XX. Now Slide year financial on let's talk outlook full about our

$XXX roughly million assumptions see to $X.X expected end You from drive our billion. are can an to slide of that prior in increase market the revenue

which about drive Next, assumptions, XXX market basis This increase delivering of full points, points. margin $XX million for to of $XX.X compared the to X.X%. expected we guidance cost XX% operating of a of currencies $XXX acquisition XXX to on foreign cost related million. Based XXX purchase we're meaningful billion to to relative form these stronger we $XX.X XX% to revenue is a before to than of the up we adjusted from synergy to revenue. from benefit AKASO, pro From to of guidance XXX margin in revenue million basis incremental Then, our a step our XX.X% higher price full margin accounting. business XX% our the approximately incrementals of expect synergies which forma to XXXX be to XXXX, previous XX.X% of year of contemplates $XXX related in $XXX is includes in out the XXXX range growth low a benefit XXXX perspective, year and Delphi organic guidance XXXX From adding revenue year projecting of margin $XX a our of the full pro in to expect our range range million the total billion. previous million and million be impact to perspective, the $XX

by is line But to which margin expected. the in momentarily, year to are adjusted $X two the share. EPS in favorability things; expect to this free $X.XX of points. per realized diluted cost prior continue XX an And we AKASO Partially finally, headwinds, million $XX $XX I'll that second, we'll prior expected basis are worse offsetting negative largely the guidance in faster flow expect simply $XXX still guidance. range we that prior That's we we're full of This deliver income. outlook. reduce revenue with discuss being million previously year. our is to sales a expected. As expecting capital And net free offset margin the acquisition increase synergies we're in $X.XX adjusted to for would of with company. is this $XXX detail, million the on outlook represent our to the share, more operating margins in which than these we holding previously diluted XXXX commodities record year is working and impact drive from anticipating generation of first, than million, two This per even flow an to as our our guidance $X.XX the with our flat outlook, now we're higher roughly full cash cash for from full range increase higher Based

financial of the on update Delphi an acquisition. for XX Slide to Technologies impact the turn Let's

the realized faster earlier, to we primary driver expected. reductions headcount of than execution cost related planned previously quickly our SG&A cost to alluded are I more synergies the is to related being energies. transaction The As

point, fact, of XX% completed In more at headcount with this synergy reductions the plan. we've our than associated

our cost that $XXX this we cumulatively $XXX the million cost a $XXX year. is the million synergies expect As by achieved to opposed we increase as to acceleration million XXXX of synergies now overall be our clear, million performance. is result, of synergies energy be But to in which the $XXX timing to million, of end of total target to an to $XXX our means unchanged. have Therefore, of expect an

in tracking of also ahead XXXX higher to expectations. synergies, is contribution cost our original Delphi's revenue addition In

to that the adjusted our we combining company. electric $X.XX. pleased award closing transaction dilutive expected We're a a note by is revenue two in China at iDM capabilities, progressing that is with XXXX been beyond the of great from a capabilities, now to of and as components factors, the done $X.XX EPS Delphi operational with awards financial also that leveraging Fred well. of these positive As synergies approximately accretion to to the are other very strength. through commercial the a look we leadership Delphi’s associated $X.XX XXXX, the of we've important the And earlier, mentioned systems result teams be impact across acquisition integration our and with technology vehicle result the testament secure to awards a as generated work these result and being the expectation it's This BorgWarner’s able relationships, including versus to

Let's Slide a turn XX the impact to for summary of financial of the AKASOL acquisition.

to expect we sequentially expect million $X.XX next to of roughly expect to significantly each grow with the we conversion contribute business grows AKASOL the to to is reported XXXX total a on over XXXX the term see, amortization. can you AKASOL which with years and results. excluding Then amortization. medium the backlog. previously impact As XXXX of sales This Then purchase on accretion we second deliver. of price year, the to half an it to $X.X sales see expect is the the the From to in transaction to as We're the benefits XXXX revenue, expected impact also incremental have pleased purchase still range. perspective, expected growth few BorgWarner’s company price excluding would long AKASOL’s by do drive of we sales by $XX in billion we expect be breakeven EPS impact supported those

we full QX cash moderating then considering another $XXX challenges. delivered higher year of production So we've increased outperformed guidance margin, let and me coming and my operating XX.X% Overall, despite million our while commodity market, financial the earnings off had summarize flow. performance, costs. our assumptions and remarks. revenue meaningfully the We And industry industry even a free that quarter solid generated

of our accretion some wins our our Ultimately, to thus turn shareholders. results, our of investments Fred discussed beyond success growth the the charging completion portion our Pat. illustrate plan. execute will inorganic we Looking near-term and back for execution, near-term like over inorganic to call organic and faster acquisition of by that it's part the of the strategy and With pillars that actions highlights the The our value electrification progress the securing believe the I'd creation initiative. from are that, project Delphi future acquisition also try the Technologies disciplined of our drive to towards forward ability profitable of the AKASOL

Patrick Nolan

you, Thank ready to we for Kevin. Jerome, questions. are open up


Instructions]. [Operator

Your comes question Evercore. first Chris with from McNally

Your line is open.

Christopher McNally

Great. half second Thanks bit so to Wanted little the much, maybe about talk a everyone. assumption.

strong something guidance, of the of which the that versus XXX be a but obviously million range, up have half pro on had XXX year-over-year second formas million million on revenue. you first you very EBIT half in would implied down in to your guidance down sequentially, lower based the XXX also Just provided

could you just if be would some So helpful? takes really the puts there, that and provide of

Frédéric B. Lissalde

it $XX speak midpoint range. think But exclude couple I of second sequentially, down to simple to the I maybe million think of revenue Yeah, is which half, why as to impact the first hundred AKASOL is million I don’t when you half first dollars. make relative to a half you of half think second the

So on second the first obviously net we then have million million to incremental commodity you've $XX $XX revenue. on you're that lost going of headwinds, to conversion as second got an half in are which the top half, that But half.

to is basis offset R&D partially Our second being $XX about $XX of up synergies. million million and another half, are things on million to $XX in stepping net a incremental by the those million $XX

half as the of to walk first kind you look that's So, second half.

actually of the if revenue of so keep and virtually look year, second $XXX $XXX bit basically million because amortization mind income second comes which means of to other things being synergies is little purchase plus the of talking an costs, million. about our conversion versus in half is half revenue at to The $XXX a our $XX the but revenue form you things exchange, what foreign that's midpoint spoke I because is FX million operating incremental on is no then pro I and have left, one net improvement downside those of of walk price thing if AKASOL million over no it margin bit year-over-year, think the of there's $XX you're part R&D being million, the AKASOL the offset. of dilutive which this a our this actually a converts year commodity of little means year is guide, up, I of with last our think on the that you conversion

So hopefully helps. that

Christopher McNally

Yeah, and number detail. talk are relative you my that business but significant where the are Thanks iDM. the on that's quarter. side wins obviously if are great think are And inverter you so how voltage to we you bit EV of just vehicles type more the dual we smaller? value, note backlog second much. of the relative then announced about the expect hundreds several year is that you talking little the hard of three of talk Could in or million Of it into these per to a about a may the addition something -- XXX,XXX in and

Frédéric B. Lissalde

what time also the in I we've volumes expectation a we are up business is is field, and up. going it meaningful this think volume book is and seen

happy it's output, power are seen, and the products. power we're from those so an market two hitting with great portfolio, us. perspective, that about and modular you've a programs iDM a different So, building different as very great for And level,

Christopher McNally

Great. Thanks so much.


Junk comes question with Luke from Baird. next Your

Your is open. line

Luke Junk

Yeah, good morning.

could it think iDM on platform we color if want any ask vehicle potentially award could this disclose question scope the in should an at you to as you customer? about of is I across additional the share whether the cut First single or that the there's today,

Frédéric B. Lissalde

iDM -- iDM the a now right is power So level. the

that power to across within level, customer for So level. the that cuts tailor that it the vehicles wants power

kilowatt we'll I can level. starts across with It the So platform the color power XXX that's give you. cut and

Luke Junk

seeing had you. one that's Asia now picture, five these here and in better March awards deal, was in is of closure bigger even in then we're And from that Day helpful. in consistent that interest you've the highlighted Thank maybe anticipated little of is year out not here six you to to Delphi in booked say you filters a than the Asia months later, a general, even your of Okay, the a couple level Investor it March? iDMs at is the it had still with or of fair

Frédéric B. Lissalde

line and with an about we is gain This into and the in standpoint. what It's is going in very we competitiveness electronic EV to very, house received. that software we're scale happy that where from motor we is market market the bring And played very acceleration early, music the the well the bring technology with is where currently expected loudest to in this that. the transmission,


Barclays. Your comes from Johnson next question Brian with

Your line open. is

Frédéric B. Lissalde

Brian, are you there?


Barclays, your is Johnson from open. Brian line

Patrick Nolan

Jerome, the we question. go can I to think next



question next Markets. Joseph comes Your Capital Spak from RBC with

Your is open. line

Joseph Spak

just much. to the so year-over-year thanks materials? million second time, of I think does as about to do sort very some remain back sort policy some so there, of to I'm in on a headwind recoveries those you on $XX this half confirm get want just raw the on you just recoveries talking And I Thank And I into you're we half or to for along could of because half. thought guess XXXX, you over helpful. was it headwind to or get start another begin the you us that. of like here that seems tend remind that the about your bridge also following if basis, commodities, walk, first if

Frédéric B. Lissalde

Yeah, I the think right. got you've number

second half a year of at basis As $XX on million you in year-over-year range. it's the $XX look the to million the

a that And right. of net net the our is So you've hit recoveries. number, midpoint exactly

lags results recoveries to the are are those be it as bulk recoveries, relates Now progress timing there to the we our some in expected but year. as obviously, of through

next half that tailwind But little of of a heading net recoveries the number quarter we're into the a there of so that year-over-year might of basis about already. be is in the year bit a And the first back the XX year. talking XX on to

Joseph Spak

So, an I recovery absolute there's year, in these timing? mean the half it's fair -- assume then first somewhat to of level by some commodity levels at mitigated headwind a if even hold, the it's of if maybe still next

Frédéric B. Lissalde

little a bit. Yes,

the million XX we exactly we million to restructuring said another actions any with actions of were million go unforeseen over call be it first negative So would as and $XX to $XX QX of and that's extent year that into announced this got because Delphi from time, were that second the to plus to or types geared BorgWarner of continued to We've ago year-over-year basis restructuring certainly another tailwind XX that it on risks. as the relative which our XX carries incremental year. we half to XX incremental got year. the recoup there's legacy million of transaction. mitigate headwind risk half and at more of year, into head QX headwinds to as things on we the -- is These course, in the an But We then tailwind of And year. carries definitely next those to that next million the project, Delphi beginning legacy a pieces year remember, the the conversion you lots we of we toward, XXXX know moving over are the months synergies unknown were of next next outgrowth. actions

of as QX be if levels incrementally into an toward would but takes and we QX. year's held, next commodity year, incremental So lots there next there's head this headwind a versus puts heading

Joseph Spak

is investors, the then we've second is And getting just Fred, maybe right. a question Okay. lot been this from question a

XX% I slide Analyst sort So whether outsourced. do it automakers would themselves. your quarter, up and like announcements show trying there's more seems the others inverters of a of like electronics you It to fit power some put Day, be [indiscernible] more you during at to think of was

sourcing, just definition -- it view like these more would the but seem is the help but in seems like necessarily might OEMs with there a And actually is by in I'm make like your or so you issue, build. changed has curious meaning like mean maybe this in whether of it it won't challenged. design, some reality cases they OEMs incrementally figure that like

Joseph Spak


in -- we already think And we've a million by units strong believe are very we X.X I relative more in very, position. announced Europe. than XXXX I a in

inverter booking change. math, volume the since more it's for happened. then, that do share see of European We you much don't significant and a overall too If the

I and think are two due field to three to it's for three this successful reasons, we reasons. in

and product more efficiencies. silicon capabilities, future. least, to electronics have it's we strength. we software I we with have. XXX not our cost innovate we are be the in in maybe business think voltage continues modules, leveraging rate this to And degree And scale. believe silicate development, with First, continue but a and the leadership. whole house last and reduction The power have is we XXX I integrated more carbide, different And that absolutely that also a high of Two integration, vertical

think business. competitive very I a this is

efficiency the at have You have best to costs. the best

a have outsourced position significant of that seeing scale. be very portion outsourced will volume a and about what we change grab And to You very have are to good inverter not in from a to of suppliers. XX% we're I'm confident

Joseph Spak

Thank Okay. you.


question next Your from comes Colin Wells with Fargo. Langan

Your line is open.

Colin Langan

Great, question. taking thanks my for

You've job good done here. a pretty

with it sales I is does You commercial much have guidance. you maybe anything your holding assumption production do with mix cutting the driving your over that market, than expected keep of mean, better? better keep growth what to raising and sort that yet

Frédéric B. Lissalde

is and think we double-digit, in products. other. all market that all performed Europe China the over driven We grew drives under not So, North the performed There pretty in than I in America exposures and we QX. much one product by due more customer to

too was Now is in looking at we're I growth of quarter, moving And lot not pieces. must QX, our finite. that a admit per there

top we're focused the is very Also to the in long-term. So, to line in the way happy very evolving very And our happy this short-term. able year. raise with and be beat

of where cash with booking. been to to R&D investing on that activities I on in the are downstream at want and are the that happy focus margin have order a the rate, people programs very example, we support also and We but And the lot really of from is booked long-term a flow in battery both voltage taking short-term and take the house battery vehicle. for solutions Battery And BorgWarner great solution innovation the example and in functions, cabin two think electric the critical problem can a gave heating. market lot that electric vehicle to a high of require where that solve a example develop we and it's thermal I traction.

we are own surprised from other product integrated have leveraging technologies have and lines. the we be BorgWarner our won't hinting we electronics software You that and

about where term. the we in organic both long happy very and are in So inorganic

Colin Langan

Got it. better, but -- of to guidance your look from thought commercial the color any in on that if it QX getting And actually I QX is at outlook I your down. holding was kind actually market, came

second in business five up actually it's that think of top does that's margin worse hold did So get your it business the a quarter, the deal, know now pretty the larger now? because high half with a chunk in I better lot I a

Frédéric B. Lissalde

overall year-over-year the of back headwinds obviously and an to expect we that one on big that is at impact production outlook. as the year half mean, things look of our the and see from I us a Yeah, has would China perspective we

Colin Langan

Okay. that okay. -- And is

the weaker. So second is getting half

my taking for thanks Okay, question.

Frédéric B. Lissalde

driver Yeah, year-over-year definitely. basis China second a is that. a weaker of half And big on is

Colin Langan

it. Got


Suisse. Dan And your from with Levy comes next Credit question

open. Your line is

Dan Levy

items for unpack quarter there on the that just you maybe and to some the you between from the second question. the taking as outgrowth on follow-up you saw and about in in Hi, good just drove targets? I question Turbo outgrowth. that Can GDI, Colin’s Thank morning. want GDI and DCT in their the toward a driving to especially we're more any color is thinking exactly and there push just CoX shift beds, the where was maybe that in Turbo pushing Europe automakers little sits of what

Frédéric B. Lissalde

VCTs also China turbos, driven I And GDI of lot factors. out grew Europe Europe as gas a Yes. before, right, mentioned and you're drives. by But we and double-digit in

booked hybrid good that example is side, us other got especially with And Bev. you've architecture, don't And -- and And good inverter trainer, business on that lounge don't Europe, that our and dual China in and world GDI the the into fast. and scale pulls power very efficient engine drive it but the hybrid the so we e-side also this combustion And forget any elements. very, expertise in a that driven just with also is forget in giving Turbo on products the are gasoline is ramping that is combustion up of a that translatable by engine.

drive, So I'm that is particular pretty how Turbo don't think think offline it's I or or color all-wheel I sure have can GDI -- follow-up Pat I you. much reason. VCT with versus but it's about the

Dan Levy

still line the is it's rolling year Okay. And that for GDI far of sight in then Turbo that something and the playing Europe, in CoX of as remainder as targets? driving

Frédéric B. Lissalde

target. CoX combustion It meet to CoX and reducing because power Absolutely in it does. trains in car the is the it of and as does an seen, it engines. Absolutely this Europe emissions does. especially does is you've of It makers hybrid enabler helping

So absolutely it help. does

Dan Levy

the with I quarter's Great. a more on Hyundai. which in award just color wanted a follow-up, Thanks. June, follow-up with And then the iDM as a little announcement, last

you be car going content So tighter much maybe take had question to its content. cost, and -- segment it's putting give a here guess lower you in I segment comment content, content can an car is, the but on $XXXX budget A much a there's for or an have if usually A the that's iDM to is

there scale you potential that opposed on to A going C what approach So B that an there that in is segment that it platforms, vehicle about something to unique or it better as does does iDM more or likely an to to doing segment them about into house? is tell or C makes you B tell us segment, up

Frédéric B. Lissalde

iDM award quarter, we but the last So Class simple, Small small. on announced small. A, mean so doesn't

a you This BorgWarner other power different the with all the that. and that made path power or the for inverters And to iDM, twice sizes if ASIC made than make do bigger see with integrating to starting seeing with wishes of we're customer mentioned of Combined who portfolio, sell And a path components. motor A levels, to motors power quarter a with iDM, in happy other we this level power Hyundai. call, different to and of vertically Asia. we're on. we're want are currently modular past a different and one that And customers two I as so as integrator, integrated in very different on we're calls, mentioned house. software the even is in of example in an transmission, inverters electronic iDM iDM last although the output announcing the type we iDMs producing as about great from path launching building

of that So globally a daylight. and you're seeing iDMs portfolio developing strategy of seeing is the commercializing

Dan Levy

Great. Thank you.

Frédéric B. Lissalde

welcome. are You


Your next from Noah with question Kaye Oppenheimer. comes

open. is line Your

Noah Kaye

Good Thanks. I AKASOL. taking the congrats first, morning. your guess on questions. closing Appreciate

roughly margins you assuming the for how over tax more do you estimates and excluding competitive battery And see provided strategically, AKASOL accretion what by in AKASOL understand are maintaining then to wanted amortization. Just time? XXXX you differentiation

Frédéric B. Lissalde

do a respect profiles to time, margin performance and of of at to in think But disclose that this relates can overall but our X.X we're EPS not billion XXXX. you sense what expecting any other profitable get the margin, With some again, Yeah. it's to to margin as a going relative I point it the than disclosing that time. this not to over the pretax at probably revenue think the the as so be year a P&L going assumptions we we're by point, to business outlook math are underlying or

as edge far far few a technological AKASOL, as Noah. As things technology at --

regularly X Gen and year the Gen density power is producing improve this later and are currently key. are being X, able they efficiency and launch they their generation First, to launching

them the be and part currently with are be that to of, the will And voltage have I in heaters. BorgWarner system that and are certainly going can working and be heating customers high we're are we soon our that BorgWarner. that for going will linking the imagine coolant them going expect batteries. they forward. Technologies. to products Now they to innovation and are to coming fully And battery software Those the for of we Delphi coolant elements them link find also going with generating part management from you value for production We

Noah Kaye

Very clarify XXX compares X% that around to million spend of And the just guidance, to previously. R&D Thanks. then helpful. new

so actually programs, is So, help that where levels just of driven R&D just is focus, you prior kind and us to up the by bumping understand, understand? EV are from guidance

Kevin Nowlan

the Yeah. that thing you'll that I'll through take get that, a couple see a guide, of our million. in the look I when things chance QX our it's is because customer perspective anticipated engineering at by XXQ, we go worth you R&D quarter results, quarter. when and had QX about noting $XX had around versus higher R&D you first to sequentially mean, down first net the we our then was second But from recoveries had actually than in we

gross R&D QX at but up was to down. look it you actually If QX, from our was sequentially, the going net

that's beginning And that R&D actually year our what million had is down implicitly about that brought means guide. implied at an our full of We've about so as $XXX million was year from what actually $XXX impact. to the the current

we anticipated being driven higher generated that second than in really And the customer by recoveries the that's quarter. so

the is revenue because as going percentage as percentage it coming opposed down. dollar guide XXXX is is a percent, is reason to a coming at the we look a is the you in gave the reason down And As guide up. percentage

our it's a R&D implying a actually cutting the spend, had with going as just X.X% is now up, X.X% case. it percentage, it's we better lower still revenue is So $XXX coming R&D -- to really percent but because but lower recoveries, looks isn't not our sales the like but spend But which spend, of actually we're million. R&D

what year about million look on we be think a beyond, plus continue basis. forward reduction in a we're expect spend but we driving to the that really to So, recoveries. as we full driven $XX year, to as and R&D X% represents And then that next go going the XXX the that's by ahead range to

Noah Kaye

That's will back. very helpful Kevin. jump Thanks detail. I

Patrick Nolan

Jerome, question. we are ready for the next


question comes from David Jefferies. Kelley next Your with

Your line is open.

Gavin Kennedy

Hi end. Gavin Kennedy is on Two guys, for from David. my this

North in First, headwind a America was you that XQ. mentioned customer mix

in? is far Just to was schedules in as America year customer curious three as what visibility BorgWarner North seeing

Frédéric B. Lissalde

because is volatile, and very seeing still QX semiconductor especially and supply and Gavin. better into we're recovery level QX mix What from the a what QX issues, currently of seeing are we coming that's the

Gavin Kennedy

billion helpful. additional give you on on in be so. That's by switching comment X focused how billion commentary your targeted might can you current it about to billion would Okay. helpful? XX going, disposition gears, on given what dispositions, that conversations And are particularly at Can in Day volatile or call you us legacy you any the these then be X and environment X ice the in next and Investor disposition mentioned year products

Frédéric B. Lissalde

Yeah, I mean, it's in progress.

as they now. growth disposing don't they expected that or leadership, we product Which X lack we're we a to get Just to month the and meet they as in margin to on generating prospects, term And XX or really means either to lack focused of we businesses progress medium or the full as talked timeframe long strong so we flow of portfolio. our announced product objectives lack financial long-term we're lines that cash lack we over billion the which about, billion QX And things, one three at you they right ability. so. noted, XX complete Investor from what execute Day, expect end to means of or

candidate line a our three And tick business or so off disposition. if those doesn't boxes, of for a product if

moving So, XXXX. billion $X billion line end at and it timeframe at continue to call we with Day. we that think actively what in the our dispositions, out deliver we're laid And expect $X mid to billion track consistent point, late or talked to Day, so Investor the this with to then that of on Investor by about at XXXX I we're we of forward we back

Gavin Kennedy

Great. Thank everyone. you,


question next with Johnson Your Brian Barclays. from comes

Your line open. is

Brian Johnson

volt When and by kind not? small and Porsche. around Thank mark Show systems performance volt it. you. volts can was at doubt bigger XXX But the the of that it started in Auto course, confirm Hyundai A And advantages. high I the question market at the of you in the but or with XXX the question is is, you I apologize the was XXX struck opening, if I this covered Chicago the look

XXX runs Hyundai. commercial. in I your it see we EV new know for volts Now motor on

the question are between three, competitors? market Delphi and synergies where my and as one? relative is your doing you product a there Tech AKASOL capable you uniquely converter volt in go AKASOL So is, capability, that your XXX of capability, e-motor packs? from see got to then trend, And big inverter positioned could is do volts volt line XXX Two, XXX

Frédéric B. Lissalde

power increases going answer the Are the volt is The yes. your absolutely we The first is is well Why, yes. is and and down trend So, because equipped, in a XXX it it absolutely. charging density vehicle the question size? time. to big answer decreases answer

advantage heart master volts first volume. be We the which XXX silicon launching to soon, a high one voltage are Synergies, power voltage of carbide inverter. is This at that is high in about made the I competitive silicon master also absolutely high XXX was house volt and very we of one going have heaters. the talking coolant at module, to carbide

our product synergies a XXXX we volt the voltage have high that different XXX XXX in yet will We Brian. heater volts portfolio start coolant at and across running

Brian Johnson

could AKASOL do And volt packs? XXX

Frédéric B. Lissalde

you is need on My this to go I need check but to particularly. one I back yes, answer to that.

Brian Johnson

you. Thank Okay.


question Rosner Bank. from Emmanuel comes your And from next Deutsche

is line open. Your

Emmanuel Rosner

Thank good morning you everybody. and

Frédéric B. Lissalde

morning. Good

Emmanuel Rosner

the a The to then XXXX, headwind customer going market? mix should talk solid little in obviously, looking full XXX the in crossover your already around particular, bit outlook. in growth mix you market acceleration are pretty in we year, of a It what you year. make more good for out you more and is does quarter your our framework obviously, play growth for of market little detail forward, in about represent And this you points. this half? improving was see then of second full then to see the first does forward, had a and rethink how growth boosting the mix would you you basis but year, the about you second outlook in market How think question you just the bit this for for XXX second had the expecting the half mentioned of Can then

Frédéric B. Lissalde

year-to-date, first the XXX a couple of Yes. you points at cumulative XXX first I of look mean, to When basis for we're half the outgrowth things. half. somewhere between

think the We for at of we're operating points basis year, we'll look half. we second half we to second probably as the in at so XXX think pace. that that the quite XXX don't be And

mix. we've some probably were the from We've vehicles ultimately The of the from in first some that numbers production production half benefited benefited of OE.

the year. to in full level you So down about that's deliver year-over-year our implicitly half, second half. feel impact the the our which some there's numbers step first and lower probably But good in a points implied to from of is why going sequentially ability the XXX for see to overall half basis second XXX

of terms the and to out give into prepared on on of that. an we previously that update In looking we backlog we'll XXXX not disclosed I we've that get update to translates what future probably as for years, beginning good the give XXXX to next any year. mean, feel about

Emmanuel Rosner

Okay, line deeper would that diving range few you then or and just how thanks. business volume vehicle and think give of of next a of revenue can years. your us of content evolve a second on just profile about sense per the you bit here, the over how little either margin you iDM, And see question

So go like of sort a how iDM you and mid-term would outlook from here. see

Kevin Nowlan

then other before, intensity an in a or sizes. higher our at capital talked to we our equation, they're programs And from X comprehensive product any look the vehicle I'm we X the including the that whether what invested the or combustion not lines. volumes. of iDM business, an side about our be that product on on iDM, to the based perspective to given tend from product are Only content some range much on going you about small I going because allowed is programs, gives to capital for basis. is And margin similar return Our new means of on comment vehicle. the like predominantly volumes, EV color to that assembly $XXXX on product rich on think we've and manufacturing times the versions am I comment for not

deliver to intensity, ROIC profile whether consistent the consistent and And we substantially so portfolio the relatively any programs capital looks discrete means product or that company, not. other to drive approved our program it have margin margin similar we it's throughout business EV on we of as across

Emmanuel Rosner

there that from this? And day target data be one on or would is a

Kevin Nowlan

Well, life a the of program. that's

they programs, when intensity, which So upfront. R&D tends you EV to much be look have generally at our more to tend speaking,

the have all generate hitting over time happens the our growing we're we margins the lot a that as up you're what your revenue ramp you But incremental of proportionately R&D higher in is And the ROIC much is because as the over generating future. contribution revenue then targets the So is of the life still program. coming relative you're and means the conversion P&L mode EV, what hits in more R&D upfront. on to blend that in the across EVs,

of generate total margin It's has the business. over not the contribution in generate investing a to R&D mode, So and portfolio margins will the of while start we're depressed EV the revenue. more the to years support you're we as because that's in in underlying coming we gross the but fundamentals that because growing

Frédéric B. Lissalde

revenue right? said are our additional like the margin things XX% R&D X% for two, R&D I that I currently would is EV quite first profile, mean and And do that -- we or spending and X% add. is our already is we the market that is Two when to has EV frankly. Kevin of everything like is in

we how path accelerating you in deliberate shows that the electrification. are forwards So

Emmanuel Rosner

it. Yes, definitely. Thanks. Appreciate


and We question from one Sachs. Delaney comes have Goldman with for time that Mark question final

is line open. Your

Mark Delaney

morning taking question. Good and the Yes. for thanks very much

to to you've announced. the had on that's clarity have can that give that of anticipating? the you broader on been extent on with and give the your asset reflecting rates that a holistically, was First, few had to was extent for solutions would more of a so you that what more time, know iDM, wins including that you're longer logic a of period win set wanted converting that you set EVs. but for is I Delphi some Delphi company you talk broader technologies, of Part iDM and with I of back when industrial

Frédéric B. Lissalde

which we months is booked after the not iDM, six yeah, those we but very -- it's close only limited systems. important, to So,

We that only inverters think be combination. also booked we could a that booked lot with of

We system, accelerating the battery are system. also software management on management battery

we track absolutely acquisition. synergy expected coming we're line Delphi a from top with So perspective, on into what the

Mark Delaney

it, half to already on a some they going working to and terms supply like views little helpful. bit supply But then talk the a you the versus Got said on chain of are a your talked little first it’s capital? implications with And both Thanks. a do you partner they and Tier and think with and in OEMs from one half. more margins the shortages, want then implications situation change, maybe the that about suppliers the customers BorgWarner directly semiconductor have second bit some longer-term how companies you your the how more may and of you supply and some that of work impact may procure around

Frédéric B. Lissalde

customers trend told that that extremely has products we that our in is not is and the are least semiconductor our with downstream. we on. seeing So, semiconductor But what partner, upstream and -- issue with suppliers. at with that to us it downstream that focus Upstream important thing

to is us forward taught has it keep our think enough. I that when when very And scaled matters you we thing the second we're those is think mind year. have close get in scale next to and The going that to I easier lessons, two move going

Mark Delaney

Thank you. Got it.

Patrick Nolan

questions today. your all great for you Thank

go feel me up any reach questions have free and to follow-up you to close out If ahead Jerome, other directly. the call.


quarter the results XXXX second Alright. That call. BorgWarner conference concludes

now disconnect. may You