BorgWarner (BWA)

Frédéric Lissalde President and CEO
Kevin Nowlan EVP and CFO
Patrick Nolan VP, IR
Colin Langan Wells Fargo
Aileen Smith Bank of America Merrill Lynch
Noah Kaye Oppenheimer
Rod Lache Wolfe Research
Emmanuel Rosner Deutsche Bank
Brian Johnson Barclays
Dan Levy Credit Suisse
James Picariello BNP Paribas
Mark Delaney Goldman Sachs
Gavin Kennedy Jefferies
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 2022 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Instructions]. [Operator like of call Investor now Nolan, to turn President Vice Relations. to would over the Patrick I Mr. Nolan, you may begin your conference.

Patrick Nolan

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

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

from results matters may this call. significantly actual during differ discussed the Our

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

discussion. to commercial Fred. call hear with We these note We will to and the With posted also the an weighted along geographic say production market, us you of our encourage you call we to IR our means refer compared that change page during happy that over When growth exposure. to light follow turn I'm that, vehicle our site. for market. the in to to Please presentation our the earnings slides Web

Frédéric Lissalde

overall approximately very Slide pleased We're our I X. you, America. and and an relative X.X am we revenue for provide quarter X% decline. we to Europe to up everyone. billion about and our share and day, the good update With results company starting organically North sales, were industry both the Thank first of pleased resilience XXXX the Pat, with in on in outperformed

performance higher negatively other and impacted was Our margin commodities inflationary by costs.

synergies our to helped cash partially increases. a usage Free quarter was flow these restructuring the mitigate headwinds. M&A during However, inventory savings and due

still we free However, cash in generate expect flow to significant XXXX.

industry during While completed the positioning took the the vehicle navigating of light drive long-term near-term Santroll's headwinds, our quarter. to We we business. acquisition eMotor steps

our program stock. we M&A In million addition opportunistically of lastly, investment, repurchased to awards. And to electrification new multiple deploying $XX capital we secured

on Let's X. at two awards Slide electrification look

win First, our to battery OEM I'm system. announce first business excited management for our flexible

by begin to We C-segment contributing their with manufacturer our global advanced global to for have in vehicles, B-segment, and tomorrow. been platforms its commercial and of two strengthen over management relationship are delighted for manufacturer equip vehicle battery decades, been with selected to further light this XXXX. all vehicle production solutions We've a leading our working expected by

for battery state suitable charge of during to It electrified and XXX cell state measuring up or over for system be flow battery discharge pack. enhances charge, and highest the individual at temperature of of operating The is and both electric balancing The hybrid the products to battery the designed preventing battery available health consumption management of is undercharging. while of the in battery monitor This example another our great allows wide state cycles. to and range for Our performed battery the battery cell by vehicles. charge volts. the is safety out achieved, each lifespan of applications is of optimizes and precisely system current

inverter dual second our announce to excited I'm program. Next,

and power to launch electronic a dual technologies for vehicle single combining different inverter efficient OEM high compact functionality. can unrivaled dual electric models highly XXXX. We drive A control voltage leading hybrid and one Chinese unit inverter will two into our package, slated advanced our product be By motors providing the we domains, provides with in cost not reductions. also awards while only electric and converter DC/DC trust in These inverter OEMs with option. these delivering leadership we've It multiple showcase have globally. a in weight the built our but an side as application comes also confidence with

for overall opportunities, to In to and brand addition additional hybrid happy eMotors used provide revenue our I'm help second an BorgWarner scale China. the drive to X, these propulsion improve vehicle programs a in to eMotors the highlight additional such capabilities eMotor electric voltage platform. of On volt The company's allow Slide world be battery has their electric generation midterm in our been high-voltage advanced selected system leading us XXX that hairpin award. competitiveness high in will product vehicle. as

winding The first with peak high-voltage is deliver technology. feature These motors over expected efficiency and to in equipped XXXX. mass stator vehicle our patented this platform start production XX% hairpin of

our As more in on eMotor volumes, X CAGR. testament million slide, are XX% to our than the to recognition rapidly grow a XXXX by chart a XXX,XXX booked you from are by units units see the to the customers, can of which expected XXXX,

X. more additional we opportunities by XXXX. is we than acquisition that a acquisition to a of next X million provide the on would acquisition XXXX our to revenue booking with years, brief $XX see Starting to this the expect contribute part to believe to on Slide our volume $XX over one three quarters. eMotor strategy, With could we over Santroll's million eMotor like and revenue, next million I Santroll the two key reach units update

a be impact the to the full We for expect to year. modest negative EBIT

acquire for results. its did we impact near-term Santroll on However, not

a products on global BorgWarner bring by our well to manufacturing Santroll of a added XXX XXXX, larger improvement acquisition inclusive has scale. synergies. in as revenue drive should Santroll's We expect million with that now assumed the and design we vehicle scale, to overall eMotors. passenger suite full and eMotor of approximately eMotor in continue With application capabilities competitiveness vehicles small revenue Santroll, of advance at will as commercial

the we're already we've right that and provided see quarters. side to secured the on expect slide, of the two now success we've programs of that list, we're pursue. position the coming excited we a in the revenue additional to synergy sampling On synergies in And

So quarter let first performance quarter was Overall, and our our results summarize our respectable. outlook. first me

once months again headwinds. being restructuring helping synergies resilience more past revenue cost by we Our while to are implement steps have inflation, proactive the than partially years And to impacted mitigate proved negatively the and are margins industry over and several been volume. these the taking our

As is outlook the costs. and of of date, top the of Kevin our reflection FX outlook our the range, commodity full XXXX year end will industry a volume increased detail shortly, at reduced moderated

However, that performance outlook relative I'm our encouraged revenue improved. has nonetheless

accepting are its and not current cash and We our profitability our on environment impact flow.

book we across turn the million in booked battery more packs. profitable management on electrified than acquiring ready that and already growth of term, believe This future. to excited we I'm great taking We're booking X for optimize and continue secure million systems our assets necessary to technology to call million are on the eDM, to electric X help into multiple continuing we us programs which the Santroll's approximately represents forward. will absolutely and even the investments, vehicles. eMotors, are steps are and we profile. inorganic booked adding iDM, team, inverters Kevin. management great eyes world, X to I'll and billion the believe short-term acquisitions stronger. X.X business extremely e-heaters, become margins business already well disciplined to the to carry supplementing about like product and more growth close we that with longer have secure while in XXXX, focused our eMotor, battery on We're to will our to significant and significant XXXX, support My scale AKASOL lines By now that, a focused over the have measures are together taking of We're With cash As portfolio charging flow. that

Kevin Nowlan

Thank morning, Fred, and you, good everyone.

overview results. our first I dive provide the quick financials, to I'd Before of into quarter a like

is weaker market. largest high in revenue First, came our in our significantly vehicle light of our the expectations, volume at Europe, industry despite which end

Performance Second, for years. that we've last our the the on cost respectable restructuring that and in is performance synergy business margin inflationary supported of our currently was executing been actions was given pressures couple facing. quarter our by

year-over-year just under was to Valley for facility the look for turn X Slide which last for disposition Water billion adjusting a our walk QX. revenue after We at Let's $X revenue, start this December. year's our of past with

the see compares the decreased this you decrease that in just can U.S. weighted dollar of X% means North a by Korea. currencies the to we driven in the challenging strengthen continued America outperformance and This market face organic end. market year-over-year. Then a revenue, X% in ago, beyond about year Europe, year-over-year quarter was to our strengthened $X.X in X% increase outperformance That environment. can has about end revenue You delivered was see sum quarter The from strong of another of That QX. of all billion a by and revenue production. under average foreign

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

adjusted from impact headwinds million that AKASOL. explained of a foreign $XX acquisition million, or includes ago. disposition, net adjusted of of income experienced operating of million operating income in which income we million quarter the The is Valley performance a XX.X%, the of e-products related and the income first Our $XX was year cost by impact R&D commodity of and balance or compares operating on $XXX exchange comparable million, higher impact excluding the the sales. On material the XX.X%, basis, $XXX Water year-over-year of of decline to $XX quarter. higher adjusted operating and other decreased the This nearly

on Moving flow. cash to free

a was production increased usage result ongoing first flow a million inventory as the quarter due cash free during to of $XX volatility. Our

With commercial we conflict Let's you this of this XXXX. you impacts assumption at expect supply in vehicle our down assumptions X% Ukraine, outcomes. of which of and to result light impact additional That's can a increase. industry can of result market in look our markets previous to Slide increase to incorporate of shutdowns a China. primarily light that where a XX, supply global to perspective our When on potential is chain X.X% range as see production vehicle the now our from in range of challenges, the that year, the the semiconductor slide, you COVID-related background see and turn a for weighted X% global the X% in mind,

relative Looking our largest by where prior is see at region, we to this the guidance. Europe reduction

driven we're than which to North a be planning prior vehicle weaker increase of worse for has up market In is markets. X%, is light can to down expect overall of our in China, from the most early blended recovered plus down This that XX% significantly commercial XX% shutdowns assumption resolved COVID-related production of X% by markets And market and the underlying to America, which previous the to the expect the loss weighted outlook. We of X% are XX%. to second that be is half our both This we our in in outlook volumes and XX%. year. to X%, by be June, an

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

our April. $XXX foreign from assumes rates headwind on based million the First, FX an which weaker guidance of as expected of currencies, is end

had currencies somewhat as of of dollar already dollar we've well. through through of the U.S. March, the While appreciation meaningful end the seen foreign against month the additional appreciated April

into But components in the to as region our and the of same year. our that purchase the customers. strategy outlook produce our factored we balance for is So remember,

translational currencies on in of As guidance our impact predominantly nature. a is the result,

Next, for continue as the growth. organic to our up year. our we markets X.X% I end overall exceed we be X% revenue to expect But to industry mentioned, to previously growth expect

almost look to organic to increase of approximately XXXX outperformance the X%. production. based way, means That other performance current year-to-date our pro in on impact our Based our costs. offsetting on we by XX% in to outlook approximately expected fact, XX% relative revenue. entirely expect outlook X% Forma increase recoveries To it both In our our at and to these stronger lower our is industry outlook commodity XXXX expect X%, and stronger pricing assumptions, our prior for is than for an market to inflationary performance of the to prior outgrow another relative than revenue which X% we higher is

inflationary revenue, together, Finally, items Fred to $XX revenue relates a the our these From XXXX expect of acquisition Adding to to XXXX is noted. to of the be as margin billion to billion. margin revenue adjusted year range to This in total add $XX.X XX.X%. basis our in of approximately over projecting margin the of million outlook, operating XX be which Of points, XXXX this Santroll a to point $XX.X forma $XX outlook. costs, just the our and pro we higher million perspective, is or other represents range and of basis we're to it as XX.X% additional previously expected to XX full X.X% commodity pricing result versus about Santroll modestly XX to a reduction points diluted to the $XX acquisition, compared million, this, expected net be relates year. to basis recoveries, XX prior is

to million R&D to $XXX key investment $XXX this long-term constraining relates investment, of anticipates the we in challenging environment, company. a million it R&D not As Despite e-products guidance our growth in support the increase XXXX. this are investments that still

our share. per year Based delivering being prior strengthening guidance $X.XX about year-over-year deliver this operating is of impact from EPS contemplates that the the partially and on million our margin cash offset by revenue by dollar share. in lower $X.XX finally, to inflation, million we is XXXX e-products this That's expectations. important we're driven the expecting note our that $X.XX outlook for XXXX high outlook, full capital And R&D of teens. incrementals by income, the business full outlook diluted to year. EPS our the margin adjusted lower U.S. to Excluding the $XXX outlook. reduction per investment, and of translation The we'll free It's spending alone our $XXX impacting flow adjusted expect range four-year in now

year. start remarks. So had financial let to we my me a summarize Overall, the respectable

tracking outgrowth our coming of expectations industry proved we inflation decline cost year. despite revenue still margins in our digit than the R&D with double into delivered the significant ahead Our higher And material volume, resilient more and investment.

out are the disruptions with ongoing look continue industry multiple we as markets, XXXX, continuing pressure. to inflation likely as production pressures cost to material As balance of well near-term in

time we and sustaining continue to Pat. and been work to But to plans delivering the hallmark strong BorgWarner's long-term managing by team, continue a charging growth under Managing results to call success. how profile, management and to balance at know same that, cash I'd has maintaining we a strike forward. over margin momentum the while turn and between this With our back As to like present flow the meet near-term the challenge. profitable long-term be the of will our

Patrick Nolan

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


[Operator Instructions].

with comes Wells Fargo. Your from first Langan question Colin

line open. is Your

Colin Langan

questions. my Thanks Great. for taking

talking about, the really bad. a that doing incrementals sort kind low you're job a offsetting on the bad million think range? number. about input your mentioned year to bring Just in cut of that commodities. of sort start, and increase quite a offsets suppliers because does of key a are you Where surprisingly And there's full keeping like sort sales nearly of on I are headwind are small pretty XX it that really a commodity aren't What lot in relatively detrimentals that of the seems those as frankly, the other as assumption for good costs? pretty And not

Kevin Nowlan

So a couple of things.

if $XX last commodity of of about and to then about million quarter, we On pressures. digit the double remember inflationary we net having million $XX you talked million additional talked XX headwind million,

actually the million of we're commodity elements, With piece year pressures, net. the to million and it's on full XX the about addition other recoveries. $XXX net for That's basis at $XXX million inflationary the where a both

that's so million. of an And increase $XX

of the from sales sales foreign through, managing by on really aside the of is in terms $XX the exchange. the In the cut, keep incrementals flowing driven mind, million bulk cut

of that at the around in million translates in $XXX is that increased talking the delivering of production range. of million million outgrowth about $XXX lower cuts, revenue. that our guide the If the $XXX we're kind But to you look math somewhere cuts production we're to

impact. the So offsetting it's substantially production

you're is So exchange. on by the translation. lower foreign detrimental driven revenue That's predominantly because lower the revenues, seeing really why not mainly huge a it's

Colin Langan

the Any Thanks. you that like It it. not recent for combustion probably volatility the market Got divestitures engines? helping internal were currently. is on seems update the planning

the this to was target the by think X end I billion do year. of

Kevin Nowlan

involved of processes. process. timing to the market still our some going likely highly actively disposition have But on that environment say We're in that the I'd is impact Yes. current it's

I lockdowns more there's I the to the think in impact in cost around like impact think more of Russia-Ukraine, making until China, a them certain has it processes buyers, the resolution hesitant clarity impact COVID different little potential of undertaking. the pressures, things inflationary of that we're bit

a So I looking think that's cash certain us. to We're at generating selling okay. We're not that a to desperate have disciplined seller. businesses approaches positive flow value

processes to we're right executing market in this there's about until market tell has I for the being situation. impact more these you near term, those clarity to fair situation the the the the But it's in now would that environment progress. think potential are I involved assume So situation. dispositions to continuing This

Colin Langan

Okay. Thanks questions. for taking my


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

open. Your line is

Aileen Smith

morning, on This Smith Aileen everyone. Good is for John.

wanted perspective question Colin's I longer course, to Of flipside to and charging forward start asking plan. the from the a term

mentioned some But around this in valuations the going of markets a with of public from year. be volatility acquisition does a that target side timing may the opportunities capital your for of anything terms divestiture available? change there are the things impacts from what may and You that be in perspective the on private and

Frédéric Lissalde

about of attributes Aileen, the or characteristics you depending it to the I need the think on target. think

come, that you target looking conditions us that impact at look startup looked in we to market it. have low very marginal. if disciplined an far MD&A years if concerned, way the two is more nature, a we've This business will we've So the a The in reason. always a way be down in nature. of concerned. the is as there comes business after would substantial the we we're will of the it is some And M&A approach in any past case, on carry actually acquisitions And bulk level on. more has have impact acquisition a as that startup at for over the economical going In the turned quarters, if at more production, current applied and versus is of production that's current a that

those in approaches. disciplined very So

Aileen Smith

the have you their got to inflation automaker few Okay, pass-throughs I customers price. ways of inflation but the to we successful And everywhere. think your then in and more customers, cost form it. understand can between cost is the different commodities inflation a asked on And side, recently pretty really That's dynamic of the we've customers suppliers your on and in cost helpful. this passing question been

So receptive automakers way from in in the to customers? they to taking opened pass past few may have the down door any of months, some you as beyond been kind or incremental cost discussions to of be able commodity on their it burden

Frédéric Lissalde

think in by discussions, not will the substantially but But detail. more earnings our are getting we customers. with progress. more the you Those to give I we're have the I making encouraged discussion tones. I Yes, the am ongoing by clarity think call encouraged easy and And next that we discussions have is

Aileen Smith

great. system quick on highlighted if or the question, X, Slide that may. that housekeeping that win battery clarification you technology acquisition? AKASOL one is I The And Okay, management came from

Frédéric Lissalde

a No. came that acquisition It's has Delphi we're been since together. the technology with that enhanced

Aileen Smith

Fantastic. Thank you.


of comes with Your the Kaye from next question Oppenheimer. Noah line

open. is line Your

Noah Kaye

activity. and about wanted Thanks we what ask can the so see, like from much. it's I It to pace accelerate. of continuing feels award just to quoting

reconcile have we this spend about outlook your should wondering how that that up? the with Any R&D picking year. considerations maintained two? to for Just activity maintaining You've

Frédéric Lissalde

year-over-year we on to and It's again, XXX we with maintain discussion activities. application XXX quoting not increase is also confidence. for scratching quotes business, of activities feel And And increase happy heads concrete, good It's with and million about going launch the intensity of we're the to businesses really high where what the develop. intensity to linked our on linked happy numbers. and we this with products those engineering have R&D, And launch customers' and on very want E. We're to R&D that. very million to book of

Noah Kaye

versus the weakness you're what Fred. anticipated see helpful. really thinking Thanks, the clarify, here very you the have to to much Okay, then markets quarter-to-date European half? of for And back in started just how

Frédéric Lissalde

good supply tell you not Ukraine would weeks really of a directly, over think done that origin the saw the job around people have that I the when past I that chain that have impacted by or pretty So and this it's war the we our some been conflict getting case, arose.

units. Russia reduced of remember, million XX% midpoint our very, where is we've low the of X.X forecast that And about European by exposure. so But very we reduction have

to So I I are job be think doing Europe. still, effective issues managing think those our even going if through in pressure really customers supply an is QX under

Noah Kaye

Very helpful. you. Thank


the comes question Rod Research. next with line of from Wolfe Your Lache

line open. Your is

Rod Lache

Good morning, everybody.

Just housekeeping things. first of all, a couple of

X% the You pointed originally growth to X% at year the market. to of the beginning of

relative mentioned commodity Now organic to growth, for reimbursement? the million. production inflation, to to the Within And net is it's X% X.X% is Which million and assumption. XXX XX net was two one weighted the for your Kevin, one to year? numbers was what that million XXX you one

Kevin Nowlan

increase of outgrowth we're going of so pricing QX, news, the the through as as incremental well the a effectively in the is recoveries really flow good saw in that up basis we anticipating. Yes, the XXX what combination points

delivering going or the of outgrowth, of things Now, how with much ultimately, points the of the X X in I is code customers? the both additional flows the a on basis. coming that the or and should points X both X commodities, on, as that the through working X so QX assume to full related of much negotiations points the that plus us outgrowth you points year commodities, that we're to somewhere think to and of pricing, non-contractual being the still rest it's zip that outgrowth even without that's minus it, really that be how of contractual of through the of of suppliers, some to through subject that passes to transpire pricing additional well ultimately as which -- that

I our to situation, trying million was of but inclusive confused XXX million get from XXX net of apologize cost inflation, in at, prior terms a to material guide. represents total commodities, a the to impact what embedded million that increase of million million, XXX basis. was I on That's $XX year-over-year the XXX if In I what

Rod Lache

And your increase the Originally, changed a for was the Thanks. bit. R&D. Okay. it definition R&D year, little

targets wanted of than I R&D. e-products cadence heard there. your a evolve? little production it's others expectations on give the for different QX, see you anything bit in have margin bit margin around better color midpoint if you you did this little Now how to and roughly margin XX% commodity us just of of we've in like it or And from a Can maybe mix got a seems there's year. to that for the expect the absorption you've the Does a year later you look XX% year?

Kevin Nowlan

guidance. Yes, because R&D And on you're actually did the little as our we R&D, the combustion other bit. in reason structure the P&L, -- the than part side quarter of We our main changed actually in right. the lower wording R&D manage within did that what on a along managing with is was that so we our things the cost our we manage implicitly

So part cost it actions. of was management our

up for $XX was was million, total at R&D up But in just company, a down actually means the it look you basis. if was So e-products our first quarter which million year-over-year. the year-over-year R&D over on R&D combustion-based $X

most year-over-year With basis. cadence that clear continuing margins, to to make the the expectation respect that on to sure a we same we're the off invest come was QX to we amount of likely giving haven't it So of is e-R&D wanted of what going likely is quarterly come would headwinds. a suggest we're volume under because guidance. that's I pressure But you the obviously lot to where we're see the to not

from Europe, going about the talked the going And second as the perspective to Fred in we're through on most impacts see China right now be probably second obviously an production challenges likely of living going in to impact to Europe that's we're that quarter with have are And the revenue well. of pronounced As shutdowns. some a quarter.

see that a So of conversion we'll obviously from perspective. impacts

working on the our in which back expect to days we further see of we we customers types of to the quarter. And the in of top significant the of situation XXX to we some as on part we're the these OEMs back the year, the half should that or million that China then recover pressures net. to with then European of back navigate abate get as gets that, even most would of to solutions volume those see mechanisms, half would that situation. are we some expect the that lost As million the help year, XX the to headwinds the of progress to over second And of there mitigate as recovery expect so, work we'll next XXX expecting on

Rod Lache

to it's Okay. size thoughts Fred, really quick, timing. lead and BMS like this typical contract, just And going it short that seems Is be very contract? any on the of that

Frédéric Lissalde

And time. a We've they such those have that to be do untypical. not since to been scratch. some months customer I start for would from platforms. a good it XX this Yes, quite the XX really a we would Usually, with we've for say little volumes announced this spread is all months. working XX proxy, product, still

And very available. rapidly. can systems management we launch why battery this modular have We is

launches running eMotors. some design, to modular linked we the seen in the other pretty You've be also of also up can eMotors rapidly. and

So XX months would be good proxy. a

Rod Lache

Thank you.


Your next Bank. with the of Emmanuel question Deutsche Rosner line comes from

Your line is open?

Emmanuel Rosner

for them year. but of of to to Because, get prospective less seem commodities. the you topic very to around of How give the some Thank you of come a in expect in be back was recovery year? through million than that mechanisms XXX I how you? can for it the for play more out XXX work color rest a little particular, these million back mechanism obviously, much. to very there lot of us XXXX? bit hoping this any is costs, some the to And successful to you you setting of this still Is

Frédéric Lissalde

it ongoing. Yes, is

As I made are the and progress and the Emmanuel, mentioned the being interaction with discussion by the customers. before, encouraged mindset of

in side of e-products both. the semi, know, with I set We're We're into that the count term and [ph] not sales-related to ownership for on business function inflation, to nurturing the I've relationship, relationship both -- relationship also to you going And been in yes, as the short in the the the of am managing my making total at fairness the that term doing lowest confident years life. in improving cost And of long-term a volume, as for about business our target we not in to expect we're and get to customers. of XX great deals. longer the we're note, so, we're I absolutely and a and ourselves,

So this got a of. is that something experience of bit little I've

Kevin Nowlan

Just million XXX to both net. they're net XXX contractual still working is the recoveries to but going normal clear, way with be the assumption to that It's that about million recoveries, we're our to we're customers extra inflationary our at is of assumption also the pricing which impacts work which to commodity of is recover try Emmanuel, the continuing an designed XX%, seeing. to some

the XXX so XXX And recoveries. net of to those about is the million million assumption

Emmanuel Rosner

this just your of $XXX will not to additional recoveries. of result the that? $XXX continue where point, question something this the you hey, towards say, and prices But left guess I this should were they go of understand. with then not or year, my assuming in either process do is, end we holding where margin are discussions necessarily XXXX? of mechanical you're commercial and have still year next Can amount. of be, so end this Or automakers margins the headwind upside of contractual, million your to discussion this the be the by like spot are, million sort at is of left year seen net to back stay we I negotiations day these and Do profile sort No, the to the at look, they

Frédéric Lissalde

difficult to already for enough resolution happening It's what's want get a this We year. for to to next year. don't speculate

year. be to this Right the targets some will year Next in our year. get the to focus is now, fairness next

Emmanuel Rosner

Okay, that's fair.

the So then the second R&D then e-products overall R&D question on for company. be and will the

because but at remain also of R&D. headwind it of forward? assume remarks, margins? of a think part level? the Or a that the level going that in are some keep guidance, Does on extra How revenue? So both does stabilize mentioned R&D same the inflation e-products of to this percentage under as growing, I as obviously in what but pressure, company investment R&D of about the you year-over-year about as will a because should we margins

Kevin Nowlan

Well, and manage But we e-R&D the the levers growth in of to and we look you we're of haven't on to programs structure -- expect the able of we're the to should investment profitable non-e-related not at R&D. think that's to continue to in we giving the launch R&D the when for going drive I necessary our that cost be the It's support that the have updated one company. future. guidance obviously growth total our

million to $XXX continue growing that we at million to expect this be to So $XXX year.

are we our I that's And X% think also current way to that from range underlying on where in year a full R&D basis. about good still overall being on it's X.X% to a a based perspective total think guidance. what's as

Emmanuel Rosner

you. Thank Okay.


comes line Our of from Barclays. Brian next Johnson with question the

line Your open. is

Brian Johnson

Thank you.

hybrids. product But costs couple little and might same to driven seems it be wanted operating much line power week effect materials, hybrids, power discussion around market, A both plug-in battery talk there uptake in of When your and amount ICE plug-in have mix on could shortages felt over the which your for could at secondly, a things. better. like of one EV that how could of about of XX particularly given look by mode. Just electric you still of minerals Is the vehicles? perhaps the most bit there growth all a is [indiscernible] price all

and uptick? would well interest any more your plug-in that midterm in [ph] seeing sales have insofar most that on And performance? may hybrids? in So Are drive renewed The seeing than think? gone are sales you be any is there the near-term is you upside investors helping

Frédéric Lissalde

this scaling but of combustion forward us important plug-in product volts I we're apply us BEV This we're scale. really great that taking China get voltage for plug-in is example simply product. right that, of on good us, giving BEV that in those the in And Hybrid and would a us in market. voltage inverters program BEV it's is launch for in seeing high focusing and Brian, The a inverter of and good the to think what's do. understand dual charging Still pure in combination is is to hybrids, now, and thing share is above. experience too. giving some high motors, really hybrids XXX

high So to want all plug-in with they getting BEV pure to us painted And whether high mentioning XXXX. our And of hybrids. or serve being voltage as BEV I in plug-in able into X.X converges without hybrids that is we was a billion clear BEV. trend are revenue voltage as customers both, scale. well

top have If you high significant. voltage hybrids add but plug-in on pretty a it's I that, the number of today, don't

Kevin Nowlan

what look to guess specific we've revenue this to in in this than million, of a outgrowth, X% more expect outgrowth year. of that year. at the numbers, that to EV translates guidance, disclosed embedded year XXX then over more it outgrowth-related what's you And billion I $X we And be which our Brian, if double X% separately, our that terms than is was last

you million XXX coming and its of see, the else. from there's hey, coming everything So EVs rest plus from can

So answer of to our outgrowth question, other yes, we're parts than seeing still EV. business in your

Brian Johnson

Okay. Thanks.


Suisse. comes question Levy with the Dan next line Your of from Credit

open. is line Your

Dan Levy

we Hi. Good those Meaning, sense And morning. to the give excluding Ukraine the otherwise margins the the of your margins? seen? which items, with shutdowns impact quarter. could start COVID a in have Maybe and just would we extent first China us could war what the

Kevin Nowlan

as But about get -- just we late production. on China then you in can very think have really an Yes, Europe, we here the quarter. started the into It's Obviously, to QX. as see really I normally teens in of talked high terms past, the more in impact convert we an the in impact loss revenue. normally we of incremental

And so accordingly. impact as our conversion it has we lose start revenue, on to an

$XX we you the exclude in little comparable Valley three perspective, when from disposition, Water you normal the Other a impacts us. was from It for that margin that, FX impact the of million, and quarter basis, what cost incremental to it and million. just a It was about conversion. net happened than just of then moved exclude AKASOL. the math the on year-over-year, you $XX a of us cut through bit things If R&D needle the was first that really there talked e-products-related pretty almost material were

to if would again, that had So we geographies, more incremental production at expect coming different of convert typical normally our on margins. we out

Dan Levy

impacts the shutdowns? COVID Europe any guidance, lumpiness or that additional the supply And China assuming any around go-forward is from

Kevin Nowlan

lockdowns be probably expecting couple in quarter from I the the of QX a that It recovery some Russia-Ukraine likely and in then of see will because We're challenged of assumes the bulk And in our resolved of are recovered the and right that going now. the underlying China, is early expectation June China the In our part get that. situation guide volumes gets most beyond impacts the situation a QX things. some production think we in those in that year. see perspective, production of lingering later manifest on will the

in the that most will embedded from perspective. So be challenge QX production the is guide a

Dan Levy

there environment, Is I EV a the understand the up, want versus difference in in as for notably margin side inflationary there's those to than any have given you'd this each input how most maybe on pressure added any the And to price? headwinds are inverters? then, trending for between likely are levers you? margin what And pressure side costs on products, EV Great. and mitigate follow combustion products, the different costs EV for everything,

Kevin Nowlan

a goes environment about inflationary the having input everything. I'd In say, is an terms on, just the of back costs, impact to it really lot overall of

see nickel nickel it underlying a gets of used used Take stainless semiconductors, in see a it on you in commodities. You commodity nickel; gets batteries, like on lot steel.

ICE. types you're impact talking propulsion whether architectures, an having or that's So across of both about EVs

our sure we're the EV growth component, component the e-R&D go ICE-based side, whether programs years. making an it's the or structure coming the long-term on same and incremental is managing to So P&L pretty investments the over cognizant we're of very that cost continuing an that to the we about the the way except much are into that coming our launch make support of EV

Dan Levy


worse any correct? they products ICE, So EV are than pressures cost the for aren't for

Kevin Nowlan

seeing in both. We're cost pressures

happened what's XX to you last increases types you're steel, XX%, If to the the of indices. even things, just in XX% days stainless look those seeing copper, to at some of aluminum, indices, nickel, in XX%, those

well. suppliers, can And cuts can then logistics And of costs, so technology. the costs labor be the across freight propulsion EV-based that or across costs, are impacting as technology be ICE-based those that some it at type

the technology limited one say wouldn't I it's to So or other.

Dan Levy

you. Great. Thank


James with Your next Picariello question BNP Paribas. comes line of from the

line is Your open.

James Picariello

guys. Hi. morning, Good

Kevin Nowlan

Good morning.

James Picariello

at perspective, I the the CPV X. around motors industry really you on eMotors appreciate From Slide average an for provided $XXX. detail

Just XXXX, trending margin million system? then full Thanks. in mix it is? the way what any versus within in any has line more the this the X iDM sale you for iDM the backlog? curious is can to And seeing, is think component if share units what BorgWarner And eMotor with roughly about is what between slated there differential

Frédéric Lissalde

that I into Pat, James. at XXXX eMotor are And the most you but standalone back go on tell can in detail. I motors. please the of few X the come vast not don't you question by of have million iDM, least will all to one is majority. What of volume a your far

back to you. Pat For come to is the going rest,

James Picariello

just the margin system And level, the a full Okay. IBM versus at high for system IBM is component? just margin eMotors, the the accretive to like materially differential relative

Kevin Nowlan

business the ROIC that's basis on margin it's more our in standalone margin whether directionally the system similar. substantially a motor the or at price capital a similar. or through we to likely percentage that system, Whether for the but or Obviously, might the have similar. tend dollar a sale, since intensity look look a we at selling bigger, the system in And which capital it profile a we comparable that the if on capital you're required. return look Yes, that business, tends content a be, to the relatively look tends assembly be invested to it's individual means amounts component, we're profile

James Picariello

AKASOL a tally Okay, how have contribution have then as understood. you year. there to months BMS-related backlog? do And you then is inorganic from in many And this awards five

thinking you're rest And Thanks. what how in about business revenue the was quarter? could AKASOL's for that So the year? of curious if you the share

Kevin Nowlan

$XX So of is terms stronger to And we're growth respect a with $XX be and that AKASOL, of that what I this would prospects we perspective. take AKASOL, from tend the to for business quarter. we first trending seeing between in delivered million say, question. I'll term revenue longer million

James Picariello

you Okay. And on first the that this your announced awards, BMS-related tally the one --? is or

Frédéric Lissalde

company as So came platform this of across other battery our that BMS BMS packs There vehicle course, for announced a major are concerned. first businesses own and cutting And, we in with lot far we're acquisition. doing launch as one commercial is of the volume lot the globally. a that of Delphi are the

revenue. We independently will the pack from out that battery flag not

little that's California, of So a James. bit

James Picariello

I appreciate it. Thanks.

Frédéric Lissalde

you. Thank


from Goldman line comes the question of next Your Sachs. Mark with Delaney

now is line Your open.

Mark Delaney

was Yes. better Good thank taking to morning. EV-related hoping revenue. And I much question. the booked understand you very the for XXXX

you X.X talked was I about quarter, last booked. think already billion

second the how quarter, driving question apples-to-apples, to X.X has the over you or talked little from if that those the This in increase bridge billion? are is can M&A billion. there's of X.X about X.X you billion been I'm a that some differences us treated. unclear if But what's to part

Frédéric Lissalde

is billion little bar X.X. X.X [indiscernible] a essentially first That's [indiscernible] to which it's math And can XXX X.X, more is charging The It's Web site. or how coming of additional AKASOL bit X.X acquisition. points The plus XXX X.X of X.X is you forward on the bit is and from and see that works. organic. a the our than That's easy. Santroll

Mark Delaney

That's up it. starts the about BMS you Got got win I today guess that helpful. follow 'XX. late speaking is the And you're

to thinking So might EV I the some contribution that have 'XX was target.

that's win. led But revenue program? little a up bit was the around to that a You of I So you you expecting pretty competitive more thought encouraging picked kind little spoke and what on what BMS can there. win the it already segment talk BMS bit a very maybe from be we

also Thanks. what's could you to you speak line, product if to win? differentiating your So what allowed BMS

Frédéric Lissalde

Yes, so four after we're the or three digit coma. X.X, on the not updating

rounding. book that a we So dig going a We're time to this not business. each is

starting and software. this winning our far as a software advantage. also and recognized AKASOL is that's this including vehicles. that equation of hardware ability to And I and with is management systems hardware It competitive for again together BMS, for products, mechanical, a we very now battery is but independently, alluded commercial do the combine being altogether. suite what as well And globally whole the always So of [indiscernible] to part absolutely

Mark Delaney

you. Thank


from All David right, time question. we Jefferies. And comes have question for one with Kelley that final

Your open. line is

Gavin Kennedy

is the expectations David you the margin team. first for you restructuring M&A synergies Gavin year? Hi, full remind mentioned This synergies in restructuring and quarter. offset us of for and Kennedy that savings Can your on we for partially I Kelley. believe headwinds the saw savings

Kevin Nowlan

it's of full north the year, $XXX million For combined.

Gavin Kennedy

today Great. you And of business be is highlight major bids to it business shutdowns awards in the in then wins presentation in the of the as or that are electrification, by and disruption? impacted pace your two region, despite China. new usual for expect the you COVID-related Do

Frédéric Lissalde

comes not delay It's I'm as far concerned. new except any as when production. But technology and business expecting it sourcing are to as usual,

Gavin Kennedy

All Thanks, right. team.

Patrick Nolan

thank today. like you your questions for to all I'd great

ahead can to go feel and follow my member or If up you questions, out the any call. you any have me free conclude of to team. Jerome, reach


call. the quarter first does That results conference conclude BorgWarner XXXX

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