Adjustments for Non-Cash Items

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

5374e33dc4ec9d1992488ec22adba11d7f66ffef666a048201a9e208c26db6b3

BorgWarner Inc. is a global leader in providing clean and efficient technology solutions for combustion, hybrid, and electric vehicles. The company primarily manufactures and sells products to original equipment manufacturers (OEMs) of light vehicles, including passenger cars, SUVs, vans, and light trucks, as well as to OEMs of commercial vehicles and off-highway vehicles such as agricultural and construction machinery **[0000908255-24-000007_bwa-20231231.htm:6]** **[0000908255-24-000023_bwa-20240331.htm:35]**. BorgWarner's business is organized into three main segments: Air Management, Drivetrain & Battery Systems, and ePropulsion **[0000908255-24-000007_bwa-20231231.htm:141]** **[0000908255-24-000036_bwa-20240630.htm:40]**. In 2023, the company's foundational products, which include all products used in internal combustion engines and hybrid powertrains, accounted for a significant portion of its total revenue, while its eProducts segment, used in electric vehicles and hybrid powertrains, represented approximately 14% of the total revenue **[0000908255-24-000007_bwa-20231231.htm:106]**. The company's strategy, known as "Charging Forward," aims to grow its eProducts segment significantly by 2027 **[0000908255-24-000007_bwa-20231231.htm:44]**.

1. **Air Management** - Improves fuel economy, reduces emissions, and enhances performance with products such as turbochargers, emissions systems, and thermal systems.
2. **Drivetrain & Battery Systems** - Includes battery modules, control modules, and torque-management products.
3. **ePropulsion** - Provides technologies for electric and hybrid vehicles, including power electronics and rotating electric machines.

2006f282448fa56d6f8cb33845911f9a5cde4d1d49a873e23b8a1b1a50e81b3e

| Metric                                              | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|------------------------------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Contract Asset for Highly Customized Products ($M)   | **16**  **[0000908255-23-000013_bwa-20221231.htm:108]**  | **14**  **[0000908255-23-000027_bwa-20230331.htm:15]**  | **15**  **[0000908255-23-000044_bwa-20230630.htm:13]**  | **16**  **[0000908255-23-000051_bwa-20230930.htm:14]**  | **18**  **[0000908255-24-000007_bwa-20231231.htm:105]**  | **16**  **[0000908255-24-000023_bwa-20240331.htm:12]**  | **16**  **[0000908255-24-000036_bwa-20240630.htm:14]**  | **16**  **[0000908255-24-000043_bwa-20240930.htm:15]**  |
| Customer Incentive Payments - Current Assets ($M)    | **34**  **[0000908255-23-000013_bwa-20221231.htm:108]**  | **34**  **[0000908255-23-000027_bwa-20230331.htm:15]**  | **28**  **[0000908255-23-000044_bwa-20230630.htm:13]**  | **27**  **[0000908255-23-000051_bwa-20230930.htm:14]**  | **27**  **[0000908255-24-000007_bwa-20231231.htm:105]**  | **26**  **[0000908255-24-000023_bwa-20240331.htm:12]**  | **25**  **[0000908255-24-000036_bwa-20240630.htm:21]**  | **25**  **[0000908255-24-000043_bwa-20240930.htm:15]**  |
| Customer Incentive Payments - Non-Current Assets ($M)| **99**  **[0000908255-23-000013_bwa-20221231.htm:108]**  | **90**  **[0000908255-23-000027_bwa-20230331.htm:15]**  | **85**  **[0000908255-23-000044_bwa-20230630.htm:13]**  | **75**  **[0000908255-23-000051_bwa-20230930.htm:14]**  | **58**  **[0000908255-24-000007_bwa-20231231.htm:105]**  | **47**  **[0000908255-24-000023_bwa-20240331.htm:12]**  | **38**  **[0000908255-24-000036_bwa-20240630.htm:21]**  | **32**  **[0000908255-24-000043_bwa-20240930.htm:15]**  |

512bb1de285c15739c6781ef84406017d761905fe11d2625b5cf8cbdc8b683e9

| Metric (Revenue in $ million) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Air Management               | **1,796**  **[0000908255-23-000008_a20221231ex991pressrelease.htm:5]**  | **1,979**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **2,027**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **1,945**  **[0000908255-23-000048_a20230930ex991pressrelease.htm:5]**  | **1,882**  **[0000908255-24-000005_a20231231ex991pressrelease.htm:5]**  | **2,030**  **[0000908255-24-000023_bwa-20240331.htm:33]**  | **1,974**  **[0000908255-24-000036_bwa-20240630.htm:40]**  | N/A |
| Turbos & Thermal Technologies| N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | **1,386**  **[0000908255-24-000040_a20240930ex991pressrelease.htm:6]**  |
| Drivetrain & Battery Systems | N/A     | **955**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **1,118**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **1,145**  **[0000908255-23-000048_a20230930ex991pressrelease.htm:5]**  | **1,130**  **[0000908255-24-000005_a20231231ex991pressrelease.htm:5]**  | **1,159**  **[0000908255-24-000023_bwa-20240331.htm:33]**  | **1,196**  **[0000908255-24-000036_bwa-20240630.htm:40]**  | N/A |
| Drivetrain & Morse Systems   | N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | **1,365**  **[0000908255-24-000040_a20240930ex991pressrelease.htm:6]**  |
| e-Propulsion & Drivetrain    | **1,531**  **[0000908255-23-000008_a20221231ex991pressrelease.htm:5]**  | N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | N/A |
| ePropulsion                  | N/A     | **487**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **567**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **571**  **[0000908255-23-000048_a20230930ex991pressrelease.htm:5]**  | **542**  **[0000908255-24-000005_a20231231ex991pressrelease.htm:5]**  | **436**  **[0000908255-24-000023_bwa-20240331.htm:33]**  | **464**  **[0000908255-24-000036_bwa-20240630.htm:40]**  | **512**  **[0000908255-24-000040_a20240930ex991pressrelease.htm:6]**  |
| Fuel Systems                 | **607**  **[0000908255-23-000008_a20221231ex991pressrelease.htm:5]**  | **568**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **605**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | N/A     | N/A     | N/A     | N/A     | N/A |
| Battery & Charging Systems   | N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | N/A     | **197**  **[0000908255-24-000040_a20240930ex991pressrelease.htm:6]**  |
| Aftermarket                  | **325**  **[0000908255-23-000008_a20221231ex991pressrelease.htm:5]**  | **330**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **339**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | N/A     | N/A     | N/A     | N/A     | N/A |
| Inter-segment eliminations   | **(151)**  **[0000908255-23-000008_a20221231ex991pressrelease.htm:5]**  | N/A     | N/A     | **(39)**  **[0000908255-23-000048_a20230930ex991pressrelease.htm:5]**  | **(32)**  **[0000908255-24-000005_a20231231ex991pressrelease.htm:5]**  | N/A     | N/A     | **(11)**  **[0000908255-24-000040_a20240930ex991pressrelease.htm:6]**  |
| Total Net Sales              | **4,108**  **[0000908255-23-000008_a20221231ex991pressrelease.htm:5]**  | **4,180**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **4,520**  **[0000908255-23-000044_bwa-20230630.htm:36]**  | **3,622**  **[0000908255-23-000048_a20230930ex991pressrelease.htm:5]**  | **3,522**  **[0000908255-24-000005_a20231231ex991pressrelease.htm:5]**  | **3,595**  **[0000908255-24-000023_bwa-20240331.htm:33]**  | **3,603**  **[0000908255-24-000036_bwa-20240630.htm:40]**  | **3,449**  **[0000908255-24-000040_a20240930ex991pressrelease.htm:6]**  |

72ab256201d761d6be910b20df816547e0e8fbc66330558fc4ade31ece631c80

| Metric (USD Million) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|
| North America        | **1,342**  **[0000908255-23-000027_bwa-20230331.htm:16]**  | **1,438**  **[0000908255-23-000044_bwa-20230630.htm:14]**  | **1,065**  **[0000908255-23-000051_bwa-20230930.htm:15]**  | N/A     | **1,013**  **[0000908255-24-000023_bwa-20240331.htm:13]**  | **1,048**  **[0000908255-24-000036_bwa-20240630.htm:15]**  | **932**  **[0000908255-24-000043_bwa-20240930.htm:16]**  |
| Europe               | **1,589**  **[0000908255-23-000027_bwa-20230331.htm:16]**  | **1,654**  **[0000908255-23-000044_bwa-20230630.htm:14]**  | **1,243**  **[0000908255-23-000051_bwa-20230930.htm:15]**  | N/A     | **1,414**  **[0000908255-24-000023_bwa-20240331.htm:13]**  | **1,360**  **[0000908255-24-000036_bwa-20240630.htm:15]**  | **1,258**  **[0000908255-24-000043_bwa-20240930.htm:16]**  |
| Asia                 | **1,158**  **[0000908255-23-000027_bwa-20230331.htm:16]**  | **1,327**  **[0000908255-23-000044_bwa-20230630.htm:14]**  | **1,262**  **[0000908255-23-000051_bwa-20230930.htm:15]**  | N/A     | **1,113**  **[0000908255-24-000023_bwa-20240331.htm:13]**  | **1,134**  **[0000908255-24-000036_bwa-20240630.htm:15]**  | **1,196**  **[0000908255-24-000043_bwa-20240930.htm:16]**  |
| Other                | **91**  **[0000908255-23-000027_bwa-20230331.htm:16]**     | **101**  **[0000908255-23-000044_bwa-20230630.htm:14]**    | **52**  **[0000908255-23-000051_bwa-20230930.htm:15]**    | N/A     | **55**  **[0000908255-24-000023_bwa-20240331.htm:13]**     | **61**  **[0000908255-24-000036_bwa-20240630.htm:15]**     | **63**  **[0000908255-24-000043_bwa-20240930.htm:16]**    |
| Total Revenue        | **4,180**  **[0000908255-23-000027_bwa-20230331.htm:16]**  | **4,520**  **[0000908255-23-000044_bwa-20230630.htm:14]**  | **3,622**  **[0000908255-23-000051_bwa-20230930.htm:15]**  | N/A     | **3,595**  **[0000908255-24-000023_bwa-20240331.htm:13]**  | **3,603**  **[0000908255-24-000036_bwa-20240630.htm:15]**  | **3,449**  **[0000908255-24-000043_bwa-20240930.htm:16]**  |

d40e37c7bd0f4043949a01b1f9e8e85fdd615415ffd65ca9f309e469fae64426

1. **In the battery and charging segment, you achieved a 36% sales increase and are near breakeven margins. With capacity now aligned to demand in North America and Europe, what specific strategies will you implement to drive margin improvement to mid to high teens over time?**  **[BWA_3405060_8]** **[BWA_3405060_9]** 

2. **Your growth over market assumption for 2024 has been lowered from 350-450 basis points to 200-300 basis points, with approximately $200 million drop in growth, half from the eProduct portfolio. What are the primary challenges causing this reduction, and how do you plan to mitigate them to regain higher growth levels?**  **[BWA_3405060_18]** 

3. **You have initiated restructuring in the PDS segment with $20-30 million in cost reductions this year and a target of $100 million by 2026. Can you elaborate on the specific structural changes being made and how they will contribute to your goal of incrementing income in the mid-teens?**  **[BWA_3405060_20]** **[BWA_3405060_15]** 

4. **Considering potential regulatory changes, especially with the upcoming U.S. elections affecting CO₂ requirements, how is BorgWarner preparing to adapt its product offerings and strategy to meet varying customer demands for combustion, hybrid, and electric powertrains?**  **[BWA_3405060_14]** **[BWA_3405060_19]** 

5. **With $525 million of cash generation being returned to shareholders this year through buybacks and dividends, how do you plan to balance shareholder returns with necessary investments in capital expenditures and R&D to support your electrification and growth initiatives in the coming years?**  **[BWA_3405060_10]** 

6738bc31d61e418a1382392b0504b43da8aca7918066d0ef9728cfa7ea359ca7

396c33b178930b6be769e8c75505dc3e6b34e267b8017bd2c0be8d56a4da7594

1b0fe478a22420fec894e02bda1573d3181da9d271cbe605c4372fffb3084f0a

- Robert Bosch GmbH, a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Denso Corporation, a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Garrett Motion, a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Hitachi, Ltd., a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Magna Powertrain (an operating unit of Magna International Inc.), a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Valeo, a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Schaeffler Group, a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Vitesco Technologies, a major non-OEM competitor  **[0000908255-24-000007_bwa-20231231.htm:14]** .
- Certain start-ups in electrification, also considered competitors  **[0000908255-24-000007_bwa-20231231.htm:14]** .

0ab28b07c6517815599cc2c33115f194ae07f33adcffaa53cadfe5aa68882f8e

Contract Asset for Highly Customized Products ($M)

Customer Incentive Payments - Current Assets ($M)

Customer Incentive Payments - Non-Current Assets ($M)

168219824776d7b123a85cd728ae1c101a83ed70315067d384fbb7d1ad39bbbf

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales**: $14.0 billion to $14.2 billion.
  2. **Organic Sales Change**: Flat to down 1.5% year-over-year.
  3. **Margin**: 9.8% to 10.0%.
  4. **Adjusted EPS**: $4.15 to $4.30 per diluted share.
  5. **Free Cash Flow**: $475 million to $575 million.
  6. **Foreign Currency Impact**: $20 million sales headwind.
  7. **Market Production Assumption**: Down 3% to 3.5%  **[BWA_3405060_3]** **[BWA_3405060_4]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Full Year Margin Outlook**: 9.6% to 9.8%.
  2. **Full Year Adjusted EPS**: $3.95 to $4.15 per diluted share.
  3. **Full Year Sales**: $14.1 billion to $14.4 billion.
  4. **Free Cash Flow**: $475 million to $575 million.
  5. **Share Repurchases**: $300 million.
  6. **Organic Growth**: 0.5% to 2.5% year-over-year.
  7. **Market Production Outperformance**: 350 to 450 basis points.
  8. **Restructuring Cost Savings**: $20 million to $30 million in 2024.
  9. **End Market Assumption**: Down 2% to 3%  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Sales Guidance**: $14.4 billion to $14.9 billion.
  2. **Foreign Currency Impact**: $100 million sales headwind.
  3. **Organic Growth**: 2% to 5% year-over-year.
  4. **Eldor and SSC Acquisitions**: $30 million to 2024 sales.
  5. **eProducts Revenue**: $2.5 billion to $2.8 billion.
  6. **Operating Margin**: 9.2% to 9.6%.
  7. **Earnings Per Share (EPS)**: $3.80 to $4.15 per diluted share.
  8. **Free Cash Flow**: $475 million to $575 million.
  9. **Incremental Margin**: Mid- to high teens  **[BWA_3382130_4]** **[BWA_3382130_22]** **[BWA_3382130_5]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue**: $14.4 billion to $14.9 billion.
  2. **eProduct Sales**: $2.5 billion to $2.8 billion.
  3. **Eldor Acquisition Impact**: $40 million to 2024 revenue.
  4. **Adjusted Operating Margin**: 9.2% to 9.6%.
  5. **Adjusted EPS**: $3.65 to $4 per diluted share.
  6. **Free Cash Flow**: $475 million to $575 million.
  7. **Market Outlook**: Flat to down 2.5%.
  8. **eProduct Sales Growth**: 25% to 40%.
  9. **Battery Systems Sales Growth**: $250 million to $350 million.
  10. **Incremental Margin**: Mid-teens  **[BWA_3372439_5]** **[BWA_3372439_4]** **[BWA_3372439_2]** **[BWA_3372439_22]** **[BWA_3372439_9]** .

4403a9ffc54b5c5b78e051a22374403f4dbcc2b5b760f32efb67222e285a6e73

5aa159911fd22a6847cf398fe047b4fabff53a676d23641cfe4de5719c212c87

**Annual guidance for FY 2024:**
- **Sales**: $14.0B to $14.2B  **[BWA_3405060_3]** **[BWA_3405060_4]**  (lowered from $14.1B to $14.4B  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** )
- **Organic sales change**: Flat to down 1.5%  **[BWA_3405060_3]** **[BWA_3405060_4]**  (lowered from 0.5% to 2.5%  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** )
- **Margin**: 9.8% to 10.0%  **[BWA_3405060_3]** **[BWA_3405060_4]**  (raised from 9.6% to 9.8%  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** )
- **Adjusted EPS**: $4.15 to $4.30  **[BWA_3405060_3]** **[BWA_3405060_4]**  (raised from $3.95 to $4.15  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** )
- **Free cash flow**: $475M to $575M  **[BWA_3405060_3]** **[BWA_3405060_4]**  (no change from prior guidance  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** )
- **Market production assumption**: Down 3% to 3.5%  **[BWA_3405060_3]** **[BWA_3405060_4]**  (lowered from down 2% to 3%  **[BWA_3395272_5]** **[BWA_3395272_4]** **[BWA_3395272_6]** )
- **Foreign currency impact**: $20M sales headwind  **[BWA_3405060_3]** **[BWA_3405060_4]**  (no prior guidance)

6d93da3c202bed81cbdeae9db302fead0c941b25543eda60c60a98916de2217d

9e699ee6f8d31403d16d1e4e9517c7b5c3102e2d766e6dc26705be63fd92694b

994ad8c73f5e6d891811c6960da6bed5a47649e76767611c2c20e02114537cfa

| Name                  | Position                                                                 | Start Date         | Short Bio                                                                                                                                                                                                                                                                                                                                 |
|-----------------------|--------------------------------------------------------------------------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Frédéric B. Lissalde  | President and Chief Executive Officer (retiring effective February 6, 2025) | August 2018        | Frédéric B. Lissalde has served as the President and CEO of BorgWarner Inc. since August 2018. He joined the company in 1999 and has held various leadership roles. He has been a board member of Autoliv, Inc. since December 2020  **[0001558370-24-003300_tmb-20240424xdef14a.htm:26]** **[0001558370-24-003300_tmb-20240424xdef14a.htm:10]** **[0000908255-24-000046_bwa-20241106.htm:1]** .                                                                                           |
| Kevin A. Nowlan       | Executive Vice President, Chief Financial Officer (until March 1, 2024)  | April 2019         | Kevin A. Nowlan has served as the Executive Vice President and CFO of BorgWarner Inc. since April 2019. He previously worked at Meritor, Inc. and GMAC  **[0000908255-24-000007_bwa-20231231.htm:18]** **[0001558370-24-003300_tmb-20240424xdef14a.htm:26]** .                                                                                                                                                                          |
| Craig D. Aaron        | Executive Vice President, Chief Financial Officer                        | March 1, 2024      | Craig D. Aaron has been with BorgWarner for nearly 18 years. He served as Vice President and Controller starting in 2022 and will become Executive Vice President and CFO on March 1, 2024  **[0000908255-24-000007_bwa-20231231.htm:18]** **[0000908255-23-000013_bwa-20221231.htm:18]** **[BWA_3410866_0]** .                                                                                                                                    |
| Tonit M. Calaway      | Executive Vice President, Chief Administrative Officer, General Counsel and Secretary | October 2020       | Tonit M. Calaway has been serving in her current roles since October 2020. She joined BorgWarner in 2016 and previously worked at Harley-Davidson, Inc.  **[0001558370-24-003300_tmb-20240424xdef14a.htm:28]** **[0000908255-24-000007_bwa-20231231.htm:18]** .                                                                                                                                                                          |
| Tania Wingfield       | Executive Vice President, Chief Human Resources Officer                  | 2022               | Tania Wingfield assumed her current position in 2022. She has held various roles within BorgWarner since 2017  **[0000908255-24-000007_bwa-20231231.htm:18]** .                                                                                                                                                                                                                      |
| Stefan Demmerle       | Vice President and President and General Manager, PowerDrive Systems     | September 2012     | Stefan Demmerle has been serving in his current roles since September 2012. He previously worked at Continental  **[0001558370-24-003300_tmb-20240424xdef14a.htm:27]** **[0001308179-23-000250_bwa4112421-def14a.htm:38]** .                                                                                                                                                                                                                 |
| Joseph F. Fadool      | Executive Vice President and Chief Operating Officer; President and CEO (effective February 6, 2025) | July 2024          | Joseph F. Fadool has been with BorgWarner since 2010. He currently serves as Executive Vice President and COO and will become President and CEO effective February 6, 2025  **[0000908255-24-000046_bwa-20241106.htm:1]** **[0001558370-24-003300_tmb-20240424xdef14a.htm:27]** .                                                                                                               |
| Paul A. Farrell       | Executive Vice President and Chief Strategy Officer                      | 2020               | Paul A. Farrell has held his current position since 2020. He previously worked at Delphi Technologies PLC  **[0000908255-24-000007_bwa-20231231.htm:18]** .                                                                                                                                                                                                                           |
| Isabelle McKenzie     | Vice President and President and General Manager, Morse Systems          | 2023               | Isabelle McKenzie assumed her current role in 2023. She has held various positions within BorgWarner since 2014  **[0000908255-24-000007_bwa-20231231.htm:18]** .                                                                                                                                                                                                                    |
| Volker Weng           | Vice President and President and General Manager, Drivetrain & Battery Systems | 2019               | Volker Weng has held his current position since 2019. He has been with BorgWarner in various roles since 2017  **[0000908255-23-000013_bwa-20221231.htm:19]** .                                                                                                                                                                                                                      |
| Amy B. Kulikowski     | Vice President and Chief Accounting Officer                              | March 1, 2024      | Amy B. Kulikowski serves as the Vice President and Chief Accounting Officer at BorgWarner Inc. She has been in this role since at least March 1, 2024  **[0001225208-24-003395_xslF345X02/doc3.xml:0]** .                                                                                                                                                                              |

9b2f86c16a236b4710de6eaea874d60eec98aa7804742c89d516b00e964d5a95

| Program Details          | Program 1       | Program 2       |
|--------------------------|-----------------|-----------------|
| Approval Date            | November 2023  **[0000908255-24-000043_bwa-20240930.htm:73]**  | April 2024  **[0000908255-24-000043_bwa-20240930.htm:73]**   |
| End Date/Duration        | December 31, 2027  **[0000908255-24-000043_bwa-20240930.htm:73]**  | December 31, 2027  **[0000908255-24-000043_bwa-20240930.htm:73]**  |
| Total additional amount  | $544 million  **[0000908255-24-000043_bwa-20240930.htm:73]**  | $767 million  **[0000908255-24-000043_bwa-20240930.htm:73]**  |
| Remaining authorization amount | $0  **[0000908255-24-000043_bwa-20240930.htm:73]**  | $463 million  **[0000908255-24-000043_bwa-20240930.htm:73]**  |
| Details                  | Replaced by April 2024 program  **[0000908255-24-000043_bwa-20240930.htm:73]**  | Allows repurchase based on market conditions and capital position  **[0000908255-24-000043_bwa-20240930.htm:73]**  |

47b3283a12bc7bc085004dd9d85b7d006d0809fbf2a8efd8ffdd8598b9522e15

1. **eProducts Revenue Outlook**  
   **Q:** Do you still expect $4.5B–$5B eProducts revenue by 2025?  
   **A:** The 2025 outlook depends on customer volumes, which will ultimately decide the eProducts revenue. We're focused on securing new business in eProducts for hybrids, strengthening our portfolio, and matching costs to deliver mid- to high-teens incrementals on an all-in basis. We'll provide more details closer to 2025.  **[BWA_3382130_27]** 

2. **Margins and Incremental Conversion**  
   **Q:** How are you managing margins amid eProducts growth?  
   **A:** We're balancing costs across all product lines to achieve mid- to high-teens incrementals. While our ePropulsion segment had about **30% incrementals**, we're not satisfied and will take steps to improve margin performance. We're adjusting costs wherever necessary to align with market conditions.  **[BWA_3382130_11]** **[BWA_3382130_17]** 

3. **China's eProducts Demand**  
   **Q:** What is your exposure to Chinese OEMs in eProducts?  
   **A:** For 2024, about **45%** of our **$1.9 billion** light vehicle eProducts revenue is from China, with **95%** of that coming from Chinese OEMs.  **[BWA_3382130_18]** 

4. **Share Buybacks and Capital Allocation**  
   **Q:** How are you approaching share repurchases this year?  
   **A:** We repurchased **$277 million** over the last two quarters and have authorization for over **$760 million**. We'll continue to repurchase opportunistically, considering liquidity, leverage, M&A needs, and maintaining our fixed dividend obligation.  **[BWA_3382130_13]** 

5. **Hybrid and PHEV Demand Growth**  
   **Q:** Are you seeing increased schedules for hybrids?  
   **A:** Yes, especially in China and Europe, where hybrids are growing faster within the new energy vehicle segment. Globally, hybrids represent about **40%** of our light vehicle eProducts revenue. In North America, it's too early to see significant interest.  **[BWA_3382130_8]** **[BWA_3382130_6]** **[BWA_3382130_7]** 

6. **Flexibility in R&D and CapEx Spending**  
   **Q:** Can you adjust R&D and CapEx amid EV market changes?  
   **A:** We manage costs holistically in line with the current sales outlook. Our facilities and equipment are flexible, allowing us to serve both hybrids and BEVs efficiently. We're focused on converting mid- to high-teens incrementals regardless of where growth comes from.  **[BWA_3382130_9]** **[BWA_3382130_10]** 

7. **Foundational Products in North America**  
   **Q:** What's the outlook for foundational products adoption?  
   **A:** In North America, we're in early discussions with customers about adopting advanced hybrids. While it's early, we have all the building blocks to support our customers as they transition.  **[BWA_3382130_16]** 

8. **Battery Systems Revenue**  
   **Q:** Any updates on battery systems revenue guidance?  
   **A:** Our eProducts guidance at the midpoint is **$2.65 billion**, which includes **$750 million** in battery packs for commercial vehicles. The ramp-up is on plan, with capacity increases in Seneca and preparations in Europe aligning with expectations.  **[BWA_3382130_22]** 

9. **Production Schedule Volatility**  
   **Q:** Have you seen recent adjustments in OEM production schedules?  
   **A:** We don't have granular details from the past two weeks, but our full-year market view is already below firms like IHS. We'll adjust to whatever comes our way.  **[BWA_3382130_21]** 

10. **Power Electronics Value Proposition**  
    **Q:** Is your power electronics offering helping win business?  
    **A:** Yes, efficiency is a key strength of our company. Power electronics are crucial for reducing losses in hybrids and BEVs. Our focus on efficient systems resonates with customers seeking to improve efficiency amid price competition. This has played a role in recent business wins.  **[BWA_3382130_26]** 

96e3d034bcdc299346dbe17f94c2be1c829d71fad4c2f3c78a1eed3e8b04a6ef

1. **eProduct Restructuring and Europe**  
   **Q:** Why is eProduct restructuring only in North America and China?  
   **A:** The eProduct business unit is mainly in North America and China, so restructuring focuses there, but it also affects parts of Europe. The restructuring aims to ensure **mid-teens conversion** as PowerDrive Systems launch products globally.  **[BWA_3395272_7]** 

2. **Margin Outlook Amid Sales Declines**  
   **Q:** How are you maintaining margins despite lower sales?  
   **A:** Despite second-half sales declining by about **$200 million** due to market factors and **$75 million** from foreign exchange, operating income at the midpoint remains unchanged. Strong first-half performance and restructuring benefits are offsetting the sales decline.  **[BWA_3395272_11]** 

3. **Capital Allocation and M&A Plans**  
   **Q:** Will you focus on M&A or shareholder returns ahead?  
   **A:** While acquisitions were crucial in building our portfolio, we are now more stringent and prudent with M&A. We don't anticipate significant M&A in the next **2–3 quarters**, thus we plan to repurchase **$300 million** of stock, effectively returning **100%** of cash generation to shareholders.  **[BWA_3395272_20]** 

4. **eR&D Spending Reduction**  
   **Q:** Is eR&D spending increasing less than planned?  
   **A:** Yes, initial eR&D increase was **$40–50 million**, but after restructuring, it's reduced to **$20–30 million** year-over-year. This supports future launches as our eProduct portfolio grows **25%** year-over-year, adding **$0.5 billion** in revenue.  **[BWA_3395272_13]** 

5. **Battery Ramp and Performance**  
   **Q:** Is the battery ramp still on track?  
   **A:** Yes, the battery business is on track. Seneca is now in production, and we're also on schedule in Europe. Battery performance contributes positively to incremental margins delivered in the first half and is significant in our full-year guidance.  **[BWA_3395272_15]** 

6. **End Market Outlook**  
   **Q:** What's your view on end markets and production cuts?  
   **A:** We expect the market to be down **2–3%** year-over-year, with the largest reductions in China, followed by North America and Europe. In China, weaker consumer demand is impacting production rates; in North America, customers are adjusting inventory levels; in Europe, there's weaker demand and backlog depletion. This is all reflected in our guidance.  **[BWA_3395272_18]** 

7. **Growth Over Market Slowed by EV Delays**  
   **Q:** Why did growth over market come down slightly?  
   **A:** Outgrowth for Q2 was **120 basis points**, impacted by eProduct revenue at the low end of our guide and a BEV program in North America that's underperforming. However, we expect full-year outgrowth around **400 basis points**, which is our target.  **[BWA_3395272_10]** 

8. **Drivetrain and Battery Systems Margins**  
   **Q:** What's driving strong margins in Drivetrain and Battery Systems?  
   **A:** Margin strength comes from both the Battery business and the foundational business, with strong growth in the quarter. We're converting extra sales and focusing on cost reductions, productivity actions, supplier savings, and restructuring.  **[BWA_3395272_16]** 

9. **eProduct Performance in China**  
   **Q:** How is eProduct performing in China amid tariffs?  
   **A:** In China, eProducts for hybrids and BEVs are performing well, especially hybrids which are the fastest-growing segment. We are launching many new products, with **95%** of our eProducts in China made with major Chinese carmakers. Impact of tariffs is too early to anticipate.  **[BWA_3395272_19]** 

10. **ICE Margins Amid Volume Declines**  
    **Q:** Will margins decline on ICE products as volumes drop?  
    **A:** Many of our combustion products go into hybrids, making them efficient. Our products are versatile across combustion, hybrid, and BEV. We have the portfolio to outgrow and convert across all segments, so isolating ICE margins isn't representative.  **[BWA_3395272_12]** 

11. **Eldor Losses and Restructuring**  
    **Q:** How will Eldor losses trend this year?  
    **A:** Eldor's outlook is unchanged; we are targeting **$100 million** in cost savings by **2026** across the total business.  **[BWA_3395272_24]** 

12. **Logic of Announcing Share Buybacks**  
    **Q:** Why announce share buybacks ahead of buying?  
    **A:** We aim for transparency with shareholders. After being blacked out for most of Q2, we wanted to clarify our intention to allocate all free cash flow to shareholders, especially given our comments on M&A.  **[BWA_3395272_22]** 

13. **R&D and Capital Investment in eProducts**  
    **Q:** How will R&D and capital investment in eProducts evolve?  
    **A:** We'll continue to support these programs with R&D, focusing on a **15%** return on invested capital for all new programs.  **[BWA_3395272_14]** 

14. **Battery Systems Impact from Commercial Vehicle BEV Softening**  
    **Q:** Is softening in commercial vehicle BEV affecting Battery Systems?  
    **A:** Our commercial vehicle numbers were adjusted slightly in the prior quarter. Currently, eProduct impact is mainly linked to light vehicles. We're growing eProducts **25%** year-over-year from **$2 billion** to about **$2.5 billion**.  **[BWA_3395272_23]** 

15. **eProduct Sales in Q2**  
    **Q:** What were eProduct sales in Q2?  
    **A:** Q2 eProduct sales were **$576 million**, up from **$500 million** in Q1.  **[BWA_3395272_23]** 

e400a4e1b68fe480de8b62187374b4122090be7299c2dc7128c845585d3de381

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 2008  **[0000908255-24-000007_bwa-20231231.htm:77]**  | Present  | Current auditor   |

93f29b63bccac18c2ee55fa5b29fe9c46ae3bf3a6f9f2865ef70a408f2a75c29

b0f742931dcfc79fdab6caa57766b6cef3ce22b43248fb3eb26bed3804cefdab

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $3,449 million (−5% YoY)  **[0000908255-24-000043_bwa-20240930.htm:16]**   
- North America: $932 million (**−13% YoY**)  **[0000908255-24-000043_bwa-20240930.htm:16]**   
- Asia: $1,196 million (−5% YoY)  **[0000908255-24-000043_bwa-20240930.htm:16]**   
- Other: $63 million (**+21% YoY**)  **[0000908255-24-000043_bwa-20240930.htm:16]**   

8601bcb76087d334e0d51c33fcaa01fa28744443283bdb9aa4d309ad0d55cefd

ba5215a85548336adedc57fc9cb6c0dfe2e0a8ddf83b9a4e57b8ba0f030e924f

e5c52f05c68f3cc666f8e1561e98dabe76190a929d1775e2035b6c5d31eb5f21

Percentage of total revenue from eProducts (percent)

78c68de6cccc9adc269970278323c80ded9d71ee8566b6fa429235bc4c271e32

| Year | Amount Due (in millions) | Debt Type                          | Interest Rate (%) | % of Total Debt                                                                                     |
|----------|------------------------------|----------------------------------------|------------------------|---------------------------------------------------------------------------------------------------------|
| 2024     | 60                           | European money market loan            | Euribor + 1.75         | 1.3% = (60 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]** **[0000908255-24-000043_bwa-20240930.htm:27]**                                                              |
| 2025     | 334                          | 3.375% Senior Notes                   | 3.375                 | 7.3% = (334 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                     |
| 2025     | 343                          | 5.000% Senior Notes                   | 5.000                 | 7.5% = (343 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]** **[0000908255-24-000043_bwa-20240930.htm:65]**                                                             |
| 2027     | 1,095                        | 2.650% Senior Notes                   | 2.650                 | 23.8% = (1,095 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                  |
| 2029     | 120                          | 7.125% Senior Notes                   | 7.125                 | 2.6% = (120 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                     |
| 2029     | 495                          | 4.950% Senior Notes                   | 4.950                 | 10.8% = (495 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                    |
| 2031     | 1,099                        | 1.000% Senior Notes                   | 1.000                 | 23.9% = (1,099 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                  |
| 2034     | 493                          | 5.400% Senior Notes                   | 5.400                 | 10.7% = (493 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                    |
| 2045     | 495                          | 4.375% Senior Notes                   | 4.375                 | 10.8% = (495 / 4,593) * 100 **[0000908255-24-000043_bwa-20240930.htm:26]**                                                                    |

66a7917f9aec46ad6dcb4993b8a53ccd97ef6cb131567dd54543d3d3f3524155

1. **Margin Outlook**  
   **Q:** Can you exceed the 10% margin target sooner?  
   **A:** Management is focusing on delivering around **9.6%** margin at the midpoint of their 2024 guidance  **[BWA_3405060_5]** **[BWA_3405060_6]** , and are not speculating on exceeding the **10%** long-term margin target before 2027.  **[BWA_3405060_6]** 

2. **Margin Drivers**  
   **Q:** What's behind the strong Q3 margin performance?  
   **A:** The strong performance was due to benefits from the **PDS restructuring** announced in July  **[BWA_3405060_7]** , focus on cost controls, and a **$24 million** one-time customer recovery, which will not repeat in future quarters.  **[BWA_3405060_7]** 

3. **Battery & Charging Business**  
   **Q:** How is the battery business performing, and what about margins?  
   **A:** The battery and charging segment saw an **incremental growth of about 36%** in the quarter, with strong sales especially in Europe.  **[BWA_3405060_8]**  As the business scales, management expects to reach breakeven and increment margins in the mid-teens.  **[BWA_3405060_8]** **[BWA_3405060_9]** 

4. **Capital Allocation**  
   **Q:** Will cash generation continue to be returned to shareholders?  
   **A:** Management is pleased with allocating cash to shareholders this year, with a line of sight to **$525 million** at the midpoint of guidance  **[BWA_3405060_10]** , effectively applied through buybacks and dividends. They will provide insights on 2025 capital allocation in February.  **[BWA_3405060_10]** 

5. **Growth Over Market**  
   **Q:** Why is growth over market guidance reduced?  
   **A:** The growth over market has been adjusted to **200 to 300 basis points**  **[BWA_3405060_18]**  due to a **$200 million** reduction in the eProduct portfolio and **$100 million** in the foundational business.  **[BWA_3405060_18]**  Year-to-date growth over market stands at **270 basis points**.  **[BWA_3405060_18]** 

6. **Customer Recoveries**  
   **Q:** Are more OEM recoveries possible due to program cancellations?  
   **A:** Management views the recent **$24 million** customer recovery as exceptional  **[BWA_3405060_11]** , and while each case is specific, they focus on flexibility and managing the business as situations develop.  **[BWA_3405060_11]** 

7. **Cost Actions**  
   **Q:** How much cost is left to take out from restructuring?  
   **A:** Structural changes from the **PDS restructuring** are expected to deliver **$20 million to $30 million** this year  **[BWA_3405060_20]** , annualizing to **$40 million to $60 million** next year, with a target of **$100 million by 2026**.  **[BWA_3405060_20]**  The goal is to grow income in the mid-teens.  **[BWA_3405060_20]** 

8. **Hybrid Pipeline**  
   **Q:** What's the outlook for the hybrid product pipeline?  
   **A:** BorgWarner's combustion portfolio is fully fungible into hybrid powertrains.  **[BWA_3405060_14]**  Their eProducts like inverters and motors are similar for hybrids and BEVs, positioning them to serve customers globally and outgrow the market.  **[BWA_3405060_14]** 

9. **Bidding Activity Slowdown**  
   **Q:** Is there a slowdown in program bidding due to EV disruptions?  
   **A:** There is a slowdown in new quoting activities for electrified powertrains in the Western world as OEMs focus on launching existing programs.  **[BWA_3405060_13]**  This creates opportunities in combustion products through program extensions and prolongations.  **[BWA_3405060_13]** 

10. **LVP Assumptions**  
    **Q:** What's your view on light vehicle production declines?  
    **A:** Management expects the market to be down **3% to 3.5%** year-over-year  **[BWA_3405060_16]** , with North America and Europe down **5% to 5.5%**, and a slight increase in China.  **[BWA_3405060_16]**  They continue to manage costs effectively in response.  **[BWA_3405060_16]** 

11. **Foundational Products & Hybrids**  
    **Q:** How does hybrid demand affect foundational segments?  
    **A:** Advanced hybrid powertrains will drive growth in both foundational segments, including engine components like turbos and drivetrain systems, as they carry components from both areas.  **[BWA_3405060_17]** 

12. **Competitive Advantages in Battery Business**  
    **Q:** What are BorgWarner's competitive advantages in the commercial vehicle battery business?  
    **A:** BorgWarner focuses on commercial vehicles, offering production in both **NMC** and **LFP** chemistries  **[BWA_3405060_21]** , with capacity in the U.S. and Europe. They handle software, cybersecurity, assembly, and testing of the battery pack, distinguishing themselves as one of the few independent suppliers in the Western world.  **[BWA_3405060_21]** 

13. **Operating Leverage in Battery Business**  
    **Q:** How is the operating leverage in the battery business?  
    **A:** The business grew significantly in the quarter, converting at a high level of about **$0.35 on the dollar**.  **[BWA_3405060_21]**  Management aims to continue incrementing margins in the mid-teens as they scale.  **[BWA_3405060_21]** 

14. **Program Capital Investment**  
    **Q:** How much capital is needed for combustion program extensions?  
    **A:** Capital investment varies; some program extensions may require minimal capital, while others may need more.  **[BWA_3405060_12]**  Extensions, prolongations, and hybrids carrying over combustion engines are driving outgrowth in the combustion market.  **[BWA_3405060_12]** 

15. **Impact of Elections on Bookings**  
    **Q:** Will U.S. election results affect OEM award activity?  
    **A:** Management did not speculate on this, stating they are ready to support customers wherever they want to go.  **[BWA_3405060_19]** 

cab0c1c1c646b7a6c20d0c94940511abaeca4d0ade88fb6e2bbefe43f05fc016

- **Strong operational performance in Q1**, with **sales growth driven by China and Europe** in both foundational and eProduct businesses, particularly in the drivetrain and battery systems segments. This resulted in a **23% all-in incremental margin**.  **[BWA_3382130_24]** **[BWA_3382130_12]**
- Management is **focused on maintaining and improving margins**, aiming for **mid- to high-teens incrementals**, and is adjusting costs to market conditions to **improve margin performance** across all product lines.  **[BWA_3382130_6]** **[BWA_3382130_17]** **[BWA_3382130_13]**
- The company has **significant exposure to the growing Chinese EV market**, with **about 45% of the $1.9 billion in light vehicle eProducts revenue for 2024 expected from China**, and **95% of that from Chinese OEMs**, positioning it well in a high-growth market.  **[BWA_3382130_18]**

f69c81eb032691499bf982dcc2140ee6e56a4fe032541622527c274f991fcf77

- BorgWarner is facing ongoing losses at Eldor with no change in outlook, indicating a continued financial drag on the company's results.  **[BWA_3395272_24]**
- Reduction in eProduct revenue growth, with eProducts at the low end of guidance and underperformance of BEV programs in North America, leading to lowered growth over market expectations.  **[BWA_3395272_23]** **[BWA_3395272_10]**
- Anticipated 2-3% reduction in the market year-over-year, with significant reductions in China due to weaker consumer demand, potentially impacting BorgWarner's top-line growth.  **[BWA_3395272_18]**

d50bca50e5eb6ca49f5db8246220384d49b116ae1a91091c236d13f7c0c12651

- **Strong financial performance with 10.4% adjusted operating margin**, up 30 basis points from prior year, and **EPS increased by $0.13**, despite declining market production.  **[BWA_3395272_4]**
- **eProduct sales growing 25% year-over-year**, from about $2 billion to about $2.5 billion, with the **battery business on track and contributing positively to margins**.  **[BWA_3395272_23]** **[BWA_3395272_15]**
- **Shareholder-friendly capital allocation**, with the intention to **repurchase $300 million of stock**, returning 100% of cash generation to shareholders, and no significant M&A planned in the near term.  **[BWA_3395272_20]**

ba925a6d260fa59954ca91af95d536b12e3bf2722665acd76715406e5faf1ef2

- BorgWarner's future eProduct revenue targets rely heavily on significant mergers and acquisitions, including **$2 billion** in 2027, indicating that organic growth may be insufficient to meet projections and introducing potential integration risks.  **[BWA_3372439_14]**
- The decline in the internal combustion engine market could challenge BorgWarner's ability to maintain its **13% foundational margin target**, as they need to offset the decreasing ICE business while investing in electrification.  **[BWA_3372439_11]**
- The acquisition of Eldor is expected to negatively impact operating margins in the short term by **30 to 40 basis points**, since Eldor is an engineering firm with minimal revenue today, which could weigh on profitability.  **[BWA_3372439_18]**

86b9d4831fb141ddde4dd9c0a496af95a622a10c1a0af1a07f5e0c9e056cdabf

1. **eProduct Revenue Growth**  
   **Q:** Is the $4.5B–$5B 2025 eProduct revenue target still achievable?  
   **A:** Management believes that the 2025 eProduct revenue target of **$4.5 billion to $5 billion** is still attainable if customer volumes hold as currently forecasted. They expect a significant ramp-up in eProduct revenues this year, with many programs launching in 2024 and higher jump-off points in both commercial vehicles and light vehicles by the end of the year.  **[BWA_3372439_12]** 

2. **Eldor Acquisition Impact**  
   **Q:** How does the Eldor acquisition affect margins and losses?  
   **A:** The Eldor acquisition was fully anticipated to have a near-term impact on margins, reducing them by **30 to 40 basis points**. The company expects operating losses from Eldor of around **$50 million** in 2024, which aligns with their original expectations. Management is confident that Eldor will contribute to long-term profitable growth in the **$30 billion** addressable market by 2030.  **[BWA_3372439_9]** **[BWA_3372439_17]** **[BWA_3372439_21]** 

3. **Flexibility Between EVs and Hybrids**  
   **Q:** Can the company adapt if there's a shift from EVs to hybrids?  
   **A:** Management states that their eProduct portfolio is highly fungible between hybrids and battery electric vehicles (BEVs). The same motors, power electronics, and other components are used for both, making R&D and capital investments flexible. They are well-positioned to support customers regardless of shifts between EVs and hybrids.  **[BWA_3372439_8]** **[BWA_3372439_15]** **[BWA_3372439_16]** 

4. **Mid-Teens Conversion Margin**  
   **Q:** What are the expected contribution margins on incremental revenue?  
   **A:** The company expects mid-teens conversion on incremental revenue, both in the foundational business and in eProducts. Despite revenue pressures in the foundational portfolio, they aim to sustain margins through pricing, cost management, and restructuring.  **[BWA_3372439_7]** **[BWA_3372439_9]** **[BWA_3372439_22]** **[BWA_3372439_23]** **[BWA_3372439_24]** 

5. **Capital Allocation and M&A Strategy**  
   **Q:** How does the current environment affect capital allocation and M&A plans?  
   **A:** The company continues to view M&A as important for strengthening electrification capabilities, with **$2 billion** of M&A assumed in the 2027 targets. They remain disciplined in evaluating opportunities and believe the current environment may offer attractive buying opportunities. They also highlight their commitment to shareholder returns through dividends and share buybacks.  **[BWA_3372439_19]** **[BWA_3372439_27]** 

6. **CapEx and R&D on eSystems**  
   **Q:** How much of the 2024 CapEx and R&D is allocated to eSystems?  
   **A:** A significant portion of R&D is allocated to eProducts, with about **$475 million** invested in 2023 and an expected organic increase of **$40 million to $50 million** in 2024. Capital expenditures will remain elevated in 2024, particularly for ePropulsion and battery pack businesses, with expectations to normalize to around **5%** of sales in the future.  **[BWA_3372439_20]** **[BWA_3372439_25]** 

7. **Battery Pack Production Ramp**  
   **Q:** What is the visibility into the battery pack production ramp?  
   **A:** The company is ramping up a second production line in Seneca, North Carolina, with another line being commissioned in Europe. They anticipate a **65%** year-over-year growth at the midpoint for battery packs, with strong demand exceeding production capacity and no issues with cell supply.  **[BWA_3372439_26]** 

8. **Foundational Business Revenue Decline**  
   **Q:** How will declining combustion revenues affect margins?  
   **A:** The company anticipates foundational revenues to decline by **0.5 to 2 percentage points** year-over-year due to a market decline of **3% to 6%**. However, they plan to sustain margins through cost management, restructuring, and by outperforming the underlying market, expecting to decrement at mid-teens rates.  **[BWA_3372439_11]** **[BWA_3372439_23]** **[BWA_3372439_24]** 

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- **Significant dependence on Chinese OEMs for eProducts revenue**, with **95% of the $1.9 billion light vehicle eProducts revenue in China attributed to Chinese OEMs**.  **[BWA_3382130_18]**  This exposes the company to geopolitical risks and market volatility in China.
- **ePropulsion segment is underperforming in margins**, with management admitting that they are **"not satisfied"** with the **30% incremental margin**.  **[BWA_3382130_17]**  This suggests challenges in achieving profitability in the electrification segment.
- **A substantial portion (40%) of eProducts sales is attributed to hybrids**, not pure EVs.  **[BWA_3382130_2]**  This reliance on hybrids could be risky if the market shifts more rapidly towards pure electric vehicles, potentially impacting future growth prospects.

161b87be366ec5248f850419fa84e5a09f932c8e74c3b8e9dda36aa72e577275

- **BorgWarner continues to outgrow market production by approximately 270 basis points year-to-date**, demonstrating the resiliency of their technology-focused portfolio.  **[BWA_3405060_18]**
- The company is implementing **structural cost reductions targeting $100 million savings by 2026**, enhancing margins and profitability.  **[BWA_3405060_20]**
- **BorgWarner's combustion portfolio is fully compatible with hybrid powertrains**, and their eProducts are applicable to both hybrids and battery electric vehicles, positioning them well for the transition to electrification.  **[BWA_3405060_14]**

3650a11c91dc2207a0ad38c50bff6d00e9d9820140cc36ef09e46eaa418b9f2e

- **BorgWarner is successfully maintaining strong margins in their foundational combustion and hybrid business, outgrowing the foundational market by about 300 basis points and constantly restructuring to sustain margins.**  **[BWA_3372439_11]**
- **Demand for BorgWarner's battery systems is exceeding production capacity, especially in the commercial vehicle segment, leading to a ramp-up of production lines to meet this strong demand, indicating robust growth prospects in their eProduct segment.**  **[BWA_3372439_26]**
- **BorgWarner's flexible and comprehensive product portfolio covers both hybrid and BEV technologies, enabling them to support customers regardless of shifting powertrain preferences, positioning them well to capture opportunities arising from potential shifts towards hybrid vehicles.**  **[BWA_3372439_15]**

d6c57dffb458090cf454ba32323ef8472c4ab03457f398cda1caf4fca754dbec

- **BorgWarner has lowered its growth over market (GOM) assumption for 2024 from 350-450 basis points to 200-300 basis points, indicating reduced expectations for sales growth.**  **[BWA_3405060_18]**
- **The recent $24 million benefit from volume-related PDS customer recoveries is a one-time item and will not be repeated, suggesting that recent margin improvements may not be sustainable.**  **[BWA_3405060_7]**
- **The company is experiencing significant declines in light vehicle production (LVP) in key markets, with expectations of a 5% to 5.5% year-over-year decrease in North America and Europe, which could negatively affect future revenues.**  **[BWA_3405060_16]**

cf70ebab13db389dc0e9df742d10349f6176f1576442179b8e7a651184126f19

Borgwarner Inc (BWA)

Financials