BorgWarner Inc. reported second quarter results today
BorgWarner Inc. today announced its second quarter results.
Update charging ahead:
- Based on new corporate pricing and promotions announced so far, BorgWarner believes it is already on track to achieve approximately $3.7 billion in electric vehicle revenue by 2025. The company now expects electric vehicle revenues to grow to about $850 million by 2022, more than double what it was in 2021.
- BorgWarner has announced that it has acquired Rhombus Energy Solutions, a provider of charging solutions to the North American market. The company paid approximately $130 million at closing and up to $55 million could be paid in the form of contingent payments over the next three years.
- BorgWarner has been selected for two additional high-voltage coolant heating programs, one with a global OEM expected to launch in 2023 and the other with an emerging electric vehicle brand in China expected to launch in 2024.
- BorgWarner has obtained a battery system from a European commercial vehicle OEM. This battery system will be used in medium duty commercial vehicles expected to be launched in 2024.
- BorgWarner published its 2022 Sustainability Report – Charging Forward Together – which focuses on how the company is delivering on its vision of a clean, energy-efficient world and embodies its beliefs of inclusion, integrity, excellence, responsibility and collaboration throughout its operations.
Highlights second quarter:
- US GAAP net sales of $3,759 million, roughly equal to the second quarter of 2021.
- Excluding the impact of foreign exchange, the 2022 acquisition of Santroll’s eMotor light-vehicle business and the 2021 divestiture of the Water Valley, Mississippi business, organic sales increased 7% compared to the second quarter of 2021 .
- US GAAP net income of $0.91 per diluted share.
- Excluding $(0.14) per diluted share related to non-comparable items (detailed in the table below), adjusted net income was $1.05 per diluted share.
- US GAAP operating income of $272 million, or 7.2% of net sales.
- Excluding $76 million in pre-tax charges related to non-comparable items, adjusted operating income was $348 million, or 9.3% of net sales.
- Net cash from operating activities of $216 million.
- Free cash flow was $62 million.
The company believes the following table is helpful for highlighting non-comparable items that impacted US GAAP net earnings per diluted share. The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to reflect the impact of restructuring costs, merger, acquisition and divestment costs, other net costs, discontinued operations, other gains and losses that are not reflective of the Company’s ongoing operations. the Company, and related tax consequences.
Net sales were $3,759 million for the second quarter of 2022, roughly equivalent to $3,758 million for the second quarter of 2021. Net income for the second quarter of 2022 was $216 million, or $0.91 per diluted share. compared to net income of $247 million, or $1.03 per diluted share, for the second quarter of 2021. Adjusted net income per diluted share for the second quarter of 2022 was $1.05, lower than adjusted net income per diluted share of $1.08 for Q2 2021. Adjusted net income for Q2 2022 excluding net non-comparable items of $(0.14) per diluted share. Adjusted net income for the second quarter of 2021 did not include non-comparable net items of $(0.05) per diluted share. These items are listed in the table above, which is provided by the company for comparison with other results and the most directly comparable US GAAP measures. The decrease in adjusted net profit was mainly due to higher net investment in R&D, the impact of production shutdowns in China and net material cost inflation, partly offset by lower income taxes.
Guidelines for the whole year 2022:
The company has confirmed its full-year revenue, margin and cash flow forecast, while increasing earnings per share. Net sales are expected to be between $15.5 billion and $16.0 billion, compared to 2021 sales of $14.8 billion. This implies a year-over-year increase in organic sales from 11% to 14%. The company expects the weighted light and commercial vehicle market to grow by approximately 2.5% to 5.0% by 2022. Foreign currencies are expected to lead to a year-over-year decline in sales of about $820 million, mainly due to the weakening of the euro, Korean won and Chinese renminbi against the US dollar. The acquisitions of Santoroll’s eMotor light-vehicle business and Rhombus Energy Solutions are expected to increase year-over-year revenue by a total of approximately $45 million to $55 million. The sale of the Water Valley, Mississippi business will reduce annual revenue by approximately $177 million.
The full year operating margin is expected to be between 8.4% and 8.8%. Excluding the impact of non-comparable items, the adjusted operating margin is expected to be between 9.8% and 10.2%. Net income is expected to be in the range of $3.40 to $3.80 per diluted share. Excluding the impact of non-comparable items, adjusted net income is expected to be in the range of $4.00 to $4.40 per diluted share. Full year operating cash flow is expected to be between $1,500 million and $1,550 million, while free cash flow will be between $650 million and $750 million.