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BorgWarner on Track to Achieve Milestone of $4 Billion of Electric Vehicle Revenue by 2025

Auburn Hills, Michigan, October 27, 2022 – BorgWarner Inc. (NYSE: BWA) today reported third quarter results.

Charging Forward Update:

  • Based on new business awards and actions announced to date, BorgWarner believes it is already on track to achieve approximately $4 billion of electric vehicle revenue by 2025. The Company continues to expect its 2022 electric vehicle revenue to grow to approximately $850 million, which is more than double what it was in 2021.
  • BorgWarner has agreed to acquire the charging business of Hubei Surpass Sun Electric (SSE). The acquisition complements BorgWarner’s existing European and North American charging footprints by adding a China presence. The Company now expects DC fast charging related revenue in the range of $225 million to $275 million by 2025.
  • BorgWarner has been granted a production increase to supply its 800V silicon carbide (SiC) inverters to a premium European OEM. The initial order has now been significantly increased with production for this program set to begin in 2024.
  • BorgWarner will supply electric motors for E-Axles of a European commercial vehicle OEM. This e-axle is designed to equip new electric light commercial trucks ranging up to 7.5 tons. Production is expected to begin in early 2023.
Third Quarter Highlights:
  • U.S. GAAP net sales of $4,060 million, an increase of 19% compared with third quarter 2021.
  • Excluding the impact of foreign currencies, the 2022 acquisitions of Santroll’s light vehicle eMotor business and, Rhombus Energy Solutions, and the 2021 divestiture of the Water Valley, Mississippi business, organic sales were up 29% compared with the third quarter 2021.
  • U.S. GAAP net earnings of $1.16 per diluted share.
  • Excluding $(0.08) per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $1.24 per diluted share.
  • U.S. GAAP operating income of $389 million, or 9.6% of net sales.
  • Excluding $49 million of pretax expenses related to non-comparable items, adjusted operating income was $438 million, or 10.8% of net sales.
  • Net cash provided by operating activities of $347 million.
  • Free cash flow was $167 million.

Financial Results:

The Company believes the following table is useful in highlighting non-comparable items that impacted its U.S. GAAP net earnings per diluted share. The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations, other gains and losses not reflective of the Company’s ongoing operations, and related tax effects.

Net sales were $4,060 million for the third quarter 2022, an increase of 19% compared with $3,416 million for the third quarter 2021. Net earnings for the third quarter 2022 were $273 million, or $1.16 per diluted share, compared with net earnings of $96 million, or $0.40 per diluted share, for the third quarter 2021. Adjusted net earnings per diluted share for the third quarter 2022 were $1.24, up from adjusted net earnings per diluted share of $0.80 for the third quarter 2021. Adjusted net earnings for the third quarter 2022 excluded net non-comparable items of $(0.08) per diluted share. Adjusted net earnings for the third quarter 2021 excluded net non-comparable items of $(0.40) 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 U.S. GAAP measures. The increase in adjusted net earnings was primarily due to the benefit of customer pricing actions and the impact of higher revenue, partially offset by inflationary impacts on cost and higher R&D investment in the Company’s electrification portfolio.

Full Year 2022 Guidance: The Company has updated full year sales, margin and EPS guidance. Net sales are expected to be in the range of $15.4 billion to $15.7 billion, compared with 2021 sales of $14.8 billion. This implies a year-over-year increase in organic sales of 12% to 14%. The Company expects its weighted light and commercial vehicle markets to increase in the range of approximately 3% to 4.5% in 2022. Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $1 billion primarily due to the weakening of the Euro, the Korean Won and Chinese Renminbi against the U.S. dollar. The acquisitions of Santroll’s light vehicle eMotor business and Rhombus Energy Solutions are expected to increase year-over-year sales by an aggregate of approximately $45 million to $55 million. The divestiture of the Water Valley, Mississippi business will decrease year-over-year sales by approximately $177 million.

Operating margin for the full year is expected to be in the range of 8.6% to 8.9%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 10.0% to 10.2%. Net earnings are expected to be within a range of $3.71 to $3.91 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $4.25 to $4.45 per diluted share. Full-year operating cash flow is expected to be in the range of $1,450 million to $1,500 million, while free cash flow is expected to be in the range of $650 million to $750 million. 

At 9:30 a.m. ET today, a brief conference call concerning third quarter 2022 results and guidance will be webcast at: https://www.borgwarner.com/investors. Additionally, an earnings call presentation will be available at https://www.borgwarner.com/investors.

For more than 130 years, BorgWarner Inc. (NYSE: BWA) has been a transformative global product leader bringing successful mobility innovation to market. Today, we’re accelerating the world’s transition to eMobility -- to help build a cleaner, healthier, safer future for all.

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