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Jun 30, 2022
BorgWarner Q2 2022 Earnings Report
BorgWarner reported second quarter results with organic sales up 7% compared with second quarter 2021.
Key Takeaways
BorgWarner's second quarter results showed roughly flat net sales compared to the previous year, but organic sales increased by 7%. The company is making progress with its electrification strategy, expecting electric vehicle revenue to more than double in 2022.
BorgWarner believes it is already on track to achieve approximately $3.7 billion of electric vehicle revenue by 2025.
The Company now expects its 2022 electric vehicle revenue to grow to approximately $850 million, which is more than double what it was in 2021.
BorgWarner acquired Rhombus Energy Solutions for approximately $130 million at closing, with up to $55 million in contingent payments possible.
BorgWarner affirmed its full year sales, margin and cash flow guidance, while increasing its EPS guidance.
BorgWarner
BorgWarner
Forward Guidance
The Company has affirmed its full year sales, margin and cash flow guidance, while increasing its EPS guidance.
Positive Outlook
- Net sales are expected to be in the range of $15.5 billion to $16.0 billion, compared with 2021 sales of $14.8 billion. This implies a year-over-year increase in organic sales of 11% to 14%.
- The Company expects its weighted light and commercial vehicle markets to increase in the range of approximately 2.5% to 5.0% in 2022.
- 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.
- Operating margin for the full year is expected to be in the range of 8.4% to 8.8%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 9.8% to 10.2%.
- Full-year operating cash flow is expected to be in the range of $1,500 million to $1,550 million, while free cash flow is expected to be in the range of $650 million to $750 million.
Challenges Ahead
- Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $820 million primarily due to the weakening of the Euro, the Korean Won and Chinese Renminbi against the U.S. dollar.
- The divestiture of the Water Valley, Mississippi business will decrease year-over-year sales by approximately $177 million.
- Net earnings are expected to be within a range of $3.40 to $3.80 per diluted share.
- Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $4.00 to $4.40 per diluted share.
- supply disruptions impacting us or our customers, such as the current shortage of semiconductor chips that has impacted original equipment manufacturer (“OEM”) customers and their suppliers, including us