BorgWarner Q4 2021 Earnings Report
Key Takeaways
BorgWarner's Q4 2021 results showed a decrease in net sales by 6.9% to $3,655 million, and a GAAP net income of $129 million, or $0.54 per diluted share. However, adjusted net earnings were $1.06 per diluted share, compared to $1.18 per diluted share in Q4 2020. The company is on track to achieve $3.3 billion of electric vehicle revenue by 2025.
Net sales decreased by 6.9% to $3,655 million compared to Q4 2020.
U.S. GAAP net earnings were $129 million, or $0.54 per diluted share.
Adjusted net earnings were $1.06 per diluted share, excluding non-comparable items.
Free cash flow was $370 million for the quarter.
BorgWarner
BorgWarner
Forward Guidance
The Company has provided 2022 full year guidance. Net sales are expected to be in the range of $15.9 billion to $16.5 billion. Adjusted net earnings are expected to be within a range of $4.15 to $4.60 per diluted share. Free cash flow is expected to be in the range of $700 million to $800 million.
Positive Outlook
- Net sales are expected to be in the range of $15.9 billion to $16.5 billion, compared with 2021 sales of $14.8 billion. This implies a year-over-year organic increase in sales of 10% to 14%.
- Operating margin is expected to be in the range of 8.7% to 9.4%.
- Excluding the impact of non-comparable items and the add back of intangible asset amortization expense, adjusted operating margin is expected to be in the range of 10.2% to 10.7%.
- Net earnings are expected to be within a range of $3.71 to $4.19 per diluted share.
- Full-year operating cash flow is expected to be in the range of $1,600 million to $1,650 million, while free cash flow is expected to be in the range of $700 million to $800 million.
Challenges Ahead
- Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $220 million, primarily due to the weakening of the Euro and Korean Won net of the strengthening of the 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.
- 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
- The difficulty in forecasting demand for electric vehicles and our electric vehicles revenue growth
- Commodities availability and pricing