BWA Investor Presentation-07-27-2018 · 2018. 9. 18. · © BorgWarner Inc. 4 Increasing Diversity...
Transcript of BWA Investor Presentation-07-27-2018 · 2018. 9. 18. · © BorgWarner Inc. 4 Increasing Diversity...
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August 2018
Investor Presentation
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© BorgWarner Inc. 2
� Technology Leadership
� Customer, Geographic and Efficient Propulsion System Diversity
� Financial Strength and Discipline
The BorgWarner Strategic Difference
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© BorgWarner Inc. 3
THERE WILL ALWAYS BE A NEED FOR A
PROPULSION SYSTEM
Addressing Vehicle Mobility Trends
autonomousdriving
shared cars and rideshare
connected cars
efficiency/CO2emissions
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© BorgWarner Inc. 4
Increasing Diversity of Light Vehicle Production
93M
2023 IHS UNITS*
83M
2016 IHS UNITS*
90M
3M
0.5M
ElectricHybridCombustion
-1.1% CAGR
34% CAGR
31% CAGR
2% CAGR
*Source market data: IHS Light Vehicle Forecast (May 2017*).
83M
107M
21M3.4M
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© BorgWarner Inc. 5
Industry Propulsion Mix: Ongoing Evolution
2023 IHS UNITS*2016 IHS UNITS*
93M
90M
3M
0.5M
83M
107M
21M3.4M
11M
89M
2.2M 102M
2020 IHS UNITS*
ElectricHybridCombustion
*Source market data: IHS Light Vehicle Forecast (May 2017*).
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© BorgWarner Inc. 6
2016 IHS UNITS*
96.4%
3.0%
0.6%
ElectricHybridCombustion
2016 BWA REVENUE (USD)
98.8%
1.1%
0.1%
2020 IHS UNITS*
87.0%
10.8%
2020 BWA REVENUE (USD)
2.2%
88.7%
9.6%
1.7%
*Source market data: IHS Light Vehicle Forecast (May 2017)
Accelerating Revenue Diversity by 2020
(As of 2017 Investor Day )
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© BorgWarner Inc. 7
ElectricHybridCombustion
CV & AM
7% CAGR
$0.1<$0.1
$1.4$8.8
2020
83M
$11.5
2016
21M $0.2
5% CAGR
88% CAGR
102% CAGR
$7.3
$1.0
$8.8
$1.63% CAGR
*all values in billions
2020 Revenue Outlook of $11.5B - $11.8B
(As of 2017 Investor Day )
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© BorgWarner Inc. 8
� Timing system
� Variable cam timing
� Exhaust gas recirculation
� Clutch plates
� All-wheel drive systems
� Enhanced starters
� Fans & fan drives
� Pictured products and many more…
Combustion Products:
Combustion Propulsion** Includes engines, transmissions and all-wheel drive systems with no electrification, includes stop/start. All prices are estimates, actual prices will vary.
$100 $250 $350
Boosting Technologies
Exhaust Gas Management
Transmission Technologies
Variable Cam Timing
$45
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© BorgWarner Inc. 9
Penetration of Key Combustion Products Continues to Grow
Technology Penetration % - Combustion Only (includes S/S) -Gas & Diesel
2017 2025
Turbochargers 45% 58%
Exhaust Gas Recirculation 26% 46%
Variable Cam Timing 65% 71%
Dual Clutch Transmission 9% 9%
Stop/Start 42% 67%
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© BorgWarner Inc. 10
aCPV (Average Content Per Vehicle) Combustion Vehicles with BW Content
53%
86M
44%
88M
2016 IHS UNITS 2023 IHS UNITS
$185aCPV
$215aCPV
2020 IHS UNITS
$200aCPV
50%
89M
(As of Aug 2017) (As of Sep 2016)(As of Sep 2016)
Growth and Participation in Combustion
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© BorgWarner Inc. 11
$300 $700 $900 $1200$200
* Includes mild, full and plug-in hybrid. All prices are estimates, actual prices will vary.
Combustion ProductsPLUS Hybrid Specific Products
� Exhaust heat recovery systems
� Electric drive motors
� Disconnect clutch and controls
� Pictured products and many more…
eBooster ® iBAS SystemsP2 Hybrid Module
On/Off AxisPower Electronics Electric All-Wheel Drive
Hybrid Propulsion*
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© BorgWarner Inc. 12
Hybrids Use Highly Efficient Internal Combustion Engines
� Hybrids drive increasing demand for BorgWarner’s efficient ICE products
Technology Penetration % - Hybrid Only - Gas & Diesel
2017 2025
Turbochargers 20% 65%
Variable Cam Timing 63% 69%
Dual Clutch Transmission 14% 31%
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© BorgWarner Inc. 13
aCPV (Average Content Per Vehicle) Hybrid Vehicles with BW Content
42%
18M
3M20%
2023 IHS UNITS
$140aCPV
$225aCPV
2016 IHS UNITS 2020 IHS UNITS*
$240aCPV
11M
36%
(As of Aug 2017) (As of Sep 2016)(As of Sep 2016)
Growth and Participation in Hybrid
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© BorgWarner Inc. 14
� Electric all-wheel drive
� Liquid heater
� Auxiliary coolant pump
� Fuel Cell air supply
� Transmission Chain
� Friction Products
� Pictured products and many more…
Electric Vehicle Products:
$500 $700 $1100Cabin Air Heater eGearDrive ® Electric Drive Motor Electric Drive Module
$200
* Includes battery electric vehicles, range extenders and fuel cells. All prices are estimates, actual prices will vary.
Power Electronics
$700
Electric Propulsion*
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© BorgWarner Inc. 15
aCPV (Average Content Per Vehicle) Electric Vehicles with BW Content
2023 IHS UNITS
29%
2.3M
$285aCPV
$620aCPV
0.5M 3%
2016 IHS UNITS 2020 IHS UNITS*
2.2M
26%$285aCPV
(As of Aug 2017) (As of Sep 2016)(As of Sep 2016)
Growth and Participation in Electric
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© BorgWarner Inc. 16
Note: Participation Rate
$285
$200
50% 36% 26%
$240
CO
MB
US
TIO
N
HY
BR
ID
EL
EC
TR
ICEstimated 2020 Average Content Per Vehicle
As of 2017 Investor Day
Note: Excludes Sevcon
Excellent Balance by 2020
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© BorgWarner Inc. 17
$2.0 Billion - $2.4 Billion of Backlog thru 2020
2018-2020 Backlog as of January 17, 2018
50% of Backlog Related to Hybrid and Electric Propulsion
50% 45% 5%
Note: Excludes Sevcon
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© BorgWarner Inc. 18
Mid-term Organic Growth Outlook
Mid-to-high single digit
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© BorgWarner Inc. 19
Recent Product Announcements
eGearDrive® Transmissionfor the First Automotive Works (FAW) Group’s Besturn B30EV and JunpaiA70E.
Electro-Mechanical On-Demand Transfer Case for the Ram 1500 4x4 pickup truck.
Variable Cam Timing (VCT) Technologyfor the new Hyundai Gamma II engine.
2018 Automotive News PACE Award for its S-wind wire forming process for electric motors and alternators.
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© BorgWarner Inc. 20
Competitive Landscape
Turbochargers
~6
VCT
EGR
Transmission Friction
Transmission Controls
Timing Systems
Starters/Alternators
All-Wheel Drive
Belt Alternator Starters
~5
Hybrid Drive Motors
Disconnect Clutches
Hybrid Modules
Power Electronics
eBooster
Drive Motors
~6
Transmissions
Power Electronics
Battery Thermal Mgmt
Cabin Heating
Average number of major competitors is similar for each product category
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© BorgWarner Inc. 21
2017
12.4%
2020
Low 13% Range
Projected Operating Margin Growth by 2020
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© BorgWarner Inc. 22
15%
16%
17%
18%
20%+
19%
ROI%
2017 2018 2019 SOP Year
Capital Deployment Discipline
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© BorgWarner Inc. 23
Delivering Operating Margins
* The acquisition of Remy was 90bps dilutive to operating margin
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© BorgWarner Inc. 24
Our Strategy is Working
� Continued significant wins across C-H-E
� 2020 revenue outlook of $11.5B - $11.8B
� Margins set to improve through the end of the decade
� Ongoing confidence in long-term growth targets of mid to high single digits
� Approach our customers as a balanced propulsion partner
� BorgWarner remains at the forefront of evolving industry C-H-E-mix
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Appendix
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© BorgWarner Inc. 26
Diesel Transition Manageable Over the Mid-term
Diesel Turbocharger
Gasoline Turbocharger Variable Cam TimingGasoline EGR Module
Diesel EGR Module Glow Plug
Revenue impact is neutralized by the end of the backlog period
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© BorgWarner Inc. 27
2018 Full Year Guidance
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© BorgWarner Inc. 28
Organic Sales Growth of ~6.0% - 7.0%$ in millions
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© BorgWarner Inc. 29
12.4% Margin 12.5% - 12.6% Margin
Operating Margins Improve YOY$ in millions
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© BorgWarner Inc. 30
� EPS Guidance $4.45 - $4.50
� Free Cash Flow $550 - $575 million
� CapEx $575 - $625 million
� Share Repurchases $150+ million
� R&D Spending ~4% of sales
� Tax Rate Low 26% range
� 2H’18 $ / Euro FX Rate ~$1.15 / ($90)M
� FY’18 FX Revenue Impact ~$220M
2018 Guidance – Other Items
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© BorgWarner Inc. 31
$650-$730
$675-$800
$700-$825
2018 2019 2020
As of January 17, 2018
$ in millions
Improved 2020 Revenue Outlook of $11.5B - $11.8B
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© BorgWarner Inc. 32
Based on 2017 Sales excluding Sevcon
VW/AudiDaimlerRenaultFordBMWPSAVolvo JLRCVOther
11%5%3%2%2%2%2%2%3%6%
Europe 38%
Hyundai/KiaOther Asia ex. China
7%5%
Asia ex. China 12%
VW/AudiGreat WallFordSAICGMSGMWOther China
2%2%1%1%1%1%8%
China 16%
FordFCAGMAsian OEMsCommercial VehiclesOther
9%7%5%3%4%
6%
Americas 34%
Long-Standing Relationships Paying Off
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© BorgWarner Inc. 33
� Timing drive Americas (2019), EU (2019), Asia (2019)
� Variable cam timing EU (2019), Asia (2018, (3) 2019)
� Dual Clutch Module Asia ((4) 2019)
� Transfer Case & Disconnect EU (2020)
� EGR Cooler EU (2017, 2019, 2020), Asia (2018, 2019)
� Plug top Ignition coils EU (2020)
� Plug top Ignition coils Asia (2) (2019)
� Gas 2.0L turbocharger EU (2020, 2021, 2022), Asia (2020)
� Gas 1.5L turbocharger Asia (2018, 2019)
Combustion - Select Customer Awards
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© BorgWarner Inc. 34
Hybrid - Select Customer Awards
� Chain drive for P3 Europe (2018)
� Wet disconnect and controls for P2 Asia (2018, 2019)
� 200V BAS for P0 EU & Asia (2019)
� P2 On-Axis Module EU (2020)
� CV P2 On-Axis motor N. America & EU (2018)
� Exhaust heat recovery system N. America (2019)
� 48V eBooster® EU (2019, 2020)
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© BorgWarner Inc. 35
Electric - Select Customer Awards
� eGearDrive® transmission Asia (2017, 2017, 2018, 2018, 2018)
� Electric Drive Module Asia (2018, 2018, 2018, 2019)
� Electric Drive Module N. America (2019)
� Cabin Air Heater N. America (2017)
� Cabin Air Heater China (2017, 2018)
� Electric Drive Motor N. America (2018)
� CV Electric Drive Motor EU (2019)
� Transmission friction plates EU (2019)
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© BorgWarner Inc. 36
Hybrid / Electric Drive Motors
� Deep systems integration
� 18,000 rpm
� Same motor used for both vehicle propulsion and battery regeneration
� Unique motor & power electronics applications
Bearing
Lamination Stacks / Magnets
Housing
Bearing
Rotor
Stator / Windings
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© BorgWarner Inc. 37
Permanent Magnet Non-Permanent Magnet
InductionCopper
InductionAluminum
Neodinium Assisted Synch Reluctance
Round Wire
Rectangular Wire
Hairpin S-Wind Round Wire
Rectangular Wire
Hairpin S-Wind
H/EV Traction MotorAwarded / Production
Quoted
Wide Variety of Hybrid / EV Motor Topologies