Welcome Investor Day
September 7, 2016 1
Welcome Investor Day
September 7, 2016 | Scott Gallett, Vice President Marketing 2
Safe Harbor Statement Statements contained in this presentation may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act (the “Act”) that are based on management's current outlook, expectations, estimates and projections. Words such as "anticipates," "believes," "continues," "could,“ "designed," "effect," "estimates," "evaluates," "expects," "forecasts," "goal," "initiative," "intends," "outlook,“ "plans," "potential," "project," "pursue," "seek," "should," "target," "when," "would," and variations of such words and similar expressions are intended to identify such forward-looking statements. All statements, other than statements of historical fact, that we expect or anticipate will or may occur in the future regarding our financial position, business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success and other such matters, are forward-looking statements. These statements are based on assumptions and analysis made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. Forward-looking statements are not guarantees of performance and the Company's actual results may differ materially from those expressed, projected or implied in or by the forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this document. Forward-looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control and include risks noted under Item 1A, “Risk Factors,” of our Annual Report on Form 10-K and in other reports that we file with the Securities and Exchange Commission. We do not undertake any obligation to update or announce publicly any updates to or revision to any of the forward-looking statements in this Form 10-Q to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements. This section is intended to provide meaningful cautionary statements for purposes of the safe harbor provisions of the Act. This should not be construed as a complete list of all of the economic, competitive, governmental, technological and other factors that could adversely affect our expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, operations, liquidity, financial condition and prospects.
© BorgWarner Inc.
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Investor Day Outline
10:40 11:10 11:20 11:30 11:40 11:50 12:00 2:35 2:45 3:15
Keynote Address – James Verrier, President and CEO Vehicle Mobility Trends – Chris Thomas, Chief Technology Officer Combustion – Frederic Lissalde, President Turbo Systems Hybrid – Stefan Demmerle, President PowerDrive Systems Electric – Joe Fadool, President Morse Systems Commercial Vehicle – Brady Ericson, President Emissions Systems Static Displays, Demonstration Vehicles & Lunch – Scott Gallett, Vice President Marketing Financial Discipline – Ron Hundzinski, Chief Financial Officer Q&A – James and Ron Closing – James
© BorgWarner Inc.
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Vehicle Mobility Trends
autonomous driving
© BorgWarner Inc.
shared cars and rideshare
connected cars
efficiency/CO2 emissions
5
Core Purpose Remains Unchanged POINT A
POINT B
THERE WILL ALWAYS BE A NEED FOR A
PROPULSION SYSTEM © BorgWarner Inc.
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Vehicle Propulsion System Categories
© BorgWarner Inc.
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Electric Hybrid Combustion
Light Vehicle Production 2% CAGR
0.5M
91M
23% CAGR
3M
2.3M 18M
29% CAGR
88M
-0.3% CAGR
2016 IHS UNITS*
© BorgWarner Inc.
107M
86M
2023 IHS UNITS*
*Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
8
Growth and Participation in Combustion Market and Participation
Revenue
aCPV (Average Content Per Vehicle) Combustion Vehicles with BW Content
88M
86M
2023
CAGR
5% aCPV
$185 2016
© BorgWarner Inc.
44% 2016 IHS UNITS*
*Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
aCPV
53%
$215 2023 IHS UNITS*
9
Combustion Propulsion* Combustion Products:
Timing system
Variable cam timing
Exhaust gas recirculation
Clutch plates
All-wheel drive systems
Enhanced starters
Fans & fan drives Stop/Start Accumulator
Pictured products and many more… • Includes engines, transmissions and all-wheel drive systems with no electrification, includes stop/start. All prices are estimates, actual prices will vary
© BorgWarner Inc.
$45
Turbocharger
Dual Clutch and Control Module
$250 $350 10
Growth and Participation in Hybrid Revenue
aCPV (Average Content Per Vehicle) Hybrid Vehicles with BW Content
18M
Market and Participation
2023
CAGR
54% aCPV
$140 2016
© BorgWarner Inc.
aCPV
3M 20% 2016 IHS UNITS*
*Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
$225
42% 2023 IHS UNITS*
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Hybrid Propulsion* Combustion Products PLUS Hybrid Specific Products
Exhaust heat recovery systems
Electric drive motors
Disconnect clutch and controls
Pictured products and many more… eBooster®
$200
Belt Alternator Starter
$250
P2 Motor/Clutch Module
Electric All-Wheel Drive
$900 $1200
* Includes mild, full and plug-in hybrid All prices are estimates, actual prices will vary
© BorgWarner Inc.
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Growth and Participation in Electric Revenue
aCPV (Average Content Per Vehicle) Electric Vehicles with BW Content
2.3M
Market and Participation
2023
CAGR
53% aCPV
aCPV
$620 2016
© BorgWarner Inc.
0.5M
3%
2016 IHS UNITS* *Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
$285
29% 2023 IHS UNITS*
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Electric Propulsion* Electric Vehicle Products:
Electric all-wheel drive
Liquid heater
Auxiliary coolant pump
Fuel Cell air supply
Transmission Chain
Pictured products and many more… Friction Plates
* Includes battery electric vehicles, range extenders and fuel cells. All prices are estimates, actual prices will vary
© BorgWarner Inc.
$40
Cabin Air Heater
eGearDrive®
Electric Drive Motor
Electric Drive Module
$200 $500 $700 $1100 14
Electric Hybrid Combustion
Excellent Balance – Light Vehicle
96.1%
2016 IHS UNITS*
© BorgWarner Inc.
0.6%
0.1%
3.3%
1.1%
98.7%
2016 BWA REVENUE (USD)
1.6%
2.2% 17.2%
14.8%
80.6%
83.6%
2023 IHS UNITS*
*Source market data: IHS Light Vehicle Forecast (June 2016)
2023 BWA REVENUE (USD)
15
Complementing Organic Growth with Acquisition Downsized Turbocharged Efficient Internal Combustion Engines
Trend
Select BWA Products Turbochargers
1993 Select BWA Milestones
Variable Cam Timing
Exhaust Gas Recirculation
2023
2008 Acquired turbocharger businesses
© BorgWarner Inc.
Acquired EGR cooler business
16
Complementing Organic Growth with Acquisition Trend
Advanced Drivetrain
Select BWA Products Dual Clutch Transmission Modules
1993 Select BWA Milestones
© BorgWarner Inc.
Front Wheel Drive All-Wheel Drive Coupling
2023
2008 Developed and launched DCT
Acquired FWD All-Wheel Drive coupling business
17
Complementing Organic Growth with Acquisition Trend
Electrification
Select BWA Products eGearDrive® Transmission
1993 Select BWA Milestones
© BorgWarner Inc.
2008 Developed and launched electric vehicle transmission
Electric Drive Motor
P2 Motor & Clutch module
2023 Acquired rotating electrics business
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Complementing Organic Growth with Acquisition Downsized Turbocharged Efficient Internal Combustion Engines
Trend
Advanced Drivetrain Electrification
Select BWA Products Turbochargers
Variable Cam Timing
Dual Clutch Transmission Modules
1993 Select BWA Milestones
eGearDrive® Transmission
Exhaust Gas Recirculation
Front Wheel Drive All-Wheel Drive Coupling
© BorgWarner Inc.
Developed and launched DCT
Developed and launched electric vehicle transmission
P2 Motor & Clutch module
2023
2008 Acquired turbocharger businesses
Electric Drive Motor
Acquired EGR cooler business
Acquired FWD All-Wheel Drive coupling business
Acquired rotating electrics business
19
Strong Global Customer Relationships
Europe Asia ex. China China Americas
© BorgWarner Inc.
38% 14% 14% 34%
Europe
38%
China
VW/Audi Daimler Ford Renault BMW PSA FCA GM CV Other
10% 5% 3% 3% 2% 2% 2% 1% 3% 7%
VW/Audi Ford GM Other China
Asia ex. China
14%
Hyundai/Kia Other Asia ex. China
*2016 Sales outlook includes net sales from Remy as of January 13, 2016
9% 5%
Americas Ford FCA GM Asian OEMs Commercial Vehicles Other
14% 3% 2% 1% 8% 34% 9% 5% 3% 2% 7% 8%
20
Zone of Growth - Organic
Mid-to-high single digit
© BorgWarner Inc.
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Summary
Vehicle mobility trends are good for our business, all still need a propulsion system
BorgWarner’s product portfolio is diverse, deep and well positioned for future propulsion needs
Our technologies strength will continue to be a key differentiator for us with our customers
Results in a zone of growth of mid to high single digits
Financial Strength and Discipline will continue
© BorgWarner Inc.
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Investor Day
September 7, 2016 23
Mobility Trends
September 7, 2016 | Prof. Christopher Thomas, Chief Technology Officer 24
Vehicle Mobility Trends
autonomous driving
© BorgWarner Inc.
shared cars and rideshare
connected cars
efficiency/CO2 emissions
25
Mobility Trends – Key Points 1. Understanding and impact on our business 2. Mobility trends all need a propulsion system 3. Continued drive for efficiency continues to be a large growth opportunity
© BorgWarner Inc.
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Autonomous Vehicles Key Points:
Lower levels of autonomy around us today
autonomous driving
© BorgWarner Inc.
Includes cruise control, active cruise control, autonomous emergency braking, lane keeping, automatic parking
Higher levels of autonomy require redundant systems
Joint development programs
Propulsion System:
Neutral for lower levels of autonomous vehicles
Full Hybrids favored for higher levels
27
Shared Cars and Rideshare Key Points:
Most prominent in urban areas
Business based ownership and decisions
Total Cost of ownership
Maximum up-time, minimal refueling time
Propulsion System:
shared cars and rideshare
© BorgWarner Inc.
48V mild hybrids favored
All propulsion types used today and into future
28
Connected Cars Key Points:
Vehicles communicate with each other and surroundings
Improves safety and efficiency
Accidents avoided and routes changed to avoid congestion
Reduction in the duty cycle for stopping, idling, accelerating
Propulsion System: Neutral
connected cars
© BorgWarner Inc.
Will improve efficiency of all vehicles
Combustion vehicles will benefit most
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Efficiency / CO2 Emissions Key Points:
Cost per % fuel economy improvement is King
Balanced global propulsion system mix:
efficiency/CO2 emissions
© BorgWarner Inc.
Downsized, turbocharged, direct injection, variable cam timing, and stop/start (2016 high end technology)
More advanced combustion engines = above plus cooled EGR, VTG turbochargers, variable valve lift, high energy ignition coils
Advanced combustion with 48V Mild Hybrid
Advanced combustion with high voltage Full Plug-in Hybrid
Electric Vehicle
30
Summary – Mobility Trends Vehicle mobility trends are good for our business, all still need a propulsion system We understand the interactions between the mobility trends and the impact on our business Efficiency/CO2 regulations in combustion, hybrid, and electric vehicles remain a big growth opportunity
© BorgWarner Inc.
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Investor Day
September 7, 2016 32
Combustion
September 7, 2016 | Frederic Lissalde, President Turbo Systems 33
Combustion © BorgWarner Inc.
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Definition – Combustion Vehicles that have an internal combustion engine and no electric motors that help propulsion Propulsion system includes transmissions and all-wheel drive systems
© BorgWarner Inc.
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Combustion – Key Point #1 1. Efficient combustion propulsion systems will play a key role in meeting government regulations Passenger car CO2 emissions and fuel consumption, normalized to NEDC
Source ICCT
© BorgWarner Inc.
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Combustion – Key Point #2 2. Continued extreme pressure for innovation $/% fuel economy
© BorgWarner Inc.
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Combustion – Key Points #3 3. Industry penetration rates continue to grow Technology Penetration % - Combustion Only (includes S/S) - Gas & Diesel 2016
2026
Turbochargers
42%
55%
Exhaust Gas Recirculation
29%
47%
Variable Cam Timing
54%
70%
8%
10%
35%
65%
Dual Clutch Transmission Stop/Start
© BorgWarner Inc.
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Growth and Participation in Combustion Market and Participation
Revenue
aCPV (Average Content Per Vehicle) Combustion Vehicles with BW Content
88M
86M
2023
CAGR
5% aCPV
$185 2016
© BorgWarner Inc.
44% 2016 IHS UNITS*
*Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
aCPV
53%
$215 2023 IHS UNITS*
39
Select Combustion Vehicles with BWA Content Audi A6
P0
P2
Hyundai Santa Fe
BYD S7
Jaguar F-PACE
Chevrolet Malibu
Mercedes E-Class
Jeep Grand Cherokee
Nissan Sentra
Ford F-Series
Toyota Tundra
Ford Escape / Kuga
Volkswagen Golf
Honda CR-V
And another ~800+ nameplates
© BorgWarner Inc.
P3
40
Combustion – Select Customer Awards Turbochargers: 1.0L gas EU 1.0L gas Asia 1.5L gas Asia
P0
Stop/Start Accumulators: N. America (2) Asia (2)
© BorgWarner Inc.
EGR Modules: P2 N. America (3) EU Asia (2)
P3
Variable Cam Timing: Americas (3) EU (2) Asia (2)
41
Combustion Vehicle Summary Combustion propulsion systems continue to be a large part of the market The drive for more efficient combustion engines continues Penetration rates for BorgWarner products continue to grow We are growing our market penetration and average content per vehicle
© BorgWarner Inc.
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Investor Day
September 7, 2016 43
Hybrid
September 7, 2016 | Stefan Demmerle, President PowerDrive Systems 44
Hybrid © BorgWarner Inc.
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Definition - Hybrid Vehicles that have an internal combustion engine and have some ability to propel the vehicle in combination with an electric motor © BorgWarner Inc.
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Definition - Hybrid Propulsion power delivered from the electric motor can vary dramatically Mild Hybrids vehicles with small electric motors and an internal combustion engine that can provide propulsion together to propel the vehicle Full Hybrids vehicles with larger electric motors and an internal combustion engine that can each propel the vehicle alone or work together Plug-in hybrids vehicle that uses an energy storage device that can be plugged into an external power source to recharge the battery
© BorgWarner Inc.
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Hybrid – Key Point #1 1. Wide variety of architectures, customers deciding what mix of hybrid, combustion and electric is best for them 48V mild hybrid systems forecast to be the majority of the volume BorgWarner’s portfolio includes a wide variety of hybrid specific products for all types of hybrids
© BorgWarner Inc.
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Hybrid – Key Point #2 2. Hybrids use highly efficient internal combustion engines Technology Penetration % - Hybrid Only - Gas & Diesel 2016
2026
Turbochargers
18%
56%
Exhaust Gas Recirculation
12%
41%
Variable Cam Timing
52%
68%
Hybrids drive increasing demand for BorgWarner’s efficient ICE products © BorgWarner Inc.
49
Hybrid Architecture Electric motors of different sizes and power levels can be placed in various positions throughout the propulsion system
P1 P3
P0
© BorgWarner Inc.
P2
P4
PS
50
Growth and Participation in Hybrid Revenue
aCPV (Average Content Per Vehicle) Hybrid Vehicles with BW Content
18M
Market and Participation
2023
CAGR
54% aCPV
$140 2016
© BorgWarner Inc.
aCPV
3M 20% 2016 IHS UNITS*
*Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
$225
42% 2023 IHS UNITS*
51
Select Hybrid vehicles with BWA Products Audi A3
Hyundai Sonata
BMW 3 Series
Mercedes C-Class
BYD Tanga
Toyota Camry
Chevrolet Malibu
Volkswagen Jetta
Chevrolet Volt
Volvo XC90
Ford Fusion
And another ~20+ nameplates
© BorgWarner Inc.
52
Hybrid – Select Customer Awards IBAS: 48V Asia & 200V EU
eBooster®: 48V EU (2)
© BorgWarner Inc.
Wet disconnect and controls: Asia
Chain Drive: Asia
P3
Exhaust Heat Recovery System: N. America
53
Hybrid Summary Hybrid market is growing quickly We have a wide variety of hybrid specific products Hybrids use highly efficient internal combustion engines Hybrids are additive to our business We are winning business, increasing our penetration and content per vehicle © BorgWarner Inc.
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Investor Day
September 7, 2016 55
Electric
September 7, 2016 | Joe Fadool, President Morse Systems 56
Electric © BorgWarner Inc.
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Definition – Electric An electric vehicle is propelled purely by an electric motor or sometimes multiple electric motors.
© BorgWarner Inc.
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Definition - Electric The electric motor(s) get their energy from a battery. Battery Electric Vehicles (BEV’s) have just the battery as the power source and when it runs out you need to plug it in to recharge it. Range Extended Electric Vehicles include the battery which supplies the power to the motor to drive the wheels, but there is a small efficient internal combustion engine in the vehicle that acts as a generator to charge the battery and/or give electrical power directly to the electric motor. Fuel Cell vehicles fall into this category
© BorgWarner Inc.
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Electric – Some Key Points Electric Propulsion systems have 5 main areas: Electric Motor Transmission Power Electronics Thermal Management Battery
© BorgWarner Inc.
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Electric – Some Key Points BorgWarner supplies products in these four areas: Electric Motor Transmission Power Electronics Thermal Management Battery
© BorgWarner Inc.
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Millions
Electric Vehicle Forecast l 7
IHS predicts strong EV growth with 19% CAGR
6 5 4 3 IHS Forecast 2 1 0 2016
© BorgWarner Inc.
2021
2026
62
Millions
Electric Vehicle Forecast 7
IHS predicts strong EV growth Asia represents 40% of units in 2026
6 5 4 3 IHS Forecast NA Brands
2 Asia Brands
1 EU Brands
0 2016
© BorgWarner Inc.
2021
2026
63
Millions
Electric Vehicle Forecast 7
IHS predicts strong EV growth Asia represents 40% of units in 2026
6 5 Including OEM announcements
4 3 IHS Forecast NA Brands
2 Asia Brands
VW, Tesla and (Toyota fuel cells, Daimler) have publicly announced significantly higher goals
1 EU Brands
0 2016
© BorgWarner Inc.
2021
2026
64
Millions
Electric Vehicle Forecast 7
Optimistic Forecast
6 5 Including OEM announcements
4 3 IHS Forecast NA Brands
2 Asia Brands
1 EU Brands
IHS predicts strong EV growth Asia represents 40% of units in 2026 VW, Tesla and Toyota fuel cells have publicly announced significantly higher goals Growth opportunity for BorgWarner
0 2016
© BorgWarner Inc.
2021
2026
65
Electric Vehicle Market Influencers Government Battery cost Vehicle range Performance Infrastructure / recharge time Consumer demand / passion
© BorgWarner Inc.
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Growth and Participation in Electric Revenue
aCPV (Average Content Per Vehicle) Electric Vehicles with BW Content
2.3M
Market and Participation
2023
CAGR
53% aCPV
aCPV
$620 2016
© BorgWarner Inc.
0.5M
3%
2016 IHS UNITS* *Source market data: IHS Light Vehicle Forecast (June 2016) All values are approximate
$285
29% 2023 IHS UNITS*
67
Electric - Select Customer Awards P0
eGearDrive® Transmission: Asia (4)
© BorgWarner Inc.
Electric Drive Motor: N. America
P2
P3
Electric Drive Module: Asia
68
Electric - Select Customer Awards Cabin Air Heater: N. America (2)
P0
Liquid Battery Heater: Asia
P2
Friction Plates: EU
P3
Auxiliary Coolant Pump: Asia
© BorgWarner Inc.
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Electric Summary Electric vehicles present some high dollar product opportunities Our product offering serves 4 of the 5 main propulsion and efficiency areas We are uniquely positioned to deliver mechanical and electrical products and modules We are winning business and actively working with traditional and new vehicle manufacturers globally
© BorgWarner Inc.
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Investor Day
September 7, 2016 71
Commercial Vehicle
September 7, 2016 | Brady Ericson, President Emissions Systems 72
Commercial Vehicle © BorgWarner Inc.
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Definition – Commercial Vehicle Includes on-highway vehicles (over six tons), off-highway, construction, agricultural, mining and marine Roughly 6 million unit annual market
© BorgWarner Inc.
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Commercial Vehicle Key Points Similar drive for efficiency as light vehicle market Greater pull from market rather than legislative push Total Cost of Ownership and Functionality Fuel Efficiency Up-time / Reliability Job Efficiency - Autonomous / Platooning Operator Satisfaction
© BorgWarner Inc.
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Commercial Vehicle Key Points Variation in duty cycles also drives need for innovative and proven product solutions Technology transfer will continue between Commercial and Light vehicles
© BorgWarner Inc.
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Making Commercial Vehicles Efficient
© BorgWarner Inc.
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Commercial - Select Customer Awards P2
Turbocharger: N. America EU (3) Asia S. America
Electric Drive motor: Asia
EGR module: EU (2)
Heavy Duty Transfer Case: N. America
© BorgWarner Inc.
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Commercial Vehicle Summary Continues to be an important portion of our business going forward Similar drive for efficiency and trends as light vehicles, U.S. Gov’t regulations We have specific products for the hybrid and electric trend and they are additive to our CV combustion business Technology transfer between Commercial and Light Vehicle continues
© BorgWarner Inc.
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Investor Day
September 7, 2016 80
Static Displays, Demo Vehicles, Lunch
September 7, 2016 | Scott Gallett, Vice President Marketing 81
Vehicle Propulsion System Categories
© BorgWarner Inc.
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Logistics Lunch available now through 2:15 Group 1 Now – 1:15 Demo Vehicles 1:15 – 1:45 Lunch 1:45 – 2:30 Static Displays
Group 2 Now – 12:30 Lunch 12:30 – 1:15 Static Displays 1:15 – 2:30 Demo Vehicles
2:35 – Resume group presentations with Ron Hundzinski, CFO
© BorgWarner Inc.
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Investor Day Outline
10:40 11:10 11:20 11:30 11:40 11:50 12:00 2:35 2:45 3:15
Keynote Address – James Verrier, President and CEO Vehicle Mobility Trends – Chris Thomas, Chief Technology Officer Combustion – Frederic Lissalde, President Turbo Systems Hybrid – Stefan Demmerle, President PowerDrive Systems Electric – Joe Fadool, President Morse Systems Commercial Vehicle – Brady Ericson, President Emissions Systems Static Displays, Demonstration Vehicles & Lunch – Scott Gallett, Vice President Marketing Financial Discipline – Ron Hundzinski, Chief Financial Officer Q&A – James and Ron Closing – James
© BorgWarner Inc.
84
Financial Discipline
September 7, 2016 | Ron Hundzinski, Chief Financial Officer 85
Zone of Growth - Organic
Mid-to-high single digit
© BorgWarner Inc.
86
BorgWarner Product leaders in clean, efficient propulsion system technology A trusted global partner Financial focus on ROIC, operating margins and economic value
© BorgWarner Inc.
87
Delivering Operating Margins Strong Operating Income Margins 12.4%
12.9%
13.0%
11.1%
11.7%
2011
2012
2013
2014
2015*
>12%
9.3%
2010
© BorgWarner Inc.
2016E*
88
Delivering ROIC 20.0%
21.7% Income Margins Strong Operating 20.7%
19.4%
16.7%
2010
© BorgWarner Inc.
2011
2012
2013
2014
18.3%
~18%
2015
2016E
89
Favorable Market Dynamics 1. Demand for combustion technology remains strong 2. For all architectures – combustion, hybrid and electric: Similar competitive landscape Opportunity for differentiation through manufacturing and product technology
3. OEMs reliance on the supply base for component level and system level technology is on the rise
© BorgWarner Inc.
90
Competitive Landscape Average number of major competitors is similar for each product category
Turbochargers
Belt Alternator Starters
Drive Motors
VCT
Hybrid Drive Motors
Transmissions
EGR
Disconnect Clutches
Transmission Friction Transmission Controls Timing Systems
~6
Hybrid Modules Power Electronics
~5
Power Electronics
~6
Battery Thermal Mgmt Cabin Heating
eBooster
Starters/Alternators All-Wheel Drive
© BorgWarner Inc.
91
BorgWarner’s Economic Moat Evolving portfolio aligned with market trends
Direct Competition
Deep, tribal knowledge of critical propulsion system technologies
BWA Margins
Economic valuebased business model
Emerging Alternative Technologies
Operational excellence
© BorgWarner Inc.
92
Expected Returns Incremental Sales
$1.00
Incremental Operating Income
$0.13 - $0.16
Incremental Capex & Working Capital
$0.55 - $0.60
ROIC
~20%
Focus and return on invested capital, margins & economic value remains strong © BorgWarner Inc.
93
Summary Confident in our long-term profitable growth Excited about our current and future products and future complementary acquisitions Balanced participation in light vehicle propulsion systems minimizes risk Financial Discipline will continue
© BorgWarner Inc.
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Investor Day
September 7, 2016 95
Investor Day
Q&A
September 7, 2016 96
Investor Day
September 7, 2016 97
Combustion - Select Customer Awards Variable cam timing Americas (3) (2017, 2018, 2019) Stop/Start accumulator N. America (2) (2017, 2018) Variable cam timing EU (2017, 2019), Asia (2018, 2019) EGR module EU (2017), Asia (2) (2018, 2019) EGR module N. America (3) (2018, 2018, 2018) Plug top ignition coils EU (2) (2018, 2020) Gas 1.0L turbocharger EU (2019), Asia (2019) Stop/Start accumulator Asia (2) (2019, 2019) Plug top Ignition coils Asia (2019) Gas 1.5L turbocharger Asia (2020) © BorgWarner Inc.
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Hybrid - Select Customer Awards Chain drive for P3 Asia (2016) Wet disconnect and controls for P2 Asia (2) (2016, 2018) 48V iBAS for P0 Asia (2017) eBooster® EU (2) (2017, 2017) 200V iBAS for P0 EU (2019) Exhaust heat recovery system N. America (2019)
© BorgWarner Inc.
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Electric - Select Customer Awards Auxiliary coolant pump Asia (2016) eGearDrive® transmission Asia (2017, 2017, 2018, 2018) Electric Drive Module Asia (2017) Cabin Air Heater N. America (2017, 2019) Electric Drive Motor N. America (2018) Liquid heater Asia (2018) Transmission friction plates EU (2019)
© BorgWarner Inc.
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Commercial - Select Customer Awards Turbocharger: N. America (2017) Turbocharger: S. America (2017) Turbocharger: Asia (2017) Turbocharger: EU (2018, 2018, 2018) Transfer-case: N. America (2018) Exhaust Gas Recirculation Module: N. America (2018, 2018) Electric Drive motor: Asia (2019)
© BorgWarner Inc.
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Summary
Vehicle mobility trends are good for our business, all still need a propulsion system
BorgWarner’s product portfolio is diverse, deep and well positioned for future propulsion needs
Our technologies strength will continue to be a key differentiator for us with our customers
Results in a zone of growth of mid to high single digits
Financial Strength and Discipline will continue
© BorgWarner Inc.
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Thank you! © BorgWarner Inc.
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Investor Day
September 7, 2016 104