BorgWarner (BWA) UBS Global Industrials and Transportation Conference summary

Performance and execution in a challenging market

• Outgrew industry production by 200–300 basis points despite a 6% industry decline in the second half of the year.

• Increased operating income and margin, with a 30 basis point rise year-over-year, or 60 basis points excluding Eldor.

• Delivered $525 million in free cash flow, all returned to shareholders via $400 million in buybacks and $100 million in dividends.

• Maintained focus on cost control, productivity, and margin resilience amid market headwinds.

• Executed well in a market with overall industry production down 3% year-over-year.

Market outlook and regional dynamics

• Cautiously optimistic for 2025, but improvement from Q3/Q4 run rates is needed for a stable market.

• Europe faces regulatory uncertainty, but multiple new product launches are planned for 2025.

• China remains a growth engine, with strong local relationships and a focus on speed and technology.

• North America sees slower EV uptake, but portfolio flexibility supports both foundational and e-product growth.

• Export sales from China to Southeast Asia and South America continue to buoy foundational business.

Portfolio strategy and business segmentation

• Business resegmented into four units: two foundational (Turbo & Thermal, Drivetrain & Morse) and two e-product (PowerDrive Systems, Battery & Charging Systems).

• Foundational units contribute 80% of revenue, are mature, profitable, and cash-generative.

• E-product units are the future growth engine, with mid-teens income conversion targeted.

• R&D spending is normalizing to 5% of sales after elevated investment for e-product launches.

• Engineering investment is closely tied to customer launches and market demand.