Deutsche Bank Auto Industry Conference. January 17, 2018

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1 Deutsche Bank Auto Industry Conference January 17, 2018

2 Safe Harbor Statement Statements contained in, or incorporated by reference into this presentation, future filings by us with the Securities and Exchange Commission ( SEC ), and oral statements made by, or with the approval of, our authorized personnel, that relate to our future performance or future events are forward-looking statements under the Private Securities Litigation Reform Act of Such statements can be identified by use of forwardlooking words or phrases such as intend, anticipate, plan, estimate, target, aim, forecast, project, expect, believe, we are optimistic that we can, current visibility indicates that we forecast, contemplation or currently envisions and similar phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, our expectations may not prove to be correct. Forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control, which could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties, among others, include: our dependence on automotive and truck production, both of which are highly cyclical; our reliance on major OEM customers; commodities availability and pricing; supply disruptions; fluctuations in interest rates and foreign currency exchange rates; availability of credit; our dependence on key management; our dependence on information systems; the uncertainty of the global economic environment; the outcome of existing or any future legal proceedings, including litigation with respect to various claims; and future changes in laws and regulations in the countries in which we operate. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All subsequent written and oral forward-looking statements concerning the matters addressed in this presentation and attributable to us or any person acting on our behalf are qualified by these cautionary statements. Forwardlooking statements are based on current expectations only and are not guarantees of future performance, and are subject to certain risks, uncertainties and assumptions. We may change our intentions, beliefs or expectations at any time and without notice, based upon any change in our assumptions or otherwise. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. In addition, some factors are beyond our control. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. BorgWarner Inc. 2

3 Strong Execution in 2017 Exceeded high-end of 2017 revenue guidance Significant launches and wins across Combustion-Hybrid-Electric Shared 2020 revenue outlook of $11.5B with continued margin improvement Continued to approach customers as a balanced propulsion partner BorgWarner Inc. 3

4 Balanced Across Propulsion Systems by 2020 $285 $240 $200 Estimated 2020 Average Content Per Vehicle C O M B U S T I O N H Y B R I D E L E C T R I C Note: Participation Rate 50% 36% 26% Note: Excludes Sevcon BorgWarner Inc. 4

5 Combustion Propulsion* * Includes engines, transmissions and all-wheel drive systems with no electrification, includes stop/start. All prices are estimates, actual prices will vary. Combustion Products: Timing system Variable cam timing Exhaust gas recirculation Clutch plates All-wheel drive systems Enhanced starters Fans & fan drives Pictured products and many more Variable Cam Timing $45 Exhaust Gas Management $100 Boosting Technologies Transmission Technologies $250 $350 BorgWarner Inc. 5

6 Hybrid Propulsion* * Includes mild, full and plug-in hybrid. All prices are estimates, actual prices will vary. Combustion Products PLUS Hybrid Specific Products Exhaust heat recovery systems Electric drive motors Disconnect clutch and controls Pictured products and many more ebooster ibas Systems $200 Power Electronics P2 Hybrid Module On/Off Axis Electric All-Wheel Drive $300 $700 $900 $1200 BorgWarner Inc. 6

7 Electric Propulsion* * Includes battery electric vehicles, range extenders and fuel cells. All prices are estimates, actual prices will vary. Electric Vehicle Products: Electric all-wheel drive Liquid heater Auxiliary coolant pump Fuel Cell air supply Transmission Chain Friction Products Pictured products and many more Cabin Air Heater egeardrive Electric Drive Motor Power Electronics Electric Drive Module $200 $500 $700 $700 $1100 BorgWarner Inc. 7

8 2018 thru 2020 Three-Year Net New Business Backlog BorgWarner Inc. 8

9 Strong Backlog Across LV C-H-E Products 50% 45% 5% 50% of Backlog Related to Hybrid and Electric Propulsion Backlog as of January 17, 2018 Note: Excludes Sevcon BorgWarner Inc. 9

10 Outpacing Market Growth in All Major Regions China 30% Europe 21% Americas 38% Asia ex. China 11% Note: Data represents regional breakdown of Net New Business Backlog BorgWarner Inc. 10

11 Improved 2020 Revenue Outlook of $11.5B-$11.8B $ in millions $700-$825 $650-$730 $675-$800 As of January 17, BorgWarner Inc. 11

12 2018 Full Year Guidance BorgWarner Inc. 12

13 Organic Sales Growth of 5.0% - 7.0% $ in millions As of January 17, 2018 BorgWarner Inc. 13

14 Operating Margins Modestly Improve $ in millions 12.5% Margin 12.6% % As of January 17, 2018 Margin BorgWarner Inc. 14

15 2018 Guidance - Other Items EPS Guidance $4.15-$4.25 Free Cash Flow $500-$550 million CapEx $575-$625 million Share Repurchases ~$100 million R&D Spending ~4% of sales Tax Rate ~29% $ / Euro Exchange Rate $1.15 BorgWarner Inc. 15

16 2018 First Quarter Guidance BorgWarner Inc. 16

17 Q Guidance Sales Guidance Range $2.56B-2.63B Organic Growth 3.0%-5.5% EPS Range $0.97-$1.01 Sevcon Impact ($0.02) Tax Rate ~29% $ / Euro Exchange Rate & Impact $1.15 / $70M BorgWarner Inc. 17

18 The BorgWarner Strategic Difference Technology Leadership Customer, Geographic and Efficient Propulsion System Diversity Financial Strength and Discipline BorgWarner Inc. 18