BorgWarner Inc. J.P. Morgan Automotive Conference

Yeah. I'd really point to going back a couple of years ago, I took over as CFO of the company, and Joe was the Chief Operating Officer, and obviously, he's the CEO now. But we really sat down and said, "Hey, what do we want the company to look like? What do we want to do differently?" And we really decided on three things. The first one was we wanted to ask all of our business units to grow. If you go back three or four years ago, it was really all about eProducts growth, focused on hybridization and electrification.

Yeah. That was really engaging only $2-ish million of the organization.

We wanted to engage all $14 billion of revenue to grow, and we are really pleased with the progress that we have made. We have announced around 60 awards over the last 18 months or so. That is phenomenal. The quality of the awards are across our foundational business, our eProducts business, so we are really excited about that. That was priority number one. We want to make sure that we are moving towards growth over market. The second item was to grow the earnings power of the company. We need to focus on what we can control, and growing the earnings power of the company is important internally, it is important externally. Let us make sure that we are growing profitably. The third was we want to have a really consistent, disciplined, balanced capital allocation approach that rewards shareholders.

Let us make sure we are creating value with our cash. If we focus on those three items, that will be good for our employees, it will be good for our customers, and for our shareholders. So those were the three items that we are really focused on.

Yeah. I would say cushion, I think we have a really realistic guide for the full year. I was really pleased with the quarter. The business unit and corporate delivered in a really great way. Revenue came in about $3.6 billion. That was flat year-over-year, but we expanded margins 100 basis points year-over-year, getting to 11.3%. Like you said, every business unit expanded margins in the quarter. Corporate provided a nice tailwind, so that was phenomenal. We grew earnings per share 17% year-over-year. Part of it operating income enhancement, the other increase coming from share repurchases. Then we delivered about half a billion dollars in free cash flow. From every KPI, it was a great quarter. As you walk first half to second half, we do expect revenue to be down about $200 million first half to second half.

Yeah. There is really three components there.

It is foreign exchange is an $80 million headwind. Our battery business, we expect to decline about $60 million. Then we do expect industry production to be modestly lower, about 1%. When you look at our margin profile first half to second half, and you exclude the step-up in industrial R&D, our margins are right on top of each other. It was 10.9% in the first half, 10.8% in the second half. So that is why I believe it is realistic. We are stepping up in R&D in the second half, $10 million to $15 million. When you take a big step back, what is the company doing year-over-year? In a relatively flat environment, we are expanding margins, we are expanding EPS, and we are leaning forward into industrial R&D because of strong feedback we are getting from our customers in that space.

Yeah. To me, that is what success looks like.