BorgWarner Inc., a global leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles, announces its 3-year net new business backlog, its guidance for full year 2018 and its guidance for first quarter 2018.
3-Year Net New Business Backlog
The company expects its net new business backlog to drive a compound annual organic growth rate of 5.0-7.0% from 2017 through 2020, compared to compound annual industry growth of 0-1.0% over the same time period:
- Net new business within a range of $650-730 million in 2018, $675-800 million in 2019 and $700-825 million in 2020.
- Based on these assumptions, the company's 2020 revenue outlook is $11.5-11.8 billion.
- Asia, the Americas and Europe are expected to account for approximately 41%, 38% and 21%, respectively, of the total net new business backlog over the 3-year period. Approximately 30% is expected in China.
- The net new business backlog represents growth across all propulsion architectures with combustion, hybrid and electric vehicles expected to account for approximately 50%, 45% and 5%, respectively, of the total net new business backlog over the 3-year period.
Full Year 2018 Guidance
The company also provided its initial guidance for full year 2018:
- Net sales of $10.4-10.6 billion, implying organic sales growth of 5.0-7.0% compared with expected 2017 net sales of $9.79 billion.
- Foreign currencies are expected to increase sales by $75 million, primarily due to the appreciation of the Euro.
- The purchase of Sevcon is expected to increase sales by $45 million.
- Excluding the impact of stronger foreign currencies and the acquisition of Sevcon, net sales growth is expected to be 5.0-7.0%.
- Operating income as a percentage of net sales of 12.6-12.7% compared to 12.5% in 2017.
- The acquisition of Sevcon is expected to decrease margins by approximately 10 basis points.
- Net earnings of $4.15 to $4.25 per diluted share.
- The acquisition of Sevcon is expected to be ($0.06) dilutive to EPS. Excluding this impact, guidance implies a 10% to 12.5% year-over-year improvement in EPS.
- Effective tax rate of approximately 29%, exclusive of any impact of the new U.S. tax act.
- Free cash flow within a range of $500 million to $550 million.
- Share repurchases of approximately $100 million.
First Quarter 2018 Guidance
The company also provided guidance for first quarter 2018:
- Organic net sales growth of 3.0% to 5.5% compared with first quarter 2017 net sales of $2.41 billion.
- Foreign currencies are expected to increase sales by $70 million, or +2.9%.
- The acquisition of Sevcon is expected to increase revenue by $15 million.
- Net earnings of $0.97 to $1.01 per diluted share.
