BorgWarner Inc.

Good morning. My name is Shelby and I will be your conference facilitator. At this time, I would like to welcome everyone to the BorgWarner 2022 third quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you're using a speakerphone, please pick up the handset before asking your question. I would now like to turn the call over to Patrick Nolan, Vice President of Investor Relations. Mr. Nolan, you may begin your conference.

Patrick Nolan, Vice President of Investor Relations. Thank you, Shelby. Good morning, everyone, and thank you for joining us today. We issued our earnings release earlier this morning. It's posted on our website, BoardWarner.com, on our homepage, and on our Investor Relations homepage. With regard to our IR calendar, we'll be attending multiple conferences between now and our next earnings release. Please see the Invent section of our IR page for a full list. Before we begin, I need to inform you that during this call, we may make forward-looking statements which involve risks and uncertainties to details that are 10-K. Our actual results may differ significantly from the matters discussed today. During today's presentation, we'll highlight certain non-GAAP measures in order to provide a clearer picture of how the core business performs and for comparison purposes with prior periods. When you hear us say on a comparable basis, that means excluding the impact of FX, net M&A, and other non-comparable items. When you hear us say adjusted, that means excluding non-comparable items. When you hear us say organic, that means excluding the impact of FX and net M&A. We will also refer to our growth compared to our market. When you hear us say market, that means the change in light and commercial vehicle production weighted for our geographic exposure. Please note that we've posted an earnings call presentation to the IRF page of our website. We encourage you to follow along with these slides during our discussion. With that, I'm happy to turn the call over to Pat.

Thank you, Pat, and good day, everyone. We're pleased to share our results for the third quarter 2022 and provide an overall company update starting on slide five. I continue to be impressed with the strength of our revenue relative to the overall industry. With about 4.1 billion in sales, we were up over 29% organically. This is approximately 7% better than the year-over-year growth in industry production. if our performance was in part supported by the execution of the pricing actions with our customers around the world. From a margin perspective, our performance was very strong in the quarter and also benefited from our customer pricing. While navigating the near-term industrial environment, we continued to take steps to drive our long-term positioning during this quarter. Year-to-date, We have repurchased $240 million of stock. During the third quarter, we announced the acquisition of the charging business of SSE in China, and we secured new electrification program awards. Next, on slide six, I would like to discuss the acquisition of the charging business of SSE, which we announced last month. SSE will add a China presence to our existing European and North American footprint. So we have now established global charging capability upon which to build. The SSE acquisition is expected to close in early 2023. So there will be no revenue impact in 2022. However, we now expect our total DC fast charging related annual revenue to be in the range of $225 million to $275 million by 2025. Our charging strategy can be summarized in four points. One, our initial focus will be on high value DC fast charging hardware, enabling software and services. Two, our objective is to establish product leadership and competitiveness in this category. We will improve the charger's quality that is key to enabling electric mobility. Also, over 50% of the bill of material in a DC fast charger is in components where BorgWarner has existing expertise and global scale. Three, we plan to leverage BorgWarner's regional sales capabilities and government interaction. And four, we want to explore potential sales synergies with our CV customers and especially the customers buying our battery packs. As we look ahead, we believe you will see further success as we continue to strengthen our capabilities in the charging area. Now, let's look at some new electrification awards on slide 7. First, Port Warner will supply its integrated drive module to a leading Chinese automotive manufacturer. This marks the first time that we have supplied our IDM on a hybrid P4. And this is also the first time that this manufacturer has awarded this system to an external supplier. Importantly, this IDM is substantially similar to the IDM used in future EV-specific application, which will drive additional scale benefits for this product. Second, Fort Warner will supply electric motors for the e-axles of a European commercial vehicle OEM. This e-axle is designed to equip new electric light commercial trucks ranging up to 7.5 tons. Production is expected to begin in early 2023. It will use our very modular HVH250 motors, and we can supply them in various stack lengths and winding configurations, either as fully assembled motors or as rotor stator assemblies. Lastly, for what has been granted, a production increase to supply itself 800-volt silicon carbide inverters for premium European OEM. The initial order has now been significantly increased. The suitability of our product has been further endorsed by this uplift. Our power-loss reducing silicon carbide inverter technology is helping our customer reach its strategic goals of a high-energy efficient drivetrain with exceptional electric driving range. Importantly, the increase of volumes to previously awarded programs is more and more becoming the new normal for many of our EV products. As you can see, we've made progress on key aspects of our charging forward strategy. So let's look at what this means in the progress report on slide eight, starting first with organic electric vehicle revenue growth. With the award secured as of this call, we now have electric vehicle programs that we believe will account for about $3.1 billion of booked revenue in 2025. Turning to M&A, we've now completed or announced four acquisitions since the start of charging forward, Acasor, Santrol, Rhombus, and SSE. Based on our due diligence, we believe those businesses will generate $900 million of additional EV-related revenue in 2025. We're not done here, though. We expect to take additional M&A steps and are actively engaged with several potential targets, which could enhance various parts of our EV portfolio. So we are already on track to achieve about $4 billion of electric vehicle revenue by 2025, based on new business awards and actions announced to date. This is a great achievement by the ball-runner teams and a significant milestone for the company. And we believe it puts us well on our way towards our 4.5 billion EV revenue target for 2025. So let me summarize our third quarter results and our outlook. Overall, our third quarter performance was strong. We delivered strong organic growth. We also made key progress in the quarter on the pricing actions with multiple customers. As Kevin will detail shortly, we have increased the low end of our full-year 2022 outlook for both organic growth and margins based on our performance year-to-date. And our full-year EPS guide has also increased. Looking beyond this year, I'm very proud of the steady progress on charging forwards. I'm extremely excited that we're now on track to achieve $4 billion in pure electric vehicle revenue by 2025. It is clear to me that our EV business is accelerating. But I expect more to come. We intend to carry on booking more new business across our base portfolio. We expect to utilize our strong cash generation to acquire great assets to become even stronger as the world continues to accelerate towards electrification. And I look forward to sharing with you additional progress in the future. With that, let me turn the call over to Kevin.