BorgWarner has announced its three-year net new business, guidance for full year 2017 and guidance for first quarter 2017.

The company expects its net new business backlog to drive a compound annual organic growth rate of 5.0% – 7.0% from 2016 through 2019:

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  • Net new business within a range of $410m to $590m in 2017, $460m to $670m in 2018 and $500m to $700m in 2019.
  • Asia, the Americas and Europe are expected to account for approximately 40%, 39% and 21% of the total over the three-year period, respectively.
  • Approximately 32% is expected in China.
  • Approximately 25% is expected with the North American domestic OEMs.
  • Approximately 62% from engine-related products such as turbochargers, ignition systems, emissions products, engine timing systems including variable cam timing devices and thermal systems.
  • Approximately 38% from drivetrain-related products including all-wheel drive systems, the company's fuel-efficient DualTronic transmission technology, traditional automatic transmission products and rotating electrical components.
  • Full Year 2017 Guidance

The company also provided its initial guidance for full year 2017:

  •     Net sales of $8.81bn – $9.04bn, implying organic sales growth of 3.5% to 6.0% compared with expected 2016 net sales of ~$9.05bn.
  •     Foreign currencies are expected to lower sales by $320m, due to the depreciation of the Euro, Yuan and Pound.
  •     The sale of the Remy light vehicle aftermarket business is expected to lower sales by ~$235m.
  •     Excluding the impact of weaker foreign currencies and the Remy light vehicle aftermarket sale, net sales growth is expected to be 3.5% to 6.0%.
  •     Operating income as a percentage of net sales of 12.7% – 12.8% compared to 12.3% in 2016.
  •     The Remy light vehicle aftermarket sale is expected to increase operating income as a percentage of net sales by approximately 30 basis points.
  •     Net earnings of $3.35 to $3.45 per diluted share.
  •     Foreign currencies are expected to lower net earnings by $0.13. Excluding this impact, guidance implies a 7% to 10% on a constant currency basis.
  •     Effective tax rate of approximately 32%.
  •     Free cash flow within a range of $450m to $500m.
  •     Share repurchases of $100m.

First quarter 2017 guidance
The company also provided guidance for first quarter 2017:

  • Organic net sales growth of 2.5% to 6.5% compared with first quarter 2016 net sales of $2.27bn.
  • Foreign currencies are expected to lower sales by $60m, or -2.7%.
  • The Remy light vehicle aftermarket sale is lower revenue by $70MM.
  • Excluding the impact of weaker foreign currencies and the Remy light vehicle aftermarket sale, net sales growth is expected to be 2.5% to 6.5%.
  • Net earnings of $0.81 to $0.85 per diluted share.
  • Higher corporate expenses, raw material timing and other costs are expected to impact Q1 EPS by $0.04.

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