BorgWarner 4Q14 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Excluding currency

“Excluding currency…”

Our organic growth, we feel comfortable, but there are other variables at work

“I’m glad you asked that, Ravi. Yes, currency is probably the most volatile piece that we’re thinking about right now, but there are other factors at play here. Commodity prices, for instance. Volumes are also in play. So our message is that our organic growth, we’re still very comfortable with that guidance that we gave back in January, but there other variables at work here that we want to get a few months behind us, kind of see how they play out and then we’ll give an update at the end of April.”

Lower gas prices wont change push for more fuel efficiency

” over the long run, which is the other question obviously we’re asked, could this influence CapEx pushouts or adjustments, our view on that is we don’t see anything meaningful there. We think the trend is in place for continued push on drive on fuel economy and emissions and we’re not seeing anything at all in terms of adoption rates of technology or discussions around technologies that will launch in 3 years, 5 years, 6 years out. So quick answer, really in the short run, it’s neutral to favorable and in the long term, no change.’

There’s more flexibility to change models 5-6 years out, but not closer ones

“when we get out 5, 6 years from now, there’s a little bit more flexibility, but certainly over the next few years, we feel very comfortable with that. And you did highlight that turbochargers is maybe one potential where people can pick that option or not, but that’s maybe the only one. As we think about it, the rest of our technology, they’re on those engines, they’re on those transmissions and there’s not a lot of consumer options or they’re thinking about different options as it relates to those other technologies. So I think that overall, that our backlog will not be affected by this change in oil prices.”

The change in oil prices doesn’t affect the consumer as much in other parts of the world

“let’s not forget, this is a U.S. phenomenon and a lot of our backlog is outside of the U.S. as well, where this change in oil prices doesn’t affect the consumer much at all.”