CS - BWA DLPH Focus

US Autos & Auto Parts BWA/DLPH: BWA/DLPH deal likely to close but not guaranteed Automobiles & Components | Earnings BWA ’s 1Q print provided multiple datapoints reminding us why it is one of the blue -chip suppliers. A solid beat, with key highlights in robust outgrowth and better-than-feared decremental margins. Moreover, while the revised DLPH acquisition terms gave BWA a lower- than-anticipated price cut, BWA importantly received a key concession with closing conditions on DLPH leverage. While overall 1Q was positive, we remain on the sidelines on BWA, as we see some risk for the powertrain product set (given product transition), and also as the DLPH acquisition creates a layer of uncertainty for BWA given the significant restructuring required for DLPH. For BWA we maintain our Neutral rating but raise our TP to $33 from $31. For DLPH we maintain our Neutral rating but raise our TP to $11 from $9. Revised deal exchange ratio lower than anticipated, reflects all-stock deal + new closing conditions: BWA and DLPH revised the deal terms, through which they cured DLPH’s breach of the merger agreement through its revolver draw. The exchange ratio was reduced 5% - DLPH owners now receive 0.4307 shares of BWA for each share of DLPH vs prior 0.4534. The exchange ratio is lower than the 15-20% we and others anticipated, reflecting two points: 1. Because the deal is all- stock, BWA’s reduced stock price implies a cheaper purchase price of DLPH; 2. BWA effectively gave up some price concession, in return receiving closing conditions on DLPH leverage which protect BWA and give it an out on the deal if macro significantly deteriorates. Deal still likely to close, but not a guarantee: We believe the resolution of the breach significantly raises the likelihood that the BWA/DLPH deal is closed, and the base case is more clearly that the deal will close…yet we’d argue a closing is not necessarily a slam dunk. DLPH must meet the following closing conditions: 1. Gross revolver draw limit of $225mn; 2. Revolver draw of $115mn net of cash balance; 3. Net debt / EBITDA limit of 6.5x if deal close pre 9/30/20, or 7.5x if deal close on or after 10/1/20. Under our current modeling assumptions, we believe these conditions are feasible for DLPH. The new terms effectively imply a go-forward limit on aggregate DLPH cash burn of ~$220mn – we model only ~$100mn in 2Q-4Q, and DLPH could see benefits through capex or working capital actions. Similarly, we believe the leverage limit is feasible, as we forecast leverage of only ~4.5x at end 3Q/4Q. And if need be, DLPH could take actions by cutting RD&E expense. However, the risk lies if there is a re-emergence of coronavirus disruption, which would drive incremental cash burn / elevated leverage at DLPH….meaning while the deal i s likely to close, it is not fully guaranteed. 8 May 2020 Equity Research Americas | United States DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Research Analysts Dan Levy 212 325 4617 dan.levy@credit-suisse.com Robert Moon 212 325 7112 robert.moon@credit-suisse.com This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 2 BWA yet another supplier with robust 1Q outgrowth: The central highlight of BWA’s 1Q beat was robust outgrowth of ~11.5pts (organic growth -8% vs. mkt -20%), well in excess of the typical 6-7pts of quarterly outgrowth BWA has posted in recent years, and likely representing one of BWA’s best -ever quarterly outgrowth results. The outgrowth is important, as growth is central to the BWA thesis. Outgrowth was especially pronounced in China (20pts+), with solid outgrowth also in Europe (~+12pts) and NA (~+9pts); among other things, BWA benefited from DCT in China, diesel in Europe, and turbos in NA. The outgrowth is credit to BWA’s backlog. However, we’d note that BWA is one of a n umber of suppliers we’ve seen in 1Q posting robust outgrowth, including APTV, ALV, VC, and Valeo among others. It’s possible that 1Q supplier outgrowth may have in part benefited from OEMs stocking up on components into shutdowns to partially mitigate supply chain risks upon production restart (albeit BWA noted on the call that 1Q did not benefit from component overstocking). Near-term outgrowth may soften amid coronavirus upheaval. Despite the robust 1Q outgrowth, BWA guided 2Q-4Q outgrowth to come down to 150-250bp. We see puts and takes on this. On one hand, we’re inclined to cite BWA’s track record in recent years of conservatism / setting the bar low. That, alongside mgmt. commentary of no major delays, implies upside to BWA’s guidance. However, we pref er not to reflect the growth upside in our model, as we expect coronavirus disruption to limit the volumes of new launches – hence limiting the amount of backlog (i.e. launch volumes in a global production outlook of sub-70mn units will be much less than launch volumes in a global production outlook of 90mn units). Indeed, BWA faced this trend in 2015 when outgrowth softened to ~1pt, in large part due to China and CV market volatility limiting launch volumes. Decremental margin showing benefits of restructuring actions: One of the highlights of BWA’s 1Q beat was a better -than-expected decremental margin of 26%, much better than the high 30% decremental margin we expected amid the upheaval, and helping to drive BWA’s 1Q margin beat. Looking at the segment res ults provides a deeper understanding of BWA’s business – Engine decremental margin of ~20% benefited from ongoing restructuring initiatives, while Drivetrain decremental margin of low 30% was driven by higher R&D expense in the segment (due to electrification investment). BWA noted that the sharp nature of the 2Q production decline will drive a higher decremental margin in the 30% range – which we believe is a fair assumption for 2Q. Yet amid the trend of some suppliers posting better-than-expected decremental margins during the upheaval due to austerity measures, we wouldn’t rule out BWA 2Q decrementals coming in better than the guided 30% range. Intact dividend – part BWA as a blue chip supplier, part deal positioning: BWA is unique amongst auto co’s, as it is part of a limited group of co’s that has maintained its dividend and has not drawn its revolver even in the face of the coronavirus upheaval. We would attribute this in part to BWA’s positioning as a blue chip supplie r, but also in part due to deal positioning. On the first point, we give BWA credit as a higher quality auto co – it expects to post positive FCF this year even in the face of the upheaval and it has one of the lowest leverage ratios amongst auto suppliers (only 0.6x net debt / TTM EBITDA end 1Q). Its dividend is a manageable ~$140mn annual commitment, and can be funded by FCF assuming BWA hits the mid-point of its revised FCF guide. It also has posted a solid track record of execution. Yet at the same time, we also think in part the dividend was maintained / the revolver was not drawn due to positioning in its breach negotiation with DLPH. Even though the negotiation is now complete, we nevertheless expect BWA to maintain the dividend and not draw the revolver. This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 4 Figure 1: 1Q20 EPS Attribution Source: Company data, Credit Suisse estimates, FactSet 1Q20E $mn ex per share data Actual CS Est. Cons. CS Cons. Y/Y Q/Q 1Q19A 4Q19A Key metrics Revenue 2,279 1,878 2,008 401 271 (287) (280) 2,566 2,559 Organic revenue growth -8.1% -23.4% -19.8% 1527 bps 1170 bps -482 bps -1070 bps -3.3% 2.6% Adj. EBIT 234 80 165 154 69 (61) (106) 295 340 EBIT Margin 10.3% 4.3% 8.2% 598 bps 205 bps -123 bps -302 bps 11.5% 13.3% Adj. EPS $0.77 $0.23 $0.48 $0.54 $0.29 -$0.23 -$0.40 $1.00 $1.17 FCF 146 50 64 96 82 223 97 (77) 49 Revenue Engine 1,434 1,150 1,318 284 116 (164) (99) 1,598 1,533 Drivetrain 860 744 839 116 21 (122) (182) 982 1,042 Eliminations (15) (16) 1 (15) (1) 1 (14) (16) Total 2,279 1,878 2,008 401 271 (287) (280) 2,566 2,559 Y/Y Growth Engine -10.3% -28.0% -17.5% 1775 bps 729 bps -339 bps -973 bps -6.9% -0.5% Drivetrain -12.4% -24.3% -14.5% 1184 bps 210 bps -310 bps -1195 bps -9.3% -0.5% Total Co -11.2% -26.8% -21.7% 1562 bps 1056 bps -334 bps -1060 bps -7.8% -0.6% Y/Y Organic Growth Engine -6.4% -23.7% 1729 bps -459 bps -983 bps -1.8% 3.4% Drivetrain -10.6% -22.3% 1171 bps -497 bps -1213 bps -5.6% 1.5% Total Co -8.1% -23.4% -19.8% 1527 bps 1170 bps -482 bps -1070 bps -3.3% 2.6% Adj. EBIT Engine 208 105 167 103 41 (33) (56) 241 264 Drivetrain 63 29 64 34 (1) (42) (73) 105 136 Eliminations (37) (54) 17 (37) 14 23 (51) (60) Total Co 234 80 165 154 69 (61) (106) 295 340 Adj. EBIT Margin Engine 14.5% 9.1% 12.7% 538 bps 185 bps -58 bps -272 bps 15.1% 17.2% Drivetrain 7.3% 4.0% 7.6% 337 bps -28 bps -337 bps -573 bps 10.7% 13.1% Total Co 10.3% 4.3% 8.2% 598 bps 205 bps -123 bps -302 bps 11.5% 13.3% Below the line / Other Equity income 5 9 (4) (4) (2) 9 7 Net interest expense 10 9 13 1 (3) (1) 1 11 9 Other expense / (income) 2 0 2 (7) 0 9 Pretax Income 227 80 144 147 83 (66) (102) 293 329 Tax 60 21 37 39 23 (14) (9) 74 69 Tax rate 26.6% 26.5% 25.7% 8 bps 84 bps 118 bps 556 bps 25.4% 21.0% Noncontrolling interest, other 8 12 (4) 8 (3) (9) 11 17 Adj. Net income 159 47 107 112 52 (49) (84) 208 243 Adj. EPS $0.77 $0.23 $0.48 $0.54 $0.29 ($0.23) ($0.40) $1.00 $1.17 Shares Outstanding 206 205.5 0.7 -0.9 -0.7 207 207 Free Cash Flow 146 50 64 96 82 223 97 (77) 49 Delta vs. Change Historicals This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 5 Figure 2: Summary Model (Income Statement) Source: Company data, Credit Suisse estimates Income Statement, $mn (ex per share data) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20E 3Q20E 4Q20E 2017 2018 2019 2020E 2021E 2022E 2023E Revenue 2,566 2,551 2,492 2,559 2,279 1,250 2,303 2,346 9,799 10,531 10,168 8,177 10,059 11,421 12,235 Gross Profit 519 513 524 545 447 29 431 446 2,119 2,231 2,101 1,353 1,927 2,275 2,479 Gross Margin 20.2% 20.1% 21.0% 21.3% 19.6% 2.3% 18.7% 19.0% 21.6% 21.2% 20.7% 16.6% 19.2% 19.9% 20.3% Operating Income, Non-GAAP 295 303 294 340 234 (74) 234 255 1,217 1,298 1,232 650 1,021 1,247 1,378 Adj. operating margin 11.5% 11.9% 11.8% 13.3% 10.3% -5.9% 10.2% 10.9% 12.4% 12.3% 12.1% 7.9% 10.2% 10.9% 11.3% Net interest expense 13 13 13 13 13 13 13 13 65 54 52 52 52 52 52 Pretax Income, Non-GAAP 2,861 2,854 2,786 2,899 2,513 1,176 2,537 2,601 11,016 11,829 11,400 8,827 11,080 12,668 13,612 Provision for taxes, Non-GAAP 74 73 74 69 63 (8) 62 68 340 286 291 186 270 331 366 Effective tax rate 25% 25% 26% 21% 27% 10% 27% 27% 28% 22% 24% 29% 26% 26% 26% Net income, Non-GAAP 208 208 199 243 160 (81) 161 177 822 941 857 416 717 891 990 Net Margin 8.1% 8.1% 8.0% 9.5% 7.0% -6.5% 7.0% 7.5% 8.4% 8.9% 8.4% 5.1% 7.1% 7.8% 8.1% Shares Outstanding, Diluted 207 207 206 207 206 206 206 206 212 210 207 206 204 201 197 EPS, Non-GAAP $1.00 $1.00 $0.96 $1.17 $0.77 ($0.39) $0.78 $0.86 $3.88 $4.49 $4.14 $2.02 $3.52 $4.44 $5.04 Dividend per share $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.59 $0.68 $0.68 0.68 $ 0.68 $ 0.68 $ 0.75 $ Payout ratio 17.0% 16.9% 17.6% 14.5% 22.0% -43.3% 21.8% 19.8% 15.2% 15.1% 16.4% 33.7% 19.3% 15.3% 14.9% Depreciation and amortization 107 107 110 115 112 106 106 107 408 431 439 431 430 451 483 EBITDA, Non-GAAP 402 410 404 455 346 33 340 362 1,625 1,729 1,671 1,081 1,451 1,698 1,861 Adj. EBITDA margin 15.7% 16.1% 16.2% 17.8% 15.2% 2.6% 14.8% 15.4% 16.6% 16.4% 16.4% 13.2% 14.4% 14.9% 15.2% Y/Y Change Revenue -7.8% -5.3% 0.5% -0.6% -11.2% -51.0% -7.6% -8.3% 8.0% 7.5% -3.5% -19.6% 23.0% 13.5% 7.1% Adj. EBIT -13.0% -11.1% 0.3% 4.8% -20.7% -124.3% -20.4% -24.9% 9.3% 6.6% -5.1% -47.3% 57.3% 22.1% 10.5% Adj. EBITDA -10.3% -8.9% 0.8% 5.8% -13.9% -92.0% -15.8% -20.5% 8.0% 6.4% -3.4% -35.3% 34.3% 17.0% 9.6% Net Income -10.4% -16.2% -4.7% -4.0% -23.1% -139.0% -19.0% -27.2% 16.8% 14.6% -9.0% -51.4% 72.3% 24.3% 11.1% EPS -8.8% -15.0% -3.6% -3.3% -22.8% -139.1% -19.0% -27.0% 18.7% 15.7% -7.8% -51.3% 74.3% 26.2% 13.4% This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 7 Figure 4: Summary Model (Balance Sheet & Cash Flow Statement) Source: Company data, Credit Suisse estimates Balance Sheet, $mn 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20E 3Q20E 4Q20E 2017 2018 2019E 2020E 2021E 2022E 2023E Total Assets 10,104 10,231 10,199 9,702 9,502 8,830 9,213 9,333 9,788 10,095 9,702 9,333 9,902 10,657 11,378 Total Liabilities 5,719 5,729 5,621 4,858 4,638 4,143 4,441 4,447 5,962 5,751 4,858 4,447 4,622 4,850 5,001 Solvency Metrics Cash 517 710 916 832 901 821 543 646 545 739 832 646 940 1,290 1,538 Gross Debt 2,087 2,100 2,075 1,960 1,950 1,950 1,700 1,700 2,188 2,113 1,960 1,700 1,700 1,700 1,700 Net Debt 1,570 1,390 1,159 1,128 1,049 1,129 1,157 1,054 1,643 1,374 1,128 1,054 760 410 162 Net Debt / TTM EBITDA 0.9x 0.8x 0.7x 0.7x 0.6x 0.9x 1.0x 1.0x 1.0x 0.8x 0.7x 1.0x 0.5x 0.2x 0.1x Statement of Cash Flows, $mn 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20E 3Q20E 4Q20E 2017 2018 2019E 2020E 2021E 2022E 2023E Net cash provided by operating activities 40 427 357 184 263 77 144 300 1,180 1,127 1,008 785 1,164 1,357 1,378 Net cash provided by investing activities (104) (173) (103) (109) (120) (100) (115) (141) (752) (515) (489) (476) (533) (622) (685) Net cash provided by financing activities (153) (65) (30) (172) (62) (45) (295) (45) (363) (383) (420) (447) (289) (336) (398) Net change in cash (222) 193 206 (84) 69 (80) (278) 102 102 194 93 (186) 294 350 247 Free cash flow (77) 300 255 49 146 (23) 29 159 620 580 527 312 631 735 693 Key Items Changes in assets and liabilities (279) 77 19 (4) 2 91 (104) 23 (145) (320) (187) 11 4 (5) (122) Depreciation and amortization 107 107 110 115 112 106 106 107 408 431 439 431 430 451 483 Capital expenditures (117) (127) (102) (135) (117) (100) (115) (141) (560) (547) (481) (473) (533) (622) (685) Acquisitions/Divestitures 13 1 0 0 (2) 0 0 0 (186) 0 14 (2) 0 0 0 Change in debt (15) 6 0 (132) (1) 0 (250) 0 (107) (41) (141) (251) 0 0 0 Stock (repurchases)/issuance (67) (33) 0 0 0 0 0 0 (100) (150) (100) 0 (100) (150) (200) Cash Flow Metrics Capex as % of Revenue 4.6% 5.0% 4.1% 5.3% 5.1% 8.0% 5.0% 6.0% 5.7% 5.2% 4.7% 5.8% 5.3% 5.5% 5.6% FCF Per Share -$0.37 $1.45 $1.24 $0.24 $0.71 -$0.11 $0.14 $0.77 $2.93 $2.77 $2.55 $1.51 $3.09 $3.66 $3.52 FCF Margin -3.0% 11.8% 10.2% 1.9% 6.4% -1.8% 1.3% 6.8% 6.3% 5.5% 5.2% 3.8% 6.3% 6.4% 5.7% FCF Conversion -37.1% 144.5% 128.3% 20.2% 91.5% 28.1% 18.2% 90.2% 75.5% 61.6% 61.5% 74.9% 87.9% 82.4% 70.0% This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS. This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 10 Figure 5: Summary Model (Income Statement) Source: Company data, Credit Suisse estimates Income Statement, $mn (ex per share data) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20E 3Q20E 4Q20E 2017 2018 2019 2020E 2021E 2022E 2023E 2024E Revenue 1,151 1,121 1,033 1,056 945 528 868 916 4,849 4,858 4,361 3,258 3,778 4,228 4,478 4,674 Gross Profit 168 166 150 149 121 (16) 112 133 968 897 633 350 506 623 689 741 Gross Margin 14.6% 14.8% 14.5% 14.1% 12.8% -3.0% 12.9% 14.5% 20.0% 18.5% 14.5% 10.7% 13.4% 14.7% 15.4% 15.9% Operating Income, Non-GAAP 87 81 71 75 40 (66) 31 47 569 548 314 51 191 273 319 355 Adj. operating margin 7.6% 7.2% 6.9% 7.1% 4.2% -12.5% 3.5% 5.1% 11.9% 11.3% 7.2% 1.6% 5.1% 6.5% 7.1% 7.6% Net interest expense 18 18 16 16 16 23 23 19 15 79 68 81 83 77 74 72 Pretax Income, Non-GAAP 74 70 64 70 29 (87) 11 32 548 485 278 (15) 122 209 257 297 Provision for taxes, Non-GAAP 12 15 12 11 7 (17) 2 6 117 74 50 (1) 11 19 24 28 Effective tax rate 16.2% 21.4% 18.8% 15.7% 24.1% 19.0% 19.0% 19.0% 21.4% 15.3% 18.0% 9.3% 9.3% 9.3% 9.3% 9.3% Net income, Non-GAAP 59 51 49 53 19 (74) 6 23 397 389 212 (26) 98 177 221 257 Net Margin 5.1% 4.5% 4.7% 5.0% 2.0% -13.9% 0.7% 2.5% 8.2% 8.0% 4.9% -0.8% 2.6% 4.2% 4.9% 5.5% Shares Outstanding, Diluted 88.6 88.1 86.9 86.1 86.3 86.3 86.3 86.3 88.7 88.9 87.4 86.3 86.3 86.3 86.3 86.3 EPS, Non-GAAP $0.67 $0.58 $0.56 $0.62 $0.22 ($0.85) $0.07 $0.27 $4.47 $4.38 $2.43 ($0.30) $1.14 $2.05 $2.57 $2.98 Dividend per share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.68 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 15.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Depreciation and amortization 54 58 55 44 57 56 56 56 201 201 211 225 221 227 237 247 EBITDA, Non-GAAP 141 139 126 119 97 (10) 87 103 770 749 525 277 412 500 556 602 Adj. EBITDA margin 12.3% 12.4% 12.2% 11.3% 10.3% -1.9% 10.0% 11.3% 16.1% 15.4% 12.0% 8.5% 10.9% 11.8% 12.4% 12.9% Y/Y Change Revenue -11.2% -9.0% -10.9% -9.8% -17.9% -52.9% -15.9% -13.2% 8.1% 0.2% -10.2% -25.3% 16.0% 11.9% 5.9% 4.4% Adj. EBIT -45.3% -48.1% -34.3% -40.0% -54.0% -181.8% -56.8% -37.3% 11.1% -3.7% -42.7% -83.6% 271.7% 42.6% 16.9% 11.5% Adj. EBITDA -32.9% -31.5% -18.7% -34.3% -31.2% -107.0% -31.3% -13.3% 50.4% -2.7% -29.9% -47.2% 48.7% 21.4% 11.1% 8.4% Net Income -49.1% -55.7% -23.4% -43.6% -67.8% -244.2% -88.3% -56.8% -5.8% -1.9% -45.5% -112.2% -479.1% 80.1% 24.9% 16.1% EPS -48.9% -55.2% -21.6% -42.0% -66.9% -247.3% -88.2% -56.9% -5.9% -2.2% -44.6% -112.4% -479.1% 80.1% 24.9% 16.1% This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 11 Figure 6: Summary Model (Segment Model) Source: Company data, Credit Suisse estimates Segment Results, $mn 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20E 3Q20E 4Q20E 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E Revenue Powertrain Systems 1,020 971 888 908 832 417 732 775 4,222 4,274 3,787 2,756 3,240 3,670 3,915 4,114 Aftermarket 193 214 214 220 174 151 196 207 873 874 841 728 780 807 819 823 Eliminations (62) (64) (69) (72) (61) (40) (60) (65) (322) (290) (267) (226) (242) (249) (257) (264) Total 1,151 1,121 1,033 1,056 945 528 868 916 4,773 4,858 4,361 3,258 3,778 4,228 4,478 4,674 Revenue Growth, Y/Y Powertrain Systems -11.5% -10.6% -12.7% -10.8% -18.4% -57.1% -17.5% -14.7% 10.0% 1.2% -11.4% -27.2% 17.6% 13.3% 6.7% 5.1% Aftermarket -11.1% -0.5% -1.4% -2.2% -9.8% -29.5% -8.4% -6.0% -5.5% 0.1% -3.8% -13.5% 7.1% 3.5% 1.5% 0.5% Total -11.2% -9.0% -10.9% -9.8% -17.9% -52.9% -15.9% -13.2% 6.4% 1.8% -10.2% -25.3% 16.0% 4.7% 5.9% 4.4% Organic Revenue Growth, Y/Y Powertrain Systems -6.8% -6.7% -10.0% -8.8% -15.9% -54.1% -15.7% -13.2% 9.6% -1.0% -8.0% -25.0% 17.9% 13.3% 6.7% 5.1% Aftermarket -6.5% 2.7% 1.1% -0.2% -7.3% -26.5% -6.5% -4.5% 3.9% 0.7% -0.7% -11.2% 7.5% 3.5% 1.5% 0.5% Total -6.5% -5.0% -8.0% -7.7% -15.2% -49.8% -14.0% -11.6% 8.5% -0.2% -6.7% -22.9% 16.4% 11.9% 5.9% 4.4% Market weighted growth -5.8% -8.2% -4.0% -4.4% -24.4% -44.4% -7.1% -8.6% 2.2% -1.0% -5.7% -21.2% 14.9% 6.7% 3.8% 2.5% Outgrowth vs market -63 bps 322 bps -404 bps -335 bps 916 bps -540 bps -691 bps -306 bps 630 bps 82 bps -104 bps -173 bps 150 bps 516 bps 211 bps 184 bps Adj. Operating Income Powertrain Systems 76 64 49 51 29 (75) 13 27 512 467 240 (5) 124 201 245 281 Aftermarket 11 17 22 24 11 8 18 20 57 81 74 57 67 71 73 74 Corporate/Other 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Operating Income 87 81 71 75 40 (66) 31 47 569 548 314 51 191 273 319 355 Adj. Operating Margin Powertrain Systems 7.5% 6.6% 5.5% 5.6% 3.5% -17.9% 1.8% 3.5% 12.1% 10.9% 6.3% -0.2% 3.8% 5.5% 6.3% 6.8% Aftermarket 5.7% 7.9% 10.3% 10.9% 6.3% 5.5% 9.0% 9.7% 6.5% 9.3% 8.8% 7.8% 8.6% 8.8% 8.9% 9.0% Total Operating Margin 7.6% 7.2% 6.9% 7.1% 4.2% -12.5% 3.5% 5.1% 11.9% 11.3% 7.2% 1.6% 5.1% 6.5% 7.1% 7.6% This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS. This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 US Autos & Auto Parts 14 Companies Mentioned (Price as of 08-May-2020) BorgWarner, Inc. (BWA.N, $27.84, NEUTRAL[V], TP $33.0) Delphi Technologies PLC (DLPH.N, $11.47, NEUTRAL[V], TP $11.0) Disclosure Appendix Analyst Certification I, Dan Levy, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. 3-Year Price and Rating History for BorgWarner, Inc. (BWA.N) BWA.N Closing Price Target Price Date (US$) (US$) Rating 26-Jun-19 41.59 50.00 O * 26-Jul-19 39.16 47.00 11-Oct-19 37.20 42.00 01-Nov-19 43.65 43.00 27-Jan-20 38.36 41.00 N 10-Feb-20 33.28 36.00 27-Apr-20 28.06 31.00 * Asterisk signifies initiation or assumption of coverage. 3-Year Price and Rating History for Delphi Technologies PLC (DLPH.N) DLPH.N Closing Price Target Price Date (US$) (US$) Rating 26-Jun-19 19.23 21.00 N * 05-Aug-19 15.04 19.00 11-Oct-19 13.61 16.00 27-Jan-20 9.80 14.00 27-Apr-20 8.28 9.00 * Asterisk signifies initiation or assumption of coverage. As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark * over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total retu rn relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European (excluding Turkey) ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the an alyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin America, Turkey and Asia (excluding Japan and Australia), stock ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark (India - S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to it s current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage un iverse. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. O UT PERFO RM N EUT RAL N EUT RAL This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

8 May 2020 Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures/view/selectArchive for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (DLPH.N) within the next 3 months. Credit Suisse or a member of the Credit Suisse Group is a market maker or liquidity provider in the securities of the following subject issuer(s): BWA.N, DLPH.N Credit Suisse beneficially holds >0.5% long position of the total issued share capital of the subject company (DLPH.N). For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit- suisse.com/disclosures/view/report?i=516832&v=50namsm42ac5hzp47waxjoicp . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. This research report is authored by: Credit Suisse Securities (USA) LLC ................................................................................................. Dan Levy ; Robert Moon Important disclosures regarding companies that are the subject of this report are available by calling +1 (877) 291-2683. The same important disclosures, wi th the exception of valuation methodology and risk discussions, are also available on Credit Suisse’s disclosure website at https://rave.credit-suisse.com/disclosures . For valuation methodology and risks associated with any recommendation, price target, or rating referenced in this report, please refer to the disclosures section of the most recent report regarding the subject company. This document is being provided for the exclusive use of DANIEL ARNOLD at SEGANTII CAPITAL MGMT USA LLC

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