Chief Financial Officer at BorgWarner
Thank you, Fred, and good morning everyone. Before I dive into the financials I'd like to provide a quick overview of our fourth-quarter results. First, our revenue came in higher than we were expecting going into the quarter due to better than expected industry volume. Second, our margin performance in the quarter was strong, driven by better than expected revenue and cost synergy performance. Additionally, our net R&D investment was lower than our guidance due entirely to higher customer reimbursements of engineering expense than we had anticipated. And finally, our cash flow performance in the quarter was strong, despite the impact of a one-time cash warranty settlement payment.
Let's turn to slide 11 for a look at our year-over-year revenue walk for Q4. We start that walk with last year's revenue, which was just over $3.9 billion. Currencies had a very small impact when comparing Q4 of last year to Q4 of this year. Then you can see the decrease in our organic revenue about 7% year-over-year. That compares to a 15% decrease in weighted average market production so we delivered another quarter of strong outperformance in the face of challenging end-market environment and we're pleased with the fact that this outperformance occurred in all three major markets.
On top of that, what's particularly exciting to see in our outgrowth is that we're seeing a portion of it coming from our electronics and electrification products, especially in China and North America. And finally, you add to that the $34 million of Q4 battery pack revenue coming from AKASOL. The sum of all this was just under $3.7 billion of revenue in Q4. Now let's look at our earnings and cash flow performance on slide 12. Our fourth-quarter adjusted operating income was $375 million or 10.3%, which compares to adjusted operating income of $448 million or 11.4% from a year ago.
On a comparable basis, excluding the impact of foreign exchange and the impact of AKASOL adjusted operating income decreased $60 million on $256 million of lower sales that translates to a decremental margin of approximately 23%. That's not a bad decremental for such a volatile environment, especially considering the roughly $16 million of net commodity cost headwinds that we experienced in the quarter. Excluding these higher commodity costs our year-over-year decremental margin was approximately 17%, which we view as a sign that we're effectively managing our operating cost performance. Moving on to free cash flow, we generated $370 million during the fourth quarter.
Our free cash flow included a $130 million payment to a customer, which was related to a warranty claim that we settled in the quarter for an engine related component. Based on the agreement with our customer this onetime payment fully resolves the claim. Let's now turn to slide 13 where you can see our perspective on global industry production for 2022. When you look at this slide you can see that our market assumptions incorporate a wide range of potential outcomes. That's primarily a result of the semiconductor supply challenges that we think will continue to impact the industry during 2022.
With that background in mind, we expect our global weighted light and commercial vehicle markets to increase in the range of 6% to 9% this year. Looking at this by region, we're planning for our weighted North American markets to be up 13% to 15%. In Europe, we expect the blended market increase of 12% to 15% and in China, we expect the overall market to be down 2% to 5% mainly due to a mid-teens decline in commercial vehicle volumes.
Before moving to our financial outlook, I wanted to highlight a change we're implementing in 2022 with respect to how we report our adjusted operating income and margin. You can see this summarized on slide 14. As you know, M&A is expected to play a significant role in project charging forward and given the nature of the likely acquisitions we anticipate the potential for significant goodwill and intangibles associated with these transactions. Importantly intangible asset amortization expense flows through our adjusted operating income line.
Now sitting here today, we don't know the magnitude of the intangible amortization expense that may come from future potential acquisitions. But what we do know is that it's likely to make true underlying operating performance as measured in our operating margin less comparable to previous periods. Therefore, we believe that excluding intangible asset amortization expense from adjusted operating income will improve year-over-year earnings comparability and provide a clear picture of the real performance of our ongoing operations.
But it's important to also note that the impact of intangible amortization expense will continue to be included in our adjusted earnings per share. Now let's talk about our full year financial outlook on Slide 15. As I mentioned earlier, we expect our end markets to be up 6% to 9% for the year. Next, we expect our revenue growth to continue to exceed industry growth driven by new business launches. Based on these assumptions, we expect our 2022 organic revenue to increase approximately 10% to 14% relative to 2021 pro forma revenue which means that we expect to outgrow the market by 4% to 5%. Then subtracting and expected $220 million headwind from weaker foreign currencies we're projecting total 2022 revenue to be in the range of $15.9 to $16.5 billion.
From a margin perspective, we expect our full year adjusted operating margin to be in the range of 10.2% to 10.7% compared to a pro forma 2021 margin of 10.9% when adjusted for intangible asset amortization expense. This 2022 margin outlook contemplates the business delivering full year incrementals in the low to mid-teens on an all-in basis before the impact of a planned increase in R&D investment. Underlying those incrementals, we expect tailwinds from continued cost synergies and restructuring savings and headwinds from the continuing impact of higher commodity costs and the mounting pressure of other supply chain cost increases.
As it relates to R&D investment we're continuing to win new business. You saw it in the six new wins Fred profiled earlier and you can see it in our 2025 EV business which now stands at more than $3 billion. With this continued success we are leaning forward and continuing to invest more in R&D for our product portfolio. In fact, our guidance anticipates a $130 million to $160 million increase in R&D investment in 2022, and that increase is 100% related to our e-products portfolio. This is higher than the $100 million increase we signaled on last quarter's call for two reasons.
First, as I mentioned earlier, our 2021 net R&D expense came in lower than our expectations due to higher-than-anticipated engineering reimbursements from our customers. Second, and more importantly, the larger increase is a reflection of our bullishness on the prospects for securing additional EV wins in the coming quarters. Based on this revenue and margin outlook, we're now expecting full year adjusted EPS of $4.15 to $4.60 per diluted share.
This EPS guidance contemplates our effective tax rate coming down to 28%, which is declining from the peak of more than 30% that we experienced over the last couple of quarters -- excuse me, the last couple of years. And finally, we expect that we'll deliver free cash flow in the range of $700 million to $800 million for the full year, despite a significant increase in capital spending year-over-year, that supports the aggressive growth we're seeing, particularly in our EV portfolio. That's our 2022 outlook.
So let me summarize my financial remarks. Overall, we had a solid year despite a really challenging end market environment, one where we saw significant volatility during the last two quarters. And remember, it was a year with only 76 million light vehicles produced globally. In the face of this environment, we outgrew the market. We drove 10% operating margins by executing on our cost synergies and restructuring savings while also investing more in R&D to support the future of our e-business, and we delivered another year of strong cash flow.
And as we continue to successfully manage the present, we were delivering on the future by making significant progress on our charging forward plan. Now as we look ahead to 2022, we're keenly focused on continuing to manage the presence by sustaining our strong margin and cash flow profile, maintaining the momentum and delivering new business wins on electric vehicle programs and continuing to make disciplined investments, both organic and inorganic, that will help secure our growth and financial strength long into the future. With that, I'd like to turn the call back over to Pat.