AUBURN HILLS, Mich.,
Feb. 14, 2013 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported fourth quarter
2012 U.S. GAAP earnings of $1.03 per
diluted share. Excluding non-comparable items, net earnings were
$1.16 per diluted share. Net sales
were $1,719 million in the
quarter.
Fourth Quarter Highlights:
- Net sales of $1,719 million.
- Excluding the impact of foreign currencies and 2011 and 2012
dispositions, net sales were flat with fourth quarter 2011.
- U.S. GAAP earnings of $1.03 per
diluted share.
- Excluding the $(0.10) per diluted
share impact of retirement related obligations, and $(0.03) per diluted share related to net tax
adjustments, net earnings were $1.16
per diluted share, down 3% from fourth quarter 2011.
- Operating income of $171 million,
or 9.9% of net sales.
- Excluding the $17 million pretax
impact of retirement related obligations, operating income was
$188 million, or 10.9% of net
sales.
- Repurchased 1.5 million shares of common stock in the
quarter.
Full Year Highlights:
- Record net sales of $7,183
million.
- Excluding the impact of foreign currencies and 2011 and 2012
dispositions, net sales were up 6% from 2011.
- U.S. GAAP earnings of $4.17 per
diluted share.
- Excluding non-comparable items, 2012 earnings were $4.97 per diluted share, a new record for the
company, up 12% from 2011 comparable results. Excluding
non-comparable items and the impact of foreign currencies, 2012
earnings were up 17% from 2011 comparable results.
- Operating income of $753 million,
or 10.5% of net sales.
- Excluding non-comparable items, operating income was 11.7% of
net sales, a new full year record.
- Repurchased approximately 4.2 million shares of common stock in
2012.
Comment and Outlook: "Market conditions were challenging
in the fourth quarter," said James
Verrier, President and CEO of BorgWarner. "Global
light vehicle production in the fourth quarter was up approximately
1% from a year ago, but light vehicle production in Europe, a market which comprises nearly half
of our sales, was down approximately 11%. Our sales were flat
during the same period, excluding the impact of foreign currencies
and 2011 and 2012 dispositions. Despite this challenging sales
environment, the continued focus on execution at our operations
resulted in a solid operating income margin of 10.9% in the fourth
quarter, excluding non-comparable items."
"In 2012, our sales, earnings and operating income margin set
all-time records on a comparable basis. In 2013, we expect reported
sales growth of 2% to 6% compared with 2012, or sales growth of 3%
to 7% excluding the impact of 2012 dispositions, earnings of
$5.15 to $5.45 per diluted share and
an operating income margin of 11.5% or better. We anticipate that
this will continue our record financial pace despite difficult
market conditions in Europe," said
Verrier.
Financial Results: Net sales were $1,719 million in fourth quarter 2012, down 3%
from $1,774 million in fourth quarter
2011. Net earnings in the quarter were $121
million, or $1.03 per diluted
share, compared with $122 million, or
$1.00 per diluted share, in fourth
quarter 2011. Fourth quarter 2012 net earnings included net
non-comparable items of $(0.13) per
diluted share. Fourth quarter 2011 net earnings included
non-comparable items of $(0.19) per
diluted share. These items are listed in a table below as
reconciliations of non-U.S. GAAP measures, which are provided by
the company for comparison with other results, and the most
directly comparable U.S. GAAP measures. The impact of foreign
currencies, primarily the Euro, decreased net sales by
approximately $22 million, and
decreased net earnings by approximately $0.02 per diluted share, in fourth quarter 2012
compared with fourth quarter 2011.
Full year 2012 net sales were $7,183
million, up 1% compared with $7,115
million in 2011. Full year 2012 net earnings were
$501 million, or $4.17 per diluted share, compared with
$550 million, or $4.45 per diluted share, in 2011. Full year 2012
net earnings included net non-comparable items of $(0.80) per diluted share. Full year 2011 net
earnings included non-comparable items which, when netted, had no
impact on reported earnings per diluted share. These items are
listed in a table below as reconciliations of non-U.S. GAAP
measures, which are provided by the company for comparison with
other results, and the most directly comparable U.S. GAAP measures.
The impact of foreign currencies, primarily the Euro, decreased net
sales by approximately $325 million,
and decreased net earnings by approximately $0.22 per diluted share, in 2012 compared with
2011.
The following table reconciles the company's non-U.S. GAAP
measures included in the press release, which are provided for
comparison with other results, and the most directly comparable
U.S. GAAP measures:
Net
earnings per diluted share
|
Fourth
Quarter
|
|
Full
Year
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Non
– U.S. GAAP
|
$
|
1.16
|
|
|
$
|
1.19
|
|
|
$
|
4.97
|
|
|
$
|
4.45
|
|
|
|
|
|
|
|
|
Reconciliations:
|
|
|
|
|
|
|
|
Retirement related obligations
|
(0.10)
|
|
|
|
|
(0.10)
|
|
|
|
Loss from disposal activities
|
|
|
(0.19)
|
|
|
(0.37)
|
|
|
(0.19)
|
Restructuring expense
|
|
|
|
|
(0.17)
|
|
|
|
Tax adjustments
|
(0.03)
|
|
|
|
|
(0.16)
|
|
|
0.05
|
Patent infringement settlement, net of legal costs
incurred
|
|
|
|
|
|
|
0.14
|
|
|
|
|
|
|
|
|
U.S.
GAAP
|
$
|
1.03
|
|
|
$
|
1.00
|
|
|
$
|
4.17
|
|
|
$
|
4.45
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities was $879 million in 2012 compared with $708 million in 2011. Investments in capital
expenditures, including tooling outlays, totaled $407 million in 2012, compared with $394 million in 2011. Balance sheet debt
decreased by $262 million and cash
increased by $356 million compared
with the end of 2011. The $618
million decrease in balance sheet debt (net of cash) was
primarily due to net cash provided by operating activities and the
company's settlement of its convertible senior notes, which was
partially offset by share repurchases. The ratio of balance sheet
debt (net of cash) to capital was 10.0% at the end of 2012 compared
with 28.3% at the end of 2011.
Engine Group Results: Engine segment net sales were
$1,167 million in fourth quarter 2012
compared with $1,245 million in
fourth quarter 2011. Excluding the negative impact of foreign
currencies and 2011 and 2012 dispositions, net sales were down 2%
from the prior year's quarter. Higher sales of light vehicle
turbochargers in China and
variable cam timing devices in Japan were offset by volume declines across
the Group's product portfolio in Europe related to the economic slowdown in the
region. Adjusted earnings before interest, income taxes and
non-controlling interest ("Adjusted EBIT") were $182 million in fourth quarter 2012, down 10%
from $203 million in fourth quarter
2011.
Drivetrain Group Results: Drivetrain segment net sales
were $559 million in fourth quarter
2012 compared with $534 million in
fourth quarter 2011. Excluding the negative impact of foreign
currencies, net sales were up 5% from the prior year's
quarter. Strong all-wheel drive system sales in North America and India combined with higher sales of
traditional transmission components in Korea offset declines across
the Group's product portfolio in Europe related to the economic slowdown in the
region. Adjusted EBIT was $49 million
in fourth quarter 2012, up 5% from $47
million in fourth quarter 2011.
Recent Highlights:
The BorgWarner Board of Directors announced the appointment of
James R. Verrier, 50, to president
and chief executive officer effective January 1, 2013, at which time he also joined the
Board of Directors. Former chief executive officer, Timothy M. Manganello, 62, will continue as
executive chairman of the company until his planned retirement at
the April 24, 2013 annual meeting, at
which time he will step down from the Board. Robin J. Adams, Vice Chairman and former chief
financial officer, will also step down from the Board at the annual
meeting in connection with his planned retirement from the company.
The Board also announced that at the time of Manganello's
retirement, the company's present lead director, Alexis P. Michas, will become non-executive
chairman of the Board.
- In November, the company reported an expected backlog of
$2.3 billion of net new business for
the period 2013 through 2015. Demand for the company's advanced
powertrain technologies, such as gasoline and diesel turbochargers,
dual-clutch transmission technology, engine timing systems and
emissions products, is expected to continue to drive strong
growth.
- For the first time, BorgWarner supplies its innovative
three-stage turbocharging technology for BMW's M Performance diesel
engine, the most powerful six-cylinder in-line diesel engine in the
world. Exclusively developed for BMW M Performance automobiles, the
engine powers the M550d xDrive Sedan and Touring, X5 M50d Touring,
and X6 M50d models.
- Propelled by the rapidly growing Chinese automotive market,
BorgWarner opened another production plant at its campus in
Ningbo, China, on November 28, 2012. The all-new high-tech
manufacturing facility will produce and test Morse TEC variable cam
timing (VCT) technologies and engine timing systems to support the
production and launch of over 50 programs with more than 20
different customers. The opening ceremony also celebrated the
inauguration of BorgWarner's world-class Ningbo Engineering Center
which provides research and development, applications engineering
and management support.
At 9:30 a.m. ET today, a brief
conference call concerning fourth quarter and full year results
will be webcast at:
http://www.borgwarner.com/en/Investors/Webcasts/default.aspx.
Auburn Hills, Michigan-based
BorgWarner Inc. (NYSE: BWA) is a product leader in highly
engineered components and systems for vehicle powertrain
applications worldwide. The company operates manufacturing and
technical facilities in 57 locations in 19 countries. Customers
include VW/Audi, Ford, Toyota, Renault/Nissan, General Motors,
Hyundai/Kia, Daimler, Chrysler, Fiat, BMW, Honda, John Deere, PSA,
and MAN. The Internet address for BorgWarner is:
http://www.borgwarner.com.
Statements contained in this news release may contain
forward-looking statements as contemplated by the 1995 Private
Securities Litigation Reform Act that are based on management's
current expectations, estimates and projections. Words such as
"outlook," "expects," "anticipates," "intends," "plans,"
"believes," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements are subject to risks and
uncertainties, many of which are difficult to predict and generally
beyond our control, that could cause actual results to differ
materially from those expressed, projected or implied in or by the
forward-looking statements. Such risks and uncertainties include:
fluctuations in domestic or foreign vehicle production, the
continued use of outside suppliers, fluctuations in demand for
vehicles containing our products, changes in general economic
conditions, and other risks detailed in our filings with the
Securities and Exchange Commission, including the Risk Factors,
identified in our most recently filed Annual Report on Form 10-K.
We do not undertake any obligation to update any forward-looking
statements.
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
(millions,
except per share amounts)
|
|
|
|
|
|
|
|
Three
Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Net
sales
|
$
|
1,719.1
|
|
|
$
|
1,773.7
|
|
|
$
|
7,183.2
|
|
|
$
|
7,114.7
|
|
Cost of
sales
|
1,374.9
|
|
|
1,414.0
|
|
|
5,716.3
|
|
|
5,704.3
|
|
Gross profit
|
344.2
|
|
|
359.7
|
|
|
1,466.9
|
|
|
1,410.4
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
156.2
|
|
|
146.8
|
|
|
629.3
|
|
|
621.0
|
|
Other
(income) expense
|
17.3
|
|
|
21.8
|
|
|
84.7
|
|
|
(8.1)
|
|
Operating income
|
170.7
|
|
|
191.1
|
|
|
752.9
|
|
|
797.5
|
|
|
|
|
|
|
|
|
|
Equity in
affiliates' earnings, net of tax
|
(10.0)
|
|
|
(10.2)
|
|
|
(42.8)
|
|
|
(38.2)
|
|
Interest
income
|
(1.0)
|
|
|
(1.3)
|
|
|
(4.7)
|
|
|
(4.8)
|
|
Interest
expense and finance charges
|
6.7
|
|
|
17.2
|
|
|
39.4
|
|
|
74.6
|
|
Earnings before income taxes and noncontrolling
interest
|
175.0
|
|
|
185.4
|
|
|
761.0
|
|
|
765.9
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
48.4
|
|
|
58.2
|
|
|
238.6
|
|
|
195.3
|
|
Net earnings
|
126.6
|
|
|
127.2
|
|
|
522.4
|
|
|
570.6
|
|
|
|
|
|
|
|
|
|
Net
earnings attributable to the noncontrolling interest, net of
tax
|
5.4
|
|
|
5.2
|
|
|
21.5
|
|
|
20.5
|
|
Net earnings attributable to BorgWarner
Inc.
|
$
|
121.2
|
|
|
$
|
122.0
|
|
|
$
|
500.9
|
|
|
$
|
550.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to diluted earnings per
share:
|
|
|
|
|
|
|
|
Net earnings attributable to BorgWarner
Inc.
|
$
|
121.2
|
|
|
$
|
122.0
|
|
|
$
|
500.9
|
|
|
$
|
550.1
|
|
Adjustment for net interest expense on convertible
notes
|
—
|
|
|
5.5
|
|
|
5.8
|
|
|
21.5
|
|
Diluted net earnings attributable to BorgWarner
Inc.
|
$
|
121.2
|
|
|
$
|
127.5
|
|
|
$
|
506.7
|
|
|
$
|
571.6
|
|
|
|
|
|
|
|
|
|
Earnings
per share — diluted
|
$
|
1.03
|
|
|
$
|
1.00
|
|
|
$
|
4.17
|
|
|
$
|
4.45
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding — diluted
|
117.8
|
|
|
127.6
|
|
|
121.4
|
|
|
128.5
|
|
|
|
|
|
|
|
|
|
Supplemental Information (Unaudited)
|
|
|
|
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
Three
Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Capital
expenditures, including tooling outlays
|
$
|
124.4
|
|
|
$
|
119.6
|
|
|
$
|
407.4
|
|
|
$
|
393.7
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
Fixed assets and tooling
|
$
|
70.4
|
|
|
$
|
65.2
|
|
|
$
|
260.2
|
|
|
$
|
252.2
|
|
Intangible assets and other
|
6.9
|
|
|
7.7
|
|
|
28.4
|
|
|
30.8
|
|
|
$
|
77.3
|
|
|
$
|
72.9
|
|
|
$
|
288.6
|
|
|
$
|
283.0
|
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales
by Reporting Segment (Unaudited)
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Engine
|
$
|
1,167.2
|
|
|
$
|
1,245.1
|
|
|
$
|
4,913.0
|
|
|
$
|
5,050.6
|
|
Drivetrain
|
559.0
|
|
|
533.7
|
|
|
2,298.7
|
|
|
2,084.5
|
|
Inter-segment eliminations
|
(7.1)
|
|
|
(5.1)
|
|
|
(28.5)
|
|
|
(20.4)
|
|
Net sales
|
$
|
1,719.1
|
|
|
$
|
1,773.7
|
|
|
$
|
7,183.2
|
|
|
$
|
7,114.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Earnings Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Engine
|
$
|
182.0
|
|
|
$
|
202.8
|
|
|
$
|
786.4
|
|
|
$
|
774.3
|
|
Drivetrain
|
49.2
|
|
|
46.8
|
|
|
209.1
|
|
|
161.2
|
|
Adjusted EBIT
|
231.2
|
|
|
249.6
|
|
|
995.5
|
|
|
935.5
|
|
Loss from
disposal activities
|
—
|
|
|
21.5
|
|
|
39.7
|
|
|
21.5
|
|
Restructuring expense
|
—
|
|
|
—
|
|
|
27.4
|
|
|
—
|
|
Retirement
related obligations
|
17.3
|
|
|
—
|
|
|
17.3
|
|
|
—
|
|
Patent
infringement settlement, net of legal costs incurred
|
—
|
|
|
—
|
|
|
—
|
|
|
(29.1)
|
|
Corporate,
including equity in affiliates' earnings and stock-based
compensation
|
33.2
|
|
|
26.8
|
|
|
115.4
|
|
|
107.4
|
|
Interest
income
|
(1.0)
|
|
|
(1.3)
|
|
|
(4.7)
|
|
|
(4.8)
|
|
Interest
expense and finance charges
|
6.7
|
|
|
17.2
|
|
|
39.4
|
|
|
74.6
|
|
Earnings before income taxes and noncontrolling
interest
|
175.0
|
|
|
185.4
|
|
|
761.0
|
|
|
765.9
|
|
Provision
for income taxes
|
48.4
|
|
|
58.2
|
|
|
238.6
|
|
|
195.3
|
|
Net earnings
|
126.6
|
|
|
127.2
|
|
|
522.4
|
|
|
570.6
|
|
Net
earnings attributable to the noncontrolling interest, net of
tax
|
5.4
|
|
|
5.2
|
|
|
21.5
|
|
|
20.5
|
|
Net earnings attributable to BorgWarner
Inc.
|
$
|
121.2
|
|
|
$
|
122.0
|
|
|
$
|
500.9
|
|
|
$
|
550.1
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
December
31,
2012
|
|
December
31,
2011
|
Assets
|
|
|
|
|
|
|
|
Cash
|
$
|
715.7
|
|
|
$
|
359.6
|
|
Receivables, net
|
1,147.3
|
|
|
1,183.0
|
|
Inventories, net
|
447.6
|
|
|
454.3
|
|
Other
current assets
|
162.2
|
|
|
140.9
|
|
Total current assets
|
2,472.8
|
|
|
2,137.8
|
|
|
|
|
|
Property,
plant and equipment, net
|
1,788.0
|
|
|
1,664.3
|
|
Other
non-current assets
|
2,140.0
|
|
|
2,156.5
|
|
Total assets
|
$
|
6,400.8
|
|
|
$
|
5,958.6
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Notes
payable and other short-term debt
|
$
|
239.1
|
|
|
$
|
196.3
|
|
Current
portion of long-term debt
|
4.3
|
|
|
381.5
|
|
Accounts
payable and accrued expenses
|
1,287.2
|
|
|
1,297.8
|
|
Income
taxes payable
|
72.5
|
|
|
29.8
|
|
Total current liabilities
|
1,603.1
|
|
|
1,905.4
|
|
|
|
|
|
Long-term
debt
|
823.8
|
|
|
751.3
|
|
Other
non-current liabilities
|
827.8
|
|
|
848.9
|
|
|
|
|
|
Total
BorgWarner Inc. stockholders' equity
|
3,082.6
|
|
|
2,387.9
|
|
Noncontrolling interest
|
63.5
|
|
|
65.1
|
|
Total equity
|
3,146.1
|
|
|
2,453.0
|
|
|
|
|
|
Total liabilities and equity
|
$
|
6,400.8
|
|
|
$
|
5,958.6
|
|
BorgWarner
Inc.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(millions
of dollars)
|
|
|
|
|
Twelve
Months Ended
December
31,
|
|
|
|
|
|
2012
|
|
2011
|
Operating
|
|
|
|
Net
earnings
|
$
|
522.4
|
|
|
$
|
570.6
|
|
Non-cash
charges (credits) to operations:
|
|
|
|
Depreciation and amortization
|
288.6
|
|
|
283.0
|
|
Loss from disposal activities, net of cash
paid
|
31.7
|
|
|
21.5
|
|
Restructuring expense, net of cash paid
|
23.3
|
|
|
—
|
|
Bond amortization
|
5.3
|
|
|
20.3
|
|
Deferred income tax benefit
|
(10.7)
|
|
|
(1.1)
|
|
Other non-cash items
|
43.7
|
|
|
14.0
|
|
Net earnings adjusted for non-cash charges to
operations
|
904.3
|
|
|
908.3
|
|
Changes in
assets and liabilities
|
(25.6)
|
|
|
(200.1)
|
|
Net cash provided by operating activities
|
878.7
|
|
|
708.2
|
|
|
|
|
|
Investing
|
|
|
|
Capital
expenditures, including tooling outlays
|
(407.4)
|
|
|
(393.7)
|
|
Net
proceeds from asset disposals
|
5.4
|
|
|
7.9
|
|
Payments
for businesses acquired, net of cash acquired
|
—
|
|
|
(203.7)
|
|
Net
proceeds from sale of businesses
|
56.8
|
|
|
25.0
|
|
Net cash used in investing activities
|
(345.2)
|
|
|
(564.5)
|
|
|
|
|
|
Financing
|
|
|
|
Net
increase in notes payable
|
12.8
|
|
|
67.6
|
|
Additions
to long-term debt, net of debt issuance costs
|
313.9
|
|
|
364.6
|
|
Repayments
of long-term debt, including current portion
|
(246.4)
|
|
|
(309.1)
|
|
Proceeds
from accounts receivable securitization facility
|
30.0
|
|
|
—
|
|
Payments
for purchase of treasury stock
|
(295.9)
|
|
|
(357.6)
|
|
Proceeds
from stock options exercised, including the tax benefit
|
52.0
|
|
|
53.0
|
|
Taxes paid
on employees' restricted stock award vestings
|
(18.1)
|
|
|
(14.4)
|
|
Purchase
of noncontrolling interest
|
(15.0)
|
|
|
(29.4)
|
|
Capital
contribution from noncontrolling interest
|
—
|
|
|
19.5
|
|
Dividends
paid to noncontrolling stockholders
|
(21.9)
|
|
|
(13.9)
|
|
Net cash used in financing activities
|
(188.6)
|
|
|
(219.7)
|
|
|
|
|
|
Effect of
exchange rate changes on cash
|
11.2
|
|
|
(14.3)
|
|
|
|
|
|
Net
increase (decrease) in cash
|
356.1
|
|
|
(90.3)
|
|
|
|
|
|
Cash at
beginning of year
|
359.6
|
|
|
449.9
|
|
Cash at
end of year
|
$
|
715.7
|
|
|
$
|
359.6
|
|
SOURCE BorgWarner Inc.