AUBURN HILLS, Mich.,
May 1, 2014 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported first quarter
2014 U.S. GAAP earnings of $0.69 per
diluted share. Excluding non-comparable items, net earnings were
$0.83 per diluted share. Net sales
were $2,084 million in the
quarter.
First Quarter Highlights:
- Completed the previously-announced acquisition of Gustav Wahler
GmbH & Co. KG and its general partner ("Wahler"). The total
consideration was $143 million.
- Net sales of $2,084 million.
- Excluding the impact of foreign currencies and the Wahler
acquisition, net sales were up 9% compared with first quarter
2013.
- U.S. GAAP earnings of $0.69 per
diluted share.
- Excluding the $(0.13) per diluted
share impact of restructuring activities, net earnings were
$0.83 per diluted share, up 28% from
first quarter 2013.
- Operating income of $233 million,
or 11.2% of net sales.
- Excluding the $40 million pretax
impact of restructuring activities, operating income was
$273 million, or 13.1% of net
sales.
First Quarter Results: "We had an excellent first
quarter," said James R. Verrier,
President and Chief Executive Officer, BorgWarner. "The worldwide
adoption of our leading edge powertrain technology, designed to
improve fuel economy, emissions and vehicle performance, drove
strong sales growth. Operating income, excluding non-comparable
items, as a percentage of net sales, was 13.1% in the quarter,
primarily due to outstanding performance from our operations."
"Additionally," Verrier continued, "we completed the acquisition
of Wahler, a leading producer of EGR valves, EGR tubes and
thermostats. As emissions regulations become more stringent and
drivers require more fuel economy, demand for EGR technologies is
expected to continue to grow and BorgWarner is positioned to
deliver."
2014 Outlook:
- Net sales growth is now expected to be 12% to 15% compared with
2013, up from 7% to 11% previously, primarily due to the impact of
the Wahler acquisition.
- The Wahler acquisition is expected to have minimal impact on
2014 operating income and net earnings as purchase accounting
adjustments will likely offset most of the operating income
generated by the business. However, due to an improved outlook for
its other businesses, the company's operating income margin is
expected to remain at 12.5% or better.
- The company's effective tax rate, excluding non-comparable
items, is now expected to be 28%, up from 27% previously, primarily
due to cash repatriation from its operations in China. However, due to an improved outlook for
its businesses, the company is raising its net earnings guidance to
a range of $3.15 to $3.30 per diluted
share from a previous range of $3.10 to
$3.25 per diluted share. Both ranges exclude non-comparable
items.
Financial Results: Net sales were $2,084 million in first quarter 2014, up 13% from
$1,851 million in first quarter 2013.
Net earnings in the quarter were $159
million, or $0.69 per diluted
share, compared with $142 million, or
$0.61 per diluted share, in first
quarter 2013. First quarter 2014 net earnings included
non-comparable items of $(0.13) per
diluted share. First quarter 2013 net earnings included net
non-comparable items of $(0.04) 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 increased net sales by approximately $29 million in first quarter 2014 compared with
first quarter 2013, while the impact on net earnings was
negligible.
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*
|
First
Quarter
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Non – U.S.
GAAP
|
$
|
0.83
|
|
|
$
|
0.65
|
|
|
|
|
|
|
|
|
|
Reconciliations:
|
|
|
|
|
|
|
Restructuring
expense
|
(0.13)
|
|
|
|
|
|
Program termination
agreement
|
|
|
|
(0.03)
|
|
|
Retirement related
obligations
|
|
|
|
(0.02)
|
|
|
Tax
adjustments
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
U.S.
GAAP
|
$
|
0.69
|
|
**
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
* Reflects a
two-for-one stock split effective December 16, 2013
|
|
|
|
|
|
|
** Column does not
add due to rounding
|
|
|
|
|
|
|
Net cash provided by operating activities was $46 million in first quarter 2014 compared with
$16 million in first quarter 2013.
Investments in capital expenditures, including tooling outlays,
totaled $126 million in first quarter
2014, compared with $87 million in
first quarter 2013. Balance sheet debt increased by $144 million and cash decreased by $131 million at the end of first quarter 2014
compared with the end of 2013. The $275
million increase in balance sheet debt (net of cash) was
primarily due to capital expenditures and the Wahler acquisition.
The ratio of balance sheet debt (net of cash) to capital was 13.0%
at the end of first quarter 2014 compared with 7.2% at the end of
2013.
Engine Segment Results: Engine segment net sales were
$1,412 million in first quarter 2014
compared with $1,258 million in first
quarter 2013. Excluding the impact of foreign currencies and the
Wahler acquisition, net sales were up 8% from the prior year's
quarter, primarily due to higher sales of turbochargers, EGR
coolers and engine timing devices. Adjusted earnings before
interest, income taxes and non-controlling interest ("Adjusted
EBIT") were $232 million in first
quarter 2014, up 15% from $202
million in first quarter 2013.
Drivetrain Segment Results: Drivetrain segment net sales
were $681 million in first quarter
2014 compared with $601 million in
first quarter 2013. Excluding the impact of foreign currencies, net
sales were up 12% from the prior year's quarter, primarily due to
higher sales of all-wheel drive systems, traditional transmission
components and dual clutch transmission modules. Adjusted EBIT was
$81 million in first quarter 2014, up
44% from $56 million in first quarter
2013.
Recent Highlights:
- BorgWarner finalized its acquisition of Gustav Wahler GmbH
& Co. KG. A producer of exhaust gas recirculation (EGR) valves
and tubes as well as engine thermostats for both on- and off-road
applications, Wahler's customers include leading automotive
manufacturers from around the world.
- The board of directors declared a quarterly cash dividend of
$0.125 per share of common stock. The
dividend is payable on May 16, 2014
to shareholders of record on May 2,
2014.
- BorgWarner received an Automotive News PACE Innovation
Partnership Award for its collaboration with General Motors (GM) on
the Eco-Launch™ solenoid valve. Several patents are pending for the
innovation, and GM has already committed to using the technology on
an upcoming vehicle. BorgWarner's innovation also received a 2014
Automotive News PACE Award.
- BorgWarner's facility in Seneca,
South Carolina, was formally named the North American
supplier of two-speed, part-time four-wheel drive transfer cases
for the Toyota Tundra pickup truck.
At 9:30 a.m. ET today, a brief
conference call concerning first quarter 2014 results will be
webcast at:
http://www.borgwarner.com/en/Investors/default.aspx.
BorgWarner Inc. (NYSE: BWA) is a product leader in highly
engineered components and systems for powertrains around the world.
Operating manufacturing and technical facilities in 60 locations in
19 countries, the company delivers innovative powertrain solutions
to improve fuel economy, reduce emissions and enhance performance.
For more information, please visit 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
March 31,
|
|
2014
|
|
|
2013
|
|
Net sales
|
$
|
2,084.1
|
|
|
$
|
1,851.1
|
|
Cost of
sales
|
1,638.3
|
|
|
1,476.4
|
|
Gross
profit
|
445.8
|
|
|
374.7
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
173.8
|
|
|
159.3
|
|
Other
expense
|
38.8
|
|
|
16.9
|
|
Operating
income
|
233.2
|
|
|
198.5
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(8.8)
|
|
|
(9.7)
|
|
Interest
income
|
(1.5)
|
|
|
(1.0)
|
|
Interest expense and
finance charges
|
8.2
|
|
|
9.7
|
|
Earnings before
income taxes and noncontrolling interest
|
235.3
|
|
|
199.5
|
|
|
|
|
|
|
|
Provision for income
taxes
|
68.1
|
|
|
50.9
|
|
Net
earnings
|
167.2
|
|
|
148.6
|
|
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
8.1
|
|
|
6.6
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
159.1
|
|
|
$
|
142.0
|
|
|
|
|
|
|
|
Earnings per share —
diluted
|
$
|
0.69
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
229.3
|
|
|
233.1
|
|
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
|
|
2013
|
|
Capital expenditures,
including tooling outlays
|
$
|
126.2
|
|
|
$
|
87.4
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
Fixed assets and
tooling
|
$
|
74.1
|
|
|
$
|
68.2
|
|
Intangible assets and
other
|
6.0
|
|
|
6.7
|
|
|
$
|
80.1
|
|
|
$
|
74.9
|
|
BorgWarner
Inc.
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
|
|
2013
|
|
Engine
|
$
|
1,412.1
|
|
|
$
|
1,257.5
|
|
Drivetrain
|
680.7
|
|
|
601.4
|
|
Inter-segment
eliminations
|
(8.7)
|
|
|
(7.8)
|
|
Net sales
|
$
|
2,084.1
|
|
|
$
|
1,851.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT")
(Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
|
|
2013
|
|
Engine
|
$
|
231.7
|
|
|
$
|
202.3
|
|
Drivetrain
|
80.5
|
|
|
56.0
|
|
Adjusted
EBIT
|
312.2
|
|
|
258.3
|
|
Restructuring
expense
|
39.5
|
|
|
—
|
|
Program termination
agreement
|
—
|
|
|
11.3
|
|
Retirement related
obligations
|
—
|
|
|
5.9
|
|
Corporate, including
equity in affiliates' earnings and stock-based
compensation
|
30.7
|
|
|
32.9
|
|
Interest
income
|
(1.5)
|
|
|
(1.0)
|
|
Interest expense and
finance charges
|
8.2
|
|
|
9.7
|
|
Earnings before
income taxes and noncontrolling interest
|
235.3
|
|
|
199.5
|
|
Provision for income
taxes
|
68.1
|
|
|
50.9
|
|
Net
earnings
|
167.2
|
|
|
148.6
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
8.1
|
|
|
6.6
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
159.1
|
|
|
$
|
142.0
|
|
BorgWarner
Inc.
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2014
|
|
December
31,
2013
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
808.1
|
|
|
$
|
939.5
|
|
Receivables,
net
|
1,546.1
|
|
|
1,248.5
|
|
Inventories,
net
|
516.9
|
|
|
458.1
|
|
Other current
assets
|
150.2
|
|
|
152.4
|
|
Total current
assets
|
3,021.3
|
|
|
2,798.5
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,027.8
|
|
|
1,939.4
|
|
Other non-current
assets
|
2,308.7
|
|
|
2,179.1
|
|
Total
assets
|
$
|
7,357.8
|
|
|
$
|
6,917.0
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable and
other short-term debt
|
$
|
338.5
|
|
|
$
|
201.6
|
|
Accounts payable and
accrued expenses
|
1,562.6
|
|
|
1,383.8
|
|
Income taxes
payable
|
9.8
|
|
|
38.5
|
|
Total current
liabilities
|
1,910.9
|
|
|
1,623.9
|
|
|
|
|
|
|
|
Long-term
debt
|
1,027.6
|
|
|
1,021.0
|
|
Other non-current
liabilities
|
682.0
|
|
|
639.7
|
|
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
3,683.5
|
|
|
3,560.6
|
|
Noncontrolling
interest
|
53.8
|
|
|
71.8
|
|
Total
equity
|
3,737.3
|
|
|
3,632.4
|
|
Total liabilities and
equity
|
$
|
7,357.8
|
|
|
$
|
6,917.0
|
|
BorgWarner
Inc.
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2014
|
|
|
2013
|
|
Operating
|
|
|
|
|
|
Net
earnings
|
$
|
167.2
|
|
|
$
|
148.6
|
|
Non-cash charges
(credits) to operations:
|
|
|
|
|
|
Depreciation and
amortization
|
80.1
|
|
|
74.9
|
|
Restructuring
expense, net of cash paid
|
34.3
|
|
|
—
|
|
Deferred income tax
provision (benefit)
|
15.6
|
|
|
(17.0)
|
|
Other non-cash
items
|
(1.2)
|
|
|
(0.4)
|
|
Net earnings adjusted
for non-cash charges to operations
|
296.0
|
|
|
206.1
|
|
Changes in assets and
liabilities
|
(249.6)
|
|
|
(189.8)
|
|
Net cash provided by
operating activities
|
46.4
|
|
|
16.3
|
|
|
|
|
|
|
|
Investing
|
|
|
|
|
|
Capital expenditures,
including tooling outlays
|
(126.2)
|
|
|
(87.4)
|
|
Net proceeds from
asset disposals
|
1.5
|
|
|
13.8
|
|
Payments for
businesses acquired, net of cash acquired
|
(106.4)
|
|
|
—
|
|
Net cash used in
investing activities
|
(231.1)
|
|
|
(73.6)
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
Net increase
(decrease) in notes payable
|
111.3
|
|
|
(11.0)
|
|
Additions to
long-term debt, net of debt issuance costs
|
100.0
|
|
|
161.0
|
|
Repayments of
long-term debt, including current portion
|
(100.1)
|
|
|
(15.6)
|
|
Payments for purchase
of treasury stock
|
—
|
|
|
(49.9)
|
|
Proceeds from stock
options exercised, including the tax benefit
|
9.4
|
|
|
11.4
|
|
Taxes paid on
employees' restricted stock award vestings
|
(22.2)
|
|
|
(27.2)
|
|
Dividends paid to
BorgWarner stockholders
|
(28.4)
|
|
|
—
|
|
Dividends paid to
noncontrolling stockholders
|
(14.0)
|
|
|
(9.0)
|
|
Net cash provided by
financing activities
|
56.0
|
|
|
59.7
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(2.7)
|
|
|
(22.7)
|
|
|
|
|
|
|
|
Net decrease in
cash
|
(131.4)
|
|
|
(20.3)
|
|
|
|
|
|
|
|
Cash at beginning of
year
|
939.5
|
|
|
715.7
|
|
Cash at end of
period
|
$
|
808.1
|
|
|
$
|
695.4
|
|
SOURCE BorgWarner Inc.