AUBURN HILLS, Mich.,
July 31, 2014 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported second quarter
2014 U.S. GAAP net earnings of $0.83
per diluted share. Excluding non-comparable items, net earnings
were $0.89 per diluted share. Net
sales were $2,197 million in the
quarter.
Second Quarter Highlights:
- Net sales of $2,197 million, up
16% compared with second quarter 2013.
- Excluding the impact of foreign currencies and the Wahler
acquisition, net sales were up 8% compared with second quarter
2013.
- U.S. GAAP net earnings of $0.83
per diluted share.
- Excluding the $(0.06) per diluted
share impact of restructuring activities, net earnings were
$0.89 per diluted share, up 19% from
second quarter 2013.
- Operating income of $281 million.
- Excluding the $15 million pretax
impact of restructuring activities, operating income was
$296 million, or 13.5% of net
sales.
Second Quarter Results: "The global adoption of our
leading edge powertrain technology, combined with the recent Wahler
acquisition, drove tremendous sales growth in the quarter, while
operational efficiency boosted our results," said James R. Verrier, President and Chief Executive
Officer, BorgWarner. "Net sales grew 16% in the second quarter and
operating income as a percentage of net sales, excluding
non-comparable items, was 13.5%. A strong quarter for the
company."
2014 Guidance: The company has an improved outlook for
2014. Net sales growth is now expected to be 13% to 15% compared
with 2013, up from 12% to 15% previously. Operating income, as a
percentage of net sales, is now expected to approach 13%, excluding
non-comparable items. Previously, operating income, as a percentage
of net sales, was expected to be 12.5% or better, excluding
non-comparable items. The company is also raising its net earnings
guidance to a range of $3.25 to $3.35
per diluted share from a previous range of $3.15 to $3.30 per diluted share. Both net
earnings guidance ranges exclude non-comparable items.
Financial Results: Net sales were $2,197 million in second quarter 2014, up 16%
from $1,894 million in second quarter
2013. Net earnings in the quarter were $190
million, or $0.83 per diluted
share, compared with $174 million, or
$0.75 per diluted share, in second
quarter 2013. Second quarter 2014 net earnings included
non-comparable items of $(0.06) 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 $56 million and increased net earnings by
approximately $0.02 per diluted share
in second quarter 2014 compared with second quarter 2013.
For the first six months of 2014, net sales were $4,281 million, up 14% from $3,745 million in the first six months of 2013.
Net earnings in the first six months of 2014 were $349 million, or $1.52 per diluted share, compared with
$316 million, or $1.36 per diluted share, in the first six months
of 2013. Net earnings in the first six months of 2014 included
non-comparable items of $(0.19) per
diluted share. Net earnings in the first six months of 2013
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
$85 million and increased net
earnings by approximately $0.02 per
diluted share in the first six months of 2014 compared with the
first six months of 2013.
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*
|
Second
Quarter
|
|
First Six
Months
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non – U.S.
GAAP
|
$
|
0.89
|
|
|
$
|
0.75
|
|
|
$
|
1.71
|
|
|
$
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
expense
|
(0.06)
|
|
|
|
|
|
(0.19)
|
|
|
|
|
Program termination
agreement
|
|
|
|
|
|
|
|
|
|
(0.03)
|
|
Retirement related
obligations
|
|
|
|
|
|
|
|
|
|
(0.02)
|
|
Tax
adjustments
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
GAAP
|
$
|
0.83
|
|
|
$
|
0.75
|
|
|
$
|
1.52
|
|
|
$
|
1.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Reflects a
two-for-one stock split effective December 16, 2013
|
Net cash provided by operating activities was $326 million in the first six months of 2014
compared with $300 million in the
first six months of 2013. Investments in capital expenditures,
including tooling outlays, totaled $257
million in the first six months of 2014, compared with
$195 million in the first six months
of 2013. Balance sheet debt increased by $23
million and cash decreased by $168
million at the end of second quarter 2014 compared with the
end of 2013. The $191 million
increase in net debt was primarily due to capital expenditures and
the Wahler acquisition. The company's net debt to net capital ratio
was 10.9% at the end of second quarter 2014 compared with 7.2% at
the end of 2013.
Engine Segment Results: Engine segment net sales were
$1,498 million in second quarter 2014
compared with $1,288 million in
second quarter 2013. Excluding the impact of foreign currencies and
the Wahler acquisition, net sales were up 6% from the prior year's
quarter, primarily due to higher sales of turbochargers and engine
timing devices. Adjusted earnings before interest, income taxes and
non-controlling interest ("Adjusted EBIT") were $242 million in second quarter 2014, up 10% from
$220 million in second quarter
2013.
Drivetrain Segment Results: Drivetrain segment net sales
were $709 million in second quarter
2014 compared with $614 million in
second quarter 2013. Excluding the impact of foreign currencies,
net sales were up 13% 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 $89 million in
second quarter 2014, up 49% from $60
million in second quarter 2013.
Recent Highlights:
- BorgWarner began producing its electronically controlled
Visctronic® fan drives at its new plant in Itatiba City,
Brazil. The advanced technology
provides efficient engine cooling as well as improved fuel economy
and reduced emissions for trucks, buses and off-highway
applications.
- BorgWarner supplies a number of advanced technologies for
winners of the 2014 World Car Awards, including the 2014 World Car
of the Year (Audi A3), the 2014 World Luxury Car (Mercedes Benz
S-Class) and the 2014 World Performance Car (Porsche 911 GT3). For
12 of the 15 finalists in all categories, including the winners
noted above, BorgWarner provides one or more advanced technologies,
such as variable cam timing systems, chain timing systems,
turbochargers, EGR coolers and valves, thermostats, ignition coils,
glow plug controllers, cabin heaters, friction plates and GenV
all-wheel drive couplings.
- BorgWarner's next-generation HY-VO® chain drives transfer cases
for the Lexus® GX and the Toyota Land Cruiser Prado, 4Runner,
Tacoma and FJ Cruiser. Specifically engineered to reduce friction,
the chain improves efficiency and helps increase fuel economy.
BorgWarner produces HY-VO chain for these applications at its
facility in Japan.
- BorgWarner supplies its innovative Pressure Sensor Glow Plug
(PSG) for Volkswagen's all new diesel engines starting with the
1.4-liter version and then adding the 1.6-liter and 2.0-liter
versions later this year. BorgWarner's PSG combines a highly
efficient glow plug with an integrated pressure sensor to improve
engine efficiency. The sensor measures the rapidly changing
cylinder pressure in the combustion chamber and reports the data to
the engine control unit, establishing closed-loop control of engine
pressure that allows the engine controller to continuously adapt
fuel injection for each cylinder.
- BorgWarner is producing multi-spark ignition coils for
Daimler's six- and eight-cylinder engines. Specially designed for
gasoline direct-injection (GDI) engines running stratified
combustion, BorgWarner's compact multi-spark ignition coil
technology enlarges the ignition zone for more controlled and
optimized combustion, improved fuel economy and reduced
emissions.
At 9:30 a.m. ET today, a brief
conference call concerning second 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net sales
|
$
|
2,197.0
|
|
|
$
|
1,893.9
|
|
|
$
|
4,281.1
|
|
|
$
|
3,745.0
|
|
Cost of
sales
|
1,724.2
|
|
|
1,497.3
|
|
|
3,362.5
|
|
|
2,973.7
|
|
Gross
profit
|
472.8
|
|
|
396.6
|
|
|
918.6
|
|
|
771.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
181.2
|
|
|
155.6
|
|
|
355.0
|
|
|
314.9
|
|
Other expense
(income), net
|
11.0
|
|
|
(2.4)
|
|
|
49.8
|
|
|
14.5
|
|
Operating
income
|
280.6
|
|
|
243.4
|
|
|
513.8
|
|
|
441.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(12.2)
|
|
|
(11.1)
|
|
|
(21.0)
|
|
|
(20.8)
|
|
Interest
income
|
(1.4)
|
|
|
(1.0)
|
|
|
(2.9)
|
|
|
(2.0)
|
|
Interest expense and
finance charges
|
9.0
|
|
|
8.8
|
|
|
17.2
|
|
|
18.5
|
|
Earnings before
income taxes and noncontrolling interest
|
285.2
|
|
|
246.7
|
|
|
520.5
|
|
|
446.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
85.3
|
|
|
66.6
|
|
|
153.4
|
|
|
117.5
|
|
Net
earnings
|
199.9
|
|
|
180.1
|
|
|
367.1
|
|
|
328.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
9.7
|
|
|
6.0
|
|
|
17.8
|
|
|
12.6
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
190.2
|
|
|
$
|
174.1
|
|
|
$
|
349.3
|
|
|
$
|
316.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share —
diluted
|
$
|
0.83
|
|
|
$
|
0.75
|
|
|
$
|
1.52
|
|
|
$
|
1.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
229.670
|
|
|
232.202
|
|
|
229.499
|
|
|
232.666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Capital expenditures,
including tooling outlays
|
$
|
131.1
|
|
|
$
|
107.4
|
|
|
$
|
257.3
|
|
|
$
|
194.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets and
tooling
|
$
|
77.3
|
|
|
$
|
69.3
|
|
|
$
|
151.4
|
|
|
$
|
137.5
|
|
Intangible assets and
other
|
7.8
|
|
|
6.7
|
|
|
13.8
|
|
|
13.4
|
|
|
$
|
85.1
|
|
|
$
|
76.0
|
|
|
$
|
165.2
|
|
|
$
|
150.9
|
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Engine
|
$
|
1,497.5
|
|
|
$
|
1,288.3
|
|
|
$
|
2,909.6
|
|
|
$
|
2,545.8
|
|
Drivetrain
|
708.7
|
|
|
613.5
|
|
|
1,389.4
|
|
|
1,214.9
|
|
Inter-segment
eliminations
|
(9.2)
|
|
|
(7.9)
|
|
|
(17.9)
|
|
|
(15.7)
|
|
Net sales
|
$
|
2,197.0
|
|
|
$
|
1,893.9
|
|
|
$
|
4,281.1
|
|
|
$
|
3,745.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Engine
|
$
|
241.7
|
|
|
$
|
220.3
|
|
|
$
|
473.4
|
|
|
$
|
422.6
|
|
Drivetrain
|
89.1
|
|
|
59.8
|
|
|
169.6
|
|
|
115.8
|
|
Adjusted
EBIT
|
330.8
|
|
|
280.1
|
|
|
643.0
|
|
|
538.4
|
|
Restructuring
expense
|
15.0
|
|
|
—
|
|
|
54.5
|
|
|
—
|
|
Program termination
agreement
|
—
|
|
|
—
|
|
|
—
|
|
|
11.3
|
|
Retirement related
obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
Corporate, including
equity in affiliates' earnings and stock-based
compensation
|
23.0
|
|
|
25.6
|
|
|
53.7
|
|
|
58.5
|
|
Interest
income
|
(1.4)
|
|
|
(1.0)
|
|
|
(2.9)
|
|
|
(2.0)
|
|
Interest expense and
finance charges
|
9.0
|
|
|
8.8
|
|
|
17.2
|
|
|
18.5
|
|
Earnings before
income taxes and noncontrolling interest
|
285.2
|
|
|
246.7
|
|
|
520.5
|
|
|
446.2
|
|
Provision for income
taxes
|
85.3
|
|
|
66.6
|
|
|
153.4
|
|
|
117.5
|
|
Net
earnings
|
199.9
|
|
|
180.1
|
|
|
367.1
|
|
|
328.7
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
9.7
|
|
|
6.0
|
|
|
17.8
|
|
|
12.6
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
190.2
|
|
|
$
|
174.1
|
|
|
$
|
349.3
|
|
|
$
|
316.1
|
|
BorgWarner
Inc.
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2014
|
|
|
December
31, 2013
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
771.4
|
|
|
$
|
939.5
|
|
Receivables,
net
|
1,571.7
|
|
|
1,248.5
|
|
Inventories,
net
|
528.0
|
|
|
458.1
|
|
Other current
assets
|
166.2
|
|
|
152.4
|
|
Total current
assets
|
3,037.3
|
|
|
2,798.5
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,089.3
|
|
|
1,939.4
|
|
Other non-current
assets
|
2,330.4
|
|
|
2,179.1
|
|
Total
assets
|
$
|
7,457.0
|
|
|
$
|
6,917.0
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable and
other short-term debt
|
$
|
541.1
|
|
|
$
|
201.6
|
|
Accounts payable and
accrued expenses
|
1,622.0
|
|
|
1,383.8
|
|
Income taxes
payable
|
7.6
|
|
|
38.5
|
|
Total current
liabilities
|
2,170.7
|
|
|
1,623.9
|
|
|
|
|
|
|
|
Long-term
debt
|
704.2
|
|
|
1,021.0
|
|
Other non-current
liabilities
|
688.4
|
|
|
639.7
|
|
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
3,828.8
|
|
|
3,560.6
|
|
Noncontrolling
interest
|
64.9
|
|
|
71.8
|
|
Total
equity
|
3,893.7
|
|
|
3,632.4
|
|
Total liabilities and
equity
|
$
|
7,457.0
|
|
|
$
|
6,917.0
|
|
BorgWarner
Inc.
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended June 30,
|
|
2014
|
|
|
2013
|
|
Operating
|
|
|
|
|
|
Net
earnings
|
$
|
367.1
|
|
|
$
|
328.7
|
|
Non-cash charges
(credits) to operations:
|
|
|
|
|
|
Depreciation and
amortization
|
165.2
|
|
|
150.9
|
|
Restructuring
expense, net of cash paid
|
38.9
|
|
|
—
|
|
Deferred income tax
provision (benefit)
|
37.6
|
|
|
(10.3)
|
|
Other non-cash
items
|
(5.0)
|
|
|
(3.6)
|
|
Net earnings adjusted
for non-cash charges to operations
|
603.8
|
|
|
465.7
|
|
Changes in assets and
liabilities
|
(277.6)
|
|
|
(165.7)
|
|
Net cash provided by
operating activities
|
326.2
|
|
|
300.0
|
|
|
|
|
|
|
|
Investing
|
|
|
|
|
|
Capital expenditures,
including tooling outlays
|
(257.3)
|
|
|
(194.8)
|
|
Net proceeds from
asset disposals
|
2.0
|
|
|
15.7
|
|
Payments for business
acquired, net of cash acquired
|
(106.4)
|
|
|
—
|
|
Net cash used in
investing activities
|
(361.7)
|
|
|
(179.1)
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
|
Net increase in notes
payable
|
304.5
|
|
|
77.4
|
|
Additions to
long-term debt, net of debt issuance costs
|
97.8
|
|
|
165.7
|
|
Repayments of
long-term debt, including current portion
|
(420.2)
|
|
|
(76.8)
|
|
Payments for purchase
of treasury stock
|
(25.0)
|
|
|
(150.5)
|
|
Proceeds from stock
options exercised, including the tax benefit
|
12.8
|
|
|
20.0
|
|
Taxes paid on
employees' restricted stock award vestings
|
(23.4)
|
|
|
(29.0)
|
|
Dividends paid to
BorgWarner stockholders
|
(56.8)
|
|
|
—
|
|
Dividends paid to
noncontrolling stockholders
|
(18.8)
|
|
|
(9.0)
|
|
Net cash used in
financing activities
|
(129.1)
|
|
|
(2.2)
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(3.5)
|
|
|
(17.4)
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash
|
(168.1)
|
|
|
101.3
|
|
|
|
|
|
|
|
Cash at beginning of
year
|
939.5
|
|
|
715.7
|
|
Cash at end of
period
|
$
|
771.4
|
|
|
$
|
817.0
|
|
SOURCE BorgWarner Inc.