AUBURN HILLS, Mich.,
July 28, 2011 /PRNewswire/ --
BorgWarner Inc. (NYSE: BWA) today reported second quarter 2011 U.S.
GAAP earnings of $1.31 per diluted
share. Excluding non-recurring items, earnings were $1.12 per diluted share, a new record for the
company, up 44% from $0.78 per
diluted share in second quarter 2010. Sales were up 28% from second
quarter 2010, while global vehicle production was down
approximately 2%.
Second Quarter Highlights:
- Record sales of $1,819 million,
up 28% from second quarter 2010.
- Record earnings of $1.12 per
diluted share, excluding net gains of $0.14 per diluted share related to a patent
infringement settlement payment from Honeywell and $0.05 per diluted share related to tax
adjustments.
- Including these non-recurring items, and on a U.S. GAAP basis,
earnings were $1.31 per diluted
share.
- Operating income of $199 million,
or 11.0% of sales, excluding the $29
million pre-tax gain related to the Honeywell
settlement.
- Earnings guidance for 2011, excluding non-recurring items,
raised to $4.25 to $4.45 per diluted
share from $3.85 to $4.15 per diluted
share.
Second Quarter Performance: "Our business continued to
strengthen in the second quarter," said Timothy Manganello, Chairman and CEO of
BorgWarner. "Increased global demand for our advanced powertrain
technology, focused on improving fuel economy, performance and
emissions reduction, continued to drive growth for our company far
in excess of industry growth. Excluding the impact of currency and
sales related to the acquisition of Haldex Traction Systems, which
closed in first quarter 2011, our sales were up approximately 15%
in the second quarter, compared with a 2% decline in global vehicle
production. While growing our sales in the quarter, we also
successfully managed costs, commodity pressures and the impact of
the Japanese earthquake. This resulted in a strong operating income
margin of 11.0%, excluding a non-recurring item."
2011 Outlook: Today the company raised its 2011 earnings
guidance range, excluding non-recurring items, to $4.25 to $4.45 per diluted share from
$3.85 to $4.15 per diluted share.
Revenue growth in 2011 is now expected to be 25% to 28% compared
with 2010, up from the previous guidance range of 19% to 23%. "Our
business continues to gain momentum," Manganello said. "Our
improved outlook is largely due to additional new business growth
and good cost controls at our operations. We also raised our
forecast for the U.S. Dollar to Euro exchange rate to $1.40 from $1.32
previously. Approximately 3% of our expected revenue growth, and
approximately $0.12 per diluted share
of our earnings growth, is related to foreign currency exchange
rates."
Financial Results: Sales were $1,819 million in second quarter 2011, up 28%
from $1,422 million in second quarter
2010. Net earnings in the quarter were $162
million, or $1.31 per diluted
share, compared with $83 million, or
$0.68 per diluted share, in second
quarter 2010. Second quarter 2011 net earnings included
non-recurring items of $0.19 per
diluted share. Second quarter 2010 net earnings included net
non-recurring items of $(0.10) 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, increased sales by $135 million, and increased net earnings
approximately $0.10 per diluted
share, in second quarter 2011 compared with second quarter
2010.
For the first six months of 2011, sales were $3,549 million, up 31% compared with $2,709 million in the first six months of 2010.
Net earnings in the first six months of 2011 was $287 million, or $2.30 per diluted share, compared with
$159 million, or $1.31 per diluted share, in the first six months
of 2010. Net earnings in the first six months of 2011 included
non-recurring items of $0.19 per
diluted share. Net earnings in the first six months of 2010
included net non-recurring items of $(0.12) 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, increased sales
by $141 million, and increased net
earnings approximately $0.12 per
diluted share, in the first six months of 2011 compared with the
first six months of 2010.
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
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Non - U.S. GAAP
|
$ 1.12
|
|
$ 0.78
|
|
$ 2.11
|
|
$ 1.42
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations:
|
|
|
|
|
|
|
|
|
|
Honeywell patent infringement
settlement
|
0.14
|
|
|
|
0.14
|
|
|
|
|
Tax adjustments
|
0.05
|
|
|
|
0.05
|
|
|
|
|
Environmental litigation
settlement
|
|
|
(0.14)
|
|
|
|
(0.14)
|
|
|
BERU-Eichenauer equity
investment gain
|
|
|
0.04
|
|
|
|
0.04
|
|
|
Medicare Part D tax law
change
|
|
|
|
|
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP
|
$ 1.31
|
|
$ 0.68
|
|
$ 2.30
|
|
$ 1.31
|
*
|
|
|
|
|
|
|
|
|
|
|
|
* Column does not add due to
rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities was $250 million in the first six months of 2011
compared with $208 million in first
six months of 2010. Investments in capital expenditures, including
tooling outlays, totaled $160 million
in the first six months of 2011, compared with $107 million in the first six months of 2010.
Balance sheet debt increased by $269
million and cash on hand decreased by $78 million compared with the end of 2010,
primarily due to the Haldex acquisition and share repurchases. The
ratio of balance sheet debt net of cash to capital was 30.1% at the
end of second quarter 2011 compared with 24.0% at the end of
2010.
Engine Group Results: Engine segment net sales were
$1,298 million in second quarter
2011, up 28% from $1,018 million in
the prior year's quarter as a result of strong global sales growth
in nearly all major product groups. Excluding the impact of
currency, sales were up approximately 17%. Adjusted earnings before
interest, income taxes and non-controlling interest ("adjusted
EBIT") were $197 million in second
quarter 2011, up 48% from $133
million in second quarter 2010.
Drivetrain Group Results: Drivetrain segment net sales
were $526 million in second quarter
2011, up 29% from $409 million in the
prior year's quarter as a result of strong four-wheel drive system
and traditional transmission component sales in Korea, higher dual
clutch transmission module sales in Europe, and the Haldex acquisition. Excluding
the impact of currency and the Haldex acquisition, sales were up
approximately 9%. Adjusted EBIT was $39
million in second quarter 2011, up 4% from $37 million in second quarter 2010.
Recent Highlights:
- BorgWarner supplies its Torque-On-Demand® transfer case for the
Tata Aria, India's first
four-wheel drive cross-over vehicle.
- In China, BorgWarner's
variable turbine geometry (VTG) turbochargers and Torque-On-Demand®
transfer cases are featured on the Great Wall Motor Company's new
2.0-liter Hover/Haval H5 sports-utility vehicle (SUV). This engine
also utilizes BorgWarner's self-regulating glow plugs and exhaust
gas recirculation (EGR) valves. This turbocharged diesel engine
will also be available in the light commercial vehicle and medium
car segment soon.
- BorgWarner supplies Fiat's new 0.9L TwinAir gasoline engine
with compact plug top ignition coils. BorgWarner's smaller, modular
ignition coils are designed to accommodate the tight spacing
available in today's downsized engines while providing more power
and more reliable starts.
- BorgWarner's award-winning regulated two-stage (R2S)
turbocharging technology boosts performance and helps lower
emissions for the Fiat Powertrain Technologies (FPT) 3.0-litre F1C
common-rail diesel engine. Available in Europe and Asia since 2009, the four-cylinder engine is
now available in the North American market for the first time. One
of Asia's leading commercial
vehicle manufacturers is also offering this fuel-efficient engine
for its next generation of medium-duty trucks in the U.S. and
Canada, and plans to offer it in
over 40 countries by the end of 2012. BorgWarner's R2S technology
helps the engine comply with EPA 2010 emissions standards while
improving fuel economy up to 10 percent compared with its
predecessor.
- A first for Class 8 commercial trucks in North America, BorgWarner Thermal Systems now
supplies Visctronic® fan drives as optional equipment for
Freightliner Cascadia trucks powered by DD13 and DD15 engines.
Engineered for optimal efficiency, BorgWarner's electronically
controlled Visctronic® fan drives operate only when needed and at
the appropriate speed, freeing up engine power and contributing to
better fuel economy.
- BorgWarner and Honeywell have resolved BorgWarner's patent
infringement claims against Honeywell. Under the terms of the
agreement, Honeywell has paid $32.5
million for a paid up license to use the asserted BorgWarner
patents. The lawsuit involved three BorgWarner patents relating to
the design and manufacture of cast titanium compressor wheels, used
in turbochargers.
At 9:30 a.m. ET today, a brief
conference call concerning second quarter 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 59 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
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Net sales
|
$
1,818.8
|
|
$
1,421.7
|
|
$
3,549.2
|
|
$
2,708.5
|
|
Cost of sales
|
1,461.7
|
|
1,146.3
|
|
2,849.3
|
|
2,194.6
|
|
Gross profit
|
357.1
|
|
275.4
|
|
699.9
|
|
513.9
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
157.7
|
|
137.8
|
|
322.8
|
|
268.1
|
|
Other (income)
expense
|
(28.9)
|
|
20.3
|
|
(30.5)
|
|
21.9
|
|
Operating income
|
228.3
|
|
117.3
|
|
407.6
|
|
223.9
|
|
|
|
|
|
|
|
|
|
|
Equity in affiliates' earnings,
net of tax
|
(8.1)
|
|
(10.0)
|
|
(16.5)
|
|
(19.3)
|
|
Interest income
|
(1.2)
|
|
(0.6)
|
|
(2.2)
|
|
(1.2)
|
|
Interest expense and finance
charges
|
20.5
|
|
14.2
|
|
38.9
|
|
28.4
|
|
Earnings before income taxes and
noncontrolling interest
|
217.1
|
|
113.7
|
|
387.4
|
|
216.0
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
49.8
|
|
26.0
|
|
90.7
|
|
46.9
|
|
Net earnings
|
167.3
|
|
87.7
|
|
296.7
|
|
169.1
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to the
noncontrolling interest, net of tax
|
5.3
|
|
4.9
|
|
10.2
|
|
10.1
|
|
Net earnings attributable to
BorgWarner Inc.
|
$ 162.0
|
|
$ 82.8
|
|
$ 286.5
|
|
$ 159.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to diluted
earnings per share:
|
|
|
|
|
|
|
|
|
Net earnings attributable to
BorgWarner Inc.
|
$ 162.0
|
|
$ 82.8
|
|
$ 286.5
|
|
$ 159.0
|
|
Adjustment for net interest
expense on convertible notes
|
5.4
|
|
5.1
|
|
10.6
|
|
10.1
|
|
Diluted net earnings
attributable to BorgWarner Inc.
|
$ 167.4
|
|
$ 87.9
|
|
$ 297.1
|
|
$ 169.1
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$ 1.31
|
|
$ 0.68
|
|
$ 2.30
|
|
$ 1.31
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding - diluted
|
128.1
|
|
129.1
|
|
129.2
|
|
129.4
|
|
|
|
|
|
|
|
|
|
|
Supplemental Information
(Unaudited)
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Capital expenditures, including
tooling outlays
|
$ 89.7
|
|
$ 52.1
|
|
$ 159.9
|
|
$ 107.4
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
Fixed assets and
tooling
|
$ 64.1
|
|
$ 57.4
|
|
$ 125.0
|
|
$ 114.5
|
|
Intangible assets and
other
|
8.2
|
|
7.1
|
|
15.1
|
|
13.6
|
|
|
$ 72.3
|
|
$ 64.5
|
|
$ 140.1
|
|
$ 128.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BorgWarner Inc.
|
|
Net Sales by Reporting Segment
(Unaudited)
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Engine
|
$
1,297.9
|
|
$
1,017.6
|
|
$
2,547.3
|
|
$
1,923.6
|
|
Drivetrain
|
525.7
|
|
408.7
|
|
1,012.1
|
|
794.5
|
|
Inter-segment
eliminations
|
(4.8)
|
|
(4.6)
|
|
(10.2)
|
|
(9.6)
|
|
Net sales
|
$
1,818.8
|
|
$
1,421.7
|
|
$
3,549.2
|
|
$
2,708.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Engine
|
$ 197.2
|
|
$ 132.8
|
|
$ 383.3
|
|
$ 239.5
|
|
Drivetrain
|
38.9
|
|
37.3
|
|
70.9
|
|
74.0
|
|
Adjusted EBIT
|
236.1
|
|
170.1
|
|
454.2
|
|
313.5
|
|
Patent infringement settlement,
net of legal costs incurred
|
(29.1)
|
|
-
|
|
(29.1)
|
|
-
|
|
Environmental litigation
settlement
|
-
|
|
28.0
|
|
-
|
|
28.0
|
|
BERU - Eichenauer equity
investment gain
|
-
|
|
(8.0)
|
|
-
|
|
(8.0)
|
|
Corporate, including equity in
affiliates' earnings and stock-based compensation
|
28.8
|
|
22.8
|
|
59.2
|
|
50.3
|
|
Interest income
|
(1.2)
|
|
(0.6)
|
|
(2.2)
|
|
(1.2)
|
|
Interest expense and finance
charges
|
20.5
|
|
14.2
|
|
38.9
|
|
28.4
|
|
Earnings before income taxes and
noncontrolling interest
|
217.1
|
|
113.7
|
|
387.4
|
|
216.0
|
|
Provision for income
taxes
|
49.8
|
|
26.0
|
|
90.7
|
|
46.9
|
|
Net earnings
|
167.3
|
|
87.7
|
|
296.7
|
|
169.1
|
|
Net earnings attributable to the
noncontrolling interest, net of tax
|
5.3
|
|
4.9
|
|
10.2
|
|
10.1
|
|
Net earnings attributable to
BorgWarner Inc.
|
$ 162.0
|
|
$ 82.8
|
|
$ 286.5
|
|
$ 159.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BorgWarner Inc.
|
|
|
|
|
Condensed Consolidated Balance
Sheets (Unaudited)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
June
30,
2011
|
|
December
31,
2010
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
$ 372.4
|
|
$ 449.9
|
|
Receivables, net
|
1,269.9
|
|
1,023.9
|
|
Inventories, net
|
495.5
|
|
430.6
|
|
Other current assets
|
167.9
|
|
155.5
|
|
Total current assets
|
2,305.7
|
|
2,059.9
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
1,681.4
|
|
1,542.6
|
|
Other non-current
assets
|
2,238.9
|
|
1,952.5
|
|
Total assets
|
$
6,226.0
|
|
$
5,555.0
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
Notes payable and other
short-term debt
|
$ 165.8
|
|
$ 122.4
|
|
Current portion of long-term
debt
|
363.6
|
|
6.1
|
|
Accounts payable and accrued
expenses
|
1,362.1
|
|
1,224.1
|
|
Income taxes payable
|
45.1
|
|
39.7
|
|
Total current
liabilities
|
1,936.6
|
|
1,392.3
|
|
|
|
|
|
|
Long-term debt
|
919.5
|
|
1,051.9
|
|
Other non-current
liabilities
|
871.4
|
|
801.0
|
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
2,430.9
|
|
2,258.6
|
|
Noncontrolling
interest
|
67.6
|
|
51.2
|
|
Total equity
|
2,498.5
|
|
2,309.8
|
|
|
|
|
|
|
Total liabilities and
equity
|
$
6,226.0
|
|
$
5,555.0
|
|
|
|
|
|
|
|
|
|
BorgWarner Inc.
|
|
|
|
|
Condensed Consolidated
Statements of Cash Flows (Unaudited)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
|
2011
|
|
2010
|
|
Operating
|
|
|
|
|
Net earnings
|
$ 296.7
|
|
$ 169.1
|
|
Non-cash charges (credits) to
operations:
|
|
|
|
|
Depreciation and
amortization
|
140.1
|
|
128.1
|
|
Environmental litigation
settlement, net of cash paid
|
-
|
|
28.0
|
|
Bond amortization
|
9.8
|
|
8.9
|
|
Deferred income tax
benefit
|
(14.6)
|
|
(15.7)
|
|
BERU - Eichenauer equity
investment gain
|
-
|
|
(8.0)
|
|
Other non-cash items
|
(9.1)
|
|
(8.1)
|
|
Net earnings adjusted for
non-cash charges to operations
|
422.9
|
|
302.3
|
|
Changes in assets and
liabilities
|
(173.3)
|
|
(94.0)
|
|
Net cash provided by operating
activities
|
249.6
|
|
208.3
|
|
|
|
|
|
|
Investing
|
|
|
|
|
Capital expenditures, including
tooling outlays
|
(159.9)
|
|
(107.4)
|
|
Net proceeds from asset
disposals
|
5.5
|
|
3.9
|
|
Payments for business acquired,
net of cash acquired
|
(203.7)
|
|
(164.7)
|
|
Net proceeds from sale of
business
|
2.1
|
|
5.0
|
|
Net cash used in investing
activities
|
(356.0)
|
|
(263.2)
|
|
|
|
|
|
|
Financing
|
|
|
|
|
Net increase in notes
payable
|
37.0
|
|
67.8
|
|
Additions to long-term debt, net
of debt issuance costs
|
353.9
|
|
-
|
|
Repayments of long-term debt,
including current portion
|
(139.7)
|
|
(11.2)
|
|
Payment for purchase of treasury
stock
|
(268.8)
|
|
(154.8)
|
|
Proceeds from stock options
exercised, including the tax benefit
|
38.2
|
|
23.7
|
|
Taxes paid on restricted stock
award vestings
|
(14.4)
|
|
-
|
|
Capital contribution from
noncontrolling interest
|
19.5
|
|
-
|
|
Dividends paid to noncontrolling
stockholders
|
(9.2)
|
|
(7.8)
|
|
Net cash used in financing
activities
|
16.5
|
|
(82.3)
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash
|
12.4
|
|
(32.7)
|
|
|
|
|
|
|
Net decrease in cash
|
(77.5)
|
|
(169.9)
|
|
|
|
|
|
|
Cash at beginning of
year
|
449.9
|
|
357.4
|
|
Cash at end of period
|
$ 372.4
|
|
$ 187.5
|
|
|
|
|
|
|
|
SOURCE BorgWarner Inc.