AUBURN HILLS, Mich.,
April 26, 2018 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported first quarter
results.
First Quarter Highlights:
- U.S. GAAP net sales of $2,784
million, up 15.7% compared with first quarter 2017.
-
- On a comparable basis, excluding the impact of foreign
currencies and the acquisition of Sevcon, net sales were up 6.6%
compared with first quarter 2017.
- U.S. GAAP net earnings of $1.07
per diluted share.
-
- Excluding the non-comparable item (detailed in the table
below), net earnings were $1.10 per
diluted share.
- U.S. GAAP operating income of $334
million.
-
- Adjusted operating income was 12.2% of net sales.
Full
Year 2018 Guidance: The company has reaffirmed its 2018 full
year organic growth guidance. Full year net sales are
expected to be $10.77 billion -
$10.94 billion, implying organic
sales growth of 5.0% to 7.0%. Foreign currencies are expected
to increase sales by $405 million,
due to the appreciation of the Euro and Chinese Yuan. The
acquisition of Sevcon will increase sales by approximately
$50 million. Excluding the
impact of noncomparable items, operating margin is expected to be
in the range of 12.5%-12.6%. This guidance includes a
negative margin impact of 10bps as a result of other postretirement
income reclassification in accordance with FASB ASU No. 2017-07,
"Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost." This is expected to
have no net earnings impact compared to prior guidance. Net
earnings are now expected to be within a range of $4.30 to $4.40,
with the increase in guidance primarily due to a larger benefit
from foreign exchange rates. This guidance includes a year
over year negative impact of $0.06
per diluted share due to higher minority interest and lower
equity income.
Second
Quarter 2018 Guidance: The company expects second quarter 2018
organic net sales growth of 7.0% to 9.0%, compared with second
quarter 2017 net sales of $2.39
billion. Foreign currencies are expected to increase
sales by $125 million. The
acquisition of Sevcon will increase sales by approximately
$15 million. Net earnings are
expected to be within a range of $1.09 to $1.11 per
diluted share, including a negative year over year impact of
$0.02 per diluted share due to higher
minority interest and lower equity income.
Financial
Results: Net sales were $2,784
million in first quarter 2018, up 15.7% from $2,407 million in first quarter 2017.
Excluding the impact of foreign currencies and the acquisition of
Sevcon, net sales were up 6.6% compared with first quarter
2017. Net earnings in first quarter 2018 were $225 million, or $1.07 per diluted share, compared with
$189 million, or $0.89 per diluted share in first quarter
2017. Net earnings in first quarter 2018 included
non-comparable items of ($0.03) per
diluted share. Net earnings in the first quarter 2017
included net non-comparable items of $(0.02) per diluted share. These items are
listed in a table below, which is 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 $200 million
and increased net earnings by approximately $0.08 per diluted share in first quarter 2018
compared with first quarter 2017. The impact of the
acquisition of Sevcon increased net sales by $20 million in the first quarter 2018 compared
with first quarter 2017.
The
company believes the following table is useful in highlighting
non-comparable items that impacted its U.S. GAAP net earnings per
diluted share:
Net earnings per
diluted share
|
First Three
Months
|
|
2018
|
|
2017
|
|
|
|
|
U.S.
GAAP
|
$
|
1.07
|
|
|
$
|
0.89
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
0.03
|
|
|
—
|
|
Merger and
acquisition expense
|
0.01
|
|
|
—
|
|
Gain on commercial
settlement
|
(0.01)
|
|
|
—
|
|
Tax
adjustments
|
—
|
|
|
0.02
|
|
|
|
|
|
Non – U.S.
GAAP
|
$
|
1.10
|
|
|
$
|
0.91
|
|
|
|
|
|
Net
cash provided by operating activities was $35 million in first quarter 2018 compared with
$60 million in first quarter
2017. Investments in capital expenditures, including tooling
outlays, totaled $160 million in
first quarter 2018, compared with $131
million in first quarter 2017. Balance sheet debt
increased $137 million and cash
decreased by $136 million at the end
of first quarter 2018 compared with the end of 2017. The
company's net debt to net capital ratio was 32.3% at the end of
first quarter 2018 compared with 30.0% at the end of 2017.
Engine
Segment Results: Engine segment net sales were $1,716 million in first quarter 2018 compared
with $1,495 million in first quarter
2017. Excluding the impact of foreign currencies and the
acquisition of Sevcon, net sales were up 4.9% from the prior year's
quarter. Adjusted earnings before interest, income taxes and
non-controlling interest ("Adjusted EBIT") were $280 million in first quarter of 2018.
Excluding the impact of foreign currencies and the acquisition of
Sevcon, Adjusted EBIT was $263
million, up 6.7% from first quarter of 2017.
Drivetrain
Segment Results: Drivetrain segment net sales were $1,083 million in first quarter 2018 compared
with $925 million in first quarter
2017. Excluding the impact of foreign currencies and the
acquisition of Sevcon, net sales were up 9.2% from the prior year's
quarter. Adjusted EBIT was $121
million in first quarter 2018. Excluding the impact of
foreign currencies and the acquisition of Sevcon, Adjusted EBIT was
$117 million, up 12.4% from first
quarter 2017.
Recent Highlights:
- Automotive News awarded BorgWarner with a prestigious 2018 PACE
Award for its groundbreaking S-wind wire forming process for
electric motors and alternators. The game-changing manufacturing
process enables high-volume production of high-voltage electric
motors up to 350 volts. Already in production on a 12-volt
alternator for Hyundai Motor Company, BorgWarner expects to launch
the technology in a first-of-its-kind 300-volt S-wind motor for an
on-axis P2 hybrid vehicle from a major global automaker in late
2019. The compact, high power density technology is particularly
well-suited for P2 hybrids, which BorgWarner expects will become a
dominant hybrid architecture.
- BorgWarner's eGearDrive® Transmission helps extend FAW's
electric vehicles' driving range. BorgWarner's eGearDrive®
transmission has been specifically designed for the emerging
high-volume electric vehicle market and is featured in First
Automotive Works (FAW) Group's Besturn B30EV and Junpai A70E. The
leading-edge eGearDrive transmission provides high torque capacity
in a compact package. Its highly efficient helical gear train
offers quiet performance and contributes to extended driving range
for electric vehicles.
- BorgWarner helps Ford deliver greater vehicle efficiency with
its Eco-Launch™ stop/start solenoid valve and hydraulic
accumulator. Engineered to deliver fast, smooth launches during
engine restarts, the award-winning solution is available on the
Ford 8-speed, front-wheel drive (FWD), mid-torque transmission used
for a variety of vehicles in North
America.
- BorgWarner presented its latest propulsion solutions optimized
for vehicles using a 48V power supply at the annual Arctic Drive
Winter Test in Arjeplog, Sweden.
BorgWarner's 48V propulsion technologies enhance vehicle traction
and stability for improved safety and a fun-to-drive experience
even under the toughest conditions. Among the innovations displayed
in Arjeplog were the company's P2 hybrid modules, the electric Rear
Drive Module (eRDM) for P3-type hybrids, the 48V electric All-Wheel
Drive (eAWD) system for P4-type hybrids and the next-generation
e-hydraulic AWD coupling.
- BorgWarner debuts its Electro-Mechanical On-Demand (EMOD)
transfer case on the 2019 Ram 1500 4x4 pickup truck. Building on
BorgWarner's proven Torque-On-Demand® clutching system, the new
EMOD technology delivers faster response and higher torque output
for better on- and off-road performance. For automakers, the
scalable system offers easy traction calibration and integration
for a variety of vehicles, from small SUVs to heavy-duty pickup
trucks.
- BorgWarner's VCT technology with mid-position lock helps
improve fuel economy for Hyundai's Gamma II engine. BorgWarner's
latest variable cam timing (VCT) system delivers improved engine
efficiency and fuel economy for the new Hyundai Gamma II engine.
For the engine's intake valve timing, BorgWarner supplies a
variable force solenoid (VFS) and patented passive torsional assist
(TA) phaser with mid-position lock (MPL) and integrated center bolt
hydraulic control valve. For exhaust valve timing, the company
supplies the VFS and TA phaser with integrated center bolt valve.
The 1.6-liter I4 gasoline engine launched in the Kia K3
Forte/Cerato and is expected to power a growing number of vehicles
for markets in South Korea,
China and North America over the next few years.
At 10:30 a.m. ET today, a brief
conference call concerning first quarter 2018 results will be
webcast at:
http://www.borgwarner.com/en/Investors/default.aspx.
BorgWarner Inc. (NYSE: BWA) is a global product leader in clean
and efficient technology solutions for combustion, hybrid and
electric vehicles. With manufacturing and technical
facilities in 67 locations in 18 countries, the company employs
approximately 29,000 worldwide. For more information, please visit
borgwarner.com.
Statements contained in, or incorporated by reference into this
presentation, future filings by us with the Securities and Exchange
Commission ("SEC"), and oral statements made by, or with the
approval of, our authorized personnel, that relate to our future
performance or future events are forward-looking statements under
the Private Securities Litigation Reform Act of 1995. Such
statements can be identified by use of forward-looking words or
phrases such as "intend," "anticipate," "plan," "estimate,"
"target," "aim," "forecast," "project," "expect," "believe," "we
are optimistic that we can," "current visibility indicates that we
forecast," "contemplation" or "currently envisions" and similar
phrases. Although we believe that the expectations reflected in
these forward-looking statements are reasonable, our expectations
may not prove to be correct. Forward-looking statements are
necessarily estimates reflecting the best judgment of our senior
management and involve a number of risks and uncertainties, some of
which may be beyond our control, which could cause actual results
to differ materially from those suggested by the forward-looking
statements. These risks and uncertainties, among others, include:
our dependence on automotive and truck production, both of which
are highly cyclical; our reliance on major OEM customers;
commodities availability and pricing; supply disruptions;
fluctuations in interest rates and foreign currency exchange rates;
availability of credit; our dependence on key management; our
dependence on information systems; the uncertainty of the global
economic environment; the outcome of existing or any future legal
proceedings, including litigation with respect to various claims;
and future changes in laws and regulations in the countries in
which we operate. All forward-looking statements should be
evaluated with the understanding of their inherent uncertainty. All
subsequent written and oral forward-looking statements concerning
the matters addressed in this presentation and attributable to us
or any person acting on our behalf are qualified by these
cautionary statements. Forward-looking statements are based on
current expectations only and are not guarantees of future
performance, and are subject to certain risks, uncertainties and
assumptions. We may change our intentions, beliefs or expectations
at any time and without notice, based upon any change in our
assumptions or otherwise. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those
anticipated, estimated or projected. In addition, some factors are
beyond our control. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
law.
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
(millions, except per
share amounts)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Net sales
|
$
|
2,784.3
|
|
|
$
|
2,407.0
|
|
Cost of
sales
|
2,192.5
|
|
|
1,890.7
|
|
Gross
profit
|
591.8
|
|
|
516.3
|
|
|
|
|
|
Selling, general and
administrative expenses
|
253.4
|
|
|
219.0
|
|
Other expense,
net
|
4.9
|
|
|
5.8
|
|
Operating
income
|
333.5
|
|
|
291.5
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(10.2)
|
|
|
(9.7)
|
|
Interest
income
|
(1.5)
|
|
|
(1.5)
|
|
Interest expense and
finance charges
|
16.1
|
|
|
18.0
|
|
Other postretirement
income
|
(2.6)
|
|
|
(1.2)
|
|
Earnings before
income taxes and noncontrolling interest
|
331.7
|
|
|
285.9
|
|
|
|
|
|
Provision for income
taxes
|
94.9
|
|
|
86.3
|
|
Net
earnings
|
236.8
|
|
|
199.6
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
11.7
|
|
|
10.4
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
225.1
|
|
|
$
|
189.2
|
|
|
|
|
|
|
|
|
|
Earnings per share —
diluted
|
$
|
1.07
|
|
|
$
|
0.89
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
210.766
|
|
|
212.236
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
(millions of
dollars)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Capital expenditures,
including tooling outlays
|
$
|
160.4
|
|
|
$
|
130.9
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
109.2
|
|
|
$
|
97.3
|
|
BorgWarner
Inc.
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Engine
|
$
|
1,716.1
|
|
|
$
|
1,495.4
|
|
Drivetrain
|
1,082.9
|
|
|
924.9
|
|
Inter-segment
eliminations
|
(14.7)
|
|
|
(13.3)
|
|
Net sales
|
$
|
2,784.3
|
|
|
$
|
2,407.0
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Engine
|
$
|
280.2
|
|
|
$
|
246.2
|
|
Drivetrain
|
121.0
|
|
|
104.4
|
|
Adjusted
EBIT
|
401.2
|
|
|
350.6
|
|
Restructuring
expense
|
7.5
|
|
|
—
|
|
Merger and
acquisition expense
|
2.2
|
|
|
—
|
|
Lease termination
settlement
|
—
|
|
|
5.3
|
|
Other income,
net
|
(4.8)
|
|
|
—
|
|
Other postretirement
income
|
(2.6)
|
|
|
(1.2)
|
|
Corporate, including
equity in affiliates' earnings and stock-based
compensation
|
52.6
|
|
|
44.1
|
|
Interest
income
|
(1.5)
|
|
|
(1.5)
|
|
Interest expense and
finance charges
|
16.1
|
|
|
18.0
|
|
Earnings before
income taxes and noncontrolling interest
|
331.7
|
|
|
285.9
|
|
Provision for income
taxes
|
94.9
|
|
|
86.3
|
|
Net
earnings
|
236.8
|
|
|
199.6
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
11.7
|
|
|
10.4
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
225.1
|
|
|
$
|
189.2
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
|
|
|
|
Cash
|
$
|
409.7
|
|
|
$
|
545.3
|
|
Receivables,
net
|
2,247.1
|
|
|
2,018.9
|
|
Inventories,
net
|
800.4
|
|
|
758.9
|
|
Prepayments and other
current assets
|
171.0
|
|
|
154.8
|
|
Assets held for
sale
|
69.6
|
|
|
67.3
|
|
Total current
assets
|
3,697.8
|
|
|
3,545.2
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,923.8
|
|
|
2,863.8
|
|
Other non-current
assets
|
3,413.2
|
|
|
3,380.6
|
|
Total
assets
|
$
|
10,034.8
|
|
|
$
|
9,789.6
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Notes payable and
other short-term debt
|
$
|
194.0
|
|
|
$
|
84.6
|
|
Accounts payable and
accrued expenses
|
2,160.4
|
|
|
2,270.4
|
|
Income taxes
payable
|
44.4
|
|
|
40.8
|
|
Liabilities held for
sale
|
37.8
|
|
|
29.5
|
|
Total current
liabilities
|
2,436.6
|
|
|
2,425.3
|
|
|
|
|
|
Long-term
debt
|
2,131.5
|
|
|
2,103.7
|
|
Other non-current
liabilities
|
1,450.9
|
|
|
1,432.8
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
3,910.7
|
|
|
3,718.7
|
|
Noncontrolling
interest
|
105.1
|
|
|
109.1
|
|
Total
equity
|
4,015.8
|
|
|
3,827.8
|
|
Total liabilities and
equity
|
$
|
10,034.8
|
|
|
$
|
9,789.6
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
Operating
|
|
|
|
Net
earnings
|
$
|
236.8
|
|
|
$
|
199.6
|
|
Depreciation and
amortization
|
109.2
|
|
|
97.3
|
|
Deferred income tax
provision
|
8.2
|
|
|
20.6
|
|
Restructuring
expense, net of cash paid
|
6.9
|
|
|
—
|
|
Other non-cash
items
|
3.7
|
|
|
3.6
|
|
Net earnings adjusted
for non-cash charges to operations
|
364.8
|
|
|
321.1
|
|
Changes in assets and
liabilities
|
(330.1)
|
|
|
(260.8)
|
|
Net cash provided by
operating activities
|
34.7
|
|
|
60.3
|
|
|
|
|
|
Investing
|
|
|
|
Capital expenditures,
including tooling outlays
|
(160.4)
|
|
|
(130.9)
|
|
Proceeds from asset
disposals and other
|
0.1
|
|
|
(0.3)
|
|
Payments for venture
capital investment
|
(0.6)
|
|
|
(1.5)
|
|
Net cash used in
investing activities
|
(160.9)
|
|
|
(132.7)
|
|
|
|
|
|
Financing
|
|
|
|
Net increase in notes
payable
|
117.4
|
|
|
74.4
|
|
Additions to
long-term debt, net of debt issuance costs
|
12.1
|
|
|
—
|
|
Repayments of
long-term debt, including current portion
|
(10.0)
|
|
|
(6.4)
|
|
Payments for purchase
of treasury stock
|
(55.2)
|
|
|
(31.0)
|
|
Payments for
stock-based compensation items
|
(14.4)
|
|
|
(1.3)
|
|
Dividends paid to
BorgWarner stockholders
|
(35.6)
|
|
|
(29.7)
|
|
Dividends paid to
noncontrolling stockholders
|
(17.8)
|
|
|
(21.8)
|
|
Net cash used in
financing activities
|
(3.5)
|
|
|
(15.8)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(5.9)
|
|
|
2.9
|
|
|
|
|
|
Net decrease in
cash
|
(135.6)
|
|
|
(85.3)
|
|
|
|
|
|
Cash at beginning of
year
|
545.3
|
|
|
443.7
|
|
Cash at end of
period
|
$
|
409.7
|
|
|
$
|
358.4
|
|
View original
content:http://www.prnewswire.com/news-releases/borgwarner-reports-first-quarter-2018-us-gaap-net-earnings-of-1-07-per-diluted-share-or-1-10-per-diluted-share-excluding-non-comparable-items-300636797.html
SOURCE BorgWarner Inc.