AUBURN HILLS, Mich.,
May 6, 2020 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported first quarter
results.
First Quarter Highlights:
- U.S. GAAP net sales of $2,279
million, down 11.2% compared with first quarter 2019.
-
- Excluding the impact of foreign currencies and the net impact
of acquisitions and divestitures, net sales were down 8.1% compared
with first quarter 2019.
- U.S. GAAP net earnings of $0.63
per diluted share.
-
- Excluding the $(0.14) per diluted
share related to non-comparable items (detailed in the table
below), adj. net earnings were $0.77
per diluted share.
- U.S. GAAP operating income of $189
million, or 8.3% of net sales.
-
- Excluding the $45 million of
pretax expenses related to non-comparable items, adj. operating
income was $234 million.
Excluding the impact of non-comparable items, adj. operating income
was 10.3% of net sales.
Financial Results:
The company believes the following
table is useful in highlighting non-comparable items that impacted
its U.S. GAAP net earnings per diluted share. The company defines
adjusted earnings per diluted share as earnings per diluted share
adjusted to eliminate the impact of restructuring expense, merger,
acquisition and divestiture expense, other net expenses,
discontinued operations, other gains and losses not reflective of
the company's ongoing operations, and related tax effects.
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Earnings per
diluted share
|
$
|
0.63
|
|
|
$
|
0.77
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Merger, acquisition
and divestiture expense
|
0.10
|
|
|
0.01
|
|
Restructuring
expense
|
0.06
|
|
|
0.05
|
|
Asset
impairment
|
0.04
|
|
|
—
|
|
Unfavorable
arbitration loss
|
—
|
|
|
0.07
|
|
Officer stock awards
modification
|
—
|
|
|
0.01
|
|
Tax
adjustments
|
(0.06)
|
|
|
0.09
|
|
|
|
|
|
Adjusted earnings
per diluted share
|
$
|
0.77
|
|
|
$
|
1.00
|
|
Net sales were $2,279 million for
the first quarter 2020, down 11.2% from $2,566 million for the first quarter 2019. Net
income for the first quarter 2020 was $129
million, or $0.63 per diluted
share, compared with $160 million, or
$0.77 per diluted share, for the
first quarter 2019. Adj. net income per share for the first
quarter 2020 was $0.77, down from
$1.00 for the first quarter 2019.
Adj. net income for the first quarter 2020 excluded net
non-comparable items of $(0.14) per
diluted share. Adj. net income for the first quarter 2019 excluded
net non-comparable items of $(0.23)
per diluted share. These items are listed in the table above, 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 decreased net sales by approximately
$52 million and decreased net
earnings by approximately $0.01 per
diluted share for the first quarter 2020 compared with the first
quarter 2019. The decline in net earnings is primarily due to the
impact of lower revenue.
Net cash provided by operating activities was $263 million for the first three months of 2020
compared with $40 million for the
first three months of 2019. Investments in capital expenditures,
including tooling outlays, totaled $117
million for the first three months of 2019 and 2020. Balance
sheet debt decreased $10 million, and
cash and cash equivalents increased by $69
million, at the end of first quarter 2020 compared with the
end of 2019.
Engine Segment Results: Engine segment net sales
were $1,434 million for the first
quarter 2020 compared with $1,598
million for the first quarter 2019. Excluding the
impact of foreign currencies and the divestiture of the thermostat
product line, net sales were down 6.4% from the prior year's
quarter. Adj. earnings before interest, income taxes and
non-controlling interest ("Adj. EBIT") were $208 million for the first quarter of 2020.
Excluding the impact of foreign currencies, Adj. EBIT was
$212 million, down 11.3% from the
first quarter of 2019. The decline in Adj. EBIT is primarily due to
the impact of lower revenue.
Drivetrain Segment Results: Drivetrain segment net
sales were $860 million for the first
quarter 2020 compared with $982
million for the first quarter 2019. Excluding the impact of
foreign currencies, net sales were down 10.6% from the prior year's
quarter. Adj. EBIT was $63 million
for the first quarter 2020. Excluding the impact of foreign
currencies, Adj. EBIT was $64
million, down 39.0% from the first quarter 2019. The decline
in Adj. EBIT is primarily due to the impact of lower revenue and
higher net research and development spending.
Full Year 2020 Guidance: The company is providing updated
2020 full year guidance. This guidance is for BorgWarner as
currently consolidated and excludes the potential impact from the
acquisition of Delphi Technologies PLC, which BorgWarner announced
on January 28, 2020. Net sales are
expected to be in the range of $7.25
billion to $8.0 billion. This
implies a year-over-year decrease in organic sales of 20% to 27%.
The company expects its blended light-vehicle market to decline in
the range of approximately 25% to 31% in 2020. Due to the impact of
COVID-19/coronavirus, global light vehicle production expectations
remain volatile. Foreign currencies are expected to result in a
year-over-year decrease in sales by approximately $120 million, primarily due to the depreciation
of the Euro, Chinese Renminbi and Korean Won against the U.S.
dollar. The divestiture of the thermostat product line decreased
year-over-year sales by approximately $30
million. Full-year operating cash flow is expected to be in
the range of $530 million to
$780 million, while free cash flow is
expected to be in the range of $100
million to $300 million.
Liquidity Update: During the first four months of
2020, the company took measures to increase its committed borrowing
capacity. On March 13, 2020, the
company increased its revolving credit facility to $1,500 million from $1,200
million, and on April 29,
2020, the company entered into a $750
million delayed-draw term loan facility. Additionally, at
March 31, 2020 the company had cash
balances of $901 million. Given its
strong liquidity position, the company believes it will have
sufficient liquidity and maintain compliance with all covenants
throughout 2020.
At 9:30 a.m. ET today, a brief
conference call concerning first quarter 2020 results and guidance
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 19 countries, the company employs
approximately 29,000 worldwide. For more information, please visit
borgwarner.com.
Forward-Looking Statements: This communication may
contain forward-looking statements as contemplated by the 1995
Private Securities Litigation Reform Act that reflect, when made,
Delphi Technologies' or BorgWarner's respective current views with
respect to future events, including the proposed transaction, and
financial performance or that are based on their respective
management's current outlook, expectations, estimates and
projections, including with respect to the combined company
following the proposed transaction, if completed. Such
forward-looking statements are subject to many risks, uncertainties
and factors relating to Delphi Technologies' or BorgWarner's
respective operations and business environment, which may cause the
actual results of Delphi Technologies or BorgWarner to be
materially different from those indicated in the forward-looking
statements. All statements that address future operating, financial
or business performance or Delphi Technologies' or BorgWarner's
respective strategies or expectations are forward-looking
statements. In some cases, you can identify these statements by
forward-looking words such as "may," "might," "will," "should,"
"could," "designed," "effect," "evaluates," "forecasts," "goal,"
"guidance," "initiative," "intends," "pursue," "seek," "target,"
"when," "will," "expects," "plans," "intends," "anticipates,"
"believes," "estimates," "predicts," "projects," "potential,"
"outlook" or "continue," the negatives thereof and other comparable
terminology. Factors that could cause actual results to differ
materially from these forward-looking statements include, but are
not limited to, the possibility that the proposed transaction will
not be pursued; failure to obtain necessary shareholder approvals,
regulatory approvals or required financing or to satisfy any of the
other conditions to the proposed transaction; adverse effects on
the market price of Delphi Technologies' ordinary shares or
BorgWarner's shares of common stock and on Delphi
Technologies' or BorgWarner's operating results because of a
failure to complete the proposed transaction; failure to realize
the expected benefits of the proposed transaction; failure to
promptly and effectively integrate Delphi Technologies' businesses;
negative effects relating to the announcement of the proposed
transaction or any further announcements relating to the proposed
transaction or the consummation of the proposed transaction on the
market price of Delphi Technologies' ordinary shares or
BorgWarner's shares of common stock; significant transaction costs
and/or unknown or inestimable liabilities; potential litigation
associated with the proposed transaction; general economic and
business conditions that affect the combined company following the
consummation of the proposed transaction; changes in global,
political, economic, business, competitive, market and regulatory
forces; changes in tax laws, regulations, rates and policies;
future business acquisitions or disposals; competitive
developments; and the timing and occurrence (or non-occurrence) of
other events or circumstances that may be beyond Delphi
Technologies' or BorgWarner's control.
For additional information about these and other factors, see
the information under the caption "Risk Factors" in Delphi
Technologies' most recent Annual Report on Form 10-K filed with the
SEC and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" filed on February 13, 2020, and the information under the
caption "Risk Factors" in BorgWarner's most recent Annual Report on
Form 10-K filed with the SEC and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on
February 13, 2020.
Delphi Technologies' and BorgWarner's forward-looking statements
speak only as of the date of this communication or as of the date
they are made. Delphi Technologies and BorgWarner each disclaim any
intent or obligation to update or revise any "forward looking
statement" made in this communication to reflect changed
assumptions, the occurrence of unanticipated events or changes to
future operating results over time, except as may be required by
law. All subsequent written and oral forward-looking statements
attributable to Delphi Technologies, BorgWarner or their respective
directors, executive officers or any person acting on behalf of any
of them are expressly qualified in their entirety by this
paragraph.
Forward-looking statements are not guarantees of performance,
and BorgWarner's actual results may differ materially from those
expressed, projected or implied in or by the forward-looking
statements. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
communication. 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. These risks and uncertainties, among
others, include: uncertainties regarding the extent and duration of
impacts of matters associated with COVID-19/coronavirus; the
failure to complete our anticipated acquisition of Delphi
Technologies, as a result of, by way of example, the failure to:
satisfy the conditions to the completion of the transaction, obtain
the regulatory approvals required for the transaction on the terms
expected or on the anticipated schedule, or obtain Delphi
Technologies stockholder approval in a timely manner or otherwise;
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;
future changes in laws and regulations, including, by way of
example, tariffs, in the countries in which BorgWarner operates;
and other risks noted in reports that BorgWarner files with the
Securities and Exchange Commission, including the Risk Factors in
our most recently filed Annual Report on Form 10-K. BorgWarner does
not undertake any obligation to update or announce publicly any
updates to or revision to any of the forward-looking statements in
this communication to reflect any change in our expectations or any
change in events, conditions, circumstances, or assumptions
underlying the statements.
No Offer or Solicitation: This communication is
being made in respect of the proposed acquisition (the "proposed
transaction") of Delphi Technologies PLC ("Delphi Technologies") by
BorgWarner Inc. ("BorgWarner"). This communication is not
intended to and does not constitute an offer to sell or the
solicitation of an offer to subscribe for or buy or an invitation
to purchase or subscribe for any securities or the solicitation of
any vote or approval in any jurisdiction pursuant to the proposed
transaction or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. In particular, this communication is not an offer
of securities for sale into the United
States. No offer of securities shall be made in the United States absent registration under
the U.S. Securities Act of 1933, as amended (the "Securities Act"),
or pursuant to an exemption from, or in a transaction not subject
to, such registration requirements. Any securities issued in the
proposed transaction are anticipated to be issued in reliance upon
available exemptions from such registration requirements pursuant
to Section 3(a)(10) of the Securities Act.
Participants in the Solicitation: Delphi
Technologies, BorgWarner and certain of their respective directors,
executive officers and employees may be deemed "participants" in
the solicitation of proxies from Delphi Technologies shareholders
in respect of the proposed transaction. Information regarding the
foregoing persons, including a description of their direct or
indirect interests, by security holdings or otherwise, is set forth
in the preliminary proxy statement filed on Schedule 14A with
the Securities and Exchange Commission (the "SEC") on March 11, 2020 (the "preliminary proxy
statement") and will be set forth in a definitive proxy statement
and any other relevant documents to be filed with the SEC. You can
find information about Delphi Technologies' directors and executive
officers in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2019 and its
definitive proxy statement filed with the SEC on Schedule 14A on
March 15, 2019. You can find
information about BorgWarner's directors and executive officers in
its Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and its definitive
proxy statement filed with the SEC on Schedule 14A on March 20, 2020.
Additional Information and Where to Find It: This
communication may be deemed solicitation material in respect of the
proposed transaction. In connection with the proposed transaction,
Delphi Technologies filed with the SEC the preliminary proxy
statement, and Delphi Technologies will file with the SEC and
furnish to its shareholders a definitive proxy statement on
Schedule 14A and other relevant documents. This communication does
not constitute a solicitation of any vote or approval. Before
making any voting decision, Delphi Technologies' shareholders are
urged to read the proxy statement and any other relevant documents
filed or to be filed with the SEC in connection with the proposed
transaction or incorporated by reference in the proxy statement
carefully and in their entirety when they become available because
they contain or will contain important information about the
proposed transaction and the parties to the proposed
transaction.
Investors are able to obtain free of charge the preliminary
proxy statement, the definitive proxy statement and other documents
filed with the SEC (when available) at the SEC's website at
http://www.sec.gov. In addition, the preliminary proxy statement,
the definitive proxy statement and Delphi Technologies' and
BorgWarner's respective annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to section 13(a) or 15(d)
of the U.S. Securities Exchange Act of 1934, as amended, are
available free of charge through Delphi Technologies' and
BorgWarner's websites at www.delphi.com and www.borgwarner.com,
respectively, as soon as reasonably practicable after they are
electronically filed with, or furnished to, the SEC
General: The release, publication or distribution
of this communication in or into certain jurisdictions may be
restricted by the laws of those jurisdictions. Accordingly, copies
of this communication and all other documents relating to the
proposed transaction are not being, and must not be, released,
published, mailed or otherwise forwarded, distributed or sent in,
into or from any such jurisdictions. Persons receiving such
documents (including, without limitation, nominees, trustees and
custodians) should observe these restrictions. Failure to do so may
constitute a violation of the securities laws of any such
jurisdiction. To the fullest extent permitted by applicable law,
the companies involved in the proposed transaction disclaim any
responsibility or liability for the violations of any such
restrictions by any person. Any response in relation to
the proposed transaction should be made only on the basis of the
information contained in the proxy statement and other relevant
documents. Delphi Technologies shareholders are advised to read
carefully the formal documentation in relation to the proposed
transaction once the proxy statement and other relevant documents
have been dispatched.
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
(in millions, except
per share amounts)
|
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
Net sales
|
$
|
2,279
|
|
|
$
|
2,566
|
|
Cost of
sales
|
1,832
|
|
|
2,047
|
|
Gross
profit
|
447
|
|
|
519
|
|
|
|
|
|
Selling, general and
administrative expenses
|
213
|
|
|
226
|
|
Other expense,
net
|
45
|
|
|
29
|
|
Operating
income
|
189
|
|
|
264
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(5)
|
|
|
(9)
|
|
Interest
income
|
(2)
|
|
|
(3)
|
|
Interest
expense
|
12
|
|
|
14
|
|
Other postretirement
income
|
(2)
|
|
|
—
|
|
Earnings before
income taxes and noncontrolling interest
|
186
|
|
|
262
|
|
|
|
|
|
Provision for income
taxes
|
49
|
|
|
91
|
|
Net
earnings
|
137
|
|
|
171
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
8
|
|
|
11
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
129
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
Earnings per share —
diluted
|
$
|
0.63
|
|
|
$
|
0.77
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
206.2
|
|
|
207.1
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
(in
millions)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
Capital expenditures,
including tooling outlays
|
$
|
117
|
|
|
$
|
117
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
112
|
|
|
$
|
107
|
|
BorgWarner
Inc.
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
(in
millions)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
Engine
|
$
|
1,434
|
|
|
$
|
1,598
|
|
Drivetrain
|
860
|
|
|
982
|
|
Inter-segment
eliminations
|
(15)
|
|
|
(14)
|
|
Net sales
|
$
|
2,279
|
|
|
$
|
2,566
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Income Taxes and Noncontrolling Interest ("Adj.
EBIT") (Unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
Engine
|
$
|
208
|
|
|
$
|
241
|
|
Drivetrain
|
63
|
|
|
105
|
|
Adjusted
EBIT
|
271
|
|
|
346
|
|
Merger, acquisition
and divestiture expense
|
21
|
|
|
1
|
|
Restructuring
expense
|
15
|
|
|
14
|
|
Asset
impairment
|
9
|
|
|
—
|
|
Unfavorable
arbitration loss
|
—
|
|
|
14
|
|
Officer stock awards
modification
|
—
|
|
|
2
|
|
Corporate, including
stock-based compensation
|
37
|
|
|
51
|
|
Equity in affiliates'
earnings, net of tax
|
(5)
|
|
|
(9)
|
|
Interest
income
|
(2)
|
|
|
(3)
|
|
Interest
expense
|
12
|
|
|
14
|
|
Other postretirement
income
|
(2)
|
|
|
—
|
|
Earnings before
income taxes and noncontrolling interest
|
186
|
|
|
262
|
|
Provision for income
taxes
|
49
|
|
|
91
|
|
Net
earnings
|
137
|
|
|
171
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
8
|
|
|
11
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
129
|
|
|
$
|
160
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
millions)
|
|
|
|
|
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
901
|
|
|
$
|
832
|
|
Receivables,
net
|
1,735
|
|
|
1,921
|
|
Inventories,
net
|
847
|
|
|
807
|
|
Prepayments and other
current assets
|
258
|
|
|
276
|
|
Total current
assets
|
3,741
|
|
|
3,836
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,839
|
|
|
2,925
|
|
Other non-current
assets
|
2,922
|
|
|
2,941
|
|
Total
assets
|
$
|
9,502
|
|
|
$
|
9,702
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Notes payable and
other short-term debt
|
$
|
286
|
|
|
$
|
286
|
|
Accounts payable and
accrued expenses
|
1,793
|
|
|
1,977
|
|
Income taxes
payable
|
45
|
|
|
66
|
|
Total current
liabilities
|
2,124
|
|
|
2,329
|
|
|
|
|
|
Long-term
debt
|
1,664
|
|
|
1,674
|
|
Other non-current
liabilities
|
850
|
|
|
855
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
4,724
|
|
|
4,706
|
|
Noncontrolling
interest
|
140
|
|
|
138
|
|
Total
equity
|
4,864
|
|
|
4,844
|
|
Total liabilities and
equity
|
$
|
9,502
|
|
|
$
|
9,702
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
millions)
|
|
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
OPERATING
|
|
|
|
Net
earnings
|
$
|
137
|
|
|
$
|
171
|
|
Depreciation and
amortization
|
112
|
|
|
107
|
|
Stock-based
compensation expense
|
10
|
|
|
8
|
|
Asset
impairment
|
9
|
|
|
—
|
|
Restructuring
expense, net of cash paid
|
2
|
|
|
7
|
|
Deferred income tax
benefit
|
(5)
|
|
|
(2)
|
|
Tax reform
adjustments to provision for income taxes
|
—
|
|
|
22
|
|
Equity in affiliates'
earnings, net of dividends received, and other
|
(4)
|
|
|
6
|
|
Net earnings adjusted
for non-cash charges to operations
|
261
|
|
|
319
|
|
Changes in assets and
liabilities
|
2
|
|
|
(279)
|
|
Net cash provided by
operating activities
|
263
|
|
|
40
|
|
|
|
|
|
INVESTING
|
|
|
|
Capital expenditures,
including tooling outlays
|
(117)
|
|
|
(117)
|
|
Payments for business
acquired, net of cash acquired
|
(2)
|
|
|
(10)
|
|
Proceeds from
settlement of net investment hedges
|
1
|
|
|
—
|
|
Proceeds from sale of
business, net of cash divested
|
—
|
|
|
23
|
|
Payments for
investments in equity securities
|
—
|
|
|
(1)
|
|
Proceeds from asset
disposals and other, net
|
(2)
|
|
|
1
|
|
Net cash used in
investing activities
|
(120)
|
|
|
(104)
|
|
|
|
|
|
FINANCING
|
|
|
|
Additions to debt,
net of debt issuance costs
|
13
|
|
|
11
|
|
Repayments of debt,
including current portion
|
(14)
|
|
|
(26)
|
|
Payments for purchase
of treasury stock
|
—
|
|
|
(67)
|
|
Payments for
stock-based compensation items
|
(12)
|
|
|
(14)
|
|
Dividends paid to
BorgWarner stockholders
|
(35)
|
|
|
(35)
|
|
Dividends paid to
noncontrolling stockholders
|
(14)
|
|
|
(22)
|
|
Net cash used in
financing activities
|
(62)
|
|
|
(153)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(12)
|
|
|
(5)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
69
|
|
|
(222)
|
|
|
|
|
|
Cash and cash
equivalents, including restricted cash at beginning of
year
|
832
|
|
|
739
|
|
Cash and cash
equivalents, including restricted cash at end of period
|
$
|
901
|
|
|
$
|
517
|
|
Non-GAAP Financial Measures
This press release contains information about BorgWarner's
financial results which is not presented in accordance with
accounting principles generally accepted in the United States ("GAAP").
Such non-GAAP financial measures are reconciled to their
closest GAAP financial measures below and in the Financial Results
table above. The provision of these comparable GAAP financial
measures for 2020 is not intended to indicate that BorgWarner is
explicitly or implicitly providing projections on those GAAP
financial measures, and actual results for such measures are likely
to vary from those presented. The reconciliations include all
information reasonably available to the company at the date of this
press release and the adjustments that management can reasonably
predict.
Management believes that these non-GAAP financial measures are
useful to management, investors, and banking institutions in their
analysis of the company's business and operating performance.
Management also uses this information for operational planning and
decision-making purposes.
Non-GAAP financial measures are not and should not be considered
a substitute for any GAAP measure. Additionally, because not all
companies use identical calculations, the non-GAAP financial
measures as presented by BorgWarner may not be comparable to
similarly titled measures reported by other companies.
Adjusted Operating Income
The company defines adjusted operating income as operating
income adjusted to eliminate the impact of restructuring expense,
merger, acquisition and divestiture expense, other net expenses,
discontinued operations, and other gains and losses not reflective
of the company's ongoing operations.
Adjusted Operating
Income
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Net sales
|
$
|
2,279
|
|
|
$
|
2,566
|
|
|
|
|
|
Gross
profit
|
447
|
|
|
519
|
|
Gross
margin
|
19.6
|
%
|
|
20.2
|
%
|
|
|
|
|
Operating
income
|
189
|
|
|
264
|
|
Operating
margin
|
8.3
|
%
|
|
10.3
|
%
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Merger, acquisition
and divestiture expense
|
$
|
21
|
|
|
$
|
1
|
|
Restructuring
expense
|
15
|
|
|
14
|
|
Asset
impairment
|
9
|
|
|
—
|
|
Unfavorable
arbitration loss
|
—
|
|
|
14
|
|
Officer stock awards
modification
|
—
|
|
|
2
|
|
Adjusted operating
income
|
$
|
234
|
|
|
$
|
295
|
|
Adjusted operating
margin
|
10.3
|
%
|
|
11.5
|
%
|
Free Cash Flow
The company defines free cash flow as net cash provided by
operating activities minus capital expenditures and it is useful to
both management and investors in evaluating the company's ability
to service and repay its debt.
Free Cash Flow
Outlook Reconciliation
|
|
Full-Year 2020
Guidance
|
|
Low
|
|
High
|
Cash Provided By
Operating Activities
|
$
|
530
|
|
|
$
|
780
|
|
Capital
Expenditures
|
(430)
|
|
|
(480)
|
|
Free Cash
Flow
|
$
|
100
|
|
|
$
|
300
|
|
Key Definitions
The terms below are commonly used by management and investors in
assessing ongoing financial performance.
Organic Revenue Change: Revenue change year over year excluding
the estimated impact of FX and net M&A.
Market: Light vehicle production weighted for BorgWarner's
geographic exposure as estimated by BorgWarner
Outgrowth: BorgWarner's "Organic Revenue Change" vs. change in
"Market".
View original
content:http://www.prnewswire.com/news-releases/borgwarner-reports-first-quarter-2020-us-gaap-net-earnings-of-0-63-per-diluted-share-or-0-77-per-diluted-share-excluding-non-comparable-items-301053556.html
SOURCE BorgWarner