AUBURN HILLS, Mich.,
July 30, 2015 /PRNewswire/ --
BorgWarner Inc. (NYSE: BWA) today reported second quarter 2015 U.S.
GAAP net earnings of $0.65 per
diluted share. Excluding non-comparable items, net earnings were
$0.75 per diluted share. Net sales
were $2,032 million in the
quarter.
Second Quarter Highlights:
- U.S. GAAP net sales of $2,032
million, down 7% compared with second quarter 2014.
- The impact of foreign currencies decreased second quarter 2015
net sales growth by approximately 11% compared with second quarter
2014.
- Excluding the impact of foreign currencies, net sales were up
4% compared with second quarter 2014.
- U.S. GAAP net earnings of $0.65
per diluted share.
- Excluding the $(0.08) per diluted
share impact of restructuring and the $(0.02) per diluted share impact of tax
adjustments, net earnings were $0.75
per diluted share.
- The impact of foreign currencies decreased net earnings by
approximately $0.09 per diluted share
in second quarter 2015 compared with second quarter 2014.
- U.S. GAAP operating income of $243
million.
- Excluding the $20 million pretax
impact of restructuring expense, operating income was $262 million, or 12.9% of net sales, down from
13.5% in second quarter 2014.
Second Quarter Results: "Our operations performed well in
the second quarter despite a challenging environment for growth,"
said James R. Verrier, President and
Chief Executive Officer, BorgWarner. "The demand for our advanced
powertrain technology, designed to improve fuel economy, emissions
and vehicle performance, remained strong around the globe, but our
growth was impacted by an unfavorable mix of light vehicle
production in North America,
slower light vehicle production growth in China and weak commercial vehicle markets
around the world. Despite this, our operating income margin was an
impressive 12.9% in the quarter, excluding non-comparable
items."
2015 Guidance: Demand for the company's advanced
powertrain technology remains strong around the globe. However, due
to the impact of weaker than expected market conditions on its
business, particularly slower light vehicle production growth in
China, unfavorable mix of light
vehicle production in North
America and weak commercial vehicle markets around the
world, the company has updated its 2015 full year guidance:
- Net sales growth is now expected to be within a range of -5.5%
to -2.5% compared with 2014, down from -4% to 0% previously.
- Net earnings per share, excluding non-comparable items, is now
expected to be within a range of $2.95 to
$3.10 per diluted share compared with a previous range of
$3.10 to $3.30 per diluted
share.
- Operating income, as a percentage of net sales, excluding
non-comparable items, is now expected to be "approximately 13%"
compared with "above 13%", previously.
Financial Results: Net sales were $2,032 million in second quarter 2015, down 7%
from $2,197 million in second quarter
2014. Net earnings in the quarter were $148
million, or $0.65 per diluted
share, compared with $190 million, or
$0.83 per diluted share, in second
quarter 2014. Second quarter 2015 net earnings included
non-comparable items of $(0.10) per
diluted share. Second quarter 2014 net earnings included a
non-comparable item 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 decreased net sales by approximately $248 million and decreased net earnings by
approximately $0.09 per diluted share
in second quarter 2015 compared with second quarter 2014.
For the first six months of 2015, net sales were $4,016 million, down 6% from $4,281 million in the first six months of 2014.
Net earnings in the first six months of 2015 were $327 million, or $1.44 per diluted share, compared with
$349 million, or $1.52 per diluted share, in the first six months
of 2014. Net earnings in the first six months of 2015 included net
non-comparable items of $(0.09) per
diluted share. Net earnings in the first six months of 2014
included a non-comparable item of $(0.19) 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 decreased net sales by approximately
$470 million and decreased net
earnings by approximately $0.18 per
diluted share in the first six months of 2015 compared with the
first six months of 2014.
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
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Non – U.S.
GAAP
|
$
|
0.75
|
|
|
$
|
0.89
|
|
|
$
|
1.53
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations:
|
|
|
|
|
|
|
|
|
Restructuring
expense
|
(0.08)
|
|
|
(0.06)
|
|
|
(0.13)
|
|
|
(0.19)
|
|
|
Gain on previously
held equity interest
|
|
|
|
|
0.05
|
|
|
|
|
Tax
adjustments
|
(0.02)
|
|
|
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
GAAP
|
$
|
0.65
|
|
|
$
|
0.83
|
|
|
$
|
1.44
|
|
|
$
|
1.52
|
|
|
Net cash provided by operating activities was $319 million in the first six months of 2015
compared with $326 million in first
six months of 2014. Investments in capital expenditures, including
tooling outlays, totaled $285 million
in the first six months of 2015, compared with $257 million in the first six months of 2014.
Balance sheet debt increased by $464
million and cash increased by $310
million at the end of second quarter 2015 compared with the
end of 2014. The $154 million
increase in net debt was primarily due to capital expenditures,
dividend payments to shareholders and share repurchases. The
company's net debt to net capital ratio was 15.6% at the end of
second quarter 2015 compared with 12.8% at the end of 2014.
Engine Segment Results: Engine segment net sales were
$1,413 million in second quarter 2015
compared with $1,498 million in
second quarter 2014. Excluding the impact of foreign currencies,
primarily the Euro, net sales were up 7% from the prior year's
quarter, primarily due to higher sales of turbochargers. Adjusted
earnings before interest, income taxes and non-controlling interest
("Adjusted EBIT") were $228 million
in second quarter 2015, down 6% from $242
million in second quarter 2014. Excluding the impact of
foreign currencies, Adjusted EBIT was $252
million, up 4% from second quarter 2014.
Drivetrain Segment Results: Drivetrain segment net sales
were $627 million in second quarter
2015 compared with $709 million in
second quarter 2014. Excluding the impact of foreign currencies,
primarily the Euro, net sales were down 3% from the prior year's
quarter, primarily due to lower sales of all-wheel drive systems.
Adjusted EBIT was $72 million in
second quarter 2015, down 19% from $89
million in second quarter 2014. Excluding the impact of
foreign currencies, Adjusted EBIT was $76
million, down 14% from second quarter 2014.
Recent Highlights:
- BorgWarner has entered into a definitive agreement to acquire
Remy International, Inc. (Remy), a global market leading producer
of rotating electrical components. Under the terms of the
agreement, BorgWarner will acquire each of the outstanding shares
of Remy for $29.50 in cash, which
implies an enterprise value of Remy of approximately $1.2 billion.The transaction is expected to close
in the fourth quarter of 2015.
- BorgWarner supplies its latest wet friction technology for ZF's
new 8- and 9-speed automatic transmissions. The 8-speed
transmission features BorgWarner's multi-segment friction plates
with intricate groove designs, and the torque converter for the
9-speed transmission utilizes a piston plate with BorgWarner
proprietary friction material.
- BorgWarner produces a number of its advanced engine and
drivetrain technologies for the new Great Wall Haval H9. The
domestically produced sport utility vehicle is powered by a
turbocharged 2.0-liter gasoline engine and features a BorgWarner
engine timing system, turbocharger and 2-speed
Torque-On-Demand® (TOD) transfer case.
- The first dual-clutch transmission (DCT) for class 6 and 7
medium-duty trucks in North
America is powered by BorgWarner's DualTronic™ clutch
module. BorgWarner's fuel-efficient technology helps Eaton's new Procision™ 7-speed DCT improve
fuel economy 8 to 10 percent compared with similarly equipped
vehicles with torque converter automatic transmissions.
- BorgWarner's facilities in Bellwood and Frankfort, Illinois, received 2014
Certificates of Achievement from Toyota Motor Engineering &
Manufacturing North America, Inc. for Quality Performance. This
Achievement Award recognizes suppliers that maintain less than 15
defects per million parts (PPMs). Both facilities achieved 100%
quality ratings and 0 PPMs in 2014.
- BorgWarner's regulated two-stage (R2S®)
turbocharging technology improves the performance and fuel economy
of Ford's new powerful 2.0-liter diesel engine, the first Ford
engine for passenger cars equipped with a two-stage turbocharging
system. The fuel-efficient diesel engine will debut in the Ford
Mondeo, S-Max and Galaxy in mid-2015 and will replace the 2.2-liter
TDCi diesel engine.
- BorgWarner's manufacturing plant in Seneca, South Carolina, was presented with an
Excellence in Quality Award from Honda North America. The award
recognized outstanding product quality in 2014. Since 2002,
BorgWarner's facility in Seneca
has earned 12 supplier awards from Honda, including seven awards
for quality, four for delivery and one for engineering
innovation.
At 9:30 a.m. ET today, a brief
conference call concerning 2015 second quarter 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 57 locations in
18 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 outlook, expectations, estimates and projections. Words
such as "anticipates," "believes," "continues," "could,"
"designed," "effect," "estimates," "evaluates," "expects,"
"forecasts," "goal," "initiative," "intends," "outlook," "plans,"
"potential," "project," "pursue," "seek," "should," "target,"
"when," "would," and 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: the failure to complete or receive the anticipated
benefits from BorgWarner's acquisition of Remy International Inc.
("Remy"), the possibility that the parties may be unable to
successfully integrate Remy's operations with those of BorgWarner,
that such integration may be more difficult, time-consuming or
costly than expected, revenues following the transaction may be
lower than expected, customer loss and business disruption
(including, without limitation, difficulties in maintaining
relationships with employees, customers, or suppliers) may be
greater than expected following the transaction; the retention of
key employees at Remy may not be achieved, the conditions to the
completion of the transaction may not be satisfied, or the
regulatory approvals required for the transaction may not be
obtained on the terms expected or on the anticipated schedule, the
failure to obtain Remy stockholder approval in a timely manner or
otherwise, fluctuations in domestic or foreign vehicle production,
the continued use by original equipment manufacturers of outside
suppliers, fluctuations in demand for vehicles containing our
products, changes in general economic conditions, as well as other
risks noted in reports that we file 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 or announce publicly any updates to or
revision to any of the 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,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net sales
|
$
|
2,031.9
|
|
|
$
|
2,197.0
|
|
|
$
|
4,016.1
|
|
|
$
|
4,281.1
|
|
Cost of
sales
|
1,602.9
|
|
|
1,724.2
|
|
|
3,158.1
|
|
|
3,362.5
|
|
Gross
profit
|
429.0
|
|
|
472.8
|
|
|
858.0
|
|
|
918.6
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
167.4
|
|
|
181.2
|
|
|
335.6
|
|
|
355.0
|
|
Other expense,
net
|
19.1
|
|
|
11.0
|
|
|
20.3
|
|
|
49.8
|
|
Operating
income
|
242.5
|
|
|
280.6
|
|
|
502.1
|
|
|
513.8
|
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(11.1)
|
|
|
(12.2)
|
|
|
(19.6)
|
|
|
(21.0)
|
|
Interest
income
|
(1.6)
|
|
|
(1.4)
|
|
|
(3.3)
|
|
|
(2.9)
|
|
Interest expense and
finance charges
|
17.6
|
|
|
9.0
|
|
|
27.6
|
|
|
17.2
|
|
Earnings before
income taxes and noncontrolling interest
|
237.6
|
|
|
285.2
|
|
|
497.4
|
|
|
520.5
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
80.2
|
|
|
85.3
|
|
|
152.3
|
|
|
153.4
|
|
Net
earnings
|
157.4
|
|
|
199.9
|
|
|
345.1
|
|
|
367.1
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
9.3
|
|
|
9.7
|
|
|
18.1
|
|
|
17.8
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
148.1
|
|
|
$
|
190.2
|
|
|
$
|
327.0
|
|
|
$
|
349.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share —
diluted
|
$
|
0.65
|
|
|
$
|
0.83
|
|
|
$
|
1.44
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
226.615
|
|
|
229.670
|
|
|
226.852
|
|
|
229.499
|
|
|
|
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Capital expenditures,
including tooling outlays
|
$
|
145.0
|
|
|
$
|
131.1
|
|
|
$
|
285.0
|
|
|
$
|
257.3
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
Fixed assets and
tooling
|
$
|
76.6
|
|
|
$
|
77.3
|
|
|
$
|
149.3
|
|
|
$
|
151.4
|
|
Intangible assets and
other
|
4.3
|
|
|
7.8
|
|
|
8.7
|
|
|
13.8
|
|
|
$
|
80.9
|
|
|
$
|
85.1
|
|
|
$
|
158.0
|
|
|
$
|
165.2
|
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Engine
|
$
|
1,413.0
|
|
|
$
|
1,497.5
|
|
|
$
|
2,793.9
|
|
|
$
|
2,909.6
|
|
Drivetrain
|
626.9
|
|
|
708.7
|
|
|
1,238.1
|
|
|
1,389.4
|
|
Inter-segment
eliminations
|
(8.0)
|
|
|
(9.2)
|
|
|
(15.9)
|
|
|
(17.9)
|
|
Net sales
|
$
|
2,031.9
|
|
|
$
|
2,197.0
|
|
|
$
|
4,016.1
|
|
|
$
|
4,281.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Engine
|
$
|
228.0
|
|
|
$
|
241.7
|
|
|
$
|
458.4
|
|
|
$
|
473.4
|
|
Drivetrain
|
72.1
|
|
|
89.1
|
|
|
143.1
|
|
|
169.6
|
|
Adjusted
EBIT
|
300.1
|
|
|
330.8
|
|
|
601.5
|
|
|
643.0
|
|
Restructuring
expense
|
19.9
|
|
|
15.0
|
|
|
32.0
|
|
|
54.5
|
|
Gain on previously
held equity interest
|
—
|
|
|
—
|
|
|
(10.8)
|
|
|
—
|
|
Corporate, including
equity in affiliates' earnings and stock-based
compensation
|
26.6
|
|
|
23.0
|
|
|
58.6
|
|
|
53.7
|
|
Interest
income
|
(1.6)
|
|
|
(1.4)
|
|
|
(3.3)
|
|
|
(2.9)
|
|
Interest expense and
finance charges
|
17.6
|
|
|
9.0
|
|
|
27.6
|
|
|
17.2
|
|
Earnings before
income taxes and noncontrolling interest
|
237.6
|
|
|
285.2
|
|
|
497.4
|
|
|
520.5
|
|
Provision for income
taxes
|
80.2
|
|
|
85.3
|
|
|
152.3
|
|
|
153.4
|
|
Net
earnings
|
157.4
|
|
|
199.9
|
|
|
345.1
|
|
|
367.1
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
9.3
|
|
|
9.7
|
|
|
18.1
|
|
|
17.8
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
148.1
|
|
|
$
|
190.2
|
|
|
$
|
327.0
|
|
|
$
|
349.3
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
|
|
|
|
Cash
|
$
|
1,107.9
|
|
|
$
|
797.8
|
|
Receivables,
net
|
1,573.0
|
|
|
1,443.5
|
|
Inventories,
net
|
525.7
|
|
|
505.7
|
|
Other current
assets
|
194.8
|
|
|
223.8
|
|
Total current
assets
|
3,401.4
|
|
|
2,970.8
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,160.5
|
|
|
2,093.9
|
|
Other non-current
assets
|
2,204.4
|
|
|
2,163.3
|
|
Total
assets
|
$
|
7,766.3
|
|
|
$
|
7,228.0
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Notes payable and
other short-term debt
|
$
|
72.1
|
|
|
$
|
623.7
|
|
Accounts payable and
accrued expenses
|
1,528.2
|
|
|
1,530.3
|
|
Income taxes
payable
|
35.3
|
|
|
14.2
|
|
Total current
liabilities
|
1,635.6
|
|
|
2,168.2
|
|
|
|
|
|
Long-term
debt
|
1,731.7
|
|
|
716.3
|
|
Other non-current
liabilities
|
647.5
|
|
|
652.6
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
3,686.7
|
|
|
3,616.2
|
|
Noncontrolling
interest
|
64.8
|
|
|
74.7
|
|
Total
equity
|
3,751.5
|
|
|
3,690.9
|
|
Total liabilities and
equity
|
$
|
7,766.3
|
|
|
$
|
7,228.0
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
Operating
|
|
|
|
Net
earnings
|
$
|
345.1
|
|
|
$
|
367.1
|
|
Non-cash charges
(credits) to operations:
|
|
|
|
Depreciation and
amortization
|
158.0
|
|
|
165.2
|
|
Restructuring
expense, net of cash paid
|
19.1
|
|
|
38.9
|
|
Gain on previously
held equity interest
|
(10.8)
|
|
|
—
|
|
Deferred income tax
provision
|
22.3
|
|
|
37.6
|
|
Other non-cash
items
|
1.9
|
|
|
(5.0)
|
|
Net earnings adjusted
for non-cash charges to operations
|
535.6
|
|
|
603.8
|
|
Changes in assets and
liabilities
|
(216.3)
|
|
|
(277.6)
|
|
Net cash provided by
operating activities
|
319.3
|
|
|
326.2
|
|
|
|
|
|
Investing
|
|
|
|
Capital expenditures,
including tooling outlays
|
(285.0)
|
|
|
(257.3)
|
|
Payments for
businesses acquired, net of cash acquired
|
(12.6)
|
|
|
(106.4)
|
|
Proceeds from asset
disposals and other
|
2.5
|
|
|
2.0
|
|
Net cash used in
investing activities
|
(295.1)
|
|
|
(361.7)
|
|
|
|
|
|
Financing
|
|
|
|
Net (decrease)
increase in notes payable
|
(539.0)
|
|
|
304.5
|
|
Additions to
long-term debt, net of debt issuance costs
|
1,015.9
|
|
|
97.8
|
|
Repayments of
long-term debt, including current portion
|
(15.5)
|
|
|
(420.2)
|
|
Payments for purchase
of treasury stock
|
(62.9)
|
|
|
(25.0)
|
|
Proceeds from stock
options exercised, including the tax benefit
|
13.6
|
|
|
12.8
|
|
Taxes paid on
employees' restricted stock award vestings
|
(13.2)
|
|
|
(23.4)
|
|
Dividends paid to
BorgWarner stockholders
|
(58.7)
|
|
|
(56.8)
|
|
Dividends paid to
noncontrolling stockholders
|
(18.1)
|
|
|
(18.8)
|
|
Net cash provided by
(used in) financing activities
|
322.1
|
|
|
(129.1)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(36.2)
|
|
|
(3.5)
|
|
|
|
|
|
Net increase
(decrease) in cash
|
310.1
|
|
|
(168.1)
|
|
|
|
|
|
Cash at beginning of
year
|
797.8
|
|
|
939.5
|
|
Cash at end of
period
|
$
|
1,107.9
|
|
|
$
|
771.4
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/borgwarner-reports-second-quarter-2015-us-gaap-net-earnings-of-065-per-diluted-share-or-075-per-diluted-share-excluding-non-comparable-items-300121190.html
SOURCE BorgWarner Inc.