AUBURN HILLS, Mich.,
Oct. 27, 2016 /PRNewswire/
-- BorgWarner Inc. (NYSE: BWA) today reported third quarter
results.
Third Quarter Highlights:
- U.S. GAAP net sales of $2,214
million, up 17.5% compared with third quarter 2015.
- Excluding the impact of foreign currencies and the Remy
acquisition, net sales were up 6.1% compared with third quarter
2015.
- U.S. GAAP net earnings of $0.39
per diluted share.
- Excluding the $(0.39) per diluted
share related to non-comparable items (detailed in the table
below), net earnings were $0.78 per
diluted share, of which $0.02 per
diluted share were contributed by the Remy acquisition.
- U.S. GAAP operating income of $150
million.
- Excluding the $115 million of
pretax expenses related to non-comparable items, operating income
was $265 million, of which
$7 million was contributed by the
Remy acquisition. Excluding the impact of non-comparable items,
operating income was 12.0% of net sales. Excluding the impact of
non-comparable items and the Remy acquisition operating income was
12.9% of net sales.
Full Year 2016 Guidance: The company has narrowed its
2016 full year net sales and net earnings guidance range. Net sales
growth is expected to be within a range of 15.2% to 16.0% compared
with 2015. Excluding the impact of foreign currencies and the Remy
acquisition, net sales growth is expected to be within a range of
4.3% to 4.8%. Net earnings are expected to be within a range of
$3.24 to $3.28 per diluted share, of
which approximately $0.12 per diluted
share are expected to be contributed by the Remy acquisition.
Excluding the impact of non-comparable items, operating income, as
a percentage of net sales, is expected to be above 12%. Excluding
the impact of non-comparable items and the Remy acquisition,
operating income, as a percentage of net sales, is expected to be
above 13%.
Fourth Quarter 2016 Guidance: Fourth quarter 2016 net
sales growth is expected to be within a range of 14.3% to 17.8%
compared with fourth quarter 2015. Excluding the impact of foreign
currencies and the Remy acquisition, net sales growth is expected
to be within a range of 3.0% to 5.0%. Net earnings are expected to
be within a range of $0.82 to $0.86
per diluted share, of which approximately $0.02 per diluted share are expected to be
contributed by the Remy acquisition. Excluding the impact of
non-comparable items, operating income, as a percentage of net
sales, is expected to be above 12%. Excluding the impact of
non-comparable items and the Remy acquisition, operating income, as
a percentage of net sales, is expected to be above 13%.
Financial Results: Net sales were $2,214 million in third quarter 2016, up 17.5%
from $1,884 million in third quarter
2015. Net earnings in third quarter 2016 were $83 million, or $0.39 per diluted share, compared with
$157 million, or $0.70 per diluted share, in third quarter 2015.
Net earnings in third quarter 2016 included non-comparable items of
$(0.39) per diluted share. Net
earnings in the third quarter 2015 included net non-comparable
items of $(0.03) 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 was
negligible in third quarter 2016 compared with the third quarter
2015.
For the first nine months of 2016, net sales were $6,812 million, up 15.5% from $5,900 million in the first nine months of 2015.
Net earnings in the first nine months of 2016 were $412 million, or $1.90 per diluted share, compared with
$484 million, or $2.14 per diluted share, in the first nine months
of 2015. Net earnings in the first nine months of 2016 included net
non-comparable items of $(0.52) per
diluted share. Net earnings in the first nine months of 2015
included net non-comparable items of $(0.12) 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 decreased net sales by
approximately $71 million and
decreased net earnings by approximately $0.03 per diluted share in the first nine months
of 2016 compared with the first nine months of 2015.
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
|
Third
Quarter
|
|
First Nine
Months
|
|
|
2016
|
|
2015
|
*
|
2016
|
*
|
2015
|
|
|
|
|
|
|
|
|
|
|
U.S.
GAAP
|
$
|
0.39
|
|
|
$
|
0.70
|
|
|
$
|
1.90
|
|
|
$
|
2.14
|
|
|
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
|
Asset impairment
expense
|
0.37
|
|
|
—
|
|
|
0.36
|
|
|
—
|
|
|
Restructuring
expense
|
—
|
|
|
0.04
|
|
|
0.10
|
|
|
0.16
|
|
|
Contract expiration
gain
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
—
|
|
|
Merger and
acquisition expense
|
0.03
|
|
|
0.02
|
|
|
0.09
|
|
|
0.02
|
|
|
Gain on previously
held equity interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.05)
|
|
|
Tax
adjustments
|
(0.01)
|
|
|
(0.02)
|
|
|
(0.02)
|
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
Non – U.S.
GAAP
|
$
|
0.78
|
|
|
$
|
0.73
|
|
|
$
|
2.42
|
|
|
$
|
2.26
|
|
|
|
|
|
|
|
|
|
|
|
*Column does not
add due to rounding
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities was $593 million in the first nine months of 2016
compared with $470 million in the
first nine months of 2015. Investments in capital expenditures,
including tooling outlays, totaled $355
million in the first nine months of 2016, compared with
$419 million in the first nine months
of 2015. Balance sheet debt increased by $65
million and cash decreased by $59
million at the end of third quarter 2016 compared with the
end of 2015. The company's net debt to net capital ratio was 35.6%
at the end of third quarter 2016 compared with 35.2% at the end of
2015.
Engine Segment Results: Engine segment net sales were
$1,359 million in third quarter 2016
compared with $1,309 million in third
quarter 2015. Excluding the impact of foreign currencies, net sales
were up 3.8% from the prior year's quarter. Adjusted earnings
before interest, income taxes and non-controlling interest
("Adjusted EBIT") were $218 million
in third quarter 2016. Excluding the impact of foreign currencies,
Adjusted EBIT was $218 million, up
2.8% from third quarter 2015.
Drivetrain Segment Results: Drivetrain segment net sales
were $866 million in third quarter
2016 compared with $584 million in
third quarter 2015. Excluding the impact of foreign currencies and
the Remy acquisition, net sales were up 11.4% from the prior year's
quarter. Adjusted EBIT was $87
million in third quarter 2016. Excluding the impact of
foreign currencies, and the Remy acquisition, Adjusted EBIT was
$81 million, up 14.3% from third
quarter 2015.
Recent Highlights:
- BorgWarner has agreed to sell its REMY light vehicle
aftermarket business to an investor group led by Torque Capital
Group. The business employs a total of approximately 3,000 people.
The purchase price of the transaction is approximately $80 million, subject to customary adjustment.
Completion of the transaction is expected in the fourth quarter,
subject to the satisfaction of customary closing conditions.
- The company provides its latest variable turbine geometry (VTG)
turbocharging technology for a wide range of Euro 6 diesel engines used for numerous Hyundai
and Kia models of the Hyundai Motor Company worldwide.
- BorgWarner supplies clutch modules for Hyundai's 8-speed
automatic front-wheel drive transmission. The transmission debuted
on the 2016 Kia K7 (known as the Cadenza in the United States) and Hyundai Aslan sedans,
built for markets around the world.
- BorgWarner produces its latest multi-segment friction plate
technology for all six clutch positions in Ford's new 10-speed
automatic transmission. Launched in the 2017 F-150 Raptor pickup
truck, the new transmission will drive multiple Ford rear-wheel
drive vehicles.
- BorgWarner supplies the first combination of its variable cam
timing (VCT) technologies, including its patented cam torque
actuated (CTA) phasers with mid-position lock and integrated center
bolt, for Hyundai's improved Lambda II V-6 engines. The 3.0- to
3.8-liter gasoline engines debuted in the 2016 Hyundai Genesis
EQ900, G90, G80 and Aslan as well as the Kia K7.
At 9:30 a.m. ET today, a brief
conference call concerning third quarter 2016 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 72 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 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; 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
2,214.2
|
|
|
$
|
1,884.0
|
|
|
$
|
6,812.0
|
|
|
$
|
5,900.1
|
|
Cost of
sales
|
1,743.1
|
|
|
1,485.8
|
|
|
5,379.9
|
|
|
4,643.9
|
|
Gross
profit
|
471.1
|
|
|
398.2
|
|
|
1,432.1
|
|
|
1,256.2
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
209.7
|
|
|
148.0
|
|
|
600.4
|
|
|
483.6
|
|
Other expense,
net
|
111.1
|
|
|
13.1
|
|
|
147.8
|
|
|
33.4
|
|
Operating
income
|
150.3
|
|
|
237.1
|
|
|
683.9
|
|
|
739.2
|
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(12.4)
|
|
|
(8.7)
|
|
|
(31.6)
|
|
|
(28.3)
|
|
Interest
income
|
(1.6)
|
|
|
(2.0)
|
|
|
(4.7)
|
|
|
(5.3)
|
|
Interest expense and
finance charges
|
22.4
|
|
|
15.0
|
|
|
65.1
|
|
|
42.6
|
|
Earnings before
income taxes and noncontrolling interest
|
141.9
|
|
|
232.8
|
|
|
655.1
|
|
|
730.2
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
48.8
|
|
|
66.9
|
|
|
213.4
|
|
|
219.2
|
|
Net
earnings
|
93.1
|
|
|
165.9
|
|
|
441.7
|
|
|
511.0
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
9.8
|
|
|
8.5
|
|
|
29.9
|
|
|
26.6
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
83.3
|
|
|
$
|
157.4
|
|
|
$
|
411.8
|
|
|
$
|
484.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share —
diluted
|
$
|
0.39
|
|
|
$
|
0.70
|
|
|
$
|
1.90
|
|
|
$
|
2.14
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
213.766
|
|
|
225.991
|
|
|
216.189
|
|
|
226.565
|
|
|
|
|
|
|
|
|
|
Supplemental
Information (Unaudited)
|
|
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Capital expenditures,
including tooling outlays
|
$
|
120.1
|
|
|
$
|
133.8
|
|
|
$
|
354.8
|
|
|
$
|
418.8
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
97.8
|
|
|
$
|
78.3
|
|
|
$
|
291.2
|
|
|
$
|
236.3
|
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
|
|
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Engine
|
$
|
1,359.3
|
|
|
$
|
1,308.9
|
|
|
$
|
4,202.7
|
|
|
$
|
4,102.8
|
|
Drivetrain
|
865.9
|
|
|
583.7
|
|
|
2,640.5
|
|
|
1,821.8
|
|
Inter-segment
eliminations
|
(11.0)
|
|
|
(8.6)
|
|
|
(31.2)
|
|
|
(24.5)
|
|
Net sales
|
$
|
2,214.2
|
|
|
$
|
1,884.0
|
|
|
$
|
6,812.0
|
|
|
$
|
5,900.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Engine
|
$
|
218.2
|
|
|
$
|
211.9
|
|
|
$
|
686.4
|
|
|
$
|
670.3
|
|
Drivetrain
|
86.9
|
|
|
70.3
|
|
|
263.5
|
|
|
213.4
|
|
Adjusted
EBIT
|
305.1
|
|
|
282.2
|
|
|
949.9
|
|
|
883.7
|
|
Asset impairment
expense
|
106.5
|
|
|
—
|
|
|
106.5
|
|
|
—
|
|
Restructuring
expense
|
1.3
|
|
|
9.3
|
|
|
26.9
|
|
|
41.3
|
|
Merger and
acquisition expense
|
5.9
|
|
|
3.9
|
|
|
18.9
|
|
|
3.9
|
|
Contract expiration
loss (gain)
|
1.3
|
|
|
—
|
|
|
(6.2)
|
|
|
—
|
|
Gain on previously
held equity interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.8)
|
|
Corporate, including
equity in affiliates' earnings and stock-based
compensation
|
27.4
|
|
|
23.2
|
|
|
88.3
|
|
|
81.8
|
|
Interest
income
|
(1.6)
|
|
|
(2.0)
|
|
|
(4.7)
|
|
|
(5.3)
|
|
Interest expense and
finance charges
|
22.4
|
|
|
15.0
|
|
|
65.1
|
|
|
42.6
|
|
Earnings before
income taxes and noncontrolling interest
|
141.9
|
|
|
232.8
|
|
|
655.1
|
|
|
730.2
|
|
Provision for income
taxes
|
48.8
|
|
|
66.9
|
|
|
213.4
|
|
|
219.2
|
|
Net
earnings
|
93.1
|
|
|
165.9
|
|
|
441.7
|
|
|
511.0
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
9.8
|
|
|
8.5
|
|
|
29.9
|
|
|
26.6
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
83.3
|
|
|
$
|
157.4
|
|
|
$
|
411.8
|
|
|
$
|
484.4
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
|
|
|
|
Cash
|
$
|
518.7
|
|
|
$
|
577.7
|
|
Receivables,
net
|
1,764.0
|
|
|
1,665.0
|
|
Inventories,
net
|
687.2
|
|
|
723.6
|
|
Prepayments and other
current assets
|
147.5
|
|
|
168.9
|
|
Assets held for
sale
|
171.8
|
|
|
—
|
|
Total current
assets
|
3,289.2
|
|
|
3,135.2
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,518.5
|
|
|
2,448.1
|
|
Other non-current
assets
|
3,199.6
|
|
|
3,242.4
|
|
Total
assets
|
$
|
9,007.3
|
|
|
$
|
8,825.7
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Notes payable and
other short-term debt
|
$
|
525.4
|
|
|
$
|
441.4
|
|
Accounts payable and
accrued expenses
|
1,763.2
|
|
|
1,866.4
|
|
Income taxes
payable
|
61.2
|
|
|
49.4
|
|
Liabilities held for
sale
|
95.3
|
|
|
—
|
|
Total current
liabilities
|
2,445.1
|
|
|
2,357.2
|
|
|
|
|
|
Long-term
debt
|
2,089.9
|
|
|
2,108.9
|
|
Other non-current
liabilities
|
681.6
|
|
|
728.1
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
3,709.9
|
|
|
3,553.7
|
|
Noncontrolling
interest
|
80.8
|
|
|
77.8
|
|
Total
equity
|
3,790.7
|
|
|
3,631.5
|
|
Total liabilities and
equity
|
$
|
9,007.3
|
|
|
$
|
8,825.7
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2016
|
|
2015
|
Operating
|
|
|
|
Net
earnings
|
$
|
441.7
|
|
|
$
|
511.0
|
|
Asset impairment
expense
|
106.5
|
|
|
—
|
|
Depreciation and
amortization
|
291.2
|
|
|
236.3
|
|
Restructuring
expense, net of cash paid
|
12.0
|
|
|
19.9
|
|
Gain on previously
held equity interest
|
—
|
|
|
(10.8)
|
|
Deferred income tax
provision
|
0.7
|
|
|
26.8
|
|
Other non-cash
items
|
5.0
|
|
|
21.7
|
|
Net earnings adjusted
for non-cash charges to operations
|
857.1
|
|
|
804.9
|
|
Changes in assets and
liabilities
|
(264.0)
|
|
|
(334.7)
|
|
Net cash provided by
operating activities
|
593.1
|
|
|
470.2
|
|
|
|
|
|
Investing
|
|
|
|
Capital expenditures,
including tooling outlays
|
(354.8)
|
|
|
(418.8)
|
|
Proceeds from sale of
business, net of cash divested
|
5.4
|
|
|
—
|
|
Proceeds from asset
disposals and other
|
7.0
|
|
|
3.4
|
|
Payment for business
acquired, net of cash acquired
|
—
|
|
|
(12.6)
|
|
Net cash used in
investing activities
|
(342.4)
|
|
|
(428.0)
|
|
|
|
|
|
Financing
|
|
|
|
Net increase
(decrease) in notes payable
|
51.6
|
|
|
(531.0)
|
|
Additions to
long-term debt, net of debt issuance costs
|
4.6
|
|
|
1,027.5
|
|
Repayments of
long-term debt, including current portion
|
(16.6)
|
|
|
(22.4)
|
|
Proceeds from
interest rate swap termination
|
8.9
|
|
|
—
|
|
Payments for purchase
of treasury stock
|
(250.0)
|
|
|
(130.3)
|
|
Proceeds from
stock-based compensation items
|
0.9
|
|
|
2.0
|
|
Dividends paid to
BorgWarner stockholders
|
(83.8)
|
|
|
(87.9)
|
|
Dividends paid to
noncontrolling stockholders
|
(25.7)
|
|
|
(18.4)
|
|
Net cash (used in)
provided by financing activities
|
(310.1)
|
|
|
239.5
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
0.4
|
|
|
(46.2)
|
|
|
|
|
|
Net (decrease)
increase in cash
|
(59.0)
|
|
|
235.5
|
|
|
|
|
|
Cash at beginning of
year
|
577.7
|
|
|
797.8
|
|
Cash at end of
period
|
$
|
518.7
|
|
|
$
|
1,033.3
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/borgwarner-reports-third-quarter-2016-us-gaap-net-earnings-of-039-per-diluted-share-or-078-per-diluted-share-excluding-non-comparable-items-300352513.html
SOURCE BorgWarner