BorgWarner Reports Fourth Quarter Earnings Of $1.16 Per Diluted Share, Excluding Non-Comparable Items

    BorgWarner Reports Fourth Quarter Earnings Of $1.16 Per Diluted Share,
                        Excluding Non-Comparable Items

2012 FULL YEAR NET SALES, OPERATING MARGIN AND EARNINGS PER SHARE REACH RECORD
LEVELS

PR Newswire

AUBURN HILLS, Mich., Feb. 14, 2013

AUBURN HILLS, Mich., Feb. 14, 2013 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA)
today reported fourth quarter 2012 U.S. GAAP earnings of $1.03 per diluted
share. Excluding non-comparable items, net earnings were $1.16 per diluted
share. Net sales were $1,719 million in the quarter.

Fourth Quarter Highlights:

  o Net sales of $1,719 million.

       o Excluding the impact of foreign currencies and 2011 and 2012
         dispositions, net sales were flat with fourth quarter 2011.

  o U.S. GAAP earnings of $1.03 per diluted share.

       o Excluding the $(0.10) per diluted share impact of retirement related
         obligations, and $(0.03) per diluted share related to net tax
         adjustments, net earnings were $1.16 per diluted share, down 3% from
         fourth quarter 2011.

  o Operating income of $171 million, or 9.9% of net sales.

       o Excluding the $17 million pretax impact of retirement related
         obligations, operating income was $188 million, or 10.9% of net
         sales.

  o Repurchased 1.5 million shares of common stock in the quarter.

Full Year Highlights:

  o Record net sales of $7,183 million.

       o Excluding the impact of foreign currencies and 2011 and 2012
         dispositions, net sales were up 6% from 2011.

  o U.S. GAAP earnings of $4.17 per diluted share.

       o Excluding non-comparable items, 2012 earnings were $4.97 per diluted
         share, a new record for the company, up 12% from 2011 comparable
         results. Excluding non-comparable items and the impact of foreign
         currencies, 2012 earnings were up 17% from 2011 comparable results.

  o Operating income of $753 million, or 10.5% of net sales.

       o Excluding non-comparable items, operating income was 11.7% of net
         sales, a new full year record.

  o Repurchased approximately 4.2 million shares of common stock in 2012.

Comment and Outlook: "Market conditions were challenging in the fourth
quarter," said James Verrier, President and CEO of BorgWarner.  "Global light
vehicle production in the fourth quarter was up approximately 1% from a year
ago, but light vehicle production in Europe, a market which comprises nearly
half of our sales, was down approximately 11%. Our sales were flat during the
same period, excluding the impact of foreign currencies and 2011 and 2012
dispositions. Despite this challenging sales environment, the continued focus
on execution at our operations resulted in a solid operating income margin of
10.9% in the fourth quarter, excluding non-comparable items."

"In 2012, our sales, earnings and operating income margin set all-time records
on a comparable basis. In 2013, we expect reported sales growth of 2% to 6%
compared with 2012, or sales growth of 3% to 7% excluding the impact of 2012
dispositions, earnings of $5.15 to $5.45 per diluted share and an operating
income margin of 11.5% or better. We anticipate that this will continue our
record financial pace despite difficult market conditions in Europe," said
Verrier.

Financial Results: Net sales were $1,719 million in fourth quarter 2012, down
3% from $1,774 million in fourth quarter 2011. Net earnings in the quarter
were $121 million, or $1.03 per diluted share, compared with $122 million, or
$1.00 per diluted share, in fourth quarter 2011. Fourth quarter 2012 net
earnings included net non-comparable items of $(0.13) per diluted share.
Fourth quarter 2011 net earnings included non-comparable items 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, primarily the Euro, decreased net sales by
approximately $22 million, and decreased net earnings by approximately $0.02
per diluted share, in fourth quarter 2012 compared with fourth quarter 2011.

Full year 2012 net sales were $7,183 million, up 1% compared with $7,115
million in 2011. Full year 2012 net earnings were $501 million, or $4.17 per
diluted share, compared with $550 million, or $4.45 per diluted share, in
2011. Full year 2012 net earnings included net non-comparable items of $(0.80)
per diluted share. Full year 2011 net earnings included non-comparable items
which, when netted, had no impact on reported earnings 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, decreased net sales by approximately $325
million, and decreased net earnings by approximately $0.22 per diluted share,
in 2012 compared with 2011.

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   Fourth Quarter          Full Year
                                 2012          2011      2012          2011
Non – U.S. GAAP                  $      1.16   $  1.19   $      4.97   $  4.45
Reconciliations:
Retirement related obligations   (0.10)                  (0.10)
Loss from disposal activities                  (0.19)    (0.37)        (0.19)
Restructuring expense                                    (0.17)
Tax adjustments                  (0.03)                  (0.16)        0.05
Patent infringement settlement,                                        0.14
net of legal costs incurred
U.S. GAAP                        $      1.03   $  1.00   $      4.17   $  4.45

Net cash provided by operating activities was $879 million in 2012 compared
with $708 million in 2011. Investments in capital expenditures, including
tooling outlays, totaled $407 million in 2012, compared with $394 million in
2011. Balance sheet debt decreased by $262 million and cash increased by $356
million compared with the end of 2011. The $618 million decrease in balance
sheet debt (net of cash) was primarily due to net cash provided by operating
activities and the company's settlement of its convertible senior notes, which
was partially offset by share repurchases. The ratio of balance sheet debt
(net of cash) to capital was 10.0% at the end of 2012 compared with 28.3% at
the end of 2011.

Engine Group Results: Engine segment net sales were $1,167 million in fourth
quarter 2012 compared with $1,245 million in fourth quarter 2011. Excluding
the negative impact of foreign currencies and 2011 and 2012 dispositions, net
sales were down 2% from the prior year's quarter. Higher sales of light
vehicle turbochargers in China and variable cam timing devices in Japan were
offset by volume declines across the Group's product portfolio in Europe
related to the economic slowdown in the region. Adjusted earnings before
interest, income taxes and non-controlling interest ("Adjusted EBIT") were
$182 million in fourth quarter 2012, down 10% from $203 million in fourth
quarter 2011.

Drivetrain Group Results: Drivetrain segment net sales were $559 million in
fourth quarter 2012 compared with $534 million in fourth quarter 2011.
Excluding the negative impact of foreign currencies, net sales were up 5% from
the prior year's quarter.  Strong all-wheel drive system sales in North
America and India combined with higher sales of traditional transmission
components in Korea offset declines across the Group's product portfolio in
Europe related to the economic slowdown in the region. Adjusted EBIT was $49
million in fourth quarter 2012, up 5% from $47 million in fourth quarter 2011.

Recent Highlights:

The BorgWarner Board of Directors announced the appointment of James R.
Verrier, 50, to president and chief executive officer effective January 1,
2013, at which time he also joined the Board of Directors. Former chief
executive officer, Timothy M. Manganello, 62, will continue as executive
chairman of the company until his planned retirement at the April 24, 2013
annual meeting, at which time he will step down from the Board. Robin J.
Adams, Vice Chairman and former chief financial officer, will also step down
from the Board at the annual meeting in connection with his planned retirement
from the company. The Board also announced that at the time of Manganello's
retirement, the company's present lead director, Alexis P. Michas, will become
non-executive chairman of the Board.

  o In November, the company reported an expected backlog of $2.3 billion of
    net new business for the period 2013 through 2015. Demand for the
    company's advanced powertrain technologies, such as gasoline and diesel
    turbochargers, dual-clutch transmission technology, engine timing systems
    and emissions products, is expected to continue to drive strong growth.

  o For the first time, BorgWarner supplies its innovative three-stage
    turbocharging technology for BMW's M Performance diesel engine, the most
    powerful six-cylinder in-line diesel engine in the world. Exclusively
    developed for BMW M Performance automobiles, the engine powers the M550d
    xDrive Sedan and Touring, X5 M50d Touring, and X6 M50d models.

  o Propelled by the rapidly growing Chinese automotive market, BorgWarner
    opened another production plant at its campus in Ningbo, China, on
    November 28, 2012. The all-new high-tech manufacturing facility will
    produce and test Morse TEC variable cam timing (VCT) technologies and
    engine timing systems to support the production and launch of over 50
    programs with more than 20 different customers. The opening ceremony also
    celebrated the inauguration of BorgWarner's world-class Ningbo Engineering
    Center which provides research and development, applications engineering
    and management support.

At 9:30 a.m. ET today, a brief conference call concerning fourth quarter and
full year 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 57 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            Twelve Months Ended
                   December 31,                  December 31,
                   2012             2011         2012             2011
Net sales          $      1,719.1   $  1,773.7   $      7,183.2   $   7,114.7
Cost of sales      1,374.9          1,414.0      5,716.3          5,704.3
Gross profit       344.2            359.7        1,466.9          1,410.4
Selling, general
and administrative 156.2            146.8        629.3            621.0
expenses
Other (income)     17.3             21.8         84.7             (8.1)
expense
Operating income   170.7            191.1        752.9            797.5
Equity in
affiliates'        (10.0)           (10.2)       (42.8)           (38.2)
earnings, net of
tax
Interest income    (1.0)            (1.3)        (4.7)            (4.8)
Interest expense
and finance        6.7              17.2         39.4             74.6
charges
Earnings before
income taxes and   175.0            185.4        761.0            765.9
noncontrolling
interest
Provision for      48.4             58.2         238.6            195.3
income taxes
Net earnings       126.6            127.2        522.4            570.6
Net earnings
attributable to
the noncontrolling 5.4              5.2          21.5             20.5
interest, net of
tax
Net earnings
attributable to    $      121.2     $  122.0     $      500.9     $   550.1
BorgWarner Inc. 
Reconciliation to
diluted earnings
per share:
Net earnings
attributable to    $      121.2     $  122.0     $      500.9     $   550.1
BorgWarner Inc.
Adjustment for net
interest expense   —                5.5          5.8              21.5
on convertible
notes
Diluted net
earnings           $      121.2     $  127.5     $      506.7     $   571.6
attributable to
BorgWarner Inc.
Earnings per share $      1.03      $  1.00      $      4.17      $   4.45
— diluted
Weighted average
shares outstanding 117.8            127.6        121.4            128.5
— diluted
Supplemental
Information
(Unaudited)
(millions of
dollars)
                   Three Months Ended            Twelve Months Ended
                   December 31,                  December 31,
                   2012             2011         2012             2011
Capital
expenditures,      $      124.4     $  119.6     $      407.4     $   393.7
including tooling
outlays
Depreciation and
amortization:
Fixed assets and   $      70.4      $  65.2      $      260.2     $   252.2
tooling
Intangible assets  6.9              7.7          28.4             30.8
and other
                   $      77.3      $  72.9      $      288.6     $   283.0

 

 

BorgWarner Inc.
Net Sales by Reporting Segment (Unaudited)
(millions of
dollars)
                    Three Months Ended            Twelve Months Ended
                    December 31,                  December 31,
                    2012             2011         2012             2011
Engine              $      1,167.2   $  1,245.1   $      4,913.0   $  5,050.6
Drivetrain          559.0            533.7        2,298.7          2,084.5
Inter-segment       (7.1)            (5.1)        (28.5)           (20.4)
eliminations
Net sales           $      1,719.1   $  1,773.7   $      7,183.2   $  7,114.7
Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
(millions of
dollars)
                    Three Months Ended            Twelve Months Ended
                    December 31,                  December 31,
                    2012             2011         2012             2011
Engine              $      182.0     $  202.8     $      786.4     $  774.3
Drivetrain          49.2             46.8         209.1            161.2
Adjusted EBIT       231.2            249.6        995.5            935.5
Loss from disposal  —                21.5         39.7             21.5
activities
Restructuring       —                —            27.4             —
expense
Retirement related  17.3             —            17.3             —
obligations
Patent infringement
settlement, net of  —                —            —                (29.1)
legal costs
incurred
Corporate,
including equity in
affiliates'         33.2             26.8         115.4            107.4
earnings and
stock-based
compensation
Interest income     (1.0)            (1.3)        (4.7)            (4.8)
Interest expense    6.7              17.2         39.4             74.6
and finance charges
Earnings before
income taxes and    175.0            185.4        761.0            765.9
noncontrolling
interest
Provision for       48.4             58.2         238.6            195.3
income taxes
Net earnings        126.6            127.2        522.4            570.6
Net earnings
attributable to the
noncontrolling      5.4              5.2          21.5             20.5
interest, net of
tax
Net earnings
attributable to     $      121.2     $  122.0     $      500.9     $  550.1
BorgWarner Inc. 

 

BorgWarner Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(millions of dollars)
                                           December 31,  December 31,

                                           2012          2011
Assets
Cash                                       $   715.7     $   359.6
Receivables, net                           1,147.3       1,183.0
Inventories, net                           447.6         454.3
Other current assets                       162.2         140.9
Total current assets                       2,472.8       2,137.8
Property, plant and equipment, net         1,788.0       1,664.3
Other non-current assets                   2,140.0       2,156.5
Total assets                               $   6,400.8   $   5,958.6
Liabilities and Equity
Notes payable and other short-term debt    $   239.1     $   196.3
Current portion of long-term debt          4.3           381.5
Accounts payable and accrued expenses      1,287.2       1,297.8
Income taxes payable                       72.5          29.8
Total current liabilities                  1,603.1       1,905.4
Long-term debt                             823.8         751.3
Other non-current liabilities              827.8         848.9
Total BorgWarner Inc. stockholders' equity 3,082.6       2,387.9
Noncontrolling interest                    63.5          65.1
Total equity                               3,146.1       2,453.0
Total liabilities and equity               $   6,400.8   $   5,958.6

 

BorgWarner Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)
(millions of dollars)
                                                      Twelve Months Ended

                                                      December 31,
                                                      2012           2011
Operating
Net earnings                                          $      522.4   $  570.6
Non-cash charges (credits) to operations:
Depreciation and amortization                         288.6          283.0
Loss from disposal activities, net of cash paid       31.7           21.5
Restructuring expense, net of cash paid               23.3           —
Bond amortization                                     5.3            20.3
Deferred income tax benefit                           (10.7)         (1.1)
Other non-cash items                                  43.7           14.0
Net earnings adjusted for non-cash charges to         904.3          908.3
operations
Changes in assets and liabilities                     (25.6)         (200.1)
Net cash provided by operating activities             878.7          708.2
Investing
Capital expenditures, including tooling outlays       (407.4)        (393.7)
Net proceeds from asset disposals                     5.4            7.9
Payments for businesses acquired, net of cash         —              (203.7)
acquired
Net proceeds from sale of businesses                  56.8           25.0
Net cash used in investing activities                 (345.2)        (564.5)
Financing
Net increase in notes payable                         12.8           67.6
Additions to long-term debt, net of debt issuance     313.9          364.6
costs
Repayments of long-term debt, including current       (246.4)        (309.1)
portion
Proceeds from accounts receivable securitization      30.0           —
facility
Payments for purchase of treasury stock               (295.9)        (357.6)
Proceeds from stock options exercised, including the  52.0           53.0
tax benefit
Taxes paid on employees' restricted stock award       (18.1)         (14.4)
vestings
Purchase of noncontrolling interest                   (15.0)         (29.4)
Capital contribution from noncontrolling interest     —              19.5
Dividends paid to noncontrolling stockholders         (21.9)         (13.9)
Net cash used in financing activities                 (188.6)        (219.7)
Effect of exchange rate changes on cash               11.2           (14.3)
Net increase (decrease) in cash                       356.1          (90.3)
Cash at beginning of year                             359.6          449.9
Cash at end of year                                   $      715.7   $  359.6

 

 

SOURCE BorgWarner Inc.

Website: http://www.borgwarner.com
Contact: Ken Lamb, +1-248-754-0884