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BorgWarner Reports First Quarter 2013 U.S. GAAP Earnings Of $1.22 Per Diluted Share

BorgWarner Reports First Quarter 2013 U.S. GAAP Earnings Of $1.22 Per Diluted
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THE COMPANY POSTS EARNINGS OF $1.30 PER DILUTED SHARE, EXCLUDING
NON-COMPARABLE ITEMS, UP 2% FROM FIRST QUARTER 2012 ON A COMPARABLE BASIS

PR Newswire

AUBURN HILLS, Mich., April 25, 2013

AUBURN HILLS, Mich., April 25, 2013 /PRNewswire/ --BorgWarner Inc. (NYSE:
BWA) today reported first quarter 2013 U.S. GAAP net earnings of $1.22 per
diluted share. Excluding non-comparable items, net earnings were $1.30 per
diluted share. Net sales were $1,851 million in the quarter.

First Quarter Highlights:

  oNet sales of $1,851 million.

       oExcluding the negative impact of foreign currencies and 2012
         dispositions, net sales were down approximately 1% compared with
         first quarter 2012.

  oU.S. GAAP net earnings of $1.22 per diluted share.

       oExcluding $(0.08) per diluted share of net non-comparable items, net
         earnings were $1.30 per diluted share, up 2% from first quarter 2012
         on a comparable basis and a new first quarter record for the company.

  oOperating income of $199 million.

       oExcluding $17 million of pre-tax costs related to non-comparable
         items, operating income was $216 million, or 11.7% of net sales.

  oRepurchased approximately $50 million of shares in the quarter.

First Quarter Performance: "Outstanding performance by our operations drove
our strong first quarter results," said James Verrier, President and CEO of
BorgWarner. "The focus on fuel economy and improved emissions continued to
drive growth for BorgWarner in most parts of the world, but sharp declines in
light vehicle production in Europe, a market that comprises nearly half of our
sales, more than offset this growth. Excluding the impact of foreign
currencies and 2012 dispositions, our net sales were down approximately 1% in
the first quarter compared with first quarter 2012, in line with global light
vehicle production, which was down 1%. Light vehicle production in Europe was
down 9% in the same period. Despite a challenging sales environment,
operational efficiency and cost controls enabled us to post a strong operating
margin of 11.7% in the quarter, excluding non-comparable items."

2013 Outlook: The company's outlook for 2013 is unchanged. Annual net sales
growth is expected to be 2% to 6% compared with 2012, or 3% to 7% net of 2012
dispositions. Net earnings are expected to be within a range of $5.15 to $5.45
per diluted share, excluding non-comparable items. Operating income, as a
percentage of net sales, is expected to be 11.5% or better, excluding
non-comparable items.

Financial Results: Net sales were $1,851 million in first quarter 2013, down
3% from $1,913 million in first quarter 2012. Net earnings in the quarter were
$142 million, or $1.22 per diluted share, compared with $158 million, or $1.28
per diluted share, in first quarter 2012. First quarter 2013 net earnings
included net non-comparable items of $(0.08) 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 Japanese Yen and Brazilian Real, decreased net sales by
approximately $2 million, and decreased net earnings approximately $(0.03) per
diluted share, in first quarter 2013 compared with first quarter 2012.

Net earnings per diluted share First Quarter
                               2013     2012
Non – U.S. GAAP                $ 1.30   $ 1.28
Reconciliations:
Retirement related obligations (0.03)
Program termination agreement  (0.06)
Tax adjustments                0.01
U.S. GAAP                      $ 1.22   $ 1.28

Net cash provided by operating activities was $16 million in first quarter
2013 compared with $31 million in first quarter 2012. Capital expenditures,
including tooling outlays, totaled $87 million in first quarter 2013, compared
with $95 million in first quarter 2012. Balance sheet debt increased by $134
million and cash on hand decreased by $20 million at the end of first quarter
2013 compared with the end of 2012. The $154 million increase in balance sheet
debt (net of cash) was primarily due to seasonal working capital funding
requirements and $50 million of share repurchases. The ratio of balance sheet
debt (net of cash) to capital was 13.8% at the end of first quarter 2013
compared with 10.0% at the end of 2012.

Engine Group Results: Engine segment net sales were $1,258 million in first
quarter 2013 compared with $1,308 million in first quarter 2012. Excluding the
negative impact of foreign currencies and 2012 dispositions, net sales were
down approximately 1%. Higher sales of variable cam timing systems in Japan
and emissions systems in Asia and the Americas were more than offset by lower
production volumes in Europe. Adjusted earnings before interest, income taxes
and non-controlling interest ("Adjusted EBIT") were $202 million in first
quarter 2013, down 4% from $210 million in first quarter 2012.

Drivetrain Group Results: Drivetrain segment net sales were $601 million in
first quarter 2013, compared with $611 million in first quarter 2012.
Excluding the positive impact of foreign currencies, net sales were down
approximately 3%. Higher sales of all-wheel drive systems in North America and
all-wheel drive systems and transmission components in Korea, were more than
offset by lower production volumes in Europe. Adjusted EBIT was $56 million in
first quarter 2013, down 8% from $61 million in first quarter 2012.

Recent Highlights:

  oOn April 24, 2013, the company's Board of Directors authorized the
    purchase of up to 5 million additional shares of the company's common
    stock on the open market.

  oOn April 15, 2013, BorgWarner's regulated three-stage (R3S) turbocharging
    system was named a winner of the prestigious 2013 Automotive News PACE
    Award at a ceremony held in Detroit, Michigan. BorgWarner also received a
    PACE Innovation Partnership Award for its collaboration with BMW on the
    R3S turbocharging system for diesel engines. Recognized around the world
    as a symbol of excellence, the annual Automotive News PACE (Premier
    Automotive Suppliers' Contribution to Excellence) Awards acknowledge
    automotive suppliers for superior innovation, technological advancement
    and business performance.

  oBorgWarner has opened its new production facility and engineering center
    in Itatiba City, Brazil. The new campus will produce several technologies
    for passenger cars and commercial vehicles such as turbochargers, viscous
    fans and fan drives, engine timing systems and emissions technologies.
    BorgWarner's new facilities are located 80 km northwest of São Paulo and
    are twice as big as its former facility in Campinas.

  oBorgWarner supplies its latest turbocharging technology for a new
    generation of medium-duty engines from Mercedes-Benz, the first commercial
    vehicle manufacturer to achieve Euro VI compliance for all of its medium-
    and heavy-duty engines.

  oBorgWarner's advanced technologies drive the 2013 North American Car and
    Truck/Utility of the Year winners: the Cadillac ATS and Ram 1500. For the
    Cadillac ATS, BorgWarner supplies friction plates and one-way clutches for
    the 6-speed automatic transmission and Torque-On-Demand^® (TOD^®) transfer
    cases and controls for all-wheel drive models. For the Ram 1500,
    BorgWarner produces viscous fan drives for the V8 engine, timing systems
    for models equipped with Pentastar engines, friction plates for the
    8-speed automatic transmission and TOD^® transfer case systems for
    four-wheel drive models.

  oBorgWarner Turbo Systems received a Daimler Supplier Award 2012 in
    recognition of outstanding performance in quality, costs and delivery
    reliability. BorgWarner supplies a variety of turbocharging technologies
    to Mercedes-Benz, including regulated two-stage (R2S®) and twin scroll
    turbochargers.

  oTwo BorgWarner facilities received 2012 Supplier Quality Excellence Awards
    from General Motors (GM). Presented to about 7% of GM's suppliers, the new
    award recognizes supplier manufacturing locations for achieving
    consistently high levels of quality that exceed defined customer quality
    performance criteria.

At 9:30 a.m. ET today, a brief conference call concerning first quarter
results will be webcast at:
http://www.borgwarner.com/en/Investors/Webcasts/default.aspx.

Auburn Hills, Michigan-based BorgWarner Inc. (NYSE: BWA) is a technology
leader in highly engineered components and systems for powertrain applications
worldwide. Operating manufacturing and technical facilities in 57 locations in
19 countries, the company develops products to improve fuel economy, reduce
emissions and enhance performance. Customers include VW/Audi, Ford, Toyota,
Renault/Nissan, General Motors, Hyundai/Kia, Daimler, Chrysler, Fiat, BMW,
Honda, John Deere, PSA, and MAN. For more information, please visit
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
                                                        March 31,
                                                        2013        2012
Net sales                                               $ 1,851.1   $ 1,912.5
Cost of sales                                           1,476.4     1,516.7
Gross profit                                            374.7       395.8
Selling, general and administrative expenses            159.3       169.0
Other (income) expense                                  16.9        1.1
Operating income                                        198.5       225.7
Equity in affiliates' earnings, net of tax              (9.7)       (9.2)
Interest income                                         (1.0)       (1.4)
Interest expense and finance charges                    9.7         15.1
Earnings before income taxes and noncontrolling         199.5       221.2
interest
Provision for income taxes                              50.9        57.5
Net earnings                                            148.6       163.7
Net earnings attributable to the noncontrolling         6.6         5.7
interest, net of tax
Net earnings attributable to BorgWarner Inc.           $ 142.0     $ 158.0
Reconciliation to diluted earnings per share:
Net earnings attributable to BorgWarner Inc.            $ 142.0     $ 158.0
Adjustment for net interest expense on convertible      —           5.0
notes
Diluted net earnings attributable to BorgWarner Inc.    $ 142.0     $ 163.0
Earnings per share — diluted                            $ 1.22      $ 1.28
Weighted average shares outstanding — diluted           116.6       127.7
Supplemental Information (Unaudited)
(millions of dollars)
                                                        Three Months Ended
                                                        March 31,
                                                        2013        2012
Capital expenditures, including tooling outlays         $ 87.4      $ 95.0
Depreciation and amortization:
Fixed assets and tooling                                $ 68.2      $ 63.8
Intangible assets and other                             6.7         7.4
                                                        $ 74.9      $ 71.2



BorgWarner Inc.
Net Sales by Reporting Segment (Unaudited)
(millions of dollars)
                                                        Three Months Ended

                                                        March 31,
                                                        2013        2012
Engine                                                  $ 1,257.5   $ 1,308.2
Drivetrain                                              601.4       611.4
Inter-segment eliminations                              (7.8)       (7.1)
Net sales                                               $ 1,851.1   $ 1,912.5
Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
(millions of dollars)
                                                        Three Months Ended

                                                        March 31,
                                                        2013        2012
Engine                                                  $ 202.3     $ 209.8
Drivetrain                                              56.0        61.2
Adjusted EBIT                                           258.3       271.0
Program termination agreement                           11.3        —
Retirement related obligations                          5.9         —
Corporate, including equity in affiliates' earnings and 32.9        36.1
stock-based compensation
Interest income                                         (1.0)       (1.4)
Interest expense and finance charges                    9.7         15.1
Earnings before income taxes and noncontrolling         199.5       221.2
interest
Provision for income taxes                              50.9        57.5
Net earnings                                            148.6       163.7
Net earnings attributable to the noncontrolling         6.6         5.7
interest, net of tax
Net earnings attributable to BorgWarner Inc.           $ 142.0     $ 158.0



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

                                           2013        2012
Assets
Cash                                       $ 695.4     $  715.7
Receivables, net                           1,318.4     1,147.3
Inventories, net                           449.5       447.6
Other current assets                       138.2       162.2
Total current assets                       2,601.5     2,472.8
Property, plant and equipment, net         1,765.2     1,788.0
Other non-current assets                   2,162.2     2,140.0
Total assets                               $ 6,528.9   $  6,400.8
Liabilities and Equity
Notes payable and other short-term debt    $ 229.3     $  243.4
Accounts payable and accrued expenses      1,311.9     1,287.2
Income taxes payable                       42.0        72.5
Total current liabilities                  1,583.2     1,603.1
Long-term debt                             971.4       823.8
Other non-current liabilities              812.7       827.8
Total BorgWarner Inc. stockholders' equity 3,106.1     3,082.6
Noncontrolling interest                    55.5        63.5
Total equity                               3,161.6     3,146.1
Total liabilities and equity               $ 6,528.9   $  6,400.8



BorgWarner Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(millions of dollars)
                                                            Three Months Ended

                                                            March 31,
                                                            2013      2012
Operating
Net earnings                                                $ 148.6   $ 163.7
Non-cash charges (credits) to operations:
Depreciation and amortization                               74.9      71.2
Bond amortization                                           —         4.4
Deferred income tax benefit                                 (17.0)    (22.1)
Other non-cash items                                        (0.4)     13.6
Net earnings adjusted for non-cash charges to operations    206.1     230.8
Changes in assets and liabilities                           (189.8)   (200.0)
Net cash provided by operating activities                   16.3      30.8
Investing
Capital expenditures, including tooling outlays             (87.4)    (95.0)
Net proceeds from asset disposals                           13.8      1.0
Net proceeds from sale of business                          —         1.6
Net cash used in investing activities                       (73.6)    (92.4)
Financing
Net decrease in notes payable                               (11.0)    (11.7)
Additions to long-term debt, net of debt issuance costs     161.0     191.4
Repayments of long-term debt, including current portion     (15.6)    (99.9)
Payments for purchase of treasury stock                     (49.9)    —
Proceeds from stock options exercised, including the tax    11.4      47.0
benefit
Taxes paid on employees' restricted stock award vestings    (27.2)    (17.5)
Dividends paid to noncontrolling stockholders               (9.0)     (12.0)
Net cash provided by financing activities                   59.7      97.3
Effect of exchange rate changes on cash                     (22.7)    1.6
Net (decrease) increase in cash                             (20.3)    37.3
Cash at beginning of year                                   715.7     359.6
Cash at end of period                                       $ 695.4   $ 396.9



SOURCE BorgWarner Inc.

Website: http://www.borgwarner.com
Contact: Ken Lamb, 248.754.0884