Borg-Warner's Q1 Results
28 April 1998
First Quarter Results on Track for Borg-Warner Automotive
CHICAGO, April 28 -- Borg-Warner Automotive, Inc.
today reported 1998 first quarter earnings per share of $1.10 ($1.09 per share
diluted), up 5% from 1997 first quarter earnings per share of $1.05 ($1.04 per
share diluted).
Net income for the quarter was $26.0 million compared with $24.8 million
in the prior period. Revenue was $464.7 million, up 5% compared with $443.5
million in 1997.
"We are pleased that our first quarter results were on track with investor
expectations," said John F. Fiedler, chairman and chief executive officer of
Borg-Warner Automotive. "As anticipated, we had a slow start this year,
especially when compared with an exceptionally strong first quarter last
year."
He commented that 1998 first quarter results reflect a variety of customer
product mix issues. "Production changes at Ford led to a 30% decline in
builds of the Ford F-150 series trucks and a reduction in overall installation
rates of four-wheel drive systems. Production of the new Chrysler LH series
reached our expectation in mid-quarter and we expect to benefit from Chrysler
programs for the remainder of the year. In Europe, we are very pleased with
the performance of the new turbocharger business and are excited about the
opportunities offered by the move to direct injected diesel engines for
improved fuel economy and better air quality."
For the quarter, revenue at Morse TEC rose 11% to $88.4 million. The
group experienced strong demand in North America for its engine, transmission
and four-wheel drive components and systems.
Powertrain Systems' sales of $133.9 million were 15% below last year's
exceptional first quarter results. The group was adversely affected by the
decline in Ford F-150 truck production, lower overall installation rates of
four-wheel drive transfer cases at Ford and a decline in transfer case
shipments to Korea.
Automatic Transmission Systems' sales were down 2% to $124.7 million, due
primarily to weak sales of General Motors mid-sized passenger cars.
Sales for Air/Fluid Systems were off 1% to $91.1 million. Improvement is
expected over the remainder of the year from increased demand for air
induction modules for new Chrysler LH vehicles and other air management
products both in North America and Europe.
Sales of the European turbocharger business through AG Kuhnle, Kopp &
Kausch, in which the company owns a majority interest, were $40.1 million.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in highly
engineered components and systems primarily for automotive drivetrain
applications. The company operates manufacturing facilities in 12 countries
serving the North American, European and Asian automotive markets.
Statements contained in this press release which are not historical facts
are "forward-looking" statements as contemplated by the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ materially
from those projected or implied in the forward-looking statements. Such risks
and uncertainties include fluctuations in domestic or foreign automotive
production, the continued use of outside suppliers by original equipment
manufacturers, and general economic conditions, as well as other risks
detailed in the Company's filings with the Securities and Exchange Commission,
including the Cautionary Statements filed as Exhibit 99.1 to the Form 10-K for
the fiscal year ended December 31, 1997.
Borg-Warner Automotive, Inc.
Consolidated Statement of Operations (Unaudited)
(millions of dollars, except per share data)
THREE MONTHS ENDED
MARCH 31,
1998 1997
Net sales $464.7 $443.5
Cost of sales 365.4 345.7
Depreciation 19.3 16.8
Selling, general and
administrative expenses 37.5 36.0
Minority interest 0.7 0.7
Goodwill amortization 4.2 4.1
Equity in affiliate earnings
and other income (5.5) (4.0)
Earnings before interest expense,
finance charges and taxes 43.1 44.2
Interest expense and
finance charges 6.0 6.5
Provision for income taxes 11.1 12.9
Net earnings $26.0 $24.8
Net earnings per share
-- basic $1.10 $1.05
Net earnings per share
-- diluted $1.09 $1.04
Average shares outstanding
-- basic (in millions) 23.6 23.7
Average shares outstanding
-- diluted (in millions) 23.8 23.8
Borg-Warner Automotive, Inc.
Sales by Operating Group (Unaudited)
(millions of dollars, average shares outstanding)
Three Three %
Months Months Change
1998 1997
Powertrain Systems $133.9 $157.5 -15.0%
Automatic Transmission Systems 124.7 127.8 -2.4%
Morse TEC 88.4 79.4 11.3%
Air/Fluid Systems 91.1 92.3 -1.3%
AG Kuhnle, Kopp & Kausch 40.1 -- N/A
Subtotal 478.2 457.0 4.6%
Eliminations (13.5) (13.5) -0.0%
Total $464.7 $443.5 4.8%
SOURCE Borg-Warner Automotive