Borg-Warner Automotive Back On Growth Track
28 April 1999
Borg-Warner Automotive Back On Growth Track: EPS Up 21% at Borg-Warner Automotive Due to Strength of Engine-Related Programs, Auto Builds
CHICAGO, April 27 -- Borg-Warner Automotive, Inc.
today announced that first quarter 1999 earnings per share were up 21% on
record sales.
Financial Results: The company reported net earnings for the 1999 first
quarter of $32.1 million, or $1.32 per share, compared with $26.0 million, or
$1.09 per share, for the 1998 first quarter. Sales were up 19% to
$551.3 million compared with $464.7 million in the prior first quarter.
Comments and Outlook: "Our business is strong across all our operations,"
said John F. Fiedler, chairman and chief executive officer of Borg-Warner
Automotive.
"Our strategic emphasis on powertrain growth trends has put us back on the
growth track. We are benefiting from strong vehicle production, new
transmission programs and the continued popularity of trucks and sport-utility
vehicles in North America. New engine technology, particularly in
turbocharged direct injected diesel engines, is providing double digit growth
in Europe, and our Asian business remains stable. The acquisition of Kuhlman
Corporation in March provided an additional boost to an already strong
quarter."
Commenting on the remainder of the year Fiedler noted: "We see continued
industry strength going in the second quarter. If these conditions continue
into the second half of the year, we expect to have a very strong year, in
line with recently increased 1999 estimates."
Operating Results: For the first quarter, revenue at Morse TEC, including
the new BWA Turbo Systems operating group, rose 49% to $191.9 million. Strong
demand for Morse TEC chain products and systems for engines, transmissions and
four-wheel drive drove revenue for those products. Accelerating demand for
European passenger car turbochargers continued to boost results for Turbo
Systems, which included one month of sales and earnings from the Kuhlman
Corporation acquisition.
Powertrain Systems' sales of $150.2 million improved 12% over the 1998
first quarter. The improvement reflects strong sales of trucks and
sport-utility vehicles at a major customer and a recovery in the export of
four-wheel drive transfer cases to Korea.
Automatic Transmission Systems' sales were up 12% to $115.5 million,
excluding sold product lines. The group saw strong European demand, robust
sales to North American automakers and stable conditions in Asia during the
quarter.
Sales for Air/Fluid Systems were up 17% to $106.7 million, due to Chrysler
engine and transmission programs and the inclusion of the fuel systems
business from Kuhlman Corporation.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in highly
engineered components and systems for vehicle powertrain applications
worldwide. The company operates 54 manufacturing and technical facilities in
13 countries. Customers include Ford, DaimlerChrysler, General Motors,
Toyota, Caterpillar, Navistar and VW.
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 "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, 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, fluctuations in
demand for vehicles containing the Company's products, 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, 1998.
Borg-Warner Automotive, Inc.
Consolidated Statement of Operations (Unaudited)
(millions of dollars, except per share data)
THREE MONTHS ENDED
MARCH 31,
1999 1998
Net sales $551.3 $464.7
Cost of sales 424.4 365.7
Depreciation 20.5 19.3
Selling, general and administrative
expenses 42.4 37.2
Minority interest 0.4 0.7
Goodwill amortization 5.7 4.2
Equity in affiliate earnings and
other income (2.5) (5.5)
Earnings before interest expense,
finance charges and taxes 60.4 43.1
Interest expense and finance charges 8.6 6.0
Earnings before income taxes 51.8 37.1
Provision for income taxes 19.7 11.1
Net earnings $32.1 $26.0
Net earnings per share - basic $1.33 $1.10
Net earnings per share - diluted $1.32 $1.09
Average shares outstanding -
basic (in millions) 24.2 23.6
Average shares outstanding -
diluted (in millions) 24.3 23.8
Borg-Warner Automotive, Inc.
Sales by Operating Group (Unaudited)
(millions of dollars, average shares outstanding)
Three Three %
Months Months Change
1999 1998
Morse TEC $191.9 $128.5 49.3%
Air/Fluid Systems 106.7 91.1 17.1%
Automatic Transmission Systems 115.5 103.5 11.6%
Powertrain Systems 150.2 133.9 12.2%
Divested Operations N/A 21.2 N/A
Subtotal 564.3 478.2 18.0%
Eliminations (13.0) (13.5) -3.7%
Total $551.3 $464.7 18.6%