Borg-Warner Automotive EPS Up 63% On Record Second Quarter Sales
22 July 1999
Borg-Warner Automotive EPS Up 63% On Record Second Quarter Sales
CHICAGO, July 21 -- Borg-Warner Automotive, Inc.
today announced that second quarter 1999 earnings per share were up 63% on
record sales.
Financial Results: The company reported net earnings for the 1999 second
quarter of $36.3 million, or $1.35 per share, compared with $19.6 million, or
$.83 per share, for the 1998 second quarter. Sales were up 42% to
$640.8 million compared with $451.3 million in the prior second quarter.
Results were driven by strong industry production, increased BWA content in
new engine and automatic transmission programs, the continued popularity of
sport-utility vehicles and light trucks, and the acquisition of Kuhlman
Corporation. Second quarter 1998 results were affected by the GM strike which
reduced earnings by $.13 cents per share.
Net earnings for the first six months of 1999 were $68.4 million, or
$2.69 per share, compared with $45.6 million, or $1.92 per share, for the 1998
first half. Sales were up 30% to $1.2 billion compared with $916 million in
1998.
Comments and Outlook: "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 technology to improve fuel
economy and emissions is driving good internal growth, with acquisitions
giving us an additional boost."
Commenting on the remainder of the year Fiedler noted: "We expect to see
continued strong growth in engine components and systems, primarily because of
European demand for turbocharged direct injected diesel engines. Production
in North America should continue to favor vehicles with good BWA content and
our Asian business remains stable."
Operating Results: For the second quarter, revenue at Morse TEC,
including BWA Turbo Systems, rose 95% to $257.6 million. Strong demand for
Morse TEC chain products and systems for engines, automatic transmissions and
four-wheel drive drove revenue for those products. Accelerating demand for
European passenger car turbochargers continued to boost Turbo Systems'
results, which included a full quarter of sales and earnings from the Kuhlman
Corporation acquisition.
Powertrain Systems' sales of $142.1 million improved 11% over the 1998
second quarter. The results reflect strong sales of four-wheel drive systems
for Ford light trucks and sport-utility vehicles and the Mercedes M-Class All
Activity Vehicle, as well as the continued recovery of four-wheel drive
transfer case exports to Korea.
Automatic Transmission Systems' sales were up 21% to $118.1 million,
excluding sold product lines. The group saw continued strong European demand,
robust sales to North American automakers and stable conditions in Asia during
the quarter.
Sales for Air/Fluid Systems were up 52% to $135.6 million, due to
DaimlerChrysler 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.
Note: Borg-Warner Automotive press releases are available on the Internet
at http://www.bwauto.com or via Company News
On-Call:http://www.prnewswire.com, or via fax, 800-758-5804, ext. 120941.
Borg-Warner Automotive, Inc.
Consolidated Statement of Operations (Unaudited)
(millions of dollars, except per share data)
Three Months Ended, Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Net sales $640.8 $451.3 $1,192.1 $916.0
Cost of sales 491.7 359.4 916.1 725.1
Depreciation 22.8 19.3 43.3 38.6
Selling, general and
administrative expenses 53.5 34.5 95.9 71.7
Minority interest 0.4 0.8 0.8 1.5
Goodwill amortization 7.7 4.2 13.4 8.4
Equity in affiliate
earnings and other income (4.6) (2.9) (7.1) (8.4)
Earnings before interest
expense, finance
charges and taxes 69.3 36.0 129.7 79.1
Interest expense and
finance charges 12.6 7.0 21.2 13.0
Earnings before
income taxes 56.7 29.0 108.5 66.1
Provision for
income taxes 20.4 9.4 40.1 20.5
Net earnings $36.3 $19.6 $68.4 $45.6
Net earnings per
share - basic $1.36 $0.84 $2.71 $1.94
Net earnings per
share - diluted $1.35 $0.83 $2.69 $1.92
Average shares
outstanding
- basic (in millions) 26.7 23.6 25.3 23.6
Average shares
outstanding
- diluted (in millions) 26.9 23.6 25.5 23.8
Borg-Warner Automotive, Inc.
Sales by Operating Group (Unaudited)
(millions of dollars, average shares outstanding)
Second Second % Six Six %
Quarter Quarter Change Months Months Change
1999 1998 1999 1998
Morse TEC $257.6 $132.0 95.2% $449.5 $260.5 72.6%
Air/Fluid Systems 135.6 89.0 52.4% 242.3 180.1 34.5%
Automatic
Transmission
Systems 118.1 98.0 20.5% 233.6 201.5 15.9%
Powertrain Systems 142.1 127.6 11.4% 292.3 261.5 11.8%
Divested Operations N/A 21.8 N/A N/A 43.0 N/A
Subtotal 653.4 468.4 39.5% 1,217.7 946.6 28.6%
Eliminations (12.6) (17.1) -26.3% (25.6) (30.6) -16.3%
Total $640.8 $451.3 42.0%$1,192.1 $916.0 30.1%