EPS up 40% at Borg-Warner Automotive
21 October 1999
EPS up 40% at Borg-Warner Automotive; Internal Growth Strong in Third Quarter
CHICAGO, Oct. 20 -- Borg-Warner Automotive, Inc.
today announced third quarter 1999 earnings per share of $1.02, up 40% over
the prior year's quarter.
Financial Results: The company reported net earnings for the 1999 third
quarter of $27.4 million, or $1.02 per share, compared with $17.3 million, or
$.73 per share, for the 1998 third quarter. Sales were up 37% to $589.7
million compared with $431.6 million in the prior third quarter. Driving the
record third quarter results were increased BWA content in new engine and
automatic transmission programs that improve fuel economy and emissions,
strong U.S. production, the continued popularity of sport-utility vehicles and
light trucks, and acquisitions. Third quarter 1998 results were affected by
the GM strike which reduced earnings by $.17 cents per share.
Net earnings for the first nine months of 1999 were $95.8 million, or
$3.71 per share, compared with $62.9 million, or $2.65 per share, for the 1998
period. Sales were up 33% to $1,789 million compared with $1,348 million in
1998.
Comments and Outlook: "Business continues to be strong across all our
operations, with above-average internal growth accounting for one-third of our
sales increase," 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 our growth. We expect to see
continued strong growth in engine components and systems next year, primarily
in Europe. Production in North America should continue to favor vehicles with
good BWA content and our Asian business remains stable." Fiedler also noted
that he expects the company to deliver more than a 25% growth in earnings over
the $4.00 per share the company reported in 1998, and to sustain a 15%
earnings growth in 2000 over the 1999 level.
Quarter in Review: During the third quarter, the company announced the
completion of the planned sale of Kuhlman Electric and a definitive agreement
to sell Coleman Cable, acquired as part of the company's acquisition of
Kuhlman Corporation in March, 1999, and the sale of Borg-Warner Automotive
operations in Gallipolis, Ohio. In addition, the acquisition of the Eaton
Fluid Power Division was announced. With the divestitures of non-core
businesses off-setting the acquisition, and anticipated solid cash flow, the
company expects to bring its debt level back to more conservative levels.
Operating Results: For the third quarter, revenue at Morse TEC, including
BWA Turbo Systems, rose 87% to $244.3 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.
Powertrain Systems' sales of $128.2 million improved 9% over the 1998
third 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 exports of four-wheel-drive transfer cases to
Korea.
Automatic Transmission Systems' sales were up 18% to $98.5 million,
excluding sold product lines. The group saw continued strong European and
North American demand and stable conditions in Asia during the quarter.
Sales for Air/Fluid Systems were up 42% to $116.7 million, due to demand
for emission enhancement products and the inclusion of the acquired 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 60 manufacturing and technical facilities in
13 countries. Customers include Ford, DaimlerChrysler, General Motors,
Toyota, Caterpillar, Navistar, PSA and VW Group. The Internet address for
Borg-Warner Automotive is: http://www.bwauto.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 "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 Nine Months Ended
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
Net sales $589.7 $431.6 $1,781.8 $1,347.6
Cost of sales 458.6 333.4 1,374.7 1,058.5
Depreciation 22.6 18.9 65.9 57.5
Selling, general and
administrative expenses 51.0 41.0 146.9 112.7
Minority interest 0.4 0.9 1.2 2.4
Goodwill amortization 7.7 4.3 21.1 12.7
Equity in affiliate
earnings and other
income (3.9) (0.4) (11.0) (8.8)
Earnings before interest
expense, finance
charges and taxes 53.3 33.5 183.0 112.6
Interest expense and
finance charges 10.5 7.6 31.7 20.6
Earnings before income
taxes 42.8 25.9 151.3 92.0
Provision for income
taxes 15.4 8.6 55.5 29.1
Net earnings $27.4 $17.3 $95.8 $62.9
Net earnings per share
- basic $1.03 $0.74 $3.73 $2.68
Net earnings per share
- diluted $1.02 $0.73 $3.71 $2.65
Average shares outstanding
- basic (in millions) 26.7 23.5 25.7 23.5
Average shares outstanding
- diluted (in millions) 26.8 23.7 25.8 23.7
Borg-Warner Automotive, Inc.Sales by Operating Group (Unaudited)
(millions of dollars, average shares outstanding)
Third Third % Nine Nine %
Quarter Quarter Change Months Months Change
1999 1998 1999 1998
Morse TEC $244.3 $130.7 86.9% $693.8 $391.2 77.4%
Air/Fluid Systems 116.7 82.1 42.1% 359.0 262.2 36.9%
Automatic Transmission
Systems 98.5 83.4 18.1% 305.1 261.0 16.9%
Powertrain Systems 128.2 118.2 8.5% 420.5 379.7 10.7%
Divested Operations 13.5 30.4 N/A 40.5 97.3 N/A
Subtotal 601.2 444.8 35.2% 1,818.9 1,391.4 30.7%
Eliminations (11.5) (13.2) -12.9% (37.1) (43.8) -15.3%
Total $589.7 $431.6 36.6% $1,781.8 $1,347.6 32.2%