BorgWarner Q1 EPS Up 16%
28 April 2000
BorgWarner Q1 EPS Up 16%; Strong Internal Growth Lead By Engine-Related Systems
CHICAGO, April 27 BorgWarner Inc. (NYSE: BWA) today
reported that first quarter earnings were up 16% to $1.53 per share on record
sales of $730.2 million. The company cited increased penetration by its
engine-related products for the better than expected quarter.
Financial Results: The company reported net earnings for the 2000 first
quarter of $41.0 million, or $1.53 per share, compared with $32.1 million, or
$1.32 per share in the 1999 first quarter. Sales were up 33% to
$730.2 million compared with $551.3 million in the prior first quarter.
Comments and Outlook: "Our strategy to provide engine components and
systems that improve fuel performance and reduce emissions is driving our
ability to outpace even a strong auto market," said John F. Fiedler,
BorgWarner Chairman and Chief Executive Officer. "Business is good across all
our operations, with internal growth above industry levels at 12%. Sales of
engine timing systems, turbochargers and emissions products are especially
strong, both in Europe and North America."
Fiedler noted that the industry outlook for the second quarter continues
to be strong, but that the company anticipates a return to more normal vehicle
build levels in the second half of the year.
Operating Results: For the first quarter, revenue at Morse TEC, including
Turbo Systems, rose 37% to $248.5 million. Strong engine timing systems and
turbochargers in both North America and Europe drove revenue for those
products. Growth was also helped by a full quarter of sales from the Kuhlman
Corporation turbocharger business acquired in March 1999.
Sales for Air/Fluid Systems were up 40% to $151.6 million, due to strong
demand for emission products. TorqTransfer Systems' sales of $147.3 million
were down 2%. Transmission Systems' sales were up 13% to $115.6 million,
excluding sold product lines, as the result of continued market share gains in
shift quality components and systems. The company's newest operating group,
Cooling Systems, reported sales of $80.1 million for the quarter, including
results from acquisitions.
First Quarter Activities: During the quarter, the company announced that
it expects to divest two non-core business units. The proceeds of the sales
are anticipated to be used for general corporate purposes, including share
repurchase.
Chicago-based BorgWarner 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 BorgWarner 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, 1999.
BorgWarner Inc.
Consolidated Statement of Operations (Unaudited)
(millions of dollars, except per share data) March 31,
2000 1999
Net sales $730.2 $551.3
Cost of sales 550.3 424.4
Depreciation 26.2 20.5
Selling, general and administrative expenses 63.5 42.4
Minority interest 0.7 0.4
Goodwill amortization 11.0 5.7
Equity in affiliate earnings and other income (3.5) (2.5)
Earnings before interest expense,
finance charges and taxes 82.0 60.4
Interest expense and finance charges 15.9 8.6
Earnings before income taxes 66.1 51.8
Provision for income taxes 25.1 19.7
Net earnings $41.0 $32.1
Net earnings per share - basic $1.54 $1.33
Net earnings per share - diluted $1.53 $1.32
Average shares outstanding - basic (in millions) 26.7 24.2
Average shares outstanding - diluted (in millions) 26.8 24.3
BorgWarner Inc.
Selected Financial Information (Unaudited)
(millions of dollars) March 31, December 31,
2000 1999
Receivables $276.3 $216.2
Inventories $178.9 $164.4
Debt $903.1 $980.3
Stockholders' Equity $1,082.5 $1,057.5
Three Months Ended
March 31,
2000 1999
Capital Spending $26.6 $27.4
BorgWarner Inc.
Sales by Operating Group (Unaudited)
(millions of dollars) Three Three %
Months Months Change
2000 1999
Air/Fluid Systems $151.6 $108.6 39.6%
Cooling Systems 80.1 9.3 N/A
Morse TEC 248.5 181.1 37.2%
TorqTransfer Systems 147.3 150.2 -1.9%
Transmission Systems 115.6 101.9 13.4%
Divested Operations N/A 13.6 N/A
Subtotal 743.1 564.7 31.6%
Eliminations (12.9) (13.4) N/A
Total Sales by Operating Group $730.2 $551.3 32.5%
BorgWarner Inc.
Earnings Before Interest and Taxes by Operating Group (Unaudited)
(millions of dollars) Three Three %
Months Months Change
2000 1999
Air/Fluid Systems $17.1 $10.2 67.6%
Cooling Systems 11.0 1.4 N/A
Morse TEC 34.1 27.1 25.8%
TorqTransfer Systems 10.4 10.9 -4.6%
Transmission Systems 14.7 15.5 -5.2%
Divested Operations - (1.3) N/A
Total EBIT by Operating Group $87.3 $63.8 36.8%