) posted a 17.7% increase in adjusted earnings to $1.40 per share
in the third quarter of 2013 compared with $1.19 in the third
quarter of 2012. Earning per share outpaced the Zacks Consensus
Estimate by 6 cents.
BORG WARNER INC (BWA): Free Stock Analysis
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On reported basis, BorgWarner reported earnings per share of
$1.45 in the third quarter of 2013 compared with 85 cents per
share a year ago.
Revenues increased 6.6% year on year to $1.81 billion, but missed
the Zacks Consensus Estimate of $1.84 billion. Revenues benefited
from favorable impact of the Euro, partially offset by
unfavorable impact of the Japanese Yen.
Excluding the impact of foreign currencies in both years and
dispositions in 2012, revenues went up 6% year over year. Rising
demand for fuel efficient vehicles and improved emission
standards benefited the company.
Operating income increased 38.4% to $225.6 million or 12.5% of
net sales from $163 million or 9.6% in the third quarter of 2012.
The improvement in operating margin was driven by enhanced
operational efficiency and the impact of cost control methods.
Revenues in the Engine segment rose 3.6% to $1.2 billion.
Excluding the favorable impact of foreign currencies and 2012
dispositions, net sales went up 4% in the segment, driven by
higher global sales of turbochargers; exhaust gas recirculation
coolers and variable cam timing devices.
Adjusted earnings before interest, income taxes and
non-controlling interest (adjusted EBIT) increased 6.2% to $195.5
million in the quarter from $184.1 million in the third quarter
Revenues in the Drivetrain segment rose 13% to $604 million.
Excluding the favorable impact of foreign currencies, net sales
increased 10%, driven by increased sales of all-wheel drive
systems and transmission components in North America and Korea.
Adjusted EBIT increased 49.4% to $65.9 million from $44.1 million
in the third quarter of 2012.
BorgWarner had $920.4 million in cash as of Sep 30, 2013,
compared with $621.5 million as of Sep 30, 2012. Total debt
including notes payable was $1.3 billion as of Sep 30, 2013,
compared with $1.1 billion as of Sep 30, 2012. Consequently,
debt-to-capitalization ratio was 27.4% compared with 26.6% as of
Sep 30, 2012.
In the first nine months of 2013, net cash provided by operating
activities decreased to $514.8 million from $542.6 million in the
same period of 2012. Capital expenditures, including tooling
outlays, went up to $297.9 million from $283 million in the
Dividend & Share Repurchase
The board of directors declared a quarterly dividend of 25 cents
per share. The dividend is payable on Nov 15, 2013 to
shareholders of record as of Nov 1, 2013.
BorgWarner spent $75 million on repurchase of shares during the
quarter. During the first nine months of 2013, the company made
an expenditure of $226 million to repurchase shares.
For 2013, BorgWarner anticipates that annual sales will improve
between 3% and 4% year over year, compared with previous guidance
of 3% to 5%. Excluding the impact of 2012 dispositions, net sales
are expected to increase between 4% and 5% as compared with
previous expectation of 4% and 6%.
BorgWarner increased its net earnings expectation (excluding
non-comparable items) for the year to $5.55-$5.65 a share from
the prior guidance of $5.40-$5.55 per share. Operating margin
guidance for 2013 is 12% or more, excluding non-comparable items.
BorgWarner is a leading manufacturer of powertrain products for
major automakers. The company's products are capable of improving
vehicle performance while meeting fuel-efficiency and emission
standards. It currently retains a Zacks Rank #2 (Buy).
The company operates in 56 locations in 19 countries. Its
products are sold worldwide, primarily to original equipment
manufacturers of passenger cars, SUVs, trucks and commercial
transportation products. The company's largest customers include
Ford Motor Co.
Toyota Motor Corp.
Honda Motor Co.