) fell 2.2% and closed at $60.91 on Aug 1, despite posting an 18.7%
increase in adjusted earnings on Jul 31, owing to the impact of
overall market movement. Adjusted earnings improved to 89 cents per
share in the second quarter of 2014 from 75 cents in the prior-year
quarter. Also, earning per share outpaced the Zacks Consensus
Estimate of 87 cents.
Including the impact of non-comparable items, BorgWarner recorded
earnings of $190.2 million or 83 cents per share in the second
quarter of 2014, reflecting an increase from $174.1 million or 75
cents per share a year ago.
Borgwarner Inc - Earnings Surprise |
Revenues improved 16% year over year to $2.2 billion, in line
with the Zacks Consensus Estimate. The sales improvement was driven
by global adoption of the powertrain technology, together with
benefits from the recent Wahler takeover. Excluding the impact of
foreign currencies in both 2013 and 2014 and the Gustav Wahler
acquisition in 2014, revenues went up 8% year over year.
Operating income increased 15.3% to $280.6 million from $243.4
million in the second quarter of 2013. Adjusted operating income
stood at $296 million, or 13.5% of net sales.
Revenues in the
rose 16.3% to $1.49 billion. Excluding the impact of foreign
currencies and synergies from the Gustav Wahler acquisition, net
sales went up 6% in the segment, driven by higher sales of
turbochargers and engine timing devices.
Adjusted earnings before interest, income taxes and non-controlling
interest (adjusted EBIT) increased 10% to $242 million in the
quarter from $220 million in the second quarter of 2013.
Revenues in the
rose 15.5% to $709 million. Excluding the impact of foreign
currencies, net sales increased 13% on increased global sales of
all-wheel drive systems, traditional transmission components and
dual clutch transmission modules. Adjusted EBIT increased 48.3% to
$89 million from $60 million in the second quarter of 2013.
BorgWarner had $771.4 million in cash as of Jun 30, 2014, compared
with $939.5 million as of Dec 31, 2013. Total debt, including notes
payable, stood at $1.24 billion as of Jun 30, 2014, compared with
$1.22 billion as of Dec 31, 2013.
In the first half of 2014, net cash from operating activities
increased to $326.2 million from $300 million in the comparable
prior-year period. Capital expenditures, including tooling outlays,
went up to $257.3 million from $194.8 million in the first half of
For 2014, BorgWarner's organic sales are expected to increase
13-15%, up from the previous guidance of 12-15%. Further, the
company expects net earnings (excluding non-comparable items) for
the year in the band of $3.25-$3.35 per share, up from the previous
projection of $3.15-$3.30 a share. Operating margin for 2014 will
likely be up 13%, improving from the previous guidance of 12.5% or
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. BorgWarner operates in 60 locations across 19 countries.
Also, the company's products are sold worldwide, primarily to
original equipment manufacturers of passenger cars, SUVs, trucks
and commercial transportation products.
BorgWarner currently carries a Zacks Rank #3 (Hold). Better-ranked
stocks worth considering in the same industry are Meritor Inc. (
), China Automotive Systems Inc. (
) and Magna International Inc. (
). Both Meritor and China Automotive sport a Zacks Rank #1 (Strong
Buy), while Magna International carries a Zacks Rank #2 (Buy).
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BORG WARNER INC (BWA): Free Stock Analysis
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