BorgWarner Inc. reported fourth quarter 2013 U.S. GAAP earnings of $0.62 per diluted share.
Excluding non-comparable items, net earnings were $0.79 per diluted share. Net sales were $1,885 million in the quarter.
In a release on February 13, the company noted earnings details:
Fourth Quarter Highlights:
-Net sales of $1,885 million.
-Excluding the impact of foreign currencies and 2012 dispositions, net sales were up 9 percent compared with fourth quarter 2012.
-U.S. GAAP earnings of $0.62 per diluted share.
-Excluding the $(0.20) per diluted share impact of restructuring activities, and $0.02 per diluted share related to net tax adjustments, net earnings were $0.79 per diluted share, up 36 percent from fourth quarter 2012.
-Operating income of $188 million, or 10.0 percent of net sales.
-Excluding the $52 million pretax impact of restructuring activities, operating income was $240 million, or 12.7 percent of net sales.
-Signed an agreement to acquire all shares in Gustav Wahler GmbH u. Co. KG and its general partner ("Wahler"), a producer of exhaust gas recirculation (EGR) valves, EGR tubes and thermostats.
-Implemented a two-for-one stock split.
-Contributed $138 million to the company's German pension plans.
Full Year Highlights:
-Record net sales of $7,437 million.
-Excluding the impact of foreign currencies and 2012 dispositions, net sales were up 4 percent from 2012.
-U.S. GAAP earnings of $2.70 per diluted share.
-Excluding net non-comparable items, 2013 earnings were $2.89 per diluted share, a record for the company, up 17 percent from 2012 comparable results.
-Operating income of $855 million, or 11.5 percent of net sales.
-Excluding non-comparable items, operating income was 12.4 percent of net sales, a full year record.
-Repurchased approximately 5.2 million shares of common stock in 2013. The number of shares repurchased has been adjusted for the two- for-one stock split.
Comment and Outlook: "2013 was a remarkable year for our company," said James R. Verrier, President and CEO, BorgWarner. "Faced with cost pressures and a challenging environment for growth, we maintained our focus on operational efficiency and cost management and achieved record profitability. Additionally, we signed an agreement to purchase Wahler, a leading producer of EGR valves, EGR tubes and thermostats. This strategic acquisition will strengthen our competitive position in EGR systems, a technology automakers and commercial vehicle makers are rapidly adopting to help improve fuel economy and meet tightening emissions standards around the world."
"As we look ahead to 2014, we expect organic net sales growth of 7 percent to 11 percent compared with 2013, earnings of $3.10 to $3.25 per diluted share and an operating income margin of 12.5 percent or better. This excludes the impact of the pending Wahler acquisition. A return to historical growth rates, combined with improved operational proficiency, should result in another great year for BorgWarner in 2014," said Verrier.
Financial Results: Net sales were $1,885 million in fourth quarter 2013, up 10 percent from $1,719 million in fourth quarter 2012. Net earnings in the quarter were $141 million, or $0.62 per diluted share, compared with $121 million, or $0.51 per diluted share, in fourth quarter 2012. Fourth quarter 2013 net earnings included net non-comparable items of $(0.18) per diluted share. Fourth quarter 2012 net earnings included non-comparable items of $(0.07) per diluted share.
Full year 2013 net sales were $7,437 million, up 4 percent compared with $7,183 million in 2012. Full year 2013 net earnings were $624 million, or $2.70 per diluted share, compared with $501 million, or $2.09 per diluted share, in 2012. Full year 2013 net earnings included net non-comparable items of $(0.20) per diluted share. Full year 2012 net earnings included non-comparable items of $(0.40) per diluted share.
Net cash provided by operating activities was $719 million in 2013 compared with $879 million in 2012. Investments in capital expenditures, including tooling outlays, totaled $418 million in 2013, compared with $407 million in 2012. Balance sheet debt increased by $155 million and cash increased by $224 million compared with the end of 2012. The $68 million decrease in balance sheet debt (net of cash) was primarily due to net cash provided by operating activities partially offset by capital expenditures, share repurchases and dividends paid to stockholders. The ratio of balance sheet debt (net of cash) to capital was 7.2 percent at the end of 2013 compared with 10.0 percent at the end of 2012.
Engine Segment Results: Engine segment net sales were $1,266 million in fourth quarter 2013 compared with $1,167 million in fourth quarter 2012. Excluding the impact of foreign currencies and 2012 dispositions, net sales were up 8 percent from the prior year's quarter, primarily due to higher sales of turbochargers, engine timing devices and EGR coolers around the world. Adjusted earnings before interest, income taxes and non-controlling interest ("Adjusted EBIT") were $208 million in fourth quarter 2013, up 14 percent from $182 million in fourth quarter 2012.
Drivetrain Segment Results: Drivetrain segment net sales were $628 million in fourth quarter 2013 compared with $559 million in fourth quarter 2012. Excluding the impact of foreign currencies, net sales were up 10 percent from the prior year's quarter, primarily due to higher sales of all-wheel drive systems, traditional transmission components and dual clutch transmission modules around the world. Adjusted EBIT was $71 million in fourth quarter 2013, up 43 percent from $49 million in fourth quarter 2012.
-The board of directors approved a two-for-one stock split effected in the form of a stock dividend on the company's common stock. To implement the stock split, shares of common stock were distributed on December 16, 2013 to all stockholders of record as of the close of business on December 2, 2013.
-In November, the company reported an expected backlog of $2.9 billion of net new business for the period 2014 through 2016. Demand for the company's advanced powertrain technologies, such as gasoline and diesel turbochargers, all-wheel drive systems, engine timing systems including variable cam timing, and emissions products, is expected to continue to drive strong growth.
-BorgWarner introduced the world's first electronic limited slip differential designed for the front transaxle of a front-wheel drive vehicle on the 2013 Volkswagen Golf GTI with Performance Pack. Known as front cross differential (FXD) technology, the system greatly enhances vehicle traction, handling and stability without sacrificing engine power. Under certain driving conditions, the FXD technology's enhanced vehicle performance approaches that of an all- wheel drive system but costs less and offers better fuel economy.
-BorgWarner has signed an agreement to acquire all shares in Gustav Wahler GmbH u. Co. KG and its general partner, a producer of EGR valves, EGR tubes and thermostats, subject to regulatory approvals. With locations in Germany, Brazil, the U.S., China and Slovakia, Wahler employs approximately 1,250 people and supplies customers such as Daimler, Volkswagen, BMW, GM and John Deere. Wahler's sales for 2013 are expected to be approximately $350 million.
BorgWarner Inc. is a provider of highly engineered components and systems for powertrains around the world.
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