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BORGWARNER SETS FULL YEAR RECORDS FOR NET SALES, OPERATING INCOME MARGIN AND EARNINGS PER SHARE IN 2014

REPORTS FOURTH QUARTER 2014 U.S. GAAP NET EARNINGS OF $0.61 PER DILUTED SHARE, OR $0.75 PER DILUTED SHARE EXCLUDING NON-COMPARABLE ITEMS

Auburn Hills, Michigan, February 12, 2015 – BorgWarner Inc. (NYSE: BWA) today reported fourth quarter 2014 U.S. GAAP net earnings of $0.61 per diluted share. Excluding non-comparable items, net earnings were $0.75 per diluted share. Net sales were $1,992 million in the quarter.

Fourth Quarter Highlights: 

  • Record net sales of $8,305 million. Excluding the impact of foreign currencies and the Wahler acquisition, net sales were up 8% from 2013.  
  • U.S. GAAP earnings of $2.86 per diluted share. Excluding net non-comparable items, 2014 earnings were $3.25 per diluted share, a record for the company, up 12% from 2013 comparable results.
  • Operating income of $964 million, or 11.6% of net sales. Excluding non-comparable items, operating income was 12.9% of net sales, a full year record.  
  • Acquired Gustav Wahler GmbH u. Co. KG., a producer of exhaust gas recirculation (EGR) valves and tubes as well as engine thermostats for both on- and off-road applications.  
  • Repurchased over 2.4 million shares of common stock.  
  • Declared a 4% increase in the quarterly cash dividend.

Full Year Highlights: Record net sales of $8,305 million. Excluding the impact of foreign currencies and the Wahler acquisition, net sales were up 8% from 2013. U.S. GAAP earnings of $2.86 per diluted share. Excluding net non-comparable items, 2014 earnings were $3.25 per diluted share, a record for the company, up 12% from 2013 comparable results. Operating income of $964 million, or 11.6% of net sales. Excluding non-comparable items, operating income was 12.9% of net sales, a full year record. Acquired Gustav Wahler GmbH u. Co. KG., a producer of exhaust gas recirculation (EGR) valves and tubes as well as engine thermostats for both on- and off-road applications. Repurchased over 2.4 million shares of common stock. Declared a 4% increase in the quarterly cash dividend.

Comment and Outlook: “2014 was a remarkably positive year for our company,” said James R. Verrier, President and Chief Executive Officer, BorgWarner. "Global adoption of our advanced powertrain technology, combined with the Wahler acquisition, drove strong net sales growth of 11.7%. Furthermore, we delivered an impressive 12.9% operating income margin, up from 12.4% in 2013, despite executing a major restructuring of the Drivetrain segment, incurring the costs of global growth and facing other macro challenges."  

"As we look ahead to 2015," Verrier continued, "we expect our backlog of net new business to drive industry-leading, low double-digit organic net sales growth as demand for our product technologies that improve fuel economy, emissions and performance, continues to accelerate around the globe.”  

On January 14, 2015, the company provided its initial guidance for 2015 net sales, earnings per diluted share, operating income as a percentage of net sales, effective tax rate and free cash flow. An update to 2015 guidance will be provided in its first quarter 2015 financial release.  

Financial Results: Net sales were $1,992 million in fourth quarter 2014, up 6% from $1,885 million in fourth quarter 2013. Net earnings in the quarter were $140 million, or $0.61 per diluted share, compared with $141 million, or $0.62 per diluted share, in fourth quarter 2013. Fourth quarter 2014 net earnings included non-comparable items of $(0.14) per diluted share. Fourth quarter 2013 net earnings included noncomparable items of $(0.17) per diluted share. These items are listed in a table attached as reconciliations of non-U.S. GAAP measures, which are provided by the company for comparison with other results, and the most directly comparable U.S. GAAP measures. The impact of foreign currencies decreased net sales by approximately $100 million and decreased net earnings by approximately $0.05 per diluted share in fourth quarter 2014 compared with fourth quarter 2013.  

Full year 2014 net sales were $8,305 million, up 12% from $7,437 million in 2013. Full year 2014 net earnings were $656 million, or $2.86 per diluted share, compared with $624 million, or $2.70 per diluted share, in 2013. Full year 2014 net earnings included non-comparable items of $(0.39) per diluted share. Full year 2013 included net non-comparable items of $(0.19) per diluted share. These items are listed in a table below as reconciliations of non-U.S. GAAP measures, which are provided by the company for comparison with other results, and the most directly comparable U.S. GAAP measures. The impact of foreign currencies decreased net sales by approximately $8 million and decreased net earnings by approximately $0.02 per diluted share in 2014 compared with 2013.  

The following table reconciles the company's non-U.S. GAAP measures included in the press release, which are provided for comparison with other results, and the most directly comparable U.S. GAAP measures:    

Net earnings per diluted share Fourth Quarter Full Year
2014 2013 2014 2013
Non – U.S. GAAP $ 0.75 $ 0.79 $ 3.25 $ 2.89
Reconciliations:
Restructuring expense (0.09) (0.15) (0.33) (0.15)
Intangible asset impairment (0.04) (0.05) (0.04) (0.05)
Pension settlement (0.01)
Program termination agreement (0.03)
Retirement related obligations (0.02)
Tax adjustments 0.02 0.05
U.S. GAAP $ 0.61 * $ 0.62 * $ 2.86 * $ 2.70 *
*Column does not add due to rounding

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