AUBURN HILLS, Mich.,
Feb. 11, 2021 /PRNewswire/ --
BorgWarner Inc. (NYSE: BWA) today reported 2020 fourth quarter and
full-year results.
Fourth Quarter Highlights:
- U.S. GAAP net sales of $3,926
million, up 53.4% compared with fourth quarter 2019.
-
- Excluding the impact of foreign currencies and the impact of
the Delphi Technologies acquisition, net sales were up 6.2%
compared with fourth quarter 2019.
- U.S. GAAP net income of $358
million, or $1.52 per diluted
share.
-
- Excluding the $0.34 per diluted
share related to non-comparable items (detailed in the table
below), adj. net income was $1.18 per
diluted share.
- U.S. GAAP operating income of $214
million, or 5.5% of net sales.
-
- Excluding the $234 million of net
pretax impacts related to non-comparable items, adj. operating
income was $448 million, or 11.4% of
net sales.
- Net cash provided by operating activities of $416 million.
-
- Free cash flow of $197
million.
Full Year Highlights:
- U.S. GAAP net sales of $10,165
million, relatively flat when compared with 2019.
-
- Excluding the impact of foreign currencies and the impact of
the Delphi Technologies acquisition and the thermostat divestiture,
net sales were down 11.0% compared with 2019.
- U.S. GAAP net income of $500
million, or $2.34 per diluted
share.
-
- Excluding $0.42 per diluted share
related to non-comparable items (detailed in the table below),
adjusted net earnings were $2.76 per
diluted share.
- U.S. GAAP operating income of $618
million, or 6.1% of net sales.
-
- Excluding the $372 million of net
pretax impacts related to non-comparable items, adjusted operating
income was $990 million, or 9.7% of
net sales.
- Net cash provided by operating activities of $1,224 million.
-
- Free cash flow of $743
million.
Financial Results:
The Company believes the following table is useful in
highlighting non-comparable items that impacted its U.S. GAAP net
earnings per diluted share. The Company defines adjusted earnings
per diluted share as earnings per diluted share adjusted to
eliminate the impact of restructuring expense, merger, acquisition
and divestiture expense, other net expenses, discontinued
operations, other gains and losses not reflective of the Company's
ongoing operations, and related tax effects.
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Earnings per
diluted share
|
$
|
1.52
|
|
|
$
|
1.06
|
|
|
$
|
2.34
|
|
|
$
|
3.61
|
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
Restructuring
expense
|
0.53
|
|
|
0.11
|
|
|
0.86
|
|
|
0.26
|
|
Merger, acquisition
and divestiture expense
|
0.13
|
|
|
0.01
|
|
|
0.38
|
|
|
0.05
|
|
Intangible asset
accelerated amortization
|
0.13
|
|
|
—
|
|
|
0.14
|
|
|
—
|
|
Amortization of
inventory step-up
|
0.09
|
|
|
—
|
|
|
0.10
|
|
|
—
|
|
Asset impairment and
loss on divestiture
|
—
|
|
|
0.03
|
|
|
0.08
|
|
|
0.03
|
|
Net gain on insurance
recovery for property damage
|
—
|
|
|
—
|
|
|
(0.04)
|
|
|
—
|
|
Unfavorable
arbitration loss
|
—
|
|
|
—
|
|
|
—
|
|
|
0.07
|
|
Officer stock awards
modification
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
Gain on derecognition
of subsidiary
|
—
|
|
|
(0.02)
|
|
|
—
|
|
|
(0.02)
|
|
Unrealized gain on
equity securities*
|
(1.26)
|
|
|
—
|
|
|
(1.36)
|
|
|
—
|
|
Delayed-draw term loan
cancellation
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Pension settlement
loss
|
0.02
|
|
|
—
|
|
|
0.02
|
|
|
0.10
|
|
Tax
adjustments
|
0.02
|
|
|
(0.02)
|
|
|
0.23
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings
per Diluted Share
|
$
|
1.18
|
|
|
$
|
1.17
|
|
|
$
|
2.76
|
|
|
$
|
4.13
|
|
*On December 29,
2020, through a business combination of Romeo Systems, Inc. and RMG
Acquisition Corporation, a new entity Romeo Power,
Inc. became a publicly listed company. In the fourth quarter of
2020, the Company recorded a net after-tax gain of $298 million to
record its
investment in Romeo Power Inc. at fair value. For full year 2020,
the Company recorded a net after-tax gain of $291 million for fair
value
adjustments to this investment.
|
Net sales were $3,926 million for
the fourth quarter 2020, up 53.4% from $2,559 million for the fourth quarter 2019 due
primarily to the acquisition of Delphi Technologies and increased
demand for the Company's products. The impact of foreign currencies
increased net sales by approximately $88
million. Net income for the fourth quarter 2020 was
$358 million, or $1.52 per diluted share, compared with net income
of $220 million, or $1.06 per diluted share, for the fourth quarter
2019. Adj. net income per diluted share for the fourth
quarter 2020 was $1.18, compared to
adj. net income per diluted share of $1.17 for the fourth quarter 2019. Adj. net
income for the fourth quarter 2020 excluded net non-comparable
items of $0.34 per diluted share.
Adj. net income for the fourth quarter 2019 excluded net
non-comparable items of $(0.11) per
diluted share. These items are listed in the table above, which is
provided by the Company for comparison with other results and the
most directly comparable U.S. GAAP measures. Adj. net earnings per
diluted share was approximately flat on a year-over-year basis as
the impact of higher revenue and adj. net earnings from the Delphi
Technologies acquisition was offset by a higher tax rate and the
impact of additional shares issued in the fourth quarter as a
result of the acquisition.
Net sales for full year 2020 were $10,165
million, which was relatively flat when compared to
$10,168 million in 2019 as added
sales from the Delphi Technologies acquisition were primarily
offset by production disruptions arising from the COVID-19
pandemic. The impact of foreign currencies increased net sales by
approximately $22 million. Net income
for the full year 2020 was $500
million, or $2.34 per diluted
share, compared with $746 million, or
$3.61 per diluted share, for
2019. Adj. net income per share for the full year 2020 was
$2.76, down from adj. net income per
diluted share of $4.13 for 2019. Adj.
net income for the full year 2020 excluded net non-comparable items
of $(0.42) per diluted share. Adj.
net income for the full year 2019 excluded net non-comparable items
of $(0.52) per diluted share. These
items are listed in the table above, which is provided by the
Company for comparison with other results and the most directly
comparable U.S. GAAP measures. The decline in adj. net earnings per
diluted share was primarily due to lower income on lower sales
arising from the COVID-19 pandemic and a higher tax rate, partially
offset by Adj. net earnings from the Delphi Technologies
acquisition.
Net cash provided by operating activities was $1,224 million for the full year 2020 compared
with $1,008 million for the full year
of 2019. Investments in capital expenditures, including tooling
outlays, totaled $481 million for the
full year 2020 compared with $481
million for the full year 2019. Compared with the end of
2019, balance sheet debt at the end of 2020 increased $1,827 million primarily due to the Delphi
Technologies acquisition. Cash and cash equivalents increased by
$818 million compared with the full
year 2019, primarily due to the Company's cash generation in
2020.
Following the completion of the Delphi Technologies acquisition
on October 1, 2020, the Company
reorganized its management reporting structure to accommodate the
newly acquired business. Previously, the Company reported its
results under two reporting segments, Engine and Drivetrain, which
are now combined with portions of the acquired business and
referred to as Air Management and e-Propulsion & Drivetrain,
respectively. The former Delphi Technologies Powertrain Products
segment was integrated into the Air Management segment, and the
former Delphi Technologies Electronics & Electrification
segment was integrated into the e-Propulsion & Drivetrain
segment. The remaining Delphi Technologies segments comprise two
additional reporting segments, which are referred to as Fuel
Injection and Aftermarket.
Air Management Segment Results: The Air Management
segment net sales were $1,942 million
in the fourth quarter 2020 compared with $1,533 million in the fourth quarter 2019.
Excluding the impact of foreign currencies and $312 million from the acquisition of Delphi
Technologies, net sales were up 2.8% from the prior year. Adj.
earnings before interest, income taxes and non-controlling interest
("Adj. EBIT") were $301 million in
the fourth quarter 2020, compared to $264
million from the prior year. The increase in Adj. EBIT was
primarily due to the acquisition of Delphi Technologies.
e-Propulsion & Drivetrain Segment Results: The
e-Propulsion & Drivetrain segment net sales were $1,447 million in the fourth quarter 2020
compared with $1,042 million in the
fourth quarter 2019. Excluding the impact of foreign currencies and
$255 million from the acquisition of
Delphi Technologies, net sales were up 11.1% from the prior year.
Adj. EBIT was $164 million in the
fourth quarter 2020, compared to $136
million from the prior year. The increase in Adj. EBIT was
primarily due to the acquisition of Delphi Technologies.
Fuel Injection Segment Results: The Fuel Injection
segment's net sales and Adj. EBIT in the fourth quarter 2020 were
$479 million and $39 million, respectively. The Adj. EBIT margin
was 8.1% in the fourth quarter 2020. This is a new segment
following the Delphi Technologies acquisition.
Aftermarket Segment Results: The Aftermarket
segment's net sales and Adj. EBIT in the fourth quarter 2020 were
$194 million and $22 million, respectively. The Adj. EBIT margin
was 11.3% in the fourth quarter 2020. This is a new segment
following the Delphi Technologies acquisition.
Full Year 2021 Guidance: The Company has provided 2021
full year guidance. Net sales are expected to be in the range of
$14.7 billion to $15.3 billion, compared with 2020 pro forma
combined sales of $12.8 billion. This
implies a year-over-year increase in organic sales of 12% to 17%.
The Company expects its weighted light and commercial vehicle
markets to increase in the range of approximately 11% to 14% in
2021. Foreign currencies are expected to result in a year-over-year
increase in sales of approximately $355
million, primarily due to the strengthening of the Euro and
Chinese Renminbi against the U.S. dollar.
Operating margin is expected to be in the range of 8.6% to 9.5%.
Excluding the impact of non-comparable items, adjusted operating
margin is expected to be in the range of 10.0% to 10.5%. Net
earnings are expected to be within a range of $3.23 to $3.77 per
diluted share. Excluding the impact of non-comparable items,
adjusted net earnings are expected to be within a range of
$3.85 to $4.25 per diluted share. Full-year operating cash
flow is expected to be in the range of $1,450 million to $1,600
million, while free cash flow is expected to be in the range
of $800 million to $900 million.
At 9:30 a.m. ET today, a brief
conference call concerning fourth quarter and full year 2020
results and guidance will be webcast at:
http://www.borgwarner.com/en/Investors/default.aspx. Additionally,
an earnings call presentation will be available at
http://www.borgwarner.com/en/Investors/default.aspx.
BorgWarner Inc. (NYSE: BWA) is a global product leader in clean
and efficient technology solutions for combustion, hybrid and
electric vehicles. Building on its original equipment expertise,
BorgWarner also brings market leading product and service solutions
to the global aftermarket. With manufacturing and technical
facilities in 96 locations in 24 countries, the Company employs
approximately 50,000 worldwide. For more information, please visit
borgwarner.com.
Forward-Looking Statements: This press release may
contain forward-looking statements as contemplated by the 1995
Private Securities Litigation Reform Act that are based on
management's current outlook, expectations, estimates and
projections. Words such as "anticipates," "believes," "continues,"
"could," "designed," "effect," "estimates," "evaluates," "expects,"
"forecasts," "goal," "guidance," "initiative," "intends," "may,"
"outlook," "plans," "potential," "predicts," "project," "pursue,"
"seek," "should," "target," "when," "will," "would," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. Further, all statements, other than
statements of historical fact contained or incorporated by
reference in this press release that we expect or anticipate will
or may occur in the future regarding our financial position,
business strategy and measures to implement that strategy,
including changes to operations, competitive strengths, goals,
expansion and growth of our business and operations, plans,
references to future success and other such matters, are
forward-looking statements. Accounting estimates, such as those
described under the heading "Critical Accounting Policies and
Estimates" in Item 7 of our Annual Report on Form 10-K for the year
ended December 31, 2019 ("Form
10-K"), are inherently forward-looking. All forward-looking
statements are based on assumptions and analyses made by us in
light of our experience and our perception of historical trends,
current conditions and expected future developments, as well as
other factors we believe are appropriate in the circumstances.
Forward-looking statements are not guarantees of performance, and
the Company's actual results may differ materially from those
expressed, projected or implied in or by the forward-looking
statements.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Forward-looking statements are subject to risks and uncertainties,
many of which are difficult to predict and generally beyond our
control, that could cause actual results to differ materially from
those expressed, projected or implied in or by the forward-looking
statements. These risks and uncertainties, among others, include:
uncertainties regarding the extent and duration of impacts of
matters associated with COVID-19, including additional production
disruptions; the failure to realize the expected benefits of the
acquisition of Delphi Technologies PLC that the Company completed
on October 1, 2020; the failure to
promptly and effectively integrate acquired businesses; the
potential for unknown or inestimable liabilities relating to
acquired businesses; our dependence on automotive and truck
production, both of which are highly cyclical and subject to
disruptions; our reliance on major OEM customers; commodities
availability and pricing; supply disruptions; fluctuations in
interest rates and foreign currency exchange rates; availability of
credit; our dependence on key management; our dependence on
information systems; the uncertainty of the global economic
environment; the outcome of existing or any future legal
proceedings, including litigation with respect to various claims;
future changes in laws and regulations, including, by way of
example, tariffs, in the countries in which we operate; impacts
from any potential future acquisition or divestiture transactions;
and the other risks, including by way of example, pandemics and
quarantines, noted in reports that we file with the Securities and
Exchange Commission, including Item 1A, "Risk Factors" in our most
recently-filed Form 10-K and in our most recently-filed Form 10-Q.
We do not undertake any obligation to update or announce publicly
any updates to or revisions to any of the forward-looking
statements in this press release to reflect any change in our
expectations or any change in events, conditions, circumstances, or
assumptions underlying the statements.
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
(in millions, except
per share amounts)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
3,926
|
|
|
$
|
2,559
|
|
|
$
|
10,165
|
|
|
$
|
10,168
|
|
Cost of
sales
|
3,154
|
|
|
2,014
|
|
|
8,255
|
|
|
8,067
|
|
Gross
profit
|
772
|
|
|
545
|
|
|
1,910
|
|
|
2,101
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
350
|
|
|
205
|
|
|
951
|
|
|
873
|
|
Other operating
expense (income), net
|
208
|
|
|
(138)
|
|
|
341
|
|
|
(75)
|
|
Operating
income
|
214
|
|
|
478
|
|
|
618
|
|
|
1,303
|
|
|
|
|
|
|
|
|
|
Equity in affiliates'
earnings, net of tax
|
(8)
|
|
|
(7)
|
|
|
(18)
|
|
|
(32)
|
|
Unrealized gain on
equity securities
|
(391)
|
|
|
—
|
|
|
(382)
|
|
|
—
|
|
Interest
income
|
(4)
|
|
|
(3)
|
|
|
(12)
|
|
|
(12)
|
|
Interest
expense
|
23
|
|
|
12
|
|
|
73
|
|
|
55
|
|
Other postretirement
(income) expense, net
|
(2)
|
|
|
1
|
|
|
(7)
|
|
|
27
|
|
Earnings before income
taxes and noncontrolling interest
|
596
|
|
|
475
|
|
|
964
|
|
|
1,265
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
211
|
|
|
238
|
|
|
397
|
|
|
468
|
|
Net
earnings
|
385
|
|
|
237
|
|
|
567
|
|
|
797
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
27
|
|
|
17
|
|
|
67
|
|
|
51
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
358
|
|
|
$
|
220
|
|
|
$
|
500
|
|
|
$
|
746
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to BorgWarner Inc. — diluted
|
$
|
1.52
|
|
|
$
|
1.06
|
|
|
$
|
2.34
|
|
|
$
|
3.61
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding — diluted
|
236.0
|
|
|
206.9
|
|
|
214.0
|
|
|
206.8
|
|
|
|
|
|
|
|
|
|
Supplemental
Financial Information (Unaudited)
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Capital expenditures,
including tooling outlays
|
$
|
219
|
|
|
$
|
135
|
|
|
$
|
481
|
|
|
$
|
481
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
229
|
|
|
$
|
115
|
|
|
$
|
568
|
|
|
$
|
439
|
|
BorgWarner
Inc.
|
|
|
|
|
|
|
|
Net Sales by
Reporting Segment (Unaudited)
|
|
|
|
|
|
|
(in
millions)
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Air
Management
|
$
|
1,942
|
|
|
$
|
1,533
|
|
|
$
|
5,678
|
|
|
$
|
6,214
|
|
e-Propulsion &
Drivetrain
|
1,447
|
|
|
1,042
|
|
|
3,989
|
|
|
4,015
|
|
Fuel
Injection
|
479
|
|
|
—
|
|
|
479
|
|
|
—
|
|
Aftermarket
|
194
|
|
|
—
|
|
|
194
|
|
|
—
|
|
Inter-segment
eliminations
|
(136)
|
|
|
(16)
|
|
|
(175)
|
|
|
(61)
|
|
Net sales
|
$
|
3,926
|
|
|
$
|
2,559
|
|
|
$
|
10,165
|
|
|
$
|
10,168
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
Earnings Before Interest, Income Taxes and Noncontrolling Interest
("Segment Adj. EBIT") (Unaudited)
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December
31,
|
|
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Air
Management
|
$
|
301
|
|
|
$
|
264
|
|
|
$
|
762
|
|
|
$
|
995
|
|
e-Propulsion &
Drivetrain
|
164
|
|
|
136
|
|
|
359
|
|
|
443
|
|
Fuel
Injection
|
39
|
|
|
—
|
|
|
39
|
|
|
—
|
|
Aftermarket
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
Segment Adjusted
EBIT
|
526
|
|
|
400
|
|
|
1,182
|
|
|
1,438
|
|
Restructuring
expense
|
131
|
|
|
31
|
|
|
203
|
|
|
72
|
|
Merger, acquisition
and divestiture expense
|
38
|
|
|
1
|
|
|
96
|
|
|
11
|
|
Intangible asset
accelerated amortization
|
38
|
|
|
—
|
|
|
38
|
|
|
—
|
|
Amortization of
inventory step-up
|
27
|
|
|
—
|
|
|
27
|
|
|
—
|
|
Asset impairment and
loss on divestiture
|
—
|
|
|
7
|
|
|
17
|
|
|
7
|
|
Net gain on insurance
recovery for property damage
|
—
|
|
|
—
|
|
|
(9)
|
|
|
—
|
|
Gain on derecognition
of subsidiary
|
—
|
|
|
(177)
|
|
|
—
|
|
|
(177)
|
|
Unfavorable
arbitration loss
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Officer stock awards
modification
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Corporate, including
stock-based compensation
|
78
|
|
|
60
|
|
|
192
|
|
|
206
|
|
Equity in affiliates'
earnings, net of tax
|
(8)
|
|
|
(7)
|
|
|
(18)
|
|
|
(32)
|
|
Unrealized gain on
equity securities
|
(391)
|
|
|
—
|
|
|
(382)
|
|
|
—
|
|
Interest
income
|
(4)
|
|
|
(3)
|
|
|
(12)
|
|
|
(12)
|
|
Interest
expense
|
23
|
|
|
12
|
|
|
73
|
|
|
55
|
|
Other postretirement
(income) expense
|
(2)
|
|
|
1
|
|
|
(7)
|
|
|
27
|
|
Earnings before income
taxes and noncontrolling interest
|
596
|
|
|
475
|
|
|
964
|
|
|
1,265
|
|
Provision for income
taxes
|
211
|
|
|
238
|
|
|
397
|
|
|
468
|
|
Net
earnings
|
385
|
|
|
237
|
|
|
567
|
|
|
797
|
|
Net earnings
attributable to the noncontrolling interest, net of tax
|
27
|
|
|
17
|
|
|
67
|
|
|
51
|
|
Net earnings
attributable to BorgWarner Inc.
|
$
|
358
|
|
|
$
|
220
|
|
|
$
|
500
|
|
|
$
|
746
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(in
millions)
|
|
|
|
|
December 31,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
1,650
|
|
|
$
|
832
|
|
Receivables,
net
|
2,919
|
|
|
1,921
|
|
Inventories,
net
|
1,286
|
|
|
807
|
|
Prepayments and other
current assets
|
312
|
|
|
276
|
|
Total current
assets
|
6,167
|
|
|
3,836
|
|
|
|
|
|
Property, plant and
equipment, net
|
4,591
|
|
|
2,925
|
|
Other non-current
assets
|
5,276
|
|
|
2,941
|
|
Total
assets
|
$
|
16,034
|
|
|
$
|
9,702
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Notes payable and
other short-term debt
|
$
|
49
|
|
|
$
|
286
|
|
Accounts
payable
|
2,352
|
|
|
1,325
|
|
Other current
liabilities
|
1,409
|
|
|
718
|
|
Total current
liabilities
|
3,810
|
|
|
2,329
|
|
|
|
|
|
Long-term
debt
|
3,738
|
|
|
1,674
|
|
Other non-current
liabilities
|
1,733
|
|
|
855
|
|
|
|
|
|
Total BorgWarner Inc.
stockholders' equity
|
6,457
|
|
|
4,706
|
|
Noncontrolling
interest
|
296
|
|
|
138
|
|
Total
equity
|
6,753
|
|
|
4,844
|
|
Total liabilities and
equity
|
$
|
16,034
|
|
|
$
|
9,702
|
|
BorgWarner
Inc.
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(in
millions)
|
Year Ended
|
|
December
31,
|
|
2020
|
|
2019
|
OPERATING
|
|
|
|
Net cash provided by
operating activities
|
$
|
1,224
|
|
|
$
|
1,008
|
|
INVESTING
|
|
|
|
Capital expenditures,
including tooling outlays
|
(481)
|
|
|
(481)
|
|
Payments for
businesses acquired, net of cash acquired
|
(449)
|
|
|
(10)
|
|
Capital expenditures
for damage to property, plant and equipment
|
(20)
|
|
|
—
|
|
Payments for
investments in equity securities
|
(2)
|
|
|
(53)
|
|
Insurance proceeds
received for damage to property, plant and equipment
|
20
|
|
|
—
|
|
Proceeds from asset
disposals and other, net
|
16
|
|
|
9
|
|
Proceeds from
settlement of net investment hedges, net
|
10
|
|
|
22
|
|
Proceeds from sale of
businesses, net of cash divested
|
—
|
|
|
24
|
|
Net cash used in
investing activities
|
(906)
|
|
|
(489)
|
|
FINANCING
|
|
|
|
Net increase
(decrease) in notes payable
|
8
|
|
|
—
|
|
Additions to
debt
|
1,178
|
|
|
63
|
|
Repayments of debt,
including current portion
|
(331)
|
|
|
(204)
|
|
Payments for debt
issuance cost
|
(10)
|
|
|
—
|
|
Payments for purchase
of treasury stock
|
(216)
|
|
|
(100)
|
|
Payments for
stock-based compensation items
|
(13)
|
|
|
(15)
|
|
Capital contribution
from noncontrolling interest
|
4
|
|
|
4
|
|
Dividends paid to
BorgWarner stockholders
|
(146)
|
|
|
(140)
|
|
Dividends paid to
noncontrolling stockholders
|
(37)
|
|
|
(28)
|
|
Net cash provided by
(used in) financing activities
|
437
|
|
|
(420)
|
|
Effect of exchange
rate changes on cash
|
63
|
|
|
(6)
|
|
Net increase in cash
and cash equivalents
|
818
|
|
|
93
|
|
Cash and cash
equivalents at beginning of year
|
832
|
|
|
739
|
|
Cash and cash
equivalents at end of year
|
$
|
1,650
|
|
|
$
|
832
|
|
Non-GAAP Financial Measures
This press release contains information about BorgWarner's
financial results that is not presented in accordance with
accounting principles generally accepted in the United States ("GAAP").
Such non-GAAP financial measures are reconciled to their
closest GAAP financial measures below and in the Financial Results
table above. The provision of these comparable GAAP financial
measures for 2020 is not intended to indicate that BorgWarner is
explicitly or implicitly providing projections on those GAAP
financial measures, and actual results for such measures are likely
to vary from those presented. The reconciliations include all
information reasonably available to the Company at the date of this
press release and the adjustments that management can reasonably
predict.
Management believes that these non-GAAP financial measures are
useful to management, investors, and banking institutions in their
analysis of the Company's business and operating performance.
Management also uses this information for operational planning and
decision-making purposes.
Non-GAAP financial measures are not and should not be considered
a substitute for any GAAP measure. Additionally, because not all
companies use identical calculations, the non-GAAP financial
measures as presented by BorgWarner may not be comparable to
similarly titled measures reported by other companies.
Adjusted Operating Income and Adjusted Operating
Margin
The Company defines adjusted operating income as operating
income adjusted to eliminate the impact of restructuring expense,
merger, acquisition and divestiture expense, other net expenses,
discontinued operations, and other gains and losses not reflective
of the Company's ongoing operations. Adjusted operating margin is
defined as adjusted operating income divided by net sales.
Adjusted Earnings per Diluted Share
The Company defines adjusted earnings per diluted share as
earnings per diluted share adjusted to eliminate the impact of
restructuring expense, merger, acquisition and divestiture expense,
other net expenses, discontinued operations, other gains and losses
not reflective of the Company's ongoing operations, and related tax
effects.
Free Cash Flow
The Company defines free cash flow as net cash provided by
operating activities minus capital expenditures and it is useful to
both management and investors in evaluating the Company's ability
to service and repay its debt.
Adjusted Operating
Income and Adjusted Operating Margin
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
December
31,
|
|
December
31,
|
|
(in
millions)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net sales
|
$
|
3,926
|
|
$
|
2,559
|
|
$
|
10,165
|
|
$
|
10,168
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
772
|
|
$
|
545
|
|
$
|
1,910
|
|
$
|
2,101
|
|
Gross
margin
|
19.7%
|
|
21.3%
|
|
18.8%
|
|
20.7%
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
214
|
|
478
|
|
618
|
|
1,303
|
|
Operating
margin
|
5.5%
|
|
18.7%
|
|
6.1%
|
|
12.8%
|
|
|
|
|
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
|
|
|
|
|
Restructuring
expense
|
$
|
131
|
|
$
|
31
|
|
$
|
203
|
|
$
|
72
|
|
Merger, acquisition
and divestiture expense
|
38
|
|
1
|
|
96
|
|
11
|
|
Intangible asset
accelerated amortization
|
38
|
|
—
|
|
38
|
|
—
|
|
Amortization of
inventory step-up
|
27
|
|
—
|
|
27
|
|
—
|
|
Asset impairment and
loss on divestiture
|
—
|
|
7
|
|
17
|
|
7
|
|
Net gain on insurance
recovery for property damage
|
—
|
|
—
|
|
(9)
|
|
—
|
|
Unfavorable
arbitration loss
|
—
|
|
—
|
|
—
|
|
14
|
|
Officer stock awards
modification
|
—
|
|
—
|
|
—
|
|
2
|
|
Gain on derecognition
of subsidiary
|
—
|
|
(177)
|
*
|
—
|
|
(177)
|
*
|
Adjusted operating
income
|
$
|
448
|
|
$
|
340
|
|
$
|
990
|
|
$
|
1,232
|
|
Adjusted operating
margin
|
11.4%
|
|
13.3%
|
|
9.7%
|
|
12.1%
|
|
|
|
|
|
|
|
|
|
|
*On October 30, 2019,
the Company entered into a definitive agreement with Enstar
Holdings (US) LLC ("Enstar"), a subsidiary of Enstar Group
Limited, pursuant to which Enstar acquired 100% of the equity
interests of BorgWarner Morse TEC LLC ("Morse TEC"), a consolidated
wholly-
owned subsidiary of the Company that held asbestos and certain
other liabilities. In connection with the closing, the Company
recorded a pre-tax
gain of $177 million. The tax expense associated with this
transaction was $173 million, resulting in a net after-tax gain of
$4 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
Quarterly Net Sales and Adjusted Operating Income
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Q1 2020
|
|
Q2 2020
|
|
Q3 2020
|
|
Q4 2020
|
|
FY 2020
|
Net sales
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
|
1,683
|
|
$
|
961
|
|
$
|
1,750
|
|
$
|
1,942
|
|
$
|
6,336
|
e-Propulsion &
Drivetrain
|
1,032
|
|
757
|
|
1,305
|
|
1,447
|
|
4,541
|
Fuel
Injection
|
411
|
|
250
|
|
410
|
|
479
|
|
1,550
|
Aftermarket
|
174
|
|
129
|
|
195
|
|
194
|
|
692
|
Inter-segment
eliminations
|
(76)
|
|
(43)
|
|
(72)
|
|
(136)
|
|
(327)
|
Total net
sales
|
$
|
3,224
|
|
$
|
2,054
|
|
$
|
3,588
|
|
$
|
3,926
|
|
$
|
12,792
|
|
|
|
|
|
|
|
|
|
|
Total Adjusted
Operating Income (Loss)
|
$
|
274
|
|
$
|
(52)
|
|
$
|
396
|
|
$
|
448
|
|
1,066
|
Total Adjusted
Operating Income Margin
|
8.5%
|
|
(2.5)%
|
|
11.0%
|
|
11.4%
|
|
8.3%
|
On October 1, 2020
BorgWarner completed its acquisition of Delphi Technologies PLC
(Delphi Technologies). The 2020 pro forma unaudited
quarterly financial information included herein includes the pro
forma combined results of BorgWarner and Delphi Technologies for
periods prior to
October 1, 2020. The pro forma financial information has been
derived from the unaudited consolidated financial statements
included in
BorgWarner's and Delphi Technologies' Quarterly Report on Form 10-Q
for the three and six months ended June 30, 2020 and does not
give
effect to the transaction on periods prior to October 1, 2020. The
pro forma financial information is not necessarily indicative of
either the actual
consolidated results had the acquisition of Delphi Technologies
occurred on January 1, 2020 or of future operating
results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
2020 Organic Net Sales Change
|
|
|
(in
millions)
|
Q4 2019
Net Sales
|
|
FX
|
|
Delphi
Technologies
Impact
|
|
Market Impact,
Pricing & Other
|
|
Q4 2020
Net Sales
|
|
Organic
Net Sales
Change
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
|
1,533
|
|
$
|
54
|
|
$
|
312
|
|
$
|
43
|
|
$
|
1,942
|
|
2.8%
|
e-Propulsion &
Drivetrain
|
1,042
|
|
34
|
|
255
|
|
116
|
|
1,447
|
|
11.1%
|
Fuel
Injection
|
—
|
|
—
|
|
479
|
|
—
|
|
479
|
|
—
|
Aftermarket
|
—
|
|
—
|
|
194
|
|
—
|
|
194
|
|
—
|
Inter-segment
eliminations
|
(16)
|
|
—
|
|
(120)
|
|
—
|
|
(136)
|
|
—
|
Total net
sales
|
$
|
2,559
|
|
$
|
88
|
|
$
|
1,120
|
|
$
|
159
|
|
$
|
3,926
|
|
6.2%
|
Full Year 2020
Organic Net Sales Change
|
|
|
(in
millions)
|
2019 Net
Sales
|
|
FX
|
|
Delphi
Technologies
Impact
|
|
Thermostat
Sale
|
|
Market Impact,
Pricing & Other
|
|
2020 Net
Sales
|
|
Organic
Net Sales
Change
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Air
Management
|
$
|
6,214
|
|
$
|
15
|
|
$
|
312
|
|
$
|
(30)
|
|
$
|
(833)
|
|
$
|
5,678
|
|
(13.5)%
|
e-Propulsion &
Drivetrain
|
4,015
|
|
7
|
|
255
|
|
—
|
|
(288)
|
|
3,989
|
|
(7.2)%
|
Fuel
Injection
|
—
|
|
—
|
|
479
|
|
—
|
|
—
|
|
479
|
|
—
|
Aftermarket
|
—
|
|
—
|
|
194
|
|
—
|
|
—
|
|
194
|
|
—
|
Inter-segment
eliminations
|
(61)
|
|
—
|
|
(120)
|
|
—
|
|
6
|
|
(175)
|
|
—
|
Total net
sales
|
$
|
10,168
|
|
$
|
22
|
|
$
|
1,120
|
|
$
|
(30)
|
|
$
|
(1,115)
|
|
$
|
10,165
|
|
(11.0)%
|
Adjusted Operating
Income and Adjusted Operating Margin Guidance
Reconciliation
|
|
|
|
|
Full-Year 2021
Guidance
|
|
Low
|
|
High
|
Net Sales
|
$
|
14,700
|
|
|
$
|
15,300
|
|
|
|
|
|
Operating
Income
|
1,260
|
|
|
1,450
|
|
Operating
Margin
|
8.6
|
%
|
|
9.5
|
%
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring and
other expense
|
$
|
200
|
|
|
$
|
150
|
|
Merger, acquisition
and divestiture expense
|
10
|
|
|
10
|
|
Adjusted Operating
Income
|
$
|
1,470
|
|
|
$
|
1,610
|
|
Adjusted Operating
Margin
|
10.0
|
%
|
|
10.5
|
%
|
Adjusted Earnings
Per Diluted Share Guidance Reconciliation
|
|
|
|
|
Full-Year 2021
Guidance
|
|
Low
|
|
High
|
Earnings per
Diluted Share
|
$
|
3.23
|
|
|
$
|
3.77
|
|
|
|
|
|
Non-comparable
items:
|
|
|
|
Restructuring
expense
|
0.58
|
|
|
0.44
|
|
Merger, acquisition
and divestiture expense
|
0.04
|
|
|
0.04
|
|
|
|
|
|
Adjusted Earnings
per Diluted Share
|
$
|
3.85
|
|
|
$
|
4.25
|
|
Free Cash Flow
Reconciliation
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided by
operating activities
|
$
|
416
|
|
|
$
|
184
|
|
|
$
|
1,224
|
|
|
$
|
1,008
|
|
Derecognition of
subsidiary
|
—
|
|
|
172
|
|
|
—
|
|
|
172
|
|
Capital expenditures,
including tooling outlays
|
(219)
|
|
|
(135)
|
|
|
(481)
|
|
|
(481)
|
|
Free cash
flow
|
$
|
197
|
|
|
$
|
221
|
|
|
$
|
743
|
|
|
$
|
699
|
|
Free Cash Flow
Outlook Reconciliation
|
|
Full-Year 2021
Guidance
|
|
Low
|
|
High
|
Net cash provided by
operating activities
|
$
|
1,450
|
|
|
$
|
1,600
|
|
Capital expenditures,
including tooling outlays
|
(650)
|
|
|
(700)
|
|
Free cash
flow
|
$
|
800
|
|
|
$
|
900
|
|
Key Definitions
The terms below are commonly used by management and investors in
assessing ongoing financial performance.
Organic Net Sales Change: BorgWarner net sales change year over
year excluding the estimated impact of foreign exchange (FX) and
net M&A.
Market: For 2020, light vehicle production weighted for
BorgWarner's geographic exposure as estimated by BorgWarner.
For 2021, light and commercial vehicle production weighted for
BorgWarner's geographic exposure as estimated by BorgWarner.
Outgrowth: For 2020, BorgWarner's "Organic Net Sales Change" vs.
year-over-year change in "Market". For 2021 "Organic Net Sales
Change" excluding Aftermarket segment vs. year-over-year change in
"Market".
View original content to download
multimedia:http://www.prnewswire.com/news-releases/borgwarner-reports-fourth-quarter-2020-net-sales-increased-compared-with-fourth-quarter-2019-and-net-cash-provided-by-operating-activities-of-416-million-301226529.html
SOURCE BorgWarner