Comment and Outlook: 'The year got off to a
strong start, with excellent results in Europe and Asia,' said
Tim Manganello, Chairman and CEO. 'Despite recession worries,
we are seeing stable growth driven by our product technologies that
improve fuel economy, lower emissions and provide better vehicle
performance. Our sales outside of the U.S. were up 15%, excluding the
impact of currency, compared with vehicle production outside of the U.S.
that was up only 4%. Our sales in the U.S. declined 4% due to lower U.S.
vehicle production, which was down 8%.'
Commenting on the remainder of the year,
Manganello pointed to the Company's reaffirmation of its 2008 earnings
guidance in the range of $2.85 to $3.00 per diluted
share, which implies earnings growth of 20% to 25% compared with 2007.
'We expect 2008 to be another record year for BorgWarner,' he said.
'Consumers want better fuel economy and reduced emissions in every
region of the world. These needs are driving demand for BorgWarner's
leading powertrain technologies like turbochargers and dual-clutch
transmission modules for which we are launching new programs and
expanding capacity. The strength of the platforms we are on has allowed
us to more than offset general vehicle schedule declines, and will
enable our continued growth to outpace that of the industry in the
future.'
Financial Results: For first quarter
2008, sales were up 17% to $1,498.9 million, compared
with $1,277.8 million in first quarter 2007. Net income
in the quarter was $88.7 million, or $0.75
per diluted share, compared with $58.4 million, or
$0.50
per diluted share in first quarter 2007 adjusted for the two-for-one
stock split on December 17, 2007. The impact of foreign
currencies, primarily the Euro, increased sales by $115.3
in first quarter 2008 compared with first quarter 2007, and net income
by $7.3 million, or $0.06 per diluted
share adjusted for the two-for-one stock split.
Operating income was $126.7
million, or 8.5% of sales, in first quarter 2008 versus
$89.9 million, or 7.0% of sales, in first quarter 2007. First
quarter 2007 operating income and net income were negatively impacted by
a warranty related charge of $14.0 million
pre-tax or $0.085 per diluted share. Research and
development spending was $57.5 million in the quarter
versus $50.9 million in 2007.
Net cash provided by operating activities
was $74.5 million
in first quarter 2008 versus $82.6 million in first
quarter 2007. Investments in capital expenditures, including tooling
outlays, totaled $75.4 million for the quarter, compared
with $58.3 million for the same period in 2007. The
company also repurchased $13.5 million
of its stock during the quarter.
Balance sheet debt increased by
$93 million and cash increased by $15 million in
first quarter 2008 compared with the end of 2007.
Engine Group Results: Strong global
demand for its turbochargers boosted Engine Group first quarter 2008
sales 23% versus first quarter 2007 to $1,098.1 million
with earnings before interest and taxes at $137.9 million.
Sales outside of the U.S. were up 16% excluding the impact of foreign
currencies. Demand outside of the U.S. for the group's engine timing,
ignition, emissions and thermal products helped offset lower domestic
sales of those products, which were lower primarily due to lower
domestic vehicle production.
Drivetrain Group Results: First quarter
2008 sales were up 5% versus first quarter 2007 to $409.8 million
with earnings before interest and income taxes at $18.3 million.
Sales outside of the U.S. were up 12%, excluding the impact of foreign
currencies, as the group continued to benefit from increased demand for
dual-clutch transmission and torque transfer products. Sales in the U.S.
were down 10% primarily due to lower domestic vehicle production. The
decline in the group's earnings before interest and taxes in the quarter
was related to challenging new product launches outside of the U.S. and
lower North American sales of light trucks and SUVs equipped with our
products.
Recent Highlights: Continued global
expansion to meet the demand for its fuel efficient products saw
BorgWarner expanding, breaking ground or opening a number of facilities
in recent months. In the Engine segment, BorgWarner Turbo & Emissions
Systems broke ground for a new production facility in Rzeszow, Poland.
BorgWarner Thermal Systems opened a new facility in Ningbo, China and
broke ground for a new facility near Chennai, India.
In addition, the company's Board of
Directors approved the investment of approximately $125 million
to increase its global turbocharger capacity by more than three million
units over the next several years. The increased capacity will support
new business awards in North America, Europe and Asia. The projects
include new facilities to produce turbochargers in Mexico for Ford and
in Thailand for a major Japanese automaker. Expansion of facilities in
Hungary and Poland will provide turbochargers for both diesel and
gasoline engine programs in Europe. The world market for turbochargers
is expected to grow over 40% in the next five years.
To serve the growing market for
dual-clutch transmission technology, BorgWarner opened its second
manufacturing facility on its Drivetrain campus in Arnstadt, Germany,
doubling the manufacturing area of the current site. Construction is
also underway for a new Drivetrain facility in Ramos, Mexico. The
facility will produce dual-clutch transmission modules to serve the
North American market in addition to other drivetrain products.
In other action, the company's Board of
Directors authorized the repurchase of an additional 5 million shares of
common stock. The new authorization was made in anticipation of
exhausting the limited number of shares that remain available under the
previous program authorized in 2000. The company has maintained share
repurchase programs since 1997.
Auburn Hills, Michigan-based
BorgWarner Inc. (NYSE: BWA) is a product leader in highly engineered
components and systems for vehicle powertrain applications worldwide.
The FORTUNE 500 company operates manufacturing and technical facilities
in 64 locations in 17 countries. Customers include VW/Audi, Ford,
Toyota, Renault/Nissan, General Motors, Hyundai/Kia, Daimler, Chrysler,
Fiat, BMW, Honda, John Deere, PSA, and MAN. The Internet address for
BorgWarner is: www.borgwarner.com.
Source:
BorgWarner Press Release