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BorgWarner (BWA) Beats on Q4 Earnings, Misses on Revenues
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BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of 85 cents per share in the fourth quarter of 2016, marginally beating the Zacks Consensus Estimate of 84 cents. Adjusted earnings increased from 77 cents per share reported in the year-ago quarter. Including the impact of non-comparable items, BorgWarner recorded loss of $293 million or $1.39 per share in fourth quarter of 2016, versus earnings of $125 million or 56 cents per share reported a year ago.
Revenues increased 6.4% year over year to $2.26 billion, missing the Zacks Consensus Estimate of $2.30 billion. Excluding the impact of foreign currencies and the Remy International acquisition, net revenues went up 6.6% year over year.
Operating loss amounted to $458 million versus operating income of $200.5 million in the fourth quarter of 2015. Adjusted operating income came in at $284 million, or 12.6% of net sales.
BorgWarner recorded adjusted earnings of $3.27 per share in 2016, beating the Zacks Consensus Estimate of $3.26. In comparison, the company had generated earnings of $3.04 per share in 2015.
Net income (on a reported basis) amounted to $119 million or 55 cents per share, compared with $610 million or $2.70 per share in 2015.
Revenues increased 13.1% to $9.07 billion from $8.02 billion in 2015. However, the figure missed the Zacks Consensus Estimate of $9.11 billion. Excluding the impact of foreign currencies and the Remy International acquisition, revenues went up 5.2% year over year.
Segment Details
Revenues in the Engine segment dipped 0.7% year over year to $1.39 billion. Excluding the impact of foreign currencies, net sales went up 1.3% in the segment.
Adjusted earnings before interest, income taxes and non-controlling interest (adjusted EBIT) improved to $247.7 million in the reported quarter from $230.4 million a year ago.
Revenues in the Drivetrain segment grew 20.1% to $883 million. Excluding the impact of foreign currencies and the Remy International acquisition, net sales rose 16.9% year over year. Adjusted EBIT improved to $91 million from $81.2 million in the fourth quarter of 2015.
Financial Position
BorgWarner had $443.7 million in cash as of Dec 31, 2016, compared with $577.7 million as of Dec 31, 2015. Total debt, including notes payable, was $2.22 billion as of Dec 31, 2016, compared with $2.55 billion as of Dec 31, 2015.
In 2016, net cash from operating activities increased to $1.04 billion from $868 million in the year-ago period. Capital expenditures, including tooling outlays, fell to $501 million from $577 million in 2015.
Outlook
Net sales growth for first-quarter 2017 is projected in the range of 2.5–6.5%. The Remy light vehicle aftermarket sale is expected to have a negative impact of $70 million. Also, foreign currencies are expected to have a negative impact of $60 million or 2.7%.
Net earnings for the first quarter of 2017 are expected in the band of 81–85 cents per share.
For 2017, the company expects net sales of around $8.81–$9.04 billion, which translates into organic growth rate of 3.5–6%. The company expects negative impact of foreign currencies due to the depreciation of the Euro, Yuan and Pound of $320 million. Also, a negative impact of around $235 million due to the sale of the Remy light vehicle aftermarket business is expected by the company.
Further, BorgWarner expects net earnings in the range of $3.35–$3.45 per share in 2017. Operating margin for 2017 is expected to improve by 40 to 50 basis points.
Price Performance
BorgWarner has outperformed the Zacks categorized Automotive-Original Equipment industry over the last three months. The company’s shares gained 18.9% over this period, compared with an 18.1% gain recorded by the industry. BorgWarner is benefiting from global expansion, capital deployment and restructuring of the Drivetrain segment.
Zacks Rank & Key Picks
BorgWarner currently carries a Zacks Rank #4 (Sell).
Some better-ranked automobile stocks include Honda Motor Co., Ltd. (HMC - Free Report) , Penske Automotive Group, Inc. (PAG - Free Report) and Fox Factory Holding Corp. (FOXF - Free Report) .
Penske Automotive has expected long-term earnings per share growth rate of 8.2%. It carries a Zacks Rank #2 (Buy).
Fox Factory holds a Zacks Rank #2. The company has expected earnings growth rate of 16.6% over the long term.
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BorgWarner (BWA) Beats on Q4 Earnings, Misses on Revenues
BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of 85 cents per share in the fourth quarter of 2016, marginally beating the Zacks Consensus Estimate of 84 cents. Adjusted earnings increased from 77 cents per share reported in the year-ago quarter. Including the impact of non-comparable items, BorgWarner recorded loss of $293 million or $1.39 per share in fourth quarter of 2016, versus earnings of $125 million or 56 cents per share reported a year ago.
Revenues increased 6.4% year over year to $2.26 billion, missing the Zacks Consensus Estimate of $2.30 billion. Excluding the impact of foreign currencies and the Remy International acquisition, net revenues went up 6.6% year over year.
Operating loss amounted to $458 million versus operating income of $200.5 million in the fourth quarter of 2015. Adjusted operating income came in at $284 million, or 12.6% of net sales.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. Price, Consensus and EPS Surprise | BorgWarner Inc. Quote
2016 Results
BorgWarner recorded adjusted earnings of $3.27 per share in 2016, beating the Zacks Consensus Estimate of $3.26. In comparison, the company had generated earnings of $3.04 per share in 2015.
Net income (on a reported basis) amounted to $119 million or 55 cents per share, compared with $610 million or $2.70 per share in 2015.
Revenues increased 13.1% to $9.07 billion from $8.02 billion in 2015. However, the figure missed the Zacks Consensus Estimate of $9.11 billion. Excluding the impact of foreign currencies and the Remy International acquisition, revenues went up 5.2% year over year.
Segment Details
Revenues in the Engine segment dipped 0.7% year over year to $1.39 billion. Excluding the impact of foreign currencies, net sales went up 1.3% in the segment.
Adjusted earnings before interest, income taxes and non-controlling interest (adjusted EBIT) improved to $247.7 million in the reported quarter from $230.4 million a year ago.
Revenues in the Drivetrain segment grew 20.1% to $883 million. Excluding the impact of foreign currencies and the Remy International acquisition, net sales rose 16.9% year over year. Adjusted EBIT improved to $91 million from $81.2 million in the fourth quarter of 2015.
Financial Position
BorgWarner had $443.7 million in cash as of Dec 31, 2016, compared with $577.7 million as of Dec 31, 2015. Total debt, including notes payable, was $2.22 billion as of Dec 31, 2016, compared with $2.55 billion as of Dec 31, 2015.
In 2016, net cash from operating activities increased to $1.04 billion from $868 million in the year-ago period. Capital expenditures, including tooling outlays, fell to $501 million from $577 million in 2015.
Outlook
Net sales growth for first-quarter 2017 is projected in the range of 2.5–6.5%. The Remy light vehicle aftermarket sale is expected to have a negative impact of $70 million. Also, foreign currencies are expected to have a negative impact of $60 million or 2.7%.
Net earnings for the first quarter of 2017 are expected in the band of 81–85 cents per share.
For 2017, the company expects net sales of around $8.81–$9.04 billion, which translates into organic growth rate of 3.5–6%. The company expects negative impact of foreign currencies due to the depreciation of the Euro, Yuan and Pound of $320 million. Also, a negative impact of around $235 million due to the sale of the Remy light vehicle aftermarket business is expected by the company.
Further, BorgWarner expects net earnings in the range of $3.35–$3.45 per share in 2017. Operating margin for 2017 is expected to improve by 40 to 50 basis points.
Price Performance
BorgWarner has outperformed the Zacks categorized Automotive-Original Equipment industry over the last three months. The company’s shares gained 18.9% over this period, compared with an 18.1% gain recorded by the industry. BorgWarner is benefiting from global expansion, capital deployment and restructuring of the Drivetrain segment.
Zacks Rank & Key Picks
BorgWarner currently carries a Zacks Rank #4 (Sell).
Some better-ranked automobile stocks include Honda Motor Co., Ltd. (HMC - Free Report) , Penske Automotive Group, Inc. (PAG - Free Report) and Fox Factory Holding Corp. (FOXF - Free Report) .
Honda carries a Zacks Rank #1 (Strong Buy) and has long-term growth rate of 27%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penske Automotive has expected long-term earnings per share growth rate of 8.2%. It carries a Zacks Rank #2 (Buy).
Fox Factory holds a Zacks Rank #2. The company has expected earnings growth rate of 16.6% over the long term.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold.Be among the very first to see them >>