BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of 84 cents per share in the second quarter of 2016, higher than 75 cents recorded in the year-ago quarter. Earnings per share also marginally surpassed the Zacks Consensus Estimate of 82 cents.
Including the impact of non-comparable items, BorgWarner recorded earnings of $164 million or 76 cents per share in second-quarter 2016, up from $148 million or 65 cents per share reported a year ago.
Revenues increased 14.6% year over year to $2.33 billion, coming in line with the Zacks Consensus Estimate. Excluding the impact of foreign currencies and the Remy International acquisition, net revenues went up 3.5% year over year.
Operating income increased to $269.4 million from $242.5 million in the second quarter of 2015. Adjusted operating income came in at $288 million, or 12.4% of net sales.
Segment Details
Revenues in the Engine segment improved 2.2% year over year to $1.44 billion. Excluding the impact of foreign currencies, net sales went up 2.8% in the segment.
Adjusted earnings before interest, income taxes and non-controlling interest (adjusted EBIT) improved to $234.8 million in the reported quarter from $228 million a year ago.
Revenues in the Drivetrain segment surged 42.7% to $895 million. Excluding the impact of foreign currencies and the Remy International acquisition, net sales rose 5.4% year over year. Adjusted EBIT improved to $92.8 million from $72.1 million in the second quarter of 2015.
Financial Position
BorgWarner had $495 million in cash as of Jun 30, 2016, compared with $577.7 million as of Dec 31, 2015. Total debt, including notes payable, was $2.63 billion as of Jun 30, 2016, compared with $2.55 billion as of Dec 31, 2015.
In first-half 2016, net cash from operating activities increased to $362 million from $319 million in the year-ago period. Capital expenditures, including tooling outlays, went down to $235 million from $285 million in the first half of 2015.
Outlook
Net sales growth for third-quarter 2016 is projected in the range of 13%–20.8%. Excluding the impact of foreign currencies and the Remy International buyout, the year-over-year increase in net sales for the third quarter is estimated in the range of 2.5%–7.7%.
Net earnings for the third quarter are projected in the band of 74–81 cents per share. The Remy International acquisition is expected to have a positive impact of 3 cents per share.
Operating income, as a percentage of net sales, is anticipated to be around 12% in third-quarter 2016. Excluding the impact of the Remy International buyout, operating margin is estimated to about 13%.
Net sales for 2016 are projected to grow 13.7%–17.5%, compared to the prior range of 12.7%–17.5%. Excluding the impact of foreign currencies and the Remy International acquisition, net sales are expected to grow around 3%–5.5%.
Further, BorgWarner expects net earnings in the range of $3.16–$3.32 per share in 2016, compared to the prior range of $3.11–$3.32. The Remy International acquisition is likely to have a positive impact of 12 cents per share.
Operating margin for 2016, excluding the impact of non-comparable items, is estimated to be over 12%. Excluding the impact of the Remy International acquisition, operating margin is expected to be higher than 13%.
Zacks Rank
BorgWarner currently carries a Zacks Rank #4 (Sell). Some better-ranked automobile stocks include Spartan Motors Inc. , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of 84 cents per share in the second quarter of 2016, higher than 75 cents recorded in the year-ago quarter. Earnings per share also marginally surpassed the Zacks Consensus Estimate of 82 cents.
Including the impact of non-comparable items, BorgWarner recorded earnings of $164 million or 76 cents per share in second-quarter 2016, up from $148 million or 65 cents per share reported a year ago.
Revenues increased 14.6% year over year to $2.33 billion, coming in line with the Zacks Consensus Estimate. Excluding the impact of foreign currencies and the Remy International acquisition, net revenues went up 3.5% year over year.
Operating income increased to $269.4 million from $242.5 million in the second quarter of 2015. Adjusted operating income came in at $288 million, or 12.4% of net sales.
Segment Details
Revenues in the Engine segment improved 2.2% year over year to $1.44 billion. Excluding the impact of foreign currencies, net sales went up 2.8% in the segment.
Adjusted earnings before interest, income taxes and non-controlling interest (adjusted EBIT) improved to $234.8 million in the reported quarter from $228 million a year ago.
Revenues in the Drivetrain segment surged 42.7% to $895 million. Excluding the impact of foreign currencies and the Remy International acquisition, net sales rose 5.4% year over year. Adjusted EBIT improved to $92.8 million from $72.1 million in the second quarter of 2015.
Financial Position
BorgWarner had $495 million in cash as of Jun 30, 2016, compared with $577.7 million as of Dec 31, 2015. Total debt, including notes payable, was $2.63 billion as of Jun 30, 2016, compared with $2.55 billion as of Dec 31, 2015.
In first-half 2016, net cash from operating activities increased to $362 million from $319 million in the year-ago period. Capital expenditures, including tooling outlays, went down to $235 million from $285 million in the first half of 2015.
Outlook
Net sales growth for third-quarter 2016 is projected in the range of 13%–20.8%. Excluding the impact of foreign currencies and the Remy International buyout, the year-over-year increase in net sales for the third quarter is estimated in the range of 2.5%–7.7%.
Net earnings for the third quarter are projected in the band of 74–81 cents per share. The Remy International acquisition is expected to have a positive impact of 3 cents per share.
Operating income, as a percentage of net sales, is anticipated to be around 12% in third-quarter 2016. Excluding the impact of the Remy International buyout, operating margin is estimated to about 13%.
Net sales for 2016 are projected to grow 13.7%–17.5%, compared to the prior range of 12.7%–17.5%. Excluding the impact of foreign currencies and the Remy International acquisition, net sales are expected to grow around 3%–5.5%.
Further, BorgWarner expects net earnings in the range of $3.16–$3.32 per share in 2016, compared to the prior range of $3.11–$3.32. The Remy International acquisition is likely to have a positive impact of 12 cents per share.
Operating margin for 2016, excluding the impact of non-comparable items, is estimated to be over 12%. Excluding the impact of the Remy International acquisition, operating margin is expected to be higher than 13%.
Zacks Rank
BorgWarner currently carries a Zacks Rank #4 (Sell). Some better-ranked automobile stocks include Spartan Motors Inc. , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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