BorgWarner (BWA) Q1 Earnings & Revenues Surpass Estimates

BorgWarner Inc. (NYSE:BWA) delivered adjusted earnings of $1.10 per share in first-quarter 2018, beating the Zacks Consensus Estimate of $1.03. Adjusted earnings increased from 91 cents per share in the year-ago quarter.

BorgWarner logged revenues of $2.78 billion, surpassing the Zacks Consensus Estimate of $2.63 billion. The figure was $2.41 billion in the year-ago quarter. The acquisition of Sevcon contributed $20 million to the net sales figure.

In the reported quarter, operating income amounted to $333.5 million compared with prior-year figure of $291.5 million.

BorgWarner Inc. Price, Consensus and EPS Surprise

Net earnings in the reported quarter came in at $225 million compared with $189 million in first-quarter 2017.

Segment Details

Revenues from the Engine segment increased to $1.72 billion from $1.5 billion in the prior-year quarter. Excluding the impact of foreign currencies, net sales rose 4.9% in the segment.

At the Drivetrain segment, revenues were up $1.08 billion in the first quarter from $925 million in the prior-year quarter. Excluding the impact of foreign currencies and acquisition of Sevcon, net sales rallied 9.2% year over year.

Financial Position

BorgWarner had $409.7 million in cash as of Mar 31, 2018 compared with $545.3 million as of Dec 31, 2017. The long-term debt was $2.13 billion compared with $2.1 billion as of Dec 31, 2017.

In first-quarter 2018, net cash provided by operating activities was $35 million compared with $60 million in the prior-year quarter. During the quarter, capital expenditures, including tooling outlays, increased to $160 million from $131 million in first-quarter 2017.

Dividend

The company announced that its board has approved a quarterly cash dividend of 17 cents per common stock. The amount will be paid on Jun 15, 2018 to shareholders as of Jun 1, 2018.

Outlook

For second-quarter 2018, the company envisions net earnings to lie within the range of $1.09-$1.11 per share. Moreover, it anticipates net organic sales growth of 7-9% compared with net sales of $2.39 billion in the year-ago quarter. The buyout of Sevcon will contribute $50 million to net sales.

For full-year 2018, the company reaffirmed organic growth guidance. It projects net sales of around $10.77-$10.94 billion, which translates into an organic growth rate of 5-7%. Further, the company projects net earnings within the range of $4.30-$4.40.

Furthermore, BorgWarner expects positive impact of foreign currencies on the appreciation of the Euro and Chinese Yuan of $405 million.

Zacks Rank & Other Stocks to Consider

BorgWarner carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the auto space are BMW AG BAMXF, Dana Incorporated (NYSE:DAN) and Allison Transmission Holdings, Inc. (NYSE:ALSN) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BMW has expected long-term growth rate of 4.5%. Over a year, shares of the company have gained 13.7%.

Dana has expected long-term growth rate of 10%. Shares of the company have risen 28.1% in the past year.

Allison Transmission has expected long-term growth rate of 10%. Over a year, shares of the company have gained 0.7%.

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