BorgWarner Inc. BWA reported adjusted earnings of $1.18 per share for fourth-quarter 2020, handily surpassing the Zacks Consensus Estimate of 88 cents amid higher-than-expected revenues. The bottom line also inched up from the year-ago figure of $1.17 per share. This automotive equipment supplier reported net sales of $3,926 million, outpacing the Zacks Consensus Estimate of $3,618 million. Moreover, the top-line figure surged 53.4% year over year.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote
Segmental Performance
Post the acquisition of Delphi Technologies, BorgWarner reorganized its management reporting structure into four segments — Air Management, e-Propulsion & Drivetrain, Fuel Injection and Aftermarket.
BorgWarner’s Engine and Drivetrain segments have been integrated with the acquired business, and are now termed as Air Management and ePropulsion & Drivetrain, respectively. While Delphi’s Powertrain Products segment has been consolidated into the Air Management unit, Electronics & Electrification segment has been integrated into the e-Propulsion & Drivetrain segment. Additionally, two new segments — namely Fuel Injection and Aftermarkets — have been formed as a result of the Delphi acquisition.
Air Management: Net sales totaled $1,942 million for the quarter under review, up 26.7% year over year. Excluding the impact of foreign currency translations and $312 million from the Delphi buyout, sales from the segment edged up 2.8% year over year. Adjusted EBIT of $301 million compared favorably with $264 million in the comparable year-ago period.
e-Propulsion & Drivetrain: Sales from the segment came in at $1,447 million, up 38.9% year over year. Excluding the impact of foreign currency translations and $255 million from the Delphi buyout, sales from the segment climbed 11.1% year over year. The segment generated adjusted EBIT of $164 million for fourth-quarter 2020, higher than $136 million in the corresponding period of 2019.
Fuel Injection: Sales and adjusted EBIT from the segment totaled $479 million and $39 million, respectively. Adjusted EBIT margin for the quarter was 8.1%.
Aftermarket: Sales and adjusted EBIT from the segment totaled $194 million and $22 million, respectively. Adjusted EBIT margin for the quarter was 11.3%.
Financial Position
As of Dec 31, 2020, BorgWarner — whose peers include Magna International MGA, Meritor MTOR and Autoliv ALV — had $1,650 million in cash compared with $832 million on Dec 31, 2019. Long-term debt was $3,738 million, up from $1,674 million recorded at the end of 2019. The company declared a quarterly cash dividend of 17 cents a share, payable on Mar 15, 2021 to shareholders of record as of Mar 1.
Net cash provided by operating activities was $416 million during the fourth quarter compared with $184 million recorded in the year-ago period. Investment in capital expenditure, including tooling outlays, was $219 million for the December-end quarter compared with the year-ago quarter’s $135 million. Free cash flow declined from $221 million in fourth-quarter 2019 to $197 million in the reported quarter.
Guidance
For full-year 2021, the Zacks Rank #3 (Hold) company anticipates net sales within $14.7-$15.3 billion, indicating an increase of 12-17% from 2020 pro-forma combined sales of $12.8 billion. Adjusted operating margin and net earnings are expected in the band of 10-10.5% and $3.23-$3.377 per share, respectively. Free cash flow is projected between $800 million and $900 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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