BorgWarner Sees Q4 2020 Net Sales Increase

BorgWarner Sees Q4 2020 Net Sales Increase

Delphi acquisition brought U.S. GAAP net sales up 53.4% compared with fourth quarter 2019.

BorgWarner Inc. has reported 2020 fourth quarter and full-year results.

Net sales were $3,926 million for the fourth quarter 2020, up 53.4% from $2,559 million for the fourth quarter 2019 due primarily to the acquisition of Delphi Technologies and increased demand for the company’s products. The impact of foreign currencies increased net sales by approximately $88 million. 

Net income for the fourth quarter 2020 was $358 million, or $1.52 per diluted share, compared with net income of $220 million, or $1.06 per diluted share, for the fourth quarter 2019.  Adjusted net income per diluted share for the fourth quarter 2020 was $1.18, compared to adjusted net income per diluted share of $1.17 for the fourth quarter 2019. Adjusted net income for the fourth quarter 2020 excluded net non-comparable items of $0.34 per diluted share. Adjusted net income for the fourth quarter 2019 excluded net non-comparable items of $(0.11) per diluted share. 

Net sales for full year 2020 were $10,165 million, which was relatively flat when compared to $10,168 million in 2019 as added sales from the Delphi Technologies acquisition were primarily offset by production disruptions arising from the COVID-19 pandemic. The impact of foreign currencies increased net sales by approximately $22 million. Net income for the full year 2020 was $500 million, or $2.34 per diluted share, compared with $746 million, or $3.61 per diluted share, for 2019. Adjusted net income per share for the full year 2020 was $2.76, down from adjusted net income per diluted share of $4.13 for 2019. Adjusted net income for the full year 2020 excluded net non-comparable items of $(0.42) per diluted share. Adjusted net income for the full year 2019 excluded net non-comparable items of $(0.52) per diluted share. 

Net cash provided by operating activities was $1,224 million for the full year 2020 compared with $1,008 million for the full year of 2019. Investments in capital expenditures, including tooling outlays, totaled $481 million for the full year 2020 compared with $481 million for the full year 2019. Compared with the end of 2019, balance sheet debt at the end of 2020 increased $1,827 million primarily due to the Delphi Technologies acquisition. Cash and cash equivalents increased by $818 million compared with the full year 2019, primarily due to the Company’s cash generation in 2020.

Following the completion of the Delphi Technologies acquisition on October 1, 2020, the company reorganized its management reporting structure to accommodate the newly acquired business. Previously, the company reported its results under two reporting segments, Engine and Drivetrain, which are now combined with portions of the acquired business and referred to as Air Management and e-Propulsion & Drivetrain, respectively. The former Delphi Technologies Powertrain Products segment was integrated into the Air Management segment, and the former Delphi Technologies Electronics & Electrification segment was integrated into the e-Propulsion & Drivetrain segment. The remaining Delphi Technologies segments comprise two additional reporting segments, which are referred to as Fuel Injection and Aftermarket. 

Full Year 2021 Guidance: The company has provided 2021 full year guidance. Net sales are expected to be in the range of $14.7 billion to $15.3 billion, compared with 2020 pro forma combined sales of $12.8 billion. This implies a year-over-year increase in organic sales of 12% to 17%. The company expects its weighted light and commercial vehicle markets to increase in the range of approximately 11% to 14% in 2021. Foreign currencies are expected to result in a year-over-year increase in sales of approximately $355 million, primarily due to the strengthening of the Euro and Chinese Renminbi against the U.S. dollar. 

Operating margin is expected to be in the range of 8.6% to 9.5%. Excluding the impact of non-comparable items, adjusted operating margin is expected to be in the range of 10.0% to 10.5%. Net earnings are expected to be within a range of $3.23 to $3.77 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be within a range of $3.85 to $4.25 per diluted share. Full-year operating cash flow is expected to be in the range of $1,450 million to $1,600 million, while free cash flow is expected to be in the range of $800 million to $900 million.

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