BorgWarner (BWA) Tops Q2 EPS by 7c, Beats on Revenues; Boosts FY17 EPS & Revenues Guidance Above Consensus

BorgWarner (NYSE: BWA) reported Q2 EPS of $0.96, $0.07 better than the analyst estimate of $0.89. Revenue for the quarter came in at $2.39 billion versus the consensus estimate of $2.28 billion.

Full Year 2017 Guidance: The company has increased its 2017 full year organic growth guidance. Full year net sales are expected to be $9.28 billion - $9.38 billion, implying organic net sales growth of 6.5% to 7.5%. Foreign currencies are expected to lower sales by approximately $100 million, due to the depreciation of the Euro, Yuan and Pound. The divested Remy light vehicle aftermarket business contributed net sales of approximately $255 million in 2016. Net earnings are now expected to be within a range of $3.65 to $3.70 per diluted share, with the increase in guidance primarily due to higher than previously expected sales. Excluding the impact of non-comparable items, operating margin is expected to improve by 30 to 40 basis points.

Third Quarter 2017 Guidance: The company expects third quarter 2017 organic net sales growth of 3.0% to 6.0% compared with third quarter 2016 proforma net sales of $2.1 billion. Foreign currencies are expected to lower sales by approximately $36 million, or 1.7%. The divested Remy light vehicle aftermarket business contributed net sales of approximately $68 million in the third quarter 2016. Net earnings are expected to be within a range of $0.84 to $0.87 per diluted share.

GUIDANCE:

BorgWarner sees FY2017 EPS of $3.65-$6.70, versus the consensus of $3.58. BorgWarner sees FY2017 revenue of $9.28-9.38 billion, versus the consensus of $9.14 billion.

Second Quarter Highlights:

• U.S. GAAP net sales of $2,390 million, up 2.6% compared with second quarter 2016.
  • On a comparable basis, excluding the impact of foreign currencies and the sale of the Remy light vehicle aftermarket business, net sales were up 7.8% compared with second quarter 2016.
• U.S. GAAP net earnings of $1.00 per diluted share.
  • Excluding the non-comparable item (detailed in the table below), net earnings were $0.96 per diluted share.
• U.S. GAAP operating income of $300 million.
  • Operating income was 12.5% of net sales.

For earnings history and earnings-related data on BorgWarner (BWA) click here.

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