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BorgWarner: 2016 Net New Business and Guidance release

BorgWarner projects mid-single digit net new business growth over the next three years Expects net sales growth of approximately 13% to 18% and net earnings of $3.11 to $3.32 per diluted share in 2016 bolstered by Remy acquisition Provides net sales and net earnings guidance for first quarter 2016 BorgWarner Inc. (NYSE: BWA), a leading … Continued

  • BorgWarner projects mid-single digit net new business growth over the next three years
  • Expects net sales growth of approximately 13% to 18% and net earnings of $3.11 to $3.32 per diluted share in 2016 bolstered by Remy acquisition
  • Provides net sales and net earnings guidance for first quarter 2016

BorgWarner Inc. (NYSE: BWA), a leading provider of highly engineered engine and drivetrain components and systems that help improve fuel efficiency, emissions and vehicle performance, today announced its three-year net new business, its guidance for full year 2016 and its guidance for first quarter 2016.

Three-Year Net New Business
The company expects net new business to drive a compound annual growth rate of 4 to 6 percent from 2015 through 2018:

  • Net new business within a range of $230 million to $390 million in 2016, $410 million to $590 million in 2017 and $460 million to $670 million in 2018.
  • Asia, the Americas and Europe are expected to account for approximately 44%, 38% and 18% of the total over the three-year period, respectively.
    • Approximately 32% is expected in China.
    • Approximately 30% is expected with the North American domestic OEMs.
  • Approximately 70% from engine-related products such as turbochargers, ignition systems, emissions products, engine timing systems including variable cam timing devices and thermal systems.
  • Approximately 30% from drivetrain-related products including all-wheel drive systems, the company’s fuel-efficient DualTronic® transmission technology and its traditional automatic transmission products.

Full Year 2016 Guidance
The company also provided its initial guidance for full year 2016:

  • Net sales growth of 13.2% to 18.3% compared with the midpoint of 2015 net sales guidance of $7,848 million.
    • Foreign currencies are expected to lower sales by $177 million to $59 million, or -2.3% to -0.8%.
    • The Remy acquisition is expected to increase sales by $1,020 million to $1,060 million, or 13.0% to 13.5%.
    • Excluding the impact of weaker foreign currencies and the Remy acquisition, net sales growth is expected to be 2.5% to 5.5%.
  • Net earnings of $3.11 to $3.32 per diluted share.
    • The Remy acquisition is expected to increase earnings by approximately $0.13 per diluted share.
    • Excluding the impact of the Remy acquisition, net earnings are expected to be $2.98 to $3.18 per diluted share, up 0.2% to 6.7% compared with the midpoint of 2015 net earnings guidance of $2.95 to $3.00 per diluted share, excluding non-recurring items.
  • Foreign currencies are expected to lower net earnings by $0.07 to $0.02 per diluted share, or -2.3% to -0.6%.
  • Operating income as a percentage of net sales above 12%.
    • The Remy acquisition is expected to lower operating income as a percentage of net sales by approximately 100 basis points.
    • Excluding the impact of the Remy acquisition, operating income, as a percentage of net sales, is expected to be above 13%.
  • Effective tax rate of approximately 30%.
  • Free cash flow within a range of $400 million to $475 million.
  • Share repurchases of $200 million to $300 million.

First Quarter 2016 Guidance
The company also provided guidance for first quarter 2016:

  • Net sales growth of 8.3% to 13.3% compared with first quarter 2015 net sales of $1,984 million.
    • Foreign currencies are expected to lower sales by $76 million to $47 million, or -3.8% to -2.4%.
    • The Remy acquisition is expected to increase sales by $247 million to $257 million, or 12.4% to 13.0%.
    • Excluding the impact of weaker foreign currencies and the Remy acquisition, net sales growth is expected to be -0.3% to 2.7%.
  • Net earnings of $0.75 to $0.79 per diluted share.
    • The Remy acquisition is expected to increase earnings by $0.03 per diluted share.
    • Excluding the impact of the Remy acquisition, net earnings are expected to be $0.72 to $0.76 per diluted share, down -8% to -2% compared with first quarter 2015 net earnings of $0.78 per diluted share, excluding nonrecurring items.
  • Operating income as a percentage of net sales over 12%.
    • Excluding the impact of the Remy acquisition, operating income, as a percentage of net sales, is expected to be above 13%.

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