BorgWarner Inc. Earnings: Profit Rises by Double-Figures for Fifth Consecutive Quarter

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BorgWarner Inc. (NASDAQ:BWA) reported its results for the fourth quarter. BorgWarner is a global supplier of engineered automotive systems and components, mainly for powertrain applications.

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BorgWarner Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for BorgWarner Inc. rose to $122 million ($1 per share) vs. $111.7 million (89 cents per share) in the same quarter a year earlier. This marks a rise of 9.2% from the year earlier quarter.

Revenue: Rose 15.7% to $1.77 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BorgWarner Inc. reported adjusted net income of $1.19 per share. By that measure, the company beat the mean estimate of $1.15 per share. It fell short of the average revenue estimate of $1.83 billion.

Quoting Management: “The fourth quarter was a strong finish to an exceptional year for our company,” said Timothy Manganello, Chairman and CEO of BorgWarner. “Our sales were up 16% in the fourth quarter of 2011 compared with fourth quarter 2010. Excluding the impact of currency and sales related to the acquisition of the Traction Systems division of Haldex, which closed in first quarter 2011, our sales were up 12%. Global vehicle production was up 1% during the same period. New business growth drove our fourth quarter results as it did throughout the year. Adoption rates of our leading-edge powertrain technology continued to outpace vehicle production in every major region of the world. The continued focus on execution at our operations resulted in a very strong operating income margin of 12.0% in the fourth quarter, excluding non-recurring items. This is sharply higher than the 10.3% operating income margin posted in the fourth quarter of 2010.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 26.6%, with the biggest boost coming in the first quarter when revenue rose 34.5% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 0.3 percentage point to 20.3% from the year earlier quarter. Over that span, margins have grown on average 0.8 percentage point per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 32.7% and in the second quarter, the figure rose 95.7%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 10 cents in the third quarter, by 14 cents in the second quarter, and by 4 cents in the first quarter.

Looking Forward: Expectations for the company’s next quarter performance are more favorable than they were a month ago. The average estimate for the first quarter of the next fiscal year is now at $1.21 per share, up from $1.21. In the last thirty days, the average estimate for the fiscal year has moved up from $4.40 per share to $4.42.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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