19/11/09
SAF-HOLLAND S.A. turned the earnings corner in the third quarter, returning to positive adjusted earnings (EBIT). The Company benefited from a highly successful restructuring of its operating business with a comprehensive cost reduction program, as well as a stabilization of sales and first signs of a return to growth in the Company's end markets. SAF-HOLLAND has thus successfully repositioned its operating and financial performance to reflect market conditions, establishing a solid base from which to achieve performance improvements going forward.
Dr. Reiner Beutel, CEO of SAF-HOLLAND group: 'SAF-HOLLAND is benefiting from the Group-wide restructuring of the operating business. We are now leaner and stronger. As a global supplier of quality systems and components for the commercial vehicle industry, we are thus perfectly positioned to participate in a major way in the expected upturn in the commercial vehicle market. We are already seeing the first signs of a recovery after an unprecedented downturn in the global commercial vehicle market.'
The Company has also made important progress with its banking syndicate on restructuring and extending existing financing facilities. Further to the recently announced standstill agreement extension to November 25, the Company expects to announce agreement with its banking syndicate in the near term. The objective of the new financing agreement is to put the Company on a solid financial footing in the long-term and to create sufficient financial flexibility to allow the Company to complete its operational restructuring and follow its planned growth path.
Sales stabilizing Parallel to the earnings trend reversal, sales stabilized in comparison to previous quarters. Sales in the third quarter amounted to EUR 103.1 million which reflects a slight upturn compared to the second quarter. The adjusted EBIT climbed to EUR 2.5 million compared to EUR -0,8 million in the second quarter. With EUR 6.5 million, adjusted EBITDA more than doubled compared to EUR 3.0 million in the previous quarter. Importantly, there has been a stabilization of sales and some signs of a return to growth are now visible in the global commercial vehicle market. In the first nine months of the year, the Group achieved sales in the amount of EUR 316.4 million (previous year: EUR 646.3 million). In particular, the Powered Vehicle Systems and Aftermarket Business Units, both of which exceeded their performance from 2008, cushioned the considerable decline of the Trailer Systems Business Unit.
Restructuring facilitates turnaround The stable gross margin of 16.8% (previous year: 16.9%) is proof of the success of the restructuring measures with extensive savings in personnel and non-personnel expenses. Overhead costs were also reduced to EUR 12.4 million. Adjusted EBIT amounted to EUR 1.2 million in the first nine months of this year.
Trailer Systems shows stable sales development compared to previous quarter In the third quarter, sales in the Trailer Systems Business Unit of EUR 41.0 million stabilized at the level of the second quarter. While the month of August was, as expected, quiet in Europe, the trailer business was able to make up for lost ground in September. A slight increase was also seen in August in North America. Another positive factor was the production of our own axle systems in the USA, which got underway in February. The number of orders for axle systems with disc brakes, which were first presented in America at the Mid-American Trucking Show at the beginning of the year, is still exceeding expectations. Sales in the first three months were EUR 130.5 million (previous year: EUR 451,3 million) and the gross margin decreased to -3.6% (previous year: 11.9%) due to the high under-utilization.
Powered Vehicle Systems sees growth of 20% over previous year The Powered Vehicle Systems Business Unit benefited from a slight upturn in the market in the USA, while business in Europe saw increasing stabilization. Year to date sales grew by 20.9% to EUR 73 million (previous year: EUR 60.4 million) and were EUR 24.1 in the third quarter compared to EUR 22.2 million in the second quarter. The sales increase over the previous year resulted primarily from the acquisition of the former Georg Fischer Verkehrstechnik GmbH and a major order in North America. Thanks to a good product mix and substantial improvements in efficiency, the gross margin increased significantly to 22.1% (previous year: 12.6%). The increased share of 23.1% of Group sales (previous year: 9.3%) shows the increasing importance of the Business Unit for the Group. Leading market research institutes expect demand in the USA to increase further at the end of the year with fleet purchases in anticipation of new emissions regulations taking effect from 2010.
Aftermarket raises gross margin The Aftermarket Business Unit continues to deliver a highly profitable performance for the group. Expansion of SAF-HOLLAND's international distribution and service network in Europe through a new agreement with Scania workshops and an extended product range as a result of the acquisition of the former Georg Fischer Verkehrstechnik GmbH were contributing factors for this increase. The Business Unit generated sales of EUR 112.9 million (previous year:134.6) in the first nine months of 2009. The third quarter showed a moderate upswing with EUR 38.0 million compared to EUR 36.7 million in the second quarter. The gross margin increased to 37.6% (previous year: 35.7%). The development confirms both the increasing and continued importance of the aftermarket business for the Group.
Strong development in cash flow Cash flow from operating activities totaled EUR 29.1 million and was thus at the level of the previous year despite a significant drop in sales. This positive development was a result of highly successful implementation of working capital reduction measures on a group-wide basis. The inventory reduction measures at SAF-HOLLAND have progressed well. Inventories decreased as of September 30, 2009 to EUR 60.2 million (December 31, 2008: EUR 85.8). The equity ratio as of the balance sheet date, September 30, 2009 was 6.6% (December 31, 2008: 13.4%). Total assets decreased to EUR 473.4 million (December 31, 2008: EUR 537.4), primarily as a result of the drop in net working capital and the extraordinary write-down in the amount of EUR 16.9 million of goodwill and intangible assets.
Outlook The Company is pleased to report the first signs of a return to growth in its end markets. The Company also expects to benefit from good growth opportunities in all three of its Business Units. Furthermore, the measures taken to improve efficiency and reduce costs are having a positive effect and will give the Company a sustainable boost. The goal of saving EUR 60 million by the end of 2009 will be exceeded by about 10%. The Group will also further reduce net working capital by the end of 2009, thus putting liquidity on a stable foundation.
10/11/09
Source: http://money.cnn.com/news/newsfeeds/articles/prnewswire/200911100800PR_NEWS_USPR_____DE08425.htm
ArvinMeritor, Inc. (NYSE: ARM) today reported financial results for its fourth quarter and full fiscal year ended Sept. 30, 2009.
Fourth-Quarter Highlights
- Fourth-quarter sales were $984 million, approximately a four percent increase from the third quarter of fiscal year 2009; down from $1.5 billion in the fourth quarter of fiscal year 2008.
- On a GAAP basis, loss from continuing operations was $49 million for the fourth quarter, or a loss of $0.68 per diluted share, compared to a loss from continuing operations of $160 million, or $2.22 per diluted share, in the same period last year.
- Fourth-quarter EBITDA from continuing operations, before special items, was $40 million, approximately a 43-percent increase from the third quarter of fiscal year 2009, down from $87 million in the fourth quarter of fiscal year 2008.
- Cash flow from operations was $46 million compared to $157 million in the same period last year.
- Free cash flow (cash flow from operations, net of capital expenditures) was $22 million in the fourth quarter compared to free cash flow of $103 million in the fourth quarter of fiscal year 2008.
- Complied with all debt covenants.
- Entered into new two-year U.S. Receivables Securitization Agreement.
Fourth-Quarter Results 2009
"We are proud of our performance in the fourth quarter and the 2009 fiscal year," said Chairman, CEO and President Chip McClure. "Our team has not only generated positive free cash flow for two consecutive quarters, we’ve also reported cost savings in our commercial vehicle businesses of $195 million, complied with all debt covenants, and completed various other actions that we believe will strengthen the company as we benefit from improving conditions in global markets - particularly in China, India and Brazil," said McClure.
For the fourth quarter of fiscal year 2009, ArvinMeritor posted sales of $984 million, down thirty-six percent from the same period last year. This decrease in sales was primarily due to continued weakness in the global markets. As compared to the third quarter of fiscal year 2009, sales in the fourth quarter increased four percent as markets began to show signs of a recovery.
EBITDA from continuing operations (which excludes the wheels business), before special items, was $40 million, compared to $87 million in the fourth quarter of fiscal year 2008. EBITDA from continuing operations, before special items, increased 43 percent in the fourth quarter of fiscal year 2009 from the third quarter of fiscal year 2009. EBITDA margin from continuing operations, before special items, was 4.1 percent in the fourth quarter, down from 5.7 percent in the same period last year.
Loss from continuing operations, on a GAAP basis, was $49 million or $0.68 per diluted share, compared to a loss from continuing operations of $160 million or $2.22 per diluted share in the prior year.
Loss from continuing operations during the fourth quarter of fiscal year 2009, before special items, was $20 million, or $0.28 per diluted share, compared to income from continuing operations, before special items, of $26 million, or $0.35 per diluted share, a year ago. The loss from continuing operations, before special items, was driven by incremental tax expenses during the quarter due to the inability to recognize the tax benefit of losses in certain countries.
Free cash flow was $22 million in the fourth quarter compared to free cash flow of $103 million in the fourth quarter of fiscal year 2008. The company had $95 million in cash balances and an unutilized commitment of $611 million under its revolving credit facility as of Sept. 30, 2009.
Fiscal Year 2009 Results
- Sales from continuing operations for fiscal year 2009 were $4.1 billion, down 36 percent from fiscal year 2008.
- On a GAAP basis, net loss was $1,212 million or a loss of $16.72 per diluted share in fiscal year 2009.
- On a GAAP basis, loss per diluted share from continuing operations was $14.86 in fiscal year 2009, compared to a loss of $1.60 per diluted share in fiscal year 2008.
- Loss per share from continuing operations, before special items, was $1.32 per diluted share in fiscal year 2009, compared to income from continuing operations, before special items, of $1.11 per diluted share in fiscal year 2008.
- Free cash outflow (cash outflow from operations, net of capital expenditures) of $429 million for the full fiscal year.
"Our team remained focused and delivered on our 2009 priorities, while simultaneously managing the company through a global recession that affected all of our segments and customers worldwide," said McClure. "As we transform into a commercial vehicle and industrial company, we believe the results we demonstrated in each of these areas will make ArvinMeritor a leaner, more efficient organization well-positioned for future growth."
- Accelerate restructuring and other cost reductions
Achieved cost savings of $195 million in our core businesses for fiscal year 2009 due to swift and preemptive actions including workforce and temporary salary reductions; selective reductions in capital spending; extended manufacturing shutdowns; elimination of training programs; suspension of the quarterly dividend and elimination of all non-critical discretionary spending. The company also announced the closure of its Carrollton, Ky. assembly, machining and casting operation and the Tilbury, Ontario, Canada braking systems facility.
- Continue operational performance improvements
Further implemented production system methodology; optimized manufacturing footprint; lowered inventory; strategically focused capital spending on core processes to lessen dependency on layered capacity; and maintained focus on direct material optimization activities - with more than 900 of approximately 1,700 initiatives implemented.
- Complete LVS separation
Completed the sale of the company’s entire ownership interest in Gabriel de Venezuela and Meritor Suspension Systems Company (finalized in October 2009) joint ventures; and sold both the Wheels business and Gabriel Ride Control Products North America, thus reducing the company’s overall light vehicle business to 25 percent of total sales at the conclusion of fiscal year 2009.
- Continue to grow high-margin segments
Working with Lockheed Martin Systems Integration and BAE Systems U.S. Combat Systems on a technology demonstrator contract for the Joint Light Tactical Vehicle (JLTV) program; began production of Navistar MXT for British Ministry of Defense; added two key product families to expanding aftermarket portfolio for commercial vehicles including remanufactured Allison automatic transmissions and all-makes power steering gears and pumps.
- Innovate and strengthen technology
Introduced MXL greaseable drivelines for linehaul customers; launched PlatinumShield(TM) coating for both aftermarket and OE brake applications; completed internal integration of smart systems(TM) technology to further incorporate controls and electronics into the commercial vehicle advanced engineering group; opened technical center in Bangalore, India; preparing to launch MT-14X tandem axle in North America in 2010.
Business Segments
ArvinMeritor has revised its reporting segments following the recent divestitures of several light vehicle businesses. For continuing operations, the company will now report results as defined within Commercial Truck, Industrial, Aftermarket & Trailer and Light Vehicle Systems. Of these four segments, Commercial Truck, Industrial, and Aftermarket & Trailer are considered core to ArvinMeritor.
- Commercial Truck
Supplies drivetrain systems and components, including axles, drivelines, braking and suspension systems, primarily for medium and heavy duty trucks in North America, South America and Europe.
- Industrial
Supplies drivetrain systems including axles, brakes, drivelines and suspensions for off-highway, military, construction, bus and coach, fire and emergency, and other industrial applications. This segment also includes the company’s business in Asia Pacific, including all on- and off-highway activities.
- Aftermarket & Trailer
Supplies axles, brakes, suspension parts and other replacement and remanufactured parts, including transmissions, to commercial vehicle aftermarket customers. Also supplies a wide variety of undercarriage products and systems for trailer applications.
- Light Vehicle Systems
Supplies primarily roof and door systems for passenger cars to original equipment manufacturers; also includes company’s remaining Chassis operations.
2010 Priorities
ArvinMeritor has defined six key priorities for fiscal year 2010. The company believes it is imperative to execute well in each of these areas and has developed specific action plans to achieve strong results.
- Remain focused on rigorous cost management to realize improved operating leverage.
- Continue transformation to focus the company on global commercial vehicle and industrial markets.
- Successfully execute as global markets recover.
- Drive innovation - accelerating new products and advanced fuel efficient technologies.
- Maintain focus on sustainable profitable growth.
- Continued focus on balance sheet management.
Outlook for 2010
The company’s financial guidance for the first quarter of fiscal year 2010 is for expected results from continuing operations, which includes all four of ArvinMeritor’s current segments. For the first quarter of fiscal year 2010 (compared to the fourth fiscal quarter of 2009), the company anticipates:
- Revenue to be higher.
- EBITDA, before special items, to be higher.
- Income before taxes, before special items, to be higher.
In addition, on an absolute basis, the company anticipates:
- Free cash flow, before factoring and restructuring, to be slightly negative.
- Free cash flow to be around breakeven.
For fiscal year 2010, ArvinMeritor expects to report results in the following ranges for capital expenditures, interest expense, cash income taxes and income tax expense.
- Capital expenditures in the range of $90 million to $110 million.
- Interest expense to be in the range of $95 million to $110 million.
- Cash income taxes to be in the range of $25 million to $50 million.
- Income tax expense, before special items, to be in the range of $40 million to $60 million.
"With the steps we have taken to manage costs - in addition to our efforts to secure new multi-year contracts, develop advanced solutions for our customers, and focus talent and resources on strategic segments of our business - we believe we are on track to benefit from future recoveries in the global markets," said McClure.
Fourth-Quarter and Fiscal Year 2009 Results Conference Call
ArvinMeritor will host a telephone conference call and Web cast to discuss the company’s full-year and fourth-quarter results for fiscal year 2009 on Tuesday, Nov. 10, 2009, at 9 a.m. (ET).
To participate, call (617) 213-4837 ten minutes prior to the start of the call. Please reference participant pass code 85768695 when dialing in. Investors can also listen to the conference call in real time -- or the recorded version for 90 days afterward-- by visiting www.arvinmeritor.com.
A replay of the call will be available from Noon on Nov. 10, to 11:59 p.m. Nov. 17, 2009, by calling (888) 286-8010 (within the United States) or (617) 801-6888 for international calls. Please refer to replay pass code number 45056962.
The company’s fourth-quarter and full-year financial results will be released prior to the conference call and Web cast. The news release will be issued through PR Newswire and First Call, and will be available on the company’s Web site.
To access the listen-only audio Web cast, visit the ArvinMeritor Web site at www.arvinmeritor.com and select the Web cast link from the home page or the investor page.
