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National Press Release
 | ArvinMeritor Reports Second-Quarter Fiscal Year 2009 ResultsPublished 2009-05-05 16:10By ArvinMeritor, Inc. |
Quarterly Highlights
-- Sales of $1.1 billion, down approximately $671 million, or 38 percent,
from the same period last year (down 32 percent on a constant currency
basis).
-- On a GAAP basis, net loss from continuing operations was $52 million or
$0.72 per diluted share, compared to net income from continuing
operations of $24 million or $0.33 per diluted share in the same period
last year.
-- Loss from continuing operations, before special items, of $9 million, or
$0.12 per diluted share, compared to income from continuing operations,
before special items, of $27 million, or $0.37 per diluted share in the
same period last year.
-- Cash outflow from operations was $102 million in the second quarter of
fiscal year 2009. Excluding reductions in sales of receivables, cash
flow was positive $77 million resulting from reductions in working
capital and benefits of cost reduction actions.
-- Free cash outflow (cash outflow from operations less capital
expenditures) of $138 million in the second quarter of fiscal year 2009
compared to positive free cash flow of $134 million in the same period
last year.
"We are proud of the strong performance from our global operations teams despite continued low volumes in the commercial and light vehicle markets," said
Second-Quarter Fiscal Year 2009 Results
For the second quarter of fiscal year 2009, ArvinMeritor posted sales from continuing operations of
EBITDA, before special items, was
Loss from continuing operations, before special items, was
Commercial vehicle sales were
Cost-Reduction Actions
During the first half of fiscal year 2009, the company executed various actions to reduce costs and manage cash during these difficult economic times. These actions are expected to result in savings of approximately
Light Vehicle Systems Update
In January, the company announced that difficulties in the credit markets and continued volume weakness in most markets prevented the sale of Body and Chassis as one entity at an acceptable value. Therefore, the company has remained intensely focused on managing both the Body Systems and Chassis businesses for maximum cost efficiencies.
EBITDA, before special items, for LVS was negative
In addition, the company continues to aggressively pursue exit strategies for its Chassis businesses. ArvinMeritor anticipates finalizing the first transaction for a significant unit of Chassis in the near future.
Impact of Chrysler Bankruptcy
As of
ArvinMeritor will be impacted by Chrysler's announcement to idle its facilities during the bankruptcy process. The company anticipates a 30-60 day shutdown to have a negative impact on EBITDA in the range of
Liquidity
The ArvinMeritor management team remains focused on managing the business for maximum liquidity. At the end of the second quarter, the company was in compliance with all covenants in our senior secured credit facility and the U.S. securitization facility. It is possible that the company may need amendments or waivers to these facilities before the end of the 2009 fiscal year in order to increase the flexibility afforded to ArvinMeritor through the senior secured debt-to-EBITDA covenants. If such amendments or waivers are not needed by the end of the third fiscal quarter, it is increasingly likely that they will be needed on
Even with amendments or waivers to the company's senior secured credit facility and the U.S. securitization facility, it may be necessary to pursue additional liquidity enhancing actions, which are not entirely within the company's control, including exploring asset sales or obtaining additional external sources of liquidity.
Outlook
While current market conditions remain depressed,
For the third quarter of fiscal year 2009 (compared to the second fiscal quarter of 2009), the company anticipates:
-- Revenue to be about flat
-- Loss per share, before special items, to be greater
-- Free cash flow, before reductions in sales of receivables, to be
positive
-- Total free cash flow to be slightly negative
"ArvinMeritor was proactive in taking aggressive steps to preserve liquidity through this downturn and continues to be diligent in maintaining all of the actions put into place in the past six months," said McClure. "We will continue to operate with that same rigor, while maintaining a constant focus on the company's financial position. We anticipate that we will begin to see positive signs of improvement in some markets during the second half of this year."
About ArvinMeritor
ArvinMeritor, Inc. is a premier global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company marks its centennial anniversary in 2009, celebrating a long history of 'forward thinking.' ArvinMeritor serves commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets, and light vehicle manufacturers. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at: www.arvinmeritor.com/.
Forward-Looking Statements
This presentation contains statements relating to future results of the company (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "estimate," "should," "are likely to be," "will" and similar expressions. There are risks and uncertainties relating to the approval by the New York Stock Exchange of our plan to meet compliance with listing requirements, our ability to obtain any needed amendment to our credit agreement, our ability to achieve anticipated cost savings from cost reduction actions and the planned disposition of the Body Systems and Chassis Systems businesses of ArvinMeritor's LVS business, including the timing and certainty of completion and the terms of any transaction or transactions. In addition, actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to global economic and market cycles and conditions, including the recent global economic crisis; whether we will have sufficient liquidity as we continue to be affected by declining vehicle production volumes; the financial condition of the company's suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; the ability of the company to continue to comply with covenants in its financing agreements; the ability of the company to find a replacement facility for its U.S. securitization facility; the ability of the company to access capital markets; credit ratings of the company's debt; continued decline in the price of our common stock on the NYSE; the demand for commercial, specialty and light vehicles for which the company supplies products; risks inherent in operating abroad (including foreign currency exchange rates and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and sharply rising cost of raw materials, including steel and oil; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers; labor relations of the company, its suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations and the ability to achieve the expected benefits of restructuring actions; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; potential adjustment of the value of deferred tax assets; competitive product and pricing pressures; the amount of the company's debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; the outcome of actual and potential product liability and warranty and recall claims; rising costs of pension and other post-retirement benefits and possible changes in pension and other accounting rules; as well as other risks and uncertainties, including but not limited to those detailed from time to time in filings of the company with the SEC. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.
All earnings per share amounts are on a diluted basis. The company's fiscal year ends on the Sunday nearest
Non-GAAP Measures
In addition to the results reported in accordance with accounting principles generally accepted in
Management believes that the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the company's financial position and results of operations. In particular, management believes that EBITDA is a meaningful measure of performance as it is commonly utilized by management and the investment community to analyze operating performance and entity valuation; and free cash flow is useful in analyzing the company's ability to service and repay its debt. Further, management uses these non-GAAP measures for planning and forecasting in future periods.
These non-GAAP measures should not be considered a substitute for the reported results prepared in accordance with GAAP. EBITDA should not be considered as an alternative to net income as an indicator of our operating performance or to cash flows as a measure of liquidity. Free cash flow should not be considered a substitute for cash provided by operating activities, or other cash flow statement data prepared in accordance with GAAP, or as a measure of financial position or liquidity. In addition, the calculation of free cash flow does not reflect cash used to service debt or cash received from the divestitures of businesses or sales of other assets and thus does not reflect funds available for investment or other discretionary uses. These non-GAAP financial measures, as determined and presented by the company, may not be comparable to related or similarly titled measures reported by other companies.
Set forth on the following pages are reconciliations of these non-GAAP financial measures, if applicable, to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Second-Quarter 2009 Conference Call
The company will host a conference call and Web cast to present the company's fiscal year 2009 second-quarter financial results on
To participate, call (617) 213-4854 ten minutes prior to the start of the call. Please reference pass code 85210970 when dialing in. Investors can also listen to the conference call in real time - or for seven days by recording - by visiting www.arvinmeritor.com.
A replay of the call will be available from
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.
The company's second-quarter financial results will be released prior to the conference call and Web cast on
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In millions, except per share amounts)
Quarter Ended Six Months Ended
March 31, March 31,
2009 2008 2009 2008
Sales $1,110 $1,781 $2,480 $3,444
Cost of sales (1,022) (1,614) (2,319) (3,147)
GROSS MARGIN 88 167 161 297
Selling, general and
administrative (69) (105) (175) (197)
Restructuring costs (56) (5) (82) (15)
Asset impairment charges - - (279) -
Other expense, net (1) (1) (1) (1)
OPERATING INCOME (LOSS) (38) 56 (376) 84
Equity in earnings (losses)
of affiliates (3) 6 1 17
Interest expense, net (23) (20) (45) (47)
INCOME (LOSS) BEFORE INCOME
TAXES (64) 42 (420) 54
Benefit (provision) for income
taxes 12 (14) (633) (24)
Minority interests - (4) 10 (7)
INCOME (LOSS) FROM CONTINUING
OPERATIONS (52) 24 (1,043) 23
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS 5 (4) 5 (15)
NET INCOME (LOSS) $(47) $20 $(1,038) $8
DILUTED EARNINGS (LOSS) PER
SHARE
Continuing operations $(0.72) $0.33 $(14.41) $0.32
Discontinued operations 0.07 (0.05) 0.07 (0.21)
Diluted earnings (loss) per
share $(0.65) $0.28 $(14.34) $0.11
Diluted average common shares
outstanding 72.6 72.5 72.4 72.5
ARVINMERITOR, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited, In millions)
March 31, September 30,
2009 2008
ASSETS:
Cash and cash equivalents $165 $497
Receivables, trade and other, net 783 1,114
Inventories 506 623
Other current assets 115 218
Net property 530 775
Goodwill 423 522
Other assets 352 925
TOTAL ASSETS $2,874 $4,674
LIABILITIES AND SHAREOWNERS' EQUITY
(DEFICIT)
Short-term debt $141 $240
Accounts payable 715 1,287
Other current liabilities 435 610
Long-term debt 1,376 1,063
Retirement benefits 654 690
Other liabilities 272 247
Minority interests 50 75
Shareowners' equity (deficit) (769) 462
TOTAL LIABILITIES AND SHAREOWNERS'
EQUITY (DEFICIT) $2,874 $4,674
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(Unaudited, In millions)
Quarter Ended Six Months Ended
March 31, March 31,
2009 2008 2009 2008
Sales:
Commercial Vehicle Systems $739 $1,192 $1,695 $2,272
Light Vehicle Systems 371 589 785 1,172
Total sales $1,110 $1,781 $2,480 $3,444
EBITDA:
Commercial Vehicle Systems $15 $84 $45 $155
Light Vehicle Systems (29) 19 (331) 21
Total Segment EBITDA (14) 103 (286) 176
Unallocated Corporate Costs (7) (4) (23) (5)
Total EBITDA (21) 99 (309) 171
Loss on Sale of Receivables (2) (5) (6) (9)
Depreciation and
Amortization (18) (36) (50) (68)
Interest Expense, Net (23) (20) (45) (47)
Benefit (Provision) for
Income Taxes 12 (14) (633) (24)
Income (Loss) from
Continuing Operations $(52) $24 $(1,043) $23
ARVINMERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In millions)
Six Months Ended March 31,
2009 2008
OPERATING ACTIVITIES
Income (loss) from continuing
operations $(1,043) $23
Adjustments to loss from continuing
operations:
Depreciation and amortization 50 68
Asset Impairment charges 279 -
Deferred income tax expense 632 21
Restructuring costs, net of payments 41 (5)
Pension and retiree medical expense 43 52
Other adjustments to income (loss)
from continuing operations, net 7 (5)
Pension and retiree medical
contributions (61) (43)
Proceeds from terminations of
interest rate swaps - 28
Changes in off-balance sheet
receivable securitization and
factoring (183) 197
Changes in assets and liabilities (197) (430)
Cash flows used for continuing
operations (432) (94)
Cash flows used for discontinued
operations, net (8) (14)
CASH USED FOR OPERATING ACTIVITIES (440) (108)
INVESTING ACTIVITIES
Capital expenditures (84) (63)
Acquisitions of businesses and
investments, net of cash acquired - (41)
Proceeds from disposition of property
and businesses 2 8
Proceeds from investments and
marketable securities 6 5
Net investing cash flows provided by
discontinued operations - 55
CASH USED FOR INVESTING ACTIVITIES (76) (36)
FINANCING ACTIVITIES
Borrowings (payments) on accounts
receivable securitization program (23) 128
Borrowings on revolving credit
facility, net 318 -
Repayment of notes (83) (5)
Borrowings on lines of credit and
other, net 6 4
Net change in debt 218 127
Debt issuance and extinguishment costs - (6)
Cash dividends (8) (15)
CASH PROVIDED BY FINANCING ACTIVITIES 210 106
EFFECT OF CHANGES IN FOREIGN CURRENCY
EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (26) 6
CHANGE IN CASH AND CASH EQUIVALENTS (332) (32)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 497 409
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $165 $377
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited)
(In millions, except per share amounts)
LVS Q2 FY 09
Q2 FY 09 Separation Before
Reported Restructuring Costs Special Items
Sales $1,110 $- $- $1,110
Gross Margin 88 - - 88
Operating Income (Loss) (38) 56 2 20
Loss from Continuing Operations (52) 41 2 (9)
Basic Loss Per Share - Continuing
Operations $(0.72) $0.57 $0.03 $(0.12)
Segment EBITDA:
Commercial Vehicle Systems $15 $38 $- $53
Light Vehicle Systems (29) 16 - (13)
Total Segment EBITDA $(14) $54 $- $40
Segment EBITDA Margins
Commercial Vehicle Systems 2.0% 7.2%
Light Vehicle Systems -7.8% -3.5%
Total Segment EBITDA Margins -1.3% 3.6%
Q1 FY 09
Q1 FY 09 Impairment Before
Adjusted (1) Restructuring Charges Special Items
Segment EBITDA:
Commercial Vehicle Systems $30 $8 $8 $46
Light Vehicle Systems (302) 15 252 (35)
Total Segment EBITDA $(272) $23 $260 $11
(1) Segment EBITDA results for the first quarter of fiscal year 2009 have been adjusted to conform to the year-to-date allocations of corporate costs.
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited)
(In millions, except per share amounts)
Q2 FY 08 Q2 FY 08 Before
Reported Restructuring Special Items
Sales $1,781 $- $1,781
Gross Margin 167 - 167
Operating Income 56 5 61
Income from Continuing Operations 24 3 27
Diluted Earnings Per Share -
Continuing Operations $0.33 $0.04 $0.37
Segment EBITDA:
Commercial Vehicle Systems $84 $- $84
Light Vehicle Systems 19 5 24
Total Segment EBITDA $103 $5 $108
Segment EBITDA Margins
Commercial Vehicle Systems 7.0% 7.0%
Light Vehicle Systems 3.2% 4.1%
Total Segment EBITDA Margins 5.8% 6.1%
ARVINMERITOR, INC.
EBITDA BEFORE SPECIAL ITEMS RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Three Months Ended
March 31,
2009 2008
Total EBITDA - Before Special Items $36 $104
Restructuring Costs, net of minority interests (55) (5)
LVS Separation Costs (2) -
Loss on Sale of Receivables (2) (5)
Depreciation and Amortization (18) (36)
Interest Expense, Net (23) (20)
Benefit (Provision) for Income Taxes 12 (14)
Income (Loss) From Continuing Operations $(52) $24
ARVINMERITOR, INC.
FREE CASH FLOW - RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Quarter Ended
March 31,
2009 2008
Cash flows provided by (used for)
operating activities, before
receivables securitization and
factoring $77 $81
Changes in receivables securitization
and factoring (179) 82
Cash flows provided by (used for)
operating activities (102) 163
Capital expenditures (36) (29)
Free cash flow $(138) $134
(Logo: http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO )
SOURCE ArvinMeritor, Inc.
