Earnings Up $114 Million Year-Over-Year on Diverse Product, Customer and
Geographic Mix
TROY, Mich., July 29 /PRNewswire-FirstCall/ -- ArvinMeritor, Inc.
(NYSE: ARM) today reported financial results for its third quarter ended
June 30, 2008.
Financial Highlights for Third-Quarter Fiscal Year 2008
-- Sales of $2.0 billion - approximately $340 million higher than the same
period last year.
-- Net income was $44 million, or $0.60 per diluted share, compared to a
net loss of $70 million, or $0.99 per diluted share, in the third
quarter of fiscal year 2007.
-- Income from continuing operations, before special items, was
$56 million, or $0.77 per diluted share, compared to $18 million, or
$0.25 per diluted share, one year ago.
-- Cash flow from operations, net of capital expenditures, was $59 million
compared to an outflow of $156 million in the same period last year.
-- Commercial Vehicle Systems (CVS) EBITDA margins increased by 1.2
percentage points, before special items, in the third quarter of fiscal
year 2008 compared to the same period last year.
-- Light Vehicle Systems (LVS) sales, largely driven by overseas markets,
increased by $34 million, a 6-percent increase over the same period
last year (down five-percent on a constant currency basis).
"ArvinMeritor's favorable product, customer and geographic mix,
combined with a dedicated focus across the company to implement and
maintain cost reduction initiatives, drove strong results this quarter."
said Chairman, CEO and President Chip McClure. "I am pleased that the hard
work and commitment of our global team is being reflected in our financial
results."
Results for the Third-Quarter Fiscal Year 2008
In the third quarter of fiscal year 2008, ArvinMeritor posted sales
from continuing operations of $2.0 billion, up from $1.7 billion in the
same period last year. Approximately one-half of this increase was due to
stronger currencies outside the U.S. The remaining increase is comprised of
higher medium and heavy duty truck production in Western Europe; favorable
industry conditions in South America and Asia Pacific; a steady demand for
the company's light vehicle product mix in Europe; and increased specialty
sales, including military products in North America and off-highway
products in China.
EBITDA, before special items, was $121 million, up $36 million from the
same period last year. This increase is primarily due to higher medium and
heavy duty truck volumes in Europe and South America, and continued higher
specialty and aftermarket sales.
On a GAAP basis, the company's income from continuing operations was
$51 million or $0.70 per diluted share, compared to a loss from continuing
operations of $4 million or $0.06 per diluted share in the same period last
year.
Income from continuing operations, before special items, was $56
million, or $0.77 per diluted share, compared to $18 million, or $0.25 per
diluted share a year ago.
Earnings benefited from the favorable resolution of certain tax issues.
These tax benefits were included in the company's full-year guidance
previously provided.
Free cash flow (cash flow from operations net of capital expenditures)
was $59 million in the third quarter, increased from an outflow of $156
million in the same period last year. This increase is primarily due to
stronger earnings this quarter as compared to the third fiscal quarter of
2007, in addition to the negative impact on cash flow in the third quarter
of last year resulting from activities associated with discontinued
operations.
Update on Plans to Spin-Off Light Vehicle Systems
On May 6, 2008, the company announced its intent to spin off its LVS
business to ArvinMeritor shareholders, with the commercial vehicle business
- consisting of truck, trailer, specialty products and the commercial
vehicle aftermarket - remaining with ArvinMeritor. The new LVS business
will be named Arvin Innovation. On May 28, Arvin Innovation filed the
initial registration document (Form 10), and provided an update to the
market via webcast. On July 28, the company filed its first amendment to
the Form 10.
LVS achieved the third quarter milestones required in order to complete
the spinoff, and is on track to achieve fourth quarter performance
milestones. Information related to the spinoff is available on the
company's website at arvinmeritor.com.
Performance Plus "Wave 2"
The company is currently launching Wave 2 of Performance Plus designed
to drive idea generation and implementation with an emphasis on the
company's business in Europe. ArvinMeritor's initial Performance Plus
initiative, launched in December 2006, will fully achieve the company's
2008 target of $75 million in savings net of material cost increases.
ArvinMeritor is in the process of re-energizing and refreshing the internal
resources dedicated to the program. This team will review processes,
products and operations across the business to identify additional ways to:
-- Foster profitable growth
-- Reduce costs
-- Achieve operational excellence
-- Encourage innovation
"Through Performance Plus, we are cultivating an environment of
innovation and continuous improvement," said Jay Craig, chief financial
officer, who played a key role in leading Performance Plus since its launch
in 2006. "It is not a short-term solution - it's more like a long-distance
race with no finish line." Wave 2 will add confidence to the company's
targeted goal of $75 million in savings for fiscal year 2009, in spite of
unprecedented cost increases in raw materials.
Growth in Commercial Vehicle Aftermarket
ArvinMeritor recently announced another strategic move to expand its
commercial vehicle aftermarket business with the acquisition of
Trucktechnic, a remanufacturer and distributor of commercial vehicle disc
and air system components based in Liege, Belgium.
Trucktechnic's line of brake kits, components, and testing equipment
expands and complements ArvinMeritor's existing European aftermarket
portfolio both in product breadth and market depth and will be key in
supporting the company's continued growth in that region. This acquisition
follows the company's purchase of Mascot Truck Parts in December 2007.
Since that time, the company announced a multi-million-dollar supply
agreement to provide remanufactured transmissions and axle carriers to
Navistar Parts, and has recently entered into agreements with PACCAR to
support its Peterbilt and Kenworth dealer networks in Canada with the
Mascot brand of remanufactured transmissions and axle carriers.
Outlook
The company's calendar year 2008 forecast for light vehicle sales is in
the range of 14.4 to 14.6 million vehicles in North America. ArvinMeritor's
forecast for Western Europe is 16.6 to 16.9 million vehicles, down from
17.1 in the prior forecast.
On a calendar year basis, the company anticipates North America Class 8
truck production to be in the range of 195,000 to 205,000 units; and heavy
and medium truck volumes in Western Europe to be in the range of 550,000 to
560,000.
ArvinMeritor's fiscal year 2008 forecast for North American Class 8
truck production is in the range of 185,000 to 195,000 units. The company's
fiscal year 2008 forecast for heavy and medium truck volumes in Western
Europe is 565,000 to 575,000.
The company expects sales from continuing operations in fiscal year
2008 to be in the range of $7.1 billion to $7.3 billion.
The outlook for full-year EBITDA from continuing operations, before
special items, is expected to be in the range of $400 million to $410
million for the fiscal year.
ArvinMeritor is reiterating its forecast for diluted earnings per share
from continuing operations, before special items, to be at the top end of
the previously forecasted range of $1.40 to $1.60. The company is raising
its forecast for free cash flow for fiscal year 2008 to be in the range of
negative $50 million to negative $100 million.
"We look forward to 2009 with optimism," said McClure. "We have
improved our results consistently through the first three quarters of
fiscal year 2008 despite deterioration in the North American and European
markets. Next year, we expect to benefit from Class 8 commercial vehicle
production volumes in North America which are forecast to increase in the
range of 20 to 40 percent."
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 serves commercial truck, trailer and specialty original
equipment manufacturers and certain aftermarkets, and light vehicle
manufacturers. Headquartered in Troy, Mich., ArvinMeritor employs
approximately 18,000 people in 24 countries. 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: http://www.arvinmeritor.com/.
Editor's Note: High- resolution photos can be downloaded from
ArvinMeritor's Photo Library at
http://www.arvinmeritor.com/media_room/photo_library.asp.
Forward-Looking Statements
This press release 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 planned spin-off of
ArvinMeritor's LVS business, including the timing and certainty of
completion of the transition. 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; 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;
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; 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 ability of the company to continue to comply with
covenants in its financing agreements; the ability of the company to access
capital markets; credit ratings 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 Sept. 30, and its fiscal quarters
end on the Sundays nearest Dec. 31, March 31 and June 30. All year and
quarter references relate to the company's fiscal year and fiscal quarters,
unless otherwise stated.
Non-GAAP Measures
In addition to the results reported in accordance with accounting
principles generally accepted in the United States ("GAAP") included
throughout this press release, the company has provided information
regarding income from continuing operations, diluted earnings per share and
operating income before special items, which are non-GAAP financial
measures. These non- GAAP measures are defined as reported income or loss
from continuing operations, reported diluted earnings or loss per share,
and operating income or loss plus or minus special items. Other non-GAAP
financial measures include EBITDA and EBITDA, before special items, and
free cash flow. EBITDA is defined as income (loss) from continuing
operations before income taxes, depreciation and amortization and loss of
sale on receivables. EBITDA, before special items, is defined as EBITDA,
plus or minus special items. Free cash flow represents net cash provided by
operating activities, less capital expenditures.
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. Management
uses EBITDA as the primary basis to evaluate the performance of each of its
reportable segments.
Management believes EBITDA is a meaningful measure of performance as it
is commonly utilized by management and investors to analyze operating
performance and entity valuation. Management, the investment community and
the banking institutions routinely use EBITDA, together with other
measures, to measure operating performance in our industry. 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 liquidity. In addition, the calculation of free
cash flow does not reflect cash used to service debt or cash received from
the divestitures or businesses or sales of other assets and thus does not
reflect funds available for investment or other discretionary uses.
These non-GAAP measures should not be considered a substitute for the
reported results prepared in accordance with GAAP. 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.
Third-Quarter Conference Call
ArvinMeritor will host a conference call and web cast to discuss the
company's third-quarter fiscal year 2008 financial results on Tuesday, July
29, 2008, at 8 a.m. (ET).
To participate, call (888) 686-9704 ten minutes prior to the start of
the call. Please reference participant conference ID 8087740 when dialing
in. Investors can also listen to the conference call in real time - or for
seven days by recording - by visiting http://www.arvinmeritor.com.
A telephone replay of the call will be available from 11 a.m. on July
29 to 11:59 p.m. on Aug. 5, 2008, by calling (888) 203-1112 (within the
United States) or (719) 457-0820 for international calls. Please refer to
replay Passcode 8087740.
To access the listen-only audio Web cast, visit the ArvinMeritor Web site
at http://www.arvinmeritor.com and select the Web cast link from the home page or the
investor page.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share amounts)
Quarter Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited) (Unaudited)
Sales $2,003 $1,662 $5,447 $4,857
Cost of sales (1,807) (1,526) (4,954) (4,474)
GROSS MARGIN 196 136 493 383
Selling, general and
administrative (130) (93) (327) (265)
Restructuring costs (4) (24) (19) (61)
Other income (expense) - - (1) 12
OPERATING INCOME 62 19 146 69
Equity in earnings of
affiliates 12 10 29 24
Interest expense, net (19) (27) (66) (88)
INCOME BEFORE INCOME TAXES 55 2 109 5
Benefit (provision) for
income taxes 3 (1) (21) (2)
Minority interests (7) (5) (14) (10)
INCOME (LOSS) FROM
CONTINUING OPERATIONS 51 (4) 74 (7)
LOSS FROM DISCONTINUED
OPERATIONS (7) (66) (22) (150)
NET INCOME (LOSS) 44 (70) 52 (157)
DILUTED EARNINGS (LOSS)
PER SHARE
Continuing operations $0.70 $(0.06) $1.02 $(0.10)
Discontinued operations (0.10) (0.93) (0.30) (2.14)
Diluted earnings (loss)
per share $0.60 $(0.99) $0.72 $(2.24)
Diluted average common
shares outstanding 72.9 70.8 72.6 70.1
ARVINMERITOR, INC.
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, September 30,
2008 2007
(Unaudited)
ASSETS:
Cash and cash equivalents $432 $409
Receivables, trade and other, net 1,356 1,223
Inventories 638 541
Other current assets 242 216
Net property 771 738
Goodwill 525 520
Other assets 1,123 1,142
TOTAL ASSETS $5,087 $4,789
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term debt $224 $18
Accounts payable 1,347 1,342
Other current liabilities 662 719
Long-term debt 1,068 1,130
Retirement benefits 790 763
Other liabilities 238 209
Minority interests 78 65
Shareowners' equity 680 543
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $5,087 $4,789
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(in millions)
Quarter Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
(Unaudited) (Unaudited)
Sales:
Commercial Vehicle Systems $1,356 $1,049 $3,628 $3,170
Light Vehicle Systems 647 613 1,819 1,687
Total sales $2,003 $1,662 $5,447 $4,857
EBITDA:
Commercial Vehicle Systems $101 $63 $256 $186
Light Vehicle Systems 23 12 44 34
Total Segment EBITDA 124 75 300 220
Unallocated Corporate Costs (13) (7) (18) (8)
ET Corporate Allocations - (9) - (27)
Total EBITDA 111 59 282 185
Loss on Sale of Receivables (6) (3) (15) (6)
Depreciation and Amortization (38) (32) (106) (96)
Interest Expense, Net (19) (27) (66) (88)
Benefit (Provision) for
Income Taxes 3 (1) (21) (2)
Income (Loss) From Continuing
Operations $51 $(4) $74 $(7)
ARVINMERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Nine Months Ended
June 30,
2008 2007
(Unaudited)
OPERATING ACTIVITIES
Income (loss) from continuing operations $74 $(7)
Adjustments to income (loss) from continuing
operations:
Depreciation and amortization 106 96
Gain on divestitures - (2)
Adjustment to impairment reserves, net - (10)
Restructuring costs, net of payments (7) 38
Loss on debt extinguishment 3 6
Pension and retiree medical expense 78 99
Other adjustments to income (loss) from
continuing operations (3) 6
Pension and retiree medical contributions (62) (182)
Proceeds from unwind of swap agreement 28 -
Changes in off-balance sheet receivable
securitization and factoring 209 115
Changes in assets and liabilities (403) (231)
Cash flows provided by (used for) continuing
operations 23 (72)
Cash flows used for discontinued operations (17) (118)
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 6 (190)
INVESTING ACTIVITIES
Capital expenditures (118) (72)
Acquisitions of businesses and investments,
net of cash acquired (41) (2)
Proceeds from disposition of property and
businesses 9 11
Proceeds from investments and marketable securities 5 5
Net investing cash flows provided by discontinued
operations 55 177
CASH PROVIDED BY (USED FOR) BY INVESTING ACTIVITIES (90) 119
FINANCING ACTIVITIES
Borrowings on accounts receivable securitization
program 118 49
Issuance of convertible notes - 200
Repayment of notes (5) (249)
Borrowings on lines of credit and other, net 8 -
Net change in debt 121 -
Debt issuance and extinguishment costs (6) (10)
Proceeds from exercise of stock options - 21
Cash dividends (23) (21)
Other financing activities - (1)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 92 (11)
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE
RATES ON CASH AND CASH EQUIVALENTS 15 16
CHANGE IN CASH AND CASH EQUIVALENTS 23 (66)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 409 350
CASH AND CASH EQUIVALENTS AT END OF PERIOD $432 $284
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(in millions, except per share amounts)
(unaudited)
Q3 FY 08
Spin-Off Before
Q3 FY 08 Transaction Tax Special
Reported Restructuring Costs Impact Items
Sales $2,003 $- $- $- $2,003
Gross Margin 196 - - - 196
Operating Income 62 4 6 - 72
Income from Continuing
Operations 51 3 4 (2) 56
Diluted Earnings (Loss)
Per Share - Continuing
Operations $0.70 $0.04 0.06 $(0.03) $0.77
Segment EBITDA:
Commercial Vehicle
Systems $101 $- $- $- $101
Light Vehicle Systems 23 3 - - 26
Total Segment EBITDA $124 $3 $- $- $127
Segment EBITDA Margins
Commercial Vehicle
Systems 7.4% 7.4%
Light Vehicle Systems 3.6% 4.0%
Total Segment EBITDA
Margins 6.2% 6.3%
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(in millions, except per share amounts)
(unaudited)
Q3 FY 07
Before
Q3 FY 07 Product Income Special
Reported Disruptions Restructuring Taxes Items
Sales $1,662 $- $- $- $1,662
Gross Margin 136 2 - - 138
Operating Income 19 2 24 - 45
Income (Loss)
from Continuing
Operations (4) 1 15 6 18
Diluted Earnings
(Loss) Per Share -
Continuing
Operations $(0.06) $0.02 $0.21 $0.08 $0.25
Segment EBITDA:
Commercial Vehicle
Systems $63 $- $2 $- $65
Light Vehicle
Systems 12 2 17 - 31
Total Segment
EBITDA $75 $2 $19 $- $96
Segment EBITDA
Margins
Commercial Vehicle
Systems 6.0% 6.2%
Light Vehicle
Systems (1) 2.0% 4.9%
Total Segment
EBITDA Margins 4.5% 5.8%
(1) LVS margins before special items are adjusted to reflect the impact of
reduced volumes in our Brussels operation.
ARVINMERITOR, INC.
EBITDA Before Special Items Reconciliation
Non-GAAP
(Unaudited, in millions)
Quarter Ended
June 30,
2008 2007
Total EBITDA - Before Special Items 121 85
Restructuring Costs (4) (24)
Spin-Off Transaction Costs (6) -
Product Disruptions - (2)
Loss on Sale of Receivables (6) (3)
Depreciation and Amortization (38) (32)
Interest Expense, Net (19) (27)
Benefit (Provision) for Income Taxes 3 (1)
Income (Loss) From Continuing Operations $51 $(4)
ARVINMERITOR, INC.
FREE CASH FLOW - RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Quarter Ended June 30,
2008 2007
Cash provided by (used for) operating activities $114 $(127)
Less: Capital expenditures (1) (55) (29)
Free cash flow $59 $(156)
(1) Includes capital expenditures of discontinued operations of $5 million
in the prior year.
SOURCE ArvinMeritor, Inc.
 back to top
Related links:
http://www.arvinmeritor.com/
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO
PRN Photo Desk, photodesk@prnewswire.com
http://www.prnewswire.com/comp/762401.html/
CONTACT:
Media Inquiries, Lin Cummins,
+1-248-435-7112, linda.cummins@arvinmeritor.com, or Investor
Inquiries, Terry Huch, +1-248-435-9426,
terry.huch@arvinmeritor.com, both of ArvinMeritor, Inc.
|
