TROY, Mich., Nov. 14 /PRNewswire-FirstCall/ -- ArvinMeritor, Inc.
(NYSE: ARM) today reported financial results for its full fiscal year and
fourth quarter ended Sept. 30, 2007.
Fiscal Year 2007 Highlights
-- Sales from continuing operations for fiscal year 2007 were $6.4
billion, up $34 million, compared to fiscal year 2006.
-- On a GAAP basis, net loss from continuing operations was $30 million,
or $0.43 per diluted share.
-- Earnings per share from continuing operations for fiscal 2007, before
special items, were $0.53 per diluted share.
-- Net debt was reduced by $146 million during the fiscal year despite
negative free cash flow of $113 million.
Fourth-Quarter Highlights
-- Fourth-quarter sales were $1.6 billion, flat from the same period last
year.
-- On a GAAP basis, net loss from continuing operations was $23 million,
or $0.32 per diluted share.
-- Fourth-quarter loss from continuing operations, before special items,
was $4 million, or $0.06 per diluted share.
-- Free cash flow of $178 million, and a $215 million reduction in net
debt, for the fourth quarter of fiscal year 2007.
"Despite the solid progress we are making in implementing our strategic
initiatives, our results this quarter were negatively impacted by weaker
than anticipated North American truck production and the continuing
capacity challenges in our European truck operations," said Chairman, CEO
and President Chip McClure. "Going forward, we believe European capacity
issues will be less severe due to actions we are taking to implement lean
manufacturing improvements and bring new suppliers into the pipeline.
"Following this period of extended softness in the North American truck
market, we expect to see a rebound as the industry gradually returns in
2008. In Europe, we look forward to continued strong sales volumes, and in
Asia and South America, we expect volumes to grow significantly."
Fourth-Quarter Results 2007
For the fourth quarter of fiscal year 2007, ArvinMeritor posted sales
of $1.6 billion, flat over the same period last year. Sales reflect the
continued downturn in Class 8 North American truck sales offset by stronger
volumes in other regions.
Operating income in the fourth quarter of 2007, before special items,
was $8 million, compared to operating income, before special items, of $56
million in the prior year's fourth quarter.
Loss from continuing operations during the fourth quarter of fiscal
year 2007, before special items, was $4 million, or $0.06 per diluted
share, compared to income from continuing operations, before special items,
of $29 million, or $0.41 per diluted share, a year ago. Fourth-quarter
results reflect reduced North American volumes and significant premium
costs associated with record European volumes.
Special items included costs associated with supplier reorganizations,
restructuring expenses and certain non-recurring tax charges. Combined,
these items accounted for approximately $0.26 per share of additional
expense in the fourth quarter.
For the fourth quarter of 2007, ArvinMeritor reported positive free
cash flow of $178 million.
Fourth-Quarter Accomplishments
Accomplishments in the fourth fiscal quarter of 2007 include:
-- Sourced as the supplier on the majority of the Mine Resistant Ambush
Protected (MRAP) vehicles awarded thus far, with additional potential
upside as new awards are announced.
-- Entered into arrangement with Chery Motors in China that the company
expects will ramp up to anticipated sales of $150 million annually by
2010.
-- Announced closure of four additional manufacturing facilities in North
America, as part of previously announced restructuring actions.
-- Awarded new business to supply more than four million window regulator
motors annually to Hyundai Motor Company worldwide.
Outlook for 2008
The company's fiscal year 2008 forecast for light vehicle sales is 16
million vehicles in North America and 17 million vehicles in Western
Europe. The company's light vehicle outlook is now based on expected sales
volume, rather than production forecasts, as in the past.
ArvinMeritor's forecast for North American Class 8 truck production is
in the range of 210,000 to 230,000 units in fiscal year 2008. The forecast
for heavy and medium truck volumes in Western Europe is in the range of
530,000 to 540,000 units.
ArvinMeritor's 2008 sales are expected to be in the range of $6.8
billion to $7.0 billion, and full-year diluted earnings per share are
expected to be in the range of $1.40 to $1.60. This guidance excludes gains
or losses on divestitures, restructuring costs, and other special items,
including any extended customer shutdowns or production interruptions.
"We are encouraged by our prospects for 2008," said McClure. "We
anticipate that our Performance Plus initiatives, combined with the
aggressive internal programs we have implemented to drive cost reductions,
will help to mitigate the soft market conditions in the first half of
fiscal year 2008. We are on track to generate $75 million in cost savings
in 2008 and $150 million in annual cost savings by 2009."
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 23 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/.
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.
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 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; 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 or loss 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," "net debt" and "free cash
flow." EBITDA is defined as income or loss from continuing operations
before interest, income taxes, depreciation and amortization and loss on
sale of receivables. We use EBITDA as the primary basis to evaluate the
performance of each of our reportable segments. Net debt is defined as
total debt less the fair value adjustment of notes due to interest rate
swaps, less cash. 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. 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; net debt
is an important indicator of the company's overall leverage; 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. Neither net debt
nor free cash flow should be considered substitutes for debt, cash provided
by operating activities, or other balance sheet or 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.
Fourth-Quarter Results Conference Call
The company will host a telephone conference call and Web cast to
discuss the company's fiscal year 2007 fourth-quarter and full year
financial results on November 14, 2007, at 9 a.m. (ET). To participate,
call (866) 223-0615 ten minutes prior to the start of the call. Please
reference participant passcode 20982262 when dialing in. Investors can also
listen to the conference call in real time - or for 90 days by recording -
by visiting http://www.arvinmeritor.com.
A replay of the call will be available from 11 a.m. November 14, to
11:59 p.m. Nov. 16, 2007, by calling (866) 247-4222 (within the United
States) or 44 (0) 1452 55 00 00 for international calls. Please refer to
replay access number 20982262.
To access the Web cast, visit the ArvinMeritor Web site at
http://www.arvinmeritor.com/ and click on the Web cast link on either the
home page or investor page.
ARVINMERITOR, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in millions, except per share amounts)
Twelve Months
Quarter Ended Ended
September 30, September 30,
2007 2006 2007 2006
Sales $1,592 $1,587 $6,449 $6,415
Cost of sales (1,483) (1,468) (5,957) (5,910)
GROSS MARGIN 109 119 492 505
Selling, general, and administrative (114) (74) (379) (336)
Restructuring costs (10) (8) (71) (18)
Other income (expense) (1) (3) 11 20
OPERATING INCOME (LOSS) (16) 34 53 171
Equity in earnings of affiliates 10 9 34 32
Interest expense, net and other (22) (28) (110) (131)
INCOME (LOSS) BEFORE INCOME TAXES (28) 15 (23) 72
Income tax benefit 10 38 8 54
Minority interests (5) (3) (15) (14)
Income (loss) from continuing
operations (23) 50 (30) 112
Loss from discontinued operations (39) (324) (189) (287)
NET LOSS $(62) $(274) $(219) $(175)
DILUTED EARNINGS (LOSS) PER SHARE
Continuing operations $(0.32) $0.71 $(0.43) $1.60
Discontinued operations (0.54) (4.60) (2.68) (4.09)
Diluted loss per share $(0.86) $(3.89) $(3.11) $(2.49)
Diluted shares outstanding 71.7 70.4 70.5 70.2
ARVINMERITOR, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION
(Unaudited, In millions)
Twelve Months
Quarter Ended Ended
September 30, September 30,
2007 2006 2007 2006
Sales:
Commercial Vehicle Systems $1,035 $1,082 $4,205 $4,179
Light Vehicle Systems 557 505 2,244 2,236
Total Sales $1,592 $1,587 $6,449 $6,415
Segment EBITDA:
Commercial Vehicle Systems $35 $74 $221 $293
Light Vehicle Systems 2 12 36 58
Total Segment EBITDA 37 86 257 351
Unallocated Costs (3) (4) (11) (8)
ET Corporate Allocations (9) (8) (36) (29)
Total EBITDA 25 74 210 314
Loss on Sale of Receivables (3) (1) (9) (1)
Depreciation and Amortization (33) (33) (129) (124)
Interest Expense, Net (22) (28) (110) (131)
Income Tax Benefit 10 38 8 54
Income (Loss) From Continuing
Operations $(23) $50 $(30) $112
ARVINMERITOR, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(In millions)
September 30, September 30,
2007 2006
ASSETS (Unaudited)
Cash and cash equivalents $409 $350
Receivables, net 1,223 1,098
Inventories 541 488
Other current assets 216 248
Assets of discontinued operations - 1,206
Net property 738 719
Goodwill 520 503
Other assets 1,142 896
TOTAL ASSETS $4,789 $5,508
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term debt $18 $56
Accounts payable 1,342 1,106
Other current liabilities 719 706
Liabilities of discontinued operations - 712
Long-term debt 1,130 1,174
Retirement benefits 763 487
Other liabilities 209 259
Minority interests 65 64
Shareowners' equity 543 944
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $4,789 $5,508
ARVINMERITOR, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Twelve Months Ended
September 30,
2007 2006
(Unaudited)
CASH PROVIDED BY OPERATING ACTIVITIES $36 $440
INVESTING ACTIVITIES
Capital expenditures (120) (107)
Proceeds from dispositions of
property and businesses 12 54
Other investing activities 5 (16)
Net investing cash flows provided
by discontinued operations 199 179
CASH PROVIDED BY INVESTING ACTIVITIES 96 110
FINANCING ACTIVITIES
Change in U.S. accounts
receivable securitization program (40) (72)
Proceeds from issuance of
convertible notes and term loan 200 470
Repayment of notes and term loan (249) (672)
Borrowings (payments) on lines of
credit and other, net 3 (57)
Net change in debt (86) (331)
Debt issuance and extinguishment costs (10) (28)
Proceeds from exercise of stock options 28 1
Cash dividends (29) (28)
Other financing activities (1) -
Net financing cash flows used for
discontinued operations - (5)
CASH USED FOR FINANCING ACTIVITIES (98) (391)
IMPACT OF CURRENCY ON CASH AND CASH
EQUIVALENTS 25 4
CHANGE IN CASH AND CASH EQUIVALENTS 59 163
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 350 187
CASH AND CASH EQUIVALENTS AT END OF PERIOD $409 $350
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited, in millions, except for per share amounts)
Q4 FY 07
Before
Q4 FY 07 Restruc- Income Special
Reported turing Other(1) Taxes Items
Sales $1,592 $- $- $- $1,592
Gross Margin 109 - 9 - 118
Operating Income (16) 10 14 - 8
Income from Continuing Operations (23) 6 9 4 (4)
Diluted Earnings Per Share -
Continuing Operations $(0.32) $0.08 $0.12 $0.06 $(0.06)
Segment EBITDA
Commercial Vehicle Systems $35 $1 $9 $- $45
Light Vehicle Systems 2 8 3 - 13
Total Segment EBITDA $37 $9 $12 $- $58
Segment EBITDA Margins
Commercial Vehicle Systems 3.4% 4.3%
Light Vehicle Systems 0.4% 2.3%
Total Segment EBITDA Margins 2.3% 3.6%
(1) Other includes costs associated with product disruptions, supplier
reorganizations, environmental remediation and other.
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited, in millions, except for per share amounts)
Ride
Control
Twelve Fair Before
Months Value Debt Special
Ended Adjust- Restruc- Extingu- Income Items
9/30/07 ment turing Other(1) ishment Taxes 9/30/07
Sales $6,449 $- $- $- $- $- $6,449
Gross Margin 492 - - 7 - - 499
Operating Income 53 (10) 71 12 - - 126
Income from
Continuing
Operations (30) (6) 44 8 4 18 38
Diluted Earnings Per
Share - Continuing
Operations $(0.43) $(0.08) $0.62 $0.11 $0.05 $0.26 $0.53
Segment EBITDA
Commercial Vehicle
Systems $221 $- $11 $- $- $- $232
Light Vehicle
Systems 36 (12) 54 12 - - 90
Total Segment EBITDA $257 $(12) $65 $12 $- $- $322
Segment EBITDA
Margins
Commercial Vehicle
Systems 5.3% 5.5%
Light Vehicle
Systems 1.6% 4.0%
Total Segment EBITDA
Margins 4.0% 5.0%
(1) Other includes costs associated with product disruptions, supplier
reorganizations, environmental remediation and other.
ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION
Non-GAAP
(Unaudited, in millions, except for per share amounts)
Environ-
mental, Q4 FY 06
Severance Before
Q4 FY 06 Retiree Restruc- and Income Special
Reported Medical turing Other Taxes Items
Sales $1,587 $- $- $- $- $1,587
Gross Margin 119 5 - 3 - 127
Operating Income 34 5 8 9 - 56
Income from Continuing
Operations 50 3 5 6 (35) 29
Diluted Earnings Per
Share - Continuing
Operations $0.71 $0.04 $0.07 $0.09 $(0.50) $0.41
Segment EBITDA
Commercial Vehicle
Systems $74 $5 $3 $2 $- $84
Light Vehicle
Systems 12 - 5 3 $- 20
Total Segment EBITDA $86 $5 $8 $5 $- $104
Segment EBITDA Margins
Commercial Vehicle
Systems 6.8% 7.8%
Light Vehicle Systems 2.4% 4.0%
Total Segment EBITDA
Margins 5.4% 6.6%
ARVINMERITOR, INC.
EBITDA BEFORE SPECIAL ITEMS RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Twelve Months
Quarter Ended Ended
September 30, September 30,
2007 2006 2007 2006
Total EBITDA - Before Special Items $49 $96 $281 $366
Restructuring Costs (10) (8) (71) (18)
Reversal of Impairment Reserves - - 12 -
Gain on Divestitures - - - 28
Retiree Medical - (5) - (5)
Other (1) (14) (9) (12) (57)
Loss on Sale of Receivables (3) (1) (9) (1)
Depreciation and Amortization (33) (33) (129) (124)
Interest Expense, Net and other (22) (28) (110) (131)
Income Tax Benefit 10 38 8 54
Income (Loss) From Continuing
Operations $(23) $50 $(30) $112
(1) Other includes costs associated with product disruptions, supplier
reorganizations, environmental remediation, severance and other.
ARVINMERITOR, INC.
FREE CASH FLOW - RECONCILIATION
Non-GAAP
(Unaudited, in millions)
Three Months Twelve Months
Ended Ended
September 30, September 30,
2007 2006 2007 2006
Cash provided by operating
activities $226 $128 $36 $440
Less: Capital expenditures (1) (48) (46) (149) (156)
Free cash flow $178 $82 $(113) $284
(1) Includes capital expenditures of discontinued operations.
ARVINMERITOR, INC.
NET DEBT COMPOSITION
Non-GAAP
(Unaudited, in millions)
September 30, June 30, March 31, December 31, September 30,
2007 2007 2007 2006 2006
Total Debt $1,148 $1,226 $1,237 $1,311 $1,230
Less: Cash (409) (284) (222) (369) (350)
Less: Fair value
adjustment of notes (13) (1) (8) (8) (8)
Net Debt $726 $941 $1,007 $934 $872
(Logo: http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO )
SOURCE ArvinMeritor, Inc.
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CONTACT:
Media: Lin Cummins, +1-248-435-7112,
linda.cummins@arvinmeritor.com; Investors: Terry Huch,
+1-248-435-9426, terry.huch@arvinmeritor.com, both of
ArvinMeritor, Inc.
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