4th February
2009 - ArvinMeritor Reports
First Quarter 2009 Results
ArvinMeritor, Inc. today reported
financial results for its first fiscal quarter ended Dec. 28,
2008.
First-Quarter Highlights
| · |
Sales from
continuing operations of $1.4 billion, down
$293 million, or 18 percent, from the same period last year (down
11 percent on a constant currency basis). |
| · |
On a GAAP
basis, net loss from continuing operations was $991
million or $13.71 per diluted share,
compared to a net loss from continuing operations of
$1 million or
$0.01 per diluted share in the same period last year. |
| · |
GAAP results
reflect non-cash charges of $944 million,
including valuation reserves for certain deferred tax
assets, and other asset impairments primarily for Light
Vehicle Systems (LVS) goodwill and fixed assets. |
| · |
Loss from
continuing operations, before special items, of $56
million, or $0.77 per diluted share,
compared to income from continuing operations, before
special items, of $6 million, or $0.08
per diluted share in the same period last year. |
| · |
Free cash
outflow (cash outflow from operations, net of capital
expenditures) of $386 million compared to an
outflow of
$305 million in the first quarter of fiscal year 2008. |
"Although significant volume declines and
charges associated with the LVS business negatively affected our results
this quarter, we are aggressively executing a series of actions to help
mitigate the effects of the ongoing economic crisis," said Chip
McClure, chairman, CEO and president.
"Through continued focus on reducing
costs, strengthening the aftermarket business and gaining new military
contracts, the Commercial Vehicle Systems (CVS) business performed well.
Despite the severe downturn in heavy truck markets in most regions of
the world, the CVS team was able to offset the negative volumes with
minimal impact on performance. These results clearly underscore the
validity of our aggressive Performance Plus cost savings and growth
initiatives."
First-Quarter Fiscal Year 2009 Results
For the first quarter of fiscal year
2009, ArvinMeritor posted sales from continuing operations of
$1.4 billion, a decrease of approximately 18 percent from the
same period last year.
EBITDA, before special items, was
$10 million, down $72 million from the same
period last year. This decrease is primarily due to lower production
volumes in most original equipment manufacturer market segments
globally.
Loss from continuing operations, before
special items, was $56 million, or $0.77
per diluted share, compared to income of $6 million, or
$0.08 per diluted share, a year ago. Special items for the
quarter reflect non-cash charges including valuation reserves for
certain deferred tax assets, other asset impairments primarily related
to LVS, restructuring charges and certain costs incurred in anticipation
of the previously planned spin-off or sale of the LVS business.
Free cash outflow was $386 million
in the first quarter of fiscal year 2009 compared with free cash outflow
of $305 million
in the same period last year. The decrease in free cash flow reflects
lower cash earnings, higher inventories due to the dramatic rate of
unplanned production declines, and previously announced settlement
payments to resolve claims with certain unions and customers.
Cost-Reduction Actions
ArvinMeritor has implemented a number of
initiatives to help manage cash, and is prepared to take additional
actions if needed. Initiatives in process include:
| · |
Implemented
workforce reductions of more than 1,500 employees. |
| · |
Extended
shutdowns and reduced work weeks at all plants. |
| · |
Reduced and
rebalanced capital spending. |
| · |
Initiated a
10-percent salary reduction for all U.S. executive-level
employees; and a 5-percent reduction in salary for all other
U.S. salaried employees, in addition to similar actions in
other parts of the world. |
| · |
Eliminated
matching contribution to the U.S. 401-K. |
| · |
Suspended merit
increases for fiscal year 2009. |
| · |
Reduced
discretionary spending by approximately 30 percent
year-over- year. |
| · |
Reduced Board
of Directors annual compensation by 10 percent. |
| · |
Suspended
quarterly dividend. |
LVS Transaction
As previously announced, economic
conditions do not support the company's strategy to divest the entire
LVS business at this time. "Due to continued deterioration in the global
markets, it is now our priority to complete the divestiture of these
businesses separately at acceptable returns to shareowners," said
McClure.
In January, the company executed multiple
actions to reduce fixed costs within the LVS business, which are
expected to result in $57 million in annual savings.
These actions included the elimination of the LVS divisional
organization, resulting in a headcount reduction of more than 100
positions. The Body and Chassis businesses are now being managed to
realize maximum cost efficiencies, with additional actions currently
under consideration.
The Wheels business, located in
Brazil and
Mexico, will be retained by ArvinMeritor.
Business Highlights
ArvinMeritor's strong product position on
a variety of military platforms continues to be a significant
contributor to the company's results. These products clearly demonstrate
the company's unique technology and advanced engineering competencies.
ArvinMeritor anticipates additional business as its customers are
awarded new contracts:
| · |
BAE awarded
8,400 additional Family of Medium Tactical Vehicles (FMTVs). |
| · |
Navistar
Defense awarded 400 more MaxxPro Dash vehicles, in addition
to more than 800 previously awarded and delivered in
January. |
| · |
Navistar
Defense awarded up to 1,300 medium support vehicles for the
Canadian Department of National Defense. |
| · |
Navistar
Defense awarded 600 WorkStar variants for U.S. forces in
Iraq. |
Cash and Liquidity
At the end of the first quarter, the
company had $158 million
in cash and cash equivalents. The company is in compliance with the
financial covenants in its material borrowing arrangements, including
its $664 million revolving credit facility, of which
$141 million
(including $38 million in letters of credit) was utilized
at the end of the quarter. ArvinMeritor maintains full access to
committed securitization lines.
Outlook
"ArvinMeritor is operating with the
expectation that global markets will remain weak for an extended period
of time," said McClure. "Given the deterioration of the market
environment and the current global constraints on credit, the management
team remains intensely focused on maintaining the liquidity necessary to
operate our business. We expect to be in compliance with the financial
covenants in our material borrowing arrangements for the remainder of
the year and believe that the actions we are taking today will help
position the company well when economics and volumes improve."
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.
Source:
ArvinMeritor Press Release