Profitability Dramatically Improves with Growth in Global Markets
TROY, Mich., Feb. 2 /PRNewswire-FirstCall/ -- ArvinMeritor, Inc.
(NYSE: ARM) today reported financial results for its first fiscal
quarter ended Dec. 31, 2009. First-Quarter Highlights --
First-quarter sales were $1.1 billion, approximately a 16-percent
increase from the fourth quarter of fiscal year 2009; and down
slightly from $1.2 billion in the first quarter of fiscal year
2009. -- Net income on a GAAP basis was breakeven compared to a
GAAP loss of $961 million in the same period last year. -- Income
from continuing operations, before special items, was also
breakeven compared to a loss of $47 million in the first quarter of
fiscal year 2009. Loss from continuing operations on a GAAP basis
for the quarter was $2 million compared to a loss of $920 million
in the prior year's quarter. -- First-quarter EBITDA from
continuing operations, before special items, was $56 million, up
$16 million compared to the fourth quarter of fiscal year 2009, and
up $40 million compared to the first quarter of fiscal year 2009.
-- Cash flow from operations was $27 million compared to a cash
outflow from operations of $338 million in the same period last
year. -- Free cash flow (cash flow from operations, net of capital
expenditures) was $2 million in the first quarter compared to free
cash outflow of $386 million in the first quarter of fiscal year
2009. "Our financial results for the first quarter demonstrate that
as we experience growth in our global markets we are successfully
retaining the benefits of our previously executed cost reductions,"
said Chip McClure, chairman, CEO and president. "This quarter, we
were able to convert on incremental revenue while maintaining
structural cost improvements and reinstating full salaries to our
employees. At the same time, we announced a nearly $10 million
planned investment in South America to support our expansion into
new product segments, and an additional planned investment of
approximately $10 million to increase production capacity at our
off-highway axle joint venture in Xuzhou, China. Both of these
investments support the strong growth we are experiencing in
emerging markets," said McClure. First-Quarter Fiscal Year 2010
Results For the first quarter of fiscal year 2010, ArvinMeritor
posted sales from continuing operations of $1.1 billion, an
increase of 16 percent from the fourth fiscal quarter of 2009, and
a decrease of approximately six percent from the same period last
year. EBITDA, before special items, was $56 million, up 40 percent
from the fourth fiscal quarter of 2009. EBITDA, before special
items, was $16 million in the same period last year. Loss from
continuing operations on a GAAP basis was $2 million for the first
quarter, or a loss of $0.03 per diluted share, compared to a loss
from continuing operations of $920 million, or a loss of $12.72 per
diluted share, in the same period last year. In the prior year, the
company recognized $856 million of non-cash asset impairment
charges mostly associated with establishing valuation reserves for
certain deferred tax assets and other asset impairments primarily
for Light Vehicle Systems (LVS) goodwill and fixed assets. Income
from continuing operations, before special items, was breakeven
compared to a loss of $47 million, or $0.65 per diluted share, a
year ago. Free cash flow was $2 million in the first quarter of
fiscal year 2010 compared with free cash outflow of $386 million in
the same period last year. The company's first-quarter free cash
flow reflects stable working capital levels, improved earnings and
represents the third consecutive quarter of positive performance in
this area. The company had $105 million in cash balances and
unutilized commitments of $605 million under its revolving credit
facility as of Dec. 31, 2009. Light Vehicle Systems EBITDA for the
LVS segment was $6 million in the first quarter of fiscal year 2010
compared to negative $252 million in the same period last year. The
improved EBITDA performance is primarily due to significant cost
reductions associated with LVS overhead costs and improved
financial performance in the Body Systems business - which was
recently awarded several new customer contracts. In addition, the
company recognized non-cash asset impairments totaling $209 million
in this segment in the prior year. Outlook The company's financial
guidance for the second quarter of fiscal year 2010 is for expected
results from continuing operations which includes all four of
ArvinMeritor's current segments. For the second quarter of fiscal
year 2010 (compared to the first fiscal quarter of 2010), the
company anticipates: -- Revenues to be flat -- EBITDA, before
special items, to be flat -- Income before taxes, before special
items, to be flat -- Free cash flow to be slightly negative
primarily due to the company's semi-annual interest payment on its
fixed debt securities. "We will maintain an acute focus on becoming
a leading commercial on- and off-highway company in our defined
segments by introducing new products that meet our customers'
needs, entrenching ourselves in emerging markets, and making
investments that enable us to grow profitably," said McClure. "At
the same time, we will be diligent in managing our costs." About
ArvinMeritor ArvinMeritor, Inc. is a premier global supplier of a
broad range of integrated systems, modules and components to
original equipment manufacturers and the aftermarket for the
transportation and industrial sectors. The company serves
commercial truck, trailer and specialty original equipment
manufacturers and certain aftermarkets, and light vehicle
manufacturers. ArvinMeritor marked its centennial anniversary in
2009, celebrating a long history of 'forward thinking.'
ArvinMeritor common stock is traded on the New York Stock Exchange
under the ticker symbol ARM. For important information about the
company, visit 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. There are risks and
uncertainties relating to the company's announced plans to divest
the Body Systems business of LVS and any of the strategic options
under which to pursue such divestiture. In the case of any sale of
all or a portion of the business, these risks and uncertainties
include the timing and certainty of completion of any sale, the
terms upon which any purchase and sale agreement may be entered
into (including potential substantial costs) and whether closing
conditions (some of which may not be within the company's control)
will be met. In the case of any shut down of portions of the
business, these risks and uncertainties include the amount of
substantial severance and other payments as well as the length of
time we will continue to have to operate the business, which is
likely to be longer than in a sale scenario. There is also a risk
of loss of customers of this business due to the uncertainty as to
the future of this business. 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; 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); whether our liquidity will be affected by
declining vehicle production volumes in the future; 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; the ability to achieve anticipated or continued cost
savings from reduction 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 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 EBITDA plus or minus special items. Other non-GAAP financial
measures include "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. 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; 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.
First-Quarter 2010 Conference Call The company will host a
conference call and Web cast to present the company's fiscal year
2010 first-quarter financial results on Tuesday, Feb. 2, 2010, at 9
a.m. (ET). To participate, call (617) 213-4850, ten minutes prior
to the start of the call. Please reference pass code 79923237 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 replay of the call will be
available from noon on Feb. 2, to 11:59 p.m. Feb. 9, 2010, by
calling (888) 286-8010 (within the United States) or (617) 801-6888
for international calls. Please refer to replay pass code number
60329180. To access the listen-only audio Web cast, visit the
company's web site at http://www.arvinmeritor.com/ and select the
Web cast link from the home page or the investor page. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGO )
ARVINMERITOR, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In millions, except per share amounts) Quarter Ended December 31,
2009 2008 ------- ------- Sales $1,146 $1,220 Cost of sales (1,031)
(1,145) ------- ------- GROSS MARGIN 115 75 Selling, general and
administrative (85) (97) Restructuring costs (2) (24) Asset
impairment charges - (153) Goodwill impairment charges - (70)
------- ------- OPERATING INCOME (LOSS) 28 (269) Equity in earnings
of affiliates 10 4 Interest expense, net (23) (23) ------- -------
INCOME (LOSS) BEFORE INCOME TAXES 15 (288) Provision for income
taxes (14) (630) ------- ------- INCOME (LOSS) FROM CONTINUING
OPERATIONS 1 (918) INCOME (LOSS) FROM DISCONTINUED OPERATIONS 2
(53) ------- ------- NET INCOME (LOSS) $3 $(971) NET INCOME (LOSS)
ATTRIBUTABLE TO NONCONTROLLING INTERESTS (3) 10 ------- -------
LOSS ATTRIBUTABLE TO ARVINMERITOR, INC. $- $(961) ======= =======
NET LOSS ATTRIBUTABLE TO ARVINMERITOR, INC. Loss From Continuing
Operations $(2) $(920) Income (Loss) From Discontinued Operations 2
(41) ------- ------- NET INCOME (LOSS) $- $(961) ======= =======
DILUTED EARNINGS (LOSS) PER SHARE Continuing operations $(0.03)
$(12.72) Discontinued operations 0.03 (0.57) ------- -------
Diluted loss per share $- $(13.29) ======= ======= Basic and
diluted average common shares outstanding 72.7 72.3 Amounts for the
prior period have been recasted for discontinued operations.
ARVINMERITOR, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited,
In millions) December 31, September 30, 2009 2009 ------------
------------- ASSETS: Cash and cash equivalents $105 $95
Receivables, trade and other, net 681 694 Inventories 394 374 Other
current assets 114 153 ------------ ------------- TOTAL CURRENT
ASSETS 1,294 1,316 ------------ ------------- Investments in
affiliates 138 125 Net property 441 445 Goodwill 437 438 Other
assets 189 181 ------------ ------------- TOTAL ASSETS $2,499
$2,505 ============ ============= LIABILITIES AND EQUITY (DEFICIT)
Short-term debt $89 $97 Accounts payable 683 674 Accrued
compensation and benefits 143 144 Other current liabilities 281 374
------------ ------------- TOTAL CURRENT LIABILITIES 1,196 1,289
------------ ------------- Long-term debt 1,001 995 Accrued
Retirement benefits 1,082 1,077 Other liabilities 332 310
Shareowners' deficit attributable to ArvinMeritor, Inc. (1,143)
(1,195) Noncontrolling interests 31 29 ------------ -------------
TOTAL EQUITY (DEFICIT) (1,112) (1,166) ------------ -------------
TOTAL LIABILITIES AND EQUITY (DEFICIT) $2,499 $2,505 ============
============= ARVINMERITOR, INC. CONSOLIDATED BUSINESS SEGMENT
INFORMATION (Unaudited, In millions) Quarter Ended December 31,
-------------------------- 2009 2008 -------- -------- Sales:
Commercial Truck $433 $595 Industrial 226 210 Aftermarket &
Trailer 222 254 Light Vehicle Systems 346 263 Intersegment Sales
(81) (102) -------- -------- Total sales $1,146 $1,220 ========
======== EBITDA: Commercial Truck $12 $(6) Industrial 22 20
Aftermarket & Trailer 17 17 Light Vehicle Systems 6 (252)
-------- -------- Total Segment EBITDA 57 (221) Unallocated
Corporate Costs (3) (16) -------- -------- Total EBITDA 54 (237)
Loss on Sale of Receivables (1) (4) Depreciation and Amortization
(18) (26) Interest Expense, Net (23) (23) Provision for Income
Taxes (14) (630) -------- -------- Loss from Continuing Operations
Attributable to ArvinMeritor, Inc. $(2) $(920) ======== ========
Amounts for the prior period have been recasted for discontinued
operations. ARVINMERITOR, INC. CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS (Unaudited, In millions) Three Months Ended December 31,
------------------- 2009 2008 ------ ------ OPERATING ACTIVITIES
Income (loss) from continuing operations $1 $(918) Adjustments to
income (loss) from continuing operations: Depreciation and
amortization 18 26 Asset Impairment charges - 223 Deferred income
tax expense 4 622 Restructuring costs, net of payments (3) 13 Other
adjustments to income (loss) from continuing operations (7) (1)
Pension and retiree medical expense 25 19 Pension and retiree
medical contributions (21) (46) Changes in off-balance sheet
receivable securitization and factoring 54 (4) Changes in assets
and liabilities (47) (255) ------ ------ Cash flows provided by
(used for) continuing operations 24 (321) Cash flows provided by
(used for) discontinued operations, net 3 (17) ------ ------ CASH
PROVIDED BY (USED FOR) OPERATING ACTIVITIES 27 (338) ------ ------
INVESTING ACTIVITIES Capital expenditures (22) (38) Other investing
activities 1 2 Net investing cash flows provided by (used for)
discontinued operations 5 (10) ------ ------ CASH PROVIDED BY (USED
FOR) INVESTING ACTIVITIES (16) (46) ------ ------ FINANCING
ACTIVITIES Borrowings (payments) on accounts receivable
securitization program 2 (18) Borrowings on revolving credit
facility 7 103 Net change in other debt (11) 3 ------ ------ Net
change in debt (2) 88 Cash dividends - (8) Net financing cash flows
used for discontinued operations - (9) ------ ------ CASH PROVIDED
BY (USED FOR) FINANCING ACTIVITIES (2) 71 ------ ------ EFFECT OF
CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH
EQUIVALENTS 1 (26) ------ ------ CHANGE IN CASH AND CASH
EQUIVALENTS 10 (339) CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 95 497 ------ ------ CASH AND CASH EQUIVALENTS AT END OF
PERIOD $105 $158 ====== ====== Amounts for the prior period have
been recasted for discontinued operations. ARVINMERITOR, INC.
SELECTED FINANCIAL INFORMATION - RECONCILIATION Non-GAAP
(Unaudited) (In millions, except per share amounts) Q1 FY 10 Q1 FY
10 Before Reported Restructuring Special Items --------
------------- ------------- Sales $1,146 $- $1,146 Gross Margin 115
- 115 Operating Income 28 2 30 Income (Loss) from Continuing
Operations Attributable to ArvinMeritor, Inc. (2) 2 - Diluted
Income (Loss) Per Share - Continuing Operations $(0.03) $0.03 $-
Segment EBITDA: Commercial Truck $12 $- $12 Industrial 22 - 22
Aftermarket & Trailer 17 - 17 Light Vehicle Systems 6 2 8
-------- -------- -------- Segment EBITDA $57 $2 $59 ========
======== ======== ARVINMERITOR, INC. SELECTED FINANCIAL INFORMATION
- RECONCILIATION Non-GAAP (Unaudited) (In millions, except per
share amounts) Q1 LVS Non-cash FY 09 Separ- Asset Income Before Q1
FY 09 Restruc- ation Impair- Tax Special Reported turing Costs
ments Charges Items -------- -------- ------ ------- --------
------- Sales $1,220 $- $- $- $- $1,220 Gross Margin 75 - - - - 75
Operating Loss (269) 24 6 223 - (16) Loss from Continuing
Operations Attributable to ArvinMeritor, Inc. (920) 24 6 210 633
(47) Diluted Income (Loss) Per Share - Continuing Operations
$(12.72) $0.33 $0.08 $2.90 8.76 $(0.65) Segment EBITDA: Commercial
Truck $(6) $7 $- $8 $- $9 Industrial 20 1 - - - 21 Aftermarket
& Trailer 17 - - - - 17 Light Vehicle Systems (252) 13 - 209 -
(30) ------- ------- ------- ------- ------- ------- Segment EBITDA
$(221) $21 $- $217 $- $17 ======= ======= ======= ======= =======
======= ARVINMERITOR, INC. EBITDA BEFORE SPECIAL ITEMS
RECONCILIATION Non-GAAP (Unaudited, In millions) Three Months Ended
-------------------------------- December 31, September 30,
-------------------------------- 2009 2008 2009 ---- ---- ----
Total EBITDA - Before Special Items $56 $16 $40 Asset Impairment
Charges - (223) - Restructuring Costs (2) (24) (4) LVS Separation
Costs - (6) - Loss on Sale of Receivables (1) (4) - Depreciation
and Amortization (18) (26) (21) Interest Expense, Net (A) (23) (23)
(23) Provision for Income Taxes (14) (630) (43) ---- ---- ----
Income (Loss) From Continuing Operations Attributable to
ArvinMeritor, Inc. $(2) $(920) $(51) ==== ==== ==== (A) Prior
period interest expense has been restated to reflect the adoption
of FASB guidance on convertible debt. ARVINMERITOR, INC. FREE CASH
FLOW - RECONCILIATION Non-GAAP (Unaudited, In millions) Quarter
Ended December 31, ---------------- 2009 2008 ---- ---- Cash flows
provided by (used for) continuing operations $24 $(321) Capital
expenditures - continuing operations (22) (38) ---- ---- Free cash
flows provided by (used for) continuing operations 2 (359) ----
---- Cash flows provided by (used for) discontinued operations 3
(17) Capital expenditures - discontinued operations (3) (10) ----
---- Cash flows provided by (used for) discontinued operations -
(27) ---- ---- Free cash flow - full company $2 $(386) ==== ====
http://www.newscom.com/cgi-bin/prnh/20010524/ARVINLOGODATASOURCE:
ArvinMeritor, Inc. CONTACT: CONTACTS: Media Inquiries: Lin Cummins,
+1-248-435-7112, ; Investor Inquiries: Brett Penzkofer,
+1-248-435-9426, Web Site: http://www.arvinmeritor.com/
Copyright