Hayes Lemmerz Reports 11% Higher Sales, Improved Operating Income, Positive Free Cash Flow, and Increased Liquidity for Third Qu
December 08 2005 - 7:55AM
PR Newswire (US)
NORTHVILLE, Mich., Dec. 8 /PRNewswire-FirstCall/ -- Hayes Lemmerz
International, Inc. (NASDAQ:HAYZ) today reported that sales for the
fiscal third quarter ended October 31, 2005, rose 11 percent to
$604.0 million from $545.9 million for the same period last year,
helped by higher international volume, significant recovery from
customers of increased steel prices, and favorable foreign exchange
rates, while North American sales were lower than a year earlier.
The Company reported earnings from operations of $16.8 million, up
29% from $13.0 million in the year earlier quarter. Net loss for
the quarter was $13.3 million, compared with a net loss of $5.3
million in the year earlier third quarter, primarily due to higher
interest costs. Adjusted EBITDA(1) was $60.8 million for the third
quarter of 2005, down slightly from $62.4 million a year earlier.
During the quarter, the Company generated positive free cash
flow(2) of $25.1 million (excluding the change in receivables
securitization), and its total liquidity improved to $179 million
at October 31, 2005 from $129 million at July 31, 2005. "In the
face of lower sales of domestic auto and light truck sales, we are
pleased with our third quarter results," said Curtis Clawson,
President, CEO and Chairman of the Board of Hayes Lemmerz. "Our
long-term strategy again demonstrated its value by making it
possible for us to realize increased sales and higher operating
income despite the difficult business environment in North America.
"We will continue to pursue our strategic plans to expand in
low-cost countries, to serve our customers as they continue to
expand in markets outside of the U.S. and Western Europe," Mr.
Clawson said. In that regard, he noted that in November, the
Company bought a controlling interest in its aluminum wheel joint
venture in Turkey. "Increasing our stake in this joint venture
further improves our ability to meet customer needs in very
important Turkish and European markets," he said. He also cited the
Company's recent decision to invest in low pressure aluminum wheel
casting technology to serve the European truck and trailer market,
where aluminum wheels are becoming widely accepted for their
ability to provide improved fuel economy and increased payload.
"Consistent with our efforts to concentrate on our core business,
subsequent to the quarter, we completed the sale of our Hubs and
Drums business and sold our operations in Cadillac, Michigan," he
said. "We will continue to cut costs, rationalize our manufacturing
capacity in the U.S., and improve efficiency worldwide. Continued
cash flow generation and lowering our debt level is of the highest
priority." Mr. Clawson noted that Hayes Lemmerz has secured over
$300 million in new and carry-over business during the first nine
months of 2005, and is winning new business internationally not
only with Japanese manufacturers, but also with Korean auto makers.
"We are winning new business with the OEMs who are winning the
global automotive competition," Mr. Clawson said. For the nine
months ended October 31, the Company reported sales of $1.75
billion, up 9 percent from $1.61 billion a year earlier. Earnings
from operations for the nine months, excluding asset impairment
losses and other restructuring charges, were $18.9 million compared
with $54.2 million in the prior year period. The Company recorded
asset impairment and restructuring charges in the first nine months
of fiscal 2005 totaling $37.6 million, compared with $6.2 million
of charges in the year earlier period. Adjusted EBITDA for the nine
months was $163.5 million, versus $197.2 million in the prior nine
months. The Company provided revised guidance for 2005, to reflect
the continued softening in the North American market, the impact to
revenue, profits, and cash flow from companies sold, and less
favorable exchange rates. Adjusted EBITDA is now expected to be
approximately $180 million to $190 million (revised from prior
guidance of $190 million to $205 million). Revenue is now expected
to be $2.2 billion to $2.3 billion for the full year, and with a
free cash flow between neutral and negative $15 million for the
full fiscal year. Capital expenditures for the year are still
expected to be under $130 million, the Company said. Due to
uncertainties in the North American market, the Company is not
providing financial guidance for fiscal year 2006 at this time, but
announced that it is targeting positive free cash flow with capital
expenditures of under $100 million. Hayes Lemmerz International,
Inc. announced that it will host a telephone conference call to
discuss the Company's fiscal year 2005 third quarter financial
results today, Thursday, December 8, 2005, at 10:00 a.m. (ET). To
participate by phone, please dial 10 minutes prior to the call:
(800) 399-3882 from the United States and Canada; (706) 643-7483
from outside the United States. Callers should ask to be connected
to Hayes Lemmerz earnings conference call, Conference ID#1874144.
The conference call will be accompanied by a slide presentation,
which can be accessed through the Company's web site, in the
Investor Kit presentations section at
http://www.hayes-lemmerz.com/investor_kit/html/presentations.html .
A replay of the call will be available from 11:30 a.m. (ET),
December 8, 2005 until 11:59 p.m. (ET), December 15, 2005, by
calling (800) 642-1687 (within the United States and Canada) or
(706) 645-9291 (for international calls). Please refer to
Conference ID#1874144. An audio replay of the call is expected to
be available on the Company's website beginning Tuesday, December
13, 2005. Hayes Lemmerz International, Inc. is a leading global
supplier of automotive and commercial highway wheels, brakes,
powertrain, suspension, structural and other lightweight
components. The Company has 36 facilities and over 10,000 employees
worldwide. (1) Adjusted EBITDA, a measure used by management to
measure operating performance, is defined as earnings from
operations plus depreciation and amortization. Adjusted EBITDA is
defined as EBITDA further adjusted to exclude: (i) asset impairment
losses and other restructuring charges; (ii) reorganization items;
and (iii) other items. Management references these non- GAAP
financial measures frequently in its decision making because they
provide supplemental information that facilitates internal
comparisons to historical operating performance of prior periods
and external comparisons to competitors' historical operating
performance. Adjusted EBITDA is not a recognized term under GAAP
and does not purport to be an alternative to earnings from
operations as an indicator of operating performance or to cash
flows from operating activities as a measure of liquidity. Because
not all companies use identical calculations, these presentations
of Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies. Additionally, Adjusted EBITDA is not
intended to be a measure of free cash flow for management's
discretionary use, as it does not consider certain cash
requirements such as interest payments, tax payments and debt
service requirements. Institutional investors generally look to
Adjusted EBITDA in measuring performance, among other things. The
company uses Adjusted EBITDA to facilitate quantification of
planned business activities and enhance subsequent follow-up with
comparisons of actual to planned Adjusted EBITDA. The company is
disclosing these non-GAAP financial measures in order to provide
transparency to investors. (2) Free Cash Flow is defined as cash
flows from operating activities adjusted to include cash used for
investing activities and discontinued operations. Management uses
this non-GAAP financial measure because it identifies the amount of
cash available to meet principal debt amortization requirements,
pay dividends to stockholders, or make corporate investments. This
press release includes forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, as amended, which
represent the company's expectations and beliefs concerning future
events that involve risks and uncertainties which could cause
actual results to differ materially from those currently
anticipated. All statements other than statements of historical
facts included in this release are forward looking statements.
Factors that could cause actual results to differ materially from
those expressed or implied in such forward looking statements
include the factors set forth in our periodic reports filed with
the SEC. Consequently, all of the forward looking statements made
in this press release are qualified by these and other factors,
risks, and uncertainties. HAYES LEMMERZ INTERNATIONAL, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in
millions, except per share amounts) Unaudited Three Months Ended
Three Months Ended October 31, 2005 October 31, 2004 Net sales
$604.0 $545.9 Cost of goods sold 548.7 491.7 Gross profit 55.3 54.2
Marketing, general, and administrative 37.5 38.2 Asset impairments
and other restructuring charges 3.8 2.9 Other (income) expense, net
(2.8) 0.1 Earnings (loss) from operations 16.8 13.0 Interest
expense, net 18.1 9.6 Other non-operating expense 0.2 1.0 Earnings
(loss) from continuing operations before taxes and minority
interest (1.5) 2.4 Income tax expense 10.2 5.2 Loss from continuing
operations before minority interest (11.7) (2.8) Minority interest
2.4 2.2 Loss from continuing operations (14.1) (5.0) (Income) loss
from discontinued operations, net of tax of $0.4, $0.4 in the three
months ended October 31, 2005 (0.8) 0.3 Net loss $(13.3) $(5.3)
Loss per common share data Basic and diluted: Net loss $(0.35)
$(0.14) Weighted average shares outstanding (in millions) 38.0 37.8
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in millions, except per share
amounts) Unaudited Nine Months Ended Nine Months Ended October 31,
2005 October 31, 2004 Net sales $1,749.2 $1,612.6 Cost of goods
sold 1,600.5 1,442.6 Gross profit 148.7 170.0 Marketing, general,
and administrative 123.0 116.3 Asset impairments and other
restructuring charges 37.6 6.2 Other (income) expense, net 6.8
(0.5) Earnings (loss) from operations (18.7) 48.0 Interest expense,
net 49.2 31.7 Other non-operating expense 0.6 1.2 Loss on early
extinguishment of debt - 12.2 Earnings (loss) from continuing
operations before taxes, minority interest, and cumulative effect
of change in accounting principle (68.5) 2.9 Income tax expense
18.8 15.9 Loss from continuing operations before minority interest
and cumulative effect of change in accounting principle (87.3)
(13.0) Minority interest 7.5 6.0 Loss from continuing operations
before cumulative effect of change in accounting principle (94.8)
(19.0) (Income) loss from discontinued operations, net of tax of
$0.8, $0.4 in the nine months ended October 31, 2005 (3.5) (2.4)
Cumulative effect of change in accounting principle, net of tax of
$0.8 - (2.6) Net loss $(91.3) $(14.0) Loss per common share data
Basic and diluted: Net loss $(2.41) $(0.37) Weighted average shares
outstanding (in millions) 37.9 37.5 HAYES LEMMERZ INTERNATIONAL,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions) Unaudited October 31, 2005 January 31, 2005
ASSETS Current assets: Cash and cash equivalents $86.6 $34.9
Receivables 274.2 226.8 Other receivables 118.8 77.0 Inventories
178.3 205.0 Prepaid expenses and other current assets 17.3 21.4
Assets held for sale 38.9 30.4 Total current assets 714.1 595.5
Property, plant, and equipment, net 878.4 971.1 Goodwill 382.2
417.9 Intangible assets, net 209.9 233.3 Assets held for sale 25.5
29.3 Other assets 62.2 54.9 Total assets $2,272.3 $2,302.0
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank
borrowings and other notes $24.6 $0.6 Current portion of long-term
debt 19.3 10.5 Accounts payable and accrued liabilities 405.9 394.7
Liabilities held for sale 17.0 10.6 Total current liabilities 466.8
416.4 Long-term debt, net of current portion 729.6 631.1 Pension
and other long-term liabilities 480.2 506.5 Series A warrants and
Series B warrants - 0.5 Liabilities held for sale 1.5 1.2
Redeemable preferred stock of subsidiary 11.9 11.3 Minority
interest 32.7 33.7 Stockholders' equity 549.6 701.3 Total
liabilities and stockholders' equity $2,272.3 $2,302.0 HAYES
LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
CASH FLOW STATEMENT (Dollars in millions) Unaudited Nine Months
Ended Nine Months Ended October 31, 2005 October 31, 2004 Cash
flows from operating activities: Loss from continuing operations
$(94.8) $(16.4) Adjustments to reconcile net loss from continuing
operations to net cash provided by (used for) operating activities:
Depreciation and amortization 126.2 124.2 Amortization of deferred
financing fees and accretion of discount 4.8 2.8 Interest income
resulting from fair value adjustment of Series A warrants and
Series B warrants (0.5) (7.5) Change in deferred income taxes (7.3)
(6.1) Asset impairments 32.6 0.7 Minority interest 7.5 6.0
Subsidiary preferred stock dividends accrued 0.6 0.6 Equity
compensation expense 4.9 4.9 Loss on early extinguishment of debt -
12.2 (Gain) loss on sale of assets (1.3) 0.1 Changes in operating
assets and liabilities that increase (decrease) cash flows:
Receivables (63.1) (57.4) Other receivables (41.7) - Inventories
16.0 0.1 Prepaid expenses and other (3.3) 1.0 Accounts payable and
accrued liabilities 12.7 25.2 Payments related to Chapter 11
Filings (0.1) (1.1) Cash provided by (used for) operating
activities (6.8) 89.3 Cash flows from investing activities:
Purchase of property, plant, equipment, and tooling (95.6) (112.4)
Proceeds from sale of assets 18.5 0.7 Cash used for investing
activities (77.1) (111.7) Cash flows from financing activities:
Changes in bank borrowings and credit facilities 23.9 0.8 Net
proceeds from issuance of common stock - 117.0 Redemption of Senior
Notes, net of discount and related fees - (96.7) Repayment of Term
Loan B, net of related fees (73.8) (16.0) Borrowings from Term Loan
C 150.0 - Borrowings (repayment) of long-term debt 33.7 (8.3)
Repayment of notes payable issued in connection with purchases of
businesses - (13.1) Cash provided by (used for) financing
activities 133.8 (16.3) Net cash provided by discontinued
operations 2.5 4.5 Adjustment for the elimination of the one month
lag - 1.4 Effect of exchange rate changes on cash and cash
equivalents (0.7) 3.2 Increase (decrease) in cash and cash
equivalents 51.7 (29.6) Cash and cash equivalents at beginning of
period 34.9 48.5 Cash and cash equivalents at end of period $86.6
$18.9 DATASOURCE: Hayes Lemmerz International, Inc. CONTACT: Marika
P. Diamond of Hayes Lemmerz International, Inc., +1-734-737-5162
Web site: http://www.hayes-lemmerz.com/
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