2013-02-27 13:37:26 -
* Fourth quarter 2012 sales of $1.6 billion, FY 2012 sales of $6.7 billion.
* Q4 2012 net loss of $(80) million primarily due to a weaker European market.
Adjusted net loss of $(41) million when excluding restructuring,
impairments and special items.
* FY 2012 net loss of $(117) million on the weak European market and
impairment charges. FY adjusted net income of $51 million, excluding
restructuring, impairments and special items.
* Operational EBITDA of $65 million in Q4 2012 and $483 million for FY 2012.
Adjusted Operational EBITDA of $84 million in Q4 2012 and $508 million for
FY 2012.
* Multi-site restructuring to transfer production and equipment to lower cost
locations.
Southfield, Michigan, February 27, 2013. Federal-Mogul Corporation (NASDAQ:
FDML) today announced fourth quarter 2012 sales of $1.6 billion, four percent
lower than the fourth quarter of 2011, or two percent lower on a constant dollar
basis. The result includes the impact of 13% lower global commercial and
industrial engine production, and a 14% decline in European light vehicle
production, compounded by a shift in mix within light vehicle production from
higher content diesel to gasoline products. The company had a net loss of $(80)
million in Q4 2012 due to the weaker European light vehicle and global
commercial vehicle markets with negative regional and product mix. Without the
impact of restructuring, impairments and special items, the company had an
adjusted net loss of $(41) million in Q4 2012. Operational EBITDA in Q4 2012
was $65 million due to the lower European sales and unfavorable mix, combined
with legal and commercial charges of $(19) million. Excluding these items, Q4
2012 Adjusted EBITDA was $84 million.
Financial Summary Q4 2012 Q4 2011 2012 2011
($ millions)
Net Sales $1,595 $1,654 $6,664 $6,910
Gross Margin $168 $247 $911 $1,088
pct. of sales 10.5% 14.9% 13.7% 15.7%
SG&A $(173) $(167) $(712) $(689)
pct. of sales 10.8% 10.1% 10.7% 10.0%
Net (Loss) $(80) $(239) $(117) $(90)
attributable to Federal-Mogul
(Loss) Per Share $(.81) $(2.42) $(1.18) $(.91)
in dollars, diluted EPS
Operational EBITDA(1) $65 $153 $483 $683
( )pct. of sales 4.1% 9.2% 7.2% 9.9%
Cash Outflow(2) $(77) $43 $(480) $(115)
Adjusted Net (Loss) Income(3) $(41) $52 $51 $208
attributable to Federal-Mogul
Adjusted Operational EBITDA(4) $84 $153 $508 $683
pct. of sales 5.3% 9.2% 7.6% 9.9%
Detailed schedules are available at the end of this press release
The company, for full year 2012 reported four percent lower sales than 2011,
comprising a one percent constant dollar increase, offset by an adverse currency
impact of five percent. Sales in North America were three percent higher and in
Rest of World (ROW) eight percent higher on a constant dollar basis, but were
offset by four percent lower sales in Europe, excluding sales from BERU. The
company in China had nine percent constant dollar sales growth during Q4 2012
versus Q4 2011.
Federal-Mogul, for full year 2012 reported a net loss of $(117) million with the
European market, impairments and special items negatively impacting results.
The company had an adjusted net income of $51 million when excluding the impact
of the impairments, restructuring and special items.
Operational EBITDA for the full year 2012 was $483 million. When excluding the
impact of special items of $25 million, including legal, customer and other
contractual agreements, the company had 2012 Adjusted Operational EBITDA of $508
million.
The company in Q2 2012 announced a $60 million restructuring program involving
three plant closures and one site downsizing. The closures are expected to be
completed by the end of Q2 2013. The company today announced plans to commence
an additional multi-site restructuring program involving the potential closure
or downsizing of manufacturing facilities, primarily in Western Europe. The
plan will be implemented from 2013 through 2015 and involves shifting capacity
and equipment to existing lower cost sites in Eastern Europe, Asia and Mexico.
Details of each site restructuring plan will be disclosed to employees in
accordance with relevant legal requirements and customary consultations with
employee representatives, labor authorities and other stakeholders.
"We are evaluating the markets closely and anticipate implementing a plan to
transfer capacity from higher cost locations to available capacity in lower cost
locations in Mexico, Poland, China and other sites," said Rainer Jueckstock, co-
CEO and Powertrain Segment CEO. "We are balancing Federal-Mogul's global
manufacturing footprint efficiency with the need to support our customer's
planned growth in developing markets and with the need to be ready for the
eventual European market recovery."
Segment Revenue and Operational EBITDA Q4 2012
Federal-Mogul in Q4 2012 had total revenue of $1.6 billion. The Powertrain
Segment (PT) had total revenue of $973 million including intercompany sales to
Vehicle Component Solutions Segment (VCS). Powertrain Segment revenue in Q4
2012 was six percent lower, or three percent lower on a constant dollar basis,
compared to Q4 2011.
Commercial vehicle production in Federal-Mogul's primary markets declined 13%
during the fourth quarter 2012, versus the same period of 2011, resulting in a
seven percent decrease in the company's Powertrain Segment sales to CV and
industrial markets during the quarter. Sales in EMEA, where PT derives a
significant portion of its revenue and profitability from light vehicle diesel,
commercial and industrial powertrain products, were 12% lower than Q4 2011,
compared to a market decline of 14%.
Furthermore, the softer European market conditions also drove a product mix
shift within light vehicle production away from higher content diesel engines
towards lower content gasoline engines, with a significant impact on
profitability. Sales to OE customers in North America during the period were up
two percent. Sales to OE customers in China grew 8% during Q4 2012, versus Q4
2011.
"Our European customers have signaled a market recovery in the second half of
2013. We don't expect current lower European volumes and diesel to gasoline
engine mix for the long term, since diesel powertrains are ultimately more fuel
efficient and are preferred by a large percentage of European customers.
However, the economic impact of conditions in the last half of 2012 drove an
unfavorable mix that negatively impacted the company's profitability in recent
periods," said Jueckstock.
The Powertrain Segment recorded Operational EBITDA of $29 million in Q4 2012,
down from $108 million in Q4 2011, primarily driven by the reduced volume and
unfavorable mix conditions previously explained. The segment was also
negatively impacted by a special commercial agreement in the quarter. Excluding
this item, the Powertrain Segment had Adjusted Operational EBITDA of $39
million.
The VCS Segment in Q4 2012 had revenue of $709 million. Total revenue was down
two percent, or flat on a constant dollar basis. The VCS Segment had a two
percent decline in sales to customers in original equipment markets, or up one
percent on a constant dollar basis. Global aftermarket sales were down one
percent on a constant dollar basis. The VCS Segment recorded Operational EBITDA
of $37 million in Q4 2012, down $8 million versus Q4 2011. Without the impact
of a legal settlement recorded in the quarter, VCS Operational EBITDA would have
been $46 million or 6.5% of sales, an improvement of $1 million versus the
fourth quarter 2011.
"We continue to see evidence of the success of our marketing and distribution
strategies," said Michael Broderick, Federal-Mogul co-CEO and CEO Vehicle
Component Solutions Segment. "Our large North American core aftermarket
business is stabilizing as we are exiting unprofitable business while
simultaneously focusing on product differentiation in all our premium product
lines."
Net Results
Federal-Mogul reported a net loss of $(80) million in the fourth quarter 2012
primarily due to lower sales, especially in the European market. The net result
was further impacted by special legal and commercial agreements of $(19)
million, impairment charges of $(20) million and $(6) million of restructuring
charges. Without the impact of these items and the associated tax benefit of $6
million, the company had an adjusted net loss of $(41) million.
For the full year 2012, the company had a net loss of $(117) million with the
full year earnings impact of lower sales in Europe, special items of $(25)
million and other non-EBITDA charges, principally impairments, totaling $(169)
million. Without the impairment, special items and associated tax impact of $26
million, the company would have recorded $51 million net income.
Cash Flow
The company recorded a cash outflow of $(77) million during the fourth quarter
of 2012 and had an outflow of $(480) million for the full year 2012. Full year
capital spending of $387 million and interest payments of $106 million offset
$483 million of Operational EBITDA. In addition, a significant portion of cash
outflow was due to the extension of $285 million of accounts receivable
requested by several large U.S. aftermarket retail customers as part of
commercial negotiations. The company does not intend to continue to extend
payment terms in the future. During the period, Federal-Mogul also contributed
$90 million to the U.S.-funded pension plan and paid $52 million for the BERU
spark plug business. Federal-Mogul had a cash balance of $467 million at the
end of the fourth quarter 2012 and an undrawn revolver of $450 million.
Analyst Call
The company will hold a call with analysts and other interested parties at
10:00AM EST on February 27, 2013.
Details for registering to join the call are available at
www.federalmogul.com/investors.
About Federal-Mogul
Federal-Mogul Corporation (NASDAQ: FDML) is a leading global supplier of
products and services to the world's manufacturers and servicers of vehicles and
equipment in the automotive, light, medium and heavy-duty commercial, marine,
rail, aerospace, power generation and industrial markets. The company's products
and services enable improved fuel economy, reduced emissions and enhanced
vehicle safety.
Federal-Mogul operates two independent business segments, each with a chief
executive officer reporting to Federal-Mogul's Board of Directors. Federal-
Mogul's Powertrain Segment designs and manufactures original equipment
powertrain components and systems protection products for automotive, heavy-
duty, industrial and transport applications.
Federal-Mogul's Vehicle Component Solutions Segment sells and distributes a
broad portfolio of products through more than 20 of the world's most recognized
brands in the global vehicle aftermarket, while also serving original equipment
vehicle manufacturers with products including braking, chassis, wipers and other
vehicle components. The company's aftermarket brands include ANCO(®) wiper
blades; Champion(®) spark plugs, wipers and filters; AE(®), Fel-Pro(®), FP
Diesel(®), Goetze(®), Glyco(®), Nüral(®), Payen(®) and Sealed Power(®) engine
products; MOOG(®) steering and suspension parts; and Ferodo(®) and Wagner(®)
brake products. Federal-Mogul was founded in Detroit in 1899. The company
employs 45,000 people in 34 countries, and its worldwide headquarters is in
Southfield, Michigan, United States. For more information, please visit
www.federalmogul.com.
Definitions
1 Management believes that Operational EBITDA provides supplemental
information for management and investors to evaluate the operating performance
of its business. Management uses, and believes that investors benefit from
referring to Operational EBITDA in assessing the Company's operating results, as
well as in planning, forecasting and analyzing future periods as this financial
measure approximates the cash flow associated with the operational earnings of
the Company. Additionally, Operational EBITDA presents measures of corporate
performance exclusive of the Company's capital structure and the method by which
assets were acquired and financed. Operational EBITDA is defined as earnings
before interest, income taxes, depreciation and amortization, and certain items
such as restructuring and impairment charges, Chapter 11 and U.K. Administration
related reorganization expenses, gains or losses on the sales of businesses, the
non-service cost components of the U.S.-based funded pension plan and OPEB
curtailment gains or losses.
2 Cash flow is equal to net cash provided by operating activities less net
cash used by investing activities, as set forth on the attached statement of
cash flows.
3 Adjusted net income (loss) is defined as net income attributable to
Federal-Mogul before the impact of impairment charges, OPEB curtailment gains
and restructuring expense and before a special commercial settlement of $10
million, a legal settlement of $9 million, both occurring in Q4 2012 and a
contractual settlement of $6 million occurring in Q1 2012.
4 Adjusted Operational EBITDA refers to Operational EBITDA, before the
impact of a special commercial settlement of $10 million, a legal settlement of
$9 million, both occurring in Q4 2012 and a contractual settlement of $6 million
occurring in Q1 2012.
CONTACT:
Media:
Steve Gaut
(248) 354-7826
steven.gaut@federalmogul.com
Investors:
David Pouliot
(248) 354-7967
david.pouliot@federalmogul.com
Federal-Mogul Q4 2012 Press Release Financial Statements:
hugin.info/151797/R/1681383/549666.pdf
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Federal-Mogul Corporation via Thomson Reuters ONE
[HUG#1681383]
