Hayes Lemmerz International,
Inc. today reported that sales for the fiscal second quarter ended July
31, 2007 were $570.3 million, up 19% from $480.8 million in the year
earlier quarter. The sales increase came from strong international steel
and aluminum wheel sales, metals cost recovery and favorable currency
fluctuations, the Company said.
For the fiscal second
quarter, the Company reported Adjusted EBITDA of $48.5 million, up $6.6
million from $41.9 million a year earlier, and a loss from operations of
$4.8 million, compared with year earlier earnings from operations of
$7.4 million.
"We continue our strategy of
restructuring our business, executing our operating plan, and extending
the lead in our global wheel business," said Curtis J. Clawson,
President, CEO and Chairman of the Board.
As part of the Company's
ongoing restructuring efforts, Hayes Lemmerz reached important
milestones in the second quarter that significantly improve its
long-term outlook, while imposing one-time transaction costs. "We
greatly strengthened our balance sheet by raising $193.1 million through
an equity rights offering and a direct equity investment, and paying
down $130.8 million of long term debt," said Mr. Clawson. The balance
sheet restructuring, which included the rights offering, new senior
credit facilities totaling approximately $495 million, and euro 130
million (approximately $175 million) of 8-1/4% senior unsecured notes
issued by a European subsidiary, "improved our liquidity by $80 million,
will generate interest cost savings of approximately $24 million
annually, and extends all significant debt maturities until 2013 or
later," Mr. Clawson said.
The Company also continues
to focus on its core capabilities. On June 29 it sold its MGG subsidiary
in Europe, whose three facilities in Belgium and the Netherlands produce
aluminum components, and accounted for about $140 million of sales
annually. On July 5, the Company completed the sale of its aluminum
components facility in Wabash, IN, which contributed about $60 million
of annual sales. Hayes Lemmerz realized $15 million net cash from the
sale of the two operations, while booking a $40 million non-cash charge
related to the sales.
Mr. Clawson noted that Hayes
Lemmerz "continues to execute its operating plan by winning new business
from international automakers whose business is growing, and continues
to rely less on the Big Three U.S. automakers." Hayes Lemmerz expects
44% of its sales in 2007 will come from leading-cost regions, and 50% to
55% in 2008, compared with only 35% in 2004, he said.
"We are continuing to extend
the lead in wheels with international expansion in leading-cost
regions," Mr. Clawson said.
"Continuing to invest in
leading-cost international markets is reflected in our improving
profitability," he said; earnings from global wheel operations were
almost double for the first half of 2007 compared with the first half of
2005.
Including impairment
charges, the Company reported a loss from continuing operations of $61.2
million, including a $21.2 million charge related to early
extinguishment of debt, compared with a loss from operations of $28.9
million in the year earlier quarter. The Company also reported a $25.9
million loss from discontinued operations compared to a profit from
discontinued operations of $2.0 million a year earlier, resulting in a
net loss of $87.1 million in the recent second quarter, compared with a
year earlier loss of $26.9 million.
Free cash flow for the
second quarter, excluding the effects of the Company's accounts
receivables securitization program, was negative $13.8 million,
essentially the same as in the second quarter of second 2006.
The Company also reaffirmed
its earnings guidance for the full fiscal year 2007, which was updated
May 15, 2007. The Company expects revenue of approximately $2.2 billion
for the fiscal year ending January 31, 2008. Adjusted EBITDA is expected
to be in the range of $200 million to $210 million. The Company expects
positive free cash flow (excluding securitization impact). Capital
expenditures for the fiscal year are expected to be between $90 million
to $95 million.
Use of Non-GAAP Financial
Information
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 asset impairment losses
and other restructuring charges, reorganization items and 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. 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. In addition, incentive compensation
for management is based on Adjusted EBITDA. Free cash flow is defined as
cash from operating activities minus capital expenditures plus cash from
discontinued operations and the sale of assets. Management uses free
cash flow to identify the amount of cash available to meet debt
amortization requirements, pay dividends to stockholders or make
corporate investments.
Hayes Lemmerz International,
Inc. is a world leading global supplier of automotive and commercial
highway wheels, brakes and powertrain components. The Company has 26
facilities and approximately 7,500 employees worldwide.
Forward Looking Statements
This press release contains
forward-looking statements with respect to our financial condition and
business. All statements other than statements of historical fact made
in this press release are forward-looking. Such forward- looking
statements include, among others, those statements including the words
"expect," "anticipate," "intend," believe," and similar language. These
forward-looking statements involve certain risks and uncertainties. Our
actual results may differ significantly from those projected in the
forward- looking statements. Factors that may cause actual results to
differ materially from those contemplated by such forward-looking
statements include, among others: (1) competitive pressure in our
industry; (2) fluctuations in the price of steel, aluminum, and other
raw materials; (3) changes in general economic conditions; (4) our
dependence on the automotive industry (which has historically been
cyclical) and on a small number of major customers for the majority of
our sales; (5) pricing pressure from automotive industry customers and
the potential for re-sourcing of business to lower-cost providers; (6)
changes in the financial markets or our debt ratings affecting our
financial structure and our cost of capital and borrowed money; (7) the
uncertainties inherent in international operations and foreign currency
fluctuations; (8) our ability to divest non-core assets and businesses;
and (9) the risks described in our most recent Annual Report on Form
10-K and our periodic statements filed with the Securities and Exchange
Commission. You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this
press release.
Source: Hayes-Lemmerz Press Release