8th May 2009 - Affinia Reports Improved Profitability on Lower Sales for the First Quarter of 2009

Affinia Group Inc., a global leader in the on and off-highway replacement products and service industry, today reported its financial results for the first quarter ended March 31, 2009.

First Quarter

Net sales were $457 million for the quarter compared to $529 million for the same period in 2008.  The decrease in sales was primarily a result of a stronger U.S. Dollar in the first quarter of 2009, as compared with the first quarter of 2008, which led to $54 million of lower sales due to currency translation.  The continued global recessionary climate also contributed to lower sales in the quarter.

Gross profit for the quarter was $85 million. Although gross profit was $10 million lower than in the first quarter of 2008, it was achieved on lower sales and resulted in a gross margin of 19 percent.   This compares with gross profit of $95 million and a gross margin of 18 percent for the same period in 2008.  The improvement in gross margin was largely due to ongoing cost savings resulting from the comprehensive restructuring program which the company initiated in 2005.

Selling, general and administrative expenses were $64 million for the quarter, a decrease of $13 million compared with the same period in 2008. The decrease resulted from $2 million in lower payroll related costs, a $4 million reduction in workers compensation and general liability reserves, a $3 million reduction in professional fees, a $3 million reduction in restructuring expense and a $1 million reduction in customer change over costs.  The reduction in selling, general and administrative expenses resulted in an operating profit of $21 million and an operating margin of 5 percent in the first quarter of 2009 compared to $18 million and 3 percent, respectively, in the first quarter of 2008.

Affinia’s net income for the quarter was $4 million compared with net income of $3 million in the first quarter of 2008.  The improvement in net income was primarily a result of lower selling, general and administrative expenses.

“Although market conditions remain soft due to the continued global economic climate, we have managed our cost structure accordingly and have not only maintained but improved our margins.  Our relentless focus on driving out cost and inefficiencies, along with closely managing our balance sheet, have placed the company in a very competitive position as the marketplace and overall economic conditions improve,” stated Terry McCormack, Affinia’s President and Chief Executive Officer.

As of March 31, 2009, the Company had $39 million of cash and cash equivalents.  Cash from operations resulted in a use of cash of $29 million for the quarter compared to a source of cash of $18 million in the same period in 2008.  Accounts payable resulted in a use of $11 million of cash in the quarter compared to a source of $19 million of cash in the same period in 2008.  Accounts payable, which fluctuates based on the timing of payments, was a significant factor in the movement of operating cash flow in the first quarter of 2009 as compared to the first quarter of 2008.

Total debt outstanding was $622 million of which $599 million was long-term debt.  Total debt remained unchanged from December 31, 2008 however, long-term debt outstanding was $9 million lower, primarily as a result of a $10 million reduction on the Company’s senior credit facility.  No borrowings were outstanding under the Company’s receivables securitization program.  At March 31, 2009 the Company continued to be in compliance with all debt covenants.

Affinia Group Inc. is a global leader in the on and off-highway replacement products and service industries. In North America the Affinia family of brands includes WIX® filters, Raybestos®, AIMCO® and BrakePro® brake products, and McQuay-Norris® and Raybestos™ Chassis parts. South American and European brands include Nakata®, Filtron®, Urba® and Quinton Hazell®.