Hayes Lemmerz International, Inc. Reports Operating Profit Fiscal 2006
Free Cash Flow Was Essentially Breakeven for the Quarter
NORTHVILLE, Mich., June 8 -- Hayes Lemmerz International, Inc. today reported that sales for the fiscal first quarter ended April 30, 2006 were $572.8 million, down 2.8% from $589.2 million a year earlier, with approximately 56% of sales from international markets. The reduction in sales was primarily the result of unfavorable currency exchange rates and the loss of sales from divested operations, with higher international volumes being offset by lower demand in the U.S. Earnings from operations for the fiscal first quarter were $7.4 million, down from $13.2 million a year earlier.
Adjusted EBITDA for the first quarter was $48.7 million, down from $60.9 million in the first quarter of fiscal 2005. Capital expenditures during the quarter were $12.3 million, a reduction of $24.1 million from the prior year period. For the quarter, the Company reported a net loss of $17.6 million, compared with a year earlier loss of $7.7 million.
Free cash flow for the first quarter, excluding the effects of the Company's accounts receivables securitization program, was slightly negative (an outflow of $0.4 million), an improvement of $30.3 million compared to an outflow of $30.7 million in the first quarter of fiscal 2005. Total liquidity improved by $20 million during the quarter to $144 million at quarter end, compared to $124 million at the end of fiscal 2005. To further improve liquidity, the Company has established a new $65 million asset-backed receivables securitization program, which replaced the existing securitization program and is expected to provide about $30 million of additional liquidity.
"Our key goals for 2006 are to execute on our operating plan, focus our capital expenditures in growth areas, maintain adequate liquidity and drive toward positive free cash flow," said Curtis Clawson, President, CEO, and Chairman of the Board. "I am pleased with our progress in all four areas. In addition to the previously announced business unit restructuring and employee compensation actions, our newly expanded Chihuahua plant is now running at full capacity and we have a number of key product launches coming in the remainder of the year. In addition to reducing capital expenditures, we have focused what we do spend on growth areas, with 62% of capital expenditures during the first quarter being invested outside the U.S. We also improved liquidity and made substantial progress toward achieving positive free cash flow during the quarter."
"For the full 2006 fiscal year, the Company expects to achieve higher Adjusted EBITDA and improved free cash flow than in fiscal 2005, with capital expenditures of less than $100 million," Mr. Clawson added.
Hayes Lemmerz International, Inc. is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 35 facilities and approximately 10,000 employees worldwide.
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions of dollars)
(Unaudited)
Actual Actual
Three Months Ended Three Months Ended
April 30, 2006 April 30, 2005
Net sales $572.8 $589.2
Cost of goods sold 520.4 531.3
Gross profit 52.4 57.9
Marketing, general and administration 39.9 41.1
Asset impairments and other restructuring
charges 3.7 0.8
Other (income) expense, net 1.4 2.8
Earnings (loss) from operations 7.4 13.2
Interest expense, net 17.3 14.7
Other non-operating (income) expense 0.2 0.2
Earnings (loss) before income taxes
and minority interest (10.1) (1.7)
Income tax provision 5.6 4.8
Earnings (loss) before minority interest (15.7) (6.5)
Minority interest 1.9 2.6
Income from discontinued operations - 1.4
Net income (loss) (17.6) (7.7)
Loss per common share data
Basic and diluted:
Loss from continuing operations $(0.46) $(0.24)
Income from discontinued operations,
net of tax of $0.0 and $0.2,
respectively - 0.04
Net loss $(0.46) $(0.20)
Weighted average shares outstanding
(in millions) 38.1 37.9
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(Unaudited)
Actual Actual
Three Months Ended Three Months Ended
April 30, 2006 April 30, 2005
Cash provided by/(used for)
operating activities $25.5 $(31.3)
Cash flows from investing activities:
Purchase of property, plant, equipment
and tooling (12.3) (36.4)
Proceeds from sale of assets 0.4 -
Capital contribution by minority
shareholders 0.4 -
Cash used for investing activities (11.5) (36.4)
Cash flows from financing activities:
Changes in bank borrowings and credit
facility (0.6) (0.2)
Borrowings/(repayment) on long term
debt (1.3) (0.2)
Proceeds from (redemption of) New
Term Loan, net of related fees - 79.5
Dividends paid to minority
shareholders (1.0) -
Bank finance fees paid (2.9) -
Cash used for financing activities (5.8) 79.1
Net cash provided by (used for)
discontinued operations (6.2)
Effect of exchange rate changes on
cash and cash equivalents 1.8 1.9
Increase/(decrease) in cash and cash
equivalents 10.0 7.1
Cash and cash equivalents at
beginning of period 42.5 34.9
Cash and cash equivalents at end of
period $52.5 $42.0
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(Unaudited)
Actual Actual
April 30, 2006 January 31, 2006
ASSETS
Current assets:
Cash and cash equivalents $52.5 $42.5
Receivables 292.7 255.6
Other Receivables 80.0 101.0
Inventories 199.7 179.9
Prepaid expenses and other 18.0 23.5
Total current assets 642.9 602.5
Property, and plant equipment, net 758.1 758.1
Goodwill, intangibles and other long
term assets 450.7 438.6
Total assets $1,851.7 $1,799.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings and other notes $26.0 $25.5
Current portion of long-term debt 20.8 19.2
Accounts payable and other accrued
liabilities 405.3 367.8
Total current liabilities 452.1 412.5
Long-term debt, net of current portion 682.2 684.3
Pension and other long-term liabilities 474.0 471.9
Series A Warrants and Series B Warrants -
Redeemable preferred stock of subsidiary 12.3 12.1
Minority interest 38.1 35.1
Commitments and contingencies - -
Stockholders' equity:
Common stock, par value $0.01 per share 0.4 0.4
Additional paid in capital 675.9 675.9
Retained earnings (583.9) (566.3)
Accumulated other comprehensive income 100.6 73.3
Total stockholders' equity 193.0 183.3
Total liabilities and stockholders'
equity $1,851.7 $1,799.2