Hayes Lemmerz Third Quarter Results Below Expectations
22 November 1999
Hayes Lemmerz Third Quarter Results Below Expectations
NORTHVILLE, Mich., Nov. 22 -- Hayes Lemmerz International
Inc. , today announced third quarter results of $0.63 per share,
below the first call consensus estimate of $.77. The third quarter was
adversely impacted by: (1): Unexpectedly strong demand for lightweight
aluminum wheels in both North America and Europe resulting in both
inefficiency and premium costs as several of the company's wheel plants
continue to operate seven days per week to meet record vehicle production
requirements. Strong aluminum penetration also resulted in soft demand for
steel wheels in Europe: (2) Launch costs in the polymer manifold business and
(3) the continuation of the economic downturn in developing markets,
particularly Brazil.
"We are experiencing extraordinary demand in North America as the industry
continues to operate at a selling rate approaching 17 million vehicles," said
Ron Cucuz, chairman and CEO of Hayes Lemmerz. "We are also seeing the
penetration of aluminum wheels accelerating, both in North America and Europe.
As a result, many of our plants have been running around the clock through the
second and third quarters to support our customers, and after a while this
affects people's productivity, makes equipment maintenance difficult and can
require premium freight cost as well. We are strategically deploying
engineering resources and capital to break bottlenecks in the United States,
and we are expanding capacity in Mexico. However, our customers' volume
forecasts through year end remain extremely strong, and our operations will
probably continue to be challenged in accommodating this record production in
the fourth quarter."
"This strong aluminum wheel penetration has also impacted our steel wheel
volumes, especially in Europe. Our operations in Europe have responded well
to lower volumes and maintained their margins, but it now appears steel wheel
volumes will not meet our initial expectations for 1999 and will have some
impact on the estimates for 2000 as well. We are working with several auto
producers to gain new business to offset this decrease and taking actions to
consolidate steel wheel capacity and reduce costs."
"The extraordinary demand for aluminum wheels in both North America and
Europe has challenged our production capacity this year and has resulted in
premium costs, which have offset the margin expansion which we were
forecasting. However, there has been no overall margin erosion, and we are
extremely well positioned to benefit from this growth in 2000 and beyond as a
result of our strategic commitment to lightweight aluminum components."
"Within the Cast Components Group, we had some product launch issues in
our polymers manifold business", continued Ron Cucuz. "There were several key
launches in the second and third quarters, and the launch of this product
turned out to be much more difficult and costly than anticipated. The most
significant parts are now in production, however, our volume and profit
forecasts for this business for 1999 are now lower than projected at the time
of the CMI acquisition. In addition, we have not seen any rebound in Brazil
or India, and we now expect these markets to remain at very low production
levels for the remainder of the year and into next year."
"These issues are now expected to result in sales growth below our
expectations for the remainder of 1999 and into 2000. However, we expect our
margins to remain strong and we are taking concrete steps to address the
issues we are facing. We will review the third quarter results in more detail
and will also discuss the outlook for the company for the remainder of 1999
and for next year during the Hayes Lemmerz International Inc., third quarter
earnings release conference call, now scheduled for 11:00 (E.S.T.) tomorrow,
Tuesday, November 23, 1999."
Hayes Lemmerz is one of the world's leading global suppliers of automotive
and commercial highway wheels, brakes, suspension, structural and other
lightweight components. The company has sales of $2.3 billion with 40 plants,
8 joint ventures and over 15,000 employees worldwide.
More information about Hayes Lemmerz International is available at
http://www.hayes-lemmerz.com , and a complete list of current and archived
press releases is available at http://www.hayes-lemmerz.com/press_kit .
Hayes Lemmerz International
Third Quarter Results
Quarter Ended Oct. 31
$ Millions 1999 1998
Sales $598.5 $443.9
Earnings from operations $ 73.3 $ 57.1
Net income $ 19.9 $ 19.7
Per Share Data:
Basic earnings per share $ 0.66 $ 0.65
Diluted earnings per share $ 0.63 $ 0.62
Basic average
common shares (000's) 30,337 30,180
Diluted weighted
average common shares (000's) 31,678 32,004
Hayes Lemmerz International
Nine Month Results
Nine Months Ended Oct. 31
$ Millions 1999 1998
Sales $1,730.8 $1,240.8
Earnings from Operations $ 204.7 $ 144.1
Income before
extraordinary loss $ 49.5 $ 41.9
Extraordinary loss,
net of tax $ -- $ (8.3)
Net Income $ 49.5 $ 33.6
Per Share Data:
Net earnings before
extraordinary loss $ 1.63 $ 1.39
Extraordinary loss,
net of tax $ -- $ (0.28)
Basic earnings per share $ 1.63 $ 1.11
Basic average common share
(000's) 30,333 30,134
Net earnings before
extraordinary loss $ 1.55 $ 1.29
Extraordinary loss,
net of tax $ -- $ (0.26)
Diluted earnings per share $ 1.55 $ 1.03
Diluted average common shares
(000's) 31,880 32,482
Hayes Lemmerz International
Third Quarter Results
Pro-Forma
Quarter Ended Oct. 31
$ Millions 1999 1998(*)
Sales $598.5 $573.9
Earnings from Operations $ 73.3 $ 73.9
Net Income $ 19.9 $ 19.7
Per Share Data:
Basic earnings per share data $0.66 $ 0.65
Diluted earnings per share data $0.63 $ 0.62
Basic weighted average
common shares (000's) 30,337 30,337
Diluted weighted average
common shares (000's) 31,678 31,678
Nine Months Ended Oct. 31
1999 1998(*)
Sales $1,730.8 $1,703.9
Earnings from Operations $ 204.7 $ 185.1
Net Income $ 49.5 $ 37.6
Per Share Data:
Basic earnings
per share data $ 1.63 $ 1.24
Diluted earnings
per share data $ 1.55 $ 1.18
Basic weighted average
common shares (000's) 30,333 30,333
Diluted weighted average
common shares (000's) 31,880 31,880
(*) Excludes one-time, extraordinary charge of $8.3 million after tax for
write-off of deferred financing costs.
CONTACT: William D. Shovers of Hayes Lemmerz International, Inc.,
734-737-5100; or Peter Collins of Rubenstein Associates, Inc.,
212-843-8050, for Hayes Lemmerz International