Hayes Lemmerz International Inc
Hayes Lemmerz International — Q3 2008 Earnings Presentation
29 slides from Hayes Lemmerz International's earnings presentation, Dec 4, 2008
Slide 1: 3rd Quarter 2008 Earnings Presentation
3rd Quarter 2008 Earnings Presentation December 4, 2008
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements with respect to our financial condition and business. All statements other than statements of historical fact made in this presentation are forward-looking. Such forward-looking statements include, among others, those s
Slide 3: Agenda
Agenda 1. Financial Highlights & Q3 Overview Curt Clawson, President, CEO & Chairman of the Board 2. Operating in a Slowing Global Economy and Summary Fred Bentley, Chief Operating Officer 3. Financial Review Mark Brebberman, Vice President & CFO
Slide 4: Our Vision: Be a Premier Automotive Supplier
BE A PREMIER AUTOMOTIVE SUPPLIER Be the lowest cost producer Have the best people in the industry Grow through maximizing our customer satisfaction Our Vision
Slide 5: Third Quarter Financial Highlights
Third Quarter Financial Highlights 2007 2008 Sales Adjusted EBITDA* ($ in millions) Core Operating Earnings* Free Cash Flow* (Excl. A/R Programs) 2007 2007 2007 2008 2008 2008 * Please refer to the appendix for the definition of these non-GAAP financial measures, reconciliations to the most comparat
Slide 6: Key Themes
Key Themes Good quarter given market conditions Cost structure from restructuring enabled us to absorb lower volumes during the quarter Most restructuring already completed Liquidity of $163M at or above historical levels Withdrawing guidance due to economic volatility and industry uncertainty Plann
Slide 7: Past Actions Improved Cost Structure
Past Actions Improved Cost Structure Sold non-core businesses MGG '07, Brakes '07, Wabash Powertrain '07 , Suspension '05-'07, Hubs and Drums '05 Closed / Sold unprofitable wheel plants Georgia '08, Belgium '08, Huntington Indiana '06, California '05, Howell Michigan '05, Italy '05 Restructured whee
Slide 8: Improved Cost Structure: EBITDA Margins Maintained
Improved Cost Structure EBITDA Margins Maintained EBITDA margin percentage on significantly lower volume Past restructuring actions have improved cost structure and allowed us to maintain margins on lower volumes during Q3 ($ in millions) 2008 Q3 2007 Q3 B/(W) Sales $ 497.0 $ 554.8 $ (57.8) EBITDA 5
Slide 9: Q3 Liquidity
Q3 Liquidity Securitization/Revolver Detail at 10/31/08 ($ in millions) 10/31/08 Liquidity = $163M Limit Drawn A/R Programs Germany 33 33 Czech 18 18 U.S. 15 15 Revolver 124 16 Liquidity Ending Q3 liquidity of $163M Still have large amount of revolver availability at the end of Q3 Excludes $15M-$20M
Slide 10: Liquidity 2005-2008
Liquidity 2005-2008 ($ in millions) $126M $120M $128M $163M Expiration of special terms Restructuring Working Capital - inventory builds to facilitate Gainesville closure, seasonality and market deterioration Q3 at or above historical liquidity levels Special terms Sale of Brakes Rights offering
Slide 11: Free Cash Flow
Free Cash Flow ($ in millions) 2008 YTD Adjusted EBITDA $ 169 Interest & Taxes (77) Pension/OPEB (14) Capex (67) Restructuring/Special Terms (92) Working Capital/Other (47) Free Cash Flow $ (127) Right-sizing all elements for future Free Cash Flow Future Outlook Current tax planning expected to redu
Slide 12: 2008 Key Business Wins
Secured almost $300M in new and carry-over business through the third quarter Given current FX rates and metal pricing, would need about $300M in annual wins to remain at current sales levels Continue to diversify customer and geographic mix No platform greater than 4% of total sales On over 200 pla
Slide 13: Additional Cost Saving Actions
Taking additional actions in response to softening markets Sold Hoboken, Belgium plant at the right time Gainesville, Georgia closure on track for year end SG&A reductions worldwide Capex and spending reductions Manufacturing costs flexed with volume reductions Eliminate employees, shifts, shorten w
Slide 14: Raw Material Update
Operating in a Slowing Global Economy Raw Material Update Metal prices declining - helps working capital Steel Minimal impact on 2008 earnings Working on 2009 prices and will know outcome in Q1 Aluminum Declined to a rate of approximately $1,700/ton Pass-through pricing for HLI - but impact to earni
Slide 15: Summary: Q3 Results
Q3 Results Strong performance given market conditions Restructuring strategy and investment in high- growth/leading-cost regions has mitigated the impact of economic downturn during Q3 Difficult restructuring mostly completed Operating in a Slowing Global Economy Continue to win diversified business
Slide 16: Financial Review
Financial Review HAYES LEMMERZ°
Slide 17: Q3 2008 vs. Q3 2007 Financial Summary
Q3 2008 vs. Q3 2007 Financial Summary ($ in millions) Third Q3 2008 Year to YTD 2008 Quarter B/(W) than Date B/(W) than 2008 2007 2008 2007 Income Statement Net Sales $ 497.0 $ (57.9) $ 1,634.3 $ 36.7 Adjusted EBITDA(1) 50.3 (5.5) 168.9 17.2 Adjusted EBITDA margin 10.1% 0.1ppts. 10.3% 0.8ppts. Core
Slide 18: Q3 2008 vs. Q3 2007 Change in Net Sales
Q3 2008 vs. Q3 2007 Change in Net Sales ($ in millions) Sale of Hoboken, Belgium aluminum wheel plant Primarily decreased volumes partially offset by favorable mix ($58) ($40) ($4) $2 ($16) 2007 2008 Metal FX Sale of Business Change Volume/Price/Mix 18
Slide 19: Q3 2008 vs. Q3 2007 Change in Core Operating Earnings
Q3 2008 vs. Q3 2007 Change in Core Operating Earnings ($ in millions) $25.5 $21.6 $8.1 ($ 3.9) ($9.0) ($3.0) 2007 2008 Productivity/ Economics/ Change FX Other Volume/ Price/Mix Primarily decreased volumes partially offset by favorable mix Productivity improvements more than offsetting inflation
Slide 20: Q3 2008 vs. Q3 2007 Change in Free Cash Flow
Q3 2008 vs. Q3 2007 Change in Free Cash Flow (Excl. A/R Programs) ($ in millions) Adjusted EBITDA ($6M) Working Capital (primarily one-time or temporary) ($47M) Cash tax timing ($7M) Other ($5M) $25.6 ($37.5) ($63.1) ($64.9) ($0.8) $2.6 2007 Cap Ex Asset Sales 2008 Change Cash from Operations
Slide 21: 2008 Outlook
2008 Outlook Withdrawing guidance due to economic volatility and industry uncertainty Past restructuring and cost savings actions have allowed us to maintain margins in Q3 Continue restructuring and cost actions to minimize ongoing impact of global market declines Planning to renegotiate bank covena
Slide 22: Appendix
Appendix HAYES LEMMERZ’
Slide 23: Top Selling Platforms
Top Selling Platforms Diverse product portfolio - over 200 platforms worldwide No platform greater than 4% of total revenue Portfolio mix minimizes risk Top 15 Platforms OEM NAMEPLATE REGION Diamler A-Class EU Honda Civic/CR-V EU/SA/NA Renault/Nissan Clio/Micra EU/SA/NA GM Cobolt/Astra/Zafira EU/SA/
Slide 24: Capital Structure
Capital Structure ($ in millions) 10/31/08 Debt Term Loan B $335 Senior Notes 170 Revolving Credit Facility 16 Other 49 Total Debt $570 Cash 57 Net Debt $513 Minority Interest 67 Book Equity 98 Total Capitalization $678 Net Debt/LTM Adj. EBITDA 2.5 Capital Structure ($ in millions) ($ in millions) $
Slide 25: Non-GAAP Financial Information: Free Cash Flow
Non-GAAP Financial Information Free Cash Flow ($ in millions) ($ in millions) Third Third Q3 2008 Quarter Quarter B/(W) than 2008 2007 2007 Net Loss from Continuing Ops ($8.1) ($62.7) $54.6 Non-Cash and Non-Operating Expenses 6.4 75.9 (69.5) Depreciation & Amortization 25.8 29.2 (3.4) Working Capita
Slide 26: Non-GAAP Financial Information: Adjusted EBITDA
Non-GAAP Financial Information Adjusted EBITDA ($ in millions) ($ in millions) Q3 2008 Third Third Increase/ Quarter Quarter (Decrease) 2008 2007 from 2007 Net loss ($10.4) ($62.7) $52.3 Loss from Discontinued Operations 2.3 - 2.3 Minority Interest 3.9 5.9 (2.0) Income Tax Provision 12.5 16.7 (4.2)
Slide 27: Non-GAAP Financial Information: Core Operating Earnings
Non-GAAP Financial Information Core Operating Earnings ($ in millions) ($ in millions) Third Third Q3 2008 Quarter Quarter B/(W) than 2008 2007 2007 Earnings from Operations $20.6 ($27.6) $48.2 Anti-Dilution Adjustment to Long-Term Incentive Plan 0.2 1.9 (1.7) Fees and services related to balance sh
Slide 28: Non-GAAP Financial Measures: Adjusted EBITDA
Non-GAAP Financial Measures Adjusted EBITDA: 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 restructur
Slide 29: Non-GAAP Financial Measures: Core Operating Earnings
Non-GAAP Financial Measures Core Operating Earnings: Core operating earnings is defined as earnings from operations less asset impairments and restructuring charges, post-emergence chapter 11 related costs, gains and losses on sales of assets, and other special items that are of an infrequent or unu
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