ArvinMeritor, Troy, Mich., reported financial results for its full fiscal year and fourth quarter ended Sept. 28, 2008.
Sales from continuing operations for fiscal year 2008 were $7.2 billion, up 11 percent compared to fiscal year 2007, due to strength in Europe and South America. This increase was 4 percent at constant exchange rates.
On a GAAP basis, net loss was $101 million, or a loss of $1.40 per diluted share, due to non-cash income tax charges of $183 million which the company incurred in the fourth quarter primarily to repatriate cash to the United States.
On a GAAP basis, loss per diluted share from continuing operations was $1.26 compared to $0.43 per diluted share in fiscal year 2007.
Earnings per share from continuing operations, before special items, were $1.60 per diluted share, compared to $0.53 per diluted share in fiscal year 2007 - in line with the company's full fiscal year guidance provided throughout the year.
Free cash outflow (cash flow from operations, net of capital expenditures) of negative $9 million for the full fiscal year, significantly better than the forecasted range of negative $50 million to negative $100 million.
"Our team executed well in fiscal year 2008," said Chairman, CEO and President Chip McClure. "We increased margins by 1.8 percentage points, before special items, in our Commercial Vehicle Systems business by sharpening operational performance in all regions, and we achieved our targeted savings of $75 million in cost reductions through our global Performance Plus profit improvement program.
"Although commercial and light vehicle volumes in North America were down dramatically from fiscal year 2007, we increased revenue from customers in Europe, South America and Asia Pacific. We also achieved our strategic objectives to grow our military business through an intense and dedicated focus on customer requirements for ArvinMeritor's drivetrain products. And, we successfully strengthened our aftermarket business through organic growth and two key acquisitions which position us for greater market penetration globally," said McClure.
For the fourth quarter of fiscal year 2008, ArvinMeritor posted sales of $1.7 billion, up 8 percent from the same period last year. At constant exchange rates, sales were up 3 percent. This increase in sales was primarily due to higher volumes in military, off-highway and aftermarket products, and strong commercial vehicle production outside of North America. These items were offset by softness in the global light vehicle markets.
Operating income in the fourth quarter of 2008 was $40 million, compared to a loss of $16 million in the fourth quarter of fiscal year 2007. Excluding special items, operating income was $52 million, compared to $8 million in the prior year's fourth quarter.
Income from continuing operations during the fourth quarter of fiscal year 2008, before special items, was $28 million, or $0.38 per diluted share, compared to a loss from continuing operations, before special items, of $4 million, or a loss of $0.06 per diluted share, a year ago. Favorable items that impacted fourth-quarter results in fiscal year 2008 were higher sales and operational improvements in supply chain management, application of lean fundamentals and direct material cost reduction programs.
Special items included non-cash income tax charges, restructuring costs and costs associated with the planned separation of the company's Light Vehicle Systems (LVS) business group. These items accounted for approximately $2.67 per diluted share of expense in the fourth quarter.
ArvinMeritor's forecast for North American Class 8 truck production is in the range of 200,000 to 220,000 units in calendar year 2009, approximately the same as in 2008. The company's forecast for heavy and medium truck volumes in Western Europe is in the range of 400,000 to 450,000 units, down approximately 25 percent from fiscal year 2008.
The company's fiscal year 2009 financial guidance is for expected continuing operations - which includes ArvinMeritor's commercial vehicle systems and wheels businesses. ArvinMeritor expects the remaining LVS businesses to be separated during 2009. The LVS outlook continues to be weak and may negatively affect the company's overall financial condition and GAAP results of operations until the point of sale.
Sales for fiscal year 2009 are forecasted to be in the range of $4.9 billion to $5.2 billion. The company expects earnings per diluted share, excluding special items, to be in the range of $0.80 to $1.00. ArvinMeritor anticipates free cash flow for the fiscal year to be approximately breakeven.
Full-year expectations include approximately $50 million in savings from the company's Performance Plus profit improvement program which is now focused on ArvinMeritor's European operations, and $80 million associated with restructuring and cost reduction actions announced on Oct. 31, 2008.
Sales from continuing operations for fiscal year 2008 were $7.2 billion, up 11 percent compared to fiscal year 2007, due to strength in Europe and South America. This increase was 4 percent at constant exchange rates.
On a GAAP basis, net loss was $101 million, or a loss of $1.40 per diluted share, due to non-cash income tax charges of $183 million which the company incurred in the fourth quarter primarily to repatriate cash to the United States.
On a GAAP basis, loss per diluted share from continuing operations was $1.26 compared to $0.43 per diluted share in fiscal year 2007.
Earnings per share from continuing operations, before special items, were $1.60 per diluted share, compared to $0.53 per diluted share in fiscal year 2007 - in line with the company's full fiscal year guidance provided throughout the year.
Free cash outflow (cash flow from operations, net of capital expenditures) of negative $9 million for the full fiscal year, significantly better than the forecasted range of negative $50 million to negative $100 million.
"Our team executed well in fiscal year 2008," said Chairman, CEO and President Chip McClure. "We increased margins by 1.8 percentage points, before special items, in our Commercial Vehicle Systems business by sharpening operational performance in all regions, and we achieved our targeted savings of $75 million in cost reductions through our global Performance Plus profit improvement program.
"Although commercial and light vehicle volumes in North America were down dramatically from fiscal year 2007, we increased revenue from customers in Europe, South America and Asia Pacific. We also achieved our strategic objectives to grow our military business through an intense and dedicated focus on customer requirements for ArvinMeritor's drivetrain products. And, we successfully strengthened our aftermarket business through organic growth and two key acquisitions which position us for greater market penetration globally," said McClure.
For the fourth quarter of fiscal year 2008, ArvinMeritor posted sales of $1.7 billion, up 8 percent from the same period last year. At constant exchange rates, sales were up 3 percent. This increase in sales was primarily due to higher volumes in military, off-highway and aftermarket products, and strong commercial vehicle production outside of North America. These items were offset by softness in the global light vehicle markets.
Operating income in the fourth quarter of 2008 was $40 million, compared to a loss of $16 million in the fourth quarter of fiscal year 2007. Excluding special items, operating income was $52 million, compared to $8 million in the prior year's fourth quarter.
Income from continuing operations during the fourth quarter of fiscal year 2008, before special items, was $28 million, or $0.38 per diluted share, compared to a loss from continuing operations, before special items, of $4 million, or a loss of $0.06 per diluted share, a year ago. Favorable items that impacted fourth-quarter results in fiscal year 2008 were higher sales and operational improvements in supply chain management, application of lean fundamentals and direct material cost reduction programs.
Special items included non-cash income tax charges, restructuring costs and costs associated with the planned separation of the company's Light Vehicle Systems (LVS) business group. These items accounted for approximately $2.67 per diluted share of expense in the fourth quarter.
ArvinMeritor's forecast for North American Class 8 truck production is in the range of 200,000 to 220,000 units in calendar year 2009, approximately the same as in 2008. The company's forecast for heavy and medium truck volumes in Western Europe is in the range of 400,000 to 450,000 units, down approximately 25 percent from fiscal year 2008.
The company's fiscal year 2009 financial guidance is for expected continuing operations - which includes ArvinMeritor's commercial vehicle systems and wheels businesses. ArvinMeritor expects the remaining LVS businesses to be separated during 2009. The LVS outlook continues to be weak and may negatively affect the company's overall financial condition and GAAP results of operations until the point of sale.
Sales for fiscal year 2009 are forecasted to be in the range of $4.9 billion to $5.2 billion. The company expects earnings per diluted share, excluding special items, to be in the range of $0.80 to $1.00. ArvinMeritor anticipates free cash flow for the fiscal year to be approximately breakeven.
Full-year expectations include approximately $50 million in savings from the company's Performance Plus profit improvement program which is now focused on ArvinMeritor's European operations, and $80 million associated with restructuring and cost reduction actions announced on Oct. 31, 2008.
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