Federal-Mogul Corporation : Federal-Mogul Reports Fourth Quarter and Full Year
*Fourth quarter 2012 sales of $1.6 billion, FY 2012 sales of $6.7 billion.
*Q4 2012 net loss of $(80) million primarily due to a weaker European
market. Adjusted net loss of $(41) million when excluding restructuring,
impairments and special items.
*FY 2012 net loss of $(117) million on the weak European market and
impairment charges. FY adjusted net income of $51 million, excluding
restructuring, impairments and special items.
*Operational EBITDA of $65 million in Q4 2012 and $483 million for FY 2012.
Adjusted Operational EBITDA of $84 million in Q4 2012 and $508 million for
*Multi-site restructuring to transfer production and equipment to lower
Southfield, Michigan, February 27, 2013. Federal-Mogul Corporation (NASDAQ:
FDML) today announced fourth quarter 2012 sales of $1.6 billion, four percent
lower than the fourth quarter of 2011, or two percent lower on a constant
dollar basis. The result includes the impact of 13% lower global commercial
and industrial engine production, and a 14% decline in European light vehicle
production, compounded by a shift in mix within light vehicle production from
higher content diesel to gasoline products. The company had a net loss of
$(80) million in Q4 2012 due to the weaker European light vehicle and global
commercial vehicle markets with negative regional and product mix. Without
the impact of restructuring, impairments and special items, the company had an
adjusted net loss of $(41) million in Q4 2012. Operational EBITDA in Q4 2012
was $65 million due to the lower European sales and unfavorable mix, combined
with legal and commercial charges of $(19) million. Excluding these items, Q4
2012 Adjusted EBITDA was $84 million.
Financial Summary Q4 2012 Q4 2011 2012 2011
Net Sales $1,595 $1,654 $6,664 $6,910
Gross Margin $168 $247 $911 $1,088
pct. of sales 10.5% 14.9% 13.7% 15.7%
SG&A $(173) $(167) $(712) $(689)
pct. of sales 10.8% 10.1% 10.7% 10.0%
Net (Loss) $(80) $(239) $(117) $(90)
attributable to Federal-Mogul
(Loss) Per Share $(.81) $(2.42) $(1.18) $(.91)
in dollars, diluted EPS
Operational EBITDA^1 $65 $153 $483 $683
^pct. of sales 4.1% 9.2% 7.2% 9.9%
Cash Outflow^2 $(77) $43 $(480) $(115)
Adjusted Net (Loss) Income^3 $(41) $52 $51 $208
attributable to Federal-Mogul
Adjusted Operational EBITDA^4 $84 $153 $508 $683
pct. of sales 5.3% 9.2% 7.6% 9.9%
Detailed schedules are available at the end of this press release
The company, for full year 2012 reported four percent lower sales than 2011,
comprising a one percent constant dollar increase, offset by an adverse
currency impact of five percent. Sales in North America were three percent
higher and in Rest of World (ROW) eight percent higher on a constant dollar
basis, but were offset by four percent lower sales in Europe, excluding sales
from BERU. The company in China had nine percent constant dollar sales growth
during Q4 2012 versus Q4 2011.
Federal-Mogul, for full year 2012 reported a net loss of $(117) million with
the European market, impairments and special items negatively impacting
results. The company had an adjusted net income of $51 million when excluding
the impact of the impairments, restructuring and special items.
Operational EBITDA for the full year 2012 was $483 million. When excluding
the impact of special items of $25 million, including legal, customer and
other contractual agreements, the company had 2012 Adjusted Operational EBITDA
of $508 million.
The company in Q2 2012 announced a $60 million restructuring program involving
three plant closures and one site downsizing. The closures are expected to be
completed by the end of Q2 2013. The company today announced plans to
commence an additional multi-site restructuring program involving the
potential closure or downsizing of manufacturing facilities, primarily in
Western Europe. The plan will be implemented from 2013 through 2015 and
involves shifting capacity and equipment to existing lower cost sites in
Eastern Europe, Asia and Mexico. Details of each site restructuring plan will
be disclosed to employees in accordance with relevant legal requirements and
customary consultations with employee representatives, labor authorities and
"We are evaluating the markets closely and anticipate implementing a plan to
transfer capacity from higher cost locations to available capacity in lower
cost locations in Mexico, Poland, China and other sites," said Rainer
Jueckstock, co-CEO and Powertrain Segment CEO. "We are balancing
Federal-Mogul's global manufacturing footprint efficiency with the need to
support our customer's planned growth in developing markets and with the need
to be ready for the eventual European market recovery."
Segment Revenue and Operational EBITDA Q4 2012
Federal-Mogul in Q4 2012 had total revenue of $1.6 billion. The Powertrain
Segment (PT) had total revenue of $973 million including intercompany sales to
Vehicle Component Solutions Segment (VCS). Powertrain Segment revenue in Q4
2012 was six percent lower, or three percent lower on a constant dollar basis,
compared to Q4 2011.
Commercial vehicle production in Federal-Mogul's primary markets declined 13%
during the fourth quarter 2012, versus the same period of 2011, resulting in a
seven percent decrease in the company's Powertrain Segment sales to CV and
industrial markets during the quarter. Sales in EMEA, where PT derives a
significant portion of its revenue and profitability from light vehicle
diesel, commercial and industrial powertrain products, were 12% lower than Q4
2011, compared to a market decline of 14%.
Furthermore, the softer European market conditions also drove a product mix
shift within light vehicle production away from higher content diesel engines
towards lower content gasoline engines, with a significant impact on
profitability. Sales to OE customers in North America during the period were
up two percent. Sales to OE customers in China grew 8% during Q4 2012, versus
"Our European customers have signaled a market recovery in the second half of
2013. We don't expect current lower European volumes and diesel to gasoline
engine mix for the long term, since diesel powertrains are ultimately more
fuel efficient and are preferred by a large percentage of European customers.
However, the economic impact of conditions in the last half of 2012 drove an
unfavorable mix that negatively impacted the company's profitability in recent
periods," said Jueckstock.
The Powertrain Segment recorded Operational EBITDA of $29 million in Q4 2012,
down from $108 million in Q4 2011, primarily driven by the reduced volume and
unfavorable mix conditions previously explained. The segment was also
negatively impacted by a special commercial agreement in the quarter.
Excluding this item, the Powertrain Segment had Adjusted Operational EBITDA of
The VCS Segment in Q4 2012 had revenue of $709 million. Total revenue was down
two percent, or flat on a constant dollar basis. The VCS Segment had a two
percent decline in sales to customers in original equipment markets, or up one
percent on a constant dollar basis. Global aftermarket sales were down one
percent on a constant dollar basis. The VCS Segment recorded Operational
EBITDA of $37 million in Q4 2012, down $8 million versus Q4 2011. Without the
impact of a legal settlement recorded in the quarter, VCS Operational EBITDA
would have been $46 million or 6.5% of sales, an improvement of $1 million
versus the fourth quarter 2011.
"We continue to see evidence of the success of our marketing and distribution
strategies," said Michael Broderick, Federal-Mogul co-CEO and CEO Vehicle
Component Solutions Segment. "Our large North American core aftermarket
business is stabilizing as we are exiting unprofitable business while
simultaneously focusing on product differentiation in all our premium product
Federal-Mogul reported a net loss of $(80) million in the fourth quarter 2012
primarily due to lower sales, especially in the European market. The net
result was further impacted by special legal and commercial agreements of
$(19) million, impairment charges of $(20) million and $(6) million of
restructuring charges. Without the impact of these items and the associated
tax benefit of $6 million, the company had an adjusted net loss of $(41)
For the full year 2012, the company had a net loss of $(117) million with the
full year earnings impact of lower sales in Europe, special items of $(25)
million and other non-EBITDA charges, principally impairments, totaling $(169)
million. Without the impairment, special items and associated tax impact of
$26 million, the company would have recorded $51 million net income.
The company recorded a cash outflow of $(77) million during the fourth quarter
of 2012 and had an outflow of $(480) million for the full year 2012. Full
year capital spending of $387 million and interest payments of $106 million
offset $483 million of Operational EBITDA. In addition, a significant portion
of cash outflow was due to the extension of $285 million of accounts
receivable requested by several large U.S. aftermarket retail customers as
part of commercial negotiations. The company does not intend to continue to
extend payment terms in the future. During the period, Federal-Mogul also
contributed $90 million to the U.S.-funded pension plan and paid $52 million
for the BERU spark plug business. Federal-Mogul had a cash balance of $467
million at the end of the fourth quarter 2012 and an undrawn revolver of $450
The company will hold a call with analysts and other interested parties at
10:00AM EST on February 27, 2013.
Details for registering to join the call are available at
Federal-Mogul Corporation (NASDAQ: FDML) is a leading global supplier of
products and services to the world's manufacturers and servicers of vehicles
and equipment in the automotive, light, medium and heavy-duty commercial,
marine, rail, aerospace, power generation and industrial markets. The
company's products and services enable improved fuel economy, reduced
emissions and enhanced vehicle safety.
Federal-Mogul operates two independent business segments, each with a chief
executive officer reporting to Federal-Mogul's Board of Directors.
Federal-Mogul's Powertrain Segment designs and manufactures original equipment
powertrain components and systems protection products for automotive,
heavy-duty, industrial and transport applications.
Federal-Mogul's Vehicle Component Solutions Segment sells and distributes a
broad portfolio of products through more than 20 of the world's most
recognized brands in the global vehicle aftermarket, while also serving
original equipment vehicle manufacturers with products including braking,
chassis, wipers and other vehicle components. The company's aftermarket
brands include ANCO^® wiper blades; Champion^® spark plugs, wipers and
filters; AE^®, Fel-Pro^®, FP Diesel^®, Goetze^®, Glyco^®, Nüral^®, Payen^® and
Sealed Power^® engine products; MOOG^® steering and suspension parts; and
Ferodo^® and Wagner^® brake products. Federal-Mogul was founded in Detroit in
1899. The company employs 45,000 people in 34 countries, and its worldwide
headquarters is in Southfield, Michigan, United States. For more information,
please visit www.federalmogul.com.
1 Management believes that Operational EBITDA provides supplemental
information for management and investors to evaluate the operating performance
of its business. Management uses, and believes that investors benefit from
referring to Operational EBITDA in assessing the Company's operating results,
as well as in planning, forecasting and analyzing future periods as this
financial measure approximates the cash flow associated with the operational
earnings of the Company. Additionally, Operational EBITDA presents measures of
corporate performance exclusive of the Company's capital structure and the
method by which assets were acquired and financed. Operational EBITDA is
defined as earnings before interest, income taxes, depreciation and
amortization, and certain items such as restructuring and impairment charges,
Chapter 11 and U.K. Administration related reorganization expenses, gains or
losses on the sales of businesses, the non-service cost components of the
U.S.-based funded pension plan and OPEB curtailment gains or losses.
2 Cash flow is equal to net cash provided by operating activities less net
cash used by investing activities, as set forth on the attached statement of
3 Adjusted net income (loss) is defined as net income attributable to
Federal-Mogul before the impact of impairment charges, OPEB curtailment gains
and restructuring expense and before a special commercial settlement of $10
million, a legal settlement of $9 million, both occurring in Q4 2012 and a
contractual settlement of $6 million occurring in Q1 2012.
4 Adjusted Operational EBITDA refers to Operational EBITDA, before the
impact of a special commercial settlement of $10 million, a legal settlement
of $9 million, both occurring in Q4 2012 and a contractual settlement of $6
million occurring in Q1 2012.
Federal-Mogul Q4 2012 Press Release Financial Statements
This announcement is distributed by Thomson Reuters on behalf of Thomson
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.
Source: Federal-Mogul Corporation via Thomson Reuters ONE
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