Federal-Mogul Corporation: Federal-Mogul Reports Improved Q3 2013 Results
Sales up 9% to $1.7 billion; Net Income of $38 million;
Operational EBITDA of $147 million and Free Cash Flow of $58 million
Q3 2013 Highlights
*Sales of $1.7 billion from continuing operations up $145 million, or 9%
higher than Q3 2012.
*Net Income of $38 million, a $49 million improvement from Q3 2012. EPS of
$0.26 per share, up from a loss of $(0.11) per share during the same
period a year ago.
*Operational EBITDA of $147 million or 8.7% of sales versus $103 million or
6.6% in Q3 2012, with EBITDA margin conversion on incremental sales of
*Free Cash Flow of $58 million demonstrating increased profitability and
strong improvement in working capital management versus Q3 2012.
*Q3 2013 ending cash position of $960 million.
Southfield, Michigan, October 23, 2013... Federal-Mogul Corporation
(NASDAQ:FDML) today reported operating results for the third quarter ended
September 30, 2013. Total sales were $1,690 million, up 9% versus Q3 2012 on
a continuing operations basis with negligible exchange impact. Federal-Mogul
sales in Europe were up 12% in Q3 2013 due to market share gains, growth in
export engine production and the impact of the BERU^® ignition acquisition and
distribution agreements. The company's North American revenue was up 6% and
Rest of the World was up 7% as these markets continued to increase production
rates versus Q3 2012. Operating Margin^(1) improved to 4.6%, up two
percentage points from Q3 2012. Net income attributable to Federal-Mogul was
$38 million or $0.26 EPS, versus a loss of $(11) million in Q3 2012.
Operational EBITDA in Q3 2013 was $147 million or 8.7% of sales, versus $103
million or 6.6% of sales in Q3 2012. Free Cash Flow was $58 million. The Q3
ending cash balance of $960 million includes $500 million in proceeds from the
company's shareholder rights offering and $51 million from divestitures.
$ millions Q3 2013 Q3 2012 B/(W)
Net Sales $1,690 $1,545 $145
Gross Margin 255 213 42
% of sales 15.1% 13.8% 1.3pts
SG&A (177) (173) (4)
% of sales (10.5%) (11.2%) 0.7pts
Net Income (Loss) 38 (11) 49
Attributable to Federal-Mogul
Earnings Per Share ^(2) 0.26 (0.11) 0.37
in dollars, diluted EPS
Operational EBITDA ^(3) 147 103 44
% of sales 8.7% 6.6% 2.1pts
Free Cash Flow ^(4) $58 $(142) $200
"The company's improved sales in the third quarter 2013 were driven by much
stronger demand for Federal-Mogul products used in European light vehicle
production," said Rainer Jueckstock, Federal-Mogul co-CEO and CEO Powertrain
Segment. "At the same time, we have experienced continued OE sales growth in
North America and Asia, especially China, versus Q3 2012. This improved light
vehicle demand helped offset continued softness in the European commercial
vehicle and industrial markets in Q3 2013. Our Q3 earnings performance
continues to show that we are making good progress on restructuring in Western
Europe and the U.S., increasing operational efficiency and implementing
ongoing cost reductions as we drive for growth and enhanced margins."
"We had improved aftermarket demand in the U.S. and Canada and much stronger
sales in Europe during Q3 2013," said Kevin Freeland, co-CEO and CEO Vehicle
Components Segment. "Further, our non-core business line divestiture actions
and ongoing footprint restructuring combined with inventory and distribution
efficiency improvements continue to position the company for improved
The company completed the divestiture of its OE and aftermarket fuel delivery
products business including an engineering center and manufacturing operations
in Logansport, Indiana, along with other related assets, including the
Carter^® brand. The business had 2013 year-to-date sales of approximately $80
million and employed 380 associates.
Q3 Segment Revenue and Operational EBITDA
Powertrain Segment (PT)
Federal-Mogul's Powertrain (PT) Segment is a leader in the design, engineering
and manufacturing of combustion chamber and other powertrain components
serving light, medium and heavy-duty vehicle and industrial customers.
Approximately 70% of PT Segment revenue is derived from passenger car vehicle
manufacturers. On a global basis, the PT Segment had a 11% revenue increase
to $1,038 million, up from $935 million in Q3 2012, with strong light vehicle
market share gains. During the same comparison period, global light vehicle
production increased 1%. Federal-Mogul's PT Segment market share gains during
the period are due to its technology leadership, market penetration with
powertrain customers in the growing luxury segment and increased presence on
emerging market mid-range vehicles.
PT Segment revenue in Q3 2013 was up 16% in North America versus Q3 2012.
Light vehicle production increased 1% in North America during the same
period. The PT Segment continued to gain market share in Europe, where PT
derives approximately 50% of its revenue. In Europe in Q3 2013, PT revenue
increased 8% due to higher volumes on new engine programs and revenue from the
BERU ignition acquisition. For comparison, in the European market, LV
production was down 1% during the same period and CV production was 7% lower.
PT Segment revenue during Q3 2013 in the Rest of the World was up 15%, with
revenue in the China market up 37% versus Q3 2012. The PT Segment regional
revenue growth levels in all regions increased at a higher percentage than
underlying market production growth rates.
The PT Segment in Q3 2013 had EBITDA of $94 million up $40 million from $54
million in Q3 2012 on a continuing operations basis. EBITDA as a percent of
sales increased to 9% in Q3 2013 from 5.7% of sales in Q3 2012 as the PT
Segment implemented cost reduction measures, continued restructuring actions
and benefitted from higher sales volumes and more stable order flow, allowing
for greater operational efficiency.
Vehicle Components Segment (VCS)
Federal-Mogul's VCS business sells and distributes a broad portfolio of
products through more than 20 of the world's most recognized brands in the
global aftermarket, while also serving original equipment vehicle
manufacturers with products including braking, chassis, wipers and other
vehicle components. VCS revenue in Q3 2013 was $734 million, up 5% from Q3
2012. More than 75% of VCS revenue is derived in the global automotive
VCS revenue in the U.S. and Canada aftermarket improved 2% in Q3 2013 versus
Q3 2012. Revenue in the European aftermarket was up 28%, primarily due to an
aftermarket ignition distribution agreement and stronger sales of Ferodo^®
braking and MOOG^® steering products.
The VCS Segment had EBITDA of $53 million or 7.3% of sales in Q3 2013, up from
$49 million or 7% in Q3 2012. Further, net working capital improved in Q3 as
the VCS Segment implemented inventory and distribution cost reductions and
fully absorbed the impact of previously agreed aftermarket accounts receivable
"Recent market studies have reinforced the importance of trust in the brand
among service technicians and installers," said Freeland. "We are placing
stronger emphasis on building customer preference for Federal-Mogul's brands
and have implemented several new programs in the third quarter. These include
new marketing partnerships, mobile catalog and product information
applications for tablets and smart phones, new technician training and
attractive programs to drive selection of Federal-Mogul's products."
"At the same time, we are also improving operational and distribution
efficiency and reducing support costs in order to offset the expense of new
marketing programs and implementation of strategies to drive higher order fill
rates and customer satisfaction. This has allowed us to refocus our direction
while maintaining our financial performance in the comparison period,"
Federal-Mogul will conduct a conference call and audio webcast on October 23,
2013 at 10:00 a.m. EDT. To participate in the call:
Domestic calls: 888.713.4199
Passcode I.D.: 86647671
To facilitate rapid connection, please click here to pre-register.
The live audio webcast will be available in the Investor Relations section of
the corporate website by clicking here on October 23, beginning at 10:00 a.m.,
An audio replay of the call will be available two hours following the call and
will be accessible until November 23, 2013 at:
Domestic calls: 888.286.8010
International calls: 617.801.6888
(1) Operating margin is defined as gross margin less SG&A expense.
(2) Earnings Per Share (EPS) for Q3 2013 is calculated on the basis of the
weighted daily average total share count during the third quarter 2013. The
share count increased from approximately 99 million to 150 million during the
third quarter 2013 as a result of a shareholder rights offering. The share
count during Q3 2012 was approximately 99 million.
(3) 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. During the third quarter of
2013, the Company adjusted its definition of Operational EBITDA to exclude the
income statement impacts associated with stock appreciation rights.
Accordingly, Operational EBITDA is defined as earnings from continuing
operations 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 component of the U.S.-based funded
pension plan, OPEB curtailment gains or losses and the income statement
impacts associated with stock appreciation rights. Prior periods have been
reclassified to conform to the presentation used in this filing.
(4) Free Cash Flow is defined as net cash provided from (used by) operating
activities less capital investment for plant, property and equipment.
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
Components 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 44,500
people in 34 countries, and its worldwide headquarters is in Southfield,
Michigan, United States. For more information, please visit
Statements contained in this press release, which are not historical fact,
constitute "Forward-Looking Statements." Actual results may differ materially
due to numerous important factors that are described in Federal-Mogul's most
recent report to the SEC on Form 10-K, which may be revised or supplemented in
subsequent reports to the SEC on Forms 10-Q and 8-K. Such factors include,
among others, fluctuations in domestic or foreign vehicle production;
fluctuations in the demand for vehicles containing our products; the ability
to refinance the Company's outstanding indebtedness on commercially reasonable
terms or at all; the Company's ability to generate cost savings or
manufacturing efficiencies to offset or exceed contractually or competitively
required price reductions or price reductions to obtain new business; the
costs, timing and success of the Company's restructuring actions; conditions
in the automotive industry; the success of the Company's segmentation and
corresponding effects; and general global and regional economic conditions.
Federal-Mogul does not intend or assume any obligation to update any
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Steve Gaut firstname.lastname@example.org
Federal-Mogul Press Release Financials
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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