SOUTHFIELD, Mich.– Federal-Mogul has reported its first quarter 2008 financial results, including record quarterly sales of $1.86 billion, an increase of 8 percent over the same period of the prior year.
During the first quarter, the company recorded a one-time, non-cash charge of $68 million relating to re-valuation of inventory, as required by fresh-start reporting following emergence from Chapter 11 in December 2007. The company reported a net loss of $(32) million as compared to net income of $5 million in the first quarter of 2007. Without the inventory charge and the associated tax impact, net income would have been $32 million, or 2 percent of sales. Federal-Mogul’s Operational EBITDA was $206 million or 11 percent for the first quarter of 2008, up from the same period in 2007 when the company reported Operational EBITDA of $199 million.
During the quarter, sales were $1.86 billion, up $143 million, or 8 percent above the same period in 2007. The sales results were impacted by favorable currency exchange of $120 million and increased sales of $23 million, principally to European original equipment vehicle manufacturers. The company said it continues to benefit from strong new business bookings with balanced regional sales and a globally diverse customer base with no single customer accounting for more than 7 percent of global sales as of Dec. 31, 2007.
Federal-Mogul realized a gross margin of $266 million or 14.3 percent of sales in the first quarter of 2008, versus $308 million or 17.9 percent of sales in the first quarter of 2007. The gross margin was unfavorably impacted by a $68 million, non-cash inventory adjustment previously discussed. Without the inventory adjustment, gross margin for the quarter would have been $335 million, or 9 percent above the prior year and at 18 percent of sales. This improvement shows that the company maintained its operating performance in spite of ongoing raw materials, energy and other general industry cost pressure.
Selling, general and administrative (SG&A) expense for the quarter was $209 million, in comparison to $207 million in the same period in 2007. SG&A as a percentage of sales was favorably reduced in the first quarter of 2008 to 11.2 percent compared to 12.1 percent in the same period a year ago. The change in SG&A comprised a reduction of $8 million offset by unfavorable currency exchange of $10 million during the quarter.
Federal-Mogul reported cash flow for the first quarter of 2008 of $49 million, which compares favorably to $12 million in the same period of 2007.
On April 7, Federal-Mogul announced it will list its Class A Common Stock on the NASDAQ Global Market on April 23, and will trade under the symbol "FDML."
"We are pleased to report a strong quarter, which shows the benefits of our solid operating performance, combined with our customer, regional and product line diversification. More than 60 percent of our revenue in the quarter was generated outside the U.S.," said President and Chief Executive Officer Jose Maria Alapont. "The Operational EBITDA is improved as a result of our restructuring and cost-reduction efforts as outlined in our strategy for sustainable global profitable growth."
For more information about Federal-Mogul, visit: www.federal-mogul.com.
