TROY, Mich. — ArvinMeritor has reported financial results for its fourth quarter and full fiscal year ended Sept. 30.
For the fourth quarter of fiscal year 2009, ArvinMeritor posted sales of $984 million, down 36 percent from the same period last year. This decrease in sales was primarily due to continued weakness in the global markets. As compared to the third quarter of fiscal year 2009, sales in the fourth quarter increased 4 percent as markets began to show signs of a recovery.
EBITDA from continuing operations (which excludes the wheels business), before special items, was $40 million, compared to $87 million in the fourth quarter of fiscal year 2008. EBITDA from continuing operations, before special items, increased 43 percent in the fourth quarter of fiscal year 2009 from the third quarter of fiscal year 2009. EBITDA margin from continuing operations, before special items, was 4.1 percent in the fourth quarter, down from 5.7 percent in the same period last year.
Loss from continuing operations, on a GAAP basis, was $49 million or $0.68 per diluted share, compared to a loss from continuing operations of $160 million or $2.22 per diluted share in the prior year.
Loss from continuing operations during the fourth quarter of fiscal year 2009, before special items, was $20 million, or 28 cents per diluted share, compared to income from continuing operations, before special items, of $26 million, or 35 cents per diluted share, a year ago. The loss from continuing operations, before special items, was driven by incremental tax expenses during the quarter due to the inability to recognize the tax benefit of losses in certain countries.
Free cash flow was $22 million in the fourth quarter compared to free cash flow of $103 million in the fourth quarter of fiscal year 2008. The company had $95 million in cash balances and an unutilized commitment of $611 million under its revolving credit facility as of Sept. 30.
“We are proud of our performance in the fourth quarter and the 2009 fiscal year,” said Chairman, CEO and President Chip McClure. “Our team has not only generated positive free cash flow for two consecutive quarters, we’ve also reported cost savings in our commercial vehicle businesses of $195 million, complied with all debt covenants, and completed various other actions that we believe will strengthen the company as we benefit from improving conditions in global markets – particularly in China, India and Brazil,” said McClure.
“Our team remained focused and delivered on our 2009 priorities, while simultaneously managing the company through a global recession that affected all of our segments and customers worldwide,” said McClure. “As we transform into a commercial vehicle and industrial company, we believe the results we demonstrated in each of these areas will make ArvinMeritor a leaner, more efficient organization well-positioned for future growth.”
ArvinMeritor achieved cost savings of $195 million in its core businesses for fiscal year 2009 due to what it described as “swift and preemptive” actions including workforce and temporary salary reductions; selective reductions in capital spending; extended manufacturing shutdowns; elimination of training programs; suspension of the quarterly dividend and elimination of all non-critical discretionary spending. The company also announced the closure of its Carrollton, Ky., assembly, machining and casting operation and the Tilbury, Ontario, Canada, braking systems facility.
The company in October also completed the sale of the company’s entire ownership interest in Gabriel de Venezuela and Meritor Suspension Systems Co. joint ventures; and sold both the Wheels business and Gabriel Ride Control Products North America, thus reducing the company’s overall light vehicle business to 25 percent of total sales at the conclusion of fiscal year 2009.
ArvinMeritor has revised its reporting segments following the recent divestitures of several light vehicle businesses. For continuing operations, the company will now report results as defined within Commercial Truck, Industrial, Aftermarket & Trailer and Light Vehicle Systems. Of these four segments, Commercial Truck, Industrial, and Aftermarket & Trailer are considered core to ArvinMeritor.
2010 Priorities
ArvinMeritor has defined six key priorities for fiscal year 2010. The company said it believes it is imperative to execute well in each of these areas and has developed specific action plans to achieve strong results:
• Remain focused on rigorous cost management to realize improved operating leverage.
• Continue transformation to focus the company on global commercial vehicle and industrial markets.
• Successfully execute as global markets recover.
• Drive innovation – accelerating new products and advanced fuel efficient technologies.
• Maintain focus on sustainable profitable growth.
• Continued focus on balance sheet management.
Outlook for 2010
The company’s financial guidance for the first quarter of fiscal year 2010 is for expected results from continuing operations, which includes all four of ArvinMeritor’s current segments. For the first quarter of fiscal year 2010 (compared to the fourth fiscal quarter of 2009), the company anticipates revenue to be higher; EBITDA, before special items, to be higher; and income before taxes, before special items, to be higher.
For fiscal year 2010, ArvinMeritor expects to report results in the following ranges for capital expenditures, interest expense, cash income taxes and income tax expense. Capital expenditures are expected to be in the range of $90 million to $110 million; interest expense to be in the range of $95 million to $110 million; cash income taxes to be in the range of $25 million to $50 million; and Income tax expense, before special items, to be in the range of $40 million to $60 million.
“With the steps we have taken to manage costs – in addition to our efforts to secure new multi-year contracts, develop advanced solutions for our customers, and focus talent and resources on strategic segments of our business – we believe we are on track to benefit from future recoveries in the global markets,” said McClure.
