TROY, Mich. — ArvinMeritor has reported financial results for its full fiscal year and fourth quarter ended Sept. 28.
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.
Earnings per share from continuing operations, before special items, were $1.60 per diluted share, compared to 53 cents 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.
Fourth-quarter sales were $1.7 billion, up eight percent from the same period last year.
Fourth-quarter income from continuing operations, before special items, was $28 million, or 38 cents per diluted share, compared to a loss of $4 million, or 6 cents per diluted share in fiscal year 2007.
Free cash flow was positive $103 million in the fourth quarter.
For the fourth quarter of fiscal year 2008, ArvinMeritor posted sales of $1.7 billion, up eight percent from the same period last year. At constant exchange rates, sales were up three 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 38 cents per diluted share, compared to a loss from continuing operations, before special items, of $4 million, or a loss of 6 cents 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.
"Our results in fiscal year 2008 indicate that we have improved our ability to consistently run leaner operations, produce highly-engineered products for our customers, execute acquisitions, and manage the business at a profitable level despite a longer than anticipated downturn in the North American Class 8 truck market," said McClure.
ArvinMeritor had $497 million in available cash balances and an undrawn, available amount of $626 million under its revolving credit facility as of Sept. 30, 2008. There are no current covenant constraints that limit the availability of this facility. Also, as of Sept. 30, 2008, the company utilized $521 million in factoring and securitization facilities – $419 million of which are pursuant to recently renewed 364-day committed liquidity facilities that extend to September and October of 2009. The company has no significant long-term debt maturity due until 2012.
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 80 cents to $1. 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.