NORTHVILLE, MI — Hayes Lemmerz International, Inc. reported that sales for the fiscal second quarter ended July 31 were $570.3 million, up 19 percent from $480.8 million in the year earlier quarter. The sales increase came from strong international steel and aluminum wheel sales, metals cost recovery and favorable currency fluctuations, the company said.
The company reported adjusted EBITDA of $48.5 million, up $6.6 million from $41.9 million a year earlier, and a loss from operations of $4.8 million, compared with year earlier earnings from operations of $7.4 million.
"We continue our strategy of restructuring our business, executing our operating plan, and extending the lead in our global wheel business," said Curtis Clawson, president, CEO and chairman of the board.
Hayes Lemmerz said it reached important milestones in the second quarter that significantly improve its long-term outlook, while imposing one-time transaction costs.
"We greatly strengthened our balance sheet by raising $193.1 million through an equity rights offering and a direct equity investment, and paying down $130.8 million of long-term debt," said Clawson.
The balance sheet restructuring, which included the rights offering, new senior credit facilities totaling approximately $495 million, and approximately $175 million of 8-1/4 percent senior unsecured notes issued by a European subsidiary improved the company’s liquidity by $80 million, will generate interest cost savings of approximately $24 million annually, and extends all significant debt maturities until 2013 or later, Clawson said.
On June 29, the company sold its MGG subsidiary in Europe, whose three facilities in Belgium and the Netherlands produce aluminum components, and accounted for about $140 million of sales annually. On July 5, the company completed the sale of its aluminum components facility in Wabash, IN, which contributed about $60 million of annual sales. Hayes Lemmerz realized $15 million net cash from the sale of the two operations, while booking a $40 million non-cash charge related to the sales.
Clawson said, “Hayes Lemmerz continues to execute its operating plan by winning new business from international automakers whose business is growing, and continues to rely less on the Big Three U.S. automakers."
The company expects 44 percent of its sales in 2007 will come from leading-cost regions, and 50 percent to 55 percent in 2008, compared with only 35 percent in 2004, he said.
"We are continuing to extend the lead in wheels with international expansion in leading-cost regions," Clawson said. "Continuing to invest in leading-cost international markets is reflected in our improving profitability." He said earnings from global wheel operations were almost double for the first half of 2007 compared with the first half of 2005.
Including impairment charges, the company reported a loss from continuing operations of $61.2 million, including a $21.2 million charge related to early extinguishment of debt, compared with a loss from operations of $28.9 million in the year earlier quarter. The company also reported a $25.9 million loss from discontinued operations compared to a profit from discontinued operations of $2 million a year earlier, resulting in a net loss of $87.1 million in the recent second quarter, compared with a year earlier loss of $26.9 million.
Free cash flow for the second quarter, excluding the effects of the company’s accounts receivables securitization program, was negative $13.8 million, essentially the same as in the second quarter of second 2006.
The company also reaffirmed its earnings guidance for the full fiscal year 2007, which was updated May 15. Expected revenue is approximately $2.2 billion for the fiscal year ending Jan. 31, 2008. Adjusted EBITDA is expected to be in the range of $200 million to $210 million.
