NORTHVILLE, MI — Citing strong international demand, Hayes Lemmerz International has reported that sales for the fiscal first quarter rose 4 percent to $618 million, compared with $594 million a year earlier. Earnings from operations for the fiscal first quarter were $14.8 million, down from $28.2 million a year earlier. For the quarter, the company reported a net loss of $7.7 million, compared with a year earlier profit of $1.1 million.
“Despite reduced volume in the U.S., we had strong growth in our international business — particularly in Europe where we have become the number one automotive steel and aluminum wheel supplier to Toyota, and the number one aluminum wheel supplier to Honda and Nissan/Renault — which fueled our increased sales in the quarter,” said Curtis Clawson, president, CEO and chairman of the board. “Our international diversification continues to pay dividends, as international sales rose 19.9 percent to $325.6 million compared to $271.5 million a year earlier, and accounted for 53 percent of our total sales in the recent quarter compared with 46 percent a year earlier.”
Clawson added that Hayes Lemmerz is also benefiting from its continued investment in serving the global medium and heavy duty truck markets. First quarter sales of steel wheels for commercial vehicles rose about 6 percent in both North America and international markets. “Sales during the quarter were also helped by partial recovery of increased steel prices and favorable currency exchange rates,” he said.
“Unfortunately, production requirements from some U.S. auto producers were down 10 percent in the fiscal first quarter from the same period a year ago, reflecting sharply decreased demand for larger vehicles, which happen to be key platforms for Hayes Lemmerz,” said Clawson.
“There’s no denying that this is a difficult time for automotive components manufacturers, but the steps we have taken in the past few years to reduce operating costs, diversify geographically and focus on meeting customer needs have all contributed to our current results, which I consider exemplary given market conditions,” Clawson said. “We have negotiated contracts with steel suppliers to stabilize the rapidly rising steel prices we had faced in earlier quarters, and negotiated acceptable recovery from customers to help mitigate higher raw materials prices.”
The company also completed a number of recent initiatives to improve its overall liquidity, Clawson added. In April 2005, the company completed a new $150 million second-lien term loan from which approximately $70 million of proceeds were used to repay a portion of the existing first-lien term loan and $75 million was made available for general corporate purposes. In May 2005, the company amended its $75 million domestic accounts receivable securitization program to mitigate the impact of some U.S. customers’ credit rating downgrades on program availability. As of April 30, the company had $42 million of cash and available borrowing capacity of approximately $82 million under its revolving credit facility. Net debt as of April 30, was $677.4 million and debt amortization requirements for the remainder of fiscal 2005 and fiscal 2006 total approximately $28 million.
The company also confirmed its earnings guidance and outlook for 2005. The company expects total revenue to be approximately $2.3 billion to $2.4 billion and Adjusted EBITDA to be approximately $220 million to $235 million, while free cash flow is expected to be negative — the latter category downgraded from “slightly negative” due to the impact of reduced availability of the receivables securitization program to finance receivables of some U.S. customers for the remainder of 2005.
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