Sales Up But Hayes Lemmerz Reports Q3 Net Loss
Third quarter results for wheel manufacturer Hayes Lemmerz showed a 20 per cent increase in sales from the same period a year earlier. For the three months ending October 31, 2007 the company took in sales of US$554.9 million, up from $463.3 million in the third quarter of 2006. The company reports that this increase in sales resulted in strong international aluminium and steel wheel sales, material cost recovery and favourable foreign currency fluctuations.
For the third quarter, the Hayes Lemmerz reported adjusted EBITDA of $55.8 million, an improvement of $12.0 million or 27 per cent over the year earlier quarter, and earnings from operations before impairments of $22.2 million, an improvement of $11.3 million –more than double Q3 2006. Free cash flow for the third quarter, excluding the effects of the company’s accounts receivables securitisation program, was $26.5 million, an increase of $26.2 million over the year earlier quarter. Free cash flow for the first nine months of fiscal 2007 was $8.0 million, an increase of $14.2 million for the same period last year.
“This was a good quarter for the company, even though our net income was negatively impacted by asset impairment and other restructuring charges,” said Curtis Clawson, president, CEO and chairman of the Board. The company reported a net loss for the third quarter of $62.7 million, of which $50.0 million resulted from asset impairments and restructuring charges, compared with a net loss of $59.6 million a year earlier.
“Our third quarter results reflect our success in implementing our strategy of restructuring our business, executing our operating plan and continuing to extend the lead in our global wheel business with international expansions in leading-cost regions,” Mr. Clawson said.
Hayes Lemmerz sold its automotive brake business in November, part of its strategy of decreasing reliance on business from Detroit’s “Big Three” carmakers, instead focusing its presence in what the company calls the “right” geographic regions, and concentrating capital and efforts on its profitable global wheel business. Earlier in the fiscal year Hayes Lemmerz sold its suspension and MGG businesses and its aluminium components facility in the state of Indiana. These businesses have been classified as discontinued operations.
Adjusted for the sale of its automotive brake business (which is now classified as discontinued operations), Hayes Lemmerz reports that it remains on track to meet its guidance for the fiscal year ending January 31, 2008. The company expects revenue of approximately $2.1 billion ($2.2 billion including the brake business), and adjusted EBITDA is expected to be in the range of $190 million to $200 million ($200 million to $210 million including the brake business). The company expects positive free cash flow (excluding securitisation impact). Capital expenditures for the fiscal year are expected to be between $95 million and $100 million.