Hayes Lemmerz Announces Strategic Actions to Fuel Long-Term Growth and Improve Financial Profile
03 March 2005 - 11:41PM
PR Newswire (US)
Hayes Lemmerz Announces Strategic Actions to Fuel Long-Term Growth
and Improve Financial Profile Provides Update on Fiscal Year 2004
Guidance and Fiscal Year 2005 Outlook NORTHVILLE, Mich., March 3
/PRNewswire-FirstCall/ -- Hayes Lemmerz International, Inc.
(NASDAQ:HAYZ) announced today strategic actions designed to fuel
long-term growth, support its international expansion, strengthen
its competitive capabilities and improve its financial profile. The
actions reflect the Company's ongoing commitment to grow as a
low-cost global automotive supplier through outstanding customer
satisfaction. "The Company is committed to improving profitability
over the long term for our shareholders and today's announcements
are integral to fulfilling this plan," said Curtis Clawson,
President, Chief Executive Officer and Chairman of the Board of
Hayes Lemmerz. "This past year, we have continued to aggressively
implement our strategy of growing in low-cost countries to serve
our customers as they continue to expand in markets outside of the
U.S. and Western Europe. By focusing on customer service, in both
new and established markets, and by implementing the strategic
decisions announced today, we believe that the Company will build
value for our shareholders." The Company announced today plans to:
-- Issue approximately $150 million of Euro denominated, senior
unsecured notes in a private placement, as described in a press
release issued earlier today; -- Establish an accounts receivable
securitization program to finance the U.S. equivalent of up to $25
million of the Company's international accounts receivable; and --
Close its aluminum wheel manufacturing facility in La Mirada,
California and transfer the production at this facility to the
Company's Huntington, Indiana facility. The Company also announced
updated guidance for fiscal year 2004 and updated its outlook for
fiscal year 2005. Specific details of today's announcements include
the following: Senior Notes Offering As described in a press
release issued earlier today, the Company intends to offer
approximately $150 million of Euro denominated, senior unsecured
notes. The notes offering will be contingent upon obtaining the
amendment to the Credit Agreement described below. International
Accounts Receivable Securitization Program In order to accelerate
cash flow and enhance liquidity in international locations, the
Company has received a commitment from a European financial
institution to establish an accounts receivable securitization
program to finance the U.S. equivalent of up to $25 million of its
international accounts receivable. This program will complete the
$100 million accounts receivable program previously announced by
the Company. The program is expected to be similar to the $75
million accounts receivable securitization facility that the
Company established in the U.S. in December 2004. The Company noted
that, although it expects to finalize the securitization program in
the first half of 2005, there can be no assurance as to whether or
when the program will be completed. Credit Agreement Amendment The
Company will seek the approval of the lenders under its $450
million Senior Secured Term Loan and its $100 million Senior
Secured Revolving Credit Loan of an amendment to its Credit
Agreement to permit the Company to use approximately 50% of the net
proceeds from the proposed divestiture of its Commercial Highway
Hub and Drum business for capital expenditures; permit the Company
to offer the new senior unsecured notes and retain a portion of the
proceeds from the notes offering for working capital purposes; and
modify certain financial covenants contained in the Credit
Agreement. The Company said that, although it expects approval of
the proposed amendment, no assurance can be given that the lenders
will approve the proposed amendment. Ongoing Strategy The Company
reiterated its strategy of focusing on actions to maximize
shareholder value. "Our long-term goal has always been to maximize
our shareholder value. We will continue to pursue aggressive cost
reductions, investments in the right geographic markets, and focus
our resources on our core strengths where we have a competitive
advantage. And, we must always consider other strategic options
that will maximize long-term value creation and be in the best
interest of our shareholders," said Mr. Clawson. Consistent with
its long-term strategy, the Company announced today that it intends
to close its aluminum wheel manufacturing facility in La Mirada,
California, and transfer that plant's production to the Company's
facility in Huntington, Indiana, which is located closer to its
customers. The La Mirada facility currently employs approximately
120 people. "Although we regret the impact this decision will have
on our La Mirada employees and their families, this closure will
better align our available capacity with the market, and make our
overall cost structure more competitive," said Mr. Clawson. As
previously reported, the Company is pursuing the sale of its
Commercial Highway Hub and Drum business. The Company may also
consider the divestiture of other non-core businesses. The
Company's capital expenditures for fiscal year 2004 and fiscal year
2005 include significant investments in low-cost countries, such as
previously announced expansions in Mexico, Turkey, Thailand, Brazil
and the Czech Republic. By 2009, the Company projects that over 60%
of its aluminum wheel capacity will be in low-cost countries. The
Company also has other projects under consideration which will
further capitalize on this strategic advantage. "We have a thriving
international wheel business with a very diverse customer base. We
are very proud of the great strides taken by our international
colleagues," said Mr. Clawson. Updated Guidance for Fiscal Year
2004 and Outlook for Fiscal Year 2005 The Company revised its
guidance for fiscal year 2004, which ended January 31, 2005. The
Company now expects to report total Adjusted EBITDA of
approximately $225 million and expects free-cash flow to be about
break-even. The Company's previous revenue guidance of
approximately $2.2 billion and capital expenditure guidance of
approximately $154 million remain unchanged. (See attachment for
reconciliation of Adjusted EBITDA.) The revised guidance reflects
lower U.S. production volumes; valuation adjustments of certain
non-production inventories; higher than expected one- time costs
associated with establishing and testing its internal controls as
required by the Sarbanes-Oxley Act; costs related to the Company's
implementation of SAP throughout its U.S. operations, which is
expected to result in improved operational efficiency; and despite
good overall productivity for 2004, the Company had lower operating
efficiencies at two of its U.S. manufacturing facilities. The
Company also said that, as of January 31, 2005: -- Amounts financed
under its U.S. accounts receivable securitization facility were $57
million; -- Total debt was approximately $645 million; and --
Excluding letters of credit of approximately $19 million, the
Company had no cash draws on its revolving line of credit. The
Company also revised its outlook for fiscal year 2005, ending
January 31, 2006. 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 slightly negative. The Company's estimated
Adjusted EBITDA is reduced from its prior guidance for fiscal year
2005, primarily because of expected lower North American customer
production requirements in the first quarter of the fiscal year.
The Company noted a number of positive factors that point to a
stronger second half of 2005 for the business. These include recent
successful negotiations with major customers on steel recovery
costs; anticipated higher OEM volumes later in the year; and the
launch of significant new customer programs. "While reduced North
American OEM volumes have made 2004 a challenging year for the
Company and the industry, we firmly believe that our focus on
low-cost, high-growth markets distinguishes us from our
competitors," said Mr. Clawson. "The actions announced today are
designed to fund our international growth strategy without
compromising our financial position. Our international strategy has
already proven to be very successful. Recently, we acquired and are
expanding an aluminum wheel production facility in Mexico, launched
a new joint venture in Turkey and are expanding operations in
Thailand, Brazil and the Czech Republic. Each of these projects
will better serve our customers in the geographies where they are
growing. There are many more opportunities on the horizon and we
look forward to taking advantage of them in the months and years to
come." The Company will release its fiscal year 2004 financial
results on Friday, April 15, 2005, and host its conference call at
9:30 a.m. (ET). Call in information for the year-end earnings
conference call will be announced shortly. Hayes Lemmerz
International, Inc. is a world leading global supplier of
automotive and commercial highway wheels, brakes, powertrain,
suspension, structural and other lightweight components. The
Company has 43 facilities and over 11,000 employees worldwide. This
press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, as amended, which
represent the Company's expectations and beliefs concerning future
events that involve risks and uncertainties which could cause
actual results to differ materially from those currently
anticipated. All statements other than statements of historical
facts included in this release are forward-looking statements.
Factors that could cause actual results to differ materially from
those expressed or implied in such forward-looking statements
include the factors set forth in our periodic reports filed with
the SEC. Consequently, all of the forward-looking statements made
in this press release are qualified by these and other factors,
risks, and uncertainties. The notes referred to in this press
release will not be registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements. This press release shall not constitute an offer to
sell or a solicitation of an offer to purchase any of the notes nor
shall there be any sale of the notes in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. Hayes Lemmerz International, Inc. Revised Guidance as
of March 3, 2005 (all $ in millions, unless stated otherwise)
Revised FY 2004(1) Revised FY 2005 Sales $2.2 billion $2.3 - $2.4
billion Earnings from operations ~ $24 $0 - $35 Depreciation &
amortization ~ 177 180 - 175 EBITDA ~ $201 $180 - $210 Asset
impairments/restructuring/other ~ 24 40 - 25 Adjusted EBITDA (2) ~
$225 $220 - $235 Capital Expenditures $154 ~$145 (including Mexican
low-pressure facility) Free Cash Flow break-even slightly negative
(with A/R (with A/R Securitization) Securitization) (1) The
Company's reported results of operations for fiscal year 2004 will
reflect a change in year end for its foreign subsidiaries to
January 31. Historically, the Company's foreign subsidiaries have
had a fiscal year end of December 31 and the Company has reported
on that 12-month period with respect to its foreign operations in
its consolidated financial statements. (2) EBITDA, a measure used
by management to measure operating performance, is defined as
earnings from operations plus depreciation and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude:
(i) asset impairment losses and other restructuring charges; (ii)
reorganization items; and (iii) other items. We reference these
non-GAAP financial measures as a management group frequently in our
decision making because they provide supplemental information that
facilitates internal comparisons to historical operating
performance of prior periods and external comparisons to
competitors' historical operating performance. Institutional
investors generally look to Adjusted EBITDA in measuring
performance, among other things. We use Adjusted EBITDA to
facilitate quantification of planned business activities and
enhance subsequent follow-up with comparisons of actual to planned
Adjusted EBITDA. In addition, incentive compensation for management
is based on Adjusted EBITDA. Fiscal year 2004 Adjusted EBITDA
includes approximately $11-$12 million attributable to the
Company's Commercial Highway Hub and Drum business. We are
disclosing these non-GAAP financial measures in order to provide
transparency to investors. Adjusted EBITDA is not a recognized term
under GAAP and does not purport to be an alternative to earnings
from operations as an indicator of operating performance or to cash
flows from operating activities as a measure of liquidity. Because
not all companies use identical calculations, these presentations
of Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies. Additionally, Adjusted EBITDA is not
intended to be a measure of free cash flow for management's
discretionary use, as it does not consider certain cash
requirements such as interest payments, tax payments and debt
service requirements. Contacts: * Marika P. Diamond Hayes Lemmerz
International, Inc. (734)737-5162 DATASOURCE: Hayes Lemmerz
International, Inc. CONTACT: Marika P. Diamond of Hayes Lemmerz
International, Inc., +1-734-737-5162 Web site:
http://www.hayes-lemmerz.com/
Copyright
Hayes Lemmerz International (MM) (NASDAQ:HAYZ)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hayes Lemmerz International (MM) (NASDAQ:HAYZ)
Historical Stock Chart
From Jul 2023 to Jul 2024