Hayes Lemmerz International Inc
Hayes Lemmerz International — Q2 2008 Earnings Presentation
34 slides from Hayes Lemmerz International's earnings presentation, Sep 4, 2008
Slide 1: 2nd Quarter 2008 Earnings Presentation
2nd Quarter 2008 Earnings Presentation September 4, 2008
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements with respect to our financial condition and business. All statements other than statements of historical fact made in this press release are forward-looking. Such forward-looking statements include, among others, those
Slide 3: Agenda
Agenda Financial Highlights & Strategy Curt Clawson, President, CEO & Chairman of the Board Keys to 2008 & Summary Fred Bentley, Chief Operating Officer Financial Review Mark Brebberman, Vice President & CFO
Slide 4: Our Vision: Be a Premier Automotive Supplier
BE A PREMIER AUTOMOTIVE SUPPLIER Be the lowest cost producer Have the best people in the industry Grow through maximizing our customer satisfaction Our Vision
Slide 5: Second Quarter Financial Highlights
Second Quarter Financial Highlights 2008 2007 YTD 63.9 45.8 2008 2007 YTD 33.8 18.3 2008 2007 YTD -34.2 -15.3 2007 2008 Sales 2008 2007 YTD 563.4 544.1 Adjusted EBITDA* ($ in millions) Core Operating Earnings* Free Cash Flow* (Excl. A/R Programs) Liquidity 2007 2007 2007 2007 2008 2008 2008 2008 200
Slide 6: Adjusted EBITDA Updated Guidance
Adjusted EBITDA Updated Guidance New Guidance: $225M - $240M Q1 Guidance: $205M - $220M Drivers of Improvement Continued success of global footprint Expansion projects performing well Metal impact limited in 1st half due to fixed contracts Increased guidance by $20M despite weaker market
Slide 7: 2008 Adjusted EBITDA Pro Forma Run Rate
2008 Adjusted EBITDA Pro Forma Run Rate Softening volumes USD strengthening Metal not settled Pro forma 2008 run rate represents 2008 based on 2nd half volume and FX expectations without restructuring plants (Gainesville, Belgium, & Nuevo Laredo) This is not guidance for 2009
Slide 8: Adjusted EBITDA Continuing Operations 2005-2008
Adjusted EBITDA Continuing Operations 2005-2008 Strong Adjusted EBITDA growth since 2005 ($ in millions) 12% 23% 17%-25% $185M $225M - $240M $203M $189M Continuing Ops $139M Continuing Ops $192M Continuing Ops $156M Continuing Ops $225M - $240M Guidance range
Slide 9: Free Cash Flow (Excl. A/R Programs) Pro Forma Run Rate
Free Cash Flow (Excl. A/R Programs) Pro Forma Run Rate Free cash flow run rate is positive ($ in millions) * * Gainesville, Belgium, and Nuevo Laredo
Slide 10: Keys to 2008
Restructuring Global Market Steel Situation Keys to 2008
Slide 11: Restructuring: 2008 Closures and Divestitures
Restructuring 2008 Closures and Divestitures Restructuring will result in annual savings of $30M - $40M Belgium Aluminum Wheel Facility Sold to Punch/BBS June 2008 Cash disposal costs of approximately $27M Annual sales of approximately $50M Avoid high restructuring costs Exit negative EBITDA/cash fl
Slide 12: Restructuring: Employees by Region
Restructuring Employees by Region Total employees down 33% since 2004 at similar revenue level High-cost region employment reduced by over 60% Reducing personnel in high-cost regions * 2004-2006 include estimated temporary workers Sales ($ in billions) Employees (in 000's)
Slide 13: Restructuring: Product and Customer Diversity
Restructuring Product and Customer Diversity Diversity reduces variability and limits exposure % of Sales to U.S. Detroit Three* 2008E Sales by Customer* 2008E Sales by Product Type* * Excludes Gainesville, Hoboken, & Nuevo Laredo sales Why This is Important Customer - Protects us from specific cust
Slide 14: Global Market: Sales by Region and Market Outlook
Global Market Sales by Region and Market Outlook Although N.A. and W. Europe markets down, most HLI markets remain strong 2008E** Pro Forma Sales * Includes all discontinued operations, disposed/ closed plants ** Excludes Gainesville, Hoboken, & Nuevo Laredo sales 2004 Sales* Full Year HLI Market Co
Slide 15: 2008 Key Business Wins
Secured over $200M in new and carry-over business during the first half Expect to meet or exceed last year's wins of $430M Continue to diversify customer and geographic mix geographic mix geographic mix geographic mix geographic mix geographic mix geographic mix Global Market 2008 Key Business Wins
Slide 16: Global Market Expansion Projects
Global Market Expansion Projects Investments continue in leading-cost/high-growth regions Completed last six months In progress Czech Lt vehicle aluminum Lt vehicle steel Turkey Lt vehicle aluminum Lt vehicle steel Commercial Truck Brazil Commercial Truck India Lt vehicle steel Commercial Truck Thai
Slide 17: Steel Situation
Steel Situation Strong recovery as a result of 2008 negotiations Minimal impact through Q2 of 2008 Our guidance considers the expected impact of the 2nd half, although suppliers seeking surcharges and we could see additional increases We are working on 2009 prices and will know outcome in Q4 Success
Slide 18: Summary
Restructuring Continue to reduce presence in high-cost / low-growth regions Closures/divestitures will improve financials in future periods Global Market New business wins will support future growth Continuing strategic investment strategy Strong geographic and product diversity reduces market and p
Slide 19: Financial Review
Financial Review HAYES LEMMERZ”
Slide 20: Q2 2008 vs. Q2 2007 Financial Summary
Q2 2008 vs. Q2 2007 Financial Summary 1 Please refer to the appendix for a reconciliation of this non-GAAP financial measure. 2 Includes discontinued operations ($ in millions)
Slide 21: Q2 2008 vs. Q2 2007 Change in Net Sales
Q2 2008 vs. Q2 2007 Change in Net Sales ($ in millions) Sale of Wabash, IN powertrain plant and Hoboken, Belgium aluminum wheel plant
Slide 22: Q2 2008 vs. Q2 2007 Change in Core Operating Earnings
Q2 2008 vs. Q2 2007 Change in Core Operating Earnings ($ in millions) Volume/Price/Mix ($7M) Productivity/Economics/Other $16M FX $7M Depreciation $3M FX ($4M)
Slide 23: Q2 2008 vs. Q2 2007 Change in Free Cash Flow
Q2 2008 vs. Q2 2007 Change in Free Cash Flow (Excl. A/R Programs) ($ in millions) Primarily Belgium divestiture Adjusted EBITDA $18M Restructuring inventory build ($7M) Other ($3M)
Slide 24: Liquidity
Liquidity Solid liquidity going into the 2nd half of 2008 7/31/2007 7/31/2008 A/R Securitization 21 12 Credit Revolver 124 125 Cash Balance 50 85 ($ in millions) $195 $222 Cash Balance Up $35M
Slide 25: 2008 Guidance
2008 Guidance Increasing Adj. EBITDA guidance by $20M
Slide 26: 2008 Outlook
2008 Outlook Free Cash Flow (Excl. A/R Programs) Target Positive free cash flow - excluding restructuring for the full year Cash Taxes Tax strategies being implemented to minimize global cash tax impact FY 2008 cash taxes estimated at $52M vs. $56M estimate in Q1 (on higher earnings)
Slide 27: Appendix
Appendix HAYES LEMMERZ’
Slide 28: 2008 Top Platforms
2008 Top Platforms Diverse product portfolio - over 200 platforms worldwide No platform greater than 4% of total revenue Top 15 Platforms % of Sales SA = South America; EU = Europe; NA = North America
Slide 29: Capital Structure
Capital Structure Capital Structure ($ in millions) ($ in millions) 2008 2009 2010-2013 2014-2015 *2008 excludes debt maturity of $39M German A/R program, which we expect to renew annually. *Excludes pre-payments No significant debt maturities until 2014 Debt Maturities
Slide 30: Non-GAAP Financial Information: Free Cash Flow
Non-GAAP Financial Information Free Cash Flow ($ in millions)
Slide 31: Non-GAAP Financial Information: Adjusted EBITDA
Non-GAAP Financial Information Adjusted EBITDA ($ in millions)
Slide 32: Non-GAAP Financial Information: Core Operating Earnings
Non-GAAP Financial Information Core Operating Earnings ($ in millions)
Slide 33: Non-GAAP Financial Measures: Adjusted EBITDA
Non-GAAP Financial Measures Adjusted EBITDA: 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 asset impairment losses and other restructur
Slide 34: Non-GAAP Financial Measures: Core Operating Earnings
Non-GAAP Financial Measures Core Operating Earnings: Core operating earnings is defined as earnings from operations less asset impairments and restructuring charges, post-emergence chapter 11 related costs, gains and losses on sales of assets, and other special items that are of an infrequent or unu
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