Net income of $90 million in Q2 2008 up from $4 million in Q2 2007
Record net sales of $2 billion and eighth consecutive quarter of year-over- year growth
SOUTHFIELD, Mich., July 25 /PRNewswire-FirstCall/ -- Federal-Mogul
Corporation (Nasdaq: FDML) today reported record second quarter sales of $2
billion and an eighth consecutive quarter of year-over-year increased sales
combined with a sharp rise in quarterly net income to $90 million.
Sales for the three-month period ending June 30, 2008, were a record
$1,995 million, an increase of 13 percent, compared to $1,763 million for the
same period a year ago. Federal-Mogul reported a gross margin of $396 million
or 19.8 percent of sales, compared to $322 million or 18.3 percent of sales,
representing an increase of $74 million, or 23 percent over the prior year.
Federal-Mogul's Operational EBITDA(1) was $257 million or 12.9 percent of
sales, compared to $212 million or 12.0 percent of sales during the same
period in 2007, representing an increase of $45 million or 21 percent. The
company recorded net income of $90 million or earnings per share of $0.90, up
from $4 million in second quarter 2007.
'We experienced another record sales quarter with strong earnings
performance. We have anticipated and reacted to changing market conditions
including a market downturn in mature automotive markets. We implemented
numerous successful actions to offset macro-economic factors and benefited
from our strong market, customer and product diversification,' said Jose Maria
Alapont, Federal-Mogul President and Chief Executive Officer.
'Federal-Mogul's global market presence and customer base is well
diversified. We serve over 250 vehicle platforms and over 700 vehicle
powertrain programs. No single customer represents more than six percent of
our global revenue and over 60 percent of our revenue is generated from sales
outside the United States and Canada. Further, we have a significant global
aftermarket business with well-recognized leading brands and we generate over
10 percent of our revenue from a global commercial and industrial customer
base. This diversification strengthens our performance and compensates for
market and customer volatility,' Alapont continued.
Financial Summary (in $millions) Three Months Ended Six Months Ended
-------------------------------- ------------------ ----------------
June 30 June 30
--------- ---------
2008 2007 2008 2007
----- ------ ------ -----
Net sales $1,995 $1,763 $3,854 $3,480
Gross margin 396 322 662 630
Adjusted gross margin (2) 396 322 730 630
Selling, general and (212) (213) (421) (420)
administrative expenses
Net income 90 4 58 9
Adjusted net income (3) 90 4 121 9
Operational EBITDA (1) 257 212 462 412
Federal-Mogul reported sales of $1,995 million for the three-month period
ending June 30, 2008, up from $1,763 million in the same period of 2007.
Sales increased by $232 million or 13 percent and were positively impacted by
favorable foreign exchange of $125 million. The company has reported
year-over-year quarterly sales increases for eight consecutive quarters as a
result of expanding sales to customers in Europe, Asia and South America.
Gross margin for the quarter was $396 million or 19.8 percent of sales, as
compared to $322 million or 18.3 percent of sales during the same period a
year ago, an increase of 23 percent or $74 million. The automotive market has
faced decreasing regional production volumes, rising energy prices,
inflationary raw material costs and other economic challenges. The company
effectively offset the impact of these and other macro-economic factors
through profitable incremental revenue from new business contracts and
improved productivity from operations. Gross margin was also favorably
impacted by reduced depreciation and foreign exchange.
Selling, General and Administrative (SG&A) expenses were reduced to 10.6
percent of sales during the quarter, compared to 12.1 percent of sales in the
same period of 2007. The company realized a reduction in SG&A expense despite
an adverse foreign exchange impact of $11 million.
Federal-Mogul's Operational EBITDA(1) for the second quarter was $257
million, a 21 percent or $45 million increase, compared to $212 million during
the same period in 2007.
Net income was $90 million in the second quarter 2008, with earnings per
share of $0.90, compared to $4 million of net income in second quarter 2007.
Federal-Mogul continued to make progress executing its sustainable global
profitable growth strategy by growing in emerging markets and strengthening
its presence in mature markets. The company achieved 50 percent growth in
sales to customers in BRIC (Brazil, Russia, India and China) markets during
the quarter. The company recently completed the successful launch of a new
powertrain component plant in Araras, Brazil and launched its new portfolio of
wipers and brake pads in the Russian market.
Federal-Mogul reported sales of $3,854 million for the six-month period
ending June 30, 2008, an increase of $374 million or 11 percent versus $3,480
million for the same period in 2007.
Gross margin increased to $662 million in the first half of 2008 versus
$630 million in 2007, despite a non-cash charge of $68 million recorded in the
first quarter of 2008 relating to re-valuation of inventory, as required by
fresh-start reporting.
Operational EBITDA(1) increased 12 percent, or $50 million, to $462
million in the first half of 2008, as compared to $412 million in the same
period the prior year.
Adjusted net income(3) rose $112 million to $121 million or 3.1 percent of
sales during the first half of 2008, versus $9 million in the first half of
2007.
The company recorded strong operating cash flow(4) of $116 million in the
first half of 2008, which compares to $79 million in the same period of 2007.
'Federal-Mogul's results demonstrate the solid foundation we have put in
place through our sustainable global profitable growth strategy.
