Exhibit 99.1
News Release | TRW Automotive 12001 Tech Center Drive Livonia, MI 48150 |
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| Investor Relations Contact: Mark Oswald (734) 855-3140 |
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| Media Contact: John Wilkerson (734) 855-3864 |
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TRW Reports First Quarter 2013 Financial Results
LIVONIA, MICHIGAN, April 30, 2013 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported first quarter 2013 financial results with sales of $4.2 billion, essentially flat compared to the prior year period. The Company reported GAAP first quarter net earnings of $162 million or $1.29 per diluted share, which compares to net earnings of $206 million or $1.59 per diluted share in the prior year period.
Excluding special items from the Company’s current and prior year quarterly results, the Company reported first quarter 2013 net earnings of $189 million, or $1.51 per diluted share, which compares to net earnings of $211 million or $1.62 per diluted share in the prior year period.
“The ability to mitigate the challenging automotive industry conditions in Europe, where vehicle demand and production continues to decline, demonstrates the benefits of TRW’s global footprint and highly diversified product and customer mix,” said John C. Plant, Chairman and Chief Executive Officer. “We expect our strong market position will continue to strengthen in the future as the Company executes its significant growth strategy.”
First Quarter 2013
The Company reported first quarter 2013 sales of $4.2 billion, an increase of $5 million from the prior year period. The impact of increasing demand for TRW’s innovative technologies and higher vehicle production volumes in China were offset by sharply lower vehicle production in Europe.
The Company’s first quarter 2013 operating income was $253 million, compared with $331 million in the 2012 period. Both the 2013 and 2012 periods included restructuring and asset impairment charges totaling $37 million and $2 million, respectively. Excluding these charges, operating income for the first quarter was $290 million, which compares to $333 million in the prior year period. The year-to-year decline in profit was primarily driven by a higher mix of lower margin business and planned increases in costs to support future growth.
Net interest expense for the first quarter of 2013 totaled $30 million, which compares to $29 million in the 2012 period. In addition, the 2012 period included a net loss on retirement of debt totaling $5 million.
Tax expense for the first quarter of 2013 was $62 million, which compares to a tax expense of $93 million in the prior year period. The 2013 period included a $10 million tax benefit related to restructuring actions, compared to the 2012 period which included a net tax benefit of $2 million related to restructuring actions and debt retirement.
The Company reported 2013 first quarter GAAP net earnings of $162 million, or $1.29 per diluted share, which compares to GAAP net earnings of $206 million, or $1.59 per diluted share in the 2012 period.
Excluding special items, the Company reported first quarter 2013 net earnings of $189 million, or $1.51 per diluted share, which compares to net earnings of $211 million or $1.62 per diluted share in the 2012 period.
Earnings before interest, taxes, depreciation and amortization and special items (“adjusted EBITDA”) were $396 million in the first quarter of 2013, compared to the prior year level of $439 million. See page A5 for a description of the special items excluded in calculating adjusted EBITDA.
Cash Flow and Capital Structure
First quarter 2013 net cash flow provided by operating activities was a use of $178 million, which compares to a use of $102 million in the first quarter of 2012. Capital expenditures were $104 million in the current quarter compared to $96 million last year. First quarter free cash flow (cash flow from operating activities less capital expenditures) was an outflow of $282 million, compared to an outflow of $198 million in
the prior year quarter. The unfavorable outcome compared with last year resulted primarily from higher working capital requirements, an increased level of restructuring and lower overall earnings.
As of March 29, 2013, the Company had $1,880 million of debt and $1,346 million of cash and cash equivalents, resulting in net debt (defined as debt less cash and cash equivalents) of $534 million. The $418 million increase in total debt compared with year end 2012 reflects the Company’s $400 million notes offering completed during the first quarter.
2013 Outlook
TRW expects full year industry production volumes to total 16.0 million units in North America and 18.4 million units in Europe. Within this forecast, the Company assumes industry conditions in Europe will remain challenging in the near-term, with a modest recovery expected in the second half of the year. The Company continues to expect expansion in vehicle production volumes in China and rest of world regions. Based on these production levels, the Company’s first quarter performance and expectations for foreign currency exchange rates, full year 2013 sales are now expected to range between $16.6 billion and $16.9 billion, with second quarter sales expected to be approximately $4.3 billion.
“The Company is on track and focused on achieving its key objectives for the year, which are straightforward — execute the Company’s growth strategy, while mitigating the negative impact related to the industry challenges in Europe, especially in the first half of the year,” said Mr. Plant.
First Quarter 2013 Conference Call
The Company will host its first quarter conference call at 8:30 a.m. (Eastern time) today, Tuesday, April 30th, to discuss financial results and other related matters. To participate in the conference call, please dial (877) 852-7898 for U.S. locations, or (706) 634-1095 for international locations.
An audio replay of the conference call will be available approximately two hours after the conclusion of the call and will be accessible afterward for approximately two weeks. To access the replay, U.S. locations should dial (855) 859-2056, and locations outside the U.S. should dial (404) 537-3406. The replay code is 28413263. A live audio
webcast and replay of the conference call will also be available on the Company’s website at www.trw.com.
Reconciliation to GAAP
In addition to GAAP results included within this press release, the Company has provided certain information which is not calculated according to GAAP (“non-GAAP”), such as net earnings, operating income and diluted earnings per share each excluding special items; adjusted EBITDA; and free cash flow. Management uses these non-GAAP measures to evaluate the operating performance of the Company and its business segments and to forecast future periods. Management believes that investors will likewise find these non-GAAP measures useful in evaluating such performance. Such measures are frequently used by security analysts, institutional investors and other interested parties in the evaluation of companies in our industry.
Non-GAAP measures should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP and, as calculated, may not be comparable to similarly titled measures of other companies. For a reconciliation of non-GAAP measures to the most comparable GAAP financial measure and for share amounts used to derive earnings per share, please see the financial schedules that accompany this release.
About TRW
With 2012 sales of $16.4 billion, TRW Automotive ranks among the world’s leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, operates in 25 countries and employs approximately 65,000 people worldwide. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. All references to “TRW Automotive”, “TRW” or the “Company” in this press release refer to TRW Automotive Holdings Corp. and its subsidiaries, unless otherwise indicated. TRW Automotive news is available on the internet at www.trw.com.
Forward-Looking Statements
This release contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. We caution readers not to place undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements are subject to numerous assumptions, risks and uncertainties which could cause our actual results to differ materially from those suggested by the forward-looking statements, including those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (our “Form 10-K”) such as: any developments related to antitrust investigations adversely affecting our financial condition, results, cash flows or reputation; economic conditions adversely affecting our business, results or the viability of our supply base; the unsuccessful implementation of our current expansion efforts adversely impacting our business or results; any shortage of supplies causing a production disruption for any customers or us; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations impacting our results; risks associated with non-U.S. operations, including economic and political uncertainty in some regions, adversely affecting our business, results or financial condition; any inability to protect our intellectual property rights adversely affecting our business or our competitive position; the loss of any of our largest customers materially adversely affecting us; commodity inflationary pressures adversely affecting our profitability or supply base; pricing pressures from our customers adversely affecting our profitability; costs of product liability, warranty and recall claims and efforts by customers to adversely alter contract terms and conditions concerning warranty and recall
participation; costs or adverse effects on our business, reputation or results from governmental regulations; costs or liabilities relating to environmental, health and safety regulations adversely affecting our results; any increase in the expense of our pension and other postretirement benefits or the funding requirements of our pension plans reducing our profitability; work stoppages or other labor issues at our facilities or at the facilities of our customers or those in our supply chain adversely affecting our business, results or financial condition; any disruption in our information technology systems adversely impacting our business and operations; any impairment of a significant amount of our goodwill or other intangible assets adversely affecting our financial condition; and other risks and uncertainties set forth in our Form 10-K and in our other filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to release publicly any update or revision to any of the forward-looking statements.
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TRW Automotive Holdings Corp.
Index of Condensed Consolidated Financial Information
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Consolidated Statements of Earnings (unaudited) for the three months ended March 29, 2013 and March 30, 2012 | A2 |
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Condensed Consolidated Balance Sheets as of March 29, 2013 (unaudited) and December 31, 2012 | A3 |
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Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 29, 2013 and March 30, 2012 | A4 |
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Reconciliation of Non-GAAP Financial Measures (unaudited) for the three months ended March 29, 2013 and March 30, 2012 | A5 |
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Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited): |
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· For the three months ended March 29, 2013 | A6 |
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· For the three months ended March 30, 2012 | A7 |
The accompanying unaudited condensed consolidated financial information and reconciliation schedules should be read in conjunction with the TRW Automotive Holdings Corp. Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the United States Securities and Exchange Commission.
TRW Automotive Holdings Corp.
Consolidated Statements of Earnings
(Unaudited)
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| Three Months Ended |
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(In millions, except per share amounts) |
| March 29, |
| March 30, |
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Sales |
| $ | 4,213 |
| $ | 4,208 |
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Cost of sales |
| 3,786 |
| 3,734 |
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Gross profit |
| 427 |
| 474 |
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Administrative and selling expenses |
| 138 |
| 146 |
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Amortization of intangible assets |
| 3 |
| 3 |
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Restructuring charges and asset impairments |
| 37 |
| 2 |
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Other (income) expense — net |
| (4 | ) | (8 | ) | ||
Operating income |
| 253 |
| 331 |
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Interest expense — net |
| 30 |
| 29 |
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Loss on retirement of debt — net |
| — |
| 5 |
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Equity in earnings of affiliates, net of tax |
| (12 | ) | (11 | ) | ||
Earnings before income taxes |
| 235 |
| 308 |
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Income tax expense |
| 62 |
| 93 |
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Net earnings |
| 173 |
| 215 |
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Less: Net earnings attributable to noncontrolling interest, net of tax |
| 11 |
| 9 |
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Net earnings attributable to TRW |
| $ | 162 |
| $ | 206 |
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Basic earnings per share: |
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Earnings per share |
| $ | 1.35 |
| $ | 1.66 |
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Weighted average shares outstanding |
| 119.6 |
| 123.8 |
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Diluted earnings per share: |
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Earnings per share |
| $ | 1.29 |
| $ | 1.59 |
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Weighted average shares outstanding |
| 126.9 |
| 131.2 |
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TRW Automotive Holdings Corp.
Condensed Consolidated Balance Sheets
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| As of |
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| March 29, |
| December 31, |
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(Dollars in millions) |
| 2013 |
| 2012 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 1,346 |
| $ | 1,223 |
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Accounts receivable — net |
| 2,666 |
| 2,200 |
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Inventories |
| 1,022 |
| 975 |
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Prepaid expenses and other current assets |
| 348 |
| 330 |
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Total current assets |
| 5,382 |
| 4,728 |
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Property, plant and equipment — net |
| 2,347 |
| 2,385 |
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Goodwill |
| 1,753 |
| 1,756 |
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Intangible assets — net |
| 291 |
| 293 |
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Pension assets |
| 814 |
| 823 |
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Other assets |
| 866 |
| 872 |
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Total assets |
| $ | 11,453 |
| $ | 10,857 |
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Liabilities and Equity |
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Current liabilities: |
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Short-term debt |
| $ | 103 |
| $ | 67 |
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Current portion of long-term debt |
| 541 |
| 26 |
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Trade accounts payable |
| 2,497 |
| 2,423 |
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Accrued compensation |
| 238 |
| 254 |
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Other current liabilities |
| 1,168 |
| 1,111 |
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Total current liabilities |
| 4,547 |
| 3,881 |
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Long-term debt |
| 1,236 |
| 1,369 |
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Postretirement benefits other than pensions |
| 389 |
| 396 |
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Pension benefits |
| 864 |
| 898 |
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Other long-term liabilities |
| 547 |
| 544 |
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Total liabilities |
| 7,583 |
| 7,088 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Capital stock |
| 1 |
| 1 |
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Paid-in-capital |
| 1,649 |
| 1,635 |
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Retained earnings |
| 2,560 |
| 2,408 |
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Accumulated other comprehensive earnings (losses) |
| (539 | ) | (466 | ) | ||
Total TRW stockholders’ equity |
| 3,671 |
| 3,578 |
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Noncontrolling interest |
| 199 |
| 191 |
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Total equity |
| 3,870 |
| 3,769 |
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Total liabilities and equity |
| $ | 11,453 |
| $ | 10,857 |
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TRW Automotive Holdings Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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| Three Months Ended |
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| March 29, |
| March 30, |
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(Dollars in millions) |
| 2013 |
| 2012 |
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Operating Activities |
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Net earnings |
| $ | 173 |
| $ | 215 |
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Adjustments to reconcile net earnings to net cash used in operating activities: |
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Depreciation and amortization |
| 105 |
| 104 |
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Net pension and other postretirement benefits income and contributions |
| (62 | ) | (58 | ) | ||
Loss on retirement of debt — net |
| — |
| 5 |
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Deferred income taxes |
| 23 |
| 51 |
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Other — net |
| 3 |
| (9 | ) | ||
Changes in assets and liabilities: |
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Accounts receivable — net |
| (506 | ) | (454 | ) | ||
Inventories |
| (63 | ) | (89 | ) | ||
Trade accounts payable |
| 119 |
| 183 |
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Prepaid expenses and other assets |
| (31 | ) | (30 | ) | ||
Other liabilities |
| 61 |
| (20 | ) | ||
Net cash used in operating activities |
| (178 | ) | (102 | ) | ||
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Investing Activities |
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Capital expenditures, including other intangible assets |
| (104 | ) | (96 | ) | ||
Net proceeds from asset sales and divestitures |
| — |
| 7 |
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Other — net |
| — |
| 3 |
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Net cash used in investing activities |
| (104 | ) | (86 | ) | ||
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Financing Activities |
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Change in short-term debt |
| 36 |
| 11 |
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Proceeds from issuance of long-term debt, net of fees |
| 394 |
| — |
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Redemption of long-term debt |
| (12 | ) | (56 | ) | ||
Proceeds from exercise of stock options |
| 16 |
| 6 |
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Repurchase of capital stock |
| (10 | ) | (38 | ) | ||
Dividends paid to noncontrolling interest |
| (2 | ) | (8 | ) | ||
Net cash provided by (used in) financing activities |
| 422 |
| (85 | ) | ||
Effect of exchange rate changes on cash |
| (17 | ) | 29 |
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Increase (decrease) in cash and cash equivalents |
| 123 |
| (244 | ) | ||
Cash and cash equivalents at beginning of period |
| 1,223 |
| 1,241 |
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Cash and cash equivalents at end of period |
| $ | 1,346 |
| $ | 997 |
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TRW Automotive Holdings Corp.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
EBITDA, Adjusted EBITDA and free cash flow are not recognized terms under GAAP and do not purport to be alternatives to the most comparable GAAP amounts. Further, since all companies do not use identical calculations, our definition and presentation of these measures may not be comparable to similarly titled measures reported by other companies.
EBITDA and Adjusted EBITDA
EBITDA as calculated below is a measure used by management to evaluate the operating performance of the Company and its business segments and to forecast future periods. Adjusted EBITDA is defined as EBITDA excluding restructuring charges, asset impairments and other significant special items. Management uses Adjusted EBITDA to evaluate the performance of ongoing operations separate from items that may have a disproportionate impact in any particular period. EBITDA and Adjusted EBITDA are frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry.
EBITDA and Adjusted EBITDA do not purport to be alternatives to net earnings as an indicator of operating performance, nor to cash flows from operating activities as a measure of liquidity. Additionally, neither is intended to be a measure of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements.
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| Three Months Ended |
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| March 29, |
| March 30, |
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(Dollars in millions) |
| 2013 |
| 2012 |
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GAAP net earnings attributable to TRW |
| $ | 162 |
| $ | 206 |
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Income tax expense |
| 62 |
| 93 |
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Interest expense - net |
| 30 |
| 29 |
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Depreciation and amortization |
| 105 |
| 104 |
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EBITDA |
| 359 |
| 432 |
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Restructuring charges and asset impairments |
| 37 |
| 2 |
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Loss on retirement of debt - net |
| — |
| 5 |
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Adjusted EBITDA |
| $ | 396 |
| $ | 439 |
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Free Cash Flow
Free cash flow represents net cash used in operating activities less capital expenditures, and is used by management in analyzing the Company’s ability to service and repay its debt and to forecast future periods. However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service debt or for other non-discretionary expenditures.
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| Three Months Ended |
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| March 29, |
| March 30, |
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(Dollars in millions) |
| 2013 |
| 2012 |
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Cash flow used in operating activities |
| $ | (178 | ) | $ | (102 | ) |
Capital expenditures |
| (104 | ) | (96 | ) | ||
Free cash flow |
| $ | (282 | ) | $ | (198 | ) |
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
The Company recorded restructuring charges of $37 million primarily related to severance and other charges.
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| Three Months |
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| Three Months |
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| Ended |
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| March 29, 2013 |
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| March 29, 2013 |
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(In millions, except per share amounts) |
| Actual |
| Adjustments |
| Adjusted |
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Sales |
| $ | 4,213 |
| $ | — |
| $ | 4,213 |
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Cost of sales |
| 3,786 |
| — |
| 3,786 |
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Gross profit |
| 427 |
| — |
| 427 |
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Administrative and selling expenses |
| 138 |
| — |
| 138 |
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Amortization of intangible assets |
| 3 |
| — |
| 3 |
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Restructuring charges and asset impairments |
| 37 |
| (37 | )(a) | — |
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Other (income) expense — net |
| (4 | ) | — |
| (4 | ) | |||
Operating income |
| 253 |
| 37 |
| 290 |
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Interest expense — net |
| 30 |
| — |
| 30 |
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Loss on retirement of debt — net |
| — |
| — |
| — |
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Equity in earnings of affiliates, net of tax |
| (12 | ) | — |
| (12 | ) | |||
Earnings before income taxes |
| 235 |
| 37 |
| 272 |
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Income tax expense |
| 62 |
| 10 | (b) | 72 |
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Net earnings |
| 173 |
| 27 |
| 200 |
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Less: Net earnings attributable to noncontrolling interest, net of tax |
| 11 |
| — |
| 11 |
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Net earnings attributable to TRW |
| $ | 162 |
| $ | 27 |
| $ | 189 |
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Basic earnings per share: |
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Earnings per share |
| $ | 1.35 |
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| $ | 1.58 |
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Weighted average shares outstanding |
| 119.6 |
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| 119.6 |
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Diluted earnings per share: |
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Earnings per share |
| $ | 1.29 |
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| $ | 1.51 |
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Weighted average shares outstanding |
| 126.9 |
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| 126.9 |
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(a) Represents the elimination of restructuring charges and asset impairments.
(b) Represents the elimination of the income tax impact of the above adjustment, by calculating the income tax impact of the item using the appropriate tax rate for the jurisdiction where the charges were incurred.
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
The Company recorded restructuring charges of $2 million primarily related to severance, retention and outplacement services.
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| Three Months |
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| Three Months |
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| Ended |
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| Ended |
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|
| March 30, 2012 |
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| March 30, 2012 |
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(In millions, except per share amounts) |
| Actual |
| Adjustments |
| Adjusted |
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Sales |
| $ | 4,208 |
| $ | — |
| $ | 4,208 |
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Cost of sales |
| 3,734 |
| — |
| 3,734 |
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Gross profit |
| 474 |
| — |
| 474 |
| |||
Administrative and selling expenses |
| 146 |
| — |
| 146 |
| |||
Amortization of intangible assets |
| 3 |
| — |
| 3 |
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Restructuring charges and asset impairments |
| 2 |
| (2 | )(a) | — |
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Other (income) expense — net |
| (8 | ) | — |
| (8 | ) | |||
Operating income |
| 331 |
| 2 |
| 333 |
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Interest expense — net |
| 29 |
| — |
| 29 |
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Loss on retirement of debt — net |
| 5 |
| (5 | )(b) | — |
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Equity in earnings of affiliates, net of tax |
| (11 | ) | — |
| (11 | ) | |||
Earnings before income taxes |
| 308 |
| 7 |
| 315 |
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Income tax expense |
| 93 |
| 2 | (c) | 95 |
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Net earnings |
| 215 |
| 5 |
| 220 |
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Less: Net earnings attributable to noncontrolling interest, net of tax |
| 9 |
| — |
| 9 |
| |||
Net earnings attributable to TRW |
| $ | 206 |
| $ | 5 |
| $ | 211 |
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Basic earnings per share: |
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Earnings per share |
| $ | 1.66 |
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| $ | 1.70 |
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Weighted average shares outstanding |
| 123.8 |
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| 123.8 |
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Diluted earnings per share: |
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Earnings per share |
| $ | 1.59 |
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| $ | 1.62 |
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Weighted average shares outstanding |
| 131.2 |
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| 131.2 |
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(a) Represents the elimination of restructuring charges and asset impairments.
(b) Represents the elimination of the loss on retirement of debt.
(c) Represents the elimination of the income tax impact of the above adjustments, by calculating the income tax impact of each of these items using the appropriate tax rate for the jurisdiction where the charges were incurred.