Federal-Mogul (FDML) Isues Q4, FY13 Guidance, Ops Update
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Based on preliminary unaudited financial information, Federal-Mogul (Nasdaq: FDML) management estimates and the assumptions described herein, we are providing the estimates set forth below with respect to our financial outlook for the quarter ending June 30, 2013 and the year ending December 31, 2013. For the second quarter ending June 30, 2013, we expect the following:
• Net sales of $1.7 billion to $1.8 billion; and
• Operational EBITDA of $150.0 million to $165.0 million.
The Street sees revs of $1.70 billion.
For the fiscal year ending December 31, 2013, we expect the following:
• Net sales of $6.8 billion to $7.0 billion; and
• Operational EBITDA of $560.0 million to $615.0 million.
The Street sees revs of $6.71 billion.
We also continue to evaluate other potential operational restructuring opportunities and may determine to undertake additional operational restructuring actions in the future. Key assumptions for our financial outlook information include assumptions regarding global industry vehicle production levels and our restructuring actions in addition to other estimates and assumptions regarding our business, industry conditions, global economic, regulatory, market and financial conditions, foreign currency exchange rates and other factors. In particular, a large portion of our Powertrain segment sales are derived from Europe and, therefore, our future financial performance is dependent on European macroeconomic conditions.
Operational EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, and certain items such as restructuring and impairment charges, Chapter 11 and U.K. Administration related reorganization expenses, gains or losses on the sales of businesses, the non-service cost components of the U.S.-based funded pension plan and OPEB curtailment gains or losses from continuing operations. Management believes that Operational EBITDA provides supplemental information for management and investors to evaluate the operating performance of its business. Management uses, and believes that investors benefit from referring to Operational EBITDA in assessing the Company’s operating results, as well as in planning, forecasting and analyzing future periods as this financial measure approximates the cash flow associated with the operational earnings of the Company. Additionally, Operational EBITDA presents measures of corporate performance exclusive of the Company’s capital structure and the method by which assets were acquired and financed. Operational EBITDA should not be considered in isolation or as a substitute for net income (loss) or other income statement or cash flow statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. Also, Operational EBITDA, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies. Given the inherent uncertainty regarding special and non-recurring items and gains or losses on the extinguishment of debt in connection with the Refinancing (as defined below) in any future period, a reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is not feasible. The magnitude of these items, however, may be significant.
We have not yet completed the quarter ending June 30, 2013, and accordingly, we do not yet have finalized financial results for that quarter. Our financial outlook information for the quarter ending June 30, 2013 remains subject to the completion of that quarter and our normal quarter-end accounting procedures and adjustments and is subject to change and may differ significantly from the estimates above.
We have prepared the quarterly and full year financial outlook information included above, and our independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to such information. Although we currently expect that our final results will be consistent with the estimates described above, these estimates are preliminary and represent the most current information available to management, and also reflect other estimates and assumptions, as described herein. Therefore, it is possible that our actual results may differ materially from these estimates due to the completion of the second quarter and subsequent periods, our final closing procedures, changes in the data and market conditions underlying our assumptions, future operational restructuring actions and other developments that may arise in the future.
We have not updated and do not intend to update or otherwise revise these projections to reflect circumstances existing since their preparation or to reflect the occurrence of subsequent events even in the event that any or all of the underlying assumptions or estimates are no longer appropriate. The foregoing preliminary financial results constitute forward looking statements. Actual results may vary materially from the information contained in these forward-looking statements based on a number of factors. Please refer to “Forward-Looking Statements” below.
The information contained in this Item 7.01 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by reference in such a filing.
• Net sales of $1.7 billion to $1.8 billion; and
• Operational EBITDA of $150.0 million to $165.0 million.
The Street sees revs of $1.70 billion.
For the fiscal year ending December 31, 2013, we expect the following:
• Net sales of $6.8 billion to $7.0 billion; and
• Operational EBITDA of $560.0 million to $615.0 million.
The Street sees revs of $6.71 billion.
We also continue to evaluate other potential operational restructuring opportunities and may determine to undertake additional operational restructuring actions in the future. Key assumptions for our financial outlook information include assumptions regarding global industry vehicle production levels and our restructuring actions in addition to other estimates and assumptions regarding our business, industry conditions, global economic, regulatory, market and financial conditions, foreign currency exchange rates and other factors. In particular, a large portion of our Powertrain segment sales are derived from Europe and, therefore, our future financial performance is dependent on European macroeconomic conditions.
Operational EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, and certain items such as restructuring and impairment charges, Chapter 11 and U.K. Administration related reorganization expenses, gains or losses on the sales of businesses, the non-service cost components of the U.S.-based funded pension plan and OPEB curtailment gains or losses from continuing operations. Management believes that Operational EBITDA provides supplemental information for management and investors to evaluate the operating performance of its business. Management uses, and believes that investors benefit from referring to Operational EBITDA in assessing the Company’s operating results, as well as in planning, forecasting and analyzing future periods as this financial measure approximates the cash flow associated with the operational earnings of the Company. Additionally, Operational EBITDA presents measures of corporate performance exclusive of the Company’s capital structure and the method by which assets were acquired and financed. Operational EBITDA should not be considered in isolation or as a substitute for net income (loss) or other income statement or cash flow statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. Also, Operational EBITDA, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies. Given the inherent uncertainty regarding special and non-recurring items and gains or losses on the extinguishment of debt in connection with the Refinancing (as defined below) in any future period, a reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is not feasible. The magnitude of these items, however, may be significant.
We have not yet completed the quarter ending June 30, 2013, and accordingly, we do not yet have finalized financial results for that quarter. Our financial outlook information for the quarter ending June 30, 2013 remains subject to the completion of that quarter and our normal quarter-end accounting procedures and adjustments and is subject to change and may differ significantly from the estimates above.
We have prepared the quarterly and full year financial outlook information included above, and our independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to such information. Although we currently expect that our final results will be consistent with the estimates described above, these estimates are preliminary and represent the most current information available to management, and also reflect other estimates and assumptions, as described herein. Therefore, it is possible that our actual results may differ materially from these estimates due to the completion of the second quarter and subsequent periods, our final closing procedures, changes in the data and market conditions underlying our assumptions, future operational restructuring actions and other developments that may arise in the future.
We have not updated and do not intend to update or otherwise revise these projections to reflect circumstances existing since their preparation or to reflect the occurrence of subsequent events even in the event that any or all of the underlying assumptions or estimates are no longer appropriate. The foregoing preliminary financial results constitute forward looking statements. Actual results may vary materially from the information contained in these forward-looking statements based on a number of factors. Please refer to “Forward-Looking Statements” below.
The information contained in this Item 7.01 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by reference in such a filing.
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