2005 q1 trw financial results presentation
TRANSCRIPT
First Quarter 2005 Financial Results Conference Call Materials
May 5, 2005
Materials Included Pages- Press Release 1-6- Financial Summaries A1-A5- Conference Call Presentation P1-P19
© TRW Automotive Holdings Corp. 2005
TRW Automotive News 12025 Tech Center Drive Livonia, MI 48150 Release
Investor Relations Contact:
Patrick R. Stobb (734) 855-3140 Media Contact:
Manley Ford (734) 855-2616
TRW Automotive Reports First Quarter 2005 Financial Results; Provides Update on 2005 Outlook LIVONIA, MICHIGAN, May 5, 2005 — TRW Automotive Holdings Corp. (NYSE: TRW),
the global leader in active and passive safety systems, today reported first-quarter 2005
sales of $3.2 billion, an increase of 10% compared to the same period a year ago. Net
earnings were $50 million or $0.50 per diluted share, which compares to $2 million or
$0.02 per diluted share in the prior year quarter. The Company’s first-quarter 2005
included five additional calendar days as compared to the previous year period.
First quarter earnings were above previously provided guidance primarily due to the
timing of restructuring actions with associated pre-tax expenses estimated at $22
million that were expected to be incurred in the quarter. These actions and related
charges are now expected to be incurred in the second quarter of 2005. First-quarter
2004 included expenses of $47 million, or $0.48 per diluted share, for charges
associated with debt retirement and refinancing transactions. Excluding these charges,
prior year first quarter earnings were $49 million or $0.50 per diluted share.
“Despite continuing tough industry conditions and developments, our first quarter
results from operations were in line with our expectations, which can be attributed to
our broad diversification and increasing demand for the Company’s strategically
focused portfolio of safety systems and products,” said John C. Plant, president and
chief executive officer.
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“During the quarter, our cost management and reduction programs allowed us to
mitigate the costs associated with a higher level of commodity inflation and other
industry and customer related issues. For the remainder of the year, we must execute
our operating plans with precision to succeed in this difficult industry environment and
be in a position to deliver our operational and financial commitments.” Mr. Plant added,
“Although we’ve benefited from industry leading diversity, either by product, customer
or geography, further industry related pressures, including substantial production cuts
by vehicle manufacturers, will cause us to reassess the Company’s financial outlook for
the year.”
First Quarter 2005 Compared to the Prior Year Period The Company reported first-quarter 2005 sales of $3.2 billion, an increase of $302
million or 10% compared to prior year sales of $2.9 billion. The increase resulted
primarily from sales of new products, foreign currency translation and the effect of five
additional calendar days in the current quarter, partially offset by pricing provided to
customers and lower vehicle production volumes in North America. Operating income
for first-quarter 2005 was $155 million, an increase of $2 million compared to the prior
year period of $153 million. The increase resulted primarily from a higher level of sales
together with cost savings, partially offset by pricing provided to customers, the
continued impact of commodity inflation and other business issues related to customer
and supplier solvency. Restructuring expenses in the first quarter of 2005 were $8
million, as compared to $5 million in the prior year quarter.
Net interest and securitization expense for the first quarter of 2005 totaled $59 million,
which included expenses of $3 million related to the refinancing of the Company’s bank
debt facilities completed in January of 2005. In comparison, net interest and
securitization expense in the prior year totaled $63 million. The year-to-year reduction
in expense can be attributed to the Company’s deleveraging activities, which include
debt reduction and other capital structure improvement efforts, offset partially by rising
interest rates.
2
The prior year quarter included $47 million of debt retirement and refinancing expenses
primarily for premiums paid on high-yield notes redeemed with proceeds from the
Company’s initial public offering in February 2004 and other expenses related to a
January 2004 bank debt refinancing.
The Company reported first-quarter 2005 net earnings of $50 million or $0.50 per
diluted share, compared to $2 million or $0.02 per diluted share in the prior year period.
Prior year results, excluding debt retirement and refinancing expenses of $47 million,
were $49 million or $0.50 per diluted share.
Earnings before interest, securitization costs, loss on retirement of debt, taxes,
depreciation and amortization (“EBITDA”) were $283 million for first-quarter 2005,
which compares to prior year EBITDA of $276 million. Excluding the year-to-year
impact of restructuring expenses, as previously mentioned, EBITDA improved by $10
million or by 4%.
Capital Structure/Liquidity In the first quarter, net cash used in operating activities totaled $51 million, with the
outflow driven mainly by seasonal factors. Capital expenditures for the quarter were
$83 million compared to $67 million in the prior year quarter. As of April 1, 2005, the
Company had $2,930 million of debt and $451 million of cash and marketable
securities, resulting in net debt (defined as debt less cash and marketable securities) of
$2,479 million. Net debt declined by $370 million compared to the prior year level and
increased $107 million from year-end 2004. The increase from year-end was due
primarily to seasonal factors.
In January 2005, the Company drew on its credit facilities as part of the refinancing
transaction it initiated in December of 2004. Under the initial draw, the Company
utilized proceeds from its new term loan facilities and a portion of its revolving credit
facility to repay applicable outstanding balances under its existing facilities. Prior to
quarter-end, the Company utilized available cash to pay-down amounts outstanding
under its revolving credit facility.
3
On March 11, 2005, the Company repurchased 7.3 million common shares of TRW
stock from Northrop Grumman Corporation for a total of $143 million. Also on March
11, 2005, in a separate transaction, the Company raised $143 million of proceeds from
the private sale of 7.3 million shares of common stock issued to institutional investors.
On March 31, 2005, the Company commenced a process to redeem a portion of its 10-
⅛% Euro-based senior notes due 2013, equivalent to approximately $63 million (USD)
of debt. This transaction closed on May 3, 2005, and was funded with a portion of the
proceeds raised from the previously discussed sale of common stock. As a result of
this transaction, the Company expects to incur pre-tax expenses of approximately $7
million for premiums and associated fees in the second quarter of 2005.
2005 Outlook For full-year 2005, the Company expects revenue in the range $12.6 to $13.0 billion
and earnings per diluted share in the range of $1.43 to $1.63. This guidance range has
been updated to reflect previously mentioned bond redemption expenses, currency
exchange assumptions and increased restructuring costs. Excluding $7 million of pre-
tax bond redemption expenses, net earnings are expected to be in the range of $1.50
to $1.70 per diluted share.
Earnings guidance now includes restructuring related expenses of approximately $55
million, an increase from the Company’s prior guidance of $35 million. This guidance
also includes $33 million of expenses for amortization of intangibles resulting from the
February 2003 acquisition of the Company by affiliates of The Blackstone Group L.P.
and assumes an effective tax rate in the range of 45% to 50%. Lastly, the Company
expects capital expenditures to total approximately 4% of sales for the year.
For the second quarter of 2005, the Company expects revenue of approximately $3.3
billion and earnings per diluted share in the range of $0.21 to $0.33. This guidance
range includes approximately $7 million of pre-tax bond redemption expenses as
discussed previously, which when excluded, results in expected earnings in the range
of $0.28 to $0.40. Additionally, second quarter guidance includes pre-tax restructuring
costs of approximately $45 million.
4
First Quarter 2005 Conference Call The Company will host its first-quarter 2005 conference call at 9:00 a.m. (EDT) today,
Thursday, May 5, to discuss financial results and other related matters. To access the
conference call, U.S. locations should dial (877) 852-7898, and locations outside the
U.S. should dial (706) 634-1095.
A replay of the conference call will be available approximately two hours after the
conclusion of the call and accessible for approximately one week. To access the
replay, U.S. locations should dial (800) 642-1687, and locations outside the U.S. should
dial (706) 645-9291. The replay code is 5455606.
A live audio web cast and subsequent replay of the conference call will also be
available on the Company’s website at www.trwauto.com/results.
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”).
Management believes these non-GAAP measures are useful to evaluate operating
performance and/or regularly used by security analysts, institutional investors and other
interested parties in the evaluation of the Company. Non-GAAP measures are not
purported to be a substitute for any GAAP measure and as calculated, may not be
comparable to other similarly titled measures of other companies. For a reconciliation
of non-GAAP measures appearing in this release to the closest GAAP measure, please
see the financial schedules that accompany this release.
About TRW With 2004 sales of $12.0 billion, TRW Automotive ranks among the world's top 10
automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through
its subsidiaries, employs approximately 60,000 people in 24 countries. 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.
5
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.trwauto.com.
Forward-Looking Statements This release contains statements that are not statements of historical fact, but instead
are forward-looking statements. All forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those contained in forward-
looking statements made in this release. Such risks, uncertainties and other important
factors which could cause our actual results to differ materially from those contained in
our forward-looking statements are set forth in our Report on Form 10-K for the fiscal
year ended December 31, 2004 (the “10K”), and include: possible production cuts by
our customers; escalating pricing pressures from our customers; severe inflationary
pressures impacting the market for ferrous metals and other commodities; non-
performance by, or insolvency of, our suppliers and customers; our substantial
leverage; interest rate risk arising from our variable rate indebtedness; the highly
competitive automotive parts industry and its cyclicality; product liability and warranty
and recall claims; our dependence on our largest customers; loss of market share by
domestic vehicle manufacturers; limitations on flexibility in operating our business
contained in our debt agreements; fluctuations in foreign exchange rates; the possibility
that our owners' interests will conflict with ours; work stoppages or other labor issues
and other risks and uncertainties set forth under "Risk Factors" in the 10-K and in our
other SEC filings. We do not intend or assume any obligation to update any of these
forward-looking statements.
# # #
6
A1
TRW Automotive Holdings Corp.
Index of Condensed Consolidated Financial Information Page
Consolidated Statements of Operations (unaudited) for the three months ended April 1, 2005 and March 26, 2004 .............................................................A2 Consolidated Balance Sheets as of April 1, 2005 (unaudited) and December 31, 2004.......................................................................A3 Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended April 1, 2005 and March 26, 2004 .............................................................A4 Reconciliation of GAAP Net Earnings to EBITDA (unaudited) for the three months ended April 1, 2005 and March 26, 2004 .............................................................A5
The accompanying unaudited consolidated financial information and reconciliation of GAAP net earnings to EBITDA should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2004 as filed with the United States Securities and Exchange Commission on February 23, 2005.
A2
TRW Automotive Holdings Corp.
Consolidated Statements of Operations(Unaudited)
Three Months Ended (In millions, except per share amounts) April 1, 2005 March 26, 2004 Sales ............................................................................................. $ 3,225 $ 2,923 Cost of sales ................................................................................. 2,861 2,599 Gross profit............................................................................ 364 324 Administrative and selling expenses............................................ 136 124 Research and development expenses ........................................... 54 37 Amortization of intangible assets................................................. 8 9 Restructuring charges and asset impairments .............................. 8 5 Other (income) expense — net .................................................... 3 (4) Operating income .................................................................. 155 153 Interest expense — net................................................................. 58 62 Loss on retirement of debt ........................................................... — 47 Accounts receivable securitization costs...................................... 1 1 Earnings before income taxes .............................................. 96 43 Income tax expense...................................................................... 46 41 Net earnings.......................................................................... $ 50 $ 2 Basic earnings per share: Earnings per share...................................................................... $ 0.51 $ 0.02 Weighted average shares............................................................ 99.0 94.3 Diluted earnings per share: Earnings per share...................................................................... $ 0.50 $ 0.02 Weighted average shares............................................................ 101.0 97.8
A3
TRW Automotive Holdings Corp.
Consolidated Balance Sheets As of
(Dollars in millions) April 1, 2005 December 31, 2004 (Unaudited)
Assets Current assets: Cash and cash equivalents ........................................................................ $ 435 $ 790 Marketable securities................................................................................ 16 19 Accounts receivable — net....................................................................... 1,904 1,813 Inventories ................................................................................................ 667 684 Prepaid expenses ...................................................................................... 57 34 Deferred income taxes.............................................................................. 170 176 Total current assets ..................................................................................... 3,249 3,516 Property, plant and equipment — net......................................................... 2,530 2,635 Goodwill ..................................................................................................... 2,357 2,357 Intangible assets — net............................................................................... 758 765 Prepaid pension cost ................................................................................... 201 190 Deferred income taxes................................................................................ 98 91 Other assets................................................................................................. 554 560
Total assets.............................................................................................. $ 9,747 $ 10,114
Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt......................................................................................... $ 38 $ 40 Current portion of long-term debt ............................................................ 17 19 Trade accounts payable ............................................................................ 1,794 1,887 Accrued compensation ............................................................................. 267 309 Income taxes payable ............................................................................... 240 233 Other current liabilities............................................................................. 1,011 992 Total current liabilities ............................................................................... 3,367 3,480 Long-term debt ........................................................................................... 2,875 3,122 Post-retirement benefits other than pensions.............................................. 953 959 Pension benefits.......................................................................................... 813 843 Deferred income taxes................................................................................ 267 268 Long-term liabilities ................................................................................... 275 272 Total liabilities............................................................................................ 8,550 8,944 Minority interests ....................................................................................... 60 65 Commitments and contingencies Stockholders’ equity: Capital stock ............................................................................................. 1 1 Treasury stock .......................................................................................... — — Paid-in-capital .......................................................................................... 1,131 1,131 Accumulated deficit.................................................................................. (22) (72) Accumulated other comprehensive earnings............................................ 27 45 Total stockholders’ equity .......................................................................... 1,137 1,105
Total liabilities, minority interests, and stockholders’ equity ................. $ 9,747 $ 10,114
A4
TRW Automotive Holdings Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
(Dollars in millions) April 1,
2005 March 26,
2004 Operating Activities Net earnings................................................................................................................... $ 50 $ 2 Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization .................................................................................. 128 123 Other — net .............................................................................................................. (20) 32
Changes in assets and liabilities, net of effects of businesses acquired or divested ..... (209) (366) Net cash used in operating activities ................................................................... (51) (209)
Investing Activities Capital expenditures ...................................................................................................... (83) (67) Net proceeds from asset sales and divestitures.............................................................. — 107 Other — net ................................................................................................................... — (2)
Net cash (used in) provided by investing activities ............................................. (83) 38 Financing Activities Decrease in short-term debt........................................................................................... (1) (10)Proceeds from issuance of long-term debt .................................................................... 1,293 1,268 Redemption of long-term debt ...................................................................................... (1,506) (1,769)Debt issue costs ............................................................................................................. (4) (6)Issuance of capital stock, net of fees ............................................................................. 143 635 Repurchase of capital stock........................................................................................... (143) (319)
Net cash used in financing activities ................................................................... (218) (201)Effect of exchange rate changes on cash....................................................................... (3) (7)Decrease in cash and cash equivalents .......................................................................... (355) (379)Cash and cash equivalents at beginning of period......................................................... 790 828 Cash and cash equivalents at end of period................................................................... $ 435 $ 449
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to EBITDA (Unaudited)
The reconciliation schedule below should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2004, which contains summary historical data. The EBITDA measure calculated in the following schedule is a measure used by management to evaluate operating performance. Management believes that EBITDA is useful to investors because it is frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance, or to cash flows from operating activities as a measure of liquidity. Additionally, 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. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies.
Three Months Ended (Dollars in millions) April 1, 2005 March 26, 2004 GAAP net earnings............................................................... $ 50 $ 2
Income tax expense.......................................................... 46 41 Interest expense, net of interest income ........................... 58 62 Accounts receivable securitization costs.......................... 1 1 Loss on retirement of debt ............................................... — 47 Depreciation and amortization......................................... 128 123
EBITDA ................................................................................ $ 283 $ 276
A5
TRW Automotive Holdings Corp.
2005 First Quarter Financial Results Conference Call
May 5, 2005
“The Global Leader in Automotive Safety Systems”
IntroductionPatrick StobbDirector, Investor Relations
First Quarter SummaryJohn C. PlantPresident and Chief Executive Officer
P2© TRW Automotive Holdings Corp.2005
Safe Harbor StatementThis material contains statements that are not statements of historical fact, but instead are forward-looking statements. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward-looking statements made in this release. Such risks, uncertainties and other important factors which could cause our actual results to differ materially from those contained in our forward-looking statements are set forth in our Report on Form 10-K for the fiscal year ended December 31, 2004 (the “10-K”), and include: possible production cuts from our customers; escalating pricing pressures from our customers; severe inflationary pressures impacting the market for ferrous metals and other commodities; our substantial leverage; non-performance by, or insolvency of, our suppliers and customers; interest rate risk arising from our variable rate indebtedness; the highly competitive automotive parts industry and its cyclicality; product liability and warranty and recall claims; our dependence on our largest customers; loss of market share by domestic vehicle manufacturers; limitations on flexibility in operating our business contained in our debt agreements; fluctuations in foreign exchange rates; the possibility that our owners' interests will conflict with ours; work stoppages or other labor issues and other risks and uncertainties set forth under "Risk Factors" in the 10-K and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements.
P3© TRW Automotive Holdings Corp.2005
First Quarter Summary Comments
• Solid set of financial results despite unrelenting industry conditions
• Industry environment more challenging than anticipated at beginning of the year, resulting from:– Widened impact of commodity inflation– Weakened vehicle production and mix– Increased supplier and customer solvency issues
• Difficult industry cycle expected to continue through 2005
• TRW’s diversification by product, geographic presence and customer anchored first quarter results
P4© TRW Automotive Holdings Corp.2005
COMBINATION OF ATTRIBUTES DRIVES SUCCESS
Safety• Primary product
focus at 80% of total sales
• Leader in active and passive safety systems
• Innovative product solutions help differentiate customer vehicles
• Drives global R&D efforts
• Fundamental to future growth
Strategic Priorities• Include Best Quality,
Lowest Cost, Global Reach and Innovative Technology
• Adherence to priorities essential to long term competitiveness
• Integrated into daily business activities
• Guide product research, manufacturing investments and growth initiatives
• Result = positioned with leading diversification and globally competitive operating structure
People• 60,000 employees
located in every major market
• Define nature of TRW’s competitiveness
• Determine the future of the Company and its ability to compete successfully over the long-term
• Repeatedly exhibit remarkable resolve under difficult industry operating conditions
“COMBINATION UNIQUE TO TRW; POSITIONS COMPANY AS LEADING SUPPLIER TO THE INDUSTRY”
P5© TRW Automotive Holdings Corp.2005
First Quarter Financial Highlights
• Sales of $3.2 billion dollars, up 10% over the prior year primarily due to:– New business growth from safety products– Foreign currency exchange– Calendar days– Industry production– Customer pricing
• Net earnings of $50 million, or $0.50 per diluted share
• Results above previous guidance primarily due to timing of estimated restructuring expenses of $22 million; now expected tobe incurred in the second quarter
• Net debt of $2,479 million at quarter end, down $370 million from prior year and up $107 million from year-end 2004(1)
(1) Net debt is equal to total indebtedness (including receivables facility) minus cash, cash equivalents and marketable securities. For net debt reconciliation to closest GAAP equivalent, please refer to the reconciliation on slide P19 of this presentation.
P6© TRW Automotive Holdings Corp.2005
First Quarter Business Developments
• Strong mix of business wins in the quarter:– Net outcome of wins in line with business plan objectives– Wins primarily focused in tire pressure monitoring, electric powered
steering, airbags, stability control and safety electronics– Heightened interest in the convergence of active and passive safety
functionality
• Investment in technology and focus on innovation are fundamental to success in highly competitive market:– Presently allocate over a half billion dollars annually to support
research, development and engineering efforts– Expansive global footprint lends access to low cost resources – Safety product breadth provides economies of scale
• Combination of market trends and strength of safety-focused portfolio supports growth objectives ≈ 4% top line CAGR
P7© TRW Automotive Holdings Corp.2005
First Quarter Business Developments (Cont.)
• Operations pushed forward with a high level of projects, work shops and other actions to reduce manufacturing costs
• Cost rationalization programs continue:– Announced plant closures at Brighton, Michigan and Burgos, Spain
manufacturing facilities– Actions necessary to rationalize global manufacturing capacity to meet
demands of the customer base– Restructuring expense increased compared to previous guidance as a
result of lower industry volumes and other developments (M.G. Rover)
• Commodity inflation update:– Sizable negative impact to bottom line in the first quarter– Deteriorating financial condition of supply-base at an elevated level– Expect 2005 incremental cost pressures in excess of 2004 level– Maintain cautious view on our ability to continually offset inflationary
pressures in 2005
P8© TRW Automotive Holdings Corp.2005
2005 Operating Environment• Challenges have mounted for the
industry
• Many prevailing issues represent major cost pressures to the automotive industry, including:– Commodity pricing– Vehicle production and mix– Supplier solvency– Health care expenses– Rising interest rates
• Production volumes in North America and Europe expected to be flat year-to-year
• Anticipate Big 3 production will be down 4% year-to-year
• Production cuts from European customers increasing(1) Source: Primarily CSM Worldwide and internal company estimates.
2005 Production Assumptions(1)
(units in millions)
20.2
11.0
15.8
20.2
11.4
15.8
19.2
11.9
15.9
Europe
NorthAmerica
Big 3
NorthAmerica
‘04
‘05
‘03
‘04
‘05
‘03
‘04
‘05
‘03
P9© TRW Automotive Holdings Corp.2005
2005 Full Year Outlook
• Sales in the range of $12.6 to $13.0 billion
• Earnings per diluted share of $1.43 to $1.63(1)
– Includes full year restructuring costs $55 million, an increase over prior guidance of $35 million
– Includes bond redemption expenses of $7 million
• Earnings excluding bond redemption expense in the range of $1.50 to $1.70 per diluted share(1)
• Effective tax rate in the range of 45% to 50%
• Further negative industry pressures will be cause to reassess outlook for the year
(1) Per share amounts based on weighted average diluted shares outstanding of approximately 101.3 million diluted shares.
P10© TRW Automotive Holdings Corp.2005
Financial OverviewJoseph S. CantieExecutive Vice President and Chief Financial Officer
P11© TRW Automotive Holdings Corp.2005
Financial Overview
• Detailed financial results– No longer comparing to pro forma results now that we are two
years clear of the Blackstone acquisition
• Capital structure– Net debt– Cash flow and liquidity– Capital transactions
• Q2 2005 outlook
• Q&A
P12© TRW Automotive Holdings Corp.2005
DebtRetirement & Q1 2004Refinancing Less
Q1 2005 Q1 2004 Adjustments AdjustmentsSales 3,225$ 2,923$ - 2,923$ Operating Income 155 153 - 153 Interest Expense, Net 59 63 - 63 Loss on Retirement of Debt - 47 (47) - Income Taxes 46 41 - 41
Net Earnings 50$ 2$ 49$
Earnings Per Diluted Share 0.50$ 0.02$ 0.50$
Effective Tax Rate 48% 95% 46%Diluted Shares 101.0 97.8 97.8
First Quarter 2005 Results(dollars in millions)
(1)
(2)
(1) Represents $47 million of debt retirement and refinancing expenses primarily for premiums paid on high yield notes redeemed with proceeds from the Company’s initial public offering in February 2004 and other expenses related to a January 2004 bank debt refinancing.
(2) Both quarters include accounts receivable securitization costs of $1 million.
P13© TRW Automotive Holdings Corp.2005
First Quarter EBITDA Summary(dollars in millions)
Q1 2005 Q1 2004
Net Earnings 50$ 2$ Income Tax Expense 46 41 Interest Expense, Net(1) 59 63
Loss on Retirement of Debt - 47
Operating Income 155$ 153$
Depreciation and Amortization 128 123
EBITDA(2) 283$ 276$
(1) Both quarters include accounts receivable securitization costs of $1 million.(2) Please refer to page A5 of the press release schedules that accompany this presentation for management’s rationalization in using this metric.
P14© TRW Automotive Holdings Corp.2005
Capital Structure((dollars in millions)
Net Debt Summary(1)
$3,089 $2,923 $2,582 $2,456 $2,304 $2,368 $2,372 $2,479
$2,709$2,849$2,964$3,295$3,437
$2,785
Feb 28,2003
Sep 26,2003
Dec 31,2003
Mar 26,2004
Jun 25,2004
Sep 24,2004
Dec 31,2004
Apr 1,2005
Net Debt Operating Co. PIK Seller Note
(1) Net debt is equal to total indebtedness (including receivables facility) minus cash, cash equivalents and marketable securities. For net debt reconciliation to closest GAAP equivalent, please refer to the reconciliation on slide P19 of this presentation.
P15© TRW Automotive Holdings Corp.2005
Capital Structure• Q1 net cash used in operations of $51 million; outflow primarily
due to seasonal factors
• First quarter capital expenditures amounted to $83 million, which compares to $67 million in the prior year
• In excess of $1 billion in available liquidity at quarter-end
• Capital transactions include:– Jan 10th Drew on new credit facilities to complete refinancing
transaction initiated in December 2004 – Mar 11th Purchased 7.3 million TRW shares from Northrop
Grumman for $143 million– Mar 11th Issued 7.3 million TRW shares to institutional investors
for $143 million– Mar 31st Commenced process to redeem a portion of 10-⅛%
Euro senior notes, which settled on May 3rd
(funded with proceeds from March 11th offering)
P16© TRW Automotive Holdings Corp.2005
Second Quarter 2005 Outlook
• Difficult industry conditions expected to continue through the remainder of the year
• Expect sales of $3.3 billion
• Earnings per diluted share in the range of $0.21 to $0.33(1)
– Includes $7 million of bond redemption expenses
• Earnings excluding bond redemption expenses in the range of $0.28 to $0.40 per diluted share(1)
• Earnings range also includes approximately $45 million of restructuring costs for various initiatives– Restructuring expenses represent a major share of the Company’s
planned restructuring for the year– Timing of expenses not “set in stone” for the quarter
(1) Per share amounts based on weighted average diluted shares outstanding of approximately 101.3 million diluted shares.
P17© TRW Automotive Holdings Corp.2005
P18© TRW Automotive Holdings Corp.2005
Net Debt Reconciliation((dollars in millions)
3/1/03 9/26/03 12/31/03 3/26/04 6/25/04 9/24/04 12/31/04 4/1/05Cash 449$ 399$ 828$ 449$ 519$ 438$ 790$ 435$ Marketable securities 26 16 16 16 15 16 19 16
Total 475 415 844 465 534 454 809 451
Short term debt 168 54 76 66 65 27 40 38
Long term debt:Term loan facilities 1,510 1,469 1,480 1,263 1,211 1,209 1,512 1,298 Senior notes 1,142 1,155 1,178 1,049 1,017 1,044 1,063 1,042 Senior subordinated notes 435 444 458 294 294 295 306 300 Lucas Varity senior notes 167 175 189 190 192 189 202 198 Other borrowings 142 41 45 59 59 58 58 54 Total Short & Long Term Debt 3,564 3,338 3,426 2,921 2,838 2,822 3,181 2,930
Net debt operating company 3,089$ 2,923$ 2,582$ 2,456$ 2,304$ 2,368$ 2,372$ 2,479$ Seller note 348 372 382 393 405 417 - - Net debt TRW Holdings 3,437$ 3,295$ 2,964$ 2,849$ 2,709$ 2,785$ 2,372$ 2,479$
Period-End Balances
P19© TRW Automotive Holdings Corp.2005