Federal-Mogul Beats on Q3 Earnings

Zacks

Federal-Mogul Corp. (FDML) returned to profit in the third quarter of 2013 with earnings from continuing operations of 21 cents per share against a loss of 8 cents in the corresponding quarter last year. The earnings comfortably outpaced the Zacks Consensus Estimate of 12 cents.

Including gains from discontinued operations of 5 cents per share, earnings amounted to 26 cents per share, against a loss of 11 cents in the year-ago quarter, which included loss from discontinued operations of 3 cents per share.

Net income increased to $38 million from a loss of $11 million in the year-ago quarter. The year-over-year increase was due to cost reduction and restructuring actions implemented by the company along with higher operational efficiency.

Revenues increased 9% year over year to $1.69 billion in the reported quarter, primarily due to a surge in demand from European light vehicle producers along with higher sales in North America and Asia. Revenues marginally surpassed the Zacks Consensus Estimate of $1.67 billion.

Segment Results            

Revenues from the Powertrain Segment rose 11% year over year to $1.04 billion. Higher revenues from North America and enhanced light vehicle production in the region supported revenue growth. Revenues from the European operations reflected an 8% year-over-year increase due to increased engine volumes and the positive impact of the BERU ignition acquisition.

Revenues from ROW increased 15% driven by a 37% increase in revenues from China. Operational EBITDA in the Powertrain Segment increased 74% to $94 million from $54 million a year ago.

Revenues from the Vehicle Components Segment improved 5% to $734 million, mostly driven by higher revenues from European operations. Operational EBITDA in the Vehicle Components Segment increased 8.2% to $53 million compared with $49 million in the third quarter of 2012.

Financial Details

Federal-Mogul had cash and cash equivalents of $960 million as of Sep 30, 2013, compared with $467.0 million as of Dec 31, 2012. Total long-term debt was $2.73 billion, in line with the figure reported on Dec 31, 2012.

In the first nine months of 2013, cash flow from operating activities amounted to $258 million against cash outflow of $76 million in the same period of 2012.

Federal-Mogul is a leading global supplier of powertrain, chassis and safety technologies. The company’s leading technology and innovation, lean manufacturing expertise, as well as marketing and distribution deliver world-class products, brands and services with quality excellence at a competitive cost. Currently, it retains a Zacks Rank #2 (Buy).

Other Stocks to Consider

Some other stocks that are performing well in the industry where Federal-Mogul operates include Denso Corp. (DNZOY), Tower International, Inc. (TOWR) and Gentex Corp. (GNTX). All these companies carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on GNTX
Read the Full Research Report on TOWR
Read the Full Research Report on FDML
Read the Full Research Report on DNZOY


Zacks Investment Research

View Comments (0)