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Federal-Mogul Beats on Q3 Earnings

Zacks Equity Research

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

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