arvinmeritor etsale07
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Emissions Technologies Conference CallFebruary 2, 2007
Emissions Technologies Conference Call
Chip McClure, Chairman, CEO & President Rakesh Sachdev, Senior VP, Strategy and Corp. Development
Vernon Baker, Senior VP and General Counsel
February 2, 2007
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Emissions Technologies Conference CallFebruary 2, 2007
Forward-Looking StatementsThis presentation contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,”“anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to global economic and market cycles and conditions; the demand for commercial, specialty and light vehicles for which the company supplies products; risks inherent in operating abroad (including foreign currency exchange rates and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and cost of raw materials, including steel; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers; labor relations of the company, its suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of the company’s suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations and the ability to achieve the expected benefits of restructuring actions; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; competitive product and pricing pressures; the amount of the company’s debt; the ability of the company to continue to comply with covenants in its financing agreements; the ability of the company to access capital markets; credit ratings of the company’s debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; rising costs of pension and other post-retirement benefits and possible changes in pension and other accounting rules; as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in other filings of the company with the SEC. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.
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Emissions Technologies Conference CallFebruary 2, 2007
Emissions Technologies Transaction Overview• Announcing today that we have reached a definitive
agreement to sell our Emissions Technologies business to One Equity Partners for cash and other consideration of $310 million
• The transaction is expected to close in the fiscal third quarter, pending standard regulatory approvals
• ArvinMeritor will focus its capital and management talent on executing transformational goals
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Emissions Technologies Conference CallFebruary 2, 2007
Narrowing Scope Enables Focused Investment
Chassis, Drivetrain and AperturesChassis, Drivetrain and Apertures
2004 2005 2006 2007 20084.2% 3.6% 3.4% 4.3% 4.3%
Emissions TechnologiesEmissions Technologies
LVA Filters & ExhaustLVA Filters & Exhaust
Roll CoaterRoll Coater
ER&D + Cap. Ex. as % of Sales
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Emissions Technologies Conference CallFebruary 2, 2007
Potential Uses of Proceeds
• Retire or fund selected long-term liabilities• Invest in organic growth and/or bolt-on
acquisitions in our focus areas- Asia- Aftermarket- Systems and controls technology for chassis,
drivetrain and apertures
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Emissions Technologies Conference CallFebruary 2, 2007
ArvinMeritor Before and After ET Divestiture
26
27,500
112
$8.9 – 9.1 billion
Before
20,000Employees
75Facilities
$5.9 – 6.1 billion2007 Sales
22Countries
AfterMeasure
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Emissions Technologies Conference CallFebruary 2, 2007
Customer Base Before ET Divestiture2006 Sales
Commercial Vehicle Customers Light Vehicle CustomersDaimlerChrysler
10%
General Motors9%
Volkswagen10%
Ford 7%
Asian Based OEMs 3%
BMW 2%Fiat 3%
Other LVS 9%
Other CVS15%
Fiat 2%
Asian Based OEMs 3%
Ford 1%Volkswagen 1%
General Motors 1%
PACCAR 2%
International 3%
Volvo 11%
DaimlerChrysler8%
47% Commercial
Vehicle
53% Light
Vehicle
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Emissions Technologies Conference CallFebruary 2, 2007
Customer Base After ET Divestiture2006 Sales
Commercial Vehicle Customers Light Vehicle CustomersDaimlerChrysler
8%
General Motors 3%
Volkswagen7%
Ford 3%
Asian BasedOEMs 4%
BMW 1%
Other LVS 7%
Other CVS22%
Fiat 2%
Asian Based OEMs 4%
Ford 1%Volkswagen 1%
General Motors 1%
PACCAR 2%
International5%
Volvo 17%DaimlerChrysler
12%
67% Commercial
Vehicle
33% Light
Vehicle
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Emissions Technologies Conference CallFebruary 2, 2007
Geographic/Customer Mix Before ET Divestiture2006 Sales
South America*
6%
Asia and Asian-based OEMs *
9%
North America47%
Europe and European-
based OEMs *38%
Consolidated Revenue
* Includes local operations of companies headquartered in North America
+ Non-Consolidated Joint Ventures
South America*
7%
Asia and Asian-based OEMs *
16%
North America44%
Europe and European-
based OEMs *33%
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Emissions Technologies Conference CallFebruary 2, 2007
South America*
8%
Asia and Asian-based OEMs *
10%
North America51%
Europe and European-
based OEMs *31%
Consolidated Revenue
* Includes local operations of companies headquartered in North America
+ Non-Consolidated Joint Ventures
South America*
10%
Asia and Asian-based OEMs *
11%
North America51%
Europe and European-
based OEMs *28%
Geographic/Customer Mix After ET Divestiture2006 Sales
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Emissions Technologies Conference CallFebruary 2, 2007
Top 10 Commercial Vehicle Platforms After ET Divestiture
W-Series, T-SeriesGM MD TrucksStralis, TrakkerIveco HD
Military VehiclesArmor HoldingsBusiness Class, Cargo, 360Freightliner/Sterling MD
VT, VN, Pinnacle, VisionMack/Volvo Class 8Premium, MagnumRenault Trucks HDCoronado, Century S/T, ColumbiaFreightliner Class 8FH, FH16Volvo Trucks HD
4000 Series, CF SeriesInternational MDProStar, 8000 Series, 9000 SeriesInternational Class 8
Key VehiclesPlatform
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Emissions Technologies Conference CallFebruary 2, 2007
Top 10 Light Vehicle Platforms After ET Divestiture
207Peugeot PF1
Focus, C-MAX, Volvo S40/V50Ford C1
RamDodge DR-DEMegane, ScenicRenault CSanta Fe, SonataHyundai NF/CM
Audi Q7VW 7LAccord, Odyssey, PilotHonda CYR2/UMTrailBlazerGMT 380/390
Polo, Ibiza, Audi A2, Skoda FabiaVW PQ24/25
Golf, Touran, Audi A1, Skoda OctaviaVW PQ34/35Key VehiclesPlatform
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Emissions Technologies Conference CallFebruary 2, 2007
Growth Strategy After ET Divestiture• Triple sales in Asia and with Asian OEMs within five
years- $1 billion added sales in China - $300 million added sales in India- Healthy mix of local OEMs and global OEMs
• Triple aftermarket sales• Generate compelling new products that create
exceptional value for customers• Increase systems, controls and electronics
capabilities
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Emissions Technologies Conference CallFebruary 2, 2007
Performance Plus Success Factors
Industry challenges Reason to change
Executive alignment Agents of change
Clear strategies Pathway to change
Fast-start actions Momentum to change
Strong balance sheet Resources to change
ET Divestiture Increases Momentumand Resources to Change
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Emissions Technologies Conference CallFebruary 2, 2007
Fiscal Year 2007 Outlook Continuing Operations Before Special Items
$ 100)$ 50)Free Cash Flow
$ 1.10)$ 1.00)Diluted Earnings Per Share
$ 78)$ 71)Income from Continuing Operations
20%18%Effective Tax Rate
$ (100)$ (90)Interest Expense
$ 320)$ 300)EBITDA
$ 6,100)$ 5,900)Sales
FY 2007Full Year Outlook (1)
-
-
-
-
-
-
-
(in $millions except tax rate and EPS)
(1) Earnings exclude gains or losses on divestitures, restructuring costs, and other special items; assumes ET transaction closes during fiscal Q3
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Emissions Technologies Conference CallFebruary 2, 2007
(1) Excluding gains or losses on divestitures, restructuring costs, and other special items; assumes ET transaction closes during fiscal Q3
$5,900 – $6,100
–
(2,900) – (3,100)
$8,900 – $9,100)
Sales ($million)
(0.25) – (0.30)Emissions Technologies Divestiture and Corporate Overhead/Tax Effect
0.10 – 0.15Use Proceeds to Lower LT Liabilities
$1.00 – $1.10FY 2007 Guidance Range
$1.15 – $1.25Previous Guidance
Estimated EPS (1)
FY 2007 Outlook vs. Prior Continuing Operations Before Special Items
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Emissions Technologies Conference CallFebruary 2, 2007