Federal-Mogul Earnings Rebound - Analyst Blog

By Zacks Equity Research,

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Federal-Mogul Corp. ( FDML ) rebounded to profit in the second quarter of 2013 with earnings per share of 57 cents as against a loss of 60 cents in the corresponding quarter last year. Reported earnings per share comfortably outpaced the Zacks Consensus Estimate of 39 cents.

Net income increased to $56.0 million from a loss of $59.0 million in the year-ago quarter. The year-over-year increase in profit was due to cost reductions and restructuring actions implemented by the company. Federal-Mogul closed the loss-making units and improved the overall operating leverage during the quarter.

Revenues increased 5.8% to $1,772 million in the reported quarter. However, it marginally missed the Zacks Consensus Estimate of $1,778 million.

Segment Results

Revenues from the Powertrain Segment went up 5% to $1.1 billion. Higher revenues from North America and enhanced light vehicle production were offset by lower commercial vehicle production in the region. Revenues from the European operation inched up 1% despite declines in light vehicle and commercial vehicle production.

Revenues from ROW increased 13% driven by increases in revenues and production from China. Operational EBITDA in the Powertrain Segment increased 3.9% to $106.0 million from $102.0 million a year ago.

Revenues from the Vehicle Components Segment improved 5% to $783.0 million, driven by higher revenues from European operation owing to the company's strategy of rapidly expanding the portfolio in this region.

Operational EBITDA in the Vehicle Components Segment increased 3.6% to $57.0 million compared with $55.0 million in the second quarter of 2012. Restructuring activities and downsizing of seven sites has benefited the segment results.

Financial Details

Federal-Mogul had cash and cash equivalents of $375.0 million as of Jun 30, 2013, compared with $467.0 million as of Dec 31, 2012. Total-term debt was $2.9 billion versus $2.8 billion as of Dec 31, 2012.

In the first half of 2013, cash outflow from operating activities amounted to $116.0 million compared with cash inflow of $7.0 million in the same period of 2012. Capital expenditure amounted to $186.0 million compared with $223.0 million a year ago.

Our Take

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).

Some other stocks that are performing well in the industry where Federal-Mogul operates include WABCO Holdings Inc. ( WBC ), Visteon Corp. ( VC ) and American Axle & Manufacturing Holdings Inc. ( AXL ). WABCO and Visteon carry a Zacks Rank #1 (Strong Buy), whereas American Axle is a Zacks Rank #2 (Buy) stock.

AMER AXLE & MFG (AXL): Free Stock Analysis Report

FEDERAL MOGUL-A (FDML): Free Stock Analysis Report

VISTEON CORP (VC): Free Stock Analysis Report

WABCO HOLDINGS (WBC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: AXL , FDML , VC , WBC

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