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TRW Automotive Holdings Corp. (TRW)
Q2 2009 Earnings Call
August 4, 2009; 8:00 am ET
John Plant - President & Chief Executive Officer
Joe Cantie - Chief Financial Officer
Mark Oswald - Director of Investor Relations
Himanshu Patel - JP Morgan
Rod Lache - Deutsche Bank
Chris Ceraso - Credit Suisse
Brett Hoselton - KeyBanc
Patrick Archambault - Goldman Sachs
Derrick Wenger - Jefferies & Company
Previous Statements by TRW
» TRW Automotive Holdings Corp. Q3 2009 Earnings Call Transcript
» TRW Automotive Holdings Corp., Q1 2009 Earnings Call Transcript
» TRW Automotive Holdings Corp., Q4 2008 Earnings Call Transcript
After the speaker’s remarks, there will be a question-and-answer period. Due to today’s limitation on time, the company requests that participants limit follow up questions to one per caller. (Operator Instructions)
I would now like to introduce your host for today’s conference call, Mark Oswald, Director of Investor Relations. Sir, you may begin.
Thank you and good morning. I would like to welcome everyone to our second quarter 2009 financial results conference call. Joining me this morning are John Plant, our President and Chief Executive Officer and Joe Cantie, our Chief Financial Officer.
On today’s call, John will provide an overview of the current automotive environment and its impact on TRW. John will also provide a brief summary of the financial results for the quarter and discuss other related business matters. After John’s comments, Joe will provide an expanded review of the financial information. At the conclusion of Joe’s comments, we will open the call to your questions.
There are a few items I would like to cover before getting started. First, today’s conference call will include forward-looking statements. These statements are based on the environment as we see it today and therefore involve risks and uncertainties. I would caution you that our actual results could differ materially from the forward-looking statements made on this call.
Please refer to slide two of the presentation for our complete Safe Harbor statement. The Risk Factors section of our 2008 Form 10-K and our first quarter 10-Q contain additional information about risks and uncertainties that could impact our business. You can access a copy of our 2008 10-K and 2009 quarterly SEC filings by visiting the Investors section on our website at www.trw.com or through the SEC’s website at www.sec.gov.
On a related matter, we expect to file our second quarter 10-Q within the next day or so. When filed, the 10-Q can also be accessed through either website. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company’s operating performance.
Reconciliations for these non-GAAP measures to the closest GAAP equivalent can be found from the conference call materials, which are posted on the Investors section of our website at www.trw.com. Finally, a replay of this call can be accessed via dial-in or through a webcast on our website.
Replay instructions were included in the release this morning. We have not given permission for any other recording of this call and do not approve or sanction any transcribing of the call. This concludes my comments.
I’ll now turn the call over to John.
Thank you, Mark and good morning everybody. The second quarter of 2009 was certainly notable for the automotive industry. We experienced bankruptcy filings at GM and Chrysler and also, hopefully, what we believed was the inflection point in the vehicle production during this devastating recession.
The impact on the industry resulting from the two vehicle manufacturers filing for bankruptcy within 30 days of each other was cushioned by the significant assistance provided to them by the U.S. Government. At TRW, we had focused on limiting our exposure to the bankruptcies occurring at one or both companies.
Based on the events that did transpire our mitigation efforts proved appropriate and allowed us to perform well during the quarter. The short term effect of the bankruptcy filings has had a minimal impact on our business with no losses incurred relating to the Chrysler or GM receivable exposures, albeit TRW did experience the full downdraft of extremely low North American production.
In fact, zero production for two months in the case of Chrysler. The lasting effect of these restructurings will shape the future of the automotive industry in North America for years to come. In addition to the government support provided to GM and Chrysler, the U.S. market for cars is expected to benefit in the second half of 2009 given the Cash for Clunkers legislation that was recently approved and hopefully is re-approved today.
Although the potential benefits maybe limited due to the size and structure of the program, any stimulus to demand will be positive in the short term. Outside of North America, scrappage schemes, tax reductions and other plans aimed at stimulating car sales are continuing to spur demand.
In the U.K. for example, it’s estimated that the scrappage scheme, which was implemented in April, accounted for one in five orders during the first few weeks of the program. Car sales in Germany rose 26% in the first half of the year. “Thanks to their scrappage scheme.” Programs have also been enacted in France, Italy and Spain.
There are positive signs emerging in North America and in Europe and reinforces our belief that the worst is behind us. The road to recovery, however, will be gradual and will span across several quarters with the possibility of a further downdraft to come.