LIVONIA — The Livonia-based automotive safety systems developer and manufacturer TRW Automotive Holdings Corp. (NYSE: TRW) reported fourth quarter sales of $4 billion, up 7 percent from a year earlier, and net income of $425 million or $3.27 a share, up from $204 million or $1.56 a share a year earlier.
The company also reported net income excluding “special items” of $238 million or $1.84 a share, up from $225 million or $1.72 a share a year earlier. Those special one-time items include restructuring and debt retirement charges, an adjustment to a gain on business acquisition, and favorable net tax items, including a benefit associated with the reversal of the valuation allowance on the company’s deferred income tax assets in the United States.
For the full year, TRW revenue grew to a record $16.2 billion, up 13 percent from 2010. For the year, net income was $1.16 billion or $8.82 a share, up from $834 million or $6.49 a share in 2010.
For the year, net income excluding “special items” was $971 million or $7.42 a share, up from $844 million or $6.57 a share in 2010. For the full year, those special items included restructuring charges, a gain related to favorable resolution of a commercial matter, charges related to the termination of a service contract, debt retirement charges, a gain on business acquisition, and favorable net tax items.
“TRW’s solid fourth quarter performance sustained the positive momentum established earlier in the year and propelled the Company to its second consecutive year of record earnings,” said John C. Plant, chairman and CEO. “Achieving record sales and net earnings in 2011 despite the fragile and uncertain business environment demonstrates the strong market position of the company.”
For the fourth quarter, operating profit actually fell, to $307 million from $310 million a year earlier. The company blamed that on higher raw material prices, higher legal fees and planned increases in costs to support future growth, partially offset by the improved profit from the higher level of sales between the two quarters. But that was offset by lower interest and debt expenses and a tax benefit during the period.
Fourth quarter 2011 net cash flow provided by operating activities was $608 million (after making $100 million in discretionary contributions to pension plans), which compares to $362 million in the fourth quarter of 2010, which included $170 million in discretionary pension contributions. Capital expenditures were $267 million in the current quarter compared to $126 million last year. Fourth quarter free cash flow (cash flow from operating activities less capital expenditures) was a positive $341 million, compared to $236 million in the prior year quarter.
For full year 2011, net cash flow provided by operating activities totaled $1,120 million, which compares to $1,052 million in the prior year period. Capital expenditures were $571 million in 2011, which compares to $294 million last year. For 2011, free cash flow was a positive $549 million compared to $758 million in 2010.
As of Dec. 31, the company had $1.53 billion of debt and $1.24 billion of cash and cash equivalents, resulting in net debt (defined as debt less cash and cash equivalents) of $291 million. This net debt is $477 million lower than the balance at the end of 2010, making 2011 the sixth consecutive year the company has reduced its net debt. In addition to strengthening the balance sheet through reducing its overall level of debt, the company made further progress on reducing its legacy liabilities.
At year end 2011, the Company’s pension and other postretirement benefits net unfunded liabilities position improved $346 million compared with year end 2010, despite the negative impact of lower discount rate assumptions between the two periods.
TRW’s planning assumptions for industry production volumes in 2012 are approximately 13.9 million light vehicle sales in North America and 18.4 million in Europe, up 6 percent and down 8 percent, respectively, compared to 2011 levels. Within the forecast for North America, the Company expects production for the Detroit Three manufacturers will be about equal to their 2011 production levels. The company continues to expect expansion in vehicle production volumes in China and the rest of world regions. Based on these production levels and the company’s expectations for foreign currency exchange rates, full year 2012 sales are expected to range between $16.0 billion and $16.4 billion, with first quarter sales expected to be approximately $4.1 billion.
“TRW is positioned to sustain its positive momentum as we enter 2012 given its strong market position and continued growth opportunities resulting from increased global demand for TRW’s innovative technologies,” Plant said. “Continuing to execute the company’s aggressive growth strategy is a key objective in 2012 that will further position the company for long-term success.”
A replay of a conference call discussing the results is available by calling (800) 642-1687 in the United States or (706) 645-9291 elsewhere, using pass code 42078050.
More at www.trw.com.