FOR IMMEDIATE DISTRIBUTION
Contact:
Francisco Freyre Servín
Rassini, S.A.B. de C.V.
Tel: (5255) 5229-58-20
Fax: (5255) 5202-58-95
www.rassini.com
e-mail: [email protected]
Rassini, S.A.B. de C.V. and Subsidiaries
Unaudited Results for the Fourth Quarter and Fiscal Year 2014
2014 Highlights:
-
-
The year 2014 was another record for Rassini in terms of Sales and EBITDA. Sales grew
15% year-over-year to $11,900 million Pesos and EBITDA rose 17% year-over-year to
$1,568 million Pesos.
Net income before taxes, non-recurrent proceeds and minority interest reached $832.5
million Pesos.
The company prepaid debt, optimized its capital structure, and reduced its interest expense
by more than 50% with new financing.
Financial ratios continue to improve: Net Debt / annualized EBITDA ratio stands at 1.2x
and EBITDA/Net Interest Expense was 5.8x as of December 31, 2014.
The company was renamed as Rassini, S.A.B. de C.V. to better align with its strong brand
among customers, partners, and other global automotive manufacturers globally.
Mexico City, February 26, 2015
Rassini, S.A.B. de C.V. (Mexican Stock Exchange Ticker: RASSINI), a Mexican industrial
company engaged in the design and manufacture of suspension and brake components for the
automotive industry, announced today its unaudited financial results for the fourth quarter and
fiscal year 2014.
Industry outlook
The North American automotive industry, Rassini’s main market, continued its strong
performance, reaching an annual production of 17.0 million light vehicles – the highest in more
than 10 years – which marked a 4.9% increase over 2013. Light trucks, including pick-up trucks
carrying Rassini suspension and brake components, continued to be the main driver of growth
with a production of 10.0 million units during 2014, which is 8.6% higher than 2013, while
passenger cars production recorded 7.0 million units, the same level as 2013 and 2012 matching
the highest level over the past 10 years.
North America Light Vehicle Production
(Million units)
Passenger Cars
15.8
15.8
15.3
15.3
15.1
9.0
8.3
8.5
6.5
16.2
17.0
13.1
12.6
9.3
CAGR (2009-2014) 14.6%
Light Trucks
11.9
8.6
6.8
8.3
9.2
10.0
7.0
7.0
7.0
2012
2013
2014
7.4
4.6
6.5
2004
6.8
2005
7.0
2006
6.6
2007
6.1
2008
4.0
5.2
5.7
2009
2010
2011
CAGR: Compound Annual Growth Rate
The Seasonally Adjusted Annualized Rate (SAAR) of U.S. light vehicle sales averaged 16.4
million units during 2014, which is 5.8% higher than the 2013 average. During the fourth
quarter alone, sales of light vehicles in the U.S. grew 14.4% compared to the same period of
2013, and the total sales of light vehicles in the U.S. for 2014 was 16.4 million units, 6% higher
than the 15.5 million units sold in 2013.
According to auto industry analysts, the U.S. SAAR will continue to grow in the coming years
due to a number of factors. The number of vehicles on the road that are at least 11 years old has
increased by almost 28% over the last eight years; employment and consumer confidence are
stronger; U.S. GDP growth is returning to levels above 3% amid a complex global environment;
a wave of new vehicles with more efficient engines and value adding gadgets are driving
customers into showrooms; fuel prices are low and consumer financing rates remain attractive.
“Consumers feel good because more people are working, the U.S. economy is expanding and
fuel prices are low,” GM Sales Chief Kurt McNeil said to The Wall Street Journal.
Financial Results
Note: Rassini had previously reported its financial results to the Mexican Stock Exchange in
Mexican Pesos, while issuing earnings to the investment community in U.S. Dollars. For
consistency purposes, Rassini started reporting its results, both to the Mexican Stock Exchange
and investors, in Mexican Pesos effective January 1, 2014. For currency conversion purposes,
the average exchange rate for 2014 and 2013 was 13.30 MxP/USD and 12.77 MxP/USD
respectively, and the exchange rate at the end of 2014 and 2013 was 14.72 MxP/USD and 13.08
MxP/USD, respectively.
Sales
Rassini had another record year in 2014 as sales totaled $11,900 million pesos, the highest
in the Company’s history and 14.9% higher than 2013. 2014 sales in the NAFTA region,
Rassini’s main market, increased 29% from 2013 to reach $9,505 million Pesos. Total sales for
the fourth quarter were $2,841 million Pesos, 12.2% higher than the same period last year.
Actual
2014
%
Actual
2013
%
4,969
1,178
42
4,166
1,009
40
10
6,147
52
5,175
51
19
3,358
28
2,169
21
55
TOTAL NAFTA
9,505
80
7,344
71
29
Leaf Springs (1)
Coil Springs
2,065
330
17
25
3
2,631
386
TOTAL BRAZIL
2,395
20
3,017
29
(21)
11,900
100
10,361
100
15
SALES ($ millions)
(Jan - Dec)
Leaf Springs (1)
Coil Springs
NAFTA Suspensions
Brakes
BRAZIL
(1)
CONSOLIDATED SALES
Var.
%
10
4
(1) Includes elimination of intercompany transactions.
Sales of 2014 for Rassini’s Suspensions Division North America were 18.8% higher than those
of 2013, reaching a total of $6,147 million Pesos, and were 10.9% higher in terms of volume.
In the Brakes Division, 2014 sales totaled $3,358 million Pesos which are 54.8% higher than a
year before, In terms of volume, sales in the Brake Division were up 29.9%. These higher
figures are attributable to the Company’s successful launch of several new platforms, such as
the inclusion of Rassini leaf springs, coil springs and brake rotors on GM’s new Sierra and
Silverado pick-up models.
The increased sales in North America were partially offset by an adverse political and economic
environment in Brazil, which has resulted in an economic slowdown and a reduction of
government subsidies to acquire new vehicles. These factors affected the sales of trucks and
buses, which represent Rassini’s main market segment in the region. The production of trucks
and buses in the country decreased 25% from 2013 to 2014, according to Sindipeças (Brazilian
Association of Automotive Components Manufacturers), resulting in sales for the Suspensions
Division Brazil of $2,395 million Pesos for 2014, down 20.6% from 2013 in Pesos but only
16.8% in local currency. The reduction in volume was 16.3%, lower that the decrease in the
industry due to the entrance of some new platforms during the year.
Regarding the fourth quarter of 2014, sales in North America increased 25.5% compared to the
same period of 2013, reaching a total of $2,389 million Pesos. This increase was mainly due to
the industry growth, ramp-up in production of recently launched platforms, the increased
market share we have in the brakes business and the start-up of sales from our new brakes
facility in Flint, Michigan. Sales in Brazil for the last quarter of 2014 totaled $455 million Pesos,
a decrease of 27.5% compared to the same period a year before in Pesos and 22.8% decrease in
local currency. This decrease reflects the difficult conditions in the truck and bus market, which
suffered more than expected in December when most customers closed their facilities for the
entire month to align their bloated inventory levels. We were unable to align our operations at
the same rate as some of our customers continued working normally through the end of the
year.
Sales distribution between the two auto markets in which Rassini operates is 80% in North
America and 20% in Brazil. On a product basis, Suspension components represent 72% of sales
and Brakes comprise the remaining 28%. 96% of sales are devoted to OEMs and 4% to the
aftermarket in Brazil.
Results from operations
Rassini delivered consolidated EBITDA of $1,568 million Pesos, 16.8% higher than in 2013,
and an all-time record high for the Company.
RASSINI - CONSOLIDATED
January - December
2014
2013 Var. (%)
(Million Pesos)
Sales
Ebitda
Ebitda / Sales (%)
(1)
11,900
1,568
13%
10,362
1,343
13%
15
17
Net Operating Cash Flow
(2)
1,164
1,512
(23)
Leverage Ratio
Interest Coverage Ratio
(3)
1.2x
5.8x
1.6x
4.4x
(4)
(1) Operating profit + Other expenses (income) + Depreciation & Amortization + Profit Sharing.
(2) Ebitda +(-) Change in Working Capital - Taxes.
(3) Net Debt / Annualized Ebitda
(4) Ebitda / Net Interest Expense.
EBITDA for North American operations reached $1,376 million Pesos in 2014, an increase of
36.2% compared to 2013, mainly due to increased sales and a tight control over cost structure.
Brazilian operations recorded EBITDA of $191 million Pesos for the year 2014, a 40.3%
decrease from 2013, mainly driven by the aforementioned difficult conditions faced in the truck
and bus regional market.
Rassini, S.A.B. de C.V. and Subsidiaries
Quarterly results by business segment
($ Million)
2013
Total
Quarter # 1
2
3
4
Sales
Nafta
1,708 1,767 1,965 1,904
7,344
Brazil
789
824
777
628
3,018
Total (1)
2,497 2,591 2,741 2,533 10,362
EBITDA
Nafta
254
226
300
230
1,010
Brazil
99
101
93
27
320
Total (1)
360
328
399
256
1,343
EBITDA/Sales
Nafta
15% 13%
15%
12%
14%
Brazil
13% 12%
12%
4%
11%
Total
14% 13%
15%
10%
13%
(1) Includes elimination of intercompany sales
2014
1
2
3
4
2,304
696
3,001
2,463
607
3,071
2,349
637
2,987
344
52
397
392
53
443
304
65
375
336
21
353
15%
7%
13%
16%
9%
14%
13%
10%
13%
14%
5%
12%
Total
2,389 9,505
455 2,395
2,841 11,900
1,376
191
1,568
14%
8%
13%
During the fourth quarter of 2014, consolidated EBITDA rose 37.9% compared to the same
period in 2013, reaching $353 million Pesos and accounting for 12.4% of sales: the higher sales
volume in North America more than compensated for the reduction in the Brazilian market.
In 2015, analysts expect that volumes in the Brazilian truck and bus market will remain at 2014
levels, while the cost of energy, other utilities and labor will increase during the year. As a
result, the Company is taking further steps at the operations level to mitigate negative impact
and preserve margins. These include capacity and operating adjustments, reduction of its fixed
cost structure, pricing negotiations with customers and directing sales to new aftermarket
locations.
Consolidated net income before taxes, non-recurrent proceeds and minority interest for the year
2014 totaled $832.5 million Pesos, an increase of 38.5% compared to 2013. This improvement
was driven by higher operating results, as explained above, and lower interest expenses due to
continued debt reduction. Consolidated net income for the fourth quarter of 2014 reached
$155.0 million Pesos and totaled $864.5 million Pesos for the full year, equivalent to $2.70
Pesos per share.
Cash flow and new debt profile
Working capital increased in 2014 in order to support the start of operations at the Company’s
second U.S. manufacturing site, which is located in Mt. Morris Township in Michigan with the
goal of producing brake rotors for customers in the region. Additionally, as a result of the tax
reform implemented in Mexico at the beginning of the year, the Company paid deferred income
tax related to the elimination of the consolidation regime and higher provisional payments of
income tax due to improved operating performance. These factors combined for a consolidated
net operating cash flow of $1,164 million Pesos for 2014, down 23% from the prior year. The
consolidated cash balance as of December 31, 2014 was $845.2 million Pesos.
In addition to debt prepayments made during the year using its internal cash generation, on
December 2, 2014 Rassini announced a new syndicated loan for the North American
Suspension business prepaying other remaining debt balances at the holding company level – a
reduction in debt cost by more than 50% – and optimizing its amortization schedule over the
next five years. The new US$120 million syndicated loan was arranged by BBVA Bancomer
as the lead underwriter for the transaction, with Comerica Bank, Sabadell Capital, Bancomext,
and Banco Monex acting as joint underwriters.
Gross Debt - Dec 2014
Term
(US$ millions)
Short
Operating Companies
Suspension Div. Nafta
Brakes Division
Total Nafta
Suspension Div. Brazil
Total Consolidated
Long
Total
41.2
16.2
57.4
9.5
100.0
26.1
126.1
8.0
141.2
42.3
183.5
17.5
66.9
134.1
201.0
In terms of U.S. dollars, consolidated debt as of December 31, 2014 decreased 8.3% compared
to year end 2013 and the consolidated cash balance at the end of 2014 was US$57 million,
resulting in consolidated net debt of US$144 million.
Long Term Debt Amortization Profile
US$ Million
33.7
34.8
26.2
32.6
25.0
-
2015
2016
2017
2018
Suspension Division NA
2019
2020
Brakes Division
Note: Debt profile does not include working capital financing or Brazil
Financial ratios continued to improve as Rassin’s leverage ratio as of December 31, 2014 was
1.2x net debt to EBITDA, while the interest coverage ratio was 5.8x EBITDA to net interest
expense.
Rassini believes that its recognized position as a preferred supplier within the NAFTA and
Mercosur regions will enable it to continue to serve OEMs as an essential and preferred business
partner. The Company bases its positive status on its technology, quality, service,
competitiveness and focus on customer service, as well as its ability and pre-emptive actions to
scale the size and structure of its operations according to shifts in demand, together with positive
industry dynamics and outlook. These factors will ultimately enable the Company to generate
shareholder value as the economy and the automotive industry continue their ascent.
Other notable recent events
During the year the Company successfully started-up its brakes facility in Flint, Michigan and
finalized the expansion of foundry capacity at its Puebla factory, which will begin operations
in early 2015.
On November 1, 2014, the name of the Company changed to Rassini, S.A.B. de C.V., which is
how customers, partners, and other global automotive manufacturers have known the company.
In early September, Standard & Poor's Ratings Services (“S&P”) announced it had upgraded
Rassini’s long-term corporate credit rating from ‘B+’ to ‘BB-’ with a ‘Stable’ outlook based on
the Company’s improving financial policy and performance, as well as substantial debt
repayments.
Conference Call
Rassini will host a conference call on Friday, February 27, 2015 at 9:00 am (U.S. Central
Time/Mexico City Time) / 10:00 am (U.S. Eastern Time) to discuss its unaudited fourth quarter
and fiscal year financial results and recent business activities.
The conference call may be accessed using the following numbers:
U.S.:
+1-888-455-2260
Mexico:
+1-800-514-1067
International:
+1-719-325-2464
Passcode:
RASSINI or 3761519
Please dial in approximately 10 minutes before the scheduled time of this call.
A replay of the conference call will be available starting from 1:00 pm (U.S. Eastern Time) on
February 27, 2015 to 1:00 pm (U.S. Eastern Time) on March 6, 2015 using the following
numbers:
U.S.:
+1-888-203-1112
Mexico:
+1 800-514-5974
Passcode:
3761519
The presentation deck for the call will be available the day before in our web page:
http://www.rassini.com/en/financial.html
Financial statements
Rassini, S.A.B. de C.V. & Subs
Consolidated Income Statement
January - December of 2014 and 2013
(Million Mexican pesos)
2014
Net Sales
Cost of Good Sold
Gross Profit
% to Sales
2013
11,900.3
9,585.0
2,315.3
10,361.8
8,313.2
2,048.6
19%
20%
Selling & Administrative Expenses
EBITDA
% to Sales
747.2
1,568.1
706.0
1,342.6
13%
13%
Depreciation & Amortization
Other Income (Expenses) Net (1)
Interest & Other Financial Expenses
Net Profit before Minority Interest
(445.5)
(61.5)
(228.6)
832.5
(319.2)
(80.2)
(342.0)
601.2
Other non-operating Income
Taxes
Deferred Taxes
Minority Interest
259.3
(153.2)
(86.3)
12.2
(252.4)
(426.6)
(65.0)
864.5
(142.8)
Net Income
(1) Includes Profit Sharing
Rassini, S.A.B. de C.V. & Subs
Consolidated Cash Flow
January - December of 2014 and 2013
(Million Mexican pesos)
2014
EBITDA
Changes in working capital & taxes
Net operating cash flow
Interest expenses
Scheduled debt amortizations
Debt prepayments
New financing
Capital expeditures
Other
Increase (Decrease) in cash
Initial cash balance
Final cash balance
2013
1,568.1
(404.1)
1,164.0
1,342.6
169.4
1,512.0
(166.2)
(272.6)
(2,358.3)
2,109.9
(395.9)
139.6
(186.9)
(402.2)
(911.2)
638.9
(689.4)
164.3
220.5
624.7
845.2
125.5
499.2
624.7
Rassini, S.A.B. de C.V. & Subs
Balance Sheet
As of December 30, 2014 and 2013
(Million Mexican pesos)
Assets
2014
2013
Cash & marketable securities
Accounts receivable
Inventories
845.2
1,686.9
812.0
624.7
1,071.9
704.1
Current assets
3,344.1
2,400.7
Net fixed assets
Deferred taxes
6,838.7
534.6
6,132.4
640.5
10,717.4
9,173.6
Short term debt
Accounts payable & other
Current portion
974.9
2,867.2
3,842.1
1,299.5
2,318.9
3,618.4
Long term debt
Pension liabilities & other
1,940.6
1,700.6
1,631.7
1,649.9
Total liabilities
7,483.3
6,900.0
Net worth
Controlling interest
Minority interest
2,967.3
266.8
1,930.9
342.7
Total net worth
3,234.1
2,273.6
10,717.4
9,173.6
Total assets
Liabilities
Liabilities & Net Worth
RASSINI
Rassini is a lead designer and manufacturer of suspension and brake components for the global
automotive industry, mainly focused on original equipment manufacturers (OEMs).
Rassini is the world’s largest producer of suspension components for light commercial vehicles
as well as the largest fully integrated brake rotor producer in the Americas and has eight
manufacturing sites strategically located in North America and Brazil.
Suspension products include Leaf Springs (parabolic and multi-leaf) for light and commercial
trucks, Coil Springs and Bushings. The Brake business manufactures Rotors, Drums, Brake
Assemblies, Clutch Plates and Motor Balancers.
Its solid and diversified customer base includes: General Motors, Ford Motor Company, FCA,
Nissan, Volkswagen, Toyota, MAN, Scania, Maserati and Mercedes Benz among others.
###