2005 Q1 TRW Financial Results Presentation
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2005 Q1 TRW Financial Results Presentation

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2005 Q1 TRW Financial Results Presentation 2005 Q1 TRW Financial Results Presentation Document Transcript

  • First Quarter 2005 Financial Results Conference Call Materials May 5, 2005 Materials Included Pages - Press Release 1-6 - Financial Summaries A1-A5 - Conference Call Presentation P1-P19 © TRW Automotive Holdings Corp. 2005
  • News Release TRW Automotive 12025 Tech Center Drive Livonia, MI 48150 Investor Relations Contact: Patrick R. Stobb (734) 855-3140 Media Contact: Manley Ford (734) 855-2616 TRW Automotive Reports First Quarter 2005 Financial Results; Provides Update on 2005 Outlook LIVONIA, MICHIGAN, May 5, 2005 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported first-quarter 2005 sales of $3.2 billion, an increase of 10% compared to the same period a year ago. Net earnings were $50 million or $0.50 per diluted share, which compares to $2 million or $0.02 per diluted share in the prior year quarter. The Company’s first-quarter 2005 included five additional calendar days as compared to the previous year period. First quarter earnings were above previously provided guidance primarily due to the timing of restructuring actions with associated pre-tax expenses estimated at $22 million that were expected to be incurred in the quarter. These actions and related charges are now expected to be incurred in the second quarter of 2005. First-quarter 2004 included expenses of $47 million, or $0.48 per diluted share, for charges associated with debt retirement and refinancing transactions. Excluding these charges, prior year first quarter earnings were $49 million or $0.50 per diluted share. “Despite continuing tough industry conditions and developments, our first quarter results from operations were in line with our expectations, which can be attributed to our broad diversification and increasing demand for the Company’s strategically focused portfolio of safety systems and products,” said John C. Plant, president and chief executive officer. 1
  • “During the quarter, our cost management and reduction programs allowed us to mitigate the costs associated with a higher level of commodity inflation and other industry and customer related issues. For the remainder of the year, we must execute our operating plans with precision to succeed in this difficult industry environment and be in a position to deliver our operational and financial commitments.” Mr. Plant added, “Although we’ve benefited from industry leading diversity, either by product, customer or geography, further industry related pressures, including substantial production cuts by vehicle manufacturers, will cause us to reassess the Company’s financial outlook for the year.” First Quarter 2005 Compared to the Prior Year Period The Company reported first-quarter 2005 sales of $3.2 billion, an increase of $302 million or 10% compared to prior year sales of $2.9 billion. The increase resulted primarily from sales of new products, foreign currency translation and the effect of five additional calendar days in the current quarter, partially offset by pricing provided to customers and lower vehicle production volumes in North America. Operating income for first-quarter 2005 was $155 million, an increase of $2 million compared to the prior year period of $153 million. The increase resulted primarily from a higher level of sales together with cost savings, partially offset by pricing provided to customers, the continued impact of commodity inflation and other business issues related to customer and supplier solvency. Restructuring expenses in the first quarter of 2005 were $8 million, as compared to $5 million in the prior year quarter. Net interest and securitization expense for the first quarter of 2005 totaled $59 million, which included expenses of $3 million related to the refinancing of the Company’s bank debt facilities completed in January of 2005. In comparison, net interest and securitization expense in the prior year totaled $63 million. The year-to-year reduction in expense can be attributed to the Company’s deleveraging activities, which include debt reduction and other capital structure improvement efforts, offset partially by rising interest rates. 2
  • The prior year quarter included $47 million of debt retirement and refinancing expenses primarily for premiums paid on high-yield notes redeemed with proceeds from the Company’s initial public offering in February 2004 and other expenses related to a January 2004 bank debt refinancing. The Company reported first-quarter 2005 net earnings of $50 million or $0.50 per diluted share, compared to $2 million or $0.02 per diluted share in the prior year period. Prior year results, excluding debt retirement and refinancing expenses of $47 million, were $49 million or $0.50 per diluted share. Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization (“EBITDA”) were $283 million for first-quarter 2005, which compares to prior year EBITDA of $276 million. Excluding the year-to-year impact of restructuring expenses, as previously mentioned, EBITDA improved by $10 million or by 4%. Capital Structure/Liquidity In the first quarter, net cash used in operating activities totaled $51 million, with the outflow driven mainly by seasonal factors. Capital expenditures for the quarter were $83 million compared to $67 million in the prior year quarter. As of April 1, 2005, the Company had $2,930 million of debt and $451 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,479 million. Net debt declined by $370 million compared to the prior year level and increased $107 million from year-end 2004. The increase from year-end was due primarily to seasonal factors. In January 2005, the Company drew on its credit facilities as part of the refinancing transaction it initiated in December of 2004. Under the initial draw, the Company utilized proceeds from its new term loan facilities and a portion of its revolving credit facility to repay applicable outstanding balances under its existing facilities. Prior to quarter-end, the Company utilized available cash to pay-down amounts outstanding under its revolving credit facility. 3
  • On March 11, 2005, the Company repurchased 7.3 million common shares of TRW stock from Northrop Grumman Corporation for a total of $143 million. Also on March 11, 2005, in a separate transaction, the Company raised $143 million of proceeds from the private sale of 7.3 million shares of common stock issued to institutional investors. On March 31, 2005, the Company commenced a process to redeem a portion of its 10- ⅛% Euro-based senior notes due 2013, equivalent to approximately $63 million (USD) of debt. This transaction closed on May 3, 2005, and was funded with a portion of the proceeds raised from the previously discussed sale of common stock. As a result of this transaction, the Company expects to incur pre-tax expenses of approximately $7 million for premiums and associated fees in the second quarter of 2005. 2005 Outlook For full-year 2005, the Company expects revenue in the range $12.6 to $13.0 billion and earnings per diluted share in the range of $1.43 to $1.63. This guidance range has been updated to reflect previously mentioned bond redemption expenses, currency exchange assumptions and increased restructuring costs. Excluding $7 million of pre- tax bond redemption expenses, net earnings are expected to be in the range of $1.50 to $1.70 per diluted share. Earnings guidance now includes restructuring related expenses of approximately $55 million, an increase from the Company’s prior guidance of $35 million. This guidance also includes $33 million of expenses for amortization of intangibles resulting from the February 2003 acquisition of the Company by affiliates of The Blackstone Group L.P. and assumes an effective tax rate in the range of 45% to 50%. Lastly, the Company expects capital expenditures to total approximately 4% of sales for the year. For the second quarter of 2005, the Company expects revenue of approximately $3.3 billion and earnings per diluted share in the range of $0.21 to $0.33. This guidance range includes approximately $7 million of pre-tax bond redemption expenses as discussed previously, which when excluded, results in expected earnings in the range of $0.28 to $0.40. Additionally, second quarter guidance includes pre-tax restructuring costs of approximately $45 million. 4
  • First Quarter 2005 Conference Call The Company will host its first-quarter 2005 conference call at 9:00 a.m. (EDT) today, Thursday, May 5, to discuss financial results and other related matters. To access the conference call, U.S. locations should dial (877) 852-7898, and locations outside the U.S. should dial (706) 634-1095. A replay of the conference call will be available approximately two hours after the conclusion of the call and accessible for approximately one week. To access the replay, U.S. locations should dial (800) 642-1687, and locations outside the U.S. should dial (706) 645-9291. The replay code is 5455606. A live audio web cast and subsequent replay of the conference call will also be available on the Company’s website at www.trwauto.com/results. Reconciliation to GAAP In addition to GAAP results included within this press release, the Company has provided certain information, which is not calculated according to GAAP (“non-GAAP”). Management believes these non-GAAP measures are useful to evaluate operating performance and/or regularly used by security analysts, institutional investors and other interested parties in the evaluation of the Company. Non-GAAP measures are not purported to be a substitute for any GAAP measure and as calculated, may not be comparable to other similarly titled measures of other companies. For a reconciliation of non-GAAP measures appearing in this release to the closest GAAP measure, please see the financial schedules that accompany this release. About TRW With 2004 sales of $12.0 billion, TRW Automotive ranks among the world's top 10 automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 60,000 people in 24 countries. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. 5
  • All references to quot;TRW Automotivequot;, “TRW” or the quot;Companyquot; in this press release refer to TRW Automotive Holdings Corp. and its subsidiaries, unless otherwise indicated. TRW Automotive news is available on the internet at www.trwauto.com. Forward-Looking Statements This release contains statements that are not statements of historical fact, but instead are forward-looking statements. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward- looking statements made in this release. Such risks, uncertainties and other important factors which could cause our actual results to differ materially from those contained in our forward-looking statements are set forth in our Report on Form 10-K for the fiscal year ended December 31, 2004 (the “10K”), and include: possible production cuts by our customers; escalating pricing pressures from our customers; severe inflationary pressures impacting the market for ferrous metals and other commodities; non- performance by, or insolvency of, our suppliers and customers; our substantial leverage; interest rate risk arising from our variable rate indebtedness; the highly competitive automotive parts industry and its cyclicality; product liability and warranty and recall claims; our dependence on our largest customers; loss of market share by domestic vehicle manufacturers; limitations on flexibility in operating our business contained in our debt agreements; fluctuations in foreign exchange rates; the possibility that our owners' interests will conflict with ours; work stoppages or other labor issues and other risks and uncertainties set forth under quot;Risk Factorsquot; in the 10-K and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements. ### 6
  • TRW Automotive Holdings Corp. Index of Condensed Consolidated Financial Information Page Consolidated Statements of Operations (unaudited) for the three months ended April 1, 2005 and March 26, 2004 .............................................................A2 Consolidated Balance Sheets as of April 1, 2005 (unaudited) and December 31, 2004.......................................................................A3 Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended April 1, 2005 and March 26, 2004 .............................................................A4 Reconciliation of GAAP Net Earnings to EBITDA (unaudited) for the three months ended April 1, 2005 and March 26, 2004 .............................................................A5 The accompanying unaudited consolidated financial information and reconciliation of GAAP net earnings to EBITDA should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2004 as filed with the United States Securities and Exchange Commission on February 23, 2005. A1
  • TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Three Months Ended April 1, 2005 March 26, 2004 (In millions, except per share amounts) Sales ............................................................................................. $ 3,225 $ 2,923 Cost of sales ................................................................................. 2,861 2,599 Gross profit............................................................................ 364 324 Administrative and selling expenses............................................ 136 124 Research and development expenses ........................................... 54 37 Amortization of intangible assets................................................. 8 9 Restructuring charges and asset impairments .............................. 8 5 Other (income) expense — net .................................................... 3 (4) Operating income .................................................................. 155 153 Interest expense — net................................................................. 58 62 Loss on retirement of debt ........................................................... — 47 Accounts receivable securitization costs...................................... 1 1 Earnings before income taxes .............................................. 96 43 Income tax expense...................................................................... 46 41 Net earnings.......................................................................... $ 50 $ 2 Basic earnings per share: Earnings per share...................................................................... $ 0.51 $ 0.02 Weighted average shares............................................................ 99.0 94.3 Diluted earnings per share: Earnings per share...................................................................... $ 0.50 $ 0.02 Weighted average shares............................................................ 101.0 97.8 A2
  • TRW Automotive Holdings Corp. Consolidated Balance Sheets As of April 1, 2005 December 31, 2004 (Dollars in millions) (Unaudited) Assets Current assets: Cash and cash equivalents ........................................................................ $ 435 $ 790 Marketable securities................................................................................ 16 19 Accounts receivable — net....................................................................... 1,904 1,813 Inventories ................................................................................................ 667 684 Prepaid expenses ...................................................................................... 57 34 Deferred income taxes.............................................................................. 170 176 Total current assets ..................................................................................... 3,249 3,516 Property, plant and equipment — net......................................................... 2,530 2,635 Goodwill..................................................................................................... 2,357 2,357 Intangible assets — net............................................................................... 758 765 Prepaid pension cost ................................................................................... 201 190 Deferred income taxes................................................................................ 98 91 Other assets................................................................................................. 554 560 Total assets.............................................................................................. $ 9,747 $ 10,114 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt......................................................................................... $ 38 $ 40 Current portion of long-term debt ............................................................ 17 19 Trade accounts payable ............................................................................ 1,794 1,887 Accrued compensation ............................................................................. 267 309 Income taxes payable ............................................................................... 240 233 Other current liabilities............................................................................. 1,011 992 Total current liabilities ............................................................................... 3,367 3,480 Long-term debt ........................................................................................... 2,875 3,122 Post-retirement benefits other than pensions.............................................. 953 959 Pension benefits.......................................................................................... 813 843 Deferred income taxes................................................................................ 267 268 Long-term liabilities ................................................................................... 275 272 Total liabilities............................................................................................ 8,550 8,944 Minority interests ....................................................................................... 60 65 Commitments and contingencies Stockholders’ equity: Capital stock ............................................................................................. 1 1 Treasury stock .......................................................................................... — — Paid-in-capital .......................................................................................... 1,131 1,131 Accumulated deficit.................................................................................. (22) (72) Accumulated other comprehensive earnings............................................ 27 45 Total stockholders’ equity .......................................................................... 1,137 1,105 Total liabilities, minority interests, and stockholders’ equity ................. $ 9,747 $ 10,114 A3
  • TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended April 1, March 26, 2005 2004 (Dollars in millions) Operating Activities Net earnings................................................................................................................... $ 50 $ 2 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization .................................................................................. 128 123 Other — net .............................................................................................................. (20) 32 Changes in assets and liabilities, net of effects of businesses acquired or divested ..... (209) (366) Net cash used in operating activities ................................................................... (51) (209) Investing Activities Capital expenditures ...................................................................................................... (83) (67) Net proceeds from asset sales and divestitures.............................................................. — 107 Other — net ................................................................................................................... — (2) Net cash (used in) provided by investing activities ............................................. (83) 38 Financing Activities Decrease in short-term debt........................................................................................... (1) (10) Proceeds from issuance of long-term debt .................................................................... 1,293 1,268 Redemption of long-term debt ...................................................................................... (1,506) (1,769) Debt issue costs ............................................................................................................. (4) (6) Issuance of capital stock, net of fees ............................................................................. 143 635 Repurchase of capital stock........................................................................................... (143) (319) Net cash used in financing activities ................................................................... (218) (201) Effect of exchange rate changes on cash....................................................................... (3) (7) Decrease in cash and cash equivalents .......................................................................... (355) (379) Cash and cash equivalents at beginning of period......................................................... 790 828 Cash and cash equivalents at end of period................................................................... $ 435 $ 449 A4
  • TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to EBITDA (Unaudited) The reconciliation schedule below should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2004, which contains summary historical data. The EBITDA measure calculated in the following schedule is a measure used by management to evaluate operating performance. Management believes that EBITDA is useful to investors because it is frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance, or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies. Three Months Ended April 1, 2005 March 26, 2004 (Dollars in millions) GAAP net earnings............................................................... $ 50 $ 2 Income tax expense.......................................................... 46 41 Interest expense, net of interest income ........................... 58 62 Accounts receivable securitization costs.......................... 1 1 Loss on retirement of debt ............................................... — 47 Depreciation and amortization......................................... 128 123 EBITDA ................................................................................ $ 283 $ 276 A5
  • TRW Automotive Holdings Corp. 2005 First Quarter Financial Results Conference Call May 5, 2005 “The Global Leader in Automotive Safety Systems”
  • Introduction Patrick Stobb Director, Investor Relations First Quarter Summary John C. Plant President and Chief Executive Officer P2 © TRW Automotive Holdings Corp.2005
  • Safe Harbor Statement This material contains statements that are not statements of historical fact, but instead are forward-looking statements. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward-looking statements made in this release. Such risks, uncertainties and other important factors which could cause our actual results to differ materially from those contained in our forward-looking statements are set forth in our Report on Form 10-K for the fiscal year ended December 31, 2004 (the “10-K”), and include: possible production cuts from our customers; escalating pricing pressures from our customers; severe inflationary pressures impacting the market for ferrous metals and other commodities; our substantial leverage; non-performance by, or insolvency of, our suppliers and customers; interest rate risk arising from our variable rate indebtedness; the highly competitive automotive parts industry and its cyclicality; product liability and warranty and recall claims; our dependence on our largest customers; loss of market share by domestic vehicle manufacturers; limitations on flexibility in operating our business contained in our debt agreements; fluctuations in foreign exchange rates; the possibility that our owners' interests will conflict with ours; work stoppages or other labor issues and other risks and uncertainties set forth under quot;Risk Factorsquot; in the 10-K and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements. P3 © TRW Automotive Holdings Corp.2005
  • First Quarter Summary Comments • Solid set of financial results despite unrelenting industry conditions • Industry environment more challenging than anticipated at beginning of the year, resulting from: – Widened impact of commodity inflation – Weakened vehicle production and mix – Increased supplier and customer solvency issues • Difficult industry cycle expected to continue through 2005 • TRW’s diversification by product, geographic presence and customer anchored first quarter results P4 © TRW Automotive Holdings Corp.2005
  • COMBINATION OF ATTRIBUTES DRIVES SUCCESS Strategic Priorities Safety People • Include Best Quality, • Primary product • 60,000 employees Lowest Cost, Global focus at 80% of located in every major Reach and Innovative total sales market Technology • Leader in active • Define nature of TRW’s • Adherence to priorities and passive safety competitiveness essential to long term systems • Determine the future of competitiveness • Innovative product the Company and its • Integrated into daily solutions help ability to compete business activities differentiate successfully over the customer vehicles long-term • Guide product research, manufacturing • Drives global R&D • Repeatedly exhibit investments and growth efforts remarkable resolve initiatives under difficult industry • Fundamental to operating conditions • Result = positioned with future growth leading diversification and globally competitive operating structure “COMBINATION UNIQUE TO TRW; POSITIONS COMPANY AS LEADING SUPPLIER TO THE INDUSTRY” P5 © TRW Automotive Holdings Corp.2005
  • First Quarter Financial Highlights • Sales of $3.2 billion dollars, up 10% over the prior year primarily due to: – New business growth from safety products – Foreign currency exchange – Calendar days – Industry production – Customer pricing • Net earnings of $50 million, or $0.50 per diluted share • Results above previous guidance primarily due to timing of estimated restructuring expenses of $22 million; now expected to be incurred in the second quarter • Net debt of $2,479 million at quarter end, down $370 million from prior year and up $107 million from year-end 2004(1) (1) Net debt is equal to total indebtedness (including receivables facility) minus cash, cash equivalents and marketable securities. For net debt reconciliation to closest GAAP equivalent, please refer to the reconciliation on slide P19 of this presentation. P6 © TRW Automotive Holdings Corp.2005
  • First Quarter Business Developments • Strong mix of business wins in the quarter: – Net outcome of wins in line with business plan objectives – Wins primarily focused in tire pressure monitoring, electric powered steering, airbags, stability control and safety electronics – Heightened interest in the convergence of active and passive safety functionality • Investment in technology and focus on innovation are fundamental to success in highly competitive market: – Presently allocate over a half billion dollars annually to support research, development and engineering efforts – Expansive global footprint lends access to low cost resources – Safety product breadth provides economies of scale • Combination of market trends and strength of safety-focused portfolio supports growth objectives ≈ 4% top line CAGR P7 © TRW Automotive Holdings Corp.2005
  • First Quarter Business Developments (Cont.) • Operations pushed forward with a high level of projects, work shops and other actions to reduce manufacturing costs • Cost rationalization programs continue: – Announced plant closures at Brighton, Michigan and Burgos, Spain manufacturing facilities – Actions necessary to rationalize global manufacturing capacity to meet demands of the customer base – Restructuring expense increased compared to previous guidance as a result of lower industry volumes and other developments (M.G. Rover) • Commodity inflation update: – Sizable negative impact to bottom line in the first quarter – Deteriorating financial condition of supply-base at an elevated level – Expect 2005 incremental cost pressures in excess of 2004 level – Maintain cautious view on our ability to continually offset inflationary pressures in 2005 P8 © TRW Automotive Holdings Corp.2005
  • 2005 Operating Environment • Challenges have mounted for the (1) 2005 Production Assumptions industry (units in millions) • Many prevailing issues represent major cost pressures to the 15.9 automotive industry, including: ‘03 North 15.8 ‘04 – Commodity pricing America 15.8 ‘05 – Vehicle production and mix – Supplier solvency 11.9 ‘03 North – Health care expenses America 11.4 ‘04 – Rising interest rates Big 3 11.0 ‘05 • Production volumes in North America and Europe expected to 19.2 ‘03 be flat year-to-year Europe 20.2 ‘04 • Anticipate Big 3 production will be 20.2 ‘05 down 4% year-to-year • Production cuts from European customers increasing (1) Source: Primarily CSM Worldwide and internal company estimates. P9 © TRW Automotive Holdings Corp.2005
  • 2005 Full Year Outlook • Sales in the range of $12.6 to $13.0 billion • Earnings per diluted share of $1.43 to $1.63(1) – Includes full year restructuring costs $55 million, an increase over prior guidance of $35 million – Includes bond redemption expenses of $7 million • Earnings excluding bond redemption expense in the range of $1.50 to $1.70 per diluted share(1) • Effective tax rate in the range of 45% to 50% • Further negative industry pressures will be cause to reassess outlook for the year (1) Per share amounts based on weighted average diluted shares outstanding of approximately 101.3 million diluted shares. P10 © TRW Automotive Holdings Corp.2005
  • Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer P11 © TRW Automotive Holdings Corp.2005
  • Financial Overview • Detailed financial results – No longer comparing to pro forma results now that we are two years clear of the Blackstone acquisition • Capital structure – Net debt – Cash flow and liquidity – Capital transactions • Q2 2005 outlook • Q&A P12 © TRW Automotive Holdings Corp.2005
  • First Quarter 2005 Results (dollars in millions) Debt Retirement & Q1 2004 Refinancing Less Q1 2005 Q1 2004 Adjustments Adjustments Sales $ 3,225 $ 2,923 - $ 2,923 Operating Income 155 153 - 153 (2) Interest Expense, Net 59 63 - 63 (1) Loss on Retirement of Debt - 47 (47) - Income Taxes 46 41 - 41 Net Earnings $ 50 $ 2 $ 49 Earnings Per Diluted Share $ 0.50 $ 0.02 $ 0.50 Effective Tax Rate 48% 95% 46% Diluted Shares 101.0 97.8 97.8 (1) Represents $47 million of debt retirement and refinancing expenses primarily for premiums paid on high yield notes redeemed with proceeds from the Company’s initial public offering in February 2004 and other expenses related to a January 2004 bank debt refinancing. (2) Both quarters include accounts receivable securitization costs of $1 million. P13 © TRW Automotive Holdings Corp.2005
  • First Quarter EBITDA Summary (dollars in millions) Q1 2005 Q1 2004 Net Earnings $ 50 $ 2 Income Tax Expense 46 41 Interest Expense, Net(1) 59 63 Loss on Retirement of Debt - 47 Operating Income $ 155 $ 153 Depreciation and Amortization 128 123 EBITDA(2) $ 283 $ 276 (1) Both quarters include accounts receivable securitization costs of $1 million. (2) Please refer to page A5 of the press release schedules that accompany this presentation for management’s rationalization in using this metric. P14 © TRW Automotive Holdings Corp.2005
  • Capital Structure (dollars in millions) (1) Net Debt Summary $3,437 $3,295 $2,964 $2,849 $2,785 $2,709 $3,089 $2,923 $2,582 $2,456 $2,479 $2,368 $2,372 $2,304 Feb 28, Sep 26, Dec 31, Mar 26, Jun 25, Sep 24, Dec 31, Apr 1, 2003 2003 2003 2004 2004 2004 2004 2005 Net Debt Operating Co. PIK Seller Note (1) Net debt is equal to total indebtedness (including receivables facility) minus cash, cash equivalents and marketable securities. For net debt reconciliation to closest GAAP equivalent, please refer to the reconciliation on slide P19 of this presentation. P15 © TRW Automotive Holdings Corp.2005
  • Capital Structure • Q1 net cash used in operations of $51 million; outflow primarily due to seasonal factors • First quarter capital expenditures amounted to $83 million, which compares to $67 million in the prior year • In excess of $1 billion in available liquidity at quarter-end • Capital transactions include: – Jan 10th Drew on new credit facilities to complete refinancing transaction initiated in December 2004 – Mar 11th Purchased 7.3 million TRW shares from Northrop Grumman for $143 million – Mar 11th Issued 7.3 million TRW shares to institutional investors for $143 million – Mar 31st Commenced process to redeem a portion of 10-⅛% Euro senior notes, which settled on May 3rd (funded with proceeds from March 11th offering) P16 © TRW Automotive Holdings Corp.2005
  • Second Quarter 2005 Outlook • Difficult industry conditions expected to continue through the remainder of the year • Expect sales of $3.3 billion • Earnings per diluted share in the range of $0.21 to $0.33(1) – Includes $7 million of bond redemption expenses • Earnings excluding bond redemption expenses in the range of $0.28 to $0.40 per diluted share(1) • Earnings range also includes approximately $45 million of restructuring costs for various initiatives – Restructuring expenses represent a major share of the Company’s planned restructuring for the year – Timing of expenses not “set in stone” for the quarter (1) Per share amounts based on weighted average diluted shares outstanding of approximately 101.3 million diluted shares. P17 © TRW Automotive Holdings Corp.2005
  • P18 © TRW Automotive Holdings Corp.2005
  • Net Debt Reconciliation (dollars in millions) Period-End Balances 3/1/03 9/26/03 12/31/03 3/26/04 6/25/04 9/24/04 12/31/04 4/1/05 Cash $ 449 $ 399 $ 828 $ 449 $ 519 $ 438 $ 790 $ 435 Marketable securities 26 16 16 16 15 16 19 16 Total 475 415 844 465 534 454 809 451 Short term debt 168 54 76 66 65 27 40 38 Long term debt: Term loan facilities 1,510 1,469 1,480 1,263 1,211 1,209 1,512 1,298 Senior notes 1,142 1,155 1,178 1,049 1,017 1,044 1,063 1,042 Senior subordinated notes 435 444 458 294 294 295 306 300 Lucas Varity senior notes 167 175 189 190 192 189 202 198 Other borrowings 142 41 45 59 59 58 58 54 Total Short & Long Term Debt 3,564 3,338 3,426 2,921 2,838 2,822 3,181 2,930 Net debt operating company $ 3,089 $ 2,923 $ 2,582 $ 2,456 $ 2,304 $ 2,368 $ 2,372 $ 2,479 Seller note 348 372 382 393 405 417 - - Net debt TRW Holdings $ 3,437 $ 3,295 $ 2,964 $ 2,849 $ 2,709 $ 2,785 $ 2,372 $ 2,479 P19 © TRW Automotive Holdings Corp.2005