2006 Q1 TRW Auto Earnings Presentation
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2006 Q1 TRW Auto Earnings Presentation 2006 Q1 TRW Auto Earnings Presentation Document Transcript

  • TRW Automotive Holdings Corp. 2006 First Quarter Financial Results Conference Call Materials May 3, 2006 Materials Included Pages - Press Release 1-6 February 21, 2006 - Financial Summaries A1-A6 - Conference Call Presentation P1-P19 © TRW Automotive Holdings Corp. 2006
  • News Release TRW Automotive 12001 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 2006 Financial Results; Provides Update on 2006 Outlook LIVONIA, MICHIGAN, May 3, 2006 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported first-quarter 2006 financial results with sales of $3.4 billion, an increase of 5.3 percent compared to the same period a year ago. Net earnings for the quarter were $47 million, or $0.46 per diluted share, which compares to net earnings of $50 million or $0.50 per diluted share in the prior year quarter. As previously announced, first-quarter 2006 earnings included expenses of $57 million for loss on retirement of debt associated with the tender for the outstanding GBP 94.6 million 10.875% bonds of the Company’s Lucas Industries Limited subsidiary. First quarter net earnings excluding these expenses were $104 million, or $1.01 per diluted share, which were above previously provided guidance primarily due to a higher level of revenues, a more favorable operational performance and a lower level of tax expense than previously anticipated. “We posted a strong start to the year, highlighted by solid first quarter financial results, steady progress on our operating initiatives and new business awards at a level that supports our future growth expectations,” said John Plant, president and chief executive officer. “Although industry conditions remain challenging, we have been successful at growing the business and executing our strategic restructuring initiatives at an accelerated pace.” 1
  • Mr. Plant added, “Looking to the remainder of the year, our ability to achieve our objectives will depend heavily on the execution of our operating strategies, particularly in the second half of the year, where we anticipate fundamentals will worsen due to heightened commodity inflation and softer industry production schedules.” First Quarter 2006 The Company reported first-quarter 2006 sales of $3.4 billion, an increase of $171 million or 5.3 percent compared to prior year sales of $3.2 billion. The increase resulted primarily from the inclusion of sales from the acquisition of Dalphi Metal Espana, S.A. (“Dalphimetal”), which was acquired in October 2005, together with sales growth from safety products and the net benefit of higher vehicle production, primarily in Europe. These positives were partially offset by the negative effect of foreign currency translation and price reductions provided to customers. Operating income for first-quarter 2006 was $227 million, which represents an increase of $75 million over the prior year total of $152 million. The positive variance resulted primarily from the increased level of sales and from a beneficial product mix that favored the Company’s Occupant Safety business. In addition, savings generated from cost reduction, productivity and restructuring programs and the non-recurrence of certain customer solvency and currency related expenses also contributed to the year- to-year increase in operating income. These items were in part offset by price reductions provided to customers and the negative net impact of commodity inflation. Restructuring expenses in both the first quarter of 2006 and 2005 were $8 million. Net interest and securitization expense for first-quarter 2006 totaled $61 million. In comparison, the prior year totaled $59 million, which included expenses of $3 million related to a refinancing transaction. The year-to-year increase in expense can be attributed to the impact of rising interest rates on the Company’s floating rate debt and incremental bank debt assumed at the time of the Dalphimetal acquisition that more than offset interest savings related to past debt reduction and capital structure improvement efforts and the non-recurrence of debt refinancing expenses. As mentioned previously, the Company incurred charges of $57 million related to the redemption of the 10.875% Lucas bonds during the 2006 quarter. 2
  • Tax expense in the 2006 quarter was $63 million, resulting in an effective tax rate of 57 percent. The effective tax rate excluding the previously mentioned $57 million loss on retirement of debt was 38 percent, which is below the expected annual rate as a result of the Company’s quarterly geographical earnings profile. Net earnings in the first quarter of 2006 were $47 million, or $0.46 per diluted share, which compares to $50 million or $0.50 per share in the 2005 period. Net earnings excluding the $57 million for loss on retirement of debt were $104 million or $1.01 per diluted share. Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization (“EBITDA”) were $360 million in the first-quarter, which is a 27 percent increase compared to prior year EBITDA of $283 million. The year-to-year increase can be attributed to the higher level of operating income in the 2006 quarter. Capital Structure/Liquidity First-quarter 2006 net cash provided by operating activities was $18 million, which compares to cash used of $51 million in the prior year quarter. Capital expenditures for the quarter were $83 million, which is equal to the level reported in the 2005 period. On February 2, 2006, the Company’s wholly owned subsidiary, Lucas Industries Limited, completed the tender for its outstanding GBP 94.6 million 10.875% bonds. The transaction was funded with cash on hand. As mentioned previously, the Company incurred a $57 million charge for loss on retirement, which reflects the difference between the tender amount and the book value of debt related to the bonds at the time of the transaction. As of March 31, 2006, the Company had $3,046 million of debt and $390 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,656 million. Net debt increased by $96 million compared to year-end 2005 primarily due to the $57 million premium associated with the bond tender transaction and the impact of net cash used in operating and investing activities, which historically is a net outflow in the first quarter due to seasonal factors. 3
  • 2006 Outlook For full-year 2006, the Company continues to expect revenue in the range of $12.8 to $13.2 billion. However, guidance related to net earnings has been revised upward from previous levels as a result of the strong first quarter results announced today. Accordingly, the Company now expects earnings per diluted share in the range of $1.30 to $1.60, which includes the $57 million charge related to the bond tender transaction. Earnings per diluted share excluding this charge are expected to be in the range of $1.85 to $2.15. The Company expects pre-tax restructuring expenses of $50 million and an effective tax rate of approximately 45 percent, which excludes expenses related to the bond tender transaction. Lastly, the Company’s estimate for capital expenditures remains at approximately 4 percent of sales for the year. For the second quarter of 2006, the Company expects revenue of approximately $3.4 billion and operating income to be slightly below the level achieved in the comparable prior year period. First Quarter 2006 Conference Call The Company will host its first-quarter 2006 conference call at 9:00 a.m. (EDT) today, Wednesday, May 3rd, 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 8234357. 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. 4
  • 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 to the closest GAAP measure and for share amounts used to derive earnings per share, please see the financial schedules that accompany this release. About TRW With 2005 sales of $12.6 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 63,000 people in 25 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. 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 within the meaning of the Private Securities Litigation Reform Act of 1995. 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, 2005 (the “10-K”), and include: work stoppages or other labor 5
  • issues at the facilities of our customers or suppliers; possible production cuts or restructuring by our customers; loss of market share by domestic vehicle manufacturers; efforts by our customers to consolidate their supply base; severe inflationary pressures impacting the market for commodities; non-performance by, or insolvency of, our suppliers and customers, which may be exacerbated by recent bankruptcies; escalating pricing pressures from our customers; our dependence on our largest customers; interest rate risk arising from our variable rate indebtedness; fluctuations in foreign exchange rates; our substantial leverage; product liability and warranty and recall claims; limitations on flexibility in operating our business contained in our debt agreements; the possibility that our owners' interests will conflict with ours 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 March 31, 2006 and April 1, 2005 ......................................................... A2 Condensed Consolidated Balance Sheets as of March 31, 2006 (unaudited) and December 31, 2005........................................................................... A3 Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2006 and April 1, 2005 ............................................................ A4 Reconciliation of GAAP Net Earnings to EBITDA (unaudited) for the three months ended March 31, 2006 and April 1, 2005 ............................................................ A5 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the three months ended March 31, 2006 ......................................................................................... A6 The accompanying unaudited condensed consolidated financial information and reconciliation schedules should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005, as filed with the United States Securities and Exchange Commission on February 23, 2006. A1
  • TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Three Months Ended (In millions, except per share amounts) March 31, 2006 April 1, 2005 Sales ....................................................................................................... $ 3,396 $ 3,225 Cost of sales ........................................................................................... 3,039 2,915 Gross profit ....................................................................................... 357 310 Administrative and selling expenses...................................................... 129 136 Amortization of intangible assets........................................................... 9 8 Restructuring charges and asset impairments ........................................ 8 8 Other (income) expense — net .............................................................. (16) 6 Operating income .............................................................................. 227 152 Interest expense — net........................................................................... 60 58 Loss on retirement of debt ..................................................................... 57 – Accounts receivable securitization costs................................................ 1 1 Equity in earnings of affiliates, net of tax .............................................. (4) (5) Minority interest, net of tax ................................................................... 3 2 Earnings before income taxes ........................................................... 110 96 Income tax expense................................................................................ 63 46 Net earnings ...................................................................................... $ 47 $ 50 Basic earnings per share: Earnings per share................................................................................ $ 0.47 $ 0.51 Weighted average shares...................................................................... 99.5 99.0 Diluted earnings per share: Earnings per share................................................................................ $ 0.46 $ 0.50 Weighted average shares...................................................................... 103.0 101.0 A2
  • TRW Automotive Holdings Corp. Condensed Consolidated Balance Sheets As of (Dollars in millions) March 31, December 31, 2006 2005 (Unaudited) Assets Current assets: Cash and cash equivalents ................................................................ $ 373 $ 659 Marketable securities........................................................................ 17 17 Accounts receivable — net............................................................... 2,203 1,948 Inventories ........................................................................................ 709 702 Prepaid expenses and other current assets........................................ 278 273 Total current assets ................................................................................ 3,580 3,599 Property, plant and equipment — net .................................................... 2,532 2,538 Goodwill ................................................................................................ 2,297 2,293 Intangible assets — net.......................................................................... 761 769 Prepaid pension cost .............................................................................. 235 222 Other assets............................................................................................ 834 809 Total assets ........................................................................................ $ 10,239 $ 10,230 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt ................................................................................ $ 98 $ 98 Current portion of long-term debt.................................................... 49 37 Trade accounts payable.................................................................... 1,952 1,865 Accrued compensation..................................................................... 254 280 Other current liabilities .................................................................... 1,358 1,310 Total current liabilities........................................................................... 3,711 3,590 Long-term debt ...................................................................................... 2,899 3,101 Post-retirement benefits other than pensions ......................................... 909 917 Pension benefits ..................................................................................... 795 795 Other long-term liabilities...................................................................... 530 513 Total liabilities .................................................................................. 8,844 8,916 Minority interests................................................................................... 107 106 Commitments and contingencies Stockholders’ equity: Capital stock..................................................................................... 1 1 Treasury stock.................................................................................. — — Paid-in-capital .................................................................................. 1,151 1,142 Retained earnings............................................................................. 179 132 Accumulated other comprehensive losses ...................................... (43) (67) Total stockholders’ equity ..................................................................... 1,288 1,208 Total liabilities, minority interests, and stockholders’ equity ........... $ 10,239 $ 10,230 A3
  • TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended (Dollars in millions) March 31, 2006 April 1, 2005 Operating Activities Net earnings.................................................................................................... $ 47 $ 50 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization ................................................................... 132 128 Other — net ............................................................................................... 11 (20) Changes in assets and liabilities, net of effects of businesses acquired or divested ................................................................................................... (172) (209) Net cash provided by (used in) operating activities.............................. 18 (51) Investing Activities Capital expenditures ....................................................................................... (83) (83) Net proceeds from asset sales and divestitures............................................... 8 — Other — net .................................................................................................... (1) — Net cash used in investing activities..................................................... (76) (83) Financing Activities Change in short-term debt .............................................................................. (3) (1) Proceeds from issuance of long-term debt ..................................................... 3 1,293 Redemption of long-term debt ....................................................................... (250) (1,506) Debt issue costs .............................................................................................. — (4) Issuance of capital stock, net of fees .............................................................. — 143 Repurchase of capital stock............................................................................ — (143) Proceeds from exercise of stock options ........................................................ 7 — Net cash used in financing activities .................................................... (243) (218) Effect of exchange rate changes on cash........................................................ 15 (3) Decrease in cash and cash equivalents ........................................................... (286) (355) Cash and cash equivalents at beginning of period.......................................... 659 790 Cash and cash equivalents at end of period.................................................... $ 373 $ 435 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, 2005, 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 a useful measurement 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 (Dollars in millions) March 31, 2006 April 1, 2005 GAAP net earnings ................................................................ $ 47 $ 50 Income tax expense ......................................................... 63 46 Interest expense — net .................................................... 60 58 Loss on retirement of debt ............................................... 57 — Accounts receivable securitization costs ......................... 1 1 Depreciation and amortization......................................... 132 128 EBITDA ................................................................................. $ 360 $ 283 A5
  • TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to Adjusted Earnings (Unaudited) In conjunction with the Company’s February 2, 2006 repurchaseof its subsidiary Lucas Industries Limited’s £94.6 million 10 7/8% bonds due 2020 for £137 million, or approximately $243 million, the Company recorded a loss on retirement of debt of £32 million, or approximately $57 million. Such loss on retirement of debt carries zero tax benefit due to the Company’s tax loss position in the respective jurisdiction. The following adjustment excludes the loss on retirement of debt to show the impact as if this transaction had not occurred. Three Months Three Months Ended Ended March 31, 2006 March 31, 2006 Actual Adjustments Adjusted (In millions, except per share amounts) Sales......................................................................... $ 3,396 $ — $ 3,396 Cost of sales............................................................. 3,039 — 3,039 Gross profit .......................................................... 357 — 357 Administrative and selling expenses........................ 129 — 129 Amortization of intangible assets ............................ 9 — 9 Restructuring charges and asset impairments .......... 8 — 8 Other income — net ................................................ (16) — (16) Operating income ................................................ 227 — 227 Interest expense, net ................................................ 60 — 60 (a) Loss on retirement of debt ....................................... 57 (57) — Account receivable securitization costs ................... 1 — 1 Equity in earnings of affiliates, net of tax................ (4) — (4) Minority interest, net of tax ..................................... 3 — 3 Earnings before income taxes .............................. 110 57 167 Income tax expense ................................................ 63 — 63 Net earnings ........................................................ $ 47 $ 57 $ 104 Effective tax rate...................................................... 57% 38% Basic earnings per share: Earnings per share ................................................. $ 0.47 $ 1.05 Weighted average shares ....................................... 99.5 99.5 Diluted earnings per share: Earnings per share ................................................. $ 0.46 $ 1.01 Weighted average shares ....................................... 103.0 103.0 (a) Reflects the elimination of the loss on retirement of debt. A6
  • TRW Automotive Holdings Corp. 2006 First Quarter Financial Results Conference Call Presentation May 3, 2006
  • Introduction Patrick Stobb Director, Investor Relations Business Summary John C. Plant President and Chief Executive Officer P2 © TRW Automotive Holdings Corp. 2006
  • Safe Harbor Statement This material contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward-looking statements made in this presentation. 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, 2005 (the “10-K”), and include: work stoppages or other labor issues at the facilities of our customers or suppliers; possible production cuts or restructuring by our customers; loss of market share by domestic vehicle manufacturers; efforts by our customers to consolidate their supply base; severe inflationary pressures impacting the market for commodities; non-performance by, or insolvency of, our suppliers and customers, which may be exacerbated by recent bankruptcies; escalating pricing pressures from our customers; our dependence on our largest customers; interest rate risk arising from our variable rate indebtedness; fluctuations in foreign exchange rates; our substantial leverage; product liability and warranty and recall claims; limitations on flexibility in operating our business contained in our debt agreements; the possibility that our owners' interests will conflict with ours 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. 2006
  • Summary Comments • Company posted a strong start to the year, highlighted by: – Solid financial results that exceeded previously provided guidance – Steady progress on operating initiatives and the completion of restructuring actions • Operating environment remains challenging: – Significant cost pressures continue to weigh heavily on results – North America in the midst of a prolonged and very difficult industry environment, led by market share losses among Big 3 and commodity inflation – Sustained pressures reshaping North American vehicle and component industry • TRW making excellent progress despite challenges, growing competitively and paving the way for long term profitability P4 © TRW Automotive Holdings Corp. 2006
  • First Quarter Financial Highlights • Reported sales of $3.4 billion dollars, an increase of 5.3% from the prior year period: + Safety product volumes – + Dalphimetal acquisition – - – Currency translation - – Customer pricing • GAAP Net earnings of $47 million, or $0.46 per diluted share, which includes: – $57 million loss on retirement of debt from Lucas bond tender transaction • Net earnings excluding the one-time item were $104 million or $1.01 per diluted share • Net debt at quarter-end increased to $2.7 billion, reflecting the negative impact of the Lucas bond tender transaction and seasonal factors on quarterly cash flow Note: Per share amounts based on weighted average diluted shares outstanding of approximately 103 million shares. P5 © TRW Automotive Holdings Corp. 2006
  • Business Developments • Steady pace of new business awards in the quarter: – Wins for the quarter in-line with business planning objectives, supports long term growth expectations – Distribution of awards strengthens diversification • Restructuring initiatives proceeding as planned: – Announced 12 manufacturing facility closures over the past 15 months – 5 plants closed to date, 6 closures expected in 2006, remaining closure expected in 2007 – Q1 announcements include Rushford, Minnesota and Kani, Japan plants – Number of initiatives aimed at making facilities more competitive • Dalphimetal integration on schedule: – Provides good value to the Company, including revenue with certain European customers that were underrepresented in the portfolio – Addresses growing capacity concerns in Europe P6 © TRW Automotive Holdings Corp. 2006
  • Business Developments • Structural issues in North America continue to raise the level of uncertainty, including: – Restructuring at GM and Ford – Delphi’s court proceedings and strike speculation – Dana’s quick descent into bankruptcy • Commodity sourcing environment – Aluminum: – Inflationary pressures have worsened mainly due to aluminum pricing – Aluminum pricing has increased 20% since the start of the year – Due to timing of contracts and forward inventory levels, pricing will begin to impact cost base at the tail end of the second quarter • TRW maintaining a steady focus on areas within its control – developing long term operating strategies and executing them decisively… P7 © TRW Automotive Holdings Corp. 2006
  • 2006 Operating Environment (1) • Adjusted North American 2006 Production Assumptions estimate downward to 15.8 (units in millions) million units • Anticipate share losses at both 15.9 ’03 Ford and GM in North America for 15.8 North ‘04 each of the remaining quarters 15.8 America ‘05 15.8 • Momentum of sales growth ‘06 demonstrated in first quarter will slow over the remaining nine 11.9 ’03 North months 11.4 ‘04 America 10.9 ‘05 • Commodity inflation still a Big 3 10.7 ‘06 challenge, particularly in the second half of the year 19.2 ’03 • Strong start to the year has led to 20.2 ‘04 Europe upward revision in full year 19.9 ‘05 guidance 20.0 ‘06 ‘06 (1) Source: Primarily CSM Worldwide and internal company estimates. P8 © TRW Automotive Holdings Corp. 2006
  • 2006 Full Year Outlook • Expect sales in the range of $12.8 to $13.2 billion • GAAP Net earnings per diluted share of $1.30 to $1.60(1) – Includes $57 million for loss on retirement of debt related to Lucas bond tender transaction • Net earnings excluding loss on retirement of debt in the range of $1.85 to $2.15 per diluted share(1) • Includes restructuring expenses of $50 million • Capital spending expected to run at approximately 4% of sales (1) Per share amounts based on weighted average diluted shares outstanding of approximately 103.5 million shares. P9 © TRW Automotive Holdings Corp. 2006
  • Business Structure Providing Value • Solid financial results and improved outlook are very much a part of TRW’s business structure, the value characteristics of which are clear: Global leader in safety Industry leading diversification Technology driven Aggressive cost reduction Experienced and dedicated global employee base • Long term profit focus serving us well – guides the decisions we make daily P10 © TRW Automotive Holdings Corp. 2006
  • Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer P11 © TRW Automotive Holdings Corp. 2006
  • First Quarter Results (dollars in millions) Adjusting Adjusted 2006 Q1 Item 2006 Q1 2005 Q1 $ 3,396 $ $ 3,225 - $ 3,396 Sales 227 152 - 227 Operating Income 61 59 - 61 Net Interest and Securitization (a) 57 (57) - - Loss on Retirement of Debt (4) (5) - (4) Equity in earnings of affiliates 3 2 - 3 Minority Interest 63 - 63 46 Income Taxes $ 47 $ 57 $ 104 $ 50 Net Earnings (Losses) 103.0 103.0 101.0 Share Count $ 0.46 $ 1.01 $ 0.50 Earnings Per Share 57% 38% 48% Effective Tax Rate Adjusting Item (a) Represents $57 million loss on retirement of debt related to Lucas bond tender transaction. P12 © TRW Automotive Holdings Corp. 2006
  • First Quarter EBITDA Summary (dollars in millions) 2006 Q1 2005 Q1 Net Earnings $ 47 $ 50 Income Tax Expense 63 46 Net Interest and Securitization 61 59 Loss on Retirement of Debt 57 - Depreciation and Amortization 128 132 EBITDA(1) $ 360 $ 283 Memo: Restructuring & Asset Impairments Included Above $ 8 $ 8 (1) Please refer to slide P18 for management’s rationale for using this metric. P13 © TRW Automotive Holdings Corp. 2006
  • Capital Structure Summary Net Debt Summary(1) (dollars in millions) Dalphimetal acquisition increased net debt by $3,437 $244 million $2,964 $2,560 $3,089 $2,656 $2,582 $2,514 $2,479 $2,372 $2,326 $2,316 Feb 28, 2003 Dec 31, 2003 Dec 31, 2004 Apr 1, 2005 July 1, 2005 Sep 30, 2005 Dec 31, 2005 Mar 31, 2006 Net Debt Operating Co. PIK Seller Note • First quarter net cash provided by operations was $18 million, which compares to a use of $51 million in the prior year period • Capital expenditures totaled $83 million, which is equal to the prior year level • In excess of $1 billion in available liquidity at quarter-end (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. P14 © TRW Automotive Holdings Corp. 2006
  • 2006 Outlook Discussion • Raised full year guidance due to strength of first quarter results • Industry production and commodity inflation expected to worsen due to aluminum pricing, particularly in the second half of the year • Second quarter expectations: – Sales of $3.4 billion – Operating income slightly below the comparable prior year level – Pre-tax restructuring expenses of approximately $8 million • Although many significant challenges still in play for 2006, solid first quarter results provide higher level of confidence to achieve full year expectations P15 © TRW Automotive Holdings Corp. 2006
  • TRW Automotive Holdings Corp. Fourth Quarter and Full Year 2005 Financial Results Conference Call “Driving Automotive Safety”
  • Financial Reconciliations P17 © TRW Automotive Holdings Corp. 2006
  • EBITDA Measurement • The accompanying unaudited consolidated financial information and reconciliation of GAAP net earnings to earnings before interest, income tax, accounts receivable securitization cost, loss on retirement of debt, and depreciation and amortization (“EBITDA”) should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005, as filed with the United States Securities and Exchange Commission. • The EBITDA measure calculated in this presentation is a measure used by management to evaluate operating performance. Management believes that EBITDA is a useful measurement 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, our presentation of EBITDA may not be comparable to other similarly titled measures of other companies. P18 © TRW Automotive Holdings Corp. 2006
  • 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 7/1/05 9/30/05 12/31/05 3/31/06 Cash $ 449 $ 399 $ 828 $ 449 $ 519 $ 438 $ 790 $ 435 $ 506 $ 300 $ 659 $ 373 Marketable securities 26 16 16 16 15 16 19 16 13 17 17 17 Total 475 415 844 465 534 454 809 451 519 317 676 390 Short term debt 168 54 76 66 65 27 40 38 37 38 98 98 Long term debt: Term loan facilities 1,510 1,469 1,480 1,263 1,211 1,209 1,512 1,298 1,296 1,293 1,593 1,588 Senior notes 1,142 1,155 1,178 1,049 1,017 1,044 1,063 1,042 981 972 964 960 Senior subordinated notes 435 444 458 294 294 295 306 300 293 293 291 294 Lucas Varity senior notes 167 175 189 190 192 189 202 198 187 186 181 - Other borrowings 142 41 45 59 59 58 58 54 51 49 109 106 Total Short & Long Term Debt 3,564 3,338 3,426 2,921 2,838 2,822 3,181 2,930 2,845 2,831 3,236 3,046 Net debt operating company $ 3,089 $ 2,923 $ 2,582 $ 2,456 $ 2,304 $ 2,368 $ 2,372 $ 2,479 $ 2,326 $ 2,514 $ 2,560 $ 2,656 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 $ 2,326 $ 2,514 $ 2,560 $ 2,656 P19 © TRW Automotive Holdings Corp. 2006