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2005 Q2 TRW Auto Earnings Presentation

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2005 Q2 TRW Auto Earnings Presentation

  1. 1. Second Quarter 2005 Financial Results Conference Call Materials August 2, 2005 Materials Included Pages - Press Release 1-7 - Financial Summaries A1-A6 - Conference Call Presentation P1-P21 © TRW Automotive Holdings Corp. 2005
  2. 2. 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 Second Quarter 2005 Financial Results; Provides Update on 2005 Outlook LIVONIA, MICHIGAN, August 2, 2005 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported second- quarter 2005 sales of $3.4 billion, an increase of 6% compared to the same period a year ago. Net earnings for the quarter were $85 million or $0.83 per diluted share, which compares to $76 million or $0.75 per diluted share in the prior year quarter. The Company’s earnings were above previously provided guidance primarily due to the timing of its Burgos, Spain facility closure and related expenses, the impact of a $17 million one-time tax benefit and improved operating performance. The Company announced in July that it received final notification from government authorities approving the closure of its Burgos, Spain manufacturing facility, and as such, restructuring expenses related to this action will now be recorded in the third quarter. During the second quarter, the Company also incurred a $7 million loss on retirement of debt related to the partial redemption of its 10-⅛% senior notes. Second quarter earnings after excluding the one-time tax benefit and loss on retirement of debt were $75 million or $0.73 per diluted share. “Consistent with our performance in the previous quarter, our solid results can be attributed to our broad diversification and the steady flow of new safety products and systems in combination with aggressive cost performance,” said John C. Plant, president and chief executive officer. 1
  3. 3. “For the remainder of the year, we expect our diversification and our portfolio of safety products to continue to bolster our results. We will also continue to execute our operating plans with precision and take aggressive actions to counter the effects of challenging industry conditions, which is the primary reason why we have elected to decisively increase our restructuring efforts this year.” Mr. Plant added, “We believe the higher level of restructuring we plan to incur this year will better position the Company to maintain its competitive position over the long term.” Second Quarter 2005 The Company reported second-quarter 2005 sales of $3.4 billion, an increase of $202 million or 6% compared to prior year sales of $3.2 billion. The increase resulted primarily from higher sales of new products and foreign currency translation, partially offset by pricing provided to customers and lower vehicle production volumes in North America. Operating income for second-quarter 2005 was $198 million, a decrease of $4 million compared to the prior year period total of $202 million. The decrease resulted primarily from the continued impact of commodity inflation above prior year levels, foreign currency losses, increased restructuring expenses and other costs, which were partially offset by the benefits of higher sales and cost reduction programs in excess of pricing provided to customers and non-commodity inflation. Restructuring expenses in the second quarter of 2005 were $13 million, as compared to $8 million in the prior year quarter. Net interest and securitization expense for the second quarter of 2005 totaled $55 million, which compares to $60 million in the prior year period. 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. As stated previously, the Company incurred $7 million for loss on retirement of debt in the quarter related to its partial bond redemption. Tax expense for the quarter was $51 million, which included a one-time tax benefit of $17 million resulting from the impact of a tax law change in Poland. The Company’s second-quarter 2005 effective tax rate excluding the tax benefit and the effect of the $7 million loss on retirement of debt was in the range of previously provided guidance. 2
  4. 4. The Company reported second-quarter 2005 net earnings of $85 million or $0.83 per diluted share, which included the one-time tax benefit of $17 million and $7 million for loss on retirement of debt. Second-quarter 2005 earnings after excluding these items were $75 million or $0.73 per diluted share, which compares to $76 million or $0.75 per diluted share in the prior year period. Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization (“EBITDA”) were $324 million for second-quarter 2005, which compares to prior year EBITDA of $325 million. Excluding the year-to-year impact of restructuring expenses, as previously mentioned, EBITDA was higher by $4 million compared to the prior year period. First Half 2005 The Company reported first-half 2005 sales of $6.6 billion, an increase of $504 million or 8% compared to prior year sales of $6.1 billion. The increase resulted primarily from sales of new products, foreign currency translation and the effect of five additional calendar days in the first half of 2005, partially offset by pricing provided to customers and lower vehicle production volumes in North America. Operating income for first-half 2005 was $353 million, a decrease of $2 million compared to the prior year total of $355 million. The decrease resulted primarily from the continued impact of commodity inflation above prior year levels, foreign currency losses, increased restructuring costs and expenses directly related to customer and supplier solvency issues, partially offset by the benefits of higher sales and cost reduction programs in excess of pricing provided to customers and non-commodity inflation. Restructuring expenses in the first half of 2005 were $21 million, as compared to $13 million in the prior year period. Net interest and securitization expense for the first half of 2005 totaled $114 million, which compares to $123 million in the prior year period. As discussed previously, the Company incurred $7 million for loss on retirement of debt during the second quarter related to the partial redemption of its 10-⅛% senior notes. 3
  5. 5. Tax expense for the first half was $97 million, which included the previously mentioned one-time tax benefit of $17 million that resulted from the impact of a tax law change in Poland. The Company’s first-half 2005 effective tax rate after excluding the tax benefit and the effect of the $7 million loss on retirement of debt was in the range of previously provided guidance. The Company reported first-half 2005 net earnings of $135 million or $1.33 per diluted share, which included the $17 million one-time tax benefit and $7 million loss on retirement of debt. First-half 2005 earnings after excluding these items were $125 million or $1.23 per diluted share. In comparison, first-half 2004 net earnings were $78 million or $0.78 per diluted share, which included debt retirement and refinancing expenses of $48 million related to the Company’s initial public offering and a bank debt refinancing transaction. Net earnings during the 2004 period after excluding debt retirement and refinancing expenses were $126 million or $1.27 per diluted share. First half 2005 EBITDA totaled $607 million, which compares to prior year EBITDA of $601 million. Excluding the year-to-year impact of restructuring expenses, as previously mentioned, EBITDA increased by $14 million compared to the prior period. Capital Structure/Liquidity Net cash flow from operating activities during the second quarter and first half of 2005 totaled $263 million and $212 million, respectively. Capital expenditures for the quarter were $91 million compared to $95 million in the prior year quarter. For first-half 2005, capital expenditures totaled $174 million, which compares to $162 million in the prior year period. As of July 1, 2005, the Company had $2,845 million of debt and $519 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,326 million. Net debt declined by $153 million compared to the end of first-quarter 2005 and $46 million compared to the year-end 2004 level. 4
  6. 6. On May 3, 2005, the Company completed the redemption of a portion of its Euro denominated 10-⅛% senior notes due 2013, equivalent to approximately $63 million (USD) of debt. The transaction was funded with a portion of the proceeds raised from the private sale of 7.3 million shares of common stock issued to institutional investors in March of this year. As mentioned previously, the Company incurred related pre-tax expenses of $7 million for premiums and associated fees during the quarter. 2005 Outlook The Company updated its full-year 2005 outlook to include the second quarter one-time tax benefit and to reflect current industry assumptions. Accordingly, the Company expects revenue in the range $12.5 to $12.9 billion and earnings per diluted share in the range of $1.60 to $1.80. Full year outlook after excluding the $17 million one-time tax benefit and the $7 million loss on retirement of debt is expected to be in the range of $1.50 to $1.70 per diluted share, unchanged from previous guidance. Earnings guidance has been updated to include restructuring related expenses of approximately $70 million and a revised effective tax rate in the range of 43% to 50%, which now reflects the impact of the one-time tax benefit. 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. Lastly, the Company expects capital expenditures to total approximately 4% of sales for the year. For the third quarter of 2005, the Company expects revenue of approximately $2.9 billion and results ranging from a loss per share of $(0.08) to earnings per diluted share of $0.05. Third quarter guidance includes net pre-tax restructuring costs of approximately $30 million. Second Quarter 2005 Conference Call The Company will host its second-quarter 2005 conference call at 9:00 a.m. (EDT) today, Tuesday, August 2, 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. 5
  7. 7. 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 7841880. 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 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 leading 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. 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. 6
  8. 8. 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, 2004 (the “10K”) and our Report on Form 10-Q for the quarter ended April 1, 2005, 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. ### 7
  9. 9. TRW Automotive Holdings Corp. Index of Condensed Consolidated Financial Information Page Consolidated Statements of Operations (unaudited) for the three months ended July 1, 2005 and June 25, 2004........................................................A2 Consolidated Statements of Operations (unaudited) for the six months ended July 1, 2005 and June 25, 2004 ...........................................................A3 Consolidated Balance Sheets as of July 1, 2005 (unaudited) and December 31, 2004............................................................... A4 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended July 1, 2005 and June 25, 2004 ........................................................... A5 Reconciliation of GAAP Net Earnings to EBITDA (unaudited) for the three and six months ended July 1, 2005 and June 25, 2004 ........................................... A6 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, 2004 and Form 10-Q for the quarterly period ended April 1, 2005 as filed with the United States Securities and Exchange Commission on February 23, 2005 and May 5, 2005, respectively. A1
  10. 10. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Three Months Ended July 1, 2005 June 25, 2004 (In millions, except per share amounts) Sales ......................................................................................... $ 3,365 $ 3,163 Cost of sales ............................................................................. 2,959 2,783 Gross profit........................................................................ 406 380 Administrative and selling expenses........................................ 126 132 Research and development expenses ....................................... 52 42 Amortization of intangible assets............................................. 8 8 Restructuring charges............................................................... 13 8 Other (income) expense — net ................................................ 9 (12) Operating income .............................................................. 198 202 Interest expense — net............................................................. 54 60 Loss on retirement of debt ....................................................... 7 1 Accounts receivable securitization costs.................................. 1 — Earnings before income taxes .......................................... 136 141 Income tax expense.................................................................. 51 65 Net earnings...................................................................... $ 85 $ 76 Basic earnings per share: Earnings per share.................................................................. $ 0.86 $ 0.77 Weighted average shares........................................................ 99.0 98.9 Diluted earnings per share: Earnings per share.................................................................. $ 0.83 $ 0.75 Weighted average shares........................................................ 102.2 101.3 A2
  11. 11. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Six Months Ended July 1, 2005 June 25, 2004 (In millions, except per share amounts) Sales ......................................................................................... $ 6,590 $ 6,086 Cost of sales ............................................................................. 5,820 5,381 Gross profit........................................................................ 770 705 Administrative and selling expenses........................................ 262 257 Research and development expenses ....................................... 106 79 Amortization of intangible assets............................................. 16 17 Restructuring charges............................................................... 21 13 Other (income) expense — net ................................................ 12 (16) Operating income .............................................................. 353 355 Interest expense — net............................................................. 112 122 Loss on retirement of debt ....................................................... 7 48 Accounts receivable securitization costs.................................. 2 1 Earnings before income taxes .......................................... 232 184 Income tax expense.................................................................. 97 106 Net earnings...................................................................... $ 135 $ 78 Basic earnings per share: Earnings per share.................................................................. $ 1.36 $ 0.81 Weighted average shares........................................................ 99.0 96.6 Diluted earnings per share: Earnings per share.................................................................. $ 1.33 $ 0.78 Weighted average shares........................................................ 101.6 99.5 A3
  12. 12. TRW Automotive Holdings Corp. Consolidated Balance Sheets As of July 1, 2005 December 31, 2004 (Unaudited) (Dollars in millions) Assets Current assets: Cash and cash equivalents......................................................................... $ 506 $ 790 Marketable securities ................................................................................ 13 19 Accounts receivable — net ....................................................................... 1,946 1,813 Inventories................................................................................................. 627 684 Prepaid expenses ....................................................................................... 77 34 Deferred income taxes .............................................................................. 168 176 Total current assets ..................................................................................... 3,337 3,516 Property, plant and equipment — net ......................................................... 2,423 2,635 Goodwill ..................................................................................................... 2,357 2,357 Intangible assets — net ............................................................................... 749 765 Prepaid pension cost ................................................................................... 204 190 Deferred income taxes ................................................................................ 115 91 Other assets ................................................................................................. 556 560 Total assets .............................................................................................. $ 9,741 $ 10,114 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt ......................................................................................... $ 37 $ 40 Current portion of long-term debt............................................................. 18 19 Trade accounts payable............................................................................. 1,775 1,887 Accrued compensation.............................................................................. 294 309 Income taxes payable................................................................................ 271 233 Other current liabilities ............................................................................. 1,049 992 Total current liabilities ................................................................................ 3,444 3,480 Long-term debt............................................................................................ 2,790 3,122 Post-retirement benefits other than pensions .............................................. 941 959 Pension benefits .......................................................................................... 775 843 Deferred income taxes ................................................................................ 254 268 Long-term liabilities.................................................................................... 268 272 Total liabilities......................................................................................... 8,472 8,944 Minority interests ........................................................................................ 62 65 Commitments and contingencies Stockholders’ equity: Capital stock.............................................................................................. 1 1 Treasury stock........................................................................................... — — Paid-in-capital ........................................................................................... 1,134 1,131 Retained earnings (accumulated deficit)................................................... 63 (72) Accumulated other comprehensive earnings ............................................ 9 45 Total stockholders’ equity........................................................................... 1,207 1,105 Total liabilities, minority interests, and stockholders’ equity.................. $ 9,741 $ 10,114 A4
  13. 13. TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended July 1, 2005 June 25, 2004 (Dollars in millions) Operating Activities Net earnings ................................................................................................ $ 135 $ 78 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization 254 246 Other — net ............................................................................................ (38) 55 Changes in assets and liabilities, net of effects of businesses acquired or divested................................................................................................. (139) (351) Net cash provided by operating activities .............................................. 212 28 Investing Activities Capital expenditures.................................................................................... (174) (162) Acquisitions, net of cash acquired .............................................................. — (5) Net proceeds from asset sales and divestitures ........................................... — 108 Net cash used in investing activities ................................................. (174) (59) Financing Activities Change in short-term debt........................................................................... (2) 4 Proceeds from issuance of long-term debt.................................................. 1,313 1,268 Redemption of long-term debt .................................................................... (1,598) (1,852) Debt issue costs........................................................................................... (4) (7) Issuance of capital stock, net of fees........................................................... 143 635 Repurchase of capital stock ........................................................................ (143) (319) Proceeds from exercise of stock options..................................................... 1 — Net cash used in financing activities ................................................. (290) (271) Effect of exchange rate changes on cash .................................................... (32) (7) Decrease in cash and cash equivalents........................................................ (284) (309) Cash and cash equivalents at beginning of period ...................................... 790 828 Cash and cash equivalents at end of period ................................................ $ 506 $ 519 A5
  14. 14. 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 and Form 10-Q for the quarterly period ended April 1, 2005, which contain 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 July 1, 2005 June 25, 2004 (Dollars in millions) GAAP net earnings .............................................................. $ 85 $ 76 Income tax expense ......................................................... 51 65 Interest expense, net of interest income .......................... 54 60 Accounts receivable securitization costs ......................... 1 — Loss on retirement of debt............................................... 7 1 Depreciation and amortization ........................................ 126 123 EBITDA ................................................................................ $ 324 $ 325 Six Months Ended July 1, 2005 June 25, 2004 (Dollars in millions) GAAP net earnings .............................................................. $ 135 $ 78 Income tax expense ......................................................... 97 106 Interest expense, net of interest income .......................... 112 122 Accounts receivable securitization costs ......................... 2 1 Loss on retirement of debt............................................... 7 48 Depreciation and amortization ........................................ 254 246 EBITDA ................................................................................ $ 607 $ 601 A6
  15. 15. TRW Automotive Holdings Corp. 2005 Second Quarter Financial Results Conference Call August 2, 2005 “The Global Leader in Automotive Safety Systems”
  16. 16. Introduction Patrick Stobb Director, Investor Relations First Quarter Summary John C. Plant President and Chief Executive Officer P2 © TRW Automotive Holdings Corp.2005
  17. 17. 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 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 our report on Form 10-Q for the quarter ended April 1, 2005, 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
  18. 18. Second Quarter Summary Comments • Solid set of financial results – Company demonstrated financial and operational resiliency in a difficult industry environment • Results above previously provided guidance level resulting from: – Timing of restructuring expense related to Burgos, Spain closure – Impact of a one-time tax benefit – Strength of operating results • Challenges expected to increase as European market softens – expected to negatively affect second half results • Sustained industry pressures at this magnitude producing major long term challenges causing the Company to: – Reevaluate all aspects of business to identify and achieve offsetting cost reduction actions – Increase level of restructuring in order to maintain market leadership positions P4 © TRW Automotive Holdings Corp.2005
  19. 19. Second Quarter Financial Highlights • Sales of $3.4 billion dollars, an increase of 6% from the prior year period + New product sales – + Currency translation – - – North American industry production - – Customer pricing • Net earnings of $85 million, or $0.83 per diluted share, which includes: – One-time favorable tax benefit of $17 million – Loss on retirement of debt of $7 million • Net earnings excluding these items were $75 million or $0.73 per diluted share(1) • Net debt of $2.3 billion at quarter end, down $153 million from the end of the first quarter(2) (1) Assumes 102.2 million diluted shares (2) 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 P21 of this presentation. P5 © TRW Automotive Holdings Corp.2005
  20. 20. Second Quarter Business Developments • Steady pace of new business awards in the quarter: – Total awards in line with business plan objectives – Awards evenly distributed among products, with no particular emphasis in any one product or technology – Loss of Rover business a negative factor • Received 2005 World Traffic Symposium Award in recognition of our leadership in automotive safety: – Recognizes our efforts corresponding with the design, development and production of the widest and most comprehensive array of safety products in the industry • Increased footprint in Asia with the expansion of Anting, China facility and new joint venture with the China South Group P6 © TRW Automotive Holdings Corp.2005
  21. 21. Second Quarter Business Developments (Cont.) • High level of cost reduction activities continue: – Accelerated cost reduction efforts prompted by difficult industry conditions – Pushing forward with an elevated level of projects, workshops and actions under our Six Sigma and Operations Excellence programs – Announced planned closures of Fremont, Ohio and Cookeville, Tennessee plants – Closed Burgos facility in late July • Commodity inflation update: – Higher pricing for steel, resins and textiles continue to have a significant financial impact on the bottom line – Expect 2005 net incremental impact in excess of 2004 level – Maintain cautious view on our ability to continually offset inflationary pressures in 2005 and beyond P7 © TRW Automotive Holdings Corp.2005
  22. 22. 2005 Operating Environment • Anticipate second half production (1) 2005 Production Assumptions in North America to hold at (units in millions) expected levels • Expect full year Big 3 production 15.9 ‘03 will be down 5% year-to-year North 15.8 ‘04 America • Europe production weakening, 15.7 ‘05 especially Western Europe • European production estimate 11.9 ‘03 North now below 20 million units America 11.4 ‘04 • Foreign currency translation will Big 3 10.8 ‘05 likely weigh on our results as USD maintains strength 19.2 ‘03 • Plan to offset a major share of Europe 20.2 ‘04 weaker second half environment 19.9 ‘05 with new business growth and aggressive cost reduction efforts (1) Source: Primarily CSM Worldwide and internal company estimates. P8 © TRW Automotive Holdings Corp.2005
  23. 23. 2005 Full Year Outlook • Sales in the range of $12.5 to $12.9 billion • Earnings per diluted share of $1.60 to $1.80(1) – Includes full year restructuring costs of $70 million, an increase over prior guidance level of $55 million – Also includes one-time tax benefit of $17 million and loss on retirement of debt of $7 million • Earnings excluding one-time tax benefit and loss on retirement of debt in the range of $1.50 to $1.70 per diluted share, unchanged from previous guidance(1) (1) Per share amounts based on weighted average diluted shares outstanding of approximately 102.6 million diluted shares. P9 © TRW Automotive Holdings Corp.2005
  24. 24. Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer P10 © TRW Automotive Holdings Corp.2005
  25. 25. Financial Overview • Second quarter and first half 2005 financial summary • Capital structure – Net debt – Cash flow and liquidity – Partial bond redemption transaction • Initial Q3 2005 outlook • Analyst Q&A P11 © TRW Automotive Holdings Corp.2005
  26. 26. Second Quarter 2005 Results (dollars in millions) Adjusting Adjusted Q2 2005 Items Q2 2005 Q2 2004 Sales $ 3,365 $ - $ 3,365 $ 3,163 Operating Income 198 - 198 202 Net Interest and Securitization 55 - 55 60 (7) (a) Loss on Retirement of Debt 7 - 1 (b) Income Taxes 51 17 68 65 Net Earnings $ 85 $ (10) $ 75 $ 76 Earnings Per Diluted Share $ 0.83 $ 0.73 $ 0.75 Effective Tax Rate 38% 48% 46% Diluted Shares 102.2 102.2 101.3 Adjusting Items (a) $7 million for premiums and associated fees related to a bond redemption transaction (b) $17 million one-time net tax benefit from a tax law change in Poland P12 © TRW Automotive Holdings Corp.2005
  27. 27. Second Quarter EBITDA Summary (dollars in millions) Q2 2005 Q2 2004 Net Earnings $ 85 $ 76 Income Tax Expense 51 65 Net Interest and Securitization 55 60 Loss on Retirement of Debt 7 1 Operating Income $ 198 $ 202 Depreciation and Amortization 126 123 EBITDA(1) $ 324 $ 325 (1) Please refer to slide P20 for management’s rationalization in using this metric. P13 © TRW Automotive Holdings Corp.2005
  28. 28. First Half 2005 Results (dollars in millions) Adjusted Adjusted First Half Adjustin First Half First Half Adjustin First Half 2005 Items 2005 2004 Items 2004 Sales $ 6,590 $ - $ 6,590 $ 6,086 $ - $ 6,086 Operating Income 353 - 353 355 - 355 Net Interest and Securitization 114 - 114 123 - 123 (c) (a) Loss on Retirement of Debt 7 (7) - 48 (48) - (b) Income Taxes 97 17 114 106 - 106 Net Earnings $ 135 $ (10) $ 125 $ 78 $ 48 $ 126 Earnings Per Diluted Share $ 1.33 $ 1.23 $ 0.78 $ 1.27 Effective Tax Rate 42% 48% 58% 46% Diluted Shares 101.6 101.6 99.5 99.5 Adjusting Items (a) $7 million of premiums and associated fees related to bond redemption transaction (b) $17 million one-time tax benefit from a tax law change in Poland (c) $48 million related to the initial public offering and a bank debt refinancing transaction P14 © TRW Automotive Holdings Corp.2005
  29. 29. First Half EBITDA Summary (dollars in millions) First Half First Half 2005 2004 Net Earnings $ 135 $ 78 Income Tax Expense 97 106 Net Interest and Securitization 114 123 Loss on Retirement of Debt 7 48 Operating Income $ 353 $ 355 Depreciation and Amortization 254 246 EBITDA(1) $ 607 $ 601 (1) Please refer to slide P20 for management’s rationalization in using this metric. P15 © TRW Automotive Holdings Corp.2005
  30. 30. Capital Structure (dollars in millions) Net Debt Summary (1) $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 $2,326 $2,304 Feb 28, Sep 26, Dec 31, Mar 26, Jun 25, Sep 24, Dec 31, Apr 1, July 1, 2003 2003 2003 2004 2004 2004 2004 2005 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 P21 of this presentation. P16 © TRW Automotive Holdings Corp.2005
  31. 31. Capital Structure • Q2 net cash provided by operations of $263 million • Second quarter capital expenditures of $91 million, which compares to $95 million in the prior year period • In excess of $1 billion in available liquidity at quarter-end • Completed partial bond redemption of Euro denominated 10-⅛% senior notes, equivalent to $63 million of debt (USD) – Good NPV positive transaction – Demonstrates focus on improving capital structure P17 © TRW Automotive Holdings Corp.2005
  32. 32. Third Quarter 2005 Outlook • Difficult industry conditions expected to continue through the remainder of the year • Expect sales of $2.9 billion • Results in the range of a loss of $(0.08) per share to earnings per diluted share of $0.05 (1) • Earnings range includes approximately $30 million of net pre-tax restructuring costs, primarily related to Burgos, Spain plant closure (1) Per share amounts based on weighted average diluted shares outstanding of approximately 103.5 million diluted shares. P18 © TRW Automotive Holdings Corp.2005
  33. 33. P19 © TRW Automotive Holdings Corp.2005
  34. 34. 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, 2004 and Form 10-Q for the quarterly period ended April 1, 2005 as filed with the United States Securities and Exchange Commission on February 23, 2005 and May 5, 2005, respectively. • The EBITDA measure calculated in this presentation 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. P20 © TRW Automotive Holdings Corp.2005
  35. 35. 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 Cash $ 449 $ 399 $ 828 $ 449 $ 519 $ 438 $ 790 $ 435 $ 506 Marketable securities 26 16 16 16 15 16 19 16 13 Total 475 415 844 465 534 454 809 451 519 Short term debt 168 54 76 66 65 27 40 38 37 Long term debt: Term loan facilities 1,510 1,469 1,480 1,263 1,211 1,209 1,512 1,298 1,296 Senior notes 1,142 1,155 1,178 1,049 1,017 1,044 1,063 1,042 981 Senior subordinated notes 435 444 458 294 294 295 306 300 293 Lucas Varity senior notes 167 175 189 190 192 189 202 198 187 Other borrowings 142 41 45 59 59 58 58 54 51 Total Short & Long Term Debt 3,564 3,338 3,426 2,921 2,838 2,822 3,181 2,930 2,845 Net debt operating company $ 3,089 $ 2,923 $ 2,582 $ 2,456 $ 2,304 $ 2,368 $ 2,372 $ 2,479 $ 2,326 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 P21 © TRW Automotive Holdings Corp.2005

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