FOR IMMEDIATE DISTRIBUTION Contact: Francisco Freyre Servín SANLUIS Corporación, S.A.B. de C.V. Tel: (5255) 5229-58-20 Fax: (5255) 5202-58-95 www.sanluisrassini.com e-mail: ffreyre@sanluisrassini.com SANLUIS Corporación, S.A.B. de C.V. and Subsidiaries Results for the Third Quarter of 2013 Third Quarter 2013 Highlights: - Third quarter 2013 is SANLUIS Rassini s strongest quarter to date, reflecting the highest level of sales and EBITDA generation in the company s history, amounting to US$212.4 million and US$30.9 million, respectively. - Consolidated sales increased 20% compared to the third quarter of 2012 and 14% on a year-to-date basis, reaching US$617.4 million for the first nine months of 2013. - Compared to the same period in 2012, EBITDA increased 34% in the third quarter and 23% for the first nine months of 2013, as EBITDA growth continued to outpace sales growth. EBITDA for the first nine months of 2013 was US$85.7 million. - Net operating cash flow for the third quarter was 117% higher compared to the same period in 2012, and totaled US$81.7 million on an accumulated basis for the first nine months of the year, 44% higher than the year-ago period. - Consolidated income before taxes for the first nine months of the year reached US$41.2 million, 57% higher than the year-ago period. - Consolidated Net Debt / annualized EBITDA ratio was 1.7x and EBITDA/Net Interest Expense was 4.5x as of September 30, 2013. - Standard & Poor s (S&P) upgraded SANLUIS Rassini to B+ with a Stable rating outlook last August 22 nd Mexico City, October 23, 2013 SANLUIS Corporación, S.A.B. de C.V. (Mexican Stock Exchange Ticker: SANLUIS), a Mexican industrial company engaged in the design and manufacture of suspension and brake components for the automotive industry, announced today its financial results for the third quarter and accumulated nine months of 2013.
Industry outlook The recovery in the North American automotive sector, SANLUIS Rassini s main market, continued during the third quarter of 2013, with the Seasonally Adjusted Annualized Rate (SAAR) of U.S. light vehicle sales averaging 15.5 million units. This represents a 49% improvement compared to the low point of 10.4 million units reached in 2009, but still below a normalized level of 16.4 million, which according to Edmunds experts, will be reached next year. According to J.P. Morgan, other metrics of industry health in the North American automotive sector are nearly as strong as they have ever been, with better prices across the board as incentives to promote sales were at the lowest level in seven years. Inventories, which are considered as another indicator of health, were at 54-days supply on hand compared to an industry ideal of 60 days supply. Production also continues to be strong in North America with 10.8 million vehicles produced during the first nine months of the year, with light trucks accounting for 55% of this production, slightly higher than the 54% seen during the same period last year. NORTH AMERICA LIGHT VEHICLE PRODUCTION Million Units CAGR (09-12) 21% 15.9 15.8 15.8 15.3 15.1 15.3 9.2 9.3 9.0 8.3 8.5 12.6 6.5 8.6 4.6 11.9 6.8 13.1 7.4 8.3 10.8 5.9 6.7 6.5 6.8 7.0 6.6 6.1 4.0 5.2 5.7 7.0 4.8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Jan-Sep'13 CAGR: Compound Annual Growth Rate Passenger Cars Light Trucks The latest forecast made by IHS indicates that the total North American vehicle production for the year 2013 will reach 16.2 million, the highest level since 2003 and 6% more than 2012. Sales data suggests that as the market works to transition from those who need to buy to those who want to buy, factors such as increased demand, the improving economy, an expanding population, a wave of new products, engagement with generation Y and favorable demographics bolster the longer-term outlook. Currently, nearly 40% of car factories in North America are operating on work schedules that push production well past 80 hours a week, compared with 11% in 2008, according to the Oliver Wyman consulting firm.
Sales Sales during the third quarter of 2013 were at the highest level in the history of the Company, totaling US$212.4 million. Sales were US$617.4 million for the first nine months of 2013, and US$791.2 million for the twelve months ended September 30, 2013, which compared to the same periods a year ago are 20%, 14% and 10% higher, respectively. SALES (US$ millions) Actual Actual Var. (Jan - Sep) 2013 % 2012 % % Leaf Springs (1) 247.6 40 245.1 45 Coil Springs 59.2 10 58.7 11 NAFTA Suspensions 306.8 50 303.8 56 1 Brakes (1) 122.2 20 91.4 17 34 TOTAL NAFTA 429.0 69 395.2 73 9 Leaf Springs (1) 164.7 27 123.3 23 BRAZIL Coil Springs 23.7 4 20.8 4 TOTAL BRAZIL 188.4 31 144.1 27 31 CONSOLIDATED SALES 617.4 100 539.3 100 14 (1) Includes elimination of intercompany transactions. For the North American Suspension business, sales volume in the nine months ended September 30, 2013 was 3.7% above the same period last year. However, there was a 1% increase in terms of dollar sales as the sales price of our products was lower, reflecting the lower cost of raw materials, given our direct link between the cost of steel and the price of finished product under the existing pass-through agreements that we have with our customers. This allows us to maintain stable margins per unit of steel that we transform into finished product. Sales in the Brakes division increased 34% in dollar terms during the first nine months of the year compared to the same period of 2012. We have launched several new programs this year, such as the Corvette Stingray, the Maserati s Ghibli and Quattroporte, the Viper and Ducato from Chrysler among others. We also began the production ramp-up of the ten new platforms launched at the end of 2012 and in the first months of 2013, (mainly, the GM Sierra and Silverado, Ford Escape, Chrysler s Dodge Dart and VW Jetta), which allowed us to increase our sales at a faster pace than the overall market. The market in North America has favored the Detroit 3, our main customers in this region, and their market share has grown to 45.6% YTD compared with 45.1% of last year. In
addition to this, the surge of 20% (YTD) in sales of full-size pickup trucks, which are the most profitable vehicles for the OEM s, has also been beneficial for our sales this year. The Brazilian Suspension sales in the first nine months of this year increased 31% in dollar terms when compared to the same period of 2012, as sales volume of heavy duty trucks in Brazil returned to normalized levels as excess inventories of trucks based on old emission control technology were run-off last year. Despite all new truck assembly in Brazil now being based on the more costly Euro 5 emission control regulation compliant engines, Sindipeças (the Brazilian Autoparts Manufacturers Association) forecasts indicate the production of trucks in Brazil for 2013 is expected to increase 28% over 2012 to reach 169 thousand units, returning to the average sales levels last seen before the emission control regulations were enacted. Due to the increase in sales volume, the operations in the North American Suspension business, Brakes and Brazil are running at a rate of 69%, 85% and 97% of their installed capacity, respectively. The sales distribution between the two markets in which we have operations is 69% concentrated in the North American automotive market and 31% in Brazil. On a product basis, Suspension components represent 80% of sales and Brakes comprise the remaining 20%, while 96% of our sales are devoted to the OEMs and 4% to the aftermarket in Brazil. Results from operations Third quarter EBITDA of US$30.9 million at 14.5% of Sales, was the highest in SANLUIS Rassini s history and was 34% higher than the same quarter of 2012. EBITDA for the nine months ended September 30, 2013 was US$85.7 million, or 23% higher than the same period
of 2012, while EBITDA for the last twelve months at US$107.6 million, was up 13% from year-ago levels. SANLUIS - CONSOLIDATED January - September (US$ million) 2013 2012 Var. (%) Sales 617.4 539.3 14 Ebitda (1) 85.7 69.4 23 Ebitda / Sales (%) 14% 13% Net Operating Cash Flow (2) 81.7 56.9 44 Leverage Ratio (3) 1.7x 2.3x Interest Coverage Ratio (4) 4.5x 3.6x (1) Operating profit + Other expenses (income) + Depreciation & Amortization + Profit Sharing. (2) Ebitda +(-) Change in Working Capital - Taxes. (3) Net Debt / Annualized Ebitda (4) Ebitda / Net Interest Expense. For operations in North America, the 2013 third quarter EBITDA was 43% higher when compared to the same period in 2012 and 11% higher compared to the first nine months of the year, mainly due to the increase in volume coupled with tight controls over fixed costs. EBITDA in our Brazilian operations grew 26% year-over-year in the third quarter in dollar terms and 78% above 2012 for the first nine months of the year. This EBITDA growth is mainly attributable to the increase in sales previously explained in addition to having our fixed cost structure in Brazil more attuned to current production levels, while in 2012, despite lower volumes, we maintained most of our labor force to support the expected higher production requirements following the temporary sales decline. SANLUIS Corporación, S.A.B. de C.V. and Subsidiaries Quarterly results by business segment (US$ Million) 2012 2013 Total Quarter # 1 2 3 4 1 2 3 Total Sales Nafta 134.7 134.5 126.1 123.0 518.3 134.9 141.7 152.4 429.0 Brazil 48.5 45.4 50.2 50.7 194.8 62.3 66.1 60.0 188.4 Total (1) 183.1 179.9 176.3 173.8 713.1 197.2 207.8 212.4 617.4 EBITDA Nafta 19.1 20.2 16.3 15.6 71.2 20.1 18.1 23.3 61.5 Brazil 2.5 4.8 5.7 6.2 19.2 7.8 8.1 7.2 23.1 Total (1) 21.5 24.9 23.0 21.9 91.3 28.5 26.3 30.9 85.7 EBITDA/Sales Nafta 14% 15% 13% 13% 14% 15% 13% 15% 14% Brazil 5% 11% 11% 12% 10% 13% 12% 12% 12% Total 12% 14% 13% 13% 13% 14% 13% 15% 14% (1) Includes elimination of intercompany sales The strong operating profits combined with lower interest expenses due to the continued debt reduction, resulted in consolidated income before taxes of US$41.2 million during the nine months ended September 30, 2013, up 57% compared to US$26.2 million recorded during the
same period of 2012. In Mexican Peso terms, the Company s reporting currency, the increase was 50%, slightly lower due to the appreciation of the Peso against the U.S. Dollar, the Company s operating currency, for a consolidated income before tax of MxP$522.2 million of Mexican Pesos. Consolidated net income was affected by higher income tax in the Brazilian Suspension business resulting from improved EBITDA, while in the North American operations both current income tax and deferred tax increased due to improved business profitability at the same time that the company decided to forgo some tax losses generated in previous years; therefore current tax expense amounted to US$12.5 million and deferred (non-cash) taxes amounted to US$15.6 million during the nine months ended September 30, 2013. The increase in taxes in all of our business units in addition to the increase in the minority interest as a result of the improvement in our Brazilian operations led to consolidated net income of US$3.0 million or MxP$38.4 million of Mexican Pesos year to date. Cash flow and indebtedness reduction Consolidated net operating cash flow for the quarter was US$27.3 million, 117% above last year s third quarter, and was US$81.7 million for the first nine months of 2013, or 44% higher than the same period of 2012. The cash balance at the end of September, 2013 was US$50.2 million. During the third quarter, the North America Suspension division continued with the accelerated reduction of the outstanding balance of the term loan agreement with a syndicate of banks, amortizing US$8.3 million or 3.6 times the scheduled amortization for the quarter. Total deleveraging on this term loan agreement since 2010 has been US$60.7 million, or 42% of the original principal amount, including US$36.4 million of prepayments (which have been applied against the final amortization scheduled for December 2014, reducing 31% its original value to US$79.3 million). The target is to continue making prepayments to this loan during the remaining of the year so the decrease in the final balance will be equivalent to 4 times the scheduled amortizations. Gross Debt - Sep 2013 (US$ millions) Nominal values Term Short Long Total Holding Companies 7.7 86.1 93.8 Operating Companies Nafta Suspensions 21.6 76.9 98.5 Brakes 12.0 28.5 40.5 Total Nafta 33.6 105.4 139 Brazil Suspensions 6.4 3.3 9.7 Total Consolidated 47.7 194.8 242.5
As of September 30, 2013, consolidated net debt was US$192.3 million or 1.7x annualized EBITDA, which compares favorably to the year-ago level of US$216.5 million or 2.3x annualized EBITDA. Interest coverage ended the period at a ratio of EBITDA/Net interest of 4.5x, a significant improvement compared to the 3.6x of September 2012. 2013 2014 1st Q - 2.8 2nd Q - 5.1 3rd Q - 2.8 4th Q 5.1 78.1* 5.1 88.9 Cash balance 3Q 13 = US$50.2 mill. 88.9 Long Term Debt Amortization Profile US$ Million 78.8 5.1 4.8 7.3 6.9 15.7 4Q 2013 2014 2015 2016 2017 2018 2019 2020 Nafta Suspensions Holding companies Brakes Note: Debt profile does not include working capital financings * Future expected prepayents will reduce this balance Nominal values Other relevant information On August 22, Standard & Poor's (S&P) upgraded SANLUIS Rassini s long-term corporate credit rating from B to B+ with a Stable outlook, commenting the following: SANLUIS Rassini's financial management has supported the gradual improvement of credit metrics, and the reduction of its debt. Its adequate liquidity and positive cash flow generation provide credit comfort on the company's ability to meet its 2014 debt maturities. S&P is raising the long-term corporate credit rating on SANLUIS Rassini to 'B+' from 'B'. The stable outlook reflects S&P expectations that SANLUIS Rassini will continue to achieve steady top-line growth and improved profitability, mainly driven by the continued recovery of U.S. auto sales. Commenting on the rationale for the ratings change, S&P noted that, The rating action reflects SANLUIS Rassini's improved credit metrics and the gradual reduction of debt, supported by the company's effective financial management. It also reflects the company's positive and sustainable medium-term growth prospects amid more favorable industry fundamentals, and new contracts in hand that should lead to stable revenue growth and margins. SANLUIS Rassini believes that its recognized position as an essential supplier within the NAFTA and Mercosur regions, which is based on its technology, quality, service,
competitiveness and focus on customer service; as well as its ability and pre-emptive actions to scale the size and structure of its operations according to shifts in demand, together with the positive industry dynamics and outlook, will enable it to continue to serve OEMs as an essential business partner within the NAFTA and Mercosur regions. This will ultimately enable the Company to generate shareholder value as the economy and the automotive industry continue in their recovery. Conference Call SANLUIS will host a conference call on Thursday, October 24 at 9:00 am (US Central Time/Mexico City Time) / 10:00 am (US Eastern Time) to discuss its third quarter financial results and recent business activities. The conference call may be accessed using the following numbers: US: 1-877-941-2332 Mexico: 001-888-425-5213 International: +1-480-629-9723 Passcode: SANLUIS or 4645352 Please dial in approximately 10 minutes before the scheduled time of this call. A replay of the conference call will be available starting from 12:00 pm (US Eastern Time) on October 24, 2013 to 12:00 pm (US Eastern Time) on October 31, 2013 using the following numbers: US: 1-800-406-7325 Outside US: +1-303-590-3030 Passcode: 4645352 The presentation deck for the call will be available the day before in our web page: www.sanluisrassini.com/eng
Financial statements SANLUIS Corporación, S.A.B. de C.V. & Subs Consolidated Income Statement January - September of 2013 and 2012 (US$ Million) 2013 2012 Net Sales 617.4 539.3 Cost of Goods Sold 492.1 434.9 Gross Profit 125.3 104.4 % to Sales 20% 19% Selling & Administrative Expenses 39.6 35.0 EBITDA 85.7 69.4 % to Sales 14% 13% Depreciation & Amortization (20.9) (17.7) Other Income (Expenses) Net (1) (3.4) (3.7) Interest & Other Financial Expenses (20.2) (21.8) Net Profit before Minority Interest 41.2 26.2 Taxes (17.7) (1.1) Deferred Taxes (15.6) (8.9) Minority Interest (4.9) (1.6) Net Income 3.0 14.6 (1) Includes Profit Sharing SANLUIS Corporación, S.A.B. de C.V. & Subs Consolidated Cash Flow January - September of 2013 and 2012 (US$ Million) 2013 2012 EBITDA 85.7 69.4 Changes in working capital & taxes (4.0) (12.5) Net operating cash flow 81.7 56.9 Interest expenses (11.1) (12.3) Amortization and prepayment of RCA loan (25.8) (8.3) Other financing and amortization 21.9 (5.0) Capital expeditures (42.4) (14.1) Other (11.8) (6.1) Increase (Decrease) in cash 12.5 11.1 Initial cash balance 37.7 21.3 Final cash balance 50.2 32.4
SANLUIS Corporación, S.A.B. de C.V. & Subs Balance Sheet As of September 30, 2013 and 2012 (US$ Million) Assets 2013 2012 Cash & marketable securities 50.2 32.4 Accounts receivable 120.8 103.0 Inventories 48.1 50.2 Current assets 219.1 185.6 Net fixed assets 456.5 449.5 Deferred taxes 51.8 49.5 Total assets 727.4 684.6 Liabilities Short term debt 47.7 43.8 Accounts payable & other 177.9 136.7 Current portion 225.6 180.5 Long term debt 194.8 205.1 Pension liabilities & other 114.9 100.9 Total liabilities 535.3 486.5 Net worth Controlling interest 160.4 161.2 Minority interest 31.7 36.9 Total net worth 192.1 198.1 Liabilities & Net Worth 727.4 684.6 SANLUIS SANLUIS, through its brand SANLUIS Rassini, is a lead designer and manufacturer of suspension and brake components for the global automotive industry, mainly focused on original equipment manufacturers (OEMs). SANLUIS Rassini is the world s largest producer of suspension components for light commercial vehicles as well as the largest fully integrated brake rotor producer in the Americas and has seven manufacturing operations strategically located in North America and Brazil. Suspension products include Leaf Springs (parabolic and multi-leaf) for light and commercial trucks, Coil Springs, Torsion Bars and Bushings. The Brake business manufactures Rotors, Drums, Brake Assemblies, Clutch Plates and Motor Balancers. Its solid and diversified customer base includes: General Motors, Ford Motor Company, Chrysler - Fiat, Nissan, Volkswagen, Toyota, MAN, Scania and Mercedes Benz among others. # # #