MONTREAL, July 15 /CNW Telbec/ - Mecachrome International Inc. (TSX: MCH)
announced today an update to its fiscal 2008 financial results and the
implementation of an action plan aimed at improving the Company's
profitability and cash generation. In addition, the Board of Directors has
established a Management Committee to lead the Company following the
resignation of Guillaume Casella as President and Chief Executive Officer.
Update on Financial Results
While long term fundamentals in the aerospace industry remain positive
and Mecachrome's backlog remains strong, continued delays to key aerospace
programs and the Formula 1 engine development freeze are currently negatively
impacting Mecachrome's results.
Since the Company's release of its first quarter 2008 results, in
response to the continued delays affecting certain key aerospace programs,
such as the Airbus A380, the Airbus A400M and the Boeing 787, certain of the
Company's customers have announced longer and more pronounced production
delays than expected. Furthermore, the Formula 1 freeze in engine development
and the technical regulatory changes announced in the fall of 2006 continue to
impact the Company. These measures have resulted in a lower number of engine
deliveries and less developmental work than initially expected.
In light of these events, for the fiscal year 2008, the Company currently
anticipates to achieve revenues of approximately (euro)290 million to
(euro)310 million and adjusted EBITDA of approximately (euro)40 million to
(euro)45 million, excluding the expected one-time restructuring charges
associated with the Phase 1 of the Profitability Improvement Plan (as defined
"In spite of current headwinds affecting our results and growth plans, I
am confident that the fundamentals of our core businesses are sound" said
Gérard Casella, Chairman of the Board of Directors. "We believe that we have
the people, know-how, technological expertise and strong customer
relationships to respond to these challenges."
While Mecachrome believes that these challenges are temporary, the
deterioration in profitability warrants a right-sizing of its near-term
production capacity and an improvement to its cost profile. Within this
context, the Company is preparing a corrective action plan aimed at addressing
cash flow generation in both the short and long-term.
The Company will discuss its second quarter results in further detail at
the earnings release call on August 13th, 2008.
Profitability Improvement Plan
Mecachrome has established an action plan aimed at improving the
Company's profitability and cash generation (the "Profitability Improvement
Plan"). The Profitability Improvement Plan will be implemented in two phases.
The implementation of Phase 1 measures, previously announced on May 15,
2008, is expected to be completed by September 30th, 2008. Mecachrome's
objective is that Phase 1 results in recurring annual cost savings of
approximately (euro)10 million on a run-rate basis, starting in the first
quarter of 2009. Phase 1 measures, which have already been identified and are
currently being implemented, will consist of selected workforce reductions,
tightened expense control and focused capital expenditures reductions.
Under Phase 2 of the Profitability Improvement Plan, the Company will
conduct a thorough review of its business activities (the "Operational
Review") with the objective of repositioning the Company to remain competitive
in a challenging market environment, generate positive free cash flow in a
sustainable manner and increase the financial returns of its activities. The
Company expects the Operational Review to be completed by the end of
September 2008, while the measures to be identified are expected to be
implemented beginning in the fourth quarter of this year. Mecachrome's
objective is to achieve breakeven free cash flow in full-year 2009 and to
generate positive free cash flow in a sustainable manner thereafter.
Mecachrome has requested and received lender commitments for certain
amendments to its Credit Agreement, dated as of May 17, 2006, that modify the
interest coverage ratio and the fixed charge coverage ratio financial
covenants as of June 30, 2008 and until December 31, 2008, inclusively and
that permit a sale-and-leaseback transaction. Mecachrome therefore maintains
access to the full amount of (euro)75 million available under its revolving
credit facility, which is undrawn at present. These amendments are not
required in respect of Mecachrome's Senior Subordinated Notes due 2014.
Mecachrome is pleased of its lenders' support and believes these amendments
will provide the necessary financial flexibility while it assesses and
implements the Profitability Improvement Plan.
Mecachrome announced that M. Guillaume Casella is resigning as President
and Chief Executive Officer, as of July 15, 2008, in agreement with the Board
of Directors, in order to pursue other business interests in Europe.
M. Gérard Casella, Chairman of the Board of Directors, thanks
M. Guillaume Casella for his accomplishments over the last six years during
which he focused his energy and dedication into Mecachrome's international
expansion, from the buildup of its manufacturing facilities to its design and
engineering offices, while leading the transition of the head office to
"The recent changes in the economic fundamentals affecting our customers
call for the implementation of a renewed operational strategy. Starting today,
a new team bringing together our French and Canadian employees will work to
assure the operational success of the Company and secure future growth
opportunities", said Mr. Gérard Casella.
In the interim, the Board of Directors has established a Management
Committee, consisting of Arnaud Casella, President of Mecachrome France,
Julio De Sousa, Managing Director and Vice-President Operations, Mecachrome
France and Stephan Yazedjian, Executive Vice-President and Chief Financial
Officer, which will assume the operational leadership of the Company. The
Management Committee, which will report to Mr. Gérard Casella, Chairman, and
to the Board of Directors, will provide continuity of leadership while the
Company assesses and implements the Profitability Improvement Plan.
Mr. Arnaud Casella has been president of Mecachrome France since January
2004. From 1997 through 2003, Mr. Casella was Managing Director of Mecachrome,
with responsibilities that included, amongst others, managing the Aubigny
plant. Julio De Sousa has been the Managing Director and Vice-President
Operations for Mecachrome since 1994. Since joining Mecachrome in 1980,
Mr. De Sousa has held various positions of increasing responsibility with the
Company. Throughout his tenure at Mecachrome, Mr. De Sousa's accomplishments
include the launch of facilities in Amboise and Sablé-sur-Sarthe, as well as
the expansion of the Aubigny plant. Mr. Yazedjian joined Mecachrome as
Executive Vice-President and Chief Financial Officer in October 2003.
With the extensive experience of theses individuals and their history in
senior positions with Mecachrome, the Board of Directors firmly believes that
the Management Committee has the operational and financial experience to lead
the Company on an interim basis, until a new Chief Executive Officer is
appointed. The Board of Directors, with the support of a renewed management
team, is committed to building a strong platform for continued growth and
delivery of improved free cash flow and shareholder value over the long-term.
The Board of Directors of Mecachrome will make additional announcements
regarding leadership at Mecachrome in due course.
About Mecachrome International Inc.
Mecachrome is a leader in the design, engineering, manufacture and
assembly of complex precision-engineered components for aircraft and
automotive applications, including aerostructural and aircraft engine
components, high-end automobile engine components and motor racing engines.
Since 1937, Mecachrome has established a significant presence and global
reputation in certain high-precision sectors of the aerospace, automotive and
industrial equipment industries, providing services primarily to original
equipment manufacturers. The company currently operates 11 state-of-the-art
facilities, principally in France and Canada, and employs over 2,000
employees. For more information on the company, visit www.mecachrome.com
Use of Certain Non-GAAP Measures
In this press release, we use certain supplemental financial measures,
which include adjusted EBITDA, that are not required by or recognized under,
or calculated in accordance with, GAAP. We define adjusted EBITDA as net loss
before amortization, interest expense, special items, other expenses, income
taxes and minority interest.
All statements, other than statements of historical facts, included in
this news release, including statements regarding our strategies and the
Profitability Improvement Plan, are forward-looking statements or contain
forward-looking information (within the meaning of the Québec Securities Act
and the Ontario Securities Act). Although we believe that the expectations
reflected in these forward-looking statements and forward-looking information
are reasonable, these statements involve risks and uncertainties and are not
guarantees of future performance. We can give no assurance that these
estimates and expectations will prove to have been correct, and actual
outcomes and results may differ materially from what is expressed, implied or
projected in such forward-looking statements and forward-looking information.
There are a number of important risks and uncertainties that could, and often
do, cause our actual results to differ materially from those indicated or
implied by forward-looking statements and forward-looking information,
including the risks and uncertainties related to our ability to realize the
performance objectives under our Profitability Improvement Plan and those
discussed in Mecachrome's Annual Information Form for the year ended December
31, 2007. Given the uncertainty of forward-looking statements and
forward-looking information, investors are cautioned not to place undue
reliance on these statements and information. The forward-looking statements
and forward-looking information speak only as of the date made, and Mecachrome
expressly disclaims any intention or obligation to update or revise any
forward-looking statements or forward looking information, whether as a result
of new information, future events or otherwise, except as may be required by
For further information:
For further information: Elina Tea, Director Investor
Relations/Corporate Finance, (514) 373-2009, email@example.com