DETROIT -- A record number of business launches will help Metaldyne Corp. overcome low volumes from its Big 3 customers this year, CEO Tim Leuliette says.
If the rest of the year resembles the first quarter, Leuliette may have a reason to be optimistic about 2005.
Metaldyne, which manufactures engine, driveline and chassis components, typically launches about 20 programs a year. But this year it expects that number to be 50.
It expects the product launches to bring in about $400 million in revenue over the next 18 months.
"We call this the year of the launches," Leuliette says. "This is the year we start to see the business model do its thing."
Metaldyne's acquisition of the Chrysler group's former chassis and machining plant in New Castle, Ind., has driven much of the company's new business. In addition to the Chrysler group, the plant has won contracts from Ford Motor Co. and Toyota Motor Corp.
Metaldyne has moved toward more complicated assemblies, as opposed to simple forgings. In fact, forgings are down to about 16 percent of revenue.
Metaldyne of Plymouth, Mich., reported a net loss of $3.5 million on sales of $578.8 million for the quarter that ended April 3. That compares with a net loss of $5.3 million on sales of $481.1 million in the comparable quarter of 2004.
Metaldyne is a private company but reports financial results publicly because of its bond debt.
For the second quarter, Metaldyne expects sales of between $560 million and $590 million.
Metaldyne still is dealing with a high debt of $959 million and increased its debt by $28 million in the first quarter.
High steel costs have hurt, but Metaldyne recovered $31.7 million in price increases in the first quarter.
Among its cash obligations, Metaldyne has $80 million interest expense, $120 million in capital spending and debt payments of $12 million. The end of fast-pay programs from the automakers, whereby suppliers were paid early on receivables, will take away $24 million in liquidity, says Shelly Lombard, a Gimme Credit bond analyst, in a report.
"Metaldyne's operations, however, are performing better than we expected," she wrote.
Metaldyne was formed in early 2001 by private equity firm Heartland Industrial Partners LP when it combined MascoTech Inc., Simpson Industries Inc. and Global Metal Technologies Inc.
The company continues to cut costs. This month it canceled post-retirement health and life insurance benefits. The company wouldn't say how many retirees it affected, but only one of the three companies that formed Metaldyne had the benefits.
Metaldyne ranks No. 29 on the Automotive News list of the top 150 suppliers to North America with North American original-equipment automotive parts sales of $1.7 billion in 2004.