Shutdown of the Chrysler Sebring platform cost Metaldyne

TRAVERSE CITY, Mich. -- The shutdown of the Chrysler Sebring platform cost Metaldyne Corp. $10 million in revenue during the second quarter, but the chassis and driveline supplier says it will begin work on the next generation of the vehicle this fall.Metaldyne, based in Plymouth Township, Mich., has tied much of its business to DaimlerChrysler AG, which accounts for more than a quarter of Metaldyne's annual sales.

CEO Tim Leuliette has said Metaldyne wants to quietly improve profit margins this year and clean up its balance sheets. So far the company is meeting those goals, said Tom Amato, executive vice president of commercial operations."Metaldyne differentiates itself by sticking with our plan over a long period of time," Amato said in an interview with Automotive News today at the Management Briefing Seminars. "Given the decimation of this industry, on a relative basis, we've done pretty well."

During the second quarter, Metaldyne posted operating earnings of $26.5 million on revenue of $505.6 million, compared with operating earnings of $30.6 million on revenue of $506.6 million during the same quarter last year. Metaldyne is privately owned and doesn't trade its stock on open markets. But the company carries publicly traded bonds, so the investment community tracks operating profits and cash flow more than net income. The company posted a loss of $16.5 million in the second quarter, compared with a net income of $600,000 during the same quarter last year.

Chrysler ceased production of the current Chrysler Sebring and Dodge Status platforms on May 12 at the Sterling Heights, Mich., assembly plant. Production of the new platform is expected to begin in September. The loss of Sebring/Stratus production was somewhat offset for Metaldyne by increased work on the Chrysler 300 and Dodge Magnum and Charger. Chrysler through July has boosted production on that platform by 7.9 percent to 177,422 units, from the same period last year. Wall Street has remained concerned about Metaldyne's long-term debt load, which stood at $864.7 million at the end of the second quarter, up 7.4 percent from the same point last year.

Standard & Poor's Corp. has rated the company's debt as junk, assigning it a "B" rating."The ratings reflect the company's limited liquidity, its highly leveraged capital structure, and the cyclical and competitive pricing pressures of the capital-intensive automotive metal component supply industry," S&P said in an Aug. 4 report. Metaldyne says most of its debt doesn't amortize for several years."We have nice cash flow from operations," Amato says. "

We're comfortable with where we're at, but we want to focus where we can to take out that higher-cost debt."Metaldyne was formed in 2000 when private-equity fund Heartland Industrial Partners of Bloomfield Hills, Mich., combined MascoTech Inc., Simpson Industries Inc. and Global Metal Technologies Inc.The company ranks No. 25 on the Automotive News list of the top 150 suppliers to North America, with North American original-equipment automotive parts sales of $1.80 billion in 2005.