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5. Metaldyne Performance Group Inc. Business Report FY ended Dec. 2017

Metaldyne Performance Group Inc. Business Report FY ended Dec. 2017

Factors
1) Net Sales
-The Company’s net sales increased by 12.2% in the fiscal year ended December 31, 2015 to USD 3,047.3 million. The increase in sales was primarily driven by the first full year of results of the Grede acquisition, which contributed approximately USD 409 million and increased sales volumes. These factors were partially offset by negative foreign currency exchange effects, lower raw material surcharge pass-through, and net price decreases.

2) Operating Income
-The Company’s operating income increased by 30.9% over the previous year to USD 266.4 million for the fiscal year ended December 31, 2015. The increase was driven by the full year impact of the Grede acquisition, increased sales volumes, reductions in manufacturing costs, and lower depreciation. These gains were partially offset by lower scrap sales.

3) HHI sales
-Sales for the Company’s HHI segment increased by 1.7% in the fiscal year ended December 31, 2015 to USD 984.8 million. The increase in sales was due to increased volumes from higher North American light vehicle production levels. The increase was partially offset by lower raw material surcharges and price decreases.

4) Metaldyne sales
-The Company’s Metaldyne segment had sales of USD 1,155.7 million in the fiscal year ended December 31, 2015, a decrease of 1.8% from the previous year. Despite gains from increased sales volumes due to increased North American European light vehicle production, sales decreased due to negative foreign currency effects, net price decreases, and lower raw material surcharges.

5) Grede sales
-In the fiscal year ended December 31, 2015, the Company’s Grede segment had sales of USD 906.8 million, an increase of 58.5% over the previous year. The increase in sales was due to the inclusion of five additional months of results in the fiscal year, as 2015 was the first year which included Grede’s full year of results in the Company’s sales. This gain was partially offset by lower raw material surcharges and sales volume reductions in the industrial market.

Restructuring

Closure of Grede facility in Berlin, Wisconsin, U.S.
-The Company announced the closure of its Grede facility in Berlin, Wisconsin, U.S. This closure was part of Grede's manufacturing footprint optimization plan, which has closed three other foundries in the U.S. since 2013 and has consolidated two foundries in Mexico. (From a press release on June 26, 2015)

Contracts

-The Company's Grede segment supplies the lightweighted differential carrier and case for the Ford "F-150", winner of the 2015 North American Truck of the Year. (From a press release on January 23, 2015)

-In the fiscal year ended December 31, 2015, the Company won USD 727 million in new business, which set a record high and was USD 55 million more than last year. The new business is focused on light vehicle powertrains.

Awards

-The Company announced that its Metaldyne operation in Valencia, Spain received special recognition from Ford for 100% on-time delivery over the past 12 years. Since May 2003, Metaldyne Sintered Components Espana, S.L has delivered over 60 million forged powder metal connecting rods for specific Ford Duratec engine lines in Europe with zero defective parts per million and 100% on-time delivery. (From a press release on August 20, 2015)

-The Company announced that its Metaldyne facility in Bluffton, Indiana, U.S., was recognized by Ford Motor Company with a World Excellence Award for production in clutch modules. The plant has significantly increased capacity for six-speed transmission clutch modules without any material quality issues, while maintaining exceptional on-time deliveries. (From a press release on June 29, 2015)

-The Company's Metaldyne, LLC subsidiary was named a 2014 Supplier of the Year from General Motors. This was the second consecutive year that Metaldyne has won this distinction. Metaldyne was recognized in the Powertrain category for its design, engineering and supply of connecting rods, which are provided to GM. (From a press release on March 17, 2015)

R&D Expenditures

-The Company does not generally incur significant R&D costs as it tends to be responsible for the manufacturing of products. The Company's customers are responsible for the design and function of the products, and thus research and development costs are typically incurred by the customer.

R&D Activities

-The Company's Grede segment is working with Lightweight Innovations for Tomorrow (LIFT), a government-funded consortium to develop lightweight material manufacturing technologies. Grede will be working with LIFT to focus on thin wall ferrous castings over the next two years. Other companies that are participating include Eaton, Comau, the American Foundry Society, and MIT. (From a press release on July 13, 2015)

Investments in U.S.

-The Company announced that it is expanding its Metaldyne facility in Bluffton, Indiana, U.S., by 37,000 square feet. The building addition will support several future transmission-related programs through the supply of ready-to-assemble differential assemblies and aluminum valve bodies. Construction is expected to start in September 2015 and be completed by March 2016. The building addition is the first step in a five-year multi-million dollar capital investment plan to support the launch and production of new programs. (From a press release on September 18, 2015)

-The Company announced plans to invest over USD 20 million over the next three years at its Grede facility in Biscoe, North Carolina, U.S. to support the growth of its commercial vehicle business. The investment will expand the facility and add 26,000 square feet of manufacturing space. Also, three new molding machines and handling systems, a heat treating system, and an environmentally friendly immersion coating system will be added to the facility. The Company expects to add more than 35 new employees through the investment. (From a press release on March 25, 2015)