Hayes Lemmerz Increases Adjusted EBITDA Guidance for Fiscal 2008 Following Strong Second Quarter Results

NORTHVILLE, Mich., Sept. 4, 2008 - Hayes Lemmerz International, Inc. today announced that it is increasing its fiscal 2008 Adjusted EBITDA guidance as it reported substantially improved Adjusted EBITDA, core operating earnings and liquidity for the second fiscal quarter ended July 31, 2008.

Updated Guidance

Curtis J. Clawson, President, CEO and Chairman of the Board, said, "We are increasing the Company's Adjusted EBITDA guidance for fiscal 2008 to $225 million to $240 million, up $20 million from prior guidance of $205 million to $220 million. Capital expenditures have been reduced for the year and are now expected to be between $90 million to $100 million, down $5 million from prior guidance of $95 million to $105 million. We are also affirming the Company's sales guidance of $2.1 billion to $2.3 billion for fiscal 2008."

Second Quarter Results

Compared to the year earlier quarter, Adjusted EBITDA for the second quarter improved 40%, to $63.9 million from $45.8 million and the Adjusted EBITDA margin rose to 11.3% from 8.4%. Adjusted EBITDA for the first half of the fiscal year was $118.5 million, up $22.6 million or 24% from the prior fiscal year. Compared to the year earlier quarter, core operating earnings for the second quarter improved 87% to $33.8 million from $18.1 million. Core operating earnings for the first half of the fiscal year were $59.0 million, an improvement of $19.8 million or 51% from the prior fiscal year.

"This was a very good quarter for Hayes Lemmerz and, although there is the potential for higher steel prices and further reductions in customer production volumes, the outlook for the full fiscal year has improved. Despite challenging industry conditions, our Adjusted EBITDA and core operating earnings improved significantly. Our good results reflect a strong overall performance including the benefits of our recent investments in leading-cost, high-growth areas, such as Brazil, the Czech Republic, Turkey, India and Thailand," Mr. Clawson said.

Sales in the second fiscal quarter were $563.5 million, up 4% from $544.1 in the year earlier quarter, due primarily to favorable currency exchange rates. For the first half of the fiscal year, Hayes Lemmerz reported sales of $1.14 billion, up 9.1% from $1.04 billion in the first half of the prior fiscal year. The Company's net loss in the quarter decreased to $47.0 million, an improvement of $40.1 million compared with a net loss of $87.1 million in the year earlier quarter. The Company reported a net loss for the first half of $59.8 million, down $42.6 million from a net loss of $102.4 million in the first half of the prior fiscal year.

At the end of the second quarter the Company had $222 million in total liquidity, an improvement of $27 million compared with the year earlier quarter. "I am satisfied with this level of liquidity during these difficult times in our industry," Mr. Clawson said.

Free Cash Flow

During the quarter the Company had negative free cash flow of $33.8 million excluding its accounts receivable programs, compared to negative $15.1 million in the year earlier quarter. Cash expenditures for restructuring and divestitures during the quarter negatively impacted free cash flow by approximately $36 million. The Company is targeting positive free cash flow for the full fiscal year, excluding the impact of its accounts receivable programs and planned and completed restructuring and divestiture activities.

Implementation of Strategic Plan

The Company also announced the sale of its aluminum wheel facility in Hoboken, Belgium during the quarter, in addition to other previously announced restructuring plans. "The divestiture of our aluminum wheel facility in Hoboken, Belgium in June, the expected closure of our Gainesville, Georgia, aluminum wheel facility and the planned divestiture of our powertrain facility in Nuevo Laredo, Mexico, will have a positive impact on our long-term financial performance. We have now essentially completed the process of divesting facilities and product lines that have negatively impacted our earnings," said Fred Bentley, Chief Operating Officer.

"Five years ago, we were saddled with a number of unprofitable facilities, heavily dependent upon the health of the U.S. auto market, and equally dependent upon the success of a small number of customers. Today, we are the only company with a cost-effective manufacturing presence in both steel and aluminum wheels in almost every global market," he said. "Our strategic focus on improving product, customer and geographic diversification is providing ever-increasing benefits."

Mr. Bentley noted that the Company's geographic distribution of sales has changed significantly: from 45% of total sales in the domestic U.S. market in 2004 to an estimated 13% in fiscal 2008 (excluding the three facilities being closed or divested), from 4% to 16% in South America, from 15% to 24% in Eastern Europe, and from 29% to 34% in Western Europe. Overall, sales in leading-cost countries have almost doubled since 2004, reducing the Company's reliance on the domestic U.S. market. "Our largest single customer today is based in the U.S., but 79% of our business with that customer is in other regions," Mr. Bentley added.

"We have also greatly diversified our customer base since 2004. We are continuing to win new business with European and U.S. customers, and we are increasingly winning with Asian OEMs," said Mr. Bentley. "The Company expects to meet or exceed last year's record of $430 million of new business, with wins spread across its customer base," he added.

"Although sales are essentially even with 5 years ago, the Company's employee count is down 33% during that period, and employment in high-cost regions is down more than 60%," he said.

Mr. Bentley also noted that the Company's product mix is well balanced, with aluminum light vehicle wheels, steel light vehicle wheels, and commercial truck wheels each accounting for approximately one-third of the Company's sales.