Stoneridge Reports Fourth-Quarter 2012 Results

01 Mar, 2013, 07:55 ET from Stoneridge, Inc.

WARREN, Ohio, March 1, 2013 /PRNewswire/ --

  • Strong Cash Flow Drives Debt Reduction in 2012
  • Continued Operating Improvements in the Fourth Quarter
  • Reaffirms 2013 Guidance of $0.75 - $0.95 per share

Stoneridge, Inc. (NYSE: SRI) today announced financial results for the fourth quarter ended December 31, 2012.

Fourth-quarter 2012 net sales were $222.7 million, an increase of $36.7 million, or 19.7%, compared with $186.0 million for the fourth quarter of 2011. The increase in the current quarter's net sales was primarily due to the consolidation of the operating results of PST, the Brazilian subsidiary of which the Company acquired controlling interest on December 29, 2011.  Excluding PST in the fourth quarter of 2012, net sales were $178.3 million, a decrease of $7.8 million, or 4.2%, from the same period a year ago, primarily as a result of lower sales in the Company's Wiring business segment, including lower sales to a large North American commercial vehicle customer, and lower sales to European commercial vehicle customers in the Company's Electronics business segment.

Net income for the fourth quarter of 2012 was $2.6 million, or $0.10 per diluted share, compared with net income of $38.6 million, or $1.56 per diluted share, in the fourth quarter of 2011.  The decrease in net income was primarily due to a $65.4 million pretax gain ($42.5 million after-tax gain) or $1.72 per share recognized in conjunction with Stoneridge's purchase of additional ownership in its Brazil-based PST joint venture on December 29, 2011.

For the year ended December 31, 2012, the Company reported net sales of $938.5 million, a 22.6% increase from $765.4 million for the same period in 2011.  The increase in the current year's net sales was primarily due to the consolidation of the operating results of PST.   Excluding the net sales of PST in 2012, net sales were $758.1 million, a decrease of $7.3 million, or 1.0%, from a year ago, primarily as a result of lower sales in the Company's Wiring business segment and lower sales to European commercial vehicle customers in the Company's Electronics business segment.

Net income for the year was $5.4 million, or $0.20 per diluted share, down from $49.4 million, or $2.00 per diluted share, for the prior year which included the $1.72 per share gain recognized in conjunction with the PST purchase.

"As we announced in our press release of February 7, we finished 2012 with strong cash flow and we have exceeded our debt reduction targets.  We finished the year generating approximately $49.1 million in free cash flow (net cash provided by operating activities less capital expenditures)," said John C. Corey, President and Chief Executive Officer.

As of December 31, 2012, Stoneridge's consolidated cash position was $44.6 million, a decrease of $34.2 million from December 31, 2011. The change in the cash balance was partially the result of the $19.8 million in cash used to fund the final portion of the PST transaction, which was completed on January 5, 2012.  The Company also reduced its debt by $65.7 million during 2012.  Stoneridge repaid $38.0 million of borrowing on its asset-based lending facility, and the remaining $27.7 million was primarily due to PST's repayment of indebtedness. 

"While our cost-reduction and other initiatives continued to drive gross margin and operating margin improvements in the fourth quarter compared with the second and third quarters of 2012, our earnings performance in the fourth quarter was below our expectations and due primarily to a slower recovery in the Brazilian market than anticipated and lower than expected sales in our European operations as European OEMs extended their holiday shutdown," Corey noted.  "We have adjusted our cost structures to reflect the market weakness and expect to see continued financial improvement in 2013 and reaffirm our full 2013 guidance as published on February 7, 2013," Corey added.

Wiring as a Separate Reporting Segment

In the fourth quarter of 2012, Stoneridge changed its reportable segments in accordance with accounting guidelines, which will provide better visibility to Stoneridge's four operating segments: Control Devices, Electronics, PST and Wiring.  The revised segment information constitutes a reclassification and has no impact on reported net income or earnings per share for any period. These changes do not restate information previously reported in the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Shareholders' Equity or Consolidated Statements of Cash Flows for the Company for any period.

Conference Call on the Web

A live Internet broadcast of Stoneridge's conference call regarding 2012 fourth-quarter results can be accessed at 11 a.m. Eastern time on Friday, March 1, 2013, at www.stoneridge.com, which will also offer a webcast replay.

A Non-GAAP Financial Measure

This press release includes the financial measure free cash flow. This measure is defined as a non-GAAP financial measure by the Securities and Exchange Commission and may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. The Company believes that free cash flow is helpful when presented in conjunction with the net cash provided by operating activities, which was $75.5 million for 2012. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Reconciliation for 2012: Net cash provided by operating activities of $75.5 million less capital expenditures of $26.4 million equals free cash flow of $49.1 million. Free cash flow is considered a liquidity measure and provides useful information to management and investors about the amount of cash generated after the capital expenditures. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period.

About Stoneridge, Inc.

Stoneridge, Inc., headquartered in Warren, Ohio, is an independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems principally for the commercial vehicle, automotive and agricultural, motorcycle and off-highway vehicle markets.  Additional information about Stoneridge can be found at www.stoneridge.com.

Forward-Looking Statements

Statements in this release that are not historical fact are forward-looking statements, which involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied in this release.  Things that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the loss of a major customer; a significant volume change in commercial vehicle, automotive or agricultural, motorcycle and off-highway vehicle production; disruption in the OEM supply chain due to bankruptcies; a significant change in general economic conditions in any of the various countries in which the Company operates; labor disruptions at the Company's facilities or at any of the Company's significant customers or suppliers; the ability of the Company's suppliers to supply the Company with parts and components at competitive prices on a timely basis; customer acceptance of new products; and the failure to achieve successful integration of any acquired company or business.  In addition, this release contains time-sensitive information that reflects management's best analysis only as of the date of this release.  The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.  Further information concerning issues that could materially affect financial performance related to forward-looking statements contained in this release can be found in the Company's periodic filings with the Securities and Exchange Commission.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

For the years ended

December 31,

December 31,

(in thousands, except per share data)

2012

2011

2012

2011

Net sales

$   222,725

$       186,048

$   938,513

$    765,373

Costs and expenses:

Cost of goods sold

168,116

153,730

713,869

618,596

Selling, general and administrative

45,961

34,957

195,915

128,306

Goodwill impairment charge

-

4,945

-

4,945

Operating income (loss)

8,648

(7,584)

28,729

13,526

Interest expense, net

4,638

4,432

20,033

17,234

Equity in earnings of investees

(317)

(4,957)

(760)

(10,034)

Gain on previously held equity interest

-

(65,372)

-

(65,372)

Other expense, net

1,521

220

4,896

56

Income before income taxes

2,806

58,093

4,560

71,642

Provision for income taxes

95

22,727

812

26,105

Net income

2,711

35,366

3,748

45,537

Net income (loss) attributable to noncontrolling interest

90

(3,209)

(1,613)

(3,820)

Net income attributable to Stoneridge, Inc. 

$        2,621

$         38,575

$        5,361

$      49,357

Earnings per share attributable to Stoneridge, Inc.:

Basic

$          0.10

$             1.58

$          0.20

$          2.04

Diluted

$          0.10

$             1.56

$          0.20

$          2.00

Weighted average shares outstanding:

Basic

26,435

24,380

26,377

24,181

Diluted

27,177

24,760

27,032

24,645

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

As of December 31 (in thousands)

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$           44,555

$             78,731

Accounts receivable, less reserves of $3,394 and $1,485, respectively

141,503

162,354

Inventories, net

96,032

120,482

Prepaid expenses and other current assets

28,964

27,897

Total current assets

311,054

389,464

Long-term assets:

Property, plant and equipment, net

119,147

124,944

Other assets

Intangible assets, net

84,397

98,039

Goodwill

66,381

71,855

Investments and other long-term assets, net

11,712

11,193

Total long-term assets

281,637

306,031

Total assets

$        592,691

$           695,495

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of debt

$           18,925

$             44,246

Revolving credit facilities

1,160

39,181

Accounts payable

76,303

83,509

Accrued expenses and other current liabilities

57,081

90,994

Total current liabilities

153,469

257,930

Long-term liabilities:

Long-term debt, net

181,311

183,711

Deferred income taxes

59,819

67,721

Other long-term liabilities

4,258

5,494

Total long-term liabilities

245,388

256,926

Shareholders' equity:

Preferred Shares, without par value, authorized 5,000 shares, none issued

-

-

Common Shares, without par value, authorized 60,000 shares, issued 28,433 and 27,097

shares and outstanding 27,913 and 26,222 shares at December 31, 2012 and 2011,

respectively, with no stated value

-

-

Additional paid-in capital

184,822

170,775

Common Shares held in treasury, 520 and 875 shares at December 31, 2012 and 2011,

respectively, at  cost

(1,885)

(1,870)

Accumulated deficit

(22,902)

(28,263)

Accumulated other comprehensive loss

(10,282)

(9,615)

Total Stoneridge Inc. and subsidiaries shareholders' equity

149,753

131,027

Noncontrolling interest

44,081

49,612

Total shareholders' equity

193,834

180,639

Total liabilities and shareholders' equity

$        592,691

$           695,495

 

 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  

 (Unaudited) 

Three months ended

For the Years Ended

December 31,

December 31,

 Years ended December 31 (in thousands) 

2012

2011

2012

2011

 Net income 

$            2,711

$          35,366

$           3,748

$         45,537

 Other comprehensive income (loss), net of tax: 

 Foreign currency translation adjustments 

(1,175)

(2,505)

(10,502)

(5,971)

 Pension liability adjustments 

(27)

-

(27)

-

 Unrealized gain on marketable securities 

-

-

-

16

 Unrealized gain (loss) on derivatives 

398

5,391

9,862

(7,722)

 Other comprehensive income (loss) 

(804)

2,886

(667)

(13,677)

 Consolidated comprehensive income 

1,907

38,252

3,081

31,860

 Comprehensive gain (loss) attributable to noncontrolling interest 

90

(3,209)

(1,613)

(3,820)

 Comprehensive income attributable to Stoneridge, Inc. 

$            1,817

$          41,461

$           4,694

$         35,680

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Years ended December 31 (in thousands)

2012

2011

OPERATING ACTIVITIES:

Net cash provided by operating activities

$         75,545

$                921

INVESTING ACTIVITIES:

Capital expenditures

(26,352)

(26,290)

Proceeds from sale of fixed assets

521

3,863

Capital contribution from noncontrolling interest

-

397

Business acquisitions, net of cash acquired

(19,779)

(7,753)

Net cash used for investing activities

(45,610)

(29,783)

FINANCING ACTIVITIES:

Proceeds from issuance of other debt

22,146

1,408

Repayments of other debt

(48,327)

(968)

Revolving credit facility borrowings

21,579

38,993

Revolving credit facility payments

(59,600)

(554)

Other financing costs

-

(605)

Repurchase of shares to satisfy employee tax withholding

(1,273)

(752)

Net cash provided by (used for) financing activities

(65,475)

37,522

Effect of exchange rate changes on cash and cash equivalents

1,364

(1,903)

Net change in cash and cash equivalents

(34,176)

6,757

Cash and cash equivalents at beginning of period

78,731

71,974

Cash and cash equivalents at end of period

$         44,555

$           78,731

Supplemental disclosure of non-cash financing activities:

Change in fair value of interest rate swap

$            1,134

$             4,095

Issuance of Common Shares for acquisition of additional PST interest

$         10,197

$             5,113

 

SOURCE Stoneridge, Inc.



RELATED LINKS

http://www.stoneridge.com