Stoneridge Reports Second-Quarter 2012 Results
RESULTS CONSISTENT WITH REVISED GUIDANCE
SIGNIFICANT FINANCIAL PERFORMANCE IMPROVEMENT PROJECTED FOR SECOND HALF OF 2012
WARREN, Ohio, Aug. 9, 2012 /PRNewswire/ -- Stoneridge, Inc. (NYSE: SRI) today announced financial results for the second quarter ended June 30, 2012.
Second-quarter 2012 net sales were $234.3 million, an increase of $43.9 million, or 23.0%, compared with $190.4 million for the second 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 joint venture in which the Company now has a controlling ownership interest. Excluding the net sales of PST in the second quarter of 2012, net sales were $195.8 million, an increase of $5.4 million, or 2.8%, from the same period a year ago as a result of increased production volumes in the agricultural and off-road markets.
Net loss for the second quarter of 2012 was $3.6 million, or $(0.13) per diluted share, compared with net income of $3.4 million, or $0.14 per diluted share, in the second quarter of 2011. The decrease in net income was primarily due to lower sales of higher margin products at PST as a result of the slowing Brazilian economy, significant unfavorable movements in foreign exchange rates and lower-than-expected growth in the North American and European commercial vehicle markets. In addition, the Company's results were negatively impacted by two items related to our PST segment: depreciation and amortization of purchase accounting adjustments of $2.8 million, and business realignment charges of $1.3 million.
For the six months ended June 30, 2012, the Company reported net sales of $496.5 million, a 29.5% increase from $383.5 million for the same period in 2011. Net income for the first six months was $2.3 million, or $0.09 per diluted share, down from $6.3 million, or $0.25 per diluted share, for the prior-year six-month period.
As of June 30, 2012, Stoneridge's consolidated cash position was $39.2 million, a decrease of $39.6 million from December 31, 2011. The change in the cash balance was primarily 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 has repaid $13.0 million of borrowing on its asset-backed lending facility during the first half of 2012.
Outlook
"As we announced in our press release of August 2, 2012 we have revised annual sales guidance to the range of $970 million to $1.01 billion," said John C. Corey, President and Chief Executive Officer. "However, each of our businesses is taking actions to mitigate a portion of the lower profitability and cash flow resulting from the lower revenues, and we expect our financial performance to improve in the second half due to rising sales levels at PST, along with the impact of our cost reductions and pricing actions. Our revised guidance for gross margins in the range of 24.5% to 26.5% is near the range that we originally guided to in February and reaffirmed in May. Our revised expectations for operating margins in the range of 4.5% to 6.0% and earnings per share in the $0.75 to $1.00 range are consistent with our projected benefits from management's actions in response to changing market conditions."
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2012 second-quarter results can be accessed at 11 a.m. Eastern time on Thursday, August 9, 2012, at www.stoneridge.com, which will also offer a webcast replay. In addition, a slide deck for the conference call is available at www.stoneridge.com.
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, off-highway vehicle and motorcycle 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 change in commercial vehicle, automotive or agricultural 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 |
Six Months Ended |
|||||||
June 30, |
June 30, |
|||||||
(in thousands, except per share data) |
2012 |
2011 |
2012 |
2011 |
||||
Net sales |
$ 234,265 |
$ 190,417 |
$ 496,532 |
$ 383,461 |
||||
Costs and expenses: |
||||||||
Cost of goods sold |
180,606 |
152,699 |
377,735 |
306,453 |
||||
Selling, general and administrative |
52,042 |
30,305 |
105,331 |
62,895 |
||||
Operating Income |
1,617 |
7,413 |
13,466 |
14,113 |
||||
Interest expense, net |
5,162 |
4,289 |
10,517 |
8,555 |
||||
Equity in earnings of investees |
(97) |
(1,808) |
(236) |
(3,724) |
||||
Other expense, net |
2,734 |
534 |
2,403 |
1,533 |
||||
Income (loss) before income taxes |
(6,182) |
4,398 |
782 |
7,749 |
||||
Provision (benefit) for income taxes |
(884) |
1,158 |
334 |
1,835 |
||||
Net income (loss) |
(5,298) |
3,240 |
448 |
5,914 |
||||
Net loss attributable to noncontrolling interest |
(1,740) |
(124) |
(1,873) |
(339) |
||||
Net income (loss) attributable to Stoneridge, |
$ (3,558) |
$ 3,364 |
$ 2,321 |
$ 6,253 |
||||
Basic net income (loss) attributable to |
$ (0.13) |
$ 0.14 |
$ 0.09 |
$ 0.26 |
||||
Basic weighted average shares outstanding |
26,424 |
24,162 |
26,322 |
24,090 |
||||
Diluted net income (loss) attributable to |
$ (0.13) |
$ 0.14 |
$ 0.09 |
$ 0.25 |
||||
Diluted weighted average shares outstanding |
26,424 |
24,606 |
26,999 |
24,545 |
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
June 30. |
December 31, |
|||
(in thousands) |
2012 |
2011 |
||
(Unaudited) |
||||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 39,164 |
$ 78,731 |
||
Accounts receivable, less reserves of $2,397 and $1,485, respectively |
160,329 |
162,354 |
||
Inventories, net |
116,494 |
120,645 |
||
Prepaid expenses and other current assets |
33,725 |
28,393 |
||
Total current assets |
349,712 |
390,123 |
||
Long-term assets: |
||||
Property, plant and equipment, net |
121,279 |
124,802 |
||
Other Assets |
||||
Intangible assets, net |
92,367 |
102,731 |
||
Goodwill |
64,706 |
68,808 |
||
Investments and other long-term assets, net |
12,456 |
11,193 |
||
Total long-term assets |
290,808 |
307,534 |
||
Total assets |
$ 640,520 |
$ 697,657 |
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Current portion of debt |
$ 37,076 |
$ 44,246 |
||
Revolving credit facilities |
26,065 |
39,181 |
||
Accounts payable |
84,931 |
83,859 |
||
Accrued expenses and other current liabilities |
54,032 |
91,417 |
||
Total current liabilities |
202,104 |
258,703 |
||
Long-term liabilities: |
||||
Long-term debt |
181,807 |
183,711 |
||
Deferred income taxes |
66,912 |
69,110 |
||
Other long-term liabilities |
5,312 |
5,494 |
||
Total long-term liabilities |
254,031 |
258,315 |
||
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 28,054 and 26,222 shares, respectively, with no stated value |
- |
- |
||
Additional paid-in capital |
182,373 |
170,775 |
||
Common Shares held in treasury, 379 and 875 shares, respectively, at cost |
(1,866) |
(1,870) |
||
Accumulated deficit |
(25,942) |
(28,263) |
||
Accumulated other comprehensive loss |
(14,475) |
(9,615) |
||
Total Stoneridge Inc. and subsidiaries shareholders' equity |
140,090 |
131,027 |
||
Noncontrolling interest |
44,295 |
49,612 |
||
Total shareholders' equity |
184,385 |
180,639 |
||
Total liabilities and shareholders' equity |
$ 640,520 |
$ 697,657 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) |
||||||||||||
Three months ended |
Six months ended |
|||||||||||
June 30, |
June 30, |
|||||||||||
(in thousands) |
2012 |
2011 |
2012 |
2011 |
||||||||
Net income (loss) |
$ (5,298) |
$ 3,240 |
$ 448 |
$ 5,914 |
||||||||
Other comprehensive income (loss), net of tax: |
||||||||||||
Foreign currency translation adjustments |
(17,456) |
2,159 |
(10,345) |
4,466 |
||||||||
Unrealized loss on marketable securities |
- |
(29) |
- |
(35) |
||||||||
Unrealized gain (loss) on derivatives |
(1,771) |
584 |
5,485 |
704 |
||||||||
Other comprehensive income (loss) |
(19,227) |
2,714 |
(4,860) |
5,135 |
||||||||
Consolidated comprehensive income (loss) |
(24,525) |
5,954 |
(4,412) |
11,049 |
||||||||
Comprehensive loss attributable to noncontrolling interest |
(1,740) |
(124) |
(1,873) |
(339) |
||||||||
Comprehensive income (loss) attributable to |
||||||||||||
Stoneridge, Inc. and subsidiaries |
$ (22,785) |
$ 6,078 |
$ (2,539) |
$ 11,388 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||
Six months ended June 30 (in thousands) |
2012 |
2011 |
||
OPERATING ACTIVITIES: |
||||
Net cash provided by (used for) operating activities |
$ 15,316 |
$ (23,113) |
||
INVESTING ACTIVITIES: |
||||
Capital expenditures |
(14,370) |
(14,117) |
||
Proceeds from sale of fixed assets |
301 |
3 |
||
Capital contribution from noncontrolling interest |
- |
271 |
||
Payment for additional interest in PST |
(19,779) |
- |
||
Net cash used for investing activities |
(33,848) |
(13,843) |
||
FINANCING ACTIVITIES: |
||||
Revolving credit facility borrowings |
11,310 |
893 |
||
Revolving credit facility payments |
(24,426) |
(457) |
||
Proceeds from issuance of other debt |
18,871 |
- |
||
Repayments of other debt |
(26,124) |
(130) |
||
Other financing costs |
(111) |
(96) |
||
Repurchase of Common Shares to satisfy employee tax withholding |
(1,119) |
(744) |
||
Net cash used for financing activities |
(21,599) |
(534) |
||
Effect of exchange rate changes on cash and cash equivalents |
564 |
1,964 |
||
Net decrease in cash and cash equivalents |
(39,567) |
(35,526) |
||
Cash and cash equivalents at beginning of period |
78,731 |
71,974 |
||
Cash and cash equivalents at end of period |
$ 39,164 |
$ 36,448 |
||
Supplemental disclosure of non-cash financing activities: |
||||
Change in fair value of interest rate swap |
$ 754 |
$ 1,208 |
||
Issuance of Common Shares for acquisition of additional PST interest |
$ 10,197 |
$ - |
||
SOURCE Stoneridge, Inc.
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