2014

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,
  Inc. and subsidiaries


$      (3,558)


$       3,364


$        2,321


$        6,253










Basic net income (loss) attributable to
  Stoneridge, Inc. and subsidiaries per share


$        (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
  Stoneridge, Inc. and subsidiaries per share


$        (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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