Stoneridge Reports Third-Quarter 2010 Results

Increasing Volume Drives Net Sales up 36%

Company Generates Operating Income of $5.0 Million Despite Component Shortages, Higher Launch Costs

Refinancing of Long Term Notes With Improved Interest Costs and Extended Maturities to 2017

Oct 22, 2010, 08:20 ET from Stoneridge, Inc.

WARREN, Ohio, Oct. 22 /PRNewswire-FirstCall/ -- Stoneridge, Inc. (NYSE: SRI) today announced improving financial results for the third quarter ended September 30, 2010.  

Net sales increased $42.4 million, or 36.0%, to $160.4 million, compared with $118.0 million for the third quarter of 2009, driven by market demand coupled with organic growth.  The increase in net sales was primarily driven by increased vehicle production volume in the third quarter of 2010 compared with the third quarter of 2009 in the passenger car and light truck markets in North America (26.3%) and medium- and heavy-duty truck markets in both North America (25.1%) and Europe (76.0%).

Net income for the third quarter of 2010 was $0.7 million, or $0.03 per diluted share, compared with a net loss of $0.8 million, or $(0.04) per diluted share, in the third quarter of 2009.  The increase in net income was primarily due to increased production volume.  Operating income for the third quarter of 2010 was $5.0 million, an increase of approximately 90.5% from a year ago.  However, our third quarter 2010 results were negatively impacted by component shortages and higher than expected program launch costs.

Equity earnings have improved to $3.9 million in the quarter due primarily to the improved profitability of PST, our Brazilian joint venture.  As a result of accounting guidelines, we provided deferred tax expense of $1.3 million, or $0.05 per diluted share, which does not impact our cash taxes.

As of September 30, 2010, Stoneridge's consolidated cash position was $84.9 million, $7.0 million lower than its 2009 year-end balance of $91.9 million. The decline was primarily the result of higher accounts receivable balances related to the increase in sales. Stoneridge's Asset Based Lending facility remains undrawn.

On October 4, 2010, Stoneridge completed the refinancing of its unsecured $183.0 million 11.5% notes that would have matured on May 1, 2012.  Stoneridge issued $175.0 million 9.5% new senior secured notes which mature October 15, 2017 and extended the maturity of the Asset Based Lending facility until November 1, 2012.

Outlook

"Although we are pleased that our net sales and net income increased in the third quarter, our results were negatively impacted by additional costs associated with the launch of a major customer program and supply shortages of electronic chips and electrical connectors," said John C. Corey, the Company's president and chief executive officer.  "These issues are being resolved, and the actions we are taking to support our customer commitments will benefit our future performance.  In the meantime, as the market continues to improve, we expect to see further improvement in our financial results.  We now expect our 2010 sales to be in the range of $630.0 to $640.0 million.  We remain committed to creating long-term value through growth, diversification and leveraging our lower cost structure.  In addition, we expect our future performance to benefit from our recently completed refinancing."

Conference Call on the Web

A live Internet broadcast of Stoneridge's conference call regarding 2010 third-quarter results can be accessed at 11 a.m. Eastern time on Friday, October 22, 2010, at www.stoneridge.com, which will also offer a webcast replay.

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 medium- and heavy-duty truck, automotive and agricultural 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 change in medium- and heavy-duty truck, 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.

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010

2009

2010

2009

Net Sales

$     160,436

$       117,992

$     474,772

$    341,367

Costs and Expenses:

Cost of goods sold

124,406

90,909

365,595

281,413

Selling, general and administrative

31,011

24,449

92,026

80,373

Operating Income (Loss)

5,019

2,634

17,151

(20,419)

Interest expense, net

5,720

5,559

16,956

16,594

Equity in earnings of investees

(3,884)

(3,386)

(6,186)

(4,864)

Other expense (income), net

559

(198)

(1,140)

447

Income (Loss) Before Income Taxes

2,624

659

7,521

(32,596)

Provision (benefit) for income taxes

1,975

1,502

1,217

(409)

Net Income (Loss)

649

(843)

6,304

(32,187)

Net Loss Attributable to Noncontrolling Interest

(35)

-

(79)

-

Net Income (Loss) Attributable to Stoneridge, Inc. and

Subsidiaries

$            684

$            (843)

$         6,383

$    (32,187)

Basic Net Income (Loss) Per Share

$           0.03

$           (0.04)

$           0.27

$        (1.37)

Basic Weighted Average Shares Outstanding

23,972

23,761

23,939

23,580

Diluted Net Income (Loss) Per Share

$           0.03

$           (0.04)

$           0.26

$        (1.37)

Diluted Weighted Average Shares Outstanding

24,357

23,761

24,359

23,580

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30,

December 31,

2010

2009

ASSETS

(Unaudited)

(Audited)

Current Assets:

Cash and cash equivalents

$             84,894

$             91,907

Accounts receivable, less reserves of $1,589 and $2,350, respectively

109,780

81,272

Inventories, net

51,336

40,244

Prepaid expenses and other current assets

17,899

17,247

Total current assets

263,909

230,670

Long-Term Assets:

Property, plant and equipment, net

73,111

76,991

Investments and other long-term assets, net

63,035

54,864

Total long-term assets

136,146

131,855

Total Assets

$           400,055

$           362,525

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$             67,015

$             50,947

Accrued expenses and other current liabilities

51,895

36,827

Total current liabilities

118,910

87,774

Long-Term Liabilities:

Long-term debt

183,240

183,431

Other long-term liabilities

13,267

17,263

Total long-term liabilities

196,507

200,694

Shareholders' Equity:

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

-

-

Common Shares, without par value, authorized 60,000 shares, issued 25,975 and 25,301

shares and outstanding 25,443 and 25,000 shares, respectively, with no stated value

-

-

Additional paid-in capital

160,784

158,748

Common Shares held in treasury, 532 and 301 shares, respectively, at cost

(413)

(292)

Accumulated deficit

(85,177)

(91,560)

Accumulated other comprehensive income

5,031

2,669

Total Stoneridge Inc. and Subsidiaries shareholders’ equity

80,225

69,565

Noncontrolling interest

4,413

4,492

Total shareholders' equity

84,638

74,057

Total Liabilities and Shareholders' Equity

$           400,055

$           362,525

STONERIDGE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

Nine Months

Ended September 30,

2010

2009

OPERATING ACTIVITIES:

Net cash provided by (used for) operating activities

$             3,232

$           (2,578)

INVESTING ACTIVITIES:

Capital expenditures

(10,417)

(8,779)

Proceeds from sale of fixed assets

25

88

Net cash used for investing activities

(10,392)

(8,691)

FINANCING ACTIVITIES:

Share-based compensation activity, net

306

-

Borrowings on revolving credit facilities, net

1,134

-

Repayments of debt

(210)

-

Other financing costs

-

(50)

Net cash provided by (used for) financing activities

1,230

(50)

Effect of exchange rate changes on cash and cash equivalents

(1,083)

3,069

Net change in cash and cash equivalents

(7,013)

(8,250)

Cash and cash equivalents at beginning of period

91,907

92,692

Cash and cash equivalents at end of period

$           84,894

$           84,442

SOURCE Stoneridge, Inc.



RELATED LINKS

http://www.stoneridge.com