Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - STONERIDGE INC | v403092_8k.htm |
| EX-99.2 - EXHIBIT 99.2 - STONERIDGE INC | v403092_ex99-2.htm |
Exhibit 99.1
STONERIDGE REPORTS FOURTH-QUARTER 2014 RESULTS
| · | Adjusted EPS from Continuing Operations (excludes unusual items) of $0.25 on Continuing Positive Sales Performance by Control Devices and Electronics |
| · | Company Recognizes Non-Cash Goodwill Impairment for All Remaining PST Goodwill Resulting in a $21.8 Million Expense or $0.81 Per Share Loss, and Non-Recurring Debt Refinancing Charges of $9.7Million or $0.36 Per Share Loss |
| · | Loss Attributable to Stoneridge from Continuing Operations of ($0.92) Includes Goodwill Impairment and Non-Recurring Debt Refinancing Charges |
| · | Wiring Transaction Proceeds of $71.4 Million Used to Deleverage the Company; Remaining $157.5 Million of 9.5% Senior Secured Notes Redeemed on October 15, 2014 |
WARREN, Ohio – February 27, 2015 – Stoneridge, Inc. (NYSE: SRI) today announced financial results for the quarter and year ended December 31, 2014.
Fourth-quarter 2014 net sales were $166.8 million, a decrease of $2.4 million, or 1.4%, compared with $169.2 million for the fourth quarter of 2013. The Company’s PST business segment experienced a sales decrease of $9.8 million, or 21.5%, compared with the fourth quarter of 2013 as a result of deteriorating economic conditions in Brazil. PST sales were also adversely affected by unfavorable foreign exchange translation. The Brazilian Real depreciated 11.7% to the U.S. dollar, which reduced U.S. dollar reported sales for PST by approximately $4.2 million of the $9.8 million decrease. On a local currency basis, PST sales decreased by 12.3%.
The Company’s Control Devices segment recorded an increase in sales of $2.8 million, or 3.8%, and the Electronics segment recorded a $4.6 million, or 8.9%, increase compared with the fourth quarter of 2013. Electronics sales in the fourth quarter of 2014 included $6.3 million of post disposition sales to the Company’s former Wiring business acquired by Motherson. These sales were previously accounted for as intercompany transactions. The increases reflect continued strength in these segments.
The adjusted earnings per share from continuing operations attributable to Stoneridge, Inc. was $0.25 for the fourth quarter of 2014 (see Exhibit 1 for reconciliation of this non-GAAP measure). The fourth-quarter 2014 loss from continuing operations attributable to Stoneridge, Inc. of ($24.9) million, or ($0.92) per diluted share, included non-cash expense for PST goodwill impairment of $21.8 million, or $0.81 per diluted share, which was the result of the Company’s annual goodwill valuation testing. In addition, the Company recorded $9.7 million, or $0.36 per diluted share, for the note redemption premium and write-off of deferred financing fees from the redemption on October 15, 2014 of the remaining $157.5 million of the outstanding 9.5% Senior Secured Notes.
Fourth-quarter 2014 net loss attributable to Stoneridge, Inc. was ($26.6) million, or ($0.99) per diluted share, composed of loss from continuing operations of ($24.9) million, or ($0.92) per share, and loss on discontinued operations related to the former Wiring business of ($1.7) million, or ($0.07) per share.
As of December 31, 2014, Stoneridge’s consolidated cash position was $43.0 million, a decrease of $19.8 million from December 31, 2013. Cash decreased due to payments made to extinguish the 9.5% Senior Secured Notes. In addition, PST’s inventories were reduced by $9.0 million in the fourth quarter compared to the third quarter, with plans in place to reduce inventory further in the first half of 2015.
John Corey, President and Chief Executive Officer, commented, “Our Electronics and Control Devices segments continued to perform well and PST’s sales performed as we expected in the fourth quarter. Consummating the sale of the Wiring business, executing our new Credit Facility on September 12, 2014, and extinguishing the Notes were important transformational steps for Stoneridge. As we begin 2015, we will focus our efforts on our organic growth which is mostly in the North America region. We will also remain active in pursuing attractive acquisition opportunities to augment our growth strategies in Control Devices and Electronics.”
Corey concluded, “Although the improvement in the Brazilian economy did not materialize as quickly as we anticipated in the second half of 2014, we are encouraged by the 8.4% revenue growth in local currency in the fourth quarter compared to the third quarter. This growth was muted by a weakening Brazilian Real compared to the U.S. dollar. Foreign currency translation and transaction risks caused by the strengthening U.S. dollar are becoming a larger factor affecting our financial performance. Our 2015 guidance published February 10, 2015 reflects our effort to grow our business profitably and our expectation of continued U.S. dollar strength and its unfavorable impact on our results.”
Conference Call on the Web
A live Internet broadcast of Stoneridge’s conference call regarding 2014 fourth-quarter results can be accessed at 10 a.m. Eastern time on Friday, February 27, 2015, 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 automotive, commercial vehicle, motorcycle, 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 volume change in commercial vehicle, automotive, motorcycle, off-highway vehicle and agricultural equipment 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.
For more information, contact:
Kenneth A. Kure, Corporate Treasurer and Director of Finance
330/856-2443
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended | For the Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| (in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net sales | $ | 166,811 | $ | 169,235 | $ | 660,579 | $ | 659,486 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of goods sold | 121,910 | 118,592 | 469,705 | 453,531 | ||||||||||||
| Selling, general and administrative | 30,043 | 30,502 | 123,630 | 123,180 | ||||||||||||
| Design and development | 9,693 | 10,583 | 41,609 | 40,372 | ||||||||||||
| Goodwill impairment | 27,960 | - | 51,458 | - | ||||||||||||
| Operating income (loss) | (22,795 | ) | 9,558 | (25,823 | ) | 42,403 | ||||||||||
| Interest expense, net | 1,821 | 4,647 | 16,880 | 18,096 | ||||||||||||
| Equity in earnings of investee | (228 | ) | (80 | ) | (815 | ) | (476 | ) | ||||||||
| Loss on early extinguishment of debt | 9,687 | - | 10,607 | - | ||||||||||||
| Other expense (income), net | (1,703 | ) | 965 | 565 | 1,457 | |||||||||||
| Income (loss) before income taxes from continuing operations | (32,372 | ) | 4,026 | (53,060 | ) | 23,326 | ||||||||||
| Provision (benefit) for income taxes from continuing operations | (1,066 | ) | 537 | (1,856 | ) | 2,797 | ||||||||||
| Income (loss) from continuing operations | (31,306 | ) | 3,489 | (51,204 | ) | 20,529 | ||||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from discontinued operations, net of tax | (897 | ) | (3,168 | ) | (811 | ) | (4,021 | ) | ||||||||
| Loss on disposal, net of tax | (795 | ) | - | (8,576 | ) | - | ||||||||||
| Income (loss) from discontinued operations | (1,692 | ) | (3,168 | ) | (9,387 | ) | (4,021 | ) | ||||||||
| Net income (loss) | (32,998 | ) | 321 | (60,591 | ) | 16,508 | ||||||||||
| Net income (loss) attributable to noncontrolling interest | (6,444 | ) | 117 | (13,483 | ) | 1,377 | ||||||||||
| Net income (loss) attributable to Stoneridge, Inc. | $ | (26,554 | ) | $ | 204 | $ | (47,108 | ) | $ | 15,131 | ||||||
| Earnings (loss) per share from continuing operations | ||||||||||||||||
| attributable to Stoneridge, Inc.: | ||||||||||||||||
| Basic | $ | (0.92 | ) | $ | 0.13 | $ | (1.40 | ) | $ | 0.72 | ||||||
| Diluted | $ | (0.92 | ) | $ | 0.12 | $ | (1.40 | ) | $ | 0.70 | ||||||
| Earnings (loss) per share attributable to discontinued operations: | ||||||||||||||||
| Basic | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.35 | ) | $ | (0.15 | ) | ||||
| Diluted | $ | (0.07 | ) | $ | (0.11 | ) | $ | (0.35 | ) | $ | (0.14 | ) | ||||
| Earnings (loss) per share attributable to Stoneridge, Inc.: | ||||||||||||||||
| Basic | $ | (0.99 | ) | $ | 0.01 | $ | (1.75 | ) | $ | 0.57 | ||||||
| Diluted | $ | (0.99 | ) | $ | 0.01 | $ | (1.75 | ) | $ | 0.56 | ||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 26,954 | 26,692 | 26,924 | 26,671 | ||||||||||||
| Diluted | 26,954 | 27,106 | 26,924 | 27,193 | ||||||||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||
| As of December 31 (in thousands) | 2014 | 2013 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 43,021 | $ | 62,825 | ||||
| Accounts receivable, less reserves of $2,017 and $2,625, respectively | 105,102 | 102,449 | ||||||
| Inventories, net | 71,253 | 79,528 | ||||||
| Prepaid expenses and other current assets | 26,135 | 27,831 | ||||||
| Current assets of discontinued operations | - | 96,969 | ||||||
| Total current assets | 245,511 | 369,602 | ||||||
| Long-term assets: | ||||||||
| Property, plant and equipment, net | 85,311 | 86,323 | ||||||
| Other assets: | ||||||||
| Intangible assets, net | 56,637 | 68,498 | ||||||
| Goodwill | 1,078 | 54,348 | ||||||
| Investments and other long-term assets, net | 10,214 | 9,551 | ||||||
| Total long-term assets | 153,240 | 218,720 | ||||||
| Total assets | $ | 398,751 | $ | 588,322 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 19,655 | $ | 12,187 | ||||
| Accounts payable | 58,593 | 57,471 | ||||||
| Accrued expenses and other current liabilities | 42,066 | 47,310 | ||||||
| Current liabilities of discontinued operations | - | 36,754 | ||||||
| Total current liabilities | 120,314 | 153,722 | ||||||
| Long-term liabilities: | ||||||||
| Revolving credit facility | 100,000 | - | ||||||
| Long-term debt, net | 10,651 | 185,045 | ||||||
| Deferred income taxes | 50,006 | 57,026 | ||||||
| Other long-term liabilities | 3,974 | 3,995 | ||||||
| Total long-term liabilities | 164,631 | 246,066 | ||||||
| Shareholders' equity: | ||||||||
| Preferred Shares, without par value, 5,000 shares authorized, none issued | - | - | ||||||
| Common Shares, without par value, 60,000 shares authorized, | ||||||||
| 28,853 and 28,803 shares issued and 28,221 and 28,483 shares outstanding at | ||||||||
| December 31, 2014 and 2013, respectively, with no stated value | - | - | ||||||
| Additional paid-in capital | 192,892 | 187,742 | ||||||
| Common Shares held in treasury, 632 and 320 shares at December 31, | ||||||||
| 2014 and 2013, respectively, at cost | (1,284 | ) | (519 | ) | ||||
| Accumulated deficit | (54,879 | ) | (7,771 | ) | ||||
| Accumulated other comprehensive loss | (45,473 | ) | (30,458 | ) | ||||
| Total Stoneridge Inc. shareholders' equity | 91,256 | 148,994 | ||||||
| Noncontrolling interest | 22,550 | 39,540 | ||||||
| Total shareholders' equity | 113,806 | 188,534 | ||||||
| Total liabilities and shareholders' equity | $ | 398,751 | $ | 588,322 | ||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended | For the years ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| (in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Net income (loss) | $ | (32,998 | ) | $ | 321 | $ | (60,591 | ) | $ | 16,508 | ||||||
| Less: income (loss) attributable to noncontrolling interest | (6,444 | ) | 117 | (13,483 | ) | 1,377 | ||||||||||
| Net income (loss) attributable to Stoneridge, Inc. | (26,554 | ) | 204 | (47,108 | ) | 15,131 | ||||||||||
| Other comprehensive income (loss), net of tax attributable | ||||||||||||||||
| to Stoneridge, Inc.: | ||||||||||||||||
| Foreign currency translation adjustments | (9,104 | ) | (5,978 | ) | (15,268 | ) | (17,925 | ) | ||||||||
| Benefit plan liability adjustments | 141 | - | 141 | - | ||||||||||||
| Unrealized gain (loss) on derivatives | 161 | (118 | ) | 112 | (2,251 | ) | ||||||||||
| Other comprehensive loss, net of tax attributable | ||||||||||||||||
| to Stoneridge, Inc. | (8,802 | ) | (5,860 | ) | (15,015 | ) | (20,176 | ) | ||||||||
| Comprehensive loss attributable to Stoneridge, Inc. | $ | (35,356 | ) | $ | (5,656 | ) | $ | (62,123 | ) | $ | (5,045 | ) | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Years ended December 31 (in thousands) | 2014 | 2013 | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net cash provided by operating activities | $ | 19,815 | $ | 43,684 | ||||
| INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (24,754 | ) | (25,344 | ) | ||||
| Proceeds from sale of fixed assets | 110 | 107 | ||||||
| Change in restricted cash | - | - | ||||||
| Loss on disposal of Wiring business | 71,386 | - | ||||||
| Business acquisition | (1,022 | ) | - | |||||
| Net cash provided by (used for) investing activities | 45,720 | (25,237 | ) | |||||
| FINANCING ACTIVITIES: | ||||||||
| Revolving credit facility borrowings | 100,000 | - | ||||||
| Revolving credit facility payments | - | (1,160 | ) | |||||
| Extinguishment of senior notes | (175,000 | ) | - | |||||
| Premiums related to early extinguishment of senior notes | (8,006 | ) | - | |||||
| Proceeds from issuance of other debt | 30,072 | 25,555 | ||||||
| Repayments of other debt | (25,610 | ) | (24,382 | ) | ||||
| Noncontrolling interest shareholder distribution | (1,083 | ) | - | |||||
| Other financing costs | (1,666 | ) | ||||||
| Repurchase of Common Shares to satisfy employee tax withholding | (765 | ) | (516 | ) | ||||
| Net cash used for financing activities | (82,058 | ) | (503 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (3,281 | ) | 326 | |||||
| Net change in cash and cash equivalents | (19,804 | ) | 18,270 | |||||
| Cash and cash equivalents at beginning of period | 62,825 | 44,555 | ||||||
| Cash and cash equivalents at end of period | $ | 43,021 | $ | 62,825 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Change in fair value of interest rate swap | $ | (793 | ) | $ | (1,419 | ) | ||
Exhibit 1
| Stoneridge, Inc. | ||||||||
| Reconciliation of Net Loss and Loss Per Diluted Share to Adjusted Net Income and Earnings Per Share | ||||||||
| Three months ended December 31, 2014 | ||||||||
| (Unaudited) | ||||||||
| Diluted | ||||||||
| Earnings (Loss) | ||||||||
| Net Income (Loss) | Per Share | |||||||
| Net Loss and Loss per Diluted Share Attributable to Stoneridge Inc. | $ | (26,554 | ) | $ | (0.99 | ) | ||
| Less: Net Loss and Loss Per Diluted Share Attributable to Discontinued Operations | (1,692 | ) | (0.07 | ) | ||||
| Net Income and Earnings per Diluted Share Attributable to Stoneridge, Inc. | ||||||||
| from Continuing Operations | (24,862 | ) | (0.92 | ) | ||||
| Unusual Items - PST Goodwill Impairment and Debt Extinguishment Costs | ||||||||
| Plus: PST Goodwill Impairment | 27,960 | 1.04 | ||||||
| Less: PST Goodwill Impairment Attributable to Noncontrolling Interest | (6,142 | ) | (0.23 | ) | ||||
| Net PST Goodwill Impairment Attributable to Stoneridge, Inc. | 21,818 | 0.81 | ||||||
| Plus: Debt Extinguishment Costs | 9,687 | 0.36 | ||||||
| Total Adjustment for PST Goodwill Impairment and Debt Extinguishment | 31,505 | 1.17 | ||||||
| Adjusted Net Income and Earnings Per Share Attributable to Stoneridge, Inc. | $ | 6,643 | $ | 0.25 | ||||