Attached files
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| 8-K - FORM 8-K - STONERIDGE INC | v416675_8k.htm |
| EX-99.2 - EXHIBIT 99.2 - STONERIDGE INC | v416675_ex99-2.htm |
Exhibit 99.1
STONERIDGE REPORTS STRONG SECOND-QUARTER 2015 RESULTS
| · | EPS from Continuing Operations of $0.25 Significantly Improved Compared with Adjusted Earnings Per Share of $0.06 in the Second Quarter of 2014 |
| · | Continued Earnings Performance in 2015 Post the Sale of Wiring Business in 2014 |
| · | Debt Refinancing Reduces Interest Expense and Strengthens Balance Sheet |
| · | Electronics and PST Sales and Earnings Negatively Affected by Foreign Currency Movements |
WARREN, Ohio – July 30, 2015 – Stoneridge, Inc. (NYSE: SRI) today announced financial results for the second quarter ended June 30, 2015.
Second-quarter 2015 net sales were $165.3 million, an increase of $3.2 million, or 2.0%, compared with $162.1 million for the second quarter of 2014.
The Company’s Control Devices segment sales increased by $8.0 million, or 10.4%, and the Electronics segment sales increased by $5.1 million, or 9.7%, while the PST segment sales decreased by $9.9 million, or 30.1%, compared with the second quarter of 2014. The sales increases in the Control Devices and Electronics segments reflect continued strength in the markets the Company serves. Electronics sales in the second quarter of 2015 included $6.8 million of post-disposition sales to the Company’s former Wiring business, which it sold in 2014 to Motherson Sumi Systems Limited (“Motherson”). Prior to the disposition, these sales were accounted for as intercompany transactions and eliminated in consolidation. Electronics sales were negatively affected during the quarter by approximately $8.7 million as a result of foreign currency translation. Excluding sales to Motherson and adjusting for constant second-quarter 2014 foreign exchange rates, Electronics sales have risen 13.3%. (See Exhibit 1 for reconciliation of this non-GAAP financial measure.) Including Motherson sales and the impact of unadjusted foreign exchange rates, Electronics segment sales increased by 9.7%.
The Company’s PST business segment experienced a sales decrease of $9.9 million, or 30.1%, compared with the second quarter of 2014, primarily due to unfavorable foreign currency exchange translation. The Brazilian Real depreciated 37.7% to the U.S. dollar, quarter-to-quarter, which reduced U.S. dollar reported sales for PST by approximately 26.3%, or $8.7 million. PST sales were also adversely affected by the continued deterioration of economic conditions in Brazil. On a local currency basis, PST sales decreased by 3.8%.
The earnings per share from continuing operations attributable to Stoneridge, Inc. was $0.25 for the second quarter of 2015 compared with adjusted earnings per share of $0.06 in the second quarter of 2014. (See Exhibit 2 for a reconciliation of this non-GAAP financial measure.) The second-quarter 2014 net loss from continuing operations attributable to Stoneridge, Inc. of ($21.3) million, or ($0.79) per diluted share, included a non-cash expense of $29.3 million, or $0.85 per diluted share, for a non-cash goodwill impairment charge for the PST business.
Earnings were favorably affected by a lower effective tax rate compared with the second quarter of 2014 due to a higher mix of U.S. earnings, primarily caused by lower interest expense, which does not attract U.S. tax expense because of the utilization of a tax loss carry forward.
As of June 30, 2015, Stoneridge’s consolidated cash position was $22.9 million, a decrease of $20.2 million from December 31, 2014. Cash decreased due primarily to capital expenditures to facilitate new business programs, seasonal working capital increases and repayment of debt in Brazil. Stoneridge’s Debt to Adjusted EBITDA ratio improved to 2.5x compared with 3.3x in the second quarter of 2014. (See Exhibit 3 for a reconciliation of this non-GAAP financial measure.)
Jon DeGaynor, President and Chief Executive Officer, commented, “Our Control Devices and Electronics segments continued to perform well in the second quarter. Our Control Devices business was able to capitalize on continued strong North American passenger car production. Our Electronics business also nearly maintained its performance despite significant foreign exchange headwinds. PST’s sales on a local currency basis performed below our expectations for this year and were below prior year by 3.8%. While both our Electronics business and PST continue to be affected by adverse foreign exchange movements, PST was able to maintain its gross profit percentage compared to prior year through a more favorable sales mix and cost reduction initiatives. This is a significant accomplishment in the face of Brazil’s severely unfavorable economic conditions.”
DeGaynor concluded, “During my first four months with Stoneridge, I have visited every business unit at least once and initiated a series of actions in conjunction with the senior leadership team to identify new opportunities where we can improve profitability, cash flow and return on invested capital. We will pursue these opportunities without compromising flawless execution of our organic growth plans, and we are continuing to seek new growth opportunities like the recent announcement that we made regarding our exciting mirror replacement technology.”
Conference Call on the Web
A live Internet broadcast of Stoneridge’s conference call regarding 2015 second-quarter results can be accessed at 10 a.m. Eastern time on Thursday, July 30, 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 automotive, commercial vehicle, 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
| Exhibit 1 | ||||||||||||||||
| Stoneridge, Inc. | ||||||||||||||||
| Reconciliation of Electronics Segment Sales to Adjusted Electronics Segment Sales | ||||||||||||||||
| Three months ended June 30, 2015 and 2014 | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Increase / | Percent | |||||||||||||||
| 2015 | 2014 | (Decrease) | Increase | |||||||||||||
| Electronics Segment Sales As Reported | $ | 57,895 | $ | 52,766 | $ | 5,129 | 9.7 | % | ||||||||
| Plus: Constant Foreign Currency Translation Adjustment | 8,711 | - | 8,711 | |||||||||||||
| Less: Post-disposition Sales to Wiring Business Acquired | ||||||||||||||||
| by Motherson | (6,845 | ) | - | (6,845 | ) | |||||||||||
| Adjusted Electronics Segment Sales | $ | 59,761 | $ | 52,766 | $ | 6,995 | 13.3 | % | ||||||||
| Exhibit 2 | ||||||||||||||||
| Stoneridge, Inc. | ||||||||||||||||
| Reconcilation of Earnings (Loss) and Earnings (Loss) Per Diluted Share to Adjusted Earnings and Earnings Per Share | ||||||||||||||||
| Three months ended June 30, 2015 and 2014 | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Income (Loss) and Earnings (Loss) Per Diluted Share from | ||||||||||||||||
| Continuing Operations Attributable to Stoneridge, Inc. | $ | 6,924 | $ | (21,348 | ) | $ | 0.25 | $ | (0.79 | ) | ||||||
| Unusual Items - PST Goodwill Impairment | ||||||||||||||||
| PST Goodwill Impairment | - | 29,300 | - | 1.09 | ||||||||||||
| PST Goodwill Impairment Attributable to Noncontrolling Interest | - | (6,436 | ) | - | (0.24 | ) | ||||||||||
| Net PST Goodwill Impairment Attributable to Stoneridge, Inc. | $ | - | $ | 22,864 | $ | - | $ | 0.85 | ||||||||
| Adjusted Income and Earnings Per Diluted Share from | ||||||||||||||||
| Continuing Operations Attributable to Stoneridge, Inc. | $ | 6,924 | $ | 1,516 | $ | 0.25 | $ | 0.06 | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net sales | $ | 165,289 | $ | 162,099 | $ | 328,114 | $ | 323,430 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of goods sold | 119,343 | 113,814 | 238,520 | 227,007 | ||||||||||||
| Selling, general and administrative | 28,482 | 31,617 | 59,224 | 62,383 | ||||||||||||
| Design and development | 10,049 | 10,589 | 19,829 | 21,527 | ||||||||||||
| Goodwill impairment | - | 29,300 | - | 29,300 | ||||||||||||
| Operating income (loss) | 7,415 | (23,221 | ) | 10,541 | (16,787 | ) | ||||||||||
| Interest expense, net | 1,658 | 5,072 | 2,936 | 10,001 | ||||||||||||
| Equity in earnings of investee | (143 | ) | (144 | ) | (332 | ) | (382 | ) | ||||||||
| Other (income) expense, net | (47 | ) | 330 | (260 | ) | 2,246 | ||||||||||
| Income (loss) before income taxes from continuing operations | 5,947 | (28,479 | ) | 8,197 | (28,652 | ) | ||||||||||
| Provision (benefit) for income taxes from continuing operations | (381 | ) | 90 | (234 | ) | 385 | ||||||||||
| Income (loss) from continuing operations | 6,328 | (28,569 | ) | 8,431 | (29,037 | ) | ||||||||||
| Discontinued operations: | ||||||||||||||||
| Income from discontinued operations, net of tax | - | 594 | - | 1,647 | ||||||||||||
| Gain (loss) on disposal, net of tax | 55 | (1,138 | ) | (113 | ) | (1,233 | ) | |||||||||
| Income (loss) from discontinued operations | 55 | (544 | ) | (113 | ) | 414 | ||||||||||
| Net income (loss) | 6,383 | (29,113 | ) | 8,318 | (28,623 | ) | ||||||||||
| Net loss attributable to noncontrolling interest | (596 | ) | (7,221 | ) | (1,005 | ) | (8,199 | ) | ||||||||
| Net income (loss) attributable to Stoneridge, Inc. | $ | 6,979 | $ | (21,892 | ) | $ | 9,323 | $ | (20,424 | ) | ||||||
| Earnings (loss) per share from continuing operations | ||||||||||||||||
| attributable to Stoneridge, Inc.: | ||||||||||||||||
| Basic | $ | 0.26 | $ | (0.79 | ) | $ | 0.35 | $ | (0.78 | ) | ||||||
| Diluted | $ | 0.25 | $ | (0.79 | ) | $ | 0.34 | $ | (0.78 | ) | ||||||
| Earnings (loss) per share attributable to discontinued operations: | ||||||||||||||||
| Basic | $ | 0.00 | $ | (0.02 | ) | $ | 0.00 | $ | 0.02 | |||||||
| Diluted | $ | 0.00 | $ | (0.02 | ) | $ | 0.00 | $ | 0.02 | |||||||
| Earnings (loss) per share attributable to Stoneridge, Inc.: | ||||||||||||||||
| Basic | $ | 0.26 | $ | (0.81 | ) | $ | 0.35 | $ | (0.76 | ) | ||||||
| Diluted | $ | 0.25 | $ | (0.81 | ) | $ | 0.34 | $ | (0.76 | ) | ||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 27,308 | 26,934 | 27,227 | 26,894 | ||||||||||||
| Diluted | 27,945 | 26,934 | 27,863 | 26,894 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| June 30, | December 31, | |||||||
| (in thousands) | 2015 | 2014 | ||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 22,860 | $ | 43,021 | ||||
| Accounts receivable, less reserves of $1,464 and $2,017, respectively | 114,456 | 105,102 | ||||||
| Inventories, net | 82,117 | 71,253 | ||||||
| Prepaid expenses and other current assets | 26,924 | 26,135 | ||||||
| Total current assets | 246,357 | 245,511 | ||||||
| Long-term assets: | ||||||||
| Property, plant and equipment, net | 86,930 | 85,311 | ||||||
| Other assets: | ||||||||
| Intangible assets, net | 46,697 | 56,637 | ||||||
| Goodwill | 1,003 | 1,078 | ||||||
| Investments and other long-term assets, net | 10,511 | 10,214 | ||||||
| Total long-term assets | 145,141 | 153,240 | ||||||
| Total assets | $ | 391,498 | $ | 398,751 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 20,618 | $ | 19,655 | ||||
| Accounts payable | 66,682 | 58,593 | ||||||
| Accrued expenses and other current liabilities | 39,832 | 42,066 | ||||||
| Total current liabilities | 127,132 | 120,314 | ||||||
| Long-term liabilities: | ||||||||
| Revolving credit facility | 100,000 | 100,000 | ||||||
| Long-term debt, net | 7,014 | 10,651 | ||||||
| Deferred income taxes | 45,157 | 50,006 | ||||||
| Other long-term liabilities | 3,741 | 3,974 | ||||||
| Total long-term liabilities | 155,912 | 164,631 | ||||||
| Shareholders' equity: | ||||||||
| Preferred Shares, without par value, 5,000 shares authorized, none issued | - | - | ||||||
| Common Shares, without par value, 60,000 shares authorized, | ||||||||
| 28,900 and 28,853 shares issued and 27,913 and 28,221 shares outstanding at | ||||||||
| June 30, 2015 and December 31, 2014, respectively, with no stated value | - | - | ||||||
| Additional paid-in capital | 197,042 | 192,892 | ||||||
| Common Shares held in treasury, 987 and 632 shares at June 30, 2015 | ||||||||
| and December 31, 2014, respectively, at cost | (4,134 | ) | (1,284 | ) | ||||
| Accumulated deficit | (45,556 | ) | (54,879 | ) | ||||
| Accumulated other comprehensive loss | (57,251 | ) | (45,473 | ) | ||||
| Total Stoneridge Inc. shareholders' equity | 90,101 | 91,256 | ||||||
| Noncontrolling interest | 18,353 | 22,550 | ||||||
| Total shareholders' equity | 108,454 | 113,806 | ||||||
| Total liabilities and shareholders' equity | $ | 391,498 | $ | 398,751 | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net income (loss) | $ | 6,383 | $ | (29,113 | ) | $ | 8,318 | $ | (28,623 | ) | ||||||
| Less: Loss attributable to noncontrolling interest | (596 | ) | (7,221 | ) | (1,005 | ) | (8,199 | ) | ||||||||
| Net income (loss) attributable to Stoneridge, Inc. | 6,979 | (21,892 | ) | 9,323 | (20,424 | ) | ||||||||||
| Other comprehensive income (loss), net of tax attributable to | ||||||||||||||||
| Stoneridge, Inc.: | ||||||||||||||||
| Foreign currency translation | 3,022 | 2,186 | (11,940 | ) | 6,364 | |||||||||||
| Benefit plan liability adjustment | - | - | (45 | ) | - | |||||||||||
| Unrealized gain (loss) on derivatives | (728 | ) | 238 | 207 | 95 | |||||||||||
| Other comprehensive income (loss), net of tax attributable to | ||||||||||||||||
| Stoneridge, Inc. | 2,294 | 2,424 | (11,778 | ) | 6,459 | |||||||||||
| Comprehensive income (loss) attributable to Stoneridge, Inc. | $ | 9,273 | $ | (19,468 | ) | $ | (2,455 | ) | $ | (13,965 | ) | |||||
The Company has combined comprehensive income (loss) from continuing operations and comprehensive income (loss) from discontinued operations herein.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended June 30 (in thousands) | 2015 | 2014 | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net cash proved by (used for) operating activities | $ | 1,632 | $ | (7,059 | ) | |||
| INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (15,229 | ) | (12,605 | ) | ||||
| Proceeds from sale of fixed assets | 36 | 73 | ||||||
| Payment for working capital adjustment related to Wiring sale | (1,230 | ) | - | |||||
| Business acquisition | (469 | ) | (1,022 | ) | ||||
| Net cash used for investing activities | (16,892 | ) | (13,554 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of debt | 12,088 | 13,067 | ||||||
| Repayments of debt | (14,206 | ) | (7,465 | ) | ||||
| Noncontrolling interest shareholder distribution | - | (1,083 | ) | |||||
| Other financing costs | (49 | ) | - | |||||
| Repurchase of Common Shares to satisfy employee tax withholding | (1,181 | ) | (664 | ) | ||||
| Net cash (used for) provided by financing activities | (3,348 | ) | 3,855 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (1,553 | ) | (310 | ) | ||||
| Net change in cash and cash equivalents | (20,161 | ) | (17,068 | ) | ||||
| Cash and cash equivalents at beginning of period | 43,021 | 62,825 | ||||||
| Cash and cash equivalents at end of period | $ | 22,860 | $ | 45,757 | ||||
The Company has combined cash flows from continuing operations and cash flows from discontinued operations within the operating, investing and financing categories.
| Exhibit 3 | ||||||||||||||||
| Stoneridge, Inc. | ||||||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations | ||||||||||||||||
| Twelve months ended June 30, 2015 and 2014 | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| 2015 | 2014 | |||||||||||||||
| Net loss | $ | (23,650 | ) | $ | (22,789 | ) | ||||||||||
| Interest expense, net | 9,814 | 19,143 | ||||||||||||||
| Equity in earnings of investees | (764 | ) | (562 | ) | ||||||||||||
| Other income, net | (1,942 | ) | 3,165 | |||||||||||||
| Provision (benefit) for income taxes | (2,474 | ) | 1,716 | |||||||||||||
| Depreciation and amortization | 25,329 | 27,872 | ||||||||||||||
| Share-based compensation impact of CEO Retirement | 2,225 | - | ||||||||||||||
| Discontinued operations | 9,913 | 4,700 | ||||||||||||||
| Loss on extinguishment of debt | 10,607 | - | ||||||||||||||
| Restructuring charges | - | - | ||||||||||||||
| PST purchase accounting and goodwill impairment | 21,553 | 28,972 | ||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 50,611 | $ | 62,217 | ||||||||||||
| Total Debt | $ | 127,632 | $ | 205,103 | ||||||||||||
| Total Debt / Adjusted EBITDA from continuing operations | $ | 2.5 | $ | 3.3 | ||||||||||||