Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - STONERIDGE INC | v423591_8-k.htm |
| EX-99.2 - EXHIBIT 99.2 - STONERIDGE INC | v423591_ex99-2.htm |
Exhibit 99.1
STONERIDGE REPORTS STRONG THIRD-QUARTER 2015 RESULTS
| · | Earnings Per Share From Continuing Operations of $0.27 Extends Trend of Significant Improvement Compared with Adjusted Earnings Per Share of $0.16 in the Third Quarter of 2014 |
| · | Full-Year 2015 Earnings Per Share Guidance Revised Upward |
| · | Debt Refinancing Reduces Interest Expense and Strengthens Balance Sheet |
| · | Electronics and PST Sales and Earnings Negatively Affected by Foreign Currency Movements, Although Sales Increased on a Local Currency Basis |
WARREN, Ohio – November 3, 2015 – Stoneridge, Inc. (NYSE: SRI) today announced financial results for the third quarter ended September 30, 2015.
Third-quarter 2015 net sales were $162.1 million, a decrease of $8.3 million, or 4.9%, compared with $170.3 million for the third quarter of 2014. Third-quarter sales were negatively affected by $19.8 million from unfavorable foreign currency translation for Electronics and PST. On a constant currency basis, sales increased by $11.5 million or 6.7% (See Exhibit 2 for reconciliation of this non-GAAP financial measure.)
The Company’s Control Devices segment sales increased by $8.6 million, or 10.9%, compared with the third quarter of 2014. The sales increase in the Control Devices segment reflects continued strength in the passenger car market.
The Electronics segment sales decreased by $4.3 million, or 7.8%, compared with the third quarter of 2014. Electronics sales decreased by $4.3 million in the third quarter on a U.S. dollar basis as current-quarter net sales were negatively affected by approximately $6.6 million of foreign currency translation effects. On a constant currency basis, Electronics’ sales increased by 4.2% in the third quarter of 2015 compared with the third quarter of 2014, which reflects the continued strength in the European commercial vehicle market. (See Exhibit 2 for reconciliation of this non-GAAP financial measure.)
The Company’s PST business segment experienced a sales decrease of $12.7 million, or 34.3%, compared with the third quarter of 2014, due to unfavorable foreign currency exchange translation. The Brazilian Real depreciated 67.8% to the U.S. dollar, quarter-to-quarter, which reduced U.S. dollar reported sales for PST by approximately 35.6%, or $13.2 million. On a local currency basis, PST sales increased by 1.3% compared with the third quarter of 2014, despite being adversely affected by the continued deterioration of economic conditions in Brazil. (See Exhibit 2 for reconciliation of this non-GAAP financial measure.)
The earnings per diluted share from continuing operations attributable to Stoneridge, Inc. was $0.27 for the third quarter of 2015 compared with adjusted earnings per share of $0.16 in the third quarter of 2014. (See Exhibit 3 for a reconciliation of this non-GAAP financial measure.) The third-quarter 2014 net income from continuing operations attributable to Stoneridge, Inc. of $8.0 million, or $0.29 per diluted share, included income of $5.8 million, or $0.21 per diluted share, for a non-cash goodwill benefit for the PST business and a loss of ($0.9) million, or ($0.03) per diluted share, for debt extinguishment costs.
As of September 30, 2015, Stoneridge’s consolidated cash position was $29.3 million, a decrease of $13.7 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 2.4x compared with 3.1x in the third quarter of 2014. (See Exhibit 4 for a reconciliation of this non-GAAP financial measure.)
Jon DeGaynor, President and Chief Executive Officer, commented, “As has been the trend so far in 2015, our Control Devices and Electronics segments continued to perform well in the third quarter, although unfavorable foreign exchange rates are masking the underlying financial performance of Electronics. I am particularly proud of our management team at PST. In spite of severely unfavorable economic conditions, they have managed to turn an operating profit (excluding non-cash purchase accounting charges) in the third quarter and recognized a sales increase in local currency compared to prior year. They are also expected to generate a modest operating profit (excluding non-cash purchase accounting charges) in the fourth quarter. This is a direct result of PST’s management addressing sales opportunities in a tough market, adjusting prices to partially offset the Brazilian real devaluation, headcount reductions and other actions taken to size the cost structure of PST to match the lower market demand. PST is also reducing inventory and paying down debt. In spite of the negative trends of currency for the euro and real and the difficult economy in Brazil, Stoneridge continues to perform well. We are preparing the Company for a significant increase in sales in 2016 while we continue to drive financial and operational improvement in 2015.”
DeGaynor concluded, “I am pleased that the organization continues to respond to the challenges of the marketplace and those we measure against ourselves. We look forward to continuing the trend of improved financial performance as we execute our sales, earnings and cash flow growth strategies. As a result of our actions so far this year, we have raised our prior annual earnings per share guidance for 2015 to more clearly reflect our expected financial performance for the rest of the year.” (See Exhibit 1 for further information on our revised guidance).
Conference Call on the Web
A live Internet broadcast of Stoneridge’s conference call regarding 2015 third-quarter results can be accessed at 10 a.m. Eastern time on Tuesday, November 3, 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
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| (Unaudited) | |||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (in thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net sales | $ | 162,057 | $ | 170,338 | $ | 490,171 | $ | 493,768 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of goods sold | 116,912 | 120,788 | 355,432 | 347,795 | ||||||||||||
| Selling, general and administrative | 26,331 | 31,204 | 85,555 | 93,587 | ||||||||||||
| Design and development | 9,867 | 10,389 | 29,696 | 31,916 | ||||||||||||
| Goodwill impairment | - | (5,802 | ) | - | 23,498 | |||||||||||
| Operating income (loss) | 8,947 | 13,759 | 19,488 | (3,028 | ) | |||||||||||
| Interest expense, net | 1,747 | 5,057 | 4,683 | 15,059 | ||||||||||||
| Equity in earnings of investee | (160 | ) | (205 | ) | (492 | ) | (587 | ) | ||||||||
| Loss on early extinguishment of debt | - | 920 | - | 920 | ||||||||||||
| Other (income) expense, net | (83 | ) | 23 | (343 | ) | 2,268 | ||||||||||
| Income (loss) before income taxes from continuing operations | 7,443 | 7,964 | 15,640 | (20,688 | ) | |||||||||||
| Provision (benefit) for income taxes from continuing operations | 32 | (1,174 | ) | (202 | ) | (790 | ) | |||||||||
| Income (loss) from continuing operations | 7,411 | 9,138 | 15,842 | (19,898 | ) | |||||||||||
| Discontinued operations: | ||||||||||||||||
| Income (loss) from discontinued operations, net of tax | - | (1,560 | ) | - | 86 | |||||||||||
| Loss on disposal, net of tax | (113 | ) | (6,548 | ) | (226 | ) | (7,781 | ) | ||||||||
| Loss from discontinued operations | (113 | ) | (8,108 | ) | (226 | ) | (7,695 | ) | ||||||||
| Net income (loss) | 7,298 | 1,030 | 15,616 | (27,593 | ) | |||||||||||
| Net income (loss) attributable to noncontrolling interest | (69 | ) | 1,160 | (1,074 | ) | (7,039 | ) | |||||||||
| Net income (loss) attributable to Stoneridge, Inc. | $ | 7,367 | $ | (130 | ) | $ | 16,690 | $ | (20,554 | ) | ||||||
| Earnings (loss) per share from continuing operations | ||||||||||||||||
| attributable to Stoneridge, Inc.: | ||||||||||||||||
| Basic | $ | 0.27 | $ | 0.30 | $ | 0.62 | $ | (0.48 | ) | |||||||
| Diluted | $ | 0.27 | $ | 0.29 | $ | 0.61 | $ | (0.48 | ) | |||||||
| Loss per share attributable to discontinued operations: | ||||||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.30 | ) | $ | (0.01 | ) | $ | (0.28 | ) | ||||
| Diluted | $ | (0.01 | ) | $ | (0.29 | ) | $ | (0.01 | ) | $ | (0.28 | ) | ||||
| Earnings (loss) per share attributable to Stoneridge, Inc.: | ||||||||||||||||
| Basic | $ | 0.26 | $ | 0.00 | $ | 0.61 | $ | (0.76 | ) | |||||||
| Diluted | $ | 0.26 | $ | 0.00 | $ | 0.60 | $ | (0.76 | ) | |||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 27,444 | 26,954 | 27,299 | 26,914 | ||||||||||||
| Diluted | 28,008 | 27,554 | 27,927 | 26,914 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| September 30, | December 31, | |||||||
| (in thousands) | 2015 | 2014 | ||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 29,289 | $ | 43,021 | ||||
| Accounts receivable, less reserves of $1,057 and $2,017, respectively | 112,595 | 105,102 | ||||||
| Inventories, net | 71,381 | 71,253 | ||||||
| Prepaid expenses and other current assets | 22,273 | 26,135 | ||||||
| Total current assets | 235,538 | 245,511 | ||||||
| Long-term assets: | ||||||||
| Property, plant and equipment, net | 83,258 | 85,311 | ||||||
| Other assets: | ||||||||
| Intangible assets, net | 35,833 | 56,637 | ||||||
| Goodwill | 1,000 | 1,078 | ||||||
| Investments and other long-term assets, net | 10,237 | 10,214 | ||||||
| Total long-term assets | 130,328 | 153,240 | ||||||
| Total assets | $ | 365,866 | $ | 398,751 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 17,913 | $ | 19,655 | ||||
| Accounts payable | 59,012 | 58,593 | ||||||
| Accrued expenses and other current liabilities | 39,372 | 42,066 | ||||||
| Total current liabilities | 116,297 | 120,314 | ||||||
| Long-term liabilities: | ||||||||
| Revolving credit facility | 100,000 | 100,000 | ||||||
| Long-term debt, net | 4,982 | 10,651 | ||||||
| Deferred income taxes | 41,261 | 50,006 | ||||||
| Other long-term liabilities | 3,404 | 3,974 | ||||||
| Total long-term liabilities | 149,647 | 164,631 | ||||||
| Shareholders' equity: | ||||||||
| Preferred Shares, without par value, 5,000 shares authorized, none issued | - | - | ||||||
| Common Shares, without par value, 60,000 shares authorized, | ||||||||
| 28,907 and 28,853 shares issued and 27,912 and 28,221 shares outstanding at | ||||||||
| September 30, 2015 and December 31, 2014, respectively, with no stated value | - | - | ||||||
| Additional paid-in capital | 198,090 | 192,892 | ||||||
| Common Shares held in treasury, 995 and 632 shares at September 30, 2015 | ||||||||
| and December 31, 2014, respectively, at cost | (4,208 | ) | (1,284 | ) | ||||
| Accumulated deficit | (38,189 | ) | (54,879 | ) | ||||
| Accumulated other comprehensive loss | (70,044 | ) | (45,473 | ) | ||||
| Total Stoneridge Inc. shareholders' equity | 85,649 | 91,256 | ||||||
| Noncontrolling interest | 14,273 | 22,550 | ||||||
| Total shareholders' equity | 99,922 | 113,806 | ||||||
| Total liabilities and shareholders' equity | $ | 365,866 | $ | 398,751 | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||
| (Unaudited) | ||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net income (loss) | $ | 7,298 | $ | 1,030 | $ | 15,616 | $ | (27,593 | ) | |||||||
| Less: Income (loss) attributable to noncontrolling interest | (69 | ) | 1,160 | (1,074 | ) | (7,039 | ) | |||||||||
| Net income (loss) attributable to Stoneridge, Inc. | 7,367 | (130 | ) | 16,690 | (20,554 | ) | ||||||||||
| Other comprehensive loss, net of tax attributable to | ||||||||||||||||
| Stoneridge, Inc.: | ||||||||||||||||
| Foreign currency translation | (12,557 | ) | (12,528 | ) | (24,497 | ) | (6,164 | ) | ||||||||
| Benefit plan liability tax adjustment | - | - | (45 | ) | - | |||||||||||
| Unrealized loss on derivatives | (236 | ) | (144 | ) | (29 | ) | (49 | ) | ||||||||
| Other comprehensive loss, net of tax attributable to | ||||||||||||||||
| Stoneridge, Inc. | (12,793 | ) | (12,672 | ) | (24,571 | ) | (6,213 | ) | ||||||||
| Comprehensive loss attributable to Stoneridge, Inc. | $ | (5,426 | ) | $ | (12,802 | ) | $ | (7,881 | ) | $ | (26,767 | ) | ||||
The Company has combined comprehensive loss from continuing operations and comprehensive loss from discontinued operations herein.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine months ended September 30 (in thousands) | 2015 | 2014 | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net cash provided by (used for) operating activities | $ | 17,133 | $ | (846 | ) | |||
| INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (23,521 | ) | (19,772 | ) | ||||
| Proceeds from sale of fixed assets | 53 | 99 | ||||||
| Change in restricted cash | - | (52,692 | ) | |||||
| Payment for working capital adjustment related to Wiring sale | (1,230 | ) | - | |||||
| Proceeds from sale of Wiring business | - | 71,386 | ||||||
| Business acquisition | (469 | ) | (1,022 | ) | ||||
| Net cash used for investing activities | (25,167 | ) | (2,001 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Extinguishment of senior notes | - | (17,500 | ) | |||||
| Premium related to early extinguishment of senior notes | - | (525 | ) | |||||
| Proceeds from issuance of debt | 19,116 | 20,462 | ||||||
| Repayments of debt | (20,015 | ) | (15,953 | ) | ||||
| Noncontrolling interest shareholder distribution | - | (1,083 | ) | |||||
| Other financing costs | (49 | ) | (1,499 | ) | ||||
| Repurchase of Common Shares to satisfy employee tax withholding | (2,854 | ) | (765 | ) | ||||
| Net cash used for financing activities | (3,802 | ) | (16,863 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (1,896 | ) | (2,165 | ) | ||||
| Net change in cash and cash equivalents | (13,732 | ) | (21,875 | ) | ||||
| Cash and cash equivalents at beginning of period | 43,021 | 62,825 | ||||||
| Cash and cash equivalents at end of period | $ | 29,289 | $ | 40,950 | ||||
The Company has combined cash flows from continuing operations and cash flows from discontinued operations within the operating, investing and financing categories.
Exhibit 1
| Existing Guidance | Revised Guidance | ||||||||||
| FX In Guidance | Full Year | Full Year | FX In Guidance | ||||||||
| 2015 | 4Q15 | ||||||||||
| USD / BRL | 2.70 | $667.0 - $687.0 | Sales | $643.2 | - | $652.2 | USD / BRL | 3.50 | |||
| USD / MXN | 14.64 | 28.0% - 30.0% | Gross Margin | 27.4% | - | 27.7% | USD / MXN | 16.20 | |||
| EUR / USD | 1.13 | 4.0% - 6.0% | Operating Margin * | 4.4% | - | 4.5% | EUR / USD | 1.11 | |||
| USD / SEK | 8.18 | $0.77 - $0.92 | Fully Dilluted EPS ** | $0.86 | - | $0.93 | USD / SEK | 8.50 | |||
| * (excludes 2Q15 Non-cash CEO Retirement Expense $2.2 million) | |||||||||||
| ** (excludes 2Q15 Non-cash CEO Retirement Expense $0.08 / diluted share) | |||||||||||
| Exhibit 2 |
| Stoneridge, Inc. |
| Reconciliation of Sales to Constant Currency Adjusted Sales |
| Three months ended September 30, 2015 and 2014 |
| (Unaudited) |
| Increase / | Percent | |||||||||||||||
| 2015 | 2014 | (Decrease) | Increase | |||||||||||||
| Electronics Segment Sales As Reported | $ | 50,688 | $ | 54,951 | $ | (4,263 | ) | (7.8 | )% | |||||||
| Plus: Constant Foreign Currency Translation Adjustment | 6,575 | - | 6,575 | |||||||||||||
| Adjusted Electronics Segment Sales | $ | 57,263 | $ | 54,951 | $ | 2,312 | 4.2 | % | ||||||||
| PST Segment Sales As Reported | $ | 24,339 | $ | 37,029 | $ | (12,690 | ) | (34.3 | )% | |||||||
| Plus: Constant Foreign Currency Translation Adjustment | 13,182 | - | 13,182 | |||||||||||||
| Adjusted PST Segment Sales | $ | 37,521 | $ | 37,029 | $ | 492 | 1.3 | % | ||||||||
| Total Consolidated Sales As Reported | $ | 162,057 | $ | 170,338 | $ | (8,281 | ) | (4.9 | )% | |||||||
| Plus: Constant Foreign Currency Translation Adjustment | 19,757 | - | 19,757 | |||||||||||||
| Total Consolidated Constant Currency Adjusted Sales | $ | 181,814 | $ | 170,338 | $ | 11,476 | 6.7 | % | ||||||||
Exhibit 3
| Stoneridge, Inc. |
| Reconcilation of Earnings and Earnings Per Diluted Share to Adjusted Earnings and Earnings Per Share |
| Three months ended September 30, 2015 and 2014 |
| (Unaudited) |
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Income and Earnings Per Diluted Share from | ||||||||||||||||
| Continuing Operations Attributable to Stoneridge, Inc. | $ | 7,480 | $ | 7,978 | $ | 0.27 | $ | 0.29 | ||||||||
| Unusual Items - PST Goodwill Impairment and Debt Extinguishment Costs | ||||||||||||||||
| PST Goodwill Impairment Adjustment | - | (5,802 | ) | - | (0.21 | ) | ||||||||||
| PST Goodwill Impairment Adjustment Attributable to | ||||||||||||||||
| Noncontrolling Interest | - | 1,274 | - | 0.05 | ||||||||||||
| Net PST Goodwill Impairment Attributable to Stoneridge, Inc. | $ | - | $ | (4,528 | ) | $ | - | $ | (0.16 | ) | ||||||
| Debt Extinguishment Costs | - | 920 | - | 0.03 | ||||||||||||
| Total Adjustment for PST Goodwill Impairment and | ||||||||||||||||
| Debt Extinguishment | - | (3,608 | ) | - | $ | (0.13 | ) | |||||||||
| Adjusted Income and Earnings Per Diluted Share from | ||||||||||||||||
| Continuing Operations Attributable to Stoneridge, Inc. | $ | 7,480 | $ | 4,370 | $ | 0.27 | $ | 0.16 | ||||||||
Exhibit 4
| Stoneridge, Inc. | ||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA from Continuing Operations | ||||||||||||
| Twelve months ended September 30, 2015 and 2014 | ||||||||||||
| (Unaudited) | ||||||||||||
| 2015 | 2014 | |||||||
| Net loss | $ | (17,382 | ) | $ | (27,272 | ) | ||
| Interest expense, net | 6,504 | 19,705 | ||||||
| Equity in earnings of investees | (719 | ) | (668 | ) | ||||
| Other (income) expense, net | (2,047 | ) | 3,235 | |||||
| Benefit for income taxes | (1,269 | ) | (252 | ) | ||||
| Depreciation and amortization | 23,941 | 29,994 | ||||||
| Share-based compensation impact of CEO Retirement | 2,225 | - | ||||||
| Discontinued operations | 1,918 | 10,862 | ||||||
| Loss on extinguishment of debt | 9,687 | 920 | ||||||
| PST purchase accounting and goodwill impairment | 27,519 | 23,087 | ||||||
| Adjusted EBITDA from continuing operations | $ | 50,377 | $ | 59,611 | ||||
| Total Debt | $ | 122,895 | $ | 183,239 | ||||
| Total Debt / Adjusted EBITDA from continuing operations | $ | 2.4 | $ | 3.1 | ||||