Stoneridge Reports Third-Quarter 2004 Results
-- Net income up 26%; net sales increase 17% --
WARREN, Ohio, Oct. 21 -- Stoneridge, Inc. today announced sales of $164.3 million and net income of $3.9 million, or $0.17 per diluted share, for the third quarter ended September 30, 2004.
Net sales increased $23.5 million, or 17 percent, to $164.3 million compared with $140.8 million for the third quarter of 2003. As was the case in the previous two quarters, the increase in sales was primarily due to stronger performance in the Company's served commercial vehicle markets. Net income for the third quarter was $3.9 million, or $0.17 per diluted share, an increase of 26 percent compared with $3.1 million, or $0.14 per diluted share, for the third quarter of 2003.
"We are very pleased with our third-quarter performance," said Gerald V. Pisani, president and chief executive officer. "Like everyone in our industry, we have been operating in a difficult environment with rising commodity costs, customer pricing pressures and increased costs related to Sarbanes-Oxley requirements. The focus at Stoneridge on Six Sigma, Lean Manufacturing and supply chain excellence has enabled us to achieve our third- quarter estimate and maintain our guidance for the full year."
For the nine months ended September 30, 2004, net sales were $518.4 million, an increase of 14 percent, compared with $455.4 million in the same period of 2003. Net income for the first nine months of 2004 was $22.4 million, or $0.98 per diluted share, compared with $16.3 million, or $0.72 per diluted share, in the comparable 2003 nine-month period.
Net cash provided by operating activities for the nine months ended September 30, 2004 was $26.9 million, compared with $51.0 million for the same period in 2003. The decrease in cash provided by operating activities was primarily due to an increase in accounts receivable resulting from the increase in sales, and a planned increase in inventories to cover customer requirements as the Company combined three plants in the United Kingdom and started up an operation in Mexico. The increase in inventory was also attributable to delays in certain product launches.
Outlook
Based on the current industry outlook, Stoneridge anticipates fourth- quarter 2004 net income to be in the range of $0.12 to $0.22 per diluted share, compared with $0.22 per diluted share for last year's fourth quarter. Fourth-quarter net income will include costs associated with the Company's three-plant combination in the United Kingdom, additional costs associated with the Mexican start-up operation and costs related to Sarbanes-Oxley requirements. For the full year of 2004, Stoneridge expects net income to be in the range of $1.10 to $1.20 per diluted share, compared with $0.94 per diluted share for 2003.
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2004 third-quarter results can be accessed at 11 a.m. Eastern time on Thursday, October 21, 2004, at http://www.stoneridge.com/ , which will also offer a webcast replay.
About Stoneridge, Inc.
Stoneridge, Inc., headquartered in Warren, Ohio, is a leading independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems principally for the automotive, medium- and heavy-duty truck, agricultural and off-road vehicle markets. Sales in 2003 were approximately $607 million. Additional information about Stoneridge can be found at http://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. Factors 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 decline in automotive, medium- and heavy-duty truck or agricultural vehicle production, the failure to achieve successful integration of any acquired company or business, labor disputes involving the Company or its significant customers, risks associated with conducting business in foreign countries, or a decline in general economic conditions. In addition, this release contains time-sensitive information that reflects management's best analysis only as of the date of this release. Stoneridge 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 Stoneridge's periodic filings with the Securities and Exchange Commission.
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except for per share data)
For the three months For the nine months
ended September 30, ended September 30,
2004 2003 2004 2003
NET SALES $164,286 $140,832 $518,365 $455,416
COSTS AND EXPENSES:
Cost of goods sold 124,836 106,462 385,676 339,796
Selling, general and
administrative 28,877 23,273 82,785 71,277
OPERATING INCOME 10,573 11,097 49,904 44,343
Interest expense, net 6,031 6,805 18,528 20,558
Other income, net (358) (187) (757) (180)
INCOME BEFORE INCOME
TAXES 4,900 4,479 32,133 23,965
Provision for income
taxes 979 1,378 9,712 7,667
NET INCOME $3,921 $3,101 $22,421 $16,298
BASIC NET INCOME PER
SHARE $0.17 $0.14 $0.99 $0.73
BASIC WEIGHTED-AVERAGE
SHARES OUTSTANDING 22,630 22,410 22,605 22,410
DILUTED NET INCOME PER
SHARE $0.17 $0.14 $0.98 $0.72
DILUTED WEIGHTED-AVERAGE
SHARES OUTSTANDING 22,925 22,758 22,863 22,676
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2004 2003
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $32,145 $24,142
Accounts receivable, net 118,579 89,161
Inventories, net 58,992 48,047
Prepaid expenses and other 13,845 10,420
Deferred income taxes 9,763 7,856
Total current assets 233,324 179,626
PROPERTY, PLANT AND EQUIPMENT, net 112,933 116,262
OTHER ASSETS:
Goodwill 255,292 255,292
Investments and other, net 29,202 28,487
TOTAL ASSETS $630,751 $579,667
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $38 $417
Accounts payable 64,474 53,594
Accrued expenses and other 65,585 54,569
Total current liabilities 130,097 108,580
LONG-TERM LIABILITIES:
Long-term debt, net of current portion 200,149 200,245
Deferred income taxes 30,143 25,288
Other liabilities 2,623 2,148
Total long-term liabilities 232,915 227,681
SHAREHOLDERS' EQUITY:
Preferred shares, without par value,
5,000 authorized, none issued -- --
Common shares, without par value,
60,000 authorized, 22,759 (net of 7
treasury shares) and 22,459 issued and
outstanding at September 30, 2004 and
December 31, 2003, respectively, with
no stated value -- --
Additional paid-in capital 145,125 143,535
Retained earnings 121,179 98,758
Accumulated other comprehensive income 1,435 1,113
Total shareholders' equity 267,739 243,406
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $630,751 $579,667
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the nine months ended
September 30,
2004 2003
Net cash provided by operating
activities $26,867 $51,037
INVESTING ACTIVITIES:
Capital expenditures (18,108) (11,615)
Proceeds from sale of fixed assets 16 832
Business acquisitions and other (714) (3)
Net cash used by investing activities (18,806) (10,786)
FINANCING ACTIVITIES:
Repayments of long-term debt (359) (22,355)
Net repayments under revolving credit facilities -- (715)
Proceeds from exercise of share options 376 258
Other financing costs (134) --
Net cash used by financing activities (117) (22,812)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 59 730
NET CHANGE IN CASH AND CASH EQUIVALENTS 8,003 18,169
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 24,142 27,235
CASH AND CASH EQUIVALENTS AT END OF PERIOD $32,145 $45,404