Stoneridge Reports Fourth-Quarter and Full-Year 2004 Results
-- Fourth-quarter net sales up 8% --
-- Full-year earnings $1.19 per diluted share before impairment charge --
WARREN, Ohio, Feb. 8 -- Stoneridge, Inc. today announced sales of $163.4 million and a net loss of $114.9 million, or $5.07 per diluted share. The net loss includes the recognition of a previously announced, non-cash goodwill impairment charge, which was recorded in the fourth quarter ended December 31, 2004.
Net sales increased $12.2 million, or 8 percent, to $163.4 million, compared with $151.2 million for the fourth quarter of 2003. The increase in sales was primarily due to stronger performance in the Company's commercial vehicle business and to a much lesser extent favorable currency exchange rates, which more than offset the decline in traditional domestic North American light vehicle production.
The fourth-quarter net loss includes a pre-tax, non-cash goodwill impairment charge of $183.5 million ($119.8 million after tax benefits of $63.7 million). Excluding the goodwill impairment charge, net income for the fourth quarter would have been $4.8 million, or $0.21 per diluted share, compared with net income of $5.1 million, or $0.22 per diluted share, in the fourth quarter of 2003.
"In view of the difficult operating environment facing North American automotive suppliers, we are pleased with our fourth-quarter performance," said Gerald V. Pisani, president and chief executive officer.
For the year ended December 31, 2004, net sales were $681.8 million, an increase of 12 percent, compared with $606.7 million in 2003. The increase in sales was primarily due to stronger performance in the Company's commercial vehicle business, which more than offset the decline in traditional domestic North American light vehicle production. The Company recognized a net loss for the year ended December 31, 2004 of $92.5 million, or $4.09 per diluted share. This net loss includes the goodwill impairment charge described above. Excluding the goodwill impairment charge, net income would have been $27.2 million, or $1.19 per diluted share, for the year ended December 31, 2004, compared with $21.4 million, or $0.94 per diluted share, for 2003.
"Intense competition, higher commodity prices, and customer pricing pressures are among the most significant challenges facing Stoneridge," Pisani said. "However, because we have a broad range of initiatives in place to improve our operating performance, our full-year earnings of $1.19 per diluted share, excluding the non-cash goodwill impairment charge recorded in the fourth quarter, were within the earnings range that we expected."
Pisani added, "The Company will continue to focus its efforts on improving operational efficiencies and investing in new products to meet the expectations of our customers. We are cautiously optimistic that the restructuring and focused sales and marketing efforts are gaining traction."
Net cash provided by operating activities for the year ended December 31, 2004 was $47.3 million, compared with $72.4 million for 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 an increase in inventories to prepare for new product launches and to satisfy customer requirements as the Company combined three plants in the United Kingdom and started up an operation in Mexico.
Outlook
"Because of the high automotive inventories carried by our North American customers, we remain cautious about the near-term business environment for this sector," Pisani said. "We expect commercial vehicle production to remain at present levels and automotive production to be lower in the first quarter."
Based on the current industry outlook, Stoneridge anticipates first- quarter 2005 net income to be in the range of $0.12 to $0.20 per diluted share, and full-year 2005 net income to be in the range of $0.95 to $1.05 per share.
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2004 fourth-quarter and full-year results can be accessed at 11 a.m. Eastern time on Tuesday, February 8, 2005, 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-highway vehicle markets. Additional information about Stoneridge can be found at http://www.stoneridge.com/ .
Use of Non-GAAP Financial Information
In addition to the results reported in accordance with U.S. generally accepted accounting principles ("GAAP") included throughout this news release, the Company has provided information regarding net income excluding the effects of the goodwill impairment charge recorded during the fourth quarter of 2004. The Company believes that this non-GAAP financial measure is useful to both management and investors in their analysis of the Company's financial performance when comparing 2004 results to prior periods.
Set forth, as required by Regulation G, is a reconciliation of this non- GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP.
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2004 2004
Net loss $(114,924) $(92,503)
Goodwill impairment loss 183,450 183,450
Tax benefit related to goodwill
impairment loss (63,699) (63,699)
Net income, excluding the goodwill
impairment loss $4,827 $27,248
Diluted net income per share, excluding
the goodwill impairment loss $0.21 $1.19
Diluted weighted average shares outstanding 22,915 22,857
Diluted net income per share, excluding the goodwill impairment loss, was calculated by dividing net income, excluding the goodwill impairment loss, by the weighted-average of all potentially dilutive common shares that were outstanding during the periods presented. Diluted net loss per share, as reported in the Company's Statements of Operations in accordance with GAAP, disregards the effect of potentially dilutive common shares, as a net loss causes dilutive shares to have an anti-dilutive effect.
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 automotive, medium- and heavy-duty truck or agricultural and off-highway vehicle production; 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. 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the Three Months Ended For the Years Ended
December 31, December 31,
2004 2003 2004 2003
Net Sales $163,430 $151,249 $681,795 $606,665
Costs and Expenses:
Cost of goods sold 121,922 110,839 507,598 450,635
Selling, general and
administrative 33,531 26,383 116,317 97,660
Goodwill impairment
loss 183,450 -- 183,450 --
Operating (Loss)
Income (175,473) 14,027 (125,570) 58,370
Interest expense,
net 5,929 7,093 24,456 27,651
Other income (113) (121) (870) (301)
(Loss) Income Before
Income Taxes (181,289) 7,055 (149,156) 31,020
(Benefit) Provision
for Income Taxes (66,365) 1,974 (56,653) 9,641
Net (Loss) Income $(114,924) $5,081 $(92,503) $21,379
Basic Net (Loss)
Income Per Share $(5.07) $0.23 $(4.09) $0.95
Diluted Net (Loss)
Income Per Share $(5.07) $0.22 $(4.09) $0.94
Basic Weighted Average
Shares Outstanding 22,672 22,436 22,622 22,415
Diluted Weighted
Average Shares
Outstanding 22,672 22,754 22,622 22,683
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
2004 2003
ASSETS
Current Assets:
Cash and cash equivalents $52,332 $24,142
Accounts receivable, less allowance for doubtful
accounts of $3,891 and $2,904, for 2004 and 2003,
respectively 100,615 89,161
Inventories, net 56,397 48,047
Prepaid expenses and other 12,993 10,420
Deferred income taxes 13,282 7,856
Total current assets 235,619 179,626
Property, Plant and Equipment, net 114,004 116,262
Other Assets:
Goodwill 65,176 248,626
Investments and other, net 24,979 28,487
Deferred income taxes 34,800 --
Total Assets $474,578 $573,001
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $104 $417
Accounts payable 57,709 53,594
Accrued expenses and other 54,484 52,783
Total current liabilities 112,297 106,794
Long-Term Liabilities:
Long-term debt, net of current portion 200,057 200,245
Deferred income taxes -- 18,622
Other liabilities 6,619 3,934
Total long-term liabilities 206,676 222,801
Shareholders' Equity:
Preferred shares, without par value, 5,000
authorized, none issued -- --
Common shares, without par value, 60,000
authorized, 22,780 (net of 8 treasury shares)
and 22,459 issued and outstanding at December 31,
2004 and 2003, respectively, with no stated value -- --
Additional paid-in capital 145,764 143,535
Retained earnings 6,255 98,758
Accumulated other comprehensive income 3,586 1,113
Total shareholders' equity 155,605 243,406
Total Liabilities and Shareholders' Equity $474,578 $573,001
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the years ended
December 31,
2004 2003
OPERATING ACTIVITIES:
Net cash provided by operating
activities $47,335 $72,354
INVESTING ACTIVITIES:
Capital expenditures (23,917) (26,382)
Proceeds from sale of fixed assets 1 1,212
Business acquisitions (702) (3)
Collection of joint venture loan receivable 4,695 --
Net cash used by investing activities (19,923) (25,173)
FINANCING ACTIVITIES:
Repayments of long-term debt (524) (52,095)
Proceeds from exercise of share options 561 444
Other financing costs (134) --
Net cash used by financing activities (97) (51,651)
Effect of exchange rate changes on cash and
cash equivalents 875 1,377
Net change in cash and cash equivalents 28,190 (3,093)
Cash and cash equivalents at beginning of period 24,142 27,235
Cash and cash equivalents at end of period $52,332 $24,142