Stoneridge Reports First-Quarter 2005 Results
-- Net sales up 3%; earnings of $0.19 per diluted share --
-- Revises full-year 2005 earnings outlook --
WARREN, Ohio, April 28 -- Stoneridge, Inc. today announced sales of $180.8 million and net income of $4.4 million, or $0.19 per diluted share, for the first quarter ended April 2, 2005.
Net sales for the first quarter increased $4.8 million, or 3 percent, to $180.8 million, compared with $176.0 million for the first quarter of 2004. The increase in sales was primarily due to increased commercial vehicle production, which more than offset the decline in traditional domestic North American light vehicle production. The effect of foreign currency translation added approximately $1.9 million to first-quarter 2005 sales compared with the same period in 2004.
Net income for the first quarter was $4.4 million, or $0.19 per diluted share, compared with net income of $9.2 million, or $0.40 per diluted share, in the first quarter of 2004. The decrease in net income was primarily the result of the Company's restructuring activities, price reductions, and increased product development activities.
The Company recorded a pre-tax restructuring charge of $2.1 million in the first quarter of 2005, primarily related to severance costs and asset impairment charges associated with previously announced plant consolidations. These consolidations are the result of the Company's cost-reduction initiatives.
"Stoneridge's North American automotive business has faced many challenges in recent months," said Gerald V. Pisani, president and chief executive officer. "As a result, we are even more committed to our current restructuring plan, which includes the consolidation of manufacturing facilities in the high-cost regions of North America and Europe."
Pisani added, "We are a company that invests in the future. We think beyond the quarter and beyond the year. The actions we are taking will help us improve our long-term competitive position and will allow us to deliver superior results going forward."
Net cash used by operating activities for the first quarter of 2005 was $5.3 million, compared with net cash provided by operating activities of $6.9 million for the first quarter of 2004. The increase in cash used by operating activities was primarily due to the decrease in net income and higher uses of cash for working capital requirements.
Change in Fiscal Year End
The Company is in the process of changing from a calendar year to a 52-53 week fiscal year ending on the Saturday nearest to December 31. Beginning in 2005, the Company's fiscal quarters are now comprised of 13-week periods ending on the Saturday nearest to March 31, June 30, September 30 and December 31. The first quarter of 2005 and 2004 ended on April 2 and March 31, respectively.
Outlook
Based on the current industry outlook, Stoneridge anticipates second- quarter 2005 net income to be in the range of $0.05 to $0.15 per diluted share, compared with $0.41 per diluted share for last year's second quarter. In addition, the Company has revised its full-year 2005 earnings outlook to a range of $0.40 to $0.50 per diluted share, from its previously announced range of $0.95 to $1.05 per diluted share. Unfavorable market conditions and operating inefficiencies related to the implementation of the Company's previously announced restructuring actions have affected the Company's full- year outlook.
"Despite these short-term challenges, we are confident that Stoneridge is positioned for long-term growth with an excellent product portfolio, growing global capabilities and a strong management team," said Pisani. "We plan to continue to broaden our customer base in our served markets and achieve further efficiencies through lean thinking in all parts of our organization."
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2005 first-quarter results can be accessed at 11 a.m. Eastern time on Thursday, April 28, 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. Sales in 2004 were approximately $682 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. 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. 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.
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
For the Three Months Ended
April 2, March 31,
2005 2004
NET SALES $180,827 $176,023
COSTS AND EXPENSES:
Cost of goods sold 135,592 128,207
Selling, general and administrative 30,388 28,061
Restructuring charges 2,126 --
OPERATING INCOME 12,721 19,755
Interest expense, net 5,989 6,251
Other income, net (929) (275)
INCOME BEFORE INCOME TAXES 7,661 13,779
Provision for income taxes 3,292 4,561
NET INCOME $4,369 $9,218
BASIC NET INCOME PER SHARE $0.19 $0.41
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING 22,683 22,572
DILUTED NET INCOME PER SHARE $0.19 $0.40
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING 22,891 22,795
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
April 2, December 31,
2005 2004
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $42,317 $52,332
Accounts receivable, net 119,248 100,615
Inventories, net 58,956 56,397
Prepaid expenses and other 14,542 11,416
Deferred income taxes 9,833 13,282
Total current assets 244,896 234,042
PROPERTY, PLANT AND EQUIPMENT, net 110,409 114,004
OTHER ASSETS:
Goodwill 65,176 65,176
Investments and other, net 25,295 24,979
Deferred income taxes 35,549 34,800
TOTAL ASSETS $481,325 $473,001
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $72 $109
Accounts payable 62,611 57,709
Accrued expenses and other 53,694 52,907
Total current liabilities 116,377 110,725
LONG-TERM LIABILITIES:
Long-term debt, net of current portion 200,052 200,052
Other liabilities 6,552 6,619
Total long-term liabilities 206,604 206,671
SHAREHOLDERS' EQUITY:
Preferred shares, without par value, 5,000
authorized, none issued -- --
Common shares, without par value, 60,000
authorized, 22,785 and 22,780 issued and
outstanding at April 2, 2005 and
December 31, 2004, respectively (net of 8
treasury shares for each period), with no
stated value -- --
Additional paid-in capital 146,128 145,764
Retained earnings 10,624 6,255
Accumulated other comprehensive income 1,592 3,586
Total shareholders' equity 158,344 155,605
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $481,325 $473,001
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the Three Months Ended
April 2, 2005 March 31, 2004
OPERATING ACTIVITIES:
Net cash (used) provided by
operating activities $(5,335) $6,909
INVESTING ACTIVITIES:
Capital expenditures (4,054) (4,750)
Net cash used by investing activities (4,054) (4,750)
FINANCING ACTIVITIES:
Repayments of long-term debt (37) (13)
Share option activity 42 (581)
Net cash provided (used) by
financing activities 5 (594)
Effect of exchange rate changes on
cash and cash equivalents (631) (46)
Net change in cash and cash equivalents (10,015) 1,519
Cash and cash equivalents at
beginning of period 52,332 24,142
Cash and cash equivalents at end of period $42,317 $25,661