Stoneridge Reports First-Quarter 2006 Results
WARREN, Ohio, May 2, 2006 -- Stoneridge, Inc. today announced net sales of $179.6 million and net income of $3.8 million, or $0.16 per diluted share, for the first quarter ended April 1, 2006.
Net sales decreased $1.2 million, or 0.7 percent, to $179.6 million, compared with $180.8 million for the first quarter of 2005. The decrease in sales was primarily due to the impact of foreign currency translation, unfavorable North American light vehicle production mix and product price reductions, slightly offset by an increase in production by the Company's commercial vehicle customers. The effect of foreign currency translation reduced first-quarter net sales by approximately $4.0 million compared with the same period in 2005.
Net income for the first quarter was $3.8 million, or $0.16 per diluted share, compared with net income of $4.4 million, or $0.19 per diluted share, in the first quarter of 2005. The decrease in net income was primarily attributable to unfavorable material price variances resulting from raw material price increases, continued operating inefficiencies at some of the Company's facilities in Mexico, and product price reductions. These factors were largely mitigated by lower restructuring expenses, an asset sale gain, and increased equity earnings from the Company's PST joint venture.
"Our first-quarter results represent progress toward our goal of operational excellence. First-quarter earnings showed sequential improvement from our results for the second half of 2005," said John C. Corey, president and chief executive officer. "We are not satisfied with our current performance levels and will continue to work diligently to build upon our first-quarter progress. Our focus for 2006 is to continue the pursuit of bringing Stoneridge back to operational and financial excellence."
Net cash provided by operating activities for the quarter ended April 1, 2006 was $6.2 million, compared with net cash use of $(5.3) million for the quarter ended April 2, 2005. The increase of $11.5 million in cash provided by operating activities was primarily due to improvements in working capital management in the areas of accounts payable and accrued expenses. The cash provided from accounts payable resulted from better matching of the Company's accounts receivable and accounts payable in the quarter compared with the prior year.
Outlook
"The rapid pace of change in the North American automotive industry continues to accelerate. Our response to this challenge is to remain committed to improving our financial performance in 2006 through focused operational efforts and improved working capital management," Corey said. "Our current expectation is that robust demand in the global commercial vehicle market will mitigate the softness in the North American light vehicle market in 2006."
Based on the current industry outlook, the Company reaffirms its previously issued full-year 2006 earnings outlook of $0.30 to $0.40 per diluted share.
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2006 first-quarter results can be accessed at 11 a.m. Eastern time on Tuesday, May 2, 2006, at 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. Net sales in 2005 were approximately $672 million. 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 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
(in thousands, except per share data)
(unaudited)
For the Thirteen Weeks Ended
April 1, April 2,
2006 2005
Net Sales $179,634 $180,827
Costs and Expenses:
Cost of goods sold 138,942 135,592
Selling, general and administrative 31,240 30,372
Provision for doubtful accounts 355 16
Gain on sale of fixed assets (1,489) -
Restructuring charges 224 2,126
Operating Income 10,362 12,721
Interest expense, net 5,919 5,989
Equity in earnings of investees (1,416) (732)
Other (income) loss, net 7 (197)
Income Before Income Taxes 5,852 7,661
Provision for income taxes 2,085 3,292
Net Income $3,767 $4,369
Basic net income per share $0.17 $0.19
Basic weighted average shares
outstanding 22,766 22,683
Diluted net income per share $0.16 $0.19
Diluted weighted average shares
outstanding 22,884 22,891
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
April 1, December 31,
2006 2005
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and cash equivalents $41,774 $40,784
Accounts receivable 121,434 100,362
Inventories, net 55,139 53,791
Prepaid expenses and other 14,842 14,490
Deferred income taxes 9,352 9,253
Total current assets 242,541 218,680
Property, Plant and Equipment, net 113,170 113,478
Other Assets:
Goodwill 65,176 65,176
Investments and other, net 29,372 26,491
Deferred income taxes 38,600 39,213
Total Assets $488,859 $463,038
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ - $44
Accounts payable 68,788 55,344
Accrued expenses and other 53,016 46,603
Total current liabilities 121,804 101,991
Long-Term Liabilities:
Long-term debt, net of current
portion 200,000 200,000
Other liabilities 7,693 7,056
Total long-term liabilities 207,693 207,056
Total shareholders' equity 159,362 153,991
Total Liabilities and Shareholders'
Equity $488,859 $463,038
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Thirteen Weeks Ended
April 1, April 2,
2006 2005
OPERATING ACTIVITIES:
Net cash provided (used) by operating
activities $6,221 $(5,335)
INVESTING ACTIVITIES:
Capital expenditures (6,563) (4,054)
Proceeds from sale of fixed assets 2,266 -
Business acquisitions and other (1,034) -
Net cash used by investing activities (5,331) (4,054)
FINANCING ACTIVITIES:
Repayments of long-term debt (44) (37)
Share-based compensation activity (69) 42
Other financing costs (150) -
Net cash (used) provided by financing
activities (263) 5
Effect of exchange rate changes on
cash and cash equivalents 363 (631)
Net change in cash and cash
equivalents 990 (10,015)
Cash and cash equivalents at
beginning of period 40,784 52,332
Cash and cash equivalents at end of
period $41,774 $42,317