Stoneridge Reports Third-Quarter 2006 Results
* Net Sales and Income Increase
* Full-year 2006 Earnings Outlook Unchanged at $0.50 to $0.60 Per Share
* 2007 Earnings Expected to Match 2006 Level
WARREN, Ohio, Oct. 27 -- Stoneridge, Inc. today announced net sales of $172.4 million and net income of $4.4 million, or $0.19 per diluted share, for the third quarter ended September 30, 2006.
Net sales increased $13.7 million, or 8.6 percent, to $172.4 million, compared with $158.7 million for the third quarter of 2005. The increase in sales was primarily due to strong demand in the Company's commercial vehicle markets. The effect of foreign currency translation resulted in a favorable impact of $2.1 million on net sales compared with the same period in 2005.
Net income for the third quarter was $4.4 million, or $0.19 per diluted share, compared with a net loss of $(3.3) million, or $(0.14) per diluted share, in the third quarter of 2005. The increase in net income was primarily attributable to improved gross profit, lower restructuring and bad debt expenses, and a lower marginal tax rate. The quarter was unfavorably affected by raw material price increases and product price reductions.
"We are pleased to report improved operating results from our commercial vehicle business as operational improvement initiatives take hold across the organization," said John C. Corey, president and chief executive officer. "Our team remains focused on continuing to improve our operational performance as the North American industry outlook remains challenging over the near term."
For the 39 weeks ended September 30, 2006, net sales were $537.5 million, an increase of 3.4 percent compared with $519.8 million for the 39 weeks ended October 1, 2005. Net income for the 2006 year-to-date period was $13.1 million, or $0.56 per diluted share, compared with $3.9 million, or $0.17 per diluted share, in the same 2005 period.
Net cash provided by operating activities for the 39 weeks ended September 30, 2006 was $22.6 million, compared with net cash provided of $15.5 million for the corresponding period ended October 1, 2005. The increase in cash provided by operating activities was primarily due to the improvement in net income.
Outlook
"For 2006, we are reaffirming our full-year guidance based upon the reduction in fourth-quarter production schedules," Corey said. "For 2007, our target is to maintain our 2006 expected net income level despite the anticipated declines in North American medium- and heavy-duty truck production. Our planned cost-reduction activities, operational improvement initiatives and new product launches will support our 2007 goal."
The Company's full-year 2006 earnings outlook is unchanged at $0.50 to $0.60 per diluted share. Full-year 2005 net income was $0.04 per diluted share. Based upon the current industry outlook, the Company expects 2007 net income to remain basically level with its anticipated 2006 earnings of $0.50 to $0.60 per diluted share. For 2007, assumptions include a North American medium- and heavy-duty truck production decline of 25-35 percent and North American light vehicle production to approximate 2006 levels.
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2006 third-quarter results can be accessed at 11 a.m. Eastern time on Friday, October 27, 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)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 30, October 1, September 30, October 1,
2006 2005 2006 2005
Net Sales $172,351 $158,715 $537,484 $519,849
Costs and Expenses:
Cost of goods sold 134,173 127,154 414,619 401,238
Selling, general and
administrative 28,956 28,357 91,346 88,943
Provision for doubtful
accounts 38 2,671 544 3,604
Loss (gain) on sale of
property, plant and
equipment 15 (5) (1,454) (344)
Restructuring charges, net 80 823 154 4,963
Operating Income (Loss) 9,089 (285) 32,275 21,445
Interest expense, net 5,710 5,936 17,462 17,973
Equity in earnings of
investees (1,838) (1,397) (4,804) (3,203)
Other (income) expense, net (55) (108) 1,697 (900)
Income (Loss) Before Income
Taxes 5,272 (4,716) 17,920 7,575
Provision (benefit) for
income taxes 866 (1,424) 4,857 3,683
Net Income (Loss) $4,406 $(3,292) $13,063 $3,892
Basic net income (loss)
per share $0.19 $(0.14) $0.57 $0.17
Basic weighted average shares
outstanding 22,880 22,726 22,833 22,701
Diluted net income (loss) per
share $0.19 $(0.14) $0.56 $0.17
Diluted weighted average
shares outstanding 23,396 22,726 23,250 22,940
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2006 2005
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 46,730 $ 40,784
Accounts receivable, less allowances
for doubtful accounts of $4,841 and
$4,562, respectively 121,938 100,362
Inventories, net 58,237 53,791
Prepaid expenses and other 14,701 14,490
Deferred income taxes 9,575 9,253
Total current assets 251,181 218,680
Long-Term Assets:
Property, Plant and Equipment, net 114,458 113,478
Other Assets:
Goodwill 65,176 65,176
Investments and other, net 31,500 26,491
Deferred income taxes 36,899 39,213
Total long-term assets 248,033 244,358
Total Assets $499,214 $463,038
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ - $ 44
Accounts payable 69,020 55,344
Accrued expenses and other 51,919 46,603
Total current liabilities 120,939 101,991
Long-Term Liabilities:
Long-term debt, net of current portion 200,000 200,000
Deferred income taxes 1,411 923
Other liabilities 5,074 6,133
Total long-term liabilities 206,485 207,056
Shareholders' Equity:
Preferred Shares, without par value,
5,000 authorized, none issued - -
Common Shares, without par value,
authorized 60,000 shares, issued
23,940 and 23,232 shares and outstanding
23,758 and 23,178 shares, respectively,
with no stated value - -
Additional paid-in capital 148,876 147,440
Common Shares held in treasury, 182
and 54 shares, respectively, at cost (150) (65)
Retained earnings 20,271 7,188
Accumulated other comprehensive
income (loss) 2,793 (572)
Total shareholders' equity 171,790 153,991
Total Liabilities and Shareholders' Equity $499,214 $463,038
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Thirty-Nine Weeks Ended
September 30, October 1,
2006 2005
Net cash provided by operating
activities $22,610 $15,521
INVESTING ACTIVITIES:
Capital expenditures (19,794) (20,934)
Proceeds from sale of property, plant
and equipment 2,266 1,664
Business acquisitions and other (668) (282)
Net cash used by investing activities (18,196) (19,552)
FINANCING ACTIVITIES:
Repayments of long-term debt (44) (96)
Share-based compensation activity 47 3
Other financing costs (150) (75)
Net cash used by financing activities (147) (168)
Effect of exchange rate changes on
cash and cash equivalents 1,679 (2,207)
Net change in cash and cash equivalents 5,946 (6,406)
Cash and cash equivalents at
beginning of period 40,784 52,332
Cash and cash equivalents at end of period $46,730 $45,926