Stoneridge Reports Second-Quarter 2007 Results
Company Reaffirms Full-Year 2007 Earnings Outlook of $0.45 to $0.55 Per Diluted Share
WARREN, Ohio, Aug. 1 -- Stoneridge, Inc. today announced net sales of $183.8 million and net income of $2.7 million, or $0.11 per diluted share, for the second quarter ended June 30, 2007.
Net sales decreased $1.7 million, or 1.0 percent, to $183.8 million, compared with $185.5 million for the second quarter of 2006. The decrease in sales was primarily due to lower North American medium- and heavy-duty truck and light vehicle production. The declines were offset by new product launches and increased European commercial vehicle production. The effect of foreign currency translation increased second-quarter net sales by approximately $3.7 million compared with the same period in 2006.
Net income for the second quarter was $2.7 million, or $0.11 per diluted share, compared with net income of $4.9 million, or $0.21 per diluted share, in the second quarter of 2006. The decrease in net income was primarily attributable to increased design and development investment and inefficiencies related to new product launches. These unfavorable variances were offset by higher earnings from the Company's 50 percent equity interest in its PST Electronica joint venture and the sale of two closed facilities.
"Our new product launches and European market exposure mitigated the substantial decline in North American medium- and heavy-duty truck production," said John C. Corey, president and chief executive officer. "We generated positive operating cash flow in the quarter and remain focused on continuing this trend in the second half of 2007."
For the six months ended June 30, 2007, net sales were $368.8 million, an increase of 1.0 percent compared with $365.1 million for the six months ended July 1, 2006. Net income for the 2007 period was $7.6 million, or $0.32 per diluted share, compared with $8.7 million, or $0.38 per diluted share, in the comparable 2006 period.
Net cash provided by operating activities for the six months ended June 30, 2007 was $2.2 million, compared with net cash provided of $12.2 million for the corresponding period ended July 1, 2006. The decrease of $10.0 million in cash provided by operating activities was primarily due to lower accounts payable variances relative to the previous year. The Company's 2007 second-quarter accounts payable balance was consistent with the prior year's second-quarter level. However, the year-end 2006 figure was considerably higher than the year-end 2005 figure, resulting in a cash outflow during the first quarter of 2007 compared with the substantial cash inflow during the first quarter of 2006.
Outlook
"Based upon our first-half performance and the current industry forecasts, we are maintaining our previously issued guidance for full-year 2007 earnings of $0.45 to $0.55 per diluted share," Corey said. "We have instituted several cost savings programs to improve our efficiency and cost structure."
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2007 second-quarter results can be accessed at 11 a.m. Eastern time on Wednesday, August 1, 2007, 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. Net sales in 2006 were approximately $709 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
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
Net Sales $183,802 $185,499 $368,830 $365,133
Costs and Expenses:
Cost of goods sold 144,920 141,504 287,101 280,447
Selling, general and
administrative 33,629 31,151 66,802 62,971
(Gain) Loss on sale of property,
plant and equipment, net (1,653) 20 (1,688) (1,469)
Operating Income 6,906 12,824 16,615 23,184
Interest expense, net 5,619 5,833 11,103 11,752
Equity in earnings of investees (2,298) (1,550) (4,418) (2,966)
Other loss, net 224 1,745 512 1,750
Income Before Income Taxes 3,361 6,796 9,418 12,648
Provision for income taxes 666 1,906 1,853 3,993
Net Income $2,695 $4,890 $7,565 $8,655
Basic net income per share $0.12 $0.21 $0.33 $0.38
Basic weighted average shares
outstanding 23,114 22,861 23,052 22,824
Diluted net income per share $0.11 $0.21 $0.32 $0.38
Diluted weighted average shares
outstanding 23,701 22,902 23,621 22,884
STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2007 2006
ASSETS (Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $66,066 $65,882
Accounts receivable, less allowances
for doubtful accounts of $5,747 and
$5,243, respectively 113,818 106,985
Inventories, net 57,261 58,521
Prepaid expenses and other 21,037 13,448
Deferred income taxes 8,820 9,196
Total current assets 267,002 254,032
Long-Term Assets:
Property, plant and equipment, net 106,016 114,586
Other Assets:
Goodwill 65,176 65,176
Investments and other, net 36,138 30,875
Deferred income taxes 36,133 37,138
Total long-term assets 243,463 247,775
Total Assets $510,465 $501,807
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $66,499 $72,493
Accrued expenses and other 46,597 45,624
Total current liabilities 113,096 118,117
Long-Term Liabilities:
Long-term debt 200,000 200,000
Deferred income taxes 1,921 1,923
Other liabilities 3,695 3,145
Total long-term liabilities 205,616 205,068
Shareholders' Equity:
Preferred Shares, without par value,
authorized 5,000 shares, none issued - -
Common Shares, without par value,
authorized 60,000 shares, issued
24,582 and 23,990 shares and
outstanding 24,224 and 23,804 shares,
respectively, with no stated value - -
Additional paid-in capital 152,754 150,078
Common Shares held in treasury, 358
and 186 shares, respectively, at cost (369) (151)
Retained earnings 29,266 21,701
Accumulated other comprehensive income 10,102 6,994
Total shareholders' equity 191,753 178,622
Total Liabilities and Shareholders' Equity $510,465 $501,807
STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30, July 1,
2007 2006
OPERATING ACTIVITIES:
Net cash provided by operating activities $2,171 $12,215
INVESTING ACTIVITIES:
Capital expenditures (8,966) (13,150)
Proceeds from sale of property, plant
and equipment 4,951 2,266
Business acquisitions and other - (673)
Net cash used for investing activities (4,015) (11,557)
FINANCING ACTIVITIES:
Repayments of long-term debt - (44)
Share-based compensation activity, net 1,796 13
Other financing costs - (150)
Net cash provided by (used for)
financing activities 1,796 (181)
Effect of exchange rate changes on
cash and cash equivalents 232 1,730
Net change in cash and cash equivalents 184 2,207
Cash and cash equivalents at
beginning of period 65,882 40,784
Cash and cash equivalents at end of period $66,066 $42,991