Stoneridge Reports Second-Quarter 2009 Results
WARREN, Ohio, July 31 -- -- Decrease in net sales, net income attributed to dramatically reduced
volumes in key markets
-- Liquidity, capital structure seen as competitive advantage
Stoneridge, Inc. today announced net sales of $102.3 million and a net loss of $19.8 million, or $(0.84) per diluted share, for the second quarter ended June 30, 2009.
Net sales for the quarter decreased by $110.9 million, or 52.0 percent, to $102.3 million, compared with $213.2 million for the second quarter of 2008. The decrease in net sales was primarily driven by dramatically reduced production volumes in the North American passenger car/light truck market (49.6%) and the commercial vehicle markets in Europe (70.0%) and North America (50.3%), and the effect of foreign currency translation. Foreign currency translation negatively affected second-quarter net sales by approximately $5.1 million compared with the same period in 2008.
The net loss for the second quarter of 2009 was $19.8 million, or $(0.84) per diluted share, compared with net income of $4.7 million, or $0.20 per diluted share, in the second quarter of 2008. The decrease in net income was due primarily to the severe reduction in sales volume the Company experienced in all of its markets. In addition, no tax benefit was recognized in the second quarter of 2009 as a result of the tax valuation allowance provided in the fourth quarter of 2008.
As of June 30, 2009, Stoneridge's consolidated cash position was $85.5 million, $7.2 million lower than its 2008 year-end balance of $92.7 million, and the Company's Asset Based Lending facility remains undrawn. Net cash used by operating activities for the six months ended June 30, 2009 was $2.6 million, compared with $12.6 million in cash provided for the six months ended June 30, 2008. The $15.2 million decrease in cash provided by operating activities was a result of reduced earnings caused by the decline in sales partially offset by working capital reductions.
For the six months ended June 30, 2009, net sales were $223.4 million, a decrease of 46.3 percent compared with $416.3 million for the six months ended June 30, 2008. The net loss for the 2009 six-month period was $31.3 million, or $(1.33) per diluted share, compared with net income of $11.2 million, or $0.47 per diluted share, in the comparable 2008 period.
Outlook
"The second-quarter volume declines were more severe than anticipated. The impact of production stoppages related to the Chrysler and GM bankruptcies, combined with the rolling European commercial vehicle shutdowns, increased in intensity during the second quarter," said John C. Corey, president and chief executive officer. "Our business plan continues to emphasize conserving cash while investing in near-term product launches and selectively investing in longer-term development projects. However, we continued to adjust to the volume declines with additional restructuring in Europe during the quarter. We are developing plans to consolidate our control devices business from two business units to one during the third quarter with the intent of further lowering our cost structure. We anticipate that we will announce the projected costs and benefits of this consolidation during the third quarter.
"The record number of customer and supplier bankruptcies has had a very limited impact as our team has managed to protect Stoneridge assets and prevent supply disruptions. While the second quarter was worse than we projected, our cost-reduction initiatives that are already under way will allow us to operate through the prolonged downturn and improve our position for the new competitive landscape once markets recover."
Regarding the Company's expectations for the second half of 2009, Corey added, "We are revising our previous guidance due to the significant drop in our global markets. At this point we expect Stoneridge to return to positive operating income in the fourth quarter. However, cash flow will depend on the bottoming of the market drop, and volume increases will require a ramp up in working capital which may result in a modest cash use for the second half."
Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2009 second-quarter results can be accessed at 9:30 a.m. Eastern time on Friday, July 31, 2009, at www.stoneridge.com, which will also offer a webcast replay.
About Stoneridge, Inc.
Stoneridge, Inc., headquartered in Warren, Ohio, is an 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 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. Factors 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; disruption in the OEM supply chain due to bankruptcies; 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
Net Sales $102,290 $213,229 $223,375 $416,299
Costs and Expenses:
Cost of goods sold 88,694 163,875 190,504 315,128
Selling, general and
administrative 26,338 36,884 53,415 73,166
Restructuring charges 1,551 1,713 2,509 3,135
----- ----- ----- -----
Operating Income (Loss) (14,293) 10,757 (23,053) 24,870
Interest expense, net 5,538 4,880 11,035 10,252
Equity in earnings of
investees (903) (3,016) (1,478) (6,835)
Loss on early extinguishment
of debt - 271 - 770
Other expense (income),
net 639 (124) 645 278
--- ---- --- ---
Income (Loss) Before Income
Taxes (19,567) 8,746 (33,255) 20,405
Provision (benefit) for income
taxes 197 4,062 (1,911) 9,174
--- ----- ------ -----
Net Income (Loss) $(19,764) $4,684 $(31,344) $11,231
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Basic net income (loss) per
share $(0.84) $0.20 $(1.33) $0.48
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Basic weighted average
shares outstanding 23,516 23,286 23,490 23,327
====== ====== ====== ======
Diluted net income (loss)per
share $(0.84) $0.20 $(1.33) $0.47
====== ===== ====== =====
Diluted weighted average
shares outstanding 23,516 23,690 23,490 23,722
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STONERIDGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2009 2008
---------- -----------
ASSETS (Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $85,481 $92,692
Accounts receivable, less reserves of
$4,186 and $4,204, respectively 70,689 96,535
Inventories, net 43,683 54,800
Prepaid expenses and other 16,453 9,069
Deferred income taxes 1,957 1,495
------- -------
Total current assets 218,263 254,591
------- -------
Long-Term Assets:
Property, plant and equipment, net 80,287 87,701
Other Assets:
Investments and other, net 43,279 40,145
------- -------
Total long-term assets 123,566 127,846
------- -------
Total Assets $341,829 $382,437
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $41,020 $50,719
Accrued expenses and other 39,040 43,485
------- -------
Total current liabilities 80,060 94,204
------- -------
Long-Term Liabilities:
Long-term debt 183,000 183,000
Deferred income taxes 5,379 7,002
Other liabilities 6,987 6,473
------- -------
Total long-term liabilities 195,366 196,475
------- -------
Shareholders' Equity:
Preferred Shares, without par value,
authorized 5,000 shares, none issued - -
Common Shares, without par value,
authorized 60,000 shares, issued 25,286
and 24,772 shares and outstanding 25,176
and 24,665 shares, respectively, with no
stated value - -
Additional paid-in capital 158,232 158,039
Common Shares held in treasury, 110 and
107 shares, respectively, at cost (132) (129)
Accumulated deficit (90,499) (59,155)
Accumulated other comprehensive loss (1,198) (6,997)
------- -------
Total shareholders' equity 66,403 91,758
------- -------
Total Liabilities and Shareholders'
Equity $341,829 $382,437
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STONERIDGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
----------------
2009 2008
---- ----
OPERATING ACTIVITIES:
Net cash provided by (used for) operating
activities $(2,600) $12,574
------- -------
INVESTING ACTIVITIES:
Capital expenditures (6,743) (11,641)
Proceeds from sale of property, plant and equipment 92 307
Business acquisitions and other - (980)
------ -------
Net cash used for investing activities (6,651) (12,314)
------ -------
FINANCING ACTIVITIES:
Repayments of long-term debt - (17,000)
Share-based compensation activity - 1,162
Premiums related to early extinguishment of debt - (553)
------ -------
Net cash used for financing activities - (16,391)
------ -------
Effect of exchange rate changes on cash and cash
equivalents 2,040 1,549
----- -----
Net change in cash and cash equivalents (7,211) (14,582)
Cash and cash equivalents at beginning of period 92,692 95,924
------ ------
Cash and cash equivalents at end of period $85,481 $81,342
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