Stoneridge Reports Fourth-Quarter 2012 Results PR Newswire WARREN, Ohio, March 1, 2013 WARREN, Ohio, March 1, 2013 /PRNewswire/ -- oStrong Cash Flow Drives Debt Reduction in 2012 oContinued Operating Improvements in the Fourth Quarter oReaffirms 2013 Guidance of $0.75 - $0.95 per share Stoneridge, Inc. (NYSE: SRI) today announced financial results for the fourth quarter ended December 31, 2012. Fourth-quarter 2012 net sales were $222.7 million, an increase of $36.7 million, or 19.7%, compared with $186.0 million for the fourth quarter of 2011. The increase in the current quarter's net sales was primarily due to the consolidation of the operating results of PST, the Brazilian subsidiary of which the Company acquired controlling interest on December 29, 2011. Excluding PST in the fourth quarter of 2012, net sales were $178.3 million, a decrease of $7.8 million, or 4.2%, from the same period a year ago, primarily as a result of lower sales in the Company's Wiring business segment, including lower sales to a large North American commercial vehicle customer, and lower sales to European commercial vehicle customers in the Company's Electronics business segment. Net income for the fourth quarter of 2012 was $2.6 million, or $0.10 per diluted share, compared with net income of $38.6 million, or $1.56 per diluted share, in the fourth quarter of 2011. The decrease in net income was primarily due to a $65.4 million pretax gain ($42.5 million after-tax gain) or $1.72 per share recognized in conjunction with Stoneridge's purchase of additional ownership in its Brazil-based PST joint venture on December 29, 2011. For the year ended December 31, 2012, the Company reported net sales of $938.5 million, a 22.6% increase from $765.4 million for the same period in 2011. The increase in the current year's net sales was primarily due to the consolidation of the operating results of PST. Excluding the net sales of PST in 2012, net sales were $758.1 million, a decrease of $7.3 million, or 1.0%, from a year ago, primarily as a result of lower sales in the Company's Wiring business segment and lower sales to European commercial vehicle customers in the Company's Electronics business segment. Net income for the year was $5.4 million, or $0.20 per diluted share, down from $49.4 million, or $2.00 per diluted share, for the prior year which included the $1.72 per share gain recognized in conjunction with the PST purchase. "As we announced in our press release of February 7, we finished 2012 with strong cash flow and we have exceeded our debt reduction targets. We finished the year generating approximately $49.1 million in free cash flow (net cash provided by operating activities less capital expenditures)," said John C. Corey, President and Chief Executive Officer. As of December 31, 2012, Stoneridge's consolidated cash position was $44.6 million, a decrease of $34.2 million from December 31, 2011. The change in the cash balance was partially the result of the $19.8 million in cash used to fund the final portion of the PST transaction, which was completed on January 5, 2012. The Company also reduced its debt by $65.7 million during 2012. Stoneridge repaid $38.0 million of borrowing on its asset-based lending facility, and the remaining $27.7 million was primarily due to PST's repayment of indebtedness. "While our cost-reduction and other initiatives continued to drive gross margin and operating margin improvements in the fourth quarter compared with the second and third quarters of 2012, our earnings performance in the fourth quarter was below our expectations and due primarily to a slower recovery in the Brazilian market than anticipated and lower than expected sales in our European operations as European OEMs extended their holiday shutdown," Corey noted. "We have adjusted our cost structures to reflect the market weakness and expect to see continued financial improvement in 2013 and reaffirm our full 2013 guidance as published on February 7, 2013," Corey added. Wiring as a Separate Reporting Segment In the fourth quarter of 2012, Stoneridge changed its reportable segments in accordance with accounting guidelines, which will provide better visibility to Stoneridge's four operating segments: Control Devices, Electronics, PST and Wiring. The revised segment information constitutes a reclassification and has no impact on reported net income or earnings per share for any period. These changes do not restate information previously reported in the Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Shareholders' Equity or Consolidated Statements of Cash Flows for the Company for any period. Conference Call on the Web A live Internet broadcast of Stoneridge's conference call regarding 2012 fourth-quarter results can be accessed at 11 a.m. Eastern time on Friday, March 1, 2013, at www.stoneridge.com, which will also offer a webcast replay. A Non-GAAP Financial Measure This press release includes the financial measure free cash flow. This measure is defined as a non-GAAP financial measure by the Securities and Exchange Commission and may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. The Company believes that free cash flow is helpful when presented in conjunction with the net cash provided by operating activities, which was $75.5 million for 2012. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Reconciliation for 2012: Net cash provided by operating activities of $75.5 million less capital expenditures of $26.4 million equals free cash flow of $49.1 million. Free cash flow is considered a liquidity measure and provides useful information to management and investors about the amount of cash generated after the capital expenditures. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. 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 commercial vehicle, automotive and agricultural, motorcycle 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. 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 volume change in commercial vehicle, automotive or agricultural, motorcycle 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. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended For the years ended December 31, December 31, (in thousands, except per 2012 2011 2012 2011 share data) Net sales $ 222,725 $ $ 938,513 $ 765,373 186,048 Costs and expenses: Cost of goods sold 168,116 153,730 713,869 618,596 Selling, general and 45,961 34,957 195,915 128,306 administrative Goodwill impairment - 4,945 - 4,945 charge Operating income (loss) 8,648 (7,584) 28,729 13,526 Interest expense, net 4,638 4,432 20,033 17,234 Equity in earnings of (317) (4,957) (760) (10,034) investees Gain on previously held - (65,372) - (65,372) equity interest Other expense, net 1,521 220 4,896 56 Income before income 2,806 58,093 4,560 71,642 taxes Provision for income 95 22,727 812 26,105 taxes Net income 2,711 35,366 3,748 45,537 Net income (loss) attributable to 90 (3,209) (1,613) (3,820) noncontrolling interest Net income attributable $ $ $ $ to Stoneridge, Inc. 2,621 38,575 5,361 49,357 Earnings per share attributable to Stoneridge, Inc.: Basic $ $ $ $ 0.10 1.58 0.20 2.04 Diluted $ $ $ $ 0.10 1.56 0.20 2.00 Weighted average shares outstanding: Basic 26,435 24,380 26,377 24,181 Diluted 27,177 24,760 27,032 24,645 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) As of December 31 (in thousands) 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 44,555 $ 78,731 Accounts receivable, less reserves of 141,503 162,354 $3,394 and $1,485, respectively Inventories, net 96,032 120,482 Prepaid expenses and other current 28,964 27,897 assets Total current assets 311,054 389,464 Long-term assets: Property, plant and equipment, net 119,147 124,944 Other assets Intangible assets, net 84,397 98,039 Goodwill 66,381 71,855 Investments and other long-term 11,712 11,193 assets, net Total long-term assets 281,637 306,031 Total assets $ 592,691 $ 695,495 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of debt $ 18,925 $ 44,246 Revolving credit facilities 1,160 39,181 Accounts payable 76,303 83,509 Accrued expenses and other current 57,081 90,994 liabilities Total current liabilities 153,469 257,930 Long-term liabilities: Long-term debt, net 181,311 183,711 Deferred income taxes 59,819 67,721 Other long-term liabilities 4,258 5,494 Total long-term liabilities 245,388 256,926 Shareholders' equity: Preferred Shares, without par value, - - authorized 5,000 shares, none issued Common Shares, without par value, authorized 60,000 shares, issued 28,433 and 27,097 shares and outstanding 27,913 and 26,222 shares at December 31, 2012 and 2011, respectively, with no stated value - - Additional paid-in capital 184,822 170,775 Common Shares held in treasury, 520 and 875 shares at December 31, 2012 and 2011, respectively, at cost (1,885) (1,870) Accumulated deficit (22,902) (28,263) Accumulated other comprehensive loss (10,282) (9,615) Total Stoneridge Inc. and 149,753 131,027 subsidiaries shareholders' equity Noncontrolling interest 44,081 49,612 Total shareholders' equity 193,834 180,639 Total liabilities and shareholders' $ 592,691 $ 695,495 equity CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three months ended For the Years Ended December 31, December 31, Years ended December 31 (in 2012 2011 2012 2011 thousands) Net income $ $ $ $ 2,711 35,366 3,748 45,537 Other comprehensive income (loss), net of tax: Foreign currency translation (1,175) (2,505) (10,502) (5,971) adjustments Pension liability (27) - (27) - adjustments Unrealized gain on marketable - - - 16 securities Unrealized gain (loss) on 398 5,391 9,862 (7,722) derivatives Other comprehensive income (804) 2,886 (667) (13,677) (loss) Consolidated comprehensive 1,907 38,252 3,081 31,860 income Comprehensive gain (loss) attributable to noncontrolling 90 (3,209) (1,613) (3,820) interest Comprehensive income $ $ $ $ attributable to Stoneridge, 1,817 41,461 4,694 35,680 Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Years ended December 31 (in 2012 2011 thousands) OPERATING ACTIVITIES: Net cash provided by operating $ 75,545 $ activities 921 INVESTING ACTIVITIES: Capital expenditures (26,352) (26,290) Proceeds from sale of fixed assets 521 3,863 Capital contribution from - 397 noncontrolling interest Business acquisitions, net of cash (19,779) (7,753) acquired Net cash used for investing (45,610) (29,783) activities FINANCING ACTIVITIES: Proceeds from issuance of other debt 22,146 1,408 Repayments of other debt (48,327) (968) Revolving credit facility borrowings 21,579 38,993 Revolving credit facility payments (59,600) (554) Other financing costs - (605) Repurchase of shares to satisfy (1,273) (752) employee tax withholding Net cash provided by (used for) (65,475) 37,522 financing activities Effect of exchange rate changes on 1,364 (1,903) cash and cash equivalents Net change in cash and cash (34,176) 6,757 equivalents Cash and cash equivalents at 78,731 71,974 beginning of period Cash and cash equivalents at end of $ 44,555 $ 78,731 period Supplemental disclosure of non-cash financing activities: Change in fair value of interest rate $ 1,134 $ 4,095 swap Issuance of Common Shares for acquisition of additional PST $ 10,197 $ 5,113 interest SOURCE Stoneridge, Inc. Website: http://www.stoneridge.com Contact: Kenneth A. Kure, Corporate Treasurer and Director of Finance, +1-330-856-2443
Stoneridge Reports Fourth-Quarter 2012 Results
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