Stoneridge Reports Strong Second-Quarter 2016 Results

Stoneridge Reports Strong Second-Quarter 2016 Results

PR Newswire

WARREN, Ohio, Aug. 2, 2016

WARREN, Ohio, Aug. 2, 2016 /PRNewswire/ --

  • Reports Earnings Per Share From Continuing Operations of $0.41, an increase of $0.16 per share or 64.0% compared with 2Q15
  • Sales of $186.9 million increased by $21.6 million or 13.1% compared with 2Q15
  • Operating Income of $13.6 million increased by $6.2 million or 83.8% compared with 2Q15
  • New program sales providing expected operating margin leverage
  • Full-Year 2016 EPS Guidance revised upward

Stoneridge, Inc. (NYSE: SRI) today announced financial results for the second quarter ended June 30, 2016, with sales of $186.9 million and earnings per diluted share from continuing operations attributable to Stoneridge, Inc. of $0.41, an increase of $0.16 per share or 64.0% compared with the second quarter of 2015.  

Second-quarter 2016 net sales were $186.9 million, an increase of $21.6 million compared with $165.3 million for the second quarter of 2015.  Second-quarter 2016 sales were negatively affected by $2.5 million primarily due to unfavorable foreign currency translation primarily in the Company's PST segment. On a constant currency basis, second-quarter sales increased by $24.2 million, or 14.6%, compared with the second quarter of 2015 (see Exhibit 1 for reconciliation of this non-GAAP financial measure).                                                                    

The Control Devices segment sales increased by $24.5 million, or 29.0%, to $108.9 million.  The sales increase in the Control Devices segment in 2016 reflects sales of new programs as well as a robust North American passenger car market.

The Electronics segment sales declined by $0.1 million, or 0.2%, to $57.8 million in the second quarter of 2016, compared with the second quarter of 2015.  Electronics sales primarily decreased due to lower volumes in the North American commercial vehicle market.  The Electronics segment exposure to the North American commercial vehicle market dropped significantly as a result of the Wiring business divestiture in August 2014.

PST experienced a sales decrease of $2.7 million, or 11.9%, to $20.3 million, compared with the second quarter of 2015, due to unfavorable foreign currency exchange translation.  On a constant currency basis, in the second quarter of 2016, the PST segment sales increased by $0.1 million, or 0.5%, compared with the second quarter of 2015 because of the continued adverse effects of the deteriorated economic conditions in Brazil which have continued (see Exhibit 1 for reconciliation of this non-GAAP financial measure).  During the second quarter of 2016, the average Brazilian Real per US Dollar rate depreciated from R$3.07 per USD to R$3.50 per USD, or 14.0%, compared with the second quarter of 2015.  This reduced U.S. dollar reported sales for PST by approximately $2.9 million, or 12.4%.

Earnings per diluted share attributable to Stoneridge, Inc. was $0.41 for the second quarter of 2016 compared with earnings per diluted share attributable to Stoneridge, Inc. of $0.25 for the second quarter of 2015, an improvement of $0.16 per share or 64.0%.

At June 30, 2016, Stoneridge's consolidated cash position was $55.3 million, an increase of $0.9 million from December 31, 2015.  Cash increased due primarily to profitability which was offset by capital expenditures to facilitate new business programs and seasonal working capital increases.   Stoneridge's Debt to Adjusted EBITDA from Continuing Operations ratio improved to 2.0x compared with 2.5x in the second quarter of 2015 (see Exhibit 2 for a reconciliation of this non-GAAP financial measure).

Jon DeGaynor, President and Chief Executive Officer, commented, "This quarter, Stoneridge delivered its best earnings per share performance in the past 10 years, excluding the gain associated with the PST purchase transaction in the fourth quarter of 2011. Our performance was driven by significant improvement to operating margins in the second quarter from higher sales at Control Devices, currency tailwinds and operating improvements at Electronics.  We are achieving the kind of leverage on sales that we had planned for in 2016, and we continue to expect year-on-year improved performance for the balance of the year."  

DeGaynor added, "PST has endured the prolonged economic downturn that has plagued Brazil over the past three years. PST's continued efforts to mitigate the effect of the downturn are paying off.  PST improved its operating performance by $1.5 million in the second quarter of 2016, compared with the second quarter of 2015, despite a sales decrease of $2.7 million. PST generated its first operating profit in June and expects to generate an operating profit (excluding non-cash intangible amortization expense related to the purchase of PST) in the third and fourth quarters of 2016.  The PST management team continues to demonstrate their agility and tenacity in the face of economic adversity." 

DeGaynor concluded, "I am very proud of the financial performance Stoneridge delivered in the second quarter. We continue to demonstrate the profitability leverage that we have projected in our 2016 guidance.  We have also adjusted our 2016 earnings guidance upward (see Exhibit 3) to reflect higher profitability on a slightly lower sales expectation due primarily to PST's sales performance.  We look forward to continued strong execution for the balance of 2016."  

Conference Call on the Web
A live Internet broadcast of Stoneridge's conference call regarding 2016 second-quarter results can be accessed at 10 a.m. Eastern time on Tuesday, August 2, 2016, 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, commercial vehicle, motorcycle, 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.  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 automotive, commercial vehicle, motorcycle, off-highway vehicle and agricultural equipment 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

Six months ended

June 30,

June 30,

(in thousands, except per share data)

2016

2015

2016

2015








Net sales

$

186,903

$

165,289

$

349,519

$

328,114








Costs and expenses:








Cost of goods sold

134,152

119,343

251,607

238,520

Selling, general and administrative

29,247

28,482

55,019

59,224

Design and development

9,878

10,049

20,761

19,829








Operating income

13,626

7,415

22,132

10,541








Interest expense, net

1,840

1,658

3,354

2,936

Equity in earnings of investee

(153)

(143)

(296)

(332)

Other income, net

(406)

(47)

(225)

(260)








Income before income taxes from continuing operations

12,345

5,947

19,299

8,197








Income tax expense (benefit) from continuing operations

1,350

(381)

2,195

(234)








Income from continuing operations

10,995

6,328

17,104

8,431








Income (loss) from discontinued operations

-

55

-

(113)








Net income

10,995

6,383

17,104

8,318








Net loss attributable to noncontrolling interest

(576)

(596)

(1,706)

(1,005)








Net income attributable to Stoneridge, Inc.

$

11,571

$

6,979

$

18,810

$

9,323








Earnings per share from continuing operations attributable to








Stoneridge, Inc.:








Basic

$

0.42

$

0.26

$

0.68

$

0.35

Diluted

$

0.41

$

0.25

$

0.67

$

0.34








Earnings per share attributable to discontinued operations:






Basic

$

0.00

$

0.00

$

0.00

$

0.00

Diluted

$

0.00

$

0.00

$

0.00

$

0.00








Earnings per share attributable to Stoneridge, Inc.:








Basic

$

0.42

$

0.26

$

0.68

$

0.35

Diluted

$

0.41

$

0.25

$

0.67

$

0.34








Weighted-average shares outstanding:








Basic

27,791

27,308

27,733

27,227

Diluted

28,262

27,945

28,208

27,863








 

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

 




CONDENSED CONSOLIDATED BALANCE SHEETS













June 30,

December 31,

(in thousands)

2016

2015

(Unaudited)

ASSETS










Current assets:




Cash and cash equivalents

$

55,284

$

54,361

Accounts receivable, less reserves of $1,592 and $1,066, respectively

125,638

94,937

Inventories, net

68,294

61,009

Prepaid expenses and other current assets

26,566

21,602

Total current assets

275,782

231,909




Long-term assets:




Property, plant and equipment, net

89,991

85,264

Intangible assets, net and goodwill

42,623

36,699

Investments and other long-term assets, net

10,803

10,380

Total long-term assets

143,417

132,343

Total assets

$

419,199

$

364,252




LIABILITIES AND SHAREHOLDERS' EQUITY










Current liabilities:




Current portion of debt

$

13,882

$

13,905

Accounts payable

73,493

55,225

Accrued expenses and other current liabilities

43,317

38,920

Total current liabilities

130,692

108,050




Long-term liabilities:




Revolving credit facility

100,000

100,000

Long-term debt, net

6,914

4,458

Deferred income taxes

43,533

41,332

Other long-term liabilities

4,163

3,983

Total long-term liabilities

154,610

149,773




Shareholders' equity:




Preferred Shares, without par value, 5,000 shares authorized, none issued

-

-

Common Shares, without par value, 60,000 shares authorized,




      28,966 and 28,907 shares issued and 27,843 and 27,912 shares outstanding at




June 30, 2016 and December 31, 2015, respectively, with no stated value

-

-

Additional paid-in capital

202,283

199,254

Common Shares held in treasury, 1,123 and 995 shares at June 30, 2016 and






 December 31, 2015, respectively, at cost

(5,592)

(4,208)

Accumulated deficit

(13,295)

(32,105)

Accumulated other comprehensive loss

(63,670)

(69,822)

Total Stoneridge, Inc. shareholders' equity

119,726

93,119

Noncontrolling interest

14,171

13,310

Total shareholders' equity

133,897

106,429

Total liabilities and shareholders' equity

$

419,199

$

364,252

 

 











CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

































Three months ended

Six months ended




June 30,

June 30,

(in thousands)




2016

2015

2016

2015











Net income



$

10,995

$

6,383

$

17,104

$

8,318

Less: Loss attributable to noncontrolling interest

(576)

(596)

(1,706)

(1,005)

Net income attributable to Stoneridge, Inc.




11,571

6,979

18,810

9,323











Other comprehensive income (loss), net of tax attributable to





Stoneridge, Inc.:











Foreign currency translation




1,833

3,022

6,561

(11,940)

Benefit plan liability




-

-

-

(45)

Unrealized gain (loss) on derivatives




41

(728)

(409)

207

Other comprehensive income (loss), net of tax attributable to






Stoneridge, Inc.




1,874

2,294

6,152

(11,778)











Comprehensive income (loss) attributable to Stoneridge, Inc.

$

13,445

$

9,273

$

24,962

$

(2,455)












The Company has combined comprehensive income (loss) from continuing operations and comprehensive loss from discontinued operations herein. 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS






Six months ended June 30 (in thousands)

2016

2015



OPERATING ACTIVITIES:



Net cash provided by operating activities

$   17,794

$       1,632



INVESTING ACTIVITIES:



Capital expenditures

(12,006)

(15,229)

Proceeds from sale of fixed assets

354

36

Payments related to sale of Wiring business

-

(1,230)

Business acquisition and other

-

(469)

Net cash used for investing activities

(11,652)

(16,892)



FINANCING ACTIVITIES:



Proceeds from issuance of debt

11,800

12,088

Repayments of debt

(15,611)

(14,206)

Other financing costs

-

(49)

Repurchase of Common Shares to satisfy employee tax withholding

(1,384)

(1,181)

Net cash used for financing activities

(5,195)

(3,348)



Effect of exchange rate changes on cash and cash equivalents

(24)

(1,553)



Net change in cash and cash equivalents

923

(20,161)



Cash and cash equivalents at beginning of period

54,361

43,021



Cash and cash equivalents at end of period

$   55,284

$     22,860








The Company has combined cash flows from continuing operations and cash flows from discontinued operations within the operating, investing and financing categories. 

 

Exhibit 1













Stoneridge, Inc.












Reconciliation of Sales to Constant Currency Adjusted Sales





Three months ended June 30, 2016 and 2015 (in thousands)





(Unaudited)






















Increase /

Percent






2016

2015

(Decrease)

Increase













Electronics Segment Sales As Reported



$       57,761

$       57,895

$        (134)

(0.2)%













Less: Constant Foreign Currency Translation Adjustment

(313)

-

(313)
















Adjusted Electronics Segment Sales



$       57,448

$       57,895

$        (447)

(0.8)%




























PST Segment Sales As Reported



$       20,253

$       22,996

$     (2,743)

(11.9)%













Plus: Constant Foreign Currency Translation Adjustment

2,858

-

2,858
















Adjusted PST Segment Sales




$       23,111

$       22,996

$          115

0.5%




























Total Consolidated Sales As Reported



$     186,903

$     165,289

$     21,614

13.1%













Plus: Constant Foreign Currency Translation Adjustment

2,545

-

2,545
















Total Consolidated Constant Currency Adjusted Sales

$     189,448

$     165,289

$     24,159

14.6%

 

 






Exhibit 2






Stoneridge, Inc.






Reconciliation of Net Income (Loss) to Adjusted EBITDA from Continuing Operations

Twelve months ended June 30, 2016 and 2015 (in thousands)



(Unaudited)











2016

2015






Net income (loss)



$         29,353

$       (23,650)

Interest expense, net



6,783

9,814

Equity in earnings of investees



(573)

(764)

Other expense (income), net



1,863

(1,942)

Expense (benefit) for income taxes



1,882

(2,474)

Depreciation and amortization



22,029

25,329

Share-based compensation impact of CEO Retirement


-

2,225

Discontinued operations



97

9,913

Loss on early extinguishment of debt



-

10,607

PST purchase accounting and goodwill impairment


22

21,553






Adjusted EBITDA from continuing operations


$         61,456

$         50,611






Total Debt



$       120,796

$       127,632

Total Debt / Adjusted EBITDA from continuing operations


 2.0x 

 2.5x 

 

Exhibit 3









March 2016


August 2,  2016

*Guidance


*Guidance**






Sales 

(in millons)

$726  -  $736


$705  -  $715

Gross Margin

25.5% - 28.0%


26.0% - 28.5%

Operating Margin

5.3% - 7.3%


6.0% - 7.3%

EPS/Adjusted EPS **

$1.10 - $1.30


$1.25 - $1.40

EBITDA %

8.0% - 11.0%


9.5% - 11.3%






FX Rates :














BRL/USD

3.80


3.40

MXN/USD

15.80


17.80

USD/EUR

1.10


1.12

SEK/USD

8.65


8.25






* Both guidance scenarios assume no reversal of US Deferred Tax Valuation Allowance

** August 2, 2016 Guidance uses adjusted EPS of $.31/share in 1Q16 and $.41/share as reported in 2Q16

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/stoneridge-reports-strong-second-quarter-2016-results-300307624.html

SOURCE Stoneridge, Inc.

Copyright CNW Group 2016