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8-K - 03/03/2011 EARNINGS RELEASE 10-K - Fuel Systems Solutions, Inc. | rrd303851.htm |
Exhibit 99.1 |
Fuel Systems Solutions Reports Fourth Quarter and Year End 2010 Results
Fourth Quarter Revenue of $83.1 Million and $0.02 Net Loss Per Share Full Year 2010 Revenue of $430.6 Million and EPS of $2.23 IMPCO Business Achieved Significant 2010 Revenue Growth and Profitability
NEW YORK, N.Y., March 3, 2011 -- Fuel Systems Solutions, Inc. (Nasdaq: FSYS) reported results for its fourth quarter and year ended December 31, 2010.
Mariano Costamagna, Fuel Systems CEO, said, We achieved full year 2010 revenue of $430.6 million and maintained gross margins of 31%, buoyed by continued strength in our industrial business amidst challenging market demand in Europe. For 2011, we are focused on leveraging our global investments for future growth in both our automotive and industrial businesses and further reducing our transportation cost structure in Europe to realign our expense base with current market conditions.
Matthew Beale, Fuel Systems President, CFO and Secretary, said, In 2010, we invested in our future growth opportunities, bolstering our transportation business with key acquisitions that together position us as leaders in the emerging US natural gas vehicle market. We also developed partnerships with fleet customers and manufacturers of CNG and LPG fleet vehicles. In Europe, we managed both ends of the new vehicle demand spectrum, and are positioned well competitively, albeit in a weaker marketplace. Our industrial business delivered renewed growth and achieved operating profitability for the full year. Looking ahead to 2011, we will continue to invest prudently in our portfolio of businesses toward achieving our target business model, building traction in our US automotive business, and right-sizing our European cost structure.
Fourth Quarter 2010 Financial Results
Revenue for the fourth quarter of 2010 was $83.1 million, compared to $163.7 million in the fourth quarter of 2009. Fourth quarter 2010 revenue was negatively impacted by approximately $8 million of foreign exchange rate fluctuations. In addition, the revenue decrease is primarily attributable to a lower level of revenue from DOEM installations after the expiration of the Italian governments 2009 incentive program, partially offset by an increase in the industrial and other automotive business and the contribution of acquisitions made in 2009. Gross profit for the fourth quarter 2010 was $18.2 million, or 22% of revenue, compared to $56.2 million, or 34% of revenue a year ago, reflecting the reduction in DOEM volumes versus last year and changes in the mix of transportation revenue, partially offset by improved margins in the industrial and other automotive business. Operating loss for the period totaled $3.2 million as compared to operating income of $33.4 million, or 20% of revenue, in the fourth quarter of 2009. This loss reflects:
- Lower volumes and gross margin and greater R&D expenses than last years quarter as the Company invested in new technologies;
- The inclusion of a total of $ 2.9 million in costs and charges, comprised of: a $0.7 million non-cash write-down of abandoned DOEM equipment assets; a $ 1.0 million provision for severance and temporary worker labor costs in Italy; and $ 1.2 million in warranty costs associated with product replacements also in Italy ;
- Partially offset by lower SG&A
Net loss for the fourth quarter 2010 was $0.4 million, or $0.02 per diluted share, including the abovementioned expenses, as compared to net income of $19.9 million, or $1.12 per diluted share, in the fourth quarter 2009.
On segment basis, fourth quarter 2010 revenues from BRC Operations, primarily representing the Companys transportation business, decreased to $44.9 million from $141.3 million in the same quarter a year ago, and revenues from IMPCO Operations, primarily representing the Companys industrial business, increased to $41.1 million from $22.8 million in the same quarter a year ago. BRC fourth quarter 2010 operating loss was $6.3 million compared to operating income of $38.4 million in the same quarter a year ago; IMPCO fourth quarter
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2010 operating income of $4.7 million reversed the operating loss of $3.3 million in the same period a year ago. A table presenting operating segment data can be found in the tables below.
Full Year Ended December 31, 2010 Financial Results
For the full year ended December 31, 2010, total revenue was $430.6 million compared to $452.3 million for the same period a year ago. Net income for the year was $39.7 million, or $2.23 per diluted share, compared to $49.8 million, or $2.95 per diluted share, for the same period a year ago.
Company Outlook |
In 2011, Fuel Systems expects continued soft European automotive trends and continued strength in the IMPCO business. As revenue growth and cost efficiencies gain traction during the year, the Company expects full year 2011 revenue to be between $375 million and $400 million and expects 2011 gross margin of 23% to 25% and 2011 operating margin of 5% to 7%. Management reiterates that it continues to target gross profit margins in excess of 25% and mid-teen EBITDA margins over the medium term.
Through its recent investments, Fuel Systems has expanded its platform and equipped the business to capture growth opportunities in attractive geographic markets. 2011 will in some respects be a transitional year as the company completes the build-out of its North American automotive operations and expands its focus on Asia and Latin America. While these activities will impact near-term results, they will position the company to achieve its medium-term growth and profitability objective while generating solid cash flow in 2011. said Mariano Costamagna.
Conference Call
The Company will host a conference call today, March 3rd at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time to discuss its fourth quarter and year ended 2010 financial results and other matters. To listen to the call live, please dial 877-356-8063 at least 10 minutes before the start of the conference. International participants may dial 706-679-2544. The pass code for the conference call will be 40657085. The call is also being webcast and can be accessed from the Investor Relations section of the Companys website at www.fuelsystemssolutions.com. A telephone replay will be available until midnight ET on March 7th by dialing 800-642-1687 or 706-645-9291 and entering pass code 40657085#. A replay will also be available at the web address above for 90 days.
Forward-Looking Statements
This press release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, expressed or implied statements concerning the Company's outlook for 2011, as well as its position in the market place, the success of products and the success and integration of recent acquisitions. Such statements represent only our opinions and predictions. The Company's actual results may differ materially. Factors that may cause the Company's results to differ include, but are not limited to our ability to integrate recently acquired businesses and to realize the expected synergies; economic uncertainties caused by political instability in certain of the local markets we do business in; the potential growth of non-gaseous alternative fuel products and other new technologies; currency rate fluctuations and devaluations; our ability to realign costs with current market conditions; potential changes in tax policies and government incentives and their effect on the economic benefits of our products to consumers; the weakness in financial and credit markets and the economy; and the repeal or implementation of government regulations relating to reducing vehicle emissions. Readers also should consider the risk factors set forth in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to, those contained in the "Risk Factors" section of the Company's Annual Report on Form 10-K, for the year ended December 31, 2009 as well as our Quarterly Reports on Form 10-Q for the period ended September 30, 2010. The Company does not undertake to update or revise any of its forward-looking statements or guidance even if experience or future changes show that the indicated results or events will not be realized.
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About Fuel Systems Solutions |
Fuel Systems Solutions (Nasdaq: FSYS) is a leading designer, manufacturer and supplier of proven, cost-effective alternative fuel components and systems for use in transportation and industrial applications. Fuel Systems components and systems control the pressure and flow of gaseous alternative fuels, such as propane and natural gas, used in internal combustion engines. These components and systems feature the Companys advanced fuel system technologies, which improve efficiency, enhance power output and reduce emissions by electronically sensing and regulating the proper proportion of fuel and air required by the internal combustion engine. In addition to the components and systems, the Company provides engineering and systems integration services to address unique customer requirements for performance, durability and configuration. The Company is composed of two operating subsidiaries: IMPCO Technologies and BRC. IMPCO Technologies is a leader in the heavy duty, industrial, power generation and stationary engines sectors and recently established a U.S. Automotive division. BRC is a leader in the light duty and automobile alternative fuel sectors and has established alliances with several major automobile manufacturers for OEM projects. Additional information is available at www.fuelsystemssolutions.com.
Company Contact: Matthew Beale, President, CFO, & Secretary Fuel Systems Solutions, Inc. (646) 502-7170 Investor Relations Contacts: Lippert / Heilshorn & Associates Carolyn M. Capaccio ccapaccio@lhai.com Cathy Mattison cmattison@lhai.com (415) 433-3777 |
Tables Follow |
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FUEL SYSTEMS SOLUTIONS, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(In thousands, except share data) | ||||
(Unaudited) | ||||
December 31, | December 31, | |||
2010 | 2009 | |||
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ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $124,775 | $ 46,519 | ||
Accounts receivable, less allowance for doubtful accounts of $2,858 and $3,159 at December 31, | ||||
2010 and December 31, 2009, respectively | 61,355 | 132,603 | ||
Inventories | 85,854 | 90,367 | ||
Deferred tax assets, net | 8,551 | 9,217 | ||
Other current assets | 22,780 | 8,647 | ||
Related party receivables | 3,613 | 2,915 | ||
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Total current assets | 306,928 | 290,268 | ||
Equipment and leasehold improvements, net | 59,653 | 40,767 | ||
Goodwill, net | 53,815 | 54,209 | ||
Deferred tax assets, net | 335 | 107 | ||
Intangible assets, net | 30,285 | 24,053 | ||
Investment in unconsolidated affiliates | | 4,058 | ||
Other assets | 2,196 | 3,051 | ||
Related party receivables | 1,351 | 599 | ||
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Total Assets | $454,563 | $ 417,112 | ||
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LIABILITIES AND EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 46,610 | $ 73,837 | ||
Accrued expenses | 37,928 | 40,384 | ||
Income taxes payable | 3,258 | 15,788 | ||
Current portion of term loans and other loans | 4,823 | 7,240 | ||
Deferred tax liabilities, net | 770 | 917 | ||
Related party payables | 2,690 | 10,293 | ||
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Total current liabilities | 96,079 | 148,459 | ||
Term and other loans | 7,571 | 12,167 | ||
Other liabilities | 8,218 | 7,551 | ||
Deferred tax liabilities | 4,128 | 5,707 | ||
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Total Liabilities | 115,996 | 173,884 | ||
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Equity: | ||||
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued and outstanding at | ||||
December 31, 2010 and 2009 | | | ||
Common stock, $0.001 par value, authorized 200,000,000 shares; 20,028,968 issued | ||||
and 19,921,217 outstanding at December 31, 2010; and 17,625,812 issued and 17,610,321 | ||||
outstanding at December 31, 2009 | 20 | 18 | ||
Additional paid-in capital | 322,948 | 257,627 | ||
Shares held in treasury, 18,545 and 15,492 shares at December 31, 2010 and 2009, respectively | (588) | (654) | ||
Retained Earnings (Accumulated deficit) | 10,189 | (29,513) | ||
Accumulated other comprehensive income | 2,237 | 15,750 | ||
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Total Fuel Systems Equity | 334,806 | 243,228 | ||
Non-controlling interests | 3,761 | | ||
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Total Equity | 338,567 | 243,228 | ||
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Total Liabilities and Equity | $454,563 | $ 417,112 | ||
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FUEL SYSTEMS SOLUTIONS, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31 | |||||||||||||||
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2010 | 2009 | 2010 | 2009 | |||||||||||||
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Revenue | $ | 83,107 | $ | 163,717 | $ 430,632 | $ | 452,325 | |||||||||
Cost of revenue | 64,902 | 107,547 | 298,259 | 303,789 | ||||||||||||
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Gross profit | 18,205 | 56,170 | 132,373 | 148,536 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development expense | 6,016 | 5,098 | 20,775 | 15,151 | ||||||||||||
Selling, general and administrative expense | 15,340 | 17,691 | 53,297 | 53,079 | ||||||||||||
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Total operating expenses | 21,356 | 22,789 | 74,072 | 68,230 | ||||||||||||
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Operating income (loss) | (3,151) | 33,381 | 58,301 | 80,306 | ||||||||||||
Other income, net | 902 | 381 | 1,542 | 4,615 | ||||||||||||
Interest income (expense), net | 171 | (541) | (3) | (1,909) | ||||||||||||
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Income (loss) before income taxes and equity share in | ||||||||||||||||
income of unconsolidated affiliates | (2,078) | 33,221 | 59,840 | 83,012 | ||||||||||||
Equity share in income of unconsolidated affiliates, net | | 358 | | 852 | ||||||||||||
Income tax (expense)/income | 1,759 | (13,712) | (19,556) | (34,023) | ||||||||||||
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Net income | (319) | 19,867 | 40,284 | 49,841 | ||||||||||||
Less: Net income | (98) | | (582) | (2) | ||||||||||||
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Net income | $ | (417) | $ | 19,867 | $ 39,702 | $ | 49,839 | |||||||||
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Net income | ||||||||||||||||
Basic | $ | (0.02) | $ | 1.13 | $ | 2.24 | $ | 2.96 | ||||||||
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Diluted | $ | (0.02) | $ | 1.12 | $ | 2.23 | $ | 2.95 | ||||||||
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Number | ||||||||||||||||
Basic | 18,046,075 | 17,598,669 | 17,725,049 | 16,847,439 | ||||||||||||
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Diluted | 18,046,075 | 17,674,743 | 17,807,330 | 16,922,971 | ||||||||||||
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FUEL SYSTEMS SOLUTIONS, INC. | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(In Thousands) | ||||
(Unaudited) | ||||
Years Ended December 31, | ||||
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2010 | 2009 | |||
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Cash flows from operating activities: | ||||
Net income | $ 40,284 | $ 49,841 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Amortization of intangibles arising from acquisitions | 5,288 | 4,108 | ||
Depreciation and other amortization | 9,035 | 8,087 | ||
Provision for doubtful accounts | 1,317 | 567 | ||
Provision for inventory reserve | 4,020 | 9,596 | ||
Goodwill impairment loss | | | ||
Extraordinary gain | | | ||
Provision for loan to unconsolidated affiliate | | 343 | ||
Equity share in income of unconsolidated affiliates | | (852) | ||
Gain on Acquisition | | (1,422) | ||
Compensation expense related to stock option and restricted stock grants | 442 | 329 | ||
Unrealized (gain) loss on foreign exchange transactions | (1,427) | (1,541) | ||
Impairment loss on equipment and leasehold improvement | 689 | | ||
Loss on disposal of assets | 468 | 357 | ||
Dividends from unconsolidated affiliates | | 196 | ||
Changes in assets and liabilities, net of acquisitions | ||||
Increase in deferred income taxes, net | (1,519) | (3,943) | ||
Decrease (increase) in accounts receivable | 58,470 | (51,366) | ||
Decrease (increase) in inventories | (453) | 17,319 | ||
(Increase) in other current assets | (8,127) | (977) | ||
Decrease (increase) in other assets | 338 | (1,131) | ||
(Decrease) increase in accounts payable | (23,437) | (789) | ||
(Decrease) increase in income taxes payable | (10,423) | 5,522 | ||
(Decrease) increase in accrued expenses | (5,150) | 451 | ||
(Decrease) increase in long-term liabilities | (621) | 759 | ||
Receivables from/payables to related party, net | (2,488) | (2,753) | ||
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Net cash provided by operating activities | 66,706 | 32,701 | ||
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Cash flows from investing activities: | ||||
Purchase of equipment and leasehold improvements | (28,043) | (12,928) | ||
Acquisitions, net of cash acquired | (11,643) | (29,209) | ||
Amount in escrow for contingent consideration | (4,000) | | ||
Controlling interest in previously unconsolidated affiliates | 1,044 | | ||
Proceeds from sale of assets | 826 | 228 | ||
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Net cash used in investing activities | (41,816) | (41,909) | ||
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Cash flows from financing activities: | ||||
(Decrease) increase in callable revolving lines of credit, net | (2,150) | (156) | ||
Proceeds from revolving lines of credit | 14,500 | | ||
Payments of revolving lines of credit | (14,500) | | ||
Payments on term and other loans | (3,762) | (18,036) | ||
Proceeds from term loans and other loans | 464 | 19,757 | ||
Proceeds from issuance of common stock, net of expense of $4.1 and $2.3 million in 2010 | ||||
and 2009, respectively | 64,852 | 27,720 | ||
Payments of capital lease obligations | (296) | (358) | ||
Proceeds (purchase) of common shares held in trust, net | 157 | (20) | ||
Dividends issued by consolidated affiliates | (241) | | ||
Dividends paid to non-controlling interests in consolidated subsidiaries | | | ||
Proceeds from exercise of stock options and warrants | 29 | 248 | ||
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Net cash provided by (used in) financing activities | 59,053 | 29,155 | ||
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Increase in cash and cash equivalents | 83,943 | 19,947 | ||
Effect of exchange rate changes on cash | (5,687) | 95 | ||
Net increase (decrease) in cash and cash equivalents | 78,256 | 20,042 | ||
Cash and cash equivalents at beginning of period | 46,519 | 26,477 | ||
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Cash and cash equivalents at end of period | $124,775 | $ 46,519 | ||
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FUEL SYSTEMS SOLUTIONS, INC. | ||||||||||||
FINANCIAL INFORMATION BY BUSINESS SEGMENT | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
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2010 | 2009 | 2010 | 2009 | |||||||||
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Revenue: | ||||||||||||
IMPCO Operations | $ 41,077 | $ | 22,838 | $131,172 | $ | 72,337 | ||||||
BRC Operations | 44,905 | 141,298 | 310,167 | 382,405 | ||||||||
Intersegment Eliminations | (2,875) | (419) | (10,707) | (2,417) | ||||||||
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Total | $ 83,107 | $ 163,717 | $430,632 | $452,325 | ||||||||
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Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
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2010 | 2009 | 2010 | 2009 | |||||||||
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Operating Income (Loss): | ||||||||||||
IMPCO Operations | $ 4,695 | $ | (3,347) | $ 13,395 | $ | (6,210) | ||||||
BRC Operations | (6,300) | 38,420 | 50,264 | 93,690 | ||||||||
Corporate Expenses (1) | (1,546) | (1,692) | (5,358) | (7,174) | ||||||||
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Total | $(3,151) | $ | 33,381 | $ 58,301 | $ | 80,306 | ||||||
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(1) Represents corporate expense not allocated to either of the business segments. |
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