Fuel Systems Solutions, Inc. (ticker: FSYS, exchange: NASDAQ Global Market (.O))
News Release -
7-May-2009
Fuel Systems Solutions Reports First Quarter 2009 Results
Delivered earnings per diluted share of $0.44
Reaffirms 2009 annual guidance
Expanded OEM conversions to more than 30,000 vehicles
in first quarter
Agrees to acquire selected natural gas vehicle refueling assets
from FuelMaker
SANTA ANA, Calif., May 7, 2009 (GLOBE NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) reported results for its first quarter ended March 31, 2009.
Mariano Costamagna, Fuel Systems' CEO, said, "As we anticipated, the first quarter of 2009 proved to be a difficult market. However, to grow our business, we invested in 2008 and continue to make progress in 2009. As a result of our investments, we increased our annual OEM installation rate and exceeded 30,000 vehicles in the first quarter. Our U.S. Automotive Division is gaining traction, and the integration of our Distribuidora Shopping subsidiary in Argentina is progressing as scheduled. In addition, we expanded our engine building capabilities for our next generation fuel injection industrial fuel systems that comply with the new 2010 emissions standards. Throughout the first quarter and in April, management continued to implement cost reductions including selective headcount reductions in both the transportation and industrial businesses, as appropriate. We expect all of these actions will improve our productivity."
Matthew Beale, Fuel Systems' president, said, "Last week, we agreed to acquire natural gas vehicle (NGV) refueling technology, patents and certifications, including the home refueling appliance marketed under the Phill(tm) brand. The addition will expand our line of turn-key refueling equipment, which we believe will create new opportunities to promote the adoption of NGVs in developing markets and further penetrate existing markets.
"We remain excited about the medium-term growth drivers in our markets and will continue to invest and position Fuel Systems to capitalize on those opportunities. To ensure we have maximum flexibility to do so, we intend to file a universal shelf registration statement that would allow us to issue a variety of security types necessary to support our growth strategy," concluded Beale.
First Quarter 2009 Financial Results
Revenue for the first quarter of 2009 was $80.1 million, compared to $94.6 million in the first quarter of 2008. The decrease in revenues was primarily due to lower demand in the industrial forklift market and a negative foreign exchange impact of approximately $9.8 million, or 10.9%. Gross profit for the 2009 first quarter reached $24.3 million, or 30.4% of revenue, compared to $27.5 million, or 29.1% of revenue, in the year earlier period. Operating income for the first quarter of 2009 totaled $11.4 million, or 14.2% of revenue, compared to $13.4 million, or 14.2% of revenue, in the first quarter of 2008. Net income for the 2009 first quarter was $7.1 million, or $0.44 per diluted share, compared to $6.2 million, $0.40 per diluted share, in the first quarter of 2008.
Company Outlook
Based on the current market outlook, the company reaffirms its guidance and expects 2009 revenue to be between $330.0 million and $360.0 million. The revenue guidance assumes a stronger U.S. Dollar that is estimated to negatively impact 2009 annual revenue by approximately 12.0%. Management expects the gross and operating margins to be impacted from the planned investment in its business. Therefore, the company is targeting 2009 gross margin between 25.0% and 27.0% and 2009 operating margin to be between 10.0% and 12.0%.
Conference Call
The company will host a conference call on May 8 at 8:00 a.m. Pacific Time / 11:00 a.m. Eastern Time to discuss its first quarter 2009 financial results. 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 94471410. The call is also being webcast and can be accessed from the "Investor Relations" section of the company's website at www.fuelsystemssolutions.com. A telephone replay will be available until midnight ET on May 22 by dialing 800-642-1687 or 706-645-9291 and entering pass code 94471410#. 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 sales and its ability to achieve 2009 revenue between $330 million and $360 million with gross profit margin between 25 percent and 27 percent and operating margin between 10 percent and 12 percent, as well as 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, risks that we cannot integrate the acquired assets into our business promptly and efficiently, that the patents or certifications acquired are insufficient or not useable by us, that that expected sales do not materialize, that changes in emissions regulations may not significantly increase demand for the Company's products, the global economic downturn may reduce customers' demand for new automobiles and/or our products, and that all closing conditions will be met, original equipment automobile manufacturers do not adopt the Company's fuel systems as expected, that expected sales not based on long-term contracts will materialize, that changes in emissions regulations will not significantly impact demand for the Company's products, that a global economic downturn may reduce customers' demand for our products, that reduction in oil prices will reduce the demand for our products and that currency fluctuations will reduce our revenue or financial condition. 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, 2008. 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.
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 company's 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. 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.
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
March 31, Dec. 31,
2009 2008
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 8,967 $ 26,477
Accounts receivable less allowance for
doubtful accounts of $3,161 and $3,293 at
March 31, 2009 and December 31, 2008,
respectively 85,170 70,009
Inventories:
Raw materials and parts 42,269 38,110
Work-in-process 1,752 1,700
Finished goods 52,322 51,068
Inventory on consignment with unconsolidated
affiliates 1,737 1,732
--------- ---------
Total inventories 98,080 92,610
Deferred tax assets, net 6,501 5,734
Other current assets 6,779 5,749
Related party receivables 234 69
--------- ---------
Total current assets 205,731 200,648
--------- ---------
Equipment and leasehold improvements:
Dies, molds and patterns 4,064 3,889
Machinery and equipment 27,954 25,996
Office furnishings and equipment 11,716 11,198
Automobiles and trucks 2,584 2,235
Leasehold improvements 8,057 8,098
--------- ---------
54,375 51,416
Less accumulated depreciation and amortization 24,508 23,744
--------- ---------
Net equipment and leasehold improvements 29,867 27,672
Goodwill 47,790 41,295
Deferred tax assets, net 149 174
Intangible assets, net 15,362 10,021
Investment in unconsolidated affiliates 3,064 3,334
Other assets 2,594 4,183
--------- ---------
Total Assets $304,557 $287,327
========= =========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
March 31, Dec. 31,
2009 2008
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 43,905 $ 65,224
Accrued expenses 40,161 34,212
Current revolving lines of credit 13,227 2,413
Current portion of term and other loans 6,735 4,470
Current portion of capital leases 293 192
Deferred tax liabilities 7 112
Related party payables 9,405 11,263
---------- ----------
Total current liabilities 113,733 117,886
Term and other loans 16,807 4,689
Capital leases 227 238
Other liabilities 5,711 6,258
Deferred tax liabilities, net 7,170 4,301
---------- ----------
Total liabilities 143,648 133,372
---------- ----------
Stockholders' equity:
Preferred stock, $0.001 par value, authorized
1,000,000 shares; none issued and outstanding
at March 31, 2009 and December 31, 2008 -- --
Common stock, $0.001 par value, authorized
200,000,000 shares; 16,086,059 issued and
16,073,809 outstanding at March 31, 2009; and
15,801,745 issued and 15,749,783 outstanding
at December 31, 2008 16 16
Additional paid-in capital 229,382 220,270
Shares held in treasury, 12,250 and 51,962
shares at March 31, 2009 and December 31,
2008, respectively (579) (1,399)
Accumulated deficit (72,284) (79,354)
Accumulated other comprehensive income 4,374 14,422
---------- ----------
Total stockholders' equity 160,909 153,955
---------- ----------
Total Liabilities and Stockholders' Equity $ 304,557 $ 287,327
========== ==========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
-------------------------
2009 2008
------------ ------------
Revenue $ 80,082 $ 94,600
Cost of revenue 55,745 67,116
------------ ------------
Gross profit 24,337 27,484
Operating expenses:
Research and development expense 2,911 2,828
Selling, general and administrative
expense 9,959 11,171
Amortization of intangible assets 109 93
------------ ------------
Total operating expenses 12,979 14,092
------------ ------------
Operating income 11,358 13,392
Other income (expense), net 716 (1,121)
Interest expense, net (384) (192)
------------ ------------
Income before income taxes and equity share
in income of unconsolidated affiliates 11,690 12,079
Equity share in income of unconsolidated
affiliates, net 113 168
Income tax expense (4,733) (5,540)
------------ ------------
Net income 7,070 6,707
Less: Net income attributable to
noncontrolling interests -- (481)
------------ ------------
Net income attributable to Fuel Systems $ 7,070 $ 6,226
============ ============
Net income per share attributable to
Fuel Systems:
Basic $ 0.44 $ 0.40
============ ============
Diluted $ 0.44 $ 0.40
============ ============
Number of shares used in per share
calculation:
Basic 16,022,561 15,519,526
============ ============
Diluted 16,095,258 15,592,626
============ ============
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
-------------------
2009 2008
--------- ---------
Net income $ 7,070 $ 6,707
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and other amortization 1,632 1,460
Amortization of intangibles arising
from acquisitions 881 715
Provision for doubtful accounts (126) (38)
Provision for inventory reserve 705 311
Equity share in income of unconsolidated
affiliates, net (113) (168)
Dividends from unconsolidated affiliates 196 --
Unrealized (gain) loss on foreign exchange
transactions (242) 1,042
Compensation expense related to stock option
and restricted stock grants 50 85
Loss on disposal of assets 19 --
Changes in assets and liabilities:
Increase in accounts receivable (18,044) (17,584)
Increase in inventories (4,965) (1,260)
(Increase) decrease in other current assets (493) 1,324
Decrease in other assets 421 225
Increase (decrease) in accounts payable (20,688) 3,357
Increase in accrued expenses 6,666 8,117
Receivables from/payables to related party, net (303) 2,030
Decrease in deferred income taxes, net (788) (994)
Increase (decrease) in long-term liabilities (433) 45
--------- ---------
Net cash (used in) provided by operating
activities (28,555) 5,374
--------- ---------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (3,774) (1,879)
Purchase of minority interest in consolidated
subsidiary -- (227)
Investment in joint venture 10 --
Purchase of intangible assets -- (193)
Purchase of Distribuidora Shopping, net of
cash acquired of $0.1 million (5,729) --
Proceeds from sale of assets 35 3
--------- ---------
Net cash used in investing activities (9,458) (2,296)
--------- ---------
Cash flows from financing activities:
Increase (decrease) in revolving lines of
credit, net 10,774 (521)
Payments on term and other loans (1,214) (951)
Proceeds from term and other loans 12,729 --
Proceeds from exercise of stock options and
warrants -- 175
Purchase of common shares held in trust, net
of proceeds (5) (4)
Payments of capital lease obligations (123) (99)
--------- ---------
Net cash provided by (used in) financing
activities 22,161 (1,400)
--------- ---------
Net increase (decrease) in cash (15,852) 1,678
Effect of exchange rate changes on cash (1,658) 1,477
--------- ---------
Net increase (decrease) in cash and cash
equivalents (17,510) 3,155
Cash and cash equivalents at beginning of period 26,477 26,797
--------- ---------
Cash and cash equivalents at end of period $ 8,967 $ 29,952
========= =========
Supplemental disclosures of cash flow
information:
Non-cash investing and financing activities:
Acquisition of equipment under capital lease $ 22 --
Issuance of 1,382 shares of restricted stock $ 15 --
Issuance of 282,932 shares of common stock
for the acquisition of Distribuidora
Shopping $ 8,654 --
Issuance of 39,868 shares from treasury stock
for the acquisition of Distribuidora
Shopping $ 1,220 --
CONTACT: Fuel Systems Solutions, Inc.
Bill Larkin, CFO
(714) 656-1320
Lippert / Heilshorn & Associates
Investor Relations Contacts:
Kirsten Chapman
Cathy Mattison
cmattison@lhai.com
(415) 433-3777
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Fuel Systems Solutions, Inc.
