Fuel Systems Solutions, Inc. (ticker: FSYS, exchange: NASDAQ Global Market (.O))
News Release -
5-Aug-2010
Fuel Systems Solutions Reports Second Quarter 2010 Results
- Second Quarter 2010 Revenue $99.8 million, compared to $92.3 million a
year ago -
- 2010 Narrows Outlook Range to $425-450 Million in Revenues, Operating
Margin of 14-16% -
NEW YORK, Aug. 5, 2010 (GLOBE NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) reported results for its second quarter ended June 30, 2010.
Mariano Costamagna, Fuel Systems' CEO, said, "Fuel Systems' second quarter 2010 results exceeded our expectations as DOEM installation volumes in Italy found a new, healthy level in an unsubsidized environment. We achieved revenue of $99.8 million, up 8% from a year ago, and were able to keep gross margin to 26% by drawing on the flexibility inherent in our manufacturing model to align costs with demand. In our transportation business, we expanded our international exposure with our OEM and aftermarket channels. Also, our industrial business revenue increased 176% over last year's second quarter and delivered significantly improved operating income."
Matthew Beale, Fuel Systems' President, CFO and Secretary, said, "During the second quarter we continued to develop sales channels in the transportation business and focused on bi-fuel OEM markets with attractive penetration rates. Our U.S. Automotive division continues to build its EPA certification with Chevy, GM and Ford vehicle platforms for commonly used fleet vehicles."
"In addition, our industrial business is gaining traction heading into the second half of 2010 and returned solidly to operating profitability in the quarter, due to an improved capital spending environment in the mobile and stationary engine markets. We anticipate continued profitability improvements in this business for the remainder of the year," Beale continued.
Second Quarter 2010 Financial Results
Revenue for the second quarter of 2010 increased 8.1% to $99.8 million from $92.3 million in the second quarter of 2009. Second quarter 2010 revenue was negatively impacted by approximately $5 million of foreign exchange. Year-over-year revenue growth primarily reflects an increase in the industrial business segment and the contribution of acquisitions made in 2009, partially offset by a lower level of revenue from DOEM installations after the expiration of the Italian government's 2009 incentive program. Gross profit for the second quarter 2010 was $25.7 million, or 25.8% of revenue, compared to $28.6 million, or 31.0% of revenue a year ago, reflecting the reduction in DOEM volumes versus last year partially offset by improved margins in the industrial business. Operating income for the period totaled $9.3 million, or 9.3% of revenue, compared to $12.5 million, or 13.5% of revenue, in the second quarter of 2009, reflecting lower gross margin and greater R&D expenses than last year's quarter as the Company invested in new technologies, partially offset by greater control over SG&A. Net income for the second quarter 2010 was $6.9 million, or $0.39 per diluted share, compared to $7.4 million, or $0.46 per diluted share in the second quarter 2009.
On segment basis, second quarter 2010 revenues from BRC Operations, primarily representing the Company's transportation business, were $70.3 million, compared to $81.7 million in the same quarter a year ago, and revenues from IMPCO Operations, primarily representing the Company's industrial business, increased a significant $18.8 million to $29.4 million from $10.6 million in the same quarter a year ago. BRC second quarter 2010 operating income was $7.2 million compared to $16.6 million in the same quarter a year ago; IMPCO second quarter 2010 operating income of $3.1 million reversed the operating loss of $1.8 million in the same period a year ago. A table presenting operating segment data can be found in the tables below.
Six Months Ended June 30, 2010 Financial Results
For the six-month period ended June 30, 2010, total revenue was $261.4 million compared to $172.4 million for the first half of 2009. Net income for the first half of 2010 was $34.9 million, or $1.98 per diluted share, compared to $14.5 million, or $0.90 per diluted share, for the first half of 2009.
Company Outlook
"We are now seeing increased levels of predictability in our markets and a stabilized post-incentive environment for DOEM installations in Italy. Given these factors, the marked improvement in the capital spending environment in our Industrial business, and the flexibility in our model to manage demand flows , we are narrowing our full year 2010 revenue expectation and slightly increasing our margin outlook." concluded Beale.
Based on the current market outlook, the Company now expects full year 2010 revenue to be between $425 million and $450 million. The Company is targeting 2010 gross margin of 29% to 31% and 2010 operating margin of 14% to 16%.
Given greater visibility of natural demand levels for bi-fuel vehicles in Italy, the Company expects third and fourth quarter 2010 results to be roughly consistent with revenue, gross margin and operating margin levels experienced during the second quarter of 2010.
Conference Call
The Company will host a conference call today, August 5th at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time to discuss its second quarter 2010 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 88398041. 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 August 9th by dialing 800-642-1687 or 706-645-9291 and entering pass code 88398041#. 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 2010, 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, 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 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, 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 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, 2009. 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.
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 -
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
December
June 30, 31,
2010 2009
--------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 106,357 $ 46,519
Accounts receivable, less allowance for
doubtful accounts of $3,828
and $3,159 at June 30, 2010 and December
31, 2009, respectively 76,688 132,603
Inventories 77,529 90,367
Deferred tax assets, net 8,105 9,217
Other current assets 11,071 8,647
Related party receivables 2,499 2,915
--------- ----------
Total current assets 282,249 290,268
Equipment and leasehold improvements, net 51,020 40,767
Goodwill, net 47,411 54,209
Deferred tax assets, net 324 107
Intangible assets, net 19,749 24,053
Investment in unconsolidated affiliates -- 4,058
Other assets 2,454 3,051
Related party receivables 946 599
--------- ----------
Total Assets $ 404,153 $ 417,112
========= ==========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 57,689 $ 73,837
Accrued expenses 34,249 40,384
Income taxes payable 32,013 15,788
Current portion of term loans
and other loans 4,414 7,240
Deferred tax liabilities, net 735 917
Related party payables 3,794 10,293
-------------------- ----------
Total current liabilities 132,894 148,459
Term and other loans 8,745 12,167
Other liabilities 6,786 7,551
Deferred tax liabilities 4,816 5,707
-------------------- ----------
Total Liabilities 153,241 173,884
-------------------- ----------
Equity:
Preferred stock, $0.001 par
value, authorized 1,000,000
shares;
none issued and outstanding
at June 30, 2010 and
December 31, 2009 -- --
Common stock, $0.001 par
value, authorized
200,000,000 shares;
17,638,793 issued and
17,620,705 outstanding at
June 30, 2010; and
17,625,812 issued and
17,610,321 outstanding at
December 31, 2009 18 18
Additional paid-in capital 257,746 257,627
Shares held in treasury,
18,400 and 15,492 shares at
June 30, 2010
and December 31, 2009,
respectively (679) (654 )
Retained Earnings
(Accumulated deficit) 5,425 (29,513 )
Accumulated other
comprehensive (loss) income (14,883) 15,750
-------------------- ----------
Total Fuel Systems Equity 247,627 243,228
Non-controlling interests 3,285 --
Total Equity 250,912 243,228
-------------------- ----------
Total Liabilities and
Equity $ 404,153 $ 417,112
==================== ==========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenue $ 99,775 $ 92,323 $ 261,426 $ 172,405
Cost of revenue 74,049 63,698 172,099 119,443
----------- ----------- ----------- -----------
Gross profit 25,726 28,625 89,327 52,962
Operating expenses:
Research and development expense 4,979 3,303 9,415 6,214
Selling, general and
administrative expense 11,482 12,843 25,961 22,911
----------- ----------- ----------- -----------
Total operating expenses 16,461 16,146 35,376 29,125
----------- ----------- ----------- -----------
Operating income 9,265 12,479 53,951 23,837
Other income (expense), net (227) 836 717 1,552
Interest expense, net (74) (524) (255) (908)
----------- ----------- ----------- -----------
Income before income taxes and
equity share in income
of unconsolidated affiliates 8,964 12,791 54,413 24,481
Equity share in income of
unconsolidated affiliates, net -- 193 -- 306
Income tax expense (1,849) (5,589) (19,080) (10,322)
----------- ----------- ----------- -----------
Net income 7,115 7,395 35,333 14,465
Less: Net income attributable to
non-controlling interests 211 -- 395 --
----------- ----------- ----------- -----------
Net income attributable to Fuel
Systems $ 6,904 $ 7,395 $ 34,938 $ 14,465
=========== =========== =========== ===========
Net income per share
attributable to Fuel Systems:
Basic $ 0.39 $ 0.46 $ 1.98 $ 0.90
=========== =========== =========== ===========
Diluted $ 0.39 $ 0.46 $ 1.98 $ 0.90
=========== =========== =========== ===========
Number of shares used in per
share calculation:
Basic 17,618,039 16,160,857 17,614,929 16,092,091
=========== =========== =========== ===========
Diluted 17,671,064 16,223,095 17,675,790 16,159,752
=========== =========== =========== ===========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
(Unaudited)
Six Months Ended
June 30,
-------------------
2010 2009
--------- --------
Net income $ 35,333 $ 14,465
Adjustments to reconcile net income to net
cash (used in) provided by operating
activities:
Depreciation and other amortization 4,457 3,699
Amortization of intangibles arising from
acquisitions 2,257 1,902
Provision for doubtful accounts 887 (171)
Provision for inventory reserve 1,254 2,658
Equity share in income of unconsolidated
affiliates, net -- (298)
Dividends from unconsolidated affiliates -- 196
Unrealized (gain) on foreign exchange
transactions, net (605) (1,389)
Compensation expense related to stock option
and restricted stock grants 95 101
Loss on disposal of assets 319 41
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in accounts receivable 37,740 (18,495)
Decrease in inventories 3,884 3,872
(Increase) decrease in other current assets (1,037) 301
Decrease in other assets -- 344
Decrease in accounts payable (13,924) (25,528)
Increase in income taxes payable 20,382 9,638
(Decrease) increase in accrued expenses (1,947) 4,753
Receivables from/payables to related party,
net (547) (3,172)
Decrease in deferred income taxes, net (189) (90)
Decrease in long-term liabilities (431) (338)
--------- --------
Net cash provided by (used in) operating
activities 87,928 (7,511)
--------- --------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (11,440) (6,706)
Acquisitions, net of cash acquired -- (12,605)
Controlling interest in previously
unconsolidated affiliate 1,044 --
Proceeds from sale of assets 218 35
--------- --------
Net cash used in investing activities (10,178) (19,276)
--------- --------
Cash flows from financing activities:
(Decrease) increase in revolving lines of
credit, net (2,650) 9,359
Payments on term loans and other loans (1,513) (3,967)
Proceeds from term loans and other loans -- 19,757
Proceeds from issuance of common stock, net
of expenses of $2.3 million -- 27,713
Dividends issued by consolidated affiliates (241) --
Proceeds from excise of stock options 24 --
Proceeds (purchase) of common shares held in
trust, net of proceeds 62 (28)
Payments of capital lease obligations (159) (202)
--------- --------
Net cash (used in) provided by financing
activities (4,477) 52,632
--------- --------
Net increase in cash and cash equivalents 73,273 25,845
Effect of exchange rate changes on cash (13,435) 729
--------- --------
Net increase in cash and cash equivalents 59,838 26,574
Cash and cash equivalents at beginning of
period 46,519 26,477
--------- --------
Cash and cash equivalents at end of period $ 106,357 $ 53,051
========= ========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Fuel Systems Solutions, Inc.
FUEL SYSTEMS SOLUTIONS, INC.
FINANCIAL INFORMATION BY BUSINESS SEGMENTS
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
2010 2009 2010 2009
-------- --------- --------- ---------
Revenue:
IMPCO Operations $ 29,439 $ 10,656 $ 53,451 $ 29,094
BRC Operations 70,336 81,667 207,975 143,311
-------- --------- --------- ---------
Total $ 99,775 $ 92,323 $ 261,426 $ 172,405
======== ========= ========= =========
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
2010 2009 2010 2009
-------- --------- --------- ---------
Operating Income
(Loss):
IMPCO Operations $ 3,148 $ (1,826) $ 3,651 $ 729
BRC Operations 7,194 16,637 52,893 27,390
Corporate Expenses (1,077) (2,332) (2,593) (4,282)
-------- --------- --------- ---------
Total $ 9,265 $ 12,479 $ 53,951 $ 23,837
======== ========= ========= =========
|
Fuel Systems Solutions, Inc.
