- 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) | |||
|
June 30, 2010 |
December 31, 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 June 30, |
Six Months Ended 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 |
| FUEL SYSTEMS SOLUTIONS, INC. | ||||
| FINANCIAL INFORMATION BY BUSINESS SEGMENTS | ||||
| (In thousands) | ||||
| (Unaudited) | ||||
|
Three Months Ended June 30, |
Six Months Ended 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 June 30, |
Six Months Ended 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 |