Fourth Quarter Revenue of $111.0 Million and EPS of $0.07
Full Year 2011 Revenue of $418.1 Million and EPS of $0.26
NEW YORK, March 8, 2012 (GLOBE NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) reported results for its fourth quarter and year ended December 31, 2011.
Mariano Costamagna, Fuel Systems' CEO, said, "Fuel Systems' fourth quarter revenue grew 34% to $111 million from the prior year with our BRC and IMPCO businesses growing 36% and 27%, respectively, enabling us to exceed our revenue outlook for 2011. Fourth quarter and full year profitability were below our outlook as a result of the mix of lower-margin aftermarket and US automotive revenue and increased investment and other spending. Nonetheless, 2011 was a very important year of strategic progress for Fuel Systems. We continued to compete effectively in European transportation markets while investing in key Latin American and Asian geographies that are experiencing accelerated growth. We also began generating revenue in our US Automotive business, including the delivery of one of the largest-ever orders for GM CNG-dedicated cargo vans, and our industrial and auxiliary power units (APU) markets continued to grow as these customers' businesses recover further."
Mr. Costamagna concluded, "We enter 2012 as a leading automotive and industrial OEM partner providing cost-efficient technology in growing natural gas vehicles markets around the world. We have continued the investment in and repositioning of our product capabilities and technologies in many of these markets. Our objective for the next two to three years is to continue to expand our leadership position worldwide as one of the top 3 players in all of our markets, employing an OEM-driven strategy for CNG and LPG applications. We are positioned to compete without substantial government incentives, and will continue to refine our operational practices to achieve greater efficiencies and expand our profitability."
Fourth Quarter 2011 Financial Results
Revenue for the fourth quarter of 2011 was $111.0 million compared to $83.1 million in the fourth quarter of 2010. The revenue increase is primarily attributable to growth in the US automotive market, continued strength in the international aftermarkets and the strength in the industrial and APU markets. Foreign exchange did not have a meaningful impact on revenues in the fourth quarter.
Gross profit for the fourth quarter of 2011 was $24.2 million, or 22% of revenue, compared to $18.2 million, or 22% of revenue in the fourth quarter of 2010, reflecting the revenue increase described above, relatively lower margins in the US automotive business, and increases in product costs as the business mix has changed. Operating income for the fourth quarter of 2011 totaled $0.7 million, or 0.7% of revenue, compared to an operating loss of $3.2 million in the fourth quarter of 2010. This improvement resulted from the higher margin dollars from the increased revenues being able to better absorb a higher level of operating expenses, primarily R&D costs. Included in the higher spending was:
- A $1.1 million provision for potential labor claims for temporary workers in Italy and $1.5 million in costs as a result of changes in our current business mix.
- These higher costs were partially offset by certain adjustments to the carrying values of earn-outs related to recent acquisitions of $1.0 million.
Net income for the fourth quarter 2011 was $1.4 million, or $0.07 per diluted share, compared to a net loss of $0.4 million, or a loss of $0.02 per diluted share, in the fourth quarter 2010.
On a segment basis, fourth quarter 2011 revenues from BRC Operations increased 36% to $64.5 million, compared to $47.5 million from the same quarter a year ago, and revenues from IMPCO Operations increased 27% to $48.4 million from $38.2 million the same quarter a year ago. BRC fourth quarter 2011 operating loss was $2.6 million compared to an operating loss of $6.2 million in the same period a year ago, reflecting stronger aftermarket demand. IMPCO fourth quarter 2011 operating income was $4.7 million compared to operating income of $4.6 million in the same period a year ago, which reflects the current business mix. A table presenting operating segment data can be found in the tables below.
Full Year Ended December 31, 2011 Financial Results
For the full year ended December 31, 2011, total revenue was $418.1 million compared to $430.6 million for 2010. Net income for the year was $5.2 million, or $0.26 per diluted share, compared to $39.7 million, or $2.23 per diluted share, for 2010. The decrease in 2011 versus the prior year is primarily attributable to the expiration of the Italian government's 2009 incentive program in early 2010.
Company Outlook
The Company expects full year 2012 revenue to be between $420 million and $440 million, 2012 gross margin of 23% to 25%, and 2012 operating margin of 3% to 5%. This outlook is based upon the following:
- Incremental 2012 revenue derived from: continued growth in European aftermarket products; growth from India, Thailand, China, and certain Latin American automotive markets, particularly in the second half of the year as OEM programs currently being planned roll out; continued growth from industrial markets; and revenue expected to be derived from IMPCO's North American automotive business, particularly in the second half of the year.
- Modest gross and operating margin expansion driven by minor changes in revenue mix and some operating leverage through cost control.
The company continues to target gross margin in excess of 25% and EBITDA margins in the mid-teens as its new markets begin to develop and operate in a more efficient manner over the medium term.
Conference Call
The Company will host a conference call today, March 8th at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time to discuss its fourth quarter and year end 2011 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 conference ID will be 46954716. The call will be webcast and can be accessed from the "Investor Relations" section of the company's website at http://www.fuelsystemssolutions.com/. A telephone replay will be available until midnight Eastern Time on March 12th by dialing 855-859-2056 or 404-537-3406 and entering pass code 46954716. 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 and implied statements concerning the Company's outlook for 2012, 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; unanticipated investigations and litigations; 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, 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.
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 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:
Pietro Bersani, Chief Financial Officer Fuel Systems Solutions, Inc.
(646) 502-7170
Investor Relations Contacts:
LHA
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) | ||
| (Unaudited) | ||
|
December 31, 2011 |
December 31, 2010 |
|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 96,740 | $ 124,775 |
| Accounts receivable, less allowance for doubtful accounts of $2,665 and $2,858 at December 31, 2011 and December 31, 2010, respectively | 62,551 | 57,654 |
| Inventories | 103,382 | 85,854 |
| Deferred tax assets, net | 6,512 | 8,551 |
| Other current assets | 19,125 | 22,780 |
| Related party receivables | 10,975 | 7,314 |
| Total current assets | 299,285 | 306,928 |
| Equipment and leasehold improvements, net | 59,051 | 59,653 |
| Goodwill, net | 58,968 | 53,815 |
| Deferred tax assets, net | 363 | 335 |
| Intangible assets, net | 29,422 | 30,285 |
| Other assets | 2,071 | 2,196 |
| Related party receivables | 842 | 1,351 |
| Total Assets | $ 450,002 | $ 454,563 |
| LIABILITIES AND EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 54,816 | $ 46,610 |
| Accrued expenses | 36,230 | 37,928 |
| Income taxes payable | 2,517 | 3,258 |
| Current portion of term loans and debt | 6,367 | 4,823 |
| Deferred tax liabilities, net | 82 | 770 |
| Related party payables | 4,680 | 2,690 |
| Total current liabilities | 104,692 | 96,079 |
| Term and other loans | 3,698 | 7,571 |
| Other liabilities | 7,885 | 8,218 |
| Deferred tax liabilities, net | 3,905 | 4,128 |
| Total Liabilities | 120,180 | 115,996 |
| Equity: | ||
| Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued and outstanding at December 31, 2011 and 2010 | — | — |
| Common stock, $0.001 par value, authorized 200,000,000 shares; 20,089,591 issued and 20,014,065 outstanding at December 31, 2011; and 20,028,968 issued and 19,921,217 outstanding at December 31, 2010 | 20 | 20 |
| Additional paid-in capital | 318,632 | 322,948 |
| Shares held in treasury, 16,055 and 18,545 shares at December 31, 2011 and 2010, respectively | (523) | (588) |
| Retained Earnings | 15,357 | 10,189 |
| Accumulated other comprehensive (loss)income | (3,664) | 2,237 |
| Total Fuel Systems Equity | 329,822 | 334,806 |
| Non-controlling interests | — | 3,761 |
| Total Equity | 329,822 | 338,567 |
| Total Liabilities and Equity | $ 450,002 | $ 454,563 |
| FUEL SYSTEMS SOLUTIONS, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||
| (In thousands, except share and per share data) | ||||
| (Unaudited) | ||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Revenue | $ 110,960 | $ 83,107 | $ 418,134 | $ 430,632 |
| Cost of revenue | 86,760 | 64,902 | 321,350 | 298,259 |
| Gross profit | 24,200 | 18,205 | 96,784 | 132,373 |
| Operating expenses: | ||||
| Research and development expense | 7,489 | 6,016 | 28,149 | 20,775 |
| Selling, general and administrative expense | 15,963 | 15,340 | 56,810 | 53,297 |
| Total operating expenses | 23,452 | 21,356 | 84,959 | 74,072 |
| Operating income (loss) | 748 | (3,151) | 11,825 | 58,301 |
| Other income(expense), net | 141 | 902 | (294) | 1,542 |
| Interest income (expense), net | 124 | 171 | 789 | (3) |
| Income (loss) before income taxes and non-controlling interests | 1,013 | (2,078) | 12,320 | 59,840 |
| Income tax benefit(expense) | 396 | 1,759 | (7,058) | (19,556) |
| Net income (loss) | 1,409 | (319) | 5,262 | 40,284 |
| Less: Net income attributable to non-controlling interests | 2 | (98) | (94) | (582) |
| Net income (loss) attributable to Fuel Systems | $ 1,411 | $ (417) | $ 5,168 | $ 39,702 |
| Net income (loss) per share attributable to Fuel Systems: | ||||
| Basic | $ 0.07 | $ (0.02) | $ 0.26 | $ 2.24 |
| Diluted | $ 0.07 | $ (0.02) | $ 0.26 | $ 2.23 |
| Number of shares used in per share calculation: | ||||
| Basic | 20,013,877 | 18,046,075 | 19,972,969 | 17,725,049 |
| Diluted | 20,037,521 | 18,046,075 | 20,004,236 | 17,807,330 |
| FUEL SYSTEMS SOLUTIONS, INC. | |||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
| (In thousands) (Unaudited) | |||
| Years Ended December 31, | |||
| 2011 | 2010 | ||
| Cash flows from operating activities: | |||
| Net income | $ 5,262 | $40,284 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and other amortization | 10,688 | 9,035 | |
| Amortization of intangibles arising from acquisitions | 8,225 | 5,288 | |
| Provision for doubtful accounts | 641 | 1,317 | |
| Write down of inventory | 3,148 | 4,020 | |
| Realized foreign exchange loss on subsidiary liquidation | 417 | — | |
| Unrealized loss (gain) on foreign exchange transactions | 46 | (1,427) | |
| Compensation expense related to stock option and restricted stock grants | 1,241 | 442 | |
| Loss on disposal of equipment and leasehold improvement | 505 | 1,157 | |
| Reduction of contingent consideration | (1,661) | — | |
| Changes in assets and liabilities | |||
| (Increase) decrease in accounts receivable | (7,499) | 58,470 | |
| (Increase) in inventories | (22,133) | (453) | |
| Decrease (increase) in other current assets | 3,272 | (8,127) | |
| Decrease in other assets | 333 | 338 | |
| Increase (decrease) in accounts payable | 9,167 | (23,437) | |
| (Decrease) in income taxes payable | (648) | (10,423) | |
| (Decrease) in accrued expenses | (224) | (5,150) | |
| Increase (decrease) in deferred income taxes, net | 824 | (1,519) | |
| (Decrease) in long-term liabilities | (307) | (621) | |
| Receivables from/payables to related party, net | (849) | (2,488) | |
| Net cash provided by operating activities | 10,448 | 66,706 | |
| Cash flows from investing activities: | |||
| Purchase of equipment and leasehold improvements | (12,130) | (28,043) | |
| Acquisitions, net of cash acquired | (13,441) | (11,643) | |
| Investment in joint venture | (33) | — | |
| Amount in restricted cash for redemption of non-controlling interest | (2,882) | — | |
| Amount in escrow for contingent consideration | — | (4,000) | |
| Controlling interest in previously unconsolidated affiliates | — | 1,044 | |
| Proceeds from sale of assets | 500 | 826 | |
| Net cash used in investing activities | (27,986) | (41,816) | |
| Cash flows from financing activities: | |||
| Increase (decrease) in callable revolving lines of credit, net | 1,830 | (2,150) | |
| Proceeds from revolving lines of credit | — | 14,500 | |
| Payments of revolving lines of credit | — | (14,500) | |
| Proceeds from term loans and other loans | — | 464 | |
| Payments on term loans and other loans | (4,083) | (3,762) | |
| Acquisition of non-controlling interest | (7,498) | — | |
| Proceeds from issuance of common stock, net of expense of $4.1 million in 2010 | — | 64,852 | |
| Payments of capital lease obligations | (199) | (296) | |
| Proceeds of common shares held in trust, net | — | 157 | |
| Dividends issued by consolidated affiliates | — | (241) | |
| Proceeds from exercise of stock options | 16 | 29 | |
| Net cash (used in) provided by financing activities | (9,934) | 59,053 | |
| Net (decrease) increase in cash and cash equivalents | (27,472) | 83,943 | |
| Effect of exchange rate changes on cash | (563) | (5,687) | |
| Net (decrease) increase in cash and cash equivalents | (28,035) | 78,256 | |
| Cash and cash equivalents at beginning of period | 124,775 | 46,519 | |
| Cash and cash equivalents at end of period | $96,740 | $124,775 | |
| FUEL SYSTEMS SOLUTIONS, INC. | ||||
| OPERATING SEGMENT INFORMATION | ||||
| (In thousands) | ||||
| (Unaudited) | ||||
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||
| 2011 | 2010(2) | 2011(2) | 2010(2) | |
| Revenue: | ||||
| IMPCO Operations | $ 48,353 | $ 38,167 | $ 159,760 | $ 116,945 |
| BRC Operations | 64,509 | 47,486 | 266,186 | 320,952 |
| Intersegment Eliminations | (1,902) | (2,546) | (7,812) | (7,265) |
| Total | $ 110,960 | $ 83,107 | $ 418,134 | $ 430,632 |
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Operating Income (Loss): | ||||
| IMPCO Operations | $ 4,675 | $ 4,636 | $ 7,792 | $ 13,872 |
| BRC Operations | (2,557) | (6,242) | 9,140 | 49,787 |
| Corporate Expenses (1) | (1,370) | (1,545) | (5,107) | (5,358) |
| Total | $ 748 | $ (3,151) | $ 11,825 | $ 58,301 |
| (1) Represents corporate expense not allocated to either of the business segments. | |
| (2) Certain amounts have been reclassified to conform with current year presentation. | |