- Published: 07 November 2008
- Written by Editor
Fuel Systems Solutions Reports Record 2008 Third Quarter Results
Revenue increased to $105.5 million, up 61.8% year-over-year - - Net income was $11.9 million, compared to a loss of $395,000 in third quarter of 2007 - - Increased 2008 revenue guidance to approximately $385 million -
Fuel Systems Solutions, Inc. (Nasdaq:FSYS) reported record results for its third quarter ended September 30, 2008.
Matthew Beale, president, said, "Even with recent energy price volatility, during the third quarter, Fuel Systems Solutions achieved 62 percent revenue growth, compared to the same period last year, driven by strong performance in our OEM and aftermarket transportation markets segments. Over the last year, the rapid and significant increase in demand for our products created critical mass. We scaled our production volumes and demonstrated our strong underlying earnings potential.
While the global economic slowdown impacts near-term revenue visibility, we remain optimistic regarding the prospects for sustained organic growth in our markets. Our financial strength positions us to invest in incremental growth opportunities in existing and adjacent business segments and to further leverage our production and engineering platform across industrial and transportation end-user markets."
Financial Results
Revenue for the 2008 third quarter was $105.5 million, up 61.8% from revenue of $65.2 million in the third quarter of 2007, which was driven by strong performance in the transportation business. Gross profit for the quarter reached $30.7 million and represented 29.1% of revenue, compared to $15.7 million, or 24.1% of revenue, in the third quarter of 2007. Net income for the third quarter of 2008 reached $11.9 million, or $0.75 per diluted share, which included a $0.2 million extraordinary gain associated with the purchase of the 49% minority interest in our IMPCO Netherlands subsidiary, compared to a loss of $359,000, or ($0.02) per share, in the third quarter of 2007.
For the nine-month period ending September 30, 2008, total revenues were $298.4 million compared to $185.6 million for the first nine months of 2007. Net income for the nine months ended September 30, 2008, which includes the non-cash goodwill impairment charge recorded in the second quarter of 2008 of $3.9 million, was $22.7 million, or $1.44 per diluted share, compared to $1.1 million, or $0.07 per diluted share, for the year earlier period.
Bill Larkin, CFO, said, "At September 30, 2008, cash and cash equivalents were $34.3 million and working capital reached $88.1 million. The strength of our financial position provides us the foundation for executing our growth strategy organically and through acquisitions."
Company Outlook
Based on its current assessment of near-term market trends, the company is increasing its full year 2008 consolidated revenue guidance to approximately $385 million and increasing its gross profit margin to approximately 29% and operating margin to approximately 14%.
Conference Call
The company will host a conference call on November 7 at 10:00 a.m. Pacific Time / 1:00 p.m. Eastern Time to discuss its third quarter 2008 financial results. To listen to the call live, please dial 800-295-3991 at least 10 minutes before the start of the conference. International participants may dial 617-614-3924. The pass code for the conference call will be 43195775. 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 November 21 by dialing 888-286-8010 or 617-801-6888 and entering pass code 27665096#. 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 2008 revenue of approximately $385 with gross profit margin of 29 percent and operating margin of 14 percent. Such statements are only predictions, and 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 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 not reduce the demand for our products and that currency fluctuations will not 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, 2007. The company does not undertake to update or revise any of its forward-looking statements even if experience or future changes show that the indicated results or events will not be realized.
About Fuel Systems Solutions
Fuel Systems Solutions, Inc. (Nasdaq:FSYS), a U.S.-based company, through its U.S. and foreign subsidiaries, delivers alternative fuel solutions for transportation and industrial applications that reduce emissions, displace petroleum and generate savings, which is extremely relevant today. The company is comprised of two subsidiaries, industrial under IMPCO Technologies and transportation under BRC. IMPCO designs, manufactures, markets and supplies advanced products and systems to enable internal combustion engines to run on clean burning gaseous fuels such as natural gas, propane and biogas. IMPCO is a leader in the heavy duty, industrial, power generation and stationary engines sectors. Headquartered in Santa Ana, California, IMPCO has offices throughout Asia, Europe and North America. BRC, through its subsidiaries, produces a complete range of systems for converting vehicles to gaseous fuel to meet market requirements. 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. Headquartered in Cherasco, Italy, BRC has offices throughout Asia, Europe, Australia and South America. Additional information is available at www.fuelsystemssolutions.com.
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
-------- -------- -------- --------
Revenue $105,539 $ 65,235 $298,423 $185,621
Cost of revenue 74,841 49,530 211,661 141,650
-------- -------- -------- --------
Gross profit 30,698 15,705 86,762 43,971
Operating expenses:
Research and
development expense 2,706 2,010 8,236 6,094
Selling, general and
administrative expense 9,730 10,214 32,560 27,446
Goodwill impairment loss -- -- 3,907 --
Amortization of
intangible assets 91 85 282 168
-------- -------- -------- --------
Total operating expenses 12,527 12,309 44,985 33,708
-------- -------- -------- --------
Operating income 18,171 3,396 41,777 10,263
Other income (expense), net 370 (902) (794) (1,566)
Interest expense, net (51) (203) (443) (693)
-------- -------- -------- --------
Income before income taxes,
equity share in income
(loss) of unconsolidated
affiliates and
extraordinary gain 18,490 2,291 40,540 8,004
Equity share in income
(loss) of
unconsolidated affiliates (58) 114 19 384
Income tax expense (6,769) (2,224) (17,187) (5,856)
-------- -------- -------- --------
Income before minority
interests and
extraordinary gain 11,663 181 23,372 2,532
Minority interests in
income of consolidated
subsidiaries 39 540 914 1,477
-------- -------- -------- --------
Income (loss) before
extraordinary gain 11,624 (359) 22,458 1,055
Extraordinary gain 243 -- 243 --
-------- -------- -------- --------
Net income (loss) $ 11,867 $ (359) $ 22,701 $ 1,055
======== ======== ======== ========
Basic earnings (loss)
per share:
Income (loss) before
extraordinary gain $ 0.74 $ (0.02) $ 1.44 $ 0.07
======== ======== ======== ========
Extraordinary gain $ 0.01 $ -- $ 0.01 $ --
======== ======== ======== ========
Net Income (loss) $ 0.75 $ (0.02) $ 1.45 $ 0.07
======== ======== ======== ========
Diluted earnings (loss)
per share:
Income (loss) before
extraordinary gain $ 0.73 $ (0.02) $ 1.42 $ 0.07
======== ======== ======== ========
Extraordinary gain $ 0.02 $ -- $ 0.02 $ --
======== ======== ======== ========
Net Income (loss) $ 0.75 $ (0.02) $ 1.44 $ 0.07
======== ======== ======== ========
Number of shares used in
per share calculation:
Basic 15,718 15,490 15,617 15,383
======== ======== ======== ========
Diluted 15,837 15,490 15,771 15,600
======== ======== ======== ========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
Sept. 30, Dec. 31,
2008 2007
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 34,285 $ 26,797
Accounts receivable less allowance for
doubtful accounts of $2,340 and $2,399 at
September 30, 2008 and December 31, 2007,
respectively 67,422 51,876
Inventories:
Raw materials and parts 35,501 33,890
Work-in-process 1,650 2,247
Finished goods 40,485 31,197
Inventory on consignment with
unconsolidated affiliates 2,671 2,991
-------- --------
Total inventories 80,307 70,325
Deferred tax assets 3,755 2,248
Related party receivables 47 44
Other current assets 6,650 3,820
-------- --------
Total current assets 192,466 155,110
-------- --------
Equipment and leasehold improvements:
Dies, molds and patterns 3,930 5,725
Machinery and equipment 27,509 25,049
Office furnishings and equipment 8,815 8,601
Automobiles and trucks 2,260 2,047
Leasehold improvements 7,090 4,769
-------- --------
49,604 46,191
Less accumulated depreciation
and amortization 22,752 21,151
-------- --------
Net equipment and leasehold improvements 26,852 25,040
Goodwill 42,235 46,486
Intangible assets, net 10,946 13,059
Investment in unconsolidated affiliates 2,975 2,310
Non-current related party receivable 1,681 3,450
Deferred tax assets, net 215 184
Other assets 2,101 1,731
-------- --------
Total Assets $279,471 $247,370
======== ========
FUEL SYSTEMS SOLUTIONS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
Sept. 30, Dec. 31,
2008 2007
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 55,235 $ 50,314
Accrued expenses 35,319 19,666
Current revolving lines of credit 980 3,307
Current portion of term loans and
other loans 4,779 4,791
Current portion of capital leases 266 428
Deferred tax liabilities 66 117
Related party payables 7,721 5,921
-------- --------
Total current liabilities 104,366 84,544
Term loans 6,311 9,449
Capital leases 301 431
Other liabilities 6,315 5,860
Minority interest 2 6,601
Deferred tax liabilities 4,910 5,432
-------- --------
Total liabilities 122,205 112,317
-------- --------
Stockholders' equity:
Preferred stock, $0.001 par value,
authorized 1,000,000 shares; none
issued and outstanding at September
30, 2008 and December 31, 2007 -- --
Common stock, $0.001 par value, authorized
200,000,000 shares; 15,796,853 issued and
15,744,891 outstanding at September 30,
2008; and 15,512,798 issued and 15,499,115
outstanding at December 31, 2007 16 15
Additional paid-in capital 220,129 216,483
Shares held in treasury, 51,962 shares at
September 30, 2008 and 13,683 shares at
December 31, 2007 (1,394) (432)
Accumulated deficit (79,995) (102,696)
Accumulated other comprehensive income 18,510 21,683
-------- --------
Total stockholders' equity 157,266 135,053
-------- --------
Total Liabilities and
Stockholders' Equity $279,471 $247,370
======== ========
FUEL SYSTEMS SOLUTIONS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
---------------------
2008 2007
-------- --------
Net income $ 22,701 $ 1,055
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 4,911 3,584
Amortization of intangible assets 2,164 1,603
Provision for doubtful accounts 225 321
Provision for loan to
unconsolidated affiliate 540 --
Provision for inventory reserve 2,266 171
Goodwill impairment loss 3,907 --
Equity share in income of
unconsolidated affiliates (19) (384)
Dividends from unconsolidated affiliates 230 --
Minority interest 914 1,477
Extraordinary Gain (243) --
Unrealized loss on foreign exchange 371 737
Loss on disposal of asset 146 38
Stock-based compensation expense 297 161
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable 17,440) 1,115
Increase in inventory 13,891) (2,586)
Increase in other current assets (3,015) (142)
(Increase) decrease in other assets (441) 642
Increase in deferred income taxes (2,160) (1,117)
Increase in accounts payable 6,151 12,369
Increase in accrued expenses 16,670 582
Increase (decrease) in long
term liabilities 555 (923)
Receivables from/payables to related
party, net 2,013 3,827
-------- --------
Net cash provided by operating activities 26,852 22,530
-------- --------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (7,561) (3,705)
Purchases of minority interest in
consolidated subsidiaries (6,311) --
Purchase of intangible asset (193) --
Payments for purchase of Zavoli, net of
cash acquired -- (8,019)
Proceeds from sale of assets 3 --
-------- --------
Net cash used in investing activities (14,062) (11,724)
-------- --------
Cash flows from financing activities:
Payment of revolving line of credit,
net of borrowings (2,274) (6,082)
Payments on term loans and other loans (3,050) (1,832)
Proceeds from term loans -- 6,722
Proceeds from exercise of stock options
and warrants 2,383 3,681
(Purchase of)/proceeds from the sale of
common shares held in trust, net (95) 37
Payment of capital lease obligations (374) (310)
Dividend paid to minority interest in
consolidated subsidiaries (900) (822)
-------- --------
Net cash (used in) provided by
financing activities (4,310) 1,394
-------- --------
Net increase in cash 8,480 12,200
Effect of exchange rate changes on cash (992) 2,533
-------- --------
Net increase in cash and cash equivalents 7,488 14,733
Cash and cash equivalents at
beginning of period 26,797 11,546
-------- --------
Cash and cash equivalents at end of period $ 34,285 $ 26,279
======== ========
Supplemental disclosure of cash
flow information:
Non-cash financing activities:
Acquisition of equipment under capital lease $ 81 $ 190
======== ========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Fuel Systems Solutions, Inc.
Fuel Systems Solutions, Inc. Bill Larkin, CFO (714) 656-1320 Lippert / Heilshorn & Associates Investor Relations Contacts: Kirsten Chapman/Cathy Mattison (415) 433-3777 This email address is being protected from spambots. You need JavaScript enabled to view it.
