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Meldungen 10.08.2015

Fuel Systems Solutions: Q2 Results

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NEW YORK - Fuel Systems Solutions, Inc. (FSYS) reported results for its second quarter ended June 30, 2015.

Q2 2015 Highlights

    Revenue of $67.2 million compared to $87.4 million for Q2 2014; revenue down 11.1% or $9.7 million, excluding FX impact
    Gross profit margin 22.3% compared to 20.4% in Q2 2014
    Adjusted EBITDA of $0.8 million compared to Adjusted EBITDA of $2.1 million for Q2 2014
    Share repurchase program retired 2,041,066 shares of common stock through June 30, 2015

Mariano Costamagna, Fuel Systems Solutions, Inc. ("Fuel Systems" or "FSS") CEO, said, "Despite continued weakness in many of our end markets being affected by economic pressure, low oil prices, foreign exchange effects and heightened competition, Fuel Systems' second quarter saw some bright spots. While still in its early stages, our 2015 cost reduction and restructuring program is accruing benefits improving the gross margin line and reducing operating expenses through improved efficiencies mainly in our Automotive business as was planned for 2015. Further, certain European geographies are showing improvement in the Automotive aftermarket, our Industrial division has renewed and extended a key contract out to 2019, and our Automotive infrastructure unit has won a new multi-year contract with the leader in the Italian gas market. Although these will benefit future years, our financial outlook is being adjusted to reflect current market realities."

Mr. Costamagna continued, "Looking into the second half of the year, we are keenly focused on executing the 2015 steps of our cost reduction and restructuring program to derive cost, organization and manufacturing footprint efficiencies, while simultaneously reinforcing the value proposition that our technological leadership affords current and potential automotive and industrial customers. Finally, our strategic process to enhance shareholder value is proceeding. We remain focused on driving returns for our shareholders."

Second Quarter 2015 Financial Results

Total revenue for the second quarter of 2015 was $67.2 million compared to $87.4 million for the second quarter of 2014. This variance includes the impact of foreign exchange on second quarter 2015 revenue, which was negative $10.5 million.

In constant currency, FSS Automotive revenue was negatively impacted by lower aftermarket, compressor and DOEM sales volumes as a result of difficult economic conditions in major markets, specifically Argentina and Italy, lower oil prices and increased competition. In constant currency, FSS Industrial revenue increased slightly compared to the prior-year period primarily reflecting higher sales of auxiliary power units in North America partially offset by lower demand for mobile equipment and stationary equipment, as a result of lower oil prices, a decrease in heavy duty sales in Thailand and increased competition.

Gross profit for the second quarter of 2015 was $15.0 million, or 22.3% of revenue, compared to $17.9 million, or 20.4% of revenue, for the second quarter of 2014. The lower gross profit primarily reflects the decreased volumes mentioned above. The gross margin percentage improvement was due to efficiencies achieved through the 2014 and 2015 restructuring activities primarily in the FSS Automotive business. The impact of the revenue decreases has been mitigated by the cost reduction activities that have been initiated on both the product cost and operating expenses. Corporate expenses increased $2.7 million compared to the prior year as a result of increases in outside services for consultants in connection with restructuring and strategic activities.

Operating loss for the second quarter of 2015 totaled $5.3 million, or 7.8% of revenue, compared to operating loss of $47.9 million, or 54.8% of revenue, which included a non-cash goodwill and long-lived asset impairment charge of $44.3 million for the second quarter of 2014.

Income tax expense for the second quarter of 2015 was $0.7 million compared to an income tax benefit of $2.8 million in the second quarter of 2014. The Company's income tax rate is primarily a result of the fluctuation of earnings in various foreign jurisdictions and losses incurred for which no tax benefits have been recorded. For the second quarter of 2015, there were certain foreign jurisdictions where tax benefits were not included in the Company's income tax provision. This was a result of a valuation allowance for deferred tax assets in Italy that was recorded in the first quarter of 2015. In the second quarter of 2014, the Company's tax provision reflected a benefit from this jurisdiction.

Net loss for the second quarter of 2015 was $6.0 million, or $0.32 per diluted share, compared to net loss of $44.2 million, or $2.20 per diluted share including the non-cash goodwill and long-lived asset impairment charge of $43.2 million, net of tax, for the second quarter of 2014.

Adjusted EBITDA for the second quarter of 2015 was $0.8 million, compared to $2.1 million for the second quarter of 2014. Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" below for a discussion of this metric.

FSS Automotive Operations

FSS Automotive second quarter 2015 revenue was $40.7 million compared to $59.7 million for the same quarter a year ago. The impact of foreign exchange on FSS Automotive was negative $9.1 million; in constant currency, second quarter 2015 FSS Automotive revenue decreased 16.6% compared to the prior year period, reflecting the lower volumes mentioned above. FSS Automotive second quarter 2015 operating loss was $3.5 million compared to operating loss of $44.7 million including the abovementioned non-cash goodwill and long-lived asset impairment charge, for the same period a year ago. FSS Automotive second quarter 2015 Adjusted EBITDA was a loss of $0.6 million compared to Adjusted EBITDA loss of $0.2 million for the same period a year ago.

FSS Industrial Operations

FSS Industrial second quarter 2015 revenue was $26.5 million compared to $27.7 million for the same quarter a year ago. The impact of foreign exchange on FSS Industrial was negative $1.4 million; in constant currency, second quarter 2015 FSS Industrial revenue increased 0.6% compared to the prior year period. FSS Industrial second quarter 2015 operating income was $2.5 million compared to operating loss of $1.6 million including the abovementioned non-cash goodwill and long-lived asset impairment charge for the same period a year ago. FSS Industrial second quarter 2015 Adjusted EBITDA was $3.4 million compared to Adjusted EBITDA of $3.5 million for the same period a year ago.

Six Months Ended June 30, 2015 Financial Results

Total revenue for the first half of 2015 was $130.5 million compared to $168.7 million for the first half of 2014. Net loss for the first half of 2015 was $17.9 million, or $0.95 per diluted share compared to a net loss of $46.2 million, or $2.30 per diluted share, including the abovementioned non-cash goodwill and long-lived asset impairment charge, net of tax, of $43.2 million, or $2.15 per share. Excluding this charge, net loss for the first half of 2014 was $3.0 million, or $0.15 per diluted share. Adjusted EBITDA for the first half of 2015 was $2.7 million compared to Adjusted EBITDA of $4.2 million for the first half of 2014.

Total FSS Automotive revenue for the first six months of 2015 was $81.2 million compared to $114.1 million for the same period a year ago. FSS Automotive operating loss was $6.4 million for the first half of 2015 compared to operating loss of $47.0 million for the first half of 2014, including the abovementioned non-cash goodwill and long-lived asset impairment charge. FSS Automotive Adjusted EBITDA for the first half of 2015 was $0.8 million compared to an Adjusted EBITDA of $1.4 million for the first half of 2014.

Total FSS Industrial revenue for the first six months of 2015 was $49.3 million compared to $54.6 million for the same period a year ago. FSS Industrial operating income was $4.6 million for the first half of 2015 compared to $0.3 million for the first half of 2014, including the abovementioned non-cash goodwill and long-lived asset impairment charge. FSS Industrial Adjusted EBITDA for the first half of 2015 was $5.6 million compared to Adjusted EBITDA of $5.8 million for the first half of 2014.

2015 Cost Reduction and Restructuring Program Update

During the second quarter of 2015, the Company executed next steps in its cost reduction and restructuring program as follows:

    Began to realize benefits from direct material cost reduction initiatives
    Began to consolidate selected manufacturing facilities in South America and Italy
    Began to implement alternative sales and distribution models in Brazil
    Reduced production volumes of inventory through temporary layoffs to decrease labor cost and working capital needs
    Began to reduce non-labor operating expenses

In the second quarter of 2015, the Company recorded $2.5 million for restructuring and costs related to outside services for consultants as follows: $0.9 million for severance; $0.3 million for the write-off of long-lived assets in connection with rationalization of activities; and $1.3 million for professional fees. Savings achieved in the second quarter of 2015 for the program were approximately $1.0 million.

With respect to the cost reduction and restructuring program, the Company currently anticipates an equal amount in the savings and expenses in 2015.

The Company continues to believe its expectations for the cost reduction and restructuring program net results are substantially unchanged with the exception of the impact that foreign exchange rates will have on the results, and expects estimated annualized savings of $22.0 million with total estimated costs of approximately $8.0 million.

Share Repurchase Program Update

During the second quarter of 2015, the Company repurchased 693,311 shares of common stock pursuant to the $25.0 million share repurchase program approved by the Board of Directors on November 3, 2014. This program is authorized to continue for up to one year from its inception. Purchases under the share repurchase program may be made from time to time in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions. The Company is authorized to repurchase shares at prevailing market prices based on market conditions and other factors.

Liquidity and Capital Resources

During the second quarter of 2015, the Company used approximately $9.2 million in cash, including $6.2 million for the repurchase of common stock as mentioned above and a $0.6 million change in working capital, primarily accounts payable, inventory and other assets. In addition, the Company invested $2.4 million in capital equipment and cash was positively impacted by foreign exchange of $0.3 million in the second quarter of 2015.

2015 Outlook

    The Company has reduced its 2015 revenue outlook to be in the range of between $270 million to $280 million, reflecting:
        Significant slowdown in Argentinian aftermarket activity due to market conditions and political uncertainty.
        Weaker than previously anticipated demand from aftermarket, OEM, compressor and new business lines despite the continued maintenance of the Company's automotive market share amid slower market demand, in part due to challenging economic conditions and persistent aggressive competition in the global transportation market, as well as lower oil prices.
        Continued lower demand and continued high competition for mobile Industrial equipment partially offset by growth in the APU market.
    2015 gross margin in the range of 21% to 23%.
    Adjusted EBITDA outlook for 2015 of $5.0 million to $10.0 million, primarily reflecting a reduction in the outlook for results from operations due to increased automotive market weakness primarily in Argentina and certain European countries.
    The revisions to gross margin and Adjusted EBITDA outlooks reflect the decreased volume of revenue and changes in the business mix, offsetting the improvements from the 2014 and 2015 restructuring activities to date.

Non-GAAP Measures

To provide investors and others with additional information regarding Fuel Systems' results, in addition to the results presented in accordance with generally accepted accounting principles, or GAAP, in this press release, Fuel Systems presents Adjusted EBITDA, which is a non-GAAP measure. A reconciliation of this non-GAAP measure to the closest GAAP financial measure is presented in the financial tables below under the heading "Non-GAAP FINANCIAL MEASURE RECONCILIATION." Adjusted EBITDA is determined by adding the following items to Net Income/(Loss), the closest GAAP financial measure: Depreciation & Amortization; Interest income/expense, net; and Benefit (Provision) for Income Taxes, Impairments, Restructuring charges, Stock based compensation Consulting fees related to restructuring and strategy and other non-operating expenses. Fuel Systems' management believes this non-GAAP financial measure offers additional insight into the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in the business, as it excludes certain non-cash items. This non-GAAP financial measure also can provide useful information to investors and others in understanding and evaluating Fuel Systems' operating results and future prospects when comparing financial results across accounting periods and to those of peer companies. Fuel Systems may not define this non-GAAP financial measure in a manner similar to other companies.

 
About Fuel Systems Solutions

Fuel Systems Solutions, Inc. (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. Additional information is available at www.fuelsystemssolutions.com.

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