Fuel Systems Solutions: Q1 Results
Fuel Systems Solutions, Inc. (FSYS) reported results for its first quarter ended March 31, 2013.
Mariano Costamagna, Fuel Systems' CEO, said, "First quarter revenues were largely as anticipated as we focused on efficient execution and continued innovation. In our Automotive segment, DOEM conversions, particularly in Italy and the US were solid, offset to some degree by weaker aftermarket sales as our marketplaces become increasingly competitive amid a tough global economy. We are promoting our premier brand position in the aftermarket by working closely with our dealer network to communicate our value proposition and by investing in new products that broaden our solutions offering. Our Industrial segment saw softer sales from heavy duty commercial vehicles, while APU and engine volumes were stronger. We remain focused for this year on managing costs to maximize profitability while further investing in advancing our brand presences and technological leadership and adding to our customer relationships around the world."
First Quarter 2013 Financial Results
Revenue for the first quarter of 2013 was $98.6 million compared to $97.4 million in the first quarter of 2012. Automotive revenue increased $3.0 million primarily reflecting DOEM and OEM increases in Europe, offset partially by softer aftermarket trends in global markets. Industrial revenue decreased $1.8 million primarily reflecting lower heavy duty volumes in Asia offset by higher APU and engine sales in North America. Included in the above results is the impact of foreign exchange, which negatively impacted revenues by $0.2 million in the first quarter of 2013.
Gross profit for the first quarter of 2013 was $21.6 million, or 21.9% of revenue, compared to $22.6 million, or 23.2% of revenue in the first quarter of 2012, reflecting changes in the sales mix. Operating income for the first quarter of 2013 totaled $1.1 million, or 1.2% of revenue, compared to an operating income of $1.0 million, or 1.1% of revenue, in the first quarter of 2012, reflecting the lower gross profit offset by a modest decrease in operating expenses.
EBITDA for the first quarter of 2013 was $4.4 million, or 4.4% of revenue, compared to $5.4 million, or 5.5% of revenue, in the first quarter of 2012, primarily reflecting the abovementioned revenue and cost variances. EBITDA is a non-GAAP measure. See "Non-GAAP Measures" below for a discussion of this metric.
Income before tax for the first quarter of 2013 was $0.8 million, or 0.8% compared to $0.9 million or 0.9% for the first quarter of 2012. The tax rate for the first quarter of 2013 was 189% compared to 231% in the prior year first quarter. The Company operates in an international environment with significant operations in various locations outside of the United States which have statutory tax rates that are different from the US tax rate. Accordingly the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates. The unusually high income tax rates are primarily a result of the fluctuation of earnings in various jurisdictions and losses incurred in the US and certain foreign jurisdictions for which no tax benefits have been recorded. The Company expects its effective tax rate for 2013 to be approximately 54%.
Net loss for the first quarter of 2013 was $0.7 million, or $0.04 per diluted share, compared to net loss of $1.2 million, or $0.06 per diluted share, in the first quarter of 2012.
A table presenting historical reclassified operating segment data can be found in the tables contained at the end of this release.
FSS Automotive Operations
FSS Automotive first quarter 2013 revenue was $66.7 million, compared to $63.7 million from the same quarter a year ago. The impact of foreign exchange on FSS Automotive was a positive $0.4 million; in constant currency, first quarter FSS Automotive revenue increased 4.0%, reflecting DOEM and OEM increases in Europe. FSS Automotive first quarter 2013 operating income was $0.3 million, compared to an operating loss of $1.4 million in the same period a year ago. FSS Automotive first quarter 2013 EBITDA was $3.3 million, compared to $2.1 million a year ago.
FSS Industrial Operations
Revenue from FSS Industrial was $31.9 million compared to $33.7 million the same quarter a year ago. The impact of foreign exchange on FSS Industrial was a negative $0.6 million; in constant currency, first quarter FSS Industrial revenue decreased 3.5%, primarily reflecting lower revenue from the heavy duty business in Asia. FSS Industrial first quarter 2013 operating income was $2.5 million, compared to operating income of $4.6 million in the same period a year ago. FSS Industrial first quarter 2013 EBITDA was $2.7 million, compared to $5.5 million a year ago, which reflects the above-mentioned revenue reduction in Asia and an overall change in the business mix.
The Company is reaffirming its previous outlook and continues to expect full year 2013 revenue to be between $400 million and $420 million, 2013 gross margin of 21% to 23%, and 2013 operating margin of 2% to 4%. This outlook is based upon the following expectations:
Automotive operations -- growth in OEM and DOEM programs, particularly in the US and Italy, combined with contributions from Asia and Latin American automotive markets; partially offset by a slower transportation aftermarket given increasingly aggressive competition in developing countries and Europe.
Industrial operations -- growth in APU market, aided by the launch of new battery products; slight growth in stationery equipment and mobile industrial markets overall with a mix of stable and weaker geographies.
A comparable margin performance in 2013 relative to 2012 as the Company focuses on achieving greater operational efficiencies given some margin compression expected from an increasingly competitive environment; continued selected investments in key leading edge technologies.
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 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." EBITDA is determined by adding the following items to Net Income, the closest GAAP financial measure: Net Income attributable to non-controlling interest; Depreciation & Amortization; Interest income, net; and Benefit (Provision) for Income Taxes. 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 (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.
Pietro Bersani, Chief Financial Officer
Fuel Systems Solutions, Inc.
Investor Relations Contacts:
Carolyn M. Capaccio
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