Fuel Systems Solutions: Q4 and Full Year 2012 Results
Fuel Systems Solutions, Inc. (FSYS) reported results for its fourth quarter and year ended December 31, 2012.
Mariano Costamagna, Fuel Systems' CEO, said, "On an operational basis, Fuel Systems' 2012 results were in line with our revised outlook. We recorded a fourth quarter asset impairment charge primarily to reflect adjustments we made over the past few quarters to our expectations for US Automotive operations and the AFS acquisition. Fuel Systems continues to enjoy solid demand for gaseous and bi-fuel solutions, with OEMs around the world looking increasingly for cleaner and more cost-efficient methods for powering automotive and industrial engines. Continued pressure on end-market growth from a stagnant global economy is resulting in increased competition, with some players now seeking lower prices. Therefore, as a uniquely positioned leader in both the aftermarket and with OEMs, our 2013 focus is on execution and profitability while continuing to extend our technological innovation and market leadership. We are working closely with our existing OEM partners, forging new OEM relationships around the world, and making key technological investments to maintain our edge in order to emerge an even stronger leader in a tighter marketplace."
Fourth Quarter 2012 Financial Results
Revenue for the fourth quarter of 2012 was $98.0 million compared to $111.0 million in the fourth quarter of 2011. Automotive revenue decreased $13.6 million primarily reflecting decreases in the US automotive and Latin America markets partially offset by a modest increase in Europe. Industrial revenue was up slightly. Included in the above results is foreign exchange, which negatively impacted revenues by $2.5 million in the fourth quarter of 2012.
Gross profit for the fourth quarter of 2012 was $21.3 million, or 21.8% of revenue, compared to $24.2 million, or 21.8% of revenue in the fourth quarter of 2011. The lower gross profit dollars primarily reflect the lower automotive revenue above and increased costs in the industrial segment.
The Company recorded a fourth quarter 2012 non-cash goodwill and asset impairment charge of $22.0 million, comprised of a goodwill impairment of $9.9 million and a write-down of long-lived assets of $12.1 million relating to the US Automotive and AFS operations. Operating loss for the fourth quarter of 2012 totaled $20.8 million, or 21.2% of revenue, compared to operating income of $0.7 million, or 0.7% of revenue in the fourth quarter of 2011; excluding the abovementioned non-cash charge, the Company recorded fourth quarter 2012 operating income of $1.3 million, or 1.3% of revenue.
Adjusted EBITDA for the fourth quarter of 2012 was $3.1 million, or 3.2% of revenue, compared to $5.4 million, or 4.8% of revenue in the fourth quarter of 2011, primarily reflecting the abovementioned automotive revenue and industrial cost variances. Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures" below for a discussion of this metric.
Net loss for the fourth quarter of 2012 was $21.0 million, or $1.05 per diluted share, compared to net income of $1.4 million, or $0.07 per diluted share, in the fourth quarter of 2011; excluding the abovementioned non-cash charge and its associated tax benefit of $ 0.9 million, the Company recorded fourth quarter 2012 net income of $0.2 million or $0.01 per diluted share.
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 fourth quarter 2012 revenue was $68.2 million, compared to $81.7 million from the same quarter a year ago. The impact of foreign exchange on FSS Automotive was a negative $2.5 million; in constant currency, fourth quarter FSS Automotive revenue decreased 13.5%, reflecting decreases in the US automotive and Latin America markets. FSS Automotive fourth quarter 2012 operating loss was $16.2 million, including $16.4 of the non-cash goodwill and asset impairment charge, compared to an operating loss of $1.9 million in the same period a year ago. FSS Automotive fourth quarter 2012 Adjusted EBITDA was $2.0 million, compared to $2.3 million a year ago.
FSS Industrial Operations
Revenue from FSS Industrial was $29.9 million compared to $29.2 million the same quarter a year ago. The impact of foreign exchange on FSS Industrial was insignificant; in constant currency, fourth quarter FSS Industrial revenue increased 2.1%, reflecting increases in the North American and European markets partially offset by declines in Japan. FSS Industrial fourth quarter 2012 operating loss was $3.2 million, including $5.7 million of the non-cash goodwill and asset impairment charge, compared to operating income of $4.1 million in the same period a year ago. FSS Industrial fourth quarter 2012 Adjusted EBITDA was $2.4 million, compared to $4.4 million a year ago, which reflects an increase in material costs.
Full Year Ended December 31, 2012 Financial Results
For the full year ended December 31, 2012, total revenue was $393.9 million compared to $418.1 million for 2011. Foreign exchange negatively impacted revenues by $23.2 million in 2012. Net loss for the year was $15.6 million, or $0.78 per diluted share, compared to net income of $5.2 million, or $0.26 per diluted share, for 2011. Excluding the non-cash goodwill and asset impairment charge, net income for 2012 was $5.5 million, or $0.28 per diluted share reflecting performance consistent with the prior year.
Total FSS Automotive revenue for the full year ended December 31, 2012 was $271.3 million compared to $295.1 million for 2011. Foreign exchange negatively impacted revenues by $20.7 million in 2012. Automotive operating loss was $11.8 million for 2012, including the $16.4 million of the non-cash goodwill and asset impairment charge, compared to operating income of $2.3 million for 2011. FSS Automotive Adjusted EBITDA for 2012 was $17.1 million compared to $18.2 million for 2011.
Total FSS Industrial revenue for the full year ended December 31, 2012 was $122.7 million compared to $123.0 million for 2011. Foreign exchange negatively impacted revenues by $2.5 million in 2012. Industrial operating income was $4.6 million for 2012 including the $5.7 million of the non-cash goodwill and asset impairment charge, compared to $14.7 million for 2011. FSS Industrial Adjusted EBITDA for 2012 was $13.4 million compared to $17.3 million for 2011.
The Company expects 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 Thailand and Latin American automotive markets; partially offset by a slower transportation aftermarket given increasingly aggressive competition in developing countries and Eastern 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 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, the closest GAAP financial measure: Net Income attributable to non-controlling interest; Depreciation & Amortization; Interest income, net; and Benefit (Provision) for Income Taxes and Impairments. 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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