Stoneridge Announces Third-Quarter 2008 Earnings Outlook; Revises Full-Year 2008 Earnings Guidance
-- Continues aggressive restructuring efforts
-- Financial position remains strong
WARREN, Ohio, Oct. 24 /PRNewswire-FirstCall/ -- Stoneridge, Inc.
(NYSE: SRI) announced today that earnings for the third quarter of 2008 are
expected to be in the range of breakeven to a loss of ($0.03) per share.
Third-quarter sales of $178.4 million were 3.2% above the third-quarter level
of 2007, though below Company expectations. The expected reduction in
earnings was due primarily to weaker-than-expected sales in the North American
automotive market and charges associated with Stoneridge's previously
announced restructuring program.
The third-quarter estimate includes restructuring charges and related
expenses of approximately $4.8 million or $0.16 per share. The third-quarter
2008 earnings performance was also affected by the loss of overhead cost
recoveries because of lower production volumes which were the result of
restructuring inventory built primarily in the first half of 2008. In
addition, third-quarter earnings were affected by a higher effective tax rate
which was due primarily to restructuring expenses incurred in the U.K. with no
associated tax benefits.
Ongoing Restructuring Efforts
Stoneridge announced a restructuring plan in November 2007 to improve its
global manufacturing network and reduce its overhead cost structures.
Stoneridge's restructuring cost has been approximately $11.0 million through
the first nine months of 2008, including the $4.8 million in the third
quarter, and is estimated to be $13.0 million to $15.0 million for the full
year, excluding the sale of the Sarasota, Florida facility. This has resulted
in a negative impact to earnings of $0.37 per share for the first nine months
of the year, and an estimated $0.48 to $0.52 per share for the full year.
Stoneridge's restructuring efforts are expected to generate annual benefits
between $8.0 million to $12.0 million in 2009, or $0.22 to $0.33 per share.
'We began to implement our restructuring efforts ahead of the market
downturn, and as a result, we are in a better position to weather this
cyclical downturn,' said John C. Corey, President and Chief Executive Officer.
'We have been aggressively executing our restructuring initiatives since the
fourth quarter of 2007, and I am pleased and encouraged that the hard work and
dedication of our management team will improve our competitive position as
these programs near conclusion.'
Corey added, 'Due to the additional market demand reductions we are
experiencing, we are assessing additional measures that may need to be taken
to adjust our capacities to the lower market forecasts. In the third quarter,
we began the additional consolidation of one more facility within our Control
Devices Group, with an expected cost of approximately $800,000 and estimated
annual savings of approximately $1.0 million in 2009. We also announced
additional layoffs in September 2008 within the Control Devices Group.'
Though the current business level is becoming increasingly more difficult
to predict, Stoneridge is also announcing a revision to its full-year 2008
earnings guidance. For the full year, the Company now expects earnings of
$0.40 to $0.46 per share including estimated restructuring charges in the
range of $13.0 million to $15.0 million or $0.48 to $0.52 per share. The
revised guidance excludes the sale of the Sarasota, Florida facility which is
now expected to occur in 2009. The Company's prior guidance of $0.75 to $0.85
per share included estimated restructuring charges in the range of $0.38 to
$0.40 per share which included an approximate $0.10 per share gain from the
previously anticipated 2008 sale of the Sarasota facility.
Improved Financial Strength
'We are not immune from the changes in the outlook for the transportation
sector and the rapid and unexpected volume declines in the North American
automotive market, as well as lower than expected volumes in the commercial
vehicle sector,' said Corey. 'However, in addition to the restructuring
program, our positive cash flow, substantial and secure cash reserves and
available borrowing capacity will further position Stoneridge to effectively
manage through the slowdown in our served markets.'
Stoneridge has improved its financial strength over the last two years,
and its debt to debt-plus-equity is at its lowest point since 2004. The
Company's cash position remains strong at nearly $90 million at September 30,
2008, even though the Company repurchased $17.0 million of its 11.5% senior
notes in the first half of this year. Management reviewed the Company's cash
investments during the first stages of the economic slowdown and amid the
financial uncertainty moved certain select investments to ensure that its
deposits were secure. In addition, Stoneridge has full availability (as
defined) up to $100 million on its asset-backed revolving credit facility.
The Company is also pursuing opportunities while minimizing risk in the
volatile commodity and foreign exchange markets.
'While market conditions are certainly challenging, we continue to execute
our cost reduction plans, eliminate products which cannot meet financial
hurdles and selectively target growth in product areas offering attractive
financial returns,' Corey said.
Third-Quarter 2008 Conference Call
Stoneridge will report its third-quarter results on November 7, 2008. A
live Internet broadcast of Stoneridge's conference call regarding 2008
third-quarter results can be accessed at 10 a.m. Eastern time on Friday,
November 7, 2008, at www.stoneridge.com , which will also offer a webcast
replay.
Automotive Conference Presentation
In addition, Stoneridge will attend and present at the Gabelli Automotive
Conference in Las Vegas, Nevada on Tuesday, November 4, 2008, at 2:30 p.m.
Eastern Time. A live Internet broadcast of the presentation and a webcast of
the replay will be available at http://www.wsw.com/webcast/gabelli24/sri/ .
About Stoneridge, Inc.
Stoneridge, Inc., headquartered in Warren, Ohio, is an independent
designer and manufacturer of highly engineered electrical and electronic
components, modules and systems principally for the automotive, medium- and
heavy-duty truck, agricultural and off-highway vehicle markets. Net sales in
2007 were approximately $727 million. Additional information about Stoneridge
can be found at www.stoneridge.com .
Forward-Looking Statements
Statements in this release that are not historical fact are forward-
looking statements, which involve risks and uncertainties that could cause
actual events or results to differ materially from those expressed or implied
in this release. Things that may cause actual results to differ materially
from those in the forward-looking statements include, among other factors, the
loss of a major customer; a significant change in automotive, medium- and
heavy-duty truck or agricultural and off-highway vehicle production; a
significant change in general economic conditions in any of the various
countries in which the Company operates; labor disruptions at the Company's
facilities or at any of the Company's significant customers or suppliers; the
ability of the Company's suppliers to supply the Company with parts and
components at competitive prices on a timely basis; customer acceptance of new
products; and the failure to achieve successful integration of any acquired
company or business. In addition, this release contains time-sensitive
information that reflects management's best analysis only as of the date of
this release. The Company does not undertake any obligation to publicly
update or revise any forward-looking statements to reflect future events,
information or circumstances that arise after the date of this release.
Further information concerning issues that could materially affect financial
performance related to forward-looking statements contained in this release
can be found in the Company's periodic filings with the Securities and
Exchange Commission.
SOURCE Stoneridge, Inc.
