SANTA ANA, Calif., Oct. 31, 2007 (PRIME NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) today announced it has completed restatements of its historical financials, which were delayed due to its voluntary stock option investigation. As a result, the company has recorded non-cash charges of $14.0 million for stock-based compensation expense for fiscal years 1997 to 2005, and through the nine months ended September 30, 2006. The company's delayed financial results for its fourth quarter and year ended December 31, 2006 and the first and second quarter of 2007 have been filed with the Securities and Exchange Commission on Forms 10-K and 10-Q, respectively.
Revenue for the fourth quarter of 2006 was $52.1 million compared with $51.9 million in the fourth quarter of 2005. Operating income for the same periods was $2.0 million compared with $3.1 million. Net loss was $1.2 million, or $0.08 per share, in the fourth quarter of 2006 compared with a net loss of $1.0 million, or $0.07 per share, during the same period in 2005.
For the twelve months ended December 31, 2006, revenue jumped 26.5 percent to $220.8 million from $174.5 million a year earlier. Operating income for the same period increased almost four-fold to $20.0 million from $5.3 million in 2005. Both the revenue and operating income increases reflect the inclusion of 100 percent of the results of the company's wholly owned BRC subsidiary for the entire twelve months of 2006, while BRC's results were only fully consolidated into the company's for nine months of 2005. In addition to the strength of BRC and its market penetration within the gaseous fuels transportation sector, the company's industrial business, IMPCO Technologies, contributed to solid performance for the year.
Other expense of $1.9 million for the twelve months in 2006 consisted primarily of an unrealized foreign exchange loss on an intercompany loan, compared with other income of $0.5 million in the same period of the prior year, primarily from unrealized foreign exchange gains on the same intercompany loan. Income tax expense, which primarily consists of foreign taxes, was $9.3 million during the twelve months of 2006 compared with $14.3 million for the same period in 2005.
Net income for 2006 was $6.9 million, or $0.46 per diluted share, compared with a net loss of $10.4 million, or $0.77 per share, for 2005 -- reflecting improvements in both IMPCO and BRC operations.
For the six months ended June 30, 2007, revenue increased 6.3 percent to $120.4 million from $113.2 million for the same period of 2006. The increase is primarily attributable to the IMPCO industrial market segment and energy initiatives in Australia for liquefied petroleum gas vehicles. Operating income for the same period was $6.9 million compared with $11.5 million a year earlier. IMPCO's operating income increased $1.1 million compared with the prior year. Stock option investigation costs of approximately $2.0 million and reduced operating income at BRC contributed to the overall decline. During the first half of 2007, BRC revenues decreased $4.9 million compared with the same period in 2006 primarily due to a reduction in demand from European customers, net of foreign exchange rate translation differences resulting from the strengthening euro. For the same period, BRC's operating expenses increased approximately $2.1 million -- including approximately $0.9 million relating to the launch of a new marketing campaign in Europe which began in the first quarter of 2007.
Other expense of $0.7 million and $1.2 million for the six months ended June 30, 2007 and 2006, respectively, consisted primarily of an unrealized foreign exchange loss on an intercompany loan. Income tax expense, which primarily consists of foreign taxes, was $3.6 million during the first half of 2007, compared with $4.6 million for the same period last year.
Net income for the first six months of 2007 was $1.4 million, or $0.09 per diluted share, compared with $5.0 million, or $0.33 per diluted share, for the same period a year ago.
"Results for the first six-month period of 2007 included charges of approximately $0.16 per diluted share related to the stock option investigation and a proactive European marketing program, as noted above, designed to build brand recognition among car owners and system installers to enhance future sales. The past six months has been a difficult period for the company, with our voluntary stock option investigation creating a distraction for management and requiring financial resources to rectify issues that the current management inherited," said Mariano Costamagna, president and chief executive officer of Fuel Systems Solutions.
He noted that the company's industrial business segment is now fully benefiting from OEM customer demand related to new U.S. EPA Tier III emission regulations, which became effective in January 2007. Costamagna emphasized that new stricter EPA emissions standards to be implemented in 2008 and 2009 for stationary and power generation products are expected to provide additional market opportunities for the company's industrial division. In addition, he highlighted the ongoing growth potential within the transportation sector, supported by contributions from the company's acquisition of Zavoli S.r.l., commencing in the third quarter, as well as other potential synergistic acquisitions in the future.
"Today, approximately 11.4 million vehicles in the world operate on liquefied petroleum gas (LPG), with an estimated 5.8 million in Europe; and, there are approximately 5.4 million vehicles operating on compressed natural gas (CNG), with 813,000 in Europe. Clearly, relative to the worldwide automotive population of vehicles operating on gasoline, the number of those converted to utilizing either LPG or CNG is relatively small. Nonetheless, increasing oil prices, environmental concerns and dependency on foreign oil continue to drive the market. Fuel Systems Solutions' strategic objective is focused on leveraging its presence in more than 70 countries worldwide to increase vehicle conversions -- utilizing a technology developed over more than forty years and supported by attractive operating cost advantages and environmental benefits," Costamagna said.
He highlighted the company's introduction in late 2006 of a competitively priced CNG refueling station product to address the rapidly growing market for CNG-powered vehicles. "There are significant business opportunities in Asia and other regions of the world committed to building refueling infrastructure, which, in turn, will support demand for the company's core transportation products and systems," Costamagna said.
Costamagna said he expects the utilization of LPG and CNG fuels by consumers within the U.S. market to gradually gain traction, though at a much lower rate than other regions in the world. He noted that the fleet market is expected to gain momentum first, citing an announcement in June 2007 regarding the company receiving certification from the United States Environmental Protection Agency to modify certain Ford F-150 vehicles to operate on either gasoline or liquefied petroleum gas.
He added that the company has also received certification for the General Motors 6.0 liter engine utilized on numerous vehicle platforms. "These certifications position the company to penetrate the high-volume fleet transportation market and will further establish Fuel Systems Solutions as a global leader within the gaseous fuels market," Costamagna added.
Teleconference and Webcast
Mariano Costamagna, president and chief executive officer, and Thomas M. Costales, chief financial officer, will host an investor conference call in November in conjunction with the issuance of the company's third quarter results ended September 30, 2007.
Fuel Systems Solutions is a holding company currently comprised of two operating subsidiaries, IMPCO Technologies and BRC Gas Equipment. Additional information is available at www.fuelsystemssolutions.com. 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, Australia and North America. Additional information is available at www.impcotechnologies.com. BRC 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 and South America. Additional information is available at BRC's web site, http://www.brc.it.
Certain matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in any forward-looking statement. Those forward-looking statements include statements relating to expected future demand for the company's products, growth potential of the transportation sector, contributions from the Zavoli acquisition and the company's ability to complete other future acquisitions and its ability to market and sell CNG refueling stations in target markets. Factors that could cause or contribute to such differences between our expected future results and actual results include, but are not limited to, prevailing market and global economic conditions; changes in environmental regulations that impact the demand for the company's products; the company's ability to manage its leverage and address operating covenant restrictions relating to its indebtedness; the company's ability to negotiate and comply with waivers pertaining to existing loan covenant noncompliance; the company's ability to design and market advanced fuel metering, fuel storage and electronic control products; the company's ability to meet OEM specifications; and the level and success of the company's development programs with OEMs. 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, 2006. 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.
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31,
(Unaudited)
2006 2005 2006 2005
(Restated) (Restated)
-------- -------- -------- --------
Revenue $ 52,139 $ 51,856 $220,816 $174,539
Cost of revenue 40,500 39,469 166,663 134,357
-------- -------- -------- --------
Gross profit 11,639 12,387 54,153 40,182
Operating expenses:
Research and
development
expense 1,739 1,571 8,056 8,155
Selling, general
and
administrative
expense 7,876 7,874 25,920 26,510
Amortization of
intangibles
acquired 36 (46) 142 101
Acquired
in-process
technology -- (105) -- 99
-------- -------- -------- --------
Total
operating
expenses 9,651 9,294 34,118 34,865
-------- -------- -------- --------
Operating income 1,988 3,093 20,035 5,317
Other income (expense),
net (871) (422) (1,871) 460
Interest expense, net (364) (184) (705) (690)
-------- -------- -------- --------
Income before income
taxes and equity
share in income of
unconsolidated
affiliates 753 2,487 17,459 5,087
Equity share in income
of unconsolidated
affiliates 332 176 685 1,035
Write-off of investment
in unconsolidated
affiliates
(271) (1,045) (271) (1,045)
Income tax expense (1,757) (2,386) (9,293) (14,339)
-------- -------- -------- --------
Income (loss) before
minority interests
and cumulative effect
of a change in
accounting principle (943) (768) 8,580 (9,262)
Minority interest in
income of
consolidated
subsidiaries (281) (192) (1,668) (975)
-------- -------- -------- --------
Income (loss) before
cumulative effect of
a change in accounting
principle (1,224) (960) 6,912 (10,237)
Cumulative effect of a
change in accounting
principle -- -- -- (117)
-------- -------- -------- --------
Net income (loss) $(1,224) $ (960) $ 6,912 $(10,354)
======== ======== ======== ========
Net income (loss) per
share before cumulative
effect of a change in
accounting principle:
Basic $ (0.08) $ (0.07) $ 0.46 $ (0.76)
======== ======== ======== ========
Diluted $ (0.08) $ (0.07) $ 0.46 $ (0.76)
======== ======== ======== ========
Per share effect of the
cumulative effect of
a change in
accounting principle:
Basic $ -- $ -- $ -- $ (0.01)
======== ======== ======== ========
Diluted $ -- $ -- $ -- $ (0.01)
======== ======== ======== ========
Net income (loss) per share:
Basic $ (0.08) $ (0.07) $ 0.46 $ (0.77)
======== ======== ======== ========
Diluted $ (0.08) $ (0.07) $ 0.46 $ (0.77)
======== ======== ======== ========
Number of shares used
in per share
calculation:
Basic 15,142 14,451 14,881 13,489
======== ======== ======== ========
Diluted 15,142 14,451 15,172 13,489
======== ======== ======== ========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
(Restated) (Restated)
-------- -------- -------- --------
Revenue $ 65,552 57,159 $120,385 $113,240
Cost of revenue 51,065 45,111 92,120 85,975
-------- -------- -------- --------
Gross profit 14,487 12,048 28,265 27,265
Operating expenses:
Research and
development
expense 2,036 2,010 4,084 4,149
Selling, general
and
administrative
expense 9,302 5,032 17,235 11,559
Amortization of
intangible
assets 50 37 83 70
-------- -------- -------- --------
Total
operating
expenses 11,388 7,079 21,402 15,778
-------- -------- -------- --------
Operating income 3,099 4,969 6,863 11,487
Other expense, net (415) (963) (661) (1,205)
Interest expense, net (201) (126) (492) (270)
-------- -------- -------- --------
Income before income
taxes and equity
share in income of
unconsolidated
affiliates 2,483 3,880 5,710 10,012
Equity share in income
of unconsolidated
affiliates 107 167 270 314
Income tax expense (1,725) (1,918) (3,630) (4,631)
-------- -------- -------- --------
Income before minority
interests and
cumulative effect of
a change in
accounting principle 865 2,129 2,350 5,695
Minority interest in
income of
consolidated
subsidiaries (470) (393) (937) (685)
-------- -------- -------- --------
Net income $ 395 $ 1,736 $ 1,413 $ 5,010
======== ======== ======== ========
Net income per share:
Basic $ 0.03 $ 0.12 $ 0.09 $ 0.34
======== ======== ======== ========
Diluted $ 0.03 $ 0.11 $ 0.09 $ 0.33
======== ======== ======== ========
Number of shares used
in per share calculation:
Basic 15,406 14,755 15,329 14,636
======== ======== ======== ========
Diluted 15,601 15,188 15,569 14,987
======== ======== ======== ========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
June 30, Dec. 31,
2007 2006
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 28,902 $ 11,546
Accounts receivable less allowance
for doubtful accounts
of $3,076 and $2,390 50,290 44,246
Inventories:
Raw materials and parts 26,713 28,072
Work-in-process 2,550 2,507
Finished goods 25,854 25,948
-------- --------
Total inventories 55,117 56,527
Other current assets 3,118 2,588
Related party receivables 769 2,442
Deferred tax assets 2,987 2,658
-------- --------
Total current assets 141,183 120,007
Equipment and leasehold improvements
Dies, molds and patterns 6,508 6,476
Machinery and equipment 21,502 18,475
Office furnishings and equipment 8,081 7,318
Automobiles and trucks 1,594 1,394
Leasehold improvements 3,502 4,122
-------- --------
41,187 37,785
Less accumulated depreciation
and amortization 19,222 16,498
-------- --------
Net equipment and leasehold
improvements 21,965 21,287
Goodwill 40,916 39,995
Deferred tax assets, net 17 18
Intangible assets, net 9,613 10,361
Investment in affiliates 1,706 1,374
Other assets 1,366 2,112
Non-current related party receivable 3,972 3,358
-------- --------
Total Assets $220,738 $198,512
======== ========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
June 30, Dec. 31,
2007 2006
---- ----
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 33,686 $ 28,625
Accrued expenses 24,826 19,911
Current revolving line of credit 5,237 9,103
Current maturities of other loans 3,443 2,948
Current maturities of capital leases 415 367
Related party payables 4,236 2,802
-------- --------
Total current liabilities 71,843 63,756
Term loans 11,949 5,846
Capital leases 615 671
Other liabilities 5,721 6,325
Minority interest 5,093 4,816
Deferred tax liabilities 5,971 6,320
-------- --------
Total liabilities 101,192 87,734
-------- --------
Stockholders' equity:
Preferred stock, $0.001 par
value, authorized 1,000,000
shares; none issued and outstanding
at June 30, 2007 and December 31, 2006 -- --
Common stock, $0.001 par value,
authorized 200,000,000 shares;
15,501,990 issued and 15,488,390
outstanding at June 30, 2007 and
15,192,409 issued and 15,180,481
outstanding at December 31, 2006 15 15
Additional paid-in capital 216,068 212,275
Shares held in treasury (396) (460)
Accumulated deficit (107,664) (109,077)
Accumulated other comprehensive
income 11,523 8,025
-------- --------
Total stockholders' equity 119,546 110,778
-------- --------
Total Liabilities
and Stockholders' Equity $220,738 $198,512
======== ========