SANTA ANA, Calif., April 22, 2008 (PRIME NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) today announced strong performance for its year ended December 31, 2007, with revenue climbing 52.9 percent for the fourth quarter and 20.2 percent for the twelve months, respectively, compared with the same periods a year earlier.
The company also filed its delayed financials with the Securities and Exchange Commission on Form 10-K for 2007 following the completion of its restated financials for 2005 and 2006. The previously disclosed restatement accounted for certain necessary adjustments associated with inventory at some of its foreign subsidiaries. The restatements resulted in a $705,000 decrease in its net loss for 2005, net of taxes, or $0.05 per share.
Revenue for the fourth quarter of 2007 jumped to a record $79.7 million from $52.1 million a year earlier. Operating income for the same period climbed sharply to $9.0 million from $2.0 million in the 2006 fourth quarter. Net income for the 2007 fourth quarter was $4.8 million, or $0.31 per diluted share, compared with a net loss of $1.2 million, or ($0.08) per share, for the same period a year ago.
For the twelve months, revenue increased 20.2 percent to $265.3 million from $220.8 million a year earlier. Operating income for the same 2007 period was $19.3 million compared with $20.0 million in the prior year. Operating income in 2007 was negatively impacted by $5.4 million in expenses related to the company's voluntary historical stock option review and related restatement of historical financials completed in October 2007.
Other expense of $1.8 million for the twelve months in 2007 consisted primarily of an unrealized foreign exchange loss on an intercompany loan, compared with a $1.9 million unrealized foreign exchange loss in the same period of the prior year, primarily related to the same inter-company loan. Income tax expense, which primarily consists of foreign taxes, was $9.2 million during the twelve months of 2007 compared with $9.3 million for the same period in 2006. Net income for 2007 was $5.9 million, or $0.38 per diluted share, compared with $6.9 million, or $0.46 per share, a year earlier.
"Results for 2007 reflect a 24.7 percent increase in revenue contributions derived from the company's transportation business, or $33.6 million, and a 12.8 percent increase in the industrial business, representing additional contributions of $10.9 million," said Mariano Costamagna, president and chief executive officer.
Industry Outlook
He noted that economic, political and environmental solutions provided by increasing utilization of gaseous fuels will continue to drive the global market. "There are more than 11.4 million vehicles in the world operating on liquefied petroleum gas (LPG) and an estimated 5.8 million in Europe, as well as approximately 5.4 million vehicles operating on compressed natural gas (CNG) - with more than 813,000 on the roads in Europe. While vehicles operating on gasoline still dominate the global market, demand for CNG and LPG applications in both the transportation and industrial sectors continues to expand," Costamagna said.
He added that the company is beginning to leverage its global market position to capitalize on potential opportunities within the transportation market in the United States, with a particular focus on commercial high-volume fleet applications for its systems and components. "While there are numerous regulatory challenges in achieving certification for multiple engine platforms and the associated conversion from an internal combustion engine application to gaseous fuel operation, we expect the process will begin to accelerate -- supported by political, economic and environmental forces," Costamagna said.
He referenced the company's recent announcement regarding the introduction of a 2008 low emissions fuel system utilizing General Motor's 3.0 liter engine and designed for various off-highway industrial applications. As previously announced, this fuel system is certified to operate at emissions levels that approach Tier 4 standards scheduled to take effect in January 2010. "Utilization of gaseous fuel systems within the industrial market provides an excellent practical example for operators of transportation fleet in the Unites States, as well as elected officials and government agencies -- demonstrating reliability, environmental benefits and cost-savings derived from gaseous fuels. We look forward to working with select domestic fleet customers and the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) to accelerate utilization of gaseous fuel vehicles," Costamagna added.
Company Outlook
Based on current projections, the company is on track to achieve revenue of at least $290 million for 2008 and gross profit margin of approximately 24 percent, with operating margin of approximately nine percent.
Teleconference and Webcast
Mariano Costamagna, president and chief executive officer, and Thomas M. Costales, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific Time to discuss the company's financial results and operations for the year. The call will be open to all interested investors, either through a live audio Web broadcast via the Internet at http://fuelsystemssolutions.com or live by calling (877) 397-0297 (domestic) or (719) 325-4908 (international) with call ID number 4719056. For those who are not available to listen to the live broadcast, the call will be archived for two weeks on Fuel Systems Solutions' Web site. A telephone playback of the conference call will also be available from 4:00 p.m. Eastern Time Tuesday, April 22 through 11:59 p.m. Tuesday, May 6 by calling (888) 203-1112 (domestic) or (719) 457-0820 (international) and using access code: 4719056
Fuel Systems Solutions is a holding company with two direct wholly owned 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, through its wholly owned subsidiaries, 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
This press release contains certain forward-looking statements under the headings "Industry Outlook" and "Company Outlook" that involve risks and uncertainties, including, without limitation, expressed or implied statements concerning the company's sales expectations derived from any new customers; the potential of fleet sales initiatives and any newly introduced fuel systems; the leveraging of the company's global market position; any expected compliance with more stringent emissions regulations in future periods; and its ability to achieve 2008 revenue of approximately $290 with gross profit margin of 24 percent and operating margin of nine percent. Such statements are only predictions, and the company's actual results may differ materially. Factors that may cause the company's results to differ include, but are not limited to: risks that the company's new customers do not purchase its fuel systems as expected or that the fuel systems do not meet future emissions regulations. 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 "Risk Factors" section of the company's Annual Report on Form 10-K, for the year ended December 31, 2007. 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)
2007 2006 2007 2006
--------- --------- --------- ---------
Revenue $ 79,711 $ 52,139 $ 265,331 $ 220,816
Cost of revenue 59,550 40,500 201,200 166,663
--------- --------- --------- ---------
Gross profit 20,161 11,639 64,131 54,153
Operating expenses:
Research and
development
expense 1,852 1,739 7,946 8,056
Selling, general
and
administrative
expense 9,208 7,876 36,657 25,920
Amortization of
intangibles
acquired 81 36 249 142
--------- --------- --------- ---------
Total operating
expenses 11,141 9,651 44,852 34,118
--------- --------- --------- ---------
Operating income 9,020 1,988 19,279 20,035
Other income
(expense), net (285) (869) (1,848) (1,871)
Interest expense,
net (268) (364) (963) (705)
--------- --------- --------- ---------
Income from
operations before
income taxes and
equity share in
income of
unconsolidated
affiliates 8,467 755 16,468 17,459
Equity share in
income of
unconsolidated
affiliates 32 332 416 685
Write-off of
investment in
unconsolidated
affiliates -- (271) -- (271)
Income tax expense (3,305) (1,759) (9,159) (9,293)
--------- --------- --------- ---------
Income (loss)
before minority
interests 5,194 (943) 7,725 8,580
Minority interests
in income of
consolidated
subsidiaries (365) (281) (1,842) (1,668)
--------- --------- --------- ---------
Net income (loss) $ 4,829 $ (1,224) $ 5,883 $ 6,912
========= ========= ========= =========
Net income (loss)
per share:
Basic $ 0.31 $ (0.08) $ 0.38 $ 0.46
========= ========= ========= =========
Diluted $ 0.31 $ (0.08) $ 0.38 $ 0.46
========= ========= ========= =========
Number of shares
used in per share
calculation:
Basic 15,491 15,142 15,410 14,881
========= ========= ========= =========
Diluted 15,661 15,142 15,614 15,172
========= ========= ========= =========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
Dec. 31, Dec. 31,
2007 2006
-------- --------
(As
Restated)
ASSETS
Current assets:
Cash and cash equivalents $ 26,797 $ 11,546
Accounts receivable less allowance
for doubtful accounts of $2,399 and $2,390,
respectively 51,876 44,246
Inventories:
Raw materials and parts 33,890 28,569
Work-in-process 2,247 2,536
Finished goods 31,197 25,834
Inventory on consignment with
unconsolidated affiliates 2,991 888
-------- --------
Total inventories 70,325 57,827
Deferred tax assets 2,248 2,324
Other current assets 3,820 2,588
Related party receivables 44 2,442
-------- --------
Total current assets 155,110 120,973
Equipment and leasehold improvements:
Dies, molds and patterns 5,725 6,476
Machinery and equipment 25,049 18,475
Office furnishings and equipment 8,601 7,318
Automobiles and trucks 2,047 1,394
Leasehold improvements 4,769 4,122
-------- --------
46,191 37,785
Less accumulated depreciation and
amortization 21,151 16,498
-------- --------
Net equipment and leasehold improvements 25,040 21,287
Goodwill 46,486 39,550
Deferred tax assets, net 184 18
Intangible assets, net 13,059 10,361
Investment in unconsolidated affiliates 2,310 1,374
Non-current related party receivable 3,450 3,358
Other assets 1,731 2,112
-------- --------
Total Assets $247,370 $199,033
======== ========
FUEL SYSTEMS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
Dec. 31, Dec. 31,
2007 2006
-------- --------
(As
Restated)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 50,314 $ 28,625
Accrued expenses 19,666 19,911
Current revolving lines of credit 3,307 9,103
Current portion of term and other loans 4,791 2,948
Current portion of capital leases 428 367
Deferred tax liabilities 117 111
Related party payables 5,921 2,802
-------- --------
Total current liabilities 84,544 63,867
Term and other loans 9,449 5,846
Capital leases 431 671
Other liabilities 5,860 6,325
Minority interest 6,601 4,946
Deferred tax liabilities 5,432 5,875
-------- --------
Total liabilities 112,317 87,530
-------- --------
Stockholders' equity:
Preferred stock, $0.001 par value,
authorized 1,000,000 shares; none issued
and outstanding at December 31, 2007
and 2006 -- --
Common stock, $0.001 par value, authorized
200,000,000 shares; 15,512,798 issued and
15,499,115 outstanding at December 31,
2007 and 15,192,409 issued and 15,180,481
outstanding at December 31, 2006 15 15
Additional paid-in capital 216,483 212,275
Shares held in treasury, 13,683 and 11,928
shares at December 31, 2007 and 2006,
respectively (432) (460)
Accumulated deficit (102,696) (108,372)
Accumulated other comprehensive income 21,683 8,045
-------- --------
Total stockholders' equity 135,053 111,503
-------- --------
Total Liabilities and Stockholders'
Equity $ 247,370 $ 199,033
========= =========