Fourth quarter revenue increased to $84.3 million, up 6% compared to
fourth quarter 2007
2008 revenue grew to $382.7 million, increasing 44% compared to 2007
2008 earnings per share reached $1.48, compared to $0.38 in 2007
SANTA ANA, Calif., March 5, 2009 (GLOBE NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) reported results for its fourth quarter and year ended December 31, 2008.
Corporate Highlights
* Achieved record revenues and profitability - Full Year 2008 compared
to 2007:
* Revenue increased to $382.7 million, up 44.2% from $265.3 million.
* Gross profit reached $108.6 million, or 28.4% of revenue, compared
to $64.1 million, or 24.2% of revenue.
* Operating income grew to $46.1 million, or 12.0% of revenues,
compared to $19.3 million, or 7.3% of revenues.
* Net income was $23.3 million, which included a $3.9 million non-cash
goodwill impairment charge, an increase from $5.9 million.
* Earnings per share were $1.48 per diluted share, up from $0.38 per
diluted share.
* Accomplished goals to broaden its capabilities, expand operations and
optimize production:
* Launched U.S. Automotive Alternative Fuels Division in February 2009.
* Acquired Distribuidora Shopping S.A. (DS) in Buenos Aires in January
2009, reinforcing the natural gas vehicle product line, diversifying
global manufacturing capacity and expanding the distribution
footprint.
* Increased capacity to meet demand to approximately 800,000
conversions annually.
* Expanded delayed original equipment manufacturing (DOEM) conversion
capacity to more than 100,000 vehicles, up from 17,000 at the
beginning of the year.
* Invested in the company's next generation of fuel injection
industrial fuel systems to be fitted on engines certified to comply
with the new 2010 emissions standards.
* Eliminated certain intercompany debt obligations and solidified
liquidity position:
* Repaid $10.8 million in principal and unpaid interest to retire
intercompany MTM loan.
* Secured access to liquidity through the establishment of two credit
facilities; IMPCO U.S. credit line for $13.0 million and MTM Italy
credit line for ?15.0 million, or approximately $20.0 million.
"2008 was a transformational year," said Mariano Costamagna, Fuel System Solutions' CEO. "We achieved critical mass and demonstrated the strength of our business model. Fuel Systems Solutions posted record revenues and, more notably in the current economic context, record profitability. Our earnings capacity and our ability to deliver our engineering and manufacturing capabilities across a variety of end-user markets distinguish Fuel Systems in the alternative energy sector."
Fourth Quarter Financial Results
Revenue for the 2008 fourth quarter was $84.3 million, up 5.7% from revenue of $79.7 million in the fourth quarter of 2007. The increase in revenues was primarily due to strong performance in the transportation business. Gross profit for the 2008 fourth quarter reached $21.9 million and represented 26.0% of revenue, compared to $20.2 million, or 25.3% of revenue, in the fourth quarter of 2007, reflecting the change in the product mix. Cost of sales for the 2008 fourth quarter reflects a $2.1 million increase in the provision for excess and obsolete inventory. Net income for the fourth quarter of 2008 was $641,000, compared to $4.8 million for the fourth quarter of 2007. Net income for the fourth quarter of 2008 included a $1.1 million increase in the provision for the loan receivable from the company's unconsolidated WMTM joint venture, a $1.0 million in foreign currency exchange loss, a $900,000 increase in provision for accounts receivable, and $800,000 in costs related to the acquisition of DS. Earnings per share for the fourth quarter of 2008 were $0.04 per diluted share, compared to $0.31 per diluted share in the fourth quarter of 2007.
Full Year 2008 Financial Results
For the year ended December 31, 2008, total revenues were $382.7 million, compared to $265.3 million for 2007. Net income for the year was $23.3 million, which included the aforementioned $5.9 million of additional provisions and expenses recorded in the fourth quarter, and $3.9 million non-cash goodwill impairment charge recorded in the second quarter, compared to $5.9 million in 2007. 2008 earnings per share were $1.48 per diluted share, compared to $0.38 per diluted share in 2007.
Company Outlook
"We are proud of our 2008 success and excited about our 2009 plans," said Matthew Beale, President of Fuel Systems Solutions. "In 2009, our management team believes that Fuel Systems Solutions will reach a variety of milestones as we continue to invest in our infrastructure to capitalize on highly favorable medium-term market drivers and execute our growth strategy. In 2009, we intend to:
* Launch new technology solutions that maintain our position at the leading edge of regulatory change; * Evaluate strategic acquisition opportunities; and * Leverage our greater capacity.
Growth often lags the investments which drive it, so we expect near-term profitability to be impacted by the initiatives we are implementing and the global economic slowdown. As much as our 2008 results validate our investments made in prior years, we expect our 2009 projects to contribute to sustaining our growth trajectory in future periods."
Based on the current market outlook, the company expects 2009 revenue to be between $330.0 million and $360.0 million. The revenue guidance assumes a stronger U.S. Dollar that is estimated to negatively impact 2009 annual revenue by approximately 12.0%. During 2008, the average U.S. Dollar to Euro exchange rate was approximately 1.50, while the exchange rate assumption used in the 2009 revenue estimates is 1.30. Management expects the gross and operating margins to be impacted from the planned investment in the business. As such, the company is targeting 2009 gross margin between 25.0% and 27.0% and 2009 operating margin to be between 10.0% and 12.0%.
"We remain excited about our business and believe we are optimally positioned as a leader in our market verticals," said Beale. "In 2008, we demonstrated Fuel Systems Solutions' ability to grow and profitably deliver alternative fuel solutions to our customers. We look forward to the continued implementation and execution of our growth strategy in 2009."
Conference Call
The company will host a conference call on March 6 at 10:00 a.m. Pacific Time / 1:00 p.m. Eastern Time to discuss its fourth quarter 2008 financial results. To listen to the call live, please dial 877-356-8063 at least 10 minutes before the start of the conference. International participants may dial 706-679-2544. The pass code for the conference call will be 85950335. The call is also being webcast and can be accessed from the "Investor Relations" section of the company's website at www.fuelsystemssolutions.com. A telephone replay will be available until midnight ET on March 20 by dialing 800-642-1687 or 706-645-9291 and entering pass code 85950335#. A replay will also be available at the web address above for 90 days.
Forward-Looking Statements
This press release contains forward-looking statements under the heading "Company Outlook" that involve risks and uncertainties, including, without limitation, expressed or implied statements concerning the Company's intention to launch new technology solutions, evaluate strategic acquisition opportunities and leverage its greater capacity and the Company's ability to achieve 2009 revenue between $330 million and $360 million with gross profit margin between 25 percent and 27 percent and operating margin between 10 percent and 12 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 original equipment automobile manufacturers do not adopt the Company's fuel systems as expected, that expected sales not based on long-term contracts will materialize, that changes in emissions regulations will not significantly impact demand for the Company's products, that a global economic downturn may reduce customers' demand for our products, that reduction in oil prices will reduce the demand for our products and that currency fluctuations will reduce our revenue or financial condition. 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, 2007 and for the Company's Quarterly Report on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2008. 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.
About Fuel Systems Solutions
Fuel Systems Solutions, Inc. (Nasdaq:FSYS), a U.S.-based company, through its U.S. and foreign subsidiaries, delivers alternative fuel solutions for transportation and industrial applications that reduce emissions, displace petroleum and generate savings, which is extremely relevant today. The Company is comprised of two subsidiaries, industrial under IMPCO Technologies and transportation under BRC. 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 and North America. BRC, through its 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, Australia and South America. Additional information is available at www.fuelsystemssolutions.com.
FUEL SYSTEMS SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
December 31, Year Ended
(unaudited) December 31,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenue $ 84,274 $ 79,711 $ 382,697 $ 265,331
Cost of revenue 62,399 59,550 274,060 201,200
--------- --------- --------- ---------
Gross profit 21,875 20,161 108,637 64,131
Operating expenses:
Research and development
expense 2,833 1,852 11,069 7,946
Selling, general and
administrative expense 14,638 9,208 47,198 36,657
Amortization of intangible
assets 82 81 364 249
Goodwill impairment loss -- -- 3,907 --
--------- --------- --------- ---------
Total operating expenses 17,553 11,141 62,538 44,852
--------- --------- --------- ---------
Operating income 4,322 9,020 46,099 19,279
Other expense, net (1,071) (285) (1,865) (1,848)
Interest expense, net (71) (268) (514) (963)
--------- --------- --------- ---------
Income before income taxes,
equity share in income of
unconsolidated affiliates
and extraordinary gain 3,180 8,467 43,720 16,468
Equity share in income of
unconsolidated affiliates 435 32 454 416
Income tax expense (2,974) (3,305) (20,161) (9,159)
--------- --------- --------- ---------
Income before minority
interests and extraordinary
gain 641 5,194 24,013 7,725
Minority interests in income
of consolidated subsidiaries -- (365) (914) (1,842)
--------- --------- --------- ---------
Income before extraordinary
gain 641 4,829 23,099 5,883
Extraordinary gain -- -- 243 --
--------- --------- --------- ---------
Net income $ 641 $ 4,829 $ 23,342 $ 5,883
========= ========= ========= =========
Basic earnings per share:
Income before extraordinary
gain $ 0.04 $ 0.31 $ 1.47 $ 0.38
========= ========= ========= =========
Extraordinary gain $ -- $ -- $ 0.02 $ --
========= ========= ========= =========
Net Income $ 0.04 $ 0.31 $ 1.49 $ 0.38
========= ========= ========= =========
Diluted earnings per share:
Income before extraordinary
gain $ 0.04 $ 0.31 $ 1.46 $ 0.38
========= ========= ========= =========
Extraordinary gain $ -- $ -- $ 0.02 $ --
========= ========= ========= =========
Net Income $ 0.04 $ 0.31 $ 1.48 $ 0.38
========= ========= ========= =========
Number of shares used in per
share calculation:
Basic 15,746 15,491 15,649 15,410
========= ========= ========= =========
Diluted 15,835 15,661 15,789 15,614
========= ========= ========= =========
FUEL SYSTEMS SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31, December 31,
2008 2007
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 26,477 $ 26,797
Accounts receivable less allowance for
doubtful accounts of $3,293 and $2,399 at
December 31, 2008 and 2007, respectively 70,009 51,876
Inventories:
Raw materials and parts 38,110 33,890
Work-in-process 1,700 2,247
Finished goods 51,068 31,197
Inventory on consignment with
unconsolidated affiliates 1,732 2,991
--------- ---------
Total inventories 92,610 70,325
Deferred tax assets 5,734 2,248
Other current assets 5,749 3,820
Related party receivables 69 44
--------- ---------
Total current assets 200,648 155,110
--------- ---------
Equipment and leasehold improvements:
Dies, molds and patterns 3,889 5,725
Machinery and equipment 25,996 25,049
Office furnishings and equipment 11,198 8,601
Automobiles and trucks 2,235 2,047
Leasehold improvements 8,098 4,769
--------- ---------
51,416 46,191
Less accumulated depreciation and
amortization 23,744 21,151
--------- ---------
Net equipment and leasehold improvements 27,672 25,040
--------- ---------
Goodwill 41,295 46,486
Deferred tax assets, net 174 184
Intangible assets, net 10,021 13,059
Investment in unconsolidated affiliates 3,334 2,310
Non-current related party receivable -- 3,450
Other assets 4,183 1,731
--------- ---------
Total Assets $ 287,327 $ 247,370
========= =========
FUEL SYSTEMS SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31, December 31,
2008 2007
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 65,224 $ 49,402
Accrued expenses 34,212 19,666
Current revolving lines of credit 2,413 3,307
Current portion of term loans and other
loans 4,470 4,791
Current portion of capital leases 192 428
Deferred tax liabilities 112 117
Related party payables 11,263 6,833
--------- ---------
Total current liabilities 117,886 84,544
Term loans 4,689 9,449
Capital leases 238 431
Other liabilities 6,256 5,860
Minority interest 2 6,601
Deferred tax liabilities 4,301 5,432
--------- ---------
Total liabilities 133,372 112,317
--------- ---------
Stockholders' equity:
Preferred stock, $0.001 par value,
authorized 1,000,000 shares; none issued
and outstanding at December 31, 2008 and
2007, respectively -- --
Common stock, $0.001 par value, authorized
200,000,000 shares; 15,801,745 issued and
15,749,783 outstanding at December 31,
2008; and 15,512,798 issued and 15,499,115
outstanding at December 31, 2007 16 15
Additional paid-in capital 220,270 216,483
Shares held in treasury, 51,962 shares at
December 31, 2008 and 13,683 shares at
December 31, 2007 (1,399) (432)
Accumulated deficit (79,354) (102,696)
Accumulated other comprehensive income 14,422 21,683
--------- ---------
Total stockholders' equity 153,955 135,053
--------- ---------
Total Liabilities and Stockholders'
Equity $ 287,327 $ 247,370
========= =========
FUEL SYSTEMS SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
----------------------
Cash flows from operating activities: 2008 2007
--------- ---------
Net income $ 23,342 $ 5,883
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of intangibles arising from
acquisitions 2,784 2,259
Depreciation and other amortization 6,502 4,961
Provision for doubtful accounts 1,268 (124)
Provision for inventory reserve 5,366 625
Goodwill impairment loss 3,907 --
Minority interests in income of
consolidated affiliates 914 1,842
Extraordinary gain (243) --
Provision for loan to unconsolidated
affiliate 1,650 583
Equity share in income of unconsolidated
affiliates (454) (416)
Compensation expense related to stock
option and restricted stock grants 419 436
Unrealized loss on foreign exchange
transactions 396 1,923
Loss on disposal of assets 341 29
Dividends from unconsolidated affiliates 228 --
Changes in assets and liabilities
Increase in deferred income taxes (4,475) (2,219)
Increase in accounts receivable (21,906) (2,906)
Increase in inventories (29,841) (3,747)
(Increase) decrease in other current assets (2,290) 170
(Increase) decrease in other assets (441) 439
Increase in accounts payable 17,371 16,047
(Decrease) increase in accrued expenses 16,300 (2,431)
(Decrease) increase in long-term
liabilities 618 (1,166)
Payables to related party - net 4,625 4,380
--------- ---------
Net cash provided by operating activities 26,381 26,568
--------- ---------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (10,675) (5,974)
Payments for purchase of Zavoli, net of
cash acquired of $399 -- (8,136)
Down payment for purchase of Distribuidora
Shopping and Tomasetto Achille (2,000) --
Purchases of minority interest in
consolidated subsidiaries (6,311) --
Purchase of intangible assets (193) --
Proceed from sale of assets 129 16
--------- ---------
Net cash used in investing activities (19,050) (14,094)
--------- ---------
Cash flows from financing activities:
Decrease in revolving lines of credit, net (847) (5,944)
Payments on term and other loans (4,567) (2,815)
Proceeds from term loans -- 6,738
Payments of capital lease obligations (505) (415)
(Purchase of)/proceeds from the sale of
common shares held in trust, net (100) 91
Dividend paid to minority interests in
consolidated subsidiaries (900) (822)
Proceeds from exercise of stock options and
warrants 2,403 3,683
--------- ---------
Net cash (used in) provided by financing
activities (4,516) 516
--------- ---------
Effect of exchange rate changes on cash (3,135) 2,261
Net increase (decrease) in cash and cash
equivalents (320) 15,251
Cash and cash equivalents at beginning of
period 26,797 11,546
--------- ---------
Cash and cash equivalents at end of period $ 26,477 $ 26,797
========= =========
Supplemental disclosure of cash flow
information:
Non-cash investing and financing
activities:
Acquisition of equipment under capital
lease $ 80 $ 216
Issuance of 5,321 shares and 4,980 shares
of restricted stock in 2008 and
2007, respectively $ 99 $ 89