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Stoneridge Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 30, 2010 03:18PM

Stoneridge Inc. (SRI) filed Quarterly Report for the period ended 2010-06-30. Stoneridge Inc. has a market cap of $259.9 million; its shares were traded at around $10.01 with and P/S ratio of 0.5.

SRI is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Our second quarter 2010 results were positively affected by improvements in the North American automotive and North American and European commercial vehicle markets as well as the economy as a whole. Production volumes in the North American automotive vehicle market increased by 72.7% during the quarter ended June 30, 2010 when compared to the quarter ended June 30, 2009. These automotive vehicle market production volume increases had a positive effect on our North American automotive vehicle market net sales of approximately $19.8 million, primarily within our Control Devices segment. The commercial vehicle market production volumes in North America improved by 28.3% during the quarter ended June 30, 2010 when compared to the prior year second quarter, which resulted in increased net sales of approximately $19.7 million, primarily within our Electronics segment. Our net sales were also favorably affected by increased European commercial vehicle production volumes of 58.1% during the quarter ended June 30, 2010 as compared to the prior year second quarter. This increased production volume had a positive effect on our net sales of approximately $11.9 million, principally within the Electronics segment. These increases in net sales were partially offset by unfavorable foreign currency exchange rates. Our revenues were unfavorably affected by foreign currency translation of approximately $3.0 million during the quarter ended June 30, 2010 when compared to the quarter ended June 30, 2009. Our gross margin percentage increased from 13.3% for the quarter ended June 30, 2009 to 23.8% for the quarter ended June 30, 2010, primarily due to the significant increases in sales and the leveraging of our cost structure resulting from our prior restructuring initiatives.

Our selling, general and administrative expenses (“SG&A”) increased from $27.9 million for the quarter ended June 30, 2009 to $31.4 million for the quarter ended June 30, 2010. This $3.5 million, or 12.5%, increase in SG&A was mainly due to increased compensation and compensation related expenses incurred during the quarter ended June 30, 2010 of approximately $2.0 million primarily as a result of increased incentive compensation expenses. In addition, our design and development costs increased by approximately $0.5 million between periods due to our support of new product launches by our customers.

At June 30, 2010 and December 31, 2009, we maintained a cash and equivalents balance of $74.6 million and $91.9 million, respectively. As discussed in Note 6 to the condensed consolidated financial statements, we have no borrowings under our asset-based credit facility. At June 30, 2010 and December 31, 2009, we had borrowing capacity of $71.8 million and $54.1 million, respectively.

Our Electronics segment was positively affected by increased volume in our served markets by approximately $40.9 million for the quarter ended June 30, 2010 when compared to the prior year second quarter. The increase in net sales for our Electronics segment was primarily due to volume increases in our North American and European commercial vehicle products. Commercial vehicle market production volumes in North America and Europe increased by 28.3% and 58.1%, respectively, during the quarter ended June 30, 2010 when compared to the prior year second quarter. The increase in North American and European commercial vehicle production positively affected net sales in our Electronics segment for the quarter ended June 30, 2010 by approximately $19.6 million, or 58.3%, and $11.8 million, or 69.8%, respectively. Our Electronics segment net sales were favorably affected by increased volumes within the agricultural vehicle market of approximately $7.2 million. Net sales within the Electronics segment were also favorably affected by approximately $2.2 million during the quarter ended June 30, 2010 due to the inclusion of Bolton Conductive Systems, LLC (“BCS”), which was acquired in the fourth quarter of 2009. These increases were partially offset by unfavorable foreign exchange rates. Our Electronics segment net sales were unfavorably affected by foreign currency fluctuations of approximately $3.0 million for the quarter ended June 30, 2010 when compared to the prior year second quarter.

The increase in North American net sales was primarily attributable to increased sales volume in our North American automotive, commercial and agricultural vehicle markets, which had a positive effect on our net sales for the quarter ended June 30, 2010 of $19.8 million, $19.7 million and $8.6 million, respectively. North American net sales for the quarter ended June 30, 2010 were also favorably affected by approximately $2.2 million due to the inclusion of BCS. Our increase in net sales outside North America was principally due to increased sales of European commercial vehicle market products, which had a positive effect on our net sales for the quarter ended June 30, 2010 of approximately $11.9 million. Foreign currency fluctuations negatively affected our net sales outside of North America by approximately $3.1 million during the quarter ended June 30, 2010 when compared to the quarter ended June 30, 2009.

Selling, General and Administrative Expenses. Design and development expenses are included within SG&A and were $10.0 million and $9.5 million for the second quarter of 2010 and 2009, respectively. Design and development expenses for our Electronics segment increased from $5.7 million for the quarter ended June 30, 2009 to $6.7 million for the second quarter of 2010. This increase in design and development costs was a result of our customers new product launches scheduled in the near term. Design and development expenses for our Control Devices segment decreased from $3.8 million for the second quarter of 2009 to $3.3 million for the quarter ended June 30, 2010. As a result of our product platform launches scheduled for 2010 and in the future, we believe that our design and development costs for the remainder of 2010 will increase from 2009 levels and will remain consistent to the current quarter expense. The increase in SG&A costs excluding design and development expenses was largely due to higher employee related costs of approximately $2.0 million, primarily incentive compensation. Our SG&A costs decreased as a percentage of net sales because of the significant increase in net sales recognized in the current quarter when compared to the prior year second quarter.

Read the The complete Report



Stocks Discussed: SRI,
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