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Fuel Systems Solutions Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 5, 2010 03:33PM

Fuel Systems Solutions Inc. (FSYS) filed Quarterly Report for the period ended 2010-06-30. Fuel Systems Solutions Inc. has a market cap of $520.5 million; its shares were traded at around $29.55 with a P/E ratio of 7.6 and P/S ratio of 1.1. Fuel Systems Solutions Inc. had an annual average earning growth of 87.6% over the past 5 years.

FSYS is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Revenue increased approximately $7.5 million for the three months ended June 30, 2010 compared to the prior year period. The increase in revenue was primarily due to increase in demand in the industrial market and aftermarket kits as well as revenue from companies acquired in 2009 offset by lower sales for post-productions OEM (“DOEM”) conversions. The unit volumes for our DOEM conversions decreased to approximately 19,000 for the three months ended June 30, 2010 from 37,000 for the three months ended June 30, 2009. This decrease was driven primarily by the discontinuation of the Italian government incentives which expired March 31, 2010. Research and Development costs increased approximately $1.7 million to $5.0 million compared to $3.3 million for the same period in 2009. This increase was due to increased projects in our BRC operations as well as increased costs associated from companies acquired in 2009. Selling general and administrative expenses decreased compared to the three months ended June 30, 2009. This was due to lower corporate expenses offset by increased costs associated from companies acquired in 2009. Operating income decreased by approximately $3.2 million to $9.3 million, compared to $12.5 million for the same period in 2009. Net income was $6.9 million on revenue of approximately $99.8 million for the three months ended June 30, 2010 as compared to net income of $7.4 million on revenue of approximately $92.3 million for the three months ended June 30, 2009

Results for the six months ended June 30, 2010 improved from 2009 due to the increase in revenue in the transportation market, particularly in sales for post-production OEM (“DOEM”) conversions and aftermarket kits as well as revenues from companies acquired in 2009. The unit volumes for our DOEM conversions increased to approximately 94,000 for the six months ended June 30, 2010 from 70,000 for the six months ended June 30, 2009. This increase was driven primarily by the Italian government incentives which expired March 31, 2010. Research and Development costs increased approximately $3.2 million to $9.4 million compared to $6.2 million for the same period in 2009. This increase was due to increased projects in our BRC operations as well as increased costs associated from companies acquired in 2009. Selling general and administrative expenses increased approximately $3.1 million to $26.0 million compared to $22.9 million primarily due to companies acquired in 2009. Operating income increased by approximately $30.2 million to $54.0 million, compared to $23.8 million for the same period in 2009. Net income was $34.9 million on revenue of approximately $261.4 million for the six months ended June 30, 2010 as compared to net income of $14.5 million on revenue of approximately $172.4 million for the six months ended June 30, 2009.

For the three months ended June 30, 2010, operating income decreased approximately $3.2 million or 25.8% to $9.3 million from $12.5 million for the three months ended June 30, 2009. The decrease in operating income was primarily composed of a decrease in operating income from BRC operations of $9.4 million, partially offset by an increase in IMPCO operations operating income of $5.0 million and a decrease in corporate expenses of $1.3 million.

For the six months ended June 30, 2010, operating income increased approximately $30.1 million or 126.3% to $54.0 million from $23.8 million for the same prior year period. The increase in operating income was primarily composed of an increase in operating income from BRC operations of $25.5 million, and IMPCO operations of $2.9 million and a decrease in corporate expenses of $1.7 million.

Corporate Expenses. Corporate expenses consist of general and administrative expenses at the corporate level to support our business segments in areas such as executive management, finance, human resources, management information systems, legal and accounting services and investor relations. Corporate expenses for the six months ended June 30, 2010 were $2.6 million, a decrease of $1.7 million compared to $4.3 million recorded for same period in 2009. Corporate expenses in 2010 decreased compared to 2009 primarily because of a reduction in employees in our corporate office which took place during the third quarter 2009 as well as lower outside service costs.

Our ratio of current assets to current liabilities was approximately 2:1 at June 30, 2010 and December 31, 2009, respectively. At June 30, 2010, our total working capital had increased by $7.5 million to $149.4 million from $141.8 million at December 31, 2009. This increase is primarily due to the following: (1) an increase of $60.0 million in cash; (2) a decrease in accounts payable of $16.1 million; and (3) a decrease in related party payables of approximately $6.5 million, which all were partially offset by a decrease of $55.9 in accounts receivables, a decrease of $12.8 in inventory, an increase of $16.2 million in income taxes payable. The increases in income taxes payable are primarily in our BRC operations as a result of increased operating profit.

Read the The complete Report



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