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SEC Filings, Earing Reports, Press Releases
Stoneridge Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2009 07:19PM
Stoneridge Inc. (SRI) filed Quarterly Report for the period ended 2009-09-30.
Highlight of Business Operations:
We recognized a net loss for the quarter ended September 30, 2009 of $0.9 million, or $(0.04) per diluted share, compared with net loss of $0.4 million, or $(0.02) per diluted share, for the third quarter of 2008. The decrease in net income was primarily due to the severe reduction in sales volume that we experienced in all of our markets. However the reduction in net income was mitigated by the benefits of previous restructuring and cost-reduction initiatives.
Our third quarter 2009 results were negatively affected by the continued decline in the North American and European commercial and North American light vehicle markets as well as the economy as a whole. Production volumes in North American light vehicle declined by 20.6% during the quarter ended September 30, 2009 when compared to the quarter ended September 30, 2008. These production volume reductions had a negative effect on our Control Devices segment net sales of approximately $2.1 million. The commercial vehicle market production volumes in Europe and North America declined by 68.6% and 38.4%, respectively during the current quarter when compared to the prior year third quarter, which resulted in lower net sales for our Electronics segment of approximately $49.1 million. In aggregate these production declines had an unfavorable effect on our consolidated net sales of approximately $51.2 million for the quarter ended September 30, 2009. Product pricing had a minimal affect on our current quarter net sales when compared to our net sales for the third quarter of 2008. Our gross margin percentage increased from 19.8% for the quarter ended September 30, 2008 to 23.0% for the current quarter. Restructuring charges included in prior year cost of goods sold of approximately $2.1 million had a negative affect of approximately 1.2% on the gross margin percentage for the quarter ended September 30, 2008. There were no restructuring charges included in current quarter cost of goods sold.
Our selling, general and administrative expenses (“SG&A”) decreased from $31.7 million for the quarter ended September 30, 2008 to $23.1 million for the quarter ended September 30, 2009. This $8.6 million or 27.1% decrease in SG&A, was primarily due to reduced compensation and compensation related expenses incurred during the quarter ended September 30, 2009 of approximately $6.2 million as a result of lower headcount and incentive compensation expenses. The reduction of current quarter SG&A expenses is largely due to cost benefits realized in the current quarter from prior period restructuring initiatives. In addition, our design and development costs decreased between periods due to customers delaying new product launches in the near term as well as planned reductions in our design activities. Our design and development costs declined by approximately $3.3 million between the two periods, which was primarily attributable to our Electronics segment. In addition to our restructuring initiatives, we have reduced discretionary spending in 2009, which has reduced our current quarter cost structure.
At September 30, 2009 and December 31, 2008, we maintained a cash and cash equivalents balance of $84.4 million and $92.7 million, respectively. As discussed in Note 6 to the condensed consolidated financial statements, we have no borrowings under our asset-based credit facility. At September 30, 2009 and December 31, 2008, we had borrowing capacity of $51.5 million and $57.7 million, respectively based upon eligible current assets.
Selling, General and Administrative Expenses. Design and development expenses included in SG&A were $6.9 million and $10.2 million for the quarters ended September 30, 2009 and 2008, respectively. Design and development expenses for our Electronics and Control Devices segments decreased from $6.2 million and $4.0 million for the quarter ended September 30, 2008 to $3.6 million and $3.3 million for the quarter ended September 30, 2009, respectively. The decrease in design and development costs was a result of our customers delaying new product launches in the near term as well as planned reductions in our design activities. The decrease in SG&A costs excluding design and development expenses was due to lower employee related costs of approximately $4.2 million due to reduced headcount and lower incentive compensation expenses company-wide. These current quarter cost reductions were primarily due to prior period restructuring initiatives. Our SG&A costs increased as a percent of sales because net sales declined faster than we were able to reduce our SG&A costs.
Restructuring Charges. Costs from our restructuring initiatives for the quarter ended September 30, 2009 decreased compared to the third quarter of 2008. Costs incurred during the quarter ended September 30, 2009 related to restructuring initiatives amounted to approximately $1.3 million and was comprised of one-time termination benefits. These restructuring costs were general and administrative in nature and were included in our condensed consolidated statements of operations as restructuring charges. During the current quarter we consolidated certain marketing and administrative positions at two of our Control Devices facilities and we initiated additional restructuring actions in our Electronics segment in response to the depressed conditions in the European and North American commercial vehicle markets. Third quarter 2008 restructuring expenses were approximately $4.8 million and were comprised of one-time termination benefits and line-transfer expenses related to our initiative to improve the Company s manufacturing efficiency and cost position by ceasing manufacturing operations at our Control Devices segment facility in Sarasota, Florida and our Electronics segment facility in Mitcheldean, United Kingdom. Restructuring expenses of $2.7 million that were general and administrative in nature were included in the Company s condensed consolidated statements of operations as restructuring charges, while the remaining $2.1 million of restructuring related expenses were included in cost of goods sold.