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Stoneridge Inc. Reports Operating Results (10-Q)

May 10, 2011 | About:
10qk

10qk

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Stoneridge Inc. (SRI) filed Quarterly Report for the period ended 2011-03-31.

Stoneridge Inc has a market cap of $373.3 million; its shares were traded at around $14.36 with a P/E ratio of 26.1 and P/S ratio of 0.6.

Highlight of Business Operations:

After the change in our method for valuing inventory (see below and Note 2 to the Financial Statements), we recognized net income for the quarter ended March 31, 2011 of $2.9 million, or $0.12 per diluted share, compared with net income of $1.9 million, or $0.08 per diluted share, for the first quarter of 2010. The increase in our profitability was primarily due to the improvement of the markets that we serve, which resulted in increased sales volume in the current quarter.

Our first quarter 2011 net sales were positively affected by improvements in the North American automotive and North American and European commercial vehicle markets. Production volumes in the North American automotive vehicle market increased by 15.6% during the first quarter of 2011 when compared to the first quarter of 2010. This automotive vehicle market production volume increase had a positive effect on our North American automotive vehicle market net sales of approximately $6.3 million, primarily within our Control Devices segment. The commercial vehicle market production volumes in North America improved by 39.7% during the first quarter of 2011 when compared to the prior year first quarter, which resulted in increased net sales of approximately $11.5 million, primarily within our Electronics segment. Our net sales were also favorably affected by increased European commercial vehicle production volumes of 66.0% during the first quarter of 2011 as compared to the prior year first quarter, which had a positive effect on our net sales of approximately $10.5 million, principally within the Electronics segment. Our 2011 first quarter net sales were further favorably affected by approximately $8.3 million, primarily within the Electronics segment, due to production volume increases within the agricultural vehicle market. Our net sales to the agricultural vehicle market as a percentage of total net sales increased from 16.4% for the first quarter of 2010 to 17.9% for the first quarter of 2011. These increases in net sales were favorably affected by foreign currency exchange rates of approximately $2.1 million during the first quarter of 2011 when compared to the first quarter of 2010.

Our selling, general and administrative expenses (“SG&A”) increased from $29.6 million for the first quarter of 2010 to $32.6 million for the first quarter of 2011. This $3.0 million, or 10.2% increase in SG&A was due to several expenses, the largest being compensation and compensation related expenses. Excluding product development, our compensation and compensation related expenses increased by approximately $0.8 million from the prior year, primarily as a result of increased share-based compensation expenses and merit increases. In addition, our design and development costs increased by approximately $0.6 million between periods due to new product launches by our customers.

At March 31, 2011 and December 31, 2010, we maintained a cash and equivalents balance of $53.2 million and $72.0 million, respectively. Our cash and equivalents balance declined during the current quarter as a result of increased working capital requirements. As discussed in Note 7 to the condensed consolidated financial statements, we have no borrowings under our asset-based credit facility. At March 31, 2011 and December 31, 2010, we had borrowing capacity of $78.8 million and $61.3 million, respectively.

Our Electronics segment was positively affected by increased volume in our served markets by approximately $29.1 million for the first quarter of 2011 when compared to the prior year first 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 39.7% and 66.0%, respectively, during the first quarter of 2011 when compared to the prior year first quarter. The increase in North American and European commercial vehicle production positively affected net sales in our Electronics segment for the first quarter of 2011 by approximately $10.0 million, or 23.2% and $10.5 million, or 43.5%, respectively. Net sales within our Electronics segment were also favorably affected by approximately $7.6 million as a result of production volume increases in the agricultural vehicle market during the first quarter of 2011 when compared to the prior year first quarter. In addition, the Electronics segment net sales were favorably affected by foreign currency fluctuations of approximately $2.1 million for the first quarter of 2011 when compared to the first quarter of 2010.

The increase in North American net sales was primarily attributable to increased sales volume in our North American commercial, agricultural and automotive vehicle markets. These increased volume levels had a positive effect on our net sales for the first quarter of 2011 of $11.5 million, $8.3 million and $6.3 million for our North American commercial, agricultural and automotive vehicle markets, respectively. Our increase in net sales outside North America was primarily due to increased sales of European commercial vehicle market products, which had a positive effect on our net sales for the first quarter of 2011 of approximately $10.5 million. In addition, our first quarter 2011 net sales outside of North America were positively affected by foreign currency fluctuations of approximately $2.1 million.

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