Shiloh Industries Reports Third Quarter Fiscal 2017 Results
August 29 2017 - 7:00AM
Shiloh Industries, Inc. (NASDAQ:SHLO), a leading
global supplier of lightweighting, noise, and vibration solutions
to the automotive, commercial vehicle and other industrial markets,
today reported financial results for its third quarter of fiscal
2017 ended July 31, 2017.
Third Quarter 2017 Highlights (compared to Third Quarter
2016):
- Net revenue increased to $256.8 million compared to $248.8
million.
- Gross margin increased 160 basis points to 11.2 percent
compared to 9.6 percent, benefiting from favorable product mix and
operational efficiencies.
- Gross profit increased 21 percent to $28.9 million.
- Net loss of $2.0 million includes a $3.6 million foreign tax
valuation allowance to fully reserve certain deferred tax assets
compared to a net loss of $0.7 million.
- Net loss per share of $0.11 includes $0.13 from the foreign tax
valuation allowance compared to a net loss per share of $0.04.
- Adjusted earnings per share more than doubled to $0.07 from
$0.03.
- Adjusted EBITDA margin increased 60 basis points to 7.2
percent, compared to 6.6 percent.
- Adjusted EBITDA increased 12 percent to $18.4 million.
- New product wins represented an expected $157 million in sales
over the life-of-programs.
"Our third quarter results demonstrate the
significant progress Shiloh has achieved as we continue to execute
our product strategy and provide innovative lightweighting
solutions,” said Ramzi Hermiz, President and Chief Executive
Officer of Shiloh Industries. “We delivered positive growth in
revenue, gross margin and EBITDA and remain well positioned to
benefit from long-term trends impacting the mobility industry, such
as global fuel efficiency and emission standards and electric and
autonomous vehicle adoption. We expect these drivers to
remain in place in the coming years, increasing the demand for our
lightweighting products and technologies.”
Shiloh to Host Conference Call Today at
8:00 A.M. ETShiloh will host a conference call on Tuesday,
August 29 at 8:00 A.M. Eastern Time to discuss Shiloh's 2017 third
quarter fiscal financial results. The conference call can be
accessed by dialing 1-877-407-0784, or for international callers,
1-201-689-8560. Please dial-in approximately five minutes in
advance and request the Shiloh third quarter fiscal 2017 results
conference call. A replay will be available after the call
and can be accessed by dialing 1-844-512-2921, or for international
callers, 1-412-317-6671. The passcode for the replay is 13666653.
The replay will be available until September 19, 2017.
Interested investors and other parties may also listen to a
simultaneous webcast of the conference call by logging onto the
Investor Relations section of Shiloh's website at
www.shiloh.com.
Investor Contact:
For inquiries, please contact Thomas Dugan, Vice
President, Finance and Treasurer at: 1-330-558-2600 or at
investor@shiloh.com.
About Shiloh Industries,
Inc.
Shiloh Industries, Inc. (NASDAQ:SHLO) is a
global innovative solutions provider focusing on lightweighting
technologies that provide environmental and safety benefits to the
mobility market. Shiloh designs and manufactures products
within body structure, chassis and powertrain systems, leveraging
one of the broadest portfolios in the industry. Shiloh’s
multi-component, multi-material solutions are comprised of a
variety of alloys in aluminum, magnesium and steel grades, along
with Shiloh's proprietary line of noise and vibration reducing
ShilohCore™ acoustic laminate products. The strategic
BlankLight®, CastLight® and StampLight® brands combine to maximize
lightweighting solutions without compromising safety or
performance. Shiloh has over 3,600 dedicated employees with
operations, sales and technical centers throughout Asia, Europe and
North America.
Forward-Looking Statements
Certain statements made by Shiloh in this press
release regarding our operating performance, events or developments
that we believe or expect to occur in the future, including those
that discuss strategies, goals, outlook or other non-historical
matters, or which relate to future sales, earnings expectations,
cost savings, awarded sales, volume growth, earnings or general
belief in our expectations of future operating results are
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements are made on the basis of management's assumptions and
expectations. As a result, there can be no guarantee or
assurance that these assumptions and expectations will in fact
occur. The forward-looking statements are subject to risks
and uncertainties that may cause actual results to materially
differ from those contained in the statements due to a variety of
factors, including (1) our ability to accomplish our strategic
objectives; (2) our ability to obtain future sales; (3) changes in
worldwide economic and political conditions, including adverse
effects from terrorism or related hostilities; (4) costs related to
legal and administrative matters; (5) our ability to realize cost
savings expected to offset price concessions; (6) our ability to
successfully integrate acquired businesses, including businesses
located outside of the United States; (7) risks associated with
doing business internationally, including economic, political and
social instability, foreign currency exposure and the lack of
acceptance of our products; (8) inefficiencies related to
production and product launches that are greater than anticipated;
(9) changes in technology and technological risks; (10) work
stoppages and strikes at our facilities and that of our customers
or suppliers; (11) our dependence on the automotive and heavy truck
industries, which are highly cyclical; (12) the dependence of the
automotive industry on consumer spending, which is subject to the
impact of domestic and international economic conditions affecting
car and light truck production; (13) regulations and policies
regarding international trade; (14) financial and business
downturns of our customers or vendors, including any production
cutbacks or bankruptcies; (15) increases in the price of, or
limitations on the availability of aluminum, magnesium or steel,
our primary raw materials, or decreases in the price of scrap
steel; (16) the successful launch and consumer acceptance of new
vehicles for which we supply parts; (17) the impact on financial
statements of any known or unknown accounting errors or
irregularities; and the magnitude of any adjustments in restated
financial statements of our operating results; (18) the occurrence
of any event or condition that may be deemed a material adverse
effect under our outstanding indebtedness or a decrease in customer
demand which could cause a covenant default under our outstanding
indebtedness; (19) pension plan funding requirements; and (20)
other factors besides those listed here could also materially
affect our business. See "Part II, Item 1A. Risk Factors" in our
Quarterly Report on Form 10-Q for the quarter ended July 31,
2017 for a more complete discussion of these risks and
uncertainties. Any or all of these risks and uncertainties
could cause actual results to differ materially from those
reflected in the forward-looking statements. These forward-looking
statements reflect management's analysis only as of the date of
this press release. We undertake no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date of filing this press release. In addition
to the disclosures contained herein, readers should carefully
review risks and uncertainties contained in other documents we file
from time to time with the SEC.
Non-GAAP Financial Measures
This press release includes the following
non-GAAP financial measures: “EBITDA,” “adjusted EBITDA," "adjusted
EBITDA margin" and "adjusted earnings per share." We define
EBITDA as net income / (loss) before interest, taxes, depreciation
and amortization. We define adjusted EBITDA as net income / (loss)
before interest, taxes, depreciation, amortization, and other
adjustments as described in the reconciliations accompanying this
press release. We define adjusted EBITDA margin as adjusted
EBITDA divided by net revenues as shown in the reconciliations
accompanying this press release. Adjusted earnings per share
excludes certain income and expense items as shown in the
reconciliation accompanying this press release. We use EBITDA,
adjusted EBITDA, adjusted EBITDA margin and adjusted earnings per
share as supplements to information provided in accordance with
generally accepted accounting principles ("GAAP") in evaluating our
business and they are included in this press release because they
are principal factors upon which our management assesses
performance. Reconciliations of these non-GAAP financial measures
to the most directly comparable financial measures calculated in
accordance with GAAP are set forth below. The non-GAAP measures
presented in this release are not measures of performance under
GAAP. These measures should not be considered as alternatives for
the most directly comparable financial measures calculated in
accordance with GAAP. Other companies in our industry may
define these non-GAAP measures differently than we do and, as a
result, these non-GAAP measures may not be comparable to similarly
titled measures used by other companies; and certain of our
non-GAAP financial measures exclude financial information that some
may consider important in evaluating our performance. Given
the inherent uncertainty regarding special items and other expenses
in any future period, a reconciliation of forward-looking financial
measures to the most directly comparable financial measures
calculated and presented in accordance with GAAP is not feasible.
The magnitude of these items, however, may be significant.
Adjusted Earnings Per Share Reconciliation
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income (loss) per common share (GAAP) |
|
|
|
|
|
|
|
Basic |
|
$ |
(0.11 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
$ |
(0.09 |
) |
|
Tax valuation
reserve |
|
|
0.13 |
|
|
— |
|
|
0.13 |
|
|
— |
|
|
Plant optimization
activities |
|
|
— |
|
|
0.04 |
|
|
0.07 |
|
|
0.04 |
|
|
Amortization of
intangibles |
|
|
0.02 |
|
|
0.02 |
|
|
0.06 |
|
|
0.06 |
|
|
Asset impairment |
|
|
— |
|
|
— |
|
|
0.03 |
|
|
0.01 |
|
|
Marketable
securities |
|
|
0.03 |
|
|
— |
|
|
0.03 |
|
|
— |
|
|
Professional fees |
|
|
— |
|
|
— |
|
|
0.06 |
|
|
0.07 |
|
|
Foreign
adjustments |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
0.01 |
|
Basic adjusted earnings per share (non-GAAP) |
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
$ |
0.39 |
|
|
$ |
0.10 |
|
Adjusted EBITDA Reconciliation |
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net income (loss) (GAAP) |
|
$ |
(1,982 |
) |
|
$ |
(678 |
) |
|
$ |
229 |
|
|
$ |
(1,596 |
) |
|
Depreciation and
amortization |
10,846 |
|
|
9,462 |
|
|
30,946 |
|
|
28,385 |
|
|
Interest expense,
net |
3,784 |
|
|
4,645 |
|
|
12,794 |
|
|
13,511 |
|
|
Income taxes |
4,439 |
|
|
1,344 |
|
|
6,686 |
|
|
(203 |
) |
EBITDA (non-GAAP) |
17,087 |
|
|
14,773 |
|
|
50,655 |
|
|
40,097 |
|
|
Plant optimization
activities |
— |
|
— |
|
1,000 |
|
|
1,978 |
|
|
1,000 |
|
|
Stock compensation
expense |
555 |
|
|
333 |
|
|
1,372 |
|
|
784 |
|
|
Asset impairment |
— |
|
|
— |
|
|
915 |
|
|
273 |
|
|
Marketable
securities |
803 |
|
|
— |
|
|
873 |
|
|
— |
|
|
Professional fees |
— |
|
|
— |
|
|
1,557 |
|
|
1,800 |
|
|
Foreign
adjustments |
— |
|
|
350 |
|
|
— |
|
|
350 |
|
Adjusted EBITDA (non-GAAP) |
|
$ |
18,445 |
|
|
$ |
16,456 |
|
|
$ |
57,350 |
|
|
$ |
44,304 |
|
Adjusted EBITDA margin (non-GAAP) |
7.2 |
% |
|
6.6 |
% |
|
7.4 |
% |
|
5.6 |
% |
SHILOH INDUSTRIES, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
(Dollar amounts in thousands) |
|
|
July 31, 2017 |
|
October 31,
2016 |
|
ASSETS: |
|
|
|
Cash and cash
equivalents |
$ |
14,271 |
|
|
$ |
8,696 |
|
Investment in
marketable securities |
177 |
|
|
174 |
|
Accounts receivable,
net of allowance for doubtful accounts of $686 and $790 at July 31,
2017and October 31, 2016, respectively |
156,465 |
|
|
183,862 |
|
Related-party accounts
receivable |
359 |
|
|
1,235 |
|
Prepaid income
taxes |
3,260 |
|
|
1,653 |
|
Inventories, net |
62,234 |
|
|
60,547 |
|
Prepaid expenses and
other assets |
32,377 |
|
|
36,986 |
|
Total
current assets |
269,143 |
|
|
293,153 |
|
Property, plant and
equipment, net |
267,465 |
|
|
265,837 |
|
Goodwill |
28,126 |
|
|
27,490 |
|
Intangible assets,
net |
15,593 |
|
|
17,279 |
|
Deferred income
taxes |
6,318 |
|
|
9,974 |
|
Other assets |
8,241 |
|
|
12,696 |
|
Total
assets |
$ |
594,886 |
|
|
$ |
626,429 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
|
|
|
Current debt |
$ |
1,427 |
|
|
$ |
2,023 |
|
Accounts payable |
148,089 |
|
|
158,514 |
|
Other accrued
expenses |
44,298 |
|
|
40,824 |
|
Accrued income
taxes |
395 |
|
|
1,686 |
|
Total
current liabilities |
194,209 |
|
|
203,047 |
|
Long-term debt |
177,276 |
|
|
256,922 |
|
Long-term benefit
liabilities |
23,508 |
|
|
23,312 |
|
Deferred income
taxes |
10,371 |
|
|
4,734 |
|
Interest rate swap
agreement |
2,702 |
|
|
5,036 |
|
Other liabilities |
849 |
|
|
588 |
|
Total
liabilities |
408,915 |
|
|
493,639 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity: |
|
|
|
Preferred
stock, $.01 per share; 5,000,000 shares authorized; no shares
issued andoutstanding at July 31, 2017 and October 31, 2016,
respectively |
— |
|
|
— |
|
Common
stock, par value $.01 per share; 50,000,000 shares authorized;
23,123,792and 17,614,057 shares issued and outstanding at July 31,
2017 and October 31, 2016,respectively |
231 |
|
|
176 |
|
Paid-in
capital |
112,034 |
|
|
70,403 |
|
Retained
earnings |
118,902 |
|
|
118,673 |
|
Accumulated other comprehensive loss, net |
(45,196 |
) |
|
(56,462 |
) |
Total stockholders’ equity |
185,971 |
|
|
132,790 |
|
Total liabilities and stockholders’ equity |
$ |
594,886 |
|
|
$ |
626,429 |
|
|
|
|
|
|
|
|
|
SHILOH INDUSTRIES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
(Amounts in thousands, except per share
data) |
|
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net revenues |
|
$ |
256,847 |
|
|
$ |
248,832 |
|
|
$ |
777,816 |
|
|
$ |
784,151 |
|
Cost of sales |
|
227,992 |
|
|
224,922 |
|
|
691,945 |
|
|
718,071 |
|
Gross
profit |
|
28,855 |
|
|
23,910 |
|
|
85,871 |
|
|
66,080 |
|
Selling, general &
administrative expenses |
|
21,251 |
|
|
17,546 |
|
|
63,134 |
|
|
51,882 |
|
Amortization of
intangible assets |
|
565 |
|
|
566 |
|
|
1,694 |
|
|
1,695 |
|
Asset impairment |
|
— |
|
|
— |
|
|
41 |
|
|
273 |
|
Operating
income |
|
7,039 |
|
|
5,798 |
|
|
21,002 |
|
|
12,230 |
|
Interest expense |
|
3,785 |
|
|
4,645 |
|
|
12,797 |
|
|
13,517 |
|
Interest income |
|
(1 |
) |
|
— |
|
|
(3 |
) |
|
(6 |
) |
Other expense |
|
798 |
|
|
487 |
|
|
1,293 |
|
|
518 |
|
Income
(loss) before income taxes |
|
2,457 |
|
|
666 |
|
|
6,915 |
|
|
(1,799 |
) |
Provision (benefit) for
income taxes |
|
4,439 |
|
|
1,344 |
|
|
6,686 |
|
|
(203 |
) |
Net
income (loss) |
|
$ |
(1,982 |
) |
|
$ |
(678 |
) |
|
$ |
229 |
|
|
$ |
(1,596 |
) |
Income (loss) per
share: |
|
|
|
|
|
|
|
|
Basic
income (loss) per share |
|
$ |
(0.11 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
$ |
(0.09 |
) |
Basic
weighted average number of common shares |
|
18,559 |
|
|
17,614 |
|
|
18,048 |
|
|
17,614 |
|
Diluted
income (loss) per share |
|
$ |
(0.11 |
) |
|
$ |
(0.04 |
) |
|
$ |
0.01 |
|
|
$ |
(0.09 |
) |
Diluted
weighted average number of common shares |
|
18,559 |
|
|
17,614 |
|
|
18,073 |
|
|
17,614 |
|
SHILOH INDUSTRIES, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
(Dollar amounts in thousands) |
|
|
Nine Months Ended July 31, |
|
|
2017 |
|
2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net
income (loss) |
|
$ |
229 |
|
|
$ |
(1,596 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
30,946 |
|
|
28,385 |
|
Asset
impairment, net |
|
41 |
|
|
273 |
|
Amortization of deferred financing costs |
|
2,495 |
|
|
1,873 |
|
Deferred
income taxes |
|
7,202 |
|
|
7,672 |
|
Stock-based compensation expense |
|
1,372 |
|
|
784 |
|
(Gain)
loss on sale of assets |
|
474 |
|
|
(76 |
) |
Other
than temporary impairment on marketable securities |
|
695 |
|
|
— |
|
Changes
in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
30,260 |
|
|
39,749 |
|
Inventories |
|
(698 |
) |
|
(5,635 |
) |
Prepaids and other assets |
|
6,191 |
|
|
5,383 |
|
Payables and other liabilities |
|
(6,810 |
) |
|
(25,913 |
) |
Prepaid and accrued income taxes |
|
(2,879 |
) |
|
(1,379 |
) |
Net cash provided by operating
activities |
|
69,518 |
|
|
49,520 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Capital
expenditures |
|
(32,564 |
) |
|
(18,023 |
) |
Net
proceeds from sale of (investment in) joint venture |
|
1,170 |
|
|
(1,500 |
) |
Proceeds
from sale of assets |
|
7,515 |
|
|
1,350 |
|
Net cash used for investing
activities |
|
(23,879 |
) |
|
(18,173 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Payment
of capital leases |
|
(646 |
) |
|
(541 |
) |
Proceeds
from long-term borrowings |
|
117,700 |
|
|
102,900 |
|
Repayments of long-term borrowings |
|
(196,984 |
) |
|
(141,874 |
) |
Payment
of deferred financing costs |
|
(221 |
) |
|
(308 |
) |
Proceeds
from exercise of stock options |
|
78 |
|
|
— |
|
Proceeds
from the issuance of common stock |
|
40,236 |
|
|
— |
|
Net cash used for financing
activities |
|
(39,837 |
) |
|
(39,823 |
) |
Effect of foreign
currency exchange rate fluctuations on cash |
|
(227 |
) |
|
(48 |
) |
Net increase (decrease)
in cash and cash equivalents |
|
5,575 |
|
|
(8,524 |
) |
Cash and cash
equivalents at beginning of period |
|
8,696 |
|
|
13,100 |
|
Cash and cash
equivalents at end of period |
|
$ |
14,271 |
|
|
$ |
4,576 |
|
|
|
|
|
|
Supplemental Cash Flow
Information: |
|
|
|
|
Cash paid
for interest |
|
$ |
10,305 |
|
|
$ |
11,543 |
|
Cash paid
for (refund of) income taxes |
|
1,538 |
|
|
(5,702 |
) |
|
|
|
|
|
Non-cash
Activities: |
|
|
|
|
Capital
equipment included in accounts payable |
|
$ |
3,554 |
|
|
$ |
2,896 |
|
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