Shiloh Industries, Inc. (NASDAQ: SHLO), an
environmentally focused global supplier of lightweighting, noise
and vibration solutions to the automotive, commercial vehicle and
other industrial markets, today reported financial results for its
fiscal 2020 second quarter ended April 30, 2020.
Second-Quarter 2020
Highlights:
- Revenues were $157.9 million.
- Net loss was $58.7 million, including a non-cash impairment
charge of $24.5 million.
- Adjusted EBITDA was a loss of $3.2 million.
- Cash on hand was $91.6 million as of April 30, 2020.
- Successfully implemented the comprehensive Shiloh Safe Restart
Plan to all facilities worldwide in response to COVID-19.
- Instituted numerous actions to reduce costs and preserve
liquidity, including headcount reductions and the furloughing of
employees as well as mandatory and voluntary pay and benefit
reductions.
- Achieved new customer wins, in the second quarter, with
contract revenue of $136.7 million.
- Resumed customer shipments in Q3 and continue to ramp up global
operations to serve customers as market demand recovers.
- Engaged external advisors to explore options to help further
improve the company’s long term financial position.
“As a result of market conditions, business restrictions and
other matters associated with the COVID-19 outbreak, many OEMs
suspended manufacturing operations, particularly in North America,
Europe and Asia, and these substantial disruptions significantly
impacted our financial performance during the second quarter of
2020,” said Cloyd J. Abruzzo, Interim Chief Executive Officer. “In
response to the outbreak and business disruption, we instituted
employee safety protocols to contain the spread, including domestic
and international travel restrictions, work-from-home practices,
extensive cleaning protocols, social distancing and various
temporary closures of our administrative offices and manufacturing
facilities. At the same time, the Company implemented a range of
actions aimed at reducing costs and preserving liquidity, including
temporary salary reductions ranging from 20% to 25%, temporary
reduction in board fees, reduction of discretionary spending,
mandatory vacations, headcount reduction and furloughs.”
Mr. Abruzzo continued, “As we moved into the third quarter, our
global operations began coming back online in China, Europe and
North America. Although we have experienced some expected
operational issues related to starting up plants that were shut
down for an extended period of time, we are working safely to ramp
up manufacturing and meet customer demand. We are also continuing
to work with our lenders and have engaged outside advisors to help
us evaluate options intended to strengthen Shiloh’s financial
position for the long term.”
The net loss for second quarter 2020 was $58.7 million compared
to $1.1 million of net income in the second quarter last year. The
significant loss was due to a $24.5 million non-cash impairment of
assets, $29.2 million negative impact on gross margin mainly due to
the impacts of COVID-19, higher restructuring costs and other
one-time costs incurred during the quarter to amend debt covenants.
The Company had $91.6 million of cash on hand as of April 30, 2020,
and is currently in compliance with its amended covenants under the
Tenth Amendment to the Credit Agreement (the “Tenth Amendment”),
entered into on June 11, 2020, as described below.
Amendment to Credit Agreement
As previously announced, on June 11, 2020 the Company entered
into the Tenth Amendment, pursuant to which, among other things,
the Company received a waiver of the interest coverage ratio and
leverage ratio covenants for the quarters ended April 30, 2020 and
July 31, 2020. The Company has been actively working during the
waiver period to complete a debt refinancing, evaluate additional
capital sources and review other strategic alternatives to
successfully navigate the current operating environment. The
Company believes the cash balances and any future availability on
the revolving credit facility will provide sufficient liquidity to
fund its operations during the third quarter, assuming there are no
unanticipated additional significant disruptions related to
COVID-19 or other events in the third quarter of fiscal 2020.
This press release should be read in conjunction with the
Company’s second quarter form 10-Q for further disclosure related
to the financial statements, results of operations, liquidity
position, impact of COVID-19 and risk factors for the quarter.
Investor Contact:
For inquiries, please contact our Investor Relations department
at: 1-646-378-2986 or at investors@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 propulsion systems. Shiloh’s multi-component,
multi-material solutions are comprised of a variety of alloys in
aluminum, magnesium and steel grades, along with its 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 approximately 3,150
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 derive a substantial portion of our sales from large
customers; (3) our ability to obtain future sales; (4) changes in
worldwide economic, social and political conditions, including
adverse effects from war, natural disasters, terrorism or related
hostilities; (5) the duration and severity of the COVID-19
pandemic, any preventive or protective actions taken by
governmental authorities, and the effectiveness of actions taken
globally to contain or mitigate its effects; (6) unfavorable
effects of the COVID-19 pandemic on either our manufacturing
operations, or those of our customers or suppliers; (7) reduction
in demand for our solutions, including any reduction in demand as a
result of a COVID-19 triggered economic recession, (8) including
any determination that the value of our assets is impaired or that
we do not have the ability to continue as a going concern; (9) our
ability to take advantage of programs and policies implemented in
response to COVID-19; (10) our ability to retain executive officers
or key employees to manage the day-to-day aspects of our business
and maintain our relationships with our customers and suppliers;
(11) our ability to obtain new financing with new covenants that we
are able to achieve in the future, including through an amendment
to our credit agreement, which could limit our access to current
and future financing sources; (12) our ability to access capital on
favorable terms or at all, including through our current financing
arrangements; (13) costs related to legal and administrative
matters; (14) our ability to realize cost savings expected to
offset price concessions; (15) our ability to successfully
integrate acquired businesses, including businesses located outside
of the United States; (16) risks associated with doing business
internationally, including economic, political and social
instability, foreign currency exposure and the lack of acceptance
of our products; (17) inefficiencies related to production and
product launches that are greater than anticipated; (18) changes in
technology and technological risks; (19) work stoppages and strikes
at our facilities and that of our customers or suppliers; (20) our
dependence on the automotive and commercial vehicle industries,
which are highly cyclical; (21) 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; (22) regulations and policies regarding
international trade; (23) financial and business downturns of our
customers or vendors, including any production cutbacks or
bankruptcies; (24) 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; (25) the
successful launch and consumer acceptance of new vehicles for which
we supply parts; (26) the impact on financial statements of any
known or unknown accounting errors or irregularities; (27) the
magnitude of any adjustments in restated financial statements of
our operating results; (28) 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;
(29) a successful transition of the CEO position and our ability to
successfully identify a qualified and effective full-time CEO; (30)
increases in pension plan funding requirements; and (31) other
factors besides those listed here could also materially affect our
business. See "Part I, Item 1A. Risk Factors" in our Annual Report
on Form 10-K for the fiscal year ended October 31, 2019 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 may include non-GAAP financial measures,
including “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 to 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 April
30,
Six Months Ended April
30,
2020
2019
2020
2019
Net income (loss) per common share
(GAAP)
Basic
$
(2.47
)
$
0.05
$
(2.63
)
$
(0.15
)
Tax items (1)
0.33
—
0.21
—
Asset Impairment(2)
0.80
—
0.80
—
Restructuring
0.24
0.15
0.36
0.25
Amortization of intangibles
0.01
0.02
0.03
0.03
Legal, professional fees and other
costs
0.06
0.02
0.08
0.07
Adjusted basic earnings (loss) per share
(non-GAAP)
$
(1.03
)
$
0.24
$
(1.15
)
$
0.20
(1) For the three months ended April 30, 2020, a $4,960
valuation allowance was established for net operating losses for
two European subsidiaries.
(2) Due to the impact of COVID-19 the Company determined that
Goodwill and a large idle fixed asset were impaired during the
three months ended April 30, 2020.
Adjusted EBITDA Reconciliation
Three Months Ended April
30,
Six Months Ended April
30,
2020
2019
2020
2019
Net income (loss) (1)
$
(58,707
)
$
1,112
$
(62,387
)
$
(3,586
)
Depreciation and amortization
12,047
11,498
23,911
23,358
Interest expense
4,623
3,847
8,973
7,197
Tax expense
4,507
1,448
2,240
(1,639
)
EBITDA (non-GAAP)
(37,530
)
17,905
(27,263
)
25,330
Restructuring
7,399
4,460
11,202
7,466
Legal and professional fees
820
461
1,479
2,096
Asset impairment(1)
24,471
—
24,471
—
Stock compensation
542
445
1,120
990
Other one-time costs(2)
1,130
—
1,130
—
Adjusted EBITDA (non-GAAP) (1)
$
(3,168
)
$
23,271
$
12,139
$
35,882
Adjusted EBITDA margin (non-GAAP)
(2.0
)%
8.5
%
3.0
%
6.7
%
(1) The net loss for the period of $58.7 million was primarily
attributable to the impact of COVID-19 and the corresponding
shutdown of global production for the majority of the second
quarter. The significant loss was due to a $24.5 non-cash
impairment of assets, $29.2 million negative gross margin impact
mainly due to the impact of COVID-19, higher restructuring costs
and other one-time costs incurred during the quarter including but
not limited to: i) costs attributable to the amendment of the
credit agreement, ii) incremental deep cleaning of plant equipment
and iii) other miscellaneous costs. The full financial impact of
COVID-19 cannot be estimated due to the complexity of the pandemic
impact on the Company and the overall automotive industry.
(2) Other one-time costs included costs related to the impacts
of COVID-19 such as extra cleaning costs and amendment costs.
SHILOH INDUSTRIES,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollar amounts in
thousands)
April 30, 2020
October 31, 2019
(Unaudited)
ASSETS
Cash and cash equivalents
$
91,575
$
14,320
Accounts receivable, net
88,616
172,468
Related party accounts receivable
1,186
1,477
Prepaid income taxes
2,346
1,853
Inventories, net
68,422
63,547
Prepaid expenses
6,689
8,980
Other current assets
19,366
13,354
Total current assets
278,200
275,999
Property, plant and equipment, net
312,693
328,026
Goodwill
—
22,395
Intangible assets, net
12,059
13,025
Deferred income taxes
4,471
5,169
Operating lease assets
50,984
—
Other assets
5,771
7,077
Total assets
$
664,178
$
651,691
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current debt(1)
$
347,469
$
1,975
Accounts payable
93,782
155,754
Current portion of operating lease
liabilities
7,546
—
Other accrued expenses
45,008
50,093
Accrued income taxes
—
316
Total current liabilities
493,805
208,138
Long-term debt(1)
—
248,695
Long-term benefit liabilities
23,362
24,147
Deferred income taxes
1,167
798
Noncurrent operating lease liabilities
43,440
—
Other liabilities
1,586
2,399
Total liabilities
563,360
484,177
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 per share;
5,000,000 shares authorized; no shares issued and outstanding at
April 30, 2020 and October 31, 2019, respectively
—
—
Common stock, par value $0.01 per share;
75,000,000 shares authorized at April 30, 2020 and October 31,
2019; 24,206,392 and 23,790,258 shares issued and outstanding at
April 30, 2020 and October 31, 2019, respectively
243
238
Paid-in capital
117,550
116,436
Retained earnings
53,479
115,866
Accumulated other comprehensive loss,
net
(70,454
)
(65,026
)
Total stockholders’ equity
100,818
167,514
Total liabilities and stockholders’
equity
$
664,178
$
651,691
(1) Long-term debt is classified as current in the condensed
consolidated balance sheet as of April 30, 2020, because the
waivers for the pre-existing financial covenants expire in less
than twelve months and the company will not comply with future
covenants based on current forecasts.
SHILOH INDUSTRIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Amounts in thousands, except
per share data)
(Unaudited)
Three Months EndedApril
30,
Six Months Ended April
30,
2020
2019
2020
2019
Net revenues
$
157,928
$
273,370
$
401,414
$
532,303
Cost of sales
158,453
244,691
382,650
489,933
Gross profit
(525
)
28,679
18,764
42,370
Selling, general & administrative
expenses
16,191
16,879
32,895
32,964
Amortization of intangible assets
512
519
1,024
1,040
Asset impairment, net
24,471
—
24,471
—
Restructuring
7,399
4,460
11,202
7,466
Operating income (loss)
(49,098
)
6,821
(50,828
)
900
Interest expense
4,627
3,848
8,983
7,203
Interest income
(4
)
(1
)
(10
)
(6
)
Other (income) expense, net
479
414
346
(1,072
)
Income (loss) before income taxes
(54,200
)
2,560
(60,147
)
(5,225
)
Provision (benefit) for income taxes
4,507
1,448
2,240
(1,639
)
Net income (loss)
$
(58,707
)
$
1,112
$
(62,387
)
$
(3,586
)
Loss per share:
Basic loss per share
$
(2.47
)
$
0.05
$
(2.63
)
$
(0.15
)
Basic weighted average number of common
shares
23,785
23,516
23,719
23,450
Diluted loss per share
$
(2.47
)
$
0.05
$
(2.63
)
$
(0.15
)
Diluted weighted average number of common
shares
23,785
23,559
23,719
23,450
SHILOH INDUSTRIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollar amounts in
thousands)
(Unaudited)
Six months ended April
30,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(62,387
)
$
(3,586
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
23,911
23,358
Asset impairment
24,471
—
Restructuring
271
1,272
Amortization of deferred financing
costs
1,054
596
Deferred income taxes
896
(2,739
)
Stock-based compensation expense
1,120
990
Loss (gain) on sale of assets
665
(4,156
)
Loss on marketable securities
—
25
Changes in operating assets and
liabilities:
Accounts receivable, net
87,373
25,456
Inventories, net
(6,318
)
7,196
Prepaids and other assets
(194
)
2,432
Payables and other liabilities
(70,875
)
(33,669
)
Prepaid and accrued income taxes
(520
)
(4,419
)
Net cash (used in) provided by operating
activities
(533
)
12,756
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(18,847
)
(33,248
)
Derivative settlements
—
5,855
Proceeds from sale of assets
77
12,339
Net cash used in investing activities
(18,770
)
(15,054
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital leases
(201
)
(370
)
Proceeds from long-term borrowings
144,700
140,700
Repayments of long-term borrowings
(47,700
)
(138,200
)
Net cash provided by financing
activities
96,799
2,130
Effect of foreign currency exchange rate
fluctuations on cash
(241
)
985
Net increase in cash and cash
equivalents
77,255
817
Cash and cash equivalents at beginning of
period
14,320
16,843
Cash and cash equivalents at end of
period
$
91,575
$
17,660
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200723005877/en/
Kevin Doherty investors@shiloh.com 1-646-378-2986
Shiloh Industries (NASDAQ:SHLO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Shiloh Industries (NASDAQ:SHLO)
Historical Stock Chart
From Apr 2023 to Apr 2024