Stoneridge reported financial results for the second quarter ended June 30.
According to a release from the Company, second-quarter 2014 net sales were $162.1 million, a decrease of $7.7 million, or 4.6 percent, compared with $169.8 million for the second quarter of 2013. The decrease in the current quarter's net sales was due to decreased sales in the PST segment, which were partially offset by increased sales to European commercial vehicle customers in the Company's Electronics business segment and increased sales to North American automotive customers in the Company's Control Devices segment.
The Company's Control Devices segment recorded an increase in sales of $2.0 million, or 2.7 percent, and the Electronics segment recorded a $4.1 million, or 8.4 percent, increase compared with the second quarter of 2013. The increases reflect continued strength in these markets. These increases were offset by lower sales from the Company's PST business segment, which experienced a decrease of $13.8 million, or 29.5 percent, compared with the second quarter of 2013, caused by worsening economic conditions in Brazil and Argentina.
The second quarter 2014 net loss from continuing operations of $(0.79) per diluted share included a $29.3 million, or $0.85 per diluted share, non-cash goodwill impairment charge for PST. Excluding the PST goodwill impairment charge the Company would have recorded net income from continuing operations of $1.6 million, or $0.06 per share. In the second quarter of 2013 the Company had net income of $5.8 million, or $0.21 per diluted share. The decrease in net income was primarily due to lower sales by PST across all of its product lines sold in Brazil, the overall Brazilian economy which grew less than 2 percent GDP in the second quarter, a significant slowdown in the automotive market and mass merchandisers/dealers who experienced a significant drop-off in consumer spending in the second quarter.
As of June 30, Stoneridge's consolidated cash position was $45.8 million, a decrease of $17.1 million from December 31, 2013. The change in the cash balance was primarily due to increases in the Wiring business working capital of $6.8 million which occurred in the first quarter and higher inventories at PST from lower-than- expected sales.
John Corey, President and Chief Executive Officer, commented, "Our Electronics and Control Devices segments continued to perform well, though PST's sales were lower than we were expecting as the Brazilian economy has weakened further which resulted in consumer uncertainty. Our PST management team continues to execute additional aggressive cost reduction programs to reduce headcount, lower selling and administrative expenses, reduce overhead costs and source components from Asia directly from design houses to lower raw material costs and partially offset some of the impact from the economic slowdown."
Corey added, "We continue to reposition the Company with the completion of the Wiring transaction on August 1. Using proceeds from this transaction, we have begun the process to de-lever the Company by calling 10 percent of our Senior Secured Notes, or $17.5 million in principal, on August 1."
Corey concluded, "Though the Brazilian economy continued to deteriorate in the second quarter of 2014, PST actually performed better at the gross margin line in the second quarter through improved labor efficiency and better mix. We expect the cost reductions discussed previously, as well as lower debt balances, will better position us to deliver the results in line with our previous guidance. With a modest second-half improvement that we are expecting in the Brazilian market, we anticipate reaching our full- year 2014 guidance for earnings per share from continuing operations of $0.55-$0.75 per share. This guidance excludes the goodwill impairment charge and any non-recurring charges for deferred financing fees for the refinancing initiative we expect to accomplish early in the fourth quarter. Our estimate for continuing operations also includes lower expected interest expense from lower debt balances and interest rates estimated to be $0.10 per share."
Stoneridge is an independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems principally for the commercial vehicle, automotive and agricultural, motorcycle and off-highway vehicle markets.
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