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 fiscal 2018 second-quarter
and six months ended April 30, 2018.
Second-Quarter 2018 Highlights:
- Revenues increased 8.9% to $297.3 million as compared to
second-quarter 2017
- Gross profit was $31.5 million and margin of 10.6%
- Net income was $4.0 million or 17 cents per diluted share
- Adjusted EBITDA was $20.3 million and margin of 6.8%
First-Half 2018 Highlights (compared to First-Half
2017):
- Revenues increased 4.6% to $545.0 million
- Gross profit increased 3.1% to $59.4 million
- Net income increased 302% to $8.9 million
- Net income per diluted share increased 217% to 38 cents per
diluted share
- Adjusted EBITDA was $36.8 million
"Shiloh remained on track with our plan in the
second quarter given the significant plant and product launch
activity as we converted more of our wins from recent years into
commercial production," said Ramzi Hermiz, president and chief
executive officer, of Shiloh Industries, Inc.
Strategic HighlightsOn March 1,
Shiloh completed the strategic acquisition of Brabant Alucast Italy
and Brabant Alucast Netherlands. This acquisition expands Shiloh’s
technology portfolio with the addition of aluminum casting
capabilities in Europe. The deal also brought additional magnesium
capacity supporting growing customer demand for this level of
lightweight performance. Shiloh is one of the leading
automotive structural magnesium component manufacturers
globally.
“As we look forward, we see meaningful
opportunity to improve profitability of the newly acquired
business. That improvement, coupled with our efforts to drive
performance in the base business, has us well positioned to achieve
our margin targets,” according to Hermiz.
Additionally, Shiloh celebrated the opening of:
(1) its new aluminum products facility in China, which is well
positioned to support the growing local electric vehicle market in
Asia, (2) its new structural magnesium die casting operation in
Clarksville, Tennessee, and (3) its new engineering lab in
Plymouth, Michigan.
Restructuring ActionsDuring the
second quarter, Shiloh incurred restructuring expense of $1.5
million related to a strategic action initiated in the
fourth-quarter of fiscal 2017. This action is designed to improve
future profitability and competitiveness as the company continues
to proactively address the shift in consumer preferences to trucks
and SUVs away from passenger cars and the desire to increase
flexibility to manage cyclical changes.
2018 OutlookShiloh is
reaffirming its adjusted EBITDA guidance range for 2018 of $73
million to $76 million which includes minimal contribution from the
Brabant acquisition, considering acquisition and integration costs
and headwinds from increasing raw material and launch costs.
This guidance reflects an adjusted EBITDA margin range of 7.0% to
7.2% as a result of the acquisition’s current lower margin
contribution. Additionally, the company continues to expect annual
capital expenditures to remain approximately 4% to 5% of
revenue.
Shiloh to Host Conference Call Today at
8:00 A.M. ETShiloh will host a conference call on
Wednesday, June 6, 2018 at 8:00 A.M. Eastern Time to discuss
Shiloh's second-quarter 2018 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 second-quarter 2018 financial
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 13680451. The replay will be available until June 27, 2018.
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 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 over 4,200 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
Annual Report on Form 10-K for the fiscal year ended
October 31, 2017 and "Part II, Item 1A. Risk Factors" in our
Quarterly Report on Form 10-Q for the quarter ended April 30,
2018 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 before interest, taxes, depreciation and
amortization. We define adjusted EBITDA as net income 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 EndedApril 30, |
|
Six Months EndedApril 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income per common share (GAAP) |
|
|
|
|
|
|
|
Diluted |
$0.17 |
|
$0.24 |
|
$0.38 |
|
$0.12 |
Tax Cuts and Jobs Act, impact |
— |
|
— |
|
(0.14) |
|
— |
Restructuring |
0.05 |
|
— |
|
0.10 |
|
— |
Amortization of intangibles |
0.02 |
|
0.02 |
|
0.04 |
|
0.04 |
Asset impairment |
— |
|
0.03 |
|
— |
|
0.03 |
Legal and professional fees |
— |
|
0.07 |
|
0.01 |
|
0.14 |
Adjusted diluted earnings per share (non-GAAP) |
$0.24 |
|
$0.36 |
|
$0.39 |
|
$0.33 |
Adjusted EBITDA Reconciliation |
Three Months EndedApril 30, |
|
Six Months EndedApril 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income (GAAP) |
$ |
4,025 |
|
|
$ |
4,229 |
|
|
$ |
8,883 |
|
|
$ |
2,211 |
|
Depreciation and amortization |
11,298 |
|
|
10,382 |
|
|
21,414 |
|
|
20,100 |
|
Interest expense, net |
2,642 |
|
|
4,200 |
|
|
4,977 |
|
|
9,010 |
|
Provision (benefit) for income taxes |
218 |
|
|
2,323 |
|
|
(2,840 |
) |
|
2,247 |
|
EBITDA (non-GAAP) |
18,183 |
|
|
21,134 |
|
|
32,434 |
|
|
33,568 |
|
Restructuring |
1,483 |
|
|
— |
|
|
2,997 |
|
|
— |
|
Legal and professional fees |
83 |
|
|
1,992 |
|
|
367 |
|
|
3,535 |
|
Stock compensation expense |
526 |
|
|
420 |
|
|
1,042 |
|
|
817 |
|
Asset impairment |
— |
|
|
944 |
|
|
— |
|
|
985 |
|
Adjusted EBITDA (non-GAAP) |
$ |
20,275 |
|
|
$ |
24,490 |
|
|
$ |
36,840 |
|
|
$ |
38,905 |
|
Adjusted EBITDA margin (non-GAAP) |
6.8 |
% |
|
9.0 |
% |
|
6.8 |
% |
|
7.5 |
% |
|
|
SHILOH INDUSTRIES,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Dollar amounts in thousands) |
|
|
April 30,2018 |
|
October 31,2017 |
|
(Unaudited) |
|
|
ASSETS: |
|
|
|
Cash and cash
equivalents |
$ |
17,613 |
|
|
$ |
8,736 |
|
Investments in
marketable securities |
64 |
|
|
194 |
|
Accounts receivable,
net |
203,962 |
|
|
188,664 |
|
Related-party accounts
receivable |
2,187 |
|
|
759 |
|
Prepaid income
taxes |
1,235 |
|
|
338 |
|
Inventories, net |
69,712 |
|
|
61,812 |
|
Prepaid expenses and
other assets |
40,284 |
|
|
34,018 |
|
Total
current assets |
335,057 |
|
|
294,521 |
|
Property, plant and
equipment, net |
327,734 |
|
|
266,891 |
|
Goodwill |
28,290 |
|
|
27,859 |
|
Intangible assets,
net |
16,157 |
|
|
15,025 |
|
Deferred income
taxes |
5,540 |
|
|
6,338 |
|
Other assets |
7,149 |
|
|
7,949 |
|
Total
assets |
$ |
719,927 |
|
|
$ |
618,583 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current debt |
$ |
1,162 |
|
|
$ |
2,027 |
|
Accounts payable |
182,736 |
|
|
166,059 |
|
Accrued income
taxes |
721 |
|
|
1,628 |
|
Other accrued
expenses |
51,442 |
|
|
46,171 |
|
Total
current liabilities |
236,061 |
|
|
215,885 |
|
Long-term debt |
255,560 |
|
|
181,065 |
|
Long-term benefit
liabilities |
21,156 |
|
|
21,106 |
|
Deferred income
taxes |
5,829 |
|
|
9,166 |
|
Other liabilities |
1,583 |
|
|
3,040 |
|
Total
liabilities |
520,189 |
|
|
430,262 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity: |
|
|
|
Preferred
stock, $.01 per share; 5,000,000 shares authorized; no shares
issued andoutstanding at April 30, 2018 and October 31, 2017,
respectively |
— |
|
|
— |
|
Common
stock, par value $.01 per share; 50,000,000 shares authorized;
23,408,314 and23,121,957 shares issued and outstanding at April 30,
2018 and October 31, 2017, respectively |
234 |
|
|
231 |
|
Paid-in
capital |
113,424 |
|
|
112,351 |
|
Retained
earnings |
126,859 |
|
|
117,976 |
|
Accumulated other comprehensive loss, net |
(40,779 |
) |
|
(42,237 |
) |
Total
stockholders’ equity |
199,738 |
|
|
188,321 |
|
Total
liabilities and stockholders’ equity |
$ |
719,927 |
|
|
$ |
618,583 |
|
|
|
SHILOH INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
INCOME(Amounts in thousands, except per share
data) |
|
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net revenues |
$ |
297,340 |
|
|
$ |
273,031 |
|
|
$ |
545,006 |
|
|
$ |
520,969 |
|
Cost of sales |
265,837 |
|
|
239,527 |
|
|
485,613 |
|
|
463,361 |
|
Gross
profit |
31,503 |
|
|
33,504 |
|
|
59,393 |
|
|
57,608 |
|
Selling, general &
administrative expenses |
22,146 |
|
|
21,677 |
|
|
43,386 |
|
|
41,847 |
|
Amortization of
intangible assets |
595 |
|
|
564 |
|
|
1,160 |
|
|
1,129 |
|
Asset impairment,
net |
— |
|
|
— |
|
|
— |
|
|
41 |
|
Restructuring |
1,483 |
|
|
— |
|
|
2,997 |
|
|
— |
|
Operating
income |
7,279 |
|
|
11,263 |
|
|
11,850 |
|
|
14,591 |
|
Interest expense |
2,645 |
|
|
4,200 |
|
|
4,985 |
|
|
9,012 |
|
Interest income |
(3 |
) |
|
— |
|
|
(8 |
) |
|
(2 |
) |
Other expense, net |
394 |
|
|
511 |
|
|
830 |
|
|
1,123 |
|
Income
before income taxes |
4,243 |
|
|
6,552 |
|
|
6,043 |
|
|
4,458 |
|
Provision (benefit) for
income taxes |
218 |
|
|
2,323 |
|
|
(2,840 |
) |
|
2,247 |
|
Net
income |
$ |
4,025 |
|
|
$ |
4,229 |
|
|
$ |
8,883 |
|
|
$ |
2,211 |
|
Income per share: |
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
0.17 |
|
|
$ |
0.24 |
|
|
$ |
0.38 |
|
|
$ |
0.12 |
|
Basic
weighted average number of common shares |
23,222 |
|
|
17,858 |
|
|
23,164 |
|
|
17,788 |
|
Diluted
earnings per share |
$ |
0.17 |
|
|
$ |
0.24 |
|
|
$ |
0.38 |
|
|
$ |
0.12 |
|
Diluted
weighted average number of common shares |
23,357 |
|
|
17,888 |
|
|
23,311 |
|
|
17,809 |
|
|
|
SHILOH INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Dollar amounts in thousands) |
|
|
Six Months Ended April 30, |
|
2018 |
|
2017 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net
income |
$ |
8,883 |
|
|
$ |
2,211 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
21,414 |
|
|
20,100 |
|
Asset
impairment, net |
— |
|
|
41 |
|
Amortization of deferred financing costs |
621 |
|
|
1,663 |
|
Deferred
income taxes |
(2,949 |
) |
|
(834 |
) |
Stock-based compensation expense |
1,042 |
|
|
817 |
|
Loss on
sale of assets |
60 |
|
|
765 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
2,294 |
|
|
1,769 |
|
Inventories |
1,287 |
|
|
860 |
|
Prepaids
and other assets |
(4,445 |
) |
|
6,248 |
|
Payables
and other liabilities |
(6,705 |
) |
|
(125 |
) |
Accrued
income taxes |
(1,442 |
) |
|
392 |
|
Net cash
provided by operating activities |
20,060 |
|
|
33,907 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Capital
expenditures |
(23,772 |
) |
|
(17,983 |
) |
Acquisitions, net of cash required |
(62,481 |
) |
|
— |
|
Proceeds
from sale of assets |
70 |
|
|
642 |
|
Net cash
used in investing activities |
(86,183 |
) |
|
(17,341 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Payment
of capital leases |
(448 |
) |
|
(360 |
) |
Proceeds
from long-term borrowings |
174,900 |
|
|
87,100 |
|
Repayments of long-term borrowings |
(100,161 |
) |
|
(100,855 |
) |
Payment
of deferred financing costs |
(103 |
) |
|
(221 |
) |
Proceeds
from exercise of stock options |
33 |
|
|
78 |
|
Net cash
provided by (used in) financing activities |
74,221 |
|
|
(14,258 |
) |
Effect of foreign
currency exchange rate fluctuations on cash |
779 |
|
|
122 |
|
Net increase in cash
and cash equivalents |
8,877 |
|
|
2,430 |
|
Cash and cash
equivalents at beginning of period |
8,736 |
|
|
8,696 |
|
Cash and cash
equivalents at end of period |
$ |
17,613 |
|
|
$ |
11,126 |
|
|
|
|
|
Supplemental Cash Flow
Information: |
|
|
|
Cash paid
for interest |
$ |
4,913 |
|
|
$ |
7,321 |
|
Cash paid
for income taxes |
2,344 |
|
|
1,199 |
|
|
|
|
|
Non-cash
Activities: |
|
|
|
Capital
equipment included in accounts payable |
$ |
3,536 |
|
|
$ |
2,697 |
|
Shiloh Industries (NASDAQ:SHLO)
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