Fuel Systems Solutions Reports Fourth Quarter and Year End 2010 Results

/ Source: GlobeNewswire

Fourth Quarter Revenue of $83.1 Million and $0.02 Net Loss Per Share
Full Year 2010 Revenue of $430.6 Million and EPS of $2.23
IMPCO Business Achieved Significant 2010 Revenue Growth and Profitability

NEW YORK, March 3, 2011 (GLOBE NEWSWIRE) -- Fuel Systems Solutions, Inc. (Nasdaq:FSYS) reported results for its fourth quarter and year ended December 31, 2010.

Mariano Costamagna, Fuel Systems' CEO, said, "We achieved full year 2010 revenue of $430.6 million and maintained gross margins of 31%, buoyed by continued strength in our industrial business amidst challenging market demand in Europe. For 2011, we are focused on leveraging our global investments for future growth in both our automotive and industrial businesses and further reducing our transportation cost structure in Europe to realign our expense base with current market conditions."

Matthew Beale, Fuel Systems' President, CFO and Secretary, said, "In 2010, we invested in our future growth opportunities, bolstering our transportation business with key acquisitions that together position us as leaders in the emerging US natural gas vehicle market. We also developed partnerships with fleet customers and manufacturers of CNG and LPG fleet vehicles. In Europe, we managed both ends of the new vehicle demand spectrum, and are positioned well competitively, albeit in a weaker marketplace. Our industrial business delivered renewed growth and achieved operating profitability for the full year. Looking ahead to 2011, we will continue to invest prudently in our portfolio of businesses toward achieving our target business model, building traction in our US automotive business, and right-sizing our European cost structure."

Fourth Quarter 2010 Financial Results

Revenue for the fourth quarter of 2010 was $83.1 million, compared to $163.7 million in the fourth quarter of 2009. Fourth quarter 2010 revenue was negatively impacted by approximately $8 million of foreign exchange rate fluctuations. In addition, the revenue decrease is primarily attributable to a lower level of revenue from DOEM installations after the expiration of the Italian government's 2009 incentive program, partially offset by an increase in the industrial and other automotive business and the contribution of acquisitions made in 2009. Gross profit for the fourth quarter 2010 was $18.2 million, or 22% of revenue, compared to $56.2 million, or 34% of revenue a year ago, reflecting the reduction in DOEM volumes versus last year and changes in the mix of transportation revenue, partially offset by improved margins in the industrial and other automotive business. Operating loss for the period totaled $3.2 million as compared to operating income of $33.4 million, or 20% of revenue, in the fourth quarter of 2009. This loss reflects:

  • Lower volumes and gross margin and greater R&D expenses than last year's quarter as the Company invested in new technologies;
  • The inclusion of a total of $2.9 million in costs and charges, comprised of: a $0.7 million non-cash write-down of abandoned DOEM equipment assets; a $1.0 million provision for severance and temporary worker labor costs in Italy; and $1.2 million in warranty costs associated with product replacements also in Italy;
  • Partially offset by lower SG&A

Net loss for the fourth quarter 2010 was $0.4 million, or $0.02 per diluted share, including the abovementioned expenses, as compared to net income of $19.9 million, or $1.12 per diluted share, in the fourth quarter 2009.

On segment basis, fourth quarter 2010 revenues from BRC Operations, primarily representing the Company's transportation business, decreased to $44.9 million from $141.3 million in the same quarter a year ago, and revenues from IMPCO Operations, primarily representing the Company's industrial business, increased to $41.1 million from $22.8 million in the same quarter a year ago. BRC fourth quarter 2010 operating loss was $6.3 million compared to operating income of $38.4 million in the same quarter a year ago; IMPCO fourth quarter 2010 operating income of $4.7 million reversed the operating loss of $3.3 million in the same period a year ago. A table presenting operating segment data can be found in the tables below.

Full Year Ended December 31, 2010 Financial Results

For the full year ended December 31, 2010, total revenue was $430.6 million compared to $452.3 million for the same period a year ago. Net income for the year was $39.7 million, or $2.23 per diluted share, compared to $49.8 million, or $2.95 per diluted share, for the same period a year ago. 

Company Outlook

In 2011, Fuel Systems expects continued soft European automotive trends and continued strength in the IMPCO business. As revenue growth and cost efficiencies gain traction during the year, the Company expects full year 2011 revenue to be between $375 million and $400 million and expects 2011 gross margin of 23% to 25% and 2011 operating margin of 5% to 7%. Management reiterates that it continues to target gross profit margins in excess of 25% and mid-teen EBITDA margins over the medium term.

"Through its recent investments, Fuel Systems has expanded its platform and equipped the business to capture growth opportunities in attractive geographic markets. 2011 will in some respects be a transitional year as the company completes the build-out of its North American automotive operations and expands its focus on Asia and Latin America. While these activities will impact near-term results, they will position the company to achieve its medium-term growth and profitability objective while generating solid cash flow in 2011," said Mariano Costamagna.

Conference Call

The Company will host a conference call today, March 3rd at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time to discuss its fourth quarter and year ended 2010 financial results and other matters. To listen to the call live, please dial 877-356-8063 at least 10 minutes before the start of the conference. International participants may dial 706-679-2544. The pass code for the conference call will be 40657085. The call is also being webcast and can be accessed from the "Investor Relations" section of the Company's website at www.fuelsystemssolutions.com. A telephone replay will be available until midnight ET on March 7th by dialing 800-642-1687 or 706-645-9291 and entering pass code 40657085#. A replay will also be available at the web address above for 90 days.

Forward-Looking Statements

This press release contains certain forward-looking statements that involve risks and uncertainties, including, without limitation, expressed or implied statements concerning the Company's outlook for 2011, as well as its position in the market place, the success of products and the success and integration of recent acquisitions. Such statements represent only our opinions and predictions. The Company's actual results may differ materially. Factors that may cause the Company's results to differ include, but are not limited to our ability to integrate recently acquired businesses and to realize the expected synergies; economic uncertainties caused by political instability in certain of the local markets we do business in; the potential growth of non-gaseous alternative fuel products and other new technologies; currency rate fluctuations and devaluations; our ability to realign costs with current market conditions; potential changes in tax policies and government incentives and their effect on the economic benefits of our products to consumers; the weakness in financial and credit markets and the economy;  and the repeal or implementation of government regulations relating to reducing vehicle emissions. Readers also should consider the risk factors set forth in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to, those contained in the "Risk Factors" section of the Company's Annual Report on Form 10-K, for the year ended December 31, 2009 as well as our Quarterly Reports on Form 10-Q for the period ended September 30, 2010. The Company does not undertake to update or revise any of its forward-looking statements or guidance even if experience or future changes show that the indicated results or events will not be realized.

About Fuel Systems Solutions

Fuel Systems Solutions (Nasdaq:FSYS) is a leading designer, manufacturer and supplier of proven, cost-effective alternative fuel components and systems for use in transportation and industrial applications. Fuel Systems' components and systems control the pressure and flow of gaseous alternative fuels, such as propane and natural gas, used in internal combustion engines. These components and systems feature the Company's advanced fuel system technologies, which improve efficiency, enhance power output and reduce emissions by electronically sensing and regulating the proper proportion of fuel and air required by the internal combustion engine. In addition to the components and systems, the Company provides engineering and systems integration services to address unique customer requirements for performance, durability and configuration. The Company is composed of two operating subsidiaries: IMPCO Technologies and BRC. IMPCO Technologies is a leader in the heavy duty, industrial, power generation and stationary engines sectors and recently established a U.S. Automotive division. BRC is a leader in the light duty and automobile alternative fuel sectors and has established alliances with several major automobile manufacturers for OEM projects. Additional information is available at www.fuelsystemssolutions.com

– Tables Follow –