Shiloh Industries Reports Third Quarter 2015 Results

VALLEY CITY, Ohio, Sept. 14, 2015 /PRNewswire/ -- Shiloh Industries, Inc. (NASDAQ: SHLO) today reported financial results for the third quarter ended July 31, 2015.

Third Quarter 2015 Highlights:

• Sales revenue for the quarter was $275.2 million, an increase of 27.2 percent compared to the prior year quarter.
• Gross profit for the quarter was $20.2 million, compared to $22.1 million in the prior year quarter.
• SG&A for the quarter was 4.4 percent of sales, an improvement of 103 basis points compared to the prior year quarter.
• Net income per diluted share for the quarter was $0.11, which included a negative $0.16 impact from lower scrap metal market pricing.
• EBITDA for the quarter was $16.4 million, which included a negative $4.3 million impact from lower scrap metal market pricing.
• Launched and received production approval for 146 new products during the quarter, compared to 61 in the prior year quarter; year-to-date launched and received production approval for 272 new products compared to 126 in the prior year period.
• New product wins from 18 different customers, representing an expected $420 million in sales over the life-of-program; year-to-date life-of-program awarded wins are expected to be $1.2 billion in sales.

"Our differentiated technology is increasingly being recognized in the marketplace, creating new business opportunities for Shiloh. We have achieved a number of important new business wins and record product launches across our portfolio that will drive growth and profitability in the years to come. Importantly, our role in the value chain continues to expand with advanced design responsibilities for many of our new product wins versus the legacy build-to-print model," said Ramzi Hermiz, president and chief executive officer. Hermiz continued, "Although we experienced some near-term headwinds in the quarter, we are confident in our long-term strategy given our leading technology and favorable position in the automotive lightweighting market."

Third Quarter 2015 Financial Review

Sales revenue for the third quarter of fiscal 2015 increased to $275.2 million, a 27.2 percent improvement compared with third quarter of fiscal 2014. Sales revenue during the quarter was negatively impacted by market pricing for scrap metal of $4.3 million and foreign currency translation of $2.7 million.

Gross profit was $20.2 million compared with $22.1 million for the third quarter of fiscal 2014. Gross profit as a percent of sales was 7.4 percent compared to the 10.2 percent in the third quarter of fiscal 2014. Scrap metal pricing softness, foreign currency exchange, and plant inefficiencies due to the ramp up of significant new product launches, impacted the gross profit results in the quarter.

Selling, general and administrative costs were $12.2 million, or 4.4 percent of sales revenue compared with $11.8 million, or 5.5 percent of sales revenue in the prior year. The 103 basis point year-over-year improvement in SG&A as a percent of sales was attributable to expense control and acquisition synergies.

EBITDA for the third quarter was $16.4 million, compared to $17.1 million in the prior year quarter. EBITDA would have been $20.7 million excluding the previously mentioned $4.3 million headwind from scrap metal pricing.    

Net income for the quarter was $2.0 million, or $0.11 per diluted share, compared with $8.3 million, or $0.49 per diluted share in the prior year quarter. The decline in net income was driven by lower operating income, higher interest expense and significantly higher income taxes compared to the year ago quarter. Our effective income tax rate was 55.6 percent during the third quarter of 2015, compared to 3.9 percent for the year ago period.  The prior year quarter results included one-time research and development tax credits of $2.4 million, or $0.14 per diluted share. The higher effective tax rate is the result of the expiration of certain credits, timing of certain deductions, foreign currency and certain foreign losses with no related tax benefit in the quarter.

As of July 31, 2015, cash and cash equivalents were $6.6 million, total debt was $260.4 million, and stockholders' equity was $146.6 million. 

Recent Events

During the third quarter of 2015 Shiloh launched and received production approval for 146 new products, compared to 61 in the prior year quarter. Year to date, there have been 272 launches and production approvals. The Company generally incurs upfront ramp-up expenses associated with new product launches prior to revenue generation.

Shiloh benefited from several important new global client wins driven by our leading technology-based solutions, including from three premium European automotive manufacturers. New product wins during the third quarter from these three manufacturers are expected to generate revenue of approximately $230 million of the expected $420 million in total new product wins over the life- of-program, beginning in 2017.

Shiloh began shipments from its new die casting facility in Clarksville, Tennessee during the quarter. This important new facility is an example of the investment that Shiloh is making to expand capacity of its leading technology-based solutions in strategically located geographies.  This facility will play a key role in supporting the growth from our new customer wins.

Financial Restatement

On September 9, 2015, the Company filed a notification of late filing with the Securities and Exchange Commission disclosing that the Company was investigating the accounting for certain costs at its Wellington, Ohio facility.  This investigation determined that previously reported financial results for this facility had been overstated and that this overstatement was attributable to the accounting for inventoried costs, the majority of which was associated with a surcharge assessed on steel. The Company has taken steps to remediate the internal control deficiencies, including replacing the financial leader at the Company's Wellington facility, continuing to evaluate additional organizational changes, reassigning detailed reconciliations of interrelated accounts to experienced employees from both corporate and plant personnel, implementing new internal reporting procedures, retraining employees in key internal control measures, utilizing subject matter experts across different facilities and enhancing management oversight over the Company's Wellington facility until remediation is completed. The financial statements for the three-month period ended January 31, 2015 and the 3- and 6-month periods ended April 30, 2015 were included in the Company's Quarterly Reports on Form 10-Q filed on March 11, 2015 and June 5, 2015, respectively. Today the Company filed amended Quarterly Reports on Form 10-Q to correct the misstatements and related disclosures.The impact of the restatement on reported net income was a reduction of $1.2 million for the first quarter of 2015 and $800,000 for the second quarter of 2015.

Shiloh to Host Conference Call Today at 5:30 P.M. EDT

Shiloh Industries will host a conference call on Monday, September 14th at 5:30 P.M. Eastern Daylight Time to discuss the Company's 2015 third-quarter 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 ten minutes in advance and request the Shiloh Industries third quarter conference call.  A replay will be available two hours after the call and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517.  The passcode for the replay is 13618438.  The replay will be available until September 17, 2015.  Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company's website at www.shiloh.com.

For inquiries, please contact Thomas Dugan, Vice President Finance and Treasurer at: [email protected].

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures: "EBITDA," "adjusted EBITDA," and "adjusted earnings per share (EPS)." We define EBITDA as as net income / (loss) before interest, taxes, and depreciation. We define adjusted EBITDA as net income / (loss) before interest, taxes, depreciation, amortization, restructuring items and other adjustments described in the reconciliations accompanying this press release. Adjusted earnings per share exclude certain income and expense items described in the reconciliation accompanying this press release.  We use EBITDA, adjusted EBITDA, 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 above 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 in our industry; 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 expense 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.

About Shiloh Industries, Inc.        

Shiloh Industries, Inc. is a leading global supplier of lightweighting, noise and vibration solutions to the automotive, commercial vehicle and industrial segments, capable of delivering solutions in aluminum, magnesium, steel and high-strength steel alloys to original equipment manufacturers and suppliers.  The Company offers the broadest portfolio of lightweighting solutions in the industry through their BlankLight™, CastLight™ and StampLight™ brands.  Shiloh designs and manufactures components in body, chassis and powertrain systems with expertise in precision blanks, ShilohCore™ acoustic laminates, aluminum and steel laser welded blanks, complex stampings, modular assemblies, aluminum and magnesium die casting, as well as precision machined components.  Shiloh has nearly 3,300 dedicated employees with operations, sales and technical centers throughout Asia, Europe and North America.

Forward-Looking Statements

Certain statements made by Shiloh Industries, Inc. (the "Company") in this release  and other periodic oral and written statements, including filings with the Securities and Exchange Commission, regarding the Company's operating performance, events or developments that the Company believes or expects 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 the Company's 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. Some, but not all, of the risks include the ability of the Company to successfully remediate the material weakness related to its internal controls; the impact on historical financial statements of any known or unknown accounting errors or irregularities; the ability of the Company to accomplish its strategic objectives; the ability to obtain future sales; changes in worldwide economic and political conditions, including adverse effects from terrorism or related hostilities; costs related to legal and administrative matters; the Company's ability to realize cost savings expected to offset price concessions; the Company's ability to successfully integrate acquired businesses, including businesses located outside of the United States; risks associated with doing business internationally, including economic, political and social instability, foreign currency exposure and the lack of acceptance of our products; inefficiencies related to production and product launches that are greater than anticipated; changes in technology and technological risks; increased fuel and utility costs; work stoppages and strikes at the Company's facilities and that of the Company's customers or suppliers; the Company's dependence on the automotive and heavy truck industries, which are highly cyclical; the dependence of the automotive industry on consumer spending, which is subject to the impact of domestic and international economic conditions, including increased energy costs affecting car and light truck production, and regulations and policies regarding international trade; financial and business downturns of the Company's customers or vendors, including any production cutbacks or bankruptcies; increases in the price of, or limitations on the availability of, steel, aluminum or magnesium, the Company's primary raw materials, or decreases in the price of scrap steel; the successful launch and consumer acceptance of new vehicles for which the Company supplies parts; the occurrence of any event or condition that may be deemed a material adverse effect under the Company's outstanding indebtedness or a decrease in customer demand which could cause a covenant default under the Company's outstanding indebtedness; pension plan funding requirements; and other factors, uncertainties, challenges and risks detailed in the Company's other public filings with the Securities and Exchange Commission. 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 release.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. In addition to the disclosures contained herein, readers should carefully review risks and uncertainties contained in other documents the Company files from time to time with the Securities and Exchange Commission.

SOURCE Shiloh Industries, Inc.

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