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Shiloh Industries Reports Fourth-Quarter and Full-Year Fiscal 2018 Results

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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 fourth-quarter ended October 31, 2018.

Fourth-Quarter 2018 Highlights (compared to Fourth Quarter 2017):

  • Revenues increased 13.6% to $300.1 million.
  • Gross profit was $23.8 million with a gross margin of 7.9%.
  • Net loss was $8.5 million or 36 cents per diluted share.
  • Adjusted EBITDA was $15.0 million.
  • Adjusted EBITDA margin was 5.0%.

Full-Year 2018 Highlights (compared to Year-End 2017):

  • Revenues increased 9.4% to $1,139.9 million.
  • Gross profit was $116.1 million with a gross margin of 10.2%.
  • Net income increased $12.2 million to $11.5 million or 49 cents per diluted share.
  • Adjusted EBITDA $74.1 million.
  • Adjusted EBITDA margin was 6.5%.

"We generated solid results for fiscal year 2018 that demonstrate the progress we have made on our strategy to position Shiloh as a technology leader with the ability to provide market leading lightweighting and value-added solutions," said Ramzi Hermiz, president and chief executive officer. "I am also pleased that we were able to deliver on our Adjusted EBITDA guidance during a challenging year for the industry.

Overall we had a very active year, completing strategic acquisitions in Europe, preparing our facilities for production launches of many new products and bringing new capacity on line to support our continued global growth."

2019 Outlook

Shiloh is introducing 2019 guidance of revenue in the range of $1,000 million to $1,150 million and adjusted EBITDA in the range of $62 million to $70 million. Additionally, the Company expects annual capital expenditure to be approximately 4% to 5% of revenue.

Shiloh to Host Conference Call Today at 8:00 A.M. ET

Shiloh will host a conference call on Thursday, December 20, 2018 at 8:00 A.M. Eastern Time to discuss Shiloh's fourth-quarter and full-year 2018 fiscal 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 fourth-quarter fiscal 2018 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 13685827. The replay will be available until January 10, 2019. 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 our Investor Relations department at: 1-330-558-2601 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 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, 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 (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 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 Ended October 31,

Year Ended October 31,

 

2018

2017

2018

2017

Net income (loss) per common share (GAAP)

 

 

 

 

Basic

$

(0.36

)

$

(0.04

)

$

0.49

 

$

(0.04

)

Tax items

 

(0.10

)

Tax Cuts and Jobs Act, impact

 

 

(0.14

)

Restructuring

 

0.05

 

 

0.13

 

 

0.21

 

 

0.16

 

Tax valuation reserve

 

0.12

 

Amortization of intangibles

 

0.02

 

 

0.02

 

 

0.08

 

 

0.08

 

Asset impairment

 

0.01

 

 

0.04

 

Marketable securities

 

0.01

 

 

0.03

 

Legal and professional fees

 

0.06

 

 

0.01

 

 

0.07

 

 

0.14

 

Adjusted basic earnings per share (non-GAAP)

$

(0.23

)

$

0.13

 

$

0.62

 

$

0.53

 

 

 

 

 

 

 

Adjusted EBITDA Reconciliation

Three Months Ended October 31,

Year Ended October 31,

2018

2017

2018

2017

Net income (loss)

 

(8,456

)

$

(926

)

$

11,479

 

$

(697

)

Depreciation and amortization

 

11,953

 

 

10,702

 

 

45,728

 

 

41,648

 

Interest expense

 

3,148

 

 

2,290

 

 

11,333

 

 

15,084

 

Provision (benefit) for income taxes

 

4,635

 

 

434

 

 

(5,219

)

 

7,120

 

EBITDA (non-GAAP)

 

11,280

 

 

12,500

 

 

63,321

 

 

63,155

 

Restructuring

 

1,469

 

 

4,777

 

 

6,431

 

 

4,777

 

Legal and professional fees

 

1,793

 

 

496

 

 

2,160

 

 

4,031

 

Stock compensation

 

427

 

 

326

 

 

1,984

 

 

1,698

 

Asset impairment, net

 

200

 

 

1,115

 

Marketable securities

 

154

 

 

873

 

Adjusted EBITDA (non-GAAP)

$

14,969

 

$

18,299

 

$

74,050

 

$

75,649

 

Adjusted EBITDA margin (non-GAAP)

 

5.0

%

 

6.9

%

 

6.5

%

 

7.3

%

SHILOH INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands)

 

 

October 31,

2018

 

October 31,

2017

 

 

 

 

 

ASSETS:

 

 

 

Cash and cash equivalents

$

16,843

 

$

8,736

Accounts receivable, net

209,733

 

188,664

Related party accounts receivable

996

 

759

Prepaid income taxes

1,391

 

338

Inventories, net

71,412

 

61,812

Prepaid expenses

10,478

 

11,940

Other current assets

22,124

 

22,272

Total current assets

332,977

 

294,521

Property, plant and equipment, net

316,176

 

266,891

Goodwill

27,376

 

27,859

Intangible assets, net

14,939

 

15,025

Deferred income taxes

5,665

 

6,338

Other assets

12,542

 

7,949

Total assets

$

709,675

 

$

618,583

LIABILITIES AND STOCKHOLDERS' EQUITY:

 

 

 

Current debt

$

1,327

 

$

2,027

Accounts payable

177,400

 

166,059

Other accrued expenses

63,031

 

46,171

Accrued income taxes

1,874

 

1,628

Total current liabilities

243,632

 

215,885

Long-term debt

245,351

 

181,065

Long-term benefit liabilities

15,553

 

21,106

Deferred income taxes

2,894

 

9,166

Other liabilities

2,723

 

3,040

Total liabilities

510,153

 

430,262

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Preferred stock, $.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at October 31, 2018 and October 31, 2017, respectively

 

Common stock, par value $.01 per share; 50,000,000 shares authorized; 23,417,107 and 23,121,957 shares issued and outstanding at October 31, 2018 and October 31, 2017, respectively

234

 

231

Paid-in capital

114,405

 

112,351

Retained earnings

135,813

 

117,976

Accumulated other comprehensive loss, net

(50,930

)

 

(42,237

)

Total stockholders' equity

199,522

 

188,321

Total liabilities and stockholders' equity

$

709,675

 

$

618,583

SHILOH INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

 

 

Three Months Ended October 31,

 

Year Ended October 31,

 

2018

 

2017

 

2018

 

2017

Net revenues

$

300,055

 

$

264,170

 

$

1,139,944

 

$

1,041,986

Cost of sales (1)

276,233

 

235,587

 

1,023,849

 

926,631

Gross profit

23,822

 

28,583

 

116,095

 

115,355

Selling, general & administrative expenses (1)

22,445

 

19,990

 

88,604

 

83,070

Amortization of intangible assets

605

 

565

 

2,372

 

2,259

Asset impairment, net

 

200

 

 

241

Restructuring

1,651

 

4,777

 

6,613

 

4,777

Operating income

(879

)

 

3,051

 

18,506

 

25,008

Interest expense

3,149

 

2,291

 

11,343

 

15,088

Interest income

(1

)

 

(1

)

 

(10

)

 

(4

)

Other expense, net (1)

(206

)

 

1,253

 

913

 

3,501

Income (loss) before income taxes

(3,821

)

 

(492

)

 

6,260

 

6,423

Provision (benefit) for income taxes

4,635

 

434

 

(5,219

)

 

7,120

Net income (loss)

$

(8,456

)

 

$

(926

)

 

$

11,479

 

$

(697

)

Income (loss) per share:

 

 

 

 

 

 

 

Basic earnings (loss) per share

$

(0.36

)

 

$

(0.04

)

 

$

0.49

 

$

(0.04

)

Basic weighted average number of common shares

23,309

 

23,055

 

23,229

 

19,233

Diluted earnings (loss) per share

$

(0.36

)

 

$

(0.04

)

 

$

0.49

 

$

(0.04

)

Diluted weighted average number of common shares

23,309

 

23,055

 

23,369

 

19,233

(1) Fiscal year 2017 reflects the reclassification of non-service cost components of net benefit costs to outside of operating income as a result of ASU 2017-07 adoption, effective November 1, 2017.

SHILOH INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)

 

 

 

Year Ended October 31,

 

 

2018

 

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

Net income (loss)

 

$

11,479

 

$

(697

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

45,728

 

41,648

Amortization of deferred financing costs

 

1,244

 

3,115

Asset impairment, net

 

 

241

Restructuring

 

280

 

4,420

Deferred income taxes

 

(9,770

)

 

4,174

Stock-based compensation expense

 

1,984

 

1,698

(Gain) loss on sale of assets

 

993

 

1,590

Other than temporary impairment on marketable securities

 

154

 

695

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

(1,426

)

 

(2,919

)

Inventories, net

 

412

 

(888

)

Prepaids and other assets

 

1,733

 

5,375

Payables and other liabilities

 

(1,462

)

 

16,715

Prepaid and accrued income taxes

 

1,877

 

1,148

Net cash provided by operating activities

 

53,226

 

76,315

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Capital expenditures

 

(50,135

)

 

(48,395

)

Sale of (investment in) joint venture

 

 

1,170

Acquisitions, net of cash required

 

(62,514

)

 

Proceeds from sale of assets

 

3,592

 

7,605

Net cash used in investing activities

 

(109,057

)

 

(39,620

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Payment of capital leases

 

(886

)

 

(879

)

Proceeds from long-term borrowings

 

266,900

 

221,600

Repayments of long-term borrowings

 

(202,282

)

 

(296,770

)

Payment of deferred financing costs

 

(105

)

 

(1,779

)

Proceeds from exercise of stock options

 

73

 

78

Proceeds from the issuance of common stock

 

 

40,227

Net cash provided by (used in) financing activities

 

63,700

 

(37,523

)

Effect of foreign currency exchange rate fluctuations on cash

 

238

 

868

Net increase (decrease) in cash and cash equivalents

 

8,107

 

40

Cash and cash equivalents at beginning of period

 

8,736

 

8,696

Cash and cash equivalents at end of period

 

$

16,843

 

$

8,736

Supplemental Cash Flow Information:

 

 

 

 

Cash paid for interest

 

$

10,594

 

$

12,432

Cash paid for (refund of) income taxes

 

3,423

 

1,780

Non-cash Activities:

 

 

 

 

Capital equipment included in accounts payable

 

$

4,049

 

$

4,239

 

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