Shiloh Industries Reports Third-Quarter Fiscal 2019 Results and Raises the Mid-Point of Guidance

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 2019 third-quarter ended July 31, 2019.

Third Quarter 2019 Highlights:

• Revenues were $263.4 million.
• Gross profit was $23.6 million with a gross margin of 9.0%.
• Net loss was $2.7 million or 11 cents per basic share.
• Adjusted income was 4 cents per basic share.
• Adjusted EBITDA was $17.3 million.
• Adjusted EBITDA margin was 6.6%.

"Overall I am pleased with Shiloh's performance throughout the year and our ability to execute our plan," said Ramzi Hermiz, president and chief executive officer. "We made solid progress on several important initiatives that position Shiloh to profitably grow and improve the capabilities of our organization over the longer term. We continued the roll-out of major product launches, won $475 million in new business so far this year, and strengthened the organization through investments in technology and systems. We continued restructuring efforts to optimize our assets and enhance our flexing capability. Going into the fourth quarter, we are confident in our ability to deliver full year guidance."

2019 Outlook

Shiloh is maintaining its previously announced 2019 guidance for revenue to range from $1,000 million to $1,150 million and tightening the range for adjusted EBITDA to range from $67 million to $70 million from the prior range of $65 million to $70 million. This is the second consecutive quarter that we have raised the mid-point of guidance.

Shiloh to Host Conference Call Today at 9:00 A.M. ET

Shiloh will host a conference call on Thursday, September 5, 2019 at 9:00 A.M. Eastern Time to discuss Shiloh's third quarter fiscal 2019 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 Industries third quarter fiscal 2019 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 13694094. The replay will be available until September 26, 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 [e-mail].

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 approximately 4,000 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 agreements related to our outstanding indebtedness or a decrease in customer demand which could cause a covenant default under agreements related to 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 may include non-GAAP financial measures, including “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 to 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 July 31,				Nine Months Ended July 31,
			2019		2018		2019		2018
Net income (loss) per common share (GAAP)
Basic			$(0.11)		$0.47		$(0.27)		$0.86
	Tax items (1)		—		(0.34)		—		(0.10)
	Tax Cuts and Jobs Act, impact		—		—		—		(0.14)
	Restructuring		0.12		0.06		0.37		0.16
	Amortization of intangibles		0.02		0.02		0.05		0.06
	Marketable securities		—		0.01		—		0.01
	Legal and professional fees		0.01		—		0.08		0.01
Adjusted basic earnings (loss) per share (non-GAAP)			$0.04		$0.22		$0.23		$0.86

⁽¹⁾ For the three months ended July 31, 2018, there was a $2,300 benefit related to a return to provision due to a change in estimate and a $5,500 benefit based on adjusting the estimated annual tax rate. For the nine months ended July 31, 2018, there was a $2,300 benefit related to a return to provision due to a change in estimate.

Adjusted EBITDA Reconciliation			Three Months Ended July 31,						Nine Months Ended July 31,
			2019			2018			2019			2018
Net income (loss)			$(2,709)			$11,052			$(6,295)			$19,935
	Depreciation and amortization		11,652			12,361			35,010			33,775
	Interest expense		4,629			3,208			11,826			8,185
	Benefit for income taxes		(973)			(7,014)			(2,612)			(9,854)
EBITDA (non-GAAP)			12,599			19,607			37,929			52,041
	Restructuring		3,905			1,965			11,371			4,962
	Legal and professional fees		195			—			2,291			367
	Stock compensation		586			515			1,576			1,557
	Marketable securities		—			154			—			154
Adjusted EBITDA (non-GAAP)			$17,285			$22,241			$53,167			$59,081
Adjusted EBITDA margin (non-GAAP)			6.6%			7.5%			6.7%			7.0%

SHILOH INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
		July 31, 2019					October 31, 2018
		(Unaudited)
ASSETS:
Cash and cash equivalents		$	11,936				$	16,843
Accounts receivable, net		180,502					209,733
Related party accounts receivable		466					996
Prepaid income taxes		6,341					1,391
Inventories, net		67,615					71,412
Prepaid expenses		11,854					10,478
Other current assets		10,318					22,124
Total current assets		289,032					332,977
Property, plant and equipment, net		333,840					316,176
Goodwill		27,384					27,376
Intangible assets, net		13,489					14,939
Deferred income taxes		2,811					5,665
Other assets		7,732					12,542
Total assets		$	674,288				$	709,675
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current debt		$	350				$	1,327
Accounts payable		170,175					177,400
Other accrued expenses		45,411					63,031
Accrued income taxes		27					1,874
Total current liabilities		215,963					243,632
Long-term debt		248,393					245,351
Long-term benefit liabilities		14,579					15,553
Deferred income taxes		792					2,894
Other liabilities		3,440					2,723
Total liabilities		483,167					510,153
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 per share; 5,000,000 shares authorized; no shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively		—					—
Common stock, par value $0.01 per share; 75,000,000 and 50,000,000 shares authorized at July 31, 2019 and October 31, 2018, respectively; 23,799,035 and 23,417,107 shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively		238					234
Paid-in capital		115,977					114,405
Retained earnings		129,518					135,813
Accumulated other comprehensive loss, net		(54,612		)			(50,930		)
Total stockholders’ equity		191,121					199,522
Total liabilities and stockholders’ equity		$	674,288				$	709,675

SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
		Three Months Ended July 31,								Nine Months Ended July 31,
		2019				2018				2019				2018
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Net revenues		$	263,445			$	294,883			$	795,748			$	839,889
Cost of sales		239,857				262,003				729,790				747,616
Gross profit		23,588				32,880				65,958				92,273
Selling, general & administrative expenses		18,105				22,773				51,069				66,159
Amortization of intangible assets		518				607				1,558				1,767
Restructuring		3,905				1,965				11,371				4,962
Operating income		1,060				7,535				1,960				19,385
Interest expense		4,633				3,209				11,836				8,194
Interest income		(4		)		(1		)		(10		)		(9		)
Other (income) expense, net		113				289				(959		)		1,119
Income (loss) before income taxes		(3,682		)		4,038				(8,907		)		10,081
Benefit for income taxes		(973		)		(7,014		)		(2,612		)		(9,854		)
Net income (loss)		$	(2,709	)		$	11,052			$	(6,295	)		$	19,935
Income (loss) per share:
Basic earnings (loss) per share		$	(0.11	)		$	0.47			$	(0.27	)		$	0.86
Basic weighted average number of common shares		23,557				23,278				23,486				23,202
Diluted earnings (loss) per share		$	(0.11	)		$	0.47			$	(0.27	)		$	0.85
Diluted weighted average number of common shares		23,557				23,453				23,486				23,341

SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
			Nine Months Ended July 31,
			2019				2018
			(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)			$	(6,295	)		$	19,935
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			35,010				33,775
Amortization of deferred financing costs			1,033				935
Restructuring			1,610				672
Deferred income taxes			232				(2,251		)
Stock-based compensation expense			1,576				1,557
(Gain) loss on sale of assets			(3,562		)		2,300
Loss on marketable securities			29				154
Changes in operating assets and liabilities:
Accounts receivable, net			30,213				18,599
Inventories, net			3,900				(2,656		)
Prepaids and other assets			(1,564		)		(4,884		)
Payables and other liabilities			(30,965		)		(6,989		)
Prepaid and accrued income taxes			(6,863		)		(10,266		)
Net cash provided by operating activities			24,354				50,881
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(48,643		)		(38,668		)
Proceeds from sale of marketable securities			14				—
Acquisitions, net of cash required			—				(62,481		)
Derivative settlements			5,855				—
Proceeds from sale of assets			12,339				2,696
Net cash used in investing activities			(30,435		)		(98,453		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital leases			(495		)		(667		)
Proceeds from long-term borrowings			223,400				218,300
Repayments of long-term borrowings			(220,000		)		(161,793		)
Payment of deferred financing costs			(1,948		)		(105		)
Proceeds from exercise of stock options			—				41
Net cash provided by financing activities			957				55,776
Effect of foreign currency exchange rate fluctuations on cash			217				336
Net increase (decrease) in cash and cash equivalents			(4,907		)		8,540
Cash and cash equivalents at beginning of period			16,843				8,736
Cash and cash equivalents at end of period			$	11,936			$	17,276

 

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