Shiloh Industries, Inc., an environmentally focused global supplier of lightweighting, noise and vibration solutions to the automotive, commercial vehicle and other industrial markets, recently reported financial results for its fiscal 2020 second quarter ended April 30, 2020.
Second-Quarter 2020 Highlights:
• Revenues were $157.9 million.
• Net loss was $58.7 million, including a non-cash impairment charge of $24.5 million.
• Adjusted EBITDA was a loss of $3.2 million.
• Cash on hand was $91.6 million as of April 30, 2020.
• Successfully implemented the comprehensive Shiloh Safe Restart Plan to all facilities worldwide in response to COVID-19.
• Instituted numerous actions to reduce costs and preserve liquidity, including headcount reductions and the furloughing of employees as well as mandatory and voluntary pay and benefit reductions.
• Achieved new customer wins, in the second quarter, with contract revenue of $136.7 million.
• Resumed customer shipments in Q3 and continue to ramp up global operations to serve customers as market demand recovers.
• Engaged external advisors to explore options to help further improve the company’s long term financial position.
“As a result of market conditions, business restrictions and other matters associated with the COVID-19 outbreak, many OEMs suspended manufacturing operations, particularly in North America, Europe and Asia, and these substantial disruptions significantly impacted our financial performance during the second quarter of 2020,” said Cloyd J. Abruzzo, interim CEO. “In response to the outbreak and business disruption, we instituted employee safety protocols to contain the spread, including domestic and international travel restrictions, work-from-home practices, extensive cleaning protocols, social distancing and various temporary closures of our administrative offices and manufacturing facilities. At the same time, the company implemented a range of actions aimed at reducing costs and preserving liquidity, including temporary salary reductions ranging from 20% to 25%, temporary reduction in board fees, reduction of discretionary spending, mandatory vacations, headcount reduction and furloughs.”
Abruzzo continued, “As we moved into the third quarter, our global operations began coming back online in China, Europe and North America. Although we have experienced some expected operational issues related to starting up plants that were shut down for an extended period of time, we are working safely to ramp up manufacturing and meet customer demand. We are also continuing to work with our lenders and have engaged outside advisors to help us evaluate options intended to strengthen Shiloh’s financial position for the long term.”
The net loss for second quarter 2020 was $58.7 million compared to $1.1 million of net income in the second quarter last year. The significant loss was due to a $24.5 million non-cash impairment of assets, $29.2 million negative impact on gross margin mainly due to the impacts of COVID-19, higher restructuring costs and other one-time costs incurred during the quarter to amend debt covenants. The company had $91.6 million of cash on hand as of April 30, 2020, and is currently in compliance with its amended covenants under the Tenth Amendment to the Credit Agreement (the “Tenth Amendment”), entered into on June 11, 2020, as described below.
Amendment to Credit Agreement
As previously announced, on June 11, 2020, the company entered into the Tenth Amendment, pursuant to which, among other things, the company received a waiver of the interest coverage ratio and leverage ratio covenants for the quarters ended April 30, 2020, and July 31, 2020. The company has been actively working during the waiver period to complete a debt refinancing, evaluate additional capital sources and review other strategic alternatives to successfully navigate the current operating environment. The company believes the cash balances and any future availability on the revolving credit facility will provide sufficient liquidity to fund its operations during the third quarter, assuming there are no unanticipated additional significant disruptions related to COVID-19 or other events in the third quarter of fiscal 2020.
This press release should be read in conjunction with the company’s second quarter form 10-Q for further disclosure related to the financial statements, results of operations, liquidity position, impact of COVID-19 and risk factors for the quarter.