Stoneridge, Inc. · NYSE:SRI
Stoneridge — Q4 2020 Earnings Presentation
40 slides from Stoneridge's earnings presentation, Feb 24, 2021
Slide 1: Full-Year and Q4 2020 Results
Full - Year and Q4 2020 Results February 25, 2021 Exhibit 99.2
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements Statements in this presentation that are not historical facts are forward - looking statements, which involve risks and uncertaint ies that could cause actual events or results to differ materially from those expressed or implied by the statements. Important factors th
Slide 3: Overview of Achievements
3 Overview of Achievements x Revenue and adjusted EPS outperformed expectations for the fourth quarter and full year 2020 x Continued portfolio, cost structure and footprint transformation to position company for continued profitable growth x Continued investment in design and development to acceler
Slide 4: 2020 Quarterly Comparison
4 2020 Quarterly Comparison 2019* vs. 2020 Adjusted Sales Adjusted Gross Profit Adjusted Operating Income Adjusted EBITDA Financial Summary Strong 2020 performance driven by continued focus on execution and efficient cost structure $’s in USD Millions *Excludes divested Non - Core product business i
Slide 5: 2020 Sales & Adj. Contribution Margin by Quarter
5 2020 Sales & Adj. Contribution Margin by Quarter *Adjusted contribution margin is calculated as incremental adjusted operating income divided by incremental revenue. Q2 decre men tal margin compared to Q1 2020. Q3 2020 and Q4 2020 incremental margins compared to Q2 2020 **Base Business excludes th
Slide 6: Weighted OEM end-markets expected to increase 15.3% in 2021
6 Weighted OEM end - markets expected to increase 15.3% in 2021 *Management estimates **Excluding Orlaco and Stoneridge Brazil ***Regional sales based on manufactured location and estimated end - market exposure Traditional Passenger Car 8% Commercial Vehicle OE 30% Aftermarket / Non - OE / Other 21
Slide 7: Supply Chain Update and Potential Impact on 2021 Guidance
7 Supply Chain Update and Potential Impact on 2021 Guidance We expect global supply chain disruptions to have a limited impact on revenue for the full year 2021 We expect increased material and expediting costs in the first half of the year Revenue Impact ▸ Global OEMs have announced reduced product
Slide 8: 2021 Performance Drivers
8 2021 Performance Drivers Expecting adjusted gross margin to improve by 135 – 235 basis points driving expected adjusted operating margin improvement of 320 – 395 basis points 24.4% 25.75% - 26.75% 2020 2021 Guidance 0.3% 3.5% - 4.25% 2020 2021 Guidance Adjusted Gross Margin Adjusted Operating Marg
Slide 9: MirrorEye Update
9 MirrorEye Update ▸ MirrorEye currently installed on 24 fleets, which have more than ~85,000 vehicles on the road ▸ One partner conducted a 3 million mile sample and verified a reduction in actual safety incidents (approximately 30%) in their MirrorEye equipped fleet vs. a comparable pool of vehicl
Slide 10: Focus on Engineering and Advanced Development
10 Focus on Engineering and Advanced Development ▸ Significant opportunities to use our existing platforms to grow content per vehicle and market share Focused development of actuation and electrified powertrain applications • Shift - by - Wire - > Electrified Transmission Actuation • Front - Axle D
Slide 11: Long-Term Financial Targets - Revenue
11 500.0 600.0 700.0 800.0 900.0 1,000.0 1,100.0 1,200.0 2021 Revenue Target (Q4 2019)* 2023 Revenue Target 2025 Revenue Target Discontinued Soot Sensor Product Line ~$17M** Long - Term Financial Targets - Revenue Long - term target of $1.1 billion+ by 2025 – additional opportunity based on MirrorEy
Slide 12: 2025 EBITDA Target of 15%+
12 2025 EBITDA target of 15%+ driven primarily by improved gross margin and leverage on existing cost structure along with rotation of engineering footprint 2021 EBITDA Margin Long - term EBITDA Target ▸ Material cost performance expected to offset annual price downs ▸ Targeting increased engineerin
Slide 13: Summary
13 Summary 2020 Summary x 2020 Revenue and adjusted EPS performance exceeded our expectations x Strong execution in 2020, navigating through the global pandemic with efficient management of production volumes during shut - downs and ramp - ups globally x Efficient cash management positioning the Com
Slide 14: Financial Update
Financial Update S:ereivee
Slide 15: Q4 2020 Financial Results
15 2020 Summary 4 th Quarter 2020 Financial Results Sales of $189.7 million, an increase of 7.9% over Q3 2020 • Control Devices sales of $100.4 million, a decrease of 0.5% over Q3 2020 • Electronics sales of $84.1 million, an increase of 19.5% over Q3 2020 • Stoneridge Brazil sales of $13.3 million,
Slide 16: Control Devices Financial Performance
16 Control Devices Financial Performance Focus on future profitable growth through continued operational improvement in 2021 and product development focused on powertrain electrification Control Devices 2020 Highlights and 2021 Expectations ▸ Continued transformation of manufacturing footprint and p
Slide 17: Electronics Financial Performance
17 Electronics Financial Performance Electronics 2020 Highlights and 2021 Expectations ▸ MirrorEye retrofit and pre - wire continue to progress while preparing for 2021 OEM launches ▸ Continued investment in advanced engineering in 2020 and incremental investment in engineering resources in 2021 to
Slide 18: Stoneridge Brazil Financial Performance
18 Stoneridge Brazil Financial Performance Expecting continued ramp - up in OEM launches to lead to stable revenue and margin performance despite continued macroeconomic challenges – focus remains on supporting global Electronics business Stoneridge Brazil 2020 Highlights and 2021 Expectations Reven
Slide 19: Net Debt Update
19 Net Debt Update Effective cash management throughout 2020 Q4 Summary ▸ Net debt decreased by approximately $13.5 million in Q4 ▸ Reduced revolving credit facility balance by $8.0 million during the quarter ▸ Q4 net debt / adjusted EBITDA of 1.8x ▸ Continue to manage cash and maintain a conservati
Slide 20: 2021 Sales Guidance
20 $ 648 million 628 628 727 732 732 $770 - $790 million $ 99 million (15.3%) $13 million ($20 million) ($7.5 million) $38 - $58 million 500.0 700.0 2020 Actual Sales Discontinued Soot Sensor Business IHS and LMC Production Forecasts Favorable Impact of Foreign Currency Annual Price Downs Stoneridge
Slide 21: 2021 Adjusted EPS Guidance
21 ($0.03) $0.91 - $1.06 ($0.06) ($0.03) ( $0.16 ) $0.72 - $0.87 ( $0.07 ) $0.60 - $0.75 (0.05) 0.15 0.35 0.55 0.75 0.95 1.15 2020 Adjusted EPS Expected Contribution on Incremental Revenue Incremental Investment in D&D 2021 Adjusted EPS Prior to External Factors Foreign Currency Exchange Rates Globa
Slide 22: Backlog Awarded Business: 2021-2025
22 Backlog Awarded Business: 2021 - 2025 ▸ Based on current backlog approximately 85% of our total targeted revenue by 2025 is expected to be drivetrain agnostic ▸ Backlog considers MirrorEye at quoted take rates (10 - 15%) – OEM penetration rates could have significant impact on backlog We have str
Slide 23: Expected Base Business Contribution Margin
23 Expected Base Business Contribution Margin ▸ Our 2021 revenue guidance includes approximately $13.0 million of currency tailwind and approximately $13.0 million related to the discontinued soot sensor product line ▸ Our 2021 operating income guidance includes approximately $2.3 million of unfavor
Slide 24: Summary
24 Summary 2020 Summary ▸ Control Devices – Strong sales in the second half of the year as a result of strong production demand at customer facilities in North America. Continued transformation of manufacturing footprint and product portfolio to align with future growth opportunities. ▸ Electronics
Slide 25: Appendix
Appendix S:ereivee
Slide 26: Primary Stoneridge Foreign Currency Sensitivities
26 Primary Stoneridge Foreign Currency Sensitivities SRI Currency Exposures 2021 Assumption Rates If 5% Weaker vs. USD N et Annual EBITDA * Transaction Impact Translation Impact Euro 1.18 Mexican Peso 22.13 N/A Chinese Yuan 6.94 Swedish Krona 8.68 Brazilia n Real 5.46 *Before impact of hedging progr
Slide 27: 2020 Adjustments
27 2020 Adjustments Adjustments ▸ The change in the fair value of the earn - out related to the acquisition of the remaining 26% minority interest in Stoneridge Bra zil (formerly known as “PST”). The after - tax impact of this adjustment was ($3.2) million in 2020. ▸ Expenses related to certain rest
Slide 28: Income Statement
28 Income Statement CONSOLIDATED STATEMENTS OF OPERATIONS Year ended December 31, (in thousands, except per share data) Net sales $ 648,006 $ 834,289 $ 866,199 Costs and expenses: Cost of goods sold 493,810 620,556 609,568 Selling, general and administrative 112,474 123,853 138,553 Gain on disposal
Slide 29: Segment Financial Information
29 Segment Financial Information Year ended December 31 Net Sales: Control Devices $ 342,576 $ 431,560 $ 441,297 Inter-segment sales 5,475 6,438 8,348 Control Devices net sales 348,051 437,998 449,645 Electronics 257,767 335,195 344,727 Inter-segment sales 24,027 33,735 37,126 Electronics net sales
Slide 30: Balance Sheet
30 Balance Sheet CONSOLIDATED BALANCE SHEETS December 31, (in thousands) ASSETS Current assets: Cash and cash equivalents $ 73,919 $ 69,403 Accounts receivable, less reserves of $817 and $1,289, respectively 136,745 138,564 Inventories, net 90,548 93,449 Prepaid expenses and other current assets 33,
Slide 31: Statement of Cash Flows
31 Statement of Cash Flows CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, (in thousands) OPERATING ACTIVITIES: Net (loss) income $ (7,950) $ 60,291 $ 53,848 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation 27,309 24,904 22,786 A
Slide 32: Statement of Cash Flows (Cont.)
32 Statement of Cash Flows (Cont.) *Refer to Note 2 in Form 10 - K as of December 31, 2020 FINANCING ACTIVITIES: Revolving credit facility borrowings 71,500 112,000 27,500 Revolving credit facility payments (61,500) (82,000) (52,500) Proceeds from issuance of debt 41,104 2,208 415 Repayments of debt
Slide 33: Reconciliations to US GAAP
33 Reconciliations to US GAAP
Slide 34: Reconciliations to US GAAP
34 Reconciliations to US GAAP This document contains information about Stoneridge's financial results which is not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non - GAAP financial measures are reconciled to their closest GAAP financial me
Slide 35: Reconciliation of Adjusted Gross Profit and Operating Income
35 Reconciliations to US GAAP Reconciliation of Adjusted Gross Profit (USD in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Gross Profit 60.9$ 56.8$ 51.9$ 44.2$ 213.7$ 45.4$ 13.3$ 46.0$ 49.6$ 154.2$ Add: Pre-Tax Restructuring Costs 1.3 2.4 2.5 1.5 7.6 1.5 0.2 0.
Slide 36: Reconciliation of Segment Adjusted Operating Income
36 Reconciliations to US GAAP Reconciliation of Control Devices Adjusted Operating Income (Loss) (USD in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Control Devices Operating Income (Loss) 11.9$ 44.4$ 9.8$ 7.2$ 73.3$ 7.3$ (9.7)$ 12.5$ 12.0$ 22.1$ Add: Pre-Tax
Slide 37: Reconciliation of Adjusted EPS
37 Reconciliations to US GAAP Reconciliation of Adjusted EPS (USD in millions) Q4 2020 Q4 2020 EPS Net Income 3.6$ 0.13$ Less: After-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) (0.2) (0.01) Add: After-Tax Restructuring Costs 0.7 0.03 Less: After-Tax Earnings in Autotech Fund Investment
Slide 38: Reconciliation of Adjusted Sales
38 Reconciliations to US GAAP Reconciliation of Adjusted Sales (USD in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Sales 218.3$ 222.2$ 203.4$ 190.4$ 834.3$ 183.0$ 99.5$ 175.8$ 189.7$ 648.0$ Less: Pre-Tax One-Time Sale of Non-Core Product Inventory - (4.2) - -
Slide 39: Reconciliation of Control Devices Adjusted Sales
39 Reconciliations to US GAAP Reconciliation of Control Devices Adjusted Sales Excluding Disposed Non-Core Products (USD in millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 2020 Adjusted Control Devices Sales 112.0$ 112.0$ 109.9$ 100.0$ 433.8$ 98.2$ 48.6$ 100.9$ 100.4$
Slide 40: Reconciliation of Adjusted Tax Rate
40 Reconciliations to US GAAP Reconciliation of Adjusted Tax Rate (USD in millions) 2020 Loss Before Tax (10.7)$ Less: Pre-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) (3.2) Add: Pre-Tax Share-Based Comp Accelerated Vesting 0.1 Add: Pre-Tax Restructuring Costs 8.8 Add: Pre-Tax Business R