Slide 1: Fourth-Quarter 2018 Results
Fourth - Quarter 2018 Results February 28, 2019
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 5 - Year Backlog increased to $3.4 billion in 2018 (5.2x 2018 OEM sales) x FMCSA exemption granted and extensive MirrorEye fleet trials. Retrofit rollout starting 2 nd half of 2019. x Acceleration of advanced technology development through addition of CTO and advanced de
Slide 4: Financial Summary
4 Financial Summary We continue to deliver sustainable, profitable growth Remain focused on continuous improvement initiatives $’s in USD Millions
Slide 5: 2019 Keys to Success
5 2019 Keys to Success *Based on long - term financial targets outlined at Deutsche Bank Conference January 2019 and 2019 midpoints of guidance We expect continued strong performance by each segment in 2019 to keep us on - track to achieve long - term financial targets ($1 billion+ in revenue and 15
Slide 6: Leveraging Our Existing Technology Portfolio
6 Leveraging Our Existing Technology Portfolio We are investing in current and future technologies that will enable system - based solutions by combining vision systems, connectivity capabilities and driver information systems Our telematics and tachograph units provide a gateway for vehicles to con
Slide 7: Summary
7 Summary 2018 Summary ▸ We continue to transform the organization while delivering consistent financial performance improvement keeping us on - track to deliver $1 billion+ of revenue and 15.5%+ EBITDA margin in 2021 ▸ MirrorEye remains on - track • Significant fleet trials paving the way for 2019
Slide 8: Financial Update
Financial Update Ssevertve
Slide 9: 4th Quarter 2018 Summary
9 4 th Quarter 2018 Summary 4 th Quarter 2018 Financial Results Sales of $210.8 million, an increase of 2% over Q4 2017 Control Devices sales of $109.7 million compared to $109.6 million in Q4 2017 Electronics sales of $90.6 million, an increase of 7% over Q4 2017 PST sales of $20.4 million, a decre
Slide 10: Control Devices Financial Performance
10 Control Devices Financial Performance Control Devices 2018 Summary Shift-by-Wire revenue of $33 million in 2018 sensor launch of $1.5 million (approximately 30bps) approximately $2.4 million (approximately 55 bps) related costs Control Devices 2019 Expectations expected operational improvements a
Slide 11: Electronics Financial Performance
11 Electronics Financial Performance 19% Revenue growth year-over-year Expecting continued revenue growth and margin improvement Electronics 2018 Summary Sales growth of 19% driven by growth throughout product portfolio and favorable commercial vehicle production volumes Adjusted operating margin im
Slide 12: PST Financial Performance
12 PST Financial Performance Continued operating margin improvement despite significant currency headwinds 2019 Expected to be relatively flat PST 2018 Summary Excluding impact of currency, sales declined by approximately $3 million (3%) Currency headwind of approximately $12 million Continued adjus
Slide 13: Tax Update
13 Tax Update Previously guided to full - year tax rate of 20% - 25% and 4th quarter tax rate of 15% - 20% 4th Quarter adjusted tax rate of 4.6% includes impact of certain non - recurring items 2019 tax rate expected to be 20% - 25% based on expected geographic earnings mix and normalization of non
Slide 14: 2019 Sales Guidance
14 2019 Sales Guidance 2018 Actual Sales New Business Launches Aftermarket / MirrorEye Retrofit Pricing $866m Shift - by - Wire Ramp - Down Currency Volume Ex. Shift - by - Wire $855m - $875m 2019 Guidance Shift - by - wire headwind, pricing and unfavorable currency offset by growth in core portfoli
Slide 15: 2019 Adjusted EPS Guidance
15 2019 Adjusted EPS Guidance Adjusted Earnings Per Share Wage / Benefit Inflation 2018 Actual $1.99 Tax Rate Tariffs D&D Investment Product Mix Operational Efficiencies $1.70 - $1.90 ~ $1.99 Expected tax rate of 20% - 25% primary driver of adjusted EPS reduction of $0.15 - $0.20 *Does not consider
Slide 16: 2019 Guidance and Timing
16 5% 6% 7% 8% 9% 10% 11% 2018 Q4 2019 1st Half 2019 2nd Half 2019 Guidance and Timing 2018 Results 2019 Guidance Sales $866.2 million $855 - $875 million Adjusted Gross Margin 29.7% 29.5% - 31.0% Adjusted Operating Margin 8.2% 7.75% - 8.75% Adjusted Tax Rate 16.5% 20.0% - 25.0% Adjusted EPS $1.99 $
Slide 17: Long-Term Financial Targets
17 Long - Term Financial Targets Significant new business awards over the last three years will drive $1 billion in revenue by 2021 Reiterating 2021 revenue ($1 billion+) and EBITDA margin (15.5%+) targets Start of Production Top 5 Business Awards Peak Annual Revenue 2019 Park - by - Wire Programs $
Slide 18: Summary
18 Summary 2018 Summary ▸ Revenue growth of 5% and adjusted earnings per share growth of 27% ▸ Control Devices – Managed anticipated reduction of Shift - by - Wire of $33 million resulting in flat year - over - year revenue. ▸ Electronics – Continued strong revenue growth. Margin improvement driven
Slide 19: Appendix
Appendix Ssevertve
Slide 20: 2018 Q4 Adjustments
20 2018 Q4 Adjustments Adjustments ▸ The change in the fair value of the earn - out related to the acquisition of the remaining 26% minority interest in PST was $1.7 million ▸ Expenses related to certain business realignment costs. The after - tax impact of this adjustment was $2.7. ▸ Impact of the
Slide 21: 2018 Full-Year Adjustments
21 2018 Full - Year Adjustments Adjustments ▸ Change in the fair value of the earn - out related to the acquisition of the remaining 26% minority interest in PST was $0.2 million ▸ The expense resulting from the step - up in the fair value of the earn - out due to Orlaco outperformance was $0.4 mill
Slide 22: Income Statement
22 Income Statement Year ended December 31 (in thousands, except per share data) Net sales $ 866,199 $ 824,444 $ 695,977 Costs and expenses: Cost of goods sold 609,568 576,304 500,538 Selling, general and administrative 138,553 141,893 111,145 Design and development 51,074 48,877 40,212 Operating in
Slide 23: Segment Financial Information
23 Segment Financial Information Year ended December 31 Net Sales: Control Devices $ 441,297 $ 447,528 $ 408,132 Inter-segment sales 8,348 5,044 1,826 Control Devices net sales 449,645 452,572 409,958 Electronics 344,727 282,383 205,256 Inter-segment sales 37,126 39,501 33,361 Electronics net sales
Slide 24: Balance Sheet
24 Balance Sheet CONSOLIDATED BALANCE SHEETS December 31, (in thousands) ASSETS Current assets: Cash and cash equivalents $ 81,092 $ 66,003 Accounts receivable, less reserves of $1,243 and $1,109, respectively 139,076 142,438 Inventories, net 79,278 73,471 Prepaid expenses and other current assets 2
Slide 25: Statement of Cash Flows
25 Statement of Cash Flows Year ended December 31, (in thousands) OPERATING ACTIVITIES: Net income $ 53,848 $ 45,049 $ 75,574 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 22,786 21,490 19,998 Amortization, including accretion of deferred financing co
Slide 26: Statement of Cash Flows (Cont.)
26 Statement of Cash Flows (Cont.) CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, (in thousands) FINANCING ACTIVITIES: Acquisition of noncontrolling interest, including transaction costs - (1,848) - Revolving credit facility borrowings 27,500 95,000 - Revolving credit facility payment
Slide 27: Reconciliations to US GAAP
27 Reconciliations to US GAAP
Slide 28: Reconciliations to US GAAP
28 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 29: Reconciliations to US GAAP
29 Reconciliations to US GAAP (USD in millions) Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 Gross Profit 61.2$ 63.4$ 62.6$ 61.0$ 248.1$ 68.0$ 67.4$ 63.3$ 58.0$ 256.6$ Add: Pre-Tax Step-Up in Acquired Inventory from Orlaco 1.0 0.7 1.6 Add: Pre-Tax Business Realignment Co
Slide 30: Reconciliations to US GAAP
30 Reconciliations to US GAAP (USD in millions) Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 2018 Control Devices Operating Income 19.1$ 19.9$ 16.2$ 17.3$ 72.6$ 17.9$ 17.2$ 16.3$ 12.9$ 64.2$ Add: Pre-Tax Allocation of Centralized Procurement and Operations Functions 0.5 0.4 0
Slide 31: Reconciliations to US GAAP
31 Reconciliations to US GAAP (USD in millions) Q4 2018 Q4 2018 EPS Net Income Attributable to Stoneridge 12.1$ 0.42$ Add: After-Tax Step-Up in Fair Value of Earn-Out (PST) (1.7) ($0.06) Less: After-Tax Impact of US Tax Cut and Jobs Act 0.7 $0.02 Add: After-Tax Business Realignment Costs 2.7 $0.09 A
Slide 32: Reconciliations to US GAAP
32 Reconciliations to US GAAP (USD in millions) Q4 2018 2018 Income Before Tax 12.7$ 65.1$ Add: Pre-Tax Step-Up in Fair Value of Earn-Out (Orlaco) - 0.4 Add: Pre-Tax Step-Up in Fair Value of Earn-Out (PST) (1.7) (0.2) Add: Pre-Tax Business Realignment Costs 3.4 4.0 Adjusted Income Before Tax 14.4$ 6