Stoneridge, Inc. · NYSE:SRI
Stoneridge — Q3 2020 Earnings Presentation
30 slides from Stoneridge's earnings presentation, Oct 28, 2020
Slide 1: Q3 2020 Results
Q3 2020 Results October 29, 2020 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 Continued strong execution in Q3 on revenue that exceeded our expectations x Adjusted gross margin and adjusted operating margin improved by 80 bps and 140 bps, respectively, vs. Q1 x Q3 incremental adjusted contribution margin* of 35.8% vs. Q2 x Liquidity remains strong
Slide 4: 2020 Q3 Financial Highlights
4 2020 Q3 Financial Highlights Sales Adjusted Gross Margin Adjusted Operating Margin $’s in USD Millions Revenue increase of 76.6% vs. Q2 Revenue outperformed previously outlined expectations due to accelerated ramp - up of global production levels, particularly in Control Devices Adjusted contribut
Slide 5: 2020 and 2021 Updated Volume Outlook
5 0 5 10 15 20 Q3 Q4 2020 2021 4 th quarter weighted average end markets expected to remain approximately flat vs. Q3 Weighted average OEM end markets expected to increase by 13.5% in 2021 compared to 2020 2020 and 2021 Updated Volume Outlook Q2 Earnings Call Data Current Outlook Passenger Car Forec
Slide 6: 2021 Preliminary Revenue Outlook
6 2021 Preliminary Revenue Outlook 2020 Adjusted Midpoint Guidance New Program Launches Including Incremental MirrorEye Retrofit Discontinued Soot Sensor Product Line $629m $715m+ Production forecasts and program launches expected to drive revenue of over $715 million in 2021 (growth of at least 20%
Slide 7: MirrorEye Update
7 MirrorEye Update Retrofit Current State ▸ Retrofit expansion with 3 fleet partners ▸ Pre - wire launched at end of Q3 with Daimler Truck North America ▸ Initial pre - wire orders came from existing fleet evaluation partner and fleets outside of current fleet partner network Retrofit Outlook ▸ Expe
Slide 8: Summary
8 Summary Summary x Strong execution as production volumes ramped back up globally x Adjusted gross margin and adjusted operating margin improved by 80 bps and 140 bps, respectively, vs. Q1 x Adjusted contribution margin exceeded 35% vs. Q2 x Efficient cash management drove net debt reduction in Q3
Slide 9: Financial Update
Financial Update Sseveve
Slide 10: 3rd Quarter 2020 Financial Summary
10 3 rd Quarter 2020 Financial Summary 3 rd Quarter 2020 Financial Results Sales of $175.8 million, an increase of 76.6% versus Q2 2020 • Control Devices sales of $100.9 million, an increase of 107.8% versus Q2 • Electronics sales of $70.4 million, an increase of 47.9% versus Q2 • Stoneridge Brazil
Slide 11: 2020 Q3 Financial Highlights (continued)
11 2020 Q3 Financial Highlights (continued) $’s in USD Millions Every aspect of the P&L improved in Q3 vs. Q1 – continued focus on strategic priorities and management of externalities driving strong financial performance and outlook $96.6 $53.2 $92.4 52.8% 53.4% 52.6% 52% 52% 52% 53% 53% 53% 53% 53%
Slide 12: Control Devices Financial Performance
12 Control Devices Financial Performance Return to normalized production levels in Q4 and typical seasonality expected to reduce revenue vs. Q3 Control Devices Q4 Expectations Expecting return to normalized production levels in Q4 after ramp - up in Q3 that exceeded expectations – typical Q4 seasona
Slide 13: Electronics Financial Performance
13 Electronics Financial Performance Expecting continued revenue growth in Q4 Expecting strong revenue performance in 2021 Electronics Q4 Expectations and 2021 Outlook Expecting continued revenue growth in Q4 as global commercial vehicle production continues to ramp - up Q4 product mix expected to r
Slide 14: Stoneridge Brazil Financial Performance
14 Stoneridge Brazil Financial Performance Continued macroeconomic challenges expected to result in stable Q4 performance and moderate revenue growth in 2021 Stoneridge Brazil Q4 Expectations and 2021 Outlook Expecting stable revenue and Q4 margin vs. Q3 as local COVID risk remains Expecting moderat
Slide 15: 2020 Q4 Guidance
15 2020 Q4 Guidance Q3 Revenue Electronics Control Devices $175.8m Expecting stable revenue performance in Q4 Expecting EPS of ($0.05) - $0.05 in Q4 Q4 Revenue Guidance Typical seasonality and return to normalized production in Control Devices Electronics revenue expected to increase in Q4 vs. Q3 dr
Slide 16: Net Debt Update and Cash Flow Outlook
16 Net Debt Update and Cash Flow Outlook Continued strong cash performance in Q3 Q3 Summary and Q4 Expectations Net debt decreased by approximately $10.3 million in Q3 Reduced revolving credit facility balance by $17.0 million during the quarter Q3 net debt / adjusted EBITDA of 2.4x Continue to mana
Slide 17: Summary
17 Summary 2020 Q3 Summary ▸ Control Devices – Strong contribution margin on revenue growth that outpaced expectations in Q3 ▸ Electronics – Continued ramp - up in global commercial vehicle markets and contribution margin over 40% in Q3 ▸ Stoneridge Brazil – Significant revenue growth and continued
Slide 18: Appendix
Appendix Sseveve
Slide 19: Income Statement
19 Income Statement CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Net sales $ 175,764 $ 203,386 $ 458,275 $ 643,924 Costs and expenses: Cost of goods sold 129,769 151,531 353,629 474,389 Selling, general and administrative 24,414 30,978 81,610 94,0
Slide 20: Balance Sheet
20 Balance Sheet CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 68,288 $ 69,403 Accounts receivable, less reserves of $1,478 and $1,289, respectively 129,518 138,564 Inventories, net 88,144 93,449 Prepaid expenses and other current
Slide 21: Statement of Cash Flows
21 Statement of Cash Flows CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended September 30 (in thousands) OPERATING ACTIVITIES: Net income (loss) $ (11,530) $ 56,082 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation 2
Slide 22: Statement of Cash Flows (Cont.)
22 Statement of Cash Flows (Cont.) INVESTING ACTIVITIES: Capital expenditures, including intangibles (24,331) (30,771) Proceeds from sale of fixed assets 43 329 Proceeds from disposal of Non-core Products - 34,386 Investment in venture capital fund (750) (1,200) Net cash (used for) provided by inves
Slide 23: Segment Financial Information
23 Segment Financial Information Net Sales: Control Devices $ 99,942 $ 108,690 $ 243,797 $ 332,876 Inter-segment sales 971 1,185 3,877 5,124 Control Devices net sales 100,913 109,875 247,674 338,000 Electronics 62,995 78,154 180,071 260,560 Inter-segment sales 7,362 8,867 17,672 27,914 Electronics n
Slide 24: Reconciliations to US GAAP
24 Reconciliations to US GAAP
Slide 25: Reconciliations to US GAAP
25 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 26: Reconciliation of Adjusted EPS
26 Reconciliations to US GAAP Reconciliation of Adjusted EPS (USD in millions) Q3 2020 Q3 2020 EPS Net Income 6.7$ 0.25$ Less: After-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) (2.8) (0.10) Add: After-Tax Restructuring Costs 0.9 0.03 Less: After-Tax Earnings in Autotech Fund Investment
Slide 27: Reconciliation of Adjusted Gross Profit and Operating Income
27 Reconciliations to US GAAP Reconciliation of Adjusted Gross Profit (USD in millions) Q1 2020 Q2 2020 Q3 2020 Gross Profit 45.4$ 13.3$ 46.0$ Add: Pre-Tax Restructuring Costs 1.5 0.2 0.6 Add: Pre-Tax Business Realignment Costs 0.1 0.9 0.1 Adjusted Gross Profit 47.0$ 14.4$ 46.7$ Reconciliation of Ad
Slide 28: Reconciliation of Adjusted Overhead and Operating Expenses
28 Reconciliations to US GAAP *Adjusted operating expenses is equal to adjusted SG&A expenses plus adjusted D&D expenses. Reconciliation of Adjusted Overhead Expense (USD in millions) Q1 2020 Q2 2020 Q3 2020 Overhead Expense 31.0$ 26.9$ 28.5$ Less: Pre-Tax Restructuring Costs (1.5) (0.2) (0.6) Less:
Slide 29: Reconciliations to US GAAP
29 Reconciliations to US GAAP
Slide 30: Reconciliation of Segment Adjusted Operating Income
30 Reconciliations to US GAAP Reconciliation of Stoneridge Brazil Adjusted Operating Income (Loss) (USD in millions) Q1 2020 Q2 2020 Q3 2020 Stoneridge Brazil Operating Income (Loss) 0.9$ (0.9)$ 3.4$ Add(Less): Pre-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) (0.6) 0.4 (2.8) Add: Pre-Tax