Slide 1: Third-Quarter 2018 Results
Third - Quarter 2018 Results October 29, 2018
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements Statements in this presentation contain “forward - looking statements” under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and may include statements regarding the intent, belief or current expectatio
Slide 3: Overview of Achievements
3 Overview of Achievements x Each segment contributed to our strong third quarter in which we drove year - over - year adjusted operating margin improvement of 130 basis points x Awarded new shift - by - wire program with Chinese OEM ($13 million peak annual revenue) x Showcased advanced technologie
Slide 4: Financial Summary
4 Financial Summary We continue to deliver sustainable, profitable growth
Slide 5: Shift-by-Wire Award
5 Stoneridge - A Vehicle Technology Company Shift - by - Wire Award Awarded new Shift - by - Wire program with Chinese OEM for local market First major actuation award to be produced in China for the Company Establishes our actuation products in Chinese market to take advantage of growing Shift - by
Slide 6: Stoneridge Leadership Announcement
6 Stoneridge Leadership Announcement Newly created CTO position will drive product development aligned with industry mega trends and continued focus on Smart products Laurent Borne joined Stoneridge as Chief Technology Officer effective August 20 th Laurent brings extensive global leadership and tra
Slide 7: Tachograph Business Realignment
7 Stoneridge – A Vehicle Technology Company Tachograph Business Realignment Launching 1C Smart Tachograph in 2019 Includes global navigation satellite system to record vehicle location Utilizes digital short - range communication (DSRC) to communicate with roadside inspections without stopping vehic
Slide 8: Each segment contributed to our strong third quarter
8 Each segment contributed to our strong 3 rd quarter Laurent Borne joined Stoneridge as Chief Technology Officer to drive product strategy and technology roadmap Significant Shift - by - Wire award with new customer in China $13 million peak annual revenue – 2020 Start - of - Production First major
Slide 9: Financial Update
Financial Update Stoneridge
Slide 10: Third Quarter 2018 Financial Summary
10 3 rd Quarter 2018 Financial Summary 3 rd Quarter 2018 Financial Results 2018 Performance and Guidance Sales of $208.9 million, an increase of 3% over Q3 2017 Control Devices sales of $110.0 million, an increase of 2% over Q3 2017 Electronics sales of $90.7 million, an increase of 13% over Q3 2017
Slide 11: Control Devices Financial Performance
11 Control Devices Financial Performance Revenue growth and stable operating profit despite reduced production levels, tariffs and continued ramp - down of Shift - by - Wire programs Control Devices Overview Growth in certain actuation products and emissions products offset by production volume redu
Slide 12: Electronics Financial Performance
12 Electronics Financial Performance Continued strong revenue performance and margin expansion. Adjusted operating margin exceeds 10% for the quarter – first time in 5 years. Segment level financial information includes intercompany sales *Due to centralizing certain procurement and operations funct
Slide 13: PST Financial Performance
13 PST Financial Performance Margin expansion continues despite challenging macroeconomic conditions Segment level financial information includes intercompany sales *Due to centralizing certain procurement and operations functions we have allocated certain corporate costs to each segment t hat were
Slide 14: Tariff / NAFTA Update
14 Tariff / NAFTA Update Total announced tariffs expected to impact Q4 by $1.0 to $1.3 million as reflected in our updated guidance Expected tariff headwind in Q4: $1.0 - $1.3 million Expected tariff headwind 2018: $2.3 - $2.6 million On August 23, 2018 the United States imposed a 25% import tariff
Slide 15: Capital Allocation Strategy
15 Capital Allocation Strategy Share Repurchase Authorization We will utilize our capital structure in order to maximize shareholder value Net Debt and Leverage Ratio Net Debt / Adjusted EBITDA We will utilize our capital to maximize shareholder return through investment in our existing business, in
Slide 16: 2018 Full-Year Adjusted EPS Guidance
16 2018 Full - Year Adjusted EPS Guidance Continued customer volume reductions on certain platforms in China and North America Movements in currency are creating additional headwinds, specifically in Europe and Brazil Tariffs announced in Q2 and Q3 created $1.3 million headwind in Q3 and are expecte
Slide 17: All segments contributing to strong financial performance
17 All segments contributing to strong financial performance Control Devices – Marginal revenue growth despite reduced production volumes and shift - by - wire ramp down. Stable operating profit. Electronics – Strong quarter - over - quarter revenue growth despite currency headwinds. Continued margi
Slide 18: Thank You
Thank You Stoneridge
Slide 19: Appendix
19 Appendix
Slide 20: 2018 Q3 Adjustments
20 2018 Q3 Adjustments The expense related to the step - up in the fair value of the earn - out related to the acquisition of the remaining 26% minority interest in PST was $0.5 million resulting in an EPS adjustment of $0.02 Expenses related to certain one - time business realignment costs have bee
Slide 21: Income Statement (Unaudited)
21 Income Statement (Unaudited) (in thousands, except per share data) 2018 2017 2018 2017 Net sales $ 208,853 $ 203,582 $ 655,385 $ 617,004 Costs and expenses: Cost of goods sold 145,568 141,033 456,713 429,890 Selling, general and administrative 32,589 37,277 105,106 107,247 Design and development
Slide 22: Segment Financial Information
22 Segment Financial Information 2018 2017 2018 2017 Net Sales: Control Devices $ 108,402 $ 106,842 $ 333,715 $ 339,716 Inter-segment sales 1,556 1,118 6,218 3,269 Control Devices net sales 109,958 107,960 339,933 342,985 Electronics 81,587 71,354 261,928 206,769 Inter-segment sales 9,067 8,959 29,3
Slide 23: Balance Sheet
23 Balance Sheet CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, (in thousands) 2018 2017 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 60,655 $ 66,003 150,393 142,438 Inventories, net 86,755 73,471 Prepaid expenses and other current assets 22,107 21,457 Total curre
Slide 24: Statement of Cash Flows (Unaudited)
24 Statement of Cash Flows (Unaudited) Nine months ended September 30, (in thousands) 2018 2017 OPERATING ACTIVITIES: Net income $ 41,792 $ 26,141 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 17,073 15,922 Amortization, including accretion of deferre
Slide 25: Statement of Cash Flows (Cont.)
25 Statement of Cash Flows (Cont.) (Unaudited) Nine months ended September 30, (in thousands) 2018 2017 FINANCING ACTIVITIES: Acquisition of noncontrolling interest, including transaction costs - (1,848) Revolving credit facility borrowings 27,500 91,000 Revolving credit facility payments (47,500) (
Slide 26: Reconciliations to US GAAP
26 Reconciliations to US GAAP
Slide 27: Reconciliations to US GAAP
27 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 28: Reconciliations to US GAAP
28 Reconciliations to US GAAP (USD in millions) Q1 2017 Q2 2017 Q3 2017 YTD Q3 2017 Q1 2018 Q2 2018 Q3 2018 YTD Q3 2018 Gross Profit 61.2$ 63.4$ 62.6$ 187.1$ 68.0$ 67.4$ 63.3$ 198.7$ Add: Pre-Tax Step-Up in Acquired Inventory from Orlaco 1.0 0.7 1.6 Adjusted Gross Profit 62.1$ 64.1$ 62.6$ 188.8$ 68.
Slide 29: Reconciliations to US GAAP
29 Reconciliations to US GAAP (USD in millions) Q1 2017 Q2 2017 Q3 2017 YTD Q3 2017 Q1 2018 Q2 2018 Q3 2018 YTD Q3 2018 Control Devices Operating Income 19.1$ 19.9$ 16.2$ 55.3$ 17.9$ 17.2$ 16.3$ 51.3$ Add: Pre-Tax Allocation of Centralized Procurement and Operations Functions 0.5 0.4 0.4 1.4 Add: Pr
Slide 30: Reconciliations to US GAAP
30 Reconciliations to US GAAP (USD in millions) Q3 2018 Q3 2018 EPS Net Income Attributable to Stoneridge 13.3$ 0.46$ Add: After-Tax Step-Up in Fair Value of Earn-Out (PST) 0.5 $0.02 Less: After-Tax Impact of US Tax Cut and Jobs Act (0.1) ($0.00) Add: After-Tax Business Realignment Costs (0.1) ($0.0
Slide 31: Reconciliations to US GAAP
31 Reconciliations to US GAAP (USD in millions) YTD Q3 2018 YTD Q3 2018 EPS Net Income Attributable to Stoneridge 41.8$ 1.44$ Add: After-Tax Step-Up in Fair Value of Earn-Out (PST) 1.6 $0.05 Add: After-Tax Step-Up in Fair Value of Earn-Out (Orlaco) 0.4 $0.01 Less: After-Tax Impact of US Tax Cut and