Stoneridge, Inc. · NYSE:SRI
Stoneridge — Deutsche Bank Auto Conference 2019
31 slides from Stoneridge's conference presentation, Jan 16, 2019
Slide 1: Deutsche Bank Auto Conference January 16, 2019
Deutsche Bank Auto Conference January 16, 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: Delivering Shareholder Value
3 Delivering Shareholder Value Stoneridge is a well - established, global, transportation technology company Our executive team is comprised of industry leaders capable of driving global growth We are well diversified globally, by segment, by end - market and by customer Our long - term strategy pos
Slide 4: Stoneridge Evolution Since 2014
4 Stoneridge Evolution Since 2014 Transformation of base business is complete and has resulted in improvement in every selected financial metric driving significant shareholder value *Based on midpoint of updated 2018 guidance as of the date of this presentation (1/16/19) ** Based on 2018 preliminar
Slide 5: Current Portfolio Overview
5 Current Portfolio Overview Current portfolio aligned with megatrends in the transportation industry – intelligence, safety and security, emissions and fuel efficiency Stoneridge, Inc (NYSE: SRI) 2018 Sales* : $865m ▸ Powertrain Actuation • Transmission • Axle - Based ▸ Switches and Connectors • OE
Slide 6: Stoneridge - A Vehicle Technology Company
6 Stoneridge - A Vehicle Technology Company 40% 45% 50% 55% 60% 65% 70% 75% 80% 2013 2014 2015 2016 2017 2018 E Smart Products* (% of Sales) *Smart products include Stoneridge products with printed circuit boards and / or electronic content, including software MEGATRENDS These megatrends are expecte
Slide 7: Stoneridge 2020
7 Stoneridge 2020 ▸ We have performed a detailed review of our product portfolio to ensure alignment with our strategic plan • Technologies that elevate our products from components to system - based solutions • Development of technology platforms rather than individual products ▸ We have identified
Slide 8: Stoneridge 2020 Control Devices
8 Stoneridge 2020 Control Devices We will rationalize our manufacturing footprint to reduce fixed cost overhead and focus our resources on technologies and platforms core to our long - term growth ▸ Powertrain Actuation • Transmission • Axle - Based ▸ Switches and Connectors • OEM / Pollak Aftermark
Slide 9: Stoneridge 2020 Electronics
9 Stoneridge 2020 Electronics We will focus our resources on development of core technologies and system - based products Strategic alternative to non - core products expected to drive margin improvement ▸ Announced restructuring of Tachograph business on Q3 2018 earnings call ▸ Evaluating strategic
Slide 10: Stoneridge 2020 PST
10 Stoneridge 2020 PST We will utilize our global footprint to serve our customers and reduce individual local end - market volatility for PST through increased scale ▸ Track and Trace ▸ Audio and Alarm • Aftermarket Audio • Security Alarms ▸ In - region OEM Business • Commercial Vehicle Connectivit
Slide 11: Electronics President Update
11 Electronics President Update Thomas A. Beaver VP & President Global Sales Alisa A. Nagle Chief Human Resources Officer Tony L. Moore Vice President Operations Dan Kusiak Vice President Global Procurement Stephen Fox Vice President Business Development Jonathan B. DeGaynor CEO & President Stonerid
Slide 12: Long-Term Financial Targets
12 $0 $200 $400 $600 $800 $1,000 2018 2019 2021 Non-Core Core Long - Term Financial Targets Stoneridge 2020 improves portfolio profitability 15.5%+ EBITDA margin by 2021 Stoneridge 2020 rationalizes non - core products 8 - 9% revenue CAGR on core portfolio 2019 - 2021 Long - Term Revenue Target Long
Slide 13: Accelerating Technology Development: Investment in Autotech Ventures
13 Accelerating Technology Development Investment in Autotech Ventures Investment in Autotech Ventures VC fund to increase visibility to cutting - edge technologies and facilitate relationships with start - up companies ▸ Stoneridge will receive certain strategic services provided by Autotech Ventur
Slide 14: MirrorEye Implementation On-Track
14 MirrorEye Implementation On - Track ▸ Received Federal Motor Carrier Safety Administration (FMCSA) exemption for mirror removal with MirrorEye • Stoneridge has the only product in the United States with approval to operate without traditional mirrors on commercial vehicles ▸ Announced agreement w
Slide 15: Winning with our Customers
15 Winning with our Customers 2016 Safe Pillar Award from Ford Motor Company 2017 Partnership award from Daimler AG 2018 PACCAR Supplier Performance Management (SPM) Achiever Award 2018 PACCAR Supplier Award 2016 Ford Supplier Award 2017 Daimler Truck Supplier Award Deepening relationships with cust
Slide 16: Summary
16 Summary ▸ We have successfully transformed our base business resulting in strong financial performance and are building a strong foundation for future growth ▸ We have identified certain products that do not align with our long - term strategy and will investigate strategic alternatives to these
Slide 17: Financial Summary
Financial Summary Siererive
Slide 18: 2018 Guidance Update
18 2018 Guidance (As of Q3) 2018 Guidance (Updated) Sales $855 - $870 Million $860 - $870 Million Production volumes remain robust, unfavorable product mix in Q4 Adjusted Gross Profit 30.0% - 31.0% 29.5% - 30.0% Quality and warranty related expenses, electronics input pricing, tariffs Adjusted Opera
Slide 19: Backlog Awarded Business: 2019-2023
19 Backlog Awarded Business: 2019 – 2023 Despite significant impact of reduced production forecasts and ramp - down of legacy Shift - by - Wire programs, backlog continues to grow (5.2x 2018 OEM SALES) Legacy Shift - by - Wire programs rolling off, offset by new Chinese OEM Shift - by - Wire award S
Slide 20: 2019 Full Year Volume Outlook
20 2019 Full Year Volume Outlook Weighted OEM end - markets expected to grow ~0.7% in 2019 *Excluding Orlaco and PST ** Regional sales based on manufactured location and estimated end - market exposure *** Management estimates Total Passenger Car / Light Truck OE 41% Commercial Vehicle OE 30% Afterm
Slide 21: FY 2019 Segment Drivers
21 FY 2019 Segment Drivers Control Devices Continued ramp - down of Shift - by - Wire presents ~$35 million revenue headwind Launch costs related to ramp - up of soot sensor and Park - by - Wire programs Expecting continued tariffs headwinds; less than 2018 run - rate Continued operational improveme
Slide 22: FY 2019 Financial Performance Drivers
22 FY 2019 Financial Performance Drivers 2018 Guidance Sales Adjusted Earnings Per Share New Business Launches Wage / Benefit Inflation Aftermarket / MirrorEye Retrofit Pricing 2018 Guidance $1.93 - $1.97 $860m - $870m Shift - by - Wire Ramp - Down Tax Rate and Share Count Currency Tariffs D&D Inves
Slide 23: Control Devices Organic Growth Despite Legacy Shift-by-Wire Ramp-Down
23 Control Devices Organic Growth Despite Legacy Shift - by - Wire Ramp - Down 0 100 200 300 400 500 600 2017 2018 E 2019 F 2020 F 2021 F Shift-by-Wire Control Devices As expected, legacy Shift - by - Wire will continue to ramp down from a peak annual revenue of approximately $100 million in 2017 Co
Slide 24: Long-Term Financial Targets
24 Long - Term Financial Targets Stoneridge 2020 project will focus portfolio on high margin, growth products driving expected 8 - 9% revenue CAGR on core products and EBITDA margin of 15.5%+ by 2021 Source: Aug 2018 IHS; Q2 2018 LMCA, ACT Research, Emerging Strategy and Company Data $0 $200 $400 $6
Slide 25: Summary
25 Summary 2018 Update ▸ Reduced gross margin relative to expectations due to increased warranty and quality - related costs, specifically at Control Devices 2019 Outlook ▸ New product launches, including MirrorEye retrofit, expected to be partially offset by continued ramp - down of legacy Shift -
Slide 26: Appendix
Appendix Siererive
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: Reconciliation of 2014 Adjusted EPS and EBITDA
Reconciliation of 2014 Adjusted EPS 2014 Reported Earnings Per Share $(1.40) Add: Goodwill PST $1.91 Less: Noncontrolling Interest PST $(0.42) Add: Bond Redemption Premium $0.30 Add: Debt Discount / Deferred Financing $0.11 Less: Swap $(0.01) Adjusted Earnings Per Share $0.49 Reconciliation of 2014
Slide 29: Business Share by Segment and Region
29 Business Share by Segment and Region Business Segments ( 2018 Preliminary) Regions ( 2018 Preliminary)* *Regional sales based on sales origination. Based on preliminary 2018 estimates. Actual results may differ. 52% 59% 54% 51% 33% 29% 34% 40% 15% 12% 11% 9% 2015 2016 2017 2018F Control Devices E
Slide 30: Business Share by Customer
30 Business Share by Customer (Direct - to - Customer) 2018 Preliminary *Does not include revenue from Minda - Stoneridge JV, Based on preliminary 2018 estimates. Actual results may differ. Ford 12% Volvo 8% Daimler 6% GM 5% MAN 5% Scania 5% Navistar 3% PACCAR 3% FCA 3% SAIC GM 2% Cummins 1% John De
Slide 31: Primary Stoneridge Foreign Currency Sensitivities
31 Primary Stoneridge Foreign Currency Sensitivities SRI Currency Exposures 2019 Assumption Rates If 5% Weaker vs. USD N et Annual EBITDA * Transaction Impact Translation Impact Euro 1.18 Mexican Peso 18.86 N/A Swedish Krona 8.65 Brazilia n Real 3.84 *Before impact of hedging programs, approximate U