Q3 2020 Results

October 29, 2020

Forward-Looking Statements

Statements in this presentation that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Important factors that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the impact of the global COVID-19 pandemic on our business, results of operations and financial condition; the loss or bankruptcy of a major customer; the costs and timing of facility closures, business realignment or similar actions; a significant change in automotive, commercial, off-highway, motorcycle and agricultural vehicle production; our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions; a significant change in general economic conditions in any of the various countries in which Stoneridge operates; labor disruptions at Stoneridge's facilities or at any of Stoneridge's significant customers or suppliers; the ability of suppliers to supply Stoneridge with parts and components at competitive prices on a timely basis; the amount of Stoneridge's indebtedness and the restrictive covenants contained in the agreements governing its indebtedness, including its revolving credit facility; customer acceptance of new products; capital availability or costs, including changes in interest rates or market perceptions; the failure to achieve successful integration of any acquired company or business; the occurrence or non-occurrence of circumstances beyond Stoneridge's control; and the items described in "Risk Factors" and other uncertainties or risks discussed in Stoneridge's periodic and current reports filed with the Securities and Exchange Commission.

Important factors that could cause the performance of the commercial vehicle and automotive industry to differ materially from those in the forward-looking statements include factors such as (1) continued economic instability or poor economic conditions in the United States and global markets, including as a result of the global COVID-19 pandemic, (2) changes in economic conditions, housing prices, foreign currency exchange rates, commodity prices, including shortages of and increases or volatility in the price of oil, (3) changes in laws and regulations,

(4) the state of the credit markets, (5) political stability, (6) international conflicts and (7) the occurrence of force majeure events.

These factors should not be construed as exhaustive and should be considered with the other cautionary statements in Stoneridge's filings with the Securities and Exchange Commission.

Forward-looking statements are not guarantees of future performance; Stoneridge's actual results of operations, financial condition and liquidity, and the development of the industry in which Stoneridge operates may differ materially from those described in or suggested by the forward-looking statements contained in this presentation. In addition, even if Stoneridge's results of operations, financial condition and liquidity, and the development of the industry in which Stoneridge operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods.

This presentation contains time-sensitive information that reflects management's best analysis only as of the date of this presentation. Any forward-looking statements in this presentation speak only as of the date of this presentation, and Stoneridge undertakes no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Stoneridge does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Rounding Disclosure: There may be slight immaterial differences between figures represented in our public filings compared to what is shown in this presentation. The differences are the result of rounding due to the representation of values in millions rather than thousands in public filings.

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Overview of Achievements

  • Continued strong execution in Q3 on revenue that exceeded our expectations
    • Adjusted gross margin and adjusted operating margin improved by 80 bps and 140 bps, respectively, vs. Q1
    • Q3 incremental adjusted contribution margin* of 35.8% vs. Q2
    • Liquidity remains strong with net debt reduction of $10.3 million in Q3 (Q3 net debt / adjusted EBITDA of 2.4x)
  • Continued progress with MirrorEye retrofit and pre-wire applications - continuing preparations for OEM launches in 2021
    • Pre-wireorders began end of Q3 - receiving orders from current fleet partners and fleets outside of current evaluation partners
  • Portfolio transformation continues
    • Previously announced planned exit of soot sensor product lines remains on track
    • Lease in place with premium tenant for vacated building in Canton, MA - evaluating divestiture opportunities for the building in 2021
  • Strong 2021 outlook driven by expected revenue of at least $715 million (growth of 20%+ adjusted for the discontinued soot sensor business)

Q3 2020 Financial Performance

Reported

Adjusted

Sales

$175.8 million

--

Gross Profit

$46.0 million

$46.7 million

Margin

26.2%

26.5%

Operating Income

$9.8 million

$8.2 million

Margin

5.6%

4.7%

Tax Rate

21.3%

28.9%

EPS

$0.25

$0.18

EBITDA

$18.5 million

$16.9 million

Margin

10.5%

9.7%

2020 Updated Guidance

Q4 2020 Guidance

2020 Adjusted

Guidance

Sales

$165 - $175 million

$624 - $634 million

Gross Margin

25.0% - 26.0%

23.75% - 24.25%

Operating Margin

0.0% - 2.0%

(1.0%) - 0.0%

Tax Rate

~$1.25 million

nmf

expense

EPS

($0.05) - $0.05

($0.22) - ($0.12)

EBITDA Margin

5.5% - 7.5%

4.5% - 5.5%

*Adjusted contribution margin is calculated as incremental adjusted operating income divided by incremental revenue

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2020 Q3 Financial Highlights

$'s in USD Millions

Q3 Financial Highlights

$183.0

$175.8

Sales

$99.5

Q1 2020

Q2 2020

Q3 2020

$50.0

25.7%

26.5%

30%

$40.0

$47.0

$46.7

25%

Adjusted

$30.0

20%

14.5%

15%

$20.0

Gross Margin

$10.0

10%

$14.4

5%

$-

Q1 2020

Q2 2020

Q3 2020

0%

3.3%

4.7%

Adjusted

$6.0

$8.2

Operating Margin

($19.1)

-19.2%

Q1 2020

Q2 2020

Q3 2020

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 contribution margin of 35.8% in Q3 vs. Q2 exceeded previously outlined expectations for the quarter on improved revenue performance

Adjusted gross margin improved by 80 basis points vs. Q1

Adjusted operating margin improved by 140 basis points vs. Q1

Incremental costs associated with COVID-19 of approximately $0.8 million during the third quarter

Efficient ramp-up of production and cost management led to an 80 basis point improvement in

gross margin and a 140 basis point improvement in operating margin vs. Q1

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Stoneridge Inc. published this content on 28 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 October 2020 21:39:10 UTC