Company Overview
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Company Overview August 2018 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 expectations of the Company, with respect to, among other things, our (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, (iv) growth opportunities related to awarded business and (v) operational expectations. Forward-looking statements may be identified by the words “will,” “may,” “should,” “designed to,” “believes,” “plans,” “projects,” “intends,” “expects,” “estimates,” “anticipates,” “continue,” and similar words and expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Important factors that could cause actual results to differ materially from those in the forward- looking statements include, among other factors: • the reduced purchases, loss or bankruptcy of a major customer or supplier; • the costs and timing of business realignment, facility closures or similar actions; • a significant change in automotive, commercial, off-highway, motorcycle or agricultural vehicle production; • competitive market conditions and resulting effects on sales and pricing; • the impact on changes in foreign currency exchange rates on sales, costs and results, particularly the Argentinian peso, Brazilian real, Chinese renminbi, euro, Mexican peso and Swedish krona; • our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions; • customer acceptance of new products; • our ability to successfully launch/produce products for awarded business; • adverse changes in laws, government regulations or market conditions, including tariffs, affecting our products or our customers’ products; • our ability to protect our intellectual property and successfully defend against assertions made against us; • liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party, or the impact of product recall or field actions on our customers; • labor disruptions at our facilities or at any of our significant customers or suppliers; • the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis, including the impact of potential tariffs and trade considerations on their operations and output; • the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our revolving credit facility; • capital availability or costs, including changes in interest rates or market perceptions; • the failure to achieve the successful integration of any acquired company or business; • risks related to a failure of our information technology systems and networks, and risks associated with current and emerging technology threats and damage from computer viruses, unauthorized access, cyber attack and other similar disruptions; and • the items described in Part I, Item IA (“Risk Factors”) of our 10-K filed with the SEC. In addition, the forward-looking statements contained herein represent our estimates only as of the date of this release and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise. 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 a result of rounding due to the representation of values in millions rather than thousands in public filings. 2 About Stoneridge No end-market* Founded comprises more than Manufacturing locations on 4 1965 11 continents 1/3 NYSE: SRI of our year-to-date sales 2018 Revenue growth** 2018 Q2 Adj. EPS growth 5-year backlog*** 6%+ 33% $3.3 billion 5.3x 2017 OEM sales Stoneridge is an established, global company with a well diversified product portfolio, strong historical financial performance and a robust 5-year backlog *End-markets include passenger car, light truck / SUV, commercial vehicle, aftermarket and other, including agriculture, off-highway vehicles, material handling, etc. ** 2018 revenue growth based on lower-end of guided range 3 *** As of December 31, 2017 Global Reach Headquarters relocated to Novi, MI in 4Q16 to facilitate stronger customer relationships and attract and retain talent Global Headquarters Manufacturing Site Design Center Sales & Technical Support 11 Manufacturing Sites 10 Design Centers 4 Organization Overview 2018 Sales* : $870.0m Stoneridge, Inc. (NYSE: SRI) 50% of 2018 Q2 Sales 41% of 2018 Q2 Sales 9% of 2018 Q2 Sales Stoneridge SCD Stoneridge SRE PST ELETRÔNICA PST CONTROL DEVICES ELECTRONICS (JV, BRAZIL) High Performance Actuators Driver Information Systems Track & Trace Sensors: Particle Matter (Soot), Vision Systems Telematics Temperature, Speed, Position, Telematics Systems Safety & Security Pressure, Fluid Level, Torque Tachograph Systems Electronic Modules Evaporative Emission Reduction and Solenoid Control Electronic Control Units (ECU) Alarm & Remote Access Valves Electronic Logging Devices Audio Power & Switch Modules Stoneridge ELECTRONICS Advanced vehicle camera systems and displays Radar *Based on lower end of full year guidance provided Video Recording 5 on Q2 2018 earnings call on August 2, 2018 Building a Culture of Performance and Growth 6 Our Current Leadership New Hire or New Position since 2015 7 Leadership Team Capable of Driving Global Growth Stoneridge has systematically assembled an executive team comprised of industry leaders capable of driving global, sustainable performance and growth 8 *Based on lower end of full year guidance provided on Q2 2018 earnings call on August 2, 2018 Business Share by Segment and Region Business Segments (2017) Regions (2017)* We continue to diversify our product portfolio and geographic exposure through organic and inorganic growth opportunities *Regional sales based on manufactured location. 9 China – A Platform for Growth Strong financial performance Backlog suggests CAGR of over 20% from 2016 – 2020* World-class manufacturing facility in Suzhou Products, operations and engineering focused on “Asia-for-Asia” strategy Regulations creating emissions requirements Exhaust gas temperature (EGT) sensors (Control Devices segment) Local customers and content growth Commercial vehicle driver information systems (Electronics segment) Continuing to focus on opportunities to serve the local market and expand manufacturing and development in China as a catalyst for growth 10 *Based on September 2017 IHS; Q3 2017 LMC 2018 Full Year Volume Outlook Sales by End Market (2017) Passenger Car* (Units in Millions) Stoneridge Vehicle Production 2018 2017E Sales** 2017E 2018E B/(W) 2017 Europe 5.0% 22.3 22.8 2.0% Asia 20.9% 50.0 50.4 0.9% North America 73.8% 17.1 17.4 1.6% South America 0.1% 3.3 3.7 13.1% Other 0.2% 2.6 2.8 9.0% Total 100.0% 95.3 97.1 1.9% Commercial Vehicle* (Units in Millions) Stoneridge Vehicle Production 2018 2017E Sales** 2017E 2018E B/(W) 2017 Europe 64.5% 0.6 0.6 3.2% Asia 4.9% 2.0 1.9 -7.8% North America 30.3% 0.5 0.6 13.9% South America 0.2% 0.1 0.1 15.5% Other 0.1% 0.0 0.0 -5.4% Total 100.0% 3.2 3.2 -1.8% Stoneridge is well positioned to take advantage of strong performing regions and end markets *Excluding Orlaco and PST 11 ** Regional sales based on manufactured location SOURCE: Dec 2017 IHS; Q4 2017 LMC, Company Data Business Share by Customer (2017) We are well diversified in our customer exposure. Approximately 75% of sales are attributable to OEM customers which comprise forecasted backlog. *Does not include revenue from Minda-Stoneridge JV, 12 Winning with Our Customers Over the past year we have been recognized for our excellence as both a passenger car and commercial vehicle supplier by some of the largest, global OEMs Received the 2016 Safe Pillar Award from Ford Motor Company for supplying a variety of advanced technology sensors and actuators Received the 2017 Partnership award from Daimler AG for the international roll-out of driver information systems for Mercedes-Benz Freightliner and FUSO Trucks “You always go above-and-beyond to create the best body electronic, instrument and telematics components for our trucks and buses. This is why you take the award trophy home in the Partnership category.” Dr. Marcus Shoenenberg Vice President of Procurement, Daimler Trucks and Buses, Daimler AG Deepening relationships with customers Positioning the Company for long-term success 13 Recent Financial Performance 14 2nd Quarter 2018 Summary 2nd Quarter 2018 Financial Results Sales of $220.6 million, an increase of 5% over Q2 2017 Control Devices sales of $112.4 million, a decrease of 3% over Q2 2017 Electronics sales of $100.1 million, an increase of 22% over Q2 2017 PST sales of $20.3 million, a decrease of 13% over Q2 2017 Adjusted operating income of $20.1 million, an increase of 8% over Q2 2017 (9.1% operating margin) Control Devices adjusted operating income of $17.7 million, a decrease of 11% over Q2 2017 (15.8% adjusted operating margin) Electronics adjusted operating income of $9.0 million, an increase of 61% over Q2 2017 (9.0% adjusted operating margin) PST adjusted operating income of $1.3 million, a decrease of 3% over Q2 2017 (6.4% adjusted operating margin) 2018 Performance and Guidance 2018 Q1 2018 Q2 2018 Full Year (Actual) (Actual) Guidance Sales $225.9 Million $220.6 Million $870 - $890 Million Gross Margin 30.1% 30.6% 31.0% - 32.0% Adjusted 8.0% 9.1% 9.0% - 10.0% Operating Margin Adjusted EPS $0.50 $0.55 $2.05 - $2.20 Adjusted EBITDA 11.9% 12.8% 12.5% - 13.5% Margin Segment level financial information includes intercompany sales.