SRI - Earnings call transcript Q2 2019

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Operator

Good morning, ladies and gentlemen and welcome to Stoneridge Second Quarter 2019 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Matt Horvath, Director of Investor Relations.

Matt Horvath

Thanks, Crystal. thank results. joining and our to everyone, quarter second morning, you us for discuss Good and presentation website release Presentations. and the The accompanying section is yesterday the Investors posted evening SEC on Webcasts our under at in was www.stoneridge.com and filed with

me Jon our Chief call President our Chief are Bob Officer and Krakowiak, today’s Financial on and Joining DeGaynor, Executive Officer.

to statements today forward-looking statements. Before certain we may that begin, inform you I need be

results that statements information are not plans. nature in include future include historical concerning and our statements or Forward-looking

Although that subject based actual should and we statements reasonable upon are and materially. believe that these such assumptions, you results uncertainties, to understand may differ are statements risks

has about differ the Securities been actual factors such the that uncertainties and results Exchange information Commission may could Forward-Looking in to found under Statements. cause which filed Additional be heading with and XX-Q, our

most referring up follow-up. During certain measures for reconciliation today’s to we of to these question the open their that will After formal have your non-GAAP questions. remarks, finished single call financial the comparable to also we you financial appendix will ask Please see Jon you and would a directly keep then call, a non-GAAP I Bob the GAAP measures. be measures. to

to With I’ll Jon. the that, call turn over

Jon DeGaynor

Thanks, Matt and good morning everyone.

on position begin X. the me while Page quarter, strong to second performance. financial Let company In success we continued the delivering for long-term

sales translating adjusted million adjusted the of resulted $X.XX. $XXX quarter for of adjusted to Adjusted an XX.X%, second operating margin was Our quarter in EPS of X.X%. an gross margin

next Park-by-Wire $XX systems. strategically business and am long-term of for year, Shift-by-Wire exceed peak now we million. awards the the for awards, transmission million, with exceeds growth a pleased and awards. both programs to with significant morning, important awarded position launching revenue This quarter, the Total in Shift-by-Wire financial I our continued $XX to Park-by-Wire actuation announce During annual while number company our

to with only our an $XX.X new in also incremental growth recently each key position million business continue Brazil, annual foundation in and geographies. awards, OEM revenue strong awarded for segments, to launch provide but peak related in will the continued a to to the success which programs been company mid-XXXX, In OEM in of of customers driver products. for for not We infotainment awards, early information have we are These region. our scheduled systems

our A few China as join weeks opening celebrated in to our I the facility we team ago, new fully able was of owned grand in Suzhou.

strategy. important we strong specifically XXXX on later Based approximately have next year, increasing in in our of will out are will sales growth year long-term our exceed don’t we production next reduced for financial expect expect the $XX double-digit quarterly in sales China remainder in line part China top from forecasted and on sales that full expect detail to our This China is and second quarter China guidance XXXX This our midpoint regarding call. Emissions we a Bob performance products we of double to growth a XXXX. of our And, $X.XX. guidance and break detail forecasts, additional provide year, an year. Although EPS our we basis, the for despite morning, million. demand to adjusted

relative our quarter to X key XXXX. Page metrics summarizes financial the second of

period. over with any This the business connectors removed agreed noted discuss it last of purposes that divested the the and switch as year. services well associated with from margin for as be should from quarter manufacturing have transition in includes the impact the estimated the the detail, comparable this quarter both financial transition revenue we Before comparison acquirer metrics to and we

our products in systems. Revenue and off-highway vision growth second exceeded primarily our in Emissions expectations, the quarter by driven

million $X.X down in ramp in XXXX. a legacy the quarter programs second to Our to continued second resulting headwind Shift-by-Wire relative the of quarter,

during million. $X.X quarter, of we approximately headwinds Additionally, the currency experienced

legacy impact our the X% key quarter-over-quarter, increased portfolio end core and markets. reductions, despite by of of reduced conditions sales our Shift-by-Wire adverse program currency some macroeconomic and in Excluding production volumes

the industry. continues growth outpace to underlying Our

basis margin Quarter-over-quarter, basis external by including while adjusted in the electronic introduced reduction These gross shortages. adjusted drove by XXX XXX and declined operating points, costs comparable adjusted points by operating margin declined quarter-over-quarter tariff XXX quarter. impacts, reduced that period, factors Several not elevated margin were the profitability, factors currency basis component alone unfavorable the points. in continued three related in approximately to expenses

term, aligning While short current tariff expenses difficult improvements supply environment. and on we business it strategies is to drive focused chain the in our currency in exposure remain the dramatic with

During quarters $X additional million two period relative year. of tariff-related the the approximately we comparable the experienced expenses of to first last year,

Our to geographic currency natural diversification volatility hedges continued and help will foreign reduce create rates. exchange related

on the reduced costs as reduce We strategy expenses high-priced reduced these we year Quarter-to-quarter, the redesigns of $XXX,XXX of have savings $XXX,XXX year. recent procurement are and the remainder the by forecasting of reliance for negotiated adjustments should electronic component components. over for and remainder expected have our product approximately

expect in to negotiated million $X as relative Next, rates. in reductions costs, least continued savings these year, current to at we visibility we run have

offset financial to continue committed to XXXX. of on target performance long-term factors within quartile our in external top that control factors. the We We and are our to focus work remain

of focused strong long-term our remain keys success on targets. segments our this Page and to performance to Turning financial each achieve for we continue X, to year to deliver specific

the basis points. includes we expenses. continued at on Devices, quarter-to-quarter by This margin first our controllable XXX Control of Control premium on expenses, operating reduction focus performance. focus Devices the For driving operational have quality-related improved warranty scrap, we quarter, and including a In freight

an trend basis continue additional quarter-to-quarter. XX improvement in the points quarter We that second with

down growth than lead excluding X%, growth and portfolio quarter, and for actuation revenue ramp expect we non-Shift-by-Wire both Devices growth to only I programs. a programs, more actuation core Control products continue previously, the we beyond During by our product portfolio our legacy the of increased XXXX. in should our Emissions strong strong in did driven Not segment continued outlined our to core a by That the programs. grow as but, Shift-by-Wire Emissions on

products transition the capabilities divested our is move to closure manufacturing our of accelerates system-based solutions of we divestiture of technologies technical the non-core the continues focus forward, Canton the Finally, our continue driving which competencies. transformation and segment facility. our The on to as building core

complexity driving and performance improving growth are We footprint. bottom operational through reduced line efficient a manufacturing more and

existing the to Electronics, to development technologies complement portfolio. drive Moving to our continue advanced of we

product OE development invest later segment of this expansion well year. continue capabilities in including complementary MirrorEye our to additional announce research corporate I to to update core will within We regarding a both I detailed the later call. progress expect our within as retrofit both activities. opportunities as advanced news development the provide and MirrorEye and in on lines, our related

and discussed controls have non-core we Electronics business our this within before to able switches our end for to we As detail to make continue progress the previously, alternatives more discuss plans and year. the be our in of expect of review in

than As Brazil. to peak approximately PST’s continue growing trailing discuss annual of two capabilities our to revenue awards on awards, in focus These this have $XX PST in we Considering we previously OEM those more announced million XX% additional morning. XX-month detail date of discussed, would at awards represent OEM sales. awards and will

Our growth long-term segment. Brazil opportunities for will in the paying OEM stable strategy is and provide off

of strategy. to this expansion additional expected technologies X the were programs. actuation I combined to pleased in on help conversion year, generation, Park-by-Wire a an X X, peak remain extension prior million $XX part one And core drive of of Generation revenue. peak of product our generate Control Page product, awards which to awarded the of our of quarter $XX Turning and is will annual generate same two segment. am will that earlier launch with detail launched growth of annual we million for transmission that business the will revenue. and, Devices’ when provide Recently, the this XXXX Generation of

In in peak how applications. been we program annual $X vehicle safety-critical Park-by-Wire for addition demonstrate electrified engineer and this peak have in products. and Park-by-Wire execute on annual trust our for our ability These Overall, previously an with awards we to of continue customers’ we awarded have revenue $XX to million. revenue platform China to approximately million of systems program, announced awarded

pursue the Park-by-Wire we larger as world, the be market We believe programs. with continue will for across opportunities Shift-by-Wire global OEMs than to our legacy

revenue are additional an our the and positioned European in start and starting growth well awarded, Park-by-Wire, continue with legacy this of to opportunities million next having our of to legacy we XXXX. years. manufactured addition annual China additional revenue $XX of market are estimated annual To-date, world. as awarded global a In leverage our of related million peak growing million success production actuation announcing early annual transmission been in With have around the program capabilities China this This in morning, technology. with we is $XX the several for Shift-by-Wire award, over platform to market, Shift-by-Wire revenue to $X we find year, to a launches Shift-by-Wire peak as drive opportunity we awards an peak

begin utilize move continue other to customers, markets. opportunities Turning XX partners while installations Currently, other rollout fleets systems on retrofit fleets and end the have of OEM continues with program and to with of trials. platform expand to forward continuing our in their to for Page as The several X, we commercialization and progress. to MirrorEye, both to investigate we to retrofit the technology a our vehicles scheduled our

in We retrofit our in work the two-quarter a or to capture delay This have production system. that for market refine resulted to of expectations our program. one market. addressable impact the fleets ability delay our have broader our up our with to does way ramp rollout in not continued refinements any and our to These

retrofit the awards. In addition market, opportunities to the continue OEM to additional we in pursue

OEM X decision late early or the short We additional sourcing in expect XXXX. decisions in term, with XXXX an

other can markets additional that be and vehicles. we applied Finally, and platform a as be development MirrorEye to technology utilized end believe for

evaluate commitment where from This we busses applications believe MirrorEye bring utilize remove XXXX. the quarter, they secure This one proposition a our a a to end the able many European bus value system could beginning as to mirrors were we technology to of just from in customer. to their is opportunities unique manufacturer

keep retrofit to traditional updated. remain in will confident to our the system We you our OEM to semi-truck with customers both of continue outside other ability applications. MirrorEye commercialize will and We explore opportunities and commercialize

to significant a our customers. Turning in fastest-growing of Brazil have we in as a provides commercial commercial the discussed our to serve have unique previous our is one Brazilian customers vehicle better forecasted calls, in opportunity of OEM markets. X, be to vehicle presence Page Many global footprint what

the million $XX of production almost have past OEM focused PST region. the announced And were to to supply OEM preparing on awards. year, Over for date, we we

morning, This to I announce OEM have we two that awards. am pleased additional

award, to local market. $X.X manufactured to systems million information The next generate of start driver program be locally peak first is expected a is annual a of production The year. award for with revenue mid

is OEM starting state of in expected award in builds represent exiting two capabilities, award million of for annual XXXX. annual million passenger and revenue with for the generate $X second This a XX infotainment systems cars. an after-market The manufacturer revenue peak of peak it’s on infotainment incremental These of with awards programs local months. our production next early to $XX.X both

for previously with Combined focus drive $XX $XX XX OEM have Brazil. are several trailing these on was our revenue over and years. revenue growth approximately of awards, annual to capabilities been the in in peak expected approximately next million we significant months Brazil continued Considering the OEM of awards million, announced PST PST’s business awarded

of expect and within business remains to existing operating stability our the improved moving region. to strategy, and in drive to the from opportunities a segment, global long-term scale forward. and a footprint to cost drive we capabilities we margin our these PST perspective in growth remain part about optimistic resulting Additionally, well core awards the utilize

achievements I execute success quarter. our to X, XXXX. the company another in on financial second headwinds am to as keys transformation our and continued delivered strong We Page quarter Turning our we several pleased of external performance, overcame in the with of

programs OEM to advantage programs strategically awarded taking continues both new improvement significant Stoneridge, refine growth drive our we awarded with Brazil. will move transmission to for strategy on and the we are global continue we continues OEMs. our forward and footprint, value. growing And MirrorEye Our to long-term actuation we customers as At shareholder deliver continuous strategy, capabilities additional of as and to regions. company, were in were fleets drive recently execute our in with

I Bob it that, discuss will to With results our financial turn more over in to detail.

Bob Krakowiak

Jon. Thanks,

were at order other quarter that April, a adjustments divestiture to in adjustments primarily we early point in as The our related adjustments. these a in we in Before be review as the can related would position detail, like the I in well to our appendix change Detail found earnings. to we attached to of smaller several announced adjustments PST, normalize presentation. tax to number made out the favorable

Slide With sales adjusted while that lines, million; in $XXX.X equal adjusted XXXX. or divested second said, turning the product were were the $XXX XX, to million of sales, quarter first approximately quarter excluding to

lines, or resulted X%, $XXX,XXX adjusted million of million adjusted or million or of quarter-over-quarter, operating of divested or product sales million sales, XX.X% Control X.X% X.X% of product of resulting was of sales of million, excluding More $XX.X $XXX.X in adjusted was lines, sales. PST million $XX.X $X.X increased adjusted divested Excluding X.X% $XXX.X increase income sales. $XX.X income, by operating product operating in Devices’ income excluding income of adjusted of operating X% divested lines, an resulting sales. sales. in specifically, Electronics of

This we EPS adjusted guidance. our increasing morning, XXXX are

We program, exchange XXXX revenue midpoint cadence a The will of is guidance our result additional the $X.XX. continued of our increase as our well to our for expected favorable share the of well reduced late expect in impact call. as of retrofit timing of provide the rates. negative expectations MirrorEye foreign the an impact the offset that to and of I of of of later year earnings more as our the impact than guidance rate, in EPS adjusted currency repurchase revenue will as expectation related and midpoint tax detail $X.XXX full

Page summarizes lines. financial the metrics product the key for Devices Control divested impact excluding our XX of

portfolio to our increased of Quarter-over-quarter, XX growth improvement. other portfolio operational of to Devices’ Emissions by as the by well our As the in Control basis case grew continuous operating products improving quarter quarter to our relative Devices’ base efficiency. products on due and Emissions million has prior of through margin the Shift-by-Wire adjusted XXXX continued the $X.X Devices increased Control XX%. excluding actuation margin China grow, been our quality-related in impact in reducing quarters, by second expansion points driven continues Sensing relative delivering products. throughout products. to sales growth legacy on focusing XXXX, by Control while Sensing Adjusted focus is operating first product the expenses as

XX segment. adjusted Page in operating over XX months the Electronics in highlights and our income growth last the revenue

margin in grew X.X%, adjusted Over by the last XX XX%. XX months, by basis sales growth resulted operating points, of operating while income which adjusted improved

of During related exchange compared million relatively the quarter, a XXXX Electronics $X.X sales were rates. despite flat of unfavorable currency to the second to quarter headwind

currency, Excluding vision increased X.X%, the sales of by unfavorable by impact driven primarily increased our systems. of foreign off-highway quarter-over-quarter sales

electronic cost decreased XXX the income to second to declined adjusted of and quarter XX%, related increases margin operating primarily by relative Adjusted points operating driven by by XXXX, component shortages. basis

increased were operating impact the electronic income which Adjusted approximately Excluding of component million incurred X.X%. costs, approximately quarter-over-quarter. by $X.X

we growth the by capabilities the Engineering-related continue segment. technologies drive will approximately engineering-related as quarter future continued will that to have we quarter. financial portfolio, for to first calls, invest $XXX,XXX increased in expenses the which during as and improving as deliver to underlying we As increased markets profile. expect Electronics discussed above by we relative the prior expenses solid deliver a led strong well performance growth the an expect margin in product

including margin $X.X quarter conditions of challenging of X.X%. reduced trailing the maintain $X.X Revenue to macroeconomic million the demonstrated costs. basis the to while a declined of operating sales adverse months, an by second by relative year. XX operating quarter, revenue And was XX, to driven points. adjusted XXX had the last Turning Page flex able currency, primarily PST ability which declined the in reduced by the to segment impact by unfavorable quarter Despite million, in margin PST

focused continued for expect remainder OE year. segment remain long-term We on the capabilities volatility Longer the in-region position to developing in of Brazil the term, our we for stability.

our some detail additional we XX, that of Page cadence guidance drivers expectations full year margin improvement. and and second-half are providing improvement for and on On updating the our

As in revenue the our quarter exceeded Jon previously, second discussed expectations.

expect quarter. $XX forecasted of More $X to of outperformance few we delayed currency the remainder program impact by We of retrofit offset million to the for the more of second in the revenue foreign expect year MirrorEye the year, and than unfavorable and the share rollout the impact remainder million specifically, cents. currency by earnings per the to for a revenue headwinds the

exception relatively revenue for midpoint the headwinds, year. of for the prior the to million year versus million MirrorEye the in With expectations This our a timing to guidance. in a performance of currency reduction delay guidance for $XXX top our remain revenue unchanged line of and remainder full $X.X results our

expect We than greater third fourth quarter will be slightly quarter that revenue. revenue the

We in operating our expect XXXX. improvement continued margin throughout

second-half we relative first-half margin margin adjusted As result, a X% of X.X%. operating to X% forecasting adjusted the a are to operating of

We are reduced the begin to facility; through speaking, commitment Canton we – by impactful reduction electronic cases example, operations. in to in improvements continued directly component end to the the Generally driven expect as – move our our in continuous year. for improvements And these the and be improvement we of costs, costs year. as toward compounding Canton are wind more enclosure the some down

full quarter an As of we for year $X.XX to guidance. to XXX quarter. a previously the guidance basis This our from over adjusted EPS third we by $X.XXX of margin expectations a points expect fourth approximately relative improve are increase result, $X.XXX, to our increasing morning, midpoint our provided

as our prior tax share for more expectations expectations impact of the of as offset favorable will to reduced rate the remainder than the the repurchase revenue our expect well reduced guidance, for We program, relative year.

number that during year This remains initiatives. the with company position business all our our strategic for committed metrics we driving of of updating reiterate are morning, closing, to full shareholder guidance delivered focus strong significant are Slide financial performance XX, continued the long-term to growth a I key $X.XXX quarter. Stoneridge $X.XX. We announcement to in the of increasing to and adjusted our our to EPS the pleased our at want results of we is Moving in all awards. that by guidance And and value. forefront with

call With questions. up I the open will that, to

Operator

of from from Your CL first comes Scott line Instructions] the King. question [Operator Stember

Scott Stember

was guess, you of processed guys us retrofit you morning for a taking for the questions. two? just of delay the couple Could you like thanks also by, talk about of driven for I and refinements. product Good delay the talk sounds this Can about But my quarter or entirety maybe and It maybe better-than-expected quarters? through decision to demand. much a walk

Jon DeGaynor

Yes. Scott the thanks for question.

with and As trials Hunt said is the really start to our since the really we and Maverick, a the robust first in confidence Schneider, system have driver. of that’s J.B. instills goal develop

So this receive constantly we loop. feedback the throughout it’s gone And as feedback a through we’ve driver evaluation, constant period.

improve to that As of system, high-volume ensure feedback, continuing a is backup features that entire the add lines result the and production. we’re system to functionality for like ready

result a sure make incorporate implemented. make feedback to the improvements to design both trials and take of the and improve to of and As we’ve all the fleet to the changes overall system of the improvements those delay decided get to product trying in some to that,

Scott Stember

it. Got

[indiscernible] strong, the but, Okay, – is very because obviously, demand still right? demand

Jon DeGaynor

Yes.

the the of fleets. is from the Sorry, demand second didn’t interest on in Scott, I there is This question. not a question half whether answer

that of concerned list about XX fleets and about lined fleets demand. list on not a We fleets What we The continues we’re installations we to all the up expand. at beyond that. talked is – have have of

to immediately sure doing system that on is why that the we’re way. confident, our the we’re product this that make driver of and reasons feels the robust, time that every it One in right is this taking experiences

whether right the this doing of the issue of the demand. issue market It’s issue not right in an in that really an an not it’s cadence sure making It’s So system. we’re confident of we’re at and timing.

Bob Krakowiak

had we’ve would optimistic more we’re I from Scott, just we actually that upon of been the some heard the based rates say, fleets, about also Yes, than take historically. feedback

Scott Stember

I’ll it, jump just Got on the queue. just MirrorEye staying follow-up back then questions, into And the then that’s two perfect. topic,

guess, tangential busses. opportunity? a year also, talked trucks you just Maybe you to You I opportunities system about system? that the about the point think here? it Is in talk you thanks. similar European And about comment next Bob, made at for of talk the or adjacent market from about for some some Maybe operations your, types have that could I

Bob Krakowiak

Scott, applied with as or common bus, applied the a system the to semi-truck. MirrorEye largely the to system, as is truck, MirrorEye a to

the the need the trailer is don’t system same overall way. You functionality same. the in panning But

specifically that size provide haven’t that we future. We’ll talked in So information the more is. about on market what

platform. we’ve we isn’t As MirrorEye about times, including product is a as the that a multiple said earnings talk it as what’s last next, in much call,

active So platform. and we’ll so really it to next. the year continue technology out to we’ll and of additional to throughout roll into be additional add capabilities, add announce safety we’ll continuing additions continue balance And technology, an becomes this

Scott Stember

That’s Alright. all you. I have now. Thank for

Bob Krakowiak

you, Thank Scott.

Jon DeGaynor

Scott. you, Thank

Operator

Your next question Long, Stephens. the comes Justin from line of from

Justin Long

good and morning. Thanks

Bob Krakowiak

Justin. morning Good

Jon DeGaynor

morning Good Justin.

Justin Long

sounds So clarify more so function like MirrorEye up. the in is retrofit making MirrorEye maybe the it product have question, that delay to that to come incremental – of improvements any my a stick problems you’re with versus the just first for to

that thought say feedback that the on opportunity you XXXX, than you about you So of would bigger first, received? just as you some MirrorEye a in if it’s could ago you’ve secondly, based retrofit and clarify think the quarter

Jon DeGaynor

out and that and to the production rollout. systems. being talked how sure since feedback are certain we we’re two, that which is are that we’ve of are as fully all trials, we’re trucks three, that’s go. product implementing learning, the the we’re and on we’re we we make system roll we’re we make a sure seen of are it making Justin, drivers slow one, a on working taking said to equipment; started what to necessarily we’ve the technology; decided in iterating And a very vehicle; bit with we we And as piece of to that into way we’ve little these situations, that the and skeptical safety is So conservative new you a getting that because putting in that sure MirrorEye that feedback why it down

amount there’s of interest. a tremendous So,

continued to at have forward, least say if what great, the not But think what greater. We regard guide the With regard XXXX see give it. going retrofits. confident I you product, we is on as we we’re in not and a I feel are going what’s would to happen develop to going opportunities to to specific in with to

Justin Long

That like, sense. Okay. your issue? changed? timing around point earlier, to But sounds market addressable just makes opportunity, the it a really hasn’t changed, your hasn’t thoughts It’s

Jon DeGaynor

right. exactly That’s

Justin Long

a some And said then, to in core product MirrorEye, talk expansion you more Jon, can looks get initial on love that to But that there prepared what I I this provide year. of incorporate you includes these and to lines. want made you back your you’re about the initial is opportunity to things thoughts. into color about Would going look can And to that’s circle comment us remarks like? like, something some some you that of any think an products what

Jon DeGaynor

active the San trying as safety we OEs safety what camera the MirrorEye additional from the example, these all what a do you And we just this a the and Not sensing of later the and solution? on from Justin, we’ve the around truck we’re to It’s where, the is an in backing fleets as as replace we’re the do in for into where working forward to our well do And a off on we the we working have it do? mirrors capabilities the and how focus And Yes. things, hearing of with feedback system. to display. from that and capabilities. what looking Diego well It becomes partners. It’s ATA we’re pull is solution work truck. active got not year an safety part truck is partners additional lines. that from Atlanta OE an and our in fleet And in as providing NACV take continue we’re year. know active integrate hearing OEs, but we’re with And like

the partners to building be confidence specific that in product doing I trials and going be product great platform. within that upon additional not happening this OE the you us be will we’re We’ll a But there fleet is am I will being announced gives we’re a So, you and doing months. will with give our the there what expansions tell next platform. example. What

Justin Long

to not products MirrorEye, included be the kind addressable that’s those just clear, you previously market of And Bolton with in that provided? figures

Jon DeGaynor

what not. it’s why really we customer to they want the they have value. to And been and to one voice try we’ve that give the and the of and doing trials what No, is doing reasons been they need understand what really

Justin Long

the leave Okay, I it appreciate great. at that. today. I time

Jon DeGaynor

Justin. Thanks

Operator

Van Your of from Chris Horn Riley comes from line next question B. the FBR.

Chris Van Horn

Thanks guys. morning Good for taking my call.

Bob Krakowiak

Chris. morning, Good

Chris Van Horn

car of takes great. and And the into get can for production us, commentary? automotive region, in your if other guidance using But exposure, you balance just and puts around you’re year, markets? great. for I shifting underlying just any terms away from what MirrorEye That’d maybe any you the give passenger and of could that’s be maybe, the your

Bob Krakowiak

little about talked I’ll comments, a little IHS data a it give you but in my do of to I right in is bit the where that. bit Happy now. terms

IHS for vehicle. markets look primary And you commercial so, for car; we currently forecast. LMC outlook, always use use the current if data at you And and Stoneridge I’ll give the data what’s pass we for

to is speaking is North down X.X%. vehicle commercial car well, American guidance for pass X.X%. now, right XXXX up North America So for our

X.X%. is pass car at look And pass is then, Europe Brazil X.X%. up is Europe cars you vehicle commercial If X%. down up about

primary end those influencers. markets and So the the are primary

talked in guidance, Chris. in comments, what’s our little terms my In that about a of bit

to important from range $X a the pretty In a delay. million it’s be it’s big if understand the second for revenue of the think to to really million MirrorEye going hold $XX And year, absent current been currency I in half that perspective impact has the forecasts us. the up.

vehicle So, bit quite at markets. And to the the the our portfolio of else, you quarter, half second actually that saw the our underlying is outperformance in everything so a better if portfolio in you year. expect continue performing second we the look than

unchanged our with the outlook of basically the So respect the of second rest really, to year. quarter the in is portfolio

Chris Van Horn

if you Okay color. that going a XXXX. And you great. wrong, to is through for for you I become me it business heard sounds bigger correct Thank like but China

have think goes double like Are about? awards from talk you have sales XXXX visibility? What those you confident kind you into backlog something to are about the things of said I that that that XXXX. you’re will you comment? there Can that doubling upcoming pretty sales in

Jon DeGaynor

is This Jon. Chris. Thanks,

We’ve in more what’s China. everybody very to emissions discussed is China, our to that a it’s implementation important there’s related implemented. you past excited one think with important content Stoneridge. just if of being We’re China. X us growth. Emissions it’s Beijing about new for and portion the products a does much the China in the for regulations opportunities change. passenger you It’s note that And for huge will. yes, our of I And directly become their in really the not happening But it SAR, that’s foundations key growth fact in for and cars of And

content a based. is is it’s And based. growth backlog market so based, it yes, And and that

well call, The is Shift-by-Wire as about second this other thing, in for for market programs, and markets. it programs, both the Shift-by-Wire talked made awards China and Park-by-Wire both we in of as China

XX So we launching see the those XX next that additions months. awards over to are backlog

Chris Van Horn

for thanks guys. morning time Okay great this the

Jon DeGaynor

Chris. Thanks Sure.

Operator

of Prestopino Gary Research. question comes from Barrington the Instructions] [Operator from your line next

Gary Prestopino

answered. looks accelerated X.X those just it repurchase, million your like correct, everyone. you have about Bob? Hi, been share good on bought that But Is shares. Most morning of questions

Bob Krakowiak

Yes, that’s Yes. correct.

for retire complete that of give we it whatever over us they XX-month shares. of shares upon a frame, And the whatever counterparty. weight market, And EPS then negotiated we the when everybody X- we is with them purposes. it up out has XX% is I’ll So, program time goes based counterpart way to And initially, and a true works, that completed. the notify volume receive our the less the VUF and the discount repurchases Gary overview those we’ve negotiated basically, the an been program is, they

Gary Prestopino

felt be correct? full that outstanding it? Is of QX, the the I’m is And in in in reading shares then, that QX? some But will that impact how impact is

Bob Krakowiak

correct. Yes, that’s

it of as result we the the the share program. a quarter EPS second repurchase Yes. From retirement. of perspective, did So, was in penny improvement about an a

Gary Prestopino

then carry terms into [indiscernible]. have, that And that just the XXXX lastly of now tax on with in rate for you does decline over just this

Bob Krakowiak

We important but run given benefit said to any haven’t guidance we the to benefit XXXX. so full necessarily the in second for that the rate, the go on given is tax half mention for not it’s we’ve guidance specific haven’t balance half. of What a is first in year seen year, it’s going the rate down we’ve the primarily that

we’ve So, pretty provided a year. second the is for the that XX.X of good number the half

Gary Prestopino

Okay, thanks a lot.

Bob Krakowiak

Thank you.

Jon DeGaynor

you, Thank Gary.

Operator

Scott comes CL Stember question the King. next from line of from Your

Scott Stember

guys. Hi,

Can that on this some year what you I about talked and out a follow-up good question a about, you’re potential of beyond. for of Just maybe year that’s tariffs, back next details think, flesh bottom doing $X gave to But just million little you to the a identifying worth reclaim lot bit? loss that you line. of

Bob Krakowiak

Yes.

the allocations, talked So, in we with really I’m And talk Scott. happy $X talk consistent over the last component about I’m about it’s electronic about excited million, what very around to that. million is quarter. that. to offsets $X The

we So for just number with components, a industry the have demand the electronics. of

that to this had a you work allocation. ways bit on. have some talked number purchase your We paying where on bringing quarter, additional that components. about three I in this. we’re mean, cases out of a capacity supplies of there’s just I products we And last little are really way premiums

supplies First year. second your we’re product changing half doing designs, We’ll on well. the Also, see That’s that way of of is as you of incremental bringing some benefit the longer lead got the the capacity bit is in potentially a little which are this speculation on that have that. a And component. specification to speculation it grade the an way an industrial and third time. go of from look you at you product, then, do grade the automotive you got

components purchase of to broaden some component allocations. So, opportunity alleviate those and you effectively your

three So, we are comfortable. all those. have right very And now, done of we

place, down in in just to on agreements have done year, going to have place, over go if based just the the We million look contacts $X by run we where date. rate, what next about run got we’ve rate’s got at you

Scott Stember

talked you’ve And for about already again, above are those year? beyond $X and what this million

Bob Krakowiak

correct. Yes, that’s

Scott Stember

Got it. Alright that’s all I have. Thanks, again.

Bob Krakowiak

Scott. Thanks

Operator

Stephens. line of next Long comes from Justin from Your question the

Justin Long

the taking for follow-up. Thanks

other $X currency, kind I income talked the one question Just over And quarter. lines But to were about in impact all a items wanted operating had you those of X I headwind? little a ask same question. of that’s tariffs million and allocations the modeling last along think that second electronic a component collectively, having negative

Bob Krakowiak

Correct.

Justin Long

the the from the headwind those operating what’s items Do X you baked have total for guidance? years, full in income

Bob Krakowiak

Yes.

I the of rate It’s the we’re these terms bit of the the of year components in we’re in with Because, comment cents few electronic a we’ve what, identified, well. I items half rate. Justin, savings Justin, my component components. know was little a electronic second moving currency, in run EPS I a negotiations in Jon his that level the about half full for the year, provided of bit some from perspective. a comments we an around remarks that second still said on some think, the half. working still it made But a in versus target second so in EPS electronic you talked of of through haven’t So, the income. worth $XXX,XXX as run candidly, little doing of

a more that’s bit then, bit that’ll of tariffs, tail. of idea. a And So little a you give little got an on long

lead have We tariffs, longer in but savings it’s for just time. some

second So, as half. material it’s not in the

Justin Long

you’ve to was changes XXX%? that the wondering conversion expectation that think I free changes be historically should flow said the with around guidance, cash then if And on your

Bob Krakowiak

expectation change around cash guidance, doesn’t our free Justin. flow No,

Justin Long

have. all That’s great. for Okay again time. I Thanks

Operator

turn at now questions time. Jon further this no showing conference DeGaynor. I am to the like would I Mr. back to

Jon DeGaynor

in profitable Thank committed your continue of participation we company control that and you strong business effectively variables and to new drive thanks through I to today’s everybody available manage performance. and for is will strong our to This value to drive shareholder that team deployment call. assure efficiently you resources. operating closing, can response results, management In focused financial and can impact continue and our

beyond. confident Thank and in are you. our continued will XXXX actions that for success result We

Operator

wonderful Thank have today’s this Ladies a for gentlemen, day. and you and concludes participation your conference.

disconnect. You all may

Stoneridge (SRI) 5 Aug 192019 Q2 Earnings call transcript