SRI - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Stoneridge Fourth Quarter 2019 earnings call. [Operator instructions] I would now like to hand the conference over to your speaker, Matt Horvath, Director of Investor Relations.

Matt Horvath

Great. Thank you. Good morning, everyone, and thank you for joining us to discuss our fourth-quarter and full-year results. presentation our with the website under and accompanying is SEC investors and webcasts on posted at presentations. release was the filed and section The www.stoneridge.com in

and are Chief our Officer. DeGaynor, call Bob Financial this on Officer; and me our Joining President Chief Executive Krakowiak, Jon

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

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

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

forward-looking such uncertainties the differ with XX-K, Additional factors information results in will actual which could Securities to and about be our statements. found and heading that Exchange filed cause Commission be may the under

we GAAP to measures. referring and call, After today's up non-GAAP certain for reconciliation to be comparable also questions. see Bob Please finished will measures formal of will directly measures. call financial financial most a remarks, the these appendix we the their open Jon have the non-GAAP to During

that would to With follow-up. single Jon. turn your over I keep will I a that, the question call you ask to

Jon DeGaynor

Thanks, everyone. morning, Matt, good and

the we growth. Let Page on X. positioning In strong for our me transformation and XXXX, of begin Company future continued

XXXX XX.X%, adjusted $XXX translating Our adjusted margin million of X.X%. of an gross to operating margin sales resulted in of an adjusted

$X.XX. was year the for EPS Adjusted

EPS. an adjusted X.X%. of adjusted contributed divested impact of of $X.XX XX lines to margin product lines, million our gross the approximately our with were and Excluding operating product sales an XXXX XX.X% Divested margin adjusted XXXX and $XXX

annual million relatively additional awarded OEM modest that take announcing MirrorEye revenue programs been are We peak at with rates. have $XX of two we

X the business we to approximately half OEMs of a volume. awarded leader the platforms camera vehicle approximately of production sourcing These OEM in customer the position programs yet Class In that additional production North the have mirror decisions. With volume, our awarded the represents has represent awards been American we Europe, market received couple which approximately European OEM awards, for have these of XX% one-third of global which MirrorEye solidify on commercial to systems date, with make the industry. been as

customers, our impact excluding backlog, of of by success external grew result business year business with driven over by our a awards. our factors, awarded As the of strong another X%,

advanced transformation for As expected a guidance Company, we due expectations the production tangible volume detail stable end continued declines operating performance our $XX announcing operational we reduced we markets to providing I in share in of our will will an morning, are and investments margin to on technologies, provide the later of in signal Bob expect XXXX. repurchase, of call. adjusted our and EPS additional Despite guidance, in relatively improvements confidence and and our in million this we discuss additional the are XXXX. some revenue expect the in remain

take Turning organization few and the to breadth want the the to on reflect X, within transformation I Page of in minutes to depth XXXX. a

focus to to took manufacturing order to future we technical drive rationalize actions performance. optimize our and footprint management our year, our the portfolio in and During resources

announced we switches and noncore our facility. manufacturing of divestiture the example, For subsequent the of and closure connectors business Canton our

our line to electronics completed product business review we switches strategic that the move controls the decision Additionally, our and culminating of within to segment, trend. in

margin basis the XX to points improvement of Company. basis this expect We move consolidated for XXX points to drive

invest we our continued resources and growth. to our streamline operations, right in In XXXX, areas systems our cost on supply will that will activities chain. and our technologies of These improve future structure, total size focus

been performance facilities, as efficiencies foundation improved transformation Stoneridge these investments have actions expect in growth. We to the manufacturing and will for lead our

XXXX in making. progress are awards we demonstrate the business Our

awards resources represent. to to continue investments will opportunities the necessary these make advantage the in We take of

the expectations. later Finally, continue drive our that XXXX, transform that was long-term undertook the leadership The financial we our below challenged contributed performance we will initiatives in as strategic we in goals. to discuss our organization to team and call, to

the continued to took we capabilities the investments and in of make portfolio and foundation and in our the XXXX, profitable we will actions because for strong growth we the of Company the transforming product XXXX are However, position to Company technical strengthening years for come.

summarizes in our metrics year-over-year key and financial periods. Page both quarter-to-quarter the X

year. we estimated GM negative reduced and the some vehicle we increased market. operating volumes, production divested detail, impact by metrics Adjusted approximately by component XXX declined European impacts it particularly these strike, X.X%, as commercial of increased sales electronic currency well in basis the in of declined financial foreign margin as the current of for particularly tariffs, points, half this have costs, we the in and be purposes, comparable earlier exchange year part discuss the externalities, that should noted the operating driven Year-over-year both periods. premium Before second by due rate, the comparison in businesses approximately and the removed from costs, to

operating declines expectations call the our negatively the impact impact began key additional at into X which provides as the production from perspective. in Page results end impacted will continued improvement on some end regarding on facilities. Revenue quarter was both of fourth. our I detail of to and third tariffs our the in in strike, the in GM provide the and well quarter-over-quarter drive and markets, reduce quarter the sales our income the the as fourth component additional of costs, by and detail of

in the our ramp quarter. addition, In Shift-by-Wire programs to continued down fourth

margin The by or of the foreign program operating Quarter-over-quarter core by of reduced of points of quarter as adjusted GM GM declined impact the foreign portfolio impact the The million points. increased basis of $X.X of currency $X.X down the reductions, XXX to X.X% negative in versus ramp margin and strike, basis resulted reduced well impact operating approximately XXX quarter. continued points movements, by or the Shift-by-Wire basis XXX sales our operating quarter-over-quarter. XXXX. currency, the negative the income Shift-by-Wire of fourth as strike, impact million Excluding in

operating facility by to electronic reduce points the impact quarters, recognize closure reduced last relative costs tariff to related the to $X.X premiums, our year. by to and expenses as reduced of the costs prior contrast basis $X of starting in margin Manufacturing In initiatives our we million almost quarter. component are those to Canton XXX the we quarter or comparable million

to non-recurring and factors In addition, comparable costs, overtime results expectations, increased and labor due underperformed cost indirect due versus to quarter. the fourth-quarter our external

team, cost can we are management responding efficiently we and the that and factors actions. a control, As to effectively to committed to appropriate reduction managing externalities

Page X. to Turning

tariffs million reductions and we move $X component into $X improvement, in to we continue $X to costs $X forecasting areas, to as In XXXX. million respectively. of and expect million million these We are

focus our continue supply reduce chain to quality to on We costs. overall cost premium freight improving expediting related and

in of we in we these the XXXX of in to reduced $X in $X initiatives place the actions significant As taken expect XXXX. improvement in costs million and have result a XXXX, areas, driving million

improvement remain basis committed improvement across which in gross We first drive approximately the on gap]. facilities the to that $X Company. driving step financial points, to gross to specific $XX expect is actions approximately achieving the [Audio sales, flat XXX performance, our margin target our in in based and midpoint We top on these million quartile improving of drive million reduced to improvement profit of to of XXXX, gross margin translates operating resulting

As to the long-range to will our I our products discussed the number resources in growth necessary will develop programs previously, we that plan. support continue in new significant drive the and invest of

relative and to DNB provide costs, of those incremental SG&A our to later and of As detail adjusted Bob a XXXX. EPS guidance result will midpoint a are operating guiding call. flat additional the margin on we in revenue approximately

supply is team vice aligns Kevin president well plan, of of We to our size. continuing actions improvement already $XX than to experience chain instituted million Stoneridge, strategies and companies Kevin our for developing I as efficiency to Heigel operational and our recently months million he at driving the Turning just Kevin of with operations. two background In as programs are responsible Page operations to the manufacturing that implementing margin brings strategic has gross and less outlined. X. for welcomed Kevin's processes. improve and $X

X. Page to Turning

several one our America North the expected award announce for estimated in XX% want our MirrorEye MirrorEye has award first company with to the revenue, a each single low largest XXXX. largest a Europe. an third rates on date, an program Shifting XX% of to pleased and MirrorEye of of programs program opportunities relatively fourth assumed This peak on OEM are rates. and combined This the I'm $XX our to To annual update is annual expand take in future program. in million estimated $XX morning revenue. the history peak of penetration drive provide will launch I the in at to growth. awards programs, Both that focus million award global of OEM on to and based

award America revenue second in take is peak a $X The much focused annual smaller of assumes with and rate North million.

awarded awards, Class X approximately these XX OEM With programs which been North customer MirrorEye we have the in American volume. the represent %of platforms production

has both in America and dynamics, on approach that suggest transformational industry. represents safety of won has are and be take regulations originally take of invested OEM In we Europe, to Based dynamics, market it MirrorEye quoted. around sourcing economy OEMs including of of approximately Europe, OEMs program We have thought in addition, production one that government for our to with North approximately may a expected European we customers changing that by the rates believes one-third than because yet be volume, fuel been could couple higher MirrorEye and leading half a make believe XXX% awarded in rates will business the the XXXX. us Industry awarded which the decisions. the

platform, in provided penetration approach fleet response recommendations to with Over to the fleets. months, feedback number of feedback major to concludes but vehicles favorable each whom working are disciplined capabilities. complementary is The has MirrorEye the pre-wire we fleets I their met a for work we our their of with with to adoption the a OEM has from the Their systems. partners. for plan new longer-term full and of have continue technology are that of suggesting the global past been fleets, from In couple important technologies,

and bridge pre-wired interested production. OEM the with With have offer begun the OEMs current the gap this production to other in feature fleets give of we start to between them multiple and ability negotiations vehicles,

XXXX America Technical was OEM is validates and and commercial be with and will industry, MirrorEye. This vehicle further we transformational were vehicle the driving it of change Stoneridge that significant how our that achievement announced commercial a will the Writers from is Award change for awarded Finally, fleet yesterday MirrorEye the partners. Achievement Truck industry. MirrorEye important that

and conditions by to long-term Turning improved well $XXX MirrorEye. morning market Page as we targets negative rates, revenue reduces our updating movement long-term reflect are to XX. the provided almost forecasts, XXXX million. our exchange production as impact This expectations revenue target of for in current previously Reduced

in OEM to Additionally, the expectations MirrorEye awards continued OEM options. some has sales momentum pre-wire applications, including retrofit of shifted for our

partners expect opportunity fleet retrofit target. applications which the XXXX OEM The revenue delay As expected the existing some a OEM to for in expectations for retrofit included will our result, applications our change offer total MirrorEye that does from our an of we market of some solution, previously MirrorEye. not may shift

in our from we OEM to XXXX, next on of we've our our increased for based XXXX midpoint $XXX would fact, In target MirrorEye the revenue revenue Relative the opportunities represent in fleet year. our future. partners, getting are XX% million growth feedback approximately and of expectations

want Turning MirrorEye revenue. significant OEM opportunity programs our a program At in MirrorEye. peak increase launch overall represent million annual XX. to of subsequent expand the to quoted we on rates, late OEM penetration awarded for revenues, awarded our of we that XXXX, expect I $XX with as launch we see first in the Page Beginning programs.

our customers, up drive However, market of penetration XXX%. by could given the dynamics recent to comments

starting become is U.S. or annual expectation that car peak term. to exceed the penetration approximately systems would peak to million. equipment, incremental would capabilities, Should in the slide. be rates rates the on and be just revenue in business, vision programs revenue and mirror double be outlined up in already Our space, the passenger Should medium quoted the capture this been in cameras growth our to would long quoted approximately saw began camera OEM $X.X ramping the penetration we the backup that XXXX. similar We have rates resources, in standard will XX%, technologies we annual improve current awarded. billion investment to opportunity opportunities to $XXX safety Retrofit rates in market,

technologies expect investment approximately several in to invest related and and years, advanced the $XX We continued million over capabilities of XXXX. last in

our Unlike and where see the on technology XXXX for bet inflection MirrorEye, to a MirrorEye investments is XXXX point ramp begin prior to these other future, up. begin were years Stoneridge. return will for thus advanced programs as the an investments in on we and

to complementary to we we discussed, programs addition awarded our are the products platform. and are advanced In that in technologies resources have MirrorEye investing and MirrorEye

of products, around We XX. been over from capabilities systems, Turning Part last before to never have considered of years Company the that the combine transformation Company. within Slide has ways review the in the seek holistic services the to and Stoneridge. of been

information. around to opportunities are combined paving and recording for and video our help with are BXX a video solutions transmission connectivity connectivity when conversations solutions, MirrorEye, Our partners fleet manage and way critical introducing the for as collect way and capabilities our

us in-cabin devices, provide driver road improve enable advanced active driver full We monitoring to safety and suite awareness and to enable capabilities drivers systems. expect and that help develop avoid detect will commercial vulnerable vehicle interface electronics user users, our smart, of

within Our give commercial the our ability be for Company future commercial to growth work vehicle transformational industry. and vehicle the the us with customers drive develop that define solutions products the will and to

the XX. to XXXX we to in transformational took pleased drive the forward. page I'm Turning Company with initiatives

we As improvement, we drive our turn deliver At results execute to leadership organization, our that, to made foundation the our capabilities Bob progress refine over Stoneridge, value. more an discuss will financial strategy, continuous in on to and team, long-term I'll detail. to in strengthened shareholder continue our profitable it for toward long-term growth. With and goals the significant

Bob Krakowiak

Thanks, Jon.

Turning product X% Sales million, in decrease divested were excluding XX. fourth quarter, to lines, the of fourth a quarter of Slide to the $XXX.X relative XXXX.

of was $X.X Excluding income divested or sales. million product X.X% lines, operating adjusted

fourth More excluding $XX XX.X% of X.X% specifically, million of in of decrease divested approximately in $XX.X sales. the was XXXX, resulting sales, decreased adjusted quarter XX%, Electronics by income compared control product million to or income X%, adjusted operating of was $XX.X lines, of which of a sales. million operating devices resulting sales or $X of million,

our in we X.X% or going $XX income Brazil of for integrate $XXX,XXX Stoneridge providing to XXXX to Stoneridge million as performance. financial forward, guidance continue PST sales adjusted we global morning, sales. will our operating of As business, of refer are we Brazil. resulted This

versus decline of divested XXXX We a revenue approximately revenue, $XX are our the guiding million, XXXX a to of midpoint excluding $XXX of impact million lines. implying product

expect component Despite costs be we to this we and year in margin in previously, well as operational resources expectations tariffs, discussed investments reductions margin As due through are expansion and approximately expecting as margin, to gross improved continued SG&A. incremental improvements. operating flat, for engineering gross

adjusted of versus to We XXX points XX.X%, margin an improvement a are XXXX. midpoint basis gross guiding approximately of

adjusted are midpoint midpoint guiding in lines. are margin a to operating product which adjusted with We of X.X%, XXXX a to adjusted and EBITDA of X.X%, both income approximately excluding XXXX divested line results,

in the effective our results and EPS midpoint a along the compared per a to to rate midpoint rate to reduced tax for XXXX. a in flat expectations our guiding increase rate of XXXX tax effective tax midpoint share guiding to are XXXX. $X.XX adjusted rate, are X.X%, we with XXXX revenue of margin effective adjusted adjusted tax of Through XXXX our a effective $X.XX rate we to adjusted to XX.X% of of headwind in earnings Finally, our relative our operating

in of drivers color the call. additional adjusted performance expected provide earnings on the will the and per share I later sales

the metrics, Page devices XX product control summarizes specific our impact key the excluding financial to divested lines. of

by of by our growth impact our strike portfolio control of due the products, and emissions operating to as core to devices income million. X.X% tariff GM relative in decreased due the part by well by strike Shift ramp approximately$X.X and which $X.X million Wire Wire down by GM non-Shift actuation the sensing in Excluding to continued expenses grew XXXX, programs the reduced income Adjusted as increased products. legacy each operating

year Wire to last have million expect headwind discussed we relative programs to year. $XX As revenue down continued approximately $XX this million ramp Shift we by legacy our previously, of create of to a the

products, by offset actuation and to revenue in Wire We this in continued XXXX. emissions approximately devices our growth expect non-Shift control leading to with decline flat

programs, legacy of X% growth the weighted markets. by product down Wire portfolio for ramp core revenue in in average of our expect our we Excluding our Shift X% versus planned growth to end expectations

devices. million well reduce basis expenses XXXX outlined as million, control to points operational that for expect to We as of efficiencies tariff expansion of actions $X XXX or margin that will Jon XXX $X to in be drive the previously operating

Page the XX over versus summarizes past performance XXXX. year electronics

to the relative to impact $X Excluding component increased the of sales for income due as related $X.X well of approximately the primarily as accounted operating impact costs which decreased year. million, of Adjusted $X.X currency, million. $X.X currency million electronic allocations, XXXX, versus by million increased by negative prior to

production and ahead commercial decline to expect due to volumes North to forecasts XXXX, production vehicle Looking lower electronics Europe we in America.

growth resources product invest the costs our driver will first our launches. substantial that that large the XXXX XXXX electronic However, this later drive system in to margin into expect related In support Despite result premiums. the specifically our year, a we in and existing OEM of Electronics, program revenue beyond. launch order we in more we program of expectations and gross for expect end in development MirrorEye maintain XXXX, and in as reduced as information support reduced need launch well to material improved opportunities of as future additional at segment the growth will component program a to we capabilities

SG&A margin engineering result operating additional investments. to a our expect and We as of decline slightly

and I long-term investing resources core for the driving to our support shareholders your the from in we to by committed are outlined our We opportunities value portfolio.

Revenue by in decline margin market an adjusted cost and $X relative XXX declines In our operating in resulting had response by year $XX.X conditions XX audio million Page business. million we storage Brazil to primarily adverse and into expenses to conditions points. driven in more alarm D&D by aftermarket challenging right-size the of declined a reduced the business, macroeconomic than of basis structure Turning to SG&A XXXX.

our to product with customers. in continue electronic We segment OEM to the aligned shift support closely more of in portfolio region

efficiency. Looking primarily first in improved margin XXXX launched as as OEM programs result of basis we stable Brazil we XXX improvement topline gross margin increased in points, forward a labor utilization by performance expect and our driven in XXX, of operating

LMC to Moving and on XX IHS Slide based forecasts.

Our primary in expected XXXX. to end decline markets are

to our commercial expect flat, decline we markets end moderately remain in vehicle car expected last while speaking, to Generally passenger production relative relatively markets is to year.

As exposure we our light have is decline by cars. end-markets side weighted passenger trucks Overall, on OEM noted the end-market X.X%. and car passenger weighted versus previously, toward traditional our SUVs, approximately we expect more to average CUVs

Slide to Moving concerns and recent surrounding Coronavirus XX, the in China. news given

expected like update brief I'd of impact overall and exposure risks on current China the our provide provide potential Stoneridge. a on to in clarity to

year. X% purchases, reminder, of not supply In of a point impacted owned time, As our our for we sales XX% risk suppliers early Suzhou, as are At the virus. purchases, China, and do of the Stoneridge supply in our this fully in We less in disruption. disruption the to Shenzhen approximately have a post-less any are majority currently result operations world-class last of existing significant virus chain chain material which of XXXX facility those accounted direct a Chinese material and China for relocated of Suzhou. approximately in or by

first of includes as are customer year half impact experiencing virus guidance reduction in continuing the in of current we some a Our the orders. minimal the

monitor materially. our will and as necessary the updates carefully to continue provide expectations should differ We situation

Turning to XX. Page

sales million. adjusted our lines, were $XXX XXXX for approximately product divested Excluding

we decline weighted previously, during to markets X.X%. expect end by I approximately outlined our As XXXX, average

X% line in expect average we typically X% downs which to years, year-over-year. Additionally, with prior contracted price

revenue $XX the Shift-by-Wire our million impact million ramp expect by We of down products legacy to $XX in XXXX. continued to

the launch to including large at bus fleet we partially American driver well expect a year. a new retrofit offset system I program information end mere Finally, be as the North in of prior programs, the markets, European of by the reductions as this sales in

We amount retrofit in our guidance. a modest have included MirrorEye sales of

as evaluate to continue progresses. We will year the this

guiding of the which in $XXX products result an X% million, XXXX our approximate XXXX. a impact of a midpoint versus to we As revenue these are revenue excluding of factors, represents decline divested

the we in in by XX%, the expect second the approximate a versus revenue From half perspective, split reduced second first year. XX% an driven expectations production half the timing half, volume for of

XX quarter the revenue will that summarizes large third share lowest this adjusted system full-year XXXX. the per guidance prior for in of expect year quarter launch our driver program fourth the our be to We Page information earnings our of quarter.

excluding was EPS, divested adjusted $X.XX. the Our approximately impact products of

to XXXX. to $X.XX more rate rate of resulted resulted XXXX rate return comparison EPS of are XX% tax in $X.XX approximately a the for adjusted headwind, to XXXX in XXXX guided tax for a purposes. and expect rate the XX%, normalized expecting which relative X.X% a We in in an to of midpoint our Adjusting

guidance reduction As $XX of I products. excluding the revenue a just divested midpoint the discussed, of implies our of of impact sales million

outlined three calls, expect and As we to approximately we in prior margins of half EBITDA margin. incremental decrementals our have a and times two contribution

of into impact $X.XX in translates XXXX. $X.XX an XXXX adjusted to EPS This versus approximately

expect $X.XX, that improvements the reductions. earlier Jon $X.XX revenue outlined offsetting to operating the improve by will performance We

an future for headwinds guidance a we additional expect XXXX. engineering SG&A in midpoint incremental launches, EPS adjusted and XXXX. in $X.XX This $X.XX development to and to product Finally, resulting of investments of resources program results support in in EPS make

expenses for timing year. So throughout cadence expected spread for for SG&A expectations and of the the even D&D year revenue perspective the our and relatively to a

adjusted and of We of the year. weighted expect the XX% half the approximately our performance in half year be second to first EPS XX% the of

XX. Page to Turning

foreign our of to the penetration to considering backlog I X.X%. forecast in with grew opportunity production impact excluding and in out grow MirrorEye rates. LMC, point the in backlog unfavorable of different year business XXXX our awards changes product by IHS of another continue estimated strong the and potential currency divested want related lines, by performance, backlog impacts We our to

in backlog, at we MirrorEye becoming represents improves $XX cycles. significant rates that million $XXX about annual Not number peak MirrorEye As in only Jon $XXX penetration equipment. about revenue currently penetration life million could are five-year growth of as outlined are business the this upside should MirrorEye we over rates peak potential the quarter our continued approximately million become of excited for optimistic the improve double previously our standard should backlog rates program increasingly awarded while

Page discussed shareholders. including Turning have shareholder XX opportunities continuously to existing as inorganic drive growth to and our capital previously, put we returning to opportunities we our our evaluate investment in return, capital to business, use

continue pursue that to We focus accelerate on previously. the targets and technologies inorganic to activities evaluate Jon advanced our technology long-term strategy development complementary and that and accelerate enable our outlined will

repurchases to for provide While M&A significant we and revenue returns given the for expansion we candidates, pursue share that margin for shareholders. our continue strong believe Company, continued the growth potential should

As that announcing share to would stock result, over incremental an program this the additional repurchase $XX us morning million an a of XX we our allow months. buy are next

returns. balance We maximize to balance shareholder are a our committed sheet and to utilizing strong sheet maintaining

technologies. marketplace initiatives forefront we reiterate of for our remains strategic that, closing, have up that at to we questions. value new of our the for driving initiatives. XX. to in call In to the and I move we all company XXXX the shareholder is that want will open our received the in Moving transformational Stoneridge focus committed the With and forward reaction positive I are Slide took that with pleased and

Operator

our [Operator with question Instructions]. first Justin comes And from Long Stephens.

open. line is Your

Justin Long

Thanks, and morning. good

Jon DeGaynor

Justin. morning, Good

Justin Long

XXXX. for guidance the with start to maybe So

those answer levels saw prior you the could sense for for the a gave as specifically expectations you year? recover rough X%, fourth take think to throughout back that, to us within And operating Electronics, be give the the how to it your for you X% for margins margins do outlook the quarter? full-year long quarterly you that to margins will So operating cadence you but of to

Jon DeGaynor

Justin. Thanks question, for the Yes.

with So And in we've guidance have confidence terms we of of encouraging respect in seen signs gives in that performance. annual the terms with provided. our that the to us guidance January cadence, some the

operational more weighted the had A the in have in initiatives performance some the The of the we're we of about in talked us is that the the performance one time exiting the of We and facilities. that versus revenue first-half Canton facility, revenue half. GM impacted revenue our nature fourth-quarter XX-XX second more things one strike issues the for and around split. number performance our split,

rollout we're So terms the in weighted margin. within comfort of the gives first-half the versus beginning the expectations in our and seeing It's out year of more second really the guidance operating half. start us of

Justin Long

question had Okay. on guidance. next And I that then was XXXX

So just taking the for of kind revenue to midpoint year of ahead and looking outlook this XXXX. the

versus kind build You're increase. about a of assuming MirrorEye of the help and your backlog that that $XX level revenue about number and Can you how bridge, us to visibility just million in is talk just of business much that secured products? is a other maybe how much of

Bob Krakowiak

Yes, question. Justin. Thanks for the

of sight of are what curse, have a really years advance So, as line few because to business three you win know, and a our sales be to years But programs, the most generally of in our businesses is great over two going we OE and next it's to blessing a speaking, we production.

the there's the next we side, of couple can years. over really So on the a OE do needle moving in of terms not lot

if and take we at and terms in the in look and new that awarded sight do IHS program to is you we those million, line we of business of levels $XXX at launches. layer So take LMC the what projections our

launches, I program respect earlier So the to on we've instrument cluster. as the the got mentioned with new call,

Park Wire and late MirrorEye well our as we Our as largest award this cluster been have by has got launching launch well. year we've year, this launched

we over our then that backlog I total as constitutes, long backlog. materialized that majority data do and basically, the So, of of vast majority as volumes per as the of $XXX IHS what that in and the is million basically is said, LMC really

if want to you add that. Jon, to

Jon DeGaynor

portions And the that clearly, of are backlogable. we Justin, as business have not

business So not some backlogable. is our our our lack of and business aftermarket miscellaneous Brazil business, Stoneridge of other

doesn't that it's in -- So year-over-year not have the progress backlog. confidence the we there, but in

confident we're the to very So increase regard year-over-year. with

Bob Krakowiak

Justin. Yes,

don't what on So our assumptions. revenues. look -- have markets, just look you IHS IHS at what in you IHS terms wasn't the we of if think add was primary the built data, $XXX so data would I million of the Right? if at I is really, end the

up pass year If look IHS is at data six car, this tenths you X.X% year. percent the North America of next and a down

this up it's vehicle, commercial year. For next year, down X% XX.X%

look you if Europe. you Western vehicle, If on Europe focus at commercial

and So look the at vehicle, X% year next Europe down LMC you X% data Western commercial if year. this up

So year. flat two but down the years, five over basically next this

get lackluster don't have we the million. into to kind So $XXX of built assumptions

Justin Long

on really in of but helpful. queue, And of on you've That's as that for talk Historically positive you MirrorEye? all the retrofit MirrorEye back you market you side, there. the scenario. talked that million about what Okay. and threw know there number that Great. again, about the hop would bullish is million last the then $XXX side, it view then XXX equipment, Have but assuming about addressable kind $XXX I obviously of million out million I'll the a one thought, on total. a be pretty XXX in and became developments OE lot standard

forward? any have realistic just a on going for thoughts addressable market you do So MirrorEye

Jon DeGaynor

we regard that to addressable OEMs stronger that fleets the the range. with and how Well, and of the penetration the fleets also our business do we We I'm the and why we product and reasons regard the this from the -- incredibly the it's we The to one both have gotten that manifest in that pleased provided actually with will stronger with both greater. higher we've is Slide more OEMs it. market with itself want. specific in use work the regular think that confidence product of feedback people with

that you the to that we So we grown that think why the and we you did. say is gave, market just numbers that's I from you the slide addressable stated, actually would that showed

Justin Long

at leave time. I'll Thanks that. the it Okay. for

Jon DeGaynor

Thank you, Justin.

Operator

Thank with comes our you. Chris Horn next And from Van question B. Riley.

is line Your open.

Chris Horn

Good my for questions. morning. Thanks taking

Jon DeGaynor

Good morning, Chris.

Chris Horn

other factor? you decided different price? you the awards? of a higher. what you about upside for something? take the that it So rate it rate and, what specifically Could then rates for and about could product? Is decision success attractive. talked were it that take And on your obviously, points Some talk thoughts maybe Is Is the your that the lot get take just opportunity recent looks

Jon DeGaynor

interim gotten to we are you give backlog our fleets, couple feedback the what take a number are So, well the on Chris, couple of The we've as rates. as based from months from OEs, points is we a in customers regard rates you us that said always a tell we've between try understated. both what to of as likely last with give take that quoted

So is what look we're to you that show like. to what would trying

backlog, XXX%. because have changed we're to it it or to will but you So XX% and the that had trying range they us what changed would has one we at go have XX% a show versus somebody we is OE the believe the isn't XX% least tell

reminder, them, there our going. haven't equipment. but We standard program in a CMS where is just And that's changed see it least as system we with know that's one making OE that we at Europe

our one expand. fleet safety So the as been of benefits, OEs see more the our fuel the take important as economy people reasons is technology, and rates have expect why demonstration so with the been accelerate, both the the what see, see to and so trial and we our and one, important, have activities adoption we comfortable get programs more that's and

Bob Krakowiak

add to Chris, what just said. onto Jon

almost I of revenue we standard think would announced awards somewhere already call peak we on to if that think the understand important million we've be awards. annual of in revenue that won, $XXX talked is about million to MirrorEye $XXX to But things the annual the I that that with the went equipment $XXX is peak million. one

to the impact has is So of transformational. absolutely Company the this

take sold a a a that, take new this product. rate, haven't and products to are something subject of we that is is lot the rate And

the you, we're of investors allows we the equipment, the reason and make some of think trying of provide this this what range, the would to to fleets. go and production, we what range a have that we hearing game allow for where what for you just sensitivities information became we to they from give is Jon the we'll when do investors not upon this been that earlier, to we're rates here's as Company, the product stage quoted. at if going being provide is determination of ultimately provide based them lot impact And take happen because But, will the ultimately, the so give that's the with room additional a So in be fee the standard said what's asked overall sensitivities.

Chris Horn

cost see do as additional that initiative savings how had an Great. that's Yes, opportunities? color. look we for Do that? you Thanks I number to additional should million XXXX, those savings saving savings, 'XX. Okay. but And or talked really imagine solid then there. the or think about to you at $X in you of about you $XX it's ongoing million a see savings

Jon DeGaynor

Yes, of course.

that quartile of as support So, everybody market Obviously, and to Chris, to new think it's and goal organization we're we to part down revenue get important our balancing, operational we the investments therefore, future to reiterate I need efficiencies investments growth. top start in that. so a see financial to for understand growth, D&D make in scaling our to to technology, continue performance, with are SG&A

So, margin a And move see cost significantly XX%, see expanding our the revenue market that. in come XXXX maintaining structural XXXX and a down with is growth see gross and at see you operating we as as wouldn't margin the it. and of back, you fixed costs we demonstration the wouldn't between market our

but gross see You'd move, other of the margin see you some costs. wouldn't

and to adjust financial business performance to well. will get top the the that continue we as quartile So externalities for work to

Chris Van Horn

more one then And squeeze don't just in, you if I'll mind.

interesting what for going. are and maybe believe and think, know you on is launch systems, I those well etcetera. in you us I 'XX, of the big saw? you digital update around QX, have a products, as driver how you I that maybe pipeline other said Your market information Could clusters,

Jon DeGaynor

Yes.

backlog portion if peak look revenue was and of a million our that, only MirrorEye. annual wins overall and mentioned of our you at quarter Bob of XXXX, business in over roughly So, we had it, a business only that small wins, $XXX

overall being our company, other just customers capabilities. not our win spaces, and systems continuing offering in a but and continue integrated to win. and to We one-product goal with is deepening We're those relationships

see good to good We regard to opportunities connectivity we opportunities our our systems. with So, regard driver information see products. with

opportunities devices that, this didn't We business. of time control there. We but we the good opportunities to good on very also in spend regard a see call see lot with

in conversation, while becomes the of true, foundational then portion talked -- continues we awards have the So, if opportunity, growth the wins. we wouldn't additional business our that had there MirrorEye $XXX large because are just that a see of magnitude weren't about XXXX. and And to business business million of the in

Operator

next Our Scott instructions] Stember. [Operator comes question from

is line Your now open.

Unidentified Analyst

to contract million to $XX Jon, that I the that in of of I that, you quarter, fourth Could rapid $XX you of million turn into OEM? MirrorEye, retrofit beginning increased side that from I retrofit $XX OEM, demand probably start you acceptance decisions shifting being the million the guess million see the some shift because OEM Can just the it's guess were rates in mentioned talk you take maybe had or to from $XX because start in about for guess range. just given to going on the life. how to that

Jon DeGaynor

that we in reinforce range marketplace done fleet The this have possible regard the OEs, did and one we the thanks had the the Scott, rates. have of conversations the why to chart with your technology. impact of that reasons the we have with yes, It's we've provided conversations question. the we for So, take trials that and the to that absolutely. And, continued

in As Commercial measured fleets make these have things piece of piece equipment. are we they sure that they production said of do very are production are sort presentation, robustness. a that of vehicles the to equipment. Trucks how during

both move. in conservative they and of the they fast we then retrofit, up. so making system, more quality we're as and the downtime, and don't that as which OEs, OE going how have they're in they So a create to also do fast is with or ramp pre-wire, But in sure effectively the undue appropriate see how uptime they that they learn activity, the more retrofit business install

Unidentified Analyst

guess this year, get announced are a do Got be XXXX. maintain permanently over Once down through we I for a follow-up it. $XX been million outside talking expecting about an what impact of that to still looking we're XXXX? to we've And the Shift-by-Wire China? and would to in business know moving $XX And while, we at in Shift-by-Wire, any for to this in impact you expect wind million you've I another

Bob Krakowiak

Yes. Thanks for Scott. question, the

and remaining. Shift-by-Wire China. in that with awarded of basically programs a of years of million will portfolio is Shift-by-Wire that next itself couple with be after of portfolio $XX So this ramp business current after wind we'll year, next of that. year, There have about the the $XX about million the just at up over will piece particular couple customers a But down

Unidentified Analyst

last one could Okay. If I in. just sneak one

standard talked the Are million equipment, America guys $XXX is MirrorEye. we if a You about becomes North exclusively? again opportunity it for this talking

Jon DeGaynor

No, that's global.

Bob Krakowiak

date. just awarded was we've business that been upon to That based

Unidentified Analyst

it would got more lot be a it. contracts. Okay. Well, and I Got bigger it. obviously,

Bob Krakowiak

Yes. Correct.

Unidentified Analyst

That's all I have. Thanks.

Bob Krakowiak

Scott. Thanks,

Operator

with Chin you. comes Buckingham of And line Glenn question from next Thank the our Research.

line Your is open.

Glenn Chin

Good morning, usual. gentlemen, the as the and slides, thanks for information on all

Jon DeGaynor

Glenn. morning, Good

Bob Krakowiak

morning, Glenn. Good

Glenn Chin

Good morning.

questions. should be remarks. and correctly, SG&A want quick in have higher think addressed expenses, heard on follow-up I make just D&D I those year, prepared the you the just it your The of the I to and prior a throughout So evenly cadence? one sure spread may

Bob Krakowiak

that's Yes, correct.

Glenn Chin

wins, good. Is Very going program American Mitzna. Okay. required they MirrorEye, And will that North mirrors, back since presumably, correct? then still to incorporate is these so that by

Jon DeGaynor

with of couple for a regard different seen We've different to quotes OEs. the mechanizations

Some to integrate able not. them the they're the separately, flexibility or it CMS regulations a get to changed size XXXX reduced others gives quote to as whether chosen had system chosen the into have by to mirror, which

that are quotes that a the with hybrid we mirror. for additional awards XXXX have a for additional the stand-alone not systems, in So system

Glenn Chin

you in sense Okay. change guys that And there's on guess, you Jon, customers be that OEM then, regulations suggesting a in your Do movement about, slides that I talk end? coming. may

Jon DeGaynor

of North MirrorEye, would to impact and more One, to issues -- want more learning use what Europe they we and the what and regulatory safety. that that. address economy two both ways both in we're And drive market is OEMs are to things. to therefore, sense America, Well, the trying and is drive find and issues fuel to find why in ways

and things in regulations that response already to user Europe. regulations that like So are the there vulnerable is road a out

technology that accelerate. thus back of what and with in with what's elimination And, start to and get OEs is happened the to they process would go the addition, confident regard obviously, more the in confidence, in Europe. more data and see you're In mirrors, you're seeing with seeing get you line Mitzna more the Mitzna as

Glenn Chin

Very Okay. a of then And good. sort question. related

XX% North is three percent-ish. program the number I Europe rate America, Your in XX versus take win, guess,

reason in are out they in Is hybrid take assuming the Europe? that for And it in Just of because straight America, in North MirrorEye what legal Europe? rate? it's curiosity, discrepancy is

Jon DeGaynor

No.

got you've for Actros -- the it's there a that's been year. out So Daimler

You've in America got just an adoption curve. nor is it hybrid. Neither North Europe a

I In just the laws activity. both the OE secondly, rate perspective, you're And market more adoption think seeing And allow is an stand-alone it's one, situations, a it. it. pull for from

Operator

And follow-up have a Justin Long you. Stephens. we with from Thank question

open. is line Your

Justin Long

the up. follow taking for Thanks

factored Bob, if just the buyback impact authorization. from that any could any guidance? into I a the thoughts And also is us about quick had clarify, give you Just question timing wondering on of the going forward? buyback the buyback was

Bob Krakowiak

question, the for Justin. Thanks

they're time guidance factored still in share the the complete within options, evaluating And like comfortable that the And announced prior basically able we'll versus we've we've on in terms open we're and programs to programs, -- repurchases. of we XX-month just the program we're is repurchase market to window did grid-based the repurchase. be nothing So relative XXBXX today. accelerated that

Operator

showing And call any to I'd like Thank any Jon turn at the further I'm remarks. back questions time. you. this DeGaynor closing not for to

Jon DeGaynor

shareholder business, team participation will strong new to We're our actions beyond, available that call. confident that respond the I our I company your talking our effectively financial through on continue operating in next results, and closing, strong efficiently and to to profitable resources. you you result success that to in to for control and and to the today's all drive our you of value This continue and call. performance. can forward will assure can committed XXXX thank manage and variables impact, look we continued Well, deployment management drive in is focused In

Stoneridge (SRI) 29 Feb 202019 Q4 Earnings call transcript