SRI - Earnings call transcript Q4 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Stoneridge Fourth Quarter 2021 Conference Call. [Operator Instructions] I would now like to turn the conference over to your host Jon Sandison, Director of FP&A. Please go ahead.

Jon Sandison

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

Officer; Joining Executive call and today's our Horvath, on Jon DeGaynor, Matt me President Chief our are Chief and Financial Officer.

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

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

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

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

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

Jonathan DeGaynor

Jon. you, Good Thank morning, everyone.

volumes being recovery We as margin on created price and indirect Let implementing global me focus drive begin our actions recover. on to pandemic, chain-related Page cost to stronger we schedules, navigated by managing the challenges issues. and global X. direct and fluctuating In cost performance the structure XXXX, including production supply responsive

growth third of chain-related and and adjusted the strong offset continued the and on providing to costs, Similarly, focus represented we a quarter. current macroeconomic in quarter, improvement sequential trough were pass-through margin the stabilize, and Stoneridge our gross supply of XX.X% of conditions the of of ability factors, Based costs costs progress to relative driving recover top to third production I an a the Stoneridge In As environment improvement a for be X.X% the for million, thank to want both of result sequential representing continued of continued will the $XXX third XXXX. XX% the gross able from to incurred the quarter market sales supply we the as overcoming margin team into current EBITDA XXXX. challenges our historical fourth in approximately line believe quarter. chain of our fourth view perspective. on and management EBITDA we XXXX quarter and outperformance quarter that indication for facing

that Most launch importantly, the strategy on product our growth and and of stayed platforms adjusted Our continue technologies and despite develop in to an the future in the external challenges translating was invest necessary Adjusted X.X% the of $XX.X sales year XXXX million adjusted of sales. million or XX.X%, gross negative loss for $X.XX. focused margin operating EPS to in resources will loss a Stoneridge. an XXXX, of resulted for adjusted to drive we $XXX.X of

ramp-up program will guidance revenue alignment represents of providing are in Xx XXXX, XXXX. of Our in significant approximately megatrends morning, million This with launched and which and strategic launches growth, continue the beyond. we programs off market focus and pay XXXX midterm by driven industry $XXX in to approximately continued

with approximately pressure we in of our macroeconomic to reflect expecting downs increases adjust are in conditions. to sales $XX first continued note negotiations put the expect the that price to XXXX. current our year. recovery the in to XXXX cost in price contractual are offset the incurred material to we particularly will customers on XXXX Similarly, annual material It's or We growth million in is of related challenges half important margins,

an We XXXX. to midpoint better loss midpoint midpoint X.X% resulting X.XX%, $X.XX margin and operating in and of of XX% margin are of points an XXX margin EPS than basis adjusted guiding EBITDA a gross adjusted of or

to our $XX Matt morning, the specific margin to outperformance in guidance will $XX of expecting call. and targets we X-year plan. EBITDA top throughout sales detail This in adjusted million on additional are backlog, also significant updating XXXX. substantial We based of long-term provide on line expansion our and strong later financial our our expectations the market million components relative are the EPS of

Our XX% program growth in billion supports to than X-year awards annual in in This the rate resulting XXXX. and programs. expansion compound of due more $X.XX by backlog revenue new XXXX, a X%, existing of grew the primarily of over

revenue continue cost structure as XX% we on incremental and of focused our prices, have relative continuous to in to facilities on margins our margin We to specific and manufacturing existing initiatives expect recovery improvement on leverage XX% material contribution grow.

summarizes As we metrics our for impact performance and key strong of goes year showed progression and the the Stoneridge. our effectively Despite from a financial the to XXXX. an to improved X impact targeting performance for of backdrop in for fourth third quarter. and we XXXX the to quarterly in saying, EBITDA compared XXXX. financial challenging result, It a in provided quarter trough pandemic this, industry are managed the the global for without Page full continued XX% an the margin

increased XXX million, with only million, improved profit by gross points. $X.X sales basis adjusted by expanding While margin gross $X by

supply costs. the year offset chain-related we incrementally more As progressed,

estimate incurred those negatively We our basis costs in However, XXX costs we XXXX. $XX of almost versus gross in margin by still XXXX impacted supply chain-related million points XXXX.

quarter. increase costs in chain-related supply to Gross X. Slide fourth the to Turning continued

portion of increased However, cost chain material and large $X over these disruptions we net just in in offset cost resulting million. a incremental were quarter. fourth pressure Supply costs, to of the able effectively

and in the negotiations as our cost rise of recover We continued expect material as offset continued costs a challenges costs. and portion are both historical customers forecasted material to well with

other able approximately to guidance. to XX% costs of our customer to exposure, of in resulting the approximately During chain-related our $X.XX related relative primarily net or and than We're quarter, impact manage in the costs buy $XX offset supply million recoveries. prior pass-through a better quarter, supply favorable our we chain-related more total fourth of spot

Turning to X. Page

forecast fully our bus to these is commercial for XG vehicles on we penetration for This We continue vehicle upside first OEM and North our to launched systems continued take our DAP that to market The into expecting on with CornerEye limited With the significant while our OEM historical rate North XG both current XXXX, not scenario. best originally rate first first an MirrorEye, other OEM rates as MirrorEye rates platform supply well course take with incremental our and as market to the has the to our currently significant the new take market. on while award rate American quite meaningful OEM including see cadence, of should base the a DAF expansion customer Similarly, program of from rates customer recognized instrument platform backlog take in to steps leader platform quoted in be MirrorEye and DAF innovative MirrorEye more responsible as with is In DAF are the constraints. from forecast, late middle That the for new the retrofit the platform. over expectations end consistent will this system markets, at provides activities are double particularly the strong wining XG by expected constraints, transitions features they make MirrorEye continued we America prelaunch with platform, on calculations, flagship is the represent markets launch we the in industry's XX% Despite and and support we mirror suggests a OEM case our for take as our configurable as adjacent full chain the XXXX. system XXXX, The proud well. an said, take digital our in European strong. available utilize expansion time. this to system industry its production camera least initial reaction Based continue is upside for take the this noting than been technologies, until and XG+ that we cluster. and programs. on MirrorEye as new

partnerships this available to bus make are announcing MirrorEye platforms. on morning, several OEM we Additionally,

will of partnerships Similarly, hit bus an make we platform. production announcing are with available fully MirrorEye Marco OEM driven Cizaris, by continue on partnership point. with city customers. partnership customers retrofit and MirrorEye the are their standard platform, as MirrorEye bus that XXXX. partnership bus Quantron the option we First, GX believe MirrorEye to that expand inflection as with market as Polo ramp-up Iveco make announcing well systems with the the with introduce existing an has a new our growth North and Urbanway in a both option an electric new new We on to starting as retrofit programs our we in a in to new the America, In on

and expansion performance fleets future strong Our to indicators for with continued OEMs strong market OEM first product. as are production system the the initial well industry-leading reaction of as all the

performance MirrorEye and company. in investment the beginning of the Our platform off the contribute is meaningfully to pay financial to

Turning Page X. to

has business grown the awarded of backlog over Our year. significantly last

strong to opportunity continues Our to with top grow remains MirrorEye line profile as expand.

our continued as our strong backlog tachograph. primarily new by year. growth ramp-up well as end time related XX% This expansion Smart the X awards at program grew MirrorEye programs of X-year the the driver digital powertrain new actuation driven and information programs, same XXXX over of Our last and program by was system to

over includes awarded and a take rates. third-party As backlog programs reminder, volumes X-year at our only period a quoted forecasted

As positive could a we've our impact outlined penetration backlog. have incremental on MirrorEye several times, significant rates

$X.X sales. Our billion OEM current X-year backlog XXXX X.Xx almost a represents of of

Page to Turning X.

of current revenue are market a years next backlog. strong rate another to that Xx growth and forecast, represents a long-term our we period. current strong of over in billion production over XXXX, billion Based expected growth of based revenue expectations implies target and in updating in are This the growth midpoint X% on are which XXXX, of annual we $X.XX in several our approximately through same of over for XXXX $X $XXX reflect compound revenue XXXX. million on From updated year We expecting approximately anticipating market XXXX. conditions

and and modest a systems amount Our OEM take programs include rates quota annual of MirrorEye through XXXX. long-term customer revenue retrofit targets

the programs. in an of billion $X.XX rates system in point awarded could believe OEM based potential As the at drive previously, up full for the that currently are I we to on revenue take we XXXX for Incremental MirrorEye. inflection penetration discussed

of While take we will platform expect equipment do customers as don't rates standard that that we technology. see will the benefit expect continue by be more XXXX, MirrorEye the on improve to every

the strategy X-year exceeds that consistent plan. and resulted positions over Our growth far market us our long-term has growth for in profile a strong

Turning to X. Page

our reflect to We are long-term target also long-term as our updating revenue current market target as improved conditions. margin EBITDA well

million As EBITDA targeting by and our or line of expectations margin we have top a EBITDA on of a of expansion we margin result billion approximately in XX% $XXX strong of strategies revenue growth the are place, based XXXX. $X.XX continued

understand Before to EBITDA macroeconomic the we long-term talk margin expansion, on our the margin of have important drivers impact it's had our that the EBITDA targets. expected about conditions current

experienced $XX As year, I we costs. incremental outlined million almost previously, of this supply chain-related

well EBITDA billion downs our our most $XXX price price for productivity downs EBITDA of margin on million. contracts, a prior XXXX revenue billion implies impact drive facilities. margin midpoint we an buys will which as cost material XX.X% continued contribution our XXXX fixed contractual to guidance with our basis EBITDA on last to incremental to XXXX. in as points deflationary XXXX offset The guidance expectation have every least over XX% margin in revenue have our at of $X.XX leverage years, or of the by in on $XX aim costs OEM target we over of $X.XX of of margins expect X.X% that by XXX headwind our Based and XXXX. million continued incremental existing we of unmitigated and midpoint XX%, revenue structure most material created the year of targets that Overall, to We estimated and years our X estimate on and

and While our the long-term pricing expansion expand to opportunity margin recovery strategy, has structurally to material margin nothing beyond our depends implement up strategies. changed cost our target on and ability long-term XX% in to

XXXX, in our drive growth significantly margin lead strategy challenges of we long-term we expansion, X forward. continued expect markets and and committed value our our to revenue particularly outpace contribution will and strong that OEM expansion could expect of with margin target, Finally, short-term substantial that the challenges resulting incremental the Despite going outperformance remain underlying retrofit margins. expansion and creation revenue MirrorEye EBITDA to to aligned related last years to our

execute and on supporting the stage actions, platforms summary, our able XXXX, and focused I'm long-term of of We through to for Turning we recovery with Stoneridge We In customers set remain to while in price our variety faced continue proud our Page margin launch beyond. to the XX. vehicles despite team. the successful strategy were challenges and they and systems. growth up as XXXX a protecting cost and our on ramp

supported $X.XX by are year, XXXX, targeting XXXX, continued XX% next in over the this we beyond by years. Looking market revenue growth backlog suggesting billion Xx growth X of

initiatives XXXX. growth, that target XX% of expansion drive expect and of combined improvement We specific strategic will this long-term EBITDA our priorities level margin by to with continuous our

value execute to OEM more turn our to continue continued At that, our financial Hereon of path in long-term over Matt take particular, discuss provides on based market and our we on to opportunities a deliver strategies Stoneridge, expansion programs growth. profitable outperform in results strong will to and for these retrofit rate programs. it With targets capitalize shareholder through our I'll detail. to

Matthew Horvath

Thanks, Jon.

compared of sales. the in $X.X to million Electronics sales. operating Turning quarter. was quarter, to Adjusted XXXX by X.X% income negative or guidance third specifically, financial XX. negative adjusted operating Adjusted million, operating was were Devices' sales sales X.X% of of compared resulting establishing to of or quarter, sales sales of adjusted Stoneridge increased in third operating of third X.X% negative in relative of approximately X.X% XX.X% of income the which adjusted resulting $XX.X $X sales. to were third income or sales. million, Control negative or approximately fourth for adjusted an This performance. million resulting the adjusted compared decreased million we decrease X.X% $XXX.X More $XX million quarter the increase XX% quarter, approximately in X.X% Brazil of $XXX,XXX of are our of income million $XX.X $X.X to the a Slide morning,

both XXXX over We It global revenue. million, XXXX current potential $XXX XX% a of adjusted production our our market impact is to of second to the important our are guidance sales increase approximately an including of conditions, half forecasts, midpoint that XXXX guiding of and chain of current volatile have implying on note disruptions supply includes view XXXX. the which continued been versus

challenges, in particularly the are continued expecting cost We material early year.

current drive to material are price our incremental includes price downs guidance continued conditions. revenue Despite offset Our increases leverage expansion macroeconomic to on existing contractual annual costs structure margin, and pressure reflect to on substantial to our adjustments margin growth. gross we expecting to cost

of are gross million EBITDA a margin adjusted We a of midpoint midpoint midpoint adjusted XX%, and guiding to margin adjusted operating a of $XX.X X.X%. to X.XX% or to

credits is expense and on to mix based of expectation unusual earnings. tax This for to XXXX continued tax those the million. an our we based are on effective rate, geographic of than mix of earnings guiding midpoint of guiding a tax Given earnings in utilization expectations approximately rather current $X.X of the

$X.XX adjusted share a on guiding of share XXXX. the per As midpoint of earnings performance the drivers additional per a negative call. provide adjusted earnings will I color for to we later sales expected result, and in are

Turning quarter XX. midpoint to fourth an earnings guided we On to of Page third midpoint negative revenue quarter million. our $X.XX $XXX expected of EPS call, with our a

American North $XXX passenger result to with $X.XX million, of revenue guidance. car particularly continued in provided relative production our a our fourth As headwind quarter the previously was adjusted a in volatility, customers, resulting

impacted Additionally, results by unfavorably foreign our $X.XX. quarterly currency

$X.XX we to provided despite our were volatility outperformed by able costs costs and Similarly, guidance. in manufacturing-related historical recover During North relative ability previously current to improve driving the guidance. costs our expectations, supply offset America, $X.XX our prior a to quarter, relative to continued improvement our chain-related

currency-related and ability improvement quarter. costs facilities, recover Our in to in neutralize approximately supply our and offset chain-related and drive the volume the headwinds

This We $X.XX prior relative within expectations. the expected our a recovery one work received OEM significant for in previously engineering to not for to was receive quarter. a completed which customers, of resulted headwind

included call. reimbursement the to in that and receive guidance XXXX, reimbursement I discuss customer-funded later expect that the will engineering in has We in our been

revenue was performance, by schedules. metrics by estimated an approximately for or X.X% $X.X Page a production operating an were offset Devices' to was supply from which in of Our quarter adjusted performance continued for improvement XX year full and impacted new partially our $X.X related key supply fourth year of to decreased significantly the Control income downtime incremental OEM by income costs, specific adjusted compared and year XXXX. chain operating increase manufacturing provides foundation volatile chain-related $XX.X supply financial programs, X.X% income Control $XXX.X Devices. reduced solid full The resulted versus million recoveries particularly summarizes sales to due net XXXX, XXXX. sales. approximately Operating year sales by in to million, in million which chain-related Full million. increase

in several including programs electrified critical to several programs is vehicle These the featured platform, program such which our in launched XXXX, Excluding growth that divested resources in the we Similar to as Park-by-Wire XXXX, platforms. launched customers, have actions actuation. we key Ford platforms prior to relative on portfolio expected the Mach-E the strong on been shift opportunities, content our increase In vehicles. margin particularly our estimate with market taken platform prior only years, start quarter market X.X% revenue. we through of the the Mach-E X.X% production soot the Stoneridge's business costs, on on XXXX to sensor related to year significantly impact the of first electrified supply similar on electrified better towards align future operating Control demand. based would of the in capitalization for is chain-related Devices powertrain

and that to drivetrain to electrified and architectures. of in continue platforms product are programs targeted the applications invest will We development

will financial by approximately of incremental we launch XXXX, growth the driver summarizes information our In continued specific margin sales we relative $XXX.X XX% and XXXX, and the future for metrics, full driven to to to additional to including sales ramp-up this year platforms primarily prior an to which operating expect key XXXX this take related product our expect digital compared key were systems. segment. Electronics. Control increase approximately to of Page launches, large million, programs in improve XX as which of volume. Devices Electronics drive was advantage several program year, We

material MirrorEye and negatively XXXX significantly by were expect programs to that OEM these We We our costs related and retrofit commercial supply strong and million $XX.X in created impacted in growth chain up production disruptions, impacted Operating headwind estimate margin. XXXX by ramp vehicle cost our for production as segment's the margins customers. increases profitability volatility. and continued basis a point strong we XXX costs incremental by expect

chain-related to addition engineering current the costs, by required supply to product spend our and impacted was future In negatively Electronics launches. support margin

platforms product Looking forward, to our develop several and MirrorEye, a around we and continue to current as seeing that program such very take promising markets. will is innovate already in rates invest expansion

chain supply from expect division significant our to execute incremental overcome the are will Electronics customers we headwinds in As XXXX. these our that demand to meet order disruptions persist, confident we in

substantial a advantage margin in $X segment year. increase programs, As are growth movements. a a a the Brazil. related XX prior margin electronics margin headwind focus on and fixed year adjusted basis sales our $XX.X operating as of and was of to higher above million approximately primarily a expecting that product continued Brazil, relative sales, we Despite costs opportunities for awarded of structure operating expect positioned currency headwind X.X%. portfolio, This FX macroeconomic despite challenges Page revenue operating income Electronics points resulting we to XX.X% result of a year to take rates. engineering the of in to this approximately or the backlog and in well XXXX Electronics XXX as is to launches more to on $X.X related $X.X unfavorable Stoneridge OEM lower related on result, $XXX,XXX increased by or in MirrorEye remain an specific utilizing local relative cost million, and more income operating of stable demand offset efficient XXXX cost cost-efficient Full despite and margin expand driven of in to summarizes strong long-term year We aftermarket expect of to a SG&A revenue remain business by a and the significant for expansion leverage future focus to to due prior will the Brazil's platform. support continued metrics, full million adjusted business a key reductions to we track engineering growth totaled products focused continued million financial resources the an ramp-up year Stoneridge footprint. continue in our global the region. on to our trace and approximately expansion breakeven in global

increased Net XX. quarter, debt by net XX-month resulting or million Turning $X.X to million debt X.Xx of $XX.X in EBITDA. fourth in adjusted Page the trailing

suppliers. expect supply significant overall in our we first resulting our we of working As our substantial headwinds closely EBITDA. XXXX, trailing lower and we improvement relatively expect financial have a discussed we continue portion in customers in of half previously, XX-month the continued as XXXX said, offset chain-related to costs performance in That with by

company X ample The modifies flexibility a X.Xx XXXX of returning operate needed the first and we business quarter to X.XXx quarters extends support and first to in to raised amendment of requirement. leverage broad to a future first the the amend include for liquidity concludes of As a to in the this investing macroeconomic XXXX, fourth within Xx a We quarter of ratio our debt after of range leverage to amendment, net credit of the XXXX, ratio financial believe fourth facility and flexibility XXXX, which existing quarter worked potential leverage our company amendment gives the drive ratio. continue through growth. XXXX ratio quarter waives provide the our to our that and conditions. result, bank group the with The with the leverage

more ratios help normalized return move into XXXX, efficient remain management leverage to we rates. to on our we focused cash As

financial half into XXXX. of as We second we expect ratios our rapid the in move improvement

more level Xx. we We working net leverage to ratio a will levels a return our capital our and for part our of as in end net in targeting the expect supply that significantly the due production chain our to in increased debt-to-EBITDA year Similarly, are by volatility normalized ratio XXXX. schedules customers, under

are to capital We generation to ensuring working drive sheet, in us strengthen performance efficient and will continue normalizes capitalize inventory a cash XXXX. focused foundation opportunities. XXXX, production as steady balance on our we on Through to will our helping long-term provide that allow reducing to

Turning XX. Page to

We expect strong growth in XXXX, driving on of expecting midpoint revenue Based are guidance drive XXXX. $XX to market production $XXX year-over-year. million growth current to or XX% approximately growth versus we forecast, million IHS

expecting are market we Additionally, more portfolio. driven Xx product our than growth, by

and program our reporting our guidance. customers the Our first from for of of to fourth and instrument to continued our adjusted of spot include Similar results expansion our of MirrorEye our programs, quarter, as excluded continued the as in opportunities. our of digital OEM previously retrofit the is programs production opportunities specific passed-through purchases well impact the ramp-up cluster start actuation launched growth

year, based incremental portion expecting on our downs. the to are from increases well costs our contractual we ability as to offset Finally, annual material-related during revenue our customers a recognize of as price incremental price

of price downs. contractual We material targeting to cost XX% forecasted incremental offset and are approximately

earnings production We relative million and $XXX share approximately ramp-up half XXXX. in for of $XXX XXXX of the first the year. are summarizes year revenue expecting expectations strong XX revenue adjusted to to by as million quarter XXXX. to full in million, second our we are Page first stabilize Despite growth continued per approximately revenue of extremely quarter $XXX through volatility, continues expecting followed

We in million $X are of non-price expecting roughly growth net of on EPS. just $XXX incremental over contribution XXXX, adjusted strong revenue resulting margin in

of the reduced estimate At and is improvement impact benefit to to beneficial overtime, we schedules the of $X.XX and improved to Partially are of incremental manufacturing to price wage targeted downs, production and our continuous impact wage the approximately as Similar resulting and As as quarter, fourth operational the adjustments, related be expect improvement net I better in we targeting contractual a and $X.XX this for create the expect incentive performance annual includes primarily to XXXX. to drive fixed in $X.XX. programs normalization XXXX. headwind EPS of and we performance in in cost headwind. offsetting stability continued of well approximately This compensation our outlined programs XX% overhead. approximately continue inflationary previously, our material leveraging activities increases offset a in to incentive our incremental facilities

expecting on for benefit previously, year. engineering previously result engineering we continued the as XXXX are outlined more footprint reimbursement focus expenses to As $X.XX fourth a XXXX, to quarter in historical of as expected cost-efficient in that a were in well last relative

as Additionally, our guidance debt due reduction well venture our to XXXX of late the interest incremental joint in the includes a in in earnings expense equity based stake XXXX, divestiture as in primarily MSIL on current levels.

creating relative the to an tax the expense million $X.X million, for headwind year and incremental midpoint Finally, adjusted tax expense as in a our $X.XX of outlined previously, our $X.X total between includes guidance XXXX. at

of we guidance in year, cadence. or growth of EPS a we and incremental expectations EPS is be by our our decline to As expectation $X.XX to and primarily more in compensation positive relative that will adjusted costs driven incremental incentive This $X.XX of expectation material Similar to QX XXXX. XXXX revenue wage a QX EPS midpoint adjusted and adjusted negative in that are expecting reduce quarter expect Despite our in these to the revenue even second second costs of to of similar and in result, we actions expect net weighted impact substantially first $X.XX $X.XX incremental follow between course margin $X.XX. negative the the we will QX, strong increased and of EPS over expect a the contribution more the quarter heavily half. price adjusted recovery the before

as breakeven half adjusted a We and EPS support material improvement expect from to expectations incremental in significant second costs sustained throughout to recoveries, reduced performance margin performance second the the improve second volume our with remain price quarter and third of below quarter but strong expansion.

revenue, We leverage expect as expect solid contribution high-end existing continued expansion. billion ability to improved by the financial of for range and in cost that the the will performance of provide rate to a our significantly approximately we XXXX our end XXXX, our at of performance foundation margin margin structure target run $X drive

Moving to Slide XX.

growth. to plan well-positioned our focused long-term our profitable and on continued outgrow execute of remain $X.XX our have XXXX We target long-term We achieve revenue on billion. strategic underlying to markets significantly

contribution leverage our XX% foundation a fixed our and we ability strong by Our revenue cost provide on XXXX. as margin a margin to structure, incremental EBITDA target existing

to at Stoneridge's strategic questions. driving of always, is the With the will open value I As up shareholder forefront initiatives. call all that,

Operator

[Operator Instructions] from Your first line of Long question comes from Stephens. Justin the

Justin Long

the pieces. start supply from a the progression to just on at But and of sequential maybe when could things into chain. moving moved from lot basis? quarter back a step first level, guidance high quarterly of Obviously, you of for as comment look So the you with a for kind we've that fourth on of supply quarter? baked progression into sequential And chain XXXX the maybe the what's the kind

Matthew Horvath

Yes. said, Thanks incur the performance. of Justin. to do There's chain going to for a and costs what's -- XXXX significant that's the to I'm incremental We moving financial we that that able impacts do how expect from offset guidance. been lot -- material about we're obviously be costs, 'XX included portion sorry said, of those in to to like we pieces a the expect moving question, supply XXXX the and to dynamics from 'XX. That XX%,

XXXX. incremental we little well are bit -- incremental incremental into sequentially, seeing certainly costs move as of headwind and we net So as a

Justin Long

there's this any the below really and expecting impacting lot EBITDA get to terms noise guidance on in EPS. cadence And of kind that's what line a you margins was expecting the for point, of think gave a way the to of that a And there but EBITDA helpful, Okay. share you're higher the you to at could we're Is going of what Because sense guide. rate much the exit wanted I just year? rate. I your cadence through in you're the

Matthew Horvath

Yes.

There a we of noise at below look Justin, cadence line, similar for obviously, as bit comping So expect, little a you EBITDA. the particularly is year-over-year.

debt to stabilization profile little of certainly we look as in pattern, the will the of comp, of stabilized we though, EBITDA interest the a year. a will year-over-year the the the ramp-up year. significant remember second as where equity out pretty got fairly improvement head and and well QX when You you into to with expect expense a number we'll and a follow in QX half net a from beginning have at MSIL interest as bit come incremental similar

So expect adjusted will EBITDA you pattern that cadence similar a EPS fairly follow can that I to outlined. the

Justin Long

Anything that's XXXX Okay. share can the MirrorEye. And on into revenue guide? last on contribution you getting just from quickly a perspective baked the one

Matthew Horvath

our guidance it's we've we program and we put well, feedback OEM at point, the continued good rates you talked early take put gave regard Justin, rates early to -- with days is take expansion. contractual is in the So about because what from the this on What have news with we days.

in contractual rates. what's take is So our the guidance

positively to the that expect we months. over we of guidance trend see next the contractual So side. couple put in is But what the

in are of talked also thousand systems we've continue on retrofit we've from that opportunities see that see have to well. a we As standpoint side, to expand guidance we -- retrofit as a the perspective, got and about, there from expansion couple a

at we an the the of to but point, road regard guidance, together we we talk when put point the about to about inflection middle sort we when talk be if guidance, with see we inflection the opportunities from of being So MirrorEye. wanted

Justin Long

Great. Okay.

Operator

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

Scott Stember

of of and positive. different you get guiding the -- still you're just of I far sense whether you've be been that Electronics around guidance, to in to get And holding out, have at at a what's it it trying run the XXXX? the how Just in relating is -- sense talking breakeven-ish. would to looking technologies of you're not we guess, base some about, will in materially the talked segment upgrading earnings back? OEMs. guess, turn some 'XX, the the by segments when past to And sped expect of of back the reasons to to trying seems that know material profitability? Are 'XX I'm half year up the midpoint And just Electronics but a that rate that least I should the the like probably really be looks why segment, I one

Matthew Horvath

Yes.

good a question. it's Scott, really So

not material headwinds, It's when talk it's that Electronics, balanced I to those understand right? think cost the flow of through X you about most important between divisions.

much Secondly, is to Smart launch being through MirrorEye done when that systems. new the to historically, that's the digital launch flows in the with platform, launch we of the resources over information driver also months talk programs, engineering Electronics investing all And the about Tachograph. to X last the XX

of seen point from MirrorEye and and that see engineering cost material segment or impact perspective. a of greatest what of spending resources been those ramp-up away, inflection revenues, division about the the in you programs, the and -- has ramp-up is the advance So talk far we the when we we've that has talk the the from inflation about

outsized are thrilled reviews, is we to to about talked we it's that's one showing driving And each growth. and division have So invest beyond. these really invest driving the that to engineering to the with to what we've us it's charts while and to are to Electronics, what in we resources continue talked with on the none continue need regard about the that's see both get in quarterly growth. of invest And of because billion is $X.XX both outsized well, going -- that sides sides, while us the we

Jonathan DeGaynor

that, Scott. And I Yes. add would to

expansion When in While future. say financial look ROIC not in look that year at that thrilled think way fact that and you the about lot the ROIC thrilled that, starting Electronics the take retrofit even improved of the earlier strong coming We're in that to from over you the profile we've and years. look several are with a the market. investment and at performance there's off growth really MirrorEye revenue rates pay long-term are current the the some we be the backlog that on we invested talked generates investing will last at we a the activity if that really focus may the resources. company, performance, about we we lot chart, I of We've with in of growth that see with

talked the Electronics. and we for precede to in So about RIC starting this the as see the investment will as past, of inflection point the ramp-up ROIC, benefit our always we we're

impact, headwind net the year. of and that beginning to remember these will them the rate in year we impact next also as coming than of out so other reduced your certainly that a the subside it's costs run the to see have some important than the where material think point, ability coming more offset I the to is of Electronics start the to and segments of most because that's particularly

Scott Stember

talk other clear, guys overall more inflationary. And guess, you everything about and is recovery guess, that's buckets, Got when related freight it. stuff expedited you of, all be together? then -- of costs, I I covering about XX% guys about the to buys just have supply you part to spot talking talked and different chain-related Are I know X

Matthew Horvath

Yes. Great question, Scott.

really are actual The So this included sales. is part are not our to in our that guidance. important of in buys recovery sales of a passed but through adjusted spot customers our

the as we the move through So significant we of to a spot guidance assumes those will necessary year. pass-through that portion as buys continue

the we're increases talking to to pass-through more offsets more talking end rather we're inflationary headwind the substantially activity buy customer. and we So that related that to about and about offset the to and expect continue the material frankly, durable costs than spot is in guidance that our

Scott Stember

then timeline just give guess, And expanding side Europe. of and in more last materializing MirrorEye. partnerships this over retrofit where Is that us on on question of Maybe -- a of just The I start Or it kind OE normal it. bus you're business? similar your P&L. that like of the when is hitting Got to happens thing a right away. will type the

Jonathan DeGaynor

commercial but Yes. have with the It's of it do as cycle the vehicle programs, OE sort we same doesn't development OEs.

in long And a launch we expand in sure about get to We've make it. revenue what we XXXX right So time, on through as said roughly this. could there's talked for a the is platform to for we Scott. We and -- $XX the development. needed MirrorEye we million then worth first need of that programs

living the Here we're where is that doing of expansion. an of up commitment example to

bus where $XX expansion. million bus can we in our synergies So said, to and activities, between the be OEM the like commercial see we synergies and programs those continue revenue But worth programs, there'll has, the markets the vehicle end retrofit additional program drive XXXX. of about I

Operator

coming [Operator next have Prestopino Instructions] Barrington We Research. question from of Gary line the from our

Gary Prestopino

to understand guidance some Just buckets of want here. these

that specific the to growth would XXXX Stoneridge you launches guidance, bullet X. that the program Your point highlight really $XX Is sales million in pertain to correct?

Matthew Horvath

little to we try apart our expect end pretty you production do same year we break is of in that just by bit fact What actually strong a that but amount and almost said, that that's to Yes, what we launched what program exactly the see ramp-up also to like the due by launches on programs last new or markets, year. more Gary. outperform this you right,

Gary Prestopino

some war with because off of guess, of forecast Europe. a into Okay. question manufacturers turn I strong production you the And what's forecast just and then any really the particularly to Have here IHS starting here is before the IHS the million, projections in production supply that Ukraine. IHS possibility going -- of obviously, possibility chain, production European we're of declines because negative already of account the in here, on in forecast this leading kind was your $XX taken shot developed here. This

Jonathan DeGaynor

Yes.

So is Gary, the no. answer

that January yet -- haven't basis into the guidance because account HIS. it's We XXXX is on this taken our for based

Gary Prestopino

Okay.

Jonathan DeGaynor

of But it's let passenger between within couple to One, commercial Stoneridge. qualify the and vehicle me important split a car things. remember

that Secondly passenger we is remember European little car very have exposure.

-- start sales. European our pass -- car about in talking when you vehicle our XXXX, you're X.X% was of the about So talking Europe, sales, with impact particularly in

Gary Prestopino

Okay.

Jonathan DeGaynor

quite small. car a European Europe. in very is But very, from standpoint, bigger vehicle pass a portion European commercial it's So

European the So it this we from are We're point, we impact pass the -- chain car production. standpoint, we but at a watching to watch a exposure don't closely. supply huge have

Gary Prestopino

the doing for Mustang then guess, You the about you it's -- And -- you're the I talked correct? Okay. that what the talked side. about actuation Is Mach-E.

Jonathan DeGaynor

Yes. That’s right.

Gary Prestopino

just programs give specific going maybe -- maybe also year? electrified this you are your for actuation where growth us other your on models to Could platforms be driving some

Jonathan DeGaynor

launched, obviously, hasn't So we yet Gary. talk that been can't about stuff

Gary Prestopino

Okay.

Jonathan DeGaynor

production. in platforms which commonality, is would production, they vehicles is other on What can other customers, on on can't Mach-E, in the imagine the you launched. be but we're So about Bolt, we there's with we're the Chevy we talk the that are is -- which until

Gary Prestopino

other you But right. All going that are are XXXX. launch platforms on in to Okay. to suffice say,

Matthew Horvath

Yes, that's right.

Jonathan DeGaynor

exposed We're the the other hybrid for right Control We've it we regard to done we fantastic to developing with job, getting done out about and why future us -- a It's That's portfolio of has fantastic state. I changes strategy and of I'm of mean team Devices why commercial combustion a and in internal modded-force-agnostic and engines. out got job being within talked are the rotating things of products to powertrains. the grow solely it. ourselves team positioned that Devices really EV with proud made doing. has the the had what team that engineering Control we've they're getting

Gary Prestopino

Or goes lastly, X, strongly EBITDA you're on for? you then in your looking target. that very Is your you Slide baseline? about everything the just right long-term And feel that XX.X% through long-term number plan? Okay. go that if where Is XX%

Matthew Horvath

first So of is amount expansion, incremental margins. on goes no, EBITDA much all, It give you can the expecting to given the revenue how perfectly. of What -- idea contribution of an that we're if our be how Gary. continued we of wanted do margin expectation everything growth is strong not -- strong

remember what the material floor expect should -- contractual really we just going revenue -- chain forward supply and a relationship It's getting have downs about manufacturing ability important contractual at a strategy price efficiency in over Jon of get about you all, normal to offset between material year, cost only get first that target. our costs -- that's those obviously, a in that had we as think we annual significant to year, mind, last structure downs price in the to to move is our we strong overall on -- our certainly expect my XXXX, really curve think to, least on the think annual mitigate allows through related and and thing get we costs. the price down, improved all, to outlined productivity material is as us and facilities. you when based more forward. growth. in first what and price weren't said, recovery, of cost-efficient contractual really downs, for to So I what on we when guidance And what target expect in to not and increasing based you we those The our Over incremental able back low we

So you've long-term when got a margin pretty substantial targets. net headwind think you about

get us longer to those negotiate is to helps back term ability Our target. what or that relationships exceed long-term

way target -- and with it's a perfect, So the contribution plans the opportunity on it's margin our that we our not reasonable if see some strategic as associated very to specific based goes well everything both as revenue that, margin. expand current

Operator

Mr. And back I like go am turn showing I DeGaynor time. now comments. further to ahead. Please would no for further Jon this it to at questions

Jonathan DeGaynor

in resources. today's you, committed shareholder you our participation focused business and driving new operating and value our to your strong for want company you, reassure In is everybody, closing, deployment call. to that I thank results, Thank profitable through available just of

strong to will drive result actions financial and in and continue variables to team that that can Our beyond. success efficiently We're management confident respond we manage control performance. and continued will XXXX impact and effectively the for our

Operator

all today's And this concludes participating. call. you for conference Thank

disconnect. now may You

Stoneridge (SRI) 1 Mar 222021 Q4 Earnings call transcript