SRI - Earnings call transcript Q1 2022

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Operator

Good morning and welcome to the Stoneridge First Quarter 2022 Conference Call. My name is Anera and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. the to turn now will call Ms. over I Relations. Harvey, Director Investor of Kelly Ms. Harvey, you may begin.

Kelly Harvey

and for the accompanying thank discuss everyone website evening morning Good you on posted under quarter with SEC our The Webcast and filed Presentation. is our stoneridge.com joining results. release section was and in presentation at the yesterday Investors first to us and

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

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

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

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

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

will see and that, the will [Operator non-GAAP comparable the we finished measures up certain to measures. be most to for call, remarks, formal With their questions. these have financial call open of Jon. I Jon After over appendix Instructions] today's will reconciliation the GAAP turn call the to During non-GAAP referring Please Matt directly measures. we to financial a

Jon DeGaynor

Kelly good morning everyone. Thanks and

cost These resulted performance quarter. our with customers continuing engage disruptions, financial production challenges fluctuating on our and actions. during cost me volatility, on the global availability schedules actions continued on from resulting we We supply structure suppliers to limited production through and begin costs. page navigate improved the chain the Let including three. managing responding component In in quarter, the rising to and first to focused pandemic material continued recovery

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

approximately are actions pricing resulted majority supply with first material on our portion in of the year. in that we XXXX. relative last to focusing increases, costs of incurred large agreed forecasting The of to During the incremental of to during first quarter significant These forward. price fourth provide customers the to for material made quarter, quarter, costs will quarter offset progress incremental upon offset costs or we the and we the pricing related a the the relief increased material chain continue going XX% negotiations incremental

pass customers, to Additionally, continue spot than our in more $XX we to offsetting million through OEM spot buys. purchases

macroeconomic This our conditions ongoing increases EPS customers are as and with adjusted full confirming price year We will expect and to revenue discussions guidance. evaluate regarding necessary. continue morning, we our

quarter. points our first adjusted taken EBITDA pricing impact in are margin account the midpoint for XX continued by to We operating, expectations actions raising and gross, of basis the

strong performance, Our year forecasted adjusted of EPS our will of expectation full guidance continued call. later earnings. our by offset reflects mix geographic expected expense margin provide incremental tax the detail on the to additional in guidance Matt due

and growth the externalities, efficiently we to profitable are that growth execute initiatives while respond focused in and to drive on Finally, also beyond. market continue to will work we XXXX long-term

programs During first expansion OEM our to rates details quarter. of with summarizes prior MirrorEye the the progress fleets with metrics of continued in launch relative our our and quarter, later four largest will Europe the and our financial on fleet additional key provide in Page activities platform, America. take the focusing call. North in I OEM to our program we make on continued retrofit some

and our end During improved strong off-highway the production stability customer in markets. continued quarter, saw in commercial markets our volumes in passenger end and we vehicle vehicle performance

particular new driver higher information during digital systems contributed the of ramp-up our quarter. continued the sales powertrain to and addition programs In in actuation

million. impacted favorably were sales quarter First price approximately $X by of increases

experienced we margin of points, the factors, net these expectations, by to X.X% declined quarter relative supply gross relative our XXXX. XXX of adjusted result and continued incremental due fourth customer first costs fourth Consistent of chain-related the quarter recoveries. a to revenue with primarily of XXXX, to basis of growth As quarter

price first recovery cost actions Given expect forward. taken with year and gross the improvement continued quarter the volume improvement of the be progresses, the and the trough in sequential we first quarter that as going will expectation margin

that customers, quarter, entered performance will first quarter key our in with other offset OEM During cost agreements we increases material incremental resulting to several and of continue recoveries the significantly and price costs. into benefited

with macroeconomic to challenges. to a us our the XXXX, second and lower in margin on relative SG&A of have We first costs Similar in of update XXXX, to provides improved strong to the to foundation due operating and recoveries the buy costs. customer of chain these improved the made costs engineering the performance margins. quarter. for Adjusted actions material our the of basis quarter expectation ongoing of and to spot related and provide pricing impact taken stabilizing The actions the supply continue X will purchases quarter the we through Slide XXX primarily taken significantly offset supply pass financial significant points despite half funding improved XXXX, chain-related during contributed quarter fourth to to timing an drive performance in strides customers. favorable to

costs. of offset the the gross $XX of we spot by $XX.X million million During quarter,

continue buy-related expect We to to significant costs majority a forward. going offset spot of

increase As quarter. the continued to expected gross chain-related first supply in costs

incremental were offset to able to our Excluding supply with increases buys price costs, spot the approximately chain agreed upon due primarily of XX% we customers.

-- margins supply actions XXXX going incremental for remainder recognize there to as continued year. stability in chain-related costs. we the We the the risk and incremental offset continue to in agreements market externalities of necessary. market first We improve will as the took reduce drive and chain material to margin is continue in relief take expect costs risk Overall, to continued in quarter in supply expect due we overall margin chain to to these the costs increased to provide related overall supply forward and material the result

Turning to page X.

We with both end in strong markets. our momentum to continue MirrorEye OEM see retrofit platform and

OEM quarter first our we delivered launched in call, program fourth take systems during XXXX. As The MirrorEye on over late have OEM we the X,XXX first as discussed, remains to-date. this strong rates program

will to retrofit optimistic take that issues supply existing continue expand as our and are subside. the with continue rate activity expand chain We Similarly, new we customers. to

America. MirrorEye in We retrofit several are announcing fleets with the largest of expansions some North

two the expansion locations. units their customers Schneider programs we're retrofit and and about we programs divisions First, announcing Schneider that is operating Maverick, previously. retrofit talked have across new of at expanding

driven trucking safety as fleet. continued to-date, the with expansion representing community the on over systems are their system, vehicles which a rapid trucks the seeing the Maverick we addition, has with target have about portion in has of growth of large their they installed In installing in seen we fleet. MirrorEye installations vocal benefits systems newer Maverick entire where they their the have XXX across been

XXXX. expect install XXXX We systems on end to over the Maverick by of trucks

new Finally, fleet to Nussbaum, are the satisfaction expanded expansion also and announcing existing and we has expansions ability safety, evaluations fleet. new demonstrate have their with who driver and efficiency. expectation a with Retrofit partners fleet partnership MirrorEye's continued across improve their fuel of

strong We fleet continued expansion the of rates our the incremental about partners are initial that announcements name expect and OEM and with indicators partners are have We believe coming existing adoption new continued market system. in strong to both performance retrofit future additional take quarters. excited and and the for

on continue of invest will channels. We successes expand MirrorEye's our resources adoption necessary effort all and and to the to our accelerate current through

related first quarter for X. the page performance many summary, global to the despite execute demonstrates still chains. our face In to we supply Turning to ability our challenges

the costs, for a we price through portion cost we actions. the are and forecasting majority During XXXX agreements agreed to of customers upon chain-related entered large incremental and our the quarter, supply material with increases into other of recovery offset

the we and addition, our to to strong remain priorities performance. financial improving on In business drive strategic delivering committed continuously

continue to XXXX discuss to that, are execute profitable in beyond. efficiently will and drive work respond externalities, also we it long-term financial the our initiatives growth more we turn over and in to on to to I'll Matt market that results growth focused With detail. While

Matt Horvath

Jon. Thanks

increase segment to taken engineering costs, was remainder slides. or net Adjusted first Turning due prior incremental XXX improved to actions performance the sales each versus material costs due a is offsetting X, expectations on million, prior were million customer first adjusted for segment discussion and recoveries. pricing the the points the brief adjusted negative X.X% of X.X% on primarily performance and in costs which the of subsequent loss provide to quarter. XXXX basis quarter approximately quarter. for detail of The in reduced an of additional favorable timing I will on to $XXX the sales, slide margin operating $X in quarter relative improvement SG&A

the revenue in are adjusted year and earlier discussed guidance. EPS Jon As we full our maintaining XXXX call,

account adjusted midpoint the favorable operating We first our expectations quarter. are points by and the of margin XX to gross for EBITDA in pricing taken raising actions impact basis

However, million SG&A actuation by fourth incremental relatively guidance we expenses XXXX, launched million, programs. negative schedules well Control revenue metrics was approximately X.X% operating expectations increased financial margin in by quarter, were to quarter $X.XX versus positive quarter compared to to as summarizes was quarter our approximately result of line our in points incremental improved basis driven compared primarily production or Page operating EPS of specific $X.X to stability lower the increase an expect adjusted $X.XX. of of for XXX the recently XXXX. X% sales. in adjusted Devices. quarter, key sales of $XX prior tax offsetting OEM to our previously due first outlined fourth with to as Control the income XX Adjusted powertrain costs. This Devices from Adjusted the

and take As initiatives quarter material expect our sequentially as and offset Devices of throughout margin in discussed Control costs. execute continue advantage sales XXXX the we on improve year, our we to call to to during incremental fourth volume operating incremental

pressure expect continue costs material to the inflationary to performance. segment's put on We

during chain-related However, incremental of costs in price result quarter, agreed increases a the material we supply XXXX. of and to portion expect offset as continue the large to a customer

first by key financial versus the an sales our fourth approximately XXXX, XX.X% engineering of summarizes in operating of well primarily systems. which ramp-up vehicle driven and architectures, product relative in million, million, Page loss to increase was the approximately drive primarily platforms electrified approximately continued driver Electronics due of pricing actions digital an our taken quarter customer in as fourth of quarter, as due by increase XXX sales XX, to to Electronics. metrics the future Lastly, first of recoveries. the to timing and $X we to drivetrain are the favorable have the that end will spend to basis $XXX to segment. invest improved and development were net growth quarter points our expansion XXXX, off-highway and of continue of targeted for higher information programs quarter Adjusted markets, specific

stabilize to revenue as continue We the our as including strong strong demand the end continued large programs, several and expect XXXX of with launch well across programs, growth and two ramp-up MirrorEye OEM growth first markets, our in discussed we is actions, cost in expenses MirrorEye expected to our Operating gross revenue ensure Jon carefully as retrofit cost margin improve, control with operating with as leverage to strong income previously. fixed growth. and recovery

economic result dollar Electronics to the US material against continued as in the will materials, improved and of during quarter, due quarter. expect in reais XXXX, strengthening of XXX costs, cost relative to of breakeven headwinds. seasonality XXXX, adjusted by the OEM a focused the of foreign remain lower efficient Stoneridge We typical income or year by XX to to quarter summarizes to partially the EPS. million, approximately $X a expect the financial our first costs and business, points the and quarter offset on Adjusted ramp-up as of approximately year, XX.X% year. as sequentially management of by Despite operating primarily specific decreased the that prior result revenue rates. of margins fourth mix income year. to Page sales result remain local relative full lower for of favorable offset XX, operating continue macroeconomic We XXXX, direct basis fourth this expectations summarizes flat first challenges Stoneridge Brazilian expect margin sales a quarter imported variable Brazil's segment and above exchange in relative our the continued operating favorable we Brazil. for in key Page approximately expand metrics to the to Brazil, the of

call, the full negative positive adjusted on As year discussed guidance earlier maintaining our of $X.XX. to we $X.XX are EPS

We maintaining $XXX guidance are of million. revenue $XXX million our range to

to be for and reflect will in We material car that production the and noted schedules. Similarly, our their expect and the prior the global vehicle production volatile to expectations relative are forecast production That commercial strong to planning and said, provide demand it possibility for our create reduced logistics continue forecasting end purposes. volumes end across remain and should have to markets, that, markets, third-party passenger availability that both indicated they forecasts. production risk strong production us forward-looking to dynamics customers for forecast have continue production

the continue of Additionally, outperform recently continued to market and programs, MirrorEye we businesses, including expect and ramp-up in to our launched strength on based continued our aftermarket non-OE retrofit. the

As taken in to cost chain supply largely the expect and our we driven call, expectations, margin earlier relative detail price discussed by in the prior recovery actions material quarter. improvement gross in from

cost to material offset significant increases portion the incremental significant material we the remainder and costs of the continue of expect for portion quarter, within of a forecasted to year. a As a result, offset

operating will drive expectations, our improvement both to margins. expect and our relative stable which to EBITDA We prior remain net operating expenses to

As gross, margins XX raising for and a basis result, by our midpoint we operating guidance are adjusted EBITDA points.

Finally, mix incremental expense as we forecast due foreign geographical US and our on we a improvement quarter $X.XX quarter. earnings of operating expect of $XXX current the $XXX as customer operations. tax on million, sequential incremental EPS market relative approximately the tax of updated to to income to of forecasts, $X Based well discussed, adjusted previously $X.XX tax on expecting for million, to conditions and million are first and revenue second

EPS. well related outbreaks as China, driving material continue second expectations challenges production to quarter, we earlier sequential COVID-XX the in growth logistic and response in both challenges availability as to adjusted our experienced the have continued are seeing in ramp we While up for to revenue

want XX. we Moving the I reiterate are challenges. In to first continued with that, macroeconomic the during to despite slide quarter, our pleased closing, performance

stabilize take execute of shareholder initiatives. call committed XXXX. driving that open efficiently supply forecasted to forefront I focus all respond the and value the questions. continue advantage demand that, strategic of schedules to the our to throughout the expect and as Stoneridge to production is chain to strong continued We up and will headwinds, continue at remains to of With

Operator

Thank you.

begin from first Justin We ahead. And comes Instructions] Please the [Operator question-and-answer will our question Long. session. now go

open. is line Your

Justin Long

Thanks and good morning.

Matt Horvath

morning, Good Justin.

Justin Long

commercial speak there the to a the way I the wanted range that just you the versus a expectation it momentum guidance. revenue XXXX And guidance? revenue assumption that on year? revenue but in seems MirrorEye MirrorEye given like I some XXXX has So start with know question you've change, could of at seen is didn't for to the that changed all of the within beginning

Matt Horvath

Yes.

on rates we're Justin, the strong. make expect remains or rates excited MirrorEye. announcements continue obviously, We're sorry momentum to really take about of the the we've continued some -- momentum made of forecasted side. incremental -- obviously seeing excited take in space And I'm and the quarter the we're OEM, this about retrofit to

of in to But half a year we potential disruptions historically chain the little both supply --continued for seeing at kept in point MirrorEye guidance. range offset the that the upside the both the this some of We to upside the broader or some chain -- we've our of the account supply bit have have given into second for that. we're that possibility that on also volatility of in incorporated some Obviously, of channels. than year

that that to of and year that upside some in expect So here. incorporated to the we progresses talk continue about have guidance as the momentum

Justin Long

pulling of that kind just well could given momentum substantially in build an months? in is driving I MirrorEye? to of we're challenges. of the X months this Are aware to over effort commercial supply pretty get the that just orders And in constraints, next backlog XX the Okay. mean, people forward those chain But any all

Jon DeGaynor

the say opposite Yes. well What retrofit both I think side way the our would rates. from Justin I on installation a is actually it's as as rate take from OE

take constraining be rates from is constraints. constraints didn't us. Our the actually would higher chain The have if side the semiconductor perspective and a supply we I believe where

regard that is the say what moves and is challenges get because and and what attraction move retention fleets not see driver can Now sure of it you safe. them standpoint, and accelerating retrofit make out at to with do the Maverick decisions with some North I to who are people is they supply a allows activities. making drivers they're in Maverick's particularly, American it the but other allows do only you looking doing and to means, to safety technology what these attract driver and younger chain drivers from best they're it there. It that them take well-trained the them

in that's entire creates it the more market semiconductor challenge see the we the bit. chain the a chain stress need, supply supply us but So as throughout constrains

Justin Long

Thanks, Matt. And helpful. just follow-up That's you Jon. talked cadence about a on that the guidance Okay.

you quarter, revenue So the your just the just second about reported year if the look I quarter in first guidance. at of we're the what I'd half take to think $XXX It and in second potentially midpoint full or touch guidance of I for million the a $XXX per jump quarter over this just up million back year -- versus see here quarter. implies going to so

and to of think half kind that's visibility to flowing ramp? As your through EPS you Could as you on about that ramp that speak just back well. obviously

Matt Horvath

Yes.

some by seeing in really that working bit revenue the a right? that retrofit that is there's with you good really The the continued the been seeing is of that strong. has particular. the momentum on of issue is own news the retrofit first in those getting take add drive hill side, stability that. quarter fourth exciting that pull-through good got with our platforms demand. forecasted really ramp-up rates challenge the that just strong electrified -- for to we're Justin, to demand spread in couple really the we're MirrorEye material We're some a production pull-through When rolling and little some level we're sequential the not some outlined. fact strong So snowball our that driver and year, good in on procuring we that the things of are One you seeing getting are of to the platforms, and like systems. information really continued expecting particularly here, self-help, we're of MirrorEye of third systems momentum similarly, got getting customers the are marketplace, that talked really components the on is The quarter And obviously last is the Obviously, the of is customers. forecasted support the vehicle Europe. We've and we've the to half peanut improvements production passenger and demand that and we down we're some remain car just and about some the the winning overall strong North production America butter

So and production own improve of programs we to in we've that growth see facilitate also continued there on like tailwind, the also fourth announced electrified that that and do self-help third good some on some expect gaining of and both visibility too demand quarters macroeconomics but our story and have got to programs platforms. some already the and car we've momentum of vehicle on passenger are the retrofit those the things

Justin Long

give coming pickup perspective Control And half or a is much more Electronics kind that us little to of versus color bit is ramp on majority on any could Okay. ramp of way follow-up from electronics, that you just revenue Devices? a half from there versus is second of how that the first

Matt Horvath

Justin. Yes,

existing about the areas where what opportunity we've programs second in that if we've as digital ramp-up If you And segment, next Electronics the on launched you the got MirrorEye driver the particularly we think we've where in look ramp OEM continued are half. in information the -- well systems. the as improvement launch about and of adoption retrofit talked the MirrorEye got up just over at

Electronics in way there's relative to growth in the Devices. about second if both So, the growth, obviously while that than is more you I think Control half probably think weighted it

Justin Long

Okay. Appreciate that. the it Got it. I’ll time. leave at

Matt Horvath

Thanks, Justin.

Jon DeGaynor

Justin. Thanks,

Operator

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

Jon DeGaynor

of thanks and their profitable can your business performance. through, by and our team for committed really and you, Thank today's shareholder of We're that drive our actions hard and Thank new and variables and I incredibly value will our I in available deployment XXXX impact saying, control our in driving participation everybody company management team focused success confident resources. result really conclude through, investors to the efficiently proud we you that assure to the financial dedication continued to will can respond challenging and manage time. results Stoneridge this operating is that continue for you. This beyond. first, to strong for and call. work during want effectively our I'm

Operator

Thank and conference. you. today's you And this ladies gentlemen, participating. for concludes thank Thank you

You may disconnect. now

Stoneridge (SRI) 8 May 222022 Q1 Earnings call transcript