UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| ITEM 2.02 | Results of Operations and Financial Condition. |
On August 3, 2022, Stoneridge, Inc. (the “Company”) issued a press release announcing its results for the second quarter ended June 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1. On August 4, 2022, members of the Company’s management will hold a second quarter 2022 earnings conference call to discuss the Company’s financial results and the presentation attached hereto as Exhibit 99.2, will accompany management’s comments.
The press release and earnings conference call presentation contain certain non-GAAP financial measures, including Adjusted Sales, Adjusted Gross Profit and Margin, Adjusted Operating Income (Loss) and Margin, Adjusted Income (Loss) Before Tax, Adjusted Net Loss, Adjusted Loss per Share (“Adjusted EPS”), Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Income Tax Expense and Adjusted Tax Rate (collectively, the “Non-GAAP Financial Measures”). Management believes that the presentation of the Non-GAAP Financial Measures used in the press release and earnings conference call presentation are useful to both management and investors in their analysis of the Company’s financial position, results of operations and expected results of operations because the Non-GAAP Financial Measures facilitate a period to period comparison of operating results by excluding significant unusual, non-recurring items in 2022 and 2021. For 2022, these items relate to the after-tax and pre-tax Brazilian indirect tax credits, pre-tax business realignment costs, after-tax write-off of deferred financing fees, sales from spot purchase recoveries and FX impact. For 2021, these items relate to the pre-tax gain on sale of the Canton facility, pre-tax Brazilian indirect tax credits, net, pre-tax gain from disposal of Soot Sensor Business, pre-tax sale of Soot Sensor product inventory, sales from disposed Soot Sensor Business, pre-tax operating loss from disposed Soot Sensor Business, pre-tax change in fair value of the earn-out consideration related to the acquisition of the remaining 26% minority interest in Stoneridge Brazil, pre-tax Stoneridge Brazil TSA and monetary correction, pre-tax gain from disposal of MSIL joint venture and pre-tax restructuring costs. These non-GAAP financial measures, however, should not be considered in isolation or as a substitute for the most comparable GAAP financial measures. Investors are cautioned that non-GAAP financial measures used by the Company may not be comparable to non-GAAP financial measures used by other companies. Adjusted Sales, Adjusted Gross Profit and Margin, Adjusted Operating Income (Loss) and Margin, Adjusted Income (Loss) Before Tax, Adjusted Net Loss, Adjusted EPS, EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Income Tax Expense and Adjusted Tax Rate should not be considered a substitute for Sales, Gross Profit, Operating Income (Loss), Income (Loss) Before Tax, Net Loss, Earnings (Loss) per Share, Income Tax Expense or Tax Rate prepared in accordance with GAAP.
| ITEM 7.01 | Regulation FD Disclosure. |
The information set forth in Item 2.02 above is hereby incorporated herein by reference.
The information in this report, including the press release and the earnings conference call presentation furnished as Exhibits 99.1 and 99.2 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. In addition, the exhibits furnished herewith contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in such exhibits.
| ITEM 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. | Description |
| 99.1 | Press release dated August 3, 2022, announcing results for the second quarter ended June 30, 2022 |
| 99.2 | Second quarter 2022 results earnings conference call presentation materials, dated August 4, 2022 |
| 104 | Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Stoneridge, Inc. | |
| Date: August 3, 2022 | /s/ Matthew R. Horvath |
| Matthew R. Horvath Chief Financial Officer and Treasurer (Principal Financial Officer) |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Stoneridge Reports Second-Quarter 2022 Results
MIRROREYE OEM TAKE RATES REMAIN STRONGER THAN ORIGINAL EXPECTATIONS WITH
INCREASED OUTLOOK FOR 2023
SECOND-QUARTER PERFORMANCE IMPACTED BY FX HEADWINDS
2022 Second-Quarter Results
| · | Sales of $220.9 million |
| · | Adjusted sales of $205.7 million |
| · | Gross profit of $38.6 million (18.7% of adjusted sales) |
| o | Excluding unfavorable impact of foreign currency vs. Q1, adjusted gross margin of 19.7% |
| · | Operating loss of ($5.9) million |
| · | Adjusted operating loss of ($6.5) million ((3.2%) of adjusted sales) |
| o | Excluding unfavorable impact of foreign currency vs. Q1, adjusted operating margin of (2.3%) |
| · | Adjusted EBITDA of $2.3 million (1.1% of adjusted sales) |
| · | Loss per share (“EPS”) of ($0.27) |
| · | Adjusted EPS of ($0.29) |
| o | Net foreign currency unfavorably impacted adjusted EPS in the quarter by ($0.06) versus prior expectations |
2022 Full-year Guidance Update
| · | Reducing full-year 2022 midpoint revenue guidance by $15 million to $865 million ($855 million - $875 million) to reflect slower-than-expected improvement in customer production volumes despite strong end-market demand |
| · | Reducing midpoint adjusted EPS guidance ($0.17) to a midpoint of ($0.20) (($0.25) – ($0.15)) |
| o | Updated full-year revenue guidance expected to reduce adjusted EPS by ~($0.11) in the second half |
| o | Incremental non-operating expenses, including FX, tax and interest expense expected to reduce adjusted EPS guidance by ~($0.11) (incremental ~($0.05) expected in second half) |
| o | Operational performance and cost control expected to drive incremental improvement for the remainder of the year |
NOVI, Mich. – August 3, 2022 – Stoneridge, Inc. (NYSE: SRI) today announced financial results for the second quarter ended June 30, 2022, with sales of $220.9 million and loss per share of ($0.27). Adjusted sales were $205.7 million and adjusted EPS was ($0.29) for the second quarter. Sales were adjusted to normalize the impact of $15.3 million of electronic component spot buys recovered from customers within the quarter. The exhibits attached hereto provide reconciliation detail on this and all other normalizing adjustments.
For the second quarter of 2022, Stoneridge reported gross profit of $38.6 million (18.7% of adjusted sales). Operating loss was ($5.9) million and adjusted operating loss was ($6.5) million ((3.2%) of adjusted sales). Adjusted EBITDA was $2.3 million (1.1% of adjusted sales). Excluding the unfavorable impact of foreign currency rates, adjusted gross, operating and EBITDA margins would have been approximately 19.7%, (2.3%) and 0.9%, respectively.
Jon DeGaynor, president and chief executive officer, commented, “In the second quarter, our team continued to adapt to volatile production schedules, limited material availability and continued rising material costs. Although material costs continue to create a headwind, we have significantly reduced the net impact of rising material costs on our financial performance as we have offset approximately 90% of these incremental costs incurred year-to-date through price increases and cost recovery actions. Our performance was negatively impacted by foreign currency exchange rate movements during the quarter resulting in an adjusted EPS headwind of $0.06. We continue to focus on controlling the variables within our control and adapting our cost structure to align with current market conditions. While production and material availability remain volatile, we are seeing improvements in customer production forecasts as a result of improved material availability. We expect that the actions we have taken, and will continue to take, will result in strong run-rate financial performance as our end-markets and supply chains continue to recover.”
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DeGaynor continued, “Although macroeconomic conditions continue to be challenging, we remain focused on the initiatives that will drive long-term, profitable growth. Market demand continues to be strong for the first OEM MirrorEye® program in Europe with take rates averaging approximately 35%. That said, material availability is constraining take rates in 2022. Based on discussions with our first OEM partner, we expect the take rate will continue to expand as supply chain issues subside and are forecasting the take rate to be greater than 50% heading into next year. This has the potential to drive significant revenue upside and strong contribution margins going-forward.”
Second Quarter in Review
Control Devices sales totaled $85.0 million, an increase of 0.7% relative to adjusted sales excluding the impact of the divested business in the second quarter of 2021, primarily due to customer price increases offset by COVID-19 related shutdowns impacting production in China in the second quarter of 2022. Second quarter adjusted operating margin was 4.8%, a decrease of 220 basis points relative to the second quarter of 2021, primarily due to the increase in material costs as a result of supply chain constraints and inflation, offset by negotiated price increases.
Control Devices sales were consistent with our first quarter sales, primarily due to incremental revenue on actuation program ramp-ups offset by continued volatility in customer production volumes and COVID-19 related shutdowns impacting production volumes in China. Second quarter adjusted operating margin decreased 310 basis points relative to the first quarter of 2022, primarily due to a one-time favorable SG&A benefit related to a legal settlement recognized in the first quarter of 2022 and higher material costs from supply chain constraints and inflation.
Electronics adjusted sales totaled $115.1 million, an increase of 18.3% relative to sales in the second quarter of 2021, primarily due to increased end-market demand, customer price increases and the ramp-up of new program launches partially offset by an unfavorable foreign currency impact of $11.8 million. Second quarter adjusted operating margin was (2.2%), a decrease of 40 basis points relative to the second quarter of 2021 primarily due to fixed cost leverage on incremental sales offset by an increase in material costs as a result of supply chain constraints.
Relative to the first quarter of 2022, Electronics adjusted sales increased 6.4%, primarily due to increased end-market demand, expansion of recently launched programs and pricing actions offset by an unfavorable foreign currency impact of $1.8 million. Excluding the unfavorable impact of foreign currency, sales increased by 8.0%. Adjusted operating margin increased 30 basis points relative to the first quarter of 2022, primarily due to reduced net engineering spend as well as reduced SG&A costs offset by an unfavorable foreign currency impact of approximately $2.1 million. Excluding the unfavorable impact of foreign currency, operating margin improved by 210 basis points versus the first quarter of 2022.
Stoneridge Brazil sales were $13.3 million, a decrease of 10.4% relative to sales in the second quarter of 2021, primarily due to lower sales in most product lines partially offset by favorable foreign currency impact of $1.0 million. First quarter adjusted operating margin decreased 440 basis points relative to the second quarter of 2021, primarily due to unfavorable fixed cost leverage on lower sales.
Relative to the first quarter of 2022, Stoneridge Brazil sales increased by $1.3 million primarily due to favorable foreign currency impact of $0.7 million. Stoneridge Brazil adjusted operating margin decreased by 140 basis points relative to the first quarter of 2022 primarily due to higher SG&A and D&D spend.
Cash and Debt Balances
As of June 30, 2022, Stoneridge had cash and cash equivalents balances totaling $40.7 million. Total debt as of June 30, 2022 was $162.0 million. The 2022 amendment to the Company’s $300 million credit facility provides for a covenant relief period through the end of Q1 2023 at which point covenants revert back to pre-amendment levels. This amendment to the credit facility waives the maximum leverage ratio covenant for the first three quarters of 2022 and modifies the fourth quarter of 2022 covenant to include a maximum 4.75x leverage ratio. This amendment also modified the minimum interest coverage covenant for each quarter of 2022. The Company expects to remain in compliance with the amended existing covenants through the covenant relief period.
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2022 Outlook
Matt Horvath, chief financial officer, commented, “The pricing and supply chain actions taken in the first half of the year continue to provide relief on incremental material costs. Driven primarily by limited material availability, customer production forecasts have not recovered as quickly as we expected despite continued strong end-market demand. As a result, we are reducing the midpoint of our 2022 adjusted revenue guidance by $15 million to $865 million to reflect updated second half expectations. This results in a reduction to adjusted EPS of approximately $0.11 based on our expected contribution margin of 25% to 30%.”
Horvath continued, “We are reducing our margin guidance to reflect reduced fixed cost leverage on lower expected revenue, offset in part by a continued focus on reducing operating expenses and aligning our cost structure with current market conditions. Additionally, we expect incremental interest and tax expense to reduce adjusted EPS by approximately $0.05 for the remainder of the year. As a result, including consideration for second quarter performance, we are reducing our full-year adjusted EPS guidance to a mid-point of ($0.20).”
The Company announced updated full-year sales guidance of $855.0 million to $875.0 million, adjusted gross margin guidance of 21.25% to 21.75% and adjusted operating margin guidance of 0.75% to 1.25%. Full-year tax expense guidance was updated to $5.5 million to $6.5 million. Adjusted EBITDA margin guidance was updated to 4.75% to 5.25%. Adjusted EPS guidance was updated to ($0.25) – ($0.15).
Conference Call on the Web
A live Internet broadcast of Stoneridge’s conference call regarding 2022 second-quarter results can be accessed at 9:00 a.m. Eastern Time on Thursday, August 4, 2022, at www.stoneridge.com, which will also offer a webcast replay.
About Stoneridge, Inc.
Stoneridge, Inc., headquartered in Novi, Michigan, is a global designer and manufacturer of highly engineered electrical and electronic components, modules and systems for the automotive, commercial, off-highway and agricultural vehicle markets. Additional information about Stoneridge can be found at www.stoneridge.com.
Forward-Looking Statements
Statements in this press release contain “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and may include statements regarding the intent, belief or current expectations of the Company, with respect to, among other things, our (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, (iv) growth opportunities related to awarded business, and (v) operational expectations. Forward-looking statements may be identified by the words “will,” “may,” “should,” “designed to,” “believes,” “plans,” “projects,” “intends,” “expects,” “estimates,” “anticipates,” “continue,” and similar words and expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other factors:
| · | the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis, including the impact of potential tariffs and trade considerations on their operations and output; |
| · | fluctuations in the cost and availability of key materials (including semiconductors, printed circuit boards, resin, aluminum, steel and copper) and components and our ability to offset cost increases through negotiated price increases with our customers or other cost reduction actions; |
| · | global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries; |
| · | our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions; |
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| · | the impact of COVID-19, or other future pandemics, on the global economy, and on our customers, suppliers, employees, business and cash flows; |
| · | the reduced purchases, loss or bankruptcy of a major customer or supplier; |
| · | the costs and timing of business realignment, facility closures or similar actions; |
| · | a significant change in automotive, commercial, off-highway or agricultural vehicle production; |
| · | competitive market conditions and resulting effects on sales and pricing; |
| · | our ability to manage foreign currency fluctuations |
| · | customer acceptance of new products; |
| · | our ability to successfully launch/produce products for awarded business; |
| · | adverse changes in laws, government regulations or market conditions, including tariffs, affecting our products or our customers’ products; |
| · | our ability to protect our intellectual property and successfully defend against assertions made against us; |
| · | liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party, or the impact of product recall or field actions on our customers; |
| · | labor disruptions at our facilities or at any of our significant customers or suppliers; |
| · | business disruptions due to natural disasters or other disasters outside of our control; |
| · | the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our revolving Credit Facility; |
| · | capital availability or costs, including changes in interest rates or market perceptions; |
| · | the failure to achieve the successful integration of any acquired company or business; |
| · | risks related to a failure of our information technology systems and networks, and risks associated with current and emerging technology threats and damage from computer viruses, unauthorized access, cyber-attack and other similar disruptions; and |
| · | the items described in Part I, Item IA (“Risk Factors”) of our 2021 10-K filed with the SEC. |
The forward-looking statements contained herein represent our estimates only as of the date of this release and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise.
Use of Non-GAAP Financial Information
This press release contains information about the Company’s financial results that is not presented in accordance with accounting
principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest
GAAP financial measures at the end of this press release. The provision of these non-GAAP financial measures for 2022 and 2021 is not
intended to indicate that Stoneridge is explicitly or implicitly providing projections on those non-GAAP financial measures, and actual
results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to
the Company at the date of this press release and the adjustments that management can reasonably predict.
Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company’s financial position and results of operations. In particular, management believes that adjusted sales, adjusted gross income and margin, adjusted operating income (loss) and margin, adjusted net loss, adjusted loss per share, adjusted EBITDA, adjusted EBITDA margin, adjusted loss before tax, adjusted income tax expense and adjusted tax rate are useful measures in assessing the Company’s financial performance by excluding certain items that are not indicative of the Company’s core operating performance or that may obscure trends useful in evaluating the Company’s continuing operating activities. Management also believes that these measures are useful to both management and investors in their analysis of the Company’s results of operations and provide improved comparability between fiscal periods.
Adjusted sales, adjusted gross income and margin, adjusted operating income (loss) and margin, adjusted net income loss, adjusted loss per share, adjusted EBITDA, adjusted EBITDA margin, adjusted loss before tax and adjusted tax rate should not be considered in isolation or as a substitute for sales, gross profit, operating income (loss), net loss, loss per share, income before tax, income tax expense, tax rate, cash provided by operating activities or other income statement or cash flow statement data prepared in accordance with GAAP.
For more information, contact Kelly K. Harvey, Director Investor Relations ([email protected]).
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CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| (in thousands) | 2022 | 2021 | ||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 40,692 | $ | 85,547 | ||||
| Accounts receivable, less reserves of $1,938 and $1,443, respectively | 159,733 | 150,388 | ||||||
| Inventories, net | 144,108 | 138,115 | ||||||
| Prepaid expenses and other current assets | 51,247 | 36,774 | ||||||
| Total current assets | 395,780 | 410,824 | ||||||
| Long-term assets: | ||||||||
| Property, plant and equipment, net | 105,137 | 107,901 | ||||||
| Intangible assets, net | 45,928 | 49,863 | ||||||
| Goodwill | 33,537 | 36,387 | ||||||
| Operating lease right-of-use asset | 15,483 | 18,343 | ||||||
| Investments and other long-term assets, net | 42,549 | 42,081 | ||||||
| Total long-term assets | 242,634 | 254,575 | ||||||
| Total assets | $ | 638,414 | $ | 665,399 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 4,178 | $ | 5,248 | ||||
| Accounts payable | 109,179 | 97,679 | ||||||
| Accrued expenses and other current liabilities | 67,111 | 70,139 | ||||||
| Total current liabilities | 180,468 | 173,066 | ||||||
| Long-term liabilities: | ||||||||
| Revolving credit facility | 157,820 | 163,957 | ||||||
| Deferred income taxes | 9,286 | 10,706 | ||||||
| Operating lease long-term liability | 12,313 | 14,912 | ||||||
| Other long-term liabilities | 5,999 | 6,808 | ||||||
| Total long-term liabilities | 185,418 | 196,383 | ||||||
| Shareholders' equity: | ||||||||
| Preferred Shares, without par value, 5,000 shares authorized, none issued | - | - | ||||||
| Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,318 and 27,191 shares outstanding at June 30, 2022 and December 31, 2021, respectively, with no stated value | - | - | ||||||
| Additional paid-in capital | 230,455 | 232,490 | ||||||
| Common Shares held in treasury, 1,648 and 1,775 shares at June 30, 2022 and December 31, 2021, respectively, at cost | (51,081 | ) | (55,264 | ) | ||||
| Retained earnings | 200,734 | 215,748 | ||||||
| Accumulated other comprehensive loss | (107,580 | ) | (97,024 | ) | ||||
| Total shareholders' equity | 272,528 | 295,950 | ||||||
| Total liabilities and shareholders' equity | $ | 638,414 | $ | 665,399 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net sales | $ | 220,936 | $ | 191,334 | $ | 441,994 | $ | 385,129 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of goods sold | 182,372 | 148,493 | 361,987 | 296,202 | ||||||||||||
| Selling, general and administrative | 28,938 | 31,380 | 56,337 | 60,756 | ||||||||||||
| Gain on sale of Canton Facility, net | - | (30,718 | ) | - | (30,718 | ) | ||||||||||
| Design and development | 15,554 | 15,495 | 32,582 | 30,146 | ||||||||||||
| Operating (loss) income | (5,928 | ) | 26,684 | (8,912 | ) | 28,743 | ||||||||||
| Interest expense, net | 1,217 | 1,860 | 3,003 | 3,626 | ||||||||||||
| Equity in loss (earnings) of investee | 377 | (496 | ) | 458 | (1,110 | ) | ||||||||||
| Other (income) expense, net | (596 | ) | (272 | ) | 735 | 86 | ||||||||||
| (Loss) income before income taxes | (6,926 | ) | 25,592 | (13,108 | ) | 26,141 | ||||||||||
| Provision for income taxes | 413 | 5,794 | 1,906 | 6,213 | ||||||||||||
| Net (loss) income | $ | (7,339 | ) | $ | 19,798 | $ | (15,014 | ) | $ | 19,928 | ||||||
| (Loss) earnings per share: | ||||||||||||||||
| Basic | $ | (0.27 | ) | $ | 0.73 | $ | (0.55 | ) | $ | 0.74 | ||||||
| Diluted | $ | (0.27 | ) | $ | 0.72 | $ | (0.55 | ) | $ | 0.73 | ||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 27,269 | 27,137 | 27,234 | 27,077 | ||||||||||||
| Diluted | 27,269 | 27,432 | 27,234 | 27,442 | ||||||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended June 30, (in thousands) | 2022 | 2021 | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | (15,014 | ) | $ | 19,928 | |||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||||||
| Depreciation | 13,618 | 14,099 | ||||||
| Amortization, including accretion and write-off of deferred financing costs | 4,323 | 3,126 | ||||||
| Deferred income taxes | (1,868 | ) | 1,658 | |||||
| Loss (earnings) of equity method investee | 458 | (1,110 | ) | |||||
| Gain on sale of fixed assets | (95 | ) | (139 | ) | ||||
| Share-based compensation expense | 2,834 | 2,761 | ||||||
| Excess tax deficiency (benefit) related to share-based compensation expense | 259 | (289 | ) | |||||
| Gain on settlement of net investment hedge | (3,716 | ) | - | |||||
| Gain on sale of Canton Facility, net | - | (30,718 | ) | |||||
| Gain on disposal of business, net | - | (740 | ) | |||||
| Change in fair value of earn-out contingent consideration | - | 1,215 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (15,481 | ) | (17,175 | ) | ||||
| Inventories, net | (11,864 | ) | (24,750 | ) | ||||
| Prepaid expenses and other assets | (15,538 | ) | (3,084 | ) | ||||
| Accounts payable | 16,577 | 13,610 | ||||||
| Accrued expenses and other liabilities | 7,689 | (1,033 | ) | |||||
| Net cash used for operating activities | (17,818 | ) | (22,641 | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Capital expenditures, including intangibles | (14,890 | ) | (14,043 | ) | ||||
| Proceeds from sale of fixed assets | 140 | 474 | ||||||
| Proceeds from settlement of net investment hedge | 3,820 | - | ||||||
| Proceeds from disposal of business, net | - | 1,050 | ||||||
| Proceeds from sale of Canton Facility, net | - | 35,167 | ||||||
| Investment in venture capital fund, net | (450 | ) | (1,599 | ) | ||||
| Net cash (used for) provided by investing activities | (11,380 | ) | 21,049 | |||||
| FINANCING ACTIVITIES: | ||||||||
| Revolving credit facility borrowings | 11,190 | 30,000 | ||||||
| Revolving credit facility payments | (16,500 | ) | (40,000 | ) | ||||
| Proceeds from issuance of debt | 19,163 | 21,888 | ||||||
| Repayments of debt | (20,358 | ) | (25,082 | ) | ||||
| Earn-out consideration cash payment | (6,276 | ) | - | |||||
| Repurchase of Common Shares to satisfy employee tax withholding | (699 | ) | (2,349 | ) | ||||
| Net cash used for financing activities | (13,480 | ) | (15,543 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (2,177 | ) | (1,197 | ) | ||||
| Net change in cash and cash equivalents | (44,855 | ) | (18,332 | ) | ||||
| Cash and cash equivalents at beginning of period | 85,547 | 73,919 | ||||||
| Cash and cash equivalents at end of period | $ | 40,692 | $ | 55,587 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest, net | $ | 3,022 | $ | 3,468 | ||||
| Cash paid for income taxes, net | $ | 3,936 | $ | 6,645 | ||||
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Regulation G Non-GAAP Financial Measure Reconciliations
Reconciliation to US GAAP
Exhibit 1 - Adjusted EPS
Reconciliation of Q2 2022 Adjusted EPS
| (USD in millions) | Q2 2022 | Q2 2022 EPS | ||||||
| Net Loss | $ | (7.3 | ) | $ | (0.27 | ) | ||
| Add: After-Tax Brazilian Indirect Tax Credit | (0.6 | ) | (0.02 | ) | ||||
| Adjusted Net Loss | $ | (7.9 | ) | $ | (0.29 | ) | ||
Reconciliation of Q1 2022 Adjusted EPS
| (USD in millions) | Q1 2022 | Q1 2022 EPS | ||||||
| Net Loss | $ | (7.7 | ) | $ | (0.28 | ) | ||
| Add: After-Tax Write-off of Deferred Financing Fees | 0.4 | 0.01 | ||||||
| Adjusted Net Loss | $ | (7.4 | ) | $ | (0.27 | ) | ||
Exhibit 2 – Adjusted EBITDA
Reconciliation of Adjusted EBITDA
| (USD in millions) | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | |||||||||||||||
| Income (Loss) Before Tax | $ | 25.6 | $ | (9.8 | ) | $ | (3.9 | ) | $ | (6.2 | ) | $ | (6.9 | ) | ||||||
| Interest expense, net | 1.9 | 1.4 | 0.1 | 1.8 | 1.2 | |||||||||||||||
| Depreciation and amortization | 8.5 | 8.2 | 8.7 | 8.7 | 8.5 | |||||||||||||||
| EBITDA | $ | 36.0 | $ | (0.2 | ) | $ | 5.0 | $ | 4.3 | $ | 2.8 | |||||||||
| Add: Pre-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) | 1.1 | 0.2 | 0.6 | - | - | |||||||||||||||
| Less: Pre-Tax TSA and Monetary Correction (Stoneridge Brazil) | - | - | (1.1 | ) | - | - | ||||||||||||||
| Less: Pre-Tax Gain from Disposal of MSIL Joint Venture | - | - | (1.8 | ) | - | - | ||||||||||||||
| Add: Pre-Tax Restructuring Costs | 0.3 | 0.7 | 0.1 | - | - | |||||||||||||||
| Less: Pre-Tax Gain on Sale of Canton Facility | (30.7 | ) | - | - | - | - | ||||||||||||||
| Add: Pre-Tax Business Realignment Costs | 0.1 | 1.1 | 0.0 | 0.0 | - | |||||||||||||||
| Add: Pre-Tax Brazilian Indirect Tax Credit, Net | 0.6 | - | - | - | (0.6 | ) | ||||||||||||||
| Less: Pre-Tax Gain from Disposal of Soot Sensor Business | - | - | (0.4 | ) | - | - | ||||||||||||||
| Less: Pre-Tax Sale of Soot Sensor Product Inventory | - | - | 0.1 | - | - | |||||||||||||||
| Adjusted EBITDA | $ | 7.4 | $ | 1.8 | $ | 2.4 | $ | 4.3 | $ | 2.3 | ||||||||||
Exhibit 3 – Adjusted Gross Profit
Reconciliation of Adjusted Gross Profit
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Gross Profit | $ | 42.8 | $ | 41.4 | $ | 38.6 | ||||||
| Add: Pre-Tax Restructuring Costs | 0.3 | - | - | |||||||||
| Add: Pre-Tax Business Realignment Costs | 0.0 | - | - | |||||||||
| Adjusted Gross Profit | $ | 43.1 | $ | 41.4 | $ | 38.6 | ||||||
8
Exhibit 4 - Adjusted Operating Income
Reconciliation of Adjusted Operating Income (Loss)
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Operating Income (Loss) | $ | 26.7 | $ | (3.0 | ) | $ | (5.9 | ) | ||||
| Add: Pre-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) | 1.1 | - | - | |||||||||
| Add: Pre-Tax Restructuring Costs | 0.3 | - | - | |||||||||
| Less: Pre-Tax Gain on Sale of Canton Facility | (30.7 | ) | - | - | ||||||||
| Add: Pre-Tax Business Realignment Costs | 0.1 | - | - | |||||||||
| Add: Pre-Tax Brazilian Indirect Tax Credit, Net | 0.6 | - | (0.6 | ) | ||||||||
| Adjusted Operating Loss | $ | (1.9 | ) | $ | (3.0 | ) | $ | (6.5 | ) | |||
Exhibit 5 – Segment Adjusted Operating Income
Reconciliation of Control Devices Adjusted Operating Income
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Control Devices Operating Income | $ | 37.1 | $ | 6.8 | $ | 4.1 | ||||||
| Add: Pre-Tax Restructuring Costs | 0.3 | - | - | |||||||||
| Less: Pre-Tax Gain on Sale of Canton Facility | (30.7 | ) | - | - | ||||||||
| Control Devices Adjusted Operating Income | $ | 6.6 | $ | 6.8 | $ | 4.1 | ||||||
Reconciliation of Electronics Adjusted Operating Loss
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Electronics Operating Loss | $ | (1.8 | ) | $ | (2.7 | ) | $ | (2.5 | ) | |||
| Add: Pre-Tax Restructuring Costs | 0.0 | - | - | |||||||||
| Add: Pre-Tax Business Realignment Costs | (0.0 | ) | - | - | ||||||||
| Electronics Adjusted Operating Loss | $ | (1.8 | ) | $ | (2.7 | ) | $ | (2.5 | ) | |||
Reconciliation of Stoneridge Brazil Adjusted Operating Income (Loss)
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Stoneridge Brazil Operating Income (Loss) | $ | (0.7 | ) | $ | 0.5 | $ | 1.0 | |||||
| Add: Pre-Tax Change in Fair Value of Earn-Out (Stoneridge Brazil) | 1.1 | - | - | |||||||||
| Add: Pre-Tax Business Realignment Costs | 0.1 | 0.0 | - | |||||||||
| Add: Pre-Tax Brazilian Indirect Tax Credit, Net | 0.6 | - | (0.6 | ) | ||||||||
| Stoneridge Brazil Adjusted Operating Income | $ | 1.1 | $ | 0.5 | $ | 0.4 | ||||||
Exhibit 6 – Adjusted Sales
Reconciliation of Adjusted Sales
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Sales | $ | 191.3 | $ | 221.1 | $ | 220.9 | ||||||
| Less: Sales from Spot Purchase Recoveries | - | (24.4 | ) | (15.3 | ) | |||||||
| Adjusted Sales | $ | 191.3 | $ | 196.6 | $ | 205.7 | ||||||
9
Exhibit 7 – Control Devices Adjusted Sales
Reconciliation of Control Devices Adjusted Sales Excluding Disposed Soot Sensor Business
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Control Devices Sales | $ | 86.7 | $ | 85.0 | $ | 85.0 | ||||||
| Less: Sales from Disposed Soot Sensor Business | (2.3 | ) | - | - | ||||||||
| Control Devices Adjusted Sales Excluding Disposed Soot Sensor Business | $ | 84.4 | $ | 85.0 | $ | 85.0 | ||||||
Exhibit 8 – Control Devices Adjusted Operating Income Excluding Disposed Soot Sensor Business
Reconciliation of Control Devices Adjusted Operating Income Excluding Disposed Soot Sensor Business
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Control Devices Adjusted Operating Income | $ | 6.6 | $ | 6.8 | $ | 4.1 | ||||||
| Less: Pre-Tax Operating Loss from Disposed Soot Sensor Business | (0.7 | ) | - | - | ||||||||
| Control Devices Adjusted Operating Income Excluding Disposed Soot Sensor Business | $ | 6.0 | $ | 6.8 | $ | 4.1 | ||||||
Exhibit 9 – Electronics Adjusted Sales
Reconciliation of Electronics Adjusted Sales
| (USD in millions) | Q2 2021 | Q1 2022 | Q2 2022 | |||||||||
| Electronics Sales | $ | 97.3 | $ | 132.7 | $ | 130.4 | ||||||
| Less: Sales from Spot Purchase Recoveries | - | (24.4 | ) | (15.3 | ) | |||||||
| Electronics Adjusted Sales | $ | 97.3 | $ | 108.3 | $ | 115.1 | ||||||
Exhibit 10 – Adjusted Tax Rate
Reconciliation of Adjusted Tax Rate
| (USD in millions) | Q2 2022 | Tax Rate | ||||||
| Loss Before Tax | $ | (6.9 | ) | |||||
| Add: Pre-Tax Brazilian Indirect Tax Credit | (0.8 | ) | ||||||
| Adjusted Loss Before Tax | $ | (7.7 | ) | |||||
| Income Tax Expense | 0.4 | (6.0 | )% | |||||
| Add: Tax Impact from Pre-Tax Adjustments | (0.2 | ) | ||||||
| Adjusted Income Tax Expense | $ | 0.2 | (2.8 | )% | ||||
10
Exhibit 11 – Adjusted Q2 Results Excluding FX Impact
Reconciliation of Adjusted Sales Ex. FX Impact*
| (USD in millions) | Q2 2022 | |||
| Adjusted Sales | $ | 205.7 | ||
| Add: FX Impact | 1.6 | |||
| Adjusted Sales Ex. FX Impact | $ | 207.3 | ||
Reconciliation of Gross Profit Ex. FX Impact*
| (USD in millions) | Q2 2022 | |||
| Gross Profit | $ | 38.6 | ||
| Add: FX Impact | 2.3 | |||
| Gross Profit Ex. FX Impact | $ | 40.8 | ||
Reconciliation of Adjusted Operating Loss Ex. FX Impact*
| (USD in millions) | Q2 2022 | |||
| Adjusted Operating Loss | $ | (6.5 | ) | |
| Add: FX Impact | 1.6 | |||
| Adjusted Operating Loss Ex. FX Impact | $ | (4.9 | ) | |
Reconciliation of Adjusted EBITDA Ex. FX Impact*
| (USD in millions) | Q2 2022 | |||
| Adjusted EBITDA | $ | 2.3 | ||
| Add: FX Impact | (0.3 | ) | ||
| Adjusted EBITDA Ex. FX Impact | $ | 2.0 | ||
Reconciliation of Electronics Adjusted Sales Ex. FX Impact*
| (USD in millions) | Q2 2022 | |||
| Electronics Adjusted Sales | $ | 115.1 | ||
| Add: FX Impact | 1.8 | |||
| Electronics Adjusted Sales Ex. FX Impact | $ | 117.0 | ||
Reconciliation of Electronics Operating Loss Ex. FX Impact*
| (USD in millions) | Q2 2022 | |||
| Electronics Operating Loss | $ | (2.5 | ) | |
| Add: FX Impact | 2.1 | |||
| Electronics Operating Loss Ex. FX Impact | $ | (0.5 | ) | |
*Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates
11
Exhibit 99.2
Q2 2022 Results August 4, 2022 Exhibit 99.2 |
2 Forward-Looking Statements Statements in this presentation that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Important factors that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the ability of suppliers to supply Stoneridge with parts and components at competitive prices on a timely basis; fluctuations in the cost and availability of key materials (including semiconductors, printed circuit boards, resin, aluminum, steel and copper) and components and our ability to offset cost increases through negotiated price increases with our customers or other cost actions; our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions; global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries; the impact of COVID-19, or other future pandemics, on the global economy, and on our customers, suppliers, employees, business and cash flows; the reduced purchases, loss or bankruptcy of a major customer or supplier; the costs and timing of facility closures, business realignment or similar actions; a significant change in automotive, commercial, off-highway and agricultural vehicle production; competitive market conditions and resulting effects on sales and pricing; our ability to successfully launch/produce products for awarded business; adverse changes in laws, government regulations or market conditions, including tariffs, affecting our products or customers products; labor disruptions at Stoneridge’s facilities or at any of Stoneridge’s significant customers or suppliers; the amount of Stoneridge’s indebtedness and the restrictive covenants contained in the agreements governing its indebtedness, including its revolving credit facility; customer acceptance of new products; capital availability or costs, including changes in interest rates or market perceptions; the occurrence or non-occurrence of circumstances beyond Stoneridge’s control; and the items described in “Risk Factors” and other uncertainties or risks discussed in Stoneridge’s periodic and current reports filed with the Securities and Exchange Commission. Important factors that could cause the performance of the commercial vehicle and automotive industry to differ materially from those in the forward- looking statements include factors such as (1) continued economic instability or poor economic conditions in the United States and global markets, (2) changes in economic conditions, housing prices, foreign currency exchange rates, commodity prices, including shortages of and increases or volatility in the price of oil, (3) changes in laws and regulations, (4) the state of the credit markets, (5) political stability, (6) international conflicts and (7) the occurrence of force majeure events. These factors should not be construed as exhaustive and should be considered with the other cautionary statements in Stoneridge’s filings with the Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance; Stoneridge’s actual results of operations, financial condition and liquidity, and the development of the industry in which Stoneridge operates may differ materially from those described in or suggested by the forward-looking statements contained in this presentation. In addition, even if Stoneridge’s results of operations, financial condition and liquidity, and the development of the industry in which Stoneridge operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. This presentation contains time-sensitive information that reflects management’s best analysis only as of the date of this presentation. Any forward-looking statements in this presentation speak only as of the date of this presentation, and Stoneridge undertakes no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. Stoneridge does not undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Rounding Disclosure: There may be slight immaterial differences between figures represented in our public filings compared to what is shown in this presentation. The differences are the result of rounding due to the representation of values in millions rather than thousands in public filings. |
3 Q2 2022 Overview Pricing and supply chain actions continue to offset incremental material costs (offset ~90% of incremental material costs year- to-date) Second quarter adjusted EPS performance negatively impacted by FX headwinds of ~($0.06) vs. prior expectations Updating full-year 2022 guidance to account for second quarter headwinds as well as current market conditions Reducing revenue midpoint by $15 million to reflect slower-than-expected improvement in customer production volumes despite continued strong end-market demand (~($0.11) second half impact vs. prior expectations) Incremental second half non-operating expenses, including tax and interest expense, to reduce adjusted EPS guidance by ~($0.05) Updating margin expectations to reflect reduced fixed cost leverage on lower sales expectations Continued focus on operational performance and cost control expected to partially offset headwinds Q2 2022 Financial Performance 2022 Adjusted Full-Year Guidance 2022 Guidance Previously Provided 2022 Guidance Updated Midpoint Change $860.0 – $900.0 million $855.0 – $875.0 million ($15.0) million 21.75% - 22.75% 21.25% - 21.75% (75) Bps 1.0% - 2.0% 0.75% - 1.25% (50) Bps $4.5 - $6.5 million $5.5 - $6.5 million $0.5 million ($0.15) - $0.10 ($0.25) – ($0.15) ($0.17) 5.25% - 6.25% 4.75% - 5.25% (75) Bps Reported Adjusted Sales $220.9 million $205.7 million Gross Profit Margin $38.6 million 17.5% $38.6 million 18.7% Operating Loss Margin ($5.9) million (2.7%) ($6.5) million (3.2%) Tax Expense Rate $0.4 million (6.0%) $0.2 million (2.8%) EPS ($0.27) ($0.29) EBITDA Margin - $2.3 million 1.1% |
4 ▸ Sales increased in Q2 vs.Q1 primarily due to higher volumes and the continued ramp-up of recently launched programs offset by unfavorable impact of foreign currency of ~($1.6) million ▸ End-market demand remains strong – customer production schedules limited by material availability in the quarter ▸ Material limitations have generated a relatively high short-term backlog ▸ Offset ~90% of incremental material costs incurred year-to- date relative to 2021, however rising material costs continue to create a headwind ▸ Gross margin declined in Q2 vs. Q1 due in part to the unfavorable impact of foreign currency of ~($2.3) million ▸ One-time inventory adjustments and warranty expenses, expected to be contained to the quarter, further negatively impacted the quarter by ($1.5) million or ~70 bps Financial Summary Second quarter performance influenced by significant FX headwinds Q1 2022 vs. Q2 2022 Adjusted Sales Adjusted Gross Profit Adjusted Operating Loss Adjusted EBITDA $’s in USD Millions Q2 Financial Highlights *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates $196.6 $205.7 $207.3 Q1 2022 Q2 2022 Q2 2022 Ex. FX Impact* $41.4 $38.6 $40.8 21.1% 18.7% 18% 23% 28% 36 38 40 42 Q1 2022 Q2 2022 Q2 2022 Ex. FX Impact* 19.7% $4.3 $2.3 $2.0 2.2% 1.1% 0% 5% 0 5 Q1 2022 Q2 2022 Q2 2022 Ex. FX Impact* 0.9% $(3.0) $(6.5) $(4.9) -1.5% -3.2% -5% -3% -1% -10 -5 0 Q1 2022 Q2 2022 Q2 2022 Ex. FX Impact* -2.3% |
5 Supply Chain Update Pricing Actions / Supply Chain Strategy ▸ The pricing and supply chain actions taken in the first half of the year offset ~90% of the year-to-date incremental material costs in 2022 relative to 2021 ▸ Continue to pass the majority of spot-buy costs through to customers Material Cost Outlook ▸ Cautious optimism on material availability in the second half of the year ▸ Expecting inflation and material availability to continue to put significant pressure on material costs through the remainder of the year ▸ Expecting continued supply chain actions and negotiations with customers related to price increases required to offset incremental material costs going-forward ▸ Macroeconomic drivers providing pressure on material availability and logistics costs including the continued conflict in Ukraine and potential further COVID lockdowns in mainland China Continued pricing and supply chain actions have stabilized margin profile and reduced material cost related headwinds Offset ~90% of year-to-date incremental material costs through continued pricing actions and cost recoveries *Recoveries from prior periods (2021 cost recoveries) not included in year-to-date cost recovery calculation $0.5 $0.1 ($1.6) $1.1 $0.6 2021 Cost Recoveries* Net Material Spot Purchases Incremental Material and Premium Freight Costs Net Supply Chain Costs by Category YTD 2022 Q2 2022 |
6 Leadership Announcements ▸ Effective July 1st, Kevin Heigel, senior vice president, integrated supply chain, has returned to a consulting role to support the Company's global integrated supply chain initiatives on an as- needed basis ▸ Sal Orsini was appointed as Chief Procurement Officer effective July 1st ▸ Sal brings more than 25 years of global supply chain management experience in the automotive and aerospace industries, leading procurement organizations around the world while living in Asia Pacific, Europe and Mexico. ▸ Most recently, he was the vice president, global chief supply management officer at Nexteer Automotive. Prior to that, Sal held various leadership roles at Aptiv, General Motors, Rolls-Royce Aerospace and Delphi ▸ Sal will be focused on executing our company strategy through all aspects of the company’s global procurement organization, including supplier quality and global supply chain strategy ▸ Archie Nimmer, Vice President of Operations ▸ Archie has been with the Company since 2017. During his tenure, he has played an integral role in shaping our operations organization ▸ Archie will be focused on continuing to drive operational excellence globally Achieving supply chain and operational excellence through new leadership appointments focused on building on a strong foundation |
7 MirrorEye Update Strong initial demand, limited in the short-term by material availability constraints OEM take rate expected to exceed 50% in 2023 as supply chain issues subside Current Production Update ▸ Market demand continues to be strong and exceeds current material availability ▸ Due to supply-chain constraints, forecasted take rate for the remainder of 2022 ~35% for first OEM program ▸ Excluding supply-chain constraints, estimated take rates in 2022 would be ~50% based on customer demand ▸ Based on customer forecasts, expecting 2023 take rates to exceed 50% OEM Program Update OEM Program Expected Launch Timing Estimated Take Rate at Time Award Estimated Peak Annual Revenue at Time of Award Program 1 Launched Q4 2021 See Above Program 2 Q1 2023 ~10% $14M Program 3 Q3 2023 (EU) Q1 2025 (NA) ~25% (EU) ~10% (NA) $35M $6M Program 4 Q1 2024 <5% $4M *Peak annual revenue based on quoted pricing at the time of the award **Based on current customer forecasts First OEM Program (Currently In-Production) Awarded Current with supply constraints Est. Current w/o supply constraints** Forecasted 2023 Take Rate Assumption 16% ~35% ~50% ~50%+ Peak Annual Revenue* $13M ~$22.5M ~$42M ~$42M+ Optimistic that future program take rates will outperform awarded rates based on current program performance |
8 Focused Strategy Driving Long-Term Performance Stoneridge is well positioned to outperform the market, drive significant margin expansion and deliver shareholder value through long-term profitable growth * The Company defines backlog as the estimated cumulative awarded sales for the next five years (or “estimated sourced future sales”). Backlog as of December 31, 2021. Revenue Growth Outpacing the Market by 2x – 3x • Product portfolio aligned with industry megatrends (~85% drivetrain agnostic by 2025) • Backlog* of awarded business supports $1.5B revenue target by 2026 (9%+ CAGR) EBITDA Margin Expansion up to 14% by 2026 • 25-30% contribution margin on incremental revenue • Engineering footprint transformation supports expanded capabilities with minimal incremental costs • SG&A structure in place to support significant growth Focused on the Future • MirrorEye retrofit momentum and OEM take-rates driving significant incremental opportunity • Control Devices aligned with powertrain electrification positioning segment for sustainable growth • Global footprint, customer and end- market diversity and product portfolio sets foundation for long- term profitable growth |
9 Financial Update |
10 2nd Quarter 2022 Financial Summary 2nd Quarter 2022 Financial Results Adjusted sales of $205.7 million, an increase of 4.6% over Q1 2022 Control Devices sales of $85.0 million, consistent with Q1 2022 Electronics adjusted sales of $115.1 million, an increase of 6.4% over Q1 2022 Stoneridge Brazil sales of $13.3 million, an increase of 10.8% compared to Q1 2022 Adjusted operating loss of ($6.5) million ((3.2%) adjusted operating margin), a decrease of 170 bps over Q1 2022 Control Devices adjusted operating income of $4.1 million (4.8% adjusted operating margin), a decrease of 310 bps over Q1 2022 Electronics operating loss of ($2.5) million ((2.2%) operating margin), an increase of 30 bps over Q1 2022 Stoneridge Brazil adjusted operating income of $0.4 million (3.0% adjusted operating margin), a decrease of 140 bps compared to Q1 2022 2022 Updated Full-Year Guidance 2022 Guidance Previously Provided 2022 Guidance Updated Mid-point Change Sales $860.0 – $900.0 million $855.0 – $875.0 million ($15.0) million Adjusted Gross Margin 21.75% - 22.75% 21.25% - 21.75% (75) Bps Adjusted Operating Margin 1.0% - 2.0% 0.75% - 1.25% (50) Bps Adjusted Tax Expense $4.5 - $6.5 million $5.5 - $6.5 million $0.5 million Adjusted EPS ($0.15) - $0.10 ($0.25) – ($0.15) ($0.17) Adjusted EBITDA Margin 5.25% - 6.25% 4.75% - 5.25% (75) Bps Updated Guidance Summary Updating full-year 2022 guidance to account for second quarter headwinds as well as current market conditions Reducing revenue mid-point by $15 million (~($0.11) impact vs. prior expectations) Non-operating expenses to reduce adjusted EPS guidance by ~($0.11) (Expecting incremental ~($0.05) in second half) Reducing margin expectations to reflect reduced fixed cost leverage on lower sales expectations Operation performance and continued cost control expected to partially offset headwinds |
11 Q2 2022 Performance Drivers Focused on driving margin expansion through cost mitigation actions and careful management of our cost structure to offset continued macroeconomic headwinds Q2 Operating Performance Incremental material costs net of customer recoveries inline with prior expectations Inventory adjustments created a headwind of ~$1.5 million or ~70 bps – not expected to recur Reduced SG&A and D&D expenses partially offset non-recurring inventory adjustments as well as production volatility/mix and manufacturing inefficiencies Q2 FX Impact Net FX headwind during the quarter primarily related to European currency exposures offset by favorable settlement of net investment hedge of $3.7 million Net FX Impact ~($0.06) Reduced SG&A & D&D Expenses Non-recurring Inventory Adjustments ~($1.5M) Net Incremental Material Costs ~Net Impact to EPS of ~($0.02) Net Impact of ~($0.06) Q2 Operating Performance Q2 FX Impact Production Volatility/Mix and Manufacturing Inefficiencies |
12 Control Devices Financial Performance Continuing to focus on pricing actions and supply chain strategy to offset incremental material costs Expecting continued production volatility for the remainder of the year Control Devices 2022 Expectations ▸ Efficiently adjust variable cost structure to align with volatile customer production schedules. ▸ Continue to focus on supply chain strategy and price negotiations with customers to offset continued material inflation as necessary ▸ Continue to invest in and grow capabilities to meet significant incremental demand on electrified vehicle platform actuation programs Q1 2022 vs. Q2 2022 Sales Operating Income $’s in USD Millions Control Devices Q2 Summary Sales in line with Q1 2022 primarily due to incremental revenue from actuation program ramp-ups offset by continued volatility in customer production volumes and COVID-related shutdowns in China Sales in Q2 2022 include the unfavorable impact of foreign currency of approximately ($0.6) million vs. Q1 2022 Operating margin declined vs. Q1 2022 primarily driven by the timing of a favorable SG&A benefit recognized in Q1 and higher material costs in Q2 $6.8 $4.1 $4.1 8.0% 4.8% 2% 4% 6% 8% 10% 12% 14% 0 1 2 3 4 5 6 7 8 Q1 2022 Q2 2022 Q2 2022 Ex FX Impact* 4.8% $85.0 $85.0 $85.6 Q1 2022 Q2 2022 Q2 2022 Ex FX Impact* *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |
13 Q1 2022 vs. Q2 2022 Adjusted Sales Operating Loss Electronics Financial Performance Focused on margin expansion based on pricing actions and efficient engineering spend Continued momentum with MirrorEye OEM program launches and retrofit expansions Electronics 2022 Expectations ▸ Strong revenue growth and updated pricing aligned with current macroeconomic conditions expected to drive continued margin expansion ▸ Continue to execute on MirrorEye OEM program launches and retrofit expansions $’s in USD Millions Electronics Q2 Summary Increased sales vs. Q1 2022 primarily due to continued strong end-market demand, expansion of recently launched programs and pricing actions Adjusted sales in Q2 2022 include unfavorable foreign currency impact of approximately ($1.8) million vs. Q1 2022 Q2 adjusted operating margin improved vs. Q1 2022 primarily due to reduced net engineering spend as well as reduced SG&A costs Operating loss in Q2 2022 includes unfavorable foreign currency impact of approximately ($2.1) million vs. Q1 2022 Incurred non-recurring inventory adjustments of $1.5 million or 70 bps -0.4% $108.3 $115.1 $117.0 Q1 2022 Q2 2022 Q2 Ex FX Impact* $(2.7) $(2.5) $(0.5) -2.5% -2.2% -5% -3% -1% 1% -3 -2 -1 0 Q1 2022 Q2 2022 Q2 Ex FX Impact* *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |
14 Q1 2022 vs. Q2 2022 Sales Adjusted Operating Income Stoneridge Brazil Financial Performance Expecting relatively stable revenue and margin performance despite continued macroeconomic challenges through careful cost management Stoneridge Brazil 2022 Expectations Continue to expect macroeconomic challenges mainly due to price increases related to imported components and inflationary increases on labor costs and service costs Remain focused on the ramp-up of local OEM business and efficient management of variable costs to offset economic headwinds Continue to support global engineering capabilities with cost-efficient, highly capable technical resources Stoneridge Brazil Q2 Summary Q2 sales increased by $1.3 million vs. Q1 2022 primarily due the favorable impact of foreign currency of $0.7 million Adjusted operating income decreased by $0.1 million vs. Q1 2022 Adjusted operating income in Q2 2022 includes favorable foreign currency impact of approximately $0.4 million vs. Q1 2022 $’s in USD Millions 0.0% $12.0 $13.3 $12.6 Q1 2022 Q2 2022 Q2 2022 Ex FX Impact* $0.5 $0.4 $0.00 4.4% 3.0% -3% 7% Q1 2022 Q2 2022 Q2 2022 Ex FX Impact* *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |
15 Updated 2022 Adjusted EPS Guidance Previously Provided 2022 Midpoint Guidance Drivers of Updated 2022 Adjusted EPS Guidance ($0.03) ($0.20) 2022 Midpoint Guidance Updated Updating 2022 full-year adjusted EPS guidance to reflect second quarter performance and current market conditions Adjusting revenue guidance to reflect slower-than-expected improvement in customer production volumes despite continued strong end-market demand Expecting current and continued pricing actions and supply chain initiatives to offset continued incremental material costs inline with prior expectations Remain focused on operating performance and cost control to offset macroeconomic headwinds Expecting higher interest expense primarily due to increased interest rates and impact of net investment hedge settlement Expecting incremental tax expense due to the forecasted geographical mix of earnings and US tax on foreign operations Expecting to remain in compliance with the amended covenants through the covenant relief period which ends Q1 2023 Incremental Material Costs net of Recoveries Income Tax Expense ~($0.02) Revenue ~($0.11) Operating Performance and Reduced Cost Structure Interest ~($0.03) 2nd Half Non-Operating Impact of ~($0.05) ($0.11) Previously Provided Guidance + Q2 Performance |
16 Summary Q2 2022 Summary ▸ Control Devices – Volatility in Q2 customer production schedules driving revenue performance inline with Q1. Continued focus on offsetting incremental material costs with pricing actions and supply chain strategies, while managing controllable costs. ▸ Electronics – Continued strong sales growth during the quarter. Improved financial performance due to pricing actions and favorable net engineering spend. Continued strong take rates on first MirrorEye OEM program in Europe. ▸ Stoneridge Brazil – Macroeconomic challenges continue – focus on growing OEM business, maintaining margin profile and supporting global engineering efforts with highly capable, cost-efficient engineering footprint 2022 Outlook and Guidance ▸ Reducing previously provided full-year 2021 adjusted revenue guidance to reflect slower-than-expected improvement in customer production volumes despite continued strong end-market demand ▸ Midpoint adjusted revenue guidance of $865 million ($855 million - $875 million) ▸ Reducing 2022 adjusted gross and operating margin guidance to reflect reduced fixed cost leverage on reduced revenue expectations, offset in-part by actions taken to reduce cost structure ▸ Midpoint adjusted gross margin guidance of 21.5% (reduction of 75 basis points) ▸ Midpoint adjusted operating margin guidance of 1.0% (reduction of 50 basis points) ▸ Reducing 2022 adjusted EBITDA margin guidance to reflect operating performance expectations ▸ Midpoint adjusted EBITDA margin guidance of 5.0% (reduction of 75 basis points) ▸ Reducing adjusted EPS guidance to the midpoint of ($0.20) Adapting and responding to challenging macroeconomic conditions to maximize financial performance and drive shareholder value |
17 Appendix |
18 Income Statement CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Net sales $ 220,936 $ 191,334 $ 441,994 $ 385,129 Costs and expenses: Cost of goods sold 182,372 148,493 361,987 296,202 Selling, general and administrative 28,938 31,380 56,337 60,756 Gain on sale of Canton Facility, net - (30,718) - (30,718) Design and development 15,554 15,495 32,582 30,146 Operating (loss) income (5,928) 26,684 (8,912) 28,743 Interest expense, net 1,217 1,860 3,003 3,626 Equity in loss (earnings) of investee 377 (496) 458 (1,110) Other (income) expense, net (596) (272) 735 86 (Loss) income before income taxes (6,926) 25,592 (13,108) 26,141 Provision for income taxes 413 5,794 1,906 6,213 Net (loss) income $ (7,339) $ 19,798 $ (15,014) $ 19,928 (Loss) earnings per share: Basic $ (0.27) $ 0.73 $ (0.55) $ 0.74 Diluted $ (0.27) $ 0.72 $ (0.55) $ 0.73 Weighted-average shares outstanding: Basic 27,269 27,137 27,234 27,077 Diluted 27,269 27,432 27,234 27,442 Three months ended Six months ended June 30, June 30, 2022 2021 2022 2021 |
19 Balance Sheet CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 40,692 $ 85,547 Accounts receivable, less reserves of $1,938 and $1,443, respectively 159,733 150,388 Inventories, net 144,108 138,115 Prepaid expenses and other current assets 51,247 36,774 Total current assets 395,780 410,824 Long-term assets: Property, plant and equipment, net 105,137 107,901 Intangible assets, net 45,928 49,863 Goodwill 33,537 36,387 Operating lease right-of-use asset 15,483 18,343 Investments and other long-term assets, net 42,549 42,081 Total long-term assets 242,634 254,575 Total assets $ 638,414 $ 665,399 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of debt $ 4,178 $ 5,248 Accounts payable 109,179 97,679 Accrued expenses and other current liabilities 67,111 70,139 Total current liabilities 180,468 173,066 Long-term liabilities: Revolving credit facility 157,820 163,957 Deferred income taxes 9,286 10,706 Operating lease long-term liability 12,313 14,912 Other long-term liabilities 5,999 6,808 Total long-term liabilities 185,418 196,383 Shareholders' equity: Preferred Shares, without par value, 5,000 shares authorized, none issued - - Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,318 and 27,191 shares outstanding at June 30, 2022 and December 31, 2021, respectively, with no stated value - - Additional paid-in capital 230,455 232,490 Common Shares held in treasury, 1,648 and 1,775 shares at June 30, 2022 and December 31, 2021, respectively, at cost (51,081) (55,264) Retained earnings 200,734 215,748 Accumulated other comprehensive loss (107,580) (97,024) Total shareholders' equity 272,528 295,950 Total liabilities and shareholders' equity $ 638,414 $ 665,399 June 30, December 31, 2022 2021 |
20 Statement of Cash Flows CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended June 30, (in thousands) OPERATING ACTIVITIES: Net (loss) income $ (15,014) $ 19,928 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation 13,618 14,099 Amortization, including accretion and w rite-off of deferred financing costs 4,323 3,126 Deferred income taxes (1,868) 1,658 Loss (earnings) of equity method investee 458 (1,110) Gain on sale of fixed assets (95) (139) Share-based compensation expense 2,834 2,761 Excess tax deficiency (benefit) related to share-based compensation expense 259 (289) Gain on settlement of net investment hedge (3,716) - Gain on sale of Canton Facility, net - (30,718) Gain on disposal of business, net - (740) Change in fair value of earn-out contingent consideration - 1,215 Changes in operating assets and liabilities: Accounts receivable, net (15,481) (17,175) Inventories, net (11,864) (24,750) Prepaid expenses and other assets (15,538) (3,084) Accounts payable 16,577 13,610 Accrued expenses and other liabilities 7,689 (1,033) Net cash used for operating activities (17,818) (22,641) 2022 2021 |
21 Statement of Cash Flows (Cont.) INVESTING ACTIVITIES: Capital expenditures, including intangibles (14,890) (14,043) Proceeds from sale of fixed assets 140 474 Proceeds from settlement of net investment hedge 3,820 - Proceeds from disposal of business, net - 1,050 Proceeds from sale of Canton Facility, net - 35,167 Investment in venture capital fund, net (450) (1,599) Net cash (used for) provided by investing activities (11,380) 21,049 FINANCING ACTIVITIES: Revolving credit facility borrow ings 11,190 30,000 Revolving credit facility payments (16,500) (40,000) Proceeds from issuance of debt 19,163 21,888 Repayments of debt (20,358) (25,082) Earn-out consideration cash payment (6,276) - Repurchase of Common Shares to satisfy employee tax w ithholding (699) (2,349) Net cash used for financing activities (13,480) (15,543) Effect of exchange rate changes on cash and cash equivalents (2,177) (1,197) Net change in cash and cash equivalents (44,855) (18,332) Cash and cash equivalents at beginning of period 85,547 73,919 Cash and cash equivalents at end of period $ 40,692 $ 55,587 Supplemental disclosure of cash flow information: Cash paid for interest, net $ 3,022 $ 3,468 Cash paid for income taxes, net $ 3,936 $ 6,645 |
22 Segment Financial Information (A) Unallocated Corporate expenses include, among other items, accounting/finance, human resources, information technology and legal costs as well as share-based compensation. (B) These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets. (C) Assets located at Corporate consist primarily of cash, intercompany loan receivables, fixed assets for the corporate headquarter building, leased assets, information technology assets, equity investments and investments in subsidiaries. SEGMENT REPORTING Net Sales: Control Devices $ 84,566 $ 86,345 $ 168,626 $ 185,963 Inter-segment sales 451 374 1,381 2,354 Control Devices net sales 85,017 86,719 170,007 188,317 Electronics 123,021 90,085 247,974 172,855 Inter-segment sales 7,368 7,229 15,079 13,208 Electronics net sales 130,389 97,314 263,053 186,063 Stoneridge Brazil 13,349 14,904 25,394 26,311 Inter-segment sales - - - - Stoneridge Brazil net sales 13,349 14,904 25,394 26,311 Eliminations (7,819) (7,603) (16,460) (15,562) Total net sales $ 220,936 $ 191,334 $ 441,994 $ 385,129 Operating (Loss) Income: Control Devices $ 4,118 $ 37,065 $ 10,894 $ 47,230 Electronics (2,524) (1,807) (5,236) (2,680) Stoneridge Brazil 970 (749) 1,462 (797) Unallocated Corporate (A) (8,492) (7,825) (16,032) (15,010) Total operating (loss) income $ (5,928) $ 26,684 $ (8,912) $ 28,743 Depreciation and Amortization: Control Devices $ 3,405 $ 3,858 $ 6,966 $ 7,937 Electronics 3,530 3,059 7,123 5,868 Stoneridge Brazil 1,032 1,041 2,023 2,045 Unallocated Corporate 567 685 1,128 1,374 Total depreciation and amortization (B) $ 8,534 $ 8,643 $ 17,240 $ 17,224 Interest Expense (Income), net: Control Devices $ 18 $ 22 $ 43 $ 67 Electronics 228 95 301 191 Stoneridge Brazil (533) (27) (691) (34) Unallocated Corporate 1,504 1,770 3,350 3,402 Total interest expense, net $ 1,217 $ 1,860 $ 3,003 $ 3,626 Capital Expenditures: Control Devices $ 1,916 $ 3,380 $ 5,761 $ 4,741 Electronics 1,926 461 4,759 3,911 Stoneridge Brazil 1,258 757 1,927 1,419 Unallocated Corporate(C) 680 197 701 698 Total capital expenditures $ 5,780 $ 4,795 $ 13,148 $ 10,769 Three months ended Six months ended June 30, June 30, 2022 2021 2022 2021 |
23 Reconciliations to US GAAP |
24 Reconciliations to US GAAP This document contains information about Stoneridge's financial results which is not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in the appendix of this document. The provision of these non- GAAP financial measures is not intended to indicate that Stoneridge is explicitly or implicitly providing projections on those non-GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this document and the adjustments that management can reasonably predict. |
25 Reconciliations to US GAAP (USD in millions) Q2 2022 Q2 2022 EPS Net Loss (7.3) $ (0.27) $ Add: After-Tax Brazilian Indirect Tax Credit (0.6) (0.02) Adjusted Net Loss (7.9) $ (0.29) $ Reconciliation of Q2 2022 Adjusted EPS Reconciliation of Q1 2022 Adjusted EPS (USD in millions) Q1 2022 Q1 2022 EPS Net Loss (7.7) $ (0.28) $ Add: After-Tax Write-off of Deferred Financing Fees 0.4 0.01 Adjusted Net Loss (7.4) $ (0.27) $ |
26 Reconciliations to US GAAP Reconciliation of Adjusted Operating Loss (USD in millions) Q1 2022 Q2 2022 Operating Loss (3.0) $ (5.9) $ Add: Pre-Tax Brazilian Indirect Tax Credit, Net - (0.6) Adjusted Operating Loss (3.0) $ (6.5) $ |
27 Reconciliations to US GAAP (USD in millions) Q2 2022 Tax Rate Loss Before Tax (6.9) $ Add: Pre-Tax Brazilian Indirect Tax Credit (0.8) Adjusted Loss Before Tax (7.7) $ Income Tax Expense 0.4 (6.0%) Add: Tax Impact from Pre-Tax Adjustments (0.2) Adjusted Income Tax Expense 0.2 $ (2.8%) Reconciliation of Adjusted Tax Rate |
28 Reconciliations to US GAAP Reconciliation of Adjusted Sales (USD in millions) Q1 2022 Q2 2022 Sales 221.1 $ 220.9 $ Less: Sales from Spot Purchase Recoveries (24.4) (15.3) Adjusted Sales 196.6 $ 205.7 $ Reconciliation of Adjusted Sales Ex. FX Impact* (USD in millions) Q2 2022 Adjusted Sales 205.7 $ Add: FX Impact 1.6 Adjusted Sales Ex. FX Impact 207.3 $ *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |
29 Reconciliations to US GAAP Reconciliation of Adjusted Operating Loss Ex. FX Impact* (USD in millions) Q2 2022 Adjusted Operating Loss (6.5) $ Add: FX Impact 1.6 Adjusted Operating Loss Ex. FX Impact (4.9) $ Reconciliation of Gross Profit Ex. FX Impact* (USD in millions) Q2 2022 Gross Profit 38.6 $ Add: FX Impact 2.3 Gross Profit Ex. FX Impact 40.8 $ *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates Reconciliation of Adjusted EBITDA Ex. FX Impact* (USD in millions) Q2 2022 Adjusted EBITDA 2.3 $ Add: FX Impact (0.3) Adjusted EBITDA Ex. FX Impact 2.0 $ |
30 Reconciliations to US GAAP Reconciliation of Control Devices Sales Ex. FX Impact* (USD in millions) Q2 2022 Control Devices Sales 85.0 $ Add: FX Impact 0.6 Control Devices Sales Ex. FX Impact 85.6 $ Reconciliation of Control Devices Operating Income Ex. FX Impact* (USD in millions) Q2 2022 Control Devices Adjusted Income 4.1 $ Add: FX Impact 0.0 Control Devices Operating Income Ex. FX Impact 4.1 $ *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |
31 Reconciliations to US GAAP Reconciliation of Electronics Adjusted Sales (USD in millions) Q1 2022 Q2 2022 Electronics Sales 132.7 $ 130.4 $ Less: Sales from Spot Purchase Recovery (24.4) (15.3) Electronics Adjusted Sales 108.3 $ 115.1 $ Reconciliation of Electronics Adjusted Sales Ex. FX Impact* (USD in millions) Q2 2022 Electronics Adjusted Sales 115.1 $ Add: FX Impact 1.8 Electronics Adjusted Sales Ex. FX Impact 117.0 $ Reconciliation of Electronics Operating Loss Ex. FX Impact* (USD in millions) Q2 2022 Electronics Operating Loss (2.5) $ Add: FX Impact 2.1 Electronics Operating Loss Ex. FX Impact (0.5) $ *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |
32 Reconciliations to US GAAP Reconciliation of Stoneridge Brazil Sales Ex. FX Impact* (USD in millions) Q2 2022 Stoneridge Brazil Sales 13.3 $ Add: FX Impact (0.7) Stoneridge Brazil Sales Ex. FX Impact 12.6 $ Reconciliation of Stoneridge Brazil Adjusted Operating Income Ex. FX Impact* (USD in millions) Q2 2022 Stoneridge Brazil Adjusted Operating Income 0.4 $ Add: FX Impact (0.4) Stoneridge Brazil Adjusted Operating Income $0.0 Reconciliation of Stoneridge Brazil Adjusted Operating Income (USD in millions) Q1 2022 Q2 2022 Stoneridge Brazil Operating Income 0.5 $ 1.0 $ Add: Pre-Tax Business Realignment Costs 0.0 - Add: Pre-Tax Brazilian Indirect Tax Credit, Net - (0.6) Stoneridge Brazil Adjusted Operating Income 0.5 $ 0.4 $ *Adjusted for estimated foreign currency translation and transaction impact using first quarter average foreign currency rates |