Stoneridge Reports Second-Quarter 2020 Results
NOVI, Mich., July 29, 2020 /PRNewswire/ --
2020 Second-Quarter Results
Stoneridge, Inc. (NYSE: SRI) today announced financial results for the second quarter ended June 30, 2020, with sales of $99.5 million and loss per share (EPS) of ($0.81). Adjusted EPS was ($0.55) for the second quarter, considering normalizing adjustments as outlined in the exhibits attached hereto.
For the second quarter of 2020, Stoneridge reported gross profit of $13.3 million and adjusted gross profit of $14.4 million (14.5% of sales) which was a reduction of 11.2% relative to the first quarter of 2020. Operating loss was ($26.8) million and adjusted operating loss was ($19.1) million ((19.2%) of sales). Adjusted EBITDA was ($11.4) million ((11.5%) of sales).
Jon DeGaynor, president and chief executive officer, commented, "In the second quarter, we continued to drive strong execution in response to the global COVID-19 pandemic and further align our resources with the greatest opportunities for the Company. We continued to invest the necessary capital and resources to ensure the successful launch of our strong backlog of new business and continue to build upon the technologies and platforms that will support future growth while reducing structural costs. Due to the cost reduction actions taken in the beginning of the second quarter, as well as our continued focus on operational improvement and working capital management, we were able to outperform our previously outlined expectations for cash flow in the quarter. Our decremental contribution margins on significantly reduced revenue were in line with our expectations at approximately 30% as we continued to focus on operational improvement and reduced costs in our facilities."
DeGaynor continued, "In the second quarter, we took several steps forward in our continued commercialization of MirrorEye®. We have expanded our fleet evaluations and completed additional installations at two of our evaluation partners, with another expected by the end of the third quarter. These three partners operate approximately 6,000 vehicles on the road today. Additionally, we are announcing our partnership with Daimler Trucks North America to provide vehicles pre-wired for MirrorEye retrofit systems, with orders expected to begin in the third quarter."
Second Quarter in Review
Electronics sales totaled $47.6 million, a decrease of $32.2 million, or 40.4%, relative to the first quarter of 2020 primarily as a result of the COVID-19 pandemic. Second quarter adjusted operating margin was (17.1%).
Stoneridge Brazil sales totaled $7.0 million, a decrease of $7.6 million, or 51.9% to the prior quarter due to the COVID-19 pandemic causing lower volumes for our Argentina aftermarket channel and audio and alarm products. Stoneridge Brazil adjusted operating margin was (6.9%).
Cash and Debt Balances
Krakowiak continued, "Despite the significant end market production disruption during the quarter, we were able to effectively manage our working capital and expenses to limit the impact on cash. During the quarter, net debt increased by approximately $11 million, which was better than the expectation that I outlined on our first quarter call of approximately $15-20 million. Furthermore, due in large part to our continued focus on inventory management and cash preservation, we expect that cash generation in the third quarter will at least offset the second quarter cash burn. We continue to evaluate opportunities to preserve cash in the short-term and adjust our cost structure as necessary to align with current and expected market conditions."
DeGaynor concluded, "As we look beyond 2020, we are starting to see signs of recovery with 2021 production forecasts implying 16% growth in our weighted-average end markets. In addition, new program launches are expected to create significant growth opportunities for the Company in 2021 and beyond. Stoneridge remains well positioned to capitalize on the industry megatrends that will drive outperformance of our underlying markets going forward."
Conference Call on the Web
About Stoneridge, Inc.
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
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 profit and margin, adjusted operating income (loss) and margin, adjusted net income (loss), adjusted earnings (loss) per share, adjusted EBITDA, net debt, adjusted income (loss) before tax 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 profit and margin, adjusted operating income (loss) and margin, adjusted net income (loss), adjusted earnings (loss) per share, adjusted EBITDA, net debt, adjusted income (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 income (loss), earnings (loss) per share, debt, income (loss) before tax or tax rate prepared in accordance with GAAP.
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SOURCE Stoneridge, Inc.