Stoneridge (SRI) Tops Q1 EPS by 1c, Revenues Beat

Stoneridge (NYSE: SRI) reported Q1 EPS of $0.20, $0.01 better than the analyst estimate of $0.19. Revenue for the quarter came in at $186 million versus the consensus estimate of $182.24 million.

2020 First-Quarter Results

• Earnings per diluted share (\"EPS\") of $0.13
• Adjusted EPS of $0.20
• Sales of $183.0 million
• Gross profit of $45.4 million
• Adjusted gross profit of $47.0 million (25.7% of sales), an improvement of 170 basis points vs. Q4 2019 (excluding divested product lines)
• Operating income of $3.7 million
• Adjusted operating income of $6.0 million (3.3% of sales)
• Adjusted EBITDA of $16.1 million (8.8% of sales)
• The Company estimated that the impact of COVID-19 on first quarter sales and adjusted operating income was $16.0 million and $4.7 million (210 basis points) respectively

2020 Outlook

• On March 30, 2020 the Company announced the withdrawal of its 2020 guidance due to uncertainty surrounding the global environment as a result of COVID-19
• Updated end-market forecasts implying weighted average end-markets to decline ~23% vs. previously provided guidance
• Temporary and structural cost reductions are expected to generate approximately $7.5 – $8.5 million in savings (excluding separation costs) for the remainder of 2020 and reduce structural costs going-forward by $5 – $6 million annually
• Incremental and decremental margins 2.5x – 3x EBITDA margins historically. Cost reduction actions expected to drive impact to low-end of the decremental range on reduced volume.
• Balance sheet and liquidity expected to remain strong given availability under U.S. revolving credit facility and cash-on-hand

Bob Krakowiak, chief financial officer, commented, "On March 30, 2020 we announced the withdrawal of our 2020 guidance due to the uncertainty surrounding the global environment as a result of COVID-19. We will revisit guidance when we have the ability to more clearly define the expected impact of COVID-19 to Stoneridge. Based on current production forecasts we are expecting OEM weighted-average production levels to decline by approximately 23% in 2020 relative to the forecasts we were utilizing in our initial guidance, which implied midpoint revenue guidance of approximately $760 million for 2020. As we have discussed previously, we expect incremental and decremental contribution margins of approximately 2.5x – 3.0x our EBITDA margins on changes in volume. Due to the temporary and structural cost reduction actions we have taken, we expect the impact of reduced volumes to be on the low-end of that range. 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. Our balance sheet remains strong and we believe that we are well positioned financially to withstand the downturn in expected production volumes."

For earnings history and earnings-related data on Stoneridge (SRI) click here.

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