Stoneridge Inc. (NYSE:SRI) Q4 2019 Earnings Conference Call - Final Transcript

Feb 27, 2020 • 09:00 am ET

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Stoneridge Inc. (NYSE:SRI) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Stoneridge Fourth Quarter 2019 Earnings Call. [Operator Instructions]

I would now like to hand the conference over to your speaker, Matt Horvath, Director of Investor Relations.

Executive
Matt Horvath

Great, thank you. Good morning, everyone, and thank you for joining us to discuss our fourth quarter and full year results. The release and accompanying presentation was filed with the SEC and is posted on our website at www.stoneridge.com in the Investors Section under webcasts and presentations. Joining me on this call are Jon DeGaynor, our President and Chief Executive Officer; and Bob Krakowiak, our Chief Financial Officer.

Before we begin, I need to inform you that certain statements today may be forward-looking statements. Forward-looking statements include statements that are not historical in nature and include information concerning our future results or plans. Although we believe that such statements are based upon reasonable assumptions, you should understand that these statements are subject to risks and uncertainties, and actual results may differ materially. Additional information about such factors and uncertainties that could cause actual results to differ may be found in our 10-K, which will be filed with the Securities and Exchange Commission under the heading forward-looking statements.

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

With that, I will turn the call over to Jon.

Executive
Jonathan B. DeGaynor

Thanks, Matt, and good morning, everyone. Let me begin on page 3. In 2019, we continued our transformation and positioning of the Company for strong future growth. Our 2019 adjusted sales of $830 million resulted in an adjusted gross margin of 26.5%, translating to an adjusted operating margin of 5.8%. Adjusted EPS for the year was $1.47. Excluding the impact of divested product lines, our 2019 sales were $793 million with an adjusted gross margin of 27.2% and an adjusted operating margin of 5.6%. Divested product lines contributed approximately 37 and $0.09 to our 2019 adjusted EPS.

We are announcing that we have been awarded two additional OEM MirrorEye programs with peak annual revenue of $50 million at relatively modest take rates. With these awards, the customer platforms on which we have been awarded MirrorEye programs represent approximately 75% of the North American OEM Class 8 production volume. In Europe, we have received approximately half of the business that has been awarded to-date, which represents approximately one-third of the European OEM production volume, with a couple of OEMs yet to make sourcing decisions. These additional awards solidify our position as the global market leader in camera mirror systems for the commercial vehicle industry.

As a result of our success with our customers, our awarded business backlog, excluding the impact of external factors, grew by over