Stoneridge Inc. (NYSE:SRI) Q1 2020 Earnings Conference Call - Final Transcript

May 07, 2020 • 09:00 am ET

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Stoneridge Inc. (NYSE:SRI) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, welcome to Stoneridge First Quarter 2020 Conference Call. [Operator Instructions] I would now like to hand the conference over to your host, Mr. Matt Horvath. Sir, you may begin.

Executive
Matthew Horvath

Great, thank you. Good morning, everyone, and thank you for joining us to discuss our first quarter results. The release and accompanying presentation was filed with the SEC yesterday evening and is posted on our website at stoneridge.com in the Investors Section under Webcasts and Presentations. Joining me on today's 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-Q, which has been 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 then open up the call 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. During our fourth quarter call, I outlined several operating initiatives aimed at improving profitability in 2020. And more specifically, reducing material costs and improving operating efficiency and manufacturing processes to reduce overhead and labor costs. During the first quarter, we executed on those initiatives and the results of the efforts were evident in the performance in the quarter.

Our first quarter sales of $183 million resulted in an adjusted gross margin of 25%, translating to an adjusted operating margin of 3.3%. Adjusted EPS for the quarter was $0.20. This is inclusive of the COVID-19 impact. Based on estimated customer orders and operating performance prior to the COVID-19 impact, we estimate that the global response to pandemic impacted quarterly sales by approximately $16 million and impacted adjusted operating income by approximately $4.7 million or 210 basis points.

We have taken several actions to temporarily reduce costs in response to the virus to drive financial performance and preserve cash as we adjust to reduce customer demand and federal, state and local laws impacting our global facilities. Additionally, we took actions to reduce our structural costs based on our longer-term and market outlook and to ensure our resources are aligned with future growth opportunities.

The future of Stoneridge has its foundation in talent and technology, and on April 1, we announced