NOVI — Stoneridge Inc. (NYSE: SRI), the manufacturer of automotive electrical and electronic components, reported higher revenue and net income for the first quarter of the year.
Net income was $9.2 million or 32 cents a share, up 27.8 percent from $7.2 million or 26 cents a share a year earlier. Revenue was $204.3 million, up 25.6 percent from $162.6 million a year earlier.
The company also released an “adjusted net income” figure of 38 cents a share for the first quarter of 2017, which excludes costs related to the February acquisition of Orlaco Products BV, a Dutch supplier of camera systems for vehicles.
“We are pleased that we have extended our quarter-over-quarter improvement for the 10th consecutive period, driven by the fact that each of our segments exceeded our expectations for the quarter,” said Stoneridge president and CEO Jon DeGaynor. “We were able to achieve this despite a significantly higher effective tax rate in the quarter relative to the previous year. We continue to focus on operational improvement, profitable growth and our long-term strategy. The addition of Orlaco accelerates our growth story and provides us with substantial opportunities to expand and diversify our existing Electronics business.”
The company said the financial improvement was a combination of higher sales, lower material costs and operating improvements.
The Control Devices segment sales increased primarily as a result of new product sales in the North American automotive market of $22.9 million and increased sales volume in the China automotive market. Control Devices operating income increased primarily due to an increase in sales, which was partially offset by higher warranty claim settlement costs and SG&A.
The Electronics segment sales increased $11.1 million, primarily due to an increase in European off-highway vehicle products related to the acquired Orlaco business as well as to an increase in sales volume in our European commercial vehicle products of $3.4 million. Electronics operating income increased primarily due to higher sales resulting from the Orlaco acquisition and lower material costs, which were partially offset by higher selling, general, administrative, design, development costs related to Orlaco.
Sales in the company’s Positron segment in South America rose by $4 million, or 22.8 percent, including an increase in sales due to a favorable foreign currency translation. PST operating performance improved primarily due to higher sales, higher gross profit from lower material costs and favorable sales mix, overall cost reduction throughout the business, as well as a decrease in business realignment costs resulting in PST’s third consecutive quarter of break-even or better operating profit. PST’s improved operating performance is expected to continue through the remainder of 2017.
“Our segments continue to perform well, highlighted by Control Devices’ substantial growth related to our electronic shift-by-wire product,” DeGaynor said. “Electronics is performing well and the Orlaco team has already exceeded our expectations with their first quarter financial contribution to the segment. PST continues to be a success story as we have proven that we can produce operating profit and sustainable growth in the face of macroeconomic headwinds.”
Stoneridge has revised its 2017 sales guidance, inclusive of Orlaco, to $775.0 million to $795.0 million, from the previous guidance of $705 million to $730 million. The company also raised its 2017 earnings per share guidance to $1.10 to $1.30, from the previous $1 to $1.15.
PS of $1.00 – $1.15, considering an effective tax rate of 30% to 35% and inclusive of Orlaco, excluding the expense associated with the step-up in acquired Orlaco inventory and transaction costs related to the Orlaco acquisition.
“Our revised guidance highlights our continued success in achieving top-line growth in the existing Stoneridge segments while driving operational improvement resulting in margin expansion, which is a credit to our global team,” DeGaynor said. “Orlaco strengthens and reinforces our long-term strategy and our financial performance. We continue to be impressed with the acquired Orlaco business and look forward to creating additional value as we take advantage of synergy opportunities related to the acquisition.”
A replay of a conference call discussing these results is available at www.stoneridge.com.