Q1 2021 Stoneridge Inc Earnings Call
Quarter 2021 conference call at this time, all participants are in a listen only mode.
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I would now like to hand, the conference over to your first speaker today, Ms. Kelly Harvey Director of Investor Relations. Please go ahead.
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 Dot com and the investors section under webcast and presentation joining me.
Today on <unk>.
Today's call are John <unk>, 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, maybe 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 assumption 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 John and Bob have finished their formal remarks, we will then open up the call for question I would ask that you keep your question to a single follow up with that I will turn the call over to John.
Thanks Kelly.
Congratulations on the new job welcome welcome to this call and good morning, everyone.
Again on page three.
First quarter, we continued to navigate through the challenges presented from the global COVID-19, pandemic and subsequent supply chain disruptions.
We delivered strong financial performance exceeding our previously outlined expectations from both a revenue and earnings perspective.
Our first quarter adjusted sales of $192 $8 million exceeded our previous expectations of approximately $180 million and resulted in an adjusted gross margin of 24, 2%.
Translating to an adjusted operating margin of one eight per cent.
Adjusted EPS for the quarter was <unk>, which also exceeded our previously outlined expectations of a breakeven quarter. Most importantly, we continued to focus on controlling the variables that we could control and limiting the impact of externalities.
During the quarter, we continued the transformation of the company entering into an agreement to divest and complete the exit of our soot sensor business.
This is yet another transaction that will allow us to focus our resources on the technology platforms that will drive future growth.
We continued to make progress with our <unk> platform preparing for OEM launches later in 2021 and expanding our retrofit programs as demonstrated by our recent public announcements that two fleets Mavericks in Montgomery and tend to install <unk> on 100% from the new trucks going forward.
Additionally, this morning on proud to announce that we're expanding our partnership with Tucker and is supporting the launch of their new heavy and medium duty trucks with the launch of our fully digital driver information system.
Finally, this morning, we have adjusted our full year guidance to reflect certain macro economic factors that we will discuss in more detail later on the call. We're.
We are maintaining our revenue guidance despite production headwinds primarily due to revenue outperformance from first quarter and the expectation that our product portfolio, we will continue to outperform the market.
Page four summarizes our key financial metrics relative to prior quarters, excluding the divested sensor business in all periods.
Linked quarter, we continued to see some volatility on production volumes in our passenger vehicle end markets. However, these headwinds were more than offset by strong performance in our commercial vehicle end markets and the favorable impact of foreign currency.
This resulted in adjusted revenue growth of one 3% relative to the fourth quarter of 2020, and five 1% versus the prior year.
During the first quarter, we continued to navigate the global pandemic and related supply chain challenges, which contributed to adjusted gross margin and operating margin declined to 210, and 190 basis points, respectively relative to the fourth quarter of 2020.
The first quarter included $2 $7 million of incremental cost specifically related to temporary supply chain issues.
These costs reduced gross and operating margin by 140 basis points.
It is important to note that this is approximately $1 million above the guidance, we gave on our fourth quarter call. The supply chain dynamics had deteriorated since that call.
Ill provide some additional color on the relative impact that these externalities had on our operating performance on the next page.
During the first quarter operating expenses remained consistent with our prior expectations for trend, which we expect to continue for the remainder of the year.
While we expect additional headwinds related to external factors for the remainder of the year. We also expect that our facilities will continue to execute at a high level and limit controllable costs.
Turning to slide five.
To provide a more detailed update on the specific supply chain disruptions impacting our business and our current view of the financial impact of these disruptions for the remainder of the year.
In summary, the supply chain disruptions, we discussed during our fourth quarter call have become incrementally more challenging there.
There have been several events that occurred since our last call that a tightened supply of key components, including a fire at one of the largest semiconductor manufacturers in Japan, a freeze on the southern U S, creating additional material shortages and supply chain turbulence and the disruption at the Suez Canal. In addition inflation in commodity prices has continued to accelerate.
<unk> has continued to accelerate semicon.
Semiconductors resin and copper are among the largest impacted areas due to shortages and rising costs.
To come back for price increases.
And shortages, we're committed to doing everything in our power to work to offset these incremental costs were.
We are actively negotiating these incremental costs with our suppliers developing strategies to cover these impacts from markets returned to a more normalized state and are working with our customers regarding cost recovery.
As discussed on our fourth quarter call several of our OEM passenger car customers reduced production schedules and in the first quarter based on our primary platform exposures. The overall impact on our revenue. So far has been limited forecasted production levels have started to adjust for the expectation that not all of the reduced schedules will be able to be made up from <unk>.
On 'twenty, one, which we will discuss in further detail later on this call.
That said, we are not seeing and do not expect the same type of reduced production schedules on our commercial vehicle end markets and we do not expect a significant impact on commercial vehicle revenue in 2021.
Similarly, our off highway business remains strong which is a trend that we expect to continue for the balance of the year.
While we do not expect a significant revenue impact we expect incremental material cost increased expediting and premium freight costs as a result of the current market conditions.
While we expect those cost to be temporary we have updated our expectations of these incremental costs from $2 $5 million for the full year to approximately $5 to $5 $5 million for the full year to.
To date, we have already incurred $2 $7 million of incremental cost we expect additional costs for just over $1 million from the second quarter and up to an additional $1 $5 million of incremental costs in the second half of the year.
We continue to monitor the global supply chain and the impact on our OEM customers to ensure we respond efficiently and effectively to any disruptions.
As it relates to current production volume expectations slide six outlines the most recent IHS on LNG information for our OEM end markets for 2021 as well as for the second through fourth quarters of the year.
As a result of the global supply chain disruptions passenger car forecast have declined while commercial vehicle forecasts remain relatively stable or have improved.
This results in a forecasted decline of approximately 1% and our weighted average end markets for the full year 2021 relative to our previously provided guidance.
Despite this decline we are maintaining our revenue guidance, primarily due to our outperformance for the first quarter and the expectation that our product portfolio will continue to outperform the market Fabre provides further detail on our revenue guidance later on the call.
Turning to page seven.
In summary, our performance in the first quarter demonstrates our ability to execute despite the many challenges we still face as a result of the global health crisis, and the cash getting impacted as had on global supply chains.
We remain committed to delivering on our strategic priorities and continuously improving the business to drive strong financial performance and stable long term profitable growth.
Main focused on a mirror I retrofit and pre wire opportunities as well as our first two OEM program launches later this year.
At Stoneridge, we will continue to execute on the things that we can control and respond effectively and efficiently to a challenging environment. We will maintain our focus on our long term strategy driving continuous improvement in refining our capabilities to deliver shareholder value with that I'll turn it over to Bob to discuss our financial results for more detail.
Thanks, John turning to slide nine.
Adjusted sales in the first quarter, excluding divested product lines were approximately $190 million.
An increase of one 3% relative to the prior quarter.
Adjusted operating income, excluding divested product lines was $3 million or one 6% of adjusted sales.
It was a decrease of 190 basis points versus the prior quarter.
The reduction in margin performance was primarily due to supply chain and commodity price headwinds negatively impacting operating margin by approximately 140 basis points.
I'll provide additional detail on segment performance and a brief discussion on our 2021 outlook for each segment on the subsequent slides.
As John discussed earlier in the call we are maintaining our revenue guidance with a midpoint of $780 million for the full year as we expect that that production headwinds.
Based on current IHS on LNG forecast.
For the approximately offset by our first quarter performance as well as the expectation that our product portfolio will continue to outperform the market.
Additionally.
This morning, we are reducing our full year 2021, adjusted EPS guidance at 13.
To a midpoint of 55, primarily due to the externalities and an unfavorable product mix for the remainder of the year I will discuss these drivers in more detail later on the call.
Okay.
Page 10 summarizes our key financial metrics specific to control devices.
Control devices first quarter adjusted sales, excluding divested slip sensor business were approximately $98 million.
This was in line with Q4 2020 adjusted sales.
Adjusted sales increased by one 8% compared to Q1 2020, primarily due to higher sales in our China end markets due to the shutdowns related to the COVID-19 pandemic.
Adjusted operating income, excluding the divested business was $10 $8 million for the quarter or 11, 1% of adjusted sales.
Adjusted operating income decreased 140 basis points versus the fourth quarter of 2020, driven by lower gross margin, primarily due to increased material labor and expediting costs due to the temporary global supply chain related issues, resulting from the global pandemic.
Adjusted operating income increased by 70 basis points versus the first quarter of 2020, primarily due to fixed overhead leverage offsetting an increase in engineering costs.
As discussed earlier in the call, we continue to transform our manufacturing footprint and product portfolio to align with future growth opportunities.
In the first quarter of 2021, we divested assistance for business and expect to complete the sales transition and exit by the end of this year.
While we expect continued strong revenue performance. We also expect continued supply chain challenges to impact control devices for the balance of the year.
We are working with our suppliers and customers to offset those incremental costs and drive margin improvement for this segment as we continue to focus on leveraging our existing cost structure to expand margin with revenue growth.
Yeah.
Page 11 summarizes our key financial metrics specific to electronics.
Electronics first quarter sales were approximately $89 million, an increase of five 6% versus the fourth quarter of 2020.
This was primarily driven by higher sales in our off highway vehicle end market as well as favorable foreign currency exchange rates.
Adjusted operating income decreased by approximately $5 million relative to the fourth quarter of 2020.
A decrease of 590 basis points.
Primarily due to material cost headwinds and commodity price increases as a result of continued supply chain issues unfavorable product mix as well as expected higher engineering costs related to advanced program development and program launches as we've outlined on prior calls.
We continue to expect strong revenue growth in 2021 due to increased demand in our commercial vehicle and off highway end markets as well as the launch and ramp up of several large programs, including our first OEM mirror I program in the second half of this year.
While sales are expected to shift from a weakening passenger car market strength and commercial vehicle end markets. We are forecasting a headwind and product mix, primarily in the electronics segment for the remainder of the year.
Net operating income is expected to improve with revenue growth despite supply chain related cost headwinds unfavorable product mix and the continued and necessary investments in engineering resources.
Page 12 summarizes our key financial metrics specific to Stoneridge, Brazil.
So rich Brazil's first quarter sales decreased by $1 9 million for approximately 14% relative to the fourth quarter of 2020.
As a result of the challenging macroeconomic market conditions in Brazil, resulting from the pandemic as well as unfavorable foreign exchange rates.
During the quarter adjusted gross margin improved by 200 basis points compared to the fourth quarter of 2020 due to lower material costs. Despite global supply chain disruption headwinds negatively impacting gross margin by 190 basis points.
Adjusted operating income declined by $100000 relative to the fourth quarter, primarily due to lower SG&A leverage for emerging sales offset by lower direct material costs.
Despite continued macroeconomic challenges in Brazil, we expect revenue and operating margin to remain approximately flat in 2021 relative to last year.
We will continue to utilize our local engineering resources to support our global electronics business and remain focused on the ramp up of local OEM business to offset historical economic headwinds.
Page 13 summarizes our updated full year adjusted earnings per share guidance for 2021.
On our fourth quarter call, we provided full year adjusted EPS guidance of 60 to 75.
In March of 2021, we entered into an agreement with standard motor products to sell the commercial vehicle set sensor assets and ongoing production.
We will support the transition to SMP through a contract manufacturing agreement and service agreement for the commercial vehicle products through the transition of the physical assets.
We will retain product manufacturing for the passenger car product line and the assets will be sold for S&P at the end of our negotiated manufacturing obligations, which we expect to include to conclude by the end of this year.
We expect the transition of all assets to be complete by the end of 2021.
We have adjusted our 2021 guidance to exclude the net impact other divestiture and exit other set sensor business.
The divested commercial vehicle product lines have a significantly lower gross margin than the overall company.
Passenger car product line will remain in our 2021 guidance and reported results will include the remaining product line results as we ramp down that business in 2021.
As a result of the acceleration in production to meet our obligations for passenger car products.
We expect increased revenue related to this product line for the remainder of this year as well as incremental contribution margin in line with historical expectations for this product line of approximately 25%.
We do not expect the net impact of the remaining business and the divested product production lines to significantly impact revenue or adjusted EPS for the remainder of the year.
As discussed previously.
First quarter adjusted EPS contributed <unk> <unk> of outperformance versus the previous breakeven expectation for the quarter.
We are expecting seven to eight of unfavorable product mix for the remainder of the year relative to prior year expectations.
As discussed in detail earlier in the call, we are expecting temporary but incremental and continued supply chain headwinds for the remainder of the year.
Currently this is forecasted to negatively impact full year adjusted earnings per share by 17.
As John outlined.
In his comments, we expect to continue our planned investments in engineering resources to support product development and future program launches, but we'll carefully monitor our operating expenses to ensure we are not only positioned for growth, but structured for current and future market conditions.
Finally current foreign exchange.
Forecasts suggest a small headwind for the remainder of 2021 relative to our prior outlook.
As a result of these primarily external factors, we are reducing our full year adjusted EPS guidance by <unk> 13 to a midpoint of 55.
From a timing perspective, we expect second quarter revenue and earnings performance to be slightly less than the first quarter as reductions in production forecast will impact our top and bottom lines.
As discussed earlier in our call, we expect temporary incremental supply chain costs of $5 to $5 $5 million for the full year with approximately three quarters of the impact occurring in the first half of the year and the balance in the second half.
This results in adjusted EPS more heavily weighted towards the back half of this year.
Turning to page 14.
Net debt increased by approximately $28 million in the first quarter, resulting in net debt of $98 million or two nine times trailing 12 month adjusted EBITDA on <unk>.
Cash flow performance during the quarter is consistent with historical seasonality.
We expect our net debt profile to return to a more normalized level of less than two times net debt to trailing 12 months EBITDA by the end of this year.
<unk> remains well positioned with relatively low leverage and significant available capital.
Moving to Slide 15, Inc.
Closing I want to reiterate that we're pleased with our performance during the first quarter. Despite the continued macroeconomic challenges that said, we expect continued insignificant temporary supply chain headwinds related to the global pandemic and we'll continue to respond decisively as the macroeconomic environment evolves.
Storage is committed to driving shareholder value and that focus remains at the forefront of all of our strategic initiatives with that I will open up the call for your questions.
As a reminder, if you would like to ask a question. Please press Star then the number one on your telephone keypad again that is star number one.
Let me draw your question please press the balance sheet.
We stand by while we compile the Q&A from there.
Yeah.
Your first question comes from the line of George Sellers from Stephens, Inc. Your line is open.
Hey, good morning, guys congrats on the call on George.
Good morning, George.
So just just to start you have the.
The change in our forecast versus what they originally were on on the previous call could you give us the updated year over year expectations for the IHS in LNG for sure George I'd be happy to do that and thanks for the question. Thanks for joining US this morning. So.
The current forecast that we put together with respect to our outlook is based upon the April 2021, IHS in the Q1 2021, LLC and I'll go through the five primary markets that impact us on what the current projections are so we'll start with IHS.
For passenger car for North America, So IHS passenger car in North America for last year was $13 million. This year is now $15 7 million.
For an increase of a little over 20% and then next year is $16 9 million and that accounts for about 40% of last year's sales for stoneridge.
So moving moving to Europe Europe pass car is about 5% of our sales last year that was $16 6 million units. This year. The current forecast is 18, 6%.
So that's up a little over 12% and then 'twenty one next year up seven 7% next year.
And then China pass car was $23 3 million units last year going into 'twenty for $6 million. This year, so up five 5% and going to $26 1 million units next year up five 8%.
And then looking at it passed at the commercial vehicle the Q1 <unk> assumptions for North America.
Let me add to China accounts for about 8% of our of our sales last year.
So if you use the China passenger car.
So we're moving to commercial vehicle for.
For North America, that's about 8% of our sales.
450000 units in 2020 going to 567000 units up 26%. This year growing to 614000 units next year, which is up eight 3%.
So western Europe, which is about 19, 5% of our sales last year was 318000 units. This year growing to 367 thousands of up 15, 5% next year growing to 420000, so up another 14, 5% as well and those are that those are the five primary end markets for <unk>.
On the on the OEM side.
Great. That's helpful. Thank you and then turned up to maybe a more broad topic. There's obviously been a lot of discussion around autonomous trucking in electric vehicles more generally could you sort of give us an update on where you see some other risks and then also the opportunities for stoneridge.
At the book of business today, and also what you have in the backlog that'd be great.
George Thanks for the question.
We talked fairly regularly about.
On the.
We're.
Our product portfolio, 100% of our electronics business.
Is drivetrain agnostic and overall, 75% to 80% of Stoneridge is drivetrain agnostic. So as you look at whether it's a past power or commercial vehicle transformation from internal combustion to electric vehicle. It doesn't have a material risk for us and it's one of the reasons as you look at a.
Portfolio rotation like we did with Sun why things that are specifically associated with one internal combustion technology, why we would move out of that to position ourselves for the future So with regard to.
The move to vehicle electrification, whether it's in pass car and commercial vehicle. We're excited about that and we believe that our technology is both in control devices and electronics are completely applied from an autonomous standpoint on commercial vehicles.
We look at it as vehicle automation before autonomy.
And our platform with nearby connectivity and the other technologies that we already provide in the space gives us the opportunity to work with the Oems.
To help them manage their driving both vehicle automation and ultimately to autonomy. We have said many times that nearby gives us puts us with a seat at the table as theyre developing the future architecture and this is this is one of the reasons why we're so excited about <unk> and what it means is our platform going forward.
Awesome. Thank you all thank you all for the time I appreciate it.
For the story.
Yeah.
Your next question comes from the line of Scott Berg from C. L. King Your line is open.
Good morning.
Hey, Scott other money debt.
Can you give a more granularity into the <unk>.
The product mix that you expect for the balance of the year the incremental costs.
Seven to eight.
It seems like a lot of it is due to that.
Yes, Scott Thanks for the question I'd be happy to do that so if you look at so first of all day. If you look at the latest forecast assumptions for the remainder of the year.
I did reference on the call on the latest IHS LNG forecasts, we are expecting from unfavorable product mix and electronics.
If you look if you look within the within the Stoneridge electronics business the businesses have different margin profiles.
The existing vision on safety business and the aftermarket connectivity business have a relatively higher margin.
And if you look at really what's happening in the space right now.
With the shutdowns that are being announced in the past on the passenger car side, not really impacting the commercial vehicle side of the business.
So net net with our with our product portfolio exposure, it's neutral for revenue, but there's been there's really been a shift from passenger car the commercial vehicle OEM that basically debt.
Debt basically.
Exercise.
Okay, and then on mirror, obviously, you guys have some very good news during the quarter about a couple of fleets more on.
On me to put their entire fleets on this could you talk about how that are we talking through pre wired.
Or are we talking through.
Rachel and aftermarket at the same time it could you just also.
Give us an updated.
Within your guidance how much on nearby revenue will come through the share.
So Scott.
All of the decisions excuse me on all of the fleet decisions and we're talking about right now are for pre wired show them buying new trucks pre wired and then we do a retrofit because of the mix of regulations.
So there isn't that there is not yet an OE option until until the OE programs launch at the end of this year, where somebody can buy one directly from <unk>.
<unk> order book.
What youre seeing is.
Customers see the value equation.
And they're making their commitments the fleet customers are making other commitments, which is which is driving we used to look at how to support their fleets.
Driving ways to make the installation process more efficient and ultimately it will change the take rate and some of our OE assumptions.
With regard to guidance there is.
There is no <unk>.
Revenue in our or limited OE revenue in our guidance for 2021, as we said the first OE program launches at the end of the year.
Okay.
Got it and just lastly for modeling purposes, you guys make comments on what the back half for the year being better than the first half for the year, but could you give us some context or.
A way of viewing how Q2 should measure up in maybe versus Q1.
Yes, I talked a little bit growth on my comments.
Scott. Thanks for the question. So what are you going to see us.
The supply chain disruptions that we've that we've emphasized during our comments this morning, theyre going to be more geared towards.
Importance towards the towards the second quarter than they are towards the balance of the year based on what we're seeing right now so.
I reference in my comments on we expect we expect.
A little bit of improvement versus our for separate quarter performance in the second quarter book the majority of it.
The majority of the of the improvement we're going to see in the second half of the year.
Okay.
Okay. That's.
That's very helpful. Robert.
My comments were basically slightly lower Q2, and then and then basically you will see that we will see the improvement in second half.
Slightly lower Q3 versus Q1, Okay, Yes, that's correct.
Okay.
Alright, thank you.
Thanks Scott.
Moving on to ask a question. Please press Star then the number one on your telephone keypad.
As for fire one.
From.
On the line okay.
From Barrington Your line is open.
Good morning, everyone.
Good morning, Gary.
Can you give me the breakdown again of the percentage of vehicles that are coming from each of the regions of the world as it relates to stoneridge.
Yes. So if you look at the percentage of so the percentage of our sales in 2020, So for North America passenger car is 40% of our sales.
Europe European passenger car is about 5%.
Okay.
China passenger car is 8%.
Okay.
North America commercial vehicle is 8%.
Okay, and Western Europe commercial vehicle is 19, 5%.
Okay great.
My last year's last year's actuals, Okay, Yeah all.
Alright, so if I have this right here it looks like.
C&I Hs were anticipating.
In passenger vehicles or 13, 4% increase when you released Q4 numbers and Thats skinny down to about an 11% increase.
In vehicles. So it looks like there is about $1 1 million less vehicles worldwide.
Yes, that's correct Gary.
That's right.
Okay, Alright, and then in terms of what's going on in the markets now you're starting to see a lot more costs.
Higher expenses, but what youre doing.
Do you have the ability to increase price.
To offset that both of these cost increases that youre seeing right now.
So Gary it's Jon good morning.
We are working both with our ship.
With our suppliers too.
To push on some of the prices, we're certainly working on trying to drive efficiencies and in many situations. We're talking with our customers. We are under in most situations other than in our aftermarket spaces, where under long term contracts. So it's not an automatic pass through.
But these are very specific times on we're looking at and very special times. We're looking at all three ways to look at offsetting those costs, while at the same time continuing to serve our customers.
And Gary I would just tell you one thing thats really important to understand that these incremental costs that we're incurring we absolutely view them as being transitory in nature until.
It's true that relate to the point where debt both the.
Our revenue manufacturers in the semiconductor manufacturers are backup or backup to the to the normalized capacity levels as a result of the pandemic.
No I understand that but a lot of prognosticators are now calling for inflation is going to increase on I want to get an idea of.
What ability you do have to increase pricing and you know I think I just I got my answer there.
Okay.
In terms of.
This maverick in Montgomery.
These are for new trucks every year do you can you guys give us a range of.
What you think these companies add as far as new trucks and on replacements every year.
Yes, Scott Alright, Gary sorry, I can't I can't answer the question specifically for them right Chuck stay by but the way to think about it is for these advanced fleets. They refresh their fleet on a four to five year cycle.
So depending on the fleet size.
Debt by four or five and you get a sense for how many of their mind.
So it's I think the most important thing is the recognition that we have fleets and more and more so every day.
Who are comfortable with the technology, and Theyre, saying theyre going on 100% across the board with us they see they see the value equation. They see the safety impact to see what it means from a driver retention perspective, and they're making the commitment to that and and that's.
That's validation of what we've been saying on these calls on what we've been saying to our investors for a couple of years, it's happening now.
Right yes.
You can go to their website from just look to see you get an idea of their fleets, but I just wanted to get an idea about the refresh so that's very helpful.
Then lastly, again I wanted to just go back for this product mix on electronics.
I'm trying to understand Bob I know you've met you talked about it on an earlier question, but is this youre doing product for passenger cars and commercial vehicles in electronics and you're seeing because of the slowdown in production on passenger cars, you've seen a shift to commercial which has.
The lower margin Inc.
No Gary let me, let me clarify that so it does not pass it is not passenger it's not passenger car electronics and commercial vehicle electronics at just our overall passenger car portfolio versus our electronics portfolio. So if you think about the fact, if you think about the announcements that have been made they've mostly impacted.
<unk>.
The passenger car Oems that commercial vehicle Oems continue to continue to run in our outlook for the on the commercial vehicle side continues to remain very strong. So when you look at our overall revenue guide on revenue guide remains flat, but we've seen a balance move from from from.
From the from passenger cars.
<unk> vehicles, and then just based upon that.
That mix.
Based on the IHS and the LNG forecasts and the awarded business that we have how that how that blends out that's basically the impact.
Okay, but again, maybe I'm not confusing things here, but you're talking about an unfavorable product mix headwind in electronics alright, now so whats what typically is going on there yeah, Gary it's John its overall stoneridge. So when we talk about pass car, we're really talking about the <unk>.
Joel devices business.
Moshe vehicle is largely the electronics business. So it's okay.
Overall stoneridge.
And.
The product mix that impacts.
What selling based on our end markets.
Okay Alright.
Yes, we're seeing it specifically when we say electronics, we're not talking about broadly electronics electronics like we're talking about our electronics segment basically when we were referencing that Gary just to make sure you understand that.
Okay.
Yes. Thank you.
Sure.
Yeah.
With no further questions in the queue I would now like to turn the conference back over to Mr. John <unk> for any additional for closing remarks, Sir.
And thank you all for your participation on today's call in closing I can assure you that our company is committed to continuing to drive shareholder value through strong operating results profitable new business and focused deployment of our available resources.
Management team will respond efficiently and effectively to manage and control the variables that we can impact and continue to drive strong financial performance for.
Confident that our actions will result in continued success for 2020 on and beyond and we look forward to talking on our next call.
Yeah.
This concludes today's conference call. Thank you for participating you may now disconnect.
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