Good day, ladies and gentlemen, and welcome to the first quarter 2010 Stoneridge earnings conference call. My name is Twanda and I will be your coordinator for today. At this time all participants are in listen-only mode. We will facilitate a question-and-answer session towards the end of today’s conference. (Operator instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn presentation over to Mr. Ken Kure, Corporate Treasurer and Director of Finance. You may proceed, sir.

Good morning, everyone, and thank you for joining us on today's call. By now you should have received our first quarter earnings release. The release is in file with the SEC and has been posted at our website at www.stoneridge.com. Joining me on today's call are John Corey, our President and Chief Executive Officer, and George Strickler, 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 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 filed with the Securities and Exchange Commission under the heading ‘Forward-Looking Statements.’ During today's call, we’ll also be referring to certain non-GAAP financial measures. Please see the ‘Investor Relations’ section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. John will begin the call with an update on our growth strategy and business development and his thoughts on the market conditions. George will discuss the financial and operational details of the quarter and future outlook. After John and George have finished their formal remarks, we will then open up the call to questions. With that, I will turn the call over to John.

Thank you. Good afternoon. In February when we reported our fourth quarter and 2009 year-end results, I reviewed our trend of improved operating and financial performance, which started in the third quarter of 2009. As stated then, and affirmed now, we have adjusted our cost structure to operate at a lower level and to leverage volume increases as the market rebounds. I am pleased to report that our first quarter results continued the positive trend started in the third quarter of last year. First quarter sales of $148 million support our sales guidance for 2010 of between $590 million and $600 million, a projected increase of 25% for the year. Gross margin was 22.7% in the quarter at the low end of our targeted range of 23% to 25%. We achieved operating income of $4 million and our marginal contribution was nearly $0.53 of sales at the gross margin line. We recorded a net income of $1.5 million and a positive EPS of $0.06 a share, our first positive EPS since the second quarter of 2008. Even as we maintain our liquidity and reduced our cost we did not lose sight of our growth objectives. In the first quarter we booked $32 million in new business wins, which further diversify our customer base and address the growing emerging markets. Our net new business wins now stand at $140 million over the next three years and $206 million in the next five, excluding the impact of the BCS acquisition. Since the third quarter of 2009 we have continued the trend of positive operating income and have recorded an improvement in the first quarter of 2010 over the prior two quarters. This performance reflects the cost improvements implemented across the company and the volume increases we are experiencing. Cash at the end…

Thank you, John. John shared earlier the focus of our business plan for liquidity and cost reductions. Our controllable cost reductions is focused on four key areas: our manufacturing overheads, direct labor, design and development, and SG&A expenses. Based on the results through the end of 2009 we’ve reduced our cost excluding restructuring by $99.3 million compared to 2008 and $85.8 million compared to 2007. As we review our first quarter 2010 results, the same four cost line items, excluding the impact of restructuring costs, are down by $19.8 million compared to the first quarter of 2008, $19.2 million compared to the first quarter of 2007 and flat compared to the first quarter of 2009. This clearly shows that we have permanently changed our cost structure and reduced our fixed cost, which combined with our sales increase has resulted in our gross margin reaching 23% in the third quarter of 2009, 21% in the fourth quarter of 2009, and 22.6% I the first quarter of 2010. With our sales reaching $148.1 million in the first quarter of this year, this would represent an annual sales level nearly $600 million, a 26% increase over the 2009 sales level of $475 million. We have accomplished this growth of minimal increase in our cost structure. Our challenge will be aggressively manage our cost structure as tightly as we did when the market was declining as when the market rebounds. Another important achievement accomplished by our management team was the successful wind down of our Mitcheldean, UK subsidiary. On February 23rd of this year, the Company placed its wholly-owned subsidiary, Stoneridge Pollak Limited, for administration in the United Kingdom. The company had previously ceased operations specifically as of December of 2008, as part of the restructuring initiatives announced in October of 2007. All SPL…

Thank you. Your first question comes from the line of Matthew Mishan with KeyBanc. Please proceed, sir. Matthew Mishan – KeyBanc: Good afternoon, gentlemen.

Hi, Matt.

Good afternoon. Matthew Mishan – KeyBanc: I don’t know where to start, lots of information. I’ll start with the sales growth. Agriculture kind of struck me coming in at $27 million. Is that new business coming in because in the previous quarter it was 17, is that seasonality, or are we just back to normalized levels of ag business?

Well I think it’s really more of seasonality as they load their pipeline and go forward. I don’t think – I don’t recall any new business awards year-over-year, but I mean versus in that category. But the ag business is strong and is somewhat offset by what’s happening in the forestry and that particular segment of the business.

Matt, I think what we did say though is that the ag sales were flat in the first quarter – we have not seen a lot of uptick, but yet John Deere is starting to improve significantly in the second and third quarter, but we did not see much of an uplift in the first quarter. Matthew Mishan – KeyBanc: I was just sort of talking in reference to the previous quarter, the fourth quarter of ’09.

That would be cyclical. Matthew Mishan – KeyBanc: Okay. The backlog, I just want to make sure I got the numbers correct. Did you say $140 million over the next three years and then $230 million over the next five years?

$206 million over the next five years. Matthew Mishan – KeyBanc: And previously it was $120 million and $140 million.

Yes, that’s right. Matthew Mishan – KeyBanc: What do you think is the difference, what’s improved?

Well it’s coming in a couple of different sectors. In the commercial side we’ve got new launches there and I think we shared with you in the last time that we got new technologies in the magnetic sensing, torque sensing and Control Devices. Those are firm orders now. We’ve landed the capacitive sensing business and the drive by wire is now coming in, in 2012. So, we are starting to see growth coming across all our key sectors plus we continue and we mentioned that we’ve got additional wiring business that we hold in. That starts in June of this year. So, it’s really a little bit of across all our segments and across each one of our key business groups. Matthew Mishan – KeyBanc: Okay. Could you elaborate a little bit on the – when I say sequential I mean from the fourth quarter to the first quarter, the sequential bump in SG&A. How much of that was incentive comp and how much of that was some of the temporary salary cuts coming back in and whether or not they’ve already all come back in and is this just a one quarter event or can we expect to some more in the second quarter?

Well, Matt, I think you almost have to go back to the third quarter of last year and the third quarter was a little bit, I will call it a little bit Draconian because we took a lot of furloughs in that period, we took a lot of unpaid leave. So it ramped down probably a little what I would call abnormal. It started to come back in the fourth quarter in terms of where it would stabilize and then what you are seeing in the first quarter is one, an increase on our (inaudible) incentives for our employees. We have held our merit increases by a quarter when they were due, so merit increases will not begin until the second quarter that’s not really in there. So it’s mostly the incentive. We have seen some pickup in the D&D side, which is including SG&A, which you referred to and it’s really with our European launches and we’ve had to spend some additional funds with our new business that’s launching in North America in June of this year.

So, I would say the annual incentive is probably about $1.0 million to $1.3 million of that and then the rest would be the additional cost that we are incurring with our startup and our launches in Europe and our new business in North America, which begins in June.

And our incentive compensation, I mean we looked at our plan year and how our plan year is holding out it looks to be a good year for – as far as what we thought would be it will turn out to be, and I think as you’ve seen it in the volumes, the North American automotive, they are better than projections. So that’s one of the other factors that are driving the incentive plan. As our results start to improve, the amount that we fund that will improve. Matthew Mishan – KeyBanc: Okay.

And I did want to share as I did share with you, Matt, then with everybody in the call is that if you look at the trend of cars from first quarter ’07-’08 and even in the first quarter of this year, we are down when you look at the aggregate of direct labor overhead and the SG&A cost, which includes the D&D, so we continue to run this pretty tightly in terms of even with a ramp-up of sales that have gone from manual rate of about 475 now we are running about 600 million.

I mean that the ERP system.

And the other thing is we are starting to ramp up the cost in our ERP system, as George mentioned that we are going to the system for our North America Electronics business and that cost start – really starts to ramp up as we go through the year. Matthew Mishan – KeyBanc: Okay. Just following up on that question, and moving on to contribution margins, and I think quarter-over-quarter and sequentially I think we saw 11% contribution margin. I think we – I think you had hinted that program launches and increased cost with that would keep the contribution margins down a little bit in the first quarter. As we look to the second and the third and fourth quarter, we start to see some ramp up, especially in the commercial vehicle production. What contribution margin would you expect on the incremental sales?

Well, I will have to tell you we were a bit surprised if the gross margin level was 50, but we historically have always used right around 30% to 35% and I would continue to use that as a factor in that. Matthew Mishan – KeyBanc: Okay. Lastly, I will jump off and see if anyone asks this question, on the Brazilian PST, can you elaborate a little bit on the – what incentives the Brazilian government was giving, why it impacted you in this quarter and not in previous quarters?

Well, yes, in the first quarter to stimulate the market similar to what we had here was a cash for clunkers. In Brazil, they offered tax incentives on the purchase of a vehicle. And what that did is that stimulated demand. The car companies down there have a limited amount of capacity. So, they quickly saw that demand was going to exceed their ability to produce and so what they started doing was moving everybody up to sell fully-loaded vehicles. And so as they moved people up and from a person’s point of view when they were buying a fully-loaded vehicle because of the government incentive, they were not paying the full price, so that is a benefit to them. So they moved up to these fully-loaded vehicles. The normal – the add-on accessories that would happen did not happen because they were already gone in the cars. So both our OES business through the car dealerships and our aftermarket dealer business suffered as that happened. And they rolled those incentives off. It was a – and so we expect to see the business pick back up as this goes forward, plus we had an inventory adjustment in there as dealers adjusted their inventories to compensate for what happened in the market. Matthew Mishan – KeyBanc: Okay. And you had mentioned a plan and you had mentioned being still believe in that you could make the plan for Brazil and PST, what is that, do you have a revenue projection for 2010 that you expect to hit, or do you have an equity income that you expect to recover from that business?

The sales forecast that we are looking at essentially takes us back to the 2008 level, roughly about the same and then the marginal contribution from Brazil, I mean you know the margins have historically run in that 48% to 50% and we don’t see any reason they should change from that. They are introducing, as John mentioned, some new platforms that will offset part of the decrease that we saw in the first quarter as they introduce the new the audio and the stereo. That will be – will help cushion some of the drop that we experienced from the luxury tax in the first quarter. Matthew Mishan – KeyBanc: Okay, thank you very much guys.

Thank you.

And our next question comes from the line of David Leiker with Robert W. Baird. Please proceed, sir. Keith Schicker – Robert W. Baird: Hi good morning, or good afternoon, I should say. It’s Keith Schicker on the line for David.

Hi, Keith. Keith Schicker – Robert W. Baird: Matt, actually answered – asked most of my questions here, so just a couple. Can you just run down what the nonrecurring gain was again in the quarter? I didn’t quite get that one down.

Keith, it was $2.3 million and it was really the reversal of the currency exchange in SPL plus the write-off of the cash and the inventories and receivables that were sold to the Stoneridge organization. So the net amount was $2.3 million included in other income below operating income. Keith Schicker – Robert W. Baird: Okay.

And then the tax credit, the $1.5 million, of that $1.2 million was the wind down of the SPL operation, it’s a one item. Keith Schicker – Robert W. Baird: So, $1.2 million of the $1.5 million was a benefit from that?

Right. Keith Schicker – Robert W. Baird: So, you actually saw a pretty sizable benefit from that transaction or that event?

Right. And then that will finally wind down all the obligations that we have with the SPL closure that we started way back in ’07. Keith Schicker – Robert W. Baird: Okay. If we look at – just a couple of quick ones on the top line – did Bolton add anything to revenue versus the prior quarter?

They have a lot of quotes in right now, but there was very little tick up in revenue. We are looking at them more for the second half of this year. Keith Schicker – Robert W. Baird: Okay. Was there an FX impact on the top line – currency?

There was, but it wasn’t huge.

Yes, it was negligible, Keith, and we will send that to you if it – we will give you the actual number. Keith Schicker – Robert W. Baird: Okay. And then I think when we talked last quarter on the earnings call, we kind of talk about it – if we look through the course of the year, Q3 was going to be the weakest quarter although Q1 will be a little bit stronger and then Q2 will – and Q4 will be about equal and stronger than where Q1 was. Do you think that trend still holds, given changes in the industry since then or should we think about that differently?

No, I think you should probably think about it the same way, if anything, I am hoping that it may be even better when we – because it’s commercial vehicle coming back a little bit sooner as we start to see some of the positive news and as George said, if you looked in Europe, some of the major truck manufacturers over there reported very good earnings and so maybe we’ll see some faster uptick in that. And I think I am – I love to see it come back u at the same rate that the automotive came up because I think that kind of surprised everybody how fast the North America automotive came back, but we are not projecting that, but I think we still stand by what we said before. Keith Schicker – Robert W. Baird: Okay. And then it sounds like on the SG&A side we had some temporary cost reductions that flowed back into the business. Was there anything similar to that on the gross profit or gross margin side or do you think that’s sort of this 22% to 23% level is sustainable at $150 million plus in revenue per quarter?

Yes, I think we’ve proven that that’s the level we’ll run at. In fact, I think we can improve that as the volume continues to go up because at that point (inaudible) and direct labor and then raw materials side tends to fluctuate based on our sales mix. So I think that marginal contribution will be there.

Yes, we mentioned we had some supply difficulties along with a lot of other people in the first quarter and a lot of that in order to make sure – and this is where I really think the team did a good job. I mean in some cases we are going to hand amount as we are getting parts in, we were working to produce the product and ship it to the customer, so there is some, probably some excessive cost in the labor lines as we work to ship that product out. So as the supply chain disruption starts to ease as it is now and we think it will take us – probably take through the second quarter to ease, we’ll see some recovery in that way. Keith Schicker – Robert W. Baird: Okay. And then lastly, George, can you just update us on what your current thoughts are for the 2012 maturity?

Yes, I – clearly, Keith, the markets are getting very robust and so John and I are much more active now starting to look at the capabilities of what we can do in the debt markets and clearly I think the bond market for a change is looking forward as opposed to looking back on LPMs so that I think the rates are attractive for a number of ratings that the company may have. So I think our rates now coming down at the level that it makes extreme sense for us to really look at refinancing our bonds. Keith Schicker – Robert W. Baird: Okay, that’s great. Thank you very much.

You’re welcome.

Hey, Keith, by the way, the currency for the quarter is $3 million – $2 million.

Net impact, favorable.

Favorable.

(Operator instructions) Your next question comes from the line of Stephen DeNichilo with ACK Asset. Please proceed. Stephen DeNichilo – ACK Asset: Hey, guys, how are you doing?

Good, Steve. Stephen DeNichilo – ACK Asset: Good to talk to you. Most of the questions have been answered, but just a little more clarity on the incentives in Brazil. When did those actually end/

They ended at the end of the first quarter – at the end of March. Stephen DeNichilo – ACK Asset: End of March, okay. And then since March have April volumes picked back up to your plan and has there been any type of re-stocking at the dealer level?

Actually the dealer re-stocking probably has not happened yet. That – you know, because we actually were in an inventory reduction as we were adjusting our inventories too. So I expect we were going to see, probably have to get to the May and June timeframe to start to see things coming back. This – (inaudible) was an automotive incentive in Brazil. There was an incentive for white goods too. And so there was a lot of things going on for share of pocket that the Brazilians could have gotten some kind of incentive for. Stephen DeNichilo – ACK Asset: Right, right, okay. And any updated thoughts on the potential monetization of the stakes [ph]?

The equity markets, they’ve returned for large cap and not for the mid cap and small cap and we continue to monitor that, but at this point in time the market they have not seen to be robust enough for the mid cap and small cap. Stephen DeNichilo – ACK Asset: Okay. Okay, and then just quickly on your contribution margins, you said of 30% to 35% and a 473 breakeven run rate. What type of contribution are you assuming from cross – potential cross-selling that you are doing, new platforms. Are those typically above margin or are you just looking at your current business run rate and what that should be once the commercial markets pick up?

Well, I think on our new business, clearly we are pricing that at higher contribution and that the new technologies differentiate ourselves like magnetic sensing, sonar positioning all those. When we say 30 to 35 that’s for the base business and where we are at today and that mix will start to change with the new technologies that we’ve been referring to the last couple of quarters. Stephen DeNichilo – ACK Asset: So as we see this new dollar business win increase that potentially creates some upside on the contribution margin?

Yes, I think you got to break it out. I mean some of the business wins are in existing business, I mean for instance in our wiring business wins you won't see any significant increase in contribution margin from historical levels. When you get into, as George said, you get into the magnetic sensing product, where we think we have proprietary technologies, we are going to price appropriately for that to improve the margin capabilities there. So, it – but I would still say that if you looked at our business I would say that you are going to look at three quarters of it running at about the historical rate and then the other quarters where we are going to start – as we expand into those segments, you will see that we get some capability there to move the contribution margin off. But and that’s going to develop over the next couple of years, because that’s part of the shift to the strategy that we’ve taken in this business of getting out of some of the community type products where we couldn’t and moving more into some more technologically oriented products where we had a different position. Stephen DeNichilo – ACK Asset: And I am assuming the new ERP system can only help those numbers as well.

Yes, well, that system is going to take all – that’s going to go through 2010 and then into 2011 to be installed, but we expect to see some benefits from that system here, correct. Stephen DeNichilo – ACK Asset: Right, okay. Thank you, guys.

You’re welcome.

And with no further questions in queue, I would now like to turn the call back over to Mr. John Corey for closing remarks

Well, thank you. I think as our first quarter as we’ve said we are building the business back, we are building the business that’s consistent with the theme that we established all of last year as we went through this terrible downturn in the marketplaces. And we are optimistic because as we come out of this we are seeing, and as I think we’ve demonstrated in the first quarter, seeing the type of leverage we can get on our new cost structure. So I think our challenge now is just to see the – we’ve got the automotive markets coming up. If we can get our commercial vehicle markets coming up, our electronics will leverage that business the same way we leverage automotive, and so we are very encouraged I mean about what’s happening. As we’ve always said, we looked at this as kind of a two-year plan, 2010-2011. But hopefully it will be a little bit better than that. So, I appreciate everybody’s participation on the call today. And with that say good-bye.

Thank you for joining today’s conference. That concludes the presentation. You may now disconnect and have a great day.