Welcome to the second quarter 2010 Stoneridge Earnings Conference Call. My name is Francine and I’m your operator for today. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session. (Operator instructions). I would now like to turn the presentation over to your host for today’s call, Mr. Ken Kure, Corporate Treasurer and Director of Finance; sir, you may proceed.

Good morning everyone and thank you for joining us on today’s call. By now, you should have received our second quarter earnings release. The release is on file with the SEC as imposed on our website at www.stoneridge.com. Joining me on today’s call is 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 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 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.

Good morning. last year’s economic disruption temporarily slowed the implementation of our business plan, which we have reviewed with you on many of our calls. The key elements of that plan were and are top line organic growth through customer and geographic diversification, improved operational performance and a lower cost structure to yield improve financial performance. These plans in the restructuring dawn are being reflected in our financial results. We are focused in driving top line growth through market demand coupled with internal organic growth. We have reduced our core structure that have raised our marginal contribution dollars as our volume return. We are managing our working capital and capital projects to grow cash flow. Our financial results in the second quarter reflect our progress in those key areas which were started in the third quarter of 2009. As you have seen in our earnings release, our second quarter sales of 166.2 million are 64 million above the prior quarter, which is an increase of 62.6% and is driven by stronger than anticipated improvement in the North American automotive production and higher North American and European commercial vehicle production volumes. Based on these market conditions, we are raising our 2010 sales guidance to the range of 605 to 625 million from our previous guidance of 590 to 610 million. Our second quarter gross margin was 23.8%, which is within our range of 23.8 to 25% -- the target range we had previously discussed, and an improvement over the first quarter. We achieved operating income of 8.2 million, and our marginal contribution was nearly $0.41 for every dollar sales at the gross margin line. We recorded net income of 4.2 and an EPS of $0.17 a share. We maintained significant liquidity with a cash position of 74.6 million, which will fund…

Thanks John. As the market has transitioned from the significant downturn for the recovery, our plans reflected those shifts; we were diligent to reduce our cost levels to drive marginal contribution and improved profitability. As sales are improving; we continue to manage our working capital tightly as receivable dollars are increasing so we need to be more efficient with our inventory and payables as a way to minimize the cash burn rate. By the end of 2009, we reduced our manufacturing over head, direct labor, design and development and other SG&A costs excluding restructuring by 99.3 million compared to 2008 and 85.8 million compared to 2007. Our second quarter 2010 results for the same four cost line items excluding the impact of restructuring costs are down by 22.2 million compared to the second quarter of 2008 and 13.7 million compared to the second quarter of 2007. We have firmly changed our cost structure and reduced our fixed costs, which combined with our sales increases has resulted in improving our gross margins. Our gross margin was 23% in the third quarter of 2009, 21% in the fourth quarter of 2009, 22.6% in the first quarter of this year and 23.8% in the second quarter. Our marginal contribution compared to prior year was 40.6% in the second quarter. Our second quarter margin performance was achieved despite head-wins of electronic module shortages, how are we going to expect the launch cost for new programs for the new customer and the unfavorable impact of the Euro weakening against other European currencies in April and May. Because the Euro dropped, the US dollar is 1.19 to Euro, we estimate that the second quarter was unfavorably impacted by approximately $3 million for these three factors. With our sales reaching 166.3 million in the second quarter of…

Yes sir, (Operator instructions). Our first question comes from the line of Brad [Hopleton] from KeyBanc

Good morning, it’s Matt Mishan in for Brad

Hi Matt, how are you

Pretty good, and yourself?

Good Mathew Mishan – KeyBanc: Let’s start off with your upwardly revised sales guidance. I think the midpoint of the guidance implies a back half declines in sales. It seems to me as if commercial vehicle productions above Europe and North America is accelerating. Light vehicle production may be down a little bit North America but it seems if your shares should up in the second half first versus the first half.

I would think if we are looking at it, we are going back and we are getting more favorable indications from the commercial vehicles sector both in North America and in Europe that they will see a strengthening second half which should have some improvement in our future forecast. And the automotive forecast looks to be relatively stable and strong out there at 11.5 million units. So I would expect if we go back through and look at this after all we get an indication what everybody is going to do in the fourth quarter -- stronger indication because we are not sure what the operating plans are for all our commercial vehicle plans in the fourth quarter. We do know the summer shut down in Europe hasn’t happened so that will be a benefit and I think we, when we get to the fourth quarter, we may see additional benefits.

I think to piggy back on that it’s clear the signals are out there that the market is improving in the second half. We’ve been getting those indications from our customers both in Europe and North America. We’ve been somewhat cautious because as you know the supply lines are rather long and it’s taken us a lot of rebounds for those positions and we’ve had some electrical components so we had not planned on building for those sales but we are very close with our customers and we will monitor that as we proceed and. But it is starting to indicate that the second half will continue stronger than the first half. Mathew Mishan – KeyBanc: Okay, so what I’m hearing is conservative sales guidance and if things continue to progress as they are looking in June and July and heading into August, you’re likely above that?

I think that’s true and one thing that we have always said is when we did our restructuring, we did not take capacity out; we relocated capacity globally so that we have the ability to ramp up with whatever the market forecasts would be and so we’ve been cautious from the operating side but we will follow the market very closely and we can react to it very quickly.

I think the issue you have got -- the one issue we can’t factor in is electronic components supply capability and not only us but others in the electronics sector are fighting that daily to make sure we are getting -- as they ramp up their plan, they can ramp up the support and increase industry demands. Every month goes by we get increased confidence that there -- that there five bases improving but it’s still uncertainty out there for us. Mathew Mishan – KeyBanc: Is that more of a European issue or is that a North American issues as well?

A lot of the chips and [indiscernible] come out of Asia so it affects both sides; both Europe and North America. Mathew Mishan – KeyBanc: Okay. And then just Following up -- and number one, congratulations on the agreement with Navistar. Did you lose anything? I know you don’t want to -- but did you lose anything or did you gain anything?

Well, when you sign a long-term agreement with you largest customer, you’ve always gained something and we didn’t give up -- we worked in conjunction with what our plans were. We expect that based on the feedback we’ve gotten that we should continue to grow with them and we will be able to continue to grow with them. So we are very pleased with the current track and also they said that the diamond supplier award, we’re pleased with that because that’s another indication of how our relationship is with that customer. Mathew Mishan – KeyBanc: Okay. As far as -- can you give an update? You did give some new numbers on some bookings on the quarter, what’s your updated that new business backlog is?

We haven’t updated that math. We will do that as the planning session we actually do that in August and so we’ll update that probably late or early fourth quarter -- late fourth quarter as we approve our budgets so we’ll give you an update on that probably over the next few months. Mathew Mishan – KeyBanc: Okay

But I think it’s based on what John reported today, we continue to renew business and more importantly, we are wining it globally with diversified customers. Some of our new technologies we shared with you some of the wins in EGT so that products are really pushing well and are pushing globally. And we’re utilizing our facilities worldwide to really address global customers and global product lines. Mathew Mishan – KeyBanc: As far as the euro goes, what was the impact on sales and operating income for the quarter of the Euro?

Well, we estimate that the impact on operating income as a little less than $2 million in the quarter. And it was sort of phenomenal because if you look at our operations in Europe, we are about 71% on the receivable side or sales in Euro and 29% [in sync] because of that relationship with our customers. And then on the direct materials, we bring in about 50% or a little over to that in dollar denominated and the rest are in Euros. So they created imbalance. Roughly our breakeven level, with our currencies or at about 1.26 Euro and so when it dipped around 1.18, 1.19 in April and May, it did have an impact on our cost that we were bringing in and then some of the revenues. So I think the combination of that and with the Euro presently at 1.30, that will not have a negative impact on us in the second half. Mathew Mishan – KeyBanc: Okay. And lastly then I’ll jump out. You mentioned that the deferred tax assets in 2Q 10 if you are utilizing them in the second quarter, why should -- and it’s affecting obviously both book and cash taxes, did you bring in the evaluation allowance back? Why should we be forecasting in a 28% to 30% tax rate for 2010?

Well, I think it’ll trend based on where our earnings are and I would assume, with your question and if the earnings stay in the level that we see them today, we will trend in the same relation to earnings and taxes so I think it was really based on our full forecast of our annual plan, but certainly the switch in the earnings will continue on that light, at least as we see it today so I think we’ll see some benefits from that during the fourth quarter.

Yeah, the automotive market strength, which is primarily our North American continent benefits us greatly in that regard so as we continue to see strength in that market, we should continue to be able to lower the tax rate. Mathew Mishan – KeyBanc: Thank you very much, and a great quarter.

Thanks Matt.

(Operator instructions). Our next question comes from the line of David Leiker from Robert W. Baird Keith Schicker – Robert W. Baird : Hi, good morning. it’s Keith Schicker on the line for David.

Hi Keith, how are you? Keith Schicker – Robert W. Baird : Good. You must have covered most of what I had here, but I just wanted to tickle back; I think in the past we had sort of talked about the first quarter being the weakest quarter for revenue and then the back half being a little stronger. Is that still the case or has there been a change with the guidance?

I know maybe the guidance is a little -- and I’ve seen your forecast too, Keith, where you’re looking at an increase of about 7% in the second half. As we put our annual business plan together and still looked at it later on, we still view the second half being stronger. Clearly the first quarter was the weakest, second has been strong; third quarter will be a little flatter before it should be an improvement also so I think if the commercial market continues to improve, and I know that you and David believe that it’s going to increase about 7%, we’ll benefit from that so there is an increase in the commercial side, 7% as you’re alluding now, we will see stronger sales and resolving earnings from that. Keith Schicker – Robert W. Baird : Okay. And then, I guess, if we look from a cost perspective, is there any additional cost that maybe you took out during the downturn that’s going to flow back into the model sequentially or [indiscernible] with your cost structure for the balance of the year and pretty much assume that it’s going to stay at the kind of the Q2 level?

I think you have to assume that we’re going to hold a cross model. We went through a lot of work it to get it down. We’re not going to let it come back up. there would be additions of individual people, but largely in our operation is if you want one in, you get one out so with a few exceptions, we’ll be adding some people but on the overhead side. But we’re going to hold that cost -- we have to hold that cost structure, that’s what we got to do in our [indiscernible]

And even -- we’ll flex direct labor, we’re getting efficiency gain from that line so I think we’ll control the cost. It took a lot of pain to get it down and we’ll manage through the process the volume growth. Keith Schicker – Robert W. Baird : Okay, and then on the contribution margin side, you get 41% during the quarter, which is a really good number. Is that elevated beyond what you would normally expect? If so, how long is that sustainable up at this level? Would we expect that to normalize at some point? What are the drivers there and how can I think about that going forward?

Well, Keith, I think we’ve said in the past -- I think we are gaining from the benefit of some of the weakness of last year in both the first and the second quarter, and our normalized rate is more in the range of 30 to 35% on an incremental module so I think that’s how you think about this moving forward in the more normal periods like third or fourth quarter and into 2011. I think the second quarter is very high in relation to what our normal rates would normally be. Keith Schicker – Robert W. Baird : Okay, and then one final one; how much did the Bolton acquisition add to the top line this quarter on a year-over-year basis?

It was actually minimal. It wasn’t all that substantial because they only had a run rate of about 10 to $12 million annually right now so within the quarter you only look at a couple of million dollars so it’s probably about 6 months behind a plan we had for them and -- but they still have a lot of opportunities upfront and they’re quoting a lot of business, they’re actually winning business now as we start to see the awards start to pick up so I think as we look at that, we think that they’re about 6 months behind where we thought they would be so probably more in the 2011 time frame is when we’ll see a more positive benefit from them. Keith Schicker – Robert W. Baird : Okay, and if I want to look at them for the rest of the year that 10 to 12 million run rate probably ramps up a little bit in 2010, but not much?

Right, it’ll ramp up because we have won some smaller business. There’s about 5 contracts we’ve picked up so their run rate starts to increase in the third and fourth above that annual rate I just referred to so I think you’ll start to see, and I think John said it well, we’re probably 6 months, maybe 12 months behind where we originally thought so we’ll start to see that build probably more in the fourth quarter and then into 2011 from what our original plans were. Keith Schicker – Robert W. Baird : Okay, and then with the notes that are out there, George, what’s the plan for that if you want to get refinanced, is that something that you’re working actively really hard on today or do you think the capital market conditions still need to come around?

Well, Keith, I think where we were at is we have been very active in the capital markets, understanding where they are, and as you know, they’ve got very powerful over the last probably 5 - 6 weeks. And I think what’s clear to John and myself is that we needed to hang on to performance of quarters to really support what we’re trying to get done in the refinancing. It takes us a nice step forward, the second quarter, and I think it strengthens the ability for us to do what we’re trying to accomplish in the capital so we will actively pursue this. I think it’s clearly we want to get this done long before we get into 11 and 12 lending mature so I think with this performance, it starts to help us sort of complete that kind of a transaction.

Yeah, I think the way to look at it, now we’ll have with this quarter, four quarters where we’re profitable again. If you looked at our business from second quarter of 2008 was great then the market fell apart and we went through a 12 month period where we work like hell to get the business back together again. We started to show the benefits of that in the third quarter of 2009, continuing in the fourth quarter of 2009 and out in the first quarter of 2010 and the second quarter of 2010. More importantly, when we look at our forward forecast and we go to talk to lenders, they should have some confidence that we have the ability to deliver on what we’re saying and what we’re doing because we demonstrate that so I think that bolds well for us as we look at this. We’re out there looking at the -- for us, it’s really trying to get the lowest rate possible and watching how the markets respond and so I think we’ve got a very good story to go to the market with now. Keith Schicker – Robert W. Baird : Okay, that’s all I had guys, thank you.

Thanks, Keith.

And our next question comes from the line of John Reilley of ACK Asset Partners

Good afternoon, John, George, great quarter.

Hi John, how are you doing?

I’m doing well. I just want to get into the drag on the quarter. You talked about a $3 million drag. Was that a revenue or cost? And you talked about the impact of several items, some of the launch difficulties and others, and currency

It was all to cost and there was some sales but when I talked about the 3 million it really was the impact on operating income because of the delay in the start up of the launch of the new program that cost on some of the revenue lines. So the 3 million was really the impact of the operating income of the company and it was really wrapped around the electronic shortages, which is driven by overtime and premium freight to deal with that; and then on the currency, the Euro really started to move fairly significantly in April and May. In fact it got down to around 1.18 and as I shared with you, the percentage of our sales revenue within the market plus our direct material buys, that had an influence on our cost structure in those two months specifically and then it write itself in June and then the start up for the product launch was the other key factor -- and that is improving and we’ve been improving every quarter and I think with the launch that is really going on in the third quarter, that will start to diminish itself, so I think that of the 3 million, it’s probably that we should recognize close to 2 million without moving forward as some of those behind us than in third and fourth quarter.

2 million being behind you, 2 million won’t be recurring?

I think another million will still continue to cost us, I think the electronic shortages is still an issue out there and it’s forcing premium freight and in some cases, we had to run overtime to catch up with production schedules and especially it could get a little dramatic than that if volume really starts to pick up. John Reilley - ACK Asset Partners: That’s great really it would have been some really powerful numbers even without that, and focusing in , you talked about another new business win in Q3, could just expand a little bit about that and is that something you’ve talked about before or is there something else now?

It’ll be a new one that’s going to -- one of our goals that we’ve already set is to improve our cross selling capabilities amongst our business units and to leverage the whole portfolio of Stoneridge and we are working on doing that within the pack and we’ve shown some examples such as John Deere where we were able to pick a rotary position center from our control device business unit and to have that sold into John Deere because we’ve got a very good relationship with them on the electronic side and so we cross sold that opportunity. I think in the third quarter we will report another example of that where we are trying to demonstrate that we are executing to our plan and the vast side growth, cross selling was one of those things we identified in our plan. John Reilley - ACK Asset Partners: That’s great, and then just to switch gears right to PST, did I hear you right say that in the month of June was back to historical pre-tax margins of 19%?

Yeah, the sales actually trended all quarter, it got a little bit better every quarter because what we really did was to balance the production schedules with their customer demands, and so every month the sales were going up and then we were finally back to more historical levels in the month of June.

That’s great, and then you said you’ve got them, does that mean within PST also it’s trained so it’s not happening at the end of month anymore, within that thought its becoming linier throughout the quarter?

Right, what they’ve done is they’ve put instead of going out the month clean, they’ve got a back order that they’re going to start to ship into the next month so it approves their operational efficiencies and lower their cost and that was part of the reason why in the second quarter they got hammered by some cost take outs as they had to reduce staff and other things. So that’s gone -- done with [multiple speakers] aligned with a business structure that aligns with doing the right thing, so for the customer and for the business. John Reilley - ACK Asset Partners: That’s great, and then just if they reiterate that they can hit their plan that is just some very significant numbers in the back half of the year, maybe a stretch but anywhere even close to it.

They are clearly trending in that direction. We want to see that they will be it, but I think the trend where they are at John clearly says that they have addressed it, they’ve approved it, the changes because of the legislative in the market -- work itself through so yes, I think they are going to have some very good results in the third and fourth quarter.

That’s great, congratulations guys, great numbers and look forward to a successful re-financing here too.

Thanks, John.

Ladies and gentlemen, we have no further questions in the queue; I’d like to turn the call over to Mr. John Corey for closing remarks.

Well thank you. I would just summarize this, we like what we see and the reason why I say that is because we’ve talked to you about our plan, we talked to you about execution of the plan, we think we’ve demonstrated that, we think we’ve got our cost structure aligned, we are having some problems with supply based problems, those are positive because the market’s growing; so we like what we see because our cost structure is aligned, this volume continues to come on stream, we should continue to see the benefits of that and so where we are positioned right now, we are very happy. Our new order book is growing as we planned so things are moving generally in the right direction with [inaudible] supply base so we’re very encouraged and we look forward to closing out this year and entering into the next year because it looks like the volumes are improving. So with that I would like to thank you all for attending.

Ladies and gentlemen, we thank you for your participation in today’s conference. This concludes the presentation, you may now disconnect.