ERIE Corp.

Management Team
Jiahua (Neil) Liu
Ashley Deutscher

Geoff Davison Zhixiao Zhuang Brittany Steven

Agenda

Companys Objective and Strategies Current Position Departmental Overview

R&D Marketing Production Finance Human Resources TQM

Future Forecast Q&A

Mission Statement

Erie is dedicated to supplying our customers with a diverse line of quality sensors, investing strongly in innovation, offering competitive prices and maximizing value for our shareholders.

Strategy

Broad Differentiation Strategy

Competitive in all 5 market segments
Unsuccessful introduction of new product Ego in Low End

segment

Competitive advantage gained through

Excellent design High customer awareness Increased accessibility

Pricing Strategies
Low end Ebb
Target Pricing

High end Echo

Prestige Pricing

Low end Ego

Penetration Pricing

Performance Edge
Prestige Pricing

Traditional Eat
Responsive Pricing?

Size Egg
Skimming Pricing

Current Position
Cash Plant & Equipment Inventory Current Debt LT Debt Sales Variable C ost Contrib Margin EBIT Net Profit 2018 19,868 193,500 9,622 0 45,000 246,674 180,186 66,488 23,329 10,911 2019 51,573 193,500 4,086 0 45,000 311,394 234,185 77,209 32,701 16,881

Net Profit Trend

(in millions) Net Income(Loss)
$20,000

$15,000

$10,000

$5,000

$0 2011 2012 2013 2014 2015 2016 2017 2018 2019 -$5,000

Financial Highlights
Unit Market Share
30% 25% 20% 15% 10% 5% 0% 35% 30% 25% 20% 15% 10% 5% 0%

Contribution Margin

2011 2012 2013 2014 2015 2016 2017 2018 2019

2011 2012 2013 2014 2015 2016 2017 2018 2019

Research & Development

Continuously adjusted products physical characteristics with changing customer expectations

Performance

Size

MTBF

Age of Product

Marketing
Accessibility Continuously invest on sales budget to maintain a high customer accessibility

Marketing Expenditures
(in millions) 2011 2012 2013 2014 2015 2016 2017 2018 2019 Promo Budget
Sales Budget Total

4.1
4.1 8.2

7
8.2 15.2

8
8.8 16.8

10.4
11.3 18.9

10.4
11.3 21.7

10.4
11.3 21.7

9.4
10.4 19.8

9.7
10.9 20.6

9.7
10.9 20.6

Total marketing expenditures were $163.5 million This is equal to 9.2% of total sales

Awareness
120% 100% 80% 60% 40% 20% 0% Eat traditional segment Ebb low end segment Echo High end segment Egg size segment Edge performance segment

Eat
120 100 80 60 Eat

Problem of promotion budget

When our consumer awareness achieved 100%, the staring awareness will be 66%. We only need to add 34% to remain 100% awareness in the next year. In the first year, we invest 1800 on the promotion budge. The awareness would add 42% to the staring awareness, for a total awareness of 79%(37%+42%) . when our consumer awareness achieve 100% awareness, we should scale back promotion budge to around 1800.

40
20 0

Marketing
Product Accessibility 100% 90% 80%

70%
60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019

eat(Tradition) ebb(Low) echo(High) edge(Pfmn) egg(Size)

averaged accessisibility
70.00%

60.00%
50.00% 40.00% 30.00% averaged accessisibility

20.00%
10.00% 0.00% 2011 2012 2013 2014 2015 2016 2017 2018 2019

After investing too much on sales budget, we got highest customer accessibility and experienced a decrease in accessibility by not invest enough in sales budget during the last few years

Production Activity

Average automation rate

5

4.5
4 3.5 3 2.5 2 2012 2013 2014 2015 2016 2017 2018 2019 Andrews Baldwin Chester Digby Eerie

Production activity

Capacity

Human Resources

Worked with needed compliment

To reduce labour costs
Increased productivity Resulted in a productivity index of 100% or higher each year Increased recruiting costs Increased training costs

Resulted in a low turnover rate

Human Resource Administration Costs

(in millions)

TQM initiatives
Total investment of $15 million Improve business procedures Improve product quality

TQM Expenditures
Continuous Process Improvement Systems Vendor/Just in Time Quality Initiative Training Channel Support Systems Concurrent Engineering
$3 million Reduced material and labor costs $2 million Reduced material costs and administrative overhead $1 million Reduced labor costs

$1 million Increased demand

$2 million Reduces R&D cycle time and costs

TQM Expenditures
UNEP Green Programs Quality Function Deployment Effort Concurrent Engineering/6 Sigma Training GEMI TQEM Sustainability
$0.5 million Increased the effectiveness of the sales budget; ultimately increasing demand $2 million Reduced R&D cycle time Increased the effectiveness of the Promotion and Sales Budgets $2.5 million Reduced material and labor costs

$1 million Reduced labor and material costs

Finance
Funding Capital Expenditures Emergency Loan Selling Capacity Issued Debt Debt Pay Down Plan Dividend Policy

Future Projection 3 years

Sales Total Variable Cost Contribution Margin Contribution Margin % Total Period Costs Net Margin Other EBIT Interest Expense Taxes Profit Sharing Net Profit 2020 354,989 $259,142 $95,847 27% $39,903 $55,944 $5,000 $50,944 $4,200 $15,283 $509 $30,952 2021 404,687 $291,375 113,312 28% $40,302 73,010 $5,000 $68,010 $3,150 $20,403 $680 $43,777 2022 461,343 $327,554 $133,789 29% $40,503 93,286 $5,000 $88,286 $2,100 $26,485 $882 $58,819

Future Selling Prices

Current Eat Ebb Echo $25.00 $17.50 $38.50 2020 $25.00 $17.50 $38.25 2021 $24.75 $17.25 $38.00 2022 $24.50 $16.75 $37.50

Edge
Egg

$33.00
$32.75

$32.50
$32.50

$32.00
$32.25

$31.50
$32.00

Future Projections
Increase Market Share Long Term Debt Pay Down Dividend Policy Capacity Expenditures New Product?

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