Core Viewpoint - Stoneridge, Inc. will host a live webcast for its third quarter 2025 earnings conference call on November 6, 2025, at 9:00 a.m. ET, featuring key executives [1]. Group 1: Company Overview - Stoneridge, Inc. is headquartered in Novi, Michigan, and is a global supplier of electronic systems and technologies that enhance vehicle intelligence and safety for both on- and off-highway transportation sectors [1]. Group 2: Upcoming Events - The third quarter 2025 earnings conference call will be led by president and CEO Jim Zizelman and CFO Matt Horvath [1]. - The webcast will be accessible on the Presentations & Events page of the company's website [1].

Group 1 - Crude Value Insights provides an investing service and community focused on oil and natural gas, emphasizing cash flow and companies that generate it [1] - The service offers subscribers access to a 50+ stock model account, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas sector [2]

Core Points - Sparton Resources reports that Beijing Puneng Century Technology Co. Ltd. has won a bid to construct a 50 Megawatt, 200-Megawatt Hour all-vanadium liquid flow battery energy storage power station in Hubei Province, China [1][2] - The project is part of the VRB China Joint Venture, which is 51% owned by Shanxi Red Sun Co., Ltd. and 49% owned by VRB Energy Inc. [2] - The winning bid value for the project was 467 million RMB, approximately $65.6 million USD [3] - The project is expected to be connected to the grid by December 31, 2025, enhancing local electricity stability and economic development [4] - The installation will be executed by a consortium including BJP, Changyang Lutong Engineering Construction Co., Ltd., and Hubei Electric Power and Design Institute Co., Ltd. [3] - Sparton holds a 9.975% interest in VRB Energy, translating to an indirect 4.4% interest in the VRB China Joint Venture [3] - Ivanhoe Electric Inc. is also establishing VRB USA to construct a vanadium battery manufacturing facility in Arizona [5]

Core Insights - Two auto stocks are experiencing a decline in their Momentum scores, indicating a weakening performance in the market [1][3] Group 1: Polestar Automotive - Polestar Automotive's Momentum score dropped significantly from 80.69 to 25.7 within a week [4] - The decline is primarily due to a widening net loss of $1.19 billion in Q2, which includes a $739 million non-cash impairment charge [4] - The company issued a going concern warning, indicating potential challenges in continuing operations without restructuring or additional funding [4][5] Group 2: Stoneridge Inc. - Stoneridge Inc. saw its Momentum score decrease from 83.32 to 35.31, a drop of 48.01 points [6] - The disappointing second-quarter performance led to missing consensus estimates significantly [6] - The company faced challenges from unfavorable currency movements, tariffs, and a costly product mix impacting its financial results [6][7]

Core Insights - Sparton Resources Inc. has commenced field operations at the Pense Critical Metals Project, which shows similarities to the Outokumpu deposits in Finland [1][12][15] - The project area spans 6,800 hectares and is located near Englehart, Ontario, with recent exploration permits obtained from both Ontario and Quebec governments [3][15] - The presence of significant gold mineralization is noted as an additional opportunity, especially with current gold prices at all-time highs [16] Exploration and Findings - Initial drill programs and funding assistance from the Ontario Junior Exploration Program (OJEP) have been reported, with a new funding application submitted for ongoing exploration [2] - Historical work at the Verrier zone has shown promising results, with assays returning values of up to 0.1% Copper and 0.4% Zinc, indicating potential for further mineralization extending into Quebec [5][6] - Recent reconnaissance geophysics has identified new targets at Pense, with at least twelve untested geophysical zones now recognized [8][13] Mineralization Details - The mineralization at Pense consists of massive to semi-massive sulphides, including pyrite, pyrrhotite, sphalerite, and chalcopyrite, hosted in mafic and ultramafic volcanic rocks [12] - Historical assay values from the Gagne program reported up to 1.31% Copper, 0.32% Nickel, and 1.2% Zinc over sample widths of up to 1.5 meters, indicating significant mineralization potential [6][14] - The newly recognized mineralization at the Verrier and Gagne zones is of particular interest due to its association with skarn mineral development related to syenite intrusions [12][15] Project Scope and Future Plans - The project scope has expanded significantly with the evaluation of new zones, and the CEO has expressed optimism about the potential for multiple critical metals targets [15] - Ongoing prospecting and sampling programs are underway, with assay results pending [9] - The exploration program aims to test all other targets within the Ontario and Quebec claims, leveraging the documented critical metals mineralization [15]

Core Viewpoint - Sparton Resources Inc. has elected two new members to its Board of Directors, enhancing its expertise and strategic direction, with over 99% of votes in favor of their election [1] Group 1: New Board Members - Arthur Potts, a former Ontario Provincial Parliament member, brings extensive experience in government relations and sustainable technologies, and has been appointed Senior Vice President of Sustainable Development [2][3] - Ahlan Veerasamy, a Chartered Professional Accountant with over 30 years in financial management and auditing, has been appointed Chairman of Sparton's Audit Committee, strengthening the company's financial oversight [4][5] Group 2: Company Overview - Sparton Resources Inc. focuses on mineral exploration, particularly critical metals and gold, with active projects in Ontario and Quebec, and holds a strategic investment in a vanadium flow battery manufacturer [7]

Financial Data and Key Metrics Changes - The second quarter sales were $228 million, including approximately $3 million of favorable foreign currency impact [22] - Second quarter free cash flow increased to $7.6 million, an improvement of approximately $5.9 million compared to the second quarter of the prior year [6][33] - Adjusted EBITDA for the second quarter was $4.6 million, or 2% of sales, heavily influenced by non-operating foreign currency expense of $3.4 million [23][26] Business Line Data and Key Metrics Changes - MirrorEye sales set a record with a 21% growth compared to the first quarter of 2025, driven by the ramp-up of OEM programs [4][10] - Control Devices second quarter sales were $71.2 million, growing by 1.9% relative to the first quarter, primarily due to higher demand in the North American passenger vehicle market [24] - Electronics second quarter sales were $149.6 million, with MirrorEye revenue growing by 21%, offset by lower sales in the European commercial vehicle end market [25][26] Market Data and Key Metrics Changes - The North American commercial vehicle production volumes are expected to decline by approximately 17.5% this year, impacting overall market conditions [31][28] - Stone Ridge Brazil's second quarter sales totaled $15.3 million, representing a 6% growth relative to the first quarter, driven by higher aftermarket product sales [29] Company Strategy and Development Direction - The company is focusing on long-term growth strategies, including a review of strategic alternatives for its Control Devices division, potentially leading to a sale [35][36] - The company aims to optimize resources towards high-growth areas such as MirrorEye and Stone Ridge Brazil, which have shown record business awards [37][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged complex market conditions but emphasized resilience and focus on factors within their control, including operational efficiencies and cost control [9][10] - The company is maintaining its full-year revenue guidance of $860 million to $890 million, despite anticipated declines in production volumes [31][32] Other Important Information - The company executed a global cash repatriation program resulting in a total debt reduction of $38.8 million and a net debt reduction of almost $20 million [33] - The company announced several significant new awards totaling approximately $775 million in lifetime revenue, including the largest program award in its history [8][40] Q&A Session Questions and Answers Question: Confirmation on MirrorEye contract announcement - Management confirmed that the contract will not impact 2025 and 2026 revenue as it is an extension and takes the program through 2033 [45][46] Question: Impact of new fleet orders on 2026 outlook - Management indicated that the new fleet customers associated with the recent OEM business win would positively impact the 2026 outlook [48] Question: Non-operational FX impact on guidance - Management clarified that the non-operational FX impact was incorporated into the guidance and there should not be any incremental headwinds moving forward [51][52]

Financial Performance - Sales reached $228 million in Q2 2025 [5], a 4.6% increase compared to Q1 2025 [9] - Adjusted operating income was $0.4 million, resulting in a margin of 0.2% [5] - Adjusted EBITDA was $4.6 million, with a margin of 2.0% [5] - Free cash flow improved to $7.6 million in Q2 2025, a $5.9 million increase compared to Q2 2024 [9] - Net debt reduced by $9.5 million compared to Q1 2025 [9] Business Highlights - New business awards totaled approximately $775 million in estimated lifetime revenue [9] - The largest OEM program award in Stoneridge history was the MirrorEye global program extension through 2033, with approximately $535 million in additional lifetime revenue [9] - MirrorEye sales experienced a 21% growth compared to Q1 2025 [9] Segment Performance - Control Devices sales increased by 1.9% from Q1 2025 to Q2 2025 [36] - Stoneridge Brazil sales grew by 6.0%, reaching $15.3 million in Q2 2025 [44] Guidance - Full-year revenue guidance maintained at $860 million to $890 million [49] - Adjusted EBITDA guidance updated to $34 million to $38 million, representing 4.0% to 4.3% of sales [49]

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive income (loss), cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, accounting standards, revenue recognition, inventories, financial instruments, debt, share-based compensation, and segment reporting [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $49,772 | $71,832 | | Total current assets | $393,427 | $387,514 | | Total long-term assets | $245,981 | $234,042 | | **Total assets** | **$639,408** | **$621,556** | | Total current liabilities | $184,150 | $149,972 | | Revolving credit facility | $164,377 | $201,577 | | Total long-term liabilities | $194,742 | $226,324 | | **Total liabilities and shareholders' equity** | **$639,408** | **$621,556** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement reports the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations (in thousands, except per share data) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $227,952 | $237,059 | $445,842 | $476,216 | | Operating (loss) income | $(2,601) | $3,407 | $(5,826) | $3,738 | | (Loss) income before income taxes | $(9,115) | $1,850 | $(14,747) | $(3,766) | | Net (loss) income | $(9,359) | $2,786 | $(16,555) | $(3,340) | | Basic (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | | Diluted (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement presents net income or loss alongside other comprehensive income or loss items, such as foreign currency translation adjustments and derivative gains/losses Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(9,359) | $2,786 | $(16,555) | $(3,340) | | Foreign currency translation | $13,666 | $(8,454) | $26,449 | $(13,333) | | Unrealized gain (loss) on derivatives | $1,766 | $(2,200) | $3,109 | $(2,130) | | Other comprehensive income (loss), net of tax | $15,432 | $(10,654) | $29,558 | $(15,463) | | **Comprehensive income (loss)** | **$6,073** | **$(7,868)** | **$13,003** | **$(18,803)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Item | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $21,588 | $17,762 | | Net cash used for investing activities | $(9,219) | $(12,958) | | Net cash used for financing activities | $(41,363) | $(1,679) | | Effect of exchange rate changes on cash and cash equivalents | $6,934 | $(1,854) | | **Net change in cash and cash equivalents** | **$(22,060)** | **$1,271** | | Cash and cash equivalents at end of period | $49,772 | $42,112 | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This statement outlines changes in the company's equity accounts, including net income, currency translation adjustments, and share transactions Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Item | Balance at December 31, 2024 | Net loss (6 months ended June 30, 2025) | Currency translation adjustments (6 months ended June 30, 2025) | Balance at June 30, 2025 | | :--------------------------------- | :--------------------------- | :-------------------------------------- | :------------------------------------------------------------ | :----------------------- | | Total shareholders' equity | $245,260 | $(16,555) | $26,449 | $260,516 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [(1) Basis of Presentation](index=9&type=section&id=%281%29%20Basis%20of%20Presentation) The condensed consolidated financial statements are unaudited, prepared according to SEC rules, and include normal recurring adjustments. Certain information is condensed or omitted per SEC regulations, and prior period amounts have been reclassified for consistent presentation - Unaudited condensed consolidated financial statements prepared by Stoneridge, Inc. (the "Company") per SEC rules[18](index=18&type=chunk) - Certain information and footnote disclosures condensed or omitted per SEC rules[18](index=18&type=chunk) - Prior period amounts reclassified to conform to 2025 presentation[19](index=19&type=chunk) [(2) Recently Issued Accounting Standards](index=9&type=section&id=%282%29%20Recently%20Issued%20Accounting%20Standards) The company is evaluating the impact of recently issued FASB ASUs, including ASU No. 2023-09 on Income Tax Disclosures (effective after Dec 15, 2024) and ASU No. 2024-03 on Expense Disaggregation Disclosures (effective after Dec 15, 2026), which are expected to modify disclosures but not significantly impact consolidated financial statements - ASU No. 2023-09, "Income Taxes (Topic 740) – Improvements to Income Tax Disclosures," effective for fiscal years beginning after **December 15, 2024**, will modify financial statement disclosures but not significantly impact consolidated financial statements[20](index=20&type=chunk) - ASU No. 2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures," effective for fiscal years beginning after **December 15, 2026**, is currently being evaluated for its impact on annual consolidated financial statement disclosures[21](index=21&type=chunk) [(3) Revenue](index=9&type=section&id=%283%29%20Revenue) Revenue is recognized upon transfer of control of products or services, typically at shipment or delivery. The company disaggregates revenue by its Control Devices, Electronics, and Stoneridge Brazil segments, as well as by geographical location, showing overall net sales decreases for both the three and six months ended June 30, 2025, compared to 2024 - Revenue is recognized when obligations under the terms of a contract with customers are satisfied, generally with the transfer of control of products and services, usually when parts are shipped or delivered[22](index=22&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Control Devices | $70,411 | $79,899 | $139,244 | $157,057 | | Electronics | $142,681 | $145,511 | $277,464 | $295,294 | | Stoneridge Brazil | $14,860 | $11,649 | $29,134 | $23,865 | | **Total net sales** | **$227,952** | **$237,059** | **$445,842** | **$476,216** | Net Sales by Geographical Location (in thousands) | Region | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $104,551 | $121,515 | $205,640 | $239,630 | | South America | $14,860 | $11,649 | $29,134 | $23,865 | | Europe and Other | $108,541 | $103,895 | $211,068 | $212,721 | | **Total net sales** | **$227,952** | **$237,059** | **$445,842** | **$476,216** | [(4) Inventories](index=11&type=section&id=%284%29%20Inventories) Inventories are valued at the lower of cost (FIFO or average cost) or net realizable value, with a quarterly evaluation of excess and obsolescence reserves. Total net inventories decreased slightly from $151.3 million at December 31, 2024, to $144.5 million at June 30, 2025 - Inventories are valued at the lower of cost (using either FIFO or average cost methods) or net realizable value[33](index=33&type=chunk) Inventories, net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $100,826 | $108,283 | | Work-in-progress | $8,741 | $7,627 | | Finished goods | $34,884 | $35,427 | | **Total inventories, net** | **$144,451** | **$151,337** | - Inventory valued using the FIFO method was **$130,250** at June 30, 2025, and **$138,420** at December 31, 2024[34](index=34&type=chunk) [(5) Financial Instruments and Fair Value Measurements](index=12&type=section&id=%285%29%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) The company uses derivative financial instruments, specifically Mexican peso-denominated foreign currency forward contracts, as cash flow hedges to manage foreign currency exchange rate risk. These hedges were highly effective, with a notional amount of $15.9 million at June 30, 2025, and fair values measured using Level 2 inputs - The Company uses Mexican peso-denominated foreign currency forward contracts solely for hedging and not for speculative purposes[36](index=36&type=chunk) - Notional amount of Mexican peso-denominated foreign currency forward contracts was **$15,916** at June 30, 2025, and **$32,339** at December 31, 2024[41](index=41&type=chunk)[43](index=43&type=chunk) Fair Values of Financial Instruments (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :------------------ | | Financial assets carried at fair value: Forward currency contracts | $1,507 | $0 | | Financial liabilities carried at fair value: Forward currency contracts | $0 | $2,429 | [(6) Share-Based Compensation](index=14&type=section&id=%286%29%20Share-Based%20Compensation) Share-based compensation expense recognized in SG&A increased for both the three and six months ended June 30, 2025, compared to the prior year periods Share-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three months ended June 30 | $1,424 | $1,115 | | Six months ended June 30 | $2,560 | $2,207 | [(7) Debt](index=15&type=section&id=%287%29%20Debt) The company's primary debt is a $275 million revolving credit facility, with an outstanding balance of $164.4 million at June 30, 2025. An amendment in February 2025 provided covenant relief, and the company remained in compliance with all covenants. Foreign subsidiaries also maintain smaller credit lines Debt Overview (in thousands) | Item | June 30, 2025 | December 31, 2024 | Interest rate at June 30, 2025 | Maturity | | :---------------------- | :-------------- | :------------------ | :----------------------------- | :------------- | | Revolving Credit Facility | $164,377 | $201,577 | 6.35% | November 2026 | - On February 26, 2025, Amendment No. 1 to the Credit Facility provided covenant relief, including increased maximum leverage ratio and reduced minimum interest coverage ratio, during the "Covenant Relief Period" (ending **December 31, 2025**)[55](index=55&type=chunk)[57](index=57&type=chunk) - The Company was in compliance with all Credit Facility covenants at **June 30, 2025**, and **December 31, 2024**[59](index=59&type=chunk) [(8) Loss Per Share](index=16&type=section&id=%288%29%20Loss%20Per%20Share) Basic and diluted loss per share calculations are presented, with potential dilutive securities excluded for periods where their inclusion would be anti-dilutive due to net losses Loss Per Share Data | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | | Diluted (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | - Potential dilutive shares were excluded from diluted loss per share for all periods in which the Company recognized a net loss, as their inclusion would be anti-dilutive[63](index=63&type=chunk) [(9) Accumulated Other Comprehensive Loss](index=17&type=section&id=%289%29%20Accumulated%20Other%20Comprehensive%20Loss) The accumulated other comprehensive loss decreased from $(122.0) million at January 1, 2025, to $(92.5) million at June 30, 2025, primarily due to significant foreign currency translation gains and unrealized gains on derivatives Changes in Accumulated Other Comprehensive Loss (in thousands) | Item | Balance at January 1, 2025 | Net other comprehensive income (loss), net of tax (6 months) | Balance at June 30, 2025 | | :--------------------------------- | :--------------------------- | :--------------------------------------------------------- | :----------------------- | | Foreign currency translation | $(120,095) | $26,449 | $(93,646) | | Unrealized gain (loss) on derivatives | $(1,918) | $3,109 | $1,191 | | **Total** | **$(122,013)** | **$29,558** | **$(92,455)** | [(10) Commitments and Contingencies](index=17&type=section&id=%2810%29%20Commitments%20and%20Contingencies) The company is subject to various legal actions, environmental remediation liabilities, long-term supply commitments, and product warranty/recall claims. Accruals are made for probable losses, and the company is vigorously defending a significant arbitration demand related to PM sensor products - Accrued liabilities for environmental remediation costs were **$215** at June 30, 2025, and **$244** at December 31, 2024, related to a former Sarasota, Florida facility[67](index=67&type=chunk)[68](index=68&type=chunk) - Stoneridge Brazil subsidiary has civil, labor, environmental, and other tax contingencies totaling **R$47,490 ($8,703)** at June 30, 2025, deemed reasonably possible but not probable, including a **R$7,995 ($1,465)** fine from CADE being challenged[69](index=69&type=chunk)[70](index=70&type=chunk) - Long-term supply agreement for semiconductor components requires minimum annual purchases, with **$5,571** expected in 2025[71](index=71&type=chunk) Product Warranty and Recall Reserve Liability (in thousands) | Item | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Product warranty and recall reserve at beginning of period | $27,523 | $21,610 | | Accruals for warranties established during period | $7,614 | $10,030 | | Settlements made during the period | $(8,302) | $(6,899) | | **Product warranty and recall reserve at end of period** | **$31,876** | **$24,448** | - The Company is vigorously defending a **$34,579** arbitration demand from a customer for warranty claims related to past sales of PM sensor products, believing the claims lack substantive merit[73](index=73&type=chunk)[74](index=74&type=chunk) [(11) Business Realignment](index=19&type=section&id=%2811%29%20Business%20Realignment) Business realignment charges, primarily severance-related, totaled $1.7 million for the three months and $4.5 million for the six months ended June 30, 2025. These costs are mainly for operational efficiency initiatives at the Juarez facility and executive separation Total Business Realignment Charges (in thousands) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three months ended June 30 | $1,676 | $1,949 | | Six months ended June 30 | $4,503 | $1,949 | - The majority of business realignment costs relate to operational efficiency initiatives at the Juarez facility and executive separation costs[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [(12) Income Taxes](index=20&type=section&id=%2812%29%20Income%20Taxes) Income tax expense for the three and six months ended June 30, 2025, was $0.2 million and $1.8 million, respectively, with effective tax rates of (2.7)% and (12.3)%. These rates vary from statutory rates due to the mix of earnings, foreign withholding taxes, tax credits, and U.S. taxes on foreign earnings. The company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) Income Tax Expense (Benefit) and Effective Tax Rate | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision (benefit) for income taxes | $244 | $(936) | $1,808 | $(426) | | Effective tax rate | (2.7)% | (50.6)% | (12.3)% | 11.3% | - The effective tax rate varies primarily due to the mix of earnings among tax jurisdictions, foreign withholding taxes, tax credits and incentives, and U.S. taxes on foreign earnings[83](index=83&type=chunk)[85](index=85&type=chunk) - The company is currently assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements[87](index=87&type=chunk) [(13) Segment Reporting](index=21&type=section&id=%2813%29%20Segment%20Reporting) The company operates through three reportable segments: Control Devices, Electronics, and Stoneridge Brazil. Detailed financial information, including net sales, operating income, and capital expenditures, is provided for each segment and unallocated corporate costs, along with geographical breakdowns of net sales and long-term assets - The Company has three reportable segments: Control Devices, Electronics, and Stoneridge Brazil, with performance evaluated based on revenues, operating income, and capital expenditures[90](index=90&type=chunk)[91](index=91&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | | Control Devices | $139,244 | $157,057 | | Electronics | $277,464 | $295,294 | | Stoneridge Brazil | $29,134 | $23,865 | | **Total net sales** | **$445,842** | **$476,216** | Operating (Loss) Income by Reportable Segment (in thousands) | Segment | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Control Devices | $3,731 | $5,889 | | Electronics | $8,244 | $16,920 | | Stoneridge Brazil | $1,554 | $163 | | Unallocated Corporate | $(19,355) | $(19,234) | | **Total operating (loss) income** | **$(5,826)** | **$3,738** | Capital Expenditures by Reportable Segment (in thousands) | Segment | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | | Control Devices | $2,159 | $3,104 | | Electronics | $4,920 | $4,354 | | Stoneridge Brazil | $695 | $1,739 | | Corporate | $281 | $760 | | **Total capital expenditures** | **$8,055** | **$9,957** | [(14) Investments](index=24&type=section&id=%2814%29%20Investments) The company holds an equity method investment in Autotech Fund II, a venture capital firm. As of June 30, 2025, cumulative contributions totaled $9.05 million, with recognized equity losses of $(0.34) million for the six months ended June 30, 2025 - The Company has a **$10,000** investment in Autotech Fund II, a venture capital firm focused on ground transportation technology, accounted for under the equity method[99](index=99&type=chunk) - Cumulative investment in Autotech Fund II was **$9,050** as of June 30, 2025[99](index=99&type=chunk) Equity in (Earnings) Loss of Investee (in thousands) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three months ended June 30 | $(50) | $52 | | Six months ended June 30 | $(344) | $329 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, covering segment performance, a detailed comparison of financial results for the three and six months ended June 30, 2025 and 2024, liquidity, capital resources, and the company's outlook amidst market challenges and strategic initiatives [Company Overview and Segments](index=25&type=section&id=Company%20Overview%20and%20Segments) Stoneridge, Inc. is a global supplier of electronics systems and technologies for commercial, automotive, off-highway, and agricultural vehicle markets, organized into three segments: Control Devices, Electronics, and Stoneridge Brazil - Stoneridge, Inc. is a global supplier of safe and efficient electronics systems and technologies for commercial, automotive, off-highway, and agricultural vehicle markets[101](index=101&type=chunk) - The company's operations are reported under three segments: Control Devices, Electronics, and Stoneridge Brazil[103](index=103&type=chunk)[104](index=104&type=chunk) [Second Quarter Overview](index=25&type=section&id=Second%20Quarter%20Overview) For Q2 2025, the company reported a net loss of $9.4 million, a significant increase from net income in Q2 2024. Net sales decreased by 3.8% due to lower volumes in North American automotive and Electronics segments, partially offset by growth in Stoneridge Brazil and favorable foreign exchange. Gross margin declined, and non-operating foreign currency losses unfavorably impacted results - Net loss for the three months ended June 30, 2025, was **$9.4 million**, or **$(0.34)** per diluted share, an increase of **$12.1 million** from net income of **$2.8 million** in the prior year[105](index=105&type=chunk)[106](index=106&type=chunk) - Net sales decreased by **$9.1 million (3.8%)** compared to Q2 2024, driven by lower volumes in North American automotive (Control Devices) and North American commercial/European off-highway (Electronics), partially offset by higher OEM sales at Stoneridge Brazil and favorable foreign exchange in Electronics[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Gross margin as a percent of sales decreased to **21.5%** in Q2 2025 from **22.7%** in Q2 2024 due to sales mix and lower contribution from sales[106](index=106&type=chunk) - Cash and cash equivalents decreased to **$49.8 million** at June 30, 2025, from **$71.8 million** at December 31, 2024, primarily due to repayments of Credit Facility borrowings from foreign cash repatriation[112](index=112&type=chunk) [Outlook](index=26&type=section&id=Outlook) The company's long-term strategy focuses on products addressing industry megatrends, such as safety, vehicle intelligence, and connectivity, including OEM MirrorEye® programs and next-generation tachographs. Despite expected market volatility, including tariffs and declining North American automotive production, the company anticipates continued growth in MirrorEye and Stoneridge Brazil OEM sales, alongside efforts in operational excellence and cost reduction - The company's long-term strategy focuses on expanding its product portfolio with advanced capabilities, applications, and data services, particularly in safety, vehicle intelligence, and connectivity (e.g., OEM MirrorEye® programs and next-generation tachograph)[113](index=113&type=chunk)[117](index=117&type=chunk) - The North American automotive market is expected to decrease from **15.5 million units** in 2024 to **14.9 million units** in 2025, impacting Control Devices sales[116](index=116&type=chunk) - Electronics segment sales are expected to outperform forecasted production volumes due to strong demand for the next-generation tachograph and ongoing MirrorEye® launches[117](index=117&type=chunk) - Stoneridge Brazil's OEM channel sales are expected to grow significantly based on existing programs and new awards, with an expansion of its engineering center[119](index=119&type=chunk) - The company continues to monitor and evaluate the direct and indirect impacts of new or additional tariffs and heightened global trade disputes, taking actions to mitigate costs[114](index=114&type=chunk)[115](index=115&type=chunk) [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=27&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Net sales decreased by 3.8% to $227.9 million, primarily due to lower volumes in North American automotive and Electronics, partially offset by Stoneridge Brazil's growth. Operating income shifted to a loss of $(2.6) million, a 176.3% decrease, driven by lower sales, higher material costs, and increased D&D expenses in Electronics, while Stoneridge Brazil's operating income significantly increased Key Financial Highlights (Three months ended June 30, in thousands) | Item | 2025 | 2024 | Dollar Change | Percent Change | | :--------------------------------- | :----- | :----- | :------------ | :------------- | | Net sales | $227,952 | $237,059 | $(9,107) | (3.8)% | | Cost of goods sold | $179,014 | $183,319 | $(4,305) | (2.3)% | | Selling, general and administrative | $32,835 | $31,876 | $959 | 3.0% | | Design and development | $18,704 | $18,457 | $247 | 1.3% | | Operating (loss) income | $(2,601) | $3,407 | $(6,008) | (176.3)% | | Interest expense, net | $3,134 | $3,801 | $(667) | (17.5)% | | Other expense (income), net | $3,430 | $(2,296) | $5,726 | 249.4% | | Net (loss) income | $(9,359) | $2,786 | $(12,145) | (435.9)% | - Control Devices net sales decreased **$9.5 million (-11.9%)** due to North American automotive (end-of-life actuator) and China commercial vehicle, while Electronics net sales decreased **$2.8 million (-1.9%)** due to lower North American commercial and European/North American off-highway volumes, partially offset by European commercial vehicle growth and favorable FX[125](index=125&type=chunk)[126](index=126&type=chunk) - Stoneridge Brazil net sales increased **$3.2 million (+27.6%)** from higher OEM product sales, despite unfavorable foreign currency translation[127](index=127&type=chunk) - Gross margin decreased to **21.5%** from **22.7%**, with material cost as a percentage of net sales increasing to **57.1%** due to higher material costs and unfavorable foreign exchange related variances[131](index=131&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=30&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) Net sales for the six months decreased by 6.4% to $445.8 million, primarily from declines in Control Devices and Electronics, partially offset by Stoneridge Brazil. The company reported a net loss of $(16.6) million, an increase from $(3.3) million in the prior year, with operating income shifting to a loss of $(5.8) million, a 255.9% decrease, mainly due to lower sales, higher business realignment costs, and D&D expenses in Electronics Key Financial Highlights (Six months ended June 30, in thousands) | Item | 2025 | 2024 | Dollar Change | Percent Change | | :--------------------------------- | :----- | :----- | :------------ | :------------- | | Net sales | $445,842 | $476,216 | $(30,374) | (6.4)% | | Cost of goods sold | $350,607 | $374,119 | $(23,512) | (6.3)% | | Selling, general and administrative | $64,531 | $62,299 | $2,232 | 3.6% | | Design and development | $36,530 | $36,060 | $470 | 1.3% | | Operating (loss) income | $(5,826) | $3,738 | $(9,564) | (255.9)% | | Interest expense, net | $6,301 | $7,435 | $(1,134) | (15.2)% | | Other expense (income), net | $2,964 | $(260) | $3,224 | 1240.0% | | Net loss | $(16,555) | $(3,340) | $(13,215) | (395.6)% | - Control Devices net sales decreased **$17.8 million (-11.3%)** due to North American automotive (end-of-life actuator) and China commercial/off-highway markets. Electronics net sales decreased **$17.8 million (-6.0%)** due to lower North American/European commercial and North American off-highway volumes, partially offset by MirrorEye® sales and favorable FX[142](index=142&type=chunk)[143](index=143&type=chunk) - Stoneridge Brazil net sales increased **$5.3 million (+22.1%)** from higher OEM product sales, despite unfavorable foreign currency translation[144](index=144&type=chunk) - Gross margin remained consistent at **21.4%**, with material cost as a percentage of net sales decreasing to **56.7%** due to favorable foreign exchange related variances[148](index=148&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Cash provided by operating activities increased to $21.6 million for the six months ended June 30, 2025, but net cash used for financing activities significantly increased to $(41.4) million due to Credit Facility repayments from foreign cash repatriation. The company maintains $160.4 million in total liquidity (cash and undrawn credit), expects to meet future cash requirements, and remains in compliance with its credit facility covenants Summary of Cash Flows (Six months ended June 30, in thousands) | Activity | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net cash provided by operating activities | $21,588 | $17,762 | | Net cash used for investing activities | $(9,219) | $(12,958) | | Net cash used for financing activities | $(41,363) | $(1,679) | | **Net change in cash and cash equivalents** | **$(22,060)** | **$1,271** | - Net cash used for financing activities increased significantly due to **$43.8 million** in Credit Facility repayments from the repatriation of cash held at foreign locations[160](index=160&type=chunk) - The Credit Facility had an outstanding balance of **$164.4 million** at June 30, 2025, and the company was in compliance with all covenants[161](index=161&type=chunk)[163](index=163&type=chunk) - Total undrawn commitments under the Credit Facility and cash balances amount to more than **$160.4 million**, which is expected to be sufficient to meet anticipated cash requirements for the next twelve months[169](index=169&type=chunk)[170](index=170&type=chunk) [Other Matters](index=27&type=section&id=Other%20Matters) The company's international operations expose it to foreign currency exchange rate fluctuations, which unfavorably impacted Q2 2025 results. Business realignment costs continue to be incurred for operational efficiency. The company manages customer pricing pressures and notes the moderate seasonality of its Control Devices and Electronics segments, with no material changes to critical accounting policies or market risk disclosures - Movements in foreign currency exchange rates can significantly affect results, with the weakening U.S. Dollar against the Swedish krona unfavorably impacting **Q2 2025** reported results[121](index=121&type=chunk) - Business realignment charges of **$1.7 million (Q2 2025)** and **$4.5 million (YTD Q2 2025)** were incurred for operational efficiency initiatives at the Juarez facility and executive separation costs, with additional costs expected[122](index=122&type=chunk) - The Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns, while Stoneridge Brazil consumer products see higher demand in the second half of the year[172](index=172&type=chunk) - There have been no material changes in critical accounting policies and estimates or quantitative and qualitative disclosures about market risk during the second quarter of 2025[173](index=173&type=chunk)[176](index=176&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's quantitative and qualitative disclosures regarding market risk since its 2024 Form 10-K - No material changes to the quantitative and qualitative information about the Company's market risk from those previously presented within Part II, Item 7A of the Company's 2024 Form 10-K[176](index=176&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the PEO and PFO, concluded that disclosure controls and procedures were effective as of June 30, 2025. No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025 - The Company's disclosure controls and procedures were effective as of June 30, 2025[177](index=177&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the six months ended June 30, 2025[178](index=178&type=chunk) [PART II – OTHER INFORMATION](index=36&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions and claims in the ordinary course of business, including product liability, warranty, and regulatory matters. Accruals are established for probable losses, and while certain contingencies exist in Stoneridge Brazil, the company does not believe current litigation will materially adversely affect its financial position - The Company is involved in various legal actions and claims, including those arising out of breach of contracts, product warranties, product liability, patent infringement, regulatory matters, and employment-related matters[179](index=179&type=chunk) - Accruals are established for matters where losses are probable and can be reasonably estimated[179](index=179&type=chunk) - The Company does not believe that any of the litigation in which it is currently engaged will have a material adverse effect on its business, consolidated financial position, or results of operations[179](index=179&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - No material changes with respect to risk factors previously disclosed in the Company's 2024 Form 10-K[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended June 30, 2025, the company repurchased 10,983 Common Shares, primarily to satisfy employee tax withholding obligations upon the vesting of share-based awards Common Shares Repurchased (Three months ended June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | | :--------------- | :------------------------------- | :--------------------------- | | 4/1/25-4/30/25 | 488 | $4.50 | | 5/1/25-5/31/25 | — | — | | 6/1/25-6/30/25 | 10,495 | $7.04 | | **Total** | **10,983** | | - Common Shares were delivered by employees as payment for withholding taxes due upon vesting of performance share awards and share unit awards[181](index=181&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[183](index=183&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There were no mine safety disclosures during the reporting period - None[184](index=184&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the six months ended June 30, 2025 - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the six months ended June 30, 2025[185](index=185&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the 2025 Long-Term Incentive Plan, CEO and CFO certifications, and various XBRL exhibits - Includes The Stoneridge, Inc. **2025 Long-Term Incentive Plan** (Exhibit 10.1)[186](index=186&type=chunk) - Contains Chief Executive Officer and Chief Financial Officer certifications pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of 2002 (Exhibits 31.1, 31.2, 32.1, 32.2)[186](index=186&type=chunk) - Includes various XBRL Exhibits (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 104)[186](index=186&type=chunk)

[Executive Summary & Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Highlights) Stoneridge reported Q2 2025 sales of **$228.0 million** and an operating loss of **$(2.6) million**, secured **$775 million** in new lifetime revenue awards, and updated full-year EBITDA guidance [Q2 2025 Financial Highlights](index=1&type=section&id=1.1.%20Q2%202025%20Financial%20Highlights) Stoneridge reported Q2 2025 sales of **$228.0 million**, a gross profit of **$48.9 million** (**21.5%** of sales), and an operating loss of **$(2.6) million**; adjusted operating income was **$0.4 million**, with a net loss of **$(9.4) million** and adjusted EBITDA at **$4.6 million** Q2 2025 Key Financials | Metric | Value (USD millions) | % of Sales | | :----------------------- | :------------------- | :--------- | | Sales | 228.0 | | | Gross Profit | 48.9 | 21.5% | | Operating Loss | (2.6) | (1.1)% | | Adjusted Operating Income | 0.4 | 0.2% | | Net Loss | (9.4) | (4.1)% | | Adjusted Net Loss | (7.0) | (3.1)% | | Adjusted EBITDA | 4.6 | 2.0% | | Adjusted EBITDA (excl. FX) | 8.1 | 3.5% | - Total debt reduced by **$38.8 million** relative to Q1, driven by a **$43.8 million** global cash repatriation program and a **$7.3 million** inventory reduction[4](index=4&type=chunk)[18](index=18&type=chunk) [Strategic Business Developments](index=1&type=section&id=1.2.%20Strategic%20Business%20Developments) MirrorEye achieved another quarterly sales record with **21%** growth QoQ, driven by OEM program ramp-ups, and the company secured approximately **$775 million** in new lifetime revenue awards, including its largest-ever global MirrorEye program extension - MirrorEye sales set a new quarterly record, growing **21%** relative to Q1 2025, driven by continued ramp-up of OEM programs[1](index=1&type=chunk)[6](index=6&type=chunk) Significant New Business Awards | Program | Estimated Lifetime Revenue (USD millions) | Peak Annual Revenue (USD millions) | | :------------------------------------------------ | :-------------------------------------- | :--------------------------------- | | Global MirrorEye Program Extension | 535 | 140 | | Smart 2 Tachograph, Secondary Displays, ECUs | 155 | N/A | | Stoneridge Brazil OEM ECU (Infotainment) | 85 | 20 | | **Total New Awards** | **~775** | N/A | - Stoneridge announced a review of strategic alternatives for its Control Devices business, with a primary focus on a potential sale to maximize shareholder value[1](index=1&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) [2025 Full-Year Guidance Update](index=1&type=section&id=1.3.%202025%20Full-Year%20Guidance%20Update) The company maintained its full-year 2025 sales guidance but narrowed its adjusted gross margin guidance and updated its adjusted EBITDA guidance to reflect non-operating foreign currency headwinds and tariff-related expenses 2025 Full-Year Guidance Update | Metric | Previous Guidance | Updated Guidance | Change | | :-------------------- | :-------------------- | :-------------------- | :----- | | Sales | $860M - $890M | $860M - $890M | Maintained | | Adjusted Gross Margin | N/A | 22.0% - 22.25% | Narrowed | | Adjusted Operating Margin | 0.75% - 1.25% | 0.75% - 1.25% | Maintained | | Adjusted EBITDA | N/A | $34M - $38M | Updated | | Adjusted EBITDA Margin | N/A | 4.0% - 4.3% | Updated | | Free Cash Flow | $25M - $30M | $25M - $30M | Maintained | - The update to adjusted EBITDA guidance reflects **$3.0 million** in non-operating foreign currency headwinds and approximately **$1.0 million** in estimated tariff-related expenses, which were not in initial guidance[4](index=4&type=chunk)[22](index=22&type=chunk) [Second Quarter 2025 Performance Review](index=1&type=section&id=2.%20Second%20Quarter%202025%20Performance%20Review) Stoneridge experienced a decline in net sales and a shift to operating loss YoY, primarily due to lower North American commercial vehicle production, with mixed segment performance [Overall Financial Performance](index=1&type=section&id=2.1.%20Overall%20Financial%20Performance) Stoneridge experienced a decline in net sales and a shift from operating income to loss compared to Q2 2024, primarily due to lower production volumes in the North American commercial vehicle market Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | YoY Change | | :----------------------- | :--------------------- | :--------------------- | :--------- | | Net Sales | 227,952 | 237,059 | (3.8%) | | Operating (Loss) Income | (2,601) | 3,407 | Shift to Loss | | Net (Loss) Income | (9,359) | 2,786 | Shift to Loss | | Basic EPS | (0.34) | 0.10 | Shift to Loss | - The operating loss was primarily due to challenging and volatile market conditions, particularly production volume reductions in the North American commercial vehicle end market, partially offset by MirrorEye sales growth and foreign currency benefits[3](index=3&type=chunk)[6](index=6&type=chunk)[14](index=14&type=chunk) [Segment Performance](index=3&type=section&id=2.2.%20Segment%20Performance) The company's segments showed mixed performance in Q2 2025, with Electronics sales increasing QoQ but decreasing YoY, Control Devices seeing QoQ sales growth and margin improvement but a YoY decline, and Stoneridge Brazil demonstrating strong growth [Electronics Segment](index=3&type=section&id=2.2.1.%20Electronics%20Segment) Electronics segment sales increased QoQ by **6.4%** to **$149.6 million** but decreased YoY by **2.6%**, with adjusted operating margin declining to **2.8%** Electronics Segment Performance | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | QoQ Change | Q2 2024 (USD millions) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------- | | Sales | 149.6 | 140.6 (implied) | +6.4% | 153.6 (implied) | (2.6%) | | Adjusted Operating Margin | 2.8% | 4.9% (implied) | (210 bps) | 7.7% (implied) | (490 bps) | - QoQ sales growth was primarily due to **$8.1 million** favorable foreign currency translation and higher MirrorEye sales; YoY sales decrease was due to lower North American commercial vehicle production volumes[11](index=11&type=chunk)[14](index=14&type=chunk) [Control Devices Segment](index=3&type=section&id=2.2.2.%20Control%20Devices%20Segment) Control Devices segment sales grew QoQ by **1.9%** to **$71.2 million**, but declined YoY by **12.0%**, with adjusted operating margin at **4.0%** Control Devices Segment Performance | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | QoQ Change | Q2 2024 (USD millions) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------- | | Sales | 71.2 | 69.9 (implied) | +1.9% | 80.9 (implied) | (12.0%) | | Adjusted Operating Margin | 4.0% | 2.2% (implied) | +180 bps | 4.6% (implied) | (60 bps) | - QoQ sales growth was driven by higher production volumes in the North American passenger vehicle end market; YoY sales decrease was due to lower customer production volumes and the wind-down of an end-of-life program[12](index=12&type=chunk)[15](index=15&type=chunk) [Stoneridge Brazil Segment](index=3&type=section&id=2.2.3.%20Stoneridge%20Brazil%20Segment) Stoneridge Brazil segment sales increased QoQ by **6.0%** to **$15.3 million** and YoY by **28.9%**, with operating income reaching **$1.0 million** Stoneridge Brazil Segment Performance | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | QoQ Change | Q2 2024 (USD millions) | YoY Change | | :-------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------- | | Sales | 15.3 | 14.4 (implied) | +6.0% | 11.9 (implied) | +28.9% | | Operating Income | 1.0 | 0.6 (implied) | +$0.4M | 0.0 (implied) | +$1.0M | - YoY sales increase was primarily driven by higher OEM product sales, partially offset by unfavorable foreign currency translation of **$0.9 million**[16](index=16&type=chunk) [Strategic Initiatives](index=2&type=section&id=3.%20Strategic%20Initiatives) Stoneridge secured **$775 million** in new lifetime revenue awards, including a major MirrorEye extension, and initiated a strategic review for its Control Devices business, focusing on a potential sale [Significant New Business Awards](index=2&type=section&id=3.1.%20Significant%20New%20Business%20Awards) Stoneridge secured approximately **$775 million** in new lifetime revenue awards, including its largest-ever global MirrorEye program extension (**$535 million** lifetime revenue) and the largest OEM program in Stoneridge Brazil's history (**$85 million** lifetime revenue for an electronic control unit) - The largest business award in company history is a global MirrorEye program extension, estimated at **$535 million** in lifetime revenue and **$140 million** in peak annual revenue[1](index=1&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - Stoneridge Brazil received its largest OEM program award for an electronic control unit for an infotainment program, estimated at **$85 million** lifetime revenue and **$20 million** peak annual revenue[1](index=1&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - Additional awards include a new OEM program for the Smart 2 next-generation tachograph and several programs for secondary displays and electronic control units, totaling an estimated **$155 million** in lifetime revenue[6](index=6&type=chunk) [Review of Strategic Alternatives for Control Devices Business](index=2&type=section&id=3.2.%20Review%20of%20Strategic%20Alternatives%20for%20Control%20Devices%20Business) Stoneridge announced a review of strategic alternatives for its Control Devices business, primarily focusing on a potential sale to maximize shareholder value and reallocate resources to core growth platforms - The review's primary focus is a potential sale of the Control Devices segment to maximize value for shareholders[8](index=8&type=chunk)[9](index=9&type=chunk) - This strategic move is intended to support and accelerate growth platforms in Electronics and Stoneridge Brazil by reallocating capital, engineering resources, and leadership focus[9](index=9&type=chunk) - The company has engaged external advisors but has not set a definitive timetable and will not comment further until a specific course of action is approved by the Board[10](index=10&type=chunk)[28](index=28&type=chunk) [Financial Position and Outlook](index=3&type=section&id=4.%20Financial%20Position%20and%20Outlook) Stoneridge reduced total debt by **$38.8 million** in Q2 2025, maintained full-year sales guidance, and updated adjusted EBITDA guidance to reflect foreign currency and tariff impacts [Cash and Debt Balances](index=3&type=section&id=4.1.%20Cash%20and%20Debt%20Balances) As of June 30, 2025, Stoneridge had **$49.8 million** in cash and **$164.4 million** in total debt, with total debt and net debt reduced by **$38.8 million** and **$9.5 million** respectively from Q1, largely due to a **$43.8 million** cash repatriation program and inventory reduction Cash and Debt Balances (as of June 30, 2025) | Metric | Value (USD millions) | | :-------------------------------- | :------------------- | | Cash and Cash Equivalents | 49.8 | | Total Debt | 164.4 | | Net Debt | 114.6 | | Adjusted Net Debt (Compliance) | 129.5 | Q2 2025 Cash Flow Performance | Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | Change | | :-------------------------------- | :--------------------- | :--------------------- | :----- | | Net Cash Provided by Operating Activities | 10.7 | 8.7 | +$2.0M | | Free Cash Flow | 7.6 | 1.7 | +$5.9M | - Total debt and net debt were reduced by **$38.8 million** and **$9.5 million** respectively from Q1, primarily due to a **$43.8 million** global cash repatriation program and a **$7.3 million** inventory reduction[4](index=4&type=chunk)[18](index=18&type=chunk) - The adjusted net debt to trailing twelve-month EBITDA compliance leverage ratio was **4.17x**, below the required **5.50x**; the company targets a ratio of approximately **2.5x** by year-end, against a **3.5x** requirement[19](index=19&type=chunk)[20](index=20&type=chunk)[47](index=47&type=chunk) [2025 Full-Year Outlook](index=4&type=section&id=4.2.%202025%20Full-Year%20Outlook) Stoneridge maintained its full-year 2025 sales guidance of **$860 million** to **$890 million**, narrowed adjusted gross margin guidance to **22.0%-22.25%**, and updated adjusted EBITDA guidance to **$34 million** to **$38 million** to account for non-operating FX and tariff expenses 2025 Full-Year Guidance | Metric | Guidance Range (USD millions) | Margin | | :-------------------- | :---------------------------- | :------- | | Sales | $860 - $890 | | | Adjusted Gross Margin | N/A | 22.0% - 22.25% | | Adjusted Operating Margin | N/A | 0.75% - 1.25% | | Adjusted EBITDA | $34 - $38 | 4.0% - 4.3% | | Free Cash Flow | $25 - $30 | | - Sales guidance is maintained as production volume headwinds (especially North American commercial vehicles) are expected to be offset by favorable foreign currency benefits[4](index=4&type=chunk)[22](index=22&type=chunk) - Adjusted EBITDA guidance was updated to reflect **$3.0 million** in non-operating foreign currency headwinds and approximately **$1.0 million** in tariff-related expenses, which were not included in initial guidance[4](index=4&type=chunk)[22](index=22&type=chunk) [Corporate Information](index=4&type=section&id=5.%20Corporate%20Information) The report provides Q2 2025 conference call details, company overview, forward-looking statement disclaimers, non-GAAP financial measure explanations, and investor contact information [Conference Call Details](index=4&type=section&id=5.1.%20Conference%20Call%20Details) A live Internet broadcast of Stoneridge's Q2 2025 results conference call was scheduled for 9:00 a.m. Eastern Time on Thursday, August 7, 2025, accessible via www.stoneridge.com, where a webcast replay would also be available - Conference call for Q2 2025 results was held on August 7, 2025, at 9:00 a.m. ET, with webcast available at www.stoneridge.com[23](index=23&type=chunk) [About Stoneridge, Inc.](index=4&type=section&id=5.2.%20About%20Stoneridge,%20Inc.) Stoneridge, Inc., headquartered in Novi, Michigan, is a global supplier of electronic systems and technologies focused on vehicle intelligence, safety, and security for on- and off-highway transportation sectors worldwide - Stoneridge, Inc. is a global supplier of safe and efficient electronic systems and technologies, headquartered in Novi, Michigan[24](index=24&type=chunk) - The company's systems and products power vehicle intelligence and enable safety and security for on- and off-highway transportation sectors globally[24](index=24&type=chunk)[25](index=25&type=chunk) [Forward-Looking Statements](index=5&type=section&id=5.3.%20Forward-Looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, with the company disclaiming any obligation to update these statements - Statements in the press release are forward-looking and subject to risks and uncertainties, including supplier issues, material costs, global economic trends, tariffs, and customer production volumes[26](index=26&type=chunk) - The company explicitly disclaims any obligation to update these forward-looking statements[27](index=27&type=chunk) - There can be no assurance that the strategic review of the Control Devices business will result in a transaction[28](index=28&type=chunk) [Use of Non-GAAP Financial Information](index=6&type=section&id=5.4.%20Use%20of%20Non-GAAP%20Financial%20Information) The press release includes non-GAAP financial measures, such as adjusted gross profit, operating income, net income, EPS, EBITDA, and free cash flow, which are reconciled to GAAP measures and used by management as supplemental measures to assess liquidity and operating performance - Non-GAAP financial measures are used as supplemental measures for liquidity (free cash flow, net debt) and operating performance (adjusted gross profit, operating income, net income, EPS, EBITDA)[29](index=29&type=chunk)[30](index=30&type=chunk) - Management believes these measures are useful for analysis by excluding items not indicative of core operating performance or that may obscure trends[30](index=30&type=chunk) - Non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial statements[31](index=31&type=chunk) [Investor Relations Contact](index=6&type=section&id=5.5.%20Investor%20Relations%20Contact) For more information, investors can contact Kelly K. Harvey, Director of Investor Relations, via email - Contact Kelly K. Harvey, Director Investor Relations (Kelly.Harvey@Stoneridge.com) for more information[32](index=32&type=chunk) [Condensed Consolidated Financial Statements](index=7&type=section&id=6.%20Condensed%20Consolidated%20Financial%20Statements) The financial statements detail Q2 2025 balance sheet changes, a net sales decline to **$228.0 million** with a net loss of **$(9.4) million**, and increased operating cash flow [Condensed Consolidated Balance Sheets](index=7&type=section&id=6.1.%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of **$639.4 million** as of June 30, 2025, an increase from **$621.6 million** at December 31, 2024, with current assets increasing while cash and cash equivalents decreased Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | Change | | :-------------------------------- | :------------------------------ | :-------------------------------- | :------- | | Total Assets | 639,408 | 621,556 | +17,852 | | Cash and Cash Equivalents | 49,772 | 71,832 | (22,060) | | Accounts Receivable, net | 163,105 | 137,766 | +25,339 | | Inventories, net | 144,451 | 151,337 | (6,886) | | Total Current Assets | 393,427 | 387,514 | +5,913 | | Total Liabilities | 378,892 | 376,296 | +2,596 | | Revolving Credit Facility | 164,377 | 201,577 | (37,200) | | Total Shareholders' Equity | 260,516 | 245,260 | +15,256 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=6.2.%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, net sales were **$228.0 million**, down from **$237.1 million** in Q2 2024, resulting in an operating loss of **$(2.6) million** and a net loss of **$(9.4) million** Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 (USD thousands) | 2024 (USD thousands) | | :-------------------------- | :------------------- | :------------------- | | Net Sales | 227,952 | 237,059 | | Cost of Goods Sold | 179,014 | 183,319 | | Operating (Loss) Income | (2,601) | 3,407 | | (Loss) Income Before Income Taxes | (9,115) | 1,850 | | Net (Loss) Income | (9,359) | 2,786 | | Basic (Loss) Income Per Share | (0.34) | 0.10 | [Consolidated Statements of Cash Flows](index=9&type=section&id=6.3.%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$21.6 million**, an increase from **$17.8 million** in the prior year, while net cash used for financing activities significantly increased to **$(41.4) million** Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (USD thousands) | 2024 (USD thousands) | | :---------------------------------------- | :------------------- | :------------------- | | Net Cash Provided by Operating Activities | 21,588 | 17,762 | | Net Cash Used for Investing Activities | (9,219) | (12,958) | | Net Cash Used for Financing Activities | (41,363) | (1,679) | | Net Change in Cash and Cash Equivalents | (22,060) | 1,271 | | Cash and Cash Equivalents at End of Period | 49,772 | 42,112 | [Regulation G Non-GAAP Financial Measure Reconciliations](index=10&type=section&id=7.%20Regulation%20G%20Non-GAAP%20Financial%20Measure%20Reconciliations) This section provides detailed reconciliations for adjusted operating income, tax rate, net loss, EPS, EBITDA, segment operating income, free cash flow, net debt, and compliance leverage ratio [Reconciliation of Adjusted Operating Income (Loss)](index=10&type=section&id=7.1.%20Reconciliation%20of%20Adjusted%20Operating%20Income%20(Loss)) For Q2 2025, operating loss was **$(2.6) million**, which, after adding back pre-tax business realignment costs, strategic review costs, and share-based compensation accelerated vesting, resulted in an adjusted operating income of **$0.4 million** Reconciliation of Adjusted Operating Income (Loss) | Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------------- | :--------------------- | :--------------------- | | Operating Income (Loss) | (2.6) | 3.4 | | Add: Pre-Tax Business Realignment Costs | 1.7 | 1.9 | | Add: Pre-Tax Strategic Review Costs | 1.0 | — | | Add: Pre-Tax Share-Based Compensation Accelerated Vesting | 0.3 | — | | **Adjusted Operating Income (Loss)** | **0.4** | **5.4** | [Reconciliation of Adjusted Tax Rate](index=11&type=section&id=7.2.%20Reconciliation%20of%20Adjusted%20Tax%20Rate) For Q2 2025, the reported loss before tax was **$(9.1) million**; after adjustments, the adjusted loss before tax was **$(6.1) million**, resulting in an adjusted income tax expense of **$1.0 million** and an adjusted tax rate of **(15.7)%** Reconciliation of Q2 2025 Adjusted Tax Rate | Metric | Q2 2025 (USD millions) | Tax Rate | | :------------------------------------------ | :--------------------- | :--------- | | Loss Before Tax | (9.1) | | | Add: Pre-Tax Business Realignment Costs | 1.7 | | | Add: Pre-Tax Strategic Review Costs | 1.0 | | | Add: Pre-Tax Share-Based Compensation Accelerated Vesting | 0.3 | | | **Adjusted Loss Before Tax** | **(6.1)** | | | Income Tax Expense | 0.2 | (2.7)% | | Add: Tax Impact from Pre-Tax Adjustments | 0.7 | | | **Adjusted Income Tax Expense on Adjusted Loss Before Tax** | **1.0** | **(15.7)%** | [Reconciliation of Adjusted Net Loss and EPS](index=11&type=section&id=7.3.%20Reconciliation%20of%20Adjusted%20Net%20Loss%20and%20EPS) For Q2 2025, the net loss was **$(9.4) million**, or **$(0.34)** per share; after adjustments, the adjusted net loss was **$(7.0) million**, or **$(0.25)** per share Reconciliation of Adjusted Net Loss and EPS | Metric | Q2 2025 (USD millions) | Q2 2025 EPS | | :------------------------------------------ | :--------------------- | :---------- | | Net Loss | (9.4) | (0.34) | | Add: After-Tax Business Realignment Costs | 1.3 | 0.05 | | Add: After-Tax Strategic Review Costs | 0.8 | 0.03 | | Add: After-Tax Share-Based Compensation Accelerated Vesting | 0.2 | 0.01 | | **Adjusted Net Loss** | **(7.0)** | **(0.25)** | [Reconciliation of Adjusted EBITDA](index=11&type=section&id=7.4.%20Reconciliation%20of%20Adjusted%20EBITDA) For Q2 2025, EBITDA was **$1.6 million**; after adding back pre-tax business realignment costs, strategic review costs, and accelerated share-based compensation, adjusted EBITDA was **$4.6 million** Reconciliation of Adjusted EBITDA | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | Q4 2024 (USD millions) | Q3 2024 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Income (Loss) Before Tax | (9.1) | (5.6) | (6.2) | (3.7) | 1.9 | | Interest expense, net | 3.1 | 3.2 | 3.4 | 3.6 | 3.8 | | Depreciation and amortization | 7.6 | 7.3 | 8.3 | 8.8 | 8.5 | | **EBITDA** | **1.6** | **4.8** | **5.5** | **8.8** | **14.2** | | Add: Pre-Tax Business Realignment Costs | 1.7 | 2.8 | 0.4 | 0.3 | 1.9 | | Add: Pre-Tax Strategic Review Costs | 1.0 | — | — | — | — | | Add: Pre-Tax Share-Based Compensation Accelerated Vesting | 0.3 | — | — | — | — | | **Adjusted EBITDA** | **4.6** | **7.6** | **6.0** | **9.2** | **16.1** | [Segment Adjusted Operating Income (Loss) Reconciliation](index=12&type=section&id=7.5.%20Segment%20Adjusted%20Operating%20Income%20(Loss)%20Reconciliation) For Q2 2025, Control Devices' operating income was **$2.6 million**, leading to an adjusted operating income of **$2.8 million** after adding back business realignment costs, while Electronics' operating income was **$2.7 million**, resulting in an adjusted operating income of **$4.2 million** after similar adjustments Control Devices Adjusted Operating Income | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Control Devices Operating Income | 2.6 | 1.2 | 3.7 | | Add: Pre-Tax Business Realignment Costs | 0.3 | 0.4 | — | | **Control Devices Adjusted Operating Income** | **2.8** | **1.5** | **3.7** | Electronics Adjusted Operating Income | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Electronics Operating Income | 2.7 | 5.5 | 9.8 | | Add: Pre-Tax Business Realignment Costs | 1.4 | 1.4 | 1.9 | | **Electronics Adjusted Operating Income** | **4.2** | **6.9** | **11.7** | [Reconciliation of Free Cash Flow](index=12&type=section&id=7.6.%20Reconciliation%20of%20Free%20Cash%20Flow) For Q2 2025, cash flow from operating activities was **$10.7 million**; after deducting capital expenditures and adding proceeds from the sale of fixed assets, free cash flow was **$7.6 million**, a significant increase from **$1.7 million** in Q2 2024 Reconciliation of Free Cash Flow | Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------- | :--------------------- | :--------------------- | | Cash Flow from Operating Activities | 10.7 | 8.7 | | Capital Expenditures, including Intangibles | (3.3) | (7.1) | | Proceeds from Sale of Fixed Assets | 0.1 | 0.1 | | **Free Cash Flow** | **7.6** | **1.7** | [Reconciliation of Net Debt](index=12&type=section&id=7.7.%20Reconciliation%20of%20Net%20Debt) As of Q2 2025, total debt was **$164.4 million**; after subtracting cash and cash equivalents of **$49.8 million**, net debt was **$114.6 million**, a reduction from **$124.1 million** in Q1 2025 Reconciliation of Net Debt | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | | :-------------------------- | :--------------------- | :--------------------- | | Total Debt | 164.4 | 203.2 | | Less: Cash and Cash Equivalents | 49.8 | 79.1 | | **Net Debt** | **114.6** | **124.1** | [Reconciliation of Compliance Leverage Ratio](index=13&type=section&id=7.8.%20Reconciliation%20of%20Compliance%20Leverage%20Ratio) For Q2 2025, the adjusted TTM EBITDA for compliance calculation was **$31.1 million**; with adjusted net debt (compliance) of **$129.5 million**, the compliance leverage ratio was **4.17x**, which is below the maximum required ratio of **5.50x** Reconciliation of Compliance Leverage Ratio | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | | :------------------------------------------ | :--------------------- | :--------------------- | | Adjusted TTM EBITDA (Compliance) | 31.1 | 39.1 | | Total Adjusted Cash (Compliance) | 36.4 | 55.8 | | Total Adjusted Debt (Compliance) | 165.9 | 204.7 | | **Adjusted Net Debt (Compliance)** | **129.5** | **148.9** | | **Compliance Leverage Ratio (Net Debt / TTM EBITDA)** | **4.17x** | **3.81x** | | Compliance Leverage Ratio Maximum Requirement | 5.50x | 6.00x |