Financial Performance - Adjusted sales for Q1 2023 were $232.2 million, representing an 18.1% increase compared to Q1 2022, driven by strong demand in commercial vehicle markets [9][19] - Adjusted gross margin was 18.5%, with an adjusted operating margin of negative 1.5%, and adjusted EPS was negative $0.25 [9][41] - Revenue growth was supported by strong performance in February and March, offsetting challenges faced in January due to supply chain constraints and reduced demand in China [34][41] Business Line Performance - Control Devices segment reported sales of $86.7 million, a 2% increase year-over-year, primarily due to higher sales in North America [53] - Electronics segment saw sales of approximately $141 million, a 30% increase compared to Q1 2022, driven by strong performance in commercial vehicle markets [57] - Stoneridge Brazil's sales totaled $14.3 million, an 18.4% increase year-over-year, mainly due to higher local OEM sales [65] Market Performance - Strong demand in commercial vehicle end markets contributed significantly to revenue growth, while European off-highway markets faced material constraints [19][57] - The company experienced reduced demand in China early in the quarter due to COVID-19 impacts [19] Company Strategy and Industry Competition - The company is focused on long-term profitable growth initiatives and improving gross margin profiles while managing SG&A and engineering costs [11][25] - New program launches, including the MirrorEye platform and the Corvette E-Ray drive unit clutch actuator, are expected to drive future growth [12][27][37] - The company is implementing a platform-based approach to streamline operations and improve economies of scale [23][40] Management Commentary on Operating Environment and Future Outlook - Management expects strong revenue growth throughout 2023, with ongoing price negotiations expected to provide relief from inflationary pressures [4][35] - The company reaffirmed its full-year guidance for 2023, anticipating adjusted sales of approximately $975 million and breakeven adjusted EPS [5][36] - Management acknowledged the challenges posed by inflation and material costs but emphasized efforts to improve manufacturing execution and cost recovery [10][31] Other Important Information - The company announced a leadership change with the departure of the Chief Strategy Officer, and a succession plan is in place [13][14] - The company filed over 25 patent applications, showcasing its commitment to innovation and technology development [16] Q&A Session Summary Question: Pricing negotiations and visibility on pricing tailwind - Management indicated ongoing negotiations with customers regarding pricing adjustments due to inflationary pressures, with good visibility on expected outcomes [67][82] Question: MirrorEye revenue expectations - The majority of MirrorEye revenue recognized in Q1 was from the first OEM program in Europe, with expectations for continued ramp-up in the second half of the year [70][72] Question: Interest expense and free cash flow outlook - Management expects interest expense to rise due to increased working capital needs but anticipates improved cash flow as the year progresses [73][75]

Front Matter This section details the Form 10-Q filing, compliance, and forward-looking statement disclaimers [Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) This section details Stoneridge, Inc.'s Q1 2023 Form 10-Q filing, confirming SEC compliance and accelerated filer status - The report is a Quarterly Report for the quarter ended **March 31, 2023**[2](index=2&type=chunk) - Stoneridge, Inc. (SRI) is registered on the New York Stock Exchange[2](index=2&type=chunk) - The registrant has filed all required reports in the preceding **12 months** and for the past **90 days**[2](index=2&type=chunk) - The registrant is classified as an 'Accelerated filer'[2](index=2&type=chunk) - Common Shares outstanding as of **April 28, 2023**, totaled **27,513,330**[2](index=2&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements, noting their inherent risks and uncertainties, and disclaims any obligation to update them - Forward-looking statements relate to future product/facility expansion, acquisition strategy, investments, new product development, growth opportunities, and operational expectations[5](index=5&type=chunk) - Key risk factors include supplier ability, cost/availability of materials (e.g., semiconductors), global economic trends, competition, geopolitical risks (Russia-Ukraine, U.S.-China), COVID-19 impact, customer/supplier loss, business realignment costs, vehicle production changes, foreign currency fluctuations, new product acceptance, intellectual property protection, warranty/recall claims, labor disruptions, indebtedness, capital availability, acquisition integration, and IT system risks[7](index=7&type=chunk) - The company disclaims any obligation to update forward-looking statements to reflect actual results or changes in assumptions[6](index=6&type=chunk) PART I – FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's analysis for Q1 2023 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Stoneridge, Inc.'s unaudited condensed consolidated financial statements for Q1 2023, including balance sheets, operations, comprehensive loss, cash flows, and shareholders' equity, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show the company's financial position as of March 31, 2023, compared to December 31, 2022, indicating an increase in total assets and current liabilities, while shareholders' equity slightly decreased | (in thousands) | March 31, 2023 | December 31, 2022 | | :--------------- | :------------- | :---------------- | | Cash and cash equivalents | $35,165 | $54,798 | | Accounts receivable, net | $175,666 | $158,155 | | Inventories, net | $168,701 | $152,580 | | Total current assets | $423,136 | $409,551 | | Total assets | $670,738 | $652,105 | | Current portion of debt | $1,456 | $1,450 | | Accounts payable | $131,996 | $110,202 | | Total current liabilities | $201,999 | $177,692 | | Revolving credit facility | $167,393 | $167,802 | | Total liabilities and shareholders' equity | $670,738 | $652,105 | | Total shareholders' equity | $276,243 | $280,942 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations show a net loss of **$(7.4) million** for the three months ended March 31, 2023, an improvement from **$(7.7) million** in the prior year, driven by increased net sales despite higher operating and interest expenses | (in thousands, except per share data) | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net sales | $241,325 | $221,058 | | Cost of goods sold | $198,523 | $179,615 | | Selling, general and administrative | $29,863 | $27,399 | | Design and development | $16,968 | $17,028 | | Operating loss | $(4,029) | $(2,984) | | Interest expense, net | $2,746 | $1,786 | | Loss before income taxes | $(8,094) | $(6,182) | | (Benefit) provision for income taxes | $(708) | $1,493 | | Net loss | $(7,386) | $(7,675) | | Basic loss per share | $(0.27) | $(0.28) | | Diluted loss per share | $(0.27) | $(0.28) | - Net sales increased by **$20.3 million (9.2%)** from **$221.1 million** in Q1 2022 to **$241.3 million** in Q1 2023[9](index=9&type=chunk) - Net loss improved slightly from **$(7.7) million** in Q1 2022 to **$(7.4) million** in Q1 2023[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) The condensed consolidated statements of comprehensive loss show a comprehensive loss of **$(3.5) million** for the three months ended March 31, 2023, compared to **$(2.5) million** in the prior year, primarily influenced by net loss and other comprehensive income from foreign currency translation | (in thousands) | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(7,386) | $(7,675) | | Foreign currency translation | $4,072 | $4,161 | | Unrealized (loss) gain on derivatives | $(232) | $1,048 | | Other comprehensive income, net of tax | $3,840 | $5,209 | | Comprehensive loss | $(3,546) | $(2,466) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows indicate a net cash outflow of **$(19.6) million** for the three months ended March 31, 2023, a significant reduction from the **$(44.2) million** outflow in the prior year, primarily due to decreased cash used in operating and financing activities | (in thousands) | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--------------- | :-------------------------------- | :-------------------------------- | | Net cash used for operating activities | $(9,182) | $(19,811) | | Net cash used for investing activities | $(8,755) | $(7,236) | | Net cash used for financing activities | $(2,119) | $(17,146) | | Effect of exchange rate changes on cash | $423 | $34 | | Net change in cash and cash equivalents | $(19,633) | $(44,159) | | Cash and cash equivalents at end of period | $35,165 | $41,388 | - Net cash used for operating activities decreased by **$10.6 million**, from **$(19.8) million** in Q1 2022 to **$(9.2) million** in Q1 2023[14](index=14&type=chunk) - Net cash used for financing activities decreased by **$15.0 million**, from **$(17.1) million** in Q1 2022 to **$(2.1) million** in Q1 2023[14](index=14&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) The condensed consolidated statements of shareholders' equity show a decrease in total shareholders' equity from **$280.9 million** at December 31, 2022, to **$276.2 million** at March 31, 2023, primarily due to net loss and share-based compensation, partially offset by currency translation adjustments | (in thousands) | Balance December 31, 2022 | Net loss | Unrealized loss on derivatives, net | Currency translation adjustments | Issuance of Common Shares | Repurchased Common Shares for treasury, net | Share-based compensation, net | Balance March 31, 2023 | | :--------------- | :------------------------ | :------- | :-------------------------- | :----------------------------- | :------------------------ | :---------------------------------------- | :-------------------------- | :--------------------- | | Total shareholders' equity | $280,942 | $(7,386) | $(232) | $4,072 | — | $5,649 | $(6,802) | $276,243 | - Total shareholders' equity decreased by **$4.7 million** from December 31, 2022, to March 31, 2023[15](index=15&type=chunk) - Net loss of **$(7.4) million** and share-based compensation expense of **$(6.8) million** were the primary reductions to equity[15](index=15&type=chunk) - Currency translation

Financial Performance - In 2022, the company reported a net loss of $14.1 million, or $(0.52) per diluted share, compared to a net income of $3.4 million, or $0.12 per diluted share in 2021[124][125]. - The Company reported net sales of $899.9 million for the year ended December 31, 2022, representing a 16.8% increase from $770.5 million in 2021[156]. - Comprehensive loss for 2022 was $20.2 million, significantly higher than a loss of $4.0 million in 2021[261]. - Operating income decreased to $2.9 million in 2022 from $15.4 million in 2021, reflecting a decline in profitability[259]. - The Company recognized a net loss of $14.1 million in 2022, compared to a net income of $3.4 million in 2021, reflecting a significant decline in profitability[156]. Sales and Revenue - Net sales increased by $129.5 million, or 16.8%, in 2022, while operating income decreased by $12.5 million[126]. - The Electronics segment net sales rose by 41.1%, driven by higher sales volumes in various markets, while the Control Devices segment net sales decreased by 3.7%[128][127]. - The North American net sales increased by $58.0 million to $444.9 million, primarily due to increases in sales volume and negotiated price increases[159]. - Net sales for 2022 reached $899.9 million, a 16.8% increase from $770.5 million in 2021[259]. Costs and Expenses - The cost of goods sold increased to $725.0 million in 2022, resulting in a gross margin decrease to 19.4% compared to 21.7% in 2021[162]. - SG&A expenses decreased by $9.3 million compared to 2021, driven by lower wages, legal fees, and non-recurring settlements[166]. - Interest expense increased by $1.9 million due to higher credit facility interest rates and write-off of deferred financing fees[171]. - The company incurred interest expense of $7.3 million in 2022, compared to $6.1 million in 2021, indicating increased borrowing costs[263]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $54.8 million in 2022 from $85.5 million in 2021, primarily due to capital expenditures for new product launches[132]. - Net cash provided by operating activities increased by $43.1 million to $6.8 million in 2022, compared to a cash used of $36.2 million in 2021[195]. - Future cash obligations total $201.7 million, with $167.8 million due under the Credit Facility[200]. - The Credit Facility had an outstanding balance of $167.8 million at December 31, 2022, with a maximum borrowing capacity of $300.0 million[203]. Segment Performance - Operating income for the Control Devices segment decreased by $31.0 million (56.5%) to $23.9 million, primarily due to prior year gains from asset sales[167]. - Operating income for the Electronics segment increased by $17.6 million (141.0%) due to higher sales and lower SG&A costs[168]. - The Electronics segment's gross margin increased due to higher sales levels and favorable negotiated pricing, despite higher material costs from supply chain issues[164]. Market Outlook - For 2023, the North American automotive market is expected to increase to 15.1 million units from 14.3 million units in 2022, indicating a recovery from previous disruptions[135]. - The company anticipates a 2.0% to 3.5% decrease in production volumes in European and North American commercial markets in 2023[137]. - The company plans to focus on product development aligned with industry megatrends, particularly in electrified vehicle platforms, to drive future growth[133]. Asset Management - Total assets decreased from $665.4 million in 2021 to $652.1 million in 2022, reflecting a decline in cash and cash equivalents[258]. - The Company’s accrued expenses and other current liabilities decreased to $66,040 in 2022 from $70,139 in 2021[300]. - The Company’s reserves for product warranty and recall totaled $13.5 million at December 31, 2022, based on historical trends and current claims understanding[255]. Strategic Initiatives - The Company entered into an Asset Purchase Agreement to sell its PM sensor business for $4.0 million, plus a post-closing inventory adjustment of $1.1 million[147]. - The estimated additional costs related to the PM Sensor Exit initiative are up to $4.2 million, primarily for potential commercial settlements and legal fees[148]. - The Company has entered into foreign currency forward contracts to reduce exposure related to foreign currency fluctuations, particularly in Brazil, Argentina, Mexico, Sweden, Estonia, the Netherlands, United Kingdom, and China[224].

2 Forward-Looking Statements Statements in this presentation that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Important factors that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the impact of COVID-19, or other future pandemics, on the global economy, and on our customer ...

Stoneridge, Inc. (NYSE:SRI) Q4 2022 Earnings Conference Call March 2, 2023 9:00 AM ET Company Participants Kelly Harvey - Director, Investor Relations Jim Zizelman - President and Chief Executive Officer Matt Horvath - Chief Financial Officer Conference Call Participants Justin Long - Stephens Gary Prestopino - Barrington Research Operator Good day, and thank you for standing by. Welcome to the Stoneridge Fourth Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. [Operato ...

Q3 2022 Results November 3, 2022 Forward-Looking Statements 2 Statements in this presentation that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Important factors that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the ability of suppliers to supply Stoneridge with parts and ...

Stoneridge, Inc. (NYSE:SRI) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Kelly Harvey - Director, IR Jonathan DeGaynor - CEO, President & Director Matthew Horvath - CFO & Treasurer Conference Call Participants Justin Long - Stephens Inc. Operator Good day, and thank you for standing by. Welcome to the Stoneridge third quarter 2022 conference call. [Operator Instructions]. I would now like to hand the conference over to our speaker today, Kelly Harvey, Director of Investo ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, detailing balance sheets, operations, cash flows, and equity, highlighting key financial shifts and notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's financial position, showing decreased total assets and shareholders' equity from December 2021 to September 2022 Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :------------------- | :------------------ | | Cash and cash equivalents | $32,337 | $85,547 | | Total current assets | $398,531 | $410,824 | | Total assets | $633,056 | $665,399 | | Total current liabilities | $177,950 | $173,066 | | Total long-term liabilities | $190,942 | $196,383 | | Total liabilities and shareholders' equity | $633,056 | $665,399 | - Total assets decreased by **$32.3 million** from **$665.4 million** at December 31, 2021, to **$633.1 million** at September 30, 2022[7](index=7&type=chunk) - Total shareholders' equity decreased by **$31.8 million** from **$295.9 million** at December 31, 2021, to **$264.2 million** at September 30, 2022[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Presents the company's operating performance, showing increased net sales and a shift to net income for the three months ended September 30, 2022 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $226,757 | $181,680 | $668,751 | $566,809 | | Operating income (loss) | $5,863 | $(8,928) | $(3,049) | $19,815 | | Net income (loss) | $731 | $(10,358) | $(14,283) | $9,570 | | Basic EPS | $0.03 | $(0.38) | $(0.52) | $0.35 | | Diluted EPS | $0.03 | $(0.38) | $(0.52) | $0.35 | - Net sales for the three months ended September 30, 2022, increased by **24.8%** year-over-year to **$226.8 million**[8](index=8&type=chunk) - The company reported a net income of **$0.7 million** for the three months ended September 30, 2022, compared to a net loss of **$10.4 million** in the prior year period[8](index=8&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) Details comprehensive loss, which significantly increased for the nine months ended September 30, 2022, primarily due to foreign currency translation losses Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $731 | $(10,358) | $(14,283) | $9,570 | | Foreign currency translation | $(10,348) | $(7,100) | $(21,899) | $(10,706) | | Other comprehensive loss, net of tax | $(10,624) | $(7,233) | $(21,180) | $(10,582) | | Comprehensive loss | $(9,893) | $(17,591) | $(35,463) | $(1,012) | - Comprehensive loss for the nine months ended September 30, 2022, significantly increased to **$35.5 million** from **$1.0 million** in the prior year, primarily due to foreign currency translation losses[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flow activities, noting increased net cash used for operating and investing activities for the nine months ended September 30, 2022 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :-------------------------------------- | :-------------------------- | :-------------------------- | | Net cash used for operating activities | $(24,138) | $(19,689) | | Net cash (used for) provided by investing activities | $(19,662) | $12,948 | | Net cash provided by (used for) financing activities | $(5,495) | $(14,652) | | Net change in cash and cash equivalents | $(53,210) | $(23,918) | | Cash and cash equivalents at end of period | $32,337 | $50,001 | - Net cash used for operating activities increased to **$24.1 million** for the nine months ended September 30, 2022, from **$19.7 million** in the prior year, mainly due to higher working capital[13](index=13&type=chunk)[188](index=188&type=chunk) - Net cash used for investing activities increased to **$19.7 million** from a **$12.9 million** inflow in the prior year, primarily due to the absence of proceeds from the Canton Facility sale in 2022[13](index=13&type=chunk)[189](index=189&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Details changes in shareholders' equity, showing a decrease primarily due to net loss and accumulated other comprehensive loss Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Metric | December 31, 2021 (in thousands) | September 30, 2022 (in thousands) | | :-------------------------------- | :------------------ | :------------------- | | Additional paid-in capital | $232,490 | $231,675 | | Common Shares held in treasury | $(55,264) | $(50,772) | | Retained earnings | $215,748 | $201,465 | | Accumulated other comprehensive loss | $(97,024) | $(118,204) | | Total shareholders' equity | $295,950 | $264,164 | - Total shareholders' equity decreased by **$31.8 million** from **$295.9 million** at December 31, 2021, to **$264.2 million** at September 30, 2022, primarily due to net loss and accumulated other comprehensive loss[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering various accounting policies and financial items [(1) Basis of Presentation](index=10&type=section&id=%281%29%20Basis%20of%20Presentation) Outlines the basis of financial statement preparation in accordance with SEC rules and U.S. GAAP, including details on the MSIL equity interest sale - The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and U.S. GAAP, including normal recurring adjustments[17](index=17&type=chunk) - The Company sold its **49%** equity interest in Minda Stoneridge Instruments Ltd (MSIL) on December 30, 2021[18](index=18&type=chunk) [(2) Recently Issued Accounting Standards](index=10&type=section&id=%282%29%20Recently%20Issued%20Accounting%20Standards) Discusses recently issued accounting standards, specifically ASU 2020-04 regarding reference rate reform, noting no contract modifications as of September 30, 2022 - ASU 2020-04 provides temporary optional expedients for reference rate reform (LIBOR to SOFR)[20](index=20&type=chunk) - As of September 30, 2022, the Company has not had contracts modified due to rate reform[20](index=20&type=chunk) [(3) Revenue](index=10&type=section&id=%283%29%20Revenue) Explains revenue recognition policies and presents net sales by reportable segment, highlighting a significant increase in Electronics segment sales - Revenue is recognized when control of products and services transfers to the customer, typically upon shipment or delivery[21](index=21&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Control Devices | $88,901 | $87,618 | $257,527 | $273,581 | | Electronics | $124,066 | $77,585 | $372,040 | $250,440 | | Stoneridge Brazil | $13,790 | $16,477 | $39,184 | $42,788 | | **Total net sales** | **$226,757** | **$181,680** | **$668,751** | **$566,809** | - The Electronics segment saw a significant increase in net sales, up **59.9%** for the three months and **48.6%** for the nine months ended September 30, 2022, compared to the prior year[26](index=26&type=chunk)[28](index=28&type=chunk) [(4) Inventories](index=13&type=section&id=%284%29%20Inventories) Details inventory composition and changes, showing an increase in total net inventories from December 2021 to September 2022 Inventories, Net (in thousands) | Category | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :---------------- | :------------------- | :------------------ | | Raw materials | $123,052 | $107,034 | | Work-in-progress | $6,206 | $9,755 | | Finished goods | $21,446 | $21,326 | | **Total inventories, net** | **$150,704** | **$138,115** | - Total inventories, net, increased by **$12.6 million** from **$138.1 million** at December 31, 2021, to **$150.7 million** at September 30, 2022[33](index=33&type=chunk) [(5) Financial Instruments and Fair Value Measurements](index=13&type=section&id=%285%29%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) Describes the use of financial instruments for hedging and presents fair value measurements, including details on unwound cross-currency swaps - The Company uses foreign currency forward contracts and interest rate swaps for hedging purposes to manage exposure to foreign currency exchange rate risk and interest rate fluctuations[35](index=35&type=chunk)[36](index=36&type=chunk)[43](index=43&type=chunk) - On May 5, 2022, the Company unwound two cross-currency swaps designated as net investment hedges for a net gain of **$3,716 thousand**[37](index=37&type=chunk) Financial Assets Carried at Fair Value (in thousands) | Asset | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------ | :------------------- | :------------------ | | Forward currency contract | $561 | $730 | | Cross-currency swaps | $0 | $1,450 | | Interest rate swap | $576 | $0 | | **Total** | **$1,137** | **$2,180** | [(6) Share-Based Compensation](index=19&type=section&id=%286%29%20Share-Based%20Compensation) Reports share-based compensation expense for the three and nine months ended September 30, 2022, noting a decrease from the prior year - Share-based compensation expense was **$1,587 thousand** for the three months ended September 30, 2022, a decrease from **$1,924 thousand** in the prior year[55](index=55&type=chunk) - For the nine months ended September 30, 2022, share-based compensation expense was **$4,421 thousand**, down from **$4,685 thousand** in the prior year[55](index=55&type=chunk) [(7) Debt](index=20&type=section&id=%287%29%20Debt) Details the company's debt structure, including the Revolving Credit Facility reduction and compliance with all credit facility covenants Debt (in thousands) | Category | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------ | :------------------- | :------------------ | | Revolving Credit Facility | $165,695 | $163,957 | | Sweden short-term credit line | $14 | $2,099 | | Suzhou short-term credit line | $2,812 | $3,149 | | **Total debt (current portion)** | **$2,826** | **$5,248** | - The Revolving Credit Facility commitments were reduced from **$400.0 million** to **$300.0 million** via Amendment No 3 on February 28, 2022[62](index=62&type=chunk) - The Company was in compliance with all credit facility covenants at September 30, 2022[66](index=66&type=chunk) [(8) Leases](index=23&type=section&id=%288%29%20Leases) Reports lease income from the Canton, Massachusetts facility and its subsequent sale and lease assignment in June 2021 - The Company recognized operating and variable lease income of **$602 thousand** and **$199 thousand**, respectively, for the nine months ended September 30, 2021, from its Canton, Massachusetts facility lease[69](index=69&type=chunk) - The Canton facility was sold and the lease assigned to the buyer on June 17, 2021[69](index=69&type=chunk) [(9) Earnings (Loss) Per Share](index=24&type=section&id=%289%29%20Earnings%20%28Loss%29%20Per%20Share) Presents weighted-average common shares outstanding for basic and diluted EPS, explaining the exclusion of anti-dilutive shares during net loss periods Weighted-Average Common Shares Outstanding | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic | 27,280,883 | 27,147,150 | 27,249,500 | 27,100,484 | | Diluted | 27,524,440 | 27,147,150 | 27,249,500 | 27,431,518 | - Potential dilutive shares were excluded from diluted loss per share for periods with a net loss, as their inclusion would be anti-dilutive (e.g., **217,711 shares** for the nine months ended September 30, 2022)[71](index=71&type=chunk) [(10) Accumulated Other Comprehensive (Loss) Income](index=24&type=section&id=%2810%29%20Accumulated%20Other%20Comprehensive%20%28Loss%29%20Income) Details accumulated other comprehensive loss, which increased primarily due to foreign currency translation losses from January to September 2022 Accumulated Other Comprehensive (Loss) Income (in thousands) | Category | January 1, 2022 (in thousands) | September 30, 2022 (in thousands) | | :------------------------ | :-------------- | :------------------- | | Foreign currency translation | $(97,203) | $(119,102) | | Unrealized gain (loss) on derivatives | $179 | $898 | | **Total** | **$(97,024)** | **$(118,204)** | - Accumulated other comprehensive loss increased by **$21.2 million** from **$97.0 million** at January 1, 2022, to **$118.2 million** at September 30, 2022, primarily due to foreign currency translation losses[75](index=75&type=chunk) [(11) Commitments and Contingencies](index=26&type=section&id=%2811%29%20Commitments%20and%20Contingencies) Outlines various commitments and contingencies, including environmental remediation costs, Stoneridge Brazil legal matters, and product warranty liabilities - Accrued environmental remediation costs were **$292 thousand** at September 30, 2022, related to a former facility in Sarasota, Florida[77](index=77&type=chunk) - Stoneridge Brazil has civil, labor, and other tax contingencies deemed reasonably possible, totaling **R$40,817 ($7,549 thousand)** at September 30, 2022[78](index=78&type=chunk) - Product warranty and recall liability increased to **$11,703 thousand** at September 30, 2022, from **$9,846 thousand** at the beginning of the period[81](index=81&type=chunk) [(12) Business Realignment and Restructuring](index=27&type=section&id=%2812%29%20Business%20Realignment%20and%20Restructuring) Discusses business realignment and restructuring efforts, including the strategic exit of the PM sensor product line and associated charges - The Company committed to the strategic exit of its Control Devices particulate matter (PM) sensor product line in May 2020, with estimated remaining costs of up to **$4,200 thousand** for potential commercial settlements and legal fees[84](index=84&type=chunk)[85](index=85&type=chunk) Total Business Realignment Charges (in thousands) | Period | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total business realignment charges | $254 | $1,080 | $288 | $1,386 | [(13) Income Taxes](index=31&type=section&id=%2813%29%20Income%20Taxes) Reports income tax expense and effective tax rates for the three and nine months ended September 30, 2022, explaining the contributing factors - For the three months ended September 30, 2022, income tax expense was **$989 thousand**, with an effective tax rate of **57.5%**, primarily due to the mix of earnings among tax jurisdictions and tax losses for which no benefit is recognized[95](index=95&type=chunk) - For the nine months ended September 30, 2022, income tax expense was **$2,895 thousand**, with an effective tax rate of **(25.4%)**, mainly due to the impact of tax losses for which no benefit is recognized[97](index=97&type=chunk) [(14) Segment Reporting](index=32&type=section&id=%2814%29%20Segment%20Reporting) Provides financial data for the three reportable segments: Control Devices, Electronics, and Stoneridge Brazil, detailing net sales and operating income - The Company has three reportable segments: Control Devices, Electronics, and Stoneridge Brazil[100](index=100&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Control Devices | $88,901 | $87,618 | $257,527 | $273,581 | | Electronics | $124,066 | $77,585 | $372,040 | $250,440 | | Stoneridge Brazil | $13,790 | $16,477 | $39,184 | $42,788 | | **Total net sales** | **$226,757** | **$181,680** | **$668,751** | **$566,809** | Operating (Loss) Income by Reportable Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Control Devices | $7,522 | $2,899 | $18,416 | $50,129 | | Electronics | $5,416 | $(5,113) | $180 | $(7,793) | | Stoneridge Brazil | $908 | $909 | $2,370 | $112 | | Unallocated Corporate | $(7,983) | $(7,623) | $(24,015) | $(22,633) | | **Total operating (loss) income** | **$5,863** | **$(8,928)** | **$(3,049)** | **$19,815** | [(15) Investments](index=34&type=section&id=%2815%29%20Investments) Details investment activities, including the sale of MSIL equity, the Stoneridge Brazil earn-out payment, and the Autotech Fund II investment - The Company sold its **49%** equity interest in Minda Stoneridge Instruments Ltd (MSIL) on December 30, 2021[107](index=107&type=chunk) - The final earn-out consideration of **$8,272 thousand** for Stoneridge Brazil was paid in April 2022[108](index=108&type=chunk) - The Company's cumulative investment in Autotech Fund II was **$7,800 thousand** as of September 30, 2022[203](index=203&type=chunk) [(16) Disposals](index=35&type=section&id=%2816%29%20Disposals) Reports on asset disposals, including the sale of the PM sensor business assets and the Canton Facility, noting associated gains - The Company sold its particulate matter (PM) sensor business assets to Standard Motor Products, Inc (SMP) for **$4,000 thousand** in March 2021[110](index=110&type=chunk) - The Canton Facility was sold on June 17, 2021, for an adjusted purchase price of **$37,900 thousand**, resulting in a net gain of **$30,718 thousand**[115](index=115&type=chunk)[116](index=116&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides an overview of the company's financial condition and results, highlighting global market impacts, increased Q3 2022 net sales and operating income, and future outlook - Global market conditions, including ongoing supply chain disruptions (semiconductor shortages), geopolitical conflicts, and COVID-19, continue to negatively impact the global vehicle industry[119](index=119&type=chunk) - In the third quarter of 2022, the Company recognized **$12.8 million** of cost recoveries related to spot buys of materials and **$7.4 million** of negotiated price increases to offset material cost inflation[120](index=120&type=chunk) - Net income for the three months ended September 30, 2022, increased by **$11.1 million** to **$0.7 million**, primarily due to higher net sales[125](index=125&type=chunk)[126](index=126&type=chunk) [Global Market Conditions](index=38&type=section&id=Global%20Market%20Conditions) Discusses the impact of ongoing supply chain disruptions, geopolitical conflicts, and material cost inflation on the global economy and vehicle industry - Ongoing supply chain disruptions, primarily semiconductor shortages, and geopolitical conflicts (Russia-Ukraine war) have negatively impacted the global economy and vehicle industry[119](index=119&type=chunk) - These situations have led to higher material cost inflation, delays in procuring raw materials, production volume uncertainty, and volatile currency markets[120](index=120&type=chunk) - Vehicle volumes began to increase in Q3 2022 in key served markets as supply chain disruptions moderated, with further improvements expected in Q4 2022[121](index=121&type=chunk) [Segments](index=38&type=section&id=Segments) Describes the company's three reportable segments: Control Devices, Electronics, and Stoneridge Brazil, outlining their primary products and services - Control Devices segment manufactures actuators, sensors, switches, and connectors[122](index=122&type=chunk) - Electronics segment produces driver information systems, camera-based vision systems, connectivity and compliance products, and electronic control units[122](index=122&type=chunk) - Stoneridge Brazil (SRB) segment designs and manufactures vehicle tracking devices, monitoring services, security alarms, convenience accessories, in-vehicle audio, infotainment, and telematics solutions[123](index=123&type=chunk) [Third Quarter Overview](index=39&type=section&id=Third%20Quarter%20Overview) Provides a summary of third-quarter performance, highlighting increased net income and net sales, particularly in the Electronics segment - Net income for the three months ended September 30, 2022, was **$0.7 million** (**$0.03 per diluted share**), an increase of **$11.1 million** from a net loss of **$10.4 million** in Q3 2021[125](index=125&type=chunk)[126](index=126&type=chunk) - Net sales increased by **$45.1 million**, or **24.8%**, primarily due to higher volumes and favorable customer pricing for electronic component spot buy recoveries and negotiated price increases[126](index=126&type=chunk) - Electronics segment net sales increased by **59.9%** compared to Q3 2021, driven by increased sales volumes, customer recoveries of semiconductor spot buys, and new product launches[128](index=128&type=chunk) [Outlook](index=40&type=section&id=Outlook) Presents the company's outlook, anticipating continued margin pressure from supply chain issues and inflation, alongside expected growth in key markets and segments - The Company expects ongoing impacts from supply chain disruptions, material cost inflation, and COVID-19, which will continue to put pressure on margins[133](index=133&type=chunk) - North American automotive market is expected to increase to **14.5 million units** in 2022 from **13.0 million units** in 2021[134](index=134&type=chunk) - Electronics segment sales are expected to increase in 2022 due to production volume forecasts, strong demand, and new program launches, including the MirrorEye camera-based vision system[135](index=135&type=chunk) [Other Matters](index=42&type=section&id=Other%20Matters) Addresses other financial matters, including the impact of U.S. Dollar strengthening, the MSIL minority interest sale, and business realignment costs - The strengthening of the U.S. Dollar against the euro, Swedish krona, and Argentine peso in 2022 unfavorably impacted material costs and reported results[143](index=143&type=chunk) - The Company completed the sale of its minority interest in MSIL for **$21.6 million** in December 2021[144](index=144&type=chunk) - Business realignment costs were **$0.3 million** for both the three and nine months ended September 30, 2022, significantly lower than the prior year[148](index=148&type=chunk) [Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021](index=44&type=section&id=Three%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20Three%20Months%20Ended%20September%2030%2C%202021) Compares financial results for the three months ended September 30, 2022, to the prior year, detailing net sales by segment, gross margin, and operating income changes Net Sales by Segment (in thousands) | Segment | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :----------- | | Control Devices | $88,901 | $87,618 | 1.5% | | Electronics | $124,066 | $77,585 | 59.9% | | Stoneridge Brazil | $13,790 | $16,477 | (16.3)% | | **Total net sales** | **$226,757** | **$181,680** | **24.8%** | - Gross margin increased from **19.8%** in Q3 2021 to **21.8%** in Q3 2022, driven by leverage of fixed costs from higher sales levels and negotiated price increases[156](index=156&type=chunk) - Operating income significantly improved to **$5.9 million** in Q3 2022 from an **$8.9 million** loss in Q3 2021, a **165.7%** increase[159](index=159&type=chunk) [Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021](index=50&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20Nine%20Months%20Ended%20September%2030%2C%202021) Compares financial results for the nine months ended September 30, 2022, to the prior year, detailing net sales by segment, gross margin, and operating income changes Net Sales by Segment (in thousands) | Segment | 2022 (in thousands) | 2021 (in thousands) | Change (YoY) | | :---------------- | :------------------ | :------------------ | :----------- | | Control Devices | $257,527 | $273,581 | (5.9)% | | Electronics | $372,040 | $250,440 | 48.6% | | Stoneridge Brazil | $39,184 | $42,788 | (8.4)% | | **Total net sales** | **$668,751** | **$566,809** | **18.0%** | - Gross margin decreased from **22.0%** in the first nine months of 2021 to **19.4%** in the first nine months of 2022, primarily due to increased material costs from supply chain disruptions, foreign currency fluctuations, and inflation[174](index=174&type=chunk) - Operating income shifted to a loss of **$3.0 million** for the nine months ended September 30, 2022, from an income of **$19.8 million** in the prior year, largely due to the absence of the Canton Facility sale gain in 2021[179](index=179&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's liquidity and capital resources, noting a decrease in cash, increased cash used in operations, and available credit facility commitments - Cash and cash equivalents decreased from **$85.5 million** at December 31, 2021, to **$32.3 million** at September 30, 2022, primarily to fund higher working capital, capital expenditures, and the Stoneridge Brazil earn-out payment[131](index=131&type=chunk)[188](index=188&type=chunk) - Net cash used for operating activities increased to **$24.1 million** for the nine months ended September 30, 2022, from **$19.7 million** in the prior year[188](index=188&type=chunk) - The Company has approximately **$134.3 million** of undrawn commitments under its **$300.0 million** Credit Facility as of September 30, 2022[190](index=190&type=chunk)[205](index=205&type=chunk) [Seasonality](index=60&type=section&id=Seasonality) Explains the seasonal impacts on Control Devices and Electronics segments due to customer shutdowns, and higher second-half demand for Stoneridge Brazil products - Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns and new model production ramp-ups at key customers[207](index=207&type=chunk) - Demand for Stoneridge Brazil segment consumer products is generally higher in the second half of the year[207](index=207&type=chunk) [Critical Accounting Policies and Estimates](index=62&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Confirms no material changes in the company's significant accounting policies or critical accounting estimates during the third quarter of 2022 - There have been no material changes in the Company's significant accounting policies or critical accounting estimates during the third quarter of 2022[209](index=209&type=chunk) [Inflation and International Presence](index=62&type=section&id=Inflation%20and%20International%20Presence) Addresses the impact of inflation and international presence, including exposure to foreign currency exchange rates and the effect of commodity price increases on profitability - Operating internationally exposes the Company to foreign currency exchange rates and economic conditions of certain countries[211](index=211&type=chunk) - An increase in commodity prices and material cost inflation could significantly affect the Company's profitability[211](index=211&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Reports no material changes to the quantitative and qualitative disclosures about market risk compared to those presented in the 2021 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 2021 Form 10-K[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were effective as of September 30, 2022[213](index=213&type=chunk) - No material changes in the Company's internal control over financial reporting occurred during the three months ended September 30, 2022[214](index=214&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) Details various legal actions and claims, including product warranties and tax contingencies, which are not expected to have a material adverse effect on the company's financial position - The Company is involved in legal actions and claims primarily arising in the ordinary course of business, including product warranties, product liability, and tax contingencies in its Stoneridge Brazil segment[215](index=215&type=chunk) - The Company does not believe that any of the current litigation, individually or in aggregate, will have a material adverse effect on its business, consolidated financial position, or results of operations[215](index=215&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to the risk factors previously disclosed in the company's 2021 Form 10-K - There have been no material changes with respect to risk factors previously disclosed in the Company's 2021 Form 10-K[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports the repurchase of 3,549 Common Shares at an average price of $17.35 per share to satisfy employee tax withholding obligations during Q3 2022 - **3,549 Common Shares** were repurchased by the Company during July 2022 at an average price of **$17.35 per share**[218](index=218&type=chunk) - These repurchases were made to satisfy employee tax withholding due upon vesting of performance share awards and share unit awards[217](index=217&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Reports no defaults upon senior securities for the period - No defaults upon senior securities were reported[219](index=219&type=chunk) [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Reports no mine safety disclosures for the period - No mine safety disclosures were reported[220](index=220&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) Reports no other information for the period - No other information was reported[221](index=221&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and various XBRL exhibits - Includes Chief Executive Officer and Chief Financial Officer certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[222](index=222&type=chunk) - Includes XBRL exhibits such as the Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Label Linkbase[222](index=222&type=chunk) Signatures Confirms the signing of the Quarterly Report on Form 10-Q on November 2, 2022, by the President, CEO, and CFO - The report was signed by Jonathan B DeGaynor, President, Chief Executive Officer and Director (Principal Executive Officer)[226](index=226&type=chunk) - The report was signed by Matthew R Horvath, Chief Financial Officer and Treasurer (Principal Financial Officer)[226](index=226&type=chunk) - The signing date for the report was November 2, 2022[226](index=226&type=chunk)

J.P. Morgan Auto Conference August 9, 2022 Forward-Looking Statements Statements in this presentation that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Important factors that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the ability of suppliers to supply Stoneridge with p ...

Stoneridge, Inc. (NYSE:SRI) Q2 2022 Earnings Conference Call August 4, 2022 9:00 AM ET CompanyParticipants Jon DeGaynor - President & CEO Matt Horvath - CFO Kelly Harvey - Director, IR Conference Call Participants Justin Long - Stephens Inc. Operator Good day, and thank you for staying by. Welcome to the Stoneridge Second Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a Q&A session. [Operator instructions]. Please be ad ...