Stoneridge(SRI) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights 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 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][18] Strategic Business Developments 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][6] 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][8][9] 2025 Full-Year Guidance Update 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][22] Second Quarter 2025 Performance Review 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 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][6][14] Segment Performance 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 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][14] Control Devices Segment 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][15] Stoneridge Brazil Segment 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] Strategic Initiatives 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 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][6][7] - 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][6][7] - 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] Review of Strategic Alternatives for Control Devices Business 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][9] - 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] - 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][28] Financial Position and Outlook 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 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][18] - 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][20][47] 2025 Full-Year Outlook 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][22] - 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][22] Corporate Information 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 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. 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] - The company's systems and products power vehicle intelligence and enable safety and security for on- and off-highway transportation sectors globally[24][25] Forward-Looking Statements 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] - The company explicitly disclaims any obligation to update these forward-looking statements[27] - There can be no assurance that the strategic review of the Control Devices business will result in a transaction[28] Use of Non-GAAP Financial Information 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][30] - Management believes these measures are useful for analysis by excluding items not indicative of core operating performance or that may obscure trends[30] - Non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial statements[31] Investor Relations Contact 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] Condensed Consolidated Financial Statements 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 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 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 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 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) 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 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 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 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 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 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 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 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 |