Stoneridge(SRI) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION 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 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 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 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) 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 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 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 This section provides detailed explanations and additional information supporting the condensed consolidated financial statements (1) Basis of Presentation 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] - Certain information and footnote disclosures condensed or omitted per SEC rules[18] - Prior period amounts reclassified to conform to 2025 presentation[19] (2) Recently Issued Accounting Standards 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] - 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] (3) Revenue 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] 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 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] 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] (5) Financial Instruments and Fair Value Measurements 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] - 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][43] 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 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 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][57] - The Company was in compliance with all Credit Facility covenants at June 30, 2025, and December 31, 2024[59] (8) Loss Per Share 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] (9) Accumulated Other Comprehensive Loss 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 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][68] - 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][70] - Long-term supply agreement for semiconductor components requires minimum annual purchases, with $5,571 expected in 2025[71] 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][74] (11) Business Realignment 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][77][78] (12) Income Taxes 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][85] - The company is currently assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements[87] (13) Segment Reporting 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][91] 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 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] - Cumulative investment in Autotech Fund II was $9,050 as of June 30, 2025[99] 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 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 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] - The company's operations are reported under three segments: Control Devices, Electronics, and Stoneridge Brazil[103][104] Second Quarter Overview 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][106] - 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][107][108][109] - 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] - 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] 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][117] - 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] - Electronics segment sales are expected to outperform forecasted production volumes due to strong demand for the next-generation tachograph and ongoing MirrorEye® launches[117] - 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] - 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][115] Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 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][126] - Stoneridge Brazil net sales increased $3.2 million (+27.6%) from higher OEM product sales, despite unfavorable foreign currency translation[127] - 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] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 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][143] - Stoneridge Brazil net sales increased $5.3 million (+22.1%) from higher OEM product sales, despite unfavorable foreign currency translation[144] - 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] Liquidity and Capital Resources 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] - 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][163] - 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][170] Other Matters 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] - 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] - 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] - 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][176] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - There were no material changes in the Company's internal control over financial reporting during the six months ended June 30, 2025[178] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits Item 1. Legal Proceedings 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] - Accruals are established for matters where losses are probable and can be reasonably estimated[179] - 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None[183] Item 4. Mine Safety Disclosures There were no mine safety disclosures during the reporting period - None[184] Item 5. Other Information 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] Item 6. Exhibits 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] - 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] - Includes various XBRL Exhibits (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 104)[186]