Financial Data and Key Metrics Changes - The company reported first quarter sales of $217.9 million, which was approximately in line with expectations [15] - Adjusted EBITDA for the first quarter was $7.6 million, reflecting an improvement of $1.6 million or 80 basis points compared to the fourth quarter [10][15] - Adjusted gross margin improved by 210 basis points, contributing to overall margin expansion [4][9] - Free cash flow increased to approximately $4.9 million, up by $1.5 million compared to the first quarter of the prior year [5][24] Business Line Data and Key Metrics Changes - MirrorEye revenue increased by 24% compared to the fourth quarter of 2024, driven by strong sales in the bus market and ramp-up of OEM programs [4][20] - Control Devices first quarter sales were $69.9 million, a 10.6% increase relative to the fourth quarter, primarily due to higher production volumes for North American passenger vehicle customers [18] - Electronics first quarter sales were $140.5 million, slightly lower than the previous quarter, but MirrorEye and SMART II Tachograph set records for quarterly sales [20][22] - Stoneridge Brazil's first quarter sales totaled $14.4 million, representing a 16% growth, driven by a 60% increase in local OEM sales [22][23] Market Data and Key Metrics Changes - The company experienced minimal direct impact from tariffs in the first quarter, with approximately 91% of product sales from Mexico exempt from tariffs due to USMCA certification [11][12] - The company noted that while there is uncertainty in consumer demand and production volumes due to tariffs, they are well-positioned to mitigate these impacts [13][14] Company Strategy and Development Direction - The company is maintaining its full-year guidance based on first quarter outperformance and expects continued progress on material cost improvement initiatives [8][16] - There is a focus on operational excellence, inventory reduction, and cash performance to drive earnings and shareholder value [7][26] - The company is strategically expanding its local OEM business in Brazil to unlock global opportunities [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating global trade policies and mitigating tariff impacts on performance [26] - The company anticipates continued expansion of MirrorEye sales in the second half of the year, offsetting production volume headwinds [17] - Management remains focused on quality improvements and operational execution to drive strong contribution margins [26] Other Important Information - The company achieved a $2.5 million reduction in quality-related costs compared to the previous quarter, indicating improved operational efficiency [5][51] - The company is committed to maintaining a targeted compliance net debt to EBITDA leverage ratio of 2 to 2.5 times by the end of the year [24][25] Q&A Session Summary Question: Can you unpack the momentum in Electronics, particularly for MirrorEye and Smart2? - Management noted significant traction from the launch with Volvo in Europe and expects continued sales growth as new programs ramp up in North America [32] Question: What are you hearing from auto customers regarding demand impacts from tariffs? - Management indicated robust orders in the first quarter, with no significant short-term impacts on demand yet observed [36] Question: How sustainable are the improvements in inventory management as the industry grows? - Management believes there is still room for improvement in inventory turns and expects to maintain these improvements even as revenue grows [41] Question: Can you address the quality-related costs and their impact moving forward? - Management reported significant progress in reducing quality-related expenses and emphasized the importance of built-in quality processes [52] Question: Is production of MirrorEye and Tachograph products affected by tariffs? - Management confirmed that both products are produced in Europe, thus avoiding tariff issues [57][59] Question: Has the outlook for MirrorEye revenue changed? - Management stated there has been no change in the outlook, with good momentum observed in existing programs [60] Question: What is the status of the connected trailer suite of products? - Management reported positive progress and expects some evaluation by customers towards the end of 2025 [62] Question: How do current production forecasts align with your expectations for 2025? - Management feels comfortable that they can maintain guidance within the broad range of production forecasts despite current volatility [65]

Stoneridge (SRI) Q1 2025 Earnings Call May 01, 2025 09:00 AM ET Speaker0 Good morning, everyone, and thank you for joining us to discuss our first quarter twenty twenty five results. The release and accompanying presentation was filed with the SEC and is posted on our website at stoneridge.com in the Investors section under Presentations and Events. Joining me on today's call are Jim Ziezelman, our President and Chief Executive Officer and Matt Horvath, our Chief Financial Officer. During today's call, we w ...