Financial Data and Key Metrics Changes - In 2024, Stoneridge's sales reached 908.3million,outperformingtheweightedaverageOEMendmarketsby490basispointsdespitea10.424 million, an increase of 56millioncomparedtothepreviousyear,drivenbya36 million reduction in inventory [9][46] - Full year adjusted EBITDA margin declined by approximately 80 basis points compared to the prior year, with a decremental contribution margin of just 19% versus the historical average of 25% to 30% [15][16] Business Line Data and Key Metrics Changes - MirrorEye revenue increased by 22% year over year, driven by the launch of a program with Volvo in Europe, contributing 66millionintotalrevenuefor2024[11][17]−Smart2Tachographrevenuereachedjustunder60 million for the full year, with sales almost doubling relative to 2023 [12][41] - Control Devices full year sales declined by approximately 14% to 296.3million,primarilyduetolowerproductionvolumesforamajorNorthAmericanpassengervehiclecustomer[38]MarketDataandKeyMetricsChanges−Thecommercialvehicleendmarketssawa2450.1 million, declining year over year due to macroeconomic challenges in South America [45] Company Strategy and Development Direction - The company is focused on improving operational performance, cash flow, and quality-related costs, with a significant emphasis on material cost improvements and structural cost reductions [10][15] - Stoneridge plans to launch additional MirrorEye programs in North America with Volvo and Daimler Truck, expecting over 50millionofadditionalgrowthforMirrorEyein2025[12][24]−Thecompanyisalsoexpandingitscoretechnologyandproductareas,particularlyintrailerconnectivity,todrivelong−termgrowth[27][32]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedthechallengesinthemacroeconomicenvironmentbutexpressedconfidenceinthecompany′sabilitytonavigatethesechallengesthroughstrategicinitiatives[7][9]−ThecompanyexpectscontinuedsuccesswithMirrorEyeandSmart2Tachographin2025,withrevenuegrowthprojectionsforMirrorEyereachingapproximately120 million [24][53] - Management highlighted the importance of quality improvements and operational efficiency as key priorities for 2025 [10][15] Other Important Information - The company amended its existing credit facility to provide financial covenant relief through the third quarter of 2025, ensuring ample liquidity and flexibility [47][48] - Stoneridge updated its long-term revenue targets, projecting nearly triple revenue by 2029 to almost $300 million annually [25][64] Q&A Session Summary Question: Can you unpack the unexpected engineering and quality costs in Q4? - Management explained that engineering costs were influenced by customer reimbursements tied to program development hurdles, with good visibility for 2025 [74][76] - Quality-related costs were attributed to ongoing improvements in processes, with a focus on minimizing future quality issues [77][80] Question: What are the growth expectations for Smart 2 Tachograph? - Management indicated that revenue from Smart 2 is expected to remain stable, with opportunities for market share expansion in the aftermarket [90][91] Question: How will inventory and working capital be managed moving into 2026? - Management expressed confidence in continued improvement in inventory management, expecting no significant build in working capital despite potential growth [92][94]
Stoneridge(SRI)2025-02-27 21:44