STONERIDGE INC
For the period ended Mar 31, 2025. Filed Apr 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 30, 2025
SRI$4.99+4.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001043337-24-000121
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0001043337-25-000092
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 109 previous paragraphs and 99 current paragraphs.
25 unchanged; 42 reworded; 32 added; 37 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
We are a global supplier of safe and efficient electronics systems and technologies. Our systems and products power vehicle intelligence, while enabling safety and security for global commercial, automotive, off-highway and agricultural vehicle markets.
Current report
First Quarter Overview
Current report
In April 2025, the U.S. government announced additional tariffs on various goods imported to the U.S. and other countries announced reciprocal tariffs on goods imported to such countries, including goods used by or manufactured by Stoneridge. Some of these additional tariffs have been implemented and others have been conditionally paused, and it is reasonably possible that new or additional tariffs will be periodically announced given the current global trade environment. We continue to monitor and evaluate the direct and indirect impacts of these tariffs as well as heightened global trade disputes.
Current report
Our business model of manufacturing by regions for the regions limits the global impact of certain trade restrictions and tariffs. Our primary tariff exposure relates to our Mexico operations that sell products into the U.S., most of which are exempt under the provisions of the United States-Mexico-Canada Agreement. Further, the majority of our supply components are not subject to the additional tariffs or are compliant with exceptions. We are taking and will continue to take actions to mitigate any direct and indirect impacts of new or additional tariffs including directly or indirectly passing the additional costs through to our customers. However, these matters are changing rapidly and there is significant uncertainty as to how long and to what degree that Stoneridge and the global transportation industry will be impacted by these new or additional tariffs, the adverse global trade environment and the resulting economic uncertainty.
Current report
While we expect continued challenges across our end markets in 2025, we will continue to focus on overall operating cost improvement and operational execution to drive contribution margin and focus on inventory reduction to improve our cash position and reduce our leverage profile.
Current report
Our Control Devices segment net sales decreased $8.3 million because of decreases in our North American automotive market of $5.0 million including the impact of expected end-of-life production for an actuator product as well as decreases in our off-highway and China commercial vehicle markets of $2.2 million and $1.5 million, respectively. These decreases were partially offset by volume increases in our China automotive and North American commercial vehicle markets of $1.0 million $0.4 million, respectively.
Current report
Our Stoneridge Brazil segment net sales increased $2.1 million from higher OEM product sales partially offset by unfavorable foreign currency translation of $1.8 million and lower OES channel sales of $0.3 million.
Current report
Our Electronics segment gross margin increased from the prior year first quarter because of reduced material costs including favorable foreign exchange related variances which were partially offset by lower contribution from lower sales levels and higher business realignment costs incurred for operational efficiency initiatives at our Juarez facility.
Current report
Our Stoneridge Brazil segment gross margin decreased primarily because of the unfavorable sales mix and the adverse impact of U.S. dollar denominated material purchases offset by higher contribution from higher sales levels.
Current report
Our Control Devices segment operating income decreased because of lower contribution from lower sales levels offset by lower D&D spending.
Current report
Our Electronics segment operating income decreased primarily because of higher D&D expense as customer reimbursements declined more than spending as well as slightly lower segment gross profit.
Current report
Our unallocated corporate operating loss increased from higher SG&A related to business realignment costs.
Current report
Cash provided by operating activities slightly increased compared to 2024 primarily due to cash provided from working capital levels. Cash used by receivables was unfavorable compared to 2024, however collection terms have remained consistent.
Current report
Net cash used for investing activities increased compared to 2024 due to higher capital expenditures including costs to modernize our Juarez facility offset by lower capitalized software development costs.
Current report
On February 26, 2025, the Company entered into Amendment No. 1 to the Fifth Amended and Restated Credit Agreement
Current report
and Waiver (“Amendment No. 1”). Amendment No. 1 provides for certain covenant relief and restrictions during the
Current report
“Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter
Current report
ending December 31, 2025). During the Covenant Relief Period:
Current report
•the maximum leverage ratio of 3.50 was increased to 6.00 for the quarter ended March 31, 2025, 5.50 for the
Current report
quarter ended June 30, 2025, 4.50 for the quarter ended September 30, 2025 and 3.50 for the quarter ended
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•the minimum interest coverage ratio of 3.50 was waived for the quarter ended December 31, 2024 and was
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reduced to 2.00 for the quarters ended March 31 and June 30, 2025, and 2.50 and 3.50 for the quarter ended
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September 30, 2025 and December 31, 2025, respectively;
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•the Company’s aggregate amount of cash and cash equivalents, defined as 100% of North American and 65% of foreign cash balances, cannot exceed $70.0 million;
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•the sale of significant assets (as defined) will require repayment in the amount of any net cash proceeds received
Current report
and result in the reduction of the Credit Facility commitment, at the lesser of $100.0 million or the net cash
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proceeds;
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•there were certain restrictions on Restricted Payments (as defined); and
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•a Permitted Acquisition (as defined) could not be consummated unless otherwise approved in writing by the
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required lenders.
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Amendment No. 1 added an additional level to the leverage ratio based pricing grid, through maturity, when the leverage
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ratio is greater than 3.50.
Removed paragraphs (37)
Previous report
We are a global designer and manufacturer of highly engineered electrical and electronic systems, components and modules primarily for the automotive, commercial, off-highway and agricultural vehicle markets.
Previous report
Third Quarter Overview
Previous report
In our Electronics segment recovery from customers related to spot buys of materials purchased by the Company on behalf of those customers, which is recognized as revenue and material costs, increased net sales by $14.6 million for the full year 2023. As a result of supply chains normalizing and material availability improving, the Company did not incur any spot buy material purchases in the first nine months of 2024 and does not expect to incur additional spot buy material purchases in the future based on current market conditions.
Previous report
While we expect continued challenges across our end markets for the remainder of the year and into 2025, we continue to focus on operating performance and enterprise-wide cost reduction. We remain focused on improving cash generation and the reduction of debt through targeted actions to reduce net working capital, particularly our inventory levels, from both the impact of our Electronics segment product launches normalizing and specific inventory reduction actions.
Previous report
We expect higher interest expense in 2024 driven by higher outstanding balances on our Credit Facility.
Previous report
Our Control Devices segment net sales decreased $16.2 million because of decreases in our North American automotive and China commercial vehicle markets of $21.0 million and $5.3 million, respectively. The decrease in our North American automotive market was primarily due to lower customer volumes including electronic and hybrid vehicle platforms and the expected wind down of end-of-life programs. These decreases were partially offset by increases in our China automotive, North American commercial vehicle and off highway markets of $3.5 million, $2.7 million and $2.1 million, respectively.
Previous report
Our Stoneridge Brazil segment net sales decreased $0.9 million from unfavorable foreign currency translation of $1.7 million, and lower monitoring service fees that were offset by higher OEM and aftermarket product sales.
Previous report
Our Electronics segment gross margin decreased from the prior year third quarter as lower contribution from lower sales levels and higher overhead spending were partially offset by lower direct material from material cost improvements and a reduction in foreign exchange related material variances.
Previous report
Our Stoneridge Brazil segment gross margin decreased primarily because of the adverse impact of U.S. dollar denominated material purchases and unfavorable sales mix from lower monitoring service fees.
Previous report
Our Control Devices segment operating income decreased because of lower contribution margin from lower sales levels and higher SG&A spending offset by lower D&D spending.
Previous report
Our Electronics segment operating income decreased primarily because of lower contribution from lower sales levels as well as higher overhead and D&D spending offset by lower SG&A from 2023 business realignment costs.
Previous report
Our Stoneridge Brazil segment operating income decreased due to the adverse impact of U.S. dollar denominated material purchases and unfavorable sales mix from lower monitoring service fees offset by lower SG&A spending.
Previous report
Our unallocated corporate operating loss decreased from lower SG&A and D&D spending.
Previous report
For the three months ended September 30, 2023, income tax expense of $2.3 million was attributable to the mix of earnings among tax jurisdictions as well as tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions, U.S. taxes on foreign earnings and non-deductible expenses offset by tax credits and incentives. The effective tax rate of 51.1% varies from the statutory tax rate primarily due to U.S. taxes on foreign earnings, non-deductible expenses and the impact of tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions offset by tax credits and incentives.
Previous report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous report
Our Control Devices segment net sales decreased $37.2 million because of decreases in our North American automotive market of $44.0 million, including lower demand for electronic and hybrid vehicle platforms and the impact of expected end of life production for certain programs, as well as decreases in our China commercial vehicle market of $3.2 million. These decreases were offset by increases in our China automotive, North American commercial vehicle and off highway markets of $2.6 million, $2.1 million and $2.1 million, respectively. The decreases were also offset by negotiated price increases of $1.2 million. In addition, net sales for the nine months ended September 30, 2024 were impacted by unfavorable foreign currency translation of $0.7 million.
Previous report
Our Electronics segment net sales decreased $12.8 million primarily due to the 2023 impacts of both lower required electronic component spot buy purchases of $14.2 million, a reduction in retroactive price increases of $2.6 million, as well as lower sales in our European off-highway vehicle and agricultural markets of $3.3 million and $3.1 million, respectively. Offsetting these decreases were higher sales volumes in our European and North American commercial vehicle markets of $4.7 million and $1.3 million, respectively. In addition, we experienced higher sales volumes in our North American off-highway vehicle market of $2.2 million and favorable euro and Swedish krona foreign currency translation of $1.8 million compared to the prior year.
Previous report
Our Stoneridge Brazil segment net sales decreased because of lower sales of our OEM products, monitoring service fees and tracking devices offset by an increase in aftermarket product sales. In addition, net sales were adversely impacted by an increase in unfavorable foreign currency translation of $1.8 million.
Previous report
The decrease in North American net sales was mostly attributable to decreases in sales volume in our automotive market of $44.1 million primarily caused by lower customer volumes including electronic and hybrid vehicle platforms and the impact of expected end of life production for certain programs as well as the 2023 impact of required electronic component spot buy purchases of $2.4 million. These decreases were offset by higher sales volume in our North American off-highway and commercial vehicle markets of $4.3 million and $3.2 million, respectively.
Previous report
The decrease in net sales in South America was primarily due to lower sales of our OEM products, monitoring service fees and tracking devices offset by an increase in aftermarket products. In addition, net sales were adversely impacted by an increase in unfavorable foreign currency translation of $1.8 million.
Previous report
The decrease in net sales in Europe and Other was due to 2023 required customer recoveries of electronic component spot buys of $11.7 million andthe change in negotiated price increases of $1.5 million. In addition, we experienced decreases in our European off-highway and agriculture markets and China commercial vehicle markets of $3.3 million, $2.8 million and $2.8 million, respectively. These sales decreases were offset by increases in our European commercial vehicle market, including sales related to the launches of a European OEM MirrorEye program and our next generation tachograph, and China automotive marketsof $4.8 million and $2.6 million, respectively, as well as favorable foreign currency translation of $1.1 million.
Previous report
Cost of Goods Sold and Gross Margin. Cost of goods sold decreased compared to the nine months ended September 30, 2023 and our gross margin increased from 20.9% in the first nine months of 2023 to 21.2% in the first nine months of 2024. Our material cost as a percentage of net sales decreased from 59.6% in the first nine months of 2023 to 57.3% in the first nine months of 2024. The decrease in material cost percentage was partially due to the impact of 2023 required electronic component spot buy purchases, reimbursed by customers. The impact of these spot buy purchases increased cost of goods sold by $14.4 million, or 1.9% of sales, for the first nine months of 2023, which reduced gross margin percent by 0.4% in 2023. Other factors contributing to the reduction in material costs were favorable product mix, material cost improvements and a reduction in foreign exchange related material variances. Overhead as a percentage of net sales was 16.7% and 14.6% for the first nine months of 2024 and 2023, respectively. The increase in overhead as a percentage of sales was attributable to higher overhead spending including higher warranty related expense and capitalized software development cost amortization as well as adverse leverage from lower sales levels.
Previous report
Our Control Devices segment gross margin increased primarily as a result of favorable sales mix despite lower sales levels.
Previous report
Our Electronics segment gross margin remained consistent because of the reduction of the adverse effect of required electronic component spot buy purchases, net of customer recoveries, favorable sales mix, material cost improvement actions and a reduction in foreign exchange related material variances.
Previous report
Our Stoneridge Brazil segment gross margin decreased primarily because of lower contribution on lower sales levels.
Previous report
Selling, General and Administrative. SG&A expenses decreased by $2.6 million from a combination of lower consulting fees, business realignment costs and incentive compensation offset by higher self-insured medical costs and legal fees as well as a 2023 gain on the sale of fixed assets.
Previous report
Design and Development. D&D costs decreased by $3.8 million from a reduction in launch activities that resulted in lower consulting, wages and recruiting being partially offset by lower capitalization of software development costs and customer reimbursements for our Electronics and Control Devices segments as well as higher Electronics business realignment costs.
Previous report
Operating Income. Operating income (loss) by segment is summarized in the following table (in thousands):
Previous report
Our Control Devices segment operating income decreased because of lower contribution from lower sales and higher SG&A due to a 2023 gain on sale of fixed assets offset by lower D&D from lower customer reimbursements.
Previous report
Our Electronics segment operating income increased primarily because of lower SG&A from lower business realignment costs and lower D&D from lower services spending offset by lower contribution from lower sales.
Previous report
Our unallocated corporate operating loss decreased due to lower SG&A and D&D spending.
Previous report
Our North American operating loss increased because of lower contribution margin from lower sales levels, higher overhead costs, higher share based compensation and a 2023 gain on disposal of fixed assets. Operating income in South America decreased because of lower contribution from lower sales levels. Our operating results in Europe and Other increased primarily because of lower direct material costs and SG&A and D&D spending offset by lower contribution from lower sales levels.
Previous report
Interest Expense, net. Interest expense, net was $11.0 million and $9.2 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was the result of higher outstanding Credit Facility balances.
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Equity in Loss of Investee. Equity loss for Autotech Fund II was $1.1 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively.
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Provision for Income Taxes. For the nine months ended September 30, 2024, income tax expense of $3.0 million was attributable to the mix of earnings among tax jurisdictions and tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions, offset by U.S. taxes on foreign earnings. The effective tax rate of (40.2%) varies from the statutory tax rate primarily due to the impact of tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions, offset by U.S. taxes on foreign earnings.
Previous report
Cash provided by operating activities increased compared to 2023 primarily dueto a reduction in cash used to support working capital levels. Cash provided by receivables was favorable to 2023 as the result of lower sales levels while collection terms remained consistent. Cash provided by inventory improved from the prior year due to the ramp up of product launches occurring in the second half of 2023 and first half of 2024, and the impact of our inventory reduction actions.
Previous report
Net cash used for investing activities decreased compared to 2023 due to lower capital expenditures and capitalized software development costs as well as the 2023 impact of cash proceeds from the sale of equipment.
Reworded paragraphs (42)
Previous wording
Electronics. This segment includes results of operations from the production of driver information systems, vision and safety systems, connectivity and compliance products and electronic control units.
Current wording
Electronics. This segment includes results of operations from the production of advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules.
Previous wording
Stoneridge Brazil. This segment includes results of operations that design and manufacture vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices, driver information systems and telematics solutions.
Current wording
Stoneridge Brazil. This segment includes results of operations that design and manufacture vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices.
Previous wording
The Company had net loss of $7.1 million, or $(0.26) per diluted share, for the three months ended September 30, 2024.
Current wording
The Company had net loss of $7.2 million, or $(0.26) per diluted share, for the three months ended March 31, 2025.
Previous wording
Net loss for the quarter ended September 30, 2024 increased by $9.2 million, or $(0.33) per diluted share, from net income of $2.2 million, or $0.08 per diluted share, for the three months ended September 30, 2023. Net loss increased due to lower contribution from lower sales offset by a reduction in SG&A spending and the favorable impact of non-operating foreign currency gains. Net sales decreased by $24.3 million, or 10.2%, compared to the three months ended September 30, 2023, primarily from lower volumes in our North American automotive market for our Control Devices segment and lower volumes in our European and North American commercial vehicle and European off-highway markets for our Electronics segment. Gross margin as a percent of sales for the quarter ended September 30, 2024 decreased to 20.8% from 22.0% for the three months ended September 30, 2023 driven by lower contribution from lower sales offset by favorable sales mix, material cost improvements and a reduction in adverse foreign exchange related material variances.
Current wording
Net loss for the quarter ended March 31, 2025 increased by $1.1 million, or $(0.04) per diluted share, from net loss of $6.1 million, or $(0.22) per diluted share, for the three months ended March 31, 2024. Net sales decreased by $21.3 million, or 8.9%, compared to the three months ended March 31, 2024, primarily from lower volumes in our North American and European commercial vehicle markets for our Electronics segment and lower volumes in our North American automotive market including the expected end-of-life production for an actuator product for our Control Devices segment offset by higher OEM product sales at Stoneridge Brazil. Gross margin as a percent of sales for the quarter ended March 31, 2025 increased to 21.2% from 20.2% for the three months ended March 31, 2024 driven by lower material costs including favorable foreign exchange related variances offset by lower contribution from lower sales and business realignment costs incurred for operational efficiency initiatives at our Juarez facility. In addition, non-operating foreign currency gains and equity earnings favorably impacted results for the quarter ending March 31, 2025.
Previous wording
Our Control Devices segment net sales decreased by 18.1% compared to the third quarter of 2023 primarily as a result ofdecreases in our North American automotive and China commercial vehicle markets. The decrease in our North American automotive market was due to lower customer volumes including electronic and hybrid vehicle platforms and the expected wind down of end-of-life programs. These decreases were offset by sales increases in our China automotive and North American commercial vehicle markets. Segment gross margin as a percentage of sales decreaseddue to lower contribution from lower sales levels. Segment operating income decreased due to lower contribution from lower sales volumes and higher SG&A spending offset by lower D&D spending.
Current wording
Our Control Devices segment net sales decreased by 10.8% compared to the first quarter of 2024 primarily as a result ofdecreases in our North American automotive market, including the expected end-of-life production for an actuator product, as well as decreases in our off-highway and China commercial vehicle markets. These decreases were offset by sales increases in our China automotive and North American commercial vehicle markets. Segment gross margin as a percentage of sales decreaseddue to lower contribution from lower sales levels offset by lower warranty and premium freight costs. Segment operating income decreased due to lower contribution from lower sales partially offset by lower D&D spending.
Previous wording
Our Electronics segment net sales decreased by 5.3% compared to the third quarter of 2023 primarily due tolower sales volumes in our European and North American commercial vehicle markets, partially mitigated by the ramp-up of recently launched programs, including a European MirrorEye OEM program and our next generation tachograph. We also experienced lower sales volume in our European off-highway vehicle market. Additionally, net sales decreased due to lower electronic component spot buy purchases, which are material purchases reimbursed by customers and recorded as both revenue and offsetting material cost. Offsetting these sales decreases was the favorable impact of foreign currency translation. Segment gross margin as a percent of sales decreased compared to the prior year third quarter as lower contribution from lower sales levels was offset by material cost improvements and a reduction in foreign exchange related material variances. Operating income for the segment decreased compared to the third quarter of 2023 because of lower contribution from lower sales levels and higher D&D because of lower customer reimbursements offset by lower SG&A from 2023 business realignment costs.
Current wording
Our Electronics segment net sales decreased by 10.0% compared to the first quarter of 2024 primarily due to lower sales volumes in our North American and European commercial vehicle markets, partially mitigated by the on-going ramp-up of a recently launched European MirrorEye OEM program and higher sales of our next generation tachograph. We also experienced lower sales volume in our North American off-highway vehicle market and an unfavorable impact of foreign currency translation which were offset by higher sales in European off-highway market. Segment gross margin as a percent of sales increased compared to the prior year first quarter from lower material costs including favorable foreign exchange related variances, which were partially offset by lower contribution from lower sales and higher business realignment costs incurred for operational efficiency initiatives at our Juarez facility. Operating income for the segment decreased compared to the first quarter of 2024 because of lower gross profit and higher D&D expense as customer reimbursements declined more than spending driven by reduced launch activities.
Previous wording
Our Stoneridge Brazil segment net sales decreased by 6.7% compared to the third quarter of 2023 primarily from unfavorable foreign currency translation of $1.7 million, and lower monitoring service fees that were offset by higher OEM and aftermarket product sales. Operating income decreased due to the adverse impact of U.S. dollar denominated material purchases and unfavorable sales mix from lower monitoring service fees offset by lower SG&A spending.
Current wording
Our Stoneridge Brazil segment net sales increased by 16.8% compared to the first quarter of 2024 primarily from higher OEM product sales offset by unfavorable foreign currency translation and lower original equipment services ("OES") channel sales. Operating income increased due tohigher contribution from higher sales levels partially offset by the adverse impact of U.S. dollar denominated material purchases.
Previous wording
In the third quarter of 2024, SG&A expenses decreased by $1.6 million compared to the third quarter of 2023 driven primarily by lower incentive compensation, business realignment costs and professional services partially offset by higher wages and self-insured medical costs.
Current wording
In the first quarter of 2025, SG&A expenses increased by $1.3 million compared to the first quarter of 2024 driven primarily by higher business realignment costs and professional services being offset by lower incentive compensation.
Previous wording
In the third quarter of 2024, D&D costs decreased by $0.2 million compared to the prior year third quarter from reduced launch activities that resulted in lower wages and consulting being mostly offset by lower customer reimbursements in our Electronics and Control Devices segments.
Current wording
In the first quarter of 2025, D&D costs increased by $0.2 million compared to the prior year first quarter from higher expense in our Electronics segment as customer reimbursements declined more than spending driven by reduced launch activities offset by lower D&D spending in our Control Devices segment.
Previous wording
At September 30, 2024 and December 31, 2023, we had cash and cash equivalents balances primarily held at our foreign locations of $54.1 million and $40.8 million, respectively, and we had $196.3 million and $189.3 million, respectively, in borrowings outstanding on our Credit Facility. The 2024 increase in cash and cash equivalents was mostly due to cash generated from operating activities including a reduction in accounts receivable and inventory balances.
Current wording
At March 31, 2025 and December 31, 2024, we had cash and cash equivalents balances primarily held at our foreign locations of $79.1 million and $71.8 million, respectively, and we had $203.2 million and $201.6 million, respectively, in borrowings outstanding on our Credit Facility. The 2025 increase in cash and cash equivalents was mostly due to cash generated from operating activities including lower working capital levels.
Previous wording
The Company believes that focusing on products that address industry megatrends has had and will continue to have a positive effect on both our top-line growth and underlying margins. Expanding on our existing products and technology platforms with advanced capabilities, applications and data services is core to our long-term strategy. For example, the Company is aligned with platforms likely to perform well against overall market dynamics including light-trucks, SUVs and crossover vehicles and our continued focus on safety, vehicle intelligence and connectivity based products, such as our ongoing launches of our OEM MirrorEye® programs in North America and Europe as well as our next generation tachograph in Europe. In addition, we are partnering with an OEM to develop advanced system capabilities based on data services, software and AI in bus applications.
Current wording
The Company believes that focusing on products that address industry megatrends has had and will continue to have a positive effect on both our top-line growth and financial performance. Expanding on our existing products and technology platforms with advanced capabilities, applications and data services is core to our long-term strategy. For example, we continue to develop safety, vehicle intelligence and connectivity based products, such as our OEM MirrorEye® programs in North America and Europe as well as our next generation tachograph in Europe.
Previous wording
Based on IHS Market production forecasts, the North American automotive market is expected to slightly decrease from 15.6 million units in 2023 to 15.5 million units in 2024 and then to 15.3 million units in 2025. In our Control Devices segment, we remain focused on drivetrain agnostic technologies to drive new business awards as the market continues to evolve. This strategy is highlighted by our recent new business award for a leak detection module product which provides further global opportunities primarily for hybrid vehicle applications, a market that we expect to continue to grow, and is also applicable to traditional powertrain vehicles. We continue to focus on operational excellence and enterprise-wide cost reduction, including material cost reduction plans, to continue to drive margin improvement going-forward.
Current wording
Based on IHS Market production forecasts, the North American automotive market is expected to decrease from 15.5 million units in 2024 to 14.0 million units in 2025. In our Control Devices segment, we remain focused on drivetrain agnostic technologies to drive new business awards as the market continues to evolve. However, we expect lower sales in 2025 related to the impact of end-of-life production for an actuator product. We expect continued volatility in our end markets as uncertainty remains related to the market’s response to tariff policies. We continue to focus on operational excellence and enterprise-wide cost reduction, including material cost reduction plans, to continue to drive margin improvement going-forward.
Previous wording
Based on IHS Market production forecasts, in 2025 the European and North American commercial vehicle end market volumes are forecasted to increase 10.0% and 4.4%, respectively. Over the long-term, we expect our Electronics’ segment sales to outperform forecasted changes in production volumes due to strong demand for our existing products and the impact of ongoing launches of our OEM MirrorEye programs in North America and Europe as well as our next generation tachograph in Europe. During 2024, sales related to our recent MirrorEye OEM program launch have been lower than anticipated, however we expect continued growth in MirrorEye as we launch new OEM programs in both North America and Europe and our equipment becomes standard on key truck platforms for existing OEM programs.
Current wording
Based on IHS Market production forecasts published in February 2025, in 2025 the European and North American commercial vehicle end market volumes are forecasted to increase 3.9% and decrease 3.3%, respectively. In 2025 and over the long-term, we expect our Electronics’ segment sales to outperform forecasted changes in production volumes due to strong demand for our existing products and the impact of ongoing launches of our OEM MirrorEye programs in North America and Europe as well as higher sales of our next generation tachograph in Europe. We expect continued growth in MirrorEye as we launch and ramp up new and existing OEM programs in both North America and Europe, and MirrorEye systems becomes standard on key truck platforms for existing OEM programs.
Previous wording
For the remainder of 2024, we expect net D&D spending to remain relatively stable driven by reduced launch activities, and as a result, we expect lower customer reimbursements and capitalization of software development costs. We continue to execute our strategy to optimize our engineering footprint to enhance capabilities and capacity for the most efficient return on our engineering spend including the reorganization of our Solna, Sweden location which resulted in business realignment expense of $1.5 million in 2024.
Current wording
In 2025, we expect net D&D spend to slightly decrease driven by a shift to spending for the development of next generation products, opposed to new product launch related spend. As a result of reduced launch activities, we expect lower customer reimbursements and capitalization of software development costs. We continue to evaluate and optimize our engineering footprint to enhance capabilities and capacity for the most efficient return on our engineering spend, including utilizing our Stoneridge Brazil engineering resources to support Electronics segment projects.
Previous wording
In October 2024, the International Monetary Fund forecasted the Brazil gross domestic product to grow 2.2% in 2025, a decline from forecasted growth of 3.0% in 2024. We expect our served market channels to remain relatively stable in 2024 based on current market and economic conditions, however our sales of in region OEM products have been lower than expected due to lower customer demand. Stoneridge Brazil continues to focus on growing our OEM capabilities in-region to better support our global customers. We expect this strategy will provide opportunities for future growth and a platform to continue to rotate our local portfolio to more closely align with our global products. In addition, we continue to align our global engineering capabilities and footprint by expanding our Brazilian engineering center.
Current wording
In January 2025, the International Monetary Fund forecasted the Brazil gross domestic product to grow 2.2% in 2025, a decline from forecasted growth of 3.0% in 2024. We expect our served market channels to remain relatively stable in 2025 based on current market and economic conditions. Stoneridge Brazil continues to focus on growing our OEM capabilities in-region to better support our global customers. We expect this strategy will provide opportunities for future growth and a platform to continue to rotate our local portfolio to more closely align with our global products. In addition, we continue to align our global engineering capabilities and footprint by expanding our Brazilian engineering center.
Previous wording
A significant portion of our sales are outside of the United States. These sales are generated by our non-U.S. based operations, and therefore, movements in foreign currency exchange rates can have a significant effect on our results of operations, which are presented in U.S. dollars. A significant portion of our raw materials purchased by our Electronics and Stoneridge Brazil segments are denominated in U.S. dollars, and therefore movements in foreign currency exchange rates can also have a significant effect on our results of operations. The U.S. Dollar strengthened against the Mexican peso, Brazilian real and Argentine peso in 2024 favorably impacting our reported results.
Current wording
A significant portion of our sales are outside of the United States. These sales are generated by our non-U.S. based operations, and therefore, movements in foreign currency exchange rates can have a significant effect on our results of operations, which are presented in U.S. dollars. A significant portion of our raw materials purchased by our Electronics and Stoneridge Brazil segments are denominated in U.S. dollars, and therefore movements in foreign currency exchange rates can also have a significant effect on our results of operations. In the first quarter of 2025, the U.S. Dollar strengthened against the Brazilian real, unfavorably impacting our reported results, while it weakened against the Swedish krona, favorably impacting our reported results.
Previous wording
We regularly evaluate the performance of our businesses and their cost structures, including personnel, and make necessary changes thereto in order to optimize our results. We also evaluate the required skill sets of our personnel and periodically make strategic changes. As a consequence of these actions, we incur severance and resignation related costs that we refer to as business realignment charges. Business realignment costs of $0.3 million and$1.2 million were incurred in the three months ended September 30, 2024 and 2023, respectively.
Current wording
We regularly evaluate the performance of our businesses and their cost structures, including personnel, and make necessary changes thereto in order to optimize our results. We also evaluate the required skill sets of our personnel and periodically make strategic changes. As a consequence of these actions, we incur severance and resignation related costs that we refer to as business realignment charges. Business realignment costs of $2.8 million and$0.0 million were incurred in the three months ended March 31, 2025 and 2024, respectively. We incurred $1.4 million in business realignment costs in the three months ended March 31, 2025 related to operational efficiency initiatives at our Juarez facility, which we expect will result in cost savings for direct and indirect labor and a more efficient overall operating structure. We expect to incur additional realignment costs related to this initiative and others in the remainder of 2025.
Previous wording
Our Electronics segment net sales decreased $7.2 million because of lower customer production volumes in our European and North American commercial vehicle markets of $1.7 million and $1.7 million, respectively, mitigated by the ramp-up of recently launched programs, including a European OEM MirrorEye program and our next generation tachograph. We experienced lower sales volumes in our European off-highway vehicle and agricultural markets of $4.5 million and $1.3 million, respectively. Net sales also decreased because of the 2023 impact of required electronic component spot buy purchases of $0.9 million. Net sales in the third quarter of 2024 were favorably impacted by euro and Swedish krona foreign currency translation of $2.4 million compared to the prior year quarter.
Current wording
Our Electronics segment net sales decreased $15.0 million because of lower customer production volumes in our North American and European commercial vehicle markets of $7.9 million and $5.5 million, respectively, partially mitigated by higher MirrorEye sales, including the ramp-up of a recently launched European OEM program and higher aftermarket sales forour next generation tachograph. We also experienced lower sales volumes in our North American off-highway vehicle market of $1.7 million. These decreases were offset by an increase in our European off-highway market of $2.5 million. Net sales in the first quarter of 2025 were unfavorably impacted by euro and Swedish krona foreign currency translation of $2.7 million compared to the prior year quarter.
Previous wording
The decrease in North American net sales was mostly attributable to a decrease in sales volume in our automotive market of $21.1 million. The decrease in our North American automotive market was primarily caused by lower customer volumes including electronic and hybrid vehicle platforms and by the expected wind down of end-of-life programs. These decreases were offset by higher sales in our off-highway and commercial vehicle markets of $2.0 million and $1.0 million, respectively.
Current wording
The decrease in North American net sales was mostly attributable to a decrease in sales volume in our commercial vehicle, automotive and off-highway markets of $7.5 million, $5.0 million and $4.0 million, respectively. The decrease in our North American automotive market was primarily caused by lower customer volumes and the expected end-of-life production of an actuator product.
Previous wording
The decrease in net sales in South America was from unfavorable foreign currency translation of $1.7 million, and lower monitoring service fees that were offset by higher OEM and aftermarket product sales.
Current wording
The increase in net sales in South America was from higher OEM product sales of $4.2 million partially offset by unfavorable foreign currency translation of $1.8 million and lower OES channel sales of $0.3 million.
Previous wording
The decrease in net sales in Europe and Other was due to decreases in customer production volumes in our China and European commercial vehicle markets of $5.1 million and $1.7 million, respectively, as well as a decrease in our European off-highway market of $4.5 million. In addition, we experienced a decrease in electronic component spot buys of $0.7 million. These decreases were offset by higher sales in our China automotive market of $3.5 million. Net sales were impacted by a favorable foreign currency translation of $2.6 million.
Current wording
The decrease in net sales in Europe and Other was due to decreases in customer production volumes in our European and China commercial vehicle markets of $5.5 million and $1.7 million, respectively, offset by an increase in our European off-highway and China automotive markets of $2.5 million and $1.0 million, respectively. Net sales were also impacted by an unfavorable foreign currency translation of $2.8 million.
Previous wording
Cost of Goods Sold and Gross Margin. Cost of goods sold decreased compared to the third quarter of 2023 and our gross margin decreased from 22.0% in the third quarter of 2023 to 20.8% in the third quarter of 2024. Our material cost as a percentage of net sales decreased to 57.2% in the third quarter of 2024 from 58.1% in the third quarter of 2023. The decrease in material cost percentage was due tofavorable product mix and material cost improvements as well as a reduction in foreign exchange related material variances. Overhead as a percentage of net sales was 17.3% and 14.9% for the third quarter of 2024 and 2023, respectively. The increase in overhead as a percentage of sales was attributable to lower sales as overhead spending was consistent with the prior year quarter.
Current wording
Cost of Goods Sold and Gross Margin. Cost of goods sold decreased compared to the first quarter of 2024 and our gross margin increased to 21.2% in the first quarter of 2025 from 20.2% in the first quarter of 2024. Our material cost as a percentage of net sales decreased to 56.3% in the first quarter of 2025 from 58.9% in the first quarter of 2024. The decrease in material cost percentage was due to lower material costs including favorable foreign exchange related variances. Overhead as a percentage of net sales was 17.8% and 16.2% for the first quarter of 2025 and 2024, respectively. The increase in overhead as a percentage of sales was attributable to lower sales as overhead spending was consistent with the prior year quarter.
Previous wording
Our Control Devices segment gross margin decreased primarily because of lower contribution from lower sales offset by improved sales mix.
Current wording
Our Control Devices segment gross margin decreased primarily because of lower contribution from lower sales.
Previous wording
Selling, General and Administrative. SG&A expenses decreased by $1.6 million primarily because of lower incentive compensation, business realignment costs and professional services being offset by higher wages and self-insured medical costs.
Current wording
Selling, General and Administrative. SG&A expenses increased by $1.3 million primarily because of higher business realignment costs and professional services being offset by lower incentive compensation.
Previous wording
Design and Development. D&D costs decreased by $0.2 million from reduced launch activities that resulted in lower wages and consulting being mostly offset by lower customer reimbursements in our Electronics and Control Devices segments.
Current wording
Design and Development. D&D costs decreased by $0.2 million compared to the first quarter of 2024 from higher expense in our Electronics segment as customer reimbursements declined more than spending driven by reduced launch activities offset by lower D&D spending in our Control Devices segment.
Previous wording
Operating Income. Operating income (loss) by segment is summarized in the following table (in thousands):
Current wording
Operating (Loss) Income. Operating (loss) income by segment is summarized in the following table (in thousands):
Previous wording
Our Stoneridge Brazil segment operating income decreased because of lower contribution from lower sales levels.
Current wording
Our Stoneridge Brazil segment operating income increased due to higher gross profit from higher sales levels offset by unfavorable sales mix and the adverse impact of U.S. dollar denominated material purchases.
Previous wording
Operating income (loss) by geographic location is summarized in the following table (in thousands):
Current wording
Operating (loss) income by geographic location is summarized in the following table (in thousands):
Previous wording
Our North American operating loss increased due to lower contribution margin from lower sales levels. Operating income in South America decreased due to the adverse impact of U.S. dollar denominated material purchases and unfavorable sales mix from lower monitoring service fees offset by lower SG&A spending. Our operating results in Europe and Other decreased primarily due to lower contribution from lower sales levels and higher overhead and D&D spending resulting from lower customer reimbursements.
Current wording
Our North American operating loss increased due to lower contribution from lower sales levels and higher business realignment costs. Operating income in South America increased due to higher contribution from higher sales levels offset by unfavorable sales mix and the adverse impact of U.S. dollar denominated material purchases. Our operating results in Europe and Other increased because of lower material costs including favorable foreign exchange related variances which were partially offset by lower contribution from lower sales levels and higher D&D spending resulting from lower customer reimbursements.
Previous wording
Interest Expense, net. Interest expense, net was $3.6 million and $3.3 million for the three months ended September 30, 2024 and 2023, respectively. The increase for the quarter ended September 30, 2024, was the result of higher Credit Facility outstanding balances.
Current wording
Interest Expense, net. Interest expense, net was $3.2 million and $3.6 million for the three months ended March 31, 2025 and 2024, respectively. The decrease for the quarter ended March 31, 2025, was the result of lower interest rates on our Credit Facility outstanding balances.
Previous wording
Equity in Loss of Investee. Equity loss for Autotech Fund II was $0.8 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively.
Current wording
Equity in (Earnings) Loss of Investee. Equity (earnings) loss for Autotech Fund II was $(0.3) million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Other Income, net. We record certain foreign currency transaction (gains) losses as a component of other income, net on the condensed consolidated statement of operations. Other income, net of $0.4 million decreased by $1.0 million compared to the third quarter of 2023 due to lower foreign currency transaction gains in our Electronics segment.
Current wording
Other (Income) Expense, net. We record certain foreign currency transaction (gains) losses as a component of other income, net on the condensed consolidated statement of operations. Other income, net of $0.5 million increased by $2.5 million compared to the first quarter of 2024 due to foreign currency transaction gains in our Electronics segment.
Previous wording
Provision for Income Taxes. For the three months ended September 30, 2024, income tax expense of $3.4 million was attributable to the mix of earnings among tax jurisdictions and tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions, offset by U.S. taxes on foreign earnings. The effective tax rate of (93.3)% varies from the statutory tax rate primarily due to the impact of tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions, offset by U.S. taxes on foreign earnings.
Current wording
Provision for Income Taxes. For the three months ended March 31, 2025, income tax expense of $1.6 million was attributable to the mix of earnings among tax jurisdictions, the impact of valuation allowances in certain jurisdictions and tax credits and incentives offset by U.S. taxes on foreign earnings. The effective tax rate of (27.8)% varies from the statutory tax rate primarily due to the impact of valuation allowances in certain jurisdictions and tax credits and incentives offset by U.S. taxes on foreign earnings.
Previous wording
For the nine months ended September 30, 2023, income tax expense of $3.0 million was attributable to the mix of earnings among tax jurisdictions and U.S. taxes on foreign earnings offset by tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions and tax credits and incentives. The effective tax rate of (59.1%) varies from the statutory tax rate primarily due to U.S. taxes on foreign earnings offset by the impact of tax losses for which no benefit is recognized due to valuation allowances in certain jurisdictions and tax credits and incentives.
Current wording
For the three months ended March 31, 2024, income tax expense of $0.5 million was attributable to the mix of earnings among tax jurisdictions and U.S. taxes on foreign earnings offset by the impact of valuation allowances in certain jurisdictions and tax credits and incentives. The effective tax rate of (9.1)% varies from the statutory tax rate primarily due to U.S. taxes on foreign earnings offset by the impact of valuation allowances in certain jurisdictions and tax credits and incentives.
Previous wording
As outlined in Note 7 to our condensed consolidated financial statements, the Credit Facility permits borrowing up to a maximum level of $275.0 million. This variable rate facility has an accordion feature which allows the Company to increase its availability by up to $150.0 million upon the satisfaction of certain conditions and lender consent through its expiration in November 2026. The Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio. The Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants that place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The Credit Facility had an outstanding balance of $196.3 million at September 30, 2024.
Current wording
As outlined in Note 7 to our condensed consolidated financial statements, the Credit Facility permits borrowing up to a maximum level of $275.0 million. This variable rate facility has an accordion feature which allows the Company to increase its availability by up to $150.0 million upon the satisfaction of certain conditions and lender consent through its expiration in November 2026. The Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio. The Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants that place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The Credit Facility had an outstanding balance of $203.2 million at March 31, 2025.
Previous wording
The Company was in compliance with all covenants at September 30, 2024 and December 31, 2023. The Company has not experienced a violation that would limit the Company’s ability to borrow under the Credit Facility and does not expect that the covenants under it will restrict the Company’s financing flexibility. However, it is possible that future borrowing flexibility under the Credit Facility may be limited as a result of lower than expected financial performance due to the adverse impact of significantly lower global demand in our markets and challenging macroeconomic conditions. The Company expects to make additional repayments on the Credit Facility when cash exceeds the amount needed for operations and to remain in compliance with all covenants.
Current wording
The Company was in compliance with all covenants at March 31, 2025 and December 31, 2024. The Company has not experienced a violation that would limit the Company’s ability to borrow under the Credit Facility, as amended, and does not expect that the covenants under it will restrict the Company’s financing flexibility. However, it is possible that future borrowing flexibility under the Credit Facility may be limited as a result of lower than expected financial performance due to the adverse impact of significantly lower global demand in our markets and challenging macroeconomic conditions. The Company expects to make additional repayments on the Credit Facility when cash exceeds the amount needed for operations and to remain in compliance with all covenants.
Previous wording
The Company’s wholly owned subsidiary located in Stockholm, Sweden, has an overdraft credit line that allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20.0 million Swedish krona, or $2.0 million at both September 30, 2024 and December 31, 2023, respectively. At September 30, 2024 and December 31, 2023 there were no borrowings outstanding on this overdraft credit line. During the nine months ended September 30, 2024, the subsidiary borrowed and repaid 255.1 million Swedish krona, or $25.1 million.
Current wording
The Company’s wholly owned subsidiary located in Stockholm, Sweden, has an overdraft credit line that allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20.0 million Swedish krona, or $2.0 million and $1.8 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025 and December 31, 2024 there were no borrowings outstanding on this overdraft credit line. During the three months ended March 31, 2025, the subsidiary borrowed and repaid 70.6 million Swedish krona, or $7.0 million. The Stockholm subsidiary has pledged certain of its assets as collateral in order to obtain a guarantee of certain of the Stockholm subsidiary’s obligations to third parties.
Previous wording
The Company’s wholly owned subsidiary located in Suzhou, China, had lines of credit that matured in August 2024 and allowed up to a maximum borrowing level of 20.0 million Chinese yuan, or $2.8 million at December 31, 2023. At December 31, 2023 there was $2.1 million in borrowings outstanding on the Suzhou credit line. The Suzhou credit line was included on the condensed consolidated balance sheet within current portion of debt. In addition, the Suzhou subsidiary has a bank acceptance draft line of credit which facilitates the extension of trade payable payment terms by 180 days. The bank acceptance draft line of credit allows up to a maximum borrowing level of 60.0 million Chinese yuan, or $8.6 million and $8.5 million at September 30, 2024 and December 31, 2023, respectively. There was $0.0 million and $2.4 million utilized on the Suzhou bank acceptance draft line of credit at September 30, 2024 and December 31, 2023, respectively. The Suzhou bank acceptance draft line of credit is included on the condensed consolidated balance sheet within accounts payable.
Current wording
The Company’s wholly owned subsidiary located in Suzhou, China, had lines of credit that matured in March 2025 and allowed up to a maximum borrowing level of 20.0 million Chinese yuan, or $2.7 million at December 31, 2024. At December 31, 2024 there were no borrowings outstanding on the Suzhou credit line. In addition, the Suzhou subsidiary has a bank acceptance draft line of credit that expired in October 2024 which facilitated the extension of trade payable payment terms by 180 days. The bank acceptance draft line of credit allowed up to a maximum borrowing level of 60.0 million Chinese yuan.
Previous wording
In December 2018, the Company entered into an agreement to make a $10.0 million investment in Autotech Fund II managed by Autotech, a venture capital firm focused on ground transportation technology. The Company’s $10.0 million investment in the Autotech Fund II will be contributed over the expected ten-year life of the fund. As of September 30, 2024, the Company’s cumulative investment in the Autotech Fund II was $8.7 million. The Company contributed $0.3 million and $0.2 million to Autotech Fund II during the nine months ended September 30, 2024 and September 30, 2023, respectively.
Current wording
In December 2018, the Company entered into an agreement to make a $10.0 million investment in Autotech Fund II managed by Autotech, a venture capital firm focused on ground transportation technology. The Company’s $10.0 million investment in the Autotech Fund II will be contributed over the expected ten-year life of the fund. As of March 31, 2025, the Company’s cumulative investment in the Autotech Fund II was $9.0 million. The Company did not contribute to Autotech Fund II during the three months ended March 31, 2025 and March 31, 2024, respectively.
Previous wording
At September 30, 2024, we had a cash and cash equivalents balance of approximately $54.1 million, of which 79.9% was held in foreign locations. The Company has approximately $78.7 million of undrawn commitments under the Credit Facility as of September 30, 2024, which results in total undrawn commitments and cash balances of more than $132.8 million. However, it is possible that future borrowing flexibility under our Credit Facility may be limited as a result of our financial performance.
Current wording
At March 31, 2025, we had a cash and cash equivalents balance of approximately $79.1 million, of which 83.9% was held in foreign locations. The Company has approximately $71.8 million of undrawn commitments under the Credit Facility as of March 31, 2025, which results in total undrawn commitments and cash balances of more than $150.9 million. However, it is possible that future borrowing flexibility under our Credit Facility may be limited as a result of our financial performance.
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Previous report — wording carried elsewhere
Condensed consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands):
Previous report — wording carried elsewhere
Net Sales. Net sales for our reportable segments, excluding inter-segment sales, are summarized in the following table (in thousands):
Previous report — wording carried elsewhere
Net sales by geographic location are summarized in the following table (in thousands):
Previous report — wording carried elsewhere
Operating income (loss) by geographic location is summarized in the following table (in thousands):
Previous report — wording carried elsewhere
Other (Income) Expense, net. We record certain foreign currency transaction (gains) losses as a component of other (income) expense, net on the condensed consolidated statement of operations. Other (income) expense, net of $(0.6) million increased by $2.8 million compared to the first nine months of 2023 due to the impact of favorable foreign currency movements in our Electronics and Stoneridge Brazil segments from strengthening of the U.S. dollar.