Executive Summary

Q1 2025 revenue was $217.9M, adjusted gross margin 21.9%, adjusted EBITDA $7.6M, and GAAP diluted EPS of $(0.26). Full-year 2025 guidance was maintained across all metrics .
Versus consensus, revenue modestly beat ($212.4M est. vs $217.9M actual), EBITDA beat ($5.86M est. vs $7.08M actual), while EPS missed (($(0.17) est. vs $(0.26) actual)) due to ongoing end-market pressure; management expects Q2 performance to slightly increase versus Q1 as initiatives compound (estimates marked with asterisks; S&P Global).
Operating performance improved quarter-over-quarter: adjusted gross margin expanded +210 bps, driven by ~220 bps material cost improvement and ~$2.5M lower quality-related costs; MirrorEye® and SMART 2 Tachograph set quarterly sales records, with MirrorEye up ~24% QoQ .
Cash generation and balance sheet trends were favorable: free cash flow of $4.9M and inventory reduced by approximately $28M YoY; compliance net debt/TTM EBITDA at 3.97x with a year-end target of 2.0x–2.5x maintained .

What Went Well and What Went Wrong

What Went Well

“Adjusted gross margin improved by a healthy 210 basis points…result of…material cost improvement (220 bps) and reduced quality-related costs (~$2.5M)” .
“MirrorEye revenue increased by an impressive 24% relative to the fourth quarter of 2024,” with strong bus market sales and OEM ramp; SMART 2 Tachograph also set a quarterly sales record .
Free cash flow of ~$4.9M and YoY inventory reduction of ~$28M reflect disciplined working capital execution (positive cash and leverage trends) .

What Went Wrong

EPS missed consensus (($(0.17)*) vs actual $(0.26)) as end-market weakness and mix weighed on profitability; management continued cost actions but highlighted macro/tariff uncertainties that could affect demand (estimates marked with asterisks; S&P Global).
Revenue was flat QoQ (Q1’25 $217.9M vs Q4’24 $218.2M) and down YoY (vs Q1’24 $239.2M) amid softer commercial vehicle and NA passenger volumes and lower off-highway sales .
Quality-related costs remain a focal area despite improvement; Q4 was impacted by elevated warranty/quality costs, and management emphasized process changes to stabilize future outcomes .

Financial Results

GAAP results vs prior year and prior quarter

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$239.157	$218.248	$217.890
Gross Profit ($USD Millions)	$48.4	$42.7	$46.3
Operating Income (Loss) ($USD Millions)	$0.331	$(4.4)	$(3.225)
Net Income (Loss) ($USD Millions)	$(6.126)	$(6.114)	$(7.196)
Diluted EPS ($USD)	$(0.22)	$(0.22)	$(0.26)

Adjusted performance and margins

Metric	Q4 2024	Q1 2025
Adjusted Gross Margin (%)	19.7%	21.9%
Adjusted Operating Margin (%)	(1.8)%	(0.2)%
Adjusted EBITDA ($USD Millions)	$6.0	$7.6
Adjusted EBITDA Margin (%)	2.7%	3.5%

Segment breakdown (Net Sales)

Segment ($USD Millions)	Q1 2024	Q4 2024	Q1 2025
Control Devices	$77.989	$63.2	$69.855
Electronics	$156.124	$149.4	$140.534
Stoneridge Brazil	$12.216	$12.4	$14.409

KPIs

KPI	Q1 2025
MirrorEye QoQ Sales Growth (%)	~24%
SMART 2 Tachograph	Quarterly sales record
Free Cash Flow ($USD Millions)	$4.9
Net Cash from Operations ($USD Millions)	$10.9
Inventory Reduction YoY ($USD Millions)	~$28
Cash & Equivalents ($USD Millions)	$79.1
Total Debt ($USD Millions)	$203.2
Compliance Net Debt / TTM EBITDA (x)	3.97x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2025	$860–$890	$860–$890	Maintained
Adjusted Gross Margin (%)	FY 2025	22.0%–22.5%	22.0%–22.5%	Maintained
Adjusted Operating Margin (%)	FY 2025	0.75%–1.25%	0.75%–1.25%	Maintained
Adjusted EBITDA ($USD Millions)	FY 2025	$38–$42 (4.4%–4.7%)	$38–$42 (4.4%–4.7%)	Maintained
Free Cash Flow ($USD Millions)	FY 2025	$25–$30	$25–$30	Maintained
Compliance Net Debt/EBITDA (x)	FY 2025 YE Target	2.0x–2.5x	2.0x–2.5x	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev)	Q4 2024 (Prev)	Q1 2025 (Current)	Trend
Tariffs/macro	Flagged macro pressures; FX and demand headwinds	Maintained cautious stance; outlined supply chain and pricing mitigations	“Very little direct impact in Q1”; ~91% Mexico-origin product USMCA exempt; pursuing price increases	Mitigation improving; demand uncertainty persists
MirrorEye adoption	Standardized on multiple EU platforms; new OEM launches; fleet trials	Announced DTNA program; reiterated 2025 MirrorEye growth	+24% QoQ; record quarter; OEM ramp and bus market strength	Accelerating
Quality-related costs	Reduction efforts underway	Elevated in Q4; process changes; expected improvement	~$2.5M QoQ improvement; focus on built-in quality	Improving
Inventory/working capital	YTD cash +$13.3M; inventory down $11.3M	FY cash +$47.7M; inventory down $36.4M	FCF $4.9M; inventory down ~$28M YoY; sustainability emphasized	Sustained improvement
End-market outlook	CV and passenger weakness; seasonality	Assumed OEM decline in 2025; MirrorEye offsets	Conservative volume assumptions; Q2 slight uptick; back half CV strength possible	Cautiously constructive
New products/technology	LDM award announced; aftermarket/bus expansion	Connected trailer suite timing (limited in 2025; expansion 2026)	Connected trailer evaluations late-2025; broader rollout 2026	Pipeline progressing

Management Commentary

CEO: “We delivered strong performance…adjusted gross margin improvement of 210 basis points and adjusted EBITDA and cash performance that soundly exceeded our expectations…MirrorEye revenue increased by an impressive 24% relative to the fourth quarter of 2024” .
CFO: “We are maintaining our full year guidance ranges…Even considering the most recent external production forecasts, we expect to perform within our previously provided EBITDA guidance range” .
CEO on tariffs: “Approximately 91% of…product sales [from Mexico] are USMCA certified and are currently not subject to tariffs…we have already secured…price increases…to offset…tariffs” .
CFO on cadence: “We expect the second quarter performance will slightly increase compared to the first quarter…EBITDA to be slightly more back half weighted” .

Q&A Highlights

Electronics momentum and margins: MirrorEye ramp (Volvo Europe), aftermarket bus interest; contribution margins typically 25–30% with linear margin progression expected through the year .
Tariffs: Direct costs limited; policy changes (no stacking), USMCA exemptions; monitoring demand-side impacts and prepared to mitigate with sourcing/pricing .
Inventory sustainability: Turns targeted to high single digits; improvements seen as sustainable even as top line grows .
Manufacturing footprint: MirrorEye and Tachograph produced in Europe, reducing tariff exposure for those lines .
MirrorEye outlook: No change to ~$120M FY 2025 mirror-eye revenue expectation; strong OEM and fleet momentum .
Connected trailer: Limited customer evaluations late-2025; significant expansion expected in 2026 .
Production forecasts vs guidance: Conservative planning within broad forecast ranges; confidence in achieving guidance .

Estimates Context

Metric	Q1 2025 Consensus	Q1 2025 Actual	Beat/Miss
Revenue ($USD Millions)	$212.4*	$217.9	Beat
Primary EPS ($USD)	$(0.17)*	$(0.26)	Miss
EBITDA ($USD Millions)	$5.86*	$7.08	Beat

Values retrieved from S&P Global.

Where estimates may need to adjust: Continued margin progression (material and quality cost reductions) and OEM MirrorEye ramps suggest upward bias to out-quarter EBITDA assumptions; persistent demand volatility and mix headwinds imply cautious EPS trajectory despite improved operations .

Key Takeaways for Investors

MirrorEye and SMART 2 are structurally driving outperformance; record quarter and +24% QoQ MirrorEye growth highlight strengthening OEM adoption and aftermarket bus momentum .
Margin expansion is credible and repeatable: +210 bps adjusted gross margin QoQ from material savings (~220 bps) and ~$2.5M lower quality costs; focus on built-in quality and structural cost control persists .
Cash discipline remains a bright spot: $4.9M FCF, ~$28M YoY inventory reduction; leverage compliance ratio at 3.97x with maintained 2.0x–2.5x target by year-end .
Guidance intact despite macro/tariff uncertainty; management anticipates slight Q2 uptick and back-half EBITDA weighting as initiatives compound and MirrorEye ramps .
Tariff exposure manageable (USMCA certifications, sourcing/pricing strategies) but monitor demand-side impacts; mix and end-market softness can pressure EPS even as EBITDA improves .
Near-term trading: Favor catalysts around OEM MirrorEye launch milestones and continued margin/cash execution; watch for QoQ margin/EBITDA progression and any tariff-demand headlines .
Medium-term thesis: Camera monitor systems adoption, connected trailer pipeline, and structural cost improvements support revenue and margin expansion into 2026+; maintain focus on quality-related expense normalization .

STONERIDGE INC (SRI)·Q1 2025 Earnings Summary