Sign in
SI

STONERIDGE INC (SRI)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue beat consensus as net sales reached $228.0M, while EPS missed; GAAP diluted EPS was $(0.34) and adjusted EPS was $(0.25). Management cited $3.4M of non-operating FX expense and $0.5M tariffs as key headwinds . Versus S&P Global consensus, revenue was above $218.1M*, but Primary EPS came in below the $(0.09)* mean estimate.
  • MirrorEye set another quarterly sales record, up 21% versus Q1, and SRI announced $775M in new lifetime program awards, including the largest in company history: a global MirrorEye extension ($535M lifetime; ~$140M peak annual) .
  • Full-year revenue guidance was maintained ($860–$890M), adjusted EBITDA lowered to $34–$38M (from $38–$42M) to reflect YTD non-operating FX (~$3.0M) and ~$1.0M tariff costs; adjusted gross margin narrowed to 22.0%–22.25% and operating margin maintained at 0.75%–1.25% .
  • Strategic review launched for the Control Devices segment, with a primary focus on a potential sale; proceeds would be used to delever the balance sheet (debt reduction and lower interest expense) .
  • Cash execution strong: Q2 free cash flow was $7.6M; total debt reduced by $38.8M quarter-over-quarter; net debt fell by $9.5M, aided by a $43.8M international cash repatriation and $7.3M inventory reduction .

What Went Well and What Went Wrong

What Went Well

  • MirrorEye momentum: “MirrorEye set yet another quarterly sales record with an impressive 21% growth relative to the first quarter of this year,” driven by OEM ramp and aftermarket/bus applications .
  • Major awards underpin long-term growth: $775M lifetime awards including global MirrorEye extension through 2033 ($535M lifetime; $140M peak), Smart 2 tachograph ($40M), and secondary displays/ECUs ($115M); Brazil won its largest-ever OEM program ($85M lifetime; ~$20M peak annual) .
  • Cash and deleveraging execution: Free cash flow of $7.6M; total debt down by $38.8M; net debt down by $9.5M, driven by $43.8M repatriation and inventory reduction of $7.3M .

What Went Wrong

  • EPS miss and EBITDA pressure: Adjusted EBITDA was $4.6M (2.0% margin), impacted by $3.4M non-operating FX expense; GAAP diluted EPS of $(0.34) missed consensus Primary EPS* and reflected FX/tariff headwinds .
  • Electronics margin compression: Adjusted operating margin declined ~190–210 bps vs Q1 on higher material costs from unfavorable mix (including reduced Smart 2), despite improving quality-related costs .
  • Tariff-related expenses emerged: $0.5M in Q2 and ~$1.0M expected for FY25; while largely mitigated via cost-sharing and pricing, they are incremental vs initial guidance .

Financial Results

Consolidated performance vs prior periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$237.059 $217.890 $227.952
Net Income ($USD Millions)$2.786 $(7.196) $(9.359)
Diluted EPS ($USD)$0.10 $(0.26) $(0.34)
Adjusted EPS ($USD)n/a$(0.19) $(0.25)
Gross Profit ($USD Millions)n/a$46.3 $48.9
Adjusted Operating Income ($USD Millions)$5.4 $(0.4) $0.4
Adjusted EBITDA ($USD Millions)$16.1 $7.6 $4.6
Adjusted EBITDA ex non-op FX ($USD Millions)n/a$7.2 $8.1
Free Cash Flow ($USD Millions)$1.7 $4.9 $7.6

Notes:

  • Q2 adjusted EBITDA was impacted by $3.4M non-operating FX; ex-FX adjusted EBITDA was $8.1M .
  • Q2 tariff-related costs were ~$0.5M .

Segment breakdown

Segment Net Sales ($USD Millions)Q2 2024Q1 2025Q2 2025
Control Devices$80.854 $69.855 $71.156
Electronics$153.478 $140.534 $149.551
Stoneridge Brazil$11.848 $14.409 $15.272
Segment Operating Income ($USD Millions)Q2 2024Q1 2025Q2 2025
Control Devices$3.725 $1.165 $2.566
Electronics$9.831 $5.505 $2.739
Stoneridge Brazil$(0.041) $0.585 $0.969
Segment Adjusted Operating Income ($USD Millions)Q2 2024Q1 2025Q2 2025
Control Devices$3.7 $1.5 $2.8
Electronics$11.7 $6.9 $4.2

KPIs

KPIQ1 2025Q2 2025Notes
MirrorEye revenue growth vs prior quarter+24% vs Q4 2024 +21% vs Q1 2025 OEM ramp plus aftermarket/bus
Free Cash Flow ($USD Millions)$4.9 $7.6 Working capital focus
Non-operating FX impact ($USD Millions)+$0.5 income $(3.4) expense Intercompany loan FX
Tariff-related costs ($USD Millions)Limited direct impact ~$0.5 in Q2; ~$1.0 FY est. Cost-sharing with customers
Net debt reduction vs prior quarter ($USD Millions)n/a$9.5 Also total debt −$38.8M
Inventory reduction vs prior quarter ($USD Millions)n/a$7.3 Inventory mgmt execution

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$860M–$890M $860M–$890M Maintained
Adjusted Gross MarginFY 202522.0%–22.5% 22.0%–22.25% Narrowed
Adjusted Operating MarginFY 20250.75%–1.25% 0.75%–1.25% Maintained
Adjusted EBITDAFY 2025$38M–$42M $34M–$38M Lowered
Free Cash FlowFY 2025$25M–$30M $25M–$30M Maintained

Reasons cited: YTD non-operating FX expense (~$3.0M) and ~$1.0M tariff-related costs not assumed in initial guide; operating performance and reduced opex expected to offset production headwinds .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Vision systems & MirrorEyeGrowth drivers: MirrorEye/Smart 2 ramp; 2026 targets outlined MirrorEye set quarterly record; OEM launches ramping MirrorEye +21% QoQ; largest-ever global extension (~$535M lifetime) and full NA OEM coverage; bus next-gen system launched Strengthening
Supply chain/materials/qualityMaterial cost improvements and structural cost control; quality remains opportunity 210 bps gross margin improvement vs Q4; ~$2.5M quality cost reduction Quality costs improved ~$0.2–$0.3M; mix-driven material cost pressure in Electronics Mixed: costs improving, mix headwind
TariffsMonitoring Mexico tariffs; mitigation strategies detailed Limited direct impact; USMCA exemptions; mitigation actions ~$0.5M Q2 cost; ~$1.0M FY; cost-sharing with customers Headwind increasing but mitigated
Regional end-marketsCV declines in EU/NA noted CV/off-highway declines; NA passenger vehicle improved NA CV volumes expected −17.5% YoY; EU CV lower; Brazil OEM resilient NA CV weakening; Brazil steady
Regulatory/Busn/an/aBus MirrorEye Multi-Purpose II supports EU GSR 2019/2144 compliance Positive
R&D/engineering executionn/aEfficiency and incentive comp adjustments Reduced engineering costs; continued platform investment Improving efficiency

Management Commentary

  • CEO: “MirrorEye… set yet another quarterly sales record with an impressive 21% growth… driven by continued ramp-up of our OEM programs… MirrorEye clearly continues to gain momentum throughout our end markets” .
  • CEO on awards: “Largest single program award in the Company’s history… global MirrorEye program extension… will contribute to our substantial growth for many years to come” .
  • CEO on strategic review: Focused on “a potential sale of the [Control Devices] segment to maximize value… dedicate our capital, engineering resources, and leadership focus accordingly” .
  • CFO: “Executed on a global cash repatriation program… $43.8 million… utilized this cash to pay down debt… resulting in a net debt reduction of $19.4 million for compliance calculation purposes” .
  • CFO on EBITDA: Adjusted EBITDA “heavily influenced by non-operating FX expense of $3.4 million… driven primarily by unfavorable FX rates on intercompany loans” .

Q&A Highlights

  • MirrorEye global extension timing: Management confirmed impact is post-2026 (extension through 2033), not affecting 2025–2026 revenue timing .
  • TAM and platform expansion: Award both fills anticipated TAM and expands platform into connected trailer/sensing, broadening the opportunity set .
  • North American fleet adoption: New fleet customers linked to recent OEM win expected to improve 2026 outlook; sizing TBD as programs ramp .
  • FX guidance mechanics: Non-operating FX headwind incorporated cumulatively; no incremental headwind assumed from Q2 to Q3 at current rates .

Estimates Context

MetricQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Actual
Revenue ($USD Millions)$212.421*$217.890 $218.094*$227.952
Primary EPS ($USD)$(0.17)*$(0.26) $(0.09)*$(0.25) (Primary EPS actual)
  • Surprise: Revenue beat in Q1 and Q2; EPS missed in Q1 and Q2 versus Primary EPS consensus*.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue outperformed estimates while EPS missed, driven by non-operating FX and tariffs; underlying operations show resilience with improving quality and cost actions .
  • MirrorEye’s record quarter and the largest-ever global program extension de-risk near-term ramp and expand medium-term TAM; OEM/bus traction and full NA OEM coverage are material catalysts .
  • Guidance prudently reset on EBITDA to reflect FX/tariffs, while revenue, operating margin and FCF ranges remain intact, signaling operational offsets despite NA CV weakness .
  • Segment trends: Electronics faces mix headwinds (Smart 2 normalization, EU CV softness) even as MirrorEye offsets; Control Devices margins expanded QoQ; Brazil shows stable growth with a large new award .
  • Balance sheet improving: debt paid down significantly; targeted compliance net debt/EBITDA ~2.5x by year-end enhances strategic flexibility .
  • Strategic review of Control Devices (potential sale) can accelerate focus on high-tech platforms and deleveraging; monitor for transaction updates and valuation implications .
  • Near-term trading: Stock likely sensitive to FX/tariff headlines and NA CV production updates; positive catalysts include additional MirrorEye wins, fleet adoption milestones, and strategic review progress .