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STONERIDGE INC (SRI)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue of $210.3M beat S&P Global consensus by 3.5% (actual $210.3M vs. $203.1M estimate), while adjusted EBITDA of $9.3M missed consensus by ~21% (actual $8.5M vs. $10.8M estimate). Gross margin compressed sequentially to 20.3% from 21.5% in Q2. *
  • Guidance was lowered across the board: sales to $860–$870M (prior $860–$890M), adjusted gross margin to 21.0–21.5% (prior 22.0–22.25%), adjusted operating margin to 0.25–0.50% (prior 0.75–1.25%), and adjusted EBITDA to $30–$32M (prior $34–$38M). Adjusted FCF cut to $20–$25M (prior $25–$30M).
  • Strategic and credit actions: amended credit facility (reduced revolver to $225M; extended interest coverage relief at 2.5x through Q1’26) and reiterated intent to evaluate a sale of Control Devices; compliance leverage ratio at 3.67x vs. 4.50x maximum.
  • Execution positives: adjusted operating margin improved 100 bps q/q; MirrorEye momentum (YTD sales +78%); Brazil strength; cost wins (material -200 bps; quality-related cost -$5.3M YTD). Potential stock catalysts: lowered guidance and covenant amendment (near-term pressure) vs. MirrorEye awards ($55M lifetime) and Ford park lock extensions ($130M lifetime) (medium-term upside).

What Went Well and What Went Wrong

What Went Well

  • Margin execution: “Adjusted operating margin improved by 100 basis points vs. Q2 2025.”
  • MirrorEye acceleration: “MirrorEye sales increased by 78% year‑to‑date compared to last year… expecting improved take rates in North America.”
  • Program wins/backlog: “New MirrorEye OEM program… $55M lifetime… Ford park lock actuator extensions… ~$130M lifetime… Leak Detection Module award.”
  • Management quote: “Excluding non‑operating FX expense of $2.4 million, adjusted EBITDA was $11.7 million, or 5.6% of sales… a 200 basis point improvement.”

What Went Wrong

  • Top-line softness: Sales declined 7.8% q/q on lower North American and European commercial vehicle production; gross margin fell to 20.3% from 21.5% in Q2.
  • FX and tariffs: Recognized $2.4M non‑operating FX expense; Control Devices overhead up due in part to tariff‑related costs.
  • Guidance cuts: FY’25 revenue, margins, EBITDA, and adjusted FCF all reduced given macro volume reductions; compliance leverage ratio ticked up to 3.67x.

Financial Results

Core Metrics vs. Prior Year and Prior Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$213.8 $228.0 $210.3
GAAP EPS ($)$(0.26) $(0.34) $(0.34)
Adjusted EPS ($)—$(0.25) $(0.18)
Gross Margin (%)~20.8% (GP $44.5 on $213.8M) 21.5% 20.3%
Adjusted Operating Margin (%)0.7% 0.2% 1.2%
Adjusted EBITDA ($USD Millions)$9.2 $4.6 $9.3
Adjusted EBITDA Margin (%)~4.3% (9.2/213.8) 2.0% 4.4%

Consensus vs. Actual (S&P Global)

MetricQ3 2025 EstimateQ3 2025 Actual
Revenue ($USD)$203.1M*$210.3M*
EBITDA ($USD)$10.8M*$8.5M*

Values with asterisk retrieved from S&P Global.

Segment Breakdown (Q3 2025)

SegmentNet Sales ($USD Millions)q/q Change vs. Q2y/y Change vs. Q3’24Adjusted Operating Income ($USD Millions)
Electronics$128.0 -$21.6 vs. $149.6 -$7.6 vs. $135.7 $6.7
Control Devices$72.5 +$1.3 vs. $71.2 -$2.8 vs. $75.3 (incl. interco; net $74.3) $1.5
Stoneridge Brazil$18.9 (net $18.862) +$3.6 vs. $15.3 +$5.2 vs. $13.6 $2.7 operating income

KPIs

KPIQ3 2025
MirrorEye YTD Sales Growth+78%
Quality-Related Cost Improvement (YTD)$5.3M reduction
Cash & Equivalents$54.0M
Total Debt$171.1M
Net Debt$117.2M
Adjusted Free Cash Flow (YTD)$16.2M
Compliance Leverage Ratio3.67x (max 4.50x)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SalesFY 2025$860M–$890M $860M–$870M Lowered (midpoint -$10M)
Adjusted Gross MarginFY 202522.0%–22.25% 21.0%–21.5% Lowered
Adjusted Operating MarginFY 20250.75%–1.25% 0.25%–0.50% Lowered
Adjusted EBITDAFY 2025$34M–$38M $30M–$32M Lowered
Adjusted Free Cash FlowFY 2025$25M–$30M $20M–$25M Lowered

Management cited lower OEM production volumes (North America/Europe CV) and the Q3 non‑operating FX expense as drivers of the reductions.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
MirrorEye adoption & awardsQ1: Record sales; OEM ramp; bus next‑gen introduced. Q2: Largest global MirrorEye extension ($535M lifetime); record quarterly sales; NA OEM option availability. New OEM award ($55M lifetime; 25–30% initial take rate); YTD sales +78%; stronger EU take rates; improving NA take rates. Strengthening
Tariffs/macroQ1: Limited direct tariff impact; mitigation actions. Q2: ~$0.5M tariff costs; maintained guidance partly offset by FX. Control Devices overhead up due in part to tariffs; market/tariff uncertainty impacting volume; guidance cut. Headwinds
Supply chain risksQ1: Managed quality and materials; inventory actions. CFO flagged aluminum supplier fire (NA) and potential Nexperia component disruptions; monitoring. Elevated risk
Cost & quality executionQ1: Material -220 bps; quality -$2.5M vs. Q4; margin expansion. Q2: Quality -$0.3M; operating cost control. Material costs improved 200 bps; YTD quality -$5.3M; adjusted op margin +100 bps q/q. Improving
Regional trends (Brazil)Q1: OEM growth; margin expansion. Q2: Stable OEM; margin up. Sales +23.5% q/q; margin +790 bps; strong local OEM demand. Strengthening
Credit/covenantsQ2: Target ~2.5x end‑year compliance leverage; repatriated $43.8M; net debt down. Interest coverage relief at 2.5x through Q1’26; compliance leverage 3.67x; revolver reduced to $225M. Stabilization actions
Strategic review (Control Devices)Q2: Initiated review focused on sale. Review ongoing; sale proceeds would reduce debt. Ongoing

Management Commentary

  • CEO: “Excluding non‑operating foreign currency expenses of $2.4 million, adjusted EBITDA was $11.7 million… a 200 basis point improvement.”
  • CEO: “Mirai sales have increased by 78% year‑to‑date… we are now expecting improved take rates in North America relative to our prior expectations.”
  • CFO: “We have amended our existing credit facility to extend our interest coverage ratio relief by maintaining the same ratio as this quarter, or 2.5x, through the first quarter of next year… we expect to remain in compliance with all of our covenant ratios.”
  • CFO: “We are updating our full‑year revenue guidance… to $860–$870 million… updating adjusted EBITDA to $30–$32 million… reflecting $2.4 million of non‑operating foreign currency expense and ~$3 million contribution impact from reduced revenue.”

Q&A Highlights

  • No analyst questions were recorded on the call; management reiterated margin progress, program awards, credit facility amendments, and strategic review status.
  • Clarifications: Market weakness (Class 8 demand) and tariff uncertainty driving reduced production volumes; Mirai take rates expected to offset some declines.

Estimates Context

  • Revenue beat: Q3 actual $210.3M vs. S&P Global consensus $203.1M (+3.5%).
  • EBITDA miss: S&P Global actual $8.5M vs. consensus $10.8M (~21% below); company’s adjusted EBITDA was $9.3M.
  • EPS consensus: Not available from S&P Global for the quarter; company reported GAAP EPS $(0.34) and adjusted EPS $(0.18).

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Guidance cuts and compliance leverage at 3.67x may pressure the stock; watch for additional FX/tariff impacts and Q4 CV production updates.
  • Execution: Despite lower volumes, adjusted operating margin expanded 100 bps and adjusted EBITDA more than doubled q/q; material and quality cost programs are delivering.
  • Growth drivers: MirrorEye trajectory (YTD +78%, new $55M OEM award, EU take rates strong, NA take rates improving) and Ford park lock extensions ($130M lifetime) support medium-term revenue and margin expansion.
  • Strategic optionality: Potential Control Devices sale could de‑lever and refocus capital on electronics/vision; monitor timeline and valuation.
  • Liquidity/covenants: Amended facility (revolver $225M; interest coverage relief) and expected covenant compliance reduce refinancing risk ahead of Nov 2026 maturity.
  • Brazil contribution: Strong OEM demand and margin expansion provide diversified earnings support.
  • Estimates: Street may lower EBITDA/ margin expectations post‑guide; revenue resilience (MirrorEye) could cushion revisions.