Executive Summary

Q4 2024 was operationally challenged: sales were $218.2M, gross profit $42.7M (19.5%), operating loss $(4.4)M, net loss $(6.1)M, and adjusted EBITDA $6.0M as quality/warranty and inventory charges weighed on profitability .
The company initiated 2025 guidance and 2026 targets: FY25 revenue $860–$890M (midpoint $875M), gross margin 22.0–22.5%, operating margin 0.75–1.25%, EBITDA $38–$42M; 2026 targets of ≥$975M revenue and ≥$70M EBITDA (7.2%) .
Growth drivers are intact: MirrorEye revenue grew 22% in 2024 to ~$66M and is expected to almost double to ~$120M in 2025, with new OEM launches (Volvo VNL NA, DTNA Freightliner Cascadia) and higher take rates; Smart2 tachograph posted record Q4 revenue (> $17M) .
Cash performance improved sharply: FY24 free cash flow was $23.8M; inventory reduced $36.4M (including $25.1M in Q4); cash rose to $71.8M; compliance net debt/TTM EBITDA was 3.08x after a credit facility amendment providing near-term covenant relief .
Stock reaction catalyst: visibility into MirrorEye OEM ramp and quality-cost normalization; potential upside if OEM volumes track above management’s conservative FY25 view (vs IHS flat CV outlook) and if 2024’s one-time costs roll off as guided .

What Went Well and What Went Wrong

What Went Well

“Outperformed weighted-average OEM end markets by 490 bps” on 2024 sales, driven by MirrorEye (+22% YoY to ~$66M) and SMART2 tachograph (~83% YoY growth) .
Cost execution: “material costs improved by 120 bps” and “direct labor improved by 30 bps,” helping hold gross margins relatively in line despite revenue declines .
Cash discipline: FY24 free cash flow of $23.8M, inventory down $36.4M (with $25.1M in Q4) — management emphasized ongoing working-capital focus for 2025 .
Quote (CEO Jim Zizelman): “We continued to focus on the execution of our major program launches, material cost reductions, continuous improvement in our manufacturing facilities and structural cost control.”

What Went Wrong

Q4 profitability was hit by “elevated warranty and other quality-related costs” and an excess inventory charge tied to a faster-than-expected program wind-down; adjusted EBITDA fell to $6.0M (2.7%) .
Segment headwinds: Control Devices Q4 sales fell 16.3% YoY on lower NA passenger volumes and program wind-downs; Electronics Q4 adjusted operating margin fell 390 bps YoY on higher D&D (lower customer reimbursements) and SG&A .
Analyst concern: engineering reimbursements slipped into 2025; management cited timing variability with program hurdles and supplier changes, but expects recognition in 2025 .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Sales ($USD Millions)	$229.5	$213.8	$218.2
Gross Profit ($USD Millions)	$45.5	$44.5	$42.7
Operating Income (Loss) ($USD Millions)	$6.0	$0.3	$(4.4)
Net Income (Loss) ($USD Millions)	N/A	$(7.1)	$(6.1)
Diluted EPS ($USD)	N/A	$(0.26)	$(0.22)
Adjusted EBITDA ($USD Millions)	$15.6	$9.2	$6.0

Segment performance and YoY/seq context:

Segment	Q3 2024 Sales ($M)	Q4 2024 Sales ($M)	Q4 2024 YoY Change
Electronics	$135.7	$149.4	+1.8% vs adj. Q4’23
Control Devices	$74.3	$63.2	−16.3% YoY
Stoneridge Brazil	$13.6	$12.4	−$1.5M YoY (FX −$2.0M)

KPIs and cash:

KPI	Q3 2024	Q4 2024	FY 2024
MirrorEye revenue ($M)	N/A	+$3.1 vs Q3 (Volvo ramp)	~$66
SMART2 tachograph revenue ($M)	N/A	>$17	~+$27 YoY growth vs 2023 tachograph
Free Cash Flow ($M)	N/A	N/A	$23.8
Inventory change ($M)	−$11.3 YTD	−$25.1 Q4	−$36.4
Cash & Equivalents ($M)	$54.1	$71.8	$71.8
Compliance Net Debt / TTM EBITDA	2.79x	3.08x	3.08x

Estimate vs actuals: We attempted to retrieve S&P Global consensus for Q4 2024 revenue, EPS, and EBITDA but the request exceeded the daily limit; Street comparisons were unavailable at time of analysis. We therefore cannot assert beats/misses versus consensus for Q4 2024.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	FY 2025	None	$860–$890 (midpoint $875)	Initiated
Gross Margin (%)	FY 2025	None	22.0–22.5	Initiated
Operating Margin (%)	FY 2025	None	0.75–1.25	Initiated
EBITDA ($M)	FY 2025	None	$38–$42 (4.4–4.7%)	Initiated
Free Cash Flow ($M)	FY 2025	None	$25–$30	Initiated
Revenue Target ($M)	FY 2026	None	≥$975	Target set
EBITDA Target ($M, %)	FY 2026	None	≥$70 (~7.2%)	Target set

FY 2024 reference (from Q3 update): Guidance was revised to revenue $895–$905M, adj. EBITDA $42–$44M (~4.7%), adj. EPS $(0.35)–$(0.40) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Quality/warranty costs	Focus on reducing quality costs; non-operating FX and equity impacts also weighed on EBITDA	Elevated Q4 warranty/quality costs and inventory charge; issues “contained”; expect normalization in 2025	Improving processes; near-term headwinds
MirrorEye OEM adoption	Standard equipment at DAF and Volvo FH Aero; new DTNA program announced; European brand launch	NA launches at Volvo VNL and DTNA Cascadia; higher take rates expected; FY25 MirrorEye ~$120M	Accelerating
Connected trailer	Not highlighted in Q3 detail	Suite launching in 2025 (backup camera, trailer systems via hard-wired link)	New initiative ramping
Tariffs/macro	CV and auto end-markets under pressure; outlook flat-to-improving late 2025; 2027 emissions prebuy	Monitoring potential Mexico tariffs; mitigation via supply chain/pricing strategies	Managed risk
Working capital & cash	YTD cash +$31.3M; inventory −$11.3M; compliance leverage 2.79x	FY FCF $23.8M; inventory −$36.4M (−$25.1M in Q4); cash $71.8M; leverage 3.08x after amendments	Positive execution

Management Commentary

CEO (Zizelman): “Our focus remained on improving the fundamentals… including MirrorEye and the Smart 2 tachograph… 120-basis point improvement in material costs and a 30-basis point improvement in direct labor costs… positive free cash flow of approximately $24 million… inventory balances declined by $36 million” .
CFO (Horvath): 2025 guidance assumes ~3.8% OEM volume decline vs 2024; MirrorEye revenue ~$120M (almost double 2024), offsetting end-of-life roll-offs; EBITDA $38–$42M with quality/material/structural cost improvements .
Quality/process: “We have instituted processes to find and address existing quality issues quickly… built-in quality… reduce the time until response” .
Long-term targets: 2026 revenue ≥$975M and EBITDA ≥$70M; 2029 revenue $1.3–$1.45B and EBITDA $160–$200M (12.3–13.8%) driven by OEM programs and cost initiatives .

Q&A Highlights

Engineering reimbursements and quality costs: Q4 variance tied to timing of customer funding and specific incidents; management expects reimbursements and quality cost improvements in 2025, with foundational process changes in place .
SMART2 tachograph outlook: FY25 contribution expected to be “fairly stable” as aftermarket regulation rollouts continue and OEM volumes persist .
Inventory trajectory: Despite 2026 growth, management believes inventory can still improve vs current levels; not expecting a significant working-capital build into 2026 .
Macro cadence: FY25 revenue split even between H1/H2; EBITDA more second-half weighted as NA MirrorEye programs launch and structural cost improvements ramp .

Estimates Context

We attempted to fetch S&P Global consensus for Q4 2024 Revenue, EPS, and EBITDA as well as prior quarters; the request exceeded the daily limit, so Street comparisons were unavailable at time of analysis. Without consensus, we cannot definitively label beats/misses versus Wall Street for Q4 2024.
Company guidance and targets provide directional context: FY25 midpoint revenue $875M, EBITDA $40M (4.6%) with quality/material cost normalization and MirrorEye OEM ramp as key drivers .

Key Takeaways for Investors

MirrorEye OEM ramp is the core growth catalyst for 2025–2026; watch early take-rate data on Volvo VNL NA and DTNA Cascadia launches and European standard-equipment expansions for upside vs guidance .
Near-term profit recovery hinges on quality-cost normalization and structural cost reductions; management expects Q4-specific issues to be contained and to roll off in 2025 .
Cash discipline is improving: sustained inventory reduction and positive FCF are de-risking the balance sheet alongside covenant amendments; target 2.0–2.5x compliance leverage by YE25 .
Control Devices remains pressured by NA passenger volumes and program roll-offs; margin stability in 2025 depends on continued material and manufacturing improvements .
Connected trailer suite offers an adjacency that can compound MirrorEye’s value proposition starting in 2025; monitor fleet adoption and feature set expansion .
Trading implications: near-term sentiment may pivot on clarity around Q1 cadence (EBITDA ~Q4’24 level) and evidence of quality-cost reduction; medium-term thesis rests on OEM program maturing, rising MirrorEye take rates, and execution on cost roadmap .

Sources: Q4 2024 8-K and press release, earnings call transcripts, and relevant Q3/Q4 press materials .

STONERIDGE INC (SRI)·Q4 2024 Earnings Summary