Stoneridge Inc (SRI) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $213.8 million, a decrease of 9.8% compared to the second quarter.

  • Adjusted Operating Profit: $700,000, with an adjusted operating margin of 0.3%.

  • Adjusted EBITDA: $9.2 million, resulting in an adjusted EBITDA margin of 4.3%.

  • Cash Generation: $13.3 million generated in the first nine months, an improvement of $31.3 million compared to the same period in 2023.

  • Inventory Reduction: $11.3 million reduction in inventory in the first nine months of 2024.

  • Control Devices Sales: $74.3 million, a decrease of 8.1% from the second quarter.

  • Electronics Sales: $135.7 million, a decrease of approximately 12% from the second quarter.

  • Stoneridge Brazil Sales: Increased by approximately 15% compared to the second quarter.

  • Full Year Revenue Guidance: Updated to approximately $900 million.

  • Net Debt to EBITDA Ratio: Approximately 2.8 times for compliance purposes.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Stoneridge Inc (NYSE:SRI) generated $13.3 million in cash during the first nine months of 2024, marking an improvement of $31.3 million compared to the same period in 2023.

  • The company has made significant progress with its MirrorEye technology, which is becoming standard equipment on several customer models, indicating strong market acceptance.

  • Stoneridge Inc (NYSE:SRI) announced a new award for its leak detection module, a strategic technology poised for growth amid the global hybrid vehicle expansion.

  • The company has successfully reduced inventory by $11.3 million, contributing to improved cash performance.

  • Stoneridge Inc (NYSE:SRI) continues to expand its retrofit applications with new partnerships, demonstrating broader market acceptance of its MirrorEye technology.

Negative Points

  • Third quarter sales decreased by 9.8% compared to the second quarter, impacted by macroeconomic pressures and typical seasonality.

  • Adjusted Operating Margin declined by 200 basis points over the second quarter, primarily due to lower gross margin.

  • Adjusted EBITDA margin fell by 250 basis points versus the second quarter, driven by unfavorable sales mix and macroeconomic pressures.

  • The company updated its full-year 2024 revenue guidance to $900 million, down from the previous midpoint of $1 billion, due to continued production headwinds.

  • MirrorEye revenue for the year is expected to be lower than initially anticipated, with a slower-than-expected ramp-up in North America.

Q & A Highlights

Q: With the current weak end market, what can Stoneridge do to drive revenue growth into 2025 if the challenging macro environment persists? A: James Zizelman, President and CEO, mentioned that Stoneridge can focus more on the aftermarket and non-OEM type orders, which are not tied to regular production runs. This focus could drive additional revenue by prioritizing these areas. Matthew Horvath, CFO, added that the MirrorEye launches and the move to make it standard equipment on several vehicles could also drive significant growth, as these are not necessarily macro-driven.

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