Stoneridge (SRI) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw significant margin expansion and earnings growth, with gross margin up 250 bps sequentially, adjusted operating margin up 210 bps, adjusted EBITDA margin up 410 bps, and adjusted EPS rising to $0.17, driven by material cost reductions and operational excellence.

• Net income was $2.8M, up from a net loss of $3.0M in Q2 2023, as lower D&D and SG&A costs, favorable FX, and business realignment benefits offset an 11.2% year-over-year sales decline to $237.1M.

• Key product launches included MirrorEye OEM systems with Volvo in Europe and Peterbilt in North America, with strong customer feedback, incremental orders, and a major Volvo order for 1,500 vehicles.

• Advanced AI and software development, including predictive algorithms and object detection, are being commercialized and piloted, notably with Volvo Bus for an AI-based Fuel Advice system.

• Natalia Noblet was appointed President of Electronics, effective September 1, 2024.

Financial highlights

• Q2 2024 sales were $237.1M, gross profit $53.7M (22.7% margin), adjusted operating income $5.4M (2.3% margin), and adjusted EBITDA $16.1M (6.8% margin), all showing sequential improvement.

• Adjusted EPS for Q2 was $0.17, a $0.39 improvement over Q1.

• Favorable FX impact of $2.3M offset prior quarter headwinds; inventory reduced by $9M in H1 2024.

• Q2 net income was $2.8M, compared to a net loss of $3.0M in Q2 2023.

• Cash and cash equivalents at June 30, 2024, were $42.1M.

Outlook and guidance

• Full-year 2024 revenue guidance updated to $940–$970M (midpoint $955M), reflecting FX headwinds and lower OEM production volumes.

• Gross margin midpoint guidance increased by 50 bps to 22.75%–23.0%; adjusted operating and EBITDA margin guidance reduced due to lower sales leverage.

• Adjusted EPS guidance narrowed to $0.18–$0.28 (midpoint $0.23), reflecting lower sales and higher tax expense.

• Q3 revenue expected to be seasonally lower, with Q4 improvement anticipated.

• Net debt to EBITDA compliance ratio expected to improve to ~2.5x by year-end.