Stoneridge (SRI) Stephens 26th Annual Investment Conference | NASH2024 summary

Business overview and product segments

• Focuses on electrical and electronic products for transportation, driven by trends like safety and electrification.

• Operates in three segments: Control Devices (powertrain, actuators, sensors), Electronics (driver info, vision, connectivity), and Brazil (shifting from aftermarket to OE support and engineering hub).

• Major customers include PACCAR, Volvo, Daimler Truck, and TRATON, with global reach in both passenger and commercial vehicles.

• MirrorEye camera system and Smart 2 Tachograph are key products, with regulatory-driven adoption in Europe and expansion in North America.

• Brazil segment now serves as a technical and engineering center, supporting global customers and innovation.

Margin improvement and operational initiatives

• Margin expansion targeted through top-line growth, especially via new product launches and standardization of MirrorEye on key truck models.

• Material cost reduction pursued through supplier negotiations, design simplification, and operational excellence.

• Focus on minimizing cost of poor quality (COPQ) by enforcing process compliance and addressing warranty and scrap issues.

• Efficiency improvements include footprint rationalization and centralization of functions for global consistency.

• Expansion in off-road and aftermarket vision products, targeting agricultural and industrial sectors.

Market outlook and growth drivers

• Macroeconomic softness expected to persist into 2025, with potential recovery in the second half, especially in commercial vehicles.

• New product launches and content growth expected to drive outperformance versus end markets, even in a flat environment.

• MirrorEye and Smart 2 Tachograph launches and retrofits provide significant near-term and mid-term revenue opportunities.

• Aftermarket and regulatory-driven demand in Europe for Smart 2 Tachograph expected to boost revenue and margins.

• Pipeline includes new business in emissions control and opportunities from Tier 1 supplier exits in conventional segments.