Stoneridge Reports Strong Growth Amidst Market Challenges

Stoneridge ((SRI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Stoneridge’s Earnings Call Highlights Strong Growth Amidst Challenges

The recent earnings call from Stoneridge painted a picture of robust growth, particularly in the MirrorEye and SMART 2 tachograph segments, alongside improvements in gross margins and free cash flow. However, the company is navigating challenges related to tariffs and production forecast volatility, which were notable concerns during the call.

MirrorEye Revenue Growth

MirrorEye revenue saw a significant increase of 24% compared to the fourth quarter of 2024. This growth was primarily driven by strong sales in the bus market and the successful ramp-up of OEM programs, showcasing the product’s increasing market penetration and acceptance.

Adjusted Gross Margin Improvement

Stoneridge reported a 210 basis point improvement in adjusted gross margin for the first quarter. This improvement was attributed to material cost reductions and a decrease in quality-related costs, reflecting the company’s effective cost management strategies.

Free Cash Flow Increase

The company’s free cash flow rose to approximately $4.9 million, marking an increase of about $1.5 million from the first quarter of the previous year. This increase highlights Stoneridge’s enhanced operational efficiency and cash management.

Record Sales for SMART 2 Tachograph

The SMART 2 tachograph achieved record quarterly sales, driven by sustained strong demand. This performance underscores the product’s critical role in Stoneridge’s portfolio and its contribution to the company’s overall revenue growth.

Stoneridge Brazil Growth

Stoneridge Brazil reported first-quarter sales of $14.4 million, representing a 16% growth relative to the fourth quarter of last year. This growth indicates the region’s expanding market presence and the effectiveness of localized strategies.

Tariff Exposure and Market Uncertainty

Despite significant market volatility due to tariffs, Stoneridge has implemented strategies to mitigate these impacts. The company remains focused on adjusting its supply chain to maintain stability and minimize tariff exposure.

Higher SG&A Costs

The earnings call revealed higher SG&A costs, primarily due to the normalization of incentive compensation to annual targeted amounts. This adjustment reflects the company’s commitment to aligning compensation with performance targets.

Volatile Production Forecasts

The company is facing reduced full-year production volume expectations, particularly in the latter half of the year, due to volatile third-party production forecasts. This presents a challenge that Stoneridge is actively addressing.

Forward-Looking Guidance

Stoneridge provided a comprehensive overview of its financial performance and future guidance during the call. The company highlighted an adjusted gross margin improvement and a significant increase in MirrorEye revenue. Despite global tariff uncertainties, Stoneridge has managed to mitigate potential impacts through strategic supply chain adjustments. The company maintains its full-year guidance, expecting continued growth driven by strategic initiatives and new product launches.

In summary, Stoneridge’s earnings call reflected a positive sentiment with strong growth in key segments and improved financial metrics. However, the company is also facing challenges related to tariffs and production forecasts. Overall, Stoneridge remains optimistic about its growth prospects, supported by strategic initiatives and effective cost management.