On July 31, 2024, Stoneridge Inc (SRI, Financial) released its 8-K filing for the second quarter of 2024, showcasing a robust performance that surpassed analyst expectations. Stoneridge Inc is a manufacturer of electrical and electronic components used in automotive vehicles, with a significant focus on the Electronics segment, which generates the majority of its revenue.
Q2 2024 Financial Highlights
Stoneridge Inc reported sales of $237.1 million, slightly below the estimated revenue of $242.60 million. However, the company achieved an earnings per share (EPS) of $0.10, significantly outperforming the estimated EPS of -$0.02. Adjusted EPS stood at $0.17.
Key financial metrics for Q2 2024 include:
| Metric | Q2 2024 |
|---|---|
| Sales | $237.1 million |
| Gross Profit | $53.7 million (22.7% of sales) |
| Operating Income | $3.4 million |
| Adjusted Operating Income | $5.4 million (2.3% of sales) |
| Adjusted EBITDA | $16.1 million (6.8% of sales) |
| EPS | $0.10 |
| Adjusted EPS | $0.17 |
Performance Analysis
Stoneridge Inc's performance in Q2 2024 was driven by strong margin expansion, with gross profit increasing by 250 basis points relative to Q1 2024. The company reported an operating income of $3.4 million, resulting in an adjusted operating income of $5.4 million, up by 210 basis points from the previous quarter. Adjusted EBITDA also saw a significant increase, reaching $16.1 million, a 410 basis point improvement over Q1 2024.
Jim Zizelman, president and chief executive officer, commented, “Our second quarter performance highlights our continued focus on improving the fundamentals of our business leading to significantly improved margins and significant outperformance relative to our prior expectations. This was primarily driven by continued material cost reductions, improved operational excellence, including reduced quality-related costs, and operating cost control as we continue to execute on the key initiatives we set at the beginning of the year.”
Segment Performance
The Electronics segment, which is the largest revenue generator for Stoneridge Inc, reported sales of $153.5 million, a decrease of 6.4% compared to the same period in 2023. This decline was primarily due to lower sales in the European and North American commercial vehicle end markets. However, the segment's adjusted operating margin improved by 230 basis points to 7.6%.
The Control Devices segment reported sales of $80.9 million, a 13.1% decrease from Q2 2023, mainly due to lower sales in the North American passenger vehicle end market and lower China automotive sales. The segment's operating margin decreased by 130 basis points to 4.6%.
Stoneridge Brazil reported sales of $11.8 million, a decrease of $3.1 million compared to Q2 2023, primarily due to lower sales in local OEM products and tracking devices. The segment's operating performance was approximately break-even.
Cash and Debt Balances
As of June 30, 2024, Stoneridge Inc had a compliance net debt of $161.4 million, resulting in a net debt to trailing twelve-month EBITDA compliance leverage ratio of 2.89x, an improvement of 0.24x compared to December 31, 2023. The company continues to focus on operating performance and working capital improvement, particularly inventory reduction, which declined by $9.0 million in the first half of the year.
2024 Full-Year Guidance Update
Stoneridge Inc has updated its full-year 2024 guidance, reducing the revenue midpoint by $45 million to reflect updated FX rates, OEM production volumes, and potential volatility in non-OEM and customer demand-based products. The new revenue guidance range is $940 million to $970 million, with a midpoint of $955 million. The company has increased its gross margin midpoint guidance by 50 basis points to reflect continued material cost improvement and operational excellence.
Matt Horvath, chief financial officer, commented, “We are updating our full-year 2024 revenue guidance to reflect updated foreign currency rates, updated OEM production volumes and current expectations for non-OEM and customer demand-based products. This results in a midpoint of $955 million for the year. Due primarily to our year-to-date performance, expectation of continued reduction in material costs and a continued focus on operational excellence, we are increasing our full-year gross margin expectations by 50 basis points.”
Stoneridge Inc remains focused on improving its financial performance and maintaining its robust approach to technology innovation and growth. The company expects to continue reducing inventory balances and improving its cash position and leverage profile throughout the year.
Explore the complete 8-K earnings release (here) from Stoneridge Inc for further details.
