SEC Form 10-Q filed by Stoneridge Inc.

4/30/25 5:22:26 PM ET

$SRI

Auto Parts:O.E.M.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-13337

STONERIDGE, INC

(Exact name of registrant as specified in its charter)


Ohio						34-1598949
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

39675 MacKenzie Drive, Suite 400, Novi, Michigan						48377
(Address of principal executive offices)						(Zip Code)


			(248) 489-9300
			Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, without par value

SRI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

xYes oNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

xYes oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer x	Non-accelerated filer o
Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). oYes xNo

The number of Common Shares, without par value, outstanding as of April 25, 2025 was 27,846,292.

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STONERIDGE, INC. AND SUBSIDIARIES

INDEX

Page

PART I–FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024

Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2025 and 2024

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2025 and 2024

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2025 and 2024

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three Months Ended March 31, 2025 and 2024

Notes to Condensed Consolidated Financial Statements (Unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II–OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Forward-Looking Statements

Portions of this report on Form 10-Q contain “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and may include statements regarding the intent, belief or current expectations of the Company, with respect to, among other things, our (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, (iv) growth opportunities related to awarded business and (v) operational expectations. Forward-looking statements may be identified by the words “will,” “may,” “should,” “designed to,” “believes,” “plans,” “projects,” “intends,” “expects,” “estimates,” “anticipates,” “continue,” and similar words and expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by these statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other factors:

•the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis, including the impact of potential tariffs and trade considerations on their operations and output;

•fluctuations in the cost and availability of key materials and components (including semiconductors, printed circuit boards, resin, aluminum, steel and copper) and our ability to offset cost increases through negotiated price increases with our customers or other cost reduction actions, as necessary;

•global economic trends, competition and geopolitical risks, including impacts from ongoing or potential global conflicts and any related sanctions and other measures, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and other countries;

•tariffs specifically in countries where we have significant direct or indirect manufacturing or supply chain exposure and our ability to either mitigate the impact of tariffs or pass any incremental costs to our customers;

•our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions;

•the reduced purchases, loss, financial distress or bankruptcy of a major customer or supplier;

•the costs and timing of business realignment, facility closures or similar actions;

•a significant change in commercial, automotive, off-highway or agricultural vehicle production;

•competitive market conditions and resulting effects on sales and pricing;

•foreign currency fluctuations and our ability to manage those impacts;

•customer acceptance of new products;

•our ability to successfully launch/produce products for awarded business;

•adverse changes in laws, government regulations or market conditions affecting our products, our suppliers, or our customers’ products;

•our ability to protect our intellectual property and successfully defend against assertions made against us;

•liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party, or the impact of product recall or field actions on our customers;

•labor disruptions at our facilities, or at any of our significant customers or suppliers;

•business disruptions due to natural disasters or other disasters outside of our control;

•the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our revolving Credit Facility;

•capital availability or costs, including changes in interest rates;

•the failure to achieve the successful integration of any acquired company or business;

•risks related to a failure of our information technology systems and networks, and risks associated with current and emerging technology threats and damage from computer viruses, unauthorized access, cyber-attack and other similar disruptions; and

•the items described in Part I, Item IA (“Risk Factors”) in the Company’s 2024 Form 10-K.

The forward-looking statements contained herein represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

STONERIDGE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)	March 31, 2025		December 31, 2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	79,109	$	71,832
Accounts receivable, less reserves of $699 and $1,060, respectively	156,683		137,766
Inventories, net	151,794		151,337
Prepaid expenses and other current assets	30,435		26,579
Total current assets	418,021		387,514
Long-term assets:
Property, plant and equipment, net	99,289		97,667
Intangible assets, net	41,260		39,677
Goodwill	34,610		33,085
Operating lease right-of-use asset	9,607		10,050
Investments and other long-term assets, net	54,572		53,563
Total long-term assets	239,338		234,042
Total assets	$	657,359	$	621,556

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:


Accounts payable	$	97,037	$	83,478
Accrued expenses and other current liabilities	78,127		66,494
Total current liabilities	175,164		149,972
Long-term liabilities:
Revolving credit facility	203,186		201,577
Deferred income taxes	5,344		5,321
Operating lease long-term liability	6,186		6,484
Other long-term liabilities	14,383		12,942
Total long-term liabilities	229,099		226,324
Shareholders' equity:
Preferred Shares, without par value, 5,000 shares authorized, none issued	—		—
Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 27,846 and 27,695 shares outstanding at March 31, 2025 and December 31, 2024, respectively, with no stated value	—		—
Additional paid-in capital	221,130		225,712
Common Shares held in treasury, 1,120 and 1,271 shares at March 31, 2025 and December 31, 2024, respectively, at cost	(32,936)		(38,424)
Retained earnings	172,789		179,985
Accumulated other comprehensive loss	(107,887)		(122,013)
Total shareholders' equity	253,096		245,260
Total liabilities and shareholders' equity	$	657,359	$	621,556

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended March 31,
(in thousands, except per share data)	2025		2024

Net sales	$	217,890	$	239,157
Costs and expenses:
Cost of goods sold	171,593		190,800
Selling, general and administrative	31,696		30,423
Design and development	17,826		17,603
Operating (loss) income	(3,225)		331
Interest expense, net	3,167		3,634
Equity in (earnings) loss of investee	(294)		277
Other (income) expense, net	(466)		2,036
Loss before income taxes	(5,632)		(5,616)
Provision for income taxes	1,564		510
Net loss	$	(7,196)	$	(6,126)

Loss per share:
Basic	$	(0.26)	$	(0.22)
Diluted	$	(0.26)	$	(0.22)

Weighted-average shares outstanding:
Basic	27,680		27,529
Diluted	27,680		27,529

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three months ended March 31,
(in thousands)	2025		2024

Net loss	$	(7,196)	$	(6,126)

Other comprehensive income (loss), net of tax:
Foreign currency translation	12,783		(4,879)
Unrealized gain on derivatives (1)	1,343		70
Other comprehensive income (loss), net of tax	14,126		(4,809)

Comprehensive income (loss)	$	6,930	$	(10,935)


(1)			Net of tax expense of $357 and $19 for the three months ended March 31, 2025 and 2024, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three months ended March 31, (in thousands)	2025		2024

OPERATING ACTIVITIES:
Net loss	$	(7,196)	$	(6,126)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Depreciation	5,428		6,601
Amortization, including accretion of deferred financing costs	2,054		2,164
Deferred income taxes	(402)		(2,279)
(Earnings) loss of equity method investee	(294)		277
Loss on sale of fixed assets	4		266
Share-based compensation expense	1,136		1,092
Excess tax deficiency related to share-based compensation expense	440		230




Changes in operating assets and liabilities:
Accounts receivable, net	(14,610)		(6,676)
Inventories, net	5,263		3,699
Prepaid expenses and other assets	(1,379)		1,377
Accounts payable	10,792		(709)
Accrued expenses and other liabilities	9,661		9,193
Net cash provided by operating activities	10,897		9,109

INVESTING ACTIVITIES:
Capital expenditures, including intangibles	(6,070)		(5,795)
Proceeds from sale of fixed assets	82		81




Net cash used for investing activities	(5,988)		(5,714)

FINANCING ACTIVITIES:
Revolving credit facility borrowings	—		30,500
Revolving credit facility payments	—		(24,500)
Proceeds from issuance of debt	6,699		7,798
Repayments of debt	(7,260)		(7,790)

Repurchase of Common Shares to satisfy employee tax withholding	(226)		(620)
Net cash (used for) provided by financing activities	(787)		5,388

Effect of exchange rate changes on cash and cash equivalents	3,155		(1,184)
Net change in cash and cash equivalents	7,277		7,599
Cash and cash equivalents at beginning of period	71,832		40,841

Cash and cash equivalents at end of period	$	79,109	$	48,440

Supplemental disclosure of cash flow information:
Cash paid for interest, net	$	3,309	$	4,194
Cash paid for income taxes, net	$	1,852	$	2,653

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(in thousands)	Number of Common Shares outstanding	Number of treasury shares	Additional paid-in capital		Common Shares held in treasury		Retained earnings		Accumulated other comprehensive loss		Total shareholders' equity


























BALANCE DECEMBER 31, 2023	27,549	1,417	$	227,340	$	(43,344)	$	196,509	$	(92,788)	$	287,717
Net loss	—	—	—		—		(6,126)		—		(6,126)
Unrealized gain on derivatives, net	—	—	—		—		—		70		70
Currency translation adjustments	—	—	—		—		—		(4,879)		(4,879)
Issuance of Common Shares	154	(154)	—		—		—		—		—
Repurchased Common Shares for treasury, net	(36)	36	—		3,958		—		—		3,958
Share-based compensation, net	—	—	(3,484)		—		—		—		(3,484)
BALANCE MARCH 31, 2024	27,667	1,299	$	223,856	$	(39,386)	$	190,383	$	(97,597)	$	277,256

















BALANCE DECEMBER 31, 2024	27,695	1,271	$	225,712	$	(38,424)	$	179,985	$	(122,013)	$	245,260
Net loss	—	—	—		—		(7,196)		—		(7,196)
Unrealized gain on derivatives, net	—	—	—		—		—		1,343		1,343
Currency translation adjustments	—	—	—		—		—		12,783		12,783
Issuance of Common Shares	192	(192)	—		—		—		—		—
Repurchased Common Shares for treasury, net	(41)	41	—		5,488		—		—		5,488
Share-based compensation, net	—	—	(4,582)		—		—		—		(4,582)
BALANCE MARCH 31, 2025	27,846	1,120	$	221,130	$	(32,936)	$	172,789	$	(107,887)	$	253,096

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by Stoneridge, Inc. (the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s 2024 Form 10-K.

Reclassifications

Certain prior period amounts have been reclassified to conform to their 2025 presentation in the condensed consolidated financial statements.

(2) Recently Issued Accounting Standards

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures," which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, companies are required to disclose additional information about income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be adopted on a prospective basis; however, retrospective application is permitted. This ASU will modify the Company's financial statement disclosures, but will

not have a significant impact on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement – Reporting Comprehensive Income – Expense

Disaggregation Disclosures," which requires companies to disclose certain costs and expenses within the notes to the

financial statements. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within

fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact on our annual consolidated financial statement disclosures.

(3) Revenue

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Incidental items that are not significant in the context of the contract are recognized as expense. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold. Customer returns only occur if products do not meet the specifications of the contract and are not connected to any repurchase obligations of the Company.

The Company does not have any financing components or significant payment terms as payment occurs shortly after the point of sale. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Amounts billed to customers related to shipping and handling costs are included in net sales in the condensed consolidated statements of operations. Shipping and handling costs associated with outbound freight after control over a product is transferred to the customer are accounted for as a fulfillment cost and are included in cost of sales.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Revenue by Reportable Segment

Control Devices. Our Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle. This segment includes product lines such as actuators, sensors, switches and connectors. We sell these products principally to the automotive market in the North American and Asia Pacific regions. To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in the North American and Asia Pacific regions. Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”).

Electronics. Our Electronics segment designs and manufactures advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules. These products are sold principally to the commercial and off-highway vehicle markets primarily through our OEM and aftermarket channels in the European, North American and Asia Pacific regions. Our vision and safety systems are sold principally to the commercial vehicle and off-highway vehicle markets in the European and North American regions.

Stoneridge Brazil. Our Stoneridge Brazil segment primarily serves the South American region and specializes in the design, manufacture and sale of vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices. Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services and directly to OEMs. In addition, monitoring services and tracking devices are sold directly to corporate customers and individual consumers.

The following tables disaggregate our revenue by reportable segment and geographical location(1) for the three months ended March 31, 2025 and 2024:


	Control Devices				Electronics				Stoneridge Brazil				Consolidated
Three months ended March 31,	2025		2024		2025		2024		2025		2024		2025		2024
Net Sales:
North America	$	58,322	$	65,822	$	42,769	$	52,294	$	—	$	—	$	101,091	$	118,116
South America	—		—		—		—		14,274		12,216		14,274		12,216
Europe	—		—		91,043		96,374		—		—		91,043		96,374
Asia Pacific	10,511		11,336		971		1,115		—		—		11,482		12,451
Total net sales	$	68,833	$	77,158	$	134,783	$	149,783	$	14,274	$	12,216	$	217,890	$	239,157

_______________________

(1)Company sales based on geographic location are where the sale originates not where the customer is located.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Performance Obligations

For OEM and Tier 1 supplier customers, the Company typically enters into contracts to provide serial production parts that consist of a set of documents including, but not limited to, an award letter, master purchase agreement and master terms and conditions. For each production product, the Company enters into separate purchase orders that contain the product specifications and an agreed-upon price. The performance obligation does not exist until a customer release is received for a specific number of parts. The majority of the parts sold to OEM and Tier 1 supplier customers are customized to the specific customer, with the exception of camera monitoring systems (“CMS”) sold through our aftermarket channel that are mostly common across all customers. The transaction price is equal to the contracted price per part and there is no expectation of material variable consideration in the transaction price. For most customer contracts, the Company does not have an enforceable right to payment at any time prior to when the parts are shipped or delivered to the customer; therefore, the Company recognizes revenue at the point in time it satisfies a performance obligation by transferring control of a part to the customer. Certain customer contracts contain an enforceable right to payment if the customer terminates the contract for convenience and therefore are recognized over time using the cost to complete input method.

Our aftermarket products including accessories and replacement parts are focused on meeting the demand for safety, compliance and entertainment applications and are sold primarily to aftermarket distributors in our South American and European markets, as well as direct to aftermarket customers in North America. Aftermarket products have one type of performance obligation, which is the delivery of aftermarket parts and spare parts. For aftermarket customers, the Company typically has standard terms and conditions for all customers. In addition, aftermarket products have alternative use as they can be sold to multiple customers. Revenue for aftermarket part production contracts is recognized at a point in time when the control of the parts transfers to the customer, which is based on the shipping terms. Aftermarket contracts may include variable consideration related to discounts and rebates, which is included in the transaction price upon recognizing the product revenue.

A small portion of the Company’s sales are comprised of monitoring services that include both monitoring devices and fees to individual, corporate, fleet and cargo customers in our Stoneridge Brazil segment. These monitoring service contracts are generally not capable of being distinct and are accounted for as a single performance obligation. We recognize revenue for our monitoring products and services contracts over the life of the contract. There is no variable consideration associated with these contracts. The Company has the right to consideration from a customer in the amount that corresponds directly with the value to the customer of the Company’s performance to date. Therefore, the Company recognizes revenue over time using the practical expedient ASC 606-10-55-18 in the amount the Company has a “right to invoice” rather than selecting an output or input method.

Contract Balances

The Company had no material contract assets, contract liabilities or capitalized contract acquisition costs as of March 31, 2025 and December 31, 2024.

(4) Inventories

Inventories are valued at the lower of cost (using either the first-in, first-out (“FIFO”) or average cost methods) or net realizable value. The Company evaluates and adjusts as necessary its excess and obsolescence reserve on a quarterly basis. Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company has guidelines for calculating provisions for excess inventories based on the number of months of inventories on hand compared to anticipated sales or usage. Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period. Inventory cost includes material, labor and overhead. Inventories consist of the following:


	March 31, 2025		December 31, 2024
Raw materials	$	108,452	$	108,283
Work-in-progress	8,391		7,627
Finished goods	34,951		35,427
Total inventories, net	$	151,794	$	151,337

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Inventory valued using the FIFO method was $137,871 and $138,420 at March 31, 2025 and December 31, 2024, respectively. Inventory valued using the average cost method was $13,923 and $12,917 at March 31, 2025 and December 31, 2024, respectively.

(5) Financial Instruments and Fair Value Measurements

Financial Instruments

A financial instrument is cash or a contract that imposes an obligation to deliver or conveys a right to receive cash or another financial instrument. The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. The fair value of debt approximates the carrying value of debt, due to the variable interest rate on our Credit Facility and the maturity of outstanding debt.

Derivative Instruments and Hedging Activities

On March 31, 2025, the Company had open Mexican peso-denominated foreign currency forward contracts. The Company used foreign currency forward contracts solely for hedging and not for speculative purposes during 2025 and 2024. Management believes that its use of these instruments to reduce risk is in the Company’s best interest. The counterparties to these financial instruments are financial institutions with investment grade credit ratings.

Foreign Currency Exchange Rate Risk

Foreign currency transactions are remeasured into the functional currency using translation rates in effect at the time of the transaction with the resulting adjustments included on the condensed consolidated statements of operations within other (income) expense, net. These foreign currency transaction (gains) losses, including the impact of hedging activities, were $(432) and $1,944 for the three months ended March 31, 2025 and 2024, respectively.

The Company conducts business internationally and, therefore, is exposed to foreign currency exchange rate risk. The Company uses derivative financial instruments as cash flow hedges to manage its exposure to fluctuations in foreign currency exchange rates by reducing the effect of such fluctuations on foreign currency denominated intercompany transactions, inventory purchases and other foreign currency exposures.

Cash Flow Hedges

The Company entered into foreign currency forward contracts to hedge the Mexican peso currency in 2025 and 2024. These forward contracts were executed to hedge forecasted transactions and have been accounted for as cash flow hedges. As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive loss, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated other comprehensive loss fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. The cash flow hedges were highly effective. The effectiveness of the transactions was measured using regression analysis and forecasted future purchases of the currency.

In certain instances, the foreign currency forward contracts may not qualify for hedge accounting or are not designated as hedges and, therefore, are marked-to-market with gains and losses recognized in the Company’s condensed consolidated statements of operations as a component of other (income) expense, net. At March 31, 2025, all of the Company’s foreign currency forward contracts were designated as cash flow hedges.

The Company’s foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows:

Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedges

The Company holds Mexican peso-denominated foreign currency forward contracts with a notional amount at March 31, 2025 of $23,257, which expire ratably on a monthly basis from April 2025 to December 2025. The notional amounts at December 31, 2024 related to Mexican peso-denominated foreign currency forward contracts were $32,339.

The Company evaluated the effectiveness of the Mexican peso denominated forward contracts held as of March 31, 2025 and concluded that the hedges were highly effective.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

The notional amounts and fair values of derivative instruments in the condensed consolidated balance sheets were as follows:


	Notional amounts (A)				Accrued expenses and other current liabilities
	March 31, 2025		December 31, 2024			March 31, 2025		December 31, 2024
Derivatives designated as hedging instruments:
Cash flow hedges:
Forward currency contracts	$	23,257	$	32,339		$	729	$	2,429

_____________________________

(A)Notional amounts represent the gross contract of the derivatives outstanding in U.S. dollars.

Gross amounts recorded for the cash flow hedges in other comprehensive income (loss) and in net loss for the three months ended March 31 were as follows:


	Gain recorded in other comprehensive income (loss)				(Loss) gain reclassified from other comprehensive income (loss) into net loss (A)
	2025		2024		2025		2024
Derivatives designated as cash flow hedges:
Forward currency contracts	$	1,103	$	743	$	(597)	$	654

_____________________________


(A)			(Losses) gains reclassified from other comprehensive income (loss) into net loss recognized in selling, general and administrative expenses (“SG&A”) in the Company’s condensed consolidated statements of operations were $0 and $117 for the three months ended March 31, 2025 and 2024, respectively. (Losses) gains reclassified from other comprehensive income (loss) into net loss recognized in cost of goods sold (“COGS”) in the Company’s condensed consolidated statements of operations were $(597) and $537 for the three months ended March 31, 2025 and 2024, respectively.

Cash flows from derivatives used to manage foreign currency exchange risks are classified as operating activities within the condensed consolidated statements of cash flows.

Fair Value Measurements

Certain assets and liabilities held by the Company are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used. Fair values estimated using Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values estimated using Level 2 inputs, other than quoted prices, are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency and cross-currency contracts, inputs include forward foreign currency exchange rates. Fair values estimated using Level 3 inputs consist of significant unobservable inputs.

The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used.


			March 31, 2025						December 31, 2024
			Fair values estimated using
	Fair value		Level 1 inputs		Level 2 inputs		Level 3 inputs		Fair value






Financial liabilities carried at fair value:
Forward currency contracts	$	729	$	—	$	729	$	—	$	2,429


Total financial liabilities carried at fair value	$	729	$	—	$	729	$	—	$	2,429

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the three months ended March 31, 2025.

(6) Share-Based Compensation

Compensation expense for share-based compensation arrangements, which is recognized in the condensed consolidated statements of operations as a component of SG&A expense, was $1,136 and $1,092 for the three months ended March 31, 2025 and 2024, respectively.

(7) Debt

Debt consisted of the following at March 31, 2025 and December 31, 2024:


	March 31, 2025		December 31, 2024		Interest rates at March 31, 2025		Maturity
Revolving Credit Facility
Revolving Credit Facility	$	203,186	$	201,577	6.44	%	November 2026

Revolving Credit Facility

On November 2, 2023, the Company entered into the Fifth Amended and Restated Credit Agreement (the “Credit Facility”). The Credit Facility provides for a $275,000 senior secured revolving credit facility and it replaced and superseded the Fourth Amended and Restated Credit Agreement. The Credit Facility has an accordion feature, which allows the Company to increase the availability by up to $150,000 upon the satisfaction of certain conditions, including the consent of lenders providing the increase in commitments, and also includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility. The Credit Facility has a termination date of November 2, 2026. Borrowings under the Credit Facility bear interest at either the Base Rate or the SOFR rate, at the Company’s option, plus the applicable margin as set forth in the Credit Facility. The Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio.

As a result of entering into the Fifth Amended and Restated Credit Agreement, the Company capitalized $1,915 of deferred financing costs and wrote off $309 of previously recorded deferred financing costs during the year ended December 31, 2023.

The Credit Facility contains customary affirmative covenants and representations. The Credit Facility also contains customary negative covenants, which, among other things, are subject to certain exceptions, including restrictions on (i) indebtedness, (ii) liens, (iii) liquidations, mergers, consolidations and acquisitions, (iv) disposition of assets or subsidiaries, (v) affiliate transactions, (vi) continuation of or change in business, (vii) restricted payments, (viii) restrictions in agreements on dividends, intercompany loans and granting liens on the collateral, (ix) loans and investments and (x) changes in organizational documents and fiscal year. The Credit Facility contains customary events of default, subject to customary thresholds and exceptions, including, among other things, (i) non-payment of principal and non-payment of interest and fees, (ii) a material inaccuracy of a representation or warranty at the time made, (iii) a failure to comply with any covenant, subject to customary grace periods in the case of certain affirmative covenants, (iv) cross default of other debt, final judgments and other adverse orders in excess of $30,000, (v) any loan document shall cease to be a legal, valid and binding agreement, (vi) certain uninsured losses or proceedings against assets with a value in excess of $30,000, (vii) ERISA events, (viii) a change of control, or (ix) bankruptcy or insolvency proceedings.

On February 26, 2025, the Company entered into Amendment No. 1 to the Fifth Amended and Restated Credit Agreement

and Waiver (“Amendment No. 1”). Amendment No. 1 provides for certain covenant relief and restrictions during the

“Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter

ending December 31, 2025). During the Covenant Relief Period:

•the maximum leverage ratio of 3.50 was increased to 6.00 for the quarter ended March 31, 2025, 5.50 for the quarter ended June 30, 2025, 4.50 for the quarter ended September 30, 2025 and 3.50 for the quarter ended December 31, 2025;

•the minimum interest coverage ratio of 3.50 was waived for the quarter ended December 31, 2024 and was reduced to 2.00 for the quarters ended March 31 and June 30, 2025, and 2.50 and 3.50 for the quarter ended September 30, 2025 and December 31, 2025, respectively;

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

•the Company’s aggregate amount of cash and cash equivalents, defined as 100% of North American and 65% of foreign cash balances, cannot exceed $70,000;

•the sale of significant assets (as defined) will require repayment in the amount of any net cash proceeds received and result in the reduction of the Credit Facility commitment, at the lesser of $100,000 or the net cash proceeds;

•there were certain restrictions on Restricted Payments (as defined); and

•a Permitted Acquisition (as defined) could not be consummated unless otherwise approved in writing by the required lenders.

Amendment No. 1 added an additional level to the leverage ratio based pricing grid, through maturity, when the leverage

ratio is greater than 3.50.

As a result of entering into Amendment No.1, the Company capitalized $561 of deferred financing costs during the three months ended March 31, 2025.

Borrowings outstanding on the Credit Facility were $203,186 and $201,577 at March 31, 2025 and December 31, 2024, respectively.

The Company was in compliance with all Credit Facility covenants at March 31, 2025 and December 31, 2024.

The Company also has outstanding letters of credit of $1,506 at March 31, 2025 and $1,571 at December 31, 2024.

Debt

The Company’s wholly owned subsidiary located in Stockholm, Sweden (the "Stockholm subsidiary"), has an overdraft credit line that allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20,000 Swedish krona, or $1,993 and $1,809, at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025 and December 31, 2024, there were no borrowings outstanding on this overdraft credit line. During the three months ended March 31, 2025, the subsidiary borrowed and repaid 70,618 Swedish krona, or $7,036. The Stockholm subsidiary has pledged certain of its assets as collateral in order to obtain a guarantee of certain of the Stockholm subsidiary’s obligations to third parties.

The Company’s wholly owned subsidiary located in Suzhou, China (the “Suzhou subsidiary”), had lines of credit (the “Suzhou credit line”) that matured in March 2025 and allowed up to a maximum borrowing level of 20,000 Chinese yuan, or $2,740 at December 31, 2024. At December 31, 2024 there was $0 in borrowings outstanding on the Suzhou credit line. In addition, the Suzhou subsidiary had a bank acceptance draft line of credit that expired in October 2024 which facilitated the extension of trade payable payment terms by 180 days. The bank acceptance draft line of credit allowed up to a maximum borrowing level of 60,000 Chinese yuan.

(8) Loss Per Share

Basic loss per share was computed by dividing net loss by the weighted-average number of Common Shares outstanding for each respective period. Diluted loss per share was calculated by dividing net loss by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented. However, for all periods in which the Company recognized a net loss, the Company did not recognize the effect of the potential dilutive securities as their inclusion would be anti-dilutive. Potential dilutive shares of 136,118 and 298,592 for the three months ended March 31, 2025 and 2024, respectively, were excluded from diluted loss per share because the effect would be anti-dilutive.

Weighted-average Common Shares outstanding used in calculating basic and diluted earnings per share were as follows:


	Three months ended March 31,
	2025	2024
Basic weighted-average Common Shares outstanding	27,679,924	27,528,831
Effect of dilutive shares	—	—
Diluted weighted-average Common Shares outstanding	27,679,924	27,528,831

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

There were 1,002,950 and 660,124 performance-based right to receive Common Shares outstanding at March 31, 2025 and 2024, respectively. The right to receive Common Shares are included in the computation of diluted earnings per share, to the extent they are not anti-dilutive, based on the number of Common Shares that would be issuable if the end of the quarter were the end of the performance period.

(9) Accumulated Other Comprehensive (Loss) Income

Changes in accumulated other comprehensive (loss) income for the three months ended March 31, 2025 and 2024 were as follows:


	Foreign currency translation		Unrealized gain (loss) on derivatives		Total
Balance at January 1, 2025	$	(120,095)	$	(1,918)	$	(122,013)
Other comprehensive income before reclassifications	12,783		871		13,654
Amounts reclassified from accumulated other comprehensive loss	—		472		472
Net other comprehensive income (loss), net of tax	12,783		1,343		14,126
Balance at March 31, 2025	$	(107,312)	$	(575)	$	(107,887)

Balance at January 1, 2024	$	(94,256)	$	1,468	$	(92,788)
Other comprehensive (loss) income before reclassifications	(4,879)		587		(4,292)
Amounts reclassified from accumulated other comprehensive loss	—		(517)		(517)
Net other comprehensive (loss) income, net of tax	(4,879)		70		(4,809)
Balance at March 31, 2024	$	(99,135)	$	1,538	$	(97,597)

(10) Commitments and Contingencies

From time to time, we are subject to various legal actions and claims incidental to our business, including those arising out of breach of contracts, product warranties, product liability, patent infringement, regulatory matters and employment-related matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimated. Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on its consolidated results of operations or financial position.

As a result of environmental studies performed at the Company’s former facility located in Sarasota, Florida, the Company became aware of soil and groundwater contamination at the site. The Company engaged an environmental engineering consultant to assess the level of contamination and to develop a remediation and monitoring plan for the site. Soil remediation at the site was completed during the year ended December 31, 2010. A remedial action plan was approved by the Florida Department of Environmental Protection and groundwater remediation began in the fourth quarter of 2015. During the three months ended March 31, 2025 and 2024, the Company did not recognize any expense related to groundwater remediation. At March 31, 2025 and December 31, 2024, the Company accrued $217 and $244, respectively, related to expected future remediation costs. At March 31, 2025 and December 31, 2024, $117 and $144, respectively, were recorded as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets while the remaining amounts as of March 31, 2025 and December 31, 2024 were recorded as a component of other long-term liabilities. Costs associated with the recorded liability will be incurred to complete the groundwater remediation and monitoring. The recorded liability is based on assumptions in the remedial action plan as well as estimates for future remediation activities. Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company. Due to the ongoing site remediation, the Company is currently required to maintain a $1,489 letter of credit for the benefit of the buyer.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

The Company’s Stoneridge Brazil subsidiary has civil, labor, environmental and other tax contingencies (excluding income tax) for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil. As a result, no provision has been recorded with respect to these contingencies, which amounted to R$48,631 ($8,470) and R$42,834 ($6,918) at March 31, 2025 and December 31, 2024, respectively. An unfavorable outcome on these contingencies could result in significant cost to the Company and adversely affect its results of operations and cash flows.

On August 12, 2020, the Brazilian Administrative Counsel for Economic Defense (“CADE”) issued a ruling against Stoneridge Brazil for abuse of dominance and market foreclosure through its prior use of exclusivity provisions in agreements with its distributors. The CADE tribunal imposed a R$7,995 ($1,392) fine which is included in the reasonably possible contingencies noted above. The Company continues to challenge this ruling in Brazilian federal court to reverse this decision by the CADE tribunal.

Long Term Supply Commitment

In 2022, the Company entered into a long term supply agreement, as amended, with a supplier for the purchase of certain electronic semiconductor components through December 31, 2030. Pursuant to the agreement, the Company paid capacity deposits of $1,000 each in December 2022 and June 2023. The capacity deposits are recognized in prepaid and other current assets on our condensed consolidated balance sheets and amortized ratably over the life of the purchase commitment. This long term supply agreement requires the Company to purchase minimum annual volumes while requiring the supplier to sell these components at a fixed price. The Company purchased $0 and $196 of these components during the three months ended March 31, 2025 and 2024, respectively. The Company is required to purchase $5,571, $6,314, $7,463, $8,313, $841 and $1,492 of these components in each of the years 2025 through 2030, respectively.

Product Warranty and Recall

Amounts accrued for product warranty and recall claims are established based on the Company’s best estimate of the amounts necessary to settle existing and future claims on products sold as of the balance sheet dates. These accruals are based on several factors including past experience, production changes, industry developments and various other considerations. Our estimate is based on historical trends of units sold and claim payment amounts, combined with our current understanding of the status of existing claims, forecasts of the resolution of existing claims, expected future claims on products sold and commercial discussions with our customers. The key factors in our estimate are the warranty period and the customer source. The Company can provide no assurances that it will not experience material claims or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued. The current portion of the product warranty and recall reserve is included as a component of accrued expenses and other current liabilities on the condensed consolidated balance sheets. Product warranty and recall reserve included $12,231 and $10,675 of a long-term liability at March 31, 2025 and December 31, 2024, respectively, which is included as a component of other long-term liabilities on the condensed consolidated balance sheets.

In 2023, the Company received a demand for arbitration from one of our customers seeking recovery for warranty claims related to past sales of PM sensor products, a product line we exited in 2019. In March 2024, pursuant to the arbitration process, the customer submitted a formal statement of claim notification for 29,340 euro ($31,733). In May 2024, the Company responded with a formal statement of defense denying responsibility for the claim. Based on our review of the technical and legal merits, we believe these warranty claims lack substantive merit and are significantly overstated. The Company continues to vigorously defend this matter in private arbitration. While no assurances can be made as to the ultimate outcome of this matter, or any other future claims, we do not currently believe a material loss is probable.

The following provides a reconciliation of changes in product warranty and recall reserve liability:


Three months ended March 31,	2025		2024
Product warranty and recall reserve at beginning of period	$	27,523	$	21,610
Accruals for warranties established during period	4,059		5,398
Aggregate changes in pre-existing liabilities due to claim developments	681		283
Settlements made during the period	(3,960)		(3,217)
Foreign currency translation	1,732		(692)
Product warranty and recall reserve at end of period	$	30,035	$	23,382

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(11) Business Realignment

The Company regularly evaluates the performance of its businesses and cost structures, including personnel, and makes necessary changes thereto in order to optimize its results. The Company also evaluates the required skill sets of its personnel and periodically makes strategic changes. As a consequence of these actions, the Company incurs severance related costs that are referred to as business realignment charges. The Company does not expect future charges related to the previously incurred termination actions noted below.

Business realignment charges incurred by reportable segment were as follows:


	Three months ended March 31,
	2025		2024
Control Devices (A)	$	377	$	—
Electronics (B)	1,373		—

Unallocated Corporate (C)	1,077		—
Total business realignment charges	$	2,827	$	—

_____________________________________


(A)			Severance costs for the three months ended March 31, 2025 related to COGS and design and development ("D&D") were $327 and $50, respectively. The majority of the business realignment costs relate to operational efficiency initiatives at our Juarez facility.


(B)			Severance costs for the three months ended March 31, 2025 related to COGS, SG&A and D&D were $1,073, $106 and $194, respectively. The majority of the business realignment costs relate to operational efficiency initiatives at our Juarez facility.


(C)			Severance related costs for the three months ended March 31, 2025 related to SG&A were $1,077 for executive separation costs.

Business realignment charges incurred, classified by statement of operations line item were as follows:


	Three months ended March 31,
	2025		2024
Cost of goods sold	$	1,400	$	—
Selling, general and administrative	1,183		—
Design and development	244		—
Total business realignment charges	$	2,827	$	—

Reconciliations of the beginning and ending liability balances related to business realignment were as follows:


					Utilization
	Accrual as of January 1, 2025		2025 Charge to Expense		Cash		Non-Cash		Accrual as of March 31, 2025
Employee termination costs	$	411	$	2,827	$	(1,020)	$	—	$	2,218
Total	$	411	$	2,827	$	(1,020)	$	—	$	2,218


					Utilization
	Accrual as of January 1, 2024		2024 Charge to Expense		Cash		Non-Cash		Accrual as of March 31, 2024
Employee termination costs	$	1,230	$	—	$	(1,095)	$	—	$	135
Total	$	1,230	$	—	$	(1,095)	$	—	$	135

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(12) Income Taxes

For interim tax reporting, we estimate our annual effective tax rate and apply it to our year to date ordinary income. Tax jurisdictions with a projected or year to date loss for which a benefit cannot be realized are excluded.

For the three months ended March 31, 2025, income tax expense of $1,564 was attributable to the mix of earnings among tax jurisdictions, the impact of valuation allowances in certain jurisdictions and tax credits and incentives offset by U.S. taxes on foreign earnings. The effective tax rate of (27.8)% varies from the statutory rate primarily due to the impact of valuation allowances in certain jurisdictions and tax credits and incentives offset by U.S. taxes on foreign earnings.

For the three months ended March 31, 2024, income tax expense of $510 was attributable to the mix of earnings among tax jurisdictions and U.S. taxes on foreign earnings offset by the impact of valuation allowances in certain jurisdictions and tax credits and incentives. The effective tax rate of (9.1)% varies from the statutory rate primarily due to U.S. taxes on foreign earnings offset by the impact of valuation allowances in certain jurisdictions and tax credits and incentives.

(13) Segment Reporting

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer.

The Company has three reportable segments, Control Devices, Electronics and Stoneridge Brazil, which also represent its operating segments. The Control Devices reportable segment produces actuators, sensors, switches and connectors. The Electronics reportable segment produces advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules. The Stoneridge Brazil reportable segment designs and manufactures vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories telematics solutions and multimedia devices.

The accounting policies of the Company’s reportable segments are the same as those described in Note 2, “Summary of Significant Accounting Policies” of the Company’s 2024 Form 10-K. The Company’s management evaluates the performance of its reportable segments based primarily on revenues from external customers, operating income and capital expenditures. Inter-segment sales are accounted for on terms similar to those to third parties and are eliminated upon consolidation.

The Company's management, including the CODM, utilizes operating income as the key performance measure of segment

profitability to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the

segments, as management believes this measure is most reflective of the financial performance of the Company's operating

segments. The CODM regularly evaluates budget-to-actual and period-over-period variances for this metric when making

decisions about the allocation of operating and capital resources to each segment. The CODM also uses operating income

in evaluating the operating performance of each segment and as part of determining the compensation of the segment

managers and certain other employees. COGS and D&D are the significant expenses regularly reviewed by the CODM.

Other segment costs primarily include SG&A items.

The financial information presented below is for our three reportable operating segments and includes adjustments for unallocated corporate costs and intercompany eliminations, where applicable. Such costs and eliminations do not meet the requirements for being classified as an operating segment. Unallocated Corporate costs include various support functions, such as accounting/finance, executive administration, human resources, information technology and legal.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

A summary of financial information by reportable segment is as follows:


	Three months ended March 31,
	2025		2024
Net Sales:
Control Devices	$	68,833	$	77,158
Inter-segment sales	1,022		831
Control Devices net sales	69,855		77,989
Electronics	134,783		149,783
Inter-segment sales	5,751		6,341
Electronics net sales	140,534		156,124
Stoneridge Brazil	14,274		12,216
Inter-segment sales	135		—
Stoneridge Brazil net sales	14,409		12,216
Eliminations	(6,908)		(7,172)
Total net sales	$	217,890	$	239,157
Cost of Goods Sold:
Control Devices	$	57,786	$	64,010
Electronics	104,527		119,143
Stoneridge Brazil	9,169		7,494
Unallocated Corporate (A)	111		153
Total cost of goods sold	$	171,593	$	190,800
Design and Development:
Control Devices	$	4,134	$	5,108
Electronics	12,001		10,738
Stoneridge Brazil	782		772
Unallocated Corporate (A)	909		985
Total design and development	$	17,826	$	17,603
Other Segment Costs:
Control Devices	$	5,746	$	5,875
Electronics	12,751		12,814
Stoneridge Brazil	3,738		3,746
Unallocated Corporate (A)	9,461		7,988
Total other segment costs	$	31,696	$	30,423
Operating (Loss) Income:
Control Devices	$	1,165	$	2,164
Electronics	5,505		7,089
Stoneridge Brazil	585		204
Unallocated Corporate (A)	(10,480)		(9,126)
Total operating (loss) income	$	(3,225)	$	331
Depreciation and Amortization:
Control Devices	$	2,326	$	2,863
Electronics	3,540		3,861
Stoneridge Brazil	1,093		1,276
Unallocated Corporate	313		584
Total depreciation and amortization (B)	$	7,272	$	8,584

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)


Interest Expense (Income), net:
Control Devices	$	(75)	$	—
Electronics	255		603
Stoneridge Brazil	(149)		(370)
Unallocated Corporate	3,136		3,401
Total interest expense, net	$	3,167	$	3,634
Capital Expenditures:
Control Devices	$	1,063	$	1,517
Electronics	3,880		1,377
Stoneridge Brazil	298		940
Corporate (C)	160		434
Total capital expenditures	$	5,401	$	4,268


	March 31, 2025		December 31, 2024
Total Assets:
Control Devices	$	145,978	$	136,028
Electronics	400,316		365,226
Stoneridge Brazil	54,307		48,280
Corporate (C)	458,013		471,793
Eliminations	(401,255)		(399,771)
Total assets	$	657,359	$	621,556

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

The following tables present net sales and long-term assets for each of the geographic areas in which the Company operates:


Three months ended March 31	2025		2024
Net Sales:
United States	$	101,091	$	118,116
North America	$	101,091	$	118,116
Brazil	14,274		12,216
South America	$	14,274	$	12,216
Sweden	38,048		44,107
Estonia	30,198		28,448
Netherlands	21,789		20,931
Other Europe	1,008		2,888
China	11,482		12,451
Europe and Other	$	102,525	$	108,825
Total net sales	$	217,890	$	239,157


	March 31, 2025		December 31, 2024
Long-term Assets:
United States	$	88,320	$	90,111
Mexico	6,974		5,254
North America	$	95,294	$	95,365
Brazil	26,353		25,222
South America	$	26,353	$	25,222
Sweden	36,224		32,918
Estonia	8,302		8,363
Netherlands	59,206		57,677
Other Europe	623		653
China	13,336		13,844
Europe and Other	$	117,691	$	113,455
Total long-term assets	$	239,338	$	234,042

__________________________________________________________

(A)Unallocated Corporate expenses include, among other items, accounting/finance, human resources, information technology and legal costs as well as share-based compensation.

(B)These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets.

(C)Assets located at Corporate consist primarily of cash, intercompany loan receivables, fixed assets for the corporate headquarter building, leased assets, information technology assets, equity investments and investments in subsidiaries.

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STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(14) Investments

In December 2018, the Company entered into an agreement to make a $10,000 investment in a fund (“Autotech Fund II”) managed by Autotech Ventures (“Autotech”), a venture capital firm focused on ground transportation technology which is accounted for under the equity method of accounting. The Company’s $10,000 investment in the Autotech Fund II will be contributed over the expected ten-year life of the fund. The Company has contributed $8,950 to the Autotech Fund II as of March 31, 2025. The Company did not contribute to or receive distributions from Autotech Fund II during the three months ended March 31, 2025 or 2024. The Company has a 6.7% interest in Autotech Fund II. The Company recognized (gains) losses of $(294) and $277 during the three months ended March 31, 2025 and 2024, respectively. The Autotech Fund II investment recorded in investments and other long-term assets in the condensed consolidated balance sheets was $8,024 and $7,730 as of March 31, 2025 and December 31, 2024, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a global supplier of safe and efficient electronics systems and technologies. Our systems and products power vehicle intelligence, while enabling safety and security for global commercial, automotive, off-highway and agricultural vehicle markets.

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes related thereto and other financial information included elsewhere herein.

Segments

We are organized by products produced and markets served. Under this structure, our operations have been reported using the following segments:

Control Devices. This segment includes results of operations that manufacture actuators, sensors, switches and connectors.

Electronics. This segment includes results of operations from the production of advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules.

Stoneridge Brazil. This segment includes results of operations that design and manufacture vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices.

First Quarter Overview

The Company had net loss of $7.2 million, or $(0.26) per diluted share, for the three months ended March 31, 2025.

Net loss for the quarter ended March 31, 2025 increased by $1.1 million, or $(0.04) per diluted share, from net loss of $6.1 million, or $(0.22) per diluted share, for the three months ended March 31, 2024. Net sales decreased by $21.3 million, or 8.9%, compared to the three months ended March 31, 2024, primarily from lower volumes in our North American and European commercial vehicle markets for our Electronics segment and lower volumes in our North American automotive market including the expected end-of-life production for an actuator product for our Control Devices segment offset by higher OEM product sales at Stoneridge Brazil. Gross margin as a percent of sales for the quarter ended March 31, 2025 increased to 21.2% from 20.2% for the three months ended March 31, 2024 driven by lower material costs including favorable foreign exchange related variances offset by lower contribution from lower sales and business realignment costs incurred for operational efficiency initiatives at our Juarez facility. In addition, non-operating foreign currency gains and equity earnings favorably impacted results for the quarter ending March 31, 2025.

Our Control Devices segment net sales decreased by 10.8% compared to the first quarter of 2024 primarily as a result of decreases in our North American automotive market, including the expected end-of-life production for an actuator product, as well as decreases in our off-highway and China commercial vehicle markets. These decreases were offset by sales increases in our China automotive and North American commercial vehicle markets. Segment gross margin as a percentage of sales decreased due to lower contribution from lower sales levels offset by lower warranty and premium freight costs. Segment operating income decreased due to lower contribution from lower sales partially offset by lower D&D spending.

Our Electronics segment net sales decreased by 10.0% compared to the first quarter of 2024 primarily due to lower sales volumes in our North American and European commercial vehicle markets, partially mitigated by the on-going ramp-up of a recently launched European MirrorEye OEM program and higher sales of our next generation tachograph. We also experienced lower sales volume in our North American off-highway vehicle market and an unfavorable impact of foreign currency translation which were offset by higher sales in European off-highway market. Segment gross margin as a percent of sales increased compared to the prior year first quarter from lower material costs including favorable foreign exchange related variances, which were partially offset by lower contribution from lower sales and higher business realignment costs incurred for operational efficiency initiatives at our Juarez facility. Operating income for the segment decreased compared to the first quarter of 2024 because of lower gross profit and higher D&D expense as customer reimbursements declined more than spending driven by reduced launch activities.

Our Stoneridge Brazil segment net sales increased by 16.8% compared to the first quarter of 2024 primarily from higher OEM product sales offset by unfavorable foreign currency translation and lower original equipment services ("OES") channel sales. Operating income increased due to higher contribution from higher sales levels partially offset by the adverse impact of U.S. dollar denominated material purchases.

In the first quarter of 2025, SG&A expenses increased by $1.3 million compared to the first quarter of 2024 driven primarily by higher business realignment costs and professional services being offset by lower incentive compensation.

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In the first quarter of 2025, D&D costs increased by $0.2 million compared to the prior year first quarter from higher expense in our Electronics segment as customer reimbursements declined more than spending driven by reduced launch activities offset by lower D&D spending in our Control Devices segment.

At March 31, 2025 and December 31, 2024, we had cash and cash equivalents balances primarily held at our foreign locations of $79.1 million and $71.8 million, respectively, and we had $203.2 million and $201.6 million, respectively, in borrowings outstanding on our Credit Facility. The 2025 increase in cash and cash equivalents was mostly due to cash generated from operating activities including lower working capital levels.

Outlook

The Company believes that focusing on products that address industry megatrends has had and will continue to have a positive effect on both our top-line growth and financial performance. Expanding on our existing products and technology platforms with advanced capabilities, applications and data services is core to our long-term strategy. For example, we continue to develop safety, vehicle intelligence and connectivity based products, such as our OEM MirrorEye® programs in North America and Europe as well as our next generation tachograph in Europe.

In April 2025, the U.S. government announced additional tariffs on various goods imported to the U.S. and other countries announced reciprocal tariffs on goods imported to such countries, including goods used by or manufactured by Stoneridge. Some of these additional tariffs have been implemented and others have been conditionally paused, and it is reasonably possible that new or additional tariffs will be periodically announced given the current global trade environment. We continue to monitor and evaluate the direct and indirect impacts of these tariffs as well as heightened global trade disputes.

Our business model of manufacturing by regions for the regions limits the global impact of certain trade restrictions and tariffs. Our primary tariff exposure relates to our Mexico operations that sell products into the U.S., most of which are exempt under the provisions of the United States-Mexico-Canada Agreement. Further, the majority of our supply components are not subject to the additional tariffs or are compliant with exceptions. We are taking and will continue to take actions to mitigate any direct and indirect impacts of new or additional tariffs including directly or indirectly passing the additional costs through to our customers. However, these matters are changing rapidly and there is significant uncertainty as to how long and to what degree that Stoneridge and the global transportation industry will be impacted by these new or additional tariffs, the adverse global trade environment and the resulting economic uncertainty.

Based on IHS Market production forecasts, the North American automotive market is expected to decrease from 15.5 million units in 2024 to 14.0 million units in 2025. In our Control Devices segment, we remain focused on drivetrain agnostic technologies to drive new business awards as the market continues to evolve. However, we expect lower sales in 2025 related to the impact of end-of-life production for an actuator product. We expect continued volatility in our end markets as uncertainty remains related to the market’s response to tariff policies. We continue to focus on operational excellence and enterprise-wide cost reduction, including material cost reduction plans, to continue to drive margin improvement going-forward.

Based on IHS Market production forecasts published in February 2025, in 2025 the European and North American commercial vehicle end market volumes are forecasted to increase 3.9% and decrease 3.3%, respectively. In 2025 and over the long-term, we expect our Electronics’ segment sales to outperform forecasted changes in production volumes due to strong demand for our existing products and the impact of ongoing launches of our OEM MirrorEye programs in North America and Europe as well as higher sales of our next generation tachograph in Europe. We expect continued growth in MirrorEye as we launch and ramp up new and existing OEM programs in both North America and Europe, and MirrorEye systems becomes standard on key truck platforms for existing OEM programs.

In 2025, we expect net D&D spend to slightly decrease driven by a shift to spending for the development of next generation products, opposed to new product launch related spend. As a result of reduced launch activities, we expect lower customer reimbursements and capitalization of software development costs. We continue to evaluate and optimize our engineering footprint to enhance capabilities and capacity for the most efficient return on our engineering spend, including utilizing our Stoneridge Brazil engineering resources to support Electronics segment projects.

In January 2025, the International Monetary Fund forecasted the Brazil gross domestic product to grow 2.2% in 2025, a decline from forecasted growth of 3.0% in 2024. We expect our served market channels to remain relatively stable in 2025 based on current market and economic conditions. Stoneridge Brazil continues to focus on growing our OEM capabilities in-region to better support our global customers. We expect this strategy will provide opportunities for future growth and a platform to continue to rotate our local portfolio to more closely align with our global products. In addition, we continue to align our global engineering capabilities and footprint by expanding our Brazilian engineering center.

While we expect continued challenges across our end markets in 2025, we will continue to focus on overall operating cost improvement and operational execution to drive contribution margin and focus on inventory reduction to improve our cash position and reduce our leverage profile.

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Our future effective tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles and our jurisdictional mix of earnings. We monitor these factors and the impact on our effective tax rate.

Other Matters

A significant portion of our sales are outside of the United States. These sales are generated by our non-U.S. based operations, and therefore, movements in foreign currency exchange rates can have a significant effect on our results of operations, which are presented in U.S. dollars. A significant portion of our raw materials purchased by our Electronics and Stoneridge Brazil segments are denominated in U.S. dollars, and therefore movements in foreign currency exchange rates can also have a significant effect on our results of operations. In the first quarter of 2025, the U.S. Dollar strengthened against the Brazilian real, unfavorably impacting our reported results, while it weakened against the Swedish krona, favorably impacting our reported results.

We regularly evaluate the performance of our businesses and their cost structures, including personnel, and make necessary changes thereto in order to optimize our results. We also evaluate the required skill sets of our personnel and periodically make strategic changes. As a consequence of these actions, we incur severance and resignation related costs that we refer to as business realignment charges. Business realignment costs of $2.8 million and $0.0 million were incurred in the three months ended March 31, 2025 and 2024, respectively. We incurred $1.4 million in business realignment costs in the three months ended March 31, 2025 related to operational efficiency initiatives at our Juarez facility, which we expect will result in cost savings for direct and indirect labor and a more efficient overall operating structure. We expect to incur additional realignment costs related to this initiative and others in the remainder of 2025.

Because of the competitive nature of the markets we serve, we face pricing pressures from our customers in the ordinary course of business. In response to these pricing pressures we have been able to effectively manage our production costs by the combination of lowering certain costs and limiting the increase of others, the net impact of which to date has not been material. However, if we are unable to effectively manage production costs in the future to mitigate future pricing pressures, our results of operations would be adversely affected.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Condensed consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands):


Three months ended March 31,	2025				2024				Dollar increase (decrease)
Net sales	$	217,890	100.0	%	$	239,157	100.0	%	$	(21,267)
Costs and expenses:
Cost of goods sold	171,593		78.8		190,800		79.8		(19,207)
Selling, general and administrative	31,696		14.5		30,423		12.7		1,273
Design and development	17,826		8.2		17,603		7.4		223
Operating (loss) income	(3,225)		(1.5)		331		0.1		(3,556)
Interest expense, net	3,167		1.5		3,634		1.5		(467)
Equity in (earnings) loss of investee	(294)		(0.1)		277		0.1		(571)
Other (income) expense, net	(466)		(0.2)		2,036		0.9		(2,502)
Loss before income taxes	(5,632)		(2.6)		(5,616)		(2.3)		(16)
Provision for income taxes	1,564		0.7		510		0.2		1,054
Net loss	$	(7,196)	(3.3)	%	$	(6,126)	(2.6)	%	$	(1,070)

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Net Sales. Net sales for our reportable segments, excluding inter-segment sales, are summarized in the following table (in thousands):


Three months ended March 31,	2025				2024				Dollar increase (decrease)		Percent increase (decrease)
Control Devices	$	68,833	31.6	%	$	77,158	32.3	%	$	(8,325)	(10.8)	%
Electronics	134,783		61.8		149,783		62.6		(15,000)		(10.0)	%
Stoneridge Brazil	14,274		6.6		12,216		5.1		2,058		16.8	%
Total net sales	$	217,890	100.0	%	$	239,157	100.0	%	$	(21,267)	(8.9)	%

Our Control Devices segment net sales decreased $8.3 million because of decreases in our North American automotive market of $5.0 million including the impact of expected end-of-life production for an actuator product as well as decreases in our off-highway and China commercial vehicle markets of $2.2 million and $1.5 million, respectively. These decreases were partially offset by volume increases in our China automotive and North American commercial vehicle markets of $1.0 million $0.4 million, respectively.

Our Electronics segment net sales decreased $15.0 million because of lower customer production volumes in our North American and European commercial vehicle markets of $7.9 million and $5.5 million, respectively, partially mitigated by higher MirrorEye sales, including the ramp-up of a recently launched European OEM program and higher aftermarket sales for our next generation tachograph. We also experienced lower sales volumes in our North American off-highway vehicle market of $1.7 million. These decreases were offset by an increase in our European off-highway market of $2.5 million. Net sales in the first quarter of 2025 were unfavorably impacted by euro and Swedish krona foreign currency translation of $2.7 million compared to the prior year quarter.

Our Stoneridge Brazil segment net sales increased $2.1 million from higher OEM product sales partially offset by unfavorable foreign currency translation of $1.8 million and lower OES channel sales of $0.3 million.

Net sales by geographic location are summarized in the following table (in thousands):


Three months ended March 31,	2025				2024				Dollar increase (decrease)		Percent increase (decrease)
North America	$	101,091	46.3	%	$	118,116	49.4	%	$	(17,025)	(14.4)	%
South America	14,274		6.6		12,216		5.1		2,058		16.8	%
Europe and Other	102,525		47.1		108,825		45.5		(6,300)		(5.8)	%
Total net sales	$	217,890	100.0	%	$	239,157	100.0	%	$	(21,267)	(8.9)	%

The decrease in North American net sales was mostly attributable to a decrease in sales volume in our commercial vehicle, automotive and off-highway markets of $7.5 million, $5.0 million and $4.0 million, respectively. The decrease in our North American automotive market was primarily caused by lower customer volumes and the expected end-of-life production of an actuator product.

The increase in net sales in South America was from higher OEM product sales of $4.2 million partially offset by unfavorable foreign currency translation of $1.8 million and lower OES channel sales of $0.3 million.

The decrease in net sales in Europe and Other was due to decreases in customer production volumes in our European and China commercial vehicle markets of $5.5 million and $1.7 million, respectively, offset by an increase in our European off-highway and China automotive markets of $2.5 million and $1.0 million, respectively. Net sales were also impacted by an unfavorable foreign currency translation of $2.8 million.

Cost of Goods Sold and Gross Margin. Cost of goods sold decreased compared to the first quarter of 2024 and our gross margin increased to 21.2% in the first quarter of 2025 from 20.2% in the first quarter of 2024. Our material cost as a percentage of net sales decreased to 56.3% in the first quarter of 2025 from 58.9% in the first quarter of 2024. The decrease in material cost percentage was due to lower material costs including favorable foreign exchange related variances. Overhead as a percentage of net sales was 17.8% and 16.2% for the first quarter of 2025 and 2024, respectively. The increase in overhead as a percentage of sales was attributable to lower sales as overhead spending was consistent with the prior year quarter.

Our Control Devices segment gross margin decreased primarily because of lower contribution from lower sales.

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Our Electronics segment gross margin increased from the prior year first quarter because of reduced material costs including favorable foreign exchange related variances which were partially offset by lower contribution from lower sales levels and higher business realignment costs incurred for operational efficiency initiatives at our Juarez facility.

Our Stoneridge Brazil segment gross margin decreased primarily because of the unfavorable sales mix and the adverse impact of U.S. dollar denominated material purchases offset by higher contribution from higher sales levels.

Selling, General and Administrative. SG&A expenses increased by $1.3 million primarily because of higher business realignment costs and professional services being offset by lower incentive compensation.

Design and Development. D&D costs decreased by $0.2 million compared to the first quarter of 2024 from higher expense in our Electronics segment as customer reimbursements declined more than spending driven by reduced launch activities offset by lower D&D spending in our Control Devices segment.

Operating (Loss) Income. Operating (loss) income by segment is summarized in the following table (in thousands):


Three months ended March 31,	2025		2024		Dollar increase (decrease)		Percent increase (decrease)
Control Devices	$	1,165	$	2,164	$	(999)	(46.2)	%
Electronics	5,505		7,089		(1,584)		(22.3)
Stoneridge Brazil	585		204		381		186.8
Unallocated corporate	(10,480)		(9,126)		(1,354)		(14.8)
Operating (loss) income	$	(3,225)	$	331	$	(3,556)	(1074.3)	%

Our Control Devices segment operating income decreased because of lower contribution from lower sales levels offset by lower D&D spending.

Our Electronics segment operating income decreased primarily because of higher D&D expense as customer reimbursements declined more than spending as well as slightly lower segment gross profit.

Our Stoneridge Brazil segment operating income increased due to higher gross profit from higher sales levels offset by unfavorable sales mix and the adverse impact of U.S. dollar denominated material purchases.

Our unallocated corporate operating loss increased from higher SG&A related to business realignment costs.

Operating (loss) income by geographic location is summarized in the following table (in thousands):


Three months ended March 31,	2025		2024		Dollar increase (decrease)		Percent increase (decrease)
North America	$	(12,889)	$	(5,606)	$	(7,283)	(129.9)	%
South America	585		204		381		186.8
Europe and Other	9,079		5,733		3,346		58.4
Operating (loss) income	$	(3,225)	$	331	$	(3,556)	(1074.3)	%

Our North American operating loss increased due to lower contribution from lower sales levels and higher business realignment costs. Operating income in South America increased due to higher contribution from higher sales levels offset by unfavorable sales mix and the adverse impact of U.S. dollar denominated material purchases. Our operating results in Europe and Other increased because of lower material costs including favorable foreign exchange related variances which were partially offset by lower contribution from lower sales levels and higher D&D spending resulting from lower customer reimbursements.

Interest Expense, net. Interest expense, net was $3.2 million and $3.6 million for the three months ended March 31, 2025 and 2024, respectively. The decrease for the quarter ended March 31, 2025, was the result of lower interest rates on our Credit Facility outstanding balances.

Equity in (Earnings) Loss of Investee. Equity (earnings) loss for Autotech Fund II was $(0.3) million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively.

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Other (Income) Expense, net. We record certain foreign currency transaction (gains) losses as a component of other income, net on the condensed consolidated statement of operations. Other income, net of $0.5 million increased by $2.5 million compared to the first quarter of 2024 due to foreign currency transaction gains in our Electronics segment.

Provision for Income Taxes. For the three months ended March 31, 2025, income tax expense of $1.6 million was attributable to the mix of earnings among tax jurisdictions, the impact of valuation allowances in certain jurisdictions and tax credits and incentives offset by U.S. taxes on foreign earnings. The effective tax rate of (27.8)% varies from the statutory tax rate primarily due to the impact of valuation allowances in certain jurisdictions and tax credits and incentives offset by U.S. taxes on foreign earnings.

For the three months ended March 31, 2024, income tax expense of $0.5 million was attributable to the mix of earnings among tax jurisdictions and U.S. taxes on foreign earnings offset by the impact of valuation allowances in certain jurisdictions and tax credits and incentives. The effective tax rate of (9.1)% varies from the statutory tax rate primarily due to U.S. taxes on foreign earnings offset by the impact of valuation allowances in certain jurisdictions and tax credits and incentives.

Liquidity and Capital Resources

Summary of Cash Flows:


Three months ended March 31,	2025		2024
Net cash provided by (used for):
Operating activities	$	10,897	$	9,109
Investing activities	(5,988)		(5,714)
Financing activities	(787)		5,388
Effect of exchange rate changes on cash and cash equivalents	3,155		(1,184)
Net change in cash and cash equivalents	$	7,277	$	7,599

Cash provided by operating activities slightly increased compared to 2024 primarily due to cash provided from working capital levels. Cash used by receivables was unfavorable compared to 2024, however collection terms have remained consistent.

Net cash used for investing activities increased compared to 2024 due to higher capital expenditures including costs to modernize our Juarez facility offset by lower capitalized software development costs.

Net cash provided by financing activities decreased compared to 2024 due to a decrease in Credit Facility borrowings net of repayments.

As outlined in Note 7 to our condensed consolidated financial statements, the Credit Facility permits borrowing up to a maximum level of $275.0 million. This variable rate facility has an accordion feature which allows the Company to increase its availability by up to $150.0 million upon the satisfaction of certain conditions and lender consent through its expiration in November 2026. The Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio. The Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants that place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The Credit Facility had an outstanding balance of $203.2 million at March 31, 2025.

On February 26, 2025, the Company entered into Amendment No. 1 to the Fifth Amended and Restated Credit Agreement

and Waiver (“Amendment No. 1”). Amendment No. 1 provides for certain covenant relief and restrictions during the

“Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter

ending December 31, 2025). During the Covenant Relief Period:

•the maximum leverage ratio of 3.50 was increased to 6.00 for the quarter ended March 31, 2025, 5.50 for the

quarter ended June 30, 2025, 4.50 for the quarter ended September 30, 2025 and 3.50 for the quarter ended

December 31, 2025;

•the minimum interest coverage ratio of 3.50 was waived for the quarter ended December 31, 2024 and was

reduced to 2.00 for the quarters ended March 31 and June 30, 2025, and 2.50 and 3.50 for the quarter ended

September 30, 2025 and December 31, 2025, respectively;

•the Company’s aggregate amount of cash and cash equivalents, defined as 100% of North American and 65% of foreign cash balances, cannot exceed $70.0 million;

•the sale of significant assets (as defined) will require repayment in the amount of any net cash proceeds received

and result in the reduction of the Credit Facility commitment, at the lesser of $100.0 million or the net cash

proceeds;

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•there were certain restrictions on Restricted Payments (as defined); and

•a Permitted Acquisition (as defined) could not be consummated unless otherwise approved in writing by the

required lenders.

Amendment No. 1 added an additional level to the leverage ratio based pricing grid, through maturity, when the leverage

ratio is greater than 3.50.

The Company was in compliance with all covenants at March 31, 2025 and December 31, 2024. The Company has not experienced a violation that would limit the Company’s ability to borrow under the Credit Facility, as amended, and does not expect that the covenants under it will restrict the Company’s financing flexibility. However, it is possible that future borrowing flexibility under the Credit Facility may be limited as a result of lower than expected financial performance due to the adverse impact of significantly lower global demand in our markets and challenging macroeconomic conditions. The Company expects to make additional repayments on the Credit Facility when cash exceeds the amount needed for operations and to remain in compliance with all covenants.

The Company’s wholly owned subsidiary located in Stockholm, Sweden, has an overdraft credit line that allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20.0 million Swedish krona, or $2.0 million and $1.8 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025 and December 31, 2024 there were no borrowings outstanding on this overdraft credit line. During the three months ended March 31, 2025, the subsidiary borrowed and repaid 70.6 million Swedish krona, or $7.0 million. The Stockholm subsidiary has pledged certain of its assets as collateral in order to obtain a guarantee of certain of the Stockholm subsidiary’s obligations to third parties.

The Company’s wholly owned subsidiary located in Suzhou, China, had lines of credit that matured in March 2025 and allowed up to a maximum borrowing level of 20.0 million Chinese yuan, or $2.7 million at December 31, 2024. At December 31, 2024 there were no borrowings outstanding on the Suzhou credit line. In addition, the Suzhou subsidiary has a bank acceptance draft line of credit that expired in October 2024 which facilitated the extension of trade payable payment terms by 180 days. The bank acceptance draft line of credit allowed up to a maximum borrowing level of 60.0 million Chinese yuan.

In December 2018, the Company entered into an agreement to make a $10.0 million investment in Autotech Fund II managed by Autotech, a venture capital firm focused on ground transportation technology. The Company’s $10.0 million investment in the Autotech Fund II will be contributed over the expected ten-year life of the fund. As of March 31, 2025, the Company’s cumulative investment in the Autotech Fund II was $9.0 million. The Company did not contribute to Autotech Fund II during the three months ended March 31, 2025 and March 31, 2024, respectively.

Our future results could also be adversely affected by unfavorable changes in foreign currency exchange rates. We have significant foreign denominated transaction exposure in certain locations, especially in Brazil, Argentina, Mexico, Sweden, Estonia, the Netherlands, United Kingdom and China. Currently, we have foreign currency forward contracts in place for Mexican pesos. See Note 5 to the condensed consolidated financial statements for additional details. Our future results could also be unfavorably affected by increased commodity prices and material cost inflation as these fluctuations impact the cost of our raw material purchases.

At March 31, 2025, we had a cash and cash equivalents balance of approximately $79.1 million, of which 83.9% was held in foreign locations. The Company has approximately $71.8 million of undrawn commitments under the Credit Facility as of March 31, 2025, which results in total undrawn commitments and cash balances of more than $150.9 million. However, it is possible that future borrowing flexibility under our Credit Facility may be limited as a result of our financial performance.

The principal sources of liquidity available for our future cash requirements are expected to be (i) cash flows from operations, (ii) cash and cash equivalents on-hand and (iii) borrowings from our Credit Facility. We believe that our overall liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working capital and other commitments during the next twelve months. While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity.

Commitments and Contingencies

See Note 10 to the condensed consolidated financial statements for disclosures of the Company’s commitments and contingencies.

Seasonality

Our Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns and the ramp-up of new model production at key customers. In addition, the demand for our Stoneridge Brazil segment consumer products is generally higher in the second half of the year.

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Critical Accounting Policies and Estimates

The Company’s critical accounting policies, which include management’s best estimates and judgments, are included in Part II, Item 7, to the consolidated financial statements of the Company’s 2024 Form 10-K. These accounting policies are considered critical as disclosed in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of the Company’s 2024 Form 10-K because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates. There have been no material changes in our significant accounting policies or critical accounting estimates during the first quarter of 2025.

Information regarding other significant accounting policies is included in Note 2 to our consolidated financial statements in Item 8 of Part II of the Company’s 2024 Form 10-K.

International Presence

By operating internationally, we are affected by foreign currency exchange rates and the economic conditions of certain countries. Furthermore, given the current economic climate and fluctuations in certain commodity prices, we believe that an increase in such items could significantly affect our profitability. See Note 5 to the condensed consolidated financial statements for additional details on the Company’s foreign currency exchange rate risks.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the quantitative and qualitative information about the Company’s market risk from those previously presented within Part II, Item 7A of the Company’s 2024 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2025, an evaluation was performed under the supervision and with the participation of the Company’s management, including the principal executive officer (“PEO”) and principal financial officer (“PFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the PEO and PFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II–OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in certain legal actions and claims primarily arising in the ordinary course of business. We establish accruals for matters that we believe that losses are probable and can be reasonably estimated. Although it is not possible to predict with certainty the outcome of these matters, we do not believe that any of the litigation in which we are currently engaged, either individually or in the aggregate, will have a material adverse effect on our business, consolidated financial position or results of operations. We are subject to litigation regarding civil, labor, regulatory and other tax contingencies in our Stoneridge Brazil segment that we believe the likelihood of loss is reasonably possible, but not probable, although these claims might take years to resolve. We are also subject to product liability and product warranty claims. In addition, if any of our products prove to be defective, we may be required to participate in a government-imposed or customer OEM-instituted recall involving such products. There can be no assurance that we will not experience any material losses related to product liability, warranty or recall claims. See additional details of these matters in Note 10 to the condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes with respect to risk factors previously disclosed in the Company’s 2024 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information with respect to repurchases of Common Shares made by us during the three months ended March 31, 2025. There were 41,004 Common Shares delivered to us by employees as payment for withholding taxes due upon vesting of performance share awards and share unit awards.


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
1/1/25-1/31/25	649	$	6.27	N/A	N/A
2/1/25-2/28/25	7,122	$	5.62	N/A	N/A
3/1/25-3/31/25	33,233	$	5.47	N/A	N/A
Total	41,004

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits


Exhibit Number	Exhibit

10.1	Separation Agreement, dated January 29, 2025, by and between Stoneridge, Inc. and Salvatore Orsini, filed herewith.

10.2	Amendment No. 1 to Fifth Amended and Restated Credit Agreement and Waiver , filed herewith.

31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

	101	XBRL Exhibits:

	101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	104	The cover page from our Quarterly Report on Form 10-Q for the period ended March 31, 2025, filed with the Securities and Exchange Commission on April 30, 2025, is formatted in Inline Extensible Business Reporting Language (“iXBRL”)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			STONERIDGE, INC.

Date: April 30, 2025			/s/ James Zizelman
			James Zizelman
			President, Chief Executive Officer and Director
			(Principal Executive Officer)

Date: April 30, 2025			/s/ Matthew R. Horvath
			Matthew R. Horvath
			Chief Financial Officer and Treasurer
			(Principal Financial Officer)

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Date	Price Target	Rating	Analyst
8/3/2023		Mkt Perform → Outperform	Barrington Research
10/13/2021		Outperform → Mkt Perform	Barrington Research

SEC Form 10-Q filed by Stoneridge Inc.

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