Stoneridge loss shrinks

NOVI–Stoneridge Inc. (NYSE: SRI) announced a first quarter loss of $6.1 million or 22 cents a share in the first quarter of 2024, an improvement from a loss of $7.4 million or 29 cents a share in the first quarter of 2023. Revenue was $239.2 million, down from $241.3 million in the first quarter of 2023.

The company said results were hit by an unfavorable impact of foreign currency translations on intercompany balances, interest expenses and warranty related expenses.

Said President and CEO Jim Zizelman: “Our first quarter performance was driven by continued strong top-line growth in our electronics segment and progress across each of our key company initiatives. Our efforts to reduce material costs contributed to a 170 basis point improvement in gross margin over the first quarter of last year. Similarly, we continued to streamline our operating structure and centralize key functions to improve our operating efficiency resulting in operating margin improvement of 160 basis points over the first quarter of last year. Despite the significant momentum we have in the fundamentals of the business, we must continue to focus on mitigating some of the historical quality issues that resulted in $2 million of incremental costs this quarter. Through recent actions taken to centralize and redesign our product line, program management and global engineering organizations, we are specifically focused on improving built-in-quality, material costs and manufacturing efficiency to drive profitability. There is no question we are seeing the positive impacts of these structural changes and expect the momentum from these changes to drive improved profitability as we continue to grow.”

Electronics sales of $156.1 million increased by 11.1% relative to adjusted sales of the first quarter of 2023. This increase was primarily driven by higher sales in the European and North American commercial vehicle end markets. First quarter operating margin of 4.5% improved by 330 basis points relative to the adjusted operating margin of the first quarter of 2023, primarily due to contribution on revenue growth and lower direct material costs as a percentage of sales.

Control Devices sales of $78 million decreased by 10% relative to sales of the first quarter of 2023. This decrease was due to lower sales in the North American passenger vehicle end market primarily related to the expected wind-down of end-of-life programs and slower demand for electric vehicle platforms. This decline was slightly offset by higher sales in China. First quarter operating margin of 2.8% increased by 120 basis points relative to the adjusted operating margin of the first quarter of 2023, primarily due to higher gross margin as a result of lower direct material costs, partially offset by unfavorable fixed cost leverage due to lower sales.

Stoneridge Brazil sales of $12.2 million decreased by $2 million relative to sales in the first quarter of 2023. This decrease was primarily due to lower sales in local OEM products as a result of one-time revenue opportunities of approximately $2.1 million recognized in the first quarter of 2023 that were not expected to recur. First quarter operating margin of 1.7% decreased by approximately 770 basis points relative to the first quarter of 2023, primarily due to reduced fixed cost leverage on lower sales.

The Company is maintaining its previously provided full-year 2024 guidance ranges including sales guidance of $990 million to $1,010 million, gross margin guidance of 22.0% to 22.75%, operating margin guidance of 2.75% to 3.25%, earnings per share guidance of 30 to 40 cents a share.

To listen to a replay of a conference call discussing these results, visit www.stoneridge.com.

Stoneridge, headquartered in Novi, is a global designer and manufacturer of highly engineered electrical and electronic systems, components and modules for the automotive, commercial, off-highway and agricultural vehicle markets.

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