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

Business overview and product segments

• Focuses on electrical and electronic products driven by safety and electrification megatrends.

• Operates in three segments: Control Devices (mainly powertrain actuators and sensors), Electronics (driver information, vision, and safety systems), and Stoneridge Brazil (transitioning from aftermarket to OE electronics support).

• Major customers include PACCAR, Volvo, Daimler Truck, and TRATON, with significant launches in both North America and Europe.

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

• Brazil operations now serve as a technical and engineering hub supporting global business.

Margin improvement and operational initiatives

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

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

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

• Efficiency improvements include workforce optimization and footprint rationalization.

• Expansion into off-road and aftermarket vision products for agricultural and industrial vehicles.

Market outlook and growth drivers

• Macroeconomic softness in 2024, especially in Europe, with limited recovery expected in early 2025; potential for a second-half pickup in commercial vehicles.

• Outperformance expected through content growth, new launches, and regulatory-driven products like MirrorEye and Smart 2 Tachograph.

• MirrorEye revenue for 2024 revised to $65–70 million, up 25% year-over-year, with further acceleration expected as new programs annualize.

• Smart 2 Tachograph retrofit cycles and regulatory expansion in Europe to drive aftermarket and OE revenue growth through 2026.

• Significant market share in tachographs (~30%) with opportunity to capture more as regulations expand.