Stoneridge, Inc. (SRI) Bundle
Understanding Stoneridge, Inc. (SRI) Revenue Streams
Understanding Stoneridge, Inc.’s Revenue Streams
Net Sales for the three months ended September 30, 2024, were $213,831,000, compared to $238,164,000 for the same period in 2023, reflecting a decrease of 10.2%. For the nine months ended September 30, 2024, net sales totaled $690,047,000, down from $746,303,000 in 2023, indicating a decrease of 7.5%.
Revenue Breakdown by Segment
The revenue contributions from various segments for the three months ended September 30, 2024, are as follows:
| Segment | Net Sales (2024) | Net Sales (2023) | Change (%) |
|---|---|---|---|
| Control Devices | $73,129,000 | $89,344,000 | -18.1% |
| Electronics | $127,483,000 | $134,652,000 | -5.3% |
| Stoneridge Brazil | $13,219,000 | $14,168,000 | -6.7% |
| Total | $213,831,000 | $238,164,000 | -10.2% |
Geographical Revenue Distribution
For the three months ended September 30, 2024, the geographical breakdown of net sales was:
| Region | Net Sales (2024) | Net Sales (2023) | Change (%) |
|---|---|---|---|
| North America | $109,395,000 | $126,499,000 | -13.5% |
| South America | $13,219,000 | $14,168,000 | -6.7% |
| Europe | $77,751,000 | $82,737,000 | -6.0% |
| Asia Pacific | $13,466,000 | $14,760,000 | -8.8% |
| Total | $213,831,000 | $238,164,000 | -10.2% |
Year-over-Year Revenue Growth Rate
Year-over-year, the revenue growth rate has shown a declining trend:
- 2022 to 2023: Decrease of 7.4%
- 2023 to 2024 (first nine months): Decrease of 7.5%
Contribution of Business Segments
The contribution of different business segments to overall revenue for the nine months ended September 30, 2024, is summarized below:
| Segment | Net Sales (2024) | Net Sales (2023) |
|---|---|---|
| Control Devices | $230,186,000 | $267,406,000 |
| Electronics | $422,777,000 | $435,565,000 |
| Stoneridge Brazil | $37,084,000 | $43,332,000 |
| Total | $690,047,000 | $746,303,000 |
Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Control Devices segment experienced a decrease of 18.1% in Q3 2024 compared to Q3 2023.
- Electronics segment saw a decline of 5.3% over the same period.
- Stoneridge Brazil's revenue dropped by 6.7% in Q3 2024 compared to Q3 2023.
A Deep Dive into Stoneridge, Inc. (SRI) Profitability
A Deep Dive into Stoneridge, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin increased to 21.2% from 20.9% in the same period of 2023. The cost of goods sold (COGS) decreased from $590,538 thousand in 2023 to $543,459 thousand in 2024.
Operating Profit Margin: The operating income for the nine months ended September 30, 2024, was $4,053 thousand, resulting in an operating margin of 0.5%, down from 0.9% in 2023.
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was $(10,410) thousand, translating to a net margin of (1.7)%, compared to a net loss of $(8,207) thousand and a margin of (1.2)% in 2023.
Trends in Profitability Over Time
The profitability metrics show a downward trend in overall profitability. The gross margin improved slightly, but operating and net margins have worsened due to increased expenses and lower sales volumes. For example, the operating income decreased from $6,814 thousand in 2023 to $4,053 thousand in 2024.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the average gross profit margin in the automotive components industry is approximately 23%, indicating that Stoneridge's gross margin of 21.2% is below industry standards. The operating margin average in the industry is around 5%, with Stoneridge's 0.5% significantly trailing behind. The net margin average is also higher in the industry, typically around (0.5)%, showing that Stoneridge's current margin of (1.7)% is less favorable.
Analysis of Operational Efficiency
Operational efficiency can be assessed through several key metrics:
- Cost of Goods Sold (COGS): COGS decreased from $590,538 thousand in 2023 to $543,459 thousand in 2024, contributing to a modest improvement in gross margin.
- Overhead Costs: Overhead as a percentage of net sales increased from 14.6% in 2023 to 16.7% in 2024, indicating rising operational costs.
- SG&A Expenses: Selling, General and Administrative expenses decreased from $91,465 thousand in 2023 to $88,832 thousand in 2024, reflecting improved cost management.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 21.2% | 20.9% | +0.3% |
| Operating Income | $4,053 thousand | $6,814 thousand | -40.5% |
| Net Loss | $(10,410) thousand | $(8,207) thousand | -27.0% |
| SG&A Expenses | $88,832 thousand | $91,465 thousand | -2.6% |
| Overhead as % of Sales | 16.7% | 14.6% | +2.1% |
Debt vs. Equity: How Stoneridge, Inc. (SRI) Finances Its Growth
Debt vs. Equity: How Stoneridge, Inc. Finances Its Growth
As of September 30, 2024, Stoneridge, Inc. reported total debt of $196.3 million, an increase from $189.3 million at the end of 2023. This debt comprises both short-term and long-term obligations, with $3.0 million classified as current liabilities and $193.3 million as long-term debt.
The company’s debt-to-equity ratio stands at approximately 0.72, calculated using total liabilities of $662.5 million and total shareholders' equity of $271.4 million. This ratio is lower than the industry average of 1.0, indicating a more conservative approach to leveraging.
In recent developments, Stoneridge issued $24.3 million in debt during the nine months ended September 30, 2024, while repaying $26.4 million. The company’s revolving credit facility, which has been a significant source of liquidity, had borrowings of $98 million at the end of the reporting period. The interest expense for the nine months ending September 30, 2024, was $11 million, reflecting the cost of higher outstanding balances.
Stoneridge balances its financing strategy between debt and equity, maintaining a cautious stance on equity dilution while optimizing its capital structure. The total shareholders' equity has seen fluctuations, with a balance of $271.4 million as of September 30, 2024, down from $287.7 million in December 2023.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Debt | $196.3 |
| Short-term Debt | $3.0 |
| Long-term Debt | $193.3 |
| Debt-to-Equity Ratio | 0.72 |
| Debt Issuances (2024) | $24.3 |
| Debt Repayments (2024) | $26.4 |
| Interest Expense (2024) | $11.0 |
| Total Shareholders' Equity | $271.4 |
Assessing Stoneridge, Inc. (SRI) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company is calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $224,599 | $169,891 | 1.32 |
This indicates a solid liquidity position, suggesting the company can cover its short-term obligations. The quick ratio, which excludes inventory from current assets, is:
| Current Assets (excluding Inventory) | Current Liabilities | Quick Ratio |
|---|---|---|
| $224,599 - (9,694) | $169,891 | 1.26 |
Analysis of Working Capital Trends
Working capital has shown a trend of improvement, with the following amounts recorded:
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $224,599 | $169,891 | $54,708 |
| June 30, 2024 | $223,856 | $169,891 | $53,965 |
| December 31, 2023 | $227,340 | $178,241 | $49,099 |
Cash Flow Statements Overview
The cash flow statement for the nine months ending September 30, 2024, reveals:
| Cash Flow Activities | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $28,517 | $(5,668) |
| Investing Activities | $(18,997) | $(26,943) |
| Financing Activities | $4,133 | $15,534 |
| Net Change in Cash | $13,297 | $(18,040) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has:
- Cash and cash equivalents of $54,138,000.
- Outstanding borrowings on the credit facility amounting to $196,322,000.
- Compliance with all covenants associated with the credit facility.
However, there is a potential concern regarding future borrowing flexibility due to lower than expected financial performance, which could impact liquidity if market conditions worsen.
Is Stoneridge, Inc. (SRI) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios, recent stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 0.0 due to a net loss reported in the latest quarter.
Price-to-Book (P/B) Ratio
The P/B ratio is 1.17, calculated using a book value of equity of $233.1 million against a current market capitalization of approximately $271.4 million.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 0.0 due to negative EBITDA in the latest reporting period.
Stock Price Trends
Over the last 12 months, the stock price has declined from approximately $14.00 to about $9.80, reflecting a decrease of 30%.
| Metric | Value |
|---|---|
| P/E Ratio | 0.0 |
| P/B Ratio | 1.17 |
| EV/EBITDA Ratio | 0.0 |
| 12-Month Stock Price Change | -30% |
Dividend Yield and Payout Ratios
Currently, the company does not pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
The consensus among analysts is a Hold rating, reflecting mixed views on the company's short-term recovery potential.
| Analyst Rating | Number of Analysts |
|---|---|
| Buy | 2 |
| Hold | 5 |
| Sell | 1 |
In summary, the company's valuation metrics indicate significant challenges, particularly with the P/E and EV/EBITDA ratios reflecting losses. The stock price trend illustrates a decline, while the lack of dividends and a mixed analyst consensus further highlight the cautious outlook for investors.
Key Risks Facing Stoneridge, Inc. (SRI)
Key Risks Facing Stoneridge, Inc.
Stoneridge, Inc. faces several internal and external risk factors that could significantly impact its financial health. These risks include intense industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The automotive and commercial vehicle markets are characterized by high competition. In the third quarter of 2024, net sales decreased by $24.3 million, or 10.2%, compared to the same period in 2023, indicating challenges in maintaining market share.
Regulatory Changes
Changes in regulations concerning vehicle safety, emissions, and technology standards can impose additional costs. The company has reported a need to adapt to evolving regulatory requirements, which may affect operational efficiency and profitability.
Market Conditions
Market conditions, including economic downturns and shifts in consumer demand, pose risks to revenue. For instance, the North American automotive market is projected to decrease from 15.6 million units in 2023 to 15.5 million units in 2024.
Operational Risks
Operational risks stem from supply chain disruptions and production inefficiencies. The company's Control Devices segment reported a 18.1% decline in net sales primarily due to lower customer volumes in the North American automotive market.
Financial Risks
Financial risks include high levels of debt and interest expenses. The interest expense for the nine months ended September 30, 2024, was $11.0 million, up from $9.2 million in the previous year.
Strategic Risks
Strategic risks arise from the company's reliance on specific markets and technological advancements. The company reported a decrease in operating income by 40.5% for the nine months ended September 30, 2024, compared to 2023.
Mitigation Strategies
To mitigate these risks, Stoneridge is focusing on operational excellence and cost reduction strategies. The company is also investing in technology to align with industry megatrends, which may enhance its competitive position in the long run.
| Risk Factor | Description | Current Impact |
|---|---|---|
| Industry Competition | High competition in automotive and commercial vehicle sectors | Net sales decreased by $24.3 million in Q3 2024 |
| Regulatory Changes | Adaptation to evolving regulations on safety and emissions | Potential increase in operational costs |
| Market Conditions | Economic downturns affecting consumer demand | North American automotive market projected to decrease to 15.5 million units in 2024 |
| Operational Risks | Supply chain disruptions affecting production | Control Devices segment sales down by 18.1% |
| Financial Risks | High levels of debt and interest expenses | Interest expense increased to $11.0 million |
| Strategic Risks | Reliance on specific markets and tech innovations | Operating income decreased by 40.5% |
Future Growth Prospects for Stoneridge, Inc. (SRI)
Future Growth Prospects for Stoneridge, Inc.
Analysis of Key Growth Drivers
The company has identified several growth drivers that are expected to enhance its market position and revenue streams. These include:
- Product Innovations: The ongoing launch of advanced products such as the OEM MirrorEye® programs in North America and Europe, along with the next-generation tachograph in Europe, are pivotal. These products align with industry trends toward enhanced vehicle intelligence and connectivity.
- Market Expansions: The North American automotive market is projected to slightly decrease from 15.6 million units in 2023 to 15.5 million units in 2024, but there is potential for growth in hybrid vehicle applications, particularly with new business awards for leak detection modules.
- Acquisitions: Strategic partnerships, particularly with OEMs to develop advanced system capabilities based on data services, software, and AI, are expected to drive future growth.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total net sales were $690,047 thousand, a decrease of 7.5% compared to $746,303 thousand in the same period of 2023. The projected revenue decline was primarily driven by lower sales volumes in both the Control Devices and Electronics segments.
Operating income for the same period was reported at $4,053 thousand, a decline of 40.5% from $6,814 thousand in 2023. Net loss for the period was $10,410 thousand compared to $8,207 thousand in 2023, indicating a need for operational adjustments to improve profitability.
Strategic Initiatives or Partnerships
The company is focusing on strategic initiatives that enhance its growth potential:
- Partnership with OEMs: Collaborating with original equipment manufacturers to enhance product offerings and develop innovative technologies that cater to evolving market demands.
- Investment in Technology: Continuous investment in advanced technologies and data services to maintain competitive advantages in the automotive sector.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Diverse Product Portfolio: A wide range of products across the automotive and commercial vehicle markets allows flexibility and adaptability in changing market conditions.
- Strong Market Presence: Established relationships with key players in the automotive industry enhance market penetration and customer loyalty.
- Operational Efficiency: Focus on reducing material costs and improving gross margins, which have increased from 20.9% in 2023 to 21.2% in 2024. This is attributed to favorable product mix and material cost improvements.
| Segment | Net Sales (2024) | Net Sales (2023) | Dollar Change | Percent Change |
|---|---|---|---|---|
| Control Devices | $230,186 thousand | $267,406 thousand | $(37,220) thousand | (13.9)% |
| Electronics | $422,777 thousand | $435,565 thousand | $(12,788) thousand | (2.9)% |
| Stoneridge Brazil | $37,084 thousand | $43,332 thousand | $(6,248) thousand | (14.4)% |
| Total Net Sales | $690,047 thousand | $746,303 thousand | $(56,256) thousand | (7.5)% |
As the company continues to align its strategic initiatives with market trends and customer needs, it is positioned to explore new growth avenues and potentially recover from recent sales declines.
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Article updated on 8 Nov 2024
Resources:
- Stoneridge, Inc. (SRI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Stoneridge, Inc. (SRI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Stoneridge, Inc. (SRI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.