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    SRI
    Earnings call· Jun 2026(Q2 FY26)

    STONERIDGE Q2 FY26 earnings call SRI

    Aug 6, 2026 Source

    Executive summary

    Stoneridge Q2 FY26 — Strong Organic Growth and Operational Efficiency Gains

    Stoneridge delivered strong Q2 FY26 results, driven by nearly 8% organic revenue growth and significant operational efficiency gains, including improved SG&A leverage and record MirrorEye sales. Despite gross margin pressures from material costs and inventory, adjusted EBITDA expanded significantly. The company reaffirmed its full-year guidance, balancing market tailwinds with macroeconomic uncertainties, and is focused on strategic execution and capital structure optimization.

    Highlights

    6

    • Organic revenue, excluding FX and Mexico manufacturing agreement, grew nearly 8%, marking the fastest rate in over two years.

    • MirrorEye sales reached a record $37 million, representing 39% year-over-year growth and 10% quarter-over-quarter growth.

    • SG&A as a percentage of sales improved by 182 basis points versus last year, contributing to cost structure enhancement.

    • Adjusted Consolidated EBITDA increased more than six-fold to $5.5 million, the highest level in eight quarters.

    • Cash from operations totaled $12 million, a 38% improvement versus last year, reflecting strong working capital discipline.

    • Net debt was reduced by $39 million over the past 12 months, significantly improving the capital structure.

    Concerns

    2

    • Adjusted gross profit margin declined 277 basis points versus the year-ago period to 20.3%, primarily due to higher material expense from currency translation losses and discrete inventory-related costs.

    • Additional investment in working capital over the balance of 2026 is expected to create near-term variability in cash generation relative to historical norms, driven by significant OEM programs ramping up in early 2027.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $645 million to $670 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $20 million to $25 million
    high materiality
    High
    Second Half 2026 Revenue
    Year-over-year improvement
    medium materiality
    Medium
    Second Half 2026 EBITDA
    Year-over-year improvement
    medium materiality
    Medium
    Q3 and Q4 2026 Revenue
    Modestly lower than Q2 levels
    low materiality
    Medium
    Sequential EBITDA Improvement
    Improve sequentially over the balance of the year
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Electronics
    Growth driven by MirrorEye. Segment-level adjusted operating margin improved 12 basis points versus the year-ago period. The increase in sales combined with cost mitigation efforts and operational efficiencies neutralized the impacts of unfavorable mix, currency-influenced material expense, and inventory-related costs.
    Core segment growth (ex-FX/Mexico Mfg Agreement): 6% YoYMirrorEye revenue: $37 millionMirrorEye growth YoY: 39%MirrorEye growth QoQ: 10%
    		$160.9 millionnearly 13%—improved 12 bps
    Brazil
    Delivered an outstanding quarter with record sales. Benefited from a temporary competitive supply dislocation in that market and strategic actions to realign product lineup and expand OEM opportunities. The 464 basis point year-over-year improvement in adjusted operating income margin was driven by record gross profit and improved fixed cost leverage across a higher sales base.
    Revenue growth (ex-FX): nearly 26%Adjusted operating income margin improvement: 464 bps YoY
    		$20.5 million38%—$2.3 million (11.2% of sales)

    Operational metrics

    9
    Organic Revenue Growth
    nearly 8%YoY
    Q2 FY26

    This was the fastest rate of organic growth in over two years.

    Net Debt
    $151 millionreduced $39 million YoY
    as of June 30, 2026

    The $39 million reduction in net debt reflects the deployment of proceeds from the sale of the control devices business in January and tighter control of working capital during the first half of the year.

    Electronics Segment Days in Inventory
    15 daysdecreased YoY
    Q2 FY26

    At the end of the second quarter, we reduced inventory on hand by approximately $5 million and lowered the electronic segment days in inventory by 15 days year over year.

    Capital Expenditures
    $4.6 million
    Q2 FY26

    Capital expenditures amounted to $4.6 million in the quarter.

    Operating Cost Reduction Target
    $5 millionon track
    FY26

    We remain on track to reduce operating costs by $5 million this year.

    Weighted Average OEM End Market Growth (IHS forecast)
    5.5%YoY
    2026

    IHS forecasts now suggest that our weighted average OEM and markets will grow by 5.5% year-over-year in 2026. This compares to the 1.8% rate of growth expected at the time of our first quarter call in May.

    Weighted Average OEM End Market Growth (IHS forecast)
    5.4%YoY
    2027

    For 2027, IHS is now anticipating an additional 5.4% year-over-year growth in our OEM end markets. While this is down from the 10% growth expectations for 2027 just three months ago, On an absolute volume basis, the 2027 forecast is largely unchanged.

    Market Outperformance (Organic Revenue vs. OEM End Markets)
    nearly 10 percentage points
    Q2 FY26

    During the second quarter, organic revenue growth exceeded our weighted average OEM end markets by nearly 10 percentage points, driven by execution in our core programs, including Mirorai, and continued momentum in the Brazil OEM business.

    Long-term Market Growth Outpacing
    2 to 3 times
    long-term

    We believe we can outpace market growth by two to three times over the long term.

    Industry KPIs

    7
    MetricValueDetails
    Revenue$181 millionUSD
    Inventoryreduced $5 millionUSD
    Gross margin20.3%%
    Sg a OPEX ratio14.3%%
    Operating marginimproved 100 bpsbps
    Adjusted EBITDA ebita$5.5 millionUSD
    Cash investments balance$72 millionUSD

    Product announcements

    2
    ProductTypeDetails
    MirrorEye MP2 systemlaunch
    MirrorEye OEM business award (bus and coach)milestone

    Deals & partnerships

    1
    N/A (internal business unit)Sale of the Control Devices business segment.

    The Control Devices business segment was sold on January 30, 2026. As a result, the company has applied discontinued operations accounting guidance, retrospectively presenting its financial results as discontinued operations for all periods presented.

    Risks & headwinds

    4
    Macroeconomic and geopolitical uncertaintyRemainder of 2026

    Unquantified, but noted as balancing positive tailwinds.

    Mitigation: Continue to control what we can control and execute the long-term strategic plan.

    Higher material expense due to currency translation losses and discrete inventory-related costsQ2 FY26

    Contributed to 277 bps decline in adjusted gross profit margin.

    Mitigation: Anticipate lesser impact over the balance of the year, assuming constant currency.

    Lower sales of Smart2 tachograph productQ2 FY26

    Weighed on gross margin percentage.

    Mitigation: Follows completion of last year's European regulatory retrofit campaign, implying a known, non-recurring impact.

    Near-term variability in cash generation due to working capital investmentOver the balance of 2026

    Will necessitate additional investment in working capital.

    Mitigation: Investment is for significant OEM programs ramping up in early 2027.

    What to watch in Q3 FY26

    5

    MirrorEye Take Rate (North America)

    Next quarter and beyond
    Current5-15%
    TargetGrowth beyond 15%

    Why it matters

    Take rates are a key driver for MirrorEye growth in the North American Class 8 truck market.

    In North America, we assume that around 5 to 15 percent, depending on the customer. obviously this will this will grow for sure this will go for sure it will it as always that the technology takes time to mature but this is going to grow okay.

    Q&A highlights

    3

    How many more Class 8 truck OEMs are there to target for MirrorEye, and what will drive future growth for the product?

    Natalia Noblet stated there are four key Class 8 OEMs in North America and four to five in Europe. She emphasized that while they continuously aim for market share, the focus for growth will increasingly be on take rates within existing OEM programs and expansion into new segments like bus and coach (20+ programs) and off-highway applications (agriculture, heavy construction).

    “In North America, obviously, there are four key OEM for a truck class 8 production... and then in Europe would be four to five... our activities are continuously going to have as much share of market as possible. But again, I would like to here focus on the fact that, as you see here, we have 20 plus bus and coach programs and this is continued and we are expanding to off-highway application as well with some good first results.”

    asked by Gary Prestopino · answered by Natalia Noblet

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Efficiency & Profitability Initiatives

    Stoneridge's initiatives to generate operational efficiencies and enhance profitability are showing results. SG&A as a percentage of sales improved by 182 basis points year-over-year, and adjusted EBITDA increased more than six-fold to $5.5 million, marking the highest level in eight quarters. The company remains on track to achieve its target of reducing operating costs by $5 million this year, reinforcing a stronger and more profitable foundation for future growth.

    02

    MirrorEye Technology Momentum and Market Penetration

    Demand for MirrorEye technology continues to accelerate, with sales reaching a record $37 million in Q2 FY26, representing 39% year-over-year growth and 10% quarter-over-quarter growth. This growth is largely driven by European OEM programs and the ramp-up of recently launched North American programs. A significant new OEM business award for the bus and coach segment, valued at $42 million in estimated lifetime revenue with full commercialization by 2027, further highlights its expanding market applicability beyond trucks into off-highway and agriculture segments.

    03

    Commercial Vehicle Market Trends and Outlook

    Global commercial vehicle end markets are showing signs of stabilization and modest improvement. Europe is transitioning to modest growth in 2026, while North America, after a deeper cyclical downturn, is now recovering due to a strengthening trucking market. IHS forecasts have been revised upwards, projecting 5.5% year-over-year growth in weighted average OEM end markets for 2026 and an additional 5.4% for 2027, indicating incremental positivity despite ongoing macroeconomic uncertainties.

    04

    Stoneridge Brazil's Outstanding Performance

    Stoneridge Brazil delivered an outstanding quarter, achieving record sales of $20.5 million, a 38% increase year-over-year (26% excluding currency translation). Adjusted operating income reached $2.3 million, or 11.2% of sales, marking a 464 basis point improvement year-over-year. This performance is attributed to strategic actions to realign the product lineup, expand opportunities with OEM customers, and a temporary competitive supply dislocation in the market.

    05

    Balance Sheet Strength and Liquidity Management

    The company demonstrated strong balance sheet management, reducing net debt by $39 million over the past 12 months to $151 million, with cash on hand at $72 million. Inventory was reduced by $5 million, and electronics segment days in inventory decreased by 15 days year-over-year. Stoneridge is on schedule to complete the refinancing process for its existing credit facility, which matures in July 2027, by the end of November, ensuring sufficient liquidity for ongoing operations and growth.

    06

    Strategic Priorities and Long-Term Growth

    Stoneridge remains focused on advanced technology solutions and strong customer service to drive market outperformance, aiming to outpace market growth by 2-3 times over the long term⏳. Key priorities include enhancing end-to-end quality management, optimizing material and structural costs, and recovering inflationary cost increases. These efforts, combined with a culture of accountability and continuous improvement, are positioning the company for sustainable performance and achieving near and medium-term financial objectives.

    AI-generated summary of the company’s earnings call. Not investment advice.