Stoneridge — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported Q3 net sales were $155.8 million, a 12.4% increase year-over-year, which included a $24.2 million reduction for an arbitration award; adjusted net sales were $180.0 million, a 29.9% increase year-over-year.
• GAAP net loss from continuing operations was $22.9 million ($0.81 per diluted share) compared to a net loss of $8.9 million ($0.32 per diluted share) in the prior year quarter.
• Adjusted net income from continuing operations was $1.6 million ($0.06 per diluted share) compared to an adjusted net loss of $7.6 million ($0.27 per diluted share) in the prior year quarter.
• Adjusted EBITDA was $7.3 million, representing a 41.7% increase year-over-year from $5.2 million.
• Gross margin decreased to 7.4% (GAAP) from 23.1% in the prior year; adjusted gross margin was 19.9%, a decline of 382 basis points year-over-year.
• SG&A as a percentage of adjusted revenue improved 317 basis points year-over-year to 13.1%.
• Cash and cash equivalents totaled $63.4 million as of September 30, 2026, compared to $53.1 million at December 31, 2025.
• Total debt was $143.7 million, resulting in net debt of $80.2 million, a decrease of $47.6 million from December 31, 2025.

Guidance and Future Outlook:

• Revised 2026 adjusted sales guidance to $690 million to $700 million, up from the previous range of $645 million to $670 million.
• Revised 2026 adjusted EBITDA guidance to the bottom end of the prior range ($20 million to $25 million), anticipating $20 million to $25 million.
• Revised 2026 adjusted gross margin guidance to 20.5% to 21.0%, down from 21.5% to 22.0%.
• Revised 2026 adjusted operating margin guidance to (0.5)% to 0.0%, down from 0.0% to 0.5%.
• Outlook driven by improved market demand, continued product momentum, and year-to-date outperformance at Stoneridge Brazil, offset by higher transitory costs, inflationary pressures, and unfavorable currency impacts.

Business Segments and Product Lines:

• Electronics segment sales reached $158.6 million, a 30.5% increase year-over-year.
• Stoneridge Brazil sales reached $21.5 million, a 25.3% increase year-over-year.
• MirrorEye achieved record quarterly revenue exceeding $37 million.
• Stoneridge Electronics secured significant additional orders for existing vision systems in the OEM market, expected to generate approximately $180 million in cumulative incremental sales through 2028.
• Electronics adjusted operating margin decreased 217 basis points year-over-year to 3.4%.
• Stoneridge Brazil adjusted operating margin decreased 411 basis points year-over-year to 11.5%.

Market and Competitive Landscape:

• Growth in the third quarter was primarily driven by increased volume in North American and European commercial vehicle markets and higher OEM sales in Brazil.
• The company is focused on mitigating inflationary headwinds, particularly for semiconductors, and supply chain disruptions.
• Management anticipates strengthening demand across European and North American commercial vehicle markets to carry into 2027.

Risks and Challenges:

• A pre-tax charge of $24.2 million was recorded for an adverse arbitration ruling regarding legacy PM sensor product warranty claims from a former customer; the company disagrees with the ruling and is evaluating appeal options but may be obligated to pay the award of approximately $25.5 million (€22.5 million).
• Gross margin and operating income were negatively impacted by higher material costs, resolution of legacy warranty obligations, strategic inventory-related actions, and adverse sales mix in Brazil.
• The company faces ongoing inflationary cost pressures and unfavorable currency movements.
• The Credit Facility matures on July 1, 2027, and the company is engaged in a global refinancing process.

Management Commentary and Tone:

• President and CEO Natalia Noblet stated the company delivered "another quarter of strong execution" with adjusted sales growth of nearly 30% and adjusted EBITDA growth of more than 40%.
• Management highlighted progress in realigning the cost structure to provide a "durable foundation for profitable growth over the long term."
• The leadership team remains "intensely focused on execution, mitigating inflationary headwinds and delivering results as global vehicle production volumes recover from the cyclical trough."
• Management noted the resolution of several legacy customer warranty matters and a review of obsolete inventory across the Electronics Division.

Other Key Points:

• The company divested its Control Devices business in the first quarter of 2026 and exited the PM sensor product line in 2019.
• Proceeds from the sale of the Control Devices business were deployed to reduce net debt by $47.6 million year-to-date.
• The company expects to pay the arbitration award from cash on hand, including cash held outside the United States, and intends to hold discussions with the former customer regarding payment timing.
• The company is unable to provide a reconciliation of full-year 2026 guidance to GAAP measures without unreasonable effort due to the difficulty of forecasting the timing and amount of various items.