Stoneridge Inc (SRI) Reports Q4 2023 Results and Provides 2024 Outlook
Q4 2023 Sales: $229.5 million with adjusted sales of $229.4 million.
Q4 2023 Gross Profit: Reported at $45.5 million and adjusted gross profit at $45.7 million (19.9% of adjusted sales).
Q4 2023 Operating Income: Operating income of $6.0 million and adjusted operating income of $6.2 million (2.7% of adjusted sales).
Q4 2023 EBITDA: Adjusted EBITDA of $15.6 million (6.8% of adjusted sales).
Q4 2023 Earnings Per Share: EPS of $0.11 and adjusted EPS of $0.12.
2024 Full-Year Guidance: Midpoint sales of $1 billion, midpoint EBITDA of $67 million, and midpoint EBITDA margin of 6.7%.
2028 Revenue and EBITDA Margin Target: $1.35 - $1.55 billion in revenue and EBITDA margin target of 12.0% - 14.0%.
On February 28, 2024, Stoneridge Inc (NYSE:SRI), a leading manufacturer of electrical and electronic components for the automotive sector, released its 8-K filing, detailing the company's financial performance for the fourth quarter of 2023. The company, which specializes in products such as driver information systems, camera-based vision systems, and electronic control units, primarily serves the North American market.
Despite facing significant macroeconomic headwinds, including the UAW strike and slower-than-expected penetration for electric vehicles, Stoneridge Inc managed to meet its financial commitments for the year. The company's Q4 sales reached $229.5 million, with a gross profit of $45.5 million. The adjusted gross profit margin stood at 19.9% of adjusted sales. Operating income was reported at $6.0 million, with an adjusted figure of $6.2 million, representing 2.7% of adjusted sales. Adjusted EBITDA for the quarter was $15.6 million, or 6.8% of adjusted sales, and the company achieved an earnings per share (EPS) of $0.11, with an adjusted EPS of $0.12.
For the full year, Stoneridge Inc reported sales of $975.8 million and a loss per share of $(0.19). Adjusted sales for the year were $961.2 million, with an adjusted loss per share of $(0.08). The company's performance in the fourth quarter showed a sequential improvement from the third quarter, in line with prior expectations.
Financial Highlights and Challenges
Jim Zizelman, president and CEO of Stoneridge, highlighted the company's resilience in the face of challenges, attributing the year's outcomes to successful new program launches, improvements in manufacturing, and operating expense initiatives. Zizelman emphasized the company's focus on efficient cash generation and inventory reduction to support growth.
Looking ahead, Stoneridge Inc has established a 2024 midpoint revenue guidance of $1 billion and a midpoint EBITDA of $67 million, with an expected EBITDA margin expansion of 170 basis points versus 2023. The company also maintains its 2027 long-term target and has set a 2028 revenue target of $1.35 - $1.55 billion, with an EBITDA margin target of 12.0% - 14.0%.
Stoneridge's Control Devices segment experienced a decrease in sales, primarily due to lower sales in the North American passenger vehicle end market, partially offset by higher sales in China. The Electronics segment, however, saw an increase in adjusted sales, driven by higher customer production volumes and the launch of new programs. Stoneridge Brazil also reported increased sales, attributed to favorable foreign currency translation and higher local OEM product sales.
Financial Position and Outlook
As of December 31, 2023, Stoneridge had cash and cash equivalents totaling $40.8 million and a total debt of $191.5 million, resulting in net debt of $150.6 million. The company's net debt to trailing twelve-month EBITDA compliance ratio stood at 3.13x, with an expectation to reduce the net debt to EBITDA ratio to between 2.0x - 2.5x by the end of 2024.
For 2024, Stoneridge anticipates sales between $990 million to $1,010 million, with gross margin guidance of 22.0% to 22.75%, operating margin guidance of 2.75% to 3.25%, EPS guidance of $0.30 to $0.40, and EBITDA guidance of $64 million to $70 million, or 6.5% to 6.9% of sales.
Matt Horvath, CFO of Stoneridge, expressed confidence in the company's growth prospects, particularly with the launch of MirrorEye with Peterbilt in North America and Volvo in Europe. The company's Smart 2 tachograph platform is also expected to contribute to growth, driven by regulatory changes in Europe.
Stoneridge Inc's strategic focus remains on operational improvements, material cost reductions, and leveraging its global footprint to drive margin expansion and long-term shareholder value creation.
For further details on Stoneridge Inc's financial performance and outlook, investors and interested parties can access the live webcast of the company's conference call or the replay at www.stoneridge.com.
Explore the complete 8-K earnings release (here) from Stoneridge Inc for further details.
This article first appeared on GuruFocus.
