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What changed in STONERIDGE INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of STONERIDGE INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+247 added−278 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-01)

Top changes in STONERIDGE INC's 2024 10-K

247 paragraphs added · 278 removed · 182 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe following table sets forth for the periods indicated, the percentage of net sales derived from our principal end markets: Principal End Markets 2023 2022 2021 Commercial vehicle 51 % 48 % 39 % Automotive 31 % 34 % 41 % Off-highway and other 12 % 12 % 12 % Aftermarket distributors and monitoring services 6 % 6 % 8 % For further information related to our reportable segments and financial information about geographic areas, see Note 13 to the consolidated financial statements. 2 Table of Contents Production Materials The principal production materials used in the Company’s manufacturing process are electrical components such as printed circuit boards, semiconductors, microprocessors, memory devices, resistors, capacitors, fuses, relays, monitors and cameras, molded plastic components and resins, copper, steel and precious metals.
Biggest changeThe following table sets forth for the periods indicated, the percentage of net sales derived from our principal end markets: Principal End Markets 2024 2023 2022 Commercial vehicle 54 % 51 % 48 % Automotive 28 % 31 % 34 % Off-highway and other 13 % 12 % 12 % Aftermarket distributors and monitoring services 5 % 6 % 6 % For further information related to our reportable segments and financial information about geographic areas, see Note 13 to the consolidated financial statements.
Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services and direct to OEMs. In addition, monitoring services and tracking devices are sold directly to corporate and individual customers.
Stoneridge Brazil sells its products through the aftermarket distribution channel, direct to OEMs and to factory authorized dealer installers, also referred to as original equipment services. In addition, monitoring services and tracking devices are sold directly to corporate and individual customers.
Because these products are used principally in the production of vehicles for the automotive, commercial, off-highway and agricultural vehicle markets, revenues and therefore results of operations, are significantly dependent on the general state of the economy and other factors, like the impact of environmental regulations on our customers and end market consumers, which affect these markets.
Because these products are used principally in the production of vehicles for the commercial, automotive, off-highway and agricultural vehicle markets, revenues and therefore results of operations, are significantly dependent on the general state of the economy and other factors, like the impact of environmental regulations on our customers and end market consumers, which affect these markets.
A significant decline in automotive, commercial, off-highway and agricultural vehicle production of our principal customers could adversely affect the Company. Our Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns and the ramp-up of new model production at key customers.
A significant decline in commercial, automotive, off-highway and agricultural vehicle production of our principal customers could adversely affect the Company. Our Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns and the ramp-up of new model production at key customers.
To that end, we have established talent management programs at Stoneridge, which include but are not limited to the following: • Periodic global employee engagement surveys and subsequent action planning • Regular talent reviews for employee development and succession planning • Feedback and coaching to ensure performance is aligned with our goals and strategic direction • Delivery of Code of Conduct and global policy training • New employee orientation with globally consistent and locally flexible messaging • Frequent global “town hall” meetings and other communications • Employee wellness programs • Opportunities for community and charitable involvement • Employee mentoring program • Internship programs When we hire new employees, we focus not just on the skills required for current positions, but the ever-changing complex skills and competencies that will be required as we move forward on our path to being the mobility industry’s integrated technology partner.
To that end, we have established talent management programs, which include but are not limited to the following: • Periodic global employee engagement surveys and subsequent action planning • Regular talent reviews for employee development and succession planning • Feedback and coaching to ensure performance is aligned with our goals and strategic direction • Delivery of Code of Conduct and global policy training • New employee orientation with globally consistent and locally flexible messaging • Frequent global “town hall” meetings and other communications • Employee wellness programs • Opportunities for community and charitable involvement • Employee mentoring program • Internship programs When we hire new employees, we focus not just on the skills required for current positions, but the ever-changing complex skills and competencies that will be required as we move forward on our path to being the mobility industry’s integrated technology partner.
Our Stoneridge Brazil segment continues to integrate into our global strategy as we leverage our global engineering footprint and prepare for continued expansion of our local OEM presence. Overall, we will continue to focus our resources on the areas of largest opportunity for the Company to drive long-term value creation for our shareholders.
Our Stoneridge Brazil segment continues to integrate into our global strategy as we leverage our global engineering and manufacturing footprint and prepare for continued expansion of our local OEM presence. Overall, we will continue to focus our resources on the areas of largest opportunity for the Company to drive long-term value creation for our shareholders.
The loss of any significant portion of our sales to these customers, or the loss of a significant customer, would have a material adverse impact on our financial condition and results of operations. We supply numerous different products to each of our principal customers.
The loss of any significant portion of our sales to these customers, or the loss of a significant customer, would have a material adverse impact on our financial condition and results of operations. We supply numerous different products to our principal customers.
We supply the majority of our products, predominantly on a sole-source basis, to many of the world’s leading automotive and commercial vehicle original equipment manufacturers (“OEMs”) and select non-vehicle OEMs, as well as certain automotive and commercial vehicle Tier 1 suppliers.
We supply the majority of our products, predominantly on a sole-source basis, to many of the world’s leading commercial vehicle, automotive and off-highway original equipment manufacturers (“OEMs”) and select non-vehicle OEMs, as well as certain automotive and commercial vehicle Tier 1 suppliers.
Driver information systems and connectivity and compliance products collect, store and display vehicle information such as speed, pressure, maintenance data, trip information, operator performance, temperature, distance traveled, and driver messages related to vehicle performance. Vision and safety products provide enhanced vehicle visibility and safety to drivers.
Advanced driver information solutions and connectivity and compliance products collect, store and display vehicle information such as speed, pressure, maintenance data, trip information, operator performance, temperature, distance traveled, and driver messages related to vehicle performance. Vision systems provide enhanced vehicle visibility and safety to drivers.
This segment includes product lines such as vehicle monitoring and tracking devices, security alarms, convenience applications such as parking sensors and rearview cameras, audio and infotainment systems, driver information systems and telematics products used for fleet management. These products improve the performance, safety and convenience features of our customers’ vehicles.
This segment includes product lines such as vehicle monitoring and tracking devices, driver information systems, security alarms, convenience applications such as parking sensors and rearview cameras, telematics solutions used for fleet management and multimedia devices. These products improve the performance, safety and convenience features of our customers’ vehicles.
In addition, the demand for our Stoneridge Brazil segment consumer products is typically higher in the second half of the year. Customers We have several customers that account for a significant percentage of our sales.
In addition, the demand for our Stoneridge Brazil segment consumer products is typically higher in the second half of the year. 2 Table of Contents Customers We have several customers that account for a significant percentage of our sales.
In addition to the divestiture of the wiring business, we deployed capital in 2017 to make strategic investments including the acquisition of Orlaco, our partner on the development of MirrorEye®, our camera monitor system, and the acquisition of an additional 24 percent of our Stoneridge Brazil business resulting in 100 percent ownership.
We deployed capital in 2017 to make strategic investments including the acquisition of Orlaco, our partner on the development of MirrorEye®, our camera monitor system, and the acquisition of an additional 26 percent of our Stoneridge Brazil business resulting in 100 percent ownership.
We seek diverse sources for candidates and we offer wages and benefits that are competitive in the markets where employees are located. 4 Table of Contents Stoneridge is committed to creating diverse, equitable and inclusive workplaces that align with our core values and deliver sustainable business success.
We seek diverse sources for candidates and we offer wages and benefits that are competitive in the markets where employees are located. The Company is committed to creating diverse, equitable and inclusive workplaces that align with our core values and deliver sustainable business success.
Our Control Devices segment is increasingly well positioned with a focus on continued development and commercialization of actuation and powertrain agnostic applications that will drive future growth for the segment.
We have positioned each of our segments for continued long-term success. Our Control Devices segment is increasingly well positioned with a focus on continued development and commercialization of actuation and powertrain agnostic applications that will drive future growth for the segment.
These activities have acted as a catalyst for the advancement of our smart product portfolio, increasing our smart content from just over 50% of our sales in 2014 to almost 80 % of our sales in 2023. Our product portfolio shift focuses on the megatrends driving the transportation industry.
These activities have acted as a catalyst for the advancement of our smart product portfolio, increasing our smart content from just over 50% of our sales in 2014 to almost 82% of our sales in 2024. Our product portfolio shift focuses on the megatrends driving the transportation and off-highway industries.
Horvath was appointed Chief Financial Officer and Treasurer in September 2021. He previously served as Stoneridge’s Executive Director of Corporate Strategy and Investor Relations from September 2020 to August 2021, and prior to that as Director of Investor Relations from November 2016 to August 2020. Prior to joining Stoneridge, Mr.
He previously served as Stoneridge’s Executive Director of Corporate Strategy and Investor Relations from September 2020 to August 2021, and prior to that as Director of Investor Relations from November 2016 to August 2020. Prior to joining Stoneridge, Mr.
Our product offerings consist of actuators, sensors, switches and connectors, driver information systems, vision and safety systems, connectivity and compliance products, electronic control units, vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions.
Our product offerings consist of actuators, sensors, switches and connectors, advanced driver information products, vision systems, connectivity and compliance solutions, control modules, vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices.
Human Capital Management As of December 31, 2023, Stoneridge employed approximately 4,850 full time and temporary employees in 14 countries, with about 86 % located outside of the United States.
Human Capital Management As of December 31, 2024, the Company employed approximately 4,450 full time and temporary employees in 14 countries, with about 85 % located outside of the United States.
To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets. Electronics. Our Electronics segment designs and manufactures driver information systems, vision and safety systems, connectivity and compliance products and electronic control units.
To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets. 1 Table of Contents Electronics. Our Electronics segment designs and manufactures advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules.
Our Stoneridge Brazil segment primarily serves the South American market and specializes in the design, manufacture and sale of vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices, driver information systems and telematics solutions primarily for the automotive and commercial vehicle markets.
Our Stoneridge Brazil segment primarily serves the South American market and designs and manufactures vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices primarily for the automotive and commercial vehicle markets.
Prior to joining Stoneridge, Mr. Zizelman served as the Vice President of Engineering and Program Management for Aptiv from December 2017 to March 2019. Prior to that, Mr. Zizelman was employed at Delphi for more than 20 years, where he was last a Vice President of Engineering from 2016 to 2017. Matthew R. Horvath, Chief Financial Officer and Treasurer. Mr.
Zizelman was employed at Delphi for more than 20 years, where he was last a Vice President of Engineering from 2016 to 2017. Matthew R. Horvath, Chief Financial Officer and Treasurer. Mr. Horvath was appointed Chief Financial Officer and Treasurer in September 2021.
We purchase production materials pursuant to both annual contract and spot purchasing methods. Such materials are available from multiple sources, but we generally establish collaborative relationships with a qualified supplier for each of our key production materials in order to lower costs and enhance service and quality.
Such materials are available from multiple sources, but we generally establish collaborative relationships with a qualified supplier for each of our key production materials in order to lower costs and enhance service and quality. As global demand for our production materials increases, we may have difficulties obtaining adequate production materials from our suppliers to satisfy our customers.
Our technology and our partnership-oriented approach to product design and development enables us to develop next-generation products and systems aligned with these trends. Beginning with the divestiture of our wiring business in 2014, we accelerated a shift in our product portfolio towards smart products, or those products that contain embedded electronics or logic.
Beginning with the divestiture of our wiring business in 2014, we accelerated a shift in our product portfolio towards smart products, or those products that contain embedded electronics or logic.
Our Electronics segment is expected to drive strong revenue growth through launches of previously awarded programs including launches for our MirrorEye camera monitor system in the European and North American commercial vehicle markets and our SE5000 Smart 2 tachograph product in the European commercial vehicle market for both OEM and aftermarket applications.
Our Electronics segment is expected to drive strong revenue growth through strong demand for our existing products including our MirrorEye camera monitor system in the European and North American commercial vehicle markets.
We compete based on strong customer relations and a fast and flexible organization that develops technically effective solutions at a competitive price. 3 Table of Contents Product Development Our research and development efforts for our reportable segments are largely product design and development oriented and consist primarily of applying known technologies to customer requests or developing new, innovative technologies aligned with industry megatrends or customer requests.
Product Development Our research and development efforts for our reportable segments are largely product design and development oriented and consist primarily of applying known technologies to customer requests or developing new, innovative technologies aligned with industry megatrends or customer requests.
Environmental and Other Regulations Our operations are subject to various federal, state, local and foreign laws and regulations governing, among other things, emissions to air, discharge to water and the generation, handling, storage, transportation, treatment and disposal of waste and other materials.
As part of our effort to evaluate our investment spending, we review our current product portfolio and adjust our spending to either accelerate or eliminate our investment in these products based on our position in the market and the potential of the market and product. 3 Table of Contents Environmental and Other Regulations Our operations are subject to various federal, state, local and foreign laws and regulations governing, among other things, emissions to air, discharge to water and the generation, handling, storage, transportation, treatment and disposal of waste and other materials.
Hartman served as Corporate Controller of the Company since 2006 and prior to that as Stoneridge’s Director of Internal Audit from 2003. Salvatore D. Orsini, Chief Procurement Officer. Mr. Orsini was appointed Chief Procurement Officer in July 2022. Prior to that Mr.
Hartman served as Corporate Controller of the Company since 2006 and prior to that as Stoneridge’s Director of Internal Audit from 2003. Natalia Noblet, President of the Electronics Division. Ms. Noblet was appointed as President of the Electronics Division in September 2024. Before joining Stoneridge, Ms.
Our custom-engineered products and systems are used to activate equipment and accessories, monitor and display vehicle performance and control, distribute electrical power and signals and provide vehicle safety, security and convenience.
Our worldwide footprint is primarily comprised of 21 locations in 14 countries and enables us to supply global commercial, automotive, off-highway, agricultural and other vehicle markets. Our custom-engineered products and systems are used to activate equipment and accessories, monitor and display vehicle performance and control, distribute electrical power and signals and provide vehicle safety, security and convenience.
Our diversity in products creates a wide range of competitors, which vary depending on both market and geographic location.
Our diversity in products creates a wide range of competitors, which vary depending on both market and geographic location. We compete based on strong customer relations and a fast and flexible organization that develops technically effective solutions at a competitive price.
Available Information We make available, free of charge through our website (www.stoneridge.com), our Annual Reports on Form 10-K (“Annual Report”), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and other filings with the U.S. Securities and Exchange Commission (“SEC”), as soon as reasonably practicable after they are filed with the SEC.
Kased was employed at Delphi from 2005 to 2017 where he served in management and engineering roles of increasing responsibility. 5 Table of Contents Available Information We make available, free of charge through our website (www.stoneridge.com), our Annual Reports on Form 10-K (“Annual Report”), Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and other filings with the U.S.
Electronic control units regulate, coordinate, monitor and direct the operation of the electrical system within a vehicle. These products are sold principally to the commercial vehicle market through both the OEM and aftermarket channels. In addition, vision and safety systems are sold to the off-highway and commercial vehicle markets. Stoneridge Brazil.
These products are sold principally to the commercial vehicle and off-highway markets through both the OEM and aftermarket channels. Stoneridge Brazil.
Our Chief Human Resources Officer reports directly to the Chief Executive Officer and interacts frequently with the Company’s Board of Directors. Our Human Capital focus will continue to be on employee engagement, employee and leadership development, communications, and employee health and safety.
Our Human Capital focus will continue to be on employee engagement, employee and leadership development, communications, and employee health and safety. 4 Table of Contents Information About Our Executive Officers Each executive officer of the Company serves the Board of Directors at its pleasure. The Board of Directors appoints corporate officers annually.
Additionally, we are challenging and responding to bias and eliminating barriers through fair policies and practices. We are building an inclusive Stoneridge where all employees can grow, excel, and contribute to our success in a meaningful way. The Human Resources function at Stoneridge is an active and visible partner to the business at all levels.
It is our mission to attract, advance and advocate for a diverse workforce that represents the communities around us. We challenge bias and strive to eliminate barriers through fair policies and practices. We are building an inclusive company where all employees can grow, excel, and contribute to our success in a meaningful way.
Orsini 54 Chief Procurement Officer Peter Österberg 55 President of the Electronics Division Rajaey Kased 44 President of the Control Devices Division James Zizelman, President, Chief Executive Officer and Director. Mr. Zizelman was appointed as President and Chief Executive Officer and elected as Director in January 2023. Previously he served as President of the Control Devices Division since April 2020.
Ferraiolo 57 President of the Stoneridge Brazil Division Robert J. Hartman Jr. 58 Chief Accounting Officer Natalia Noblet 47 President of the Electronics Division Rajaey Kased 45 President of the Control Devices Division James Zizelman, President, Chief Executive Officer and Director. Mr. Zizelman was appointed as President and Chief Executive Officer and elected as Director in January 2023.
Information About Our Executive Officers Each executive officer of the Company serves the Board of Directors at its pleasure. The Board of Directors appoints corporate officers annually. The following table sets forth the names, ages, and positions of the executive officers of the Company: Name Age Position James Zizelman 63 President, Chief Executive Officer and Director Matthew R.
The following table sets forth the names, ages, and positions of the executive officers of the Company: Name Age Position James Zizelman 64 President, Chief Executive Officer and Director Matthew R. Horvath 39 Chief Financial Officer and Treasurer Susan C. Benedict 58 Chief Human Resources Officer and Assistant General Counsel Caetano R.
Item 1. Business. Overview Founded in 1965, Stoneridge, Inc. (the “Company”) is a global designer and manufacturer of highly engineered electrical and electronic systems, components and modules for the automotive, commercial, off-highway and agricultural vehicle markets.
Item 1. Business. Overview Founded in 1965, Stoneridge, Inc. (the “Company”) is a global supplier of safe and efficient electronics systems and technologies. Our systems and products power vehicle intelligence, while enabling safety and security for on-and off-highway transportation sectors around the world.
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Our products and systems are critical elements in the management of systems to improve overall vehicle performance, convenience and monitoring in areas such as safety and security, intelligence, efficiency and emissions. Our worldwide footprint is primarily comprised of 21 locations in 11 countries and enables us to supply global automotive, commercial, off-highway, agricultural and other vehicle markets.
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Our technology and our partnership-oriented approach to product design and development enables us to develop next-generation products and systems aligned with these trends. For example, we continue to invest in the development of advanced system capabilities that are complementary to our driver information solutions and vision systems such as integrated driver assistance technologies and an intelligent connected trailer system.
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While the wiring business was our largest single business, based on revenues and employees, and the business that the Company was founded on, its products were largely commodities that did not provide a technology platform to drive our expected future growth.
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Production Materials The principal production materials used in the Company’s manufacturing process are electrical components such as printed circuit boards, semiconductors, microprocessors, memory devices, resistors, capacitors, fuses, relays, monitors and cameras, molded plastic components and resins, copper, steel and precious metals. We purchase production materials pursuant to both annual contract and spot purchasing methods.
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In January 2019, the Company committed to a restructuring plan that resulted in the closure of the Canton, Massachusetts facility (“Canton Facility”) as of March 31, 2020 and the consolidation of manufacturing operations at that site into other Company locations (“Canton Restructuring”). On June 17, 2021, we sold the Canton facility.
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Our Human Resources function is an active and visible partner to the business at all levels. Our Chief Human Resources Officer reports directly to the Chief Executive Officer and interacts frequently with the Company’s Board of Directors.
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See Note 2 to the consolidated financial statements for additional details regarding the sale of the Canton Facility. See Note 12 to the consolidated financial statements for additional details regarding the Canton Restructuring . On May 19, 2020, the Company committed to the strategic exit of its Control Devices particulate matter (“PM”) sensor product line (“PM Sensor Exit”).
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Previously he served as President of the Control Devices Division since April 2020. Prior to joining Stoneridge, Mr. Zizelman served as the Vice President of Engineering and Program Management for Aptiv from December 2017 to March 2019. Prior to that, Mr.
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The decision to exit the PM sensor product line was made after the consideration of the decline in the market outlook for diesel passenger vehicles, the current and expected profitability of the product line and the Company’s strategic focus on aligning resources with the greatest opportunities.
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Noblet served as senior vice president EMEA (Europe, Middle East, Africa) region within ZF's Commercial Vehicle Solutions division from 2022 until August 2024. From 2020 to 2022 Ms. Noblet held various positions at ZF. From 2017 to 2020 Ms. Noblet served as Chief Quality Officer at WABCO. Rajaey Kased, President of the Control Devices Division. Mr.
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See Note 12 to the consolidated financial statements for additional details regarding the PM Sensor Exit. On March 8, 2021, the Company entered into an Asset Purchase Agreement and sold the PM sensor product line and assets. The PM sensor product line and assets were located in Lexington, Ohio and Tallinn, Estonia.
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Securities and Exchange Commission (“SEC”), as soon as reasonably practicable after they are filed with the SEC.
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See Note 2 to the consolidated financial statements for additional details regarding the sale of the PM sensor business. On November 2, 2021, the Company entered into a Share Purchase Agreement (the “SPA”) with Minda Corporation Limited (“Minda”), as the buyer, and Minda Stoneridge Instruments Ltd. (“MSIL”).
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On December 30, 2021, pursuant to the SPA, the Company closed the sale of MSIL to Minda. See Note 2 to the consolidated financial statements for additional details regarding the sale of MSIL. 1 Table of Contents We have positioned each of our segments for continued long-term success.
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As global demand for our production materials increases, we may have difficulties obtaining adequate production materials from our suppliers to satisfy our customers. Refer to the Risk Factors for risks related to the current supply chain disruption related to semiconductors and other production materials.
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Any extended period for which we cannot obtain adequate production material or which we experience an increase in the price of production material would materially affect our results of operations and financial condition.
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As part of our effort to evaluate our investment spending, we review our current product portfolio and adjust our spending to either accelerate or eliminate our investment in these products based on our position in the market and the potential of the market and product.
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It is our mission to attract, advance and advocate for a diverse workforce that represents the communities around us. To this end, Stoneridge created a steering committee to drive diversity, equity and inclusion initiatives across its various sites and functions and report on progress to our executive leadership team and Board of Directors.
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Horvath 38 Chief Financial Officer and Treasurer Susan C. Benedict 57 Chief Human Resources Officer and Assistant General Counsel Caetano R. Ferraiolo 56 President of the Stoneridge Brazil Division Robert J. Hartman Jr. 57 Chief Accounting Officer Salvatore D.
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Orsini had been employed at Nexteer Automotive as Vice President, Global Chief Supply Management Officer from 2020 until June 2022. From 2019 to 2020 Mr. Orsini served as Supply Chain Director at Aptiv and from 2013 to 2019 Mr. Orsini held various leadership roles at General Motors, most recently Global Commodity Director. Prior to that Mr.
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Orsini held various positions at Rolls-Royce Aerospace and Delphi. 5 Table of Contents Peter Österberg, President of the Electronics Division. Mr. Österberg was appointed as President of the Electronics Division in March 2022. Before joining Stoneridge, Peter served as vice president of Supplier Quality and Development at Volvo Group from 2017 to 2022.
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Before that, he served in a variety of roles at Volvo including Vice President of Engineering at Volvo CE, Global Director Volvo Powertrain, and other positions with increasing responsibility over time. Prior to that, he worked at Volvo Cars, both within product development and quality. Rajaey Kased, President of the Control Devices Division. Mr.
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Kased was employed at Delphi from 2005 to 2017 where he served in management and engineering roles of increasing responsibility.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+11 added−8 removed68 unchanged
Biggest changeA successful claim brought against us that exceeds available insurance coverage or a requirement to participate in any product recall could have a material adverse effect on our business, financial condition or results of operations. 11 Table of Contents Intellectual Property Risks If we fail to protect our intellectual property rights or maintain our rights to use licensed intellectual property or are found liable for infringing the rights of others, our business could be adversely affected.
Biggest changeA successful claim brought against us that exceeds available insurance coverage or a requirement to participate in any product recall could have a material adverse effect on our business, financial condition or results of operations.
Item 1A. Risk Factors. Uncertain Business, Economic and Market Conditions Our business is cyclical and a downturn in the automotive, commercial, off-highway and agricultural vehicle markets as well as overall economic conditions could reduce our sales and profitability. The demand for products is largely dependent on the domestic and foreign production of automotive, commercial, off-highway and agricultural vehicles.
Item 1A. Risk Factors. Uncertain Business, Economic and Market Conditions Our business is cyclical and a downturn in the commercial, automotive, off-highway and agricultural vehicle markets as well as overall economic conditions could reduce our sales and profitability. The demand for products is largely dependent on the domestic and foreign production of commercial, automotive, off-highway and agricultural vehicles.
For example, the COVID-19 pandemic disrupted the global vehicle industry and customer sales, production volumes, supply of components critical to our business, and purchases of automotive, commercial, off-highway and agricultural vehicles by end-consumers. Any future significant public health crisis could adversely impact the global economy, our industry and the overall demand for our products.
For example, the COVID-19 pandemic disrupted the global vehicle industry and customer sales, production volumes, supply of components critical to our business, and purchases of commercial, automotive, off-highway and agricultural vehicles by end-consumers. Any future significant public health crisis could adversely impact the global economy, our industry and the overall demand for our products.
The strengthening of the U.S. dollar against these foreign currencies ordinarily has a negative effect on our reported sales and operating margin (and conversely, the weakening of the U.S. dollar against these foreign currencies has a positive impact). The volatility of currency exchange rates may materially adversely affect our business, financial condition or results of operations.
The strengthening of the U.S. dollar against these foreign currencies ordinarily has a negative effect on our reported sales and operating margin (and conversely, the weakening of the U.S. dollar against these foreign currencies has a positive operating margin impact). The volatility of currency exchange rates may materially adversely affect our business, financial condition or results of operations.
OEM customers have exerted and continue to exert considerable pressure on component suppliers to reduce costs, improve quality and provide additional design and engineering capabilities and continue to demand and receive price reductions and measurable increases in quality through their use of competitive selection processes, rating programs and various other arrangements.
OEM customers have exerted and continue to exert considerable pressure on system and component suppliers to reduce costs, improve quality and provide additional design and engineering capabilities and continue to demand and receive price reductions and measurable increases in quality through their use of competitive selection processes, rating programs and various other arrangements.
Because we sell certain products such as security accessories and driver information products to independent dealers and distributors, we are subject to many risks, including risks related to their inventory levels and support for our products. If dealers and distributors do not maintain sufficient inventory levels to meet customer demand, our sales could be negatively impacted.
Because we sell certain products such as security and convenience accessories and driver information products to independent dealers and distributors, we are subject to many risks, including risks related to their inventory levels and support for our products. If dealers and distributors do not maintain sufficient inventory levels to meet customer demand, our sales could be negatively impacted.
As a result of future changes in our effective tax rate our business, financial condition or results of operations could be materially adversely affected. Risks Related to Products, Pricing and Supply We are dependent on the availability and price of raw materials and other supplies.
As a result of future changes in our effective tax rate our business, financial condition or results of operations could be materially adversely affected. Risks Related to Products, Pricing and Supply We are dependent on the availability and price of raw materials, components and other supplies.
If we cannot obtain adequate raw materials and other supplies, or if we experience an increase in the price of raw materials and other supplies, our business, financial condition or results of operations could be materially adversely affected. 8 Table of Contents The prices that we can charge our customers are typically predetermined and we bear the risk of costs in excess of our estimates, in addition to the risk of adverse effects resulting from general customer demands for cost reductions and quality improvements.
If we cannot obtain adequate amounts of raw materials, components and other supplies, or if we experience an increase in the price of raw materials, components and other supplies, our business, financial condition or results of operations could be materially adversely affected. 8 Table of Contents The prices that we can charge our customers are typically predetermined and we bear the risk of costs in excess of our estimates, in addition to the risk of adverse effects resulting from general customer demands for cost reductions and quality improvements.
Our leverage and the terms of our indebtedness may have important consequences including the following: • we may have difficulty satisfying our obligations with respect to our indebtedness, and if we fail to comply with these requirements, an event of default could result; 7 Table of Contents • we may be required to dedicate a substantial portion of our cash flow from operations to required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures and other general corporate activities; • covenants relating to our debt may limit our ability to obtain additional financing for working capital, capital expenditures and other general corporate activities; • covenants relating to our debt may limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and • we may be placed at a competitive disadvantage against less leveraged competitors.
Our leverage and the terms of our indebtedness may have important consequences including the following: • we may have difficulty satisfying our obligations with respect to our indebtedness, and if we fail to comply with these requirements, an event of default could result; • we may be required to dedicate a substantial portion of our cash flow from operations to required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures and other general corporate activities; • covenants relating to our debt may limit our ability to obtain additional financing for working capital, capital expenditures and other general corporate activities; • covenants relating to our debt may limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and • we may be placed at a competitive disadvantage against less leveraged competitors.
While we have taken steps to protect the Company from cybersecurity risks and security breaches (including enhancing our firewall, workstation, email security and network monitoring with managed detection and response (MDR) and alerting capabilities, and training employees around phishing, malware and other cybersecurity risks), and we have policies and procedures to prevent or limit the impact of systems failures, interruptions, and security breaches, there can be no assurance that such events will not occur or that they will be adequately addressed if they do.
While we have taken steps to protect the Company from cybersecurity risks and security breaches (including enhancing our firewall, workstation, email security and network monitoring with managed extended detection and response (MXDR) and alerting capabilities, and training employees around phishing, malware and other cybersecurity risks), and we have policies and procedures to prevent or limit the impact of systems failures, interruptions, and security breaches, there can be no assurance that such events will not occur or that they will be adequately addressed if they do.
The vehicle life cycle typically included the two to four year pre-production period and production for a term covering the life of such vehicle model or platform, generally between three to seven years, although there is no guarantee that this will occur.
The vehicle life cycle typically included the two to five year pre-production period and production for a term covering the life of such vehicle model or platform, generally between three to seven years, although there is no guarantee that this will occur.
Our business may, therefore, require significant recurring additional capital expenditures and investment in product development, manufacturing and information technology systems. We cannot assure that we will be able to achieve technological advances or introduce new products that may be necessary to remain competitive.
Our business may, therefore, require significant recurring additional capital expenditures and investment in product development, manufacturing and information technology systems. We cannot ensure that we will be able to achieve technological advances or introduce new products that may be necessary to remain competitive.
International sales and operations are subject to significant risks, including, among others: • political and economic instability and conflicts; • restrictive trade policies; • economic conditions in local markets; • currency exchange rates and controls; • labor or social unrest; • difficulty in obtaining distribution support and potentially adverse tax consequences; and • the imposition of product tariffs and the burden of complying with a wide variety of international and U.S. export laws.
International sales and operations are subject to significant risks, including, among others: • political and economic instability and conflicts; • restrictive trade policies; • economic conditions in local markets; • currency exchange rates and controls; • labor or social unrest; • difficulty in obtaining distribution support and potentially adverse tax consequences; and 9 Table of Contents • the imposition of product tariffs and the burden of complying with a wide variety of international and U.S. export laws.
Our Credit Facility limits our ability to, among other things: • incur additional debt and guarantees; • pay dividends and repurchase our shares; • make other restricted payments, including investments; • create liens; • sell or otherwise dispose of assets, including capital shares of subsidiaries; • enter into agreements that restrict dividends from subsidiaries; • consolidate, merge or sell or otherwise dispose of all or substantially all of our assets; and • substantially change the nature of our business.
Our Credit Facility limits our ability to, among other things: • incur additional debt and guarantees; • pay dividends and repurchase our shares; • make other restricted payments, including investments; • create liens; 7 Table of Contents • sell or otherwise dispose of assets, including capital shares of subsidiaries; • enter into agreements that restrict dividends from subsidiaries; • consolidate, merge or sell or otherwise dispose of all or substantially all of our assets; and • substantially change the nature of our business.
Future price reductions, increased quality standards and additional engineering capabilities required by OEMs may reduce our profitability and have a material adverse effect on our business, financial condition or results of operations.
Future price reductions, increased quality standards and additional engineering capabilities required by OEMs may have a material adverse effect on our business, financial condition or results of operations.
Our inability to effectively manage the timing, quality and costs of these new program launches could adversely affect our business, financial condition or results of operations. 10 Table of Contents We may not be able to successfully integrate acquisitions into our business or may otherwise be unable to benefit from pursuing acquisitions.
Our inability to effectively manage the timing, quality and costs of these new program launches could adversely affect our business, financial condition or results of operations. We may not be able to successfully integrate acquisitions into our business or may otherwise be unable to benefit from pursuing acquisitions.
If demand for raw materials we require increases, we may have difficulties obtaining adequate raw materials and other supplies from our suppliers to satisfy our customers. Currently, and at times in the past, we have experienced difficulty obtaining adequate supplies of semiconductors, memory chips and other electronic components.
If demand for raw materials we require increases, we may have difficulties obtaining adequate raw materials and other supplies from our suppliers to satisfy our customers. In the past, we have experienced difficulty obtaining adequate supplies of semiconductors, memory chips and other electronic components.
We cannot assure you that any business acquired by us will be successfully integrated with our operations or prove to be profitable. We could incur substantial indebtedness in connection with our acquisition strategy, which could significantly increase our interest expense. We anticipate that acquisitions could occur in foreign markets in which we do not currently operate.
We cannot assure you that any business acquired by us will be successfully integrated with our operations or prove to be profitable. We could incur substantial indebtedness in connection with our acquisition strategy, which could significantly increase our interest expense. 10 Table of Contents We anticipate that acquisitions could occur in foreign markets in which we do not currently operate.
Public health crises and other global health pandemics, epidemics or disease outbreaks could adversely impact our business, results of operation and financial condition. A significant public health crisis, pandemic or disease outbreak, such as COVID-19, could adversely impact our business as well as those of our suppliers and customers.
Public health crises and other global health pandemics, epidemics or disease outbreaks could adversely impact our business, results of operation and financial condition. A significant public health crisis, pandemic or disease outbreak could adversely impact our business as well as those of our suppliers and customers.
Our debt obligations could limit our flexibility in managing our business and expose us to risks. As of December 31, 2023, there was $189.3 million in borrowings outstanding on our Fifth Amended and Restated Credit Agreement (the “Credit Facility”). In addition, we are permitted under our Credit Facility to incur additional debt, subject to specified limitations.
Our debt obligations could limit our flexibility in managing our business and expose us to risks. As of December 31, 2024, there was $201.6 million in borrowings outstanding on our Fifth Amended and Restated Credit Agreement (the “Credit Facility”). In addition, we are permitted under our Credit Facility to incur additional debt, subject to specified limitations.
Because the majority of our products are used principally in the production of vehicles for the automotive, commercial, off-highway and agricultural vehicle markets, our net sales, and therefore our results of operations, are significantly dependent on the general state of the economy and other factors which affect these markets.
Because the majority of our products are used principally in the production of vehicles for the commercial, automotive, off-highway and agricultural vehicle markets, our net sales, and therefore our results of operations, are significantly dependent on the general state of the economy as well as other factors affecting these markets.
We may be subject to risks relating to our information technology systems and cybersecurity. We rely on information technology systems to process, transmit and store electronic information and manage and operate our business. Despite the implementation of security measures, our IT networks and systems are at risk to damages from computer viruses, unauthorized access, cyber-attack and other similar disruptions.
We rely on information technology systems to process, transmit and store electronic information and manage and operate our business. Despite the implementation of security measures, our IT networks and systems are at risk to damages from computer viruses, unauthorized access, cyber-attack and other similar disruptions.
An economic downturn or other adverse industry conditions that result in a decline in automotive, commercial, off-highway or agricultural vehicle production, or a material decline in market share by our significant customers, could adversely affect our results of operations and financial condition.
An economic downturn or other adverse industry conditions that result in a decline in commercial, automotive, off-highway or agricultural vehicle production, or a material decline in market share by our significant customers, could adversely affect our results of operations and financial condition. The loss or insolvency of any of our principal customers would adversely affect our future results.
In addition, there have been challenges at times in obtaining timely supply of nylon and resins for our Control Devices segment and audio component parts for our Stoneridge Brazil segment.
In addition, there have been challenges at times in obtaining timely supply of nylon and resins for our Control Devices segment.
In 2023, approximately 94% of our net sales were derived from automotive, commercial, off-highway and agricultural vehicle markets while approximately 6% were derived from aftermarket distributors and monitoring services markets.
In 2024, approximately 95% of our net sales were derived from commercial, automotive, off-highway and agricultural vehicle markets while approximately 5% were derived from aftermarket distributors and monitoring services markets.
We are dependent on several principal customers for a significant percentage of our net sales. In 2023, our top five customers were PACCAR, Traton, Volvo, Daimler Truck and Ford, which comprised 16%, 15%, 10%, 8% and 6% of our net sales, respectively. In 2023, our top ten customers accounted for 66% of our net sales.
We are dependent on several principal customers for a significant percentage of our net sales. In 2024, our top five customers were PACCAR, Traton, Volvo, Daimler Truck and Ford, which comprised 16%, 13%, 13%, 7% and 7% of our net sales, respectively. In 2024, our top ten customers accounted for 66% of our net s ales.
We cannot be certain that we have rights to all intellectual property currently used in the conduct of our businesses or that we have complied with the terms of agreements by which we acquire such rights, which could expose us to infringement, misappropriation or other claims alleging violations of third party intellectual property rights, or customer indemnification claims.
In addition, our competitors may design products around our patents that avoid infringement and violation of our intellectual property rights. 11 Table of Contents We cannot be certain that we have rights to all intellectual property currently used in the conduct of our businesses or that we have complied with the terms of agreements by which we acquire such rights, which could expose us to infringement, misappropriation or other claims alleging violations of third party intellectual property rights, or customer indemnification claims.
The Company has taken actions to mitigate this risk from new programs; however, significant indemnification claims related to these products could have a material adverse effect on our business, financial condition or results of operations.
The Company has taken actions to mitigate this risk from new programs; however, significant indemnification claims related to these products could have a material adverse effect on our business, financial condition or results of operations. Information Technology and Cybersecurity Risks We may be subject to risks relating to our information technology systems and cybersecurity.
In addition, to the extent such significant health crises may adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section. 6 Table of Contents The loss or insolvency of any of our principal customers would adversely affect our future results.
In addition, to the extent such significant health crises may adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section.
In the case of pending patent applications, we may not be successful in securing issued patents or securing patents of a scope that provide us with a competitive advantage for our businesses. In addition, our competitors may design products around our patents that avoid infringement and violation of our intellectual property rights.
In the case of pending patent applications, we may not be successful in securing issued patents or securing patents of a scope that provide us with a competitive advantage for our businesses.
Information Technology and Cybersecurity Risks A failure of our information technology (IT) networks and systems, or the inability to successfully implement upgrades to our enterprise resource planning (ERP) systems, could adversely impact our business and operations.
A failure of our information technology (IT) networks and systems, or the inability to successfully implement upgrades to our enterprise resource planning (ERP) systems, could adversely impact our business and operations. We rely upon information technology networks and systems to process, transmit and store electronic information, and to manage or support a variety of business processes and/or activities.
In addition, we continually update our IT networks and systems in response to the changing needs of our business and periodically upgrade our ERP systems.
The secure operation of these IT networks and systems and the proper processing and maintenance of this electronic information are critical to our business operations. In addition, we continually update our IT networks and systems in response to the changing needs of our business and periodically upgrade our ERP systems.
In addition, the interpretation and application of consumer and data protection laws in the U.S., Europe and elsewhere are often uncertain and frequently change. Complying with these various laws could cause the Company to incur substantial costs. Environmental, Climate and Weather Risks Compliance with environmental and other governmental regulations could be costly and require us to make significant expenditures.
Complying with these various laws could cause the Company to incur substantial costs. 12 Table of Contents Environmental, Climate and Weather Risks Compliance with environmental and other governmental regulations could be costly and require us to make significant expenditures.
We operate our business on a global basis and policy changes affecting international trade could adversely impact the demand for our products and our competitive position. We manufacture, sell and service products globally and rely upon a global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture and service our products.
We manufacture, sell and service products globally and rely upon a global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture and service our products.
The discontinuation of, loss of business or lack of commercial success, with respect to a particular vehicle model for which the Company is a significant supplier could reduce the Company’s sales and harm its profitability.
Our inability to continuously improve existing products, develop new products and achieve technological advances could have a material adverse effect on our business, financial condition or results of operations. 6 Table of Contents The discontinuation of, loss of business or lack of commercial success, with respect to a particular vehicle model for which the Company is a significant supplier could reduce the Company’s sales and harm its profitability.
We may gain access to sensitive, confidential or personal data or information that is subject to privacy and security laws, regulations and customer-imposed controls.
Privacy and security concerns relating to the Company’s current or future products and services could damage its reputation and deter current and potential users from using them. We may gain access to sensitive, confidential or personal data or information that is subject to privacy and security laws, regulations and customer-imposed controls.
Our ability to comply with these covenants as well as the negative covenants under the terms of our indebtedness may be affected by events beyond our control.
Amendment No. 1 added an additional level to the leverage ratio based pricing grid, through maturity, when the leverage ratio is greater than 3.50. Our ability to comply with these covenants as well as the negative covenants under the terms of our indebtedness may be affected by events beyond our control.
We may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future. 12 Table of Contents Privacy and security concerns relating to the Company’s current or future products and services could damage its reputation and deter current and potential users from using them.
We may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.
Approximately 49% of our net sales in 2023 were derived from sales outside of North America. At December 31, 2023, significant concentrations of net assets outside of North America included $228.7 million in Europe, $43.9 million in Asia Pacific and $51.0 million in South America.
At December 31, 2024, significant concentrations of net assets outside of North America included $202.4 million in Europe, $45.5 million in Asia Pacific and $35.7 million in South America. Non-current assets outside of North America accounted for approximately 59% of our non-current assets as of December 31, 2024.
Our inability to maintain successful relationships with dealers and distributors, or to expand our distribution channels, could have a material adverse effect on our business, financial condition or results of operations. Our Global Positioning Systems (“GPS”) products depend upon satellites maintained by the United States Department of Defense.
Our inability to maintain successful relationships with dealers and distributors, or to expand our distribution channels, could have a material adverse effect on our business, financial condition or results of operations. Geopolitical Uncertainties We are subject to risks related to our international operations. Approximately 51% of our net sales in 2024 were derived from sales outside of North America.
Our inability to continuously improve existing products, develop new products and achieve technological advances could have a material adverse effect on our business, financial condition or results of operations.
The Company has taken actions to mitigate risks relating to our information technology systems and cybersecurity; however, significant compromises or breaches related to cybersecurity could have a material adverse effect on our business, financial condition or results of operations.
Removed
If a significant number of these satellites become inoperable, unavailable or are not replaced, or if the policies of the United States government for the use of the GPS without charge are changed, our business will suffer. The GPS is a satellite-based navigation and positioning system consisting of a constellation of orbiting satellites.
Added
On February 26, 2025, we entered into Amendment No. 1 to the Fifth Amended and Restated Credit Agreement and Waiver ("Amendment No. 1").
Removed
The satellites and their ground control and monitoring stations are maintained and operated by the United States Department of Defense. The Department of Defense does not currently charge users for access to the satellite signals.
Added
Amendment No. 1 provides for certain financial covenant relief and additional covenant restrictions during the “Covenant Relief Period” (the period ending on the date that the Company delivers a compliance certificate for the quarter ending December 31, 2025).
Removed
These satellites and their ground support systems are complex electronic systems subject to electronic and mechanical failures and possible sabotage. 9 Table of Contents If a significant number of satellites were to become inoperable, unavailable or are not replaced, it would impair the current utility of our GPS products and the growth of market opportunities.
Added
During the Covenant Relief Period: • the maximum leverage ratio of 3.50 was increased to 6.00 for the quarter ended March 31, 2025, 5.50 for the quarter ended June 30, 2025, 4.50 for the quarter ended September 30, 2025 and 3.50 for the quarter ended December 31, 2025; • the minimum interest coverage ratio of 3.50 was waived for the quarter ended December 31, 2024 and was reduced to 2.00 for the quarters ended March 31 and June 30, 2025, and 2.50 and 3.50 for the quarter ended September 30, 2025 and December 31, 2025, respectively; • the Company’s aggregate amount of cash and cash equivalents (as defined) cannot exceed $70.0 million; • the sale of significant assets (as defined) will require repayment in the amount of any net cash proceeds received and result in the reduction of the Credit Facility commitment, at the lesser of $100.0 million or the net cash proceeds; • there were certain restrictions on Restricted Payments (as defined); and • a Permitted Acquisition (as defined) could not be consummated unless otherwise approved in writing by the required lenders.
Removed
In addition, there can be no assurance that the U.S. government will remain committed to the operation and maintenance of GPS satellites over a long period, or that the policies of the U.S. government that provide for the use of the GPS without charge and without accuracy degradation will remain unchanged.
Added
Changes in U.S. administrative policy, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on our business.
Removed
Because of the increasing commercial applications of the GPS, other U.S. government agencies may become involved in the administration or the regulation of the use of GPS signals.
Added
Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products, such as Mexico and China, could have a material adverse effect on our business and financial results.
Removed
Any of the foregoing factors could affect the willingness of buyers of our products to select GPS-based products instead of products based on competing technologies, which could adversely affect our business, financial condition and results of operation. Geopolitical Uncertainties We are subject to risks related to our international operations.
Added
For example, in February 2025, the U.S. government imposed or threatened to impose new tariffs on imported products from Mexico, Canada and China.
Removed
Non-current assets outside of North America accounted for approximately 63% of our non-current assets as of December 31, 2023.
Added
The impact of these tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any retaliatory responses to such actions that the target countries may take and any mitigating actions that may become available.
Removed
We rely upon information technology networks and systems to process, transmit and store electronic information, and to manage or support a variety of business processes and/or activities. The secure operation of these IT networks and systems and the proper processing and maintenance of this electronic information are critical to our business operations.
Added
Despite recent trade negotiations between the U.S. and the Mexican, Canadian and Chinese governments, given the uncertainty regarding the scope and duration of any new tariffs, as well as the potential for additional tariffs or trade barriers by the U.S., Mexico, Canada, China or other countries, we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful.
Added
A trade war or other significant changes in trade regulations could have a material adverse effect on our business, financial condition and results of operations. We operate our business on a global basis and policy changes affecting international trade could adversely impact the demand for our products and our competitive position.
Added
Intellectual Property Risks If we fail to protect our intellectual property rights or maintain our rights to use licensed intellectual property or are found liable for infringing the rights of others, our business could be adversely affected.
Added
In addition, the interpretation and application of consumer and data protection laws in the U.S., Europe and elsewhere are often uncertain and frequently change.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company has established processes to identify risks from cybersecurity threats associated with its third-party service providers. 13 Table of Contents The Company has established a cybersecurity policy which requires mandatory compliance of all Company directors, officers, employees, interns, consultants, and contractors. The Company has also established cybersecurity and information security awareness training programs.
Biggest changeThe Company has established a cybersecurity policy which requires mandatory compliance of all Company directors, officers, employees, interns, consultants, and contractors. The Company has also established cybersecurity and information security awareness training programs. Employees with access to the Company’s network receive annual training on topics such as phishing, malware, and other cybersecurity risks.
Our information technology (“IT”) function manages IT operations and continually evolves our systems to meet the constantly changing digital environment. We enhanced our workstation, server, email security, and network monitoring with managed detection and response and alerting capabilities. We perform periodic cybersecurity risk assessments to identify, assess, and prioritize potential risks to information, data assets, and infrastructure.
Our information technology (“IT”) function manages IT operations and continually evolves our systems to meet the constantly changing digital environment. We enhanced our workstation, server, email security, and network monitoring with managed extended detection and response and alerting capabilities. We perform periodic cybersecurity risk assessments to identify, assess, and prioritize potential risks to information, data assets, and infrastructure.
As part of its' oversight role, the Audit Committee receives reporting about the Company’s strategy, programs, incidents and threats, and other developments and action items related to cybersecurity regularly throughout the year, including through periodic updates from the Chief Information Officer ("CIO").
As part of its oversight role, the Audit Committee receives reporting about the Company’s strategy, programs, incidents and threats, and other developments and action items related to cybersecurity regularly throughout the year, including through periodic updates from the Chief Information Officer ("CIO").
For more information about the cybersecurity risks we face, refer to the Risk Factors in section “Information Technology and Cybersecurity Risks” in Part I, Item 1A, "Risk Factors". Cybersecurity Governance The Company's Board of Directors, as a whole, has oversight responsibility for our strategic and operational risks.
For more information about the cybersecurity risks we face, refer to the Risk Factors in section “Information Technology and Cybersecurity Risks” in Part I, Item 1A, "Risk Factors". 13 Table of Contents Cybersecurity Governance The Company's Board of Directors, as a whole, has oversight responsibility for our strategic and operational risks.
We work to continually evolve our systems to meet the constantly changing digital environment and continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain.
Training is administered and tracked through online learning modules. We work to continually evolve our systems to meet the constantly changing digital environment and continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain.
The Company addresses identified risks and develops and implements controls to mitigate issues. The Company engages third parties in connection with its cybersecurity processes as appropriate.
The Company addresses identified risks and develops and implements controls to mitigate issues. The Company engages third parties in connection with its cybersecurity processes as appropriate. The Company has established processes to identify risks from cybersecurity threats associated with its third-party service providers.
Removed
Employees with access to the Company’s network receive annual training on topics such as phishing, malware, and other cybersecurity risks. Training is administered and tracked through online learning modules.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeThe following table provides information regarding our facilities: Location Owned/ Leased Use Square Footage Control Devices Lexington, Ohio Owned Manufacturing/Engineering 219,612 Suzhou, China (A) Leased Manufacturing/Engineering/Sales Office 145,033 El Paso, Texas (A) Leased Warehouse 57,000 Lexington, Ohio Leased Warehouse 15,000 Novi, Michigan Leased Engineering 6,398 Electronics Juarez, Mexico (B) Owned Manufacturing/Engineering 235,035 Tallinn, Estonia Leased Manufacturing/Engineering 85,911 Orebro, Sweden Leased Manufacturing/Engineering 77,472 Barneveld, Netherlands Owned Manufacturing/Engineering 62,700 Stockholm, Sweden Leased Engineering/Division Office 41,248 Bayonne, France Leased Sales Office/Warehouse 9,655 Dundee, Scotland Leased Sales Office/Engineering 4,683 Gothenburg, Sweden Leased Engineering 710 Stoneridge Brazil Manaus, Brazil Owned Manufacturing 94,103 Campinas, Brazil Owned Engineering/Division Office 45,467 Hortolândia, Brazil Leased Sales Office 3,229 Buenos Aires, Argentina Leased Sales Office 4,532 Serra, Brazil Leased Sales Office 344 Corporate and Other Novi, Michigan (A, B) Leased Headquarters/Division Office 37,713 Esslingen, Germany Leased Sales Office 1,722 __________________________________ (A) This facility is also used in the Electronics reportable segment.
Biggest changeThe following table provides information regarding our facilities: Location Owned/ Leased Use Square Footage Control Devices Lexington, Ohio Owned Manufacturing/Engineering 219,612 Suzhou, China (A) Leased Manufacturing/Engineering/Sales Office 145,033 Lexington, Ohio Leased Warehouse 15,000 Novi, Michigan Leased Engineering 6,398 Electronics Juarez, Mexico (B) Owned Manufacturing/Engineering 235,035 Tallinn, Estonia Leased Manufacturing/Engineering 85,911 Orebro, Sweden Leased Manufacturing/Engineering 77,472 Juarez, Mexico (B) Leased Warehouse/Division Office 64,873 Barneveld, Netherlands Owned Manufacturing/Engineering 62,700 El Paso, Texas (B) Leased Warehouse 57,000 Stockholm, Sweden Leased Engineering/Division Office 41,248 Bayonne, France Leased Sales Office/Warehouse 9,655 Dundee, Scotland Leased Sales Office/Engineering 4,683 Gothenburg, Sweden Leased Engineering 710 Stoneridge Brazil Manaus, Brazil Owned Manufacturing 94,103 Campinas, Brazil Owned Engineering/Division Office 45,467 Buenos Aires, Argentina Leased Sales Office 4,532 Hortolândia, Brazil Leased Sales Office 3,229 Serra, Brazil Leased Sales Office 344 Corporate and Other Novi, Michigan (A, B) Leased Headquarters/Division Office 37,713 Esslingen, Germany Leased Sales Office 1,722 __________________________________ (A) This facility is also used in the Electronics reportable segment.
Item 2. Properties. At December 31, 2023, the Company owned or leased seven manufacturing facilities, which together contain approximately 0.9 million square feet of manufacturing space. Of these manufacturing facilities, two are used by our Control Devices reportable segment, four are used by our Electronics reportable segment and one is used by our Stoneridge Brazil reportable segment.
Item 2. Properties. At December 31, 2024, the Company owned or leased seven manufacturing facilities, which together contain approximately 0.9 million square feet of manufacturing space. Of these manufacturing facilities, two are used by our Control Devices reportable segment, four are used by our Electronics reportable segment and one is used by our Stoneridge Brazil reportable segment.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed2 unchanged
Biggest changePeriod Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs 10/1/23-10/31/23 394 $ 18.66 N/A N/A 11/1/23-11/30/23 — $ — N/A N/A 12/1/23-12/31/23 842 $ 19.51 N/A N/A Total 1,236 Other than the repurchase of Common Shares of 87,387 and 42,100, respectively, to satisfy employee tax withholdings associated with the delivery of Common Shares earned by employees pursuant to equity-based awards under the Company’s Long-Term Incentive Plan there were no other repurchases of Common Shares made by us during the years ended December 31, 2023 or 2022.
Biggest changePeriod Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs 10/1/24-10/31/24 183 $ 10.59 N/A N/A 11/1/24-11/30/24 237 $ 6.60 N/A N/A 12/1/24-12/31/24 1,848 $ 6.68 N/A N/A Total 2,268 Other than the repurchase of Common Shares of 50,275 and 87,387, respectively, to satisfy employee tax withholdings associated with the delivery of Common Shares earned by employees pursuant to equity-based awards under the Company’s Long-Term Incentive Plan there were no other repurchases of Common Shares made by us during the years ended December 31, 2024 or 2023.
This does not include persons whose stock is in nominee or “street name” accounts held by banks, brokers and other nominees. There were no sales of unregistered securities by the Company or its affiliates during the fiscal year ended December 31, 2023.
This does not include persons whose stock is in nominee or “street name” accounts held by banks, brokers and other nominees. There were no sales of unregistered securities by the Company or its affiliates during the fiscal year ended December 31, 2024.
The Company did not have a Board approved share repurchase program in effect in either 2023 or 2022.
The Company did not have a Board approved share repurchase program in effect in either 2024 or 2023.
The following table presents information with respect to repurchases of Common Shares made by us during the three months ended December 31, 2023. There were 1,236 Common Shares delivered to us by employees as payment for withholding taxes due upon vesting of performance share awards and share unit awards during the three months ended December 31, 2023.
The following table presents information with respect to repurchases of Common Shares made by us during the three months ended December 31, 2024. There were 2,268 Common Shares delivered to us by employees as payment for withholding taxes due upon vesting of performance share awards and share unit awards during the three months ended December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “SRI.” As of February 26, 2024, we had 27,553,610 Common Shares, without par value, outstanding that were owned by approximately 165 shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “SRI.” As of February 26, 2025, we had 27,695,248 Common Shares, without par value, outstanding that were owned by approximately 250 shareholders of record.
The graph is based on the respective market price of each investment as of December 31, 2018, 2019, 2020, 2021, 2022 and 2023 assuming in each case an initial investment of $100 on December 31, 2018, and reinvestment of dividends. 2018 2019 2020 2021 2022 2023 Stoneridge, Inc. $ 100 $ 119 $ 123 $ 80 $ 87 $ 79 Dow Jones U.S.
The graph is based on the respective market price of each investment as of December 31, 2019, 2020, 2021, 2022, 2023 and 2024 assuming in each case an initial investment of $100 on December 31, 2019, and reinvestment of dividends. 2019 2020 2021 2022 2023 2024 Stoneridge, Inc. $ 100 $ 103 $ 67 $ 74 $ 67 $ 21 Dow Jones U.S.
Auto Parts Total Return Index $ 100 $ 127 $ 150 $ 181 $ 133 $ 133 NYSE Composite Index $ 100 $ 126 $ 135 $ 162 $ 147 $ 167 Item 6. [Reserved] 17 Table of Contents
Auto Parts Total Return Index $ 100 $ 118 $ 142 $ 105 $ 105 $ 81 NYSE Composite Index $ 100 $ 107 $ 129 $ 117 $ 133 $ 154 Item 6. [Reserved] 17 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. [Reserved] 17 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 31 Item 8. Financial Statements and Supplementary Data 32 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 69 Item 9A. Controls and Procedures 69 Item 9B.
Biggest changeItem 6. [Reserved] 17 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 28 Item 8. Financial Statements and Supplementary Data 30 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 67 Item 9A. Controls and Procedures 67 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+48 added−70 removed24 unchanged
Biggest changeNet sales by geographic location are summarized in the following table (in thousands): Year ended December 31, 2023 2022 Dollar increase / (decrease) Percent increase / (decrease) North America $ 495,541 50.8 % $ 444,928 49.4 % $ 50,613 11.4 % South America 57,214 5.9 52,230 5.8 4,984 9.5 % Europe and Other 423,063 43.3 402,765 44.8 20,298 5.0 % Total net sales $ 975,818 100.0 % $ 899,923 100.0 % $ 75,895 8.4 % 21 Table of Contents The increase in North American net sales was attributable to increased sales volume in our commercial vehicle market of $51.5 million and by negotiated price increases of $10.7 million.
Biggest changeOur Stoneridge Brazil segment net sales decreased $7.6 million primarily as a result of unfavorable foreign currency translation of $3.8 million and lower sales of our OEM products and monitoring service fees and tracking devices. 21 Table of Contents Net sales by geographic location are summarized in the following table (in thousands): Year ended December 31, 2024 2023 Dollar decrease Percent decrease North America $ 447,142 49.2 % $ 495,541 50.8 % $ (48,399) (9.8) % South America 49,649 5.5 57,214 5.9 (7,565) (13.2) % Europe and Other 411,504 45.3 423,063 43.3 (11,559) (2.7) % Total net sales $ 908,295 100.0 % $ 975,818 100.0 % $ (67,523) (6.9) % The decrease in North American net sales was mostly attributable to decreases in sales volume and the impact of expected end of life production for certain programs in our automotive market of $53.0 million as well as the 2023 impact of required electronic component spot buy purchases of $2.7 million.
We record certain foreign currency transaction losses (gains) as a component of other expense, net on the consolidated statement of operations.
We record certain foreign currency transaction (gains) losses as a component of other (income) expense, net on the consolidated statement of operations.
A small portion of our sales are comprised of monitoring services of which the revenue is recognized over the life of the contract. See Note 3 to the consolidated financial statements for additional information on our revenue recognition policies, including recognizing revenue based on satisfying performance obligations. Warranties.
A small portion of our sales are comprised of monitoring services of which the revenue is recognized over the life of the contract. See Note 3 to the consolidated financial statements for additional information on our revenue recognition policies, including recognizing revenue based on satisfying performance obligations. Goodwill.
In 2023 and 2022, the provision for income taxes was impacted by jurisdictional earnings mix, U.S. taxes on foreign earnings, various tax credits and incentives and tax losses for which no benefit is recognized due to valuation allowances.
In 2024 and 2023, the provision for income taxes was impacted by jurisdictional earnings mix, U.S. taxes on foreign earnings, various tax credits and incentives and tax losses for which no benefit is recognized due to valuation allowances.
The Company’s wholly-owned subsidiary located in Stockholm, Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20.0 million Swedish krona, or $2.0 million and $1.9 million, at December 31, 2023 and 2022, respectively.
The Company’s wholly-owned subsidiary located in Stockholm, Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a daily maximum level of 20.0 million Swedish krona, or $1.8 million and $2.0 million, at December 31, 2024 and 2023, respectively.
Our U.S. federal general business credits, if unused, begin to expire in 2027, and the state and foreign tax credits expire at various times.
Our U.S. federal general business credits, if unused, begin to expire in 2025, and the state and foreign tax credits expire at various times.
Although we believe that our warranty liability is adequate and that the judgment applied is appropriate, such amounts estimated to be due and payable could differ materially from what will actually transpire in the future. 29 Table of Contents Contingencies.
Although we believe that our warranty liability is adequate and that the judgment applied is appropriate, such amounts estimated to be due and payable could differ materially from what will actually transpire in the future. Contingencies.
The Company has contributed $8.4 million to the Autotech Fund II since December 2018. Management will continue to focus on efficiently managing its weighted-average cost of capital and believes that cash flows from operations and the availability of funds from our Credit Facility provides sufficient liquidity to meet our future growth and operating needs.
The Company has contributed $9.0 million to the Autotech Fund II since December 2018. Management will continue to focus on efficiently managing its weighted-average cost of capital and believes that cash flows from operations and the availability of funds from our Credit Facility provide sufficient liquidity to meet our future growth and operating needs.
The Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants that place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The Credit Facility had an outstanding balance of $189.3 million at December 31, 2023.
The Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants that place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The Credit Facility had an outstanding balance of $201.6 million at December 31, 2024.
In December 2018, the Company entered into an agreement to make a $10.0 million investment in Autotech Fund II managed by Autotech. The Company’s $10.0 million investment in the Autotech Fund II will be contributed over the expected ten-year life of the fund. As of December 31 2023, the Company’s cumulative investment in the Autotech Fund II was $8.4 million.
In December 2018, the Company entered into an agreement to make a $10.0 million investment in Autotech Fund II managed by Autotech. The Company’s $10.0 million investment in the Autotech Fund II will be contributed over the expected ten-year life of the fund. As of December 31 2024, the Company’s cumulative investment in the Autotech Fund II was $9.0 million.
This segment includes results of operations that design and manufacture vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices, driver information systems and telematics solutions.
This segment includes results of operations that design and manufacture vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices.
Our future results could also be unfavorably affected by increased commodity prices as commodity fluctuations impact the cost of our raw material purchases. At December 31, 2023, we had a cash and cash equivalents balance of approximately $40.8 million, of which 94.1 % was held in foreign locations.
Our future results could also be unfavorably affected by increased commodity prices as commodity fluctuations impact the cost of our raw material purchases. At December 31, 2024, we had a cash and cash equivalents balance of approximately $71.8 million, of which 65.8% was held in foreign locations.
The Company contributed $0.4 million and $1.0 million, net to the Autotech Fund II during the years ended December 31, 2023 and 2022, respectively. 28 Table of Contents Our future results could also be adversely affected by unfavorable changes in foreign currency exchange rates.
The Company contributed $0.6 million and $0.4 million, net to the Autotech Fund II during the years ended December 31, 2024 and 2023, respectively. Our future results could also be adversely affected by unfavorable changes in foreign currency exchange rates.
These sales are generated by our non-U.S. based operations, and therefore, movements in foreign currency exchange rates can have a significant effect on our results of operations, which are presented in U.S. dollars.
Other Matters A significant portion of our sales are outside of the United States. These sales are generated by our non-U.S. based operations, and therefore, movements in foreign currency exchange rates can have a significant effect on our results of operations, which are presented in U.S. dollars.
In addition, companies are required to disclose additional information about income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be adopted on a prospective basis; however, retrospective application is permitted. We are currently evaluating the impact on our annual consolidated financial statement disclosures.
In addition, companies are required to disclose additional information about income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be adopted on a prospective basis; however, retrospective application is permitted.
The Company has approximately $85.7 million of undrawn commitments un der the Credit Facility as of December 31, 2023, which results in total undrawn commitments and cash balances of more th an $126.5 million. Commitments and Contingencies See Note 11 to the consolidated financial statements for disclosures of the Company’s commitments and contingencies.
The Company has approximately $73.4 million of undrawn commitments un der the Credit Facility as of December 31, 2024, which results in total undrawn commitments and cash balances of more th an $145.3 million. Commitments and Contingencies See Note 11 to the consolidated financial statements for disclosures of the Company’s commitments and contingencies.
At December 31, 2023 and 2022 there was $2.1 million and $1.5 million, respectively, in borrowings outstanding recorded within current portion of debt. In addition, the Suzhou subsidiary has a bank acceptance draft line of credit which facilitates the extension of trade payable payment terms by 180 days.
At December 31, 2024 and 2023 there was $0.0 million and $2.1 million, respectively, in borrowings outstanding recorded within current portion of debt. In addition, the Suzhou subsidiary had a bank acceptance draft line of credit that expired in October 2024 which facilitated the extension of trade payable payment terms by 180 days.
At December 31, 2023 and 2022, there were no borrowings outstanding on this overdraft credit line. During the year ended December 31, 2023, the subsidiary borrowed and repaid 358.5 million Swedish krona, or $35.6 million.
At December 31, 2024 and 2023, there were no borrowings outstanding on this overdraft credit line. During the year ended December 31, 2024, the subsidiary borrowed and repaid 334.5 million Swedish krona, or $30.3 million.
At December 31, 2023 and 2022, we had cash and cash equivalents of $40.8 million and $54.8 million, respectively. At December 31, 2023 and 2022 , we had $189.3 million and $167.8 million , respectively, in borrowings outstanding on the Credit Facility.
At December 31, 2024 and 2023, we had cash and cash equivalents of $71.8 million and $40.8 million, respectively. At December 31, 2024 and 2023 , we had $201.6 million and $189.3 million , respectively, in borrowings outstanding on the Credit Facility.
The Company’s wholly-owned subsidiary located in Suzhou, China, has lines of credit which allow up to a maximum borrowing level of 20.0 million Chinese yuan, or $2.8 million and $2.9 million, at December 31, 2023 and 2022, respectively.
The Company’s wholly-owned subsidiary located in Suzhou, China, had lines of credit that allowed up to a maximum borrowing level of 20.0 million Chinese yuan, or $2.7 million and $2.8 million, at December 31, 2024 and 2023, respectively.
The bank acceptance draft line of credit allows up to a maximum borrowing level of 60.0 million Chinese yuan, or $8.5 million, at December 31, 2023 and $8.7 million at December 31, 2022. There was $2.4 million and $2.0 million utilized on the Suzhou bank acceptance draft line of credit at December 31, 2023 and 2022, respectively.
The bank acceptance draft line of credit allowed up to a maximum borrowing level of 60.0 million Chinese yuan, or $8.5 million at December 31, 2023. There was $2.4 million utilized on the Suzhou bank acceptance draft line of credit at December 31, 2023 recorded on the consolidated balance sheet within accounts payable.
Other expense, net of $1.2 million, decreased by $4.5 million in 2023 compared to other expense, net of $5.7 million for 2022 primarily due to the impact of favorable foreign currency movements in our Electronics and Control Devices segments from moderated strengthening of the U.S. dollar. Provision for Income Taxes.
Other income, net of $2.5 million, increased by $3.8 million in 2024 compared to other expense, net of $1.2 million for 2023 due to the impact of favorable foreign currency movements in our Electronics and Stoneridge Brazil segments from strengthening of the U.S. dollar. Provision for Income Taxes.
In 2023, the provision for income tax expense was $3.3 million, resulting in an effective tax rate of (169.7)%. In 2022, the provision for income tax expense was $3.4 million, resulting in an effective tax rate of (31.4)%.
In 2024, the provision for income tax expense was $2.9 million, resulting in an effective tax rate of (21.5)%. In 2023, the provision for income tax expense was $3.3 million, resulting in an effective tax rate of (169.7)%.
Operating income in South America increased due to higher sales levels offset by higher SG&A and D&D spending. Our operating results in Europe and Other increased primarily due to contribution from higher sales levels offset by higher D&D expense. Interest Expense, net.
Operating income in South America decreased because of lower contribution from lower sales levels. Our operating results in Europe and Other increased primarily because of material cost actions and lower SG&A and D&D spending offset by lower contribution from lower sales levels. Interest Expense, net. Interest expense, net increased by $1.4 million compared to 2023.
Seasonality Our Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns and the ramp-up of new model production at key customers. In addition, the demand for our Stoneridge Brazil segment consumer products is generally higher in the second half of the year.
Seasonality Our Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns and the ramp-up of new model production at key customers.
We are currently evaluating the impact that the updated standard will have on our financial statement disclosures. 30 Table of Contents In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures," which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
Recently Issued Accounting Standards Not Yet Adopted as of December 31, 2024 In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures," which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
However, if we are unable to effectively manage production costs in the future to mitigate future pricing pressures, our results of operations would be adversely affected. 20 Table of Contents Year Ended December 31, 2023 Compared To Year Ended December 31, 2022 Consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands): Year ended December 31, 2023 2022 Dollar increase / (decrease) Net sales $ 975,818 100.0 % $ 899,923 100.0 % $ 75,895 Costs and expenses: Cost of goods sold 774,512 79.4 724,997 80.6 49,515 Selling, general and administrative 117,395 12.0 106,695 11.9 10,700 Design and development 71,075 7.3 65,296 7.3 5,779 Operating income 12,836 1.3 2,935 0.3 9,901 Interest expense, net 13,000 1.3 7,097 0.8 5,903 Equity in loss of investee 522 0.1 823 0.1 (301) Other expense, net 1,236 0.1 5,711 0.6 (4,475) Loss before income taxes (1,922) (0.2) (10,696) (1.2) 8,774 Provision for income taxes 3,261 0.3 3,360 0.4 (99) Net loss $ (5,183) (0.5) % $ (14,056) (1.6) % $ 8,873 Net Sales.
However, if we are unable to effectively manage production costs in the future to mitigate future pricing pressures, our results of operations would be adversely affected. 20 Table of Contents Year Ended December 31, 2024 Compared To Year Ended December 31, 2023 Consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands): Year ended December 31, 2024 2023 Dollar increase / (decrease) Net sales $ 908,295 100.0 % $ 975,818 100.0 % $ (67,523) Costs and expenses: Cost of goods sold 719,042 79.2 774,512 79.4 (55,470) Selling, general and administrative 117,460 12.9 117,395 12.0 65 Design and development 72,174 7.9 71,075 7.3 1,099 Operating (loss) income (381) — 12,836 1.3 (13,217) Interest expense, net 14,447 1.6 13,000 1.3 1,447 Equity in loss of investee 1,292 0.1 522 0.1 770 Other (income) expense, net (2,523) (0.3) 1,236 0.1 (3,759) Loss before income taxes (13,597) (1.5) (1,922) (0.2) (11,675) Provision for income taxes 2,927 0.3 3,261 0.3 (334) Net loss $ (16,524) (1.8) % $ (5,183) (0.5) % $ (11,341) Net Sales.
We expect our served market channels to remain relatively stable in 2024 based on current market conditions. Stoneridge Brazil will focus on continuing to grow our OEM capabilities in-region to better support our global customers.
We expect our served market channels to remain relatively stable in 2024 based on current market and economic conditions, however our sales of in region OEM products have been lower than expected due to lower customer demand and program delays. Stoneridge Brazil will focus on continuing to grow our OEM capabilities in-region to better support our global customers.
The impact of these spot buy purchases increased cost of goods sold by $14.6 million, or 1.5% of net sales, and $58.4 million, or 6.5% of sales, during 2023 and 2022, respectively, which reduced gross margin percent by 0.3 % and 1.4% in 2023 and 2022, respectively.
The decrease in the material cost percentage was partially due to the impact of 2023 required electronic component spot buy purchases, reimbursed by customers. The impact of these spot buy purchases increased cost of goods sold by $14.6 million, or 1.5% of net sales during 2023 which reduced gross margin percent by 0.3 % in 2023.
Recently Adopted Accounting Standards In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance in ASU 2020-04 provides temporary optional expedient and exceptions to the guidance in U.S.
The Company has made an accounting policy election to reflect the impact of GILTI taxes, if any, as a current period tax expense when incurred. 27 Table of Contents Recently Adopted Accounting Standards In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance in ASU 2020-04 provides temporary optional expedient and exceptions to the guidance in U.S.
Recently Issued Accounting Standards Not Yet Adopted as of December 31, 2023 In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures", which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.
In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures", which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The updated standard is effective for annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026.
The guidance allows companies to elect not to apply certain modification accounting requirements to contracts affected by the reference rate reform, if certain criteria are met.
The guidance allows companies to elect not to apply certain modification accounting requirements to contracts affected by the reference rate reform, if certain criteria are met. The guidance also allowed companies to elect various optional expedients which would allow them to continue to apply hedge accounting for hedging relationships affected by the reference rate reform, if certain criteria are met.
We recognized $2.4 million of expense as a result of this initiative during the year ended December 31, 2021. In December 2018, the Company entered into an agreement to make a $10.0 million investment in a fund (“Autotech Fund II”) managed by Autotech Ventures (“Autotech”), a venture capital firm focused on ground transportation technology.
In December 2018, the Company entered into an agreement to make a $10.0 million investment in a fund (“Autotech Fund II”) managed by Autotech Ventures (“Autotech”), a venture capital firm focused on ground transportation technology. The Company’s $10.0 million investment in the Autotech Fund II will be contributed over the expected ten year life of the fund.
This segment includes results of operations that manufacture actuators, sensors, switches and connectors. Electronics. This segment includes results of operations from the production of driver information systems, vision and safety systems, connectivity and compliance products and electronic control units. Stoneridge Brazil.
Under this structure, our operations have been reported using the following segments: Control Devices. This segment includes results of operations that manufacture actuators, sensors, switches and connectors. Electronics. This segment includes results of operations from the production of advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules. Stoneridge Brazil.
We expect our Electronics’ segment sales to outperform forecasted changes in production volumes due to strong demand for our existing products and the ramp-up of recently launched programs, including our next generation tachograph product in Europe for both OEM and aftermarket applications and our first North American OEM MirrorEye program, as well as expected program launches, including our next OEM MirrorEye program launch in Europe in 2024.
Over the long-term, we expect our Electronics’ segment sales to continue to outperform forecasted changes in production volumes due to strong demand for our existing products including our OEM MirrorEye programs in North America and Europe as well as our next generation tachograph in Europe.
In order to minimize the impact of these incremental costs, we have taken several actions, including negotiating price increases and cost recoveries with our customers. Additionally, we continued to focus on improving manufacturing performance and optimizing our global cost structure to both reduce costs and improve operational efficiency. We expect these actions will benefit our future financial performance.
Additionally, we continue to focus on improving manufacturing performance and optimizing our global cost structure to both reduce costs and improve operational efficiency. We expect these actions will benefit our future financial performance.
This focus will provide opportunities for future growth and provide a platform to continue to rotate our local portfolio to more closely align with our global business.
This focus will provide opportunities for future growth and provide a platform to continue to rotate our local portfolio to more closely align with our global business. While we expect continued challenges across our end markets in 2025, we continue to focus on operating performance and enterprise-wide cost reduction.
These decreases were offset by increases in our China commercial vehicle and automotive markets of $2.6 million and $2.2 million, respectively. In addition, net sales for the year ended December 31, 2023 were impacted by negotiated price increases of $5.4 million offset by an increase in unfavorable foreign currency translation of $2.5 million.
These decreases were offset by increases in our off-highway, North American commercial vehicle and China automotive markets of $3.7 million, $2.6 million and $2.3 million, respectively, as well as the favorable impact of negotiated price increases of $0.9 million. In addition, 2024 net sales were impacted by unfavorable foreign currency translation of $0.7 million compared to 2023.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes related thereto and other financial information included elsewhere herein. Segments We are organized by products produced and markets served. Under this structure, our operations have been reported using the following segments: Control Devices.
Our systems and products power vehicle intelligence, while enabling safety and security for global commercial, automotive, off-highway and agricultural vehicle markets. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes related thereto and other financial information included elsewhere herein. Segments We are organized by products produced and markets served.
In February 2022, the Company amended its credit facility to incorporate hardwired mechanics to permit a future replacement of LIBOR as the interest reference rate without lender consent. The Company has applied the guidance to impacted transactions during the transition period. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
The Company has applied the guidance to impacted transactions during the transition period. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
The increase in net sales in Europe and Other was due to increases in our European and China commercial vehicle markets of $55.2 million and $4.5 million, respectively, China automotive of $2.2 million and negotiated price increases o f $2.2 million. These increases were offset by lower required customer recoveries of electronic component spot buys of $39.7 million.
The decrease in net sales in Europe and Other was primarily due to the 2023 impact of lower customer recoveries of required electronic component spot buys of $11.7 million, and a reduction in retroactive price increases of $2.2 million and lower sales in our China commercial vehicle, European agricultural and European off-highway markets of $4.0 million, $1.4 million and $1.3 million, respectively.
Segment gross margin as a percent of sales increased primarily due to higher contribution from higher sales levels, negotiated price increases, lower material costs including the favorable effect of foreign currency and lower required electronic component spot buy purchases offset by an increase in labor and overhead costs.
Segment gross margin as a percent of sales slightly improved due to material cost improvement actions and lower required electronic component spot buy purchases being offset by an increase in overhead costs including higher warranty related expense.
Outlook The Company believes that focusing on products that address industry megatrends has had and will continue to have a positive effect on both our top-line growth and underlying margins.
The 2024 increase in cash and cash equivalents was due to reductions in working capital, specifically lower inventory and a higher outstanding balance on our Credit Facility. Outlook The Company believes that focusing on products that address industry megatrends has had and will continue to have a positive effect on both our top-line growth and financial performance.
However, it is possible that future borrowing flexibility under the Credit Facility may be limited as a result of lower than expected financial performance. The Company expects to make additional repayments on the Credit Facility when cash exceeds the amount needed for operations and to remain in compliance with all covenants.
The Company expects to make additional repayments on the Credit Facility when cash exceeds the amount needed for operations and to remain in compliance with all covenants.
We regularly evaluate the performance of our businesses and their cost structures, including personnel, and make necessary changes thereto in order to optimize our results. We also evaluate the required skill sets of our personnel and periodically make strategic changes. As a consequence of these actions, we incur severance related costs which we refer to as business realignment charges.
The Company has contributed $9.0 million to the Autotech Fund II since December 2018. We regularly evaluate the performance of our businesses and their cost structures, including personnel, and make necessary changes thereto in order to optimize our results. We also evaluate the required skill sets of our personnel and periodically make strategic changes.
Net sales for our reportable segments, excluding inter-segment sales are summarized in the following table (in thousands): Year ended December 31, 2023 2022 Dollar increase / (decrease) Percent increase / (decrease) Control Devices $ 342,065 35.1 % $ 342,596 38.1 % $ (531) (0.2) % Electronics 576,539 59.0 505,097 56.1 71,442 14.1 % Stoneridge Brazil 57,214 5.9 52,230 5.8 4,984 9.5 % Total net sales $ 975,818 100.0 % $ 899,923 100.0 % $ 75,895 8.4 % Our Control Devices segment net sales decreased $0.5 million due to a decrease in our North American automotive market of $6.3 million, including the adverse impact of the UAW strike in the fourth quarter of 2023 and a slower than expected penetration rate for electric vehicle platforms, as well as a decrease in our agricultural market of $1.1 million.
Net sales for our reportable segments, excluding inter-segment sales are summarized in the following table (in thousands): Year ended December 31, 2024 2023 Dollar decrease Percent decrease) Control Devices $ 292,606 32.2 % $ 342,065 35.1 % $ (49,459) (14.5) % Electronics 566,040 62.3 576,539 59.0 (10,499) (1.8) % Stoneridge Brazil 49,649 5.5 57,214 5.9 (7,565) (13.2) % Total net sales $ 908,295 100.0 % $ 975,818 100.0 % $ (67,523) (6.9) % Our Control Devices segment net sales decreased $49.5 million primarily as a result of decreases in our North American automotive market of $52.9 million, including the impact of expected end of life production for certain programs as well as decreases in our China commercial vehicle market of $5.3 million.
Inflation and International Presence By operating internationally, we are affected by foreign currency exchange rates and the economic conditions of certain countries. Furthermore, given the current economic climate and recent fluctuations in certain commodity prices, we believe that an increase in such items could significantly affect our profitability.
Furthermore, given the current economic climate and recent fluctuations in certain commodity prices, we believe that an increase in such items could significantly affect our profitability. See Note 10 to the consolidated financial statements for additional details on the Company’s commodity price and foreign currency exchange rate risks.
Net cash used for financing activities increased compared to the prior year primarily due to lower Credit Facility net borrowings and the 2022 cash payment of Stoneridge Brazil earn-out consideration. 27 Table of Contents Summary of Future Cash Flows The following table summarizes our future cash outflows resulting from financial contracts and commitments, as of December 31, 2023 (in thousands): Total Less than 1 year 2-3 years 4-5 years After 5 years Credit Facility $ 189,346 $ — $ 189,346 $ — $ — Debt 2,113 2,113 — — — Interest payments (A) 45,116 15,498 29,618 — — Operating leases 12,959 4,220 5,622 2,125 992 Total contractual obligations (B) $ 249,534 $ 21,831 $ 224,586 $ 2,125 $ 992 (A) Includes estimated payments under the Company’s Credit Facility and other debt obligations using the most current interest rate and principal balance information available at December 31, 2023, extended through the end of the term.
Summary of Future Cash Flows The following table summarizes our future cash outflows resulting from financial contracts and commitments, as of December 31, 2024 (in thousands): Total Less than 1 year 2-3 years 4-5 years After 5 years Credit Facility $ 201,577 $ — $ 201,577 $ — $ — Debt — — — — — Interest payments (A) 25,363 13,233 12,130 — — Operating leases 11,445 4,180 4,579 2,686 — Total contractual obligations (B) $ 238,385 $ 17,413 $ 218,286 $ 2,686 $ — (A) Includes estimated payments under the Company’s Credit Facility and other debt obligations using the most current interest rate and principal balance information available at December 31, 2024, extended through the end of the term.
Net loss in 2023 decreased by $8.9 million, or $0.33 per diluted share, from $14.1 million, or $(0.52) per diluted share, for the year ended December 31, 2022 primarily due to additional contribution from higher sales levels, including the benefit of negotiated price increases and favorable foreign exchange fluctuations offset by higher Selling, General and Administrative (“SG&A”) and Design and Development (“D&D”) spending, including higher business realignment costs, and interest expense.
Net loss in 2024 increased by $11.3 million, or $(0.41) per diluted share, from $5.2 million, or $(0.19) per diluted share, for the year ended December 31, 2023 primarily due to lower contribution from lower sales levels and higher interest expense offset by other income from favorable foreign exchange fluctuations and lower business realignment costs.
Our future effective tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles and our jurisdictional mix of earnings. We monitor these factors and the impact on our effective tax rate. Other Matters A significant portion of our sales are outside of the United States.
We remain focused on improving cash generation and the reduction of debt through efficient operating performance and targeted actions to reduce our inventory levels. Our future effective tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles and our jurisdictional mix of earnings. We monitor these factors and the impact on our effective tax rate.
The Company was in compliance with all covenants at December 31, 2023. The Company has not experienced a violation that would limit the Company’s ability to borrow under the Credit Facility and does not expect that the covenants under it will restrict the Company’s financing flexibility.
The Company has not experienced a violation that would limit the Company’s ability to borrow under the Credit Facility, as amended, and does not expect that the covenants under it will restrict the Company’s financing flexibility. However, it is possible that future borrowing flexibility under the Credit Facility may be limited as a result of lower than expected financial performance.
Certain deferred tax assets are dependent on future taxable income to be realized. Risk factors include U.S. and foreign economic conditions that affect the automotive and commercial vehicle markets of which the Company has significant operations.
Risk factors include U.S. and foreign economic conditions that affect the automotive and commercial vehicle markets of which the Company has significant operations. The Company has recognized deferred taxes related to the expected foreign currency impact upon repatriation from foreign subsidiaries not considered indefinitely reinvested.
Other factors reducing the material cost percentage were favorable foreign currency fluctuations and favorable sales mix in our Electronics segment. Overhead as a percentage of net sales was 15.1% and 14.2% for 2023 and 2022, respectively.
Other factors contributing to the reduction the material cost percentage were material cost improvement actions. Overhead as a percentage of net sales was 17.0% and 15.1% for 2024 and 2023, respectively.
Operating income (loss) by geographic location is summarized in the following table (in thousands): Year ended December 31, 2023 2022 Dollar increase / (decrease) Percent increase / (decrease) North America $ (13,566) $ (2,066) $ (11,500) 556.6 % South America 4,454 3,150 1,304 41.4 % Europe and Other 21,948 1,851 20,097 1085.7 % Operating income $ 12,836 $ 2,935 $ 9,901 337.3 % Our North American operating loss increased due to higher material and labor costs, higher business realignment, higher incentive compensation and a 2022 favorable legal settlement offset by a 2023 gain on disposal of fixed assets.
Operating (loss) income by geographic location is summarized in the following table (in thousands): Year ended December 31, 2024 2023 Dollar increase / (decrease) Percent increase / (decrease) North America $ (28,431) $ (13,566) $ (14,865) (109.6) % South America 982 4,454 (3,472) (78.0) % Europe and Other 27,068 21,948 5,120 23.3 % Operating (loss) income $ (381) $ 12,836 $ (13,217) (103.0) % Our North American operating loss increased primarily as a result of lower contribution from lower sales levels, higher overhead spending including warranty expense, higher self-insured medical costs, wages and a 2023 gain on disposal of fixed assets, offset by lower incentive compensation due to Company performance and lower business realignment costs.
In 2023, our net sales increased by $75.9 million, or 8.4%, while our operating income increased $9.9 million.
In 2024, our net sales decreased by $67.5 million, or 6.9%, while our operating income decreased $13.2 million.
The increase in overhead as a percentage of sales was attributable to higher indirect wage inflation and warranty costs which offset favorable fixed cost leverage from higher sales levels. Our Control Devices segment gross margin decreased primarily due to higher direct material costs associated with inflation and financial support for a troubled supplier as well as unfavorable sales mix.
The increase in overhead as a percentage of sales was attributable to higher overhead spending including higher warranty related expense and amortization for capitalized software development costs as well as adverse leverage from lower sales levels. Our Control Devices segment gross margin decreased from lower contribution from lower sales levels.
See Note 10 to the consolidated financial statements for additional details on the Company’s commodity price and foreign currency exchange rate risks. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with U.S.
Critical Accounting Policies and Estimates The preparation of financial statements in conformity with U.S.
Our Electronics segment gross margin increased due to the contribution from higher sales levels, including negotiated price increases, and the reduction of the adverse effect of required electronic component spot buy purchases, net of customer recoveries, offset by higher labor and overhead costs including wages and warranty expense.
Our Electronics segment gross margin slightly improved due to material cost improvement actions and lower required electronic component spot buy purchases being offset by an increase in overhead costs including higher warranty related expense. Our Stoneridge Brazil segment gross margin decreased because of lower contribution from lower sales levels and adverse sales mix. Selling, General and Administrative.
The increase in net sales in Europe and Other was due to customer recoveries of semiconductor spot buy purchases and negotiated price increases of $40.1 million and $15.9 million, respectively and increases in our Electronics segment European commercial vehicle and European off-highway markets of $52.9 million and $18.2 million, respectively.
Our Electronics segment net sales decreased $10.5 million primarily due to the 2023 impact of lower customer recoveries of required electronic component spot buy purchases of $14.4 million, a reduction in retroactive price increases of $2.3 million, and lower sales volumes in our agricultural, North American commercial vehicle and European off-highway vehicle markets of $1.8 million, $1.4 million and $1.3 million, respectively.
Operating income (loss) is summarized in the following table by reportable segment (in thousands): Year ended December 31, 2023 2022 Dollar increase / (decrease) Percent increase / (decrease) Control Devices $ 13,582 $ 23,917 $ (10,335) (43.2) % Electronics 27,309 5,128 22,181 432.5 % Stoneridge Brazil 4,454 3,150 1,304 41.4 % Unallocated corporate (32,509) (29,260) (3,249) (11.1) % Operating income $ 12,836 $ 2,935 $ 9,901 337.3 % Our Control Devices segment operating income decreased due to lower gross margin primarily resulting from higher material costs associated with inflation and troubled supplier support costs , unfavorable sales mix and a 2022 favorable legal settlement offset by a 2023 gain on disposal of fixed assets.
Operating (loss) income is summarized in the following table by reportable segment (in thousands): Year ended December 31, 2024 2023 Dollar decrease Percent decrease Control Devices $ 6,178 $ 13,582 $ (7,404) (54.5) % Electronics 25,561 27,309 (1,748) (6.4) % Stoneridge Brazil 982 4,454 (3,472) (78.0) % Unallocated corporate (33,102) (32,509) (593) (1.8) % Operating (loss) income $ (381) $ 12,836 $ (13,217) (103.0) % Our Control Devices segment operating income decreased primarily as a result of lower contribution from lower sales levels and higher SG&A due to a 2023 gain on sale of fixed assets offset by lower D&D spending.
The Company had net loss of $5.2 million, or $(0.19) per diluted share, for the year ended December 31, 2023.
Further we significantly increased cash provided by operating activities by reducing working capital levels, specifically lowering inventory. The Company had net loss of $16.5 million, or $(0.60) per diluted share, for the year ended December 31, 2024.
The OECD implemented a 15% global corporate minimum tax to ensure that large multinational enterprises pay a minimum level of tax in the countries they operate. While various countries have implemented the legislation as of January 1, 2024, we do not expect a material change to our income tax provision for the year ended December 31, 2024.
The OECD implemented a 15% global corporate minimum tax to ensure that large multinational enterprises pay a minimum level of tax in the countries they operate. A number of countries have passed legislation enacting the OECD Pillar Two model rules as issued, in a modified form or not at all which is effective in 2024.
Net cash used for investing activities increased compared to the prior year due to 2021 proceeds from the sale of the Canton Facility, from the disposal of the MSIL joint venture and from the disposal of the PM sensor business as well as higher capital expenditures and capitalized software costs which were offset by 2022 proceeds from the settlement of the net investment hedges and lower investments in the Autotech Fund II.
Net cash used for investing activities decreased compared to the prior year due to lower capital expenditures and capitalized software development costs as well as the 2023 impact of cash proceeds from the sale of equipment. Net cash provided by financing activities decreased compared to the prior year primarily due to a decrease in Credit Facility borrowings net of repayments.
Our Electronics segment net sales increased $147.2 million due to higher sales volumes in our European commercial, North American commercial, European off-highway vehicle and North American off-highway markets of $55.1 million, $33.8 million, $18.2 million and $6.0 million, respectively.
Offsetting these decreases were higher sales volumes in our European commercial vehicle market of $6.2 million, including sales related to the launches of a European OEM MirrorEye program and our next generation tachograph and higher sales in our North American off-highway and China commercial vehicle markets of $2.0 million and $1.3 million, respectively.
The decrease in net sales in South America was primarily due to lower sales in most Stoneridge Brazil product lines of $7.8 million offset by favorable foreign currency translation of $2.6 million and higher sales of tracking devices and monitoring service fees of $0.7 million.
These decreases were offset by higher sales volume in our North American off-highway and commercial vehicle markets of $5.4 million and $1.2 million, respectively. The decrease in net sales in South America was primarily as a result of unfavorable foreign currency translation of $3.8 million and lower sales of our OEM products and monitoring service fees and tracking devices.
The Company expects spot buy activity to continue to decline as supply chains normalize and material availability improves. In 2024, we expect net D&D spend to increase primarily driven by spend for the development of next generation products as new product launch related spend decreases in the second half of 2024.
In 2025, we expect net D&D spend to slightly increase driven by spend for the development of next generation products as opposed to new product launch related spend. As a result of reduced launch activities, we expect lower customer reimbursements and capitalization of software development costs.
Liquidity and Capital Resources Summary of Cash Flows for the years ended December 31, 2023 and 2022 (in thousands): Year ended December 31, 2023 2022 Dollar increase / (decrease) Net cash provided by (used for): Operating activities $ 4,946 $ 6,806 $ (1,860) Investing activities (36,979) (28,581) (8,398) Financing activities 17,485 (7,297) 24,782 Effect of exchange rate changes on cash and cash equivalents 591 (1,677) 2,268 Net change in cash and cash equivalents $ (13,957) $ (30,749) $ 16,792 Cash provided by operating activities decreased compared to 2022 primarily due to an increase in cash used to fund working capital levels from a combination of higher inventory levels for new product launches and the residual impact of supply chain issues on inventory , lower accounts payable and the 2022 increase in assets for spot buys not yet invoiced.
The OECD Pillar Two framework could have a material impact on our effective tax rate and cash tax payments depending on which countries enact the legislation and in what manner. 23 Table of Contents Liquidity and Capital Resources Summary of Cash Flows for the years ended December 31, 2024 and 2023 (in thousands): Year ended December 31, 2024 2023 Dollar increase / (decrease) Net cash provided by (used for): Operating activities $ 47,748 $ 4,946 $ 42,802 Investing activities (24,468) (36,979) 12,511 Financing activities 11,121 17,485 (6,364) Effect of exchange rate changes on cash and cash equivalents (3,410) 591 (4,001) Net change in cash and cash equivalents $ 30,991 $ (13,957) $ 44,948 Cash provided by operating activities increased compared to 2023 primarily due to a reduction in working capital levels.
Dollar strengthened against the Chinese yuan and Argentine peso in 2023 and the euro, Swedish krona, Chinese yuan and Argentine peso in 2022, unfavorably impacting our reported results. On November 2, 2021, the Company entered into a Share Purchase Agreement (the “SPA”) with Minda Corporation Limited (“Minda”), as the buyer, and MSIL.
Dollar strengthened against the Argentine peso, Brazilian real, Mexican peso and Swedish krona in 2024 and the Chinese yuan and Argentine peso in 2023, unfavorably impacting our reported results.
Equity losses for Autotech Fund II were $0.5 million and $0.8 million for the years ended December 31, 2023 and 2022 . The decrease in Autotech Fund II earnings was due to unfavorable 2023 and 2022 fair value adjustments to fund investments and fund expenses. Other Expense, net .
The increase was the result of higher outstanding Credit Facility balances. Equity in Loss of Investee. Equity loss for Autotech Fund II was $1.3 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively . Other (Income) Expense, net .
Our Electronics segment net sales increased by 14.1% primarily due to higher sales volumes in our European and North American commercial vehicle markets, including the launches of a next generation tachograph product for OEM and aftermarket applications in Europe and our first OEM MirrorEye program in North America, and the impact of negotiated price increases offset by lower required electronic component spot buy purchases.
Segment operating income decreased from lower contribution from lower sales levels and higher selling, general and administrative expenses ("SG&A") due to a 2023 gain on sale of fixed assets offset by lower D&D from higher customer reimbursements. 18 Table of Contents Our Electronics segment net sales decreased by 1.8% primarily due to the 2023 impact of lower customer recoveries of required electronic component spot buy purchases, a reduction in retroactive price increases, and lower sales in our agricultural, North American commercial vehicle and European off-highway vehicle markets from lower customer demand.
D&D costs decreased by $0.9 million due to higher customer reimbursements for ongoing development activities in our Electronics segment of $8.3 million that were offset by increased spend for awarded business program launches and development of advanced technologies and systems in our Electronics, Control Devices and Stoneridge Brazil segments. 25 Table of Contents Operating Income (Loss).
D&D costs increased in 2024 because of lower launch activities and a shift to platform development resulting in lower customer reimbursements and capitalization of software development costs that were offset by lower consulting spend compared to 2023 for our Electronics and Control Devices segments. In addition, higher business realignment costs were incurred in our Electronics segment.
Our material cost as a percentage of net sales de creased by 2.4% t o 59.4% in 2023 compared to 61.8% in 2022. The decrease in the material cost percentage was partially due to the impact of required electronic component spot buy purchases that were offset by customer recoveries.
Cost of Goods Sold and Gross Margin. Cost of goods sold decreased compared to 2023 and our gross margin increased to 20.8% in 2024 compared to 20.6% in 2023. Our material cost as a percentage of net sales de creased by 1.8% t o 57.6% in 2024 compared to 59.4% in 2023.
In 2023, SG&A expenses increased compared to 2022 due to higher business realignment costs of $3.0 million, higher incentive compensation due to the achievement of performance targets, consulting and professional service fees and travel related costs. 18 Table of Contents D &D costs increased in 2023 due to lower customer reimbursements as a result of a shift to platform development and higher costs related to product launch preparations offset by increased capitalized software development costs.
SG&A expenses increased by $0.1 million compared to 2023 due to higher self-insured medical costs, wages and legal fees as well as a 2023 gain on the sale of fixed assets being offset by lower business realignment costs and incentive compensation benefits due to Company performance. Design and Development.
Our unallocated corporate operating loss increased due to the 2021 gain on disposal of the MSIL joint venture offset by lower business realignment.
Our unallocated corporate operating loss increased due to higher self-insured medical costs and wages offset by lower incentive compensation due to Company performance and business realignment costs.
Our Electronics segment net sales increased $71.4 million due to higher sales volumes in our European and North American commercial vehicle markets of $55.2 million and $52.4 million, respectively, including the launches of a next generation tachograph product in Europe for both OEM and aftermarket applications and our first OEM MirrorEye program in North America, and the impact of negotiated price increases of $7.5 million.
Offsetting these decreases were higher sales volumes in our European commercial vehicle market, including sales related to the launches of a European OEM MirrorEye program and our next generation tachograph as well as our China commercial vehicle and North American off-highway vehicle markets.
Our Stoneridge Brazil segment operating income increased due to contribution from higher sales levels offset by higher SG&A and D&D spending. 22 Table of Contents Our unallocated corporate operating loss increased primarily from higher service related costs, business realignment costs associated with employee separation related costs of $0.9 million and higher incentive compensation due to achievement of performance targets.
Our Stoneridge Brazil segment operating income decreased primarily as a result of lower contribution from lower sales levels and adverse sales mix offset by lower SG&A because of a reduction in incentive compensation due to Company performance.
Business realignment costs of $4.5 million and $0.3 million were incurred during the years ended December 31, 2023 and 2022, respectively. Realignment expense for the year ended December 31, 2023 was primarily related to the centralization of the product line management, sales and engineering funct ions and executive separation costs.
As a consequence of these actions, we incur severance related costs which we refer to as business realignment charges. Business realignment costs of $2.6 million and $4.5 million were incurred during the years ended December 31, 2024 and 2023, respectively.
The updated standard is effective for annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026. Early adoption is permitted.
The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact on our annual consolidated financial statement disclosures.
D&D costs increased by $5.8 million due to lower customer reimbursements and higher costs related to product launch preparations offset by increases in capitalized software development costs for our Electronics segment. All other segments also incurred slightly higher spending attributable to product launch activities. Operating Income.
D&D costs increased by $1.1 million because of a reduction in launch activities and a shift in platform development resulting in lower customer reimbursements and capitalization of software development costs that were offset by lower consulting spending compared to 2023 for our Electronics and Control Devices segments.
For example, the Company is aligned with platforms likely to perform well against overall market dynamics including light-trucks, SUVs and crossover vehicles and our continued focus on safety, vehicle intelligence and connectivity based products, such as the recent release of our next generation tachograph in Europe as well as current and future launches of our MirrorEye programs in North America and Europe for both OEM and aftermarket applications.
For example, we continue to develop safety, vehicle intelligence and connectivity based products, such as our OEM MirrorEye programs in North America and Europe as well as our next generation tachograph in Europe. Global inflation has increased significantly since 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs discussed in detail in Note 10 to our consolidated financial statements, we entered into foreign currency forward contracts the purpose of which is to reduce exposure related to the Company’s future Mexican peso-denominated purchases.
Biggest changeAs discussed in detail in Note 10 to our consolidated financial statements, we entered into foreign currency forward contracts the purpose of which is to reduce exposure related to the Company’s future Mexican peso-denominated purchases. 28 Table of Contents We estimate that a 10.0% unidirectional change in currency exchange rates relative to the U.S dollar would have changed our income before income taxes for the year ended December 31, 2024 by approximately $2.9 million.
In the future, if we believe that the terms of a fixed price agreement become beneficial to us, we will enter into another such instrument. We may also consider pursuing alternative commodities or alternative suppliers to mitigate this risk over a period of time. 31 Table of Contents
In the future, if we believe that the terms of a fixed price agreement become beneficial to us, we will enter into another such instrument. We may also consider pursuing alternative commodities or alternative suppliers to mitigate this risk over a period of time. 29 Table of Contents
We estimate that a 1.0% change in the interest costs of our floating-rate debt outstanding as of December 31, 2023 would change interest expense on an annual basis by approximately $1.9 million. Currency Exchange Rates In addition to the United States, we have significant operations in Europe, South America, Mexico and China.
We estimate that a 1.0% change in the interest costs of our floating-rate debt outstanding as of December 31, 2024 would change interest expense on an annual basis by approximately $2.0 million. Currency Exchange Rates In addition to the United States, we have significant operations in Europe, South America, Mexico and China.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rates We are exposed to interest rate risk primarily from the effects of changes in interest rates. At December 31, 2023, approximately 98.9% of our outstanding debt was floating-rate and 1.1% was fixed-rate.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rates We are exposed to interest rate risk primarily from the effects of changes in interest rates. At December 31, 2024, 100.0% of our outstanding debt was floating-rate.
We estimate that a 10.0% unidirectional change in currency exchange rates relative to the U.S dollar would have changed our income before income taxes for the year ended December 31, 2023 by approximately $3.0 million. Commodity Price Risk The competitive marketplace in which we operate may limit our ability to recover increased costs through higher prices.
Commodity Price Risk The competitive marketplace in which we operate may limit our ability to recover increased costs through higher prices.

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