What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-03-01 · 283 added, 283 removed, 1011 unchanged (36% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 3 , 202 2 and 202 1

Consolidated Statements of Comprehensive ( Loss ) Income for the Years Ended December 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Cash Flows for the Years Ended December 31, 202 4 , 202 3 and 202 2

7 unchanged sentences

We have audited the accompanying consolidated balance sheets of Stoneridge, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements“).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements“).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

23 unchanged sentences

For example, we tested management review controls over the appropriateness of assumptions management used in the calculation and the completeness of warranty claims.

To evaluate the reserve for product warranty and recall, we performed audit procedures that included, among others, testing the completeness and accuracy of the underlying claims data and costs used in the computation of management’s estimate, performing inquiries of the Company’s quality control team, and obtaining legal confirmation letters to evaluate the status and assessment of certain reserves.

We assessed the historical accuracy of management’s product warranty and recall reserves and performed sensitivity analyses of significant assumptions to evaluate the impact to the reserve that would result from changes in the assumptions.

To evaluate the reserve for product warranty and recall, we performed audit procedures that included, among others, evaluating the Company’s estimation methodology and testing significant assumptions including the completeness and accuracy of the underlying claims data and reasonableness of the cost assumptions used in the computation of management’s estimate.

We performed inquiries of the Company’s quality control team and obtained legal confirmation letters to evaluate the status and assessment of certain reserves.

We also have assessed the historical accuracy of management’s product warranty and recall reserves by comparing actual results to previous estimates and judgments made by management.

/s/ Ernst & Young LLP

51 unchanged sentences

Selling, general and administrative 117,460 117,395 106,695

Gain on sale of Canton Facility, net — — ( 30,718 )

Design and development 72,174 71,075 65,296

Operating income 12,836 2,935 15,411

Operating (loss) income ( 381 ) 12,836 2,935

Interest expense, net 14,447 13,000 7,097

Equity in loss (earnings) of investee 522 823 ( 3,658 )

Other expense, net 1,236 5,711 1,444

(Loss) income before income taxes ( 1,922 ) ( 10,696 ) 12,436

Equity in loss of investee 1,292 522 823

Other (income) expense, net ( 2,523 ) 1,236 5,711

Loss before income taxes ( 13,597 ) ( 1,922 ) ( 10,696 )

Provision for income taxes 2,927 3,261 3,360

Net (loss) income $ ( 5,183 ) $ ( 14,056 ) $ 3,406

(Loss) earnings per share:

Net loss $ ( 16,524 ) $ ( 5,183 ) $ ( 14,056 )

Loss per share:

Basic $ ( 0.60 ) $ ( 0.19 ) $ ( 0.52 )

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Year ended December 31, (in thousands) 2024 2023 2022

Net (loss) income $ ( 5,183 ) $ ( 14,056 ) $ 3,406

Other comprehensive income (loss), net of tax:

Net loss $ ( 16,524 ) $ ( 5,183 ) $ ( 14,056 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation (1) ( 25,839 ) 9,118 ( 6,171 )

9,118 ( 6,171 ) ( 8,408 )

Unrealized gain on derivatives (2)

1,236 53 1,019

Other comprehensive income (loss), net of tax 10,354 ( 6,118 ) ( 7,389 )

Comprehensive income (loss) $ 5,171 $ ( 20,174 ) $ ( 3,983 )

Unrealized (loss) gain on derivatives (2) ( 3,386 ) 1,236 53

Other comprehensive (loss) income, net of tax ( 29,225 ) 10,354 ( 6,118 )

Comprehensive (loss) income $ ( 45,749 ) $ 5,171 $ ( 20,174 )

_____________________________

(1) Net of tax expense of $ 514 and $ 267 for the years ended December 31, 2022 and 2021, respectively.

(2) Net of tax expense of $ 328 , $ 14 and $ 271 for the years ended December 31, 2023, 2022 and 2021, respectively.

(1) Net of tax expense of $ 514 for the year ended December 31, 2022.

(2) Net of tax (benefit) expense of $( 901 ), $ 328 and $ 14 for the years ended December 31, 2024, 2023 and 2022, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

OPERATING ACTIVITIES:

Net (loss) income $ ( 5,183 ) $ ( 14,056 ) $ 3,406

Net loss $ ( 16,524 ) $ ( 5,183 ) $ ( 14,056 )

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

2 unchanged sentences

Deferred income taxes ( 5,742 ) ( 4,038 ) ( 5,110 )

Loss (earnings) of equity method investee 522 823 ( 3,658 )

Gain on sale of fixed assets ( 860 ) ( 241 ) ( 165 )

Loss of equity method investee 1,292 522 823

Loss (gain) on sale of fixed assets 257 ( 860 ) ( 241 )

Share-based compensation expense 4,094 3,322 5,942

Excess tax deficiency (benefit) related to share-based compensation expense 230 543 ( 563 )

Gain on sale of Canton Facility, net — — ( 30,718 )

Gain on disposal of business and joint venture, net — — ( 2,942 )

Change in fair value of earn-out contingent consideration — — 2,065

Excess tax deficiency related to share-based compensation expense 248 230 543

Changes in operating assets and liabilities:

4 unchanged sentences

Accrued expenses and other liabilities 5,804 ( 4,226 ) 4,088

Net cash provided by (used for) operating activities 4,946 6,806 ( 36,248 )

Net cash provided by operating activities 47,748 4,946 6,806

INVESTING ACTIVITIES:

2 unchanged sentences

Proceeds from settlement of net investment hedges — — 3,820

Proceeds from disposal of business, net — — 1,837

Proceeds from disposal of joint venture, net — — 20,999

Proceeds from sale of Canton Facility, net — — 35,167

Investment in venture capital fund, net ( 350 ) ( 950 ) ( 3,199 )

Net cash (used for) provided by investing activities ( 36,979 ) ( 28,581 ) 28,041

Investment in venture capital fund ( 550 ) ( 350 ) ( 950 )

Net cash used for investing activities ( 24,468 ) ( 36,979 ) ( 28,581 )

FINANCING ACTIVITIES:

25 unchanged sentences

comprehensive

(loss) income Total

shareholders'

BALANCE , DECEMBER 31, 2021 27,191 1,775 $ 232,490 $ ( 55,264 ) $ 215,748 $ ( 97,024 ) $ 295,950

Net income — — — — 3,406 — 3,406

Net loss — — — — ( 14,056 ) — ( 14,056 )

Unrealized gain on derivatives, net — — — — — 53 53

12 unchanged sentences

Net loss — — $ — $ — $ ( 16,524 ) $ — $ ( 16,524 )

Unrealized gain on derivatives, net — — — — — 1,236 1,236

Unrealized loss on derivatives, net — — — — — ( 3,386 ) ( 3,386 )

Currency translation adjustments — — — — — ( 25,839 ) ( 25,839 )

10 unchanged sentences

Stoneridge, Inc.

and its subsidiaries are global designers and manufacturers of highly engineered electrical and electronic systems, components and modules for the automotive, commercial, off-highway and agricultural vehicle markets.

and its subsidiaries are global designers and manufacturers of highly engineered electrical and electronic systems, components and modules for the commercial, automotive, off-highway and agricultural vehicle markets.

Summary of Significant Accounting Policies

4 unchanged sentences

The Company analyzes its ownership interests in accordance with Accounting Standards Codification (“ASC”) “Consolidations (Topic 810)” to determine whether they are a variable interest entity and, if so, whether the Company is the primary beneficiary.

Prior to the sale of our investment in Minda Stoneridge Instruments Ltd.

(“MSIL”) on December 30, 2021, the Company accounted for its 49 % ownership in MSIL under the equity method of accounting.

Accounting Estimates

7 unchanged sentences

Accounts Receivable and Concentration of Credit Risk

Revenues are principally generated from the automotive, commercial, off-highway and agricultural vehicle markets.

Revenues are principally generated from the commercial, automotive, off-highway and agricultural vehicle markets.

The Company’s largest customers are PACCAR and Traton, primarily related to the Electronics reportable segment and accounted for the following percentages of consolidated net sales:

3 unchanged sentences

Accounts receivable are recorded at the invoice price, net of an estimate of allowance for doubtful accounts and other reserves.

Allowance for Doubtful Accounts

The Company evaluates the collectability of accounts receivable based on a combination of factors.

In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected.

Additionally, the Company reviews historical trends for collectability in determining an estimate for its allowance for doubtful accounts.

If economic circumstances change substantially, estimates of the recoverability of amounts due to the Company could be reduced by a material amount.

Credit losses

The Company primarily utilizes historical write-off experience, combined with customer specific considerations and industry and regional economic data to develop the estimate of the allowance for doubtful accounts in accordance with ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”).

These allowances reflect management's estimate of credit losses over the remaining expected life of such assets.

If customer specific or economic circumstances change substantially, estimates of the recoverability of amounts due to the Company could be reduced by a material amount.

The Company does not have collateral requirements with its customers.

18 unchanged sentences

Long Term Supply Commitment

In 2022, the Company entered into a long term supply agreement with a supplier for the purchase of certain electronic semiconductor components through December 31, 2026.

In 2022, the Company entered into a long term supply agreement, as amended, with a supplier for the purchase of certain electronic semiconductor components through December 31, 2030.

Pursuant to the agreement, the Company paid capacity deposits of $ 1,000 in 2022 and 2023, respectively.

5 unchanged sentences

Engineering, research and development and other design and development costs for products sold on long-term supply arrangements are expensed as incurred unless the Company has a contractual guarantee for reimbursement from the customer which are capitalized as pre-production costs.

Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company either has title to the assets or has the noncancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets, typically three to seven years .

Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company either has title to the assets or has the non-cancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets, typically three to seven years .

Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company has a contractual guarantee to a lump sum reimbursement from the customer are capitalized either as a component of prepaid expenses and other current assets or an investment and other long-term assets, net within the consolidated balance sheets.

Capitalized pre-production costs were $ 13,104 and $ 12,378 at December 31, 2024 and 2023, respectively, and were recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets.

Disposal of Particulate Matter Sensor Business

On March 8, 2021, the Company entered into an Asset Purchase Agreement (the “APA”) by and among the Company, the Company’s wholly owned subsidiary, Stoneridge Electronics AS, as the Sellers, and Standard Motor Products, Inc.

(“SMP”) and SMP Poland SP Z O.O., as the Buyers.

Pursuant to the APA, the Company agreed to sell to the Buyers the Company’s assets located in Lexington, Ohio and Tallinn, Estonia related to the manufacturing of particulate matter sensor products and related service part operations (together, the “PM sensor business”).

The Buyers did not acquire any of the Company’s locations or employees.

The purchase price for the sale of the PM sensor assets was $ 4,000 (subject to a post-closing inventory adjustment which was a payment to SMP of $ 1,133 ) plus the assumption of certain liabilities.

The purchase price was allocated among PM sensor product lines, Gen 1 and Gen 2 as defined under the APA.

The purchase price allocated to Gen 1 fixed assets and inventory and Gen 2 fixed assets was $ 3,214 and $ 786 , respectively.

The sale of the Gen 2 assets occurred during November 2021, upon completion of the Company’s supply commitments to certain customers.

The Company and SMP also entered into certain ancillary agreements, including a contract manufacturing agreement, a transitional services agreement, and a supply agreement, pursuant to which the Company provided and was compensated for certain manufacturing, transitional, administrative and support services to SMP on a short-term basis.

STONERIDGE, INC.

2 unchanged sentences

(in thousands, except share and per share data, unless otherwise indicated)

On March 8, 2021 the Company’s Control Devices segment recognized net sales and cost of goods sold ("COGS") of $ 971 and $ 898 , respectively, for the one-time sale of Gen 1 inventory and a gain on disposal of $ 740 for the sale of Gen 1 fixed assets less transaction costs of $ 60 within selling, general and administrative ("SG&A") during the three months ended March 31, 2021.

Pursuant to the contract manufacturing agreement, the Company produced and sold PM sensor Gen 1 finished goods inventory to SMP recognizing net sales of $ 8,042 in the year ended December 31, 2021.

In addition, the Company received $ 308 and $ 783 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the years ended December 31, 2022 and 2021, respectively.

PM sensor Gen 1 net sales, including sales of $ 8,042 to SMP pursuant to the contract manufacturing agreement and the sale of Gen 1 inventory components of $ 2,283 and operating income were $ 12,592 and $ 1,415 , respectively, for the year ended December 31, 2021.

The Company completed the PM sensor Gen 2 product supply commitments and ended production on September 23, 2021.

In November 2021, the Company’s Control Devices segment recognized proceeds of $ 786 and a gain on disposal of $ 408 for the sale of the Gen 2 fixed assets within SG&A, for the year ended December 31, 2021.

Sale of Canton Facility

On May 7, 2021, the Company entered into a Real Estate Purchase and Sale Agreement (the “Agreement”) with Sun Life Assurance Company of Canada, a Canadian corporation (the “Buyer”), to sell the Canton Facility for $ 38,200 (subject to adjustment pursuant to the Agreement).

On June 17, 2021, pursuant to the Agreement, as amended after May 7, 2021, the Company closed the sale of the Canton Facility to the Buyer for an adjusted purchase price of $ 37,900 .

The Company recognized in the Control Devices segment, net proceeds of $ 35,167 and a gain, net of direct selling costs, of $ 30,718 within SG&A.

On November 2, 2021, the Company entered into a Share Purchase Agreement (the “SPA”) with Minda Corporation Limited (“Minda”), as the buyer, and MSIL.

Pursuant to the SPA the Company agreed to sell to Minda the Company’s minority interest in MSIL for approximately $ 21,500 equivalent Indian Rupee which was payable in U.S.

dollars at closing.

On December 30, 2021, pursuant to the SPA, the Company closed the sale of MSIL to Minda for $ 21,587 .

The Company recognized net proceeds of $ 20,999 and a gain, net of transaction costs, of $ 1,794 .

Property, Plant and Equipment

13 unchanged sentences

Property, plant and equipment, net $ 97,667 $ 110,126

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Depreciation is provided using the straight-line method over the estimated useful lives of the assets.

10 unchanged sentences

Expenditures for improvements and major renewals are capitalized.

When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is recorded in the consolidated statements of operations as a component of SG&A expenses.

Impairment of Long-Lived or Finite-Lived Assets

8 unchanged sentences

The occurrence of certain events, including changes in economic and competitive conditions, could impact cash flows eventually realized and management’s ability to accurately assess whether an asset is impaired.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Goodwill and Other Intangible Assets

2 unchanged sentences

Goodwill is not amortized, but instead is tested for impairment at least annually, or earlier when events and circumstances indicate that it is more likely than not that such assets have been impaired, by applying a fair value-based test.

Goodwill is evaluated at the reporting unit level by comparing the fair value of the reporting unit with its carrying amount including goodwill.

An impairment of goodwill exists if the carrying amount of the reporting unit exceeds its fair value.

The impairment loss is the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill.

In conducting our annual impairment assessment testing, we first perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount.

2 unchanged sentences

If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

The Company utilizes an income statement approach to estimate the fair value of a reporting unit and a market valuation approach to further support this analysis.

The Company utilizes an income approach to estimate the fair value of a reporting unit and a market valuation approach to further support this analysis.

The income approach is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of cash flows.

5 unchanged sentences

Other significant assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures and changes in future working capital requirements.

While there are inherent uncertainties related to the assumptions used and to management’s application of these assumptions to this analysis, we believe that the income statement approach provides a reasonable estimate of the fair value of a reporting unit.

While there are inherent uncertainties related to the assumptions used and to management’s application of these assumptions to this analysis, we believe that the income approach provides a reasonable estimate of the fair value of a reporting unit.

The market valuation approach is used to further support our analysis.

5 unchanged sentences

The Company’s cumulative goodwill impairment loss since inception was $ 300,083 at December 31, 2024 and 2023, which includes Stoneridge Brazil’s goodwill impairment in 2014 and goodwill impairment recorded by the Company’s Control Devices segment in 2008 and 2004.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Other Intangible Assets

18 unchanged sentences

Customer lists, tradenames and technology of $ 1,903 , $ 3,330 and $ 1,424 , respectively, related to the Stoneridge Brazil segment at December 31, 2024.

Capitalized software development and patents of $ 2,149 and $ 60 , respectively, related to the Control Devices segment at December 31, 2023.

Patents and capitalized software development of $ 48 and $ 1,463 , respectively, related to the Control Devices segment at December 31, 2024.

The Company designs and develops software that will be embedded into certain products and sold to customers.

1 unchanged sentence

These intangible assets are amortized using the straight-line method over estimated useful lives generally ranging from three to seven years .

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

The Company recognized $ 8,127 , $ 6,942 and $ 7,003 of amortization expense related to intangible assets in 2024, 2023 and 2022, respectively.

Amortization expense is included as a component of COGS, SG&A and design and development ("D&D") on the consolidated statements of operations.

Amortization expense is included as a component of cost of goods sold ("COGS"), SG&A and design and development ("D&D") on the consolidated statements of operations.

Annual amortization expense for intangible assets is estimated to be approximately $ 7,900 for the year 2025 and approximately $ 6,300 for the years 2026 through 2029.

14 unchanged sentences

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Deferred tax assets are recognized to the extent that these assets are more likely than not to be realized (See Note 6).

5 unchanged sentences

The Company adjusts this liability in the period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position, or more information becomes available.

The Company has made an accounting policy election to reflect global intangible low-taxed income (“GILTI”) taxes, if any, as a current period tax expense when incurred.

The Company has made an accounting policy election to reflect GILTI taxes, if any, as a current period tax expense when incurred.

Currency Translation

2 unchanged sentences

Adjustments resulting from translation of financial statements are reflected as a component of accumulated other comprehensive loss in the Company’s consolidated balance sheets.

Foreign currency transactions are remeasured into the functional currency using translation rates in effect at the time of the transaction with the resulting adjustments included on the consolidated statements of operations within other expense, net.

These foreign currency transaction losses, including the impact of hedging activities, were $ 1,226 , $ 5,534 and $ 2,037 for the years ended December 31, 2023, 2022 and 2021, respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

These foreign currency transaction (gains) losses, including the impact of hedging activities, were $( 2,414 ) , $ 1,226 and $ 5,534 for the years ended December 31, 2024, 2023 and 2022, respectively.

Revenue Recognition and Sales Commitments

22 unchanged sentences

Product warranty and recall includes $ 10,675 and $ 7,228 of a long-term liability at December 31, 2024 and 2023, respectively, which is included as a component of other long-term liabilities on the consolidated balance sheets.

During the second quarter of 2023, the Company received a request for arbitration of warranty claims related to past sales of PM sensor products, a product line we exited in 2019.

The claim notification was submitted by one of our customers seeking recovery for warranty related claims.

Based on our review of the technical merits and specific claims as well as prior discussions with the customer, we believe these claims lack merit and are significantly overstated.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

In 2023, the Company received a demand for arbitration from one of our customers seeking recovery of warranty claims in the amount of 29,340 euro ($ 32,669 ), related to past sales of PM sensor products, a product line we exited in 2019.

The Company denies responsibility for these claims.

Based on our review of the technical and legal merits, we believe these warranty claims lack substantive merit and are significantly overstated.

The Company continues to vigorously defend this matter in private arbitration.

While no assurances can be made as to the ultimate outcome of this matter, or any other future claims, we do not currently believe a material loss is probable.

10 unchanged sentences

These product development costs amounted to $ 72,174 , $ 71,075 and $ 65,296 for the years ended December 31, 2024, 2023 and 2022, respectively, or 7.9 %, 7.3 % and 7.3 % of net sales for these respective periods.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Research and Development Activities

14 unchanged sentences

The Company accounts for Common Shares held in treasury under the cost method (applied on a FIFO basis) and includes such shares as a reduction of total shareholders’ equity.

(Loss) Earnings Per Share

Basic (loss) earnings per share was computed by dividing net (loss) income by the weighted-average number of Common Shares outstanding for each respective period.

Diluted earnings per share was calculated by dividing net (loss) income by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Loss Per Share

Basic loss per share was computed by dividing net loss by the weighted-average number of Common Shares outstanding for each respective period.

Diluted earnings per share was calculated by dividing net loss by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented.

However, for all periods in which the Company recognized a net loss, the Company did not recognize the effect of the potential dilutive securities as their inclusion would be anti-dilutive.

Potential dilutive shares of 227,741 and 232,458 for the years ended December 31, 2023 and December 31, 2022, respectively, were excluded from diluted loss per share because the effect would have been anti-dilutive.

Actual weighted-average Common Shares outstanding used in calculating basic and diluted net (loss) income per share were as follows:

Potential dilutive shares of 202,163 , 227,741 and 232,458 for the years ended December 31, 2024, 2023 and 2022 , respectively, were excluded from diluted loss per share because the effect would have been anti-dilutive.

Actual weighted-average Common Shares outstanding used in calculating basic and diluted net loss per share were as follows:

Year ended December 31, 2024 2023 2022

2 unchanged sentences

Diluted weighted-average Common Shares outstanding 27,595,698 27,442,984 27,258,456

There were 418,834 , 767,593 and 580,116 performance-based right to receive Common Shares outstanding at December 31, 2023, 2022 and 2021.

There were 605,196 , 418,834 and 767,593 performance-based right to receive Common Shares outstanding at December 31, 2024, 2023 and 2022, respectively.

These performance-based restricted and right to receive Common Shares are included in the computation of diluted earnings per share based on the number of Common Shares that would be issuable if the end of the year were the end of the contingency period.

8 unchanged sentences

4 to the Fourth Amended and Restated Credit Facility.

Additionally in 2023, the Company capitalized $ 1,915 of deferred financing costs and wrote off $ 309 of previously recorded deferred financing costs as a result of entering into the Fifth Amended and Restated Credit Agreement.

See Note 5 to the consolidated financial statements for additional details regarding the Credit Facility and related deferred financing costs.

The Company has elected to continue to present deferred financing costs within long-term assets in the Company’s consolidated balance sheets.

Deferred financing costs, net, were $ 1,332 and $ 2,057 , as of December 31, 2024 and 2023, respectively.

STONERIDGE, INC.

2 unchanged sentences

(in thousands, except share and per share data, unless otherwise indicated)

Additionally 2023, the Company capitalized $ 1,915 of deferred financing costs and wrote off $ 309 of previously recorded deferred financing costs as a result of entering into the Fifth Amended and Restated Credit Agreement.

See Note 5 to the consolidated financial statements for additional details regarding the Credit Facility and related deferred financing costs.

The Company has elected to continue to present deferred financing costs within long-term assets in the Company’s consolidated balance sheets.

Deferred financing costs, net, were $ 2,057 and $ 996 , as of December 31, 2023 and 2022, respectively.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Changes in accumulated other comprehensive income (loss) for the years ended December 31, 2023 and 2022 were as follows:

Changes in Accumulated Other Comprehensive Loss by Component

Changes in accumulated other comprehensive loss for the years ended December 31, 2024 and 2023 were as follows:

translation Unrealized

1 unchanged sentence

Balance at January 1, 2024 $ ( 94,256 ) $ 1,468 $ ( 92,788 )

Other comprehensive income before reclassifications 9,118 1,817 10,935

Other comprehensive loss before reclassifications ( 25,839 ) ( 3,700 ) ( 29,539 )

Amounts reclassified from accumulated other comprehensive loss — 314 314

Net other comprehensive income, net of tax 9,118 1,236 10,354

Net other comprehensive loss, net of tax ( 25,839 ) ( 3,386 ) ( 29,225 )

Balance at December 31, 2024 $ ( 120,095 ) $ ( 1,918 ) $ ( 122,013 )

Balance at January 1, 2023 $ ( 103,374 ) $ 232 $ ( 103,142 )

Other comprehensive (loss) income before reclassifications ( 6,171 ) 1,816 ( 4,355 )

Other comprehensive income before reclassifications 9,118 1,817 10,935

Amounts reclassified from accumulated other comprehensive loss — ( 581 ) ( 581 )

Net other comprehensive (loss) income, net of tax ( 6,171 ) 53 ( 6,118 )

Net other comprehensive income, net of tax 9,118 1,236 10,354

Balance at December 31, 2023 $ ( 94,256 ) $ 1,468 $ ( 92,788 )

5 unchanged sentences

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 will also allow 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.

The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2023.

The guidance also allows 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.

The new standard was effective upon issuance and generally could have been applied to applicable contract modifications through December 31, 2023.

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.

1 unchanged sentence

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted as of December 31, 2023

In November 2023, the FASB issued ASU No.

2 unchanged sentences

Early adoption is permitted.

We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

We adopted this ASU retrospectively on December 31, 2024.

Refer to Note 13, Segment Reporting for the inclusion of the new required disclosures.

Recently Issued Accounting Standards Not Yet Adopted as of December 31, 2024

In December 2023, the FASB issued ASU No.

4 unchanged sentences

however, retrospective application is permitted.

This ASU will modify the Company's financial statement disclosures, but will not have a significant impact on its consolidated financial statements.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

In November 2024, the FASB issued ASU No.

2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures," which requires companies to disclose certain costs and expenses within the notes to the financial statements.

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.

17 unchanged sentences

Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”).

Our Electronics segment designs and manufactures driver information systems, vision and safety systems, connectivity and compliance products and electronic control units.

Our Electronics segment designs and manufactures advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules.

These products are sold principally to the commercial and off-highway vehicle markets primarily through our OEM and aftermarket channels in the European, North American and Asia Pacific regions.

Stoneridge Brazil.

Our Stoneridge Brazil segment primarily serves the South American region 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.

Our Stoneridge Brazil segment primarily serves the South American region and specializes in the design, manufacture and sale of vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices.

Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services and directly to OEMs.

17 unchanged sentences

The performance obligation does not exist until a customer release is received for a specific number of parts.

The majority of the parts sold to OEM and Tier 1 supplier customers are customized to the specific customer, with the exception of MirrorEye camera monitor systems (“CMS”) sold through our aftermarket channel that are common across all customers.

The transaction price is equal to the contracted price per part and there is no expectation of material variable consideration in the transaction price.

16 unchanged sentences

The Company had no material contract assets, contract liabilities or capitalized contract acquisition costs as of December 31, 2024 or 2023.

Minda Stoneridge Instruments Ltd.

The Company had a 49 % equity interest in MSIL, a company based in India that manufactured electronics, instrumentation equipment and sensors primarily for the motorcycle, commercial vehicle and automotive markets.

As discussed in Note 2, the Company sold its equity interest in MSIL on December 30, 2021.

The investment was accounted for under the equity method of accounting.

Equity in earnings of MSIL included in the consolidated statements of operations was $ 1,776 for the year ended December 31, 2021.

PST Eletrônica Ltda.

4 unchanged sentences

See Note 10 for the fair value and foreign currency adjustments of the earn-out consideration for the current and prior periods.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Other Investments

3 unchanged sentences

The Company contributed $ 550 , $ 350 and $ 950 to the Autotech Fund II during the years ended December 31, 2024, 2023 and 2022, respectively.

The Company contributed $ 3,450 to and received $ 251 in distributions from the Autotech Fund II during the year ended December 31, 2021.

The Company has a 6.7 % interest in Autotech Fund II.

The Company recognized loss (earnings) of $ 522 , $ 823 and $( 1,882 ) during the years ended December 31, 2023, 2022 and 2021, respectively.

The Company recognized losses of $ 1,292 , $ 522 and $ 823 during the years ended December 31, 2024, 2023 and 2022, respectively.

The Autotech Fund II investment recorded in investments and other long-term assets, net in the consolidated balance sheets was $ 7,730 and $ 8,472 as of December 31, 2024 and 2023, respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

2024 December 31,

3 unchanged sentences

Credit Facility $ 201,577 $ 189,346 6.56 % November 2026

Sweden short-term credit line — —

Suzhou short-term credit line 2,113 1,450 3.25 % August 2024

Suzhou short-term credit line — 2,113

Total debt — 2,113

15 unchanged sentences

The Credit Facility also contains customary negative covenants, which, among other things, are subject to certain exceptions, including restrictions on (i) indebtedness, (ii) liens, (iii) liquidations, mergers, consolidations and acquisitions, (iv) disposition of assets or subsidiaries, (v) affiliate transactions, (vi) continuation of or change in business, (vii) restricted payments, (viii) restrictions in agreements on dividends, intercompany loans and granting liens on the collateral, (ix) loans and investments and (x) changes in organizational documents and fiscal year.

The Credit Facility contains customary events of default, subject to customary thresholds and exceptions, including, among other things, (i) non-payment of principal and non-payment of interest and fees, (ii) a material inaccuracy of a representation or warranty at the time made, (iii) a failure to comply with any covenant, subject to customary grace periods in the case of certain affirmative covenants, (iv) cross default of other debt, final judgments and other adverse orders in excess of $ 30,000 , (v) any loan document shall cease to be a legal, valid and binding agreement,

On February 26, 2025, the Company entered into Amendment No.

1 to the Fifth Amended and Restated Credit Agreement and Waiver (“Amendment No.

Amendment No.

1 provides for certain covenant relief and 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).

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 $ 70,000 ;

STONERIDGE, INC.

2 unchanged sentences

(in thousands, except share and per share data, unless otherwise indicated)

(vi) certain uninsured losses or proceedings against assets with a value in excess of $ 30,000 , (vii) ERISA events, (viii) a change of control, or (ix) bankruptcy or insolvency proceedings.

• 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 $ 100,000 or the net cash proceeds;

• there were certain restrictions on Restricted Payments (as defined);

• a Permitted Acquisition (as defined) could not be consummated unless otherwise approved in writing by the required lenders.

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 .

Borrowings outstanding on credit facilities were $ 201,577 and $ 189,346 at December 31, 2024 and 2023, respectively.

As a result of Amendment No.

1, the Company was in compliance with all credit facility covenants at December 31, 2024 and 2023.

4 unchanged sentences

The Stockholm subsidiary has pledged certain of its assets as collateral in order to obtain a guarantee of certain of the Stockholm subsidiary’s obligations to third parties.

The Company’s wholly-owned subsidiary located in Suzhou, China (the "Suzhou subsidiary"), has lines of credit (the “Suzhou credit line”) which allow up to a maximum borrowing level of 20,000 Chinese yuan, or $ 2,818 and $ 2,900 at December 31, 2023 and 2022, respectively.

At December 31, 2023 and 2022 there was $ 2,113 and $ 1,450 , respectively, in borrowings outstanding on the Suzhou credit line with weighted-average interest rates of 3.25 % and 3.70 %, respectively.

The Suzhou credit line is included on the consolidated balance sheet 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.

The bank acceptance draft line of credit allows up to a maximum borrowing level of 60,000 Chinese yuan, or $ 8,453 and $ 8,699 at December 31, 2023 and 2022, respectively.

There was $ 2,387 and $ 1,998 utilized on the Suzhou bank acceptance draft line of credit at December 31, 2023 and 2022, respectively.

The Suzhou bank acceptance draft line of credit is included on the consolidated balance sheet within accounts payable.

At December 31, 2023, the future maturities of the Credit Facility and debt were as follows:

The Company’s wholly-owned subsidiary located in Suzhou, China (the "Suzhou subsidiary"), had lines of credit (the “Suzhou credit line”) that allowed up to a maximum borrowing level of 20,000 Chinese yuan, or $ 2,740 and $ 2,818 at December 31, 2024 and 2023, respectively.

At December 31, 2024 and 2023 there was $ 0 and $ 2,113 , respectively, in borrowings outstanding on the Suzhou credit line.

The Suzhou credit line was included on the consolidated balance sheet 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.

The bank acceptance draft line of credit allowed up to a maximum borrowing level of 60,000 Chinese yuan, or $ 8,453 at December 31, 2023.

There was $ 2,387 utilized on the Suzhou bank acceptance draft line of credit at December 31, 2023.

The Suzhou bank acceptance draft line of credit was included on the consolidated balance sheet within accounts payable.

At December 31, 2024, the future maturities of the Credit Facility were as follows:

Year ended December 31,

10 unchanged sentences

Foreign 31,822 27,736 1,248

Total (loss) income before income taxes $ ( 1,922 ) $ ( 10,696 ) $ 12,436

Total loss before income taxes $ ( 13,597 ) $ ( 1,922 ) $ ( 10,696 )

Provision (benefit) for income taxes:

11 unchanged sentences

Statutory U.S.

federal income tax (benefit) provision $ ( 403 ) $ ( 2,246 ) $ 2,612

federal income tax benefit $ ( 2,855 ) $ ( 403 ) $ ( 2,246 )

State income taxes, net of federal tax benefit ( 542 ) ( 136 ) 495

4 unchanged sentences

tax on foreign earnings 5,922 4,815 1,376

Tax reserves and audit adjustments 4,054 — ( 346 )

Tax impact of unconsolidated subsidiaries — — 395

18 unchanged sentences

Capitalized research and development 4,665 4,345

Disallowed interest deduction 3,575 380

Lease liability 2,339 2,351

15 unchanged sentences

Net deferred tax assets $ 32,149 $ 23,168

The Company has recognized deferred taxes related to foreign withholding taxes and the expected foreign currency impact upon repatriation from foreign subsidiaries not considered indefinitely reinvested.

The Company has recognized deferred taxes related to the expected foreign currency impact upon repatriation from foreign subsidiaries not considered indefinitely reinvested.

At December 31, 2024, the aggregate undistributed earnings of our foreign subsidiaries amounted to $ 35,670 .

10 unchanged sentences

(in thousands, except share and per share data, unless otherwise indicated)

As of December 31, 2024, the Company has consolidated deferred tax assets of $ 63,216 with a valuation allowance of $ 17,632 principally related to tax credit carryforwards, tax loss carryforwards and other deferred tax assets in Sweden, Brazil, and the US.

The Company has considered historical pre-tax income or loss and the four sources of income in determining the need for a valuation allowance when the realization of its deferred tax assets are not more likely than not.

The four sources of income considered are 1.) taxable income in prior carryback years where carryback is allowable, 2.) future reversals of existing temporary differences, 3.) consideration of reasonable and prudent tax planning strategies, and 4.) forecasts of future taxable income, exclusive of reversing temporary differences and carryforwards.

In the cases where a valuation allowance has been recorded, the evidence described above did not result in a conclusion that the deferred tax assets are more likely than not to be realizable.

Current and future provision for income taxes is significantly impacted by the initial recognition of and changes in valuation allowances.

The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized.

The Company is significantly impacted by the GILTI tax provisions of the US tax code, and should those provisions change, it could have a material impact on our assessment of the realizability of general business credits in the US for which we currently believe are more likely than not to be realized based on the considerations noted above.

The following is a reconciliation of the Company’s total gross unrecognized tax benefits:

6 unchanged sentences

Expirations of statutes of limitation — — ( 346 )

Cumulative translation adjustment ( 97 ) — —

Balance as of December 31 $ 4,746 $ 2,545 $ 2,545

The Company has classified its uncertain tax positions as a reduction to non-current deferred income tax assets.

If the Company’s tax positions are sustained by the taxing authorities in favor of the Company, the amount that would affect the Company’s effective tax rate is approximately $ 2,545 at December 31, 2023 and 2022.

The Company classifies interest expense and, if applicable, penalties which could be assessed related to unrecognized tax benefits as a component of income tax expense.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized no expense related to interest and penalties.

If the Company’s tax positions are sustained by the taxing authorities in favor of the Company, the amount that would affect the Company’s effective tax rate is approximately $ 4,746 and $ 2,545 at December 31, 2024 and 2023, respectively.

The Company classifies interest expense and, if applicable, penalties which could be assessed related to unrecognized tax benefits as a component of provision for income taxes.

The Company recognized interest and penalties of $ 34 , $ 0 and $ 0 for the years ended December 31, 2024, 2023 and 2022, respectively.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022 ("IRA"), which, among other things, implemented a 15% minimum tax on financial statement income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.

The IRA did not have a material impact on the Company's consolidated financial statements.

For the years ended December 31, 2024 and 2023, the IRA did not have a material impact on the Company's consolidated financial statements.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

The Company conducts business globally and, as a result, files income tax returns in the U.S.

15 unchanged sentences

United Kingdom 2023-2024

The Company has various cancelable and noncancelable leased assets within all segments, which include certain properties, vehicles and equipment of which are all classified as operating leases.

The Company has various cancelable and noncancelable leased assets within all of our segments, which include certain properties, vehicles and equipment of which are all classified as operating leases.

Payments for these leases are generally fixed;

1 unchanged sentence

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Under Leases (Topic 842), the Company determines an arrangement is a lease when we have the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

Under Leases (Topic 842), the Company determines an arrangement is a lease when we have the right to control the use of identified property, vehicle or equipment for a period of time in exchange for consideration.

Other than the leases that we have already identified, we are not aware of any material leases that have not yet commenced.

9 unchanged sentences

The Company has made the policy election to account for lease and non-lease components as a single lease component for all of its leases.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

The components of lease expense are as follows:

10 unchanged sentences

Total leased liabilities $ 10,476 $ 11,555

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Maturities of operating lease liabilities are as follows:

As of December 31, 2024

Thereafter 992

Total future minimum lease payments $ 11,445

12 unchanged sentences

operating lease obligations $ 3,302 $ 250

The Company, as lessor, entered into a lease with a third-party lessee effective July 1, 2020, of its Canton, Massachusetts facility.

In conjunction with the Canton restructuring plan outlined in Note 12, the Company ceased operations at this facility in March 2020.

As discussed in Note 2, the Company sold the Canton facility and assigned the lease to the buyer on June 17, 2021.

The Company recognized lease income on a straight-line basis over the lease term until the time of the sale.

The Company recognized, in its Control Devices segment, operating and variable lease income from leases in our consolidated statements of operations of $ 602 and $ 199 , respectively, for the year ended December 31, 2021.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Share-Based Compensation Plans

5 unchanged sentences

There are 863,479 shares available to be granted under the 2016 Plan at December 31, 2024.

In 2023, 2022 and 2021, pursuant to the 2016 Plan, the Company granted time-based share units and performance-based performance shares.

In 2024, 2023 and 2022, pursuant to the 2016 Plan, the Company granted time-based share units and performance-based performance share units.

The majority of the time-based share units cliff vest three years after the date of grant.

The performance-based performance shares vest and are no longer subject to forfeiture upon the recipient remaining an employee of the Company for three years from the date of grant and, for a portion of the annual awards, upon the Company attaining certain targets of performance measured against a peer group’s three year performance in terms of total shareholder return and, for the remaining portion of the annual awards, upon achieving certain earnings per share targets and return on invested capital targets established by the Company during the performance period of the award.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

The performance-based performance share units vest and are no longer subject to forfeiture upon the recipient remaining an employee of the Company for three years from the date of grant and, for a portion of the annual awards, upon the Company attaining certain targets of performance measured against a peer group’s three year performance in terms of total shareholder return and, for the remaining portion of the annual awards, upon achieving certain earnings per share targets and return on invested capital targets established by the Company during the performance period of the award.

The allocation of performance shares granted between total shareholder return, earnings per share and return on invested capital were as follows for the years ended December 31:

5 unchanged sentences

The phantom shares will settle in cash based on the volume-weighted average closing price of the Company's stock for a 30 day period prior to the vesting date.

As of December 31, 2023, the Company has recorded a liability of $ 795 for the phantom shares which was included on the consolidated balance sheet as a component of other long-term liabilities.

As of December 31, 2024, the Company has recorded a liability of $ 897 for the phantom shares which was included on the consolidated balance sheet as a component of accrued expenses and other current liabilities.

In April 2005, the Company adopted the Directors’ Restricted Shares Plan (the “Director Share Plan”) and reserved 500,000 Common Shares for issuance under the Director Share Plan.

3 unchanged sentences

1 to the 2018 Director Share Plan to increase the number of shares for issuance by 100,000 to 950,000 .

In May 2024, the Company's shareholders approved Amendment No.

2 to the 2018 Director Share Plan to increase the number of shares for issuance by 200,000 to 1,150,000 .

Under the 2018 Director Share Plan, the Company has cumulatively issued 931,692 restricted Common Shares.

52 unchanged sentences

The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of fair value because of the short maturity of these instruments.

The fair value of debt approximates the carrying value of debt, due to the variable interest rate on the Credit Facility and the maturity of the remaining outstanding debt.

The fair value of debt approximates the carrying value of debt, due to the variable interest rate on the Credit Facility and the maturity of outstanding debt.

STONERIDGE, INC.

26 unchanged sentences

The effectiveness of the transactions has been and will be measured on an ongoing basis using regression analysis and forecasted future purchases of the currency.

In certain instances, the foreign currency forward contracts may not qualify for hedge accounting or are not designated as hedges and, therefore, are marked-to-market with gains and losses recognized in the Company’s consolidated statements of operations as a component of other expense, net.

During 2024 and 2023, all of the Company’s foreign currency forward contracts were designated as cash flow hedges.

18 unchanged sentences

The difference between amounts to be received and paid under the Swap were recognized as a component of interest expense, net on the consolidated statements of operations.

The swap settlements (reduced) increased interest expense, net by $( 290 ), $( 156 ) and $ 651 for the years ended December 31, 2023, 2022 and 2021, respectively.

The swap settlements reduced interest expense, net by $ 290 and $ 156 for the years ended December 31, 2023 and 2022, respectively.

The notional amounts and fair values of derivative instruments in the consolidated balance sheets were as follows:

1 unchanged sentence

Prepaid expenses

and other current assets

and other current assets Accrued expenses and

other current liabilities

As of December 31, 2024 2023 2024 2023 2024 2023

Derivatives designated as hedging instruments:

Cash flow hedges:

Forward currency contracts $ 32,339 $ 26,613 $ — $ 1,858 $ 2,429 $ —

Interest rate swap $ — $ 50,000 $ — $ 294

_____________________________

(A) Notional amounts represent the gross contract of the derivatives outstanding in U.S.

Gross amounts recorded for the cash flow hedges in other comprehensive income (loss) and in net (loss) income for the years ended December 31 were as follows:

Gain (loss) recorded in other

comprehensive income (loss) Gain (loss) reclassified from other comprehensive

income (loss) income into net (loss) income (A)

Gross amounts recorded for the cash flow hedges in other comprehensive (loss) income and in net loss for the years ended December 31 were as follows:

(Loss) gain recorded in other

comprehensive (loss) income (Loss) gain reclassified from other

comprehensive (loss) income into net loss (A)

2024 2023 2022 2024 2023 2022

5 unchanged sentences

_____________________________

(A) Gains reclassified from comprehensive income (loss) into net (loss) income recognized in COGS in the Company’s consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 were $ 337 , $ 1,572 and $ 341 , respectively.

Gains reclassified from other comprehensive income (loss) into net (loss) income recognized in SG&A in the Company’s consolidated statements of operations were $ 109 , $ 504 and $ 107 for the years ended December 31, 2023, 2022 and 2021, respectively.

Gains (losses) reclassified from other comprehensive income (loss) into net (loss) income recognized in interest expense, net in the Company’s consolidated statements of operations were $ 290 , $ 156 and $( 651 ) for the years ended December 31, 2023, 2022 and 2021, respectively.

(A) (Losses) gains reclassified from comprehensive (loss) income into net loss recognized in COGS in the consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022 were $( 350 ), $ 337 and $ 1,572 , respectively.

(Losses) gains reclassified from other comprehensive (loss) income into net loss recognized in SG&A in the consolidated statements of operations were $( 47 ), $ 109 and $ 504 for the years ended December 31, 2024, 2023 and 2022, respectively.

Gains reclassified from other comprehensive (loss) income into net loss recognized in interest expense, net in the consolidated statements of operations were $ 0 , $ 290 and $ 156 for the years ended December 31, 2024, 2023 and 2022, respectively.

Cash flows from derivatives used to manage foreign exchange and interest rate risks are classified as operating activities within the consolidated statements of cash flows.

19 unchanged sentences

Forward currency contracts $ — $ — $ — $ — $ 1,858

Interest rate swap — — — — 294

Total financial assets carried at fair value $ — $ — $ — $ — $ 1,858

Financial liabilities carried at fair value:

Forward currency contracts $ 2,429 $ — $ 2,429 $ — $ —

Total financial liabilities carried at fair value $ 2,429 $ — $ 2,429 $ — $ —

The following table sets forth a summary of the change in fair value of the Company’s Level 3 financial liabilities related to earn-out consideration that are measured at fair value on a recurring basis.

5 unchanged sentences

The Company was required to pay the Stoneridge Brazil earn-out consideration based on Stoneridge Brazil’s financial performance in 2021.

The fair value of the Stoneridge Brazil earn-out consideration was based on 2021 earnings before interest, taxes, depreciation and amortization.

The Stoneridge Brazil earn-out consideration obligation was recorded within accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2021.

The earn-out consideration obligation of $ 8,272 was paid in April 2022 and recorded in the consolidated statement of cash flows within operating and financing activities in the amounts of $ 1,996 and $ 6,276 , respectively, for the year ended December 31, 2022.

1 unchanged sentence

No non-recurring fair value adjustments were required for nonfinancial assets for the years ended December 31, 2024 and 2023.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Impairment of Long-Lived Assets or Finite-Lived Assets

4 unchanged sentences

If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify projected cash flows.

If these undiscounted cash flows are less than their respective carrying values, an impairment charge would be recognized to the extent that the carrying values exceed estimated fair values.

If these undiscounted cash flows are less than their respective carrying values,

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

an impairment charge would be recognized to the extent that the carrying values exceed estimated fair values.

The estimation of undiscounted cash flows and fair value requires us to make assumptions regarding future operating results over the life of the asset or the life of the primary asset in the asset group.

5 unchanged sentences

Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on its consolidated results of operations or financial position.

The Company denies responsibility for these claims.

Based on our review of the technical and legal merits, we believe these warranty claims lack substantive merit and are significantly overstated.

The Company continues to vigorously defend this matter in private arbitration.

While no assurances can be made as to the ultimate outcome of this matter, or any other future claims, we do not currently believe a material loss is probable.

As a result of environmental studies performed at the Company’s former facility located in Sarasota, Florida, the Company became aware of soil and groundwater contamination at the site.

9 unchanged sentences

Due to the ongoing site remediation, the Company is currently required to maintain a $ 1,489 letter of credit for the benefit of the buyer.

The Company’s Stoneridge Brazil subsidiary has civil, labor and other tax contingencies (excluding income tax) for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company which is supported by legal advisors in Brazil.

The Company’s Stoneridge Brazil subsidiary has civil, labor, environmental and other tax contingencies (excluding income tax) for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company which is supported by legal advisors in Brazil.

As a result, no provision has been recorded with respect to these contingencies, which amounted to R$ 42,834 ($ 6,918 ) and R$ 41,681 ($ 8,609 ) at December 31, 2024 and 2023, respectively.

7 unchanged sentences

(in thousands, except share and per share data, unless otherwise indicated)

Restructuring and Business Realignment

On May 19, 2020, the Company committed to the strategic exit of its Control Devices particulate matter sensor product line ("PM Sensor Exit").

The decision to exit the PM sensor product line was made after 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.

In conjunction with the strategic exit of the PM sensor product line, the Company entered into an asset purchase agreement related to the sale of the PM sensor product line during the first quarter of 2021.

Refer to Note 2 of the consolidated financial statements for additional details regarding this sale.

As a result of the PM Sensor Exit, the Company recognized expense of $ 2,360 for the year ended December 31, 2021, for non-cash fixed asset charges, including impairment and accelerated depreciation of PM sensor related fixed assets, employee severance and termination costs and other related costs including supplier settlements.

For the year ended December 31, 2021 restructuring related costs of $ 1,510 , $ 642 and $ 208 were recognized in COGS, SG&A and D&D, respectively.

The expenses for the PM Sensor Exit that relate to the Control Devices reportable segment include the following:

Accrual as of January 1, 2022 2022 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2022

Employee termination benefits $ 35 $ — $ ( 35 ) $ — $ —

Other related costs — — — — —

Total $ 35 $ — $ ( 35 ) $ — $ —

Accrual as of January 1, 2021 2021 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2021

Fixed asset impairment and accelerated depreciation $ — $ 188 $ — $ ( 188 ) $ —

Employee termination benefits — 139 ( 104 ) — 35

Other related costs — 2,033 ( 2,033 ) — —

Total $ — $ 2,360 $ ( 2,137 ) $ ( 188 ) $ 35

On January 10, 2019, the Company committed to a restructuring plan that resulted in the closure of the Canton, Massachusetts facility (“Canton Facility”) on March 31, 2020 and the consolidation of manufacturing operations at that site into other Company locations (“Canton Restructuring”).

The costs for the Canton Restructuring included employee severance and termination costs, contract terminations costs, professional fees and other related costs such as moving and set-up costs for equipment and costs to restore the engineering function previously located at the Canton facility.

As a result of the Canton Restructuring actions, the Company recognized expense of $ 13 for the year ended December 31, 2021, for employee severance and termination costs and other restructuring related costs.

For the year ended December 31, 2021 severance and other restructuring related costs of $ 13 were recognized in D&D in the consolidated statement of operations.

Refer to Note 2 to the consolidated financial statements for additional details regarding the sale of the Canton Facility.

The expenses for the Canton Restructuring that relate to the Control Devices reportable segment include the following:

Accrual as of January 1, 2022 2022 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2022

Employee termination benefits $ 93 $ — $ ( 93 ) $ — $ —

Other related costs — — — — —

Total $ 93 $ — $ ( 93 ) $ — $ —

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Accrual as of January 1, 2021 2021 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2021

Employee termination benefits $ 165 $ — $ ( 72 ) $ — $ 93

Other related costs — 13 ( 13 ) — —

Total $ 165 $ 13 $ ( 85 ) $ — $ 93

In the fourth quarter of 2018, the Company undertook restructuring actions for the Electronics segment affecting the European Aftermarket business and China operations.

In the second quarter of 2020, the Company finalized plans to move its European Aftermarket sales activities in Dundee, Scotland to a new location which resulted in incurring contract termination costs as well as employee severance and termination costs.

In addition, the Company announced a restructuring program to transfer the European production of its controls product line to China.

As a result of these actions, the Company recognized expense of $ 290 for the year ended December 31, 2021 for employee severance and termination costs and other related costs.

Electronics segment restructuring costs recognized in COGS, SG&A and D&D in the consolidated statement of operations for the year ended December 31, 2021 were $ 37 , $ 210 and $ 43 , respectively.

The expenses for the restructuring activities that relate to the Electronics reportable segment include the following:

Accrual as of January 1, 2021 2021 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2021

Employee termination benefits $ 227 $ 50 $ ( 277 ) $ — $ —

Other related costs — 240 ( 240 ) — —

Total $ 227 $ 290 $ ( 517 ) $ — $ —

In addition to the specific restructuring activities, the Company regularly evaluates the performance of its businesses and cost structures, including personnel, and makes necessary changes thereto in order to optimize its results.

Business Realignment

The Company regularly evaluates the performance of its businesses and cost structures, including personnel, and makes necessary changes thereto in order to optimize its results.

The Company also evaluates the required skill sets of its personnel and periodically makes strategic changes.

As a consequence of these actions, the Company incurs severance related costs which are referred to as business realignment charges.

The Company does not expect future charges related to the previously incurred termination actions noted below.

Business realignment charges by reportable segment were as follows:

3 unchanged sentences

Electronics (B)

2,333 2,862 —

Stoneridge Brazil (C)

Unallocated Corporate (D)

1,137 190 1,138

Total business realignment charges $ 2,642 $ 4,510 $ 288

_____________________________

(A) Severance costs for the year ended December 31, 2023 related to COGS and SG&A were $ 369 and $ 142 , respectively.

Severance costs for the year ended December 31, 2021 related to SG&A were $ 192 .

(A) Severance costs for the year ended December 31, 2024 related to COGS were $ 250 .

Severance costs for the year ended December 31, 2023 related to COGS and SG&A were $ 369 and $ 142 , respectively.

(B) Severance costs for the year ended December 31, 2024 related to COGS, SG&A and D&D were $ 327 , $ 458 and $ 1,548 , respectively.

Severance costs (benefit) for the year ended December 31, 2021 related to COGS, SG&A and D&D were $ 1 , $( 7 ) and $ 9 respectively.

Severance costs for the year ended December 31, 2023 related to COGS, SG&A and D&D were $ 423 , $ 2,057 and $ 382 respectively.

Severance costs for the year ended December 31, 2021 related to COGS and SG&A were $ 7 and $ 52 , respectively.

(D) Employee separation related costs for the year ended December 31, 2023 related to SG&A and D&D were $ 1,122 and $ 15 , respectively.

Severance costs for the years ended December 31, 2022 and 2021 related to SG&A were $ 190 and $ 1,138 , respectively.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

(D) Severance related costs for the year ended December 31, 2024 related to SG&A were $ 59 .

Severance related costs for the year ended December 31, 2023 related to SG&A and D&D were $ 1,122 and 15 , respectively.

Severance related costs for the year ended December 31, 2022 related to SG&A were $ 190 .

Business realignment charges classified by statement of operations line item were as follows:

4 unchanged sentences

Total business realignment charges $ 2,642 $ 4,510 $ 288

Reconciliations of the beginning and ending liability balances related to business realignment were as follows:

Accrual as of January 1, 2024 2024 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2024

Employee termination benefits $ 1,230 $ 2,642 $ ( 3,461 ) $ — $ 411

Total $ 1,230 $ 2,642 $ ( 3,461 ) $ — $ 411

Accrual as of January 1, 2023 2023 Charge

to Expense Cash Non-Cash Accrual as of December 31, 2023

Employee termination benefits $ 101 $ 4,510 $ ( 3,381 ) $ — $ 1,230

Total $ 101 $ 4,510 $ ( 3,381 ) $ — $ 1,230

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Segment Reporting

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the chief executive officer.

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance.

The Company’s CODM is the chief executive officer.

The Company has three reportable segments, Control Devices, Electronics and Stoneridge Brazil, which also represent its operating segments.

The Control Devices reportable segment produces actuators, sensors, switches and connectors.

The Electronics reportable segment produces driver information systems, vision and safety systems, connectivity and compliance products and electronic control units.

The Stoneridge Brazil reportable segment designs and manufactures vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices, driver information systems and telematics solutions.

The Electronics reportable segment produces advanced driver information solutions, vision systems, connectivity and compliance solutions and control modules.

The Stoneridge Brazil reportable segment designs and manufactures vehicle tracking devices and monitoring services, driver information systems, vehicle security alarms and convenience accessories, telematics solutions and multimedia devices.

The accounting policies of the Company’s reportable segments are the same as those described in Note 2.

1 unchanged sentence

Inter-segment sales are eliminated upon consolidation.

The Company's management, including the CODM, utilizes operating income as the key performance measure of segment profitability to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the financial performance of the Company's operating segments.

The CODM regularly evaluates budget-to-actual and period-over-period variances for this metric when making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses operating income in evaluating the operating performance of each segment and as part of determining the compensation of the segment managers and certain other employees.

COGS and D&D are the significant expenses regularly reviewed by the CODM.

Other segment costs primarily include SG&A items.

The financial information presented below is for our three reportable operating segments and includes adjustments for unallocated corporate costs and intercompany eliminations, where applicable.

1 unchanged sentence

Corporate costs include various support functions, such as accounting/finance, executive administration, human resources, information technology and legal.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

A summary of financial information by reportable segment is as follows:

11 unchanged sentences

Total net sales $ 908,295 $ 975,818 $ 899,923

Operating Income (Loss):

Cost of Goods Sold:

Control Devices $ 243,784 $ 285,303 $ 279,605

3 unchanged sentences

( 24 ) 176 ( 67 )

Total operating income $ 12,836 $ 2,935 $ 15,411

Total cost of goods sold $ 719,042 $ 774,512 $ 724,997

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

December 31, 2024 2023 2022

Design and Development:

Control Devices $ 20,044 $ 21,848 $ 20,654

Electronics 45,560 43,027 39,651

Stoneridge Brazil 3,113 3,061 2,634

Unallocated Corporate (A)

3,457 3,139 2,357

Total design and development $ 72,174 $ 71,075 $ 65,296

Other Segment Costs:

Control Devices $ 22,600 $ 21,332 $ 18,419

Electronics 49,382 49,799 45,769

Stoneridge Brazil 15,809 17,068 15,537

Unallocated Corporate (A)

29,669 29,196 26,970

Total other segment costs $ 117,460 $ 117,395 $ 106,695

Operating (Loss) Income:

Control Devices $ 6,178 $ 13,582 $ 23,917

Electronics 25,561 27,309 5,128

Stoneridge Brazil 982 4,454 3,150

Unallocated Corporate (A)

( 33,102 ) ( 32,509 ) ( 29,260 )

Total operating (loss) income $ ( 381 ) $ 12,836 $ 2,935

Depreciation and Amortization:

2 unchanged sentences

Stoneridge Brazil 4,753 4,801 3,939

Unallocated Corporate 2,388 2,318 2,134

Unallocated Corporate (C)

2,013 2,388 2,318

Total depreciation and amortization (B)

26 unchanged sentences

Total assets $ 621,556 $ 679,900

The following table presents net sales and long-term assets for the geographic areas in which the Company operates:

The following tables present net sales and long-term assets for the geographic areas in which the Company operates:

December 31, 2024 2023 2022

United States $ 447,142 $ 495,541 $ 444,928

North America $ 447,142 $ 495,541 $ 444,928

Brazil 49,649 57,214 52,230

South America $ 49,649 $ 57,214 $ 52,230

Sweden 159,035 157,895 170,228

Estonia 110,112 109,480 89,130

Netherlands 84,297 74,842 68,326

Other Europe 6,755 18,465 19,445

China 51,305 62,381 55,636

Europe and Other $ 411,504 $ 423,063 $ 402,765

2 unchanged sentences

Long-term Assets:

United States $ 90,111 $ 87,712

Mexico 5,254 4,707

North America $ 95,365 $ 92,419

Brazil 25,222 32,679

South America $ 25,222 $ 32,679

Sweden 32,918 31,058

Estonia 8,363 9,581

Netherlands 57,677 64,660

Other Europe 653 577

China 13,844 19,536

Europe and Other $ 113,455 $ 125,412

4 unchanged sentences

(C) Assets located at Corporate consist primarily of cash, intercompany receivables, fixed and leased assets for the headquarter building, information technology assets, equity investments and investments in subsidiaries.

STONERIDGE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data, unless otherwise indicated)

Subsequent Events

Credit Facility Amendment

On February 26, 2025, the Company entered into Amendment No.

1 to the Credit Facility.

Refer to Note 5 of the consolidated financial statements for details regarding this amendment.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

7 unchanged sentences

Year ended December 31, 2022 $ 1,443 $ 1,255 $ ( 1,736 ) $ 962

period Net additions

(expense) Exchange rate

items Balance at

period Additions Deductions Other Changes Balance at

end of period

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data