Stoneridge (NYSE:SRI) used a business update webcast to discuss the completed sale of its Control Devices segment, outlining the transaction terms, transition arrangements, and how the company expects the divestiture to sharpen its strategic focus and support balance sheet priorities.
Control Devices sale details and valuation
President and CEO Jim Zizelman said the company completed its previously announced review of strategic alternatives and closed the sale of the Control Devices segment on Jan. 30. The buyer is Center Rock Capital Partners, a private equity investment firm.
As part of the transaction, Stoneridge sold the Lexington, Ohio, and Suzhou, China, manufacturing facilities to Center Rock. The company will retain its Juarez, Mexico, facility.
Transition services and supply agreements
Management detailed several agreements designed to support continuity as ownership changes hands. Stoneridge and Center Rock entered into a transition services agreement as well as supply agreements related to Mexico and China.
- Juarez supply: Stoneridge will supply parts from the Juarez facility while Center Rock prepares to manufacture independently.
- Suzhou supply: Center Rock will supply electronics parts to Stoneridge from Suzhou as Stoneridge transitions products out of that facility.
- Transition services: Stoneridge will provide IT, finance, and HR support for as long as one year during the transition period.
How Stoneridge plans to use proceeds
Zizelman said Stoneridge intends to use net sale proceeds to reduce debt and related interest expense, which he said would create immediate value for shareholders. During the Q&A, CFO Matt Horvath said tax impacts were not expected to be significant, noting there could be “a little bit of tax here and there” depending on jurisdiction, but “nothing dramatic.”
Asked whether the bulk of proceeds would go toward debt reduction, management responded affirmatively. Horvath also clarified that Stoneridge did not push debt down to the sold business; Center Rock bought the segment without attached debt.
Post-sale portfolio focus and growth platforms
Following the divestiture, Zizelman said Stoneridge’s remaining portfolio will focus on advanced technologies and electronic solutions primarily for global commercial vehicle and off-highway end markets, supported by manufacturing in North America, South America, and Europe. He described three primary product categories:
- Vision and Safety
- Connectivity
- Vehicle Intelligence and Electronic Controls
Zizelman highlighted continued expansion of Vision and Safety systems, including MirrorEye and adjacent products, as well as new offerings such as Connected Trailer and SurroundView technologies. He said MirrorEye is expanding globally through ramp-up of existing programs, increasing take rates, and record new business awards, and characterized Stoneridge as the “dominant leader” in camera monitor systems for commercial vehicles globally.
He also framed the company’s broader strategy around “the cockpit of the future and domain integration,” citing MirrorEye, digital driver information systems, secondary displays, and tachograph and other connectivity devices as areas where Stoneridge develops products used by drivers and fleets to interact with vehicles.
In addition, Zizelman pointed to growth in Brazil, where he said the company has seen record OEM awards, and described Stoneridge Brazil as a critical engineering center as the company rotates its global engineering footprint to pursue a more cost-effective structure.
Targets, margins, and balance sheet priorities
Looking ahead, Zizelman reiterated priorities including new product development, gross margin expansion, operating cost discipline, and a strong balance sheet. He said the company expects opportunities over the next five years to enable it to exceed weighted average end markets by at least 2x-3x, resulting in a 5-year compound annual growth rate target of 8% to 12% through 2030.
On margins, he referenced increased resources allocated to quality-related costs and processes and cited a pipeline of material cost reduction opportunities in both product engineering and supply chains, including reduced supplier complexity, which he said should accelerate with the transaction.
On capital structure, Zizelman said Stoneridge expects to amend its existing credit facility by the time it files fourth-quarter results in early March, providing time to refinance and align its capital structure with the remaining business. He added that the company plans to provide 2026 guidance and updated long-term targets on its fourth-quarter call scheduled for Thursday, March 12.
In response to an analyst question about unallocated corporate costs, management did not provide a specific reduction estimate, saying it would address opportunities to streamline operations in more detail on the early March call.
About Stoneridge (NYSE:SRI)
Stoneridge, Inc (NYSE: SRI) is a global developer and manufacturer of highly engineered electrical and electronic components for the automotive and commercial vehicle markets. The company’s product offerings span a range of safety, convenience and control systems, delivering tailored solutions that help original equipment manufacturers (OEMs) meet increasingly stringent regulatory and performance requirements.
Among Stoneridge’s core products are rearview and side-view mirror systems, camera-based advanced driver assistance systems (ADAS) and interior and exterior lighting solutions.
