10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2020

Commission file number: 001-13337

STONERIDGE INC

(Exact name of registrant as specified in its charter)

Ohio	34-1598949
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
39675 MacKenzie Drive, Suite 400, Novi, Michigan	48377
(Address of principal executive offices)	(Zip Code)

(248) 489-9300

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Common Shares, without par value SRI New York Stock Exchange

Title of each class Trading symbol(s) Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒Yes ☐No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒	Accelerated filer  ☐	Non-accelerated filer  ☐
Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐Yes ☒No

The number of Common Shares, without par value, outstanding as of April 30, 2020 was 26,993,184.

STONERIDGE, INC. AND SUBSIDIARIES

INDEX		Page
PART I–FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and December 31, 2019	4
	Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) for the Three Months Ended March 31, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2020 and 2019	7
	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three Months Ended March 31, 2020 and 2019	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II–OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		40

2

Forward-Looking Statements

Portions of this report on Form 10-Q contain “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this report and may include statements regarding the intent, belief or current expectations of the Company, with respect to, among other things, our (i) future product and facility expansion, (ii) acquisition strategy, (iii) investments and new product development, (iv) growth opportunities related to awarded business and (v) operational expectations. Forward-looking statements may be identified by the words “will,” “may,” “should,” “designed to,” “believes,” “plans,” “projects,” “intends,” “expects,” “estimates,” “anticipates,” “continue,” and similar words and expressions. The forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed in or implied by the statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among other factors:

● the reduced purchases, loss or bankruptcy of a major customer or supplier;

● the costs and timing of business realignment, facility closures or similar actions;

● a significant change in automotive, commercial, off-highway, motorcycle or agricultural vehicle production;

● competitive market conditions and resulting effects on sales and pricing;

● the impact on changes in foreign currency exchange rates on sales, costs and results, particularly the Argentinian peso, Brazilian real, Chinese renminbi, euro, Mexican peso and Swedish krona;

● our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions;

● customer acceptance of new products;

● our ability to successfully launch/produce products for awarded business;

● adverse changes in laws, government regulations or market conditions, including tariffs, affecting our products or our customers’ products;

● our ability to protect our intellectual property and successfully defend against assertions made against us;

● liabilities arising from warranty claims, product recall or field actions, product liability and legal proceedings to which we are or may become a party, or the impact of product recall or field actions on our customers;

● labor disruptions at our facilities or at any of our significant customers or suppliers;

● business disruptions due to natural disasters or other disasters or other disasters outside our control, such as the COVID-19 pandemic;

● the ability of our suppliers to supply us with parts and components at competitive prices on a timely basis, including the impact of potential tariffs and trade considerations on their operations and output;

● the amount of our indebtedness and the restrictive covenants contained in the agreements governing our indebtedness, including our revolving credit facility;

● capital availability or costs, including changes in interest rates or market perceptions;

● the failure to achieve the successful integration of any acquired company or business;

● risks related to a failure of our information technology systems and networks, and risks associated with current and emerging technology threats and damage from computer viruses, unauthorized access, cyber-attack and other similar disruptions; and

● those items described in Part II Item 1A (“Risk Factors”) of this Quarterly Report on Form 10-Q and Part I, Item IA (“Risk Factors”) in the Company’s 2019 Form 10-K.

In addition, the forward-looking statements contained herein represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements or otherwise.

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

STONERIDGE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
(in thousands)	2020		2019
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	81,305	$	69,403
Accounts receivable, less reserves of $813 and $1,289, respectively		138,438		138,564
Inventories, net		95,777		93,449
Prepaid expenses and other current assets		33,739		29,850
Total current assets		349,259		331,266
Long-term assets:
Property, plant and equipment, net		116,149		122,483
Intangible assets, net		51,463		58,122
Goodwill		35,279		35,874
Operating lease right-of-use asset		20,316		22,027
Investments and other long-term assets, net		28,024		32,437
Total long-term assets		251,231		270,943
Total assets	$	600,490	$	602,209
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of debt	$	2,516	$	2,672
Accounts payable		79,222		80,701
Accrued expenses and other current liabilities		48,731		55,223
Total current liabilities		130,469		138,596
Long-term liabilities:
Revolving credit facility		161,000		126,000
Long-term debt, net		255		454
Deferred income taxes		11,335		12,530
Operating lease long-term liability		16,569		17,971
Other long-term liabilities		13,569		16,754
Total long-term liabilities		202,728		173,709
Shareholders' equity:
Preferred Shares, without par value, 5,000 shares authorized, none issued		-		-
Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 26,993 and 27,408 shares outstanding at March 31, 2020 and December 31, 2019, respectively, with no stated value		-		-
Additional paid-in capital		230,506		225,607
Common Shares held in treasury, 1,973 and 1,558 shares at March 31, 2020 and December 31, 2019, respectively, at cost		(60,999)		(50,773)
Retained earnings		210,032		206,542
Accumulated other comprehensive loss		(112,246)		(91,472)
Total shareholders' equity		267,293		289,904
Total liabilities and shareholders' equity	$	600,490	$	602,209

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

4

STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended March 31 (in thousands, except per share data)	2020		2019
Net sales	$	182,966	$	218,297
Costs and expenses:
Cost of goods sold		137,569		157,444
Selling, general and administrative		29,503		35,910
Design and development		12,235		13,244
Operating income		3,659		11,699
Interest expense, net		1,030		1,003
Equity in earnings of investee		(457)		(364)
Other income, net		(1,617)		(432)
Income before income taxes		4,703		11,492
Provision for income taxes		1,213		1,835
Net income	$	3,490	$	9,657
Earnings per share:
Basic	$	0.13	$	0.34
Diluted	$	0.13	$	0.33
Weighted-average shares outstanding:
Basic		27,232		28,529
Diluted		27,591		29,085

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

5

STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

Three months ended March 31 (in thousands)		2020	2019
Net income	$	3,490	$	9,657
Other comprehensive income (loss), net of tax:
Foreign currency translation		(17,119)		(3,804)
Unrealized (loss) gain on derivatives (1)		(3,655)		42
Other comprehensive loss, net of tax		(20,774)		(3,762)
Comprehensive (loss) income	$	(17,284)	$	5,895

(1) Net of tax (benefit) expense of $(972) and $11 for the three months ended March 31, 2020 and 2019, respectively.

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

6

STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three months ended March 31 (in thousands)	2020		2019
OPERATING ACTIVITIES:
Net income	$	3,490	$	9,657
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation		6,650		5,697
Amortization, including accretion and write-off of deferred financing costs		1,429		1,613
Deferred income taxes		76		(2,979)
Earnings of equity method investee		(457)		(364)
Loss (gain) on sale of fixed assets		131		(1)
Share-based compensation expense		1,372		1,548
Excess tax deficiency (benefit) related to share-based compensation expense		17		(656)
Change in fair value of earn-out contingent consideration		(633)		469
Change in fair value of venture capital fund		39		(16)
Changes in operating assets and liabilities, net of effect of business combination:
Accounts receivable, net		(3,730)		(17,821)
Inventories, net		(5,838)		(13,655)
Prepaid expenses and other assets		(3,702)		(660)
Accounts payable		2,327		16,395
Accrued expenses and other liabilities		(7,733)		(4,836)
Net cash used for operating activities		(6,562)		(5,609)
INVESTING ACTIVITIES:
Capital expenditures, including intangibles		(7,140)		(8,684)
Proceeds from sale of fixed assets		8		1
Investment in venture capital fund		-		(400)
Net cash used for investing activities		(7,132)		(9,083)
FINANCING ACTIVITIES:
Revolving credit facility borrowings		71,500		-
Revolving credit facility payments		(36,500)		(5,000)
Proceeds from issuance of debt		1,958		34
Repayments of debt		(2,076)		(690)
Earn-out consideration cash payment		-		(3,394)
Other financing costs		(1)		(2)
Common Share repurchase program		(4,995)		-
Repurchase of Common Shares to satisfy employee tax withholding		(1,687)		(2,945)
Net cash provided by (used for) financing activities		28,199		(11,997)
Effect of exchange rate changes on cash and cash equivalents		(2,603)		(1,317)
Net change in cash and cash equivalents		11,902		(28,006)
Cash and cash equivalents at beginning of period		69,403		81,092
Cash and cash equivalents at end of period	$	81,305	$	53,086
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,150	$	1,109
Cash paid for income taxes, net	$	1,832	$	3,327

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

7

STONERIDGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Number of								Accumulated
	Common	Number of	Additional		Common				other		Total
	Shares	treasury	paid-in		Shares held		Retained		comprehensive		shareholders'
(in thousands)	outstanding	shares	capital		in treasury		earnings		loss		equity
BALANCE DECEMBER 31, 2018	28,488	478	$	231,647	$	(8,880)	$	146,251	$	(85,752)	$	283,266
Net income	—	—		—		—		9,657		—		9,657
Unrealized gain on derivatives, net	—	—		—		—		—		42		42
Currency translation adjustments	—	—		—		—		—		(3,804)		(3,804)
Issuance of Common Shares	305	(305)		—		—		—		—		—
Repurchased Common Shares for treasury, net	(98)	98		—		(1,883)		—		—		(1,883)
Share-based compensation, net	—	—		480		—		—		—		480
BALANCE MARCH 31, 2019	28,695	271	$	232,127	$	(10,763)	$	155,908	$	(89,514)	$	287,758
BALANCE DECEMBER 31, 2019	27,408	1,558	$	225,607	$	(50,773)	$	206,542	$	(91,472)	$	289,904
Net income	—	—		—		—		3,490		—		3,490
Unrealized loss on derivatives, net	—	—		—		—		—		(3,655)		(3,655)
Currency translation adjustments	—	—		—		—		—		(17,119)		(17,119)
Issuance of Common Shares	267	(267)		—		—		—		—		—
Repurchased Common Shares for treasury, net	(75)	75		—		4,769		—		—		4,769
Common Share repurchase program	(607)	607		10,000		(14,995)		—		—		(4,995)
Share-based compensation, net	—	—		(5,101)		—		—		—		(5,101)
BALANCE MARCH 31, 2020	26,993	1,973	$	230,506	$	(60,999)	$	210,032	$	(112,246)	$	267,293

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

8

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by Stoneridge, Inc. (the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s 2019 Form 10-K.

The Company’s investment in Minda Stoneridge Instruments Ltd. (“MSIL”) for the three months ended March 31, 2020 and 2019 has been determined to be an unconsolidated entity, and therefore is accounted for under the equity method of accounting based on the Company’s 49% ownership in MSIL.

(2) Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board (‘FASB”) issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The guidance in ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this standard prospectively as of January 1, 2020 and the impact on the Company’s condensed consolidated financial statements will depend on the nature of our future cloud computing arrangements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The guidance in ASU 2018-13 changes disclosure requirements related to fair value measurements as part of the disclosure framework project. The disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the Company’s condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019. The guidance allows for various methods for measuring expected credit losses. The Company has elected to apply a historical loss rate based on historical write-offs by region, adjusted for current economic conditions and forecasts about future economic conditions that are reasonable and supportable. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the Company’s condensed consolidated financial statements.

9

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued 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. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”) (also known as the “reference rate reform”). 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 allows companies to elect various option expedients that allow them to continue to apply hedge accounting for hedging relationships affected by the reference rate reform, if certain criteria are met. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

(3) Revenue

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Incidental items that are not significant in the context of the contract are recognized as expense. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold. Customer returns only occur if products do not meet the specifications of the contract and are not connected to any repurchase obligations of the Company.

The Company does not have any financing components or significant payment terms as payment occurs shortly after the point of sale. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Amounts billed to customers related to shipping and handling costs are included in net sales in the condensed consolidated statements of operations. Shipping and handling costs associated with outbound freight after control over a product is transferred to the customer are accounted for as a fulfillment cost and are included in cost of sales.

Revenue by Reportable Segment

Control Devices. Our Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle. This segment includes product lines such as actuators, sensors, switches and connectors. We sell these products principally to the automotive market in the North American, European, and Asia Pacific regions. To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in our North America, European and Asia Pacific regions. Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”).

10

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Electronics. Our Electronics segment designs and manufactures driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units. These products are sold principally to the commercial vehicle market primarily through our OEM and aftermarket channels in the North American and European regions, and to a lesser extent, the Asia Pacific region. The camera-based vision systems and related products are sold principally to the off-highway vehicle market in the North American and European regions.

Stoneridge Brazil. Our Stoneridge Brazil segment (also referred to as “PST” in prior filings) 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 and telematics solutions. Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services, direct to OEMs and through mass merchandisers. In addition, monitoring services and tracking devices are sold directly to corporate and individual consumers.

The following tables disaggregate our revenue by reportable segment and geographical location⁽¹⁾ for the periods ended March 31, 2020 and 2019:

	Control Devices				Electronics				Stoneridge Brazil				Consolidated
Three months ended March 31,	2020		2019		2020		2019		2020		2019		2020		2019
Net Sales:
North America	$	80,410	$	96,720	$	19,441	$	22,647	$	-	$	-	$	99,851	$	119,367
South America		-		-		-		-		14,570		17,332		14,570		17,332
Europe		7,388		4,412		51,306		66,942		-		-		58,694		71,354
Asia Pacific		9,052		8,987		799		1,257		-		-		9,851		10,244
Total net sales	$	96,850	$	110,119	$	71,546	$	90,846	$	14,570	$	17,332	$	182,966	$	218,297

(1) Company sales based on geographic location are where the sale originates not where the customer is located.

Performance Obligations

For OEM and Tier 1 supplier customers, the Company typically enters into contracts to provide serial production parts that consist of a set of documents including, but not limited to, an award letter, master purchase agreement and master terms and conditions. For each production product, the Company enters into separate purchase orders that contain the product specifications and an agreed-upon price. 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 off-highway products 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. For most customer contracts, the Company does not have an enforceable right to payment at any time prior to when the parts are shipped or delivered to the customer; therefore, the Company recognizes revenue at the point in time it satisfies a performance obligation by transferring control of a part to the customer. Certain customer contracts contain an enforceable right to payment if the customer terminates the contract for convenience and therefore are recognized over time using the cost to complete input method.

Our aftermarket products are focused on meeting the demand for repair and replacement parts, compliance parts and accessories and are sold primarily to aftermarket distributors and mass retailers in our South American, European and North American markets. Aftermarket products have one type of performance obligation which is the delivery of aftermarket parts and spare parts.  For aftermarket customers, the Company typically has standard terms and conditions for all customers.  In addition, aftermarket products have alternative use as they can be sold to multiple customers. Revenue for aftermarket part production contracts is recognized at a point in time when the control of the parts transfer to the customer which is based on the shipping terms.  Aftermarket contracts may include variable consideration related to discounts and rebates and is included in the transaction price upon recognizing the product revenue. 

11

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

A small portion of the Company’s sales are comprised of monitoring services that include both monitoring devices and fees to individual, corporate, fleet and cargo customers in our Stoneridge Brazil segment. These monitoring service contracts are generally not capable of being distinct and are accounted for as a single performance obligation.  We recognize revenue for our monitoring products and services contracts over the life of the contract. There is no variable consideration associated with these contracts. The Company has the right to consideration from a customer in the amount that corresponds directly with the value to the customer of the Company’s performance to date.  Therefore, the Company recognizes revenue over time using the practical expedient ASC 606-10-55-18 in the amount the Company has a “right to invoice” rather than selecting an output or input method.

Contract Balances

The Company had no material contract assets, contract liabilities or capitalized contract acquisition costs as of March 31, 2020 and December 31, 2019.

(4) Inventories

Inventories are valued at the lower of cost (using either the first-in, first-out (“FIFO”) or average cost methods) or net realizable value. The Company evaluates and adjusts as necessary its excess and obsolescence reserve on a quarterly basis. Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company has guidelines for calculating provisions for excess inventories based on the number of months of inventories on-hand compared to anticipated sales or usage. Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period. Inventory cost includes material, labor and overhead. Inventories consisted of the following:

	March 31,		December 31,
	2020		2019
Raw materials	$	69,316	$	66,357
Work-in-progress		6,875		5,582
Finished goods		19,586		21,510
Total inventories, net	$	95,777	$	93,449

Inventory valued using the FIFO method was $86,807 and $82,910 at March 31, 2020 and December 31, 2019, respectively. Inventory valued using the average cost method was $8,970 and $10,539 at March 31, 2020 and December 31, 2019, respectively.

(5) Financial Instruments and Fair Value Measurements

Financial Instruments

A financial instrument is cash or a contract that imposes an obligation to deliver or conveys a right to receive cash or another financial instrument. 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.

Derivative Instruments and Hedging Activities

On March 31, 2020, the Company had open foreign currency forward contracts which are used solely for hedging and not for speculative purposes. Management believes that its use of these instruments to reduce risk is in the Company’s best interest. The counterparties to these financial instruments are financial institutions with investment grade credit ratings.

12

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Foreign Currency Exchange Rate Risk

The Company conducts business internationally and therefore is exposed to foreign currency exchange rate risk. The Company uses derivative financial instruments as cash flow hedges to manage its exposure to fluctuations in foreign currency exchange rates by reducing the effect of such fluctuations on foreign currency denominated intercompany transactions, inventory purchases and other foreign currency exposures. The Company hedged the euro and Mexican peso currencies during 2020 and the Mexican peso in 2019.

These forward contracts were executed to hedge forecasted transactions and have been accounted for as cash flow hedges. As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive income, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated other comprehensive income will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. The cash flow hedges were highly effective. 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 condensed consolidated statement of operations as a component of other income (loss), net. At March 31, 2020, all of the Company’s foreign currency forward contracts were designated as cash flow hedges.

The Company’s foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows:

U.S. dollar-denominated Foreign Currency Forward Contracts – Cash Flow Hedges

During the quarter, The Company entered into U.S. dollar-denominated currency contracts on behalf of one of its European Electronics subsidiaries, whose functional currency is the euro, with a notional amount at March 31, 2020 of $2,100 which expire ratably on a monthly basis from April 2020 through December 2020. There were no such contracts at December 31, 2019.

Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedge

The Company holds Mexican peso-denominated foreign currency forward contracts with a notional amount at March 31, 2020 of $22,746 which expire ratably on a monthly basis from April 2020 to March 2021. There were no open Mexican peso-denominated foreign currency forward contracts at December 31, 2019.

The Company evaluated the effectiveness of the Mexican peso and euro-denominated forward contracts held as of March 31, 2020 and 2019, and for the three months then ended, and concluded that the hedges were effective.

13

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Interest Rate Risk

Interest Rate Risk – Cash Flow Hedge

On February 18, 2020, the Company entered into a floating-to-fixed interest rate swap agreement (the “Swap”) with a notional amount of $50,000 to hedge its exposure to interest payment fluctuations on a portion of its 2019 Credit Facility. The Swap was designated as a cash flow hedge of the variable interest rate obligation under the Company's 2019 Credit Facility that has a current balance of $161,000 at March 31, 2020. The Swap agreement settles each month on the same day that the 2019 Credit Facility interest payments are due and has a maturity date of March 10, 2023 which is prior to the 2019 Credit Facility maturity date of June 4, 2024. Under the Swap terms, the Company pays a fixed interest rate and receives a floating interest rate based on the one-month LIBOR, with a floor. The critical terms of the Swap are aligned with the terms of the 2019 Credit Facility, resulting in no hedge ineffectiveness. The difference between amounts to be received and paid under the Swap is recognized as a component of interest expense, net on the condensed consolidated statements of operations. The Swap increased interest expense by $4 for the three months ended March 31, 2020.

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

					Prepaid expenses				Accrued expenses and
	Notional amounts (A)				and other current assets				other current liabilities
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2020		2019		2020		2019		2020		2019
Derivatives designated as hedging instruments:
Cash flow hedges:
Forward currency contracts	$	24,846	$	-	$	66	$	-	$	3,230	$	-
Interest rate swap contract	$	50,000		-		-		-	$	1,463	$	-

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

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

					Gain (loss) reclassified from
	Gain (loss) recorded in other				other comprehensive income
	comprehensive income (loss) (A)				(loss) into net income (B)
	2020		2019		2020		2019
Derivatives designated as cash flow hedges:
Forward currency contracts	$	(3,320)	$	269	$	(156)	$	216
Interest rate swap		(1,467)		-		(4)		-

(A) For the three months ended March 31, 2020, the total net losses on the foreign currency contract cash flow hedges of $3,164 are expected to be included in cost of goods sold (“COGS”) and design and development (“D&D”) within the next 12 months. Of the total net losses on the interest rate swap cash flow hedges, approximately $545 of losses are expected to be included in interest expense within the next 12 months and $918 of losses are expected to be included in interest expense in subsequent periods.

(B) Gains (losses) reclassified from other comprehensive income (loss) into net income recognized in COGS in the Company’s condensed consolidated statements of operations were $(127) and $173 for the three months ended March 31, 2020 and 2019, respectively. Gains (losses) reclassified from other comprehensive income (loss) into net income recognized in design and development D&D in the Company’s condensed consolidated statements of operations were $(29) and $43 for the three months ended March 31, 2020 and 2019, respectively. Losses reclassified from other comprehensive income (loss) into net income recognized in interest expense in the Company’s condensed consolidated statements of operations was $4 for the three months ended March 31, 2020.

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

14

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Fair Value Measurements

The Company’s assets and liabilities are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used. Fair values estimated using Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values estimated using Level 2 inputs, other than quoted prices, are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency contracts, inputs include foreign currency exchange rates. For the interest rate swap, inputs include LIBOR. Fair values estimated using Level 3 inputs consist of significant unobservable inputs.

The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used.

								March 31,		December 31,
			2020						2019
			Fair values estimated using
			Level 1		Level 2		Level 3
	Fair value		inputs		inputs		inputs		Fair value
Financial assets carried at fair value:
Forward currency contract	$	66	$	-	$	66	$	-	$	-
Total financial assets carried at fair value	$	66	$	-	$	66	$	-	$	-
Financial liabilities carried at fair value:
Forward currency contracts	$	3,230	$	-	$	3,230	$	-	$	-
Interest rate swap		1,463		-		1,463		-		-
Earn-out consideration		8,610		-		-		8,610		12,011
Total financial liabilities carried at fair value	$	13,303	$	-	$	4,693	$	8,610	$	12,011

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.

	Stoneridge Brazil		Total
Balance at December 31, 2019	$	12,011	$	12,011
Change in fair value		(633)		(633)
Foreign currency adjustments		(2,768)		(2,768)
Balance at March 31, 2020	$	8,610	$	8,610

	Orlaco		Stoneridge Brazil		Total
Balance at December 31, 2018	$	8,602	$	10,070	$	18,672
Change in fair value		-		469		469
Foreign currency adjustments		(128)		(133)		(261)
Earn-out consideration cash payment		(8,474)		-		(8,474)
Balance at March 31, 2019	$	-	$	10,406	$	10,406

15

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

The Company will be required to pay the Stoneridge Brazil earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. The fair value of the Stoneridge Brazil earn-out consideration is based on discounted cash flows utilizing forecasted earnings before interest, depreciation and amortization (“EBITDA”) in 2020 and 2021 using the key inputs of forecasted sales and expected operating income reduced by the market required rate of return. The former Stoneridge Brazil owners may choose either the 2020 or 2021 financial performance period to be used to determine the earn-out consideration payment. The former Stoneridge Brazil owners must choose the 2020 financial performance period by March 31, 2021 otherwise the 2021 financial performance period will automatically be used. The earn-out consideration obligation related to Stoneridge Brazil is recorded within other long-term liabilities in the consolidated balance sheets as of March 31, 2020 and December 31, 2019.

The change in fair value of the earn-out consideration for Stoneridge Brazil was primarily due to favorable foreign currency translation and updated forecast projections offset by the reduced time from the current period end to the payment date. The foreign currency impact for the Stoneridge Brazil earn-out considerations is included in other (income) expense, net in the condensed consolidated statements of operations.

The fair value of the Orlaco earn-out consideration was based on a Monte Carlo simulation utilizing forecasted EBITDA for the 2017 and 2018 earn-out period as well as a growth rate reduced by the market required rate of return. The change in fair value of the earn-out considerations was recorded within selling, general and administrative (“SG&A”) expense in the consolidated statements of operations for the years ended December 31, 2019 and 2018.

The Orlaco earn-out consideration reached the capped amount of €7,500 as of the quarter ended March 31, 2018 due to actual performance exceeding forecasted performance and remained at the capped amount until it was paid out in March 2019 for $8,474. The earn-out consideration payout was recorded in the condensed consolidated statement of cash flows within operating and financing activities in the amounts of $5,080 and $3,394, respectively, for the three months ended March 31, 2019.

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the three months ended March 31, 2020.

(6) Share-Based Compensation

Compensation expense for share-based compensation arrangements, which is recognized in the condensed consolidated statements of operations as a component of SG&A expenses, was $1,372 and $1,548 for the three months ended March 31, 2020 and 2019, respectively. The expenses related to share-based compensation awards for the three months ended March 31, 2020 was lower than the three months ended March 31, 2019 due to lower attainment of performance-based awards.

(7) Debt

Debt consisted of the following at March 31, 2020 and December 31, 2019:

	March 31,		December 31,		Interest rates at
	2020		2019		March 31, 2020	Maturity
Revolving Credit Facility
Credit Facility	$	161,000	$	126,000	1.67 - 2.04%	June 2024
Debt
Stoneridge Brazil long-term notes		653		972	7.00%	November 2021
Suzhou short-term credit line		2,118		2,154	4.70% - 5.00%	August 2020
Total debt		2,771		3,126
Less: current portion		(2,516)		(2,672)
Total long-term debt, net	$	255	$	454

16

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Revolving Credit Facility

On September 12, 2014, the Company entered into a Third Amended and Restated Credit Agreement (the “Amended Agreement”). The Amended Agreement provided for a $300,000 revolving credit facility, which replaced the Company’s $100,000 asset-based credit facility and included a letter of credit subfacility, swing line subfacility and multicurrency subfacility.

On June 5, 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (the “2019 Credit Facility”). The 2019 Credit Facility provides for a $400,000 senior secured revolving credit facility and it replaced and superseded the Amended Agreement. The 2019 Credit Facility has an accordion feature which allows the Company to increase the availability by up to $150,000 upon the satisfaction of certain conditions and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility. The 2019 Credit Facility has a termination date of June 5, 2024. In 2019, the Company capitalized $1,366 of deferred financing costs and wrote off previously recorded deferred financing costs of $275 as a result of entering into the 2019 Credit Facility. Borrowings under the 2019 Credit Facility bear interest at either the Base Rate or the LIBOR rate, at the Company’s option, plus the applicable margin as set forth in the 2019 Credit Facility. The 2019 Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio of 3.50 to 1.00 and more than a minimum interest coverage ratio of 3.50 to 1.00.

The 2019 Credit Facility contains customary affirmative covenants and representations. The 2019 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) creation or ownership of certain subsidiaries, partnerships and joint ventures, (vii) continuation of or change in business, (viii) restricted payments, (ix) prepayment of subordinated and junior lien indebtedness, (x) restrictions in agreements on dividends, intercompany loans and granting liens on the collateral, (xi) loans and investments, (xii) sale and leaseback transactions, (xiii) changes in organizational documents and fiscal year and (xiv) transactions with respect to bonding subsidiaries. The 2019 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, (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.

Borrowings outstanding on the 2019 Credit Facility and the Amended Agreement as applicable, were $161,000 and $126,000 at March 31, 2020 and December 31, 2019, respectively.

The Company was in compliance with all credit facility covenants at March 31, 2020 and December 31, 2019.

The Company also has outstanding letters of credit of $1,768 at March 31, 2020 and December 31, 2019, respectively.

Debt

Stoneridge Brazil maintains long-term notes used for working capital purposes which have fixed or variable interest rates. The weighted-average interest rates of long-term debt of Stoneridge Brazil at March 31, 2020 was 7.0%. Depending on the specific note, interest is payable either monthly or annually. Principal repayments on Stoneridge Brazil debt at March 31, 2020 are as follows: $398 from April 2020 through March 2021 and $255 from April 2021 through December 2021. 

In December 2019, the Company’s wholly-owned subsidiary located in Brazil, established an overdraft credit line which allows overdrafts on Stoneridge Brazil’s bank account up to a maximum level of 5,000 Brazilian real (“R$”), or $962 and $1,244, at March 31, 2020 and December 31, 2019, respectively.  There was no balance outstanding on the overdraft credit line as of March 31, 2020 and December 31, 2019.

17

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

The Company’s wholly-owned subsidiary located in Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a maximum level of 20,000 Swedish krona, or $2,025 and $2,136, at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019, there was no balance outstanding on this overdraft credit line however, during the three months ended March 31, 2020, the subsidiary borrowed and repaid 19,155 Swedish krona, or $1,949.

The Company’s wholly-owned subsidiary located in Suzhou, China (the “Suzhou subsidiary”), has two credit lines (the “Suzhou credit line”) which allow up to a maximum borrowing level of 40,000 Chinese yuan, or $5,649 and $5,746 at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019 there was $2,118 and $2,154, respectively, in borrowings outstanding on the Suzhou credit line with a weighted-average interest rate of 4.80%. The Suzhou credit line is included on the condensed 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 that have currently been extended by 180 days. This bank acceptance draft line of credit allows up to a maximum borrowing level of 15,000 Chinese yuan, or $2,118 and $2,154, at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019 there was approximately $150 utilized on the Suzhou bank acceptance draft line of credit.

The Company was in compliance with all debt covenants at March 31, 2020 and December 31, 2019.

(8) Earnings Per Share

Basic earnings per share was computed by dividing net income by the weighted-average number of Common Shares outstanding for each respective period. Diluted earnings per share was calculated by dividing net income by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented. 

Weighted-average Common Shares outstanding used in calculating basic and diluted earnings per share were as follows:

Three months ended March 31,	2020	2019
Basic weighted-average Common Shares outstanding	27,232,036	28,529,301
Effect of dilutive shares	359,135	555,507
Diluted weighted-average Common Shares outstanding	27,591,171	29,084,808

There were 789,027 and 691,207 performance-based right to receive Common Shares outstanding at March 31, 2020 and 2019, respectively. The 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 quarter were the end of the contingency period.

(9)  Equity and Accumulated Other Comprehensive Loss

Common Share Repurchase

On October 26, 2018, the Company’s Board of Directors authorized the Company to repurchase up to $50,000 of Common Shares. Thereafter, on May 7, 2019, the Company entered into a Master Confirmation (the “Master Confirmation”) and a Supplemental Confirmation, together with the Master Confirmation, the Accelerated Share Repurchase Agreement (“ASR Agreement”), with Citibank N.A. (the “Bank”) to purchase Company Common Shares for a payment of $50,000 (the “Prepayment Amount”). Under the terms of the ASR Agreement, on May 7, 2019, the Company paid the Prepayment Amount to the Bank and received on May 8, 2019 an initial delivery of 1,349,528 Company Common Shares, which approximated 80% of the total number of Company Common Shares expected to be repurchased under the ASR Agreement based on the closing price of the Company’s Common Shares on May 7, 2019. These Common Shares became treasury shares and were recorded as a $40,000 reduction to shareholder’s equity. The remaining $10,000 of the Prepayment Amount was recorded as a reduction to shareholders’ equity as an unsettled forward contract indexed to our Common Shares.

18

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

On February 25, 2020, the Bank notified the Company that it terminated early its commitment pursuant the ASR Agreement and would deliver 364,604 Common Shares on February 27, 2020 based on the volume weighted average price of our Common Shares during the term set forth in the ASR Agreement. The Bank’s notice of early termination and the subsequent delivery of Common Shares represents the final settlement of the Company’s share repurchase program pursuant to the accelerated share repurchase agreement. These Common Shares became treasury shares and were recorded as a $10,000 reduction to shareholders’ equity as Common Shares held in treasury with the offset of $10,000 to additional paid-in capital.

On February 24, 2020, the Company’s Board of Directors authorized a new repurchase program of $50,000 for the repurchase of the Company’s outstanding Common Shares over the next 18 months. The repurchases may be made from time to time in either open market transactions or in privately negotiated transactions. Repurchases may also be made under Rule 10b-18 plans, which permit Common Shares to be repurchased through pre-determined criteria.

On March 3, 2020, the Company entered into a 10b-18 Agreement Letter (the “10b-18 Agreement”), with Citibank N.A. (the “Bank”) to purchase Company Common Shares, under purchasing conditions of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 10b-18”), for up to $5,000. Under the terms of the 10b18 Agreement, commencing March 3, 2020 and ending March 6, 2020, the Company received delivery of a total of 242,634 Company Common Shares for the amount of $4,995. These Common Shares became treasury shares and were recorded as a $4,995 reduction to shareholders’ equity as Common Shares held in treasury.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 were as follows:

		Foreign		Unrealized
		currency		gain (loss)
		translation		on derivatives	Total
Balance at January 1, 2020	$	(91,472)	$	-	$	(91,472)
Other comprehensive loss before reclassifications		(17,119)		(3,781)		(20,900)
Amounts reclassified from accumulated other comprehensive loss		-		126		126
Net other comprehensive loss, net of tax		(17,119)		(3,655)		(20,774)
Balance at March 31, 2020	$	(108,591)	$	(3,655)	$	(112,246)
Balance at January 1, 2019	$	(86,044)	$	292	$	(85,752)
Other comprehensive (loss) income before reclassifications		(3,804)		213		(3,591)
Amounts reclassified from accumulated other comprehensive loss		-		(171)		(171)
Net other comprehensive (loss) income, net of tax		(3,804)		42		(3,762)
Balance at March 31, 2019	$	(89,848)	$	334	$	(89,514)

19

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(10) Commitments and Contingencies

From time to time we are subject to various legal actions and claims incidental to our business, including those arising out of breach of contracts, product warranties, product liability, patent infringement, regulatory matters and employment-related matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimated. 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.

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 and engaged an environmental engineering consultant to develop a remediation and monitoring plan for the site. Soil remediation at the site was completed during the year ended December 31, 2010. A remedial action plan was approved by the Florida Department of Environmental Protection and groundwater remediation began in the fourth quarter of 2015. During the three months ended March 31, 2020 and 2019, environmental remediation costs incurred were immaterial. At March 31, 2020 and December 31, 2019, the Company accrued a remaining undiscounted liability of $235 and $82, respectively, related to future remediation costs which were recorded as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. Costs associated with the recorded liability will be incurred to complete the groundwater remediation and monitoring. The recorded liability is based on assumptions in the remedial action plan. Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company. 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 non-income tax contingencies for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil. As a result, no provision has been recorded with respect to these contingencies, which amounted to R$29,300 ($5,600) and R$29,200 ($7,300) at March 31, 2020 and December 31, 2019, respectively. An unfavorable outcome on these contingencies could result in significant cost to the Company and adversely affect its results of operations.

Product Warranty and Recall

Amounts accrued for product warranty and recall claims are established based on the Company’s best estimate of the amounts necessary to settle existing and future claims on products sold as of the balance sheet dates. These accruals are based on several factors including past experience, production changes, industry developments and various other considerations. Our estimate is based on historical trends of units sold and claim payment amounts, combined with our current understanding of the status of existing claims and discussions with our customers. The key factors in our estimate are the stated or implied warranty period, the customer source, customer policy decisions regarding warranties and customers seeking to hold the Company responsible for their product warranties. The Company can provide no assurances that it will not experience material claims or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued. The current portion of product warranty and recall is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. Product warranty and recall included $3,059 and $3,111 of a long-term liability at March 31, 2020 and December 31, 2019, respectively, which is included as a component of other long-term liabilities in the condensed consolidated balance sheets.

The following provides a reconciliation of changes in product warranty and recall liability:

Three months ended March 31,	2020		2019
Product warranty and recall at beginning of period	$	10,796	$	10,494
Accruals for warranties established during period		1,128		1,545
Aggregate changes in pre-existing liabilities due to claim developments		387		1,238
Settlements made during the period		(2,134)		(2,715)
Foreign currency translation		(385)		(215)
Product warranty and recall at end of period	$	9,792	$	10,347

20

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Brazilian Indirect Tax

In March 2017, the Supreme Court of Brazil issued a decision concluding that a certain state value added tax should not be included in the calculation of federal gross receipts taxes. The decision reduced Stoneridge Brazil’s gross receipts tax prospectively and, potentially, retrospectively. In April 2019, the Company received judicial notification that the Superior Judicial Court of Brazil rendered a favorable decision on Stoneridge Brazil’s case granting the Company the right to recover, through offset of federal tax liabilities, amounts collected by the government from June 2010 to February 2017. Based on the Company’s determination that these tax credits will be used prior to expiration, the Company recorded a pre-tax benefit of $6,473 as a reduction to SG&A expense which is inclusive of related interest income of $2,392, net of applicable professional fees of $990 in the year ended December 31, 2019. The Company received administrative approval in January 2020 and is now able to offset eligible federal tax with these tax credits.

The Brazilian tax authorities have sought clarification before the Supreme Court of Brazil (in a leading case involving another taxpayer) of certain matters that could affect the rights of Brazilian taxpayers regarding these credits. The timing for a decision is uncertain due to the COVID-19 pandemic. If the Brazilian tax authorities challenge our rights to these credits, we may become subject to new litigation that could impact the amount ultimately realized by Stoneridge Brazil.

(11) Business Realignment and Restructuring

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”).  Company management informed employees at the Canton Facility of this restructuring decision on January 11, 2019. The estimated costs for the Canton Restructuring include 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.

The Company recognized expense of $2,222 and $2,225, respectively, for the three months ended March 31, 2020 and 2019 as a result of these actions for employee termination benefits and other restructuring related costs. For the three months ended March 31, 2020 severance and other restructuring related costs of $1,490, $314 and $418 were recognized in COGS, SG&A and D&D, respectively, in the condensed consolidated statement of operations.  For the three months ended March 31, 2019 severance and other related restructuring costs of $1,252, $195 and $778 were recognized in COGS, SG&A and D&D, respectively, in the condensed consolidated statement of operations. The estimated additional cost of this restructuring plan, that will impact the Control Devices segment, is approximately $700 and is related to additional costs to restore the engineering function previously located at the Canton Facility. These costs will be incurred throughout 2020.

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

	Accrual as of		2020 Charge			Utilization			Accrual as of
	January 1, 2020		to Expense		Cash		Non-Cash		March 31, 2020
Employee termination benefits	$	2,636	$	1,118	$	(3,437)	$	-	$	317
Other related costs		-		1,104		(1,104)		-		-
Total	$	2,636	$	2,222	$	(4,541)	$	-	$	317

	Accrual as of		2019 Charge			Utilization			Accrual as of
	January 1, 2019		to Expense		Cash		Non-Cash		March 31, 2019
Employee termination benefits	$	-	$	1,980	$	-	$	-	$	1,980
Other related costs		-		245		(245)		-		-
Total	$	-	$	2,225	$	(245)	$	-	$	1,980

21

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

In the fourth quarter of 2018, the Company undertook restructuring actions for the Electronics segment affecting the European Aftermarket business and China operations.  The Company recognized expense of $7 and $216, respectively, for the three months ended March 31, 2020 and 2019 as a result of these actions for severance, contract termination costs, accelerated depreciation of fixed assets and other related costs.  Electronics segment restructuring costs were recognized in SG&A in the condensed consolidated statement of operations for the three months ended March 31, 2020 and 2019. The Company expects to incur approximately $750 of additional restructuring costs related to these actions through 2020.

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

	Accrual as of		2020 Charge to			Utilization			Accrual as of
	January 1, 2020		Expense		Cash		Non-Cash		March 31, 2020
Employee termination benefits	$	52	$	-	$	-	$	-	$	52
Other related costs		-		7		(7)		-		-
Total	$	52	$	7	$	(7)	$	-	$	52

	Accrual as of		2019 Charge to			Utilization			Accrual as of
	January 1, 2019		Expense (Income)		Cash		Non-Cash		March 31, 2019
Employee termination benefits	$	520	$	(15)	$	(456)	$	-	$	49
Accelerated depreciation		-		98		-		(98)		-
Contract termination costs		17		16		(33)		-		-
Other related costs		119		117		(236)		-		-
Total	$	656	$	216	$	(725)	$	(98)	$	49

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. 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.

Business realignment charges by reportable segment were as follows:

Three months ended March 31,	2020		2019
Control Devices (A)	$	377	$	522
Stoneridge Brazil (B)		153		-
Unallocated Corporate (C)		74		613
Total business realignment charges	$	604	$	1,135

(A) Severance costs for the three months ended March 31, 2020 related to SG&A were $377. Severance costs for the three months ended March 31, 2019 related to SG&A and D&D were $512 and $10, respectively.

(B) Severance costs for the three months ended March 31, 2020 related to COGS and SG&A were $86 and $67, respectively.

(C) Severance costs for the three months ended March 31, 2020 and 2019 related to SG&A were $74 and $613, respectively.

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

Three months ended March 31,	2020		2019
Cost of goods sold	$	86	$	-
Selling, general and administrative		518		1,125
Design and development		-		10
Total business realignment charges	$	604	$	1,135

22

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

(12) Income Taxes

In the three months ended March 31, 2020, income tax expense of $1,213 was attributable to the mix of earnings among tax jurisdictions as well as valuation allowances in certain jurisdictions. The effective tax rate of 25.8% is greater than the statutory rate primarily due to losses incurred in jurisdictions for which a valuation allowance is recorded.

In the three months ended March 31, 2019, income tax expense of $1,835 was attributable to the mix of earnings among tax jurisdictions as well as the favorable benefit related to the annual vesting of share-based compensation. The effective tax rate of 16.0% is lower than the statutory rate primarily due to the annual vesting of share-based compensation.

(13) 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.

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, camera-based vision systems, connectivity and compliance products and electronic control units. The Stoneridge Brazil reportable segment designs and manufactures electronic vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions.

The accounting policies of the Company’s reportable segments are the same as those described in Note 2, “Summary of Significant Accounting Policies” of the Company’s 2019 Form 10-K. The Company’s management evaluates the performance of its reportable segments based primarily on revenues from external customers, capital expenditures and operating income. Inter-segment sales are accounted for on terms similar to those to third parties and are eliminated upon consolidation.

The financial information presented below is for our three reportable operating segments and includes adjustments for unallocated corporate costs and intercompany eliminations, where applicable. Such costs and eliminations do not meet the requirements for being classified as an operating segment. Corporate costs include various support functions, such as corporate accounting/finance, executive administration, human resources, information technology and legal.

23

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

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

Three months ended March 31,	2020		2019
Net Sales:
Control Devices	$	96,850	$	110,119
Inter-segment sales		1,347		1,861
Control Devices net sales		98,197		111,980
Electronics		71,546		90,846
Inter-segment sales		8,268		8,722
Electronics net sales		79,814		99,568
Stoneridge Brazil		14,570		17,332
Inter-segment sales		-		6
Stoneridge Brazil net sales		14,570		17,338
Eliminations		(9,615)		(10,589)
Total net sales	$	182,966	$	218,297
Operating Income (Loss):
Control Devices	$	7,322	$	11,948
Electronics		2,872		9,031
Stoneridge Brazil		859		670
Unallocated Corporate (A)		(7,394)		(9,950)
Total operating income	$	3,659	$	11,699
Depreciation and Amortization:
Control Devices	$	3,530	$	3,094
Electronics		2,481		2,397
Stoneridge Brazil		1,450		1,525
Unallocated Corporate		526		213
Total depreciation and amortization (B)	$	7,987	$	7,229
Interest Expense, net:
Control Devices	$	81	$	182
Electronics		87		56
Stoneridge Brazil		10		108
Unallocated Corporate		852		657
Total interest expense, net	$	1,030	$	1,003
Capital Expenditures:
Control Devices	$	2,314	$	3,492
Electronics		2,650		3,738
Stoneridge Brazil		1,133		819
Unallocated Corporate(C)		572		635
Total capital expenditures	$	6,669	$	8,684

	March 31,		December 31,
	2020		2019
Total Assets:
Control Devices	$	189,348	$	191,491
Electronics		271,750		285,027
Stoneridge Brazil		65,258		89,393
Corporate (C)		390,475		358,766
Eliminations		(316,341)		(322,468)
Total assets	$	600,490	$	602,209

24

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

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

Three months ended March 31,	2020		2019
Net Sales:
North America	$	99,851	$	119,367
South America		14,570		17,332
Europe and Other		68,545		81,598
Total net sales	$	182,966	$	218,297

	March 31,		December 31,
	2020		2019
Long-term Assets:
North America	$	87,375	$	87,430
South America		37,446		52,518
Europe and Other		126,410		130,995
Total long-term assets	$	251,231	$	270,943

(A) Unallocated Corporate expenses include, among other items, accounting/finance, human resources, information technology and legal costs as well as share-based compensation.

(B) These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets.

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

(14) Investments

Minda Stoneridge Instruments Ltd.

The Company has a 49% equity interest in Minda Stoneridge Instruments Ltd. (“MSIL”), a company based in India that manufactures electronics, instrumentation equipment and sensors primarily for the motorcycle, commercial vehicle and automotive markets. The investment is accounted for under the equity method of accounting. The Company’s investment in MSIL, recorded as a component of investments and other long-term assets, net on the condensed consolidated balance sheets, was $12,346 and $12,701 at March 31, 2020 and December 31, 2019, respectively. Equity in earnings of MSIL included in the condensed consolidated statements of operations was $457 and $364, for the three months ended March 31, 2020 and 2019, respectively.

PST Eletrônica Ltda.

The Company had a 74% controlling interest in Stoneridge Brazil from December 31, 2011 through May 15, 2017. On May 16, 2017, the Company acquired the remaining 26% noncontrolling interest in Stoneridge Brazil. As part of the acquisition agreement, the Company will be required to pay additional earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. See Note 5 for the fair value and foreign currency adjustments of the earn-out consideration for the current and prior periods.

Stoneridge Brazil had dividends payable to former noncontrolling interest holders of R$24,154 ($6,010) as of December 31, 2019. The dividends payable balance included R$261 ($68) in monetary correction for the three months ended March 31, 2019 based on the Brazilian National Extended Consumer Price inflation index. The dividend payable related to Stoneridge Brazil was recorded within other current liabilities on the consolidated balance sheet as of December 31, 2019. These dividends were paid in January 2020.

25

STONERIDGE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data, unless otherwise stated)

(Unaudited)

Other Investments

In December 2018, the Company entered into an agreement to make a $10,000 investment in a fund managed by Autotech Ventures (“Autotech”), a venture capital firm focused on ground transportation technology which is accounted for in accordance with ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10)”. This investment does not have a readily determinable fair value and is measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company’s $10,000 investment in the Autotech fund will be contributed over the expected ten-year life of the fund. The Company contributed $400 to the Autotech fund as of March 31, 2019 and did not contribute to the Autotech fund during the three months ended March 31, 2020. The Company recognized $39 and $16 in fair value and other adjustments during the three months ended March 31, 2020 and 2019, respectively. The Autotech investment recorded in investments and other long-term assets in the condensed consolidated balance sheets was $1,788 and $1,827 as of March 31, 2020 and December 31, 2019, respectively.

(15) Disposal of Non-Core Products

On April 1, 2019, the Company entered into an Asset Purchase Agreement (the “APA”) by and among the Company, the Company’s wholly owned subsidiary, Stoneridge Control Devices, Inc. (“SCD”), and Standard Motor Products, Inc. (“SMP”). On the same day pursuant to the APA, in exchange for $40,000 (subject to a post-closing inventory adjustment) and the assumption of certain liabilities, the Company and SCD sold to SMP, product lines and assets related to certain non-core switches and connectors (the “Non-core Products”). On April 1, 2019, the Company and SMP also entered into certain ancillary agreements, including a transition services agreement, a contract manufacturing agreement and a supply agreement, pursuant to which the Company would provide and be compensated for certain manufacturing, transitional, and administrative and support services to SMP on a short-term basis. The products related to the Non-core Products were manufactured in Juarez, Mexico and Canton, Massachusetts, and included ball switches, ignition switches, rotary switches, courtesy lamps, toggle switches, headlamp switches and other related components.

During the three months ended March 31, 2019, the Company recognized transaction costs associated with the disposal of Control Devices’ Non-core Products of $322 within SG&A.

The Company received $21 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the three months ended March 31, 2020.

There were no Non-core Product net sales for the three months ended March 31, 2020. Non-core Product net sales and operating income were $11,230 and $3,112, for the three months ended March 31, 2019, respectively.

(16) Subsequent Events

On May 4, 2020, the Company undertook business realignment actions that resulted in the reduction of our global salaried workforce by approximately 5.0%. These actions were made to better align our resources and cost structure with our current business opportunities and market outlook as well as respond to the COVID-19 pandemic. One-time separation costs of $1,500 to $2,000 associated with these realignment actions are expected to be incurred in the second quarter of 2020.

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a global designer and manufacturer of highly engineered electrical and electronic components, modules and systems primarily for the automotive, commercial, off-highway, motorcycle 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.

Impact of COVID-19 on Our Business

The coronavirus (“COVID-19”) pandemic has resulted, and is likely to continue to result, in significant economic disruption globally. The COVID-19 pandemic has had a negative impact on the global economy, disrupting financial markets and increasing volatility, and has impeded global supply chains, restricted manufacturing operations and resulted in significantly reduced economic activity and higher unemployment rates. It has disrupted, and may continue to disrupt, the global vehicle industry and customer sales, production volumes and purchases of automotive, commercial, off-highway, motorcycle and agricultural vehicles by end-consumers. COVID-19 began to impact our operations in the first quarter of 2020 and is likely to continue to affect our business as government authorities impose mandatory closures, work-from-home orders, social distancing protocols, and other restrictions. These actions could materially affect our ability to adequately staff and maintain our operations and supply chain and impact our financial results. The adverse conditions caused by COVID-19 have reduced demand for our products and increased operating costs, which we anticipate will result in lower overall margins until the impact of COVID-19 begins to moderate.

We are experiencing disruptions in our business as we implement modifications to preserve adequate liquidity and ensure that our business can continue to operate during this uncertain time. Beginning in the first quarter of 2020, certain states and countries issued executive orders requiring all workers to remain at home, unless their work is critical, essential, or life-sustaining. With respect to liquidity, we are evaluating and taking actions to reduce costs and spending across our organization. This includes reducing hiring activities, temporarily reducing workforce in facilities impacted by volume reductions or shutdowns and limiting discretionary spending. In some instances, the Company has delayed anticipated spending on capital investment projects. 

We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

Segments

We are organized by products produced and markets served. 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 driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units.

Stoneridge Brazil (formerly referred to as “PST”). 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 and telematics solutions.

First Quarter Overview

The Company had net income of $3.5 million, or $0.13 per diluted share, for the three months ended March 31, 2020.

Net income decreased by $6.2 million, or $0.20 per diluted share, from $9.7 million, or $0.33 per diluted share, for the three months ended March 31, 2019 primarily due to a decrease in net sales. Pursuant to the Company’s Common Share Repurchase program (“ASR Agreement”), we repurchased 1,349,528 outstanding Common Shares on May 8, 2019 and on February 27, 2020, we received an additional 364,604 Common Shares under that program. In early March 2020, under the new authorized 2020 Common Share repurchase program, we repurchased a total of 242,634 Common Shares. These transactions increased earnings per share by reducing the first quarter 2020 diluted weighted-average shares outstanding compared to the first quarter of 2019.

27

Net sales decreased by $35.3 million, or 16.2%, while our operating income decreased by $8.0 million, or 68.7%.

Our Control Devices segment net sales decreased by 12.0% primarily as a result of decreased sales volume in the North American automotive market due to the disposal of Non-core Products in the second quarter of 2019. In addition, we experienced decreased sales volume in our North American commercial vehicle and agricultural markets. These decreases were partially offset by sales volume increases in our China automotive, European automotive and European commercial vehicle markets. Segment gross margin decreased due to lower sales and higher direct material costs as a percentage of sales including fixed costs associated with our Canton Facility which ceased production in conjunction with our Canton Restructuring plan in December 2019. Segment operating income decreased 38.7% relative to 2019 due to lower segment margin.

Our Electronics segment net sales decreased by 21.2% primarily due to a decrease in sales volume in our European, North American and China commercial vehicle markets, unfavorable foreign currency translation and a decrease in sales of European and North American off-highway vehicle products. Segment gross margin decreased due to lower sales, unfavorable product mix, price downs on legacy products and adverse leverage of fixed costs from lower sales levels. Operating income for the segment decreased 68.2% compared to 2019 due to lower segment gross margin.

Our Stoneridge Brazil segment net sales decreased by 15.9% due to unfavorable foreign currency translation and lower volumes for our Argentina aftermarket channel and audio and alarm products. Segment gross margin declined due to the reduction in sales volume and adverse sales mix from lower sales of alarm products. Operating income decreased compared to 2019 primarily due to the impact of lower sales and gross margin.

In the first quarter of 2020, SG&A expenses decreased by $6.4 million mostly due to lower incentive compensation and professional service fees at unallocated corporate, staff reductions from the closure of the Canton Facility in the first quarter of 2020 and favorable a fair value adjustment for earn-out consideration of $1.1 million at Stoneridge Brazil.

At March 31, 2020 and December 31, 2019, we had cash and cash equivalents balances of $81.3 million and $69.4 million, respectively. The increase in cash and cash equivalents in the first quarter of 2020 was primarily due to net borrowings on the 2019 Credit Facility. The increase in borrowings under the 2019 Credit Facility were to maintain a high level of liquidity to ensure adequate available capital across our global locations due to adverse economic conditions caused by the COVID-19 pandemic. At March 31, 2020 and December 31, 2019, we had $161.0 million and $126.0 million, respectively, in borrowings outstanding on the 2019 Credit Facility and the Amended Agreement, as applicable.

Outlook

While the Company believes that focusing on products that address industry megatrends will have a positive impact on both our top-line growth and underlying margins, beginning in the first quarter of 2020, the COVID-19 pandemic has caused worldwide adverse economic conditions and uncertainty in our served markets.

The North American automotive market is expected to decrease from 16.3 million units in 2019 to 12.2 million units in 2020 due to adverse economic conditions caused by COVID-19. The Company expects sales volumes in our Control Devices segment to decline from the prior year.

We expect full year 2020 European and North American commercial vehicle volumes to significantly decline compared to prior year volumes due to adverse economic conditions caused by COVID-19.

Our 2019 Stoneridge Brazil segment revenues declined compared to the prior year due to lower volumes in our Brazilian served markets for our audio and alarm products, monitoring products and service revenues. In addition, revenues were adversely affected by the continued decline in the Argentinian economy. In April 2020, the International Monetary Fund (“IMF”) forecasted the Brazil gross domestic product to decline 5.3% in 2020 and grow 2.9% in 2021. We expect our served market channels to decline due to the contraction in the Brazilian economy but expect higher OEM related revenues from new program launches occurring in 2020. Our financial performance in our Stoneridge Brazil segment is also subject to uncertainty from movements in the Brazilian Real and Argentina Peso foreign currencies.

28

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. A significant portion of our raw materials purchased by our Electronics and Stoneridge Brazil segments are denominated in U.S. dollars, and therefore movements in foreign currency exchange rates can also have a significant effect on our results of operations. The U.S. Dollar strengthened against the Swedish krona, euro, Brazilian real and Argentinian peso in 2020 and 2019, unfavorably impacting our material costs and reported results.

In January 2019, we committed to a restructuring plan that resulted in the closure of our 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”). The estimated costs for the Canton Restructuring included employee severance and termination costs, contract termination 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.  We recognized $2.2 million of expense as a result of these actions during both the three months ended March 31, 2020 and 2019. We expect to incur additional costs related to the Canton Restructuring of $0.7 million through December 2020 primarily to restore the engineering function previously located at the Canton Facility.

On April 1, 2019, the Company entered into an Asset Purchase Agreement by and among the Company, the Company’s wholly owned subsidiary, Stoneridge Control Devices, Inc. (“SCD”), and Standard Motor Products, Inc. (“SMP”). On the same day pursuant to the APA, in exchange for $40.0 million (subject to a post-closing inventory adjustment which was a payment to SMP of $1.6 million) and the assumption of certain liabilities, the Company and SCD sold to SMP product lines and assets related to certain non-core switches and connectors (the “Non-core Products”). On April 1, 2019, the Company and SMP also entered into certain ancillary agreements, including a transition services agreement, a contract manufacturing 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. The products related to the Non-core Products were manufactured in Juarez, Mexico and Canton, Massachusetts, and include ball switches, ignition switches, rotary switches, courtesy lamps, toggle switches, headlamp switches and other related components.

On October 26, 2018 the Company announced a Board of Directors approved share repurchase program authorizing Stoneridge to repurchase up to $50.0 million of our Common Shares. Thereafter, on May 7, 2019, we announced that the Company had entered into an accelerated share repurchase agreement with Citibank N.A. to repurchase an aggregate of $50.0 million of our Common Shares. Pursuant to the accelerated share repurchase agreement in the second quarter of 2019 we made an upfront payment of $50.0 million and received an initial delivery of 1,349,528 Common Shares which became treasury shares. On February 25, 2020, Citibank N.A. terminated early its commitment pursuant to the accelerated share repurchase agreement and delivered to the Company, 364,604 Common Shares representing the final settlement of the Company’s repurchase program which became treasury shares.

On February 24, 2020, the Board of Directors authorized a new repurchase program of $50.0 million for the repurchase of outstanding Common Shares over an 18 month period. The repurchases may be made from time to time in either open market transactions or in privately negotiated transactions. Repurchases may also be made under rule 10b-18, which permit Common Shares to be repurchased through pre-determined criteria. The timing, volume and nature of common share repurchases will be at the discretion of management, dependent on market conditions, other priorities of cash investment, applicable securities laws and other factors. This Common Share repurchase program authorization does not obligate the Company to acquire any particular amount of its Common Shares, and it may be suspended or discontinued at any time. For the quarter ended March 31, 2020, under the new 2020 repurchase program in early March 2020, the Company repurchased 242,634 Common Shares for $5.0 million in accordance with this repurchase program authorization. The Company is temporarily suspending the previously announced share repurchase program in response to uncertainty surrounding the duration and magnitude of the impact of the COVID-19 pandemic.

29

In March 2017, the Supreme Court of Brazil issued a decision concluding that a certain state value added tax should not be included in the calculation of federal gross receipts taxes. The decision reduced Stoneridge Brazil’s gross receipts tax prospectively and, potentially, retrospectively. In April 2019, the Company received judicial notification that the Superior Judicial Court of Brazil rendered a favorable decision on Stoneridge Brazil’s case granting the Company the right to recover, through offset of federal tax liabilities, amounts collected by the government from June 2010 to February 2017. Based on the Company’s determination that these tax credits will be used prior to expiration, we recorded a pre-tax benefit of $6.5 million as a reduction to SG&A expense which is inclusive of related interest income of $2.4 million, net of applicable professional fees of $1.0 million in the second quarter of 2019. The Company received administrative approval in January 2020 and is now offsetting eligible federal taxes with these tax credits. The Brazilian tax authorities have sought clarification before the Supreme Court of Brazil (in a leading case involving another taxpayer) of certain matters that could affect the rights of Brazilian taxpayers regarding these credits. The timing for a decision is uncertain due to the COVID-19 pandemic. If the Brazilian tax authorities challenge our rights to these credits, we may become subject to new litigation that could impact the amount ultimately realized by Stoneridge Brazil.

In the fourth quarter of 2018, we undertook restructuring actions for our Electronics segment affecting our European Aftermarket business and China operations.  For the three months ended March 31, 2020 and 2019, we recognized expense of less than $0.1 and $0.2 million, respectively, as a result of these actions for related costs and non-cash accelerated depreciation. We expect to incur additional costs related to the Electronics segment restructuring actions of $0.8 million through 2020.

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. On May 4, 2020, the Company began business realignment actions that resulted in the reduction of our global salaried workforce by approximately 5.0%. These actions were made to better align our resources and cost structure with our current business opportunities and market outlook as well as respond to the COVID-19 pandemic. One-time separation costs of $1.5 million to $2.0 million associated with these realignment actions are expected to be incurred in the second quarter of 2020.

Because of the competitive nature of the markets we serve, we face pricing pressures from our customers in the ordinary course of business. In response to these pricing pressures we have been able to effectively manage our production costs by the combination of lowering certain costs and limiting the increase of others, the net impact of which to date has not been material. 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.

Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019

Condensed consolidated statements of operations as a percentage of net sales are presented in the following table (in thousands):

									Dollar
									increase /
Three months ended March 31,	2020				2019				(decrease)
Net sales	$	182,966	100.0	%	$	218,297	100.0	%	$	(35,331)
Costs and expenses:
Cost of goods sold		137,569	75.2			157,444	72.1			(19,875)
Selling, general and administrative		29,503	16.1			35,910	16.5			(6,407)
Design and development		12,235	6.7			13,244	6.1			(1,009)
Operating income		3,659	2.0			11,699	5.3			(8,040)
Interest expense, net		1,030	0.5			1,003	0.5			27
Equity in earnings of investee		(457)	(0.2)			(364)	(0.2)			(93)
Other income, net		(1,617)	(0.9)			(432)	(0.2)			1,185
Income before income taxes		4,703	2.6			11,492	5.2			(6,789)
Provision for income taxes		1,213	0.7			1,835	0.8			(622)
Net income	$	3,490	1.9	%	$	9,657	4.4	%	$	(6,167)

30

Net Sales. Net sales for our reportable segments, excluding inter-segment sales, are summarized in the following table (in thousands):

									Dollar		Percent
									increase /		increase /
Three months ended March 31,	2020				2019				(decrease)		(decrease)
Control Devices	$	96,850	52.9	%	$	110,119	50.5	%	$	(13,269)	(12.0)	%
Electronics		71,546	39.1			90,846	41.6			(19,300)	(21.2)	%
Stoneridge Brazil		14,570	8.0			17,332	7.9			(2,762)	(15.9)	%
Total net sales	$	182,966	100.0	%	$	218,297	100.0	%	$	(35,331)	(16.2)	%

Our Control Devices segment net sales decreased primarily as a result of decreased sales volume of $11.1 million from the disposal of Non-core Products that occurred in the second quarter of 2019. Including the impact of the disposal of Non-core Products, Control Devices experienced decreased sales volume in our North American automotive, North American commercial vehicle and agriculture markets of $5.1 million, $4.3 million and $2.7 million, respectively, and a decrease in other markets sales volume of $4.2 million as well as unfavorable foreign currency translation of $0.4 million. These decreases were partially offset by sales volume increases in our European automotive, European commercial vehicle and China automotive markets of $2.3 million, $0.7 million and $0.3 million, respectively.

Our Electronics segment net sales decreased primarily due to a decrease in sales volume in our European commercial vehicle market of $10.6 million and unfavorable foreign currency translation of $3.2 million as well as a decrease in sales volume in our North American and China commercial vehicle markets of $3.3 million and $0.4 million, respectively. In addition, the Electronics segment net sales decreased due to a decrease in sales volume in our European and North American off-highway vehicle products of $1.8 million and $0.2 million, respectively.

Our Stoneridge Brazil segment net sales decreased due to unfavorable foreign currency translation of $2.2 million and lower volumes for our Argentina aftermarket channel and audio and alarm products.

Net sales by geographic location are summarized in the following table (in thousands):

										Dollar	Percent
										increase /	increase /
Three months ended March 31,	2020				2019					(decrease)	(decrease)
North America	$	99,851	54.5	%	$	119,367	54.7	%	$	(19,516)	(16.3)	%
South America		14,570	8.0			17,332	7.9			(2,762)	(15.9)	%
Europe and Other		68,545	37.5			81,598	37.4			(13,053)	(16.0)	%
Total net sales	$	182,966	100.0	%	$	218,297	100.0	%	$	(35,331)	(16.2)	%

The decrease in North American net sales was primarily attributable to a reduction of $11.1 million from the disposal of Control Devices’ Non-core Products in the second quarter of 2019. Including the impact of the disposal of Non-core Products, sales volume has decreased in our North American commercial vehicle, automotive and agricultural markets of $7.8 million, $5.1 million and $2.6 million, respectively, as well as a decrease of $0.2 million in our Electronics segment off-highway market and other North American volumes of $4.2 million. The decrease in net sales in South America was primarily due to unfavorable foreign currency translation of $2.2 million and lower volumes for our Argentina aftermarket channel and alarm and audio products. The decrease in net sales in Europe and Other was primarily due to a decrease in our European commercial vehicle and off-highway markets of $9.9 million and $1.8 million, respectively. Additionally, Europe and Other sales were unfavorably impacted by foreign currency translation of $3.2 million. The decreases in Europe and Other sales were offset by an increase in European and China automotive sales of $2.2 million and $0.3 million.

31

Cost of Goods Sold and Gross Margin. Cost of goods sold decreased compared to the first quarter of 2019 and our gross margin decreased from 27.9% in the first quarter of 2019 to 24.8% in the first quarter of 2020. Our material cost as a percentage of net sales increased by 0.5% to 52.8% in the first quarter of 2020 compared to 52.3% in the first quarter of 2019. Direct material costs in our Control Devices segment were negatively impacted by unfavorable product mix including the impact of the disposal of Non-core Products while our Electronics segment was negatively impacted by unfavorable product mix and price downs on legacy products. Overhead as a percentage of net sales increased by 2.2% to 16.9% for the first quarter of 2020 compared to 14.7% for the first quarter of 2019 primarily due to adverse fixed cost leverage on lower sales levels including our Canton facility which ceased production in accordance with our Canton restructuring plan in December 2019 offset by lower warranty expenses in our Control Devices segment.

Our Control Devices segment gross margin decreased due to lower sales and higher direct material costs as a percentage of sales, the adverse impact of the disposal of Non-core Products in the second quarter of 2019, as well as higher overhead costs as a percentage of sales due to adverse fixed cost leverage on lower sales levels including our Canton facility which ceased production in accordance with our Canton restructuring plan in December 2019 offset by lower warranty expenses.

Our Electronics segment gross margin decreased primarily due to lower sales, an unfavorable product mix and price downs on legacy products and higher overhead costs as a percentage of sales due to adverse leverage of fixed costs.

Our Stoneridge Brazil segment gross margin decreased due to lower sales and unfavorable sales mix of lower alarm sales.

Selling, General and Administrative (“SG&A”). SG&A expenses decreased by $6.4 million compared to the first quarter of 2019 due to staff reductions from the closure of the Canton Facility during the first quarter of 2020 at Control Devices and lower incentive compensation costs and professional service fees at unallocated corporate and a favorable fair value adjustment for earn-out consideration of $1.1 million at Stoneridge Brazil.

Design and Development (“D&D”). D&D costs decreased by $1.0 million due to higher capitalization of software development costs of $0.8 million and lower spending at Control Devices due to the pace of the restoration of the engineering function previously located at the Canton facility.

Operating Income. Operating income (loss) is summarized in the following table by reportable segment (in thousands):

					Dollar		Percent
					increase /		increase /
Three months ended March 31,	2020		2019		(decrease)		decrease
Control Devices	$	7,322	$	11,948	$	(4,626)	(38.7)	%
Electronics		2,872		9,031		(6,159)	(68.2)	%
Stoneridge Brazil		859		670		189	28.2	%
Unallocated corporate		(7,394)		(9,950)		2,556	25.7	%
Operating income	$	3,659	$	11,699	$	(8,040)	(68.7)	%

Our Control Devices segment operating income decreased due to lower sales and unfavorable product mix from the disposal of Non-core Products that occurred in the second quarter of 2019 offset by lower SG&A costs from staff reductions due to the closure of the Canton Facility in the first quarter of 2020.

Our Electronics segment operating income decreased primarily due to lower sales and higher material costs resulting in lower gross margin.

Our Stoneridge Brazil segment operating income increased primarily due to a favorable fair value adjustment for earn-out consideration of $1.1 million offset by lower sales volumes and unfavorable sales mix from lower sales of alarm products.

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Our unallocated corporate operating loss decreased primarily from incentive compensation and professional costs.

Operating income (loss) by geographic location is summarized in the following table (in thousands):

					Dollar		Percent
Three months ended March 31,	2020		2019		decrease		decrease
North America	$	(483)	$	1,573	$	(2,056)	NM
South America		859		670		189	28.2	%
Europe and Other		3,283		9,456		(6,173)	(65.3)	%
Operating income	$	3,659	$	11,699	$	(8,040)	(68.7)	%

NM – Not meaningful

Our North American operating results decreased due to lower sales in our automotive, commercial vehicle and off-highway markets. The increase in operating income in South America was primarily due to a favorable fair value adjustment for earn-out consideration offset by lower sales volumes and adverse sales mix. Our operating results in Europe and Other decreased primarily due to the unfavorable foreign currency translation impact on sales as well as lower sales in our commercial vehicle market.

Interest Expense, net. Interest expense, net remained consistent with the first quarter or 2019.

Equity in Earnings of Investee. Equity earnings for MSIL were $0.5 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively.

Other Income, net. We record certain foreign currency transaction (gains) losses as a component of other income, net on the condensed consolidated statement of operations. Other income, net increased by $1.2 million to $1.6 million in the first quarter of 2020 compared to other income, net of $0.4 million for the first quarter of 2019 primarily due to higher foreign currency transaction gains in our Electronics segment.

Provision for Income Taxes. In the three months ended March 31, 2020, income tax expense of $1.2 million was attributable to the mix of earnings among tax jurisdictions as well as valuation allowances in certain jurisdictions. The effective tax rate of 25.8% is greater than the statutory rate primarily due to losses incurred in jurisdictions for which a valuation allowance is recorded.

In the three months ended March 31, 2019, income tax expense of $1.8 million was attributable to the mix of earnings among tax jurisdictions as well as the favorable benefit related to the annual vesting of share-based compensation. The effective tax rate of 16.0% is lower than the statutory rate primarily due to the annual vesting of share-based compensation.

Liquidity and Capital Resources

Summary of Cash Flows:

Three months ended March 31,	2020		2019
Net cash provided by (used for):
Operating activities	$	(6,562)	$	(5,609)
Investing activities		(7,132)		(9,083)
Financing activities		28,199		(11,997)
Effect of exchange rate changes on cash and cash equivalents		(2,603)		(1,317)
Net change in cash and cash equivalents	$	11,902	$	(28,006)

33

Cash used for operating activities increased compared to the first quarter of 2019 primarily due to lower net income and the payment of dividends to former noncontrolling interest holders of Stoneridge Brazil of $6.0 million offset by a reduction in cash used to fund working capital levels. Our receivable terms and collections rates have remained consistent between periods presented.

Net cash used for investing activities decreased compared to 2019 due to lower capital expenditures and 2019 investments in the Autotech venture capital fund offset by the capitalization of $0.8 million of software development costs.

Net cash provided by financing activities increased primarily due to higher net 2019 Credit Facility borrowings of $35.0 million and offset by the repurchase of $5.0 million of Common Shares in the first quarter of 2020. The increase in borrowings under the 2019 Credit Facility were to maintain a high level of liquidity due to adverse economic conditions caused by the COVID-19 pandemic.

As outlined in Note 7 to our condensed consolidated financial statements, the 2019 Credit Facility increased our borrowing capacity by $100.0 million and permits borrowing up to a maximum level of $400.0 million which includes an accordion feature which allows the Company to increase the availability by up to $150.0 million upon the satisfaction of certain conditions. This variable rate facility provides the flexibility to refinance other outstanding debt or finance acquisitions through June 2024. The 2019 Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio and more than a minimum interest coverage ratio. The 2019 Credit Facility also contains affirmative and negative covenants and events of default that are customary for credit arrangements of this type including covenants which place restrictions and/or limitations on the Company’s ability to borrow money, make capital expenditures and pay dividends. The 2019 Credit Facility had an outstanding balance of $161.0 million at March 31, 2020. The Company was in compliance with all covenants at March 31, 2020. However, it is possible that future borrowing capacity under the 2019 Credit Facility may be limited as a result of financial performance due to the adverse impact of COVID-19 on the Company’s markets and general global demand. The Company expects to make additional repayments on the Credit Facility when cash exceeds the amount needed for operations.

Stoneridge Brazil maintains several short-term and long-term loans used for working capital purposes. At March 31, 2020, there was $0.7 million of Stoneridge Brazil debt outstanding. Scheduled principal repayments on Stoneridge Brazil debt at March 31, 2020 were as follows: $0.4 million from April 2020 to March 2021 and $0.3 million from April 2021 to December 2021.

In December 2019, Stoneridge Brazil established an overdraft credit line which allows overdrafts on Stoneridge Brazil’s bank account up to a maximum level of Brazilian real 5.0 million, or $1.0 million and $1.2 million, at March 31, 2020 and December 31, 2019, respectively.  There was no balance outstanding on the overdraft credit line as of March 31, 2020 or December 31, 2019.

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 maximum level of 20.0 million Swedish krona, or $2.0 million and $2.1 million, at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019, there was no balance outstanding on this overdraft credit line.

The Company’s wholly-owned subsidiary located in Suzhou, China, has two credit lines which allow up to a maximum borrowing level of 40.0 million Chinese yuan, or $5.6 million and $5.7 million, at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019 there was $2.1 million and $2.2 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 allows up to a maximum borrowing level of 15.0 million Chinese yuan, or $2.1 million and $2.2 million at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019 there was $0.2 million, in borrowing outstanding on the Suzhou bank acceptance draft line.

Although the Company’s notes and credit facilities contain various covenants, the Company has not experienced a violation which would limit or preclude their use or accelerate the maturity and does not expect these covenants to restrict our financing flexibility. The Company has been and expects to continue to remain in compliance with these covenants during the term of the credit facilities and loans.

34

On October 26, 2018 the Company announced a Board of Directors approved repurchase program authorizing Stoneridge to repurchase up to $50.0 million of our Common Shares. Thereafter, on May 7, 2019, we announced that the Company had entered into an accelerated share repurchase agreement with Citibank N.A. to repurchase an aggregate of $50.0 million of our Common Shares. Pursuant to the accelerated share repurchase agreement in the second quarter of 2019 we made an upfront payment of $50.0 million and received an initial delivery of 1,349,528 Common Shares which became treasury shares. On February 25, 2020, Citibank N.A. terminated early its commitment pursuant to the accelerated share repurchase agreement and delivered to the Company, 364,604 Common Shares representing the final settlement of the Company’s repurchase program which became treasury shares.

On February 24, 2020, the Board of Directors authorized the repurchase of $50.0 million of outstanding Common Shares over an 18 month period. The repurchases may be made from time to time in either open market transactions or in privately negotiated transactions. Repurchases may also be made under rule 10b-18, which permit Common Shares to be repurchased through pre-determined criteria. The timing, volume and nature of common share repurchases will be at the discretion of management, dependent on market conditions, other priorities of cash investment, applicable securities laws and other factors. This Common Share repurchase program authorization does not obligate the Company to acquire any particular amount of its Common Shares, and it may be suspended or discontinued at any time. For the quarter ended March 31, 2020, the Company repurchased 242,634 Common Shares for $5.0 million in accordance with this repurchase program authorization. The Company is temporarily suspending the previously announced share repurchase program in response to uncertainty surrounding the duration and magnitude of the impact of the COVID-19 pandemic.

In January 2020, Stoneridge Brazil paid dividends to former noncontrolling interest holders of Brazilian real (“R$”) 24,154 ($6,010) as of December 31, 2019. The dividend payable related to Stoneridge Brazil was recorded within other current liabilities on the consolidated balance sheet as of December 31, 2019. See Note 14 to the condensed consolidated financial statements for additional details.

In December 2018, the Company entered into an agreement to make a $10.0 million investment in a fund 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 will be contributed over the expected ten-year life of the fund.  As of March 31, 2020, the Company’s cumulative investment in the Autotech fund was $2.1 million. The Company contributed $0.4 million to the Autotech fund during the three months ended March 31, 2019 and did not contribute to the Autotech fund during the three months ended March 31, 2020.

Our future results could also be adversely affected by unfavorable changes in foreign currency exchange rates. We have significant foreign denominated transaction exposure in certain locations, especially in Brazil, Argentina, Mexico, Sweden, Estonia, the Netherlands, United Kingdom and China. We have entered into foreign currency forward contracts to reduce our exposure related to certain foreign currency fluctuations. See Note 5 to the condensed consolidated financial statements for additional details. Our future results could also be unfavorably affected by increased commodity prices as commodity fluctuations impact the cost of our raw material purchases.

At March 31, 2020, we had a cash and cash equivalents balance of approximately $81.3 million, of which 66.8% was held in foreign locations. The increase in cash and cash equivalents from $69.4 million at December 31, 2019 was primarily due to net borrowings on the 2019 Credit Facility and the Amended Agreement, as applicable. The Company has approximately $239 million of undrawn commitments under the 2019 Credit Facility as of March 31, 2020, which results in total undrawn commitments and cash balances of more than $320 million.  However, it is possible that future borrowing capacity under our 2019 Credit Facility may be limited as a result of our financial performance due the adverse impact of COVID-19 on the Company’s markets and general global demand.

Commitments and Contingencies

See Note 10 to the condensed consolidated financial statements for disclosures of the Company’s commitments and contingencies.

Seasonality

Our Control Devices and Electronics segments are not typically affected by seasonality, however the demand for our Stoneridge Brazil segment consumer products is typically higher in the second half of the year, the fourth quarter in particular.

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Critical Accounting Policies and Estimates

The Company’s critical accounting policies, which include management’s best estimates and judgments, are included in Part II, Item 7, to the consolidated financial statements of the Company’s 2019 Form 10-K. These accounting policies are considered critical as disclosed in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of the Company’s 2019 Form 10-K because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates. There have been no material changes in our significant accounting policies or critical accounting estimates during the first quarter of 2020.

Information regarding other significant accounting policies is included in Note 2 to our consolidated financial statements in Item 8 of Part II of the Company’s 2019 Form 10-K.

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 fluctuations in certain commodity prices, we believe that an increase in such items could significantly affect our profitability. See Note 5 to the condensed consolidated financial statements for additional details on the Company’s foreign currency exchange rate and interest rate risks.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk presented within Part II, Item 7A of the Company’s 2019 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2020, an evaluation was performed under the supervision and with the participation of the Company’s management, including the principal executive officer (“PEO”) and principal financial officer (“PFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the PEO and PFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2020.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2020 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

36

PART II–OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in certain legal actions and claims primarily arising in the ordinary course of business. Although it is not possible to predict with certainty the outcome of these matters, we do not believe that any of the litigation in which we are currently engaged, either individually or in the aggregate, will have a material adverse effect on our business, consolidated financial position or results of operations. We are subject to litigation regarding civil, labor, and other tax contingencies in our Stoneridge Brazil segment for which we believe the likelihood of loss is reasonably possible, but not probable, although these claims might take years to resolve. In addition, we are subject to litigation regarding patent infringement. We are also subject to the risk of exposure to product liability claims in the event that the failure of any of our products causes personal injury or death to users of our products as well as product warranty and recall claims. There can be no assurance that we will not experience any material losses related to product liability, warranty or recall claims. In addition, if any of our products prove to be defective, we may be required to participate in a government-imposed or customer OEM-instituted recall involving such products. See additional details of these matters in Note 10 to the condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes with respect to risk factors previously disclosed in the Company’s 2019 Form 10-K with the exception of adding the following risk factor:

We face risks related to the novel coronavirus (COVID-19) pandemic that could adversely affect our business, results of operation and financial condition.

In December 2019, a novel strain of the coronavirus (COVID-19) was reported to have been detected in Wuhan, China and on March 11, 2020 it was declared by the World Health Organization to be a global pandemic.  The COVID-19 pandemic has had a negative impact on the global economy, disrupting the financial markets and increasing volatility, and has impeded global supply chains, restricted manufacturing operations and resulted in significantly reduced economic activity and higher unemployment rates. It has disrupted, and may continue to disrupt for an indefinite period of time, the global vehicle industry and customer sales, production volumes and purchases of automotive, commercial, off-highway, motorcycle and agricultural vehicles by end-consumers. The COVID-19 pandemic began to impact our operations in the first quarter of 2020 and is likely to continue to adversely affect our business as government authorities continue to impose mandatory closures, work-from-home orders, social distancing protocols, and other restrictions to combat the spread of the virus. As a result, we have modified our production schedules and have experienced, and may continue to experience, delays in the production and distribution of our products and the loss or delay of customers’ sales. If the global economic effects caused by COVID-19 continue or increase, overall customer demand may continue to decrease, which could have an adverse effect on our business, results of operation and financial condition. In addition, if a significant portion of our workforce or our customers’ workforce are affected by COVID-19, either directly or due to government closures or otherwise, associated work stoppages or facility closures could halt or further delay production in our facilities, including our manufacturing facility in Juarez, Mexico which is currently expected to be shut-down until at least May 30, 2020 due to a Mexican governmental decree. Moreover, concerns over the economic impact of the COVID-19 pandemic have also caused extreme volatility in financial and other capital markets which has and may continue to adversely impact our stock price and our ability to access the capital markets. The full extent of the effect of COVID-19 on our customers, our supply chain and our business, in either scope or duration, cannot be assessed at this time although we expect our full year 2020 results of operations and financial condition to be adversely affected by COVID-19.   

37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents information with respect to repurchases of Common Shares made by us during the three months ended March 31, 2020. There were 75,345 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 March 31, 2020.

				Total number of	Maximum number
				shares purchased as	of shares that may
				part of publicly	yet be purchased
	Total number of	Average price		announced plans	under the plans
Period	shares purchased	paid per share		or programs	or programs
1/1/20-1/31/20	-	$	-	N/A	(1)
2/1/20-2/29/20	364,833		29.17	364,604	(1)(2)
3/1/20-3/31/20	317,750		20.36	242,634	(2)
Total	682,583

(1) On October 26, 2018 we announced a Board of Directors approved repurchase program authorizing the Company to repurchase up to $50.0 million of our Common Shares. Thereafter, on May 7, 2019, we announced that the Company had entered into an accelerated share repurchase agreement with Citibank N.A. to repurchase an aggregate of $50.0 million of our Common Shares. Pursuant to the accelerated share repurchase agreement in the second quarter of 2019 we made an upfront payment of $50.0 million and received an initial delivery of 1,349,528 Common Shares which became treasury shares. On February 25, 2020, Citibank N.A. terminated early its commitment pursuant to the accelerated share repurchase agreement and delivered to the Company, 364,604 Common Shares representing the final settlement of the Company’s repurchase program which became treasury shares.

(2) On February 24, 2020, the Board of Directors authorized the repurchase of $50.0 million of outstanding Common Shares over an 18 month period. The repurchases may for made from time to time in either open market transactions or in privately negotiated transactions. Repurchases may also be made under rule 10b5-1, which permit Common Shares to be repurchased through pre-determined criteria. The timing, volume and nature of common share repurchases will be at the discretion of management, dependent on market conditions, other priorities of cash investment, applicable securities laws and other factors. This Common Share repurchase program authorization does not obligate the Company to acquire any particular amount of its Common Shares, and it may be suspended or discontinued at any time. For the quarter ended March 31, 2020, the Company repurchased 242,634 Common Shares for $5.0 million in accordance with this repurchase program authorization.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None

38

Item 6. Exhibits

Exhibit Number	Exhibit
10.1	Employment Agreement, dated January 3, 2020, by and between the Company and Kevin Heigel, filed herewith.
10.2	Separation Agreement and Release of Claim, dated March 31, 2020, by and between the Company and Robert Willig, incorporated by reference to Exhibit 99.1 on the Company’s Current Report on Form 8-K filed on March 9, 2020.
31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
104	Cover page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document)
	101	XBRL Exhibits:
	101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	104	The cover page from our Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed with the Securities and Exchange Commission on May 6, 2020, is formatted in Inline Extensible Business Reporting Language (“iXBRL”)

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STONERIDGE, INC.
Date:  May 6, 2020	/s/ Jonathan B. DeGaynor
	Jonathan B. DeGaynor
	President, Chief Executive Officer and Director
	(Principal Executive Officer)
Date:  May 6, 2020	/s/ Robert R. Krakowiak
	Robert R. Krakowiak
	Executive Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)

40

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement is entered into as of the   3rd    day of    January, 2020                      with respect to an employment start date of January 2, 2020 (the “Effective Date”), by and between Stoneridge, Inc. (the “Company”) and Kevin Heigel (the “Executive”).

NOW, THEREFORE, in consideration of the mutual promises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1.Employment.

A.The Company agrees to employ the Executive as its Vice President of Operations and the Executive accepts such employment for the Term (as defined in Section 2 below), subject to the terms and conditions set forth below. Executive shall report to the Chief Executive Officer of the Company.

B.During the Term, the Executive shall devote Executive’s full working time, attention, and energy to Executive’s employment and to the affairs of the Company, its subsidiaries and divisions, and perform faithfully and diligently Executive’s duties hereunder and such duties as are customarily performed by Vice Presidents of Operations, together with such other duties as may be reasonably requested from time to time by the Company’s Chief Executive Officer and/or the Board of Directors of the Company (the “Board”).  The Executive agrees to comply with and be bound by the Company’s operational policies, procedures, and practices from time to time in effect during the Term.  The Company agrees that Executive may retain his ownership interest in Alpha Performance Group LLC.  However, Executive agrees that he will not be actively involved in the management or operations of Alpha Performance Group LLC during the Term and will not provide consulting services on behalf of Alpha Performance Group LLC during the Term.

C.The Company agrees to permit Executive to work out of his home office in Florida, but Executive shall generally travel to the Company’s headquarters for one week each month and to the Company’s other locations during the remaining weeks each month, in accordance with the needs of the Company.

2.Term.The term of Executive’s employment and the term of this Employment Agreement (the “Term”) shall commence as of the Effective Date and shall continue until March 15, 2022, subject to the termination and notice requirements described in Section 4 below.

3.Compensation and Benefits.

A.The Company shall pay to the Executive a base salary payable in accordance with the Company’s usual pay practices in the amount of $325,000.00 per annum.

B.Beginning with the Company’s 2020 fiscal year, and for the 2021 fiscal year, the Executive shall be eligible to participate in the Company’s Annual Incentive Plan (the “AIP”) in effect at the time at the target level approved by the Compensation Committee of the Board (the “Committee”), or in accordance with a formula or other bonus plan established by the Committee for such fiscal year. The Company shall pay to the Executive any bonus compensation earned by Executive under the AIP at or around March 15 following the end of each fiscal year. For the Company’s 2020 and 2021 fiscal years, Executive’s target bonus will be 50% of annual base salary.  In the event the Executive’s employment is terminated by the Company without “Cause,” the Executive shall be eligible for bonus compensation, if any, prorated on a per diem basis for the partial fiscal year. If the Executive’s employment is terminated for any other reason prior to the expiration of the Term, the Executive shall not be entitled to be paid any bonus compensation under the AIP.

C.The Company shall provide to the Executive such health insurance for himself, his spouse and eligible dependents, as offered to the Company’s executive officers, and shall provide such other employee welfare benefits such as life and long-term disability as offered to the Company’s executive officers.

D.The Executive shall be entitled to participate in all retirement and other benefit plans, including 401(k) plans, of the Company generally available from time to time to employees of the Company and for which the Executive qualifies under the terms thereof.

E.The Executive shall be entitled to such vacation with pay during each year of his employment hereunder consistent with the policies of the Company, but in no event less than four (4) weeks in any such calendar

1

year (pro-rated as necessary for partial calendar years during the Term); provided, however, that the vacation days taken do not interfere with the operations of the Company. Such vacation may be taken, in the Executive’s discretion, at such time or times as are not inconsistent with the reasonable business needs of the Company. Unused vacation time shall not be carried over to another year. The Executive shall not be entitled to any compensation in lieu of vacation in the event that the Executive, for whatever reason, including termination of employment, fails to take such vacation during any year of Executive’s employment hereunder. The Executive shall also be entitled to all paid holidays given by the Company to its executive officers.

F.In March 2020 the Compensation Committee of the Board shall grant to Executive Share Units under the Company’s 2016 Long-Term Incentive Plan (the “Plan”).  The Share Units grant shall be subject to the Plan and shall be equal in value on the date of grant to 150% of Executive’s annual base salary.  The grant shall be made pursuant to a customary grant agreement, except the Share Units shall vest and be payable on a one-for-one basis in Company common shares on the second anniversary of the date of grant.  Executive will not receive a grant under the Plan in 2021 or 2022.    

G.The Company shall reimburse the Executive for expenses reasonably and necessarily incurred by the Executive in connection with the Company’s business. The Executive shall furnish such documentation with respect to reimbursement to be paid hereunder as the Company shall reasonably request.

4.Termination of Employment.This Employment Agreement shall be terminated prior to the expiration of the Term only under the following circumstances:

A.Termination by the Company for Cause.  The Company may terminate this Employment Agreement and Executive’s employment for Cause at any time and without notice. For purposes of this Employment Agreement, termination for “Cause” shall result from the Executive’s: (1) misappropriation of funds from the Company; (2) conviction for a felony; (3) commission of a crime or act or series of acts involving moral turpitude; (4) commission of an act or series of acts of dishonesty; (5) breach of any material term of this Employment Agreement; (6) willful and repeated failure to perform the duties associated with the Executive’s position, which failure has not been cured within thirty (30) days after the Company gives notice thereof to the Executive; or (7) failure to cooperate with any Company investigation or with any investigation, inquiry, hearing or similar proceedings by any governmental authority having jurisdiction over the Executive or the Company. In the event of termination by the Company for Cause, the Executive shall only be entitled to payment of Executive’s unpaid base salary through the date of termination.

B.Termination by the Company without Cause. The Company may terminate this Employment Agreement and Executive’s employment without Cause prior to the expiration of the Term at any time upon providing the Executive ninety (90) days’ prior written notice or by providing Executive his full base salary for ninety (90) days in lieu of notice.  If the Company terminates Executive’s employment without Cause, the Company will also pay Executive severance pay in the amount of ninety (90) days of his base salary, in conjunction with an executed Separation Agreement and Release of Claims.

C.Termination by Executive.  The Executive may terminate this Employment Agreement and Executive’s employment prior to the expiration of the Term at any time upon providing the Company ninety (90) days’ prior written notice.

D.Section 409A Compliance.To the extent the payments and benefits to be made or provided to Executive upon a termination of employment are “non-qualified deferred compensation” within the meaning of Code Section 409A, then they may only be made upon a “separation from service” of the Executive, within the meaning of Code Section 409A and for purposes of Section 409A, (i) each payment made under this Employment Agreement shall be treated as a separate payment; (ii) the Executive (his/her spouse or beneficiary) may not, directly or indirectly, designate the calendar year of payment; and (iii) except as provided by Section 409A, no acceleration of the time and form of payment of any nonqualified deferred compensation to the Executive or any portion thereof, shall be permitted. All compensation, including nonqualified deferred compensation with the meaning of Section 409A, payable pursuant to the terms of this Employment Agreement or otherwise, shall be subject to all applicable tax withholdings. In the event Executive is a “specified employee” under Code Section 409A, the payments under this Employment Agreement and related benefits, to the extent required, will be delayed in accordance with Code Section 409A(2).

5.Covenants, Non-Competition, Non-Solicitation, and Confidential Information.

A.Covenants.  Employee acknowledges that he is subject to the following covenants for one (1) year from the date his employment with the Company ends (for any reason):

Initial _krh_

1)Employee shall not, directly or indirectly, own, manage, control, or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated as a consultant, independent contractor, or otherwise with, any other corporation, partnership, proprietorship, firm, association or other business entity (i) that has material operations which are engaged in any business activity competitive with the business of the Company or (ii) engaged in the business of designing and/or manufacturing of engineered electrical and electronic components, modules, and systems for the automotive, medium- and heavy-duty truck, agricultural and off-highway vehicle markets.  Employee and the Company acknowledge that the ownership of not more than one percent (1%) of any class of publicly traded securities of any entity shall not be deemed a violation of this covenant.

2)Without prior written consent of Company, on Employee’s behalf or on behalf of any person or entity, directly or indirectly, hire or solicit the employment of any employee who has been employed by the Company or its subsidiaries or affiliates at any time during the six (6) months immediately preceding such date of hiring or solicitation.

B.Executive agrees not to use, disclose or make accessible to any other person, firm, partnership, corporation or any other entity any Confidential Information (as defined below) pertaining to the business of the Company or any entity controlling, controlled by or under common control with the Company (each an “Affiliate”) except (i) while employed by the Company in the business of and for the benefit of the Company or its Affiliates or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company or its Affiliates, or by any administrative body or legislative body with jurisdiction to order the Company or its Affiliates to divulge, disclose or make accessible such information. For purposes of this Employment Agreement, “Confidential Information” shall mean non-public information concerning the Company’s financial data, statistical data, strategic business plans, product development (or other proprietary product data), customer and supplier lists, customer and supplier information, pricing data, information relating to governmental relations, discoveries, practices, processes, methods, trade secrets, developments, marketing plans and other non-public, proprietary and confidential information of the Company or its Affiliates, that, in any case, is not otherwise generally available to the public and has not been disclosed by the Company, or its Affiliates, as the case may be, to others not subject to confidentiality agreements. In the event the Executive’s employment is terminated hereunder for any reason, the Executive immediately shall return to the Company all Confidential Information in Executive’s possession. 

C.The Executive agrees and understands that the remedy at law for any breach by Executive of this Section 5 will be inadequate and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, it is acknowledged that, upon adequate proof of the Executive’s violation of any legally enforceable provision of this Section 5, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach. Nothing in this Section 5 shall be deemed to limit the Company’s remedies at law or in equity for any breach by the Executive of any of the provisions of this Section 5 which may be pursued or availed of by the Company.

D.The Executive and the Company agree that the covenants of non-competition and non-solicitation are reasonable covenants under the circumstances, and further agree that if, in the opinion of any court of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power, and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.

6.Miscellaneous.

A.The Executive represents and warrants that Executive is not a party to any agreement, contract or understanding, whether employment or otherwise, which would restrict or prohibit Executive from undertaking or performing employment in accordance with the terms and conditions of this Employment Agreement.

B.The provisions of this Employment Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions and any partially unenforceable provision to the extent enforceable in any jurisdiction nevertheless shall be binding and enforceable.

C.The rights and obligations of the Company under this Employment Agreement shall inure to the benefit of, and shall be binding on, the Company and its successors and assigns. “Successors and assigns” shall mean, in the case of the Company, any successor pursuant to a merger, consolidation, or sale, or other transfer of all or substantially all of the assets or common shares of the Company.

Initial _krh_

D.All notices and other communications hereunder shall be in writing and shall be deemed to have been given if delivered personally or sent by facsimile transmission, overnight courier, or certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally or sent by facsimile transmission (provided that a confirmation copy is sent by overnight courier), one day after deposit with an overnight courier, or if mailed, five (5) days after the date of deposit in the United States mails, as follows:

To the Company:To Executive:

Stoneridge, Inc.Kevin Heigel

39675 MacKenzie Drive, Suite 4001360 SW 82nd Ter Apt 615

Novi, Michigan  48377Plantation, Florida 33324-3222

Telephone (248)  489-9300Telephone (330) 651-1155

Fax (248) 489-3970

Attn: Chief Executive Officer

With copy to:

Susan Benedict

Chief Human Resources Officer

39675 MacKenzie Drive, Suite 400

Novi, Michigan 48377

Telephone (248) 489-9300

Fax (248) 489-3970

E.The failure of either party to enforce any provision or provisions of this Employment Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Employment Agreement.

F.This Employment Agreement supersedes all prior agreements and understandings between the parties and may not be modified or terminated orally. No modification, termination or attempted waiver shall be valid unless in writing and signed by the party against whom the same is sought to be enforced.

G.This Employment Agreement shall not be assignable or otherwise transferable by Executive. The Company shall have the right to assign this Agreement to any successor which agrees to be bound by the terms hereof.

H.This Employment Agreement shall be governed by and construed according to the laws of the State of Michigan.

I.This Employment Agreement may be executed in one or more counterparts, which together shall constitute one agreement.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement on the dates set forth below.  

STONERIDGE, INC.	EXECUTIVE
By: _/s/ Jonathan B. DeGaynor_________________ Jonathan B. DeGaynor President and CEO	/s/Kevin Heigel_________________________ Kevin Heigel
_Jan 10, 2020__________________________	_January 3, 2020_______________________
Date	Date

Initial _krh_

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES–OXLEY ACT OF 2002

I, Jonathan B. DeGaynor certify that:

(1)  I have reviewed this Quarterly Report on Form 10-Q of Stoneridge, Inc. (the “Company”);

(2)  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

(4)   The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the Company and we have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)  Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;

(5)  The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Jonathan B. DeGaynor

Jonathan B. DeGaynor, President and Chief Executive Officer 

May 6, 2020

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES–OXLEY ACT OF 2002

I, Robert R. Krakowiak certify that:

(1)  I have reviewed this Quarterly Report on Form 10-Q of Stoneridge, Inc. (the “Company”);

(2)  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

(4)  The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the Company and we have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)  Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting;

(5)  The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

/s/ Robert R. Krakowiak

Robert R. Krakowiak, Executive Vice President

Chief Financial Officer and Treasurer

May 6, 2020

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathan B. DeGaynor, President and Chief Executive Officer of Stoneridge, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   the Quarterly Report on Form 10-Q of the Company for the three months ended March 31, 2020 (“the Report”) which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2)   the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jonathan B. DeGaynor

Jonathan B. DeGaynor, President and Chief Executive Officer 

May 6, 2020

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert R. Krakowiak, Chief Financial Officer and Treasurer of Stoneridge, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   the Quarterly Report on Form 10-Q of the Company for the three months ended March 31, 2020 (“the Report”) which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2)   the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert R. Krakowiak

Robert R. Krakowiak,  Executive Vice President

Chief Financial Officer and Treasurer

May 6, 2020

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2020

Basis of Presentation [Abstract]

Basis of Presentation

(1) Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by Stoneridge, Inc. (the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s 2019 Form 10-K.

The Company’s investment in Minda Stoneridge Instruments Ltd. (“MSIL”) for the three months ended March 31, 2020 and 2019 has been determined to be an unconsolidated entity, and therefore is accounted for under the equity method of accounting based on the Company’s 49% ownership in MSIL.

XML

Investments

3 Months Ended

Mar. 31, 2020

Investments [Abstract]

Investments

(14) Investments

Minda Stoneridge Instruments Ltd.

The Company has a 49% equity interest in Minda Stoneridge Instruments Ltd. (“MSIL”), a company based in India that manufactures electronics, instrumentation equipment and sensors primarily for the motorcycle, commercial vehicle and automotive markets. The investment is accounted for under the equity method of accounting. The Company’s investment in MSIL, recorded as a component of investments and other long-term assets, net on the condensed consolidated balance sheets, was $12,346 and $12,701 at March 31, 2020 and December 31, 2019, respectively. Equity in earnings of MSIL included in the condensed consolidated statements of operations was $457 and $364, for the three months ended March 31, 2020 and 2019, respectively.

PST Eletrônica Ltda.

The Company had a 74% controlling interest in Stoneridge Brazil from December 31, 2011 through May 15, 2017. On May 16, 2017, the Company acquired the remaining 26% noncontrolling interest in Stoneridge Brazil. As part of the acquisition agreement, the Company will be required to pay additional earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. See Note 5 for the fair value and foreign currency adjustments of the earn-out consideration for the current and prior periods.

Stoneridge Brazil had dividends payable to former noncontrolling interest holders of R$24,154 ($6,010) as of December 31, 2019. The dividends payable balance included R$261 ($68) in monetary correction for the three months ended March 31, 2019 based on the Brazilian National Extended Consumer Price inflation index. The dividend payable related to Stoneridge Brazil was recorded within other current liabilities on the consolidated balance sheet as of December 31, 2019. These dividends were paid in January 2020.

Other Investments

In December 2018, the Company entered into an agreement to make a $10,000 investment in a fund managed by Autotech Ventures (“Autotech”), a venture capital firm focused on ground transportation technology which is accounted for in accordance with ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10)”. This investment does not have a readily determinable fair value and is measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company’s $10,000 investment in the Autotech fund will be contributed over the expected ten-year life of the fund. The Company contributed $400 to the Autotech fund as of March 31, 2019 and did not contribute to the Autotech fund during the three months ended March 31, 2020. The Company recognized $39 and $16 in fair value and other adjustments during the three months ended March 31, 2020 and 2019, respectively. The Autotech investment recorded in investments and other long-term assets in the condensed consolidated balance sheets was $1,788 and $1,827 as of March 31, 2020 and December 31, 2019, respectively.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2020

Inventories [Abstract]

Schedule of Inventory, Current

	March 31,		December 31,
	2020		2019
Raw materials	$	69,316	$	66,357
Work-in-progress		6,875		5,582
Finished goods		19,586		21,510
Total inventories, net	$	95,777	$	93,449

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income		$ 3,490	$ 9,657
Net income		3,490	9,657
Other comprehensive (loss) income, net of tax:
Foreign currency translation		(17,119)	(3,804)
Unrealized (loss) gain on derivatives (1)	[1]	(3,655)	42
Other comprehensive loss, net of tax		(20,774)	(3,762)
Comprehensive (loss) income		$ (17,284)	$ 5,895

[1] Net of tax (benefit) expense of $(972) and $11 for the three months ended March 31, 2020 and 2019, respectively.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2020
Entity File Number	001-13337
Entity Registrant Name	STONERIDGE INC
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	34-1598949
Entity Address, Address Line One	39675 MacKenzie Drive, Suite 400
Entity Address, City or Town	Novi
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48377
City Area Code	248
Local Phone Number	489-9300
Title of 12(g) Security	Common Shares
Trading Symbol	SRI
Amendment Flag	false
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock Shares Outstanding		26,993,184
Entity Central Index Key	0001043337
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1

XML

Segment Reporting (Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Segment Reporting Information [Line Items]
Net sales	$ 182,966	$ 218,297
Long-term Assets:
Total long-term assets	251,231		$ 270,943
North America [Member]
Segment Reporting Information [Line Items]
Net sales	99,851	119,367
Long-term Assets:
Total long-term assets	87,375		87,430
South America [Member]
Segment Reporting Information [Line Items]
Net sales	14,570	17,332
Long-term Assets:
Total long-term assets	37,446		52,518
Europe and Other [Member]
Segment Reporting Information [Line Items]
Net sales	68,545	$ 81,598
Long-term Assets:
Total long-term assets	$ 126,410		$ 130,995

XML

Debt (Schedule of Debt) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Revolving credit facility	$ 161,000	$ 126,000
Debt:
Total debt	2,771	3,126
Less: current portion	(2,516)	(2,672)
Total long-term debt, net	255	454
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility	$ 161,000	126,000
Debt:
Debt, maturity	June 2024
Suzhou Short-Term Credit Line [Member]
Debt Instrument [Line Items]
Revolving credit facility	$ 2,118	2,154
Debt:
Debt, maturity	August 2020
Maximum [Member] | Revolving Credit Facility [Member]
Debt:
Long-term debt, weighted average interest rate	2.04%
Maximum [Member] | Suzhou Short-Term Credit Line [Member]
Debt:
Outstanding credit lines interest rate	5.00%
Minimum [Member] | Revolving Credit Facility [Member]
Debt:
Long-term debt, weighted average interest rate	1.67%
Minimum [Member] | Suzhou Short-Term Credit Line [Member]
Debt:
Outstanding credit lines interest rate	4.70%
Stoneridge Brazil Long-Term Notes [Member]
Debt:
Long-term debt	$ 653	$ 972
Debt, maturity	November 2021
Interest rate	7.00%

XML

Financial Instruments and Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Recurring [Member]
Financial assets carried at fair value:
Forward currency asset contracts	$ 66
Total financial assets carried at fair value	66
Financial liabilities carried at fair value:
Forward currency liabilities contracts	3,230
Interest rate swap	1,463
Earn-out consideration	8,610	$ 12,011
Total financial liabilities carried at fair value	13,303	$ 12,011
Fair Value, Inputs, Level 2 [Member]
Financial assets carried at fair value:
Forward currency asset contracts	66
Total financial assets carried at fair value	66
Financial liabilities carried at fair value:
Forward currency liabilities contracts	3,230
Interest rate swap	1,463
Total financial liabilities carried at fair value	4,693
Fair Value, Inputs, Level 3 [Member]
Financial liabilities carried at fair value:
Earn-out consideration	8,610
Total financial liabilities carried at fair value	$ 8,610

XML

Commitments and Contingencies (Narrative) (Details) R$ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Mar. 31, 2020 BRL (R$)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 BRL (R$)	Dec. 31, 2019 USD ($)
Short-term Debt [Line Items]
Environmental remediation accrued undiscounted liability			$ 235		$ 82
Product warranty and recall accrual			3,059		3,111
Selling, General and Administrative Expenses [Member]
Short-term Debt [Line Items]
Gain on litigation	$ 6,473
Interest Income [Member]
Short-term Debt [Line Items]
Gain on litigation	2,392
Professional Fees [Member]
Short-term Debt [Line Items]
Gain on litigation	$ 990
Letter of Credit [Member]
Short-term Debt [Line Items]
Line of credit			1,489
Stoneridge Brazil [Member] | Civil, labor and other tax contingencies [Member]
Short-term Debt [Line Items]
Loss contingency, estimate of possible loss		R$ 29,300	$ 5,600	R$ 29,200	$ 7,300

XML

Business Realignment and Restructurings Realignment Charges Classified by Statement of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Restructuring Cost and Reserve [Line Items]
Total business realignment charges	$ 604	$ 1,135
Cost of Goods Sold [Member]
Restructuring Cost and Reserve [Line Items]
Total business realignment charges	86
Selling, General and Administrative Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Total business realignment charges	518	1,125
Design and Development Expense [Member]
Restructuring Cost and Reserve [Line Items]
Total business realignment charges		10
Control Devices [Member]
Restructuring Cost and Reserve [Line Items]
Total business realignment charges	377	522
Control Devices [Member] | Selling, General and Administrative Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Severance costs	377	512
Control Devices [Member] | Design and Development Expense [Member]
Restructuring Cost and Reserve [Line Items]
Severance costs		10
Stoneridge Brazil [Member]
Restructuring Cost and Reserve [Line Items]
Total business realignment charges	153
Stoneridge Brazil [Member] | Cost of Goods Sold [Member]
Restructuring Cost and Reserve [Line Items]
Severance costs	86
Stoneridge Brazil [Member] | Selling, General and Administrative Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Severance costs	67
Unallocated Corporate [Member]
Restructuring Cost and Reserve [Line Items]
Total business realignment charges	74	613
Unallocated Corporate [Member] | Selling, General and Administrative Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Severance costs	$ 74	$ 613

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Revenue (Revenue by Segment and Geographical Location) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Total net sales	$ 182,966	$ 218,297
North America [Member]
Disaggregation of Revenue [Line Items]
Total net sales	99,851	119,367
South America [Member]
Disaggregation of Revenue [Line Items]
Total net sales	14,570	17,332
Europe [Member]
Disaggregation of Revenue [Line Items]
Total net sales	58,694	71,354
Asia Pacific [Member]
Disaggregation of Revenue [Line Items]
Total net sales	9,851	10,244
Control Devices [Member]
Disaggregation of Revenue [Line Items]
Total net sales	96,850	110,119
Control Devices [Member] | North America [Member]
Disaggregation of Revenue [Line Items]
Total net sales	80,410	96,720
Control Devices [Member] | Europe [Member]
Disaggregation of Revenue [Line Items]
Total net sales	7,388	4,412
Control Devices [Member] | Asia Pacific [Member]
Disaggregation of Revenue [Line Items]
Total net sales	9,052	8,987
Electronics [Member]
Disaggregation of Revenue [Line Items]
Total net sales	71,546	90,846
Electronics [Member] | North America [Member]
Disaggregation of Revenue [Line Items]
Total net sales	19,441	22,647
Electronics [Member] | Europe [Member]
Disaggregation of Revenue [Line Items]
Total net sales	51,306	66,942
Electronics [Member] | Asia Pacific [Member]
Disaggregation of Revenue [Line Items]
Total net sales	799	1,257
Stoneridge Brazil [Member]
Disaggregation of Revenue [Line Items]
Total net sales	14,570	17,332
Stoneridge Brazil [Member] | South America [Member]
Disaggregation of Revenue [Line Items]
Total net sales	$ 14,570	$ 17,332

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Business Realignment and Restructuring (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of Restructuring and Related Costs

Business realignment charges by reportable segment were as follows:

Three months ended March 31,	2020		2019
Control Devices (A)	$	377	$	522
Stoneridge Brazil (B)		153		-
Unallocated Corporate (C)		74		613
Total business realignment charges	$	604	$	1,135

(A) Severance costs for the three months ended March 31, 2020 related to SG&A were $377. Severance costs for the three months ended March 31, 2019 related to SG&A and D&D were $512 and $10, respectively.

(B) Severance costs for the three months ended March 31, 2020 related to COGS and SG&A were $86 and $67, respectively.

(C) Severance costs for the three months ended March 31, 2020 and 2019 related to SG&A were $74 and $613, respectively.

Schedule of Business Realignment Charges Classified by Statement of Operations

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

Three months ended March 31,	2020		2019
Cost of goods sold	$	86	$	-
Selling, general and administrative		518		1,125
Design and development		-		10
Total business realignment charges	$	604	$	1,135

Canton Facility Restructuring Plan [Member]

Schedule of Restructuring and Related Costs

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

	Accrual as of		2020 Charge			Utilization			Accrual as of
	January 1, 2020		to Expense		Cash		Non-Cash		March 31, 2020
Employee termination benefits	$	2,636	$	1,118	$	(3,437)	$	-	$	317
Other related costs		-		1,104		(1,104)		-		-
Total	$	2,636	$	2,222	$	(4,541)	$	-	$	317

	Accrual as of		2019 Charge			Utilization			Accrual as of
	January 1, 2019		to Expense		Cash		Non-Cash		March 31, 2019
Employee termination benefits	$	-	$	1,980	$	-	$	-	$	1,980
Other related costs		-		245		(245)		-		-
Total	$	-	$	2,225	$	(245)	$	-	$	1,980

Electronics [Member]

Schedule of Restructuring and Related Costs

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

	Accrual as of		2020 Charge to			Utilization			Accrual as of
	January 1, 2020		Expense		Cash		Non-Cash		March 31, 2020
Employee termination benefits	$	52	$	-	$	-	$	-	$	52
Other related costs		-		7		(7)		-		-
Total	$	52	$	7	$	(7)	$	-	$	52

	Accrual as of		2019 Charge to			Utilization			Accrual as of
	January 1, 2019		Expense (Income)		Cash		Non-Cash		March 31, 2019
Employee termination benefits	$	520	$	(15)	$	(456)	$	-	$	49
Accelerated depreciation		-		98		-		(98)		-
Contract termination costs		17		16		(33)		-		-
Other related costs		119		117		(236)		-		-
Total	$	656	$	216	$	(725)	$	(98)	$	49

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(10) Commitments and Contingencies

From time to time we are subject to various legal actions and claims incidental to our business, including those arising out of breach of contracts, product warranties, product liability, patent infringement, regulatory matters and employment-related matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimated. 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.

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 and engaged an environmental engineering consultant to develop a remediation and monitoring plan for the site. Soil remediation at the site was completed during the year ended December 31, 2010. A remedial action plan was approved by the Florida Department of Environmental Protection and groundwater remediation began in the fourth quarter of 2015. During the three months ended March 31, 2020 and 2019, environmental remediation costs incurred were immaterial. At March 31, 2020 and December 31, 2019, the Company accrued a remaining undiscounted liability of $235 and $82, respectively, related to future remediation costs which were recorded as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. Costs associated with the recorded liability will be incurred to complete the groundwater remediation and monitoring. The recorded liability is based on assumptions in the remedial action plan. Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company. 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 non-income tax contingencies for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil. As a result, no provision has been recorded with respect to these contingencies, which amounted to R$29,300 ($5,600) and R$29,200 ($7,300) at March 31, 2020 and December 31, 2019, respectively. An unfavorable outcome on these contingencies could result in significant cost to the Company and adversely affect its results of operations.

Product Warranty and Recall

Amounts accrued for product warranty and recall claims are established based on the Company’s best estimate of the amounts necessary to settle existing and future claims on products sold as of the balance sheet dates. These accruals are based on several factors including past experience, production changes, industry developments and various other considerations. Our estimate is based on historical trends of units sold and claim payment amounts, combined with our current understanding of the status of existing claims and discussions with our customers. The key factors in our estimate are the stated or implied warranty period, the customer source, customer policy decisions regarding warranties and customers seeking to hold the Company responsible for their product warranties. The Company can provide no assurances that it will not experience material claims or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued. The current portion of product warranty and recall is included as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets. Product warranty and recall included $3,059 and $3,111 of a long-term liability at March 31, 2020 and December 31, 2019, respectively, which is included as a component of other long-term liabilities in the condensed consolidated balance sheets.

The following provides a reconciliation of changes in product warranty and recall liability:

Three months ended March 31,	2020		2019
Product warranty and recall at beginning of period	$	10,796	$	10,494
Accruals for warranties established during period		1,128		1,545
Aggregate changes in pre-existing liabilities due to claim developments		387		1,238
Settlements made during the period		(2,134)		(2,715)
Foreign currency translation		(385)		(215)
Product warranty and recall at end of period	$	9,792	$	10,347

Brazilian Indirect Tax

In March 2017, the Supreme Court of Brazil issued a decision concluding that a certain state value added tax should not be included in the calculation of federal gross receipts taxes. The decision reduced Stoneridge Brazil’s gross receipts tax prospectively and, potentially, retrospectively. In April 2019, the Company received judicial notification that the Superior Judicial Court of Brazil rendered a favorable decision on Stoneridge Brazil’s case granting the Company the right to recover, through offset of federal tax liabilities, amounts collected by the government from June 2010 to February 2017. Based on the Company’s determination that these tax credits will be used prior to expiration, the Company recorded a pre-tax benefit of $6,473 as a reduction to SG&A expense which is inclusive of related interest income of $2,392, net of applicable professional fees of $990 in the year ended December 31, 2019. The Company received administrative approval in January 2020 and is now able to offset eligible federal tax with these tax credits.

The Brazilian tax authorities have sought clarification before the Supreme Court of Brazil (in a leading case involving another taxpayer) of certain matters that could affect the rights of Brazilian taxpayers regarding these credits. The timing for a decision is uncertain due to the COVID-19 pandemic. If the Brazilian tax authorities challenge our rights to these credits, we may become subject to new litigation that could impact the amount ultimately realized by Stoneridge Brazil.

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Recently Issued Accounting Standards

3 Months Ended

Mar. 31, 2020

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards

(2) Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board (‘FASB”) issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The guidance in ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this standard prospectively as of January 1, 2020 and the impact on the Company’s condensed consolidated financial statements will depend on the nature of our future cloud computing arrangements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The guidance in ASU 2018-13 changes disclosure requirements related to fair value measurements as part of the disclosure framework project. The disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the Company’s condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected credit losses for financial assets held and requires enhanced disclosures regarding significant estimates and judgments used in estimating credit losses. ASU 2016-13 is effective for public business entities for annual periods beginning after December 15, 2019. The guidance allows for various methods for measuring expected credit losses. The Company has elected to apply a historical loss rate based on historical write-offs by region, adjusted for current economic conditions and forecasts about future economic conditions that are reasonable and supportable. The Company adopted this standard as of January 1, 2020 and it did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued 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. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”) (also known as the “reference rate reform”). 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 allows companies to elect various option expedients that allow them to continue to apply hedge accounting for hedging relationships affected by the reference rate reform, if certain criteria are met. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The amendments in this update remove certain exceptions of Topic 740 including: exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or gain from other items; exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. There are also additional areas of guidance in regards to: franchise and other taxes partially based on income and the interim recognition of enactment of tax laws and rate changes. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-Based Compensation [Abstract]

Share-Based Compensation

(6) Share-Based Compensation

Compensation expense for share-based compensation arrangements, which is recognized in the condensed consolidated statements of operations as a component of SG&A expenses, was $1,372 and $1,548 for the three months ended March 31, 2020 and 2019, respectively. The expenses related to share-based compensation awards for the three months ended March 31, 2020 was lower than the three months ended March 31, 2019 due to lower attainment of performance-based awards.

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Commitments and Contingencies (Reconciliation of Changes in Product Warranty and Recall Liability) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Commitments and Contingencies [Abstract]
Product warranty and recall at beginning of period	$ 10,796	$ 10,494
Accruals for warranties established during period	1,128	1,545
Aggregate changes in pre-existing liabilities due to claim developments	387	1,238
Settlements made during the period	(2,134)	(2,715)
Foreign currency translation	(385)	(215)
Product warranty and recall at end of period	$ 9,792	$ 10,347

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Taxes [Abstract]
Income tax expense (benefit) on operations	$ 1,213	$ 1,835
Effective income tax rate	25.80%	16.00%

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Revenue (Narrative) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Revenue [Abstract]
Contract assets	$ 0	$ 0
Contract liabilities	0	0
Capitalized contract acquisition costs	$ 0	$ 0

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies [Abstract]

Schedule of Product Warranty and Recall Liability

The following provides a reconciliation of changes in product warranty and recall liability:

Three months ended March 31,	2020		2019
Product warranty and recall at beginning of period	$	10,796	$	10,494
Accruals for warranties established during period		1,128		1,545
Aggregate changes in pre-existing liabilities due to claim developments		387		1,238
Settlements made during the period		(2,134)		(2,715)
Foreign currency translation		(385)		(215)
Product warranty and recall at end of period	$	9,792	$	10,347

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Revenue

3 Months Ended

Mar. 31, 2020

Revenue [Abstract]

Revenue

(3) Revenue

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products and services, which is usually when the parts are shipped or delivered to the customer’s premises. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. Incidental items that are not significant in the context of the contract are recognized as expense. The expected costs associated with our base warranties continue to be recognized as expense when the products are sold. Customer returns only occur if products do not meet the specifications of the contract and are not connected to any repurchase obligations of the Company.

The Company does not have any financing components or significant payment terms as payment occurs shortly after the point of sale. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Amounts billed to customers related to shipping and handling costs are included in net sales in the condensed consolidated statements of operations. Shipping and handling costs associated with outbound freight after control over a product is transferred to the customer are accounted for as a fulfillment cost and are included in cost of sales.

Revenue by Reportable Segment

Control Devices. Our Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle. This segment includes product lines such as actuators, sensors, switches and connectors. We sell these products principally to the automotive market in the North American, European, and Asia Pacific regions. To a lesser extent, we also sell these products to the commercial vehicle and agricultural markets in our North America, European and Asia Pacific regions. Our customers included in these markets primarily consist of original equipment manufacturers (“OEM”) and companies supplying components directly to the OEMs (“Tier 1 supplier”).

Electronics. Our Electronics segment designs and manufactures driver information systems, camera-based vision systems, connectivity and compliance products and electronic control units. These products are sold principally to the commercial vehicle market primarily through our OEM and aftermarket channels in the North American and European regions, and to a lesser extent, the Asia Pacific region. The camera-based vision systems and related products are sold principally to the off-highway vehicle market in the North American and European regions.

Stoneridge Brazil. Our Stoneridge Brazil segment (also referred to as “PST” in prior filings) 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 and telematics solutions. Stoneridge Brazil sells its products through the aftermarket distribution channel, to factory authorized dealer installers, also referred to as original equipment services, direct to OEMs and through mass merchandisers. In addition, monitoring services and tracking devices are sold directly to corporate and individual consumers.

The following tables disaggregate our revenue by reportable segment and geographical location⁽¹⁾ for the periods ended March 31, 2020 and 2019:

	Control Devices				Electronics				Stoneridge Brazil				Consolidated
Three months ended March 31,	2020		2019		2020		2019		2020		2019		2020		2019
Net Sales:
North America	$	80,410	$	96,720	$	19,441	$	22,647	$	-	$	-	$	99,851	$	119,367
South America		-		-		-		-		14,570		17,332		14,570		17,332
Europe		7,388		4,412		51,306		66,942		-		-		58,694		71,354
Asia Pacific		9,052		8,987		799		1,257		-		-		9,851		10,244
Total net sales	$	96,850	$	110,119	$	71,546	$	90,846	$	14,570	$	17,332	$	182,966	$	218,297

(1) Company sales based on geographic location are where the sale originates not where the customer is located.

Performance Obligations

For OEM and Tier 1 supplier customers, the Company typically enters into contracts to provide serial production parts that consist of a set of documents including, but not limited to, an award letter, master purchase agreement and master terms and conditions. For each production product, the Company enters into separate purchase orders that contain the product specifications and an agreed-upon price. 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 off-highway products 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. For most customer contracts, the Company does not have an enforceable right to payment at any time prior to when the parts are shipped or delivered to the customer; therefore, the Company recognizes revenue at the point in time it satisfies a performance obligation by transferring control of a part to the customer. Certain customer contracts contain an enforceable right to payment if the customer terminates the contract for convenience and therefore are recognized over time using the cost to complete input method.

Our aftermarket products are focused on meeting the demand for repair and replacement parts, compliance parts and accessories and are sold primarily to aftermarket distributors and mass retailers in our South American, European and North American markets. Aftermarket products have one type of performance obligation which is the delivery of aftermarket parts and spare parts.  For aftermarket customers, the Company typically has standard terms and conditions for all customers.  In addition, aftermarket products have alternative use as they can be sold to multiple customers. Revenue for aftermarket part production contracts is recognized at a point in time when the control of the parts transfer to the customer which is based on the shipping terms.  Aftermarket contracts may include variable consideration related to discounts and rebates and is included in the transaction price upon recognizing the product revenue. 

A small portion of the Company’s sales are comprised of monitoring services that include both monitoring devices and fees to individual, corporate, fleet and cargo customers in our Stoneridge Brazil segment. These monitoring service contracts are generally not capable of being distinct and are accounted for as a single performance obligation.  We recognize revenue for our monitoring products and services contracts over the life of the contract. There is no variable consideration associated with these contracts. The Company has the right to consideration from a customer in the amount that corresponds directly with the value to the customer of the Company’s performance to date.  Therefore, the Company recognizes revenue over time using the practical expedient ASC 606-10-55-18 in the amount the Company has a “right to invoice” rather than selecting an output or input method.

Contract Balances

The Company had no material contract assets, contract liabilities or capitalized contract acquisition costs as of March 31, 2020 and December 31, 2019.

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Debt

3 Months Ended

Mar. 31, 2020

Debt [Abstract]

Debt

(7) Debt

Debt consisted of the following at March 31, 2020 and December 31, 2019:

	March 31,		December 31,		Interest rates at
	2020		2019		March 31, 2020	Maturity
Revolving Credit Facility
Credit Facility	$	161,000	$	126,000	1.67 - 2.04%	June 2024
Debt
Stoneridge Brazil long-term notes		653		972	7.00%	November 2021
Suzhou short-term credit line		2,118		2,154	4.70% - 5.00%	August 2020
Total debt		2,771		3,126
Less: current portion		(2,516)		(2,672)
Total long-term debt, net	$	255	$	454

Revolving Credit Facility

On September 12, 2014, the Company entered into a Third Amended and Restated Credit Agreement (the “Amended Agreement”). The Amended Agreement provided for a $300,000 revolving credit facility, which replaced the Company’s $100,000 asset-based credit facility and included a letter of credit subfacility, swing line subfacility and multicurrency subfacility.

On June 5, 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (the “2019 Credit Facility”). The 2019 Credit Facility provides for a $400,000 senior secured revolving credit facility and it replaced and superseded the Amended Agreement. The 2019 Credit Facility has an accordion feature which allows the Company to increase the availability by up to $150,000 upon the satisfaction of certain conditions and includes a letter of credit subfacility, swing line subfacility and multicurrency subfacility. The 2019 Credit Facility has a termination date of June 5, 2024. In 2019, the Company capitalized $1,366 of deferred financing costs and wrote off previously recorded deferred financing costs of $275 as a result of entering into the 2019 Credit Facility. Borrowings under the 2019 Credit Facility bear interest at either the Base Rate or the LIBOR rate, at the Company’s option, plus the applicable margin as set forth in the 2019 Credit Facility. The 2019 Credit Facility contains certain financial covenants that require the Company to maintain less than a maximum leverage ratio of 3.50 to 1.00 and more than a minimum interest coverage ratio of 3.50 to 1.00.

The 2019 Credit Facility contains customary affirmative covenants and representations. The 2019 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) creation or ownership of certain subsidiaries, partnerships and joint ventures, (vii) continuation of or change in business, (viii) restricted payments, (ix) prepayment of subordinated and junior lien indebtedness, (x) restrictions in agreements on dividends, intercompany loans and granting liens on the collateral, (xi) loans and investments, (xii) sale and leaseback transactions, (xiii) changes in organizational documents and fiscal year and (xiv) transactions with respect to bonding subsidiaries. The 2019 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, (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.

Borrowings outstanding on the 2019 Credit Facility and the Amended Agreement as applicable, were $161,000 and $126,000 at March 31, 2020 and December 31, 2019, respectively.

The Company was in compliance with all credit facility covenants at March 31, 2020 and December 31, 2019.

The Company also has outstanding letters of credit of $1,768 at March 31, 2020 and December 31, 2019, respectively.

Debt

Stoneridge Brazil maintains long-term notes used for working capital purposes which have fixed or variable interest rates. The weighted-average interest rates of long-term debt of Stoneridge Brazil at March 31, 2020 was 7.0%. Depending on the specific note, interest is payable either monthly or annually. Principal repayments on Stoneridge Brazil debt at March 31, 2020 are as follows: $398 from April 2020 through March 2021 and $255 from April 2021 through December 2021. 

In December 2019, the Company’s wholly-owned subsidiary located in Brazil, established an overdraft credit line which allows overdrafts on Stoneridge Brazil’s bank account up to a maximum level of 5,000 Brazilian real (“R$”), or $962 and $1,244, at March 31, 2020 and December 31, 2019, respectively.  There was no balance outstanding on the overdraft credit line as of March 31, 2020 and December 31, 2019.

The Company’s wholly-owned subsidiary located in Sweden, has an overdraft credit line which allows overdrafts on the subsidiary’s bank account up to a maximum level of 20,000 Swedish krona, or $2,025 and $2,136, at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019, there was no balance outstanding on this overdraft credit line however, during the three months ended March 31, 2020, the subsidiary borrowed and repaid 19,155 Swedish krona, or $1,949.

The Company’s wholly-owned subsidiary located in Suzhou, China (the “Suzhou subsidiary”), has two credit lines (the “Suzhou credit line”) which allow up to a maximum borrowing level of 40,000 Chinese yuan, or $5,649 and $5,746 at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019 there was $2,118 and $2,154, respectively, in borrowings outstanding on the Suzhou credit line with a weighted-average interest rate of 4.80%. The Suzhou credit line is included on the condensed 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 that have currently been extended by 180 days. This bank acceptance draft line of credit allows up to a maximum borrowing level of 15,000 Chinese yuan, or $2,118 and $2,154, at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020 and December 31, 2019 there was approximately $150 utilized on the Suzhou bank acceptance draft line of credit.

The Company was in compliance with all debt covenants at March 31, 2020 and December 31, 2019.

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Business Realignment and Restructuring

3 Months Ended

Mar. 31, 2020

Business Realignment and Restructuring

Business Realignment and Restructuring

(11) Business Realignment and Restructuring

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”).  Company management informed employees at the Canton Facility of this restructuring decision on January 11, 2019. The estimated costs for the Canton Restructuring include 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.

The Company recognized expense of $2,222 and $2,225, respectively, for the three months ended March 31, 2020 and 2019 as a result of these actions for employee termination benefits and other restructuring related costs. For the three months ended March 31, 2020 severance and other restructuring related costs of $1,490, $314 and $418 were recognized in COGS, SG&A and D&D, respectively, in the condensed consolidated statement of operations.  For the three months ended March 31, 2019 severance and other related restructuring costs of $1,252, $195 and $778 were recognized in COGS, SG&A and D&D, respectively, in the condensed consolidated statement of operations. The estimated additional cost of this restructuring plan, that will impact the Control Devices segment, is approximately $700 and is related to additional costs to restore the engineering function previously located at the Canton Facility. These costs will be incurred throughout 2020.

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

	Accrual as of		2020 Charge			Utilization			Accrual as of
	January 1, 2020		to Expense		Cash		Non-Cash		March 31, 2020
Employee termination benefits	$	2,636	$	1,118	$	(3,437)	$	-	$	317
Other related costs		-		1,104		(1,104)		-		-
Total	$	2,636	$	2,222	$	(4,541)	$	-	$	317

	Accrual as of		2019 Charge			Utilization			Accrual as of
	January 1, 2019		to Expense		Cash		Non-Cash		March 31, 2019
Employee termination benefits	$	-	$	1,980	$	-	$	-	$	1,980
Other related costs		-		245		(245)		-		-
Total	$	-	$	2,225	$	(245)	$	-	$	1,980

In the fourth quarter of 2018, the Company undertook restructuring actions for the Electronics segment affecting the European Aftermarket business and China operations.  The Company recognized expense of $7 and $216, respectively, for the three months ended March 31, 2020 and 2019 as a result of these actions for severance, contract termination costs, accelerated depreciation of fixed assets and other related costs.  Electronics segment restructuring costs were recognized in SG&A in the condensed consolidated statement of operations for the three months ended March 31, 2020 and 2019. The Company expects to incur approximately $750 of additional restructuring costs related to these actions through 2020.

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

	Accrual as of		2020 Charge to			Utilization			Accrual as of
	January 1, 2020		Expense		Cash		Non-Cash		March 31, 2020
Employee termination benefits	$	52	$	-	$	-	$	-	$	52
Other related costs		-		7		(7)		-		-
Total	$	52	$	7	$	(7)	$	-	$	52

	Accrual as of		2019 Charge to			Utilization			Accrual as of
	January 1, 2019		Expense (Income)		Cash		Non-Cash		March 31, 2019
Employee termination benefits	$	520	$	(15)	$	(456)	$	-	$	49
Accelerated depreciation		-		98		-		(98)		-
Contract termination costs		17		16		(33)		-		-
Other related costs		119		117		(236)		-		-
Total	$	656	$	216	$	(725)	$	(98)	$	49

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. 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.

Business realignment charges by reportable segment were as follows:

Three months ended March 31,	2020		2019
Control Devices (A)	$	377	$	522
Stoneridge Brazil (B)		153		-
Unallocated Corporate (C)		74		613
Total business realignment charges	$	604	$	1,135

(A) Severance costs for the three months ended March 31, 2020 related to SG&A were $377. Severance costs for the three months ended March 31, 2019 related to SG&A and D&D were $512 and $10, respectively.

(B) Severance costs for the three months ended March 31, 2020 related to COGS and SG&A were $86 and $67, respectively.

(C) Severance costs for the three months ended March 31, 2020 and 2019 related to SG&A were $74 and $613, respectively.

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

Three months ended March 31,	2020		2019
Cost of goods sold	$	86	$	-
Selling, general and administrative		518		1,125
Design and development		-		10
Total business realignment charges	$	604	$	1,135

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 182,966	$ 218,297
Costs and expenses:
Cost of goods sold	137,569	157,444
Selling, general and administrative	29,503	35,910
Design and development	12,235	13,244
Operating income	3,659	11,699
Interest expense, net	1,030	1,003
Equity in earnings of investee	(457)	(364)
Other income , net	(1,617)	(432)
Income before income taxes	4,703	11,492
Provision for income taxes	1,213	1,835
Net income	3,490	9,657
Net income attributable to Stoneridge, Inc.	$ 3,490	$ 9,657
Earnings per share:
Basic (in dollars per share)	$ 0.13	$ 0.34
Diluted (in dollars per share)	$ 0.13	$ 0.33
Weighted-average shares outstanding:
Basic (in shares)	27,232,036	28,529,301
Diluted (in shares)	27,591,171	29,084,808

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Number of Common Shares outstanding	Treasury shares	Additional Paid-In Capital	Common Shares held in treasury	Retained earnings	Accumulated other comprehensive loss	Total
Balance at Dec. 31, 2018			$ 231,647	$ (8,880)	$ 146,251	$ (85,752)	$ 283,266
Net income					9,657		9,657
Common Stock, Share, Beginning Balance (in shares) at Dec. 31, 2018	28,488
Treasury Stock, Shares, Beginning Balance at Dec. 31, 2018		478
Unrealized gain on derivatives, net						42	42	[1]
Currency translation adjustments						(3,804)	(3,804)
Issuance of Common Shares ( in shares)	305
Issuance of Common Shares ( in treasury shares)		(305)
Repurchased Common Shares for treasury,net				(1,883)			(1,883)
Repurchased Common Shares for treasury (in shares)	(98)
Repurchased Common Shares for treasury (in treasury shares)		98
Share-based compensation			480				480
Balance at Mar. 31, 2019			232,127	(10,763)	155,908	(89,514)	287,758
Common Stock, Share, Ending Balance (in shares) at Mar. 31, 2019	28,695
Treasury Stock, Shares, Ending Balance at Mar. 31, 2019		271
Balance at Dec. 31, 2019			225,607	(50,773)	206,542	(91,472)	289,904
Net income					3,490		$ 3,490
Common Stock, Share, Beginning Balance (in shares) at Dec. 31, 2019	27,408						27,408
Treasury Stock, Shares, Beginning Balance at Dec. 31, 2019		1,558					1,558
Unrealized gain on derivatives, net						(3,655)	$ (3,655)	[1]
Currency translation adjustments						(17,119)	(17,119)
Issuance of Common Shares ( in shares)	267
Issuance of Common Shares ( in treasury shares)		(267)
Repurchased Common Shares for treasury,net				4,769			4,769
Repurchased Common Shares for treasury (in shares)	(75)
Repurchased Common Shares for treasury (in treasury shares)		75
Common Share repurchase program			10,000	(14,995)			(4,995)
Common Share repurchase program (in shares)	(607)
Common Share repurchase program (in treasury shares)		607
Share-based compensation			(5,101)				(5,101)
Balance at Mar. 31, 2020			$ 230,506	$ (60,999)	$ 210,032	$ (112,246)	$ 267,293
Common Stock, Share, Ending Balance (in shares) at Mar. 31, 2020	26,993						26,993
Treasury Stock, Shares, Ending Balance at Mar. 31, 2020		1,973					1,973

[1] Net of tax (benefit) expense of $(972) and $11 for the three months ended March 31, 2020 and 2019, respectively.

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Disposal of Non-Core Products

3 Months Ended

Mar. 31, 2020

Disposal of Non-Core Products [Abstract]

Disposal of Non-Core Products

(15) Disposal of Non-Core Products

On April 1, 2019, the Company entered into an Asset Purchase Agreement (the “APA”) by and among the Company, the Company’s wholly owned subsidiary, Stoneridge Control Devices, Inc. (“SCD”), and Standard Motor Products, Inc. (“SMP”). On the same day pursuant to the APA, in exchange for $40,000 (subject to a post-closing inventory adjustment) and the assumption of certain liabilities, the Company and SCD sold to SMP, product lines and assets related to certain non-core switches and connectors (the “Non-core Products”). On April 1, 2019, the Company and SMP also entered into certain ancillary agreements, including a transition services agreement, a contract manufacturing agreement and a supply agreement, pursuant to which the Company would provide and be compensated for certain manufacturing, transitional, and administrative and support services to SMP on a short-term basis. The products related to the Non-core Products were manufactured in Juarez, Mexico and Canton, Massachusetts, and included ball switches, ignition switches, rotary switches, courtesy lamps, toggle switches, headlamp switches and other related components.

During the three months ended March 31, 2019, the Company recognized transaction costs associated with the disposal of Control Devices’ Non-core Products of $322 within SG&A.

The Company received $21 for services provided pursuant to the transition services agreement which were recognized as a reduction in SG&A for the three months ended March 31, 2020.

There were no Non-core Product net sales for the three months ended March 31, 2020. Non-core Product net sales and operating income were $11,230 and $3,112, for the three months ended March 31, 2019, respectively.

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Changes in Accumulated Other Comprehensive Loss by Component (Tables)

3 Months Ended

Mar. 31, 2020

Equity and Accumulated Other Comprehensive Loss [Abstract]

Changes in Accumulated Other Comprehensive Loss by Component

Changes in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 were as follows:

		Foreign		Unrealized
		currency		gain (loss)
		translation		on derivatives	Total
Balance at January 1, 2020	$	(91,472)	$	-	$	(91,472)
Other comprehensive loss before reclassifications		(17,119)		(3,781)		(20,900)
Amounts reclassified from accumulated other comprehensive loss		-		126		126
Net other comprehensive loss, net of tax		(17,119)		(3,655)		(20,774)
Balance at March 31, 2020	$	(108,591)	$	(3,655)	$	(112,246)
Balance at January 1, 2019	$	(86,044)	$	292	$	(85,752)
Other comprehensive (loss) income before reclassifications		(3,804)		213		(3,591)
Amounts reclassified from accumulated other comprehensive loss		-		(171)		(171)
Net other comprehensive (loss) income, net of tax		(3,804)		42		(3,762)
Balance at March 31, 2019	$	(89,848)	$	334	$	(89,514)

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Investments (Narrative) (Details) R$ in Thousands, $ in Thousands	3 Months Ended		64 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	May 15, 2017	Dec. 31, 2019 BRL (R$)	Dec. 31, 2019 USD ($)	Mar. 31, 2019 BRL (R$)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	May 16, 2017
Schedule of Equity Method Investments [Line Items]
Income (loss) from equity method investments	$ 457	$ 364
Fair value and other adjustments	39	16
Investment	$ 28,024				$ 32,437
MSIL
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	49.00%					49.00%	49.00%
Equity method investments	$ 12,346				12,701
Income (loss) from equity method investments	457	$ 364
Stoneridge Brazil [Member]
Schedule of Equity Method Investments [Line Items]
Percentage ownership in consolidated subsidiary			74.00%
Percentage of additional noncontrolling interest acquired									26.00%
Dividends Payable, Price Index Adjustment						R$ 261	$ 68
Stoneridge Brazil [Member] | Noncontrolling interest
Schedule of Equity Method Investments [Line Items]
Dividends payable				R$ 24,154	6,010
Autotech Ventures [Member] | Venture Capital Funds [Member]
Schedule of Equity Method Investments [Line Items]
Investment commitment					10,000			$ 10,000
Investment	$ 1,788				$ 1,827
Contribution expected period (in years)	10 years
Contribution by company	$ 400

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Debt (Narrative) (Details) ¥ in Thousands, kr in Thousands, R$ in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2020 SEK (kr)	Mar. 31, 2020 BRL (R$)	Mar. 31, 2020 USD ($)	Mar. 31, 2020 CNY (¥)	Mar. 31, 2020 SEK (kr)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 SEK (kr)	Jun. 30, 2019 USD ($)	Jun. 05, 2019 USD ($)	Sep. 12, 2014 USD ($)	Nov. 02, 2007 USD ($)
Debt Instrument [Line Items]
Borrowings outstanding				$ 161,000			$ 126,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Capitalized deferred financing costs										$ 1,366
Line of credit facility, maximum borrowing capacity											$ 400,000	$ 300,000
Increase in maximum borrowing capacity of credit facility											$ 150
Borrowings outstanding				$ 161,000			126,000
Maximum leverage ratio			350.00%	350.00%	350.00%	350.00%
Minimum interest coverage ratio			350.00%	350.00%	350.00%	350.00%
Write off of deferred debt issuance cost	$ 275
Debt instrument covenant default of other debt maximum amount				$ 30,000
Debt instrument covenant uninsured asset losses maximum amount	$ 30,000
Revolving Credit Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Long-term debt, weighted average interest rate			2.04%	2.04%	2.04%	2.04%
Revolving Credit Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Long-term debt, weighted average interest rate			1.67%	1.67%	1.67%	1.67%
Asset-Based Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity													$ 100,000
Suzhou Short-Term Credit Line [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity				$ 5,649	¥ 40,000
Borrowings outstanding				$ 2,118			2,154
Outstanding credit lines weighted-average interest rate			4.80%	4.80%	4.80%	4.80%
Suzhou Short-Term Credit Line [Member] | Maximum [Member]
Debt Instrument [Line Items]
Outstanding credit lines interest rate	5.00%	5.00%
Suzhou Short-Term Credit Line [Member] | Minimum [Member]
Debt Instrument [Line Items]
Outstanding credit lines interest rate	4.70%	4.70%
Bank Acceptance Draft Credit Line [Member]
Debt Instrument [Line Items]
Credit facility, borrowing capacity				$ 2,118	¥ 15,000		2,154	¥ 15,000
Borrowings outstanding				150
Letter of Credit [Member]
Debt Instrument [Line Items]
Outstanding letters of credit				1,768
Credit Facility [Member]
Debt Instrument [Line Items]
Credit Facility covenant compliance	The Company was in compliance with all credit facility covenants at March 31, 2020 and December 31, 2019	The Company was in compliance with all credit facility covenants at March 31, 2020 and December 31, 2019
Stoneridge Brazil?s Bank Overdraft Credit
Debt Instrument [Line Items]
Credit facility, borrowing capacity			R$ 5,000	962			1,244
Borrowings outstanding				0			0
Stoneridge Brazil Debt [Member]
Debt Instrument [Line Items]
Notes covenant compliance	The Company was in compliance with all debt covenants at March 31, 2020 and December 31, 2019	The Company was in compliance with all debt covenants at March 31, 2020 and December 31, 2019
Stoneridge Brazil [Member] | Term Loan [Member]
Debt Instrument [Line Items]
2020				398
2021				$ 255
Stoneridge Brazil [Member] | Stoneridge Brazil Long-Term Notes [Member]
Debt Instrument [Line Items]
Long-term debt, weighted average interest rate			7.00%	7.00%	7.00%	7.00%
Electronics [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity				$ 2,025		kr 20,000	2,136		kr 20,000
Borrowings outstanding				$ 0			0
Subsidiary borrowed and repaid	$ 1,949	kr 19,155
Suzhou Short-Term Note [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity							$ 5,746

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Financial Instruments and Fair Value Measurements (Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)) (Details) - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Forward Currency Contracts [Member]
Derivatives designated as cash flow hedges:
Gain (loss) recorded in other comprehensive income (loss)	$ (3,320)	$ 269
Gain (loss) reclassified from other comprehensive income (loss) into net income	(156)	$ 216
Foreign currency cash flow hedge gain (loss) to be reclassified during next 12 months	(3,164)
Losses expected to be recognized in interest expense in next year	545
Losses expected to be recognized in interest expense in after next year	918
Interest Rate Swap [Member]
Derivatives designated as cash flow hedges:
Gain (loss) recorded in other comprehensive income (loss)	(1,467)
Gain (loss) reclassified from other comprehensive income (loss) into net income	(4)
Cost of Goods Sold [Member] | Forward Currency Contracts [Member]
Derivatives designated as cash flow hedges:
Gain (loss) reclassified from other comprehensive income (loss) into net income	(127)		$ 173
Design and Development Expense [Member] | Forward Currency Contracts [Member]
Derivatives designated as cash flow hedges:
Gain (loss) reclassified from other comprehensive income (loss) into net income	(29)		$ 43
Interest Expense [Member] | Forward Currency Contracts [Member]
Derivatives designated as cash flow hedges:
Gain (loss) reclassified from other comprehensive income (loss) into net income	$ 4

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Segment Reporting (Schedule of Segment Reporting Information, by Segment) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Net Sales:
Net sales	$ 182,966	$ 218,297
Operating Income (Loss)
Total operating income (loss)	3,659	11,699
Total income before income taxes	4,703	11,492
Depreciation and Amortization:
Total depreciation and amortization	7,987	7,229
Interest Expense, net:
Total interest expense, net	1,030	1,003
Interest Expense, net:
Total interest expense, net	1,030	1,003
Capital Expenditures:
Capital expenditures	6,669	8,684
Long-Lived Assets	251,231		$ 270,943
Total Assets:
Total assets	600,490		602,209
Intersegment Eliminations [Member]
Net Sales:
Net sales	(9,615)	(10,589)
Total Assets:
Total assets	(316,341)		(322,468)
Control Devices [Member]
Net Sales:
Net sales	96,850	110,119
Operating Income (Loss)
Total operating income (loss)	7,322	11,948
Depreciation and Amortization:
Total depreciation and amortization	3,530	3,094
Interest Expense, net:
Total interest expense, net	81	182
Capital Expenditures:
Capital expenditures	2,314	3,492
Total Assets:
Total assets	189,348		191,491
Control Devices [Member] | Operating Segments [Member]
Net Sales:
Net sales	98,197	111,980
Control Devices [Member] | Inter-Segment Sales [Member]
Net Sales:
Net sales	1,347	1,861
Electronics [Member]
Net Sales:
Net sales	71,546	90,846
Operating Income (Loss)
Total operating income (loss)	2,872	9,031
Depreciation and Amortization:
Total depreciation and amortization	2,481	2,397
Interest Expense, net:
Total interest expense, net	87	56
Capital Expenditures:
Capital expenditures	2,650	3,738
Total Assets:
Total assets	271,750		285,027
Electronics [Member] | Operating Segments [Member]
Net Sales:
Net sales	79,814	99,568
Electronics [Member] | Inter-Segment Sales [Member]
Net Sales:
Net sales	8,268	8,722
Stoneridge Brazil [Member]
Net Sales:
Net sales	14,570	17,332
Operating Income (Loss)
Total operating income (loss)	859	670
Depreciation and Amortization:
Total depreciation and amortization	1,450	1,525
Interest Expense, net:
Total interest expense, net	10	108
Capital Expenditures:
Capital expenditures	1,133	819
Total Assets:
Total assets	65,258		89,393
Stoneridge Brazil [Member] | Operating Segments [Member]
Net Sales:
Net sales	14,570	17,338
Stoneridge Brazil [Member] | Inter-Segment Sales [Member]
Net Sales:
Net sales		6
Unallocated Corporate [Member]
Operating Income (Loss)
Total operating income (loss)	(7,394)	(9,950)
Depreciation and Amortization:
Total depreciation and amortization	526	213
Interest Expense, net:
Total interest expense, net	852	657
Capital Expenditures:
Capital expenditures	572	$ 635
Total Assets:
Total assets	$ 390,475		$ 358,766

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Equity and Accumulated Other Comprehensive Loss (Changes in Accumulated Other Comprehensive Loss by Component) (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Equity and Accumulated Other Comprehensive Loss [Abstract]
Foreign currency translation, Beginning balance		$ (91,472)	$ (86,044)
Foreign currency translation, Other comprehensive income (loss) before reclassifications		(17,119)	(3,804)
Foreign currency translation, Net other comprehensive income (loss), net of tax		(17,119)	(3,804)
Foreign currency translation, Ending balance		(108,591)	(89,848)
Unrealized gain (loss) on on derivatives, Beginning balance			292
Unrealized gain (loss) on on derivatives, Other comprehensive income (loss) before reclassifications		(3,781)	213
Unrealized gain (loss) on on derivatives, Amounts reclassified from accumulated other comprehensive loss		126	(171)
Unrealized gain (loss) on on derivatives, Net other comprehensive income (loss), net of tax	[1]	(3,655)	42
Unrealized gain (loss) on on derivatives, Ending balance		(3,655)	334
Total, Other comprehensive income (loss) before reclassifications		(20,900)	(3,591)
Total, Amounts reclassified from accumulated other comprehensive loss		126	(171)
Total, Net other comprehensive income (loss), net of tax		(20,774)	(3,762)
Accumulated other comprehensive income (loss), net of tax, total		$ (112,246)	$ (89,514)	$ (91,472)	$ (85,752)

[1] Net of tax (benefit) expense of $(972) and $11 for the three months ended March 31, 2020 and 2019, respectively.

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Business Realignment and Restructuring (Schedule of Restructuring and Related Costs) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Canton Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning Balance	$ 2,636	$ 1,980
Charge to expense	2,222		$ 2,225
Cash payments	(4,541)		(245)
Restructuring Reserve, Ending Balance	317		1,980
Control Devices [Member]
Restructuring Cost and Reserve [Line Items]
Charge to expense	2,222		2,225
Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning Balance	52	49	656
Charge to expense	7		216
Cash payments	(7)	(725)
Utilization, Non-Cash			(98)
Restructuring Reserve, Ending Balance	52		49
Employee Termination [Member] | Canton Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning Balance	2,636	1,980
Charge to expense	1,118		1,980
Cash payments	(3,437)
Restructuring Reserve, Ending Balance	317		1,980
Employee Termination [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning Balance	52	49	520
Charge to expense			(15)
Cash payments		(456)
Restructuring Reserve, Ending Balance	52		49
Accelerated Depreciation [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Charge to expense			98
Utilization, Non-Cash			(98)
Contract Termination [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning Balance			17
Charge to expense			16
Cash payments		(33)
Other Restructuring [Member] | Canton Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Charge to expense	1,104		245
Cash payments	(1,104)		(245)
Other Restructuring [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Reserve, Beginning Balance			119
Charge to expense	7		$ 117
Cash payments	$ (7)	$ (236)

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Financial Instruments and Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Financial Instruments and Fair Value Measurements [Abstract]

Financial Instruments and Fair Value Measurements

(5) Financial Instruments and Fair Value Measurements

Financial Instruments

A financial instrument is cash or a contract that imposes an obligation to deliver or conveys a right to receive cash or another financial instrument. 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.

Derivative Instruments and Hedging Activities

On March 31, 2020, the Company had open foreign currency forward contracts which are used solely for hedging and not for speculative purposes. Management believes that its use of these instruments to reduce risk is in the Company’s best interest. The counterparties to these financial instruments are financial institutions with investment grade credit ratings.

Foreign Currency Exchange Rate Risk

The Company conducts business internationally and therefore is exposed to foreign currency exchange rate risk. The Company uses derivative financial instruments as cash flow hedges to manage its exposure to fluctuations in foreign currency exchange rates by reducing the effect of such fluctuations on foreign currency denominated intercompany transactions, inventory purchases and other foreign currency exposures. The Company hedged the euro and Mexican peso currencies during 2020 and the Mexican peso in 2019.

These forward contracts were executed to hedge forecasted transactions and have been accounted for as cash flow hedges. As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive income, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated other comprehensive income will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. The cash flow hedges were highly effective. 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 condensed consolidated statement of operations as a component of other income (loss), net. At March 31, 2020, all of the Company’s foreign currency forward contracts were designated as cash flow hedges.

The Company’s foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows:

U.S. dollar-denominated Foreign Currency Forward Contracts – Cash Flow Hedges

During the quarter, The Company entered into U.S. dollar-denominated currency contracts on behalf of one of its European Electronics subsidiaries, whose functional currency is the euro, with a notional amount at March 31, 2020 of $2,100 which expire ratably on a monthly basis from April 2020 through December 2020. There were no such contracts at December 31, 2019.

Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedge

The Company holds Mexican peso-denominated foreign currency forward contracts with a notional amount at March 31, 2020 of $22,746 which expire ratably on a monthly basis from April 2020 to March 2021. There were no open Mexican peso-denominated foreign currency forward contracts at December 31, 2019.

The Company evaluated the effectiveness of the Mexican peso and euro-denominated forward contracts held as of March 31, 2020 and 2019, and for the three months then ended, and concluded that the hedges were effective.

Interest Rate Risk

Interest Rate Risk – Cash Flow Hedge

On February 18, 2020, the Company entered into a floating-to-fixed interest rate swap agreement (the “Swap”) with a notional amount of $50,000 to hedge its exposure to interest payment fluctuations on a portion of its 2019 Credit Facility. The Swap was designated as a cash flow hedge of the variable interest rate obligation under the Company's 2019 Credit Facility that has a current balance of $161,000 at March 31, 2020. The Swap agreement settles each month on the same day that the 2019 Credit Facility interest payments are due and has a maturity date of March 10, 2023 which is prior to the 2019 Credit Facility maturity date of June 4, 2024. Under the Swap terms, the Company pays a fixed interest rate and receives a floating interest rate based on the one-month LIBOR, with a floor. The critical terms of the Swap are aligned with the terms of the 2019 Credit Facility, resulting in no hedge ineffectiveness. The difference between amounts to be received and paid under the Swap is recognized as a component of interest expense, net on the condensed consolidated statements of operations. The Swap increased interest expense by $4 for the three months ended March 31, 2020.

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

					Prepaid expenses				Accrued expenses and
	Notional amounts (A)				and other current assets				other current liabilities
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2020		2019		2020		2019		2020		2019
Derivatives designated as hedging instruments:
Cash flow hedges:
Forward currency contracts	$	24,846	$	-	$	66	$	-	$	3,230	$	-
Interest rate swap contract	$	50,000		-		-		-	$	1,463	$	-

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

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

					Gain (loss) reclassified from
	Gain (loss) recorded in other				other comprehensive income
	comprehensive income (loss) (A)				(loss) into net income (B)
	2020		2019		2020		2019
Derivatives designated as cash flow hedges:
Forward currency contracts	$	(3,320)	$	269	$	(156)	$	216
Interest rate swap		(1,467)		-		(4)		-

(A) For the three months ended March 31, 2020, the total net losses on the foreign currency contract cash flow hedges of $3,164 are expected to be included in cost of goods sold (“COGS”) and design and development (“D&D”) within the next 12 months. Of the total net losses on the interest rate swap cash flow hedges, approximately $545 of losses are expected to be included in interest expense within the next 12 months and $918 of losses are expected to be included in interest expense in subsequent periods.

(B) Gains (losses) reclassified from other comprehensive income (loss) into net income recognized in COGS in the Company’s condensed consolidated statements of operations were $(127) and $173 for the three months ended March 31, 2020 and 2019, respectively. Gains (losses) reclassified from other comprehensive income (loss) into net income recognized in design and development D&D in the Company’s condensed consolidated statements of operations were $(29) and $43 for the three months ended March 31, 2020 and 2019, respectively. Losses reclassified from other comprehensive income (loss) into net income recognized in interest expense in the Company’s condensed consolidated statements of operations was $4 for the three months ended March 31, 2020.

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

Fair Value Measurements

The Company’s assets and liabilities are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used. Fair values estimated using Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values estimated using Level 2 inputs, other than quoted prices, are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency contracts, inputs include foreign currency exchange rates. For the interest rate swap, inputs include LIBOR. Fair values estimated using Level 3 inputs consist of significant unobservable inputs.

The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used.

								March 31,		December 31,
			2020						2019
			Fair values estimated using
			Level 1		Level 2		Level 3
	Fair value		inputs		inputs		inputs		Fair value
Financial assets carried at fair value:
Forward currency contract	$	66	$	-	$	66	$	-	$	-
Total financial assets carried at fair value	$	66	$	-	$	66	$	-	$	-
Financial liabilities carried at fair value:
Forward currency contracts	$	3,230	$	-	$	3,230	$	-	$	-
Interest rate swap		1,463		-		1,463		-		-
Earn-out consideration		8,610		-		-		8,610		12,011
Total financial liabilities carried at fair value	$	13,303	$	-	$	4,693	$	8,610	$	12,011

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.

	Stoneridge Brazil		Total
Balance at December 31, 2019	$	12,011	$	12,011
Change in fair value		(633)		(633)
Foreign currency adjustments		(2,768)		(2,768)
Balance at March 31, 2020	$	8,610	$	8,610

	Orlaco		Stoneridge Brazil		Total
Balance at December 31, 2018	$	8,602	$	10,070	$	18,672
Change in fair value		-		469		469
Foreign currency adjustments		(128)		(133)		(261)
Earn-out consideration cash payment		(8,474)		-		(8,474)
Balance at March 31, 2019	$	-	$	10,406	$	10,406

The Company will be required to pay the Stoneridge Brazil earn-out consideration, which is not capped, based on Stoneridge Brazil’s financial performance in either 2020 or 2021. The fair value of the Stoneridge Brazil earn-out consideration is based on discounted cash flows utilizing forecasted earnings before interest, depreciation and amortization (“EBITDA”) in 2020 and 2021 using the key inputs of forecasted sales and expected operating income reduced by the market required rate of return. The former Stoneridge Brazil owners may choose either the 2020 or 2021 financial performance period to be used to determine the earn-out consideration payment. The former Stoneridge Brazil owners must choose the 2020 financial performance period by March 31, 2021 otherwise the 2021 financial performance period will automatically be used. The earn-out consideration obligation related to Stoneridge Brazil is recorded within other long-term liabilities in the consolidated balance sheets as of March 31, 2020 and December 31, 2019.

The change in fair value of the earn-out consideration for Stoneridge Brazil was primarily due to favorable foreign currency translation and updated forecast projections offset by the reduced time from the current period end to the payment date. The foreign currency impact for the Stoneridge Brazil earn-out considerations is included in other (income) expense, net in the condensed consolidated statements of operations.

The fair value of the Orlaco earn-out consideration was based on a Monte Carlo simulation utilizing forecasted EBITDA for the 2017 and 2018 earn-out period as well as a growth rate reduced by the market required rate of return. The change in fair value of the earn-out considerations was recorded within selling, general and administrative (“SG&A”) expense in the consolidated statements of operations for the years ended December 31, 2019 and 2018.

The Orlaco earn-out consideration reached the capped amount of €7,500 as of the quarter ended March 31, 2018 due to actual performance exceeding forecasted performance and remained at the capped amount until it was paid out in March 2019 for $8,474. The earn-out consideration payout was recorded in the condensed consolidated statement of cash flows within operating and financing activities in the amounts of $5,080 and $3,394, respectively, for the three months ended March 31, 2019.

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the three months ended March 31, 2020.

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Equity and Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2020

Equity and Accumulated Other Comprehensive Loss [Abstract]

Equity and Accumulated Other Comprehensive Loss

(9)  Equity and Accumulated Other Comprehensive Loss

Common Share Repurchase

On October 26, 2018, the Company’s Board of Directors authorized the Company to repurchase up to $50,000 of Common Shares. Thereafter, on May 7, 2019, the Company entered into a Master Confirmation (the “Master Confirmation”) and a Supplemental Confirmation, together with the Master Confirmation, the Accelerated Share Repurchase Agreement (“ASR Agreement”), with Citibank N.A. (the “Bank”) to purchase Company Common Shares for a payment of $50,000 (the “Prepayment Amount”). Under the terms of the ASR Agreement, on May 7, 2019, the Company paid the Prepayment Amount to the Bank and received on May 8, 2019 an initial delivery of 1,349,528 Company Common Shares, which approximated 80% of the total number of Company Common Shares expected to be repurchased under the ASR Agreement based on the closing price of the Company’s Common Shares on May 7, 2019. These Common Shares became treasury shares and were recorded as a $40,000 reduction to shareholder’s equity. The remaining $10,000 of the Prepayment Amount was recorded as a reduction to shareholders’ equity as an unsettled forward contract indexed to our Common Shares.

On February 25, 2020, the Bank notified the Company that it terminated early its commitment pursuant the ASR Agreement and would deliver 364,604 Common Shares on February 27, 2020 based on the volume weighted average price of our Common Shares during the term set forth in the ASR Agreement. The Bank’s notice of early termination and the subsequent delivery of Common Shares represents the final settlement of the Company’s share repurchase program pursuant to the accelerated share repurchase agreement. These Common Shares became treasury shares and were recorded as a $10,000 reduction to shareholders’ equity as Common Shares held in treasury with the offset of $10,000 to additional paid-in capital.

On February 24, 2020, the Company’s Board of Directors authorized a new repurchase program of $50,000 for the repurchase of the Company’s outstanding Common Shares over the next 18 months. The repurchases may be made from time to time in either open market transactions or in privately negotiated transactions. Repurchases may also be made under Rule 10b-18 plans, which permit Common Shares to be repurchased through pre-determined criteria.

On March 3, 2020, the Company entered into a 10b-18 Agreement Letter (the “10b-18 Agreement”), with Citibank N.A. (the “Bank”) to purchase Company Common Shares, under purchasing conditions of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 10b-18”), for up to $5,000. Under the terms of the 10b18 Agreement, commencing March 3, 2020 and ending March 6, 2020, the Company received delivery of a total of 242,634 Company Common Shares for the amount of $4,995. These Common Shares became treasury shares and were recorded as a $4,995 reduction to shareholders’ equity as Common Shares held in treasury.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 were as follows:

		Foreign		Unrealized
		currency		gain (loss)
		translation		on derivatives	Total
Balance at January 1, 2020	$	(91,472)	$	-	$	(91,472)
Other comprehensive loss before reclassifications		(17,119)		(3,781)		(20,900)
Amounts reclassified from accumulated other comprehensive loss		-		126		126
Net other comprehensive loss, net of tax		(17,119)		(3,655)		(20,774)
Balance at March 31, 2020	$	(108,591)	$	(3,655)	$	(112,246)
Balance at January 1, 2019	$	(86,044)	$	292	$	(85,752)
Other comprehensive (loss) income before reclassifications		(3,804)		213		(3,591)
Amounts reclassified from accumulated other comprehensive loss		-		(171)		(171)
Net other comprehensive (loss) income, net of tax		(3,804)		42		(3,762)
Balance at March 31, 2019	$	(89,848)	$	334	$	(89,514)

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

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

Three months ended March 31,	2020		2019
Net Sales:
Control Devices	$	96,850	$	110,119
Inter-segment sales		1,347		1,861
Control Devices net sales		98,197		111,980
Electronics		71,546		90,846
Inter-segment sales		8,268		8,722
Electronics net sales		79,814		99,568
Stoneridge Brazil		14,570		17,332
Inter-segment sales		-		6
Stoneridge Brazil net sales		14,570		17,338
Eliminations		(9,615)		(10,589)
Total net sales	$	182,966	$	218,297
Operating Income (Loss):
Control Devices	$	7,322	$	11,948
Electronics		2,872		9,031
Stoneridge Brazil		859		670
Unallocated Corporate (A)		(7,394)		(9,950)
Total operating income	$	3,659	$	11,699
Depreciation and Amortization:
Control Devices	$	3,530	$	3,094
Electronics		2,481		2,397
Stoneridge Brazil		1,450		1,525
Unallocated Corporate		526		213
Total depreciation and amortization (B)	$	7,987	$	7,229
Interest Expense, net:
Control Devices	$	81	$	182
Electronics		87		56
Stoneridge Brazil		10		108
Unallocated Corporate		852		657
Total interest expense, net	$	1,030	$	1,003
Capital Expenditures:
Control Devices	$	2,314	$	3,492
Electronics		2,650		3,738
Stoneridge Brazil		1,133		819
Unallocated Corporate(C)		572		635
Total capital expenditures	$	6,669	$	8,684

	March 31,		December 31,
	2020		2019
Total Assets:
Control Devices	$	189,348	$	191,491
Electronics		271,750		285,027
Stoneridge Brazil		65,258		89,393
Corporate (C)		390,475		358,766
Eliminations		(316,341)		(322,468)
Total assets	$	600,490	$	602,209

Schedule Of Revenue From External Customers and Long-Lived Assets, By Geographical Areas [Table Text Block]

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

Three months ended March 31,	2020		2019
Net Sales:
North America	$	99,851	$	119,367
South America		14,570		17,332
Europe and Other		68,545		81,598
Total net sales	$	182,966	$	218,297

	March 31,		December 31,
	2020		2019
Long-term Assets:
North America	$	87,375	$	87,430
South America		37,446		52,518
Europe and Other		126,410		130,995
Total long-term assets	$	251,231	$	270,943

(A) Unallocated Corporate expenses include, among other items, accounting/finance, human resources, information technology and legal costs as well as share-based compensation.

(B) These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets.

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

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Weighted-Average Number of Shares

Weighted-average Common Shares outstanding used in calculating basic and diluted earnings per share were as follows:

Three months ended March 31,	2020	2019
Basic weighted-average Common Shares outstanding	27,232,036	28,529,301
Effect of dilutive shares	359,135	555,507
Diluted weighted-average Common Shares outstanding	27,591,171	29,084,808

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Inventories (Narrative) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventories [Abstract]
Inventory amount, FIFO	$ 86,807	$ 82,910
Inventory amount, weighted average cost	$ 8,970	$ 10,539

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Tax (benefit) expense	$ (972)	$ 11

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 81,305	$ 69,403
Accounts receivable, less reserves of $813 and $1,289, respectively	138,438	138,564
Inventories, net	95,777	93,449
Prepaid expenses and other current assets	33,739	29,850
Total current assets	349,259	331,266
Long-term assets:
Property, plant and equipment, net	116,149	122,483
Intangible assets, net	51,463	58,122
Goodwill	35,279	35,874
Operating lease right-of-use asset	20,316	22,027
Investments and other long-term assets, net	28,024	32,437
Total long-term assets	251,231	270,943
Total assets	600,490	602,209
Current liabilities:
Current portion of debt	2,516	2,672
Accounts payable	79,222	80,701
Accrued expenses and other current liabilities	48,731	55,223
Total current liabilities	130,469	138,596
Long-term liabilities:
Revolving credit facility	161,000	126,000
Long-term debt, net	255	454
Deferred income taxes	11,335	12,530
Operating lease long-term liability	16,569	17,971
Other long-term liabilities	13,569	16,754
Total long-term liabilities	202,728	173,709
Shareholders' equity:
Preferred Shares, without par value, 5,000 shares authorized, none issued
Common Shares, without par value, 60,000 shares authorized, 28,966 and 28,966 shares issued and 26,993 and 27,408 shares outstanding at March 31, 2020 and December 31, 2019, respectively, with no stated value
Additional paid-in capital	230,506	225,607
Common Shares held in treasury, 1,973 and 1,558 shares at March 31, 2020 and December 31, 2019, respectively, at cost	(60,999)	(50,773)
Retained earnings	210,032	206,542
Accumulated other comprehensive loss	(112,246)	(91,472)
Total Shareholders' equity	267,293	289,904
Total liabilities and shareholders' equity	$ 600,490	$ 602,209

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Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt [Abstract]

Schedule of Debt

Debt consisted of the following at March 31, 2020 and December 31, 2019:

	March 31,		December 31,		Interest rates at
	2020		2019		March 31, 2020	Maturity
Revolving Credit Facility
Credit Facility	$	161,000	$	126,000	1.67 - 2.04%	June 2024
Debt
Stoneridge Brazil long-term notes		653		972	7.00%	November 2021
Suzhou short-term credit line		2,118		2,154	4.70% - 5.00%	August 2020
Total debt		2,771		3,126
Less: current portion		(2,516)		(2,672)
Total long-term debt, net	$	255	$	454

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Segment Reporting

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segment Reporting

(13) 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.

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, camera-based vision systems, connectivity and compliance products and electronic control units. The Stoneridge Brazil reportable segment designs and manufactures electronic vehicle tracking devices and monitoring services, vehicle security alarms and convenience accessories, in-vehicle audio and infotainment devices and telematics solutions.

The accounting policies of the Company’s reportable segments are the same as those described in Note 2, “Summary of Significant Accounting Policies” of the Company’s 2019 Form 10-K. The Company’s management evaluates the performance of its reportable segments based primarily on revenues from external customers, capital expenditures and operating income. Inter-segment sales are accounted for on terms similar to those to third parties and are eliminated upon consolidation.

The financial information presented below is for our three reportable operating segments and includes adjustments for unallocated corporate costs and intercompany eliminations, where applicable. Such costs and eliminations do not meet the requirements for being classified as an operating segment. Corporate costs include various support functions, such as corporate accounting/finance, executive administration, human resources, information technology and legal.

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

Three months ended March 31,	2020		2019
Net Sales:
Control Devices	$	96,850	$	110,119
Inter-segment sales		1,347		1,861
Control Devices net sales		98,197		111,980
Electronics		71,546		90,846
Inter-segment sales		8,268		8,722
Electronics net sales		79,814		99,568
Stoneridge Brazil		14,570		17,332
Inter-segment sales		-		6
Stoneridge Brazil net sales		14,570		17,338
Eliminations		(9,615)		(10,589)
Total net sales	$	182,966	$	218,297
Operating Income (Loss):
Control Devices	$	7,322	$	11,948
Electronics		2,872		9,031
Stoneridge Brazil		859		670
Unallocated Corporate (A)		(7,394)		(9,950)
Total operating income	$	3,659	$	11,699
Depreciation and Amortization:
Control Devices	$	3,530	$	3,094
Electronics		2,481		2,397
Stoneridge Brazil		1,450		1,525
Unallocated Corporate		526		213
Total depreciation and amortization (B)	$	7,987	$	7,229
Interest Expense, net:
Control Devices	$	81	$	182
Electronics		87		56
Stoneridge Brazil		10		108
Unallocated Corporate		852		657
Total interest expense, net	$	1,030	$	1,003
Capital Expenditures:
Control Devices	$	2,314	$	3,492
Electronics		2,650		3,738
Stoneridge Brazil		1,133		819
Unallocated Corporate(C)		572		635
Total capital expenditures	$	6,669	$	8,684

	March 31,		December 31,
	2020		2019
Total Assets:
Control Devices	$	189,348	$	191,491
Electronics		271,750		285,027
Stoneridge Brazil		65,258		89,393
Corporate (C)		390,475		358,766
Eliminations		(316,341)		(322,468)
Total assets	$	600,490	$	602,209

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

Three months ended March 31,	2020		2019
Net Sales:
North America	$	99,851	$	119,367
South America		14,570		17,332
Europe and Other		68,545		81,598
Total net sales	$	182,966	$	218,297

	March 31,		December 31,
	2020		2019
Long-term Assets:
North America	$	87,375	$	87,430
South America		37,446		52,518
Europe and Other		126,410		130,995
Total long-term assets	$	251,231	$	270,943

(A) Unallocated Corporate expenses include, among other items, accounting/finance, human resources, information technology and legal costs as well as share-based compensation.

(B) These amounts represent depreciation and amortization on property, plant and equipment and certain intangible assets.

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

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Revenue (Tables)

3 Months Ended

Mar. 31, 2020

Revenue [Abstract]

Revenue by Segment and Geographical Location

The following tables disaggregate our revenue by reportable segment and geographical location⁽¹⁾ for the periods ended March 31, 2020 and 2019:

	Control Devices				Electronics				Stoneridge Brazil				Consolidated
Three months ended March 31,	2020		2019		2020		2019		2020		2019		2020		2019
Net Sales:
North America	$	80,410	$	96,720	$	19,441	$	22,647	$	-	$	-	$	99,851	$	119,367
South America		-		-		-		-		14,570		17,332		14,570		17,332
Europe		7,388		4,412		51,306		66,942		-		-		58,694		71,354
Asia Pacific		9,052		8,987		799		1,257		-		-		9,851		10,244
Total net sales	$	96,850	$	110,119	$	71,546	$	90,846	$	14,570	$	17,332	$	182,966	$	218,297

(1) Company sales based on geographic location are where the sale originates not where the customer is located.

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Financial Instruments and Fair Value Measurements (Summary of the change in fair value of the Level 3 financial liabilities related to earn-out consideration) (Details) - Earnout Consideration [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial liability, Beginning balance	$ 12,011	$ 18,672
Change in fair value	(633)	469
Foreign currency adjustments	(2,768)	(261)
Earn-out consideration cash payment		(8,474)
Financial liability, Ending balance	8,610	10,406
Orlaco [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial liability, Beginning balance		8,602
Foreign currency adjustments		(128)
Earn-out consideration cash payment		(8,474)
Stoneridge Brazil [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Financial liability, Beginning balance	12,011	10,070
Change in fair value	(633)	469
Foreign currency adjustments	(2,768)	(133)
Financial liability, Ending balance	$ 8,610	$ 10,406

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Financial Instruments and Fair Value Measurements (Narrative) (Details) € in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Feb. 18, 2020 USD ($)	Dec. 31, 2019 USD ($)	Mar. 31, 2018 EUR (€)
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Borrowings outstanding	$ 161,000			$ 126,000
Interest expense	1,030	$ 1,003
Payment of earn-out consideration paid within operating activities	(633)	469
Earn-out consideration cash payment within financing activities		3,394
Transfers in or out of Level 3	0
Cash Flow Hedging [Member] | U.S. Dollar Denominated Foreign Currency Forward Contracts Euro Functional Currency [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Notional amounts	2,100			0
Cash Flow Hedging [Member] | Mexican Peso-Denominated Foreign Currency Forward Contracts [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Notional amounts	22,746			$ 0
Cash Flow Hedging [Member] | Interest Rate Swap [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Notional amounts			$ 50,000
Interest expense	4
Cash Flow Hedging [Member] | Interest Rate Swap [Member] | Credit Facility [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Borrowings outstanding	161,000
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Forward Currency Contracts [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Notional amounts	24,846
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest Rate Swap [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Notional amounts	50,000
Electronics [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Interest expense	$ 87	56
Orlaco [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Earn-out consideration		8,474			€ 7,500
Payment of earn-out consideration paid within operating activities		5,080
Earn-out consideration cash payment within financing activities		$ 3,394

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Earnings Per Share (Narrative) (Details) - shares	Mar. 31, 2020	Mar. 31, 2019
Performance Based Right to Receive Common Shares [Member]
Common shares, non-vested	789,027	691,207

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Subsequent Events (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended
	May 04, 2020	Jun. 30, 2020
Subsequent Event [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restructuring initiation date	May 04, 2020
Percentage reduction in global salaried workforce	5.00%
Maximum [Member] | Scenario, Forecast [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Severance costs		$ 2,000
Minimum [Member] | Scenario, Forecast [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Severance costs		$ 1,500

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Taxes [Abstract]

Income Taxes

(12) Income Taxes

In the three months ended March 31, 2020, income tax expense of $1,213 was attributable to the mix of earnings among tax jurisdictions as well as valuation allowances in certain jurisdictions. The effective tax rate of 25.8% is greater than the statutory rate primarily due to losses incurred in jurisdictions for which a valuation allowance is recorded.

In the three months ended March 31, 2019, income tax expense of $1,835 was attributable to the mix of earnings among tax jurisdictions as well as the favorable benefit related to the annual vesting of share-based compensation. The effective tax rate of 16.0% is lower than the statutory rate primarily due to the annual vesting of share-based compensation.

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

(16) Subsequent Events

On May 4, 2020, the Company undertook business realignment actions that resulted in the reduction of our global salaried workforce by approximately 5.0%. These actions were made to better align our resources and cost structure with our current business opportunities and market outlook as well as respond to the COVID-19 pandemic. One-time separation costs of $1,500 to $2,000 associated with these realignment actions are expected to be incurred in the second quarter of 2020.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
OPERATING ACTIVITIES:
Net income	$ 3,490	$ 9,657
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation	6,650	5,697
Amortization, including accretion and write-off of deferred financing costs	1,429	1,613
Deferred income taxes	76	(2,979)
Earnings of equity method investee	(457)	(364)
Loss (gain) on sale of fixed assets	131	(1)
Share-based compensation expense	1,372	1,548
Change in fair value of earn-out contingent consideration	(633)	469
Change in fair value of venture capital fund	39	(16)
Excess tax deficiency (benefit) related to share-based compensation expense	17	(656)
Changes in operating assets and liabilities, net of effect of business combination:
Accounts receivable, net	(3,730)	(17,821)
Inventories, net	(5,838)	(13,655)
Prepaid expenses and other assets	(3,702)	(660)
Accounts payable	2,327	16,395
Accrued expenses and other liabilities	(7,733)	(4,836)
Net cash used for operating activities	(6,562)	(5,609)
INVESTING ACTIVITIES:
Capital expenditures, including intangibles	(7,140)	(8,684)
Proceeds from sale of fixed assets	8	1
Investment in venture capital fund		(400)
Net cash used for investing activities	(7,132)	(9,083)
FINANCING ACTIVITIES:
Revolving credit facility borrowings	71,500
Revolving credit facility payments	(36,500)	(5,000)
Proceeds from issuance of debt	1,958	34
Repayments of debt	(2,076)	(690)
Earn-out consideration cash payment		(3,394)
Other financing costs	(1)	(2)
Common Share repurchase program	(4,995)
Repurchase of Common Shares to satisfy employee tax withholding	(1,687)	(2,945)
Net cash provided by (used for) financing activities	28,199	(11,997)
Effect of exchange rate changes on cash and cash equivalents	(2,603)	(1,317)
Net change in cash and cash equivalents	11,902	(28,006)
Cash and cash equivalents at beginning of period	69,403	81,092
Cash and cash equivalents at end of period	81,305	53,086
Supplemental disclosure of cash flow information:
Cash paid for interest	1,150	1,109
Cash paid for income taxes, net	$ 1,832	$ 3,327

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, reserves (in dollars)	$ 813	$ 1,289
Preferred shares, no par value	$ 0	$ 0
Preferred shares, authorized	5,000	5,000
Preferred shares, issued	0	0
Common shares, no par value	$ 0	$ 0
Common shares, authorized	60,000	60,000
Common shares, issued	28,966	28,966
Common shares, outstanding	26,993	27,408
Common shares held in treasury, shares	1,973	1,558

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Financial Instruments and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2020

Financial Instruments and Fair Value Measurements [Abstract]

Notional Amounts and Fair Values of Derivative Instruments in the Consolidated Balance

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

					Prepaid expenses				Accrued expenses and
	Notional amounts (A)				and other current assets				other current liabilities
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2020		2019		2020		2019		2020		2019
Derivatives designated as hedging instruments:
Cash flow hedges:
Forward currency contracts	$	24,846	$	-	$	66	$	-	$	3,230	$	-
Interest rate swap contract	$	50,000		-		-		-	$	1,463	$	-

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

Amounts Recorded for the Cash Flow Hedges in Other Comprehensive Income (Loss) in Shareholders' Equity and in Net Income

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

					Gain (loss) reclassified from
	Gain (loss) recorded in other				other comprehensive income
	comprehensive income (loss) (A)				(loss) into net income (B)
	2020		2019		2020		2019
Derivatives designated as cash flow hedges:
Forward currency contracts	$	(3,320)	$	269	$	(156)	$	216
Interest rate swap		(1,467)		-		(4)		-

(A) For the three months ended March 31, 2020, the total net losses on the foreign currency contract cash flow hedges of $3,164 are expected to be included in cost of goods sold (“COGS”) and design and development (“D&D”) within the next 12 months. Of the total net losses on the interest rate swap cash flow hedges, approximately $545 of losses are expected to be included in interest expense within the next 12 months and $918 of losses are expected to be included in interest expense in subsequent periods.

(B) Gains (losses) reclassified from other comprehensive income (loss) into net income recognized in COGS in the Company’s condensed consolidated statements of operations were $(127) and $173 for the three months ended March 31, 2020 and 2019, respectively. Gains (losses) reclassified from other comprehensive income (loss) into net income recognized in design and development D&D in the Company’s condensed consolidated statements of operations were $(29) and $43 for the three months ended March 31, 2020 and 2019, respectively. Losses reclassified from other comprehensive income (loss) into net income recognized in interest expense in the Company’s condensed consolidated statements of operations was $4 for the three months ended March 31, 2020.

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

Schedule of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used.

								March 31,		December 31,
			2020						2019
			Fair values estimated using
			Level 1		Level 2		Level 3
	Fair value		inputs		inputs		inputs		Fair value
Financial assets carried at fair value:
Forward currency contract	$	66	$	-	$	66	$	-	$	-
Total financial assets carried at fair value	$	66	$	-	$	66	$	-	$	-
Financial liabilities carried at fair value:
Forward currency contracts	$	3,230	$	-	$	3,230	$	-	$	-
Interest rate swap		1,463		-		1,463		-		-
Earn-out consideration		8,610		-		-		8,610		12,011
Total financial liabilities carried at fair value	$	13,303	$	-	$	4,693	$	8,610	$	12,011

Summary of the Change in Fair Value of the Level 3 Financial Liabilities Related to Contingent Consideration

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.

	Stoneridge Brazil		Total
Balance at December 31, 2019	$	12,011	$	12,011
Change in fair value		(633)		(633)
Foreign currency adjustments		(2,768)		(2,768)
Balance at March 31, 2020	$	8,610	$	8,610

	Orlaco		Stoneridge Brazil		Total
Balance at December 31, 2018	$	8,602	$	10,070	$	18,672
Change in fair value		-		469		469
Foreign currency adjustments		(128)		(133)		(261)
Earn-out consideration cash payment		(8,474)		-		(8,474)
Balance at March 31, 2019	$	-	$	10,406	$	10,406

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Earnings Per Share (Weighted Average Shares Outstanding Used in Calculating Basic and Diluted Net Income Per Share) (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Basic weighted-average Common Shares outstanding	27,232,036	28,529,301
Effect of dilutive shares	359,135	555,507
Diluted weighted-average Common Shares outstanding	27,591,171	29,084,808

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Share-Based Compensation (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 1,372	$ 1,548

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Financial Instruments and Fair Value Measurements (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value) (Details) - Cash Flow Hedging [Member] - USD ($) $ in Thousands	Mar. 31, 2020	Feb. 18, 2020
Forward Currency Contracts [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Notional amounts	$ 24,846
Interest Rate Swap [Member]
Derivatives, Fair Value [Line Items]
Notional amounts		$ 50,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Notional amounts	50,000
Prepaid Expenses and Other Current Assets [Member] | Forward Currency Contracts [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Financial assets carried at fair value	66
Accrued Expenses and Other Current Liabilities [Member] | Forward Currency Contracts [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Financial liabilities carried at fair value	3,230
Accrued Expenses and Other Current Liabilities [Member] | Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Financial liabilities carried at fair value	$ 1,463

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Disposal of Non-Core Products (Disposal of Non-Core Products) (Details) - USD ($) $ in Thousands		3 Months Ended
	Apr. 01, 2019	Mar. 31, 2020	Mar. 31, 2019
Asset Purchase Agreement date		Apr. 01, 2019
Proceeds from sale of productive assets	$ 40,000
Selling, general and administrative		$ 29,503	$ 35,910
Non-core Switches and Connector Product [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Disposal group, net sales		0	11,230
Disposal group, operating income			3,112
Control Devices [Member] | Non-core Switches and Connector Product [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Selling, general and administrative			$ 322
Services provided income per agreement recognized as reduction to selling general and administrative expenses		$ 21

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Equity and Accumulated Other Comprehensive Loss (Common Share Repurchase) (Details) - USD ($) $ in Thousands							3 Months Ended
	Mar. 06, 2020	Mar. 06, 2020	Mar. 03, 2020	Feb. 25, 2020	Feb. 24, 2020	May 07, 2019	Mar. 31, 2020	Oct. 26, 2018
Stock Repurchase Program, Authorized Amount					$ 50,000			$ 50,000
Payments for repurchase of common stock							$ 4,995
Weighted average price of common shares				364,604
Period over which shares will be repurchased					18 months
Accelerated Share Repurchase Agreement [Member]
Payments for repurchase of common stock						$ 50,000
Stock repurchased and retired during period, shares						1,349,528
Percentage of expected shares repurchased						80.00%
Treasury stock, retired, cost method, amount						$ 40,000
Equity increase (decrease) related to shares repurchase program.						$ 10,000
Agreement Letter 10b18 [Member]
Stock Repurchase Program, Authorized Amount			$ 5,000
Treasury stock, retired, cost method, amount			$ 4,995
Total company common shares	242,634
Treasury shares
Treasury stock, retired, cost method, amount				$ (10,000)
Additional Paid-In Capital
Treasury stock, retired, cost method, amount				$ 10,000
Additional Paid-In Capital | Agreement Letter 10b18 [Member]
Treasury stock, retired, cost method, amount		$ 4,995

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Business Realignment and Restructuring (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 7	$ 216
Additional restructuring costs	750
Control Devices [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	2,222	2,225
Canton Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	2,222	2,225
Canton Facility Restructuring Plan [Member] | Control Devices [Member]
Restructuring Cost and Reserve [Line Items]
Estimated total cost	700
Employee Termination [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		(15)
Employee Termination [Member] | Canton Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,118	1,980
Other Restructuring [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	7	117
Other Restructuring [Member] | Canton Facility Restructuring Plan [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,104	245
Contract Termination [Member] | Electronics [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges		16
Selling, General and Administrative Expenses [Member] | Canton Facility Restructuring Plan [Member] | Canton Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	314	195
Cost of Goods Sold [Member] | Canton Facility Restructuring Plan [Member] | Canton Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,490	1,252
Design and Development Expense [Member] | Canton Facility Restructuring Plan [Member] | Canton Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 418	$ 778

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Segment Reporting (Narrative) (Details)	3 Months Ended
	Mar. 31, 2020 segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Inventories

3 Months Ended

Mar. 31, 2020

Inventories [Abstract]

Inventories

(4) Inventories

Inventories are valued at the lower of cost (using either the first-in, first-out (“FIFO”) or average cost methods) or net realizable value. The Company evaluates and adjusts as necessary its excess and obsolescence reserve on a quarterly basis. Excess inventories are quantities of items that exceed anticipated sales or usage for a reasonable period. The Company has guidelines for calculating provisions for excess inventories based on the number of months of inventories on-hand compared to anticipated sales or usage. Management uses its judgment to forecast sales or usage and to determine what constitutes a reasonable period. Inventory cost includes material, labor and overhead. Inventories consisted of the following:

	March 31,		December 31,
	2020		2019
Raw materials	$	69,316	$	66,357
Work-in-progress		6,875		5,582
Finished goods		19,586		21,510
Total inventories, net	$	95,777	$	93,449

Inventory valued using the FIFO method was $86,807 and $82,910 at March 31, 2020 and December 31, 2019, respectively. Inventory valued using the average cost method was $8,970 and $10,539 at March 31, 2020 and December 31, 2019, respectively.

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Earnings Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

(8) Earnings Per Share

Basic earnings per share was computed by dividing net income by the weighted-average number of Common Shares outstanding for each respective period. Diluted earnings per share was calculated by dividing net income by the weighted-average of all potentially dilutive Common Shares that were outstanding during the periods presented. 

Weighted-average Common Shares outstanding used in calculating basic and diluted earnings per share were as follows:

Three months ended March 31,	2020	2019
Basic weighted-average Common Shares outstanding	27,232,036	28,529,301
Effect of dilutive shares	359,135	555,507
Diluted weighted-average Common Shares outstanding	27,591,171	29,084,808

There were 789,027 and 691,207 performance-based right to receive Common Shares outstanding at March 31, 2020 and 2019, respectively. The 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 quarter were the end of the contingency period.

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Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventories [Abstract]
Raw materials	$ 69,316	$ 66,357
Work-in-progress	6,875	5,582
Finished goods	19,586	21,510
Total inventories, net	$ 95,777	$ 93,449

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Basis of Presentation (Narrative) (Details)	Mar. 31, 2020	Mar. 31, 2019
MSIL
Schedule of Equity Method Investments [Line Items]
Ownership percentage	49.00%	49.00%

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Equity and Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2020

Equity and Accumulated Other Comprehensive Loss [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Loss by Component

Changes in accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 were as follows:

		Foreign		Unrealized
		currency		gain (loss)
		translation		on derivatives	Total
Balance at January 1, 2020	$	(91,472)	$	-	$	(91,472)
Other comprehensive loss before reclassifications		(17,119)		(3,781)		(20,900)
Amounts reclassified from accumulated other comprehensive loss		-		126		126
Net other comprehensive loss, net of tax		(17,119)		(3,655)		(20,774)
Balance at March 31, 2020	$	(108,591)	$	(3,655)	$	(112,246)
Balance at January 1, 2019	$	(86,044)	$	292	$	(85,752)
Other comprehensive (loss) income before reclassifications		(3,804)		213		(3,591)
Amounts reclassified from accumulated other comprehensive loss		-		(171)		(171)
Net other comprehensive (loss) income, net of tax		(3,804)		42		(3,762)
Balance at March 31, 2019	$	(89,848)	$	334	$	(89,514)