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Stoneridge Reports Third Quarter 2024 Results

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MirrorEye Becomes Standard Equipment on Several European Truck Platforms

MirrorEye OEM Programs to Launch with Daimler Truck North America and a European Brand

Year-to-Date Cash Performance Improved $31.3 million vs. Same Period in 2023

2024 Third Quarter Results

Sales of $213.8 millionGross profit of $44.5 million Adjusted gross profit of $44.6 million (20.9% of sales)Operating income of $0.3 million Adjusted operating income of $0.7 million (0.3% of sales)Adjusted EBITDA of $9.2 million (4.3% of sales) Adjusted EBITDA was unfavorably impacted by $2.6 million related to operating FX and non-operating expenses vs. prior expectationsIncome tax expense of $3.4 millionAdjusted income tax expense of $3.5 millionLoss per share (“EPS”) of $(0.26)Adjusted EPS of $(0.24)Year-to-date cash performance of $13.3 million improved $31.3 million vs. the same period in 2023Year-to-date inventory reduction of $11.3 million

2024 Full-Year Guidance Update

Revenue guidance of $895 million – $905 million (midpoint of $900 million)Reflecting current market conditions resulting in significant production volume reductions across our weighted-average end markets of ~(3.6)% vs. prior guidanceUpdating full-year 2024 guidance to reflect reduced revenue expectations        Adjusted Gross Margin ~21.5%Adjusted Operating Margin ~1.0%Adjusted EBITDA of $42 million to $44 million  (adjusted EBITDA margin of ~4.7%)Adjusted EPS of $(0.35) – $(0.40) considering a full-year adjusted income tax expense of $4.0 million – $4.5 million

NOVI, Mich., Oct. 30, 2024 /PRNewswire/ — Stoneridge, Inc. (NYSE: SRI) today announced financial results for the third quarter ended September 30, 2024, with sales of $213.8 million, gross profit of $44.5 million and adjusted gross profit of $44.6 million (20.9% of sales). Operating income was $0.3 million resulting in adjusted operating income of $0.7 million (0.3% of sales). Income tax expense was $3.4 million resulting in adjusted income tax expense of $3.5 million. Loss per share was $(0.26) and adjusted EPS was $(0.24). Adjusted EBITDA was $9.2 million (4.3% of sales). The exhibits attached hereto provide reconciliation detail on normalizing adjustments of non-GAAP financial measures used in this press release. 

Jim Zizelman, president and chief executive officer, commented, “During the third quarter, our focus remained on improving the fundamentals of our business. Our efforts to improve operational efficiency resulted in reduced quality-related costs while reductions to operating expenses helped to offset some of the significant market-related challenges we faced. That said, like many of our peers, third quarter performance was significantly impacted by continued pressure across all of our major end markets resulting in reduced customer production. We will continue to improve fundamental financial performance through operational excellence and a focus on controllable costs.”

Zizelman continued, “While we continue to drive operational performance improvement, we remain focused on our key growth initiatives, including new business awards and the flawless execution of the program launches that will drive growth going-forward. We continue to build momentum with MirrorEye in both our OEM and fleet channels. Earlier this week, we announced MirrorEye will be available on Daimler Truck North America’s new fifth generation Freightliner Cascadia truck, which begins series production in mid-2025. We also announced that MirrorEye will be launching with an additional European brand, as part of an extension of a previously launched global OEM MirrorEye program, in the fourth quarter of this year. MirrorEye will be offered as standard equipment on several of this brands’ models as well as an option on their other truck models. Similarly, our other European OEM customers, DAF and Volvo, have now made their respective camera monitor systems standard on several key truck platforms. The standardization of MirrorEye with several OEM customers across several key truck platforms shows the strong momentum we are creating for the product. Additionally, we continue to expand our retrofit applications with new partnerships with DB Schenker in North America and VDL Bus and Coach in Europe. Finally, during the quarter, we continued to drive growth opportunities for Control Devices as well, with our first ever award related to our Leak Detection Module technology for an all-new hybrid vehicle with a Chinese OEM customer. This strategic technology is well-positioned for growth amid the global hybrid vehicle expansion and is also applicable to traditional powertrain vehicles to improve the effectiveness of their emissions systems.”

Zizelman concluded, “While we expect continued challenges across our end markets for the remainder of the year and into 2025, we continue to focus on the variables that we can control as we respond efficiently and effectively to macroeconomic headwinds that are prevalent across our industry. We remain confident that our efforts to fundamentally improve business performance and our continued focus on key growth initiatives will drive long-term profitable growth for our shareholders.”

Third Quarter in Review

Electronics sales of $135.7 million decreased by 4.7% relative to adjusted sales of the third quarter of 2023. This was primarily driven by lower customer production volumes in the European and North American commercial vehicle markets and lower sales in the European off-highway end market. This decline was partially mitigated by the ramp-up of recently launched programs, including MirrorEye and the Company’s next generation tachograph. Third quarter adjusted operating margin of 2.8% declined by 330 basis points relative to the third quarter of 2023, primarily due to reduced leverage from lower sales as well as higher overhead and D&D costs, partially offset by lower direct material costs.

Control Devices sales of $74.3 million decreased by 17.5% relative to the third quarter of 2023. This decrease was primarily due to lower customer production volumes in the North American passenger vehicle end market, including reduced demand for electric vehicle programs, and the expected wind-down of end-of-life programs. Higher sales in the China passenger vehicle and North America commercial vehicle end markets were offset by lower sales in the China commercial vehicle end market. Third quarter adjusted operating margin of 3.1% decreased by 320 basis points relative to the third quarter of 2023, primarily due to reduced leverage on lower sales, slightly offset by lower D&D costs.

Stoneridge Brazil sales of $13.6 million decreased by $0.5 million relative to the third quarter of 2023. This decrease was primarily due to unfavorable foreign currency translation of $1.7 million as well as lower monitoring service fees, offset by higher OEM and aftermarket product sales. Third quarter operating income of $0.7 million decreased by approximately $0.1 million relative to the third quarter adjusted operating income of 2023, primarily due to the adverse impact of U.S. dollar denominated material purchases and unfavorable sales mix from lower monitoring service fees offset by lower SG&A spending.

Relative to the second quarter of 2024, Electronics sales decreased by 11.6%. This decrease was driven primarily by continued macroeconomic pressures impacting European and North American commercial vehicle production and reduced sales in the off-highway end market. Third quarter adjusted operating margin decreased by 490 basis points relative to the second quarter of 2024, primarily due to reduced leverage on lower sales, unfavorable sales mix and higher D&D costs due to lower customer reimbursements, partially offset by lower SG&A costs.

Relative to the second quarter of 2024, Control Devices sales decreased by 8.1%. This decrease was primarily driven by continued pressure and reduced demand in the North American passenger vehicle end market. Stronger sales in the China passenger vehicle end market were offset by lower sales in the China commercial vehicle end market versus the second quarter. Third quarter adjusted operating margin decreased by 150 basis points relative to the second quarter of 2024, primarily due to reduced leverage on lower sales slightly offset by lower material costs.

Relative to the second quarter of 2024, Stoneridge Brazil sales increased by $1.8 million, or 15.0%. This was primarily due to higher sales in the OEM end market and higher aftermarket sales, partially offset by the unfavorable foreign currency impact of $0.7 million. Third quarter operating income improved by $0.8 million relative to the second quarter of 2024, primarily due to fixed cost leverage on incremental sales partially offset by the unfavorable foreign currency impact of $0.4 million.

.Cash and Debt Balances

As of September 30, 2024, Stoneridge had cash and cash equivalents totaling $54.1 million. During the first nine months of 2024, the Company generated $13.3 million in cash driven by our continued focus on reducing net working capital, including an $11.3 million reduction in inventory balances. This represents an increase of $31.3 million in cash performance over the same period in 2023.  

For compliance purposes, adjusted net debt was $158.9 million while adjusted EBITDA for the trailing twelve months was $56.8 million, resulting in an adjusted net debt to trailing twelve-month EBITDA compliance leverage ratio of 2.79x.

The Company continues to focus on both operating performance and working capital improvement to drive cash performance, particularly related to inventory reduction. The Company expects to remain in compliance with all covenant requirements.

2024 Outlook

The Company is updating its previously provided full-year 2024 guidance ranges including sales guidance of $895 million to $905 million, adjusted gross margin guidance of approximately 21.5%, adjusted operating margin guidance of approximately 1.0%, adjusted loss per share guidance of $(0.35) to $(0.40) and adjusted EBITDA guidance of $42 million to $44 million, or approximately 4.7% of sales.

Matt Horvath, chief financial officer, commented, “We are updating our full-year 2024 revenue guidance to reflect industry-wide macroeconomic headwinds that are resulting in reduced production expectations for the majority of our customers across our end markets. Overall, our weighted average end markets are expected to decline by 3.6% relative to our previously provided guidance. Furthermore, we are expecting non-OEM and option-based products revenue to be aligned with the low-end of the previously provided range. We expect there could be some continued incremental headwinds in the off-highway end market and lower than expected MirrorEye aftermarket fleet and bus volumes despite the continuing expansion in fleet relationships. Many of these fleets are evaluating the technology prior to availability as a factory installation which we expect will increase the OEM volumes, as we have outlined with several of our OEM customers making the system standard equipment but may impact demand for higher volume retrofit applications.”

Horvath continued, “Our updated revenue guidance results in a midpoint of $900 million for the year. Although we continue to expect improvement in operating performance, including improvements in material costs and quality-related costs, as well as continued focus on operating cost control, due primarily to the impact of our reduced revenue expectations, we are updating our full-year adjusted gross margin and adjusted operating margin expectations to approximately 21.5% and 1.0%, respectively. Similarly, we are updating our adjusted EBITDA guidance to $42 million to $44 million, or approximately 4.7% of sales. Finally, we are updating our full-year adjusted EPS guidance to $(0.35) to $(0.40). Our guidance reflects approximately $4 million to $4.5 million of total adjusted tax expense for the year based on our forecasted geographical mix of earnings.”

Horvath, concluded, “By continuing to focus on improving the fundamentals of our business, controlling the variables within our control and responding efficiently and effectively to macroeconomic headwinds, we expect to drive performance improvement throughout the business. Additionally, we continue to focus on inventory reduction to improve our cash position and reduce our leverage profile. Stoneridge remains well positioned to outpace our underlying end market growth and drive significant earnings expansion going forward.”

Conference Call on the Web
A live Internet broadcast of Stoneridge’s conference call regarding 2024 third quarter results can be accessed at 9:00 a.m. Eastern Time on Thursday, October 31, 2024, at www.stoneridge.com, which will also offer a webcast replay.

About Stoneridge, Inc.
Stoneridge, Inc., headquartered in Novi, Michigan, is a global designer and manufacturer of highly engineered electrical and electronic systems, components and modules for the automotive, commercial, off-highway and agricultural vehicle markets. Additional information about Stoneridge can be found at www.stoneridge.com.

Forward-Looking Statements
Statements in this press release 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 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;fluctuations in the cost and availability of key materials and components (including semiconductors, printed circuit boards, resin, aluminum, steel and copper) and our ability to offset cost increases through negotiated price increases with our customers or other cost reduction actions, as necessary;global economic trends, competition and geopolitical risks, including impacts from ongoing or potential global conflicts and any related sanctions and other measures, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and other countries;our ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions;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 or agricultural vehicle productioncompetitive market conditions and resulting effects on sales and pricing;foreign currency fluctuations and our ability to manage those impacts;customer acceptance of new products;our ability to successfully launch/produce products for awarded business;adverse changes in laws, government regulations or market conditions affecting our products, our suppliers, 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 outside of our control;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;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; andthe items described in Part I, Item IA (“Risk Factors”) in our Form 10-K filed with the SEC.

The forward-looking statements contained herein represent our estimates only as of the date of this release 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.

Use of Non-GAAP Financial Information
This press release contains information about the Company’s financial results that is not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release. The provision of these non-GAAP financial measures for 2024 and 2023 is not intended to indicate that Stoneridge is explicitly or implicitly providing projections on those non-GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this press release and the adjustments that management can reasonably predict.

Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company’s financial position and results of operations. In particular, management believes that adjusted sales, adjusted gross profit and margin, adjusted operating income and margin, adjusted income (loss) before tax, adjusted income tax expense, adjusted net income (loss), adjusted EPS, EBITDA, adjusted EBITDA, adjusted net debt, adjusted debt and adjusted cash are useful measures in assessing the Company’s financial performance by excluding certain items that are not indicative of the Company’s core operating performance or that may obscure trends useful in evaluating the Company’s continuing operating activities. Management also believes that these measures are useful to both management and investors in their analysis of the Company’s results of operations and provide improved comparability between fiscal periods.

Adjusted sales, adjusted gross profit and margin, adjusted operating income and margin, adjusted income (loss) before tax, adjusted income tax expense, adjusted net income (loss), adjusted EPS, EBITDA, adjusted EBITDA, adjusted net debt, adjusted debt and adjusted cash should not be considered in isolation or as a substitute for sales, gross profit, operating income, income (loss) before tax, income tax expense, net income (loss), EPS, debt, cash and cash equivalents, cash provided by operating activities or other income statement or cash flow statement data prepared in accordance with GAAP.

 

CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30,
2024

December 31,
2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$            54,138

$            40,841

Accounts receivable, less reserves of $845 and $1,058, respectively

158,529

166,545

Inventories, net

176,445

187,758

Prepaid expenses and other current assets

25,301

34,246

Total current assets

414,413

429,390

Long-term assets:

Property, plant and equipment, net

103,450

110,126

Intangible assets, net

44,206

47,314

Goodwill

35,593

35,295

Operating lease right-of-use asset

10,758

10,795

Investments and other long-term assets, net

54,103

46,980

Total long-term assets

248,110

250,510

Total assets

$         662,523

$         679,900

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Current portion of debt

$                    —

$              2,113

Accounts payable

98,130

111,925

Accrued expenses and other current liabilities

71,761

64,203

Total current liabilities

169,891

178,241

Long-term liabilities:

Revolving credit facility

196,322

189,346

Deferred income taxes

6,344

7,224

Operating lease long-term liability

7,219

7,684

Other long-term liabilities

11,397

9,688

Total long-term liabilities

221,282

213,942

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 27,689 and 27,549 shares outstanding at September 30, 2024 and
December 31, 2023, respectively, with no stated value

—

—

Additional paid-in capital

224,944

227,340

Common Shares held in treasury, 1,277 and 1,417 shares at September 30, 2024 and
December 31, 2023, respectively, at cost

(38,641)

(43,344)

Retained earnings

186,099

196,509

Accumulated other comprehensive loss

(101,052)

(92,788)

Total shareholders’ equity

271,350

287,717

Total liabilities and shareholders’ equity

$         662,523

$         679,900

 

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended
September 30,

Nine months ended
September 30,

(in thousands, except per share data)

2024

2023

2024

2023

Net sales

$         213,831

$         238,164

$         690,047

$         746,303

Costs and expenses:

Cost of goods sold

169,340

185,689

543,459

590,538

Selling, general and administrative

26,533

28,111

88,832

91,465

Design and development

17,643

17,852

53,703

57,486

Operating income

315

6,512

4,053

6,814

Interest expense, net

3,604

3,313

11,039

9,179

Equity in loss of investee

752

141

1,081

641

Other (income) expense, net

(384)

(1,383)

(644)

2,152

(Loss) income before income taxes

(3,657)

4,441

(7,423)

(5,158)

Provision for income taxes

3,413

2,270

2,987

3,049

Net (loss) income

$            (7,070)

$              2,171

$          (10,410)

$            (8,207)

(Loss) earnings per share:

Basic

$              (0.26)

$                0.08

$              (0.38)

$              (0.30)

Diluted

$              (0.26)

$                0.08

$              (0.38)

$              (0.30)

Weighted-average shares outstanding:

Basic

27,618

27,484

27,586

27,428

Diluted

27,618

27,734

27,586

27,428

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30, (in thousands)

2024

2023

OPERATING ACTIVITIES:

Net loss

$            (10,410)

$              (8,207)

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

Depreciation

19,695

19,800

Amortization, including accretion and write-off of deferred financing costs

6,812

6,077

Deferred income taxes

(6,339)

(2,732)

Loss of equity method investee

1,081

641

Loss (gain) on sale of fixed assets

257

(861)

Share-based compensation expense

3,092

2,272

Excess tax deficiency related to share-based compensation expense

263

74

Changes in operating assets and liabilities:

Accounts receivable, net

6,042

(21,335)

Inventories, net

9,694

(33,651)

Prepaid expenses and other assets

4,949

7,473

Accounts payable

(13,127)

23,322

Accrued expenses and other liabilities

6,508

1,459

Net cash provided by (used for) operating activities

28,517

(5,668)

INVESTING ACTIVITIES:

Capital expenditures, including intangibles

(19,049)

(28,584)

Proceeds from sale of fixed assets

312

1,841

Investment in venture capital fund, net

(260)

(200)

Net cash used for investing activities

(18,997)

(26,943)

FINANCING ACTIVITIES:

Revolving credit facility borrowings

98,000

81,365

Revolving credit facility payments

(91,000)

(64,568)

Proceeds from issuance of debt

24,277

27,579

Repayments of debt

(26,364)

(27,145)

Repurchase of Common Shares to satisfy employee tax withholding

(780)

(1,697)

Net cash provided by financing activities

4,133

15,534

Effect of exchange rate changes on cash and cash equivalents

(356)

(963)

Net change in cash and cash equivalents

13,297

(18,040)

Cash and cash equivalents at beginning of period

40,841

54,798

Cash and cash equivalents at end of period

$             54,138

$             36,758

Supplemental disclosure of cash flow information:

Cash paid for interest, net

$             11,892

$               9,248

Cash paid for income taxes, net

$               8,429

$               8,453

 

Regulation G Non-GAAP Financial Measure Reconciliations

Exhibit 1 – Reconciliation of Adjusted EPS

Reconciliation of Q3 2024 Adjusted EPS

(USD in millions, except EPS)

Q3 2024

Q3 2024 EPS

Net Loss

$             (7.1)

$           (0.26)

Add: After-Tax Business Realignment Costs

0.2

0.01

Add: After-Tax Environmental Remediation Costs

0.1

0.00

Adjusted Net Loss

$             (6.7)

$           (0.24)

 

Exhibit 2 – Reconciliation of Adjusted EBITDA

(USD in millions)

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Q3 2024

Income (Loss) Before Tax

$       4.4

$       3.2

$     (5.6)

$       1.9

$     (3.7)

Interest expense, net

3.3

3.8

3.6

3.8

3.6

Depreciation and amortization

8.5

8.4

8.6

8.5

8.8

EBITDA

$     16.2

$     15.5

$       6.6

$     14.2

$      8.8

Add: Pre-Tax Business Realignment Costs

1.2

0.1

—

1.9

0.3

Add: Pre-Tax Environmental Remediation
Costs

—

—

—

—

0.2

Add: Pre-Tax Brazilian Indirect Tax Credits,
Net

(0.5)

—

—

—

—

Adjusted EBITDA

$     17.0

$     15.6

$       6.6

$     16.1

$      9.2

 

Exhibit 3 – Reconciliation of Adjusted Gross Profit

(USD in millions)

Q2 2024

Q3 2024

Gross Profit

$         53.7

$         44.5

Add: Pre-Tax Business Realignment Costs

—

0.1

Adjusted Gross Profit

$         53.7

$         44.6

 

Exhibit 4 – Reconciliation of Adjusted Operating Income

(USD in millions)

Q2 2024

Q3 2024

Operating Income

$           3.4

$           0.3

Add: Pre-Tax Business Realignment Costs

1.9

0.3

Add: Pre-Tax Environmental Remediation Costs

—

0.2

Adjusted Operating Income

$           5.4

$           0.7

 

Exhibit 5 – Segment Adjusted Operating Income

Reconciliation of Control Devices Adjusted Operating Income

(USD in millions)

Q3 2023

Q2 2024

Q3 2024

Control Devices Operating Income

$       5.5

$       3.7

$       2.1

Add: Pre-Tax Environmental Remediation Costs

—

—

0.2

Add: Pre-Tax Business Realignment Costs

0.1

—

—

Control Devices Adjusted Operating Income

$       5.6

$       3.7

$       2.3

Reconciliation of Electronics Adjusted Operating Income

(USD in millions)

Q3 2023

Q2 2024

Q3 2024

Electronics Operating Income

$       7.6

$       9.8

$       3.5

Add: Pre-Tax Business Realignment Costs

1.1

1.9

0.3

Electronics Adjusted Operating Income

$       8.7

$     11.7

$       3.8

Reconciliation of Stoneridge Brazil Adjusted Operating Income (Loss)

(USD in millions)

Q3 2023

Q2 2024

Q3 2024

Stoneridge Brazil Operating Income (Loss)

$       1.2

$     (0.0)

$       0.7

Add: Pre-Tax Brazilian Indirect Tax Credits, Net

(0.5)

—

—

Stoneridge Brazil Adjusted Operating Income (Loss)

$       0.8

$     (0.0)

$       0.7

 

Exhibit 6 – Reconciliation of Adjusted Sales

(USD in millions)

Q3 2023

Q2 2024

Q3 2024

Sales

$     238.2

$    237.1

$     213.8

Less: Sales from Spot Purchases Recoveries

(0.9)

—

—

Adjusted Sales

$     237.2

$    237.1

$     213.8

 

Exhibit 7 – Reconciliation of Electronics Adjusted Sales

(USD in millions)

Q3 2023

Q2 2024

Q3 2024

Electronics Sales

$    143.3

$   153.5

$      135.7

Less: Sales from Spot Purchases Recoveries

(0.9)

—

—

Electronics Adjusted Sales

$    142.4

$   153.5

$      135.7

 

Exhibit 8 – Reconciliation of Adjusted Tax Rate

Reconciliation of Q3 2024 Adjusted Tax Rate

(USD in millions)

Q3 2024

Tax Rate

Loss Before Tax

$            (3.7)

Add: Pre-Tax Business Realignment Costs

0.3

Add: Pre-Tax Environmental Remediation Costs

0.2

Adjusted Loss Before Tax

$            (3.2)

Income Tax Expense

3.4

(93.3) %

Add: Tax Impact from Pre-Tax Adjustments

0.1

Adjusted Income Tax Expense on Adjusted Loss Before Tax

$             3.5

nm

 

Exhibit 9 – Reconciliation of Compliance Leverage Ratio

UPDATED

Reconciliation of Adjusted EBITDA for Compliance Calculation

(USD in millions)

Q4 2023

Q1 2024

Q2 2024

Q3 2024

Income (Loss) Before Tax

$       3.2

(5.6)

$       1.9

$     (3.7)

Interest Expense, net

3.8

3.6

3.8

3.6

Depreciation and Amortization

8.4

8.6

8.5

8.8

EBITDA

$     15.5

$       6.6

$     14.2

$       8.8

Compliance adjustments:

Add: Non-Cash Impairment Charges and
Write-offs or Write Downs

0.1

0.1

—

—

Add: Adjustments from Foreign Currency
Impact

(0.7)

2.2

(2.4)

(0.6)

Add: Extraordinary, Non-recurring or Unusual
Items

—

—

—

—

Add: Cash Restructuring Charges

0.3

1.6

0.5

0.7

Add: Charges for Transactions,
Amendments, and Refinances

0.3

—

—

—

Add: Adjustment to Autotech Fund II
Investment

(0.1)

0.3

0.1

0.8

Add:  Accrual-based Expenses

5.5

8.2

7.1

1.3

Less: Cash Payments for Accrual-based
Expenses

(3.1)

(3.2)

(3.7)

(3.3)

Adjusted EBITDA (Compliance)

$     17.7

$     15.8

$     15.8

$       7.6

Adjusted TTM EBITDA (Compliance)

$     68.5

$     56.8

Reconciliation of Adjusted Cash for Compliance Calculation

(USD in millions)

Q3 2024

Total Cash and Cash Equivalents

$      54.1

Less: 35% of Cash in Foreign Locations

(15.1)

Total Adjusted Cash (Compliance)

$      39.0

Reconciliation of Adjusted Debt for Compliance Calculation

(USD in millions)

Q3 2024

Total Debt

$     196.3

Outstanding Letters of Credit

1.6

Total Adjusted Debt (Compliance)

$     197.9

Adjusted Net Debt (Compliance)

$     158.9

Compliance Leverage Ratio (Net Debt / TTM EBITDA)

2.79x

 

 

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Teradata Introduces New Privacy, Security, and Resiliency Capabilities as AI Forces Change in Enterprise Data Protection

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45 minutes ago

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October 20, 2026

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New capabilities protect the sensitive data and intelligence behind enterprise AI while keeping mission-critical operations available and recoverable

SAN DIEGO, Oct. 20, 2026 /PRNewswire/ — Teradata (NYSE: TDC) today announced new privacy, security, and resiliency capabilities designed to address one of the defining challenges of enterprise AI: how sensitive data is protected, who and what can access it, and whether it remains available and recoverable when something goes wrong. Teradata addresses all three through an integrated approach that reduces raw identity exposure, enforces protection closer to the data, and keeps the intelligence powering AI available and recoverable. In practice, that means protecting the intelligence behind AI without diminishing what makes it valuable.

Key Capabilities

Poly-Anonymization®: reduces raw identity exposure while preserving the relationships and utility AI and analytics requireFormat-preserving encryption: protects sensitive values without changing their format or breaking downstream systemsPost-quantum security and readiness: strengthens protection against emerging quantum-era threats through Anonomatic PII Vault® and TLS 1.3 hybrid-key exchange for data in transitImmutable backup protection: prevents recovery points from being modified or deleted, strengthening cyber-recovery readinessDatabase-level high availability: an additional availability layer for mission-critical workloads, distinct from disaster recovery

Why It Matters Now
As AI becomes mission-critical, it expands both the value and the vulnerability of enterprise data. Sensitive information now moves among users, applications, models, and agents, making it harder to secure at the boundary alone. AI is designed to combine disparate information to find patterns and make decisions, which means data that isn’t individually identifiable can become so when AI brings it together.

Executive Quote
“Privacy, security, and resiliency have historically been treated as separate problems with separate solutions. That approach doesn’t hold up when AI is moving sensitive data across users, applications, models, and agents simultaneously. This announcement reflects how we think those capabilities need to work together, and it’s the foundation for how we intend to extend that protection as AI environments grow more complex and the actors operating within them multiply.”
          -Sumeet Arora, Chief Product Officer, Teradata

Privacy Protection
Access control determines who can see sensitive data. Identity reduction changes how much identifying information needs to be present in the analytical environment in the first place. Teradata combines both, through an OEM partnership with Anonomatic, whose privacy capabilities are natively available to Teradata customers.

Poly-Anonymization replaces PII fields with a stable identifier while holding underlying identity separately within Anonomatic PII Vault, a post-quantum-secure environment built with multiple layers of overlapping security controls designed to protect sensitive identity information. Authorized users can restore identity when a legitimate use case requires it, but everyone else works with data that retains its analytical structure, its relationships, and its utility. The result is an analytical environment where sensitive data can be used for AI, analytics, testing, and approved collaboration without broadly exposing who the data is about.

Unlike approaches that rely solely on mathematically reversible encryption, PII Vault combines identity separation, Poly-Anonymization, access controls, and additional layered protections to reduce identity exposure while retaining the utility required for AI and analytics. Format-preserving encryption extends that protection to situations where a value’s structure matters to downstream systems, protecting sensitive data without breaking the applications and workflows built around it.

Testing at large scale demonstrated that Teradata’s Anonomatic-powered privacy-preserving controls can support enterprise analytical workloads without the performance tradeoffs organizations typically associate with data privacy. Multi-table join queries on protected data used fewer Teradata resources than equivalent queries on unprotected data, though results will vary by workload and configuration.

Partner Quote
“Enterprise AI creates a fundamentally different privacy challenge. Organizations need to use sensitive, individual-level data to build effective AI, but the traditional tools for protecting that data weren’t designed to preserve what AI needs to work. Our partnership with Teradata makes it possible to reduce identity exposure at enterprise scale without forcing organizations to choose between protection and utility.”
          -Matt Fleck, Founder and CEO at Anonomatic, a data security software company focused on making PII data privacy secure, simple and cost effective

Native Data Security
Protection that follows the data requires controls enforced at the data layer, not just at the systems surrounding it. Teradata applies classification, policy enforcement, and access controls closer to the data itself. Together, these capabilities provide a governance-led foundation for protecting data and intelligence across users, applications, and workloads.

For data in transit, Teradata introduces post-quantum protection via TLS 1.3 hybrid-key exchange, which combines classical and post-quantum cryptographic algorithms in a single handshake. As quantum computing advances make current encryption standards increasingly vulnerable, organizations that establish cryptographic readiness now will be better positioned for what’s ahead.

New native capabilities including dynamic data masking, data classification and tagging, column-level encryption, and global identity extend that protection across the data layer. Through a partnership with Immuta, a data authorization platform between identity and enterprise data, dynamic ABAC brings identity-aware, attribute-driven access control that enforces policy consistently across users and AI workloads without duplicating data or rewriting governance rules.

Teradata’s security architecture is designed to extend as AI environments evolve, with ongoing investment in controls that govern how AI agents access and act on enterprise data within policy boundaries.

Enterprise Data Protection
For enterprises running AI at scale, a cyberattack is a threat to the data, context, and operational knowledge that AI depends on to function. Teradata Enterprise Data Protection addresses that reality through a workload-aligned approach that lets organizations match protection levels to business criticality rather than applying the same resiliency architecture to every workload. The objective is not simply to restore data, but to restore the trusted context AI needs to resume mission-critical operations.

Database-level high availability via real-time replication introduces an additional availability layer designed for continuous synchronization and low recovery objectives.

Immutable backup protection strengthens cyber-recovery readiness by ensuring recovery points cannot be modified, encrypted, or deleted, even by privileged administrators. As ransomware increasingly targets backup data specifically, protected recovery points have become as critical as the protection strategies built around them. Teradata’s resiliency architecture is designed to extend as cyber threats and recovery requirements evolve.

Additional capabilities including backup and recovery, scheduled data synchronization, and disaster recovery round out a more consistent Enterprise Data Protection experience.

Availability

Privacy capabilities, powered by Anonomatic and delivered by Teradata, are available now for Teradata Cloud on AWS, Azure, and Google Cloud.Native data security capabilities including dynamic data masking, data classification and tagging, and column-level encryption are available on Teradata Cloud across AWS, Azure, and Google Cloud. Dynamic data masking, data classification and tagging are available for Teradata Factory and on-premises deployment options.Teradata Enterprise Data Protection including immutable backup protection is available now on Teradata Cloud across AWS, Azure, and Google Cloud with availability on Teradata Customer Cloud planned in the coming months. 

About Teradata
Teradata empowers enterprises to turn intelligence into autonomous action, grounding AI agents in deep business context and trusted data. As AI agents multiply, Teradata is the context foundation, governance layer, and performance backbone that companies need now. The Teradata Autonomous Knowledge Platform puts AI into production across cloud, on-premises, and hybrid environments.

Forward-Looking Statements
This press release contains “forward-looking statements” about the expectations, beliefs, plans, and intentions relating to Teradata’s privacy, security, and resiliency capabilities. Such statements include statements regarding future product availability, capabilities, and offerings, and expected benefits to Teradata customers. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, Teradata’s results could differ materially from the results expressed or implied by the forward-looking statements made. Teradata undertakes no obligation, and does not intend to update the forward-looking statements. Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) delays and unexpected difficulties and expenses in executing the planned product capabilities and offerings, (ii) changes in the regulatory landscape related to AI and (iii) uncertainty as to whether customer adoption will justify the investments in the product capabilities and offerings. Further information on factors that could affect Teradata’s financial and other results is included in the filings Teradata makes with the Securities and Exchange Commission from time to time.

The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.

Poly-Anonymization and PII Vault are registered trademarks of Anonomatic, Inc.

MEDIA CONTACT
Jennifer Donahue
Jennifer.Donahue@Teradata.com

View original content:https://www.prnewswire.com/news-releases/teradata-introduces-new-privacy-security-and-resiliency-capabilities-as-ai-forces-change-in-enterprise-data-protection-302913579.html

SOURCE Teradata

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Teradata Expands Sovereign AI Across On-Premises and Air-Gapped Cloud Environments

Published

46 minutes ago

on

October 20, 2026

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New Teradata Factory and Teradata Sovereign Cloud on Google Distributed Cloud capabilities give enterprises greater control over where their most sensitive data and AI operate

SAN DIEGO, Oct. 20, 2026 /PRNewswire/ — Teradata (NYSE: TDC) today announced a portfolio of deployment and platform capabilities designed to give governments and enterprises greater control over the data, AI, and technology that power their most critical operations. This includes expanded capabilities for Teradata Factory with AI Studio and the availability of Teradata Sovereign Cloud on Google Distributed Cloud air-gapped environment.

What’s New
Teradata’s portfolio spans two complementary deployment models designed to address different sovereignty requirements.

The expanded capabilities for Teradata Factory with AI Studio bring a unified AI environment to operate on data, vectors, models, and agents directly into customer-controlled on-premises infrastructure. These capabilities include:

Tera, the agentic coworker for enterprise data work, including Tera Harness and Tera Context EngineAgentStack, the complete AI agent development capabilities to build, manage, observe and operate agents through natural language, pro-code, low-code, and Model Context Protocol (MCP) interfacesModel services, which provide machine learning operations and AI model management with pre-integrated model and bring-your-own-model supportData pipelines for ingesting multimodal unstructured data, vector embeddings, vector storage and hybrid search for RAGAnalytics, native notebooks backed by in-database analytics and Teradata’s Elastic Python Compute, built on Ray and Arrow, bring AI to where data lives

Teradata Sovereign Cloud on Google Distributed Cloud air-gapped brings Teradata’s high-performance enterprise-scale analytics into fully isolated environments. Key benefits of running Teradata Sovereign Cloud on Google Distributed Cloud air-gapped include:

Full isolation: Deploy Teradata in an air-gapped environment with no external connectivity— keeping classified and regulated data fully containedSecurity and compliance: Meet stringent regulatory requirements while maintaining complete audit trails and governanceHigh-performance analytics and AI at scale: Run complex queries across billions of rows and petabytes of data with predictable performance

Why it Matters
Research points to growing urgency. According to a 2026 BARC global study of 320 business and IT decision-makers, 62 percent of organizations cite data and AI in core business processes as a key driver of sovereignty requirements. A separate IBM study found that 91 percent of executives say they do not fully understand their organization’s dependencies across AI vendors, models and infrastructure. And Gartner predicts that by 2030, more than 75 percent of enterprises outside the United States will have a digital sovereignty strategy, supported by a sovereign cloud strategy.

As AI moves into mission-critical operations, sovereignty is no longer only about where data resides. Organizations must also consider where AI runs, which models are used, how enterprise information is accessed, who operates the environment, and which external technologies their AI depends on.

This is particularly relevant for governments, defense organizations, regulated industries and critical infrastructure, where data residency, privacy, jurisdiction, operational continuity or national-security requirements can limit the use of traditional public-cloud AI services.

Teradata frames sovereignty across three dimensions: data sovereignty (where data lives and who can access it), operational sovereignty (who controls the environment and whether it can operate independently), and digital sovereignty (which technologies and AI models the organization depends on). An organization can satisfy data residency requirements and still lack full sovereignty if AI processing occurs externally, external administrators can access the environment, or operations stop when public connectivity is unavailable.

Teradata’s sovereign portfolio is designed to address these requirements, bringing enterprise analytics and AI inside the boundaries that organizations control.

The Deployment Portfolio
Teradata Factory and Teradata Sovereign Cloud on Google Distributed Cloud air-gapped address different sovereignty requirements.

Teradata Factory is an integrated hardware and software rack that brings a private enterprise data and AI environment into customer-controlled on-premises infrastructure. It is designed for organizations that require direct physical control over their infrastructure and AI execution.

Teradata Sovereign Cloud on Google Distributed Cloud air-gapped provides a cloud operating model inside a sovereign boundary. The environment has no connection to the public internet and is operated by the customer. It is designed for organizations that need the operational model of cloud within a fully isolated, sovereign environment. Teradata provides the enterprise analytics layer within the air-gapped boundary, enabling organizations to support use cases such as operational reporting, mission analysis, intelligence fusion, training and simulation analytics, and defense logistics and sustainment inside the sovereign boundary.

Together, Teradata Factory and Teradata Sovereign Cloud on Google Distributed Cloud air-gapped support a hybrid approach to sovereign deployment, giving organizations the flexibility to run enterprise analytics and AI inside whichever boundary their requirements demand.

Executive Perspectives
“As AI becomes embedded in mission-critical decisions, organizations can no longer treat sovereignty as a data-location requirement. They need control over where AI runs, which models are used, who can operate the environment, and whether critical workloads can continue if external connectivity disappears. And increasingly, sovereignty is not a single location. It is an architecture that spans public cloud, sovereign cloud, and on-premises infrastructure. Teradata is uniquely built for that reality. We can run in all of those environments, connect them through Teradata Fabric without requiring data to move, and give organizations the freedom to choose the AI models and infrastructure that work for them.”

— Sumeet Arora, Chief Product Officer, Teradata

“Google Distributed Cloud is purpose-built, air-gapped infrastructure that delivers complete technical, operational and software sovereignty. By combining Google Distributed Cloud’s sovereign infrastructure with Teradata’s AI and knowledge capabilities, we are giving enterprise customers in regulated industries the ability to innovate without sacrificing control over their data.”

— Muninder Singh Sambi, VP of Product Management, Google Distributed Cloud

Availability
The expanded Teradata sovereign capabilities for Teradata Factory with AI Studio will be available in Q1 2027. Teradata Sovereign Cloud on Google Distributed Cloud air-gapped is available in Private Preview.

About Teradata
Teradata empowers enterprises to turn intelligence into autonomous action, grounding AI agents in deep business context and trusted data. As AI agents multiply, Teradata is the context foundation, governance layer, and performance backbone that companies need now. The Teradata Autonomous Knowledge Platform puts AI into production across cloud, on-premises, and hybrid environments.

Teradata Forward-Looking Statements
This press release contains “forward-looking statements” about the expectations, beliefs, plans, and intentions relating to Teradata’s sovereign portfolio. Such statements include statements regarding future product availability, capabilities, and offerings, and expected benefits to Teradata customers. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, Teradata’s results could differ materially from the results expressed or implied by the forward-looking statements made. Teradata undertakes no obligation, and does not intend to update the forward-looking statements. Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) delays and unexpected difficulties and expenses in executing the planned product capabilities and offerings, (ii) changes in the regulatory landscape related to AI and (iii) uncertainty as to whether customer adoption will justify the investments in the product capabilities and offerings. Further information on factors that could affect Teradata’s financial and other results is included in the filings Teradata makes with the Securities and Exchange Commission from time to time.

The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.

MEDIA CONTACT
January Machold
January.Machold@Teradata.com

 

View original content:https://www.prnewswire.com/news-releases/teradata-expands-sovereign-ai-across-on-premises-and-air-gapped-cloud-environments-302913587.html

SOURCE Teradata Corporation

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State Farm® and MIT AgeLab Collaborate to Study What’s Driving Distraction Behind the Wheel

Published

46 minutes ago

on

October 20, 2026

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Drivefulness™ research explores the human side of a nearly $100 billion roadway risk

BLOOMINGTON, Ill., Oct. 20, 2026 /PRNewswire/ — As vehicles become more connected and technology-enabled, the challenge of distracted driving is becoming more complex across the country. The question is no longer simply what distracts drivers, but understanding why people make certain choices behind the wheel and how technology may influence those decisions.

State Farm® and the MIT AgeLab are exploring those questions through a research initiative examining driver attention, distraction, and the behaviors that influence decision-making behind the wheel. Researchers have coined the term “drivefulness” to describe a state in which a driver is safe, aware, appropriately engaged, and ready to respond to the road, while being supported in having the best possible driving experience for them.

The study brings together State Farm’s decades of experience understanding crash risk, driver behavior, and the real-world consequences of distraction with MIT AWARE initiative’s multidisciplinary research expertise in transportation safety, human factors, behavioral science, and how people interact with technology.

Distracted driving carries significant human and economic consequences. According to U.S. Department of Transportation research, distraction was involved in 29% of motor vehicle crashes studied, contributing to more than 10,000 deaths, 1.3 million injuries, and an estimated $98.2 billion in economic costs.

Understanding the relationship among driver attention, distraction, and behaviors could help inform how automakers, organizations, regulators, and insurers approach roadway safety, risk prevention, and the design of future driving experiences.

“Distracted driving is not simply about whether a driver knows what is safe or unsafe. It reflects a much more complex interaction between the driver’s state, the demands of the driving environment, and the technologies that compete for or support their attention,” said Dr. Pnina Gershon of the MIT AgeLab. “With this research, we are looking beyond individual moments of distraction to understand what drivers need to be prepared, attentive, and appropriately engaged during the driving task. That allows us to think differently about safety and about how technology, information, and interventions can support drivers before, during, and after the drive.”

Dr. Gershon is the director of the MIT AWARE initiative and a co-director of the MIT Advanced Vehicle Technology Consortium. With more than two decades of research experience, she leads work at the intersection of driving safety, human behavior, health, and human-centered AI. Her research uses sensing, real-world data, and behavioral analytics to understand human states and to develop technologies and interventions that support safer, more effective interactions between people and increasingly automated systems.

Understanding the behavior behind the risk

Drivers may know distraction is dangerous, but State Farm research shows that knowledge doesn’t always change what happens behind the wheel. Sixty-eight percent of drivers admit to engaging in distracting behaviors while driving, and 44% say they have crashed or experienced a near-crash while doing so.

Perception may be part of the challenge. Sixty-two percent of drivers believe taking their eyes off the road for two or more seconds is safe, even though a two-second glance away doubles crash risk.

“Technology is changing the driving experience, creating new opportunities to better understand and support drivers,” said Jeff Legner, technology executive at State Farm. “The more we learn about how people interact with technology behind the wheel, the better positioned we are to anticipate evolving risks, improve driver experiences and explore new approaches to accident prevention. This research can help turn those insights into meaningful ways to support drivers before, during and after every drive.”

Combining real-world risk with behavioral science

State Farm has worked to address distracted driving from multiple angles, including advocating for stronger hands-free laws, supporting cross-industry safety research and advancing technology that can help drivers better understand their behavior. That work includes telematics-based tools for customers and collaboration with companies such as Cambridge Mobile Telematics to explore how technology and data can help reduce roadway risk. The MIT AgeLab brings deep expertise in understanding the human side of a rapidly changing driving environment.

The collaboration builds on an established research relationship between State Farm and MIT, including State Farm’s participation in the MIT Advanced Vehicle Technology Consortium, which studies how drivers interact with increasingly automated and technology-enabled vehicles.

First findings expected in October
The first phase of the research is focused on establishing a deeper understanding of how people perceive and manage attention behind the wheel.

Findings from the first phase of the drivefulness study are expected later in October 2026, providing an early look at what the research is uncovering about driver attention, distraction and behavior through consumer survey findings.

The findings will help inform the next phase of drivefulness research, beginning in January 2027, on how people, technology and the driving environment can work together to support safer driving.

About State Farm®
For over 100 years, the mission of State Farm has been to help people manage the risks of everyday life, recover from the unexpected and realize their dreams. State Farm Mutual Automobile Insurance Company and its affiliates are the largest providers of auto and home insurance combined in the United States. Its more than 19,200 agent offices and over 62,000 employees serve over 96 million policies and accounts – including auto, fire, life, health, commercial policies and financial services accounts. Commercial auto insurance, along with coverage for renters, business owners, boats and motorcycles, is also available. State Farm Mutual Automobile Insurance Company is the parent of the State Farm family of companies. State Farm is ranked No. 32 on the 2025 Fortune 500 list of largest companies. For more information, please visit http://www.statefarm.com.

About the AWARE initiative at the MIT AgeLab
AWARE is an MIT research initiative focused on developing intelligent vehicle systems that can better understand drivers and support them in real-world conditions. Based at the MIT AgeLab and Center for Transportation & Logistics, AWARE brings together naturalistic driving research, advanced simulation, behavioral science, and artificial intelligence to study how driver state, behavior, and context interact across the driving journey. Its research examines areas such as distraction, fatigue, impairment, workload, automation use, driver monitoring, and human-machine interaction, with the goal of moving beyond simply detecting driver behavior toward systems that can sense, interpret, respond, and promote safer and more appropriate driver engagement. Through this work, AWARE is building the evidence and methods needed to support the next generation of adaptive, human-centered mobility technologies. For more information about AWARE, visit https://ctl.mit.edu/aware-initiative, and about the AgeLab, visit https://agelab.mit.edu/.

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