Standard Motor Products, Inc. Announces First Quarter 2023 Results

NEW YORK, May 3, 2023 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three months ended March 31, 2023.

Net sales for the first quarter of 2023 were $328.0 million, compared to consolidated net sales of $322.8 million during the comparable quarter in 2022. Earnings from continuing operations for the first quarter of 2023 were $12.7 million or $0.57 per diluted share, compared to $20.6 million or $0.91 per diluted share in the first quarter of 2022. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the first quarter of 2023 were $13.4 million or $0.61 per diluted share, compared to $20.6 million or $0.92 per diluted share in the first quarter of 2022.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are pleased with our first quarter results, as sales increased 1.6% against a difficult comparison, as last year's first quarter was up 17% from the previous year."

By segment, Vehicle Control sales were up 4.1% in the quarter, reflecting continued strength in demand within the aftermarket. Our customers' POS throughout the quarter also remained favorable, which bodes well for future demand.

Turning to Temperature Control, sales declined a modest 0.9% versus the almost 30% growth experienced during the same quarter last year.  As a seasonal business, first quarter sales are heavily dependent on customer preseason ordering patterns, and therefore not indicative of the full year.

Engineered Solutions sales were 2% lower than last year's first quarter, but 5% higher than the quarterly average sales level achieved in 2022. We expect this segment to be slightly lumpy quarter to quarter as a result of changes in customer order patterns.  Based upon customer interest, we continue to believe long-term sales growth will be strong, though revenue growth from business wins is not linear. 

Looking at profitability, consolidated non-GAAP operating profit margin was 6.6% in the quarter versus 8.3% in the first quarter last year. The decline in profit of $5.3 million was mainly the result of a $5.5 million increase in customer factoring program expense over last year, due to rising interest rates.  Excluding these incremental factoring costs, our operating expenses would have been flat year over year at 19.5% of net sales.  Adjusted EBITDA margin was 8.8% in the quarter versus 11.0% last year and was impacted by the above-mentioned factoring expense.  We continue to implement both pricing and cost savings initiatives to help offset rising interest cost increases and lingering inflationary pressures on certain commodities and labor expense.

Our sales and profit expectations for the full year of 2023 remain unchanged with top line sales growth expected to be in the low single digits with an Adjusted EBITDA margin of approximately 10% of revenue, assuming current interest rates. 

As part of our commitment to return value to shareholders, the Board of Directors has approved payment of a quarterly dividend of 29 cents per share on the common stock outstanding, which will be paid on June 1, 2023 to stockholders of record on May 15, 2023.

As we recently announced, we are pleased to have published our 2022 Corporate Sustainability report.  This report outlines our commitment to being environmentally and socially responsible, and highlights the noticeable progress we have made to date. We remain committed to leveraging sustainability as a catalyst for positive change both within our organization and in the communities within which we operate.

In closing, Mr. Sills commented, "While uncertainty remains, we continue to be bullish on all of our markets. The aftermarket has a long history of stability in challenging economic times, and while still relatively new to us, we are excited about where we are heading with our Engineered Solutions business and the attention it has been getting from its customer base.  We will continue to look for ways to drive growth, offset rising costs and deliver increasing value to all our customers and stakeholders alike."

Conference Call

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, May 3, 2023.  This call will be web cast and can be accessed on the Investor Relations page of our website at www.smpcorp.com and clicking on the SMP Q1 2023 Earnings Webcast link.  Investors may also listen to the call by dialing 800-225-9448 (domestic) or 203-518-9708 (international).  Our playback will be made available for dial in immediately following the call.  For those choosing to listen to the replay by webcast, the link should be active on our website within 24 hours after the call.  The playback number is 800-934-4245 (domestic) or 402-220-1173 (international). The participant passcode is 94640.

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Standard Motor Products cautions investors that any forward-looking statements made by the company, including those that may be made in this press release, are based on management's expectations at the time they are made, but they are subject to risks and uncertainties that may cause actual results, events or performance to differ materially from those contemplated by such forward looking statements. Among the factors that could cause actual results, events or performance to differ materially from those risks and uncertainties discussed in this press release are those detailed from time-to-time in prior press releases and in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q.  By making these forward-looking statements, Standard Motor Products undertakes no obligation or intention to update these statements after the date of this release.

 

STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
		THREE MONTHS ENDED
		MARCH 31,
		2023			2022
		(Unaudited)
NET SALES		$       328,028	100.0 %		$       322,831	100.0 %
COST OF SALES		236,761	72.2 %		232,991	72.2 %
GROSS PROFIT		91,267	27.8 %		89,840	27.8 %
SELLING, GENERAL & ADMINISTRATIVE EXPENSES		69,633	21.2 %		62,884	19.5 %
RESTRUCTURING AND INTEGRATION EXPENSES		912	0.3 %		41	0.0 %
OTHER INCOME, NET		24	0.0 %		-	0.0 %
OPERATING INCOME		20,746	6.3 %		26,915	8.3 %
OTHER NON-OPERATING INCOME, NET		225	0.1 %		1,449	0.4 %
INTEREST EXPENSE		3,862	1.2 %		805	0.2 %
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		17,109	5.2 %		27,559	8.5 %
PROVISION FOR INCOME TAXES		4,372	1.3 %		7,005	2.2 %
EARNINGS FROM CONTINUING OPERATIONS		12,737	3.9 %		20,554	6.4 %
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(780)	-0.2 %		(1,116)	-0.3 %
NET EARNINGS		11,957	3.6 %		19,438	6.0 %
NET EARNINGS (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST		39	0.0 %		(8)	0.0 %
NET EARNINGS ATTRIBUTABLE TO SMP (a)		$         11,918	3.6 %		$         19,446	6.0 %
NET EARNINGS ATTRIBUTABLE TO SMP
EARNINGS FROM CONTINUING OPERATIONS		$         12,698	3.9 %		$         20,562	6.4 %
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(780)	-0.2 %		(1,116)	-0.3 %
TOTAL		$         11,918	3.6 %		$         19,446	6.0 %
NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP
BASIC EARNINGS FROM CONTINUING OPERATIONS		$             0.59			$             0.94
DISCONTINUED OPERATION		(0.04)			(0.06)
NET EARNINGS PER COMMON SHARE - BASIC		$             0.55			$             0.88
DILUTED EARNINGS  FROM CONTINUING OPERATIONS		$             0.57			$             0.91
DISCONTINUED OPERATION		(0.03)			(0.04)
NET EARNINGS  PER COMMON SHARE - DILUTED		$             0.54			$             0.87
WEIGHTED AVERAGE NUMBER OF COMMON SHARES		21,609,618			21,978,507
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES		22,097,750			22,477,819
(a) "SMP" refers to Standard Motor Products, Inc. and subsidiaries.

 

STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Profit
(In thousands)
		THREE MONTHS ENDED
		March 31,
		2023			2022
		(Unaudited)
Revenues
Engine Management (Ignition, Emissions and
Fuel Delivery)		$       116,083			$       109,149
Electrical and Safety		51,804			52,257
Wire sets and other		16,690			15,858
Vehicle Control		184,577			177,264
AC System Components		45,752			47,374
Other Thermal Components		26,654			25,684
Temperature Control		72,406			73,058
Commercial Vehicle		19,857			21,451
Construction / Agriculture		12,795			10,984
Light Vehicle		22,966			26,075
All Other		15,427			13,999
Engineered Solutions		71,045			72,509
Revenues		$       328,028			$       322,831
Gross Margin
Vehicle Control		$         58,472	31.7 %		$         55,424	31.3 %
Temperature Control		19,155	26.5 %		19,488	26.7 %
Engineered Solutions		13,640	19.2 %		14,928	20.6 %
All Other		-			-
Gross Margin		$         91,267	27.8 %		$         89,840	27.8 %
Selling, General & Administrative
Vehicle Control		$         40,836	22.1 %		$         35,039	19.8 %
Temperature Control		16,528	22.8 %		15,326	21.0 %
Engineered Solutions		7,909	11.1 %		8,640	11.9 %
All Other		4,360			3,879
Selling, General & Administrative		$         69,633	21.2 %		$         62,884	19.5 %
Operating Income
Vehicle Control		$         17,636	9.6 %		$         20,385	11.5 %
Temperature Control		2,627	3.6 %		4,162	5.7 %
Engineered Solutions		5,731	8.1 %		6,288	8.7 %
All Other		(4,360)			(3,879)
Subtotal		$         21,634	6.6 %		$         26,956	8.3 %
Restructuring & Integration		(912)	-0.3 %		(41)	0.0 %
Other Income, Net		24	0.0 %		-	0.0 %
Operating Income		$         20,746	6.3 %		$         26,915	8.3 %

 

STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures
(In thousands, except per share amounts)
		THREE MONTHS ENDED
		MARCH 31,
		2023		2022
		(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP EARNINGS FROM CONTINUING OPERATIONS		$          12,698		$          20,562
RESTRUCTURING AND INTEGRATION EXPENSES		912		41
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		(237)		(11)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS		$          13,373		$          20,592
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$             0.57		$             0.91
RESTRUCTURING AND INTEGRATION EXPENSES		0.04		0.01
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		-		-
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$             0.61		$             0.92
OPERATING INCOME
GAAP OPERATING INCOME		$          20,746		$          26,915
RESTRUCTURING AND INTEGRATION EXPENSES		912		41
OTHER INCOME, NET		(24)		-		LAST TWELVE MONTHS ENDED				YEAR ENDED
						MARCH 31,				DECEMBER 31,
NON-GAAP OPERATING INCOME		$          21,634		$          26,956		2023		2022		2022
						(Unaudited)
EBITDA WITHOUT SPECIAL ITEMS
GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		$          17,109		$          27,559		$          87,882		$        128,274		$           98,332
DEPRECIATION AND AMORTIZATION		7,082		6,952		28,428		27,681		28,298
INTEREST EXPENSE		3,862		805		13,674		2,624		10,617
EBITDA		28,053		35,316		129,984		158,579		137,247
RESTRUCTURING AND INTEGRATION EXPENSES		912		41		2,762		433		1,891
CUSTOMER BANKRUPTCY CHARGE		-		-		7,002		-		7,002
ONE-TIME ACQUISITION COSTS		-		-		-		1,711		-
SPECIAL ITEMS		912		41		9,764		2,144		8,893
EBITDA WITHOUT SPECIAL ITEMS		$          28,965		$          35,357		$        139,748		$        160,723		$         146,140

MANAGEMENT BELIEVES THAT NON-GAAP EARNINGS FROM CONTINUING OPERATIONS AND NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS WHICH ARE ATTRIBUTABLE TO SMP, AND NON-GAAP OPERATING INCOME AND EBITDA WITHOUT SPECIAL ITEMS, EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS.  SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

 

STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures by Segments
(In thousands)		THREE MONTHS ENDED MARCH 31, 2023
		Vehicle Control		Temperature Control		Engineered Solutions		All Other		Consolidated
		(Unaudited)
OPERATING INCOME
GAAP OPERATING INCOME		$          17,375		$            2,084		$           5,647		$           (4,360)		$          20,746
RESTRUCTURING AND INTEGRATION EXPENSES		285		543		84		-		912
OTHER INCOME, NET		(24)		-		-		-		(24)
NON-GAAP OPERATING INCOME		$          17,636		$            2,627		$           5,731		$           (4,360)		$          21,634
EBITDA WITHOUT SPECIAL ITEMS
GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		$          15,057		$            1,105		$           5,286		$           (4,339)		$          17,109
DEPRECIATION AND AMORTIZATION		3,412		763		2,481		426		7,082
INTEREST EXPENSE		2,741		893		359		(131)		3,862
EBITDA		21,210		2,761		8,126		(4,044)		28,053
RESTRUCTURING AND INTEGRATION EXPENSES		285		543		84		-		912
SPECIAL ITEMS		285		543		84		-		912
EBITDA WITHOUT SPECIAL ITEMS		$          21,495		$            3,304		$           8,210		$           (4,044)		$          28,965
% of Net Sales		11.6 %		4.6 %		11.6 %				8.8 %
		THREE MONTHS ENDED MARCH 31, 2022
		Vehicle Control		Temperature Control		Engineered Solutions		All Other		Consolidated
		(Unaudited)
OPERATING INCOME
GAAP OPERATING INCOME		$          20,344		$            4,162		$           6,288		$           (3,879)		$          26,915
RESTRUCTURING AND INTEGRATION EXPENSES		41		-		-		-		41
OTHER INCOME, NET		-		-		-		-		-
NON-GAAP OPERATING INCOME		$          20,385		$            4,162		$           6,288		$           (3,879)		$          26,956
EBITDA WITHOUT SPECIAL ITEMS
GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		$          20,366		$            4,480		$           6,578		$           (3,865)		$          27,559
DEPRECIATION AND AMORTIZATION		3,417		680		2,458		397		6,952
INTEREST EXPENSE		575		160		146		(76)		805
EBITDA		24,358		5,320		9,182		(3,544)		35,316
RESTRUCTURING AND INTEGRATION EXPENSES		41		-		-		-		41
SPECIAL ITEMS		41		-		-		-		41
EBITDA WITHOUT SPECIAL ITEMS		$          24,399		$            5,320		$           9,182		$           (3,544)		$          35,357
% of Net Sales		13.8 %		7.3 %		12.7 %				11.0 %

MANAGEMENT BELIEVES THAT NON-GAAP OPERATING INCOME AND EBITDA WITHOUT SPECIAL ITEMS, EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS.  SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

 

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
		MARCH		MARCH		DECEMBER
		2023		2022		2022
		(Unaudited)		(Unaudited)
ASSETS
CASH		$         24,196		$         19,999		$         21,150
ACCOUNTS RECEIVABLE, GROSS		216,617		231,963		173,013
ALLOWANCE FOR EXPECTED CREDIT LOSSES		5,816		6,660		5,375
ACCOUNTS RECEIVABLE, NET		210,801		225,303		167,638
INVENTORIES		522,039		534,421		528,715
UNRETURNED CUSTOMER INVENTORY		20,626		22,221		19,695
OTHER CURRENT ASSETS		26,192		17,471		25,241
TOTAL CURRENT ASSETS		803,854		819,415		762,439
PROPERTY, PLANT AND EQUIPMENT, NET		107,123		102,984		107,148
OPERATING LEASE RIGHT-OF-USE ASSETS		74,291		42,116		49,838
GOODWILL		132,289		131,538		132,087
OTHER INTANGIBLES, NET		98,389		104,344		100,504
DEFERRED INCOME TAXES		33,893		35,964		33,658
INVESTMENT IN UNCONSOLIDATED AFFILIATES		42,719		45,518		41,745
OTHER ASSETS		27,462		28,530		27,510
TOTAL ASSETS		$    1,320,020		$    1,310,409		$    1,254,929
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT PORTION OF REVOLVING CREDIT FACILITY		$         52,600		$       245,450		$         50,000
CURRENT PORTION OF TERM LOAN AND OTHER DEBT		5,014		3,235		5,031
ACCOUNTS PAYABLE		94,372		139,392		89,247
ACCRUED CUSTOMER RETURNS		42,153		46,085		37,169
ACCRUED CORE LIABILITY		21,319		23,513		22,952
ACCRUED REBATES		39,657		42,606		37,381
PAYROLL AND COMMISSIONS		24,268		31,972		31,361
SUNDRY PAYABLES AND ACCRUED EXPENSES		42,041		45,875		49,990
TOTAL CURRENT LIABILITIES		321,424		578,128		323,131
LONG-TERM DEBT		215,487		-		184,589
NONCURRENT OPERATING LEASE LIABILITY		65,319		32,281		40,709
ACCRUED ASBESTOS LIABILITIES		60,820		51,909		63,305
OTHER LIABILITIES		24,298		25,178		22,157
TOTAL LIABILITIES		687,348		687,496		633,891
TOTAL SMP STOCKHOLDERS' EQUITY		621,644		611,871		610,020
NONCONTROLLING INTEREST		11,028		11,042		11,018
TOTAL STOCKHOLDERS' EQUITY		632,672		622,913		621,038
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$    1,320,020		$    1,310,409		$    1,254,929

 

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
	(In thousands)
		THREE MONTHS ENDED
		MARCH 31,
		2023			2022
		(Unaudited)
	CASH FLOWS FROM OPERATING ACTIVITIES
	NET EARNINGS	$       11,957			$       19,438
	ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
	USED IN OPERATING ACTIVITIES:
	DEPRECIATION AND AMORTIZATION	7,082			6,952
	OTHER	4,587			4,374
	CHANGE IN ASSETS AND LIABILITIES:
	ACCOUNTS RECEIVABLE	(42,617)			(44,706)
	INVENTORY	6,195			(67,662)
	ACCOUNTS PAYABLE	4,809			1,942
	PREPAID EXPENSES AND OTHER CURRENT ASSETS	1,165			2,171
	SUNDRY PAYABLES AND ACCRUED EXPENSES	(10,656)			(21,226)
	OTHER	(2,964)			(5,245)
	NET CASH USED IN OPERATING ACTIVITIES	(20,442)			(103,962)
	CASH FLOWS FROM INVESTING ACTIVITIES
	CAPITAL EXPENDITURES	(4,363)			(6,449)
	OTHER INVESTING ACTIVITIES	13			-
	NET CASH USED IN INVESTING ACTIVITIES	(4,350)			(6,449)
	CASH FLOWS FROM FINANCING ACTIVITIES
	NET CHANGE IN DEBT	33,478			120,340
	PURCHASE OF TREASURY STOCK	-			(6,517)
	DIVIDENDS PAID	(6,261)			(5,935)
	OTHER FINANCING ACTIVITIES	125			444
	NET CASH PROVIDED BY FINANCING ACTIVITIES	27,342			108,332
	EFFECT OF EXCHANGE RATE CHANGES ON CASH	496			323
	NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	3,046			(1,756)
	CASH AND CASH EQUIVALENTS at beginning of period	21,150			21,755
	CASH AND CASH EQUIVALENTS at end of period	$       24,196			$       19,999

 

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SOURCE Standard Motor Products, Inc.