Standard Motor Products, Inc. Announces Second Quarter 2022 Results and Quarterly Dividend

Rhea-AI Summary

Standard Motor Products (NYSE: SMP) reported Q2 2022 net sales of $359.4 million, a 5.1% increase from Q2 2021. However, earnings from continuing operations fell to $20.8 million ($0.93/share), down from $28.0 million ($1.23/share). For the six months ended June 30, 2022, sales were $682.2 million, up 10.3% year-over-year, but earnings dropped to $41.4 million ($1.85/share) from $50.2 million ($2.21/share). A dividend of $0.27 per share will be paid on September 1, 2022. The company anticipates lower gross margins due to inflation and supply chain challenges.

Positive

• Q2 2022 net sales increased by 5.1% year-over-year.
• Temperature Control division saw a sales growth of 7.5% due to strong demand.
• New five-year $500 million credit facility enhances financial flexibility.
• Board approved a quarterly dividend of $0.27 per share.
• Initiated a new $30 million common share repurchase plan.

Negative

• Earnings from continuing operations decreased to $20.8 million, down from $28 million in Q2 2021.
• Operating margins fell to 7.8%, below expectations.
• Projected gross margin is lower than anticipated at approximately 27% for the year.
• Rising interest rates are increasing costs related to supply chain finance.

NEW YORK, Aug. 3, 2022 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three and six months ended June 30, 2022.

Net sales for the second quarter of 2022 were $359.4 million, compared to consolidated net sales of $342.1 million during the comparable quarter in 2021. Earnings from continuing operations for the second quarter of 2022 were $20.8 million or $0.93 cents per diluted share, compared to $28.0 million or $1.23 cents per diluted share in the second quarter of 2021. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the second quarter of 2022 were $20.8 million or $0.93 cents per diluted share, compared to $28.6 million or $1.26 per diluted share in the second quarter of 2021.

Consolidated net sales for the six months ended June 30, 2022, were $682.2 million, compared to consolidated net sales of $618.6 million during the comparable period in 2021.  Earnings from continuing operations for the six months ended June 30, 2022, were $41.4 million or $1.85 per diluted share, compared to $50.2 million or $2.21 per diluted share in the comparable period of 2021.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the six months ended June 30, 2022 and 2021 were $41.4 million or $1.85 per diluted share and $50.7 million or $2.23 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "Although we faced a challenging macroeconomic environment in the second quarter, we are pleased with our sales results, particularly against the record sales in the comparable period last year. Our sales improved 5.1% over last year's strong second quarter, with particular strength in our Temperature Control division.   

"By division, Engine Management sales increased 3.7% in the quarter, driven largely by acquisitions made in 2021 as well as price increases that were implemented during the quarter. Customer POS remained solid throughout the quarter against record levels from 2021, excluding Wire and Cable, which has returned to its secular decline.

"Turning to Temperature Control, an early start to the summer season provided a favorable tailwind against the challenging comparison from last year. Sales grew 7.5% year over year due to a combination of new business wins, price increases, and solid customer demand.  Record heat has continued into the 3^rd quarter across the country, and while weather trends are hard to predict, we are hopeful for ongoing strong customer demand, although we face a difficult comparison relative to last year's long, hot summer.  

"We were also pleased with the performance of our specialized non-aftermarket channels. To remind you, this focuses on custom-engineered products for niche end markets such as medium and heavy-duty vehicles, construction and agricultural equipment, power sports, and others. Over the past few years we have doubled this business to a run rate of $300 million.  We continue to make progress integrating our recent acquisitions, and are making inroads as we identify cross-selling opportunities.

"Consolidated operating margins were below expectations at 7.8% in the second quarter. Inflationary pressures across many cost inputs remain a headwind, and we continue to implement price increases in an effort to offset these higher costs.  Additionally, the rapid rise in interest rates has resulted in increased costs related to customer supply chain finance programs.  We are actively pursuing initiatives to help offset these elevated operating costs.  

"Given this year's inflationary and supply chain challenges, we expect our consolidated gross margin will be lower than originally anticipated at approximately 27% for the full year.  We also note that with the projected interest rate hikes and the associated impact on our factoring program expenses, we expect our operating profit will be in the range of 7-8% of net sales. 

"As previously announced, during the quarter we entered into a new five-year $500 million credit facility that includes a $100 million term loan and $400 million revolving credit facility. In addition, SMP entered into an interest rate swap agreement to fix the interest rate on $100 million of borrowings under the new facility.  This new credit facility is expected to afford us the flexibility we need to support our growth and continue to execute on strategic priorities.  The new facility should also allow for our continued focus on returning value to our shareholders with quarterly dividends and opportunistic share repurchases.

"To that point, the Board of Directors has approved payment of a quarterly dividend of 27 cents per share on the common stock outstanding, which will be paid on September 1, 2022 to stockholders of record on August 15, 2022.  Furthermore, we repurchased shares of our common stock in the amount of $19.6 million during the quarter.  To date as of this release, we have exhausted the remaining balance of the prior $30 million share repurchase authorization.  As a result, the Board of Directors has authorized a new $30 million common share repurchase plan.    

"Lastly, as recently announced, we were deeply saddened by the passing of John Gethin, a Director for the company since 2016. Prior to that, John was a long-tenured leader at SMP, including many years as our Chief Operating Officer and President. He will be sorely missed. In connection with John's passing, the Board of Directors decreased the size of the Board from ten to nine directors, effective as of July 28, 2022.

"In closing, there remains much uncertainty as we head into the second half of 2022 with respect to inflation, interest rates and the increasing risk of potential recession.  Yet we remain confident in our business and the industry's resilience based on performance during past turbulent markets.  Underlying tailwinds including an aging fleet, limited new vehicle availability and favorable summer weather to date should help offset some of the potential near-term challenges that may persist.  Furthermore, we believe our go-to-market strategy of being a full-line full-service supplier of professional grade products continues to resonate with our customers, and our favorable manufacturing footprint which relies less on the Far East than many of our peers provides us with structural advantages to better control our supply chain. We also remain bullish on our expansion into new markets, and see vast potential in growing this business. Finally, we thank all of our people for their effort in working with us through challenging times."   

Conference Call
Standard Motor Products, Inc. will hold a conference call at 10:30 AM, Eastern Time, on Wednesday, August 3rd, 2022.  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 SMPQ22022 Earnings Webcast link.  Investors may also listen to the call by dialing 866-952-8559 (domestic) or 785-424-1877 (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 800-934-8221 (domestic) or 402-220-6990 (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							SIX MONTHS ENDED
		JUNE 30,							JUNE 30,
		2022			2021				2022			2021
		(Unaudited)							(Unaudited)
NET SALES		$      359,412			$      342,076				$      682,243			$      618,629
COST OF SALES		263,061			242,804				496,052			435,573
GROSS PROFIT		96,351			99,272				186,191			183,056
SELLING, GENERAL & ADMINISTRATIVE EXPENSES		68,468			62,347				131,352			116,807
RESTRUCTURING AND INTEGRATION EXPENSES		3			-				44			-
OTHER INCOME, NET		13			-				13			-
OPERATING INCOME		27,893			36,925				54,808			66,249
OTHER NON-OPERATING INCOME, NET		1,927			832				3,376			1,467
INTEREST EXPENSE		1,821			495				2,626			704
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		27,999			37,262				55,558			67,012
PROVISION FOR INCOME TAXES		7,122			9,248				14,127			16,834
EARNINGS FROM CONTINUING OPERATIONS		20,877			28,014				41,431			50,178
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(1,666)			(853)				(2,782)			(2,017)
NET EARNINGS		19,211			27,161				38,649			48,161
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		85			19				77			19
NET EARNINGS ATTRIBUTABLE TO SMP (a)		$        19,126			$        27,142				$        38,572			$        48,142
NET EARNINGS ATTRIBUTABLE TO SMP
EARNINGS FROM CONTINUING OPERATIONS		$        20,792			$        27,995				$        41,354			$        50,159
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(1,666)			(853)				(2,782)			(2,017)
TOTAL		$        19,126			$        27,142				$        38,572			$        48,142
NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP
BASIC EARNINGS FROM CONTINUING OPERATIONS		$            0.96			$            1.26				$            1.89			$            2.25
DISCONTINUED OPERATION		(0.08)			(0.04)				(0.13)			(0.09)
NET EARNINGS PER COMMON SHARE - BASIC		$            0.88			$            1.22				$            1.76			$            2.16
DILUTED EARNINGS  FROM CONTINUING OPERATIONS		$            0.93			$            1.23				$            1.85			$            2.21
DISCONTINUED OPERATION		(0.07)			(0.03)				(0.13)			(0.09)
NET EARNINGS  PER COMMON SHARE - DILUTED		$            0.86			$            1.20				$            1.72			$            2.12
WEIGHTED AVERAGE NUMBER OF COMMON SHARES		21,757,998			22,198,545				21,867,644			22,257,922
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES		22,255,642			22,686,384				22,372,702			22,741,171
(a) "SMP" refers to Standard Motor Products, Inc. and subsidiaries.

 

STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Profit
(In thousands)
		THREE MONTHS ENDED						SIX MONTHS ENDED
		JUNE 30,						JUNE 30,
		2022			2021			2022			2021
		(unaudited)						(unaudited)
Revenues
Ignition, Emission Control, Fuel & Safety
Related System Products		$      202,823			$      192,486			$      403,177			$      366,152
Wire and Cable		39,050			40,730			77,953			79,082
Engine Management		241,873			233,216			481,130			445,234
Compressors		72,063			69,577			115,340			102,951
Other Climate Control Parts		42,369			36,894			80,413			65,993
Temperature Control		114,432			106,471			195,753			168,944
All Other		3,107			2,389			5,360			4,451
Revenues		$      359,412			$      342,076			$      682,243			$      618,629
Gross Margin
Engine Management		$       62,294	25.8 %		$       67,532	29.0 %		$      127,829	26.6 %		$      132,602	29.8 %
Temperature Control		30,564	26.7 %		28,658	26.9 %		50,550	25.8 %		44,653	26.4 %
All Other		3,493			3,167			7,812			5,886
Gross Margin		$       96,351	26.8 %		$       99,357	29.0 %		$      186,191	27.3 %		$      183,141	29.6 %
One-Time Acquisition Costs		-	0.0 %		(85)	0.0 %		-	0.0 %		(85)	0.0 %
Gross Margin		$       96,351	26.8 %		$       99,272	29.0 %		$      186,191	27.3 %		$      183,056	29.6 %
Selling, General & Administrative
Engine Management		$       41,204	17.0 %		$       37,063	15.9 %		$       79,982	16.6 %		$       71,019	16.0 %
Temperature Control		18,299	16.0 %		15,429	14.5 %		33,067	16.9 %		27,832	16.5 %
All Other		8,965			9,185			18,303			17,286
Selling, General & Administrative		$       68,468	19.1 %		$       61,677	18.0 %		$      131,352	19.3 %		$      116,137	18.8 %
One-Time Acquisition Costs		-	0.0 %		670	0.2 %		-	0.0 %		670	0.1 %
Selling, General & Administrative		$       68,468	19.1 %		$       62,347	18.2 %		$      131,352	19.3 %		$      116,807	18.9 %
Operating Income
Engine Management		$       21,090	8.7 %		$       30,469	13.1 %		$       47,847	9.9 %		$       61,583	13.8 %
Temperature Control		12,265	10.7 %		13,229	12.4 %		17,483	8.9 %		16,821	10.0 %
All Other		(5,472)			(6,018)			(10,491)			(11,400)
Subtotal		$       27,883	7.8 %		$       37,680	11.0 %		$       54,839	8.0 %		$       67,004	10.8 %
One-Time Acquisition Costs		-	0.0 %		(755)	-0.2 %		-	0.0 %		(755)	-0.1 %
Restructuring & Integration		(3)	0.0 %		-	0.0 %		(44)	0.0 %		-	0.0 %
Other Income, Net		13	0.0 %		-	0.0 %		13	0.0 %		-	0.0 %
Operating Income		$       27,893	7.8 %		$       36,925	10.8 %		$       54,808	8.0 %		$       66,249	10.7 %

 

STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures
(In thousands, except per share amounts)
		THREE MONTHS ENDED				SIX MONTHS ENDED
		JUNE 30,				JUNE 30,
		2022		2021		2022		2021
		(Unaudited)				(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP EARNINGS FROM CONTINUING OPERATIONS		$          20,792		$          27,995		$          41,354		$          50,159
RESTRUCTURING AND INTEGRATION EXPENSES		3		-		44		-
ONE-TIME ACQUISITION COSTS		-		755		-		755
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		-		(196)		(11)		(196)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS		$          20,795		$          28,554		$          41,387		$          50,718
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$             0.93		$             1.23		$             1.85		$             2.21
RESTRUCTURING AND INTEGRATION EXPENSES		-		-		-		-
ONE-TIME ACQUISITION COSTS		-		0.03		-		0.03
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		-		-		-		(0.01)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$             0.93		$             1.26		$             1.85		$             2.23
OPERATING INCOME
GAAP OPERATING INCOME		$          27,893		$          36,925		$          54,808		$          66,249
RESTRUCTURING AND INTEGRATION EXPENSES		3		-		44		-
ONE-TIME ACQUISITION COSTS		-		755		-		755
OTHER (INCOME) EXPENSE, NET		(13)		-		(13)		-		LAST TWELVE MONTHS ENDED				YEAR ENDED
										JUNE 30,				DECEMBER 31,
NON-GAAP OPERATING INCOME		$          27,883		$          37,680		$          54,839		$          67,004		2022		2021		2021
										(Unaudited)
EBITDA WITHOUT SPECIAL ITEMS
GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		$          27,999		$          37,262		$          55,558		$          67,012		$        119,011		$        145,614		$         130,465
DEPRECIATION AND AMORTIZATION		6,941		6,586		13,893		13,100		28,036		26,546		27,243
INTEREST EXPENSE		1,821		495		2,626		704		3,950		1,387		2,028
EBITDA		36,761		44,343		72,077		80,816		150,997		173,547		159,736
RESTRUCTURING AND INTEGRATION EXPENSES		3		-		44		-		436		250		392
ONE-TIME ACQUISITION COSTS		-		755		-		755		956		755		1,711
INTANGIBLE ASSET IMPAIRMENT		-		-		-		-		-		2,600		-
SPECIAL ITEMS		3		755		44		755		1,392		3,605		2,103
EBITDA WITHOUT SPECIAL ITEMS		$          36,764		$          45,098		$          72,121		$          81,571		$        152,389		$        177,152		$         161,839

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.
Condensed Consolidated Balance Sheets
(In thousands)
		June 30,			December  31,
		2022			2021
		(Unaudited)
ASSETS
CASH		$        14,186			$        21,755
ACCOUNTS RECEIVABLE, GROSS		235,669			186,774
ALLOWANCE FOR EXPECTED CREDIT LOSSES		6,012			6,170
ACCOUNTS RECEIVABLE, NET		229,657			180,604
INVENTORIES		551,415			468,755
UNRETURNED CUSTOMER INVENTORY		21,405			22,268
OTHER CURRENT ASSETS		26,198			17,823
TOTAL CURRENT ASSETS		842,861			711,205
PROPERTY, PLANT AND EQUIPMENT, NET		104,931			102,786
OPERATING LEASE RIGHT-OF-USE ASSETS		39,827			40,469
GOODWILL		131,125			131,652
OTHER INTANGIBLES, NET		101,649			106,234
DEFERRED INCOME TAXES		34,086			36,126
INVESTMENT IN UNCONSOLIDATED AFFILIATES		44,885			44,087
OTHER ASSETS		27,188			25,402
TOTAL ASSETS		$    1,326,552			$    1,197,961
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT PORTION OF REVOLVING CREDIT FACILITY		$        56,000			$       125,298
CURRENT PORTION OF TERM LOAN AND OTHER DEBT		7,954			3,117
ACCOUNTS PAYABLE		140,082			137,167
ACCRUED CUSTOMER RETURNS		55,725			42,412
ACCRUED CORE LIABILITY		23,117			23,663
ACCRUED REBATES		41,647			42,472
PAYROLL AND COMMISSIONS		35,985			45,058
SUNDRY PAYABLES AND ACCRUED EXPENSES		49,710			57,182
TOTAL CURRENT LIABILITIES		410,220			476,369
LONG-TERM DEBT		203,500			21
NONCURRENT OPERATING LEASE LIABILITY		30,039			31,206
ACCRUED ASBESTOS LIABILITIES		48,025			52,698
OTHER LIABILITIES		22,119			25,040
TOTAL LIABILITIES		713,903			585,334
TOTAL SMP STOCKHOLDERS' EQUITY		601,586			601,580
NONCONTROLLING INTEREST		11,063			11,047
TOTAL STOCKHOLDERS' EQUITY		612,649			612,627
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$    1,326,552			$    1,197,961

 

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
	SIX MONTHS ENDED
	JUNE 30,
	2022			2021
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS	$        38,649			$        48,161
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION	13,893			13,100
OTHER	10,831			4,127
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE	(49,659)			(4,715)
INVENTORY	(87,744)			(46,682)
ACCOUNTS PAYABLE	1,591			16,097
PREPAID EXPENSES AND OTHER CURRENT ASSETS	(7,102)			3,220
SUNDRY PAYABLES AND ACCRUED EXPENSES	(5,020)			(6,491)
OTHER	(10,772)			(3,664)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(95,333)			23,153
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES	-			(109,267)
CAPITAL EXPENDITURES	(13,203)			(11,709)
OTHER INVESTING ACTIVITIES	-			2
NET CASH USED IN INVESTING ACTIVITIES	(13,203)			(120,974)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CHANGE IN DEBT	139,319			127,250
PURCHASE OF TREASURY STOCK	(25,605)			(11,096)
DIVIDENDS PAID	(11,822)			(11,134)
PAYMENTS OF DEBT ISSUANCE COSTS	(2,128)			-
OTHER FINANCING ACTIVITIES	1,903			694
NET CASH PROVIDED BY FINANCING ACTIVITIES	101,667			105,714
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(700)			72
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(7,569)			7,965
CASH AND CASH EQUIVALENTS at beginning of period	21,755			19,488
CASH AND CASH EQUIVALENTS at end of period	$        14,186			$        27,453

 

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SOURCE Standard Motor Products, Inc.

FAQ

What were Standard Motor Products' net sales for Q2 2022?

Standard Motor Products reported net sales of $359.4 million for Q2 2022.

How much did the company's earnings per diluted share drop in Q2 2022?

Earnings per diluted share dropped to $0.93 in Q2 2022 from $1.23 in Q2 2021.

What is the dividend amount and payment date for Standard Motor Products?

The Board approved a quarterly dividend of $0.27 per share, payable on September 1, 2022.

What challenges did Standard Motor Products mention for the second half of 2022?

The company cited inflation, interest rate increases, and risks of potential recession as challenges.

How did the Temperature Control division perform in Q2 2022?

The Temperature Control division experienced a sales growth of 7.5% year-over-year.