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

Rhea-AI Summary

Standard Motor Products, Inc. (NYSE: SMP) reported Q3 2022 net sales of $381.4 million, up from $370.3 million in Q3 2021. However, earnings declined to $23.1 million or $1.06 per diluted share, compared to $29.2 million or $1.29 per diluted share in the prior year. For the nine months ending September 30, 2022, sales reached $1.06 billion, up from $988.9 million in 2021, while earnings fell to $64.5 million or $2.91 per diluted share. The company announced a quarterly dividend of 27 cents per share, payable on December 1, 2022, amidst ongoing inflation concerns and rising interest rates.

Positive

• Q3 2022 net sales increased 3% YoY to $381.4 million.
• Q3 earnings, excluding non-operational losses, were $22.9 million.
• Strong sales in Temperature Control segment with a 3.3% growth QoQ.
• Acquisition of Kade Trading GmbH enhances European market entry.
• Quarterly dividend of 27 cents per share approved.

Negative

• Earnings per diluted share decreased from $1.29 in Q3 2021 to $1.06 in Q3 2022.
• Ongoing inflation and rising interest rates impacting operating profit.
• Operating profit below last year's levels at 8.8%.

NEW YORK, Oct. 28, 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 nine months ended September 30, 2022.

Net sales for the third quarter of 2022 were $381.4 million, compared to consolidated net sales of $370.3 million during the comparable quarter in 2021. Earnings from continuing operations for the third quarter of 2022 were $23.1 million or $1.06 per diluted share, compared to $29.2 million or $1.29 per diluted share in the third 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 third quarter of 2022 were $22.9 million or $1.05 per diluted share, compared to $29.7 million or $1.32 per diluted share in the third quarter of 2021.

Consolidated net sales for the nine months ended September 30, 2022, were $1.06 billion, compared to consolidated net sales of $988.9 million during the comparable period in 2021.  Earnings from continuing operations for the nine months ended September 30, 2022, were $64.5 million or $2.91 per diluted share, compared to $79.3 million or $3.50 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 nine months ended September 30, 2022 and 2021 were $64.3 million or $2.90 per diluted share and $80.4 million or $3.54 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "Overall, we are pleased with our sales results which continue to reflect the steady demand for our products as seen in our 3% sales increase over last year, with gains in both segments." 

Engine Management sales increased approximately 2% in the quarter despite tough comparisons. Excluding the Wire and Cable business, which is in secular ongoing decline, our Engine Management sales were ahead approximately 3%, in line with our long-term projections of low single digit growth. Engine Management experienced consistently higher customer POS levels throughout the quarter against record levels from 2021.   

Temperature Control benefited from a strong summer season with extreme temperatures across many regions even against record heat and the difficult comparison in 2021.  Sales grew 3.3% in the quarter vs. last year, and up nearly 11% year-to-date due to a combination of favorable weather, successful pricing initiatives and overall strength in customer demand. 

We were also pleased with the performance of our specialized non-aftermarket business, which focuses on custom-engineered products for niche end markets such as medium and heavy-duty vehicles, construction and agricultural equipment, power sports, and others. Our business strategy remains on track with a sales run rate of over $300 million.  Cross-selling opportunities continue to surface and customers are beginning to look beyond their current product categories and inquiring as to other potential solutions and capabilities we can provide. 

In October, we acquired Kade Trading GmbH, a supplier of temperature control products across Europe. While small at $6 million in annual sales, it provides synergies to our other recent acquisitions, and provides SMP with an entry point into the European market for our temperature control products with a strong focus on the continuing electrification of thermal systems. 

Consolidated operating profit was 8.8% and was helped by the strength of the Temperature Control segment.  However, operating profit was below last year's record levels as ongoing inflationary pressures and rising interest rates continue to create a headwind. We will be implementing additional price increases and continue to seek out cost savings opportunities to offset these higher expenses. 

Our outlook for the full year has incorporated inflationary pressures and interest rate increases as noted above, and remains unchanged from our prior quarter.  We expect our full year gross margin to be approximately 27% and expect our operating profit to be in the range of 7-8% of net sales. 

Finally, we are pleased to announce that our 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 December 1, 2022 to stockholders of record on November 15, 2022.  

In closing, Mr. Sills commented, "The past three years have presented some unprecedented challenges to our industry and the marketplace in general. While there remain many unknowns related to inflation, interest rates and the increasing risk of potential recession, we are confident in our ability to navigate these challenges. We appreciate and thank all our employees for their hard work and support during this difficult period."   

Conference Call

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Friday, October 28th, 2022.  This call will be webcast and can be accessed on the Investor Relations page of our website at www.smpcorp.com and clicking on the SMP Q3'22 Earnings Call Earnings Webcast link.  Investors may also listen to the call by dialing 800-791-4813 (domestic) or 785-424-1102 (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 800-839-9562 (domestic) or 402-220-6090 (international). The participant passcode is 34579.

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							NINE MONTHS ENDED
		SEPTEMBER 30,							SEPTEMBER 30,
		2022			2021				2022			2021
		(Unaudited)							(Unaudited)
NET SALES		$       381,373			$       370,310				$    1,063,616			$       988,939
COST OF SALES		274,589			265,105				770,641			700,678
GROSS PROFIT		106,784			105,205				292,975			288,261
SELLING, GENERAL & ADMINISTRATIVE EXPENSES		73,199			66,509				204,551			183,316
RESTRUCTURING AND INTEGRATION EXPENSES		-			166				44			166
OTHER INCOME, NET		30			8				43			8
OPERATING INCOME		33,615			38,538				88,423			104,787
OTHER NON-OPERATING INCOME, NET		1,513			780				4,889			2,247
INTEREST EXPENSE		3,656			652				6,282			1,356
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		31,472			38,666				87,030			105,678
PROVISION FOR INCOME TAXES		8,280			9,481				22,407			26,315
EARNINGS FROM CONTINUING OPERATIONS		23,192			29,185				64,623			79,363
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(14,294)			(5,122)				(17,076)			(7,139)
NET EARNINGS		8,898			24,063				47,547			72,224
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		52			13				129			32
NET EARNINGS ATTRIBUTABLE TO SMP (a)		$           8,846			$         24,050				$         47,418			$         72,192
NET EARNINGS ATTRIBUTABLE TO SMP
EARNINGS FROM CONTINUING OPERATIONS		$         23,140			$         29,172				$         64,494			$         79,331
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(14,294)			(5,122)				(17,076)			(7,139)
TOTAL		$           8,846			$         24,050				$         47,418			$         72,192
NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP
BASIC EARNINGS FROM CONTINUING OPERATIONS		$            1.08			$            1.32				$            2.97			$            3.57
DISCONTINUED OPERATION		(0.67)			(0.23)				(0.79)			(0.32)
NET EARNINGS PER COMMON SHARE - BASIC		$            0.41			$            1.09				$            2.18			$            3.25
DILUTED EARNINGS  FROM CONTINUING OPERATIONS		$            1.06			$            1.29				$            2.91			$            3.50
DISCONTINUED OPERATION		(0.66)			(0.22)				(0.77)			(0.32)
NET EARNINGS  PER COMMON SHARE - DILUTED		$            0.40			$            1.07				$            2.14			$            3.18
WEIGHTED AVERAGE NUMBER OF COMMON SHARES		21,427,393			22,090,195				21,719,281			22,201,398
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES		21,847,602			22,543,781				22,153,348			22,678,114
(a) "SMP" refers to Standard Motor Products, Inc. and subsidiaries.

 

STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Profit
(In thousands)
		THREE MONTHS ENDED						NINE MONTHS ENDED
		SEPTEMBER 30,						SEPTEMBER 30,
		2022			2021			2022			2021
		(unaudited)						(unaudited)
Revenues
Ignition, Emission Control, Fuel & Safety
Related System Products		$      215,021			$      208,443			$      618,198			$      574,595
Wire and Cable		36,720			38,708			114,673			117,790
Engine Management		251,741			247,151			732,871			692,385
Compressors		78,211			75,080			193,551			178,031
Other Climate Control Parts		44,780			43,995			125,193			109,988
Temperature Control		122,991			119,075			318,744			288,019
All Other		6,641			4,084			12,001			8,535
Revenues		$      381,373			$      370,310			$    1,063,616			$      988,939
Gross Margin
Engine Management		$        66,026	26.2 %		$        66,907	27.1 %		$      193,855	26.5 %		$      199,509	28.8 %
Temperature Control		35,415	28.8 %		33,815	28.4 %		85,965	27.0 %		78,468	27.2 %
All Other		5,343			4,676			13,155			10,562
Gross Margin		$      106,784	28.0 %		$      105,398	28.5 %		$      292,975	27.5 %		$      288,539	29.2 %
One-Time Acquisition Costs		-	0.0 %		(193)	-0.1 %		-	0.0 %		(278)	0.0 %
Gross Margin		$      106,784	28.0 %		$      105,205	28.4 %		$      292,975	27.5 %		$      288,261	29.1 %
Selling, General & Administrative
Engine Management		$        42,763	17.0 %		$        38,702	15.7 %		$      122,745	16.7 %		$      109,721	15.8 %
Temperature Control		21,163	17.2 %		17,120	14.4 %		54,230	17.0 %		44,952	15.6 %
All Other		9,273			10,029			27,576			27,315
Selling, General & Administrative		$        73,199	19.2 %		$        65,851	17.8 %		$      204,551	19.2 %		$      181,988	18.4 %
One-Time Acquisition Costs		-	0.0 %		658	0.2 %		-	0.0 %		1,328	0.1 %
Selling, General & Administrative		$        73,199	19.2 %		$        66,509	18.0 %		$      204,551	19.2 %		$      183,316	18.5 %
Operating Income
Engine Management		$        23,263	9.2 %		$        28,205	11.4 %		$        71,110	9.7 %		$        89,788	13.0 %
Temperature Control		14,252	11.6 %		16,695	14.0 %		31,735	10.0 %		33,516	11.6 %
All Other		(3,930)			(5,353)			(14,421)			(16,753)
Subtotal		$        33,585	8.8 %		$        39,547	10.7 %		$        88,424	8.3 %		$      106,551	10.8 %
One-Time Acquisition Costs		-	0.0 %		(851)	-0.2 %		-	0.0 %		(1,606)	-0.2 %
Restructuring & Integration		-	0.0 %		(166)	0.0 %		(44)	0.0 %		(166)	0.0 %
Other Income, Net		30	0.0 %		8	0.0 %		43	0.0 %		8	0.0 %
Operating Income		$        33,615	8.8 %		$        38,538	10.4 %		$        88,423	8.3 %		$      104,787	10.6 %

 

STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures
(In thousands, except per share amounts)
		THREE MONTHS ENDED				NINE MONTHS ENDED
		SEPTEMBER 30,				SEPTEMBER 30,
		2022		2021		2022		2021
		(Unaudited)				(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP EARNINGS FROM CONTINUING OPERATIONS		$          23,140		$          29,172		$          64,494		$          79,331
RESTRUCTURING AND INTEGRATION EXPENSES		-		166		44		166
ONE-TIME ACQUISITION COSTS		-		851		-		1,606
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD		(249)		(259)		(249)		(259)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		-		(265)		(11)		(461)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS		$          22,891		$          29,665		$          64,278		$          80,383
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$              1.06		$              1.29		$              2.91		$              3.50
RESTRUCTURING AND INTEGRATION EXPENSES		-		0.01		-		-
ONE-TIME ACQUISITION COSTS		-		0.04		-		0.07
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD		(0.01)		(0.01)		(0.01)		(0.01)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		-		(0.01)		-		(0.02)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$              1.05		$              1.32		$              2.90		$              3.54
OPERATING INCOME
GAAP OPERATING INCOME		$          33,615		$          38,538		$          88,423		$         104,787
RESTRUCTURING AND INTEGRATION EXPENSES		-		166		44		166
ONE-TIME ACQUISITION COSTS		-		851		-		1,606
OTHER (INCOME) EXPENSE, NET		(30)		(8)		(43)		(8)		LAST TWELVE MONTHS ENDED				YEAR ENDED
										SEPTEMBER 30,				DECEMBER 31,
NON-GAAP OPERATING INCOME		$          33,585		$          39,547		$          88,424		$         106,551		2022		2021		2021
										(Unaudited)
EBITDA WITHOUT SPECIAL ITEMS
GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		$          31,472		$          38,666		$          87,030		$         105,678		$         111,817		$         136,264		$         130,465
DEPRECIATION AND AMORTIZATION		7,002		7,060		20,895		20,160		27,978		27,170		27,243
INTEREST EXPENSE		3,656		652		6,282		1,356		6,954		1,577		2,028
EBITDA		42,130		46,378		114,207		127,194		146,749		165,011		159,736
RESTRUCTURING AND INTEGRATION EXPENSES		-		166		44		166		270		166		392
ONE-TIME ACQUISITION COSTS		-		851		-		1,606		105		1,606		1,711
INTANGIBLE ASSET IMPAIRMENT		-		-		-		-		-		2,600		-
SPECIAL ITEMS		-		1,017		44		1,772		375		4,372		2,103
EBITDA WITHOUT SPECIAL ITEMS		$          42,130		$          47,395		$         114,251		$         128,966		$         147,124		$         169,383		$         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)
		September 30,			December  31,
		2022			2021
		(Unaudited)
ASSETS
CASH		$         17,525			$         21,755
ACCOUNTS RECEIVABLE, GROSS		236,342			186,774
ALLOWANCE FOR EXPECTED CREDIT LOSSES		5,900			6,170
ACCOUNTS RECEIVABLE, NET		230,442			180,604
INVENTORIES		534,310			468,755
UNRETURNED CUSTOMER INVENTORY		21,485			22,268
OTHER CURRENT ASSETS		25,911			17,823
TOTAL CURRENT ASSETS		829,673			711,205
PROPERTY, PLANT AND EQUIPMENT, NET		104,199			102,786
OPERATING LEASE RIGHT-OF-USE ASSETS		47,168			40,469
GOODWILL		130,727			131,652
OTHER INTANGIBLES, NET		99,756			106,234
DEFERRED INCOME TAXES		34,484			36,126
INVESTMENT IN UNCONSOLIDATED AFFILIATES		42,648			44,087
OTHER ASSETS		30,071			25,402
TOTAL ASSETS		$     1,318,726			$     1,197,961
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT PORTION OF REVOLVING CREDIT FACILITY		$         52,100			$       125,298
CURRENT PORTION OF TERM LOAN AND OTHER DEBT		6,036			3,117
ACCOUNTS PAYABLE		103,894			137,167
ACCRUED CUSTOMER RETURNS		53,857			42,412
ACCRUED CORE LIABILITY		23,845			23,663
ACCRUED REBATES		42,378			42,472
PAYROLL AND COMMISSIONS		37,539			45,058
SUNDRY PAYABLES AND ACCRUED EXPENSES		54,215			57,182
TOTAL CURRENT LIABILITIES		373,864			476,369
OTHER LONG-TERM DEBT		211,400			21
NONCURRENT OPERATING LEASE LIABILITY		38,618			31,206
ACCRUED ASBESTOS LIABILITIES		63,820			52,698
OTHER LIABILITIES		20,637			25,040
TOTAL LIABILITIES		708,339			585,334
TOTAL SMP STOCKHOLDERS' EQUITY		599,387			601,580
NONCONTROLLING INTEREST		11,000			11,047
TOTAL STOCKHOLDERS' EQUITY		610,387			612,627
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$     1,318,726			$     1,197,961

 

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
	NINE MONTHS ENDED
	SEPTEMBER 30,
	2022			2021
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS	$        47,547			$        72,224
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION	20,895			20,160
OTHER	25,904			13,904
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE	(51,887)			(15,343)
INVENTORY	(75,300)			(52,742)
ACCOUNTS PAYABLE	(31,844)			24,228
PREPAID EXPENSES AND OTHER CURRENT ASSETS	(6,270)			2,324
SUNDRY PAYABLES AND ACCRUED EXPENSES	3,807			18,905
OTHER	(8,327)			(4,522)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(75,475)			79,138
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES	-			(124,663)
CAPITAL EXPENDITURES	(19,499)			(19,406)
OTHER INVESTING ACTIVITIES	12			29
NET CASH USED IN INVESTING ACTIVITIES	(19,487)			(144,040)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CHANGE IN DEBT	141,457			121,854
PURCHASE OF TREASURY STOCK	(29,656)			(26,518)
DIVIDENDS PAID	(17,602)			(16,678)
PAYMENTS OF DEBT ISSUANCE COSTS	(2,128)			-
OTHER FINANCING ACTIVITIES	(54)			455
NET CASH PROVIDED BY FINANCING ACTIVITIES	92,017			79,113
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(1,285)			(555)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(4,230)			13,656
CASH AND CASH EQUIVALENTS at beginning of period	21,755			19,488
CASH AND CASH EQUIVALENTS at end of period	$        17,525			$        33,144

 

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SOURCE Standard Motor Products, Inc.

FAQ

What are the Q3 2022 financial results for Standard Motor Products (SMP)?

SMP reported Q3 2022 net sales of $381.4 million, up from $370.3 million in Q3 2021, despite a drop in earnings.

What is the SMP dividend amount and payment date for Q4 2022?

Standard Motor Products has declared a quarterly dividend of 27 cents per share, payable on December 1, 2022.

How has inflation affected SMP's financial performance?

Inflation has negatively impacted SMP's operating profit, which was below last year's levels at 8.8%.

What are the projected full-year gross margins for SMP?

SMP expects its full-year gross margin to be approximately 27%.

What business acquisitions has SMP made recently?

In October 2022, SMP acquired Kade Trading GmbH, expanding its presence in the European market.