Standard Motor Products, Inc. Releases Fourth Quarter and 2022 Year-End Results; Announces Segment Reporting Changes

Rhea-AI Summary

Standard Motor Products (NYSE: SMP) announced its Q4 2022 financial results, reporting net sales of $308.2 million, a slight decline from $309.9 million in Q4 2021. Earnings from continuing operations dropped to $8.5 million ($0.39 per diluted share), down from $20.0 million ($0.89 per diluted share) a year prior. Total net sales for 2022 increased to $1.37 billion, a 5.6% rise from 2021. However, earnings per diluted share fell to $3.30 from $4.39. A significant $7.0 million pre-tax charge was recorded due to a bankruptcy filing by a customer. The company anticipates low single-digit sales growth in 2023 and introduced a new operating segment, 'Engineered Solutions', to enhance focus on growth opportunities.

Positive

• 2022 total net sales increased to $1.37 billion, up 5.6% from 2021.
• Engine Management sales rose 4% for the full year 2022, building on a strong 2021 performance.
• Temperature Control sales grew 5.2% in Q4 due to favorable weather and strong customer demand.
• Consolidated operating profit for Q4 2022 was stable at 7.9% despite inflationary pressures.
• New operating segment 'Engineered Solutions' introduced to align with strategic growth.

Negative

• Q4 2022 net sales decreased slightly by $1.7 million compared to Q4 2021.
• Earnings from continuing operations for Q4 2022 fell significantly to $8.5 million from $20.0 million in Q4 2021.
• Full year earnings per diluted share dropped to $3.30 from $4.39 in 2021.
• A pre-tax charge of $7.0 million was incurred due to a bankruptcy filing by a customer.
• Operating profit for the full year was down to 8.2% from 10.1% in 2021.

NEW YORK, Feb. 22, 2023 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three and twelve months ended December 31, 2022.

Net sales for the fourth quarter of 2022 were $308.2 million, compared to consolidated net sales of $309.9 million during the same quarter in 2021. Earnings from continuing operations for the fourth quarter of 2022 were $8.5 million or $0.39 per diluted share, compared to $20.0 million or $0.89 per diluted share in the fourth 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 fourth quarter of 2022 were $15.1 million or $0.69 per diluted share, compared to $20.3 million or $0.90 per diluted share in the fourth quarter of 2021. 

Consolidated net sales for the twelve months ended December 31, 2022, were $1.37 billion, compared to consolidated net sales of $1.30 billion during the comparable period in 2021.  Earnings from continuing operations for the twelve months ended December 31, 2022, were $73.0 million or $3.30 per diluted share, compared to $99.4 million or $4.39 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 twelve months ended December 31, 2022 and 2021 were $79.4 million or $3.59 per diluted share and $100.7 million or $4.45 per diluted share, respectively. Our earnings for both the fourth quarter and the full-year 2022 were impacted by the recent announcement of a bankruptcy filing by an Aftermarket customer. We recorded a pre-tax charge of $7.0 million in the fourth quarter related to anticipated losses from this event, which has been treated as a non-operational loss on our GAAP to non-GAAP reconciliation.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are pleased with our full year sales results, up 5.6% from 2021, with both Engine Management and Temperature Control segments performing well. Against a challenging comparison, sales for the fourth quarter dropped a half a percentage point from the same period last year, which was up nearly 10% from 2020."

By segment, Engine Management sales increased 4% for the full year, on top of 12% growth in 2021. However, fourth quarter sales were down slightly, just over 1%, versus a very strong 2021, which was up 6% over the prior year.  Our customers' Engine Management POS sales remained robust in the quarter, reflecting continued market strength and demand for our products.

Temperature Control sales remained strong in the fourth quarter on the strength of winter related products and from another long, hot summer. Sales grew 5.2% in the quarter versus last year, and were up nearly 10% for the full year due to a combination of favorable weather, successful pricing initiatives and overall strength in customer demand. 

Consolidated operating profit for the quarter, excluding non-operational gains and losses, was 7.9%, in line with the fourth quarter of 2021. Pricing actions taken earlier in 2022, along with various cost reduction initiatives, largely offset ongoing inflationary pressures.

Consolidated operating profit for the full year, excluding non-operational gains and losses, finished at 8.2%, vs. 10.1% in 2021. As we've noted many times, 2021 was an anomaly year with many non-recurring benefits associated with emerging from COVID lockdowns while still operating in a very low interest rate environment. Our operating profit of 8.2% was more in line with historical trends despite incurring an additional $20.6 million of customer factoring costs, which negatively affected operating profit by 150 basis points as compared to 2021.

Mr. Sills added, "Today we are announcing our new operating segment, 'Engineered Solutions', along with the intent to rename the Engine Management segment to 'Vehicle Control'. These segment changes, beginning in 2023, will better align the Company's operating businesses with its strategic focus as well as provide greater clarity into how the Company is positioned to capture growth opportunities of the future.  Please see our separate press release on these changes, also distributed today, along with a supplementary presentation available on the Company's Investor Relations website. We will discuss in more detail on today's call."  

As we head into 2023, our outlook for the full year includes an expectation that sales will grow in the low single digits and Adjusted EBITDA will be approximately 10%.

In closing, Mr. Sills commented, "While there still remains uncertainty as it relates to the economy and various global dynamics, we believe our end markets' resiliency and diversification should continue to afford opportunities for new wins and stable levels of growth throughout 2023 and into the future."  

Conference Call
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, February 22, 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 Q4'22 Earnings Call Earnings Webcast link.  Investors may also listen to the call by dialing 800-343-1703 (domestic) or 785-424-1226 (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 800-723-1517 (domestic) or 402-220-2659 (international). The participant passcode is 73005.

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							TWELVE MONTHS ENDED
	DECEMBER 31,							DECEMBER 31,
	2022			2021				2022			2021
	(Unaudited)							(Unaudited)
NET SALES	$       308,199			$       309,877				$   1,371,815			$   1,298,816
COST OF SALES	218,635			221,207				989,276			921,885
GROSS PROFIT	89,564			88,670				382,539			376,931
SELLING, GENERAL & ADMINISTRATIVE EXPENSES	72,075			64,231				276,626			247,547
RESTRUCTURING AND INTEGRATION EXPENSES	1,847			226				1,891			392
OTHER INCOME (EXPENSE), NET	70			(1)				113			7
OPERATING INCOME	15,712			24,212				104,135			128,999
OTHER NON-OPERATING INCOME (EXPENSE), NET	(75)			1,247				4,814			3,494
INTEREST EXPENSE	4,335			672				10,617			2,028
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES	11,302			24,787				98,332			130,465
PROVISION FOR INCOME TAXES	2,799			4,729				25,206			31,044
EARNINGS FROM CONTINUING OPERATIONS	8,503			20,058				73,126			99,421
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES	(615)			(1,328)				(17,691)			(8,467)
NET EARNINGS	7,888			18,730				55,435			90,954
NET EARNINGS (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST	(45)			36				84			68
NET EARNINGS ATTRIBUTABLE TO SMP (a)	$           7,933			$         18,694				$         55,351			$         90,886
NET EARNINGS ATTRIBUTABLE TO SMP
EARNINGS FROM CONTINUING OPERATIONS	$           8,548			$         20,022				$         73,042			$         99,353
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES	(615)			(1,328)				(17,691)			(8,467)
TOTAL	$           7,933			$         18,694				$         55,351			$         90,886
NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP
BASIC EARNINGS FROM CONTINUING OPERATIONS	$             0.40			$             0.91				$             3.37			$             4.49
DISCONTINUED OPERATION	(0.03)			(0.06)				(0.82)			(0.39)
NET EARNINGS PER COMMON SHARE - BASIC	$             0.37			$             0.85				$             2.55			$             4.10
DILUTED EARNINGS  FROM CONTINUING OPERATIONS	$             0.39			$             0.89				$             3.30			$             4.39
DISCONTINUED OPERATION	(0.03)			(0.06)				(0.80)			(0.37)
NET EARNINGS  PER COMMON SHARE - DILUTED	$             0.36			$             0.83				$             2.50			$             4.02
WEIGHTED AVERAGE NUMBER OF COMMON SHARES	21,578,194			21,987,480				21,683,719			22,147,479
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES	22,030,263			22,485,032				22,139,981			22,616,456

(a)	"SMP" refers to Standard Motor Products, Inc. and subsidiaries.

 

STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Profit
(In thousands)
	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	DECEMBER 31,						DECEMBER 31,
	2022			2021			2022			2021
	(unaudited)						(unaudited)
Revenues
Ignition, Emission Control, Fuel & Safety
Related System Products	$      206,479			$      211,919			$      824,677			$      786,514
Wire and Cable	35,893			33,632			150,566			151,422
Engine Management	242,372			245,551			975,243			937,936
Compressors	28,981			28,666			222,532			206,697
Other Climate Control Parts	34,560			31,738			159,753			141,726
Temperature Control	63,541			60,404			382,285			348,423
All Other	2,286			3,922			14,287			12,457
Revenues	$      308,199			$      309,877			$   1,371,815			$   1,298,816
Gross Margin
Engine Management	$        69,099	28.5 %		$        67,776	27.6 %		$      262,954	27.0 %		$      267,285	28.5 %
Temperature Control	16,675	26.2 %		16,670	27.6 %		102,640	26.8 %		95,138	27.3 %
All Other	3,790			4,270			16,945			14,832
Subtotal	$        89,564	29.1 %		$        88,716	28.6 %		$      382,539	27.9 %		$      377,255	29.0 %
One-Time Acquisition Costs	-	0.0 %		(46)	0.0 %		-	0.0 %		(324)	0.0 %
Gross Margin	$        89,564	29.1 %		$        88,670	28.6 %		$      382,539	27.9 %		$      376,931	29.0 %
Selling, General & Administrative
Engine Management	$        42,644	17.6 %		$        39,485	16.1 %		$      165,389	17.0 %		$      149,206	15.9 %
Temperature Control	14,436	22.7 %		13,192	21.8 %		68,666	18.0 %		58,144	16.7 %
All Other	7,993			11,495			35,569			38,810
Subtotal	$        65,073	21.1 %		$        64,172	20.7 %		$      269,624	19.7 %		$      246,160	19.0 %
Customer Bankruptcy Charge	7,002	2.3 %		-	0.0 %		7,002	0.5 %		-	0.0 %
One-Time Acquisition Costs	-	0.0 %		59	0.0 %		-	0.0 %		1,387	0.1 %
Selling, General & Administrative	$        72,075	23.4 %		$        64,231	20.7 %		$      276,626	20.2 %		$      247,547	19.1 %
Operating Income
Engine Management	$        26,455	10.9 %		$        28,291	11.5 %		$        97,565	10.0 %		$      118,079	12.6 %
Temperature Control	2,239	3.5 %		3,478	5.8 %		33,974	8.9 %		36,994	10.6 %
All Other	(4,203)			(7,225)			(18,624)			(23,978)
Subtotal	$        24,491	7.9 %		$        24,544	7.9 %		$      112,915	8.2 %		$      131,095	10.1 %
Customer Bankruptcy Charge	(7,002)	-2.3 %		-	0.0 %		(7,002)	-0.5 %		-	0.0 %
One-Time Acquisition Costs	-	0.0 %		(105)	0.0 %		-	0.0 %		(1,711)	-0.1 %
Restructuring & Integration	(1,847)	-0.6 %		(226)	-0.1 %		(1,891)	-0.1 %		(392)	0.0 %
Other Income (Expense), Net	70	0.0 %		(1)	0.0 %		113	0.0 %		7	0.0 %
Operating Income	$        15,712	5.1 %		$        24,212	7.8 %		$      104,135	7.6 %		$      128,999	9.9 %

 

STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures
(In thousands, except per share amounts)
	THREE MONTHS ENDED				TWELVE MONTHS ENDED
	DECEMBER 31,				DECEMBER 31,
	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP EARNINGS FROM CONTINUING OPERATIONS	$           8,548		$          20,022		$          73,042		$          99,353
RESTRUCTURING AND INTEGRATION EXPENSES	1,847		226		1,891		392
CUSTOMER BANKRUPTCY CHARGE	7,002		-		7,002		-
ONE-TIME ACQUISITION COSTS	-		105		-		1,711
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD	-		-		(249)		(259)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS	(2,301)		(86)		(2,312)		(547)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS	$          15,096		$          20,267		$          79,374		$        100,650
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$             0.39		$             0.89		$             3.30		$             4.39
RESTRUCTURING AND INTEGRATION EXPENSES	0.08		0.01		0.08		0.02
CUSTOMER BANKRUPTCY CHARGE	0.32		-		0.32		-
ONE-TIME ACQUISITION COSTS	-		-		-		0.07
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD	-		-		(0.01)		(0.01)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS	(0.10)		-		(0.10)		(0.02)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$             0.69		$             0.90		$             3.59		$             4.45
OPERATING INCOME
GAAP OPERATING INCOME	$          15,712		$          24,212		$        104,135		$        128,999
RESTRUCTURING AND INTEGRATION EXPENSES	1,847		226		1,891		392
CUSTOMER BANKRUPTCY CHARGE	7,002		-		7,002		-
ONE-TIME ACQUISITION COSTS	-		105		-		1,711
OTHER (INCOME) EXPENSE, NET	(70)		1		(113)		(7)
NON-GAAP OPERATING INCOME	$          24,491		$          24,544		$        112,915		$        131,095
EBITDA WITHOUT SPECIAL ITEMS
GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES	$          11,302		$          24,787		$          98,332		$        130,465
DEPRECIATION AND AMORTIZATION	7,403		7,083		28,298		27,243
INTEREST EXPENSE	4,335		672		10,617		2,028
EBITDA	23,040		32,542		137,247		159,736
RESTRUCTURING AND INTEGRATION EXPENSES	1,847		226		1,891		392
CUSTOMER BANKRUPTCY CHARGE	7,002		-		7,002		-
ONE-TIME ACQUISITION COSTS	-		105		-		1,711
SPECIAL ITEMS	8,849		331		8,893		2,103
EBITDA WITHOUT SPECIAL ITEMS	$          31,889		$          32,873		$        146,140		$        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)
	December  31,		December  31,
	2022		2021
	(Unaudited)
ASSETS
CASH	$         21,150		$         21,755
ACCOUNTS RECEIVABLE, GROSS	173,013		186,774
ALLOWANCE FOR EXPECTED CREDIT LOSSES	5,375		6,170
ACCOUNTS RECEIVABLE, NET	167,638		180,604
INVENTORIES	528,715		468,755
UNRETURNED CUSTOMER INVENTORY	19,695		22,268
OTHER CURRENT ASSETS	25,241		17,823
TOTAL CURRENT ASSETS	762,439		711,205
PROPERTY, PLANT AND EQUIPMENT, NET	107,148		102,786
OPERATING LEASE RIGHT-OF-USE ASSETS	49,838		40,469
GOODWILL	132,087		131,652
OTHER INTANGIBLES, NET	100,504		106,234
DEFERRED INCOME TAXES	33,658		36,126
INVESTMENT IN UNCONSOLIDATED AFFILIATES	41,745		44,087
OTHER ASSETS	27,510		25,402
TOTAL ASSETS	$    1,254,929		$    1,197,961
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT PORTION OF REVOLVING CREDIT FACILITY	$         50,000		$       125,298
CURRENT PORTION OF TERM LOAN AND OTHER DEBT	5,031		3,117
ACCOUNTS PAYABLE	89,247		137,167
ACCRUED CUSTOMER RETURNS	37,169		42,412
ACCRUED CORE LIABILITY	22,952		23,663
ACCRUED REBATES	37,381		42,472
PAYROLL AND COMMISSIONS	31,361		45,058
SUNDRY PAYABLES AND ACCRUED EXPENSES	49,990		57,182
TOTAL CURRENT LIABILITIES	323,131		476,369
OTHER LONG-TERM DEBT	184,589		21
NONCURRENT OPERATING LEASE LIABILITY	40,709		31,206
ACCRUED ASBESTOS LIABILITIES	63,305		52,698
OTHER LIABILITIES	22,157		25,040
TOTAL LIABILITIES	633,891		585,334
TOTAL SMP STOCKHOLDERS' EQUITY	610,020		601,580
NONCONTROLLING INTEREST	11,018		11,047
TOTAL STOCKHOLDERS' EQUITY	621,038		612,627
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$    1,254,929		$    1,197,961

 

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
	TWELVE MONTHS ENDED
	DECEMBER 31,
	2022		2021
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS	$        55,435		$        90,954
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION	28,298		27,243
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES	17,691		8,467
CUSTOMER BANKRUPTCY CHARGE	7,002		-
OTHER	13,064		7,456
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE	6,916		28,464
INVENTORY	(67,495)		(107,609)
ACCOUNTS PAYABLE	(48,604)		33,046
PREPAID EXPENSES AND OTHER CURRENT ASSETS	(5,509)		(843)
SUNDRY PAYABLES AND ACCRUED EXPENSES	(29,089)		13,430
OTHER	(5,242)		(15,044)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(27,533)		85,564
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES	(1,934)		(125,419)
CAPITAL EXPENDITURES	(25,956)		(25,875)
OTHER INVESTING ACTIVITIES	73		45
NET CASH USED IN INVESTING ACTIVITIES	(27,817)		(151,249)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CHANGE IN DEBT	111,307		118,346
PURCHASE OF TREASURY STOCK	(29,656)		(26,862)
DIVIDENDS PAID	(23,428)		(22,179)
DIVIDENDS PAID TO NONCONTROLLING INTEREST	-		(540)
PAYMENTS OF DEBT ISSUANCE COSTS	(2,128)		-
OTHER FINANCING ACTIVITIES	(595)		247
NET CASH PROVIDED BY FINANCING ACTIVITIES	55,500		69,012
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(755)		(1,060)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(605)		2,267
CASH AND CASH EQUIVALENTS at beginning of period	21,755		19,488
CASH AND CASH EQUIVALENTS at end of period	$        21,150		$        21,755

 

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SOURCE Standard Motor Products, Inc.

FAQ

What were Standard Motor Products' Q4 2022 earnings?

In Q4 2022, Standard Motor Products reported earnings from continuing operations of $8.5 million, or $0.39 per diluted share.

How did Standard Motor Products perform in 2022 overall?

For the full year 2022, Standard Motor Products achieved total net sales of $1.37 billion, a 5.6% increase from 2021.

What factors impacted Standard Motor Products' earnings in Q4 2022?

Earnings were affected by a $7.0 million pre-tax charge related to a bankruptcy filing by an after-market customer.

What changes were announced regarding Standard Motor Products' operating segments?

The company announced a new operating segment, 'Engineered Solutions', and plans to rename the Engine Management segment to 'Vehicle Control'.

What is Standard Motor Products' sales outlook for 2023?

The company expects sales to grow in the low single digits for the full year 2023.