Standard Motor Products, Inc. Releases Fourth Quarter and 2023 Year-End Results

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NEW YORK, Feb. 22, 2024 /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, 2023.

Net sales for the fourth quarter of 2023 were $290.8 million, compared to consolidated net sales of $308.2 million during the same quarter in 2022. Earnings from continuing operations for the fourth quarter of 2023 were $7.2 million or $0.32 per diluted share, compared to $8.5 million or $0.39 per diluted share in the fourth 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 fourth quarter of 2023 were $8.2 million or $0.37 per diluted share, compared to $15.1 million or $0.69 per diluted share in the fourth quarter of 2022. 

Consolidated net sales for the twelve months ended December 31, 2023, were $1.36 billion, compared to consolidated net sales of $1.37 billion during the comparable period in 2022. Earnings from continuing operations for the twelve months ended December 31, 2023, were $63.1 million or $2.85 per diluted share, compared to $73.0 million or $3.30 per diluted share in the comparable period 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 twelve months ended December 31, 2023 and 2022 were $64.8 million or $2.92 per diluted share and $79.4 million or $3.59 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products’ Chairman and Chief Executive Officer stated, “Overall we were disappointed in our results. Sales were down 1% in 2023, with the fourth quarter finishing softer than expected, down 5.7% from last year. As we look at our two end markets, we were very pleased with the continued solid performance in our Engineered Solutions business as we experienced strong growth with both new and existing customers. Meanwhile our aftermarket business experienced a challenging quarter, impacting our full-year performance especially when compared to records we set in 2022.”

By segment, Vehicle Control sales declined 5.9% in the fourth quarter, bringing full-year performance down 1.7% compared to 2022. The sales results in the quarter were due to a combination of modest changes to customer order patterns as well as general softness in the marketplace. While large customer POS trends were slightly positive early in the quarter, they weakened in December finishing roughly flat overall.

Turning to Temperature Control, weather patterns throughout the year created challenges for this highly seasonal category, with full-year sales down 3.8%. 2022 was the longest and hottest season on record, with full-year sales up 8.4% over the previous year, making for a difficult comparison. The first half of 2023 was unseasonably cool, and while it got quite hot across much of the country in the third quarter, it tends to be difficult to recover from a late start to the selling season. The fourth quarter itself was light, down 19.0%, though it is important to note with the seasonal demand over, it is always far and away our lowest sales quarter and can therefore be quite volatile. 

Our Engineered Solutions segment continues to post strong numbers as sales increased 6.7% in the fourth quarter and 4.7% for the year. After several years of building out this new business, we officially launched it as its own operating segment at the start of 2023, and we are delighted to see the ongoing momentum. We are pleased with the overall traction to date in this segment and continue to believe we will be able to capitalize on new awards as well as introduce new products over time to broaden both new and existing customer opportunities.   

Consolidated operating profit for the full year, excluding non-operational gains and losses, finished at 7.0%, vs. 8.2% in 2022, and adjusted EBITDA was 9.3% for the year compared to our guidance of approximately 9.5%. Lower sales volumes resulted in lower leverage of fixed costs, even though our pricing actions along with cost reduction initiatives have started to offset lingering inflationary pressures. Customer factoring program expense at $46.0 million was $14.0 million (110 basis points) higher in 2023. And while interest rates remain high, the general consensus is that they will begin to decline later in 2024.

From a cash flow perspective, we were pleased with the impact of our initiatives on reducing both our inventory and borrowing levels. At year-end, our inventory was $507.1 million, down from $528.7 million at year-end 2022. Additionally, our total debt at year-end stood at $156.2 million as we paid down $83.6 million in the full year of 2023, ending with a net leverage ratio of 1.0X.   

As we head into 2024, our outlook for the full year includes an expectation that sales growth will be flat to low single digits and Adjusted EBITDA will be in a range of 9.0% to 9.5%. We remind investors that as part of our distribution center expansion into Shawnee, KS, we will incur roughly $7-8 million of added costs in 2024 related to increased rent as well as redundancy expenses as we transition away from our Edwardsville, KS distribution center. Additionally, we anticipate approximately $25 million in capital expenditures related to the implementation of upgraded automation capabilities, as well as other equipment and racking, as we outfit the new DC. 

In closing, Mr. Sills commented, “Although the economic backdrop and various geopolitical risks may continue to create volatility in 2024, we are confident in the resiliency of our end markets. We are excited about the partial opening of our new distribution center in just a few months and full opening in 2025 that will expand our capacity and provide additional risk avoidance to our overall distribution footprint. We look to continue to find ways to even better service our customers as well as explore opportunities to partner together for growth in 2024 and well into the future. We thank our employees that make all of this possible.”  

Conference Call

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, February 22, 2024. This call will be webcast and can be accessed on our website at www.smpcorp.com and clicking on the SMP Q4’23 Earnings Call Earnings Webcast link. Investors may also listen to the call by dialing 800-245-3047 (domestic) or 203-518-9765 (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 888-566-0878 (domestic) or 402-220-6925 (international).

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,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

NET SALES

$       290,756

$       308,199

$   1,358,272

$   1,371,815

COST OF SALES

209,226

218,635

969,446

989,276

GROSS PROFIT

81,530

89,564

388,826

382,539

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

70,326

72,075

293,583

276,626

RESTRUCTURING AND INTEGRATION EXPENSES

1,259

1,847

2,642

1,891

OTHER INCOME, NET

2

70

76

113

OPERATING INCOME 

9,947

15,712

92,677

104,135

OTHER NON-OPERATING INCOME (EXPENSE), NET

(433)

(75)

2,326

4,814

INTEREST EXPENSE

2,521

4,335

13,287

10,617

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

6,993

11,302

81,716

98,332

PROVISION FOR (BENEFIT FROM) INCOME TAXES

(288)

2,799

18,368

25,206

EARNINGS FROM CONTINUING OPERATIONS

7,281

8,503

63,348

73,126

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(795)

(615)

(28,996)

(17,691)

NET EARNINGS

6,486

7,888

34,352

55,435

NET EARNINGS (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST

52

(45)

204

84

NET EARNINGS ATTRIBUTABLE TO SMP (a)

$           6,434

$           7,933

$         34,148

$         55,351

NET EARNINGS ATTRIBUTABLE TO SMP 

EARNINGS FROM CONTINUING OPERATIONS

$           7,229

$           8,548

$         63,144

$         73,042

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(795)

(615)

(28,996)

(17,691)

TOTAL

$           6,434

$           7,933

$         34,148

$         55,351

NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$             0.33

$             0.40

$             2.91

$             3.37

   DISCONTINUED OPERATION

(0.04)

(0.03)

(1.34)

(0.82)

   NET EARNINGS PER COMMON SHARE – BASIC

$             0.29

$             0.37

$             1.57

$             2.55

   DILUTED EARNINGS  FROM CONTINUING OPERATIONS

$             0.32

$             0.39

$             2.85

$             3.30

   DISCONTINUED OPERATION

(0.03)

(0.03)

(1.31)

(0.80)

   NET EARNINGS  PER COMMON SHARE – DILUTED

$             0.29

$             0.36

$             1.54

$             2.50

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

21,836,293

21,578,194

21,716,177

21,683,719

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

22,310,085

22,030,263

22,161,341

22,139,981

(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,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

Revenues

Engine Management (Ignition, Emissions and

Fuel Delivery)

$       107,320

$       116,091

$       450,180

$       454,571

Electrical and Safety

55,062

57,309

221,782

230,487

Wire sets and other

16,247

16,437

65,970

65,513

        Vehicle Control

178,629

189,837

737,932

750,571

AC System Components

19,843

26,161

237,756

245,484

Other Thermal Components

24,788

28,960

99,998

105,753

        Temperature Control

44,631

55,121

337,754

351,237

Commercial Vehicle

20,218

20,022

83,025

80,275

Construction / Agriculture

8,861

9,208

43,402

42,385

Light Vehicle

21,578

21,010

92,759

91,533

All Other

16,839

13,001

63,400

55,814

        Engineered Solutions

67,496

63,241

282,586

270,007

        Revenues

$       290,756

$       308,199

$   1,358,272

$   1,371,815

Gross Margin

Vehicle Control

$         58,769

32.9 %

$         62,765

33.1 %

$       238,215

32.3 %

Full story available on Benzinga.com


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