Standard Motor Products, Inc. Announces

First Quarter 2023 Results

New York, NY, May 3, 2023......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

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

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

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	%

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Balance Sheets

(In thousands)
		MARCH 2023				MARCH 2022				DECEMBER 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