SMP Standard Motor Products Inc

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2023

STANDARD MOTOR PRODUCTS, INC.

(Exact Name of Registrant as Specified in its Charter)

37-18 Northern Boulevard, Long Island City, New York 11101

(Address of Principal Executive Offices, including Zip Code)

Registrant’s Telephone Number, including Area Code:  718-392-0200

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

On October 27, 2023, Standard Motor Products, Inc. (the “Company”) issued a press release announcing its financial results for the three months and nine months ended September 30, 2023. A copy of such press release is furnished as Exhibit 99.1 hereto.

Such press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

(d)

Exhibits.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit Index

 

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Standard Motor Products, Inc. Announces

Third Quarter 2023 Results and Quarterly Dividend

New York, NY, October 27, 2023......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, 2023.

Net sales for the third quarter of 2023 were $386.4 million, compared to consolidated net sales of $381.4 million during the comparable quarter in 2022. Earnings from continuing operations for the third quarter of 2023 were $24.9 million or $1.12 per diluted share, compared to $23.1 million or $1.06 per diluted share in the third 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 third quarter of 2023 were $24.7 million or $1.11 per diluted share, compared to $22.9 million or $1.05 per diluted share in the third quarter of 2022.

 

Consolidated net sales for the nine months ended September 30, 2023, were $1.07 billion, compared to consolidated net sales of $1.06 billion during the comparable period in 2022.  Earnings from continuing operations for the nine months ended September 30, 2023, were $55.9 million or $2.52 per diluted share, compared to $64.5 million or $2.91 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 nine months ended September 30, 2023 and 2022 were $56.6 million or $2.55 per diluted share and $64.3 million or $2.90 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “We are pleased with our third quarter results as our sales rebounded after a sluggish second quarter with the return of hot summer weather.  Overall, sales increased 1.3% over last year’s strong third quarter, while year-to-date we are roughly flat compared to 2022. The third quarter was again influenced by the recent bankruptcy of a large aftermarket customer, and while the business has since been acquired by other SMP accounts, we believe it will take some time to return to historical demand as the business gets fully digested.”

By segment, Vehicle Control sales were down 3.4% in the quarter against a difficult comparison of nearly 6% growth last year, and are relatively flat on a year-to-date basis.  The segment was negatively impacted by the previously discussed customer bankruptcy, as well as by certain 2022 customer pipeline orders that did not recur this year.

Thanks to a warm summer, Temperature Control sales increased 5.3% on top of the record sales experienced during the same quarter last year. However, a cool spring caused a slow start to the season, and we remain down slightly by 1.0% year-to-date against a difficult comparison.

Our Engineered Solutions segment sales increased 8.4% in the quarter due to solid demand from our existing customers as well as new business wins. Our team continues to foster relationships and bid on new business opportunities as we gain traction with our expanded customer base and take advantage of cross-selling opportunities.

Looking at profitability, consolidated non-GAAP operating margins were 9.1% in the quarter, 30 basis points better than the 8.8% in the third quarter last year.  Our margin improvement benefited from measures to offset inflationary pressures, including price and cost containment actions, and we will continue to try to find ways to drive margin performance going forward.  During the quarter, our operating income was impacted by a $4.0 million (or 100 basis point) increase in customer factoring program expense over last year due to elevated interest rates.  On the bottom line, Adjusted EBITDA and earnings per share were up primarily due to the higher sales performance in Temperature Control and Engineered Solutions, despite headwinds from the impact of higher interest rates both on our customer factoring programs and on our borrowings.

From a cash flow perspective, we were pleased with the impact of our initiatives on reducing both our inventory and borrowing levels.  At quarter-end, our inventory was $479.8 million, down from $528.7 million at year-end 2022 and $534.3 million in last year’s third quarter.  Additionally, our total debt at quarter-end stood at $147.6 million as we paid down $75.6 million in the third quarter.

Regarding our full year expectations for 2023, we anticipate top line sales growth to be flat to low-single digit, and our Adjusted EBITDA to be approximately 9.5% of revenue.   This outlook considers higher expense related to customer factoring programs that will be roughly $48-$50 million at current implied rates, as well as the impact of startup costs and duplicate overhead expense associated with the new distribution center discussed last quarter.

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 December 1, 2023 to stockholders of record on November 15, 2023.

In closing, Mr. Sills commented, “Moving into the last quarter of the year there continue to be near-term headwinds including inflationary pressures, interest rate uncertainty, and increasing economic challenges facing consumers.  That said, aftermarket fundamentals remain strong, and continued progress in our new Engineered Solutions segment presents exciting opportunities.  We want to thank all our employees for our current success and helping us achieve our goals for the future.”

Conference Call

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)
		THREE MONTHS ENDED														NINE MONTHS ENDED
		SEPTEMBER 30,														SEPTEMBER 30,
		2023							2022							2023							2022
		(Unaudited)														(Unaudited)
Revenues
Engine Management (Ignition, Emissions and Fuel Delivery)		$	113,188						$	117,750						$	342,860						$	338,480
Electrical and Safety			62,049							63,867							166,720							173,178
Wire sets and other			15,700							16,082							49,723							49,076
Vehicle Control			190,937							197,699							559,303							560,734
AC System Components			96,794							90,341							216,995							219,323
Other Thermal Components			26,849							27,080							76,128							76,793
Temperature Control			123,643							117,421							293,123							296,116
Commercial Vehicle			16,253							19,299							62,852							60,253
Construction / Agriculture			13,643							10,971							34,541							33,177
Light Vehicle			24,667							21,409							71,181							70,523
All Other			17,270							14,574							46,516							42,813
Engineered Solutions			71,833							66,253							215,090							206,766
Revenues		$	386,413						$	381,373						$	1,067,516						$	1,063,616
Gross Margin
Vehicle Control		$	60,865			31.9%			$	60,350			30.5%			$	179,446			32.1%			$	169,502			30.2%
Temperature Control			37,785			30.6%				35,105			29.9%				83,452			28.5%				83,908			28.3%
Engineered Solutions			16,110			22.4%				11,329			17.1%				44,398			20.6%				39,565			19.1%
All Other			-							-							-							-
Gross Margin		$	114,760			29.7%			$	106,784			28.0%			$	307,296			28.8%			$	292,975			27.5%
Selling, General & Administrative
Vehicle Control		$	42,752			22.4%			$	39,229			19.8%			$	124,308			22.2%			$	111,947			20.0%
Temperature Control			24,624			19.9%				21,716			18.5%				61,736			21.1%				55,834			18.9%
Engineered Solutions			8,832			12.3%				8,027			12.1%				25,222			11.7%				24,866			12.0%
All Other			3,573							4,227							11,991							11,904
Selling, General & Administrative		$	79,781			20.6%			$	73,199			19.2%			$	223,257			20.9%			$	204,551			19.2%
Operating Income
Vehicle Control		$	18,113			9.5%			$	21,121			10.7%			$	55,138			9.9%			$	57,555			10.3%
Temperature Control			13,161			10.6%				13,389			11.4%				21,716			7.4%				28,074			9.5%
Engineered Solutions			7,278			10.1%				3,302			5.0%				19,176			8.9%				14,699			7.1%
All Other			(3,573	)						(4,227	)						(11,991	)						(11,904	)
Subtotal		$	34,979			9.1%			$	33,585			8.8%			$	84,039			7.9%			$	88,424			8.3%
Restructuring & Integration			(177	)		0.0%				-			0.0%				(1,383	)		-0.1%				(44	)		0.0%
Other Income, Net			4			0.0%				30			0.0%				74			0.0%				43			0.0%
Operating Income		$	34,806			9.0%			$	33,615			8.8%			$	82,730			7.7%			$	88,423			8.3%

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

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.

Reconciliation of GAAP and Non-GAAP Measures by Segments

MANAGEMENT BELIEVES THAT 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.

 

MANAGEMENT BELIEVES THAT 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