Le Lézard
Classified in: Transportation, Business
Subjects: ERN, ERP

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


NEW YORK, Aug. 3, 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 six months ended June 30, 2022.

Net sales for the second quarter of 2022 were $359.4 million, compared to consolidated net sales of $342.1 million during the comparable quarter in 2021. Earnings from continuing operations for the second quarter of 2022 were $20.8 million or $0.93 cents per diluted share, compared to $28.0 million or $1.23 cents per diluted share in the second 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 second quarter of 2022 were $20.8 million or $0.93 cents per diluted share, compared to $28.6 million or $1.26 per diluted share in the second quarter of 2021.

Consolidated net sales for the six months ended June 30, 2022, were $682.2 million, compared to consolidated net sales of $618.6 million during the comparable period in 2021.  Earnings from continuing operations for the six months ended June 30, 2022, were $41.4 million or $1.85 per diluted share, compared to $50.2 million or $2.21 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 six months ended June 30, 2022 and 2021 were $41.4 million or $1.85 per diluted share and $50.7 million or $2.23 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "Although we faced a challenging macroeconomic environment in the second quarter, we are pleased with our sales results, particularly against the record sales in the comparable period last year. Our sales improved 5.1% over last year's strong second quarter, with particular strength in our Temperature Control division.   

"By division, Engine Management sales increased 3.7% in the quarter, driven largely by acquisitions made in 2021 as well as price increases that were implemented during the quarter. Customer POS remained solid throughout the quarter against record levels from 2021, excluding Wire and Cable, which has returned to its secular decline.

"Turning to Temperature Control, an early start to the summer season provided a favorable tailwind against the challenging comparison from last year. Sales grew 7.5% year over year due to a combination of new business wins, price increases, and solid customer demand.  Record heat has continued into the 3rd quarter across the country, and while weather trends are hard to predict, we are hopeful for ongoing strong customer demand, although we face a difficult comparison relative to last year's long, hot summer.  

"We were also pleased with the performance of our specialized non-aftermarket channels. To remind you, this focuses on custom-engineered products for niche end markets such as medium and heavy-duty vehicles, construction and agricultural equipment, power sports, and others. Over the past few years we have doubled this business to a run rate of $300 million.  We continue to make progress integrating our recent acquisitions, and are making inroads as we identify cross-selling opportunities.

"Consolidated operating margins were below expectations at 7.8% in the second quarter. Inflationary pressures across many cost inputs remain a headwind, and we continue to implement price increases in an effort to offset these higher costs.  Additionally, the rapid rise in interest rates has resulted in increased costs related to customer supply chain finance programs.  We are actively pursuing initiatives to help offset these elevated operating costs.  

"Given this year's inflationary and supply chain challenges, we expect our consolidated gross margin will be lower than originally anticipated at approximately 27% for the full year.  We also note that with the projected interest rate hikes and the associated impact on our factoring program expenses, we expect our operating profit will be in the range of 7-8% of net sales. 

"As previously announced, during the quarter we entered into a new five-year $500 million credit facility that includes a $100 million term loan and $400 million revolving credit facility. In addition, SMP entered into an interest rate swap agreement to fix the interest rate on $100 million of borrowings under the new facility.  This new credit facility is expected to afford us the flexibility we need to support our growth and continue to execute on strategic priorities.  The new facility should also allow for our continued focus on returning value to our shareholders with quarterly dividends and opportunistic share repurchases.

"To that point, the 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 September 1, 2022 to stockholders of record on August 15, 2022.  Furthermore, we repurchased shares of our common stock in the amount of $19.6 million during the quarter.  To date as of this release, we have exhausted the remaining balance of the prior $30 million share repurchase authorization.  As a result, the Board of Directors has authorized a new $30 million common share repurchase plan.    

"Lastly, as recently announced, we were deeply saddened by the passing of John Gethin, a Director for the company since 2016. Prior to that, John was a long-tenured leader at SMP, including many years as our Chief Operating Officer and President. He will be sorely missed. In connection with John's passing, the Board of Directors decreased the size of the Board from ten to nine directors, effective as of July 28, 2022.

"In closing, there remains much uncertainty as we head into the second half of 2022 with respect to inflation, interest rates and the increasing risk of potential recession.  Yet we remain confident in our business and the industry's resilience based on performance during past turbulent markets.  Underlying tailwinds including an aging fleet, limited new vehicle availability and favorable summer weather to date should help offset some of the potential near-term challenges that may persist.  Furthermore, we believe our go-to-market strategy of being a full-line full-service supplier of professional grade products continues to resonate with our customers, and our favorable manufacturing footprint which relies less on the Far East than many of our peers provides us with structural advantages to better control our supply chain. We also remain bullish on our expansion into new markets, and see vast potential in growing this business. Finally, we thank all of our people for their effort in working with us through challenging times."   

Conference Call
Standard Motor Products, Inc. will hold a conference call at 10:30 AM, Eastern Time, on Wednesday, August 3rd, 2022.  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 SMPQ22022 Earnings Webcast link.  Investors may also listen to the call by dialing 866-952-8559 (domestic) or 785-424-1877 (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 800-934-8221 (domestic) or 402-220-6990 (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




SIX MONTHS ENDED





JUNE 30,




JUNE 30,





2022



2021




2022



2021





(Unaudited)




(Unaudited)



NET SALES


$      359,412



$      342,076




$      682,243



$      618,629


















COST OF SALES


263,061



242,804




496,052



435,573


















GROSS PROFIT


96,351



99,272




186,191



183,056


















SELLING, GENERAL & ADMINISTRATIVE EXPENSES


68,468



62,347




131,352



116,807



RESTRUCTURING AND INTEGRATION EXPENSES


3



-




44



-



OTHER INCOME, NET


13



-




13



-


















OPERATING INCOME 


27,893



36,925




54,808



66,249


















OTHER NON-OPERATING INCOME, NET


1,927



832




3,376



1,467


















INTEREST EXPENSE


1,821



495




2,626



704


















EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES


27,999



37,262




55,558



67,012


















PROVISION FOR INCOME TAXES


7,122



9,248




14,127



16,834


















EARNINGS FROM CONTINUING OPERATIONS


20,877



28,014




41,431



50,178


















LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES


(1,666)



(853)




(2,782)



(2,017)


















NET EARNINGS


19,211



27,161




38,649



48,161


















NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST


85



19




77



19


















NET EARNINGS ATTRIBUTABLE TO SMP (a)


$        19,126



$        27,142




$        38,572



$        48,142

































NET EARNINGS ATTRIBUTABLE TO SMP 















EARNINGS FROM CONTINUING OPERATIONS


$        20,792



$        27,995




$        41,354



$        50,159



LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES


(1,666)



(853)




(2,782)



(2,017)



TOTAL


$        19,126



$        27,142




$        38,572



$        48,142

































NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP















   BASIC EARNINGS FROM CONTINUING OPERATIONS


$            0.96



$            1.26




$            1.89



$            2.25



   DISCONTINUED OPERATION


(0.08)



(0.04)




(0.13)



(0.09)



   NET EARNINGS PER COMMON SHARE - BASIC


$            0.88



$            1.22




$            1.76



$            2.16

































   DILUTED EARNINGS  FROM CONTINUING OPERATIONS


$            0.93



$            1.23




$            1.85



$            2.21



   DISCONTINUED OPERATION


(0.07)



(0.03)




(0.13)



(0.09)



   NET EARNINGS  PER COMMON SHARE - DILUTED


$            0.86



$            1.20




$            1.72



$            2.12

































WEIGHTED AVERAGE NUMBER OF COMMON SHARES


21,757,998



22,198,545




21,867,644



22,257,922



WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES


22,255,642



22,686,384




22,372,702



22,741,171


















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















 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit





























(In thousands)












































THREE MONTHS ENDED



SIX MONTHS ENDED





JUNE 30, 



JUNE 30, 





2022



2021



2022



2021





(unaudited)



(unaudited)



Revenues














Ignition, Emission Control, Fuel & Safety














   Related System Products


$      202,823



$      192,486



$      403,177



$      366,152



Wire and Cable


39,050



40,730



77,953



79,082



        Engine Management


241,873



233,216



481,130



445,234

















Compressors


72,063



69,577



115,340



102,951



Other Climate Control Parts


42,369



36,894



80,413



65,993



        Temperature Control


114,432



106,471



195,753



168,944

















All Other


3,107



2,389



5,360



4,451



        Revenues


$      359,412



$      342,076



$      682,243



$      618,629

















Gross Margin














Engine Management


$       62,294

25.8 %


$       67,532

29.0 %


$      127,829

26.6 %


$      132,602

29.8 %


Temperature Control


30,564

26.7 %


28,658

26.9 %


50,550

25.8 %


44,653

26.4 %


All Other


3,493



3,167



7,812



5,886



        Gross Margin


$       96,351

26.8 %


$       99,357

29.0 %


$      186,191

27.3 %


$      183,141

29.6 %


One-Time Acquisition Costs


-

0.0 %


(85)

0.0 %


-

0.0 %


(85)

0.0 %


        Gross Margin


$       96,351

26.8 %


$       99,272

29.0 %


$      186,191

27.3 %


$      183,056

29.6 %
















Selling, General & Administrative














Engine Management


$       41,204

17.0 %


$       37,063

15.9 %


$       79,982

16.6 %


$       71,019

16.0 %


Temperature Control


18,299

16.0 %


15,429

14.5 %


33,067

16.9 %


27,832

16.5 %


All Other


8,965



9,185



18,303



17,286



        Selling, General & Administrative


$       68,468

19.1 %


$       61,677

18.0 %


$      131,352

19.3 %


$      116,137

18.8 %


One-Time Acquisition Costs


-

0.0 %


670

0.2 %


-

0.0 %


670

0.1 %


        Selling, General & Administrative


$       68,468

19.1 %


$       62,347

18.2 %


$      131,352

19.3 %


$      116,807

18.9 %






























Operating Income














Engine Management


$       21,090

8.7 %


$       30,469

13.1 %


$       47,847

9.9 %


$       61,583

13.8 %


Temperature Control


12,265

10.7 %


13,229

12.4 %


17,483

8.9 %


16,821

10.0 %


All Other


(5,472)



(6,018)



(10,491)



(11,400)



        Subtotal


$       27,883

7.8 %


$       37,680

11.0 %


$       54,839

8.0 %


$       67,004

10.8 %


One-Time Acquisition Costs


-

0.0 %


(755)

-0.2 %


-

0.0 %


(755)

-0.1 %


Restructuring & Integration


(3)

0.0 %


-

0.0 %


(44)

0.0 %


-

0.0 %


Other Income, Net


13

0.0 %


-

0.0 %


13

0.0 %


-

0.0 %


        Operating Income


$       27,893

7.8 %


$       36,925

10.8 %


$       54,808

8.0 %


$       66,249

10.7 %
















 

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures





























































(In thousands, except per share amounts)

















THREE MONTHS ENDED


SIX MONTHS ENDED









JUNE 30,


JUNE 30,









2022


2021


2022


2021









(Unaudited)


(Unaudited)







EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP






























GAAP EARNINGS FROM CONTINUING OPERATIONS


$          20,792


$          27,995


$          41,354


$          50,159






















RESTRUCTURING AND INTEGRATION EXPENSES


3


-


44


-







ONE-TIME ACQUISITION COSTS


-


755


-


755







INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


-


(196)


(11)


(196)







NON-GAAP EARNINGS FROM CONTINUING OPERATIONS


$          20,795


$          28,554


$          41,387


$          50,718





































DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP






























GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$             0.93


$             1.23


$             1.85


$             2.21






















RESTRUCTURING AND INTEGRATION EXPENSES


-


-


-


-







ONE-TIME ACQUISITION COSTS


-


0.03


-


0.03







INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


-


-


-


(0.01)






















NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$             0.93


$             1.26


$             1.85


$             2.23





































OPERATING INCOME






























GAAP OPERATING INCOME


$          27,893


$          36,925


$          54,808


$          66,249






















RESTRUCTURING AND INTEGRATION EXPENSES


3


-


44


-







ONE-TIME ACQUISITION COSTS


-


755


-


755







OTHER (INCOME) EXPENSE, NET


(13)


-


(13)


-


LAST TWELVE MONTHS ENDED


YEAR ENDED











JUNE 30,


DECEMBER 31,

NON-GAAP OPERATING INCOME


$          27,883


$          37,680


$          54,839


$          67,004


2022


2021


2021











(Unaudited)



EBITDA WITHOUT SPECIAL ITEMS






























GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES


$          27,999


$          37,262


$          55,558


$          67,012


$        119,011


$        145,614


$         130,465
















DEPRECIATION AND AMORTIZATION


6,941


6,586


13,893


13,100


28,036


26,546


27,243

INTEREST EXPENSE


1,821


495


2,626


704


3,950


1,387


2,028

     EBITDA


36,761


44,343


72,077


80,816


150,997


173,547


159,736
















RESTRUCTURING AND INTEGRATION EXPENSES


3


-


44


-


436


250


392

ONE-TIME ACQUISITION COSTS


-


755


-


755


956


755


1,711

INTANGIBLE ASSET IMPAIRMENT


-


-


-


-


-


2,600


-

    SPECIAL ITEMS


3


755


44


755


1,392


3,605


2,103
















EBITDA WITHOUT SPECIAL ITEMS


$          36,764


$          45,098


$          72,121


$          81,571


$        152,389


$        177,152


$         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)




















June 30,



December  31,



2022



2021



(Unaudited)










ASSETS







CASH


$        14,186



$        21,755







ACCOUNTS RECEIVABLE, GROSS


235,669



186,774

ALLOWANCE FOR EXPECTED CREDIT LOSSES


6,012



6,170

ACCOUNTS RECEIVABLE, NET


229,657



180,604







INVENTORIES


551,415



468,755

UNRETURNED CUSTOMER INVENTORY


21,405



22,268

OTHER CURRENT ASSETS


26,198



17,823







TOTAL CURRENT ASSETS


842,861



711,205







PROPERTY, PLANT AND EQUIPMENT, NET


104,931



102,786

OPERATING LEASE RIGHT-OF-USE ASSETS


39,827



40,469

GOODWILL


131,125



131,652

OTHER INTANGIBLES, NET


101,649



106,234

DEFERRED INCOME TAXES


34,086



36,126

INVESTMENT IN UNCONSOLIDATED AFFILIATES


44,885



44,087

OTHER ASSETS


27,188



25,402







TOTAL ASSETS


$    1,326,552



$    1,197,961













LIABILITIES AND STOCKHOLDERS' EQUITY













CURRENT PORTION OF REVOLVING CREDIT FACILITY


$        56,000



$       125,298

CURRENT PORTION OF TERM LOAN AND OTHER DEBT


7,954



3,117

ACCOUNTS PAYABLE


140,082



137,167

ACCRUED CUSTOMER RETURNS


55,725



42,412

ACCRUED CORE LIABILITY


23,117



23,663

ACCRUED REBATES


41,647



42,472

PAYROLL AND COMMISSIONS


35,985



45,058

SUNDRY PAYABLES AND ACCRUED EXPENSES


49,710



57,182







TOTAL CURRENT LIABILITIES


410,220



476,369







LONG-TERM DEBT


203,500



21

NONCURRENT OPERATING LEASE LIABILITY


30,039



31,206

ACCRUED ASBESTOS LIABILITIES


48,025



52,698

OTHER LIABILITIES


22,119



25,040







 TOTAL LIABILITIES 


713,903



585,334







TOTAL SMP STOCKHOLDERS' EQUITY


601,586



601,580

NONCONTROLLING INTEREST


11,063



11,047

 TOTAL STOCKHOLDERS' EQUITY 


612,649



612,627







 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 


$    1,326,552



$    1,197,961







 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows
















(In thousands)
















SIX MONTHS ENDED


JUNE 30,


2022



2021


(Unaudited)






CASH FLOWS FROM OPERATING ACTIVITIES










NET EARNINGS 

$        38,649



$        48,161

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH





PROVIDED BY (USED IN) OPERATING ACTIVITIES:





DEPRECIATION AND AMORTIZATION

13,893



13,100

OTHER

10,831



4,127

CHANGE IN ASSETS AND LIABILITIES:





ACCOUNTS RECEIVABLE

(49,659)



(4,715)

INVENTORY 

(87,744)



(46,682)

ACCOUNTS PAYABLE

1,591



16,097

PREPAID EXPENSES AND OTHER CURRENT ASSETS

(7,102)



3,220

SUNDRY PAYABLES AND ACCRUED EXPENSES 

(5,020)



(6,491)

OTHER

(10,772)



(3,664)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(95,333)



23,153











CASH FLOWS FROM INVESTING ACTIVITIES










ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

-



(109,267)

CAPITAL EXPENDITURES

(13,203)



(11,709)

OTHER INVESTING ACTIVITIES

-



2

NET CASH USED IN INVESTING ACTIVITIES 

(13,203)



(120,974)











CASH FLOWS FROM FINANCING ACTIVITIES










NET CHANGE IN DEBT

139,319



127,250

PURCHASE OF TREASURY STOCK

(25,605)



(11,096)

DIVIDENDS PAID

(11,822)



(11,134)

PAYMENTS OF DEBT ISSUANCE COSTS

(2,128)



-

OTHER FINANCING ACTIVITIES

1,903



694

NET CASH PROVIDED BY FINANCING ACTIVITIES

101,667



105,714











EFFECT OF EXCHANGE RATE CHANGES ON CASH

(700)



72

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(7,569)



7,965

CASH AND CASH EQUIVALENTS at beginning of period

21,755



19,488

CASH AND CASH EQUIVALENTS at end of period

$        14,186



$        27,453






 

SOURCE Standard Motor Products, Inc.


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