Standard Motor Products Inc. has reported its consolidated financial results for the three and nine months ended Sept. 30, 2022.
Net sales for the third quarter of 2022 were $381.4 million, compared to consolidated net sales of $370.3 million during the comparable quarter in 2021. Earnings from continuing operations for the third quarter of 2022 were $23.1 million or $1.06 per diluted share, compared to $29.2 million or $1.29 per diluted share in the third 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 third quarter of 2022 were $22.9 million or $1.05 per diluted share, compared to $29.7 million or $1.32 per diluted share in the third quarter of 2021.
Consolidated net sales for the nine months ended Sept. 30, 2022, were $1.06 billion, compared to consolidated net sales of $988.9 million during the comparable period in 2021. Earnings from continuing operations for the nine months ended Sept. 30, 2022, were $64.5 million or $2.91 per diluted share, compared to $79.3 million or $3.50 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 nine months ended September 30, 2022 and 2021 were $64.3 million or $2.90 per diluted share and $80.4 million or $3.54 per diluted share, respectively.
“Overall, we are pleased with our sales results which continue to reflect the steady demand for our products as seen in our 3% sales increase over last year, with gains in both segments,” said Eric Sills, Standard Motor Products’ CEO and president.
Engine Management sales increased approximately 2% in the quarter despite tough comparisons. Excluding the Wire and Cable business, which is in secular ongoing decline, Engine Management sales were ahead approximately 3%, in line with long-term projections of low single digit growth. Engine Management experienced consistently higher customer POS levels throughout the quarter against record levels from 2021.
Temperature Control benefited from a strong summer season with extreme temperatures across many regions even against record heat and the difficult comparison in 2021. Sales grew 3.3% in the quarter vs. last year, and up nearly 11% year-to-date due to a combination of favorable weather, successful pricing initiatives and overall strength in customer demand.
The company said it is also pleased with the performance of its specialized non-aftermarket business, which focuses on custom-engineered products for niche end markets such as medium and heavy-duty vehicles, construction and agricultural equipment, power sports, and others. The company’s business strategy remains on track with a sales run rate of over $300 million. Cross-selling opportunities continue to surface and customers are beginning to look beyond their current product categories and inquiring as to other potential solutions and capabilities we can provide.
In October, the company acquired Kade Trading GmbH, a supplier of temperature control products across Europe. The company says, while small at $6 million in annual sales, it provides synergies to the company’s other recent acquisitions, and provides SMP with an entry point into the European market for our temperature control products with a strong focus on the continuing electrification of thermal systems.
Consolidated operating profit was 8.8% and was helped by the strength of the Temperature Control segment. However, operating profit was below last year’s record levels as ongoing inflationary pressures and rising interest rates continue to create a headwind. The company will be implementing additional price increases and continue to seek out cost savings opportunities to offset these higher expenses.
The company’s outlook for the full year has incorporated inflationary pressures and interest rate increases as noted above, and remains unchanged from our prior quarter. The company expects its full year gross margin to be approximately 27% and expects its operating profit to be in the range of 7-8% of net sales.
Finally, the company is pleased to announce that its 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 December 1, 2022 to stockholders of record on November 15, 2022.
In closing, Mr. Sills commented, “The past three years have presented some unprecedented challenges to our industry and the marketplace in general. While there remain many unknowns related to inflation, interest rates and the increasing risk of potential recession, we are confident in our ability to navigate these challenges. We appreciate and thank all our employees for their hard work and support during this difficult period.”
