SMP Announces Q1 2024 Results

SMP Announces Q1 2024 Results

Net sales for the first quarter of 2024 were $331.4 million, compared to consolidated net sales of $328.0 million during the comparable quarter in 2023.

Standard Motor Products, Inc. reported its consolidated financial results for the three months ended March 31, 2024.

Net sales for the first quarter of 2024 were $331.4 million, compared to consolidated net sales of $328.0 million during the comparable quarter in 2023, the company said. Earnings from continuing operations for the first quarter of 2024 were $9.9 million or $0.44 per diluted share, compared to $12.7 million or $0.57 per diluted share in the first quarter of 2023. 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 2024 were $10.0 million or $0.45 per diluted share, compared to $13.4 million or $0.61 per diluted share in the first quarter of 2023.

“Our first quarter experienced mixed results. We are pleased with our record-setting top line performance as sales increased 1% against last year’s first quarter, rebounding from the sluggish sales we saw at the end of 2023. However, as expected, we continued to experience headwinds across various cost inputs, causing a drag on our profitability,” said Eric Sills, Standard Motor Products’ chief executive officer and president.

By segment, Vehicle Control sales were up 0.5% against a difficult comparison of over 4% growth last year, as customers returned to more normalized ordering patterns after a slowdown in the fourth quarter of last year, according to SMP.

Turning to Temperature Control, sales declined 1.1% versus the same quarter last year.  “However, this is mainly due to the timing of pre-season orders which can always shift between periods. Ultimately, as a seasonal business, our annual results will be determined by the degree and duration of hot weather the country experiences, and therefore early results are not indicative of the full year,” SMP added.

“Engineered Solutions sales increased 4.5% over last year’s first quarter, setting a single quarter record for this segment, as our traction with new and existing customers continues to build,” according to SMP.

Looking at profitability, SMP said adjusted EBITDA margin was 6.9% in the quarter vs. 8.8% last year. Excluding $1.1 million of start-up costs related to our new distribution center in Shawnee, KS, Adjusted EBITDA was 7.2% in the quarter. Within the combined Aftermarket segments, Adjusted EBITDA was helped by a 40 basis point gross margin improvement, but was offset by $1.0 million of higher factoring costs, as well as inflation in other SG&A expenses. Adjusted EBITDA in Engineered Solutions was down primarily due to a lower gross margin in the quarter, which was impacted by inflationary cost increases and some unfavorable changes in mix of sales. 

“Our sales and profit expectations for the full year of 2024 remain unchanged. We anticipate sales growth will be flat to low single digits, and Adjusted EBITDA will be in a range of 9.0% to 9.5%.  As previously discussed, we expect to incur roughly $5 million of added costs in 2024 as compared to 2023 for our new distribution center in Shawnee, KS, 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 as we outfit the new facility.  We are pleased to have successfully begun the first phase of shipping from our new DC, and are optimistic about the benefits it will bring once fully implemented. It will provide SMP with expanded capacity for future growth, mitigate risk through a multi-point distribution strategy, and improve product delivery times in certain geographies,” SMP said.

As part of its commitment to return value to shareholders, the Board of Directors approved payment of a quarterly dividend of 29 cents per share on the common stock outstanding, which will be paid on June 3, 2024 to stockholders of record on May 15, 2024, SMP said. Additionally, we purchased $2.6 million of common stock under our existing $30 million share repurchase authorization during the quarter.  From the end of the first quarter through April 29, 2024, we purchased an additional $3.5 million of common stock, leaving our remaining authorization under the current program at $23.9 million,” the company said.

In closing, Sills said, “As we look to the long term, we remain optimistic about both of our end markets. The fundamental trends in the aftermarket are favorable – a growing and aging car parc, a return to historical miles driven, and the high cost of new vehicles should lead to ongoing demand for parts, especially in non-discretionary categories such as ours. Our Engineered Solutions business continues to grow globally as we become known as a capable high-quality supplier, and opportunities continue to present themselves. And while near-term cost pressures persist, we are excited for 2024 and beyond, and we thank our employees that make all of this possible.”

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