Standard Motor Products, Inc. reported its consolidated financial results for the three and 12 months ended December 31, 2022.
Net sales for the fourth quarter of 2022 were $308.2 million, compared to consolidated net sales of $309.9 million during the same quarter in 2021, according to SMP. Earnings from continuing operations for the fourth quarter of 2022 were $8.5 million or $0.39 per diluted share, compared to $20.0 million or $0.89 per diluted share in the fourth quarter of 2021.
Excluding non-operational gains and losses, earnings from continuing operations for the fourth quarter of 2022 were $15.1 million or $0.69 per diluted share, compared to $20.3 million or $0.90 per diluted share in the fourth quarter of 2021.
Consolidated net sales for the 12 months ended December 31, 2022, were $1.37 billion, compared to consolidated net sales of $1.30 billion during the comparable period in 2021, according to SMP. Earnings from continuing operations for the 12 months ended December 31, 2022, were $73.0 million or $3.30 per diluted share, compared to $99.4 million or $4.39 per diluted share in the comparable period of 2021.
Excluding non-operational gains and losses, earnings from continuing operations for the 12 months ended December 31, 2022 and 2021 were $79.4 million or $3.59 per diluted share and $100.7 million or $4.45 per diluted share, respectively. “Our earnings for both the fourth quarter and the full-year 2022 were impacted by the recent announcement of a bankruptcy filing by an Aftermarket customer. We recorded a pre-tax charge of $7.0 million in the fourth quarter related to anticipated losses from this event, which has been treated as a non-operational loss on our GAAP to non-GAAP reconciliation,” according to SMP.
“We are pleased with our full year sales results, up 5.6% from 2021, with both Engine Management and Temperature Control segments performing well. Against a challenging comparison, sales for the fourth quarter dropped a half a percentage point from the same period last year, which was up nearly 10% from 2020,” said Eric Sills, Standard Motor Products’ chief executive officer and president.
Segment Reporting Changes
By segment, Engine Management sales increased 4% for the full year, on top of 12% growth in 2021. However, fourth quarter sales were down slightly, just over 1%, versus a very strong 2021, which was up 6% over the prior year. “Our customers’ Engine Management POS sales remained robust in the quarter, reflecting continued market strength and demand for our products,” SMP said.
Temperature Control sales remained strong in the fourth quarter on the strength of winter related products and from another long, hot summer. Sales grew 5.2% in the quarter versus last year, and were up nearly 10% for the full year due to a combination of favorable weather, successful pricing initiatives and overall strength in customer demand.
Consolidated operating profit for the quarter, excluding non-operational gains and losses, was 7.9%, in line with the fourth quarter of 2021. Pricing actions taken earlier in 2022, along with various cost reduction initiatives, largely offset ongoing inflationary pressures.
Consolidated operating profit for the full year, excluding non-operational gains and losses, finished at 8.2%, vs. 10.1% in 2021. “As we’ve noted many times, 2021 was an anomaly year with many non-recurring benefits associated with emerging from COVID lockdowns while still operating in a very low interest rate environment. Our operating profit of 8.2% was more in line with historical trends despite incurring an additional $20.6 million of customer factoring costs, which negatively affected operating profit by 150 basis points as compared to 2021,” SMP said.
New Operating Segment
“Today [Feb. 22, 2023], we are announcing our new operating segment, ‘Engineered Solutions,’ along with the intent to rename the Engine Management segment to ‘Vehicle Control,” Sills said. “These segment changes, beginning in 2023, will better align the Company’s operating businesses with its strategic focus as well as provide greater clarity into how the Company is positioned to capture growth opportunities of the future.”
SMP says its outlook for the full year includes an expectation that sales will grow in the low single digits and Adjusted EBITDA will be approximately 10%.
“While there still remains uncertainty as it relates to the economy and various global dynamics, we believe our end markets’ resiliency and diversification should continue to afford opportunities for new wins and stable levels of growth throughout 2023 and into the future,” Sills said.