8-K
STANDARD MOTOR PRODUCTS, INC. (SMP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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): August 2, 2023
STANDARD MOTOR PRODUCTS, INC.
(Exact Name of Registrant as Specified in its Charter)
| New York | 001-04743 | 11-1362020 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employee Identification Number) |
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:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $2.00 per share | SMP | New York Stock Exchange LLC |
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).
Emerging growth company ☐
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. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On August 2, 2023, Standard Motor Products, Inc. issued a press release announcing its financial results for the three months and six months ended June 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.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits. |
| --- | --- |
| 99.1 | Press release dated August 2, 2023 announcing Standard Motor Products, Inc.’s financial results for the three months and six months ended June 30, 2023. |
| --- | --- |
| 104 | Cover Page Interactive Data File--the cover page XBRL tags are embedded within the Inline XBRL document. |
| --- | --- |
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.
| STANDARD MOTOR PRODUCTS, INC. | ||
|---|---|---|
| By: | /s/ Nathan R. Iles | |
| Nathan R. Iles | ||
| Chief Financial Officer | ||
| Date: August 2, 2023 |
2
Exhibit Index
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated August 2, 2023 announcing Standard Motor Products, Inc.’s<br> financial results for the three months and six months ended June 30, 2023. |
| 104 | Cover Page Interactive Data File--the cover page XBRL tags are embedded within the Inline XBRL document. |
3
Exhibit 99.1
For Immediate Release
For more information, contact:
Anthony (Tony) Cristello
Standard Motor Products, Inc.
(972) 316-8107
tony.cristello@smpcorp.com
Standard Motor Products, Inc. Announces
Second Quarter 2023 Results and Quarterly Dividend
New York, NY, August 2, 2023......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, 2023.
Net sales for the second quarter of 2023 were $353.1 million, compared to consolidated net sales of $359.4 million during the comparable quarter in 2022. Earnings from continuing operations for the second quarter of 2023 were $18.4 million or $0.83 per diluted share, compared to $20.8 million or $0.93 per diluted share in the second 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 second quarter of 2023 were $18.6 million or $0.84 per diluted share, compared to $20.8 million or $0.93 per diluted share in the second quarter of 2022.
Consolidated net sales for the six months ended June 30, 2023, were $681.1 million, compared to consolidated net sales of $682.2 million during the comparable period in 2022. Earnings from continuing operations for the six months ended June 30, 2023, were $31.1 million or $1.40 per diluted share, compared to $41.4 million or $1.85 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 six months ended June 30, 2023 and 2022 were $31.9 million or $1.44 per diluted share and $41.4 million or $1.85 per diluted share, respectively.
Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “Overall, sales decreased 1.8% versus last year’s strong second quarter, while year-to-date we were roughly flat to 2022. The cooler and wetter conditions in the quarter had a negative impact on our aftermarket business, particularly on our Temperature Control segment. Additionally, we continue to experience the impact of a recent bankruptcy of a large aftermarket customer, negatively impacting our quarterly sales by 1.6%. While we believe in the long run that volume will return, as the business has either been acquired or will be absorbed by other accounts, in the near term it will continue to be a headwind.”
By segment, Vehicle Control sales were down 1.1% in the quarter, though remain 1.5% favorable on a year-to-date basis. This segment was the most impacted by the customer bankruptcy, reflecting a 2.2% negative impact in the quarter, which again, we believe will eventually be recovered. Meanwhile, we continue to see favorable customer sell-through, suggesting general market stability.
Temperature Control sales declined 8.1% versus the strong 6.4% growth experienced during the same quarter last year, and down 5.2% in the first half. As noted above, a cooler and wetter spring negatively impacted demand for this seasonal product category against an already difficult prior year comparison. That said, after a slow start, the heat has picked up across the country, with many areas hitting record temperatures, and that should bode well for the third quarter.
Our Engineered Solutions segment sales increased 6.2% in the quarter due to strong demand from our existing customers as well as new business wins. We continue to be bullish on long-term sales growth in this segment as we gain traction with our expanded customer base, though revenue growth is not necessarily linear.
Looking at profitability, consolidated non-GAAP operating margins were 7.8% in the quarter, flat with the 7.8% in the second quarter last year. We are pleased with our ability to largely overcome the impact of inflation through a combination of pricing actions and cost reduction initiatives. While Temperature Control operating margins, down 390 basis points from last year, came under pressure due to sales performance, the Vehicle Control and Engineered Solutions segments improved operating margin by 190 basis points and 100 basis points, respectively. During the quarter, our operating income was impacted by a $4.8 million increase in customer factoring program expense over last year from elevated interest rates. On the bottom line, Adjusted EBITDA and earnings per share were down primarily due to the lower sales performance in Temp Control, lower overhead absorption from inventory reduction efforts, and the impact of interest rates both on our customer factoring programs and our borrowings.
From a cash flow perspective, we continue to make progress with respect to initiatives on reducing both our inventory and our debt. At quarter-end, our inventory was $499.1 million, down from $528.7 million at year-end 2022 and $551.4 million at last year’s second quarter. Additionally, our total debt at quarter-end stood at $223.2 million as we paid down $50 million in the second quarter.
We are excited to announce our plans to open a new distribution center in Shawnee, KS, which eventually will replace our existing smaller DC in nearby Edwardsville, KS. This 575,000 sq.ft. facility, scheduled to have a phased opening beginning early 2025, will provide capacity expansion for all aftermarket product categories with improved logistics capabilities, though in the near term we will incur additional costs while we operate two facilities.
Regarding our full year expectations for 2023, we anticipate top line sales growth to be in the low single digits. We are updating our Adjusted EBITDA expectations to approximately 9.5% of revenue for the full year 2023 from our prior estimate of approximately 10%. This outlook considers higher expense related to customer factoring programs that will fall between $48-$50 million at current rates, the impact of startup costs and duplicate overhead expense associated with the new distribution center discussed above, an exchange rate headwind from the weakening of the U.S. Dollar on our international operations, and the impact from softer than expected sales in our second 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 September 1, 2023 to stockholders of record on August 15, 2023.
The Company has been involved in a legal proceeding with a third party since March 2019. This lawsuit arose from a breach of contract claim associated with a discontinued operation of SMP. SMP has vigorously defended itself but, on May 11, 2023, we were found liable for approximately $11 million in damages. Although it is expected that the Court will not finalize its judgment until the end of the third quarter of 2023, we incurred a charge to SMP’s discontinued operation in the second quarter of 2023.
In closing, Mr. Sills commented “As we start to look into the second half of the year, we are optimistic that the return of hotter summer weather patterns should help normalize aftermarket demand trends where fundamental industry dynamics remain favorable. Our Engineered Solutions business, which can be lumpy quarter to quarter, is on a very nice trajectory. And our initiatives of reducing inventory levels and improving working capital have us on track to return to healthy levels of operating cash flow consistent with years past. We recognize that macro pressures are lingering, but we will continue to invest in our business and people to be well-positioned to take advantage of the strength of the industries in which we operate once these near-term headwinds subside. We want to thank all our employees for our current success and helping us achieve our goals for the future.”
Conference Call
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, August 2, 2023. This call will be webcast and can be accessed on the Investor Relations page of our website at www.smpcorp.com and clicking on the SMP 2Q 2023 Earnings Webcast link. Investors may also listen to the call by dialing 800-274-8461 (domestic) or 203-518-9814 (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 888-562-0905 (domestic) or 402-220-7347 (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<br><br> <br>JUNE 30, | SIX MONTHS ENDED<br><br> <br>JUNE 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| NET SALES | $ | 353,075 | $ | 359,412 | $ | 681,103 | $ | 682,243 | ||||
| COST OF SALES | 251,806 | 263,061 | 488,567 | 496,052 | ||||||||
| GROSS PROFIT | 101,269 | 96,351 | 192,536 | 186,191 | ||||||||
| SELLING, GENERAL & ADMINISTRATIVE EXPENSES | 73,843 | 68,468 | 143,476 | 131,352 | ||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 294 | 3 | 1,206 | 44 | ||||||||
| OTHER INCOME, NET | 46 | 13 | 70 | 13 | ||||||||
| OPERATING INCOME | 27,178 | 27,893 | 47,924 | 54,808 | ||||||||
| OTHER NON-OPERATING INCOME, NET | 802 | 1,927 | 1,027 | 3,376 | ||||||||
| INTEREST EXPENSE | 3,283 | 1,821 | 7,145 | 2,626 | ||||||||
| EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | 24,697 | 27,999 | 41,806 | 55,558 | ||||||||
| PROVISION FOR INCOME TAXES | 6,289 | 7,122 | 10,661 | 14,127 | ||||||||
| EARNINGS FROM CONTINUING OPERATIONS | 18,408 | 20,877 | 31,145 | 41,431 | ||||||||
| LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES | (9,221 | ) | (1,666 | ) | (10,001 | ) | (2,782 | ) | ||||
| NET EARNINGS | 9,187 | 19,211 | 21,144 | 38,649 | ||||||||
| NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 50 | 85 | 89 | 77 | ||||||||
| NET EARNINGS ATTRIBUTABLE TO SMP (a) | $ | 9,137 | $ | 19,126 | $ | 21,055 | $ | 38,572 | ||||
| NET EARNINGS ATTRIBUTABLE TO SMP | ||||||||||||
| EARNINGS FROM CONTINUING OPERATIONS | $ | 18,358 | $ | 20,792 | $ | 31,056 | $ | 41,354 | ||||
| LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES | (9,221 | ) | (1,666 | ) | (10,001 | ) | (2,782 | ) | ||||
| TOTAL | $ | 9,137 | $ | 19,126 | $ | 21,055 | $ | 38,572 | ||||
| NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP | ||||||||||||
| BASIC EARNINGS FROM CONTINUING OPERATIONS | $ | 0.85 | $ | 0.96 | $ | 1.43 | $ | 1.89 | ||||
| DISCONTINUED OPERATION | (0.43 | ) | (0.08 | ) | (0.46 | ) | (0.13 | ) | ||||
| NET EARNINGS PER COMMON SHARE - BASIC | $ | 0.42 | $ | 0.88 | $ | 0.97 | $ | 1.76 | ||||
| DILUTED EARNINGS FROM CONTINUING OPERATIONS | $ | 0.83 | $ | 0.93 | $ | 1.40 | $ | 1.85 | ||||
| DISCONTINUED OPERATION | (0.42 | ) | (0.07 | ) | (0.45 | ) | (0.13 | ) | ||||
| NET EARNINGS PER COMMON SHARE - DILUTED | $ | 0.41 | $ | 0.86 | $ | 0.95 | $ | 1.72 | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | 21,689,067 | 21,757,998 | 21,649,562 | 21,867,644 | ||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES | 22,183,489 | 22,255,642 | 22,139,708 | 22,372,702 | ||||||||
| (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, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Revenues | ||||||||||||
| Engine Management (Ignition, Emissions and | ||||||||||||
| Fuel Delivery) | $ | 113,589 | $ | 111,581 | $ | 229,672 | $ | 220,730 | ||||
| Electrical and Safety | 52,867 | 57,054 | 104,671 | 109,311 | ||||||||
| Wire sets and other | 17,333 | 17,136 | 34,023 | 32,994 | ||||||||
| Vehicle Control | 183,789 | 185,771 | 368,366 | 363,035 | ||||||||
| AC System Components | 74,449 | 81,608 | 120,201 | 128,982 | ||||||||
| Other Thermal Components | 22,625 | 24,029 | 49,279 | 49,713 | ||||||||
| Temperature Control | 97,074 | 105,637 | 169,480 | 178,695 | ||||||||
| Commercial Vehicle | 26,742 | 19,503 | 46,599 | 40,954 | ||||||||
| Construction / Agriculture | 8,103 | 11,222 | 20,898 | 22,206 | ||||||||
| Light Vehicle | 23,548 | 23,039 | 46,514 | 49,114 | ||||||||
| All Other | 13,819 | 14,240 | 29,246 | 28,239 | ||||||||
| Engineered Solutions | 72,212 | 68,004 | 143,257 | 140,513 | ||||||||
| Revenues | $ | 353,075 | $ | 359,412 | $ | 681,103 | $ | 682,243 | ||||
| Gross Margin | ||||||||||||
| Vehicle Control | $ | 60,109 | 32.7% | $ | 53,728 | 28.9% | $ | 118,581 | 32.2% | $ | 109,152 | 30.1% |
| Temperature Control | 26,512 | 27.3% | 29,315 | 27.8% | 45,667 | 26.9% | 48,803 | 27.3% | ||||
| Engineered Solutions | 14,648 | 20.3% | 13,308 | 19.6% | 28,288 | 19.7% | 28,236 | 20.1% | ||||
| All Other | - | - | - | - | ||||||||
| Gross Margin | $ | 101,269 | 28.7% | $ | 96,351 | 26.8% | $ | 192,536 | 28.3% | $ | 186,191 | 27.3% |
| Selling, General & Administrative | ||||||||||||
| Vehicle Control | $ | 40,720 | 22.2% | $ | 37,679 | 20.3% | $ | 81,556 | 22.1% | $ | 72,718 | 20.0% |
| Temperature Control | 20,584 | 21.2% | 18,792 | 17.8% | 37,112 | 21.9% | 34,118 | 19.1% | ||||
| Engineered Solutions | 8,481 | 11.7% | 8,199 | 12.1% | 16,390 | 11.4% | 16,839 | 12.0% | ||||
| All Other | 4,058 | 3,798 | 8,418 | 7,677 | ||||||||
| Selling, General & Administrative | $ | 73,843 | 20.9% | $ | 68,468 | 19.1% | $ | 143,476 | 21.1% | $ | 131,352 | 19.3% |
| Operating Income | ||||||||||||
| Vehicle Control | $ | 19,389 | 10.5% | $ | 16,049 | 8.6% | $ | 37,025 | 10.1% | $ | 36,434 | 10.0% |
| Temperature Control | 5,928 | 6.1% | 10,523 | 10.0% | 8,555 | 5.0% | 14,685 | 8.2% | ||||
| Engineered Solutions | 6,167 | 8.5% | 5,109 | 7.5% | 11,898 | 8.3% | 11,397 | 8.1% | ||||
| All Other | (4,058) | (3,798) | (8,418) | (7,677) | ||||||||
| Subtotal | $ | 27,426 | 7.8% | $ | 27,883 | 7.8% | $ | 49,060 | 7.2% | $ | 54,839 | 8.0% |
| Restructuring & Integration | (294) | -0.1% | (3) | 0.0% | (1,206) | -0.2% | (44) | 0.0% | ||||
| Other Income, Net | 46 | 0.0% | 13 | 0.0% | 70 | 0.0% | 13 | 0.0% | ||||
| Operating Income | $ | 27,178 | 7.7% | $ | 27,893 | 7.8% | $ | 47,924 | 7.0% | $ | 54,808 | 8.0% |
| 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, | |||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||||
| EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP | ||||||||||||||||||
| GAAP EARNINGS FROM CONTINUING OPERATIONS | $ | 18,358 | $ | 20,792 | $ | 31,056 | $ | 41,354 | ||||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 294 | 3 | 1,206 | 44 | ||||||||||||||
| INCOME TAX EFFECT RELATED TO RECONCILING ITEMS | (77 | ) | - | (314 | ) | (11 | ) | |||||||||||
| NON-GAAP EARNINGS FROM CONTINUING OPERATIONS | $ | 18,575 | $ | 20,795 | $ | 31,948 | $ | 41,387 | ||||||||||
| DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS<br><br> <br>ATTRIBUTABLE TO SMP | ||||||||||||||||||
| GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | $ | 0.83 | $ | 0.93 | $ | 1.40 | $ | 1.85 | ||||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 0.01 | - | 0.05 | - | ||||||||||||||
| INCOME TAX EFFECT RELATED TO RECONCILING ITEMS | - | - | (0.01 | ) | - | |||||||||||||
| NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | $ | 0.84 | $ | 0.93 | $ | 1.44 | $ | 1.85 | ||||||||||
| OPERATING INCOME | ||||||||||||||||||
| GAAP OPERATING INCOME | $ | 27,178 | $ | 27,893 | $ | 47,924 | $ | 54,808 | ||||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 294 | 3 | 1,206 | 44 | ||||||||||||||
| OTHER INCOME, NET | (46 | ) | (13 | ) | (70 | ) | (13 | ) | LAST TWELVE MONTHS ENDED | YEAR ENDED | ||||||||
| JUNE 30, | DECEMBER 31, | |||||||||||||||||
| NON-GAAP OPERATING INCOME | $ | 27,426 | $ | 27,883 | $ | 49,060 | $ | 54,839 | 2023 | 2022 | 2022 | |||||||
| (Unaudited) | ||||||||||||||||||
| EBITDA WITHOUT SPECIAL ITEMS | ||||||||||||||||||
| GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | $ | 24,697 | $ | 27,999 | $ | 41,806 | $ | 55,558 | $ | 84,580 | $ | 119,011 | $ | 98,332 | ||||
| DEPRECIATION AND AMORTIZATION | 7,047 | 6,941 | 14,129 | 13,893 | 28,534 | 28,036 | 28,298 | |||||||||||
| INTEREST EXPENSE | 3,283 | 1,821 | 7,145 | 2,626 | 15,136 | 3,950 | 10,617 | |||||||||||
| EBITDA | 35,027 | 36,761 | 63,080 | 72,077 | 128,250 | 150,997 | 137,247 | |||||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 294 | 3 | 1,206 | 44 | 3,053 | 436 | 1,891 | |||||||||||
| CUSTOMER BANKRUPTCY CHARGE | - | - | - | - | 7,002 | - | 7,002 | |||||||||||
| ONE-TIME ACQUISITION COSTS | - | - | - | - | - | 956 | - | |||||||||||
| SPECIAL ITEMS | 294 | 3 | 1,206 | 44 | 10,055 | 1,392 | 8,893 | |||||||||||
| EBITDA WITHOUT SPECIAL ITEMS | $ | 35,321 | $ | 36,764 | $ | 64,286 | $ | 72,121 | $ | 138,305 | $ | 152,389 | $ | 146,140 |
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
| (In thousands) | THREE MONTHS ENDED JUNE 30, 2023 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Vehicle Control | Temperature<br><br> <br>Control | Engineered<br><br> <br>Solutions | All Other | Consolidated | |||||||||||
| (Unaudited) | |||||||||||||||
| OPERATING INCOME | |||||||||||||||
| GAAP OPERATING INCOME | $ | 19,273 | $ | 5,800 | $ | 6,163 | $ | (4,058 | ) | $ | 27,178 | ||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 154 | 128 | 12 | - | 294 | ||||||||||
| OTHER INCOME, NET | (38 | ) | - | (8 | ) | - | (46 | ) | |||||||
| NON-GAAP OPERATING INCOME | $ | 19,389 | $ | 5,928 | $ | 6,167 | $ | (4,058 | ) | $ | 27,426 | ||||
| EBITDA WITHOUT SPECIAL ITEMS | |||||||||||||||
| GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | $ | 17,235 | $ | 5,259 | $ | 6,247 | $ | (4,044 | ) | $ | 24,697 | ||||
| DEPRECIATION AND AMORTIZATION | 3,373 | 768 | 2,486 | 420 | 7,047 | ||||||||||
| INTEREST EXPENSE | 2,304 | 842 | 637 | (500 | ) | 3,283 | |||||||||
| EBITDA | 22,912 | 6,869 | 9,370 | (4,124 | ) | 35,027 | |||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 154 | 128 | 12 | - | 294 | ||||||||||
| SPECIAL ITEMS | 154 | 128 | 12 | - | 294 | ||||||||||
| EBITDA WITHOUT SPECIAL ITEMS | $ | 23,066 | $ | 6,997 | $ | 9,382 | $ | (4,124 | ) | $ | 35,321 | ||||
| % of Net Sales | 12.6 | % | 7.2 | % | 13.0 | % | 10.0 | % | |||||||
| (In thousands) | THREE MONTHS ENDED JUNE 30, 2022 | ||||||||||||||
| Vehicle Control | Temperature<br><br> <br>Control | Engineered<br><br> <br>Solutions | All Other | Consolidated | |||||||||||
| (Unaudited) | |||||||||||||||
| OPERATING INCOME | |||||||||||||||
| GAAP OPERATING INCOME | $ | 16,059 | $ | 10,523 | $ | 5,109 | $ | (3,798 | ) | $ | 27,893 | ||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 3 | - | - | - | 3 | ||||||||||
| OTHER INCOME, NET | (13 | ) | - | - | - | (13 | ) | ||||||||
| NON-GAAP OPERATING INCOME | $ | 16,049 | $ | 10,523 | $ | 5,109 | $ | (3,798 | ) | $ | 27,883 | ||||
| EBITDA WITHOUT SPECIAL ITEMS | |||||||||||||||
| GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | $ | 14,928 | $ | 12,064 | $ | 4,950 | $ | (3,943 | ) | $ | 27,999 | ||||
| DEPRECIATION AND AMORTIZATION | 3,491 | 742 | 2,295 | 413 | 6,941 | ||||||||||
| INTEREST EXPENSE | 1,353 | 406 | 139 | (77 | ) | 1,821 | |||||||||
| EBITDA | 19,772 | 13,212 | 7,384 | (3,607 | ) | 36,761 | |||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 3 | - | - | - | 3 | ||||||||||
| SPECIAL ITEMS | 3 | - | - | - | 3 | ||||||||||
| EBITDA WITHOUT SPECIAL ITEMS | $ | 19,775 | $ | 13,212 | $ | 7,384 | $ | (3,607 | ) | $ | 36,764 | ||||
| % of Net Sales | 10.6 | % | 12.5 | % | 10.9 | % | 10.2 | % |
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.
Reconciliation of GAAP and Non-GAAP Measures by Segments
| (In thousands) | SIX MONTHS ENDED JUNE 30, 2023 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Vehicle Control | Temperature<br><br> <br>Control | Engineered<br><br> <br>Solutions | All Other | Consolidated | |||||||||||
| (Unaudited) | |||||||||||||||
| OPERATING INCOME | |||||||||||||||
| GAAP OPERATING INCOME | $ | 36,648 | $ | 7,884 | $ | 11,810 | $ | (8,418 | ) | $ | 47,924 | ||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 439 | 671 | 96 | - | 1,206 | ||||||||||
| OTHER INCOME, NET | (62 | ) | - | (8 | ) | - | (70 | ) | |||||||
| NON-GAAP OPERATING INCOME | $ | 37,025 | $ | 8,555 | $ | 11,898 | $ | (8,418 | ) | $ | 49,060 | ||||
| EBITDA WITHOUT SPECIAL ITEMS | |||||||||||||||
| GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | $ | 32,292 | $ | 6,364 | $ | 11,533 | $ | (8,383 | ) | $ | 41,806 | ||||
| DEPRECIATION AND AMORTIZATION | 6,785 | 1,531 | 4,967 | 846 | 14,129 | ||||||||||
| INTEREST EXPENSE | 5,045 | 1,735 | 996 | (631 | ) | 7,145 | |||||||||
| EBITDA | 44,122 | 9,630 | 17,496 | (8,168 | ) | 63,080 | |||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 439 | 671 | 96 | - | 1,206 | ||||||||||
| SPECIAL ITEMS | 439 | 671 | 96 | - | 1,206 | ||||||||||
| EBITDA WITHOUT SPECIAL ITEMS | $ | 44,561 | $ | 10,301 | $ | 17,592 | $ | (8,168 | ) | $ | 64,286 | ||||
| % of Net Sales | 12.1 | % | 6.1 | % | 12.3 | % | 9.4 | % | |||||||
| (In thousands) | SIX MONTHS ENDED JUNE 30, 2022 | ||||||||||||||
| Vehicle Control | Temperature<br><br> <br>Control | Engineered<br><br> <br>Solutions | All Other | Consolidated | |||||||||||
| (Unaudited) | |||||||||||||||
| OPERATING INCOME | |||||||||||||||
| GAAP OPERATING INCOME | $ | 36,403 | $ | 14,685 | $ | 11,397 | $ | (7,677 | ) | $ | 54,808 | ||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 44 | - | - | - | 44 | ||||||||||
| OTHER INCOME, NET | (13 | ) | - | - | - | (13 | ) | ||||||||
| NON-GAAP OPERATING INCOME | $ | 36,434 | $ | 14,685 | $ | 11,397 | $ | (7,677 | ) | $ | 54,839 | ||||
| EBITDA WITHOUT SPECIAL ITEMS | |||||||||||||||
| GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | $ | 35,294 | $ | 16,544 | $ | 11,528 | $ | (7,808 | ) | $ | 55,558 | ||||
| DEPRECIATION AND AMORTIZATION | 6,908 | 1,422 | 4,753 | 810 | 13,893 | ||||||||||
| INTEREST EXPENSE | 1,928 | 566 | 285 | (153 | ) | 2,626 | |||||||||
| EBITDA | 44,130 | 18,532 | 16,566 | (7,151 | ) | 72,077 | |||||||||
| RESTRUCTURING AND INTEGRATION EXPENSES | 44 | - | - | - | 44 | ||||||||||
| SPECIAL ITEMS | 44 | - | - | - | 44 | ||||||||||
| EBITDA WITHOUT SPECIAL ITEMS | $ | 44,174 | $ | 18,532 | $ | 16,566 | $ | (7,151 | ) | $ | 72,121 | ||||
| % of Net Sales | 12.2 | % | 10.4 | % | 11.8 | % | 10.6 | % |
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 | ||||||
| (In thousands) | ||||||
| JUNE<br><br> <br>2023 | JUNE<br><br> <br>2022 | DECEMBER<br><br> <br>2022 | ||||
| (Unaudited) | (Unaudited) | |||||
| ASSETS | ||||||
| CASH | $ | 23,019 | $ | 14,186 | $ | 21,150 |
| ACCOUNTS RECEIVABLE, GROSS | 223,862 | 235,669 | 173,013 | |||
| ALLOWANCE FOR EXPECTED CREDIT LOSSES | 5,757 | 6,012 | 5,375 | |||
| ACCOUNTS RECEIVABLE, NET | 218,105 | 229,657 | 167,638 | |||
| INVENTORIES | 499,134 | 551,415 | 528,715 | |||
| UNRETURNED CUSTOMER INVENTORY | 19,722 | 21,405 | 19,695 | |||
| OTHER CURRENT ASSETS | 27,903 | 26,198 | 25,241 | |||
| TOTAL CURRENT ASSETS | 787,883 | 842,861 | 762,439 | |||
| PROPERTY, PLANT AND EQUIPMENT, NET | 107,590 | 104,931 | 107,148 | |||
| OPERATING LEASE RIGHT-OF-USE ASSETS | 73,093 | 39,827 | 49,838 | |||
| GOODWILL | 132,391 | 131,125 | 132,087 | |||
| OTHER INTANGIBLES, NET | 96,291 | 101,649 | 100,504 | |||
| DEFERRED INCOME TAXES | 33,905 | 34,086 | 33,658 | |||
| INVESTMENT IN UNCONSOLIDATED AFFILIATES | 41,557 | 44,885 | 41,745 | |||
| OTHER ASSETS | 29,435 | 27,188 | 27,510 | |||
| TOTAL ASSETS | $ | 1,302,145 | $ | 1,326,552 | $ | 1,254,929 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| CURRENT PORTION OF REVOLVING CREDIT FACILITY | $ | 53,700 | $ | 56,000 | $ | 50,000 |
| CURRENT PORTION OF TERM LOAN AND OTHER DEBT | 5,028 | 7,954 | 5,031 | |||
| ACCOUNTS PAYABLE | 94,657 | 140,082 | 89,247 | |||
| ACCRUED CUSTOMER RETURNS | 43,664 | 55,725 | 37,169 | |||
| ACCRUED CORE LIABILITY | 20,187 | 23,117 | 22,952 | |||
| ACCRUED REBATES | 43,781 | 41,647 | 37,381 | |||
| PAYROLL AND COMMISSIONS | 28,346 | 35,985 | 31,361 | |||
| SUNDRY PAYABLES AND ACCRUED EXPENSES | 59,126 | 49,710 | 49,990 | |||
| TOTAL CURRENT LIABILITIES | 348,489 | 410,220 | 323,131 | |||
| LONG-TERM DEBT | 164,488 | 203,500 | 184,589 | |||
| NONCURRENT OPERATING LEASE LIABILITY | 64,271 | 30,039 | 40,709 | |||
| ACCRUED ASBESTOS LIABILITIES | 59,565 | 48,025 | 63,305 | |||
| OTHER LIABILITIES | 24,917 | 22,119 | 22,157 | |||
| TOTAL LIABILITIES | 661,730 | 713,903 | 633,891 | |||
| TOTAL SMP STOCKHOLDERS' EQUITY | 629,673 | 601,586 | 610,020 | |||
| NONCONTROLLING INTEREST | 10,742 | 11,063 | 11,018 | |||
| TOTAL STOCKHOLDERS' EQUITY | 640,415 | 612,649 | 621,038 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,302,145 | $ | 1,326,552 | $ | 1,254,929 |
STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
| (In thousands) | ||||||
|---|---|---|---|---|---|---|
| SIX MONTHS ENDED | ||||||
| JUNE 30, | ||||||
| 2023 | 2022 | |||||
| (Unaudited) | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| NET EARNINGS | $ | 21,144 | $ | 38,649 | ||
| ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH | ||||||
| PROVIDED BY (USED IN) OPERATING ACTIVITIES: | ||||||
| DEPRECIATION AND AMORTIZATION | 14,129 | 13,893 | ||||
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES | 10,001 | 2,782 | ||||
| OTHER | 5,835 | 8,049 | ||||
| CHANGE IN ASSETS AND LIABILITIES: | ||||||
| ACCOUNTS RECEIVABLE | (48,271 | ) | (49,659 | ) | ||
| INVENTORY | 30,924 | (87,744 | ) | |||
| ACCOUNTS PAYABLE | 4,323 | 1,591 | ||||
| PREPAID EXPENSES AND OTHER CURRENT ASSETS | (468 | ) | (7,102 | ) | ||
| SUNDRY PAYABLES AND ACCRUED EXPENSES | 2,776 | (5,020 | ) | |||
| OTHER | (1,023 | ) | (10,772 | ) | ||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 39,370 | (95,333 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| CAPITAL EXPENDITURES | (9,507 | ) | (13,203 | ) | ||
| OTHER INVESTING ACTIVITIES | 66 | - | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (9,441 | ) | (13,203 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| NET CHANGE IN DEBT | (16,547 | ) | 139,319 | |||
| PURCHASE OF TREASURY STOCK | - | (25,605 | ) | |||
| DIVIDENDS PAID | (12,544 | ) | (11,822 | ) | ||
| PAYMENTS OF DEBT ISSUANCE COSTS | - | (2,128 | ) | |||
| OTHER FINANCING ACTIVITIES | 3 | 1,903 | ||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (29,088 | ) | 101,667 | |||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 1,028 | (700 | ) | |||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,869 | (7,569 | ) | |||
| CASH AND CASH EQUIVALENTS at beginning of period | 21,150 | 21,755 | ||||
| CASH AND CASH EQUIVALENTS at end of period | $ | 23,019 | $ | 14,186 |