Standard Motor Products (SMP) Gabelli Funds 48th Annual Automotive Aftermarket Symposium summary

Company overview and strategic direction

• Celebrated 105 years in business with 2023 sales just under $1.4 billion.

• Operates globally with 34 locations, focusing on aftermarket (80%) and Engineered Solutions (21%).

• Strategic pillars include nurturing North American aftermarket, expanding Engineered Solutions, continuous improvement, and effective cash use.

• Maintains a strong manufacturing base, especially in Mexico and Eastern Europe, with limited exposure to China.

• Differentiates through professional-grade, full-line offerings and strong partnerships with distributors.

Growth initiatives and acquisitions

• Engineered Solutions segment launched in 2023, targeting non-light vehicle markets and showing growth above traditional aftermarket.

• Acquisitions are key to growth, with the recent Nissens Automotive deal being the largest and considered transformational.

• Nissens brings $260 million in sales, strong brand equity in Europe, and significant category overlap.

• Expected $8–12 million in synergies from Nissens within 24 months, focusing on product insourcing and purchasing leverage.

• Engineered Solutions now generates $300 million in revenue, benefiting from cross-selling and strategic bolt-on acquisitions.

Financial performance and capital allocation

• Achieved 20% sales growth from 2020–2023, half from acquisitions and half organic.

• Gross margins have remained stable despite inflation, with recent improvements in operating profit, EBITDA, and EPS.

• Q3 sales up 3.3% with margin gains and controlled SG&A; CapEx increase driven by a new Kansas distribution center.

• Maintains low leverage, but post-Nissens acquisition leverage will rise to 3–3.5x, targeted to fall below 2x by end of 2026.

• Capital allocation prioritizes business investment, steady dividends, and toggling between share repurchases and M&A.