Standard Motor Products (SMP) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales reached $389.8 million, up 10.4% year-over-year, with growth across all segments, especially Temperature Control; year-to-date net sales rose 5.9% to $721.2 million.

• Temperature Control segment sales surged 28.2% in Q2, driven by extended heat and early season orders, and are up nearly 16% year-to-date.

• Vehicle Control segment rebounded with 2.7% growth in Q2 and 1.6% year-to-date, supported by non-discretionary demand and new business.

• Engineered Solutions sales rose 6.1% in Q2 and 5.3% year-to-date, driven by new business wins and production ramp-up.

• Announced definitive agreement to acquire Nissens Automotive for €360 million ($388 million), a leading European aftermarket supplier, expected to close by year-end 2024 after regulatory approvals.

Financial highlights

• Q2 2024 gross margin was 28.6%; adjusted EBITDA margin was 10.1% (10.4% excluding $1.3 million in start-up costs for a new distribution center).

• Q2 2024 operating income was $25 million (6.4% margin), impacted by higher SG&A and restructuring costs; net earnings from continuing operations were $18.0 million ($0.81 per diluted share).

• Year-to-date adjusted EBITDA was $62.4 million (8.7% of sales), and diluted EPS (non-GAAP) was $1.42.

• Cash used in operations was $10.1 million for the first six months, compared to $39.4 million generated last year.

• Dividend per share was $0.29 in Q2 2024, with a quarterly dividend of $0.29 per share declared for Q3.

Outlook and guidance

• Full-year 2024 sales expected to grow low- to mid-single digits, with adjusted EBITDA margin guidance at 9%-9.5%, excluding the impact of the Nissens acquisition.

• Management anticipates continued margin pressure from inflation but expects cost savings initiatives and pricing actions to help offset impacts.

• Interest expense projected at $2-$3 million per quarter; income tax rate expected at 25%.

• Additional $3-4 million in start-up costs anticipated in 2024 for the new Shawnee, KS distribution center.

• Cash flow from operations, available cash, and credit capacity expected to meet liquidity needs for at least the next 12 months.