Standard Motor Products (SMP) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 increased 3.3% year-over-year to $399.3M, with all segments contributing to growth; year-to-date net sales reached $1.12B, up 5.0% year-over-year.

• Adjusted diluted EPS for Q3 rose 15% year-over-year to $1.28; year-to-date adjusted EPS up nearly 6% to $2.70.

• Adjusted EBITDA margin for Q3 was 12.2%, up 80 bps year-over-year; year-to-date adjusted EBITDA was $111.1M (9.9% margin).

• Announced and received regulatory approval for the $388M acquisition of Nissens Automotive, expected to close by year-end 2024, with anticipated synergies in growth and cost reduction.

• Net earnings attributable to continuing operations increased, but GAAP net earnings were impacted by higher asbestos-related charges and discontinued operations losses.

Financial highlights

• Q3 2024 net sales: $399.3M (+3.3% year-over-year); nine months: $1.12B (+5.0%).

• Q3 gross margin improved to 30.4% from 29.7% last year; Q3 operating income was $37.1M (9.3% margin).

• Q3 adjusted earnings from continuing operations: $28.3M ($1.28/share) vs. $24.7M ($1.11/share) in Q3 2023.

• Q3 2024 interest expense decreased to $3.1M from $3.6M year-over-year.

• Q3 2024 operating margin: 9.3% (up from 9.0%); year-to-date: 6.8% (down from 7.7%).

Outlook and guidance

• Full-year 2024 sales growth expected in low- to mid-single digits; adjusted EBITDA margin guidance 9.0–9.5%.

• Guidance excludes impact from Nissens Automotive acquisition, which will be reported as a new segment in 2025.

• Management anticipates continued inflationary pressures but expects cost savings and operational initiatives to help offset margin impacts.

• The new Shawnee, Kansas distribution facility is expected to be fully operational in early 2025, with some transitional costs in 2024-2025.

• Favorable industry trends with an aging vehicle parc and increasing number of repairable vehicles support long-term demand.