Standard Motor Products, Inc. Releases Fourth Quarter and 2022 Year-End Results; Announces Segment Reporting Changes

NEW YORK, Feb. 22, 2023 /PRNewswire/ — Standard Motor Products, Inc. (NYSE: SMP), a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three and twelve 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. 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 identified on the attached reconciliation of GAAP and non-GAAP measures, 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 twelve months ended December 31, 2022, were $1.37 billion, compared to consolidated net sales of $1.30 billion during the comparable period in 2021.  Earnings from continuing operations for the twelve 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 identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the twelve 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.

Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “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.”

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.

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.

Mr. Sills added, “Today we are announcing our new operating segment, ‘Engineered Solutions’, along with the intent to rename the Engine Management segment to ‘Vehicle Control’. 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.  Please see our separate press release on these changes, also distributed today, along with a supplementary presentation available on the Company’s Investor Relations website. We will discuss in more detail on today’s call.”  

As we head into 2023, our outlook for the full year includes an expectation that sales will grow in the low single digits and Adjusted EBITDA will be approximately 10%.

In closing, Mr. Sills commented, “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.”  

Conference CallStandard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, February 22, 2023.  This call will be web cast and can be accessed on the Investor Relations page of our website at www.smpcorp.com and clicking on the SMP Q4’22 Earnings Call Earnings Webcast link.  Investors may also listen to the call by dialing 800-343-1703 (domestic) or 785-424-1226 (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 800-723-1517 (domestic) or 402-220-2659 (international). The participant passcode is 73005.

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

TWELVE MONTHS ENDED

DECEMBER 31,

DECEMBER 31,

2022

2021

2022

2021

(Unaudited)

(Unaudited)

NET SALES

$       308,199

$       309,877

$   1,371,815

$   1,298,816

COST OF SALES

218,635

221,207

989,276

921,885

GROSS PROFIT

89,564

88,670

382,539

376,931

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

72,075

64,231

276,626

247,547

RESTRUCTURING AND INTEGRATION EXPENSES

1,847

226

1,891

392

OTHER INCOME (EXPENSE), NET

70

(1)

113

7

OPERATING INCOME 

15,712

24,212

104,135

128,999

OTHER NON-OPERATING INCOME (EXPENSE), NET

(75)

1,247

4,814

3,494

INTEREST EXPENSE

4,335

672

10,617

2,028

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

11,302

24,787

98,332

130,465

PROVISION FOR INCOME TAXES

2,799

4,729

25,206

31,044

EARNINGS FROM CONTINUING OPERATIONS

8,503

20,058

73,126

99,421

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(615)

(1,328)

(17,691)

(8,467)

NET EARNINGS

7,888

18,730

55,435

90,954

NET EARNINGS (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST

(45)

36

84

68

NET EARNINGS ATTRIBUTABLE TO SMP (a)

$           7,933

$         18,694

$         55,351

$         90,886

NET EARNINGS ATTRIBUTABLE TO SMP 

EARNINGS FROM CONTINUING OPERATIONS

$           8,548

$         20,022

$         73,042

$         99,353

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(615)

(1,328)

(17,691)

(8,467)

TOTAL

$           7,933

$         18,694

$         55,351

$         90,886

NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$             0.40

$             0.91

$             3.37

$             4.49

   DISCONTINUED OPERATION

(0.03)

(0.06)

(0.82)

(0.39)

   NET EARNINGS PER COMMON SHARE – BASIC

$             0.37

$             0.85

$             2.55

$             4.10

   DILUTED EARNINGS  FROM CONTINUING OPERATIONS

$             0.39

$             0.89

$             3.30

$             4.39

   DISCONTINUED OPERATION

(0.03)

(0.06)

(0.80)

(0.37)

   NET EARNINGS  PER COMMON SHARE – DILUTED

$             0.36

$             0.83

$             2.50

$             4.02

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

21,578,194

21,987,480

21,683,719

22,147,479

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

22,030,263

22,485,032

22,139,981

22,616,456

(a)

“SMP” refers to Standard Motor Products, Inc. and subsidiaries.

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

(In thousands)

THREE MONTHS ENDED

TWELVE MONTHS ENDED

DECEMBER 31, 

DECEMBER 31, 

2022

2021

2022

2021

(unaudited)

(unaudited)

Revenues

Ignition, Emission Control, Fuel & Safety

   Related System Products

$      206,479

$      211,919

$      824,677

$      786,514

Wire and Cable

35,893

33,632

150,566

151,422

        Engine Management

242,372

245,551

975,243

937,936

Compressors

28,981

28,666

222,532

206,697

Other Climate Control Parts

34,560

31,738

159,753

141,726

        Temperature Control

63,541

60,404

382,285

348,423

All Other

2,286

3,922

14,287

12,457

        Revenues

$      308,199

$      309,877

$   1,371,815

$   1,298,816

Gross Margin

Engine Management

$        69,099

28.5 %

$        67,776

27.6 %

$      262,954

27.0 %

$      267,285

28.5 %

Temperature Control

16,675

26.2 %

16,670

27.6 %

102,640

26.8 %

95,138

27.3 %

All Other

3,790

4,270

16,945

14,832

        Subtotal

$        89,564

29.1 %

$        88,716

28.6 %

$      382,539

27.9 %

$      377,255

29.0 %

One-Time Acquisition Costs

0.0 %

(46)

0.0 %

0.0 %

(324)

0.0 %

        Gross Margin

$        89,564

29.1 %

$        88,670

28.6 %

$      382,539

27.9 %

$      376,931

29.0 %

Selling, General & Administrative

Engine Management

$        42,644

17.6 %

$        39,485

16.1 %

$      165,389

17.0 %

$      149,206

15.9 %

Temperature Control

14,436

22.7 %

13,192

21.8 %

68,666

18.0 %

58,144

16.7 %

All Other

7,993

11,495

35,569

38,810

        Subtotal

$        65,073

21.1 %

$        64,172

20.7 %

$      269,624

19.7 %

$      246,160

19.0 %

Customer Bankruptcy Charge

7,002

2.3 %

0.0 %

7,002

0.5 %

0.0 %

One-Time Acquisition Costs

0.0 %

59

0.0 %

0.0 %

1,387

0.1 %

        Selling, General & Administrative

$        72,075

23.4 %

$        64,231

20.7 %

$      276,626

20.2 %

$      247,547

19.1 %

Operating Income

Engine Management

$        26,455

10.9 %

$        28,291

11.5 %

$        97,565

10.0 %

$      118,079

12.6 %

Temperature Control

2,239

3.5 %

3,478

5.8 %

33,974

8.9 %

36,994

10.6 %

All Other

(4,203)

(7,225)

(18,624)

(23,978)

        Subtotal

$        24,491

7.9 %

$        24,544

7.9 %

$      112,915

8.2 %

$      131,095

10.1 %

Customer Bankruptcy Charge

(7,002)

-2.3 %

0.0 %

(7,002)

-0.5 %

0.0 %

One-Time Acquisition Costs

0.0 %

(105)

0.0 %

0.0 %

(1,711)

-0.1 %

Restructuring & Integration

(1,847)

-0.6 %

(226)

-0.1 %

(1,891)

-0.1 %

(392)

0.0 %

Other Income (Expense), Net

70

0.0 %

(1)

0.0 %

113

0.0 %

7

0.0 %

        Operating Income

$        15,712

5.1 %

$        24,212

7.8 %

$      104,135

7.6 %

$      128,999

9.9 %

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

THREE MONTHS ENDED

TWELVE MONTHS ENDED

DECEMBER 31,

DECEMBER 31,

2022

2021

2022

2021

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP

GAAP EARNINGS FROM CONTINUING OPERATIONS

$           8,548

$          20,022

$          73,042

$          99,353

RESTRUCTURING AND INTEGRATION EXPENSES

1,847

226

1,891

392

CUSTOMER BANKRUPTCY CHARGE

7,002

7,002

ONE-TIME ACQUISITION COSTS

105

1,711

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

(249)

(259)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS

(2,301)

(86)

(2,312)

(547)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$          15,096

$          20,267

$          79,374

$        100,650

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$             0.39

$             0.89

$             3.30

$             4.39

RESTRUCTURING AND INTEGRATION EXPENSES

0.08

0.01

0.08

0.02

CUSTOMER BANKRUPTCY CHARGE

0.32

0.32

ONE-TIME ACQUISITION COSTS

0.07

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

(0.01)

(0.01)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS

(0.10)

(0.10)

(0.02)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$             0.69

$             0.90

$             3.59

$             4.45

OPERATING INCOME

GAAP OPERATING INCOME

$          15,712

$          24,212

$        104,135

$        128,999

RESTRUCTURING AND INTEGRATION EXPENSES

1,847

226

1,891

392

CUSTOMER BANKRUPTCY CHARGE

7,002

7,002

ONE-TIME ACQUISITION COSTS

105

1,711

OTHER (INCOME) EXPENSE, NET

(70)

1

(113)

(7)

NON-GAAP OPERATING INCOME

$          24,491

$          24,544

$        112,915

$        131,095

EBITDA WITHOUT SPECIAL ITEMS

GAAP EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

$          11,302

$          24,787

$          98,332

$        130,465

DEPRECIATION AND AMORTIZATION

7,403

7,083

28,298

27,243

INTEREST EXPENSE

4,335

672

10,617

2,028

     EBITDA

23,040

32,542

137,247

159,736

RESTRUCTURING AND INTEGRATION EXPENSES

1,847

226

1,891

392

CUSTOMER BANKRUPTCY CHARGE

7,002

7,002

ONE-TIME ACQUISITION COSTS

105

1,711

    SPECIAL ITEMS

8,849

331

8,893

2,103

EBITDA WITHOUT SPECIAL ITEMS

$          31,889

$          32,873

$        146,140

$        161,839

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.

Condensed Consolidated Balance Sheets

(In thousands)

December  31,

December  31,

2022

2021

(Unaudited)

ASSETS

CASH

$         21,150

$         21,755

ACCOUNTS RECEIVABLE, GROSS

173,013

186,774

ALLOWANCE FOR EXPECTED CREDIT LOSSES

5,375

6,170

ACCOUNTS RECEIVABLE, NET

167,638

180,604

INVENTORIES

528,715

468,755

UNRETURNED CUSTOMER INVENTORY

19,695

22,268

OTHER CURRENT ASSETS

25,241

17,823

TOTAL CURRENT ASSETS

762,439

711,205

PROPERTY, PLANT AND EQUIPMENT, NET

107,148

102,786

OPERATING LEASE RIGHT-OF-USE ASSETS

49,838

40,469

GOODWILL

132,087

131,652

OTHER INTANGIBLES, NET

100,504

106,234

DEFERRED INCOME TAXES

33,658

36,126

INVESTMENT IN UNCONSOLIDATED AFFILIATES

41,745

44,087

OTHER ASSETS

27,510

25,402

TOTAL ASSETS

$    1,254,929

$    1,197,961

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT PORTION OF REVOLVING CREDIT FACILITY

$         50,000

$       125,298

CURRENT PORTION OF TERM LOAN AND OTHER DEBT

5,031

3,117

ACCOUNTS PAYABLE

89,247

137,167

ACCRUED CUSTOMER RETURNS

37,169

42,412

ACCRUED CORE LIABILITY

22,952

23,663

ACCRUED REBATES

37,381

42,472

PAYROLL AND COMMISSIONS

31,361

45,058

SUNDRY PAYABLES AND ACCRUED EXPENSES

49,990

57,182

TOTAL CURRENT LIABILITIES

323,131

476,369

OTHER LONG-TERM DEBT

184,589

21

NONCURRENT OPERATING LEASE LIABILITY

40,709

31,206

ACCRUED ASBESTOS LIABILITIES

63,305

52,698

OTHER LIABILITIES

22,157

25,040

 TOTAL LIABILITIES 

633,891

585,334

TOTAL SMP STOCKHOLDERS’ EQUITY

610,020

601,580

NONCONTROLLING INTEREST

11,018

11,047

 TOTAL STOCKHOLDERS’ EQUITY 

621,038

612,627

 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 

$    1,254,929

$    1,197,961

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

TWELVE MONTHS ENDED

DECEMBER 31,

2022

2021

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS 

$        55,435

$        90,954

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY (USED IN) OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION

28,298

27,243

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES

17,691

8,467

CUSTOMER BANKRUPTCY CHARGE

7,002

OTHER

13,064

7,456

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE

6,916

28,464

INVENTORY 

(67,495)

(107,609)

ACCOUNTS PAYABLE

(48,604)

33,046

PREPAID EXPENSES AND OTHER CURRENT ASSETS

(5,509)

(843)

SUNDRY PAYABLES AND ACCRUED EXPENSES 

(29,089)

13,430

OTHER

(5,242)

(15,044)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(27,533)

85,564

CASH FLOWS FROM INVESTING ACTIVITIES

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

(1,934)

(125,419)

CAPITAL EXPENDITURES

(25,956)

(25,875)

OTHER INVESTING ACTIVITIES

73

45

NET CASH USED IN INVESTING ACTIVITIES 

(27,817)

(151,249)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT

111,307

118,346

PURCHASE OF TREASURY STOCK

(29,656)

(26,862)

DIVIDENDS PAID

(23,428)

(22,179)

DIVIDENDS PAID TO NONCONTROLLING INTEREST

(540)

PAYMENTS OF DEBT ISSUANCE COSTS

(2,128)

OTHER FINANCING ACTIVITIES

(595)

247

NET CASH PROVIDED BY FINANCING ACTIVITIES

55,500

69,012

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(755)

(1,060)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(605)

2,267

CASH AND CASH EQUIVALENTS at beginning of period

21,755

19,488

CASH AND CASH EQUIVALENTS at end of period

$        21,150

$        21,755

SOURCE Standard Motor Products, Inc.


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