On August 1, 2024, Standard Motor Products Inc (SMP, Financial) released its 8-K filing for the second quarter of 2024. The company, a leading manufacturer and distributor of premium automotive parts, reported consolidated net sales of $389.8 million, surpassing the analyst estimate of $365.60 million. This represents a 10.4% increase compared to $353.1 million in the same quarter of 2023.
Company Overview
Standard Motor Products Inc is a manufacturer and distributor of premium automotive parts used in the maintenance, service, and repair of vehicles in the automotive aftermarket industry. It operates in three business segments: Engineered Solutions, Vehicle Control, and Temperature Control. The company focuses on the original equipment and original equipment services markets, with a product lineup of replacement parts for engine management ignition, emission, and fuel systems, as well as temperature-control products. The company operates primarily in the United States, with additional sales in Canada, Europe, Asia, Mexico, and other Latin American countries.
Performance and Challenges
Despite the impressive sales growth, earnings from continuing operations for the second quarter of 2024 were $18.0 million or $0.81 per diluted share, slightly down from $18.4 million or $0.83 per diluted share in the second quarter of 2023. However, excluding non-operational gains and losses, earnings from continuing operations were $21.7 million or $0.98 per diluted share, compared to $18.6 million or $0.84 per diluted share in the same period last year.
Mr. Eric Sills, Standard Motor Products’ Chairman and Chief Executive Officer, stated, “We are pleased with our second quarter results as sales increased 10.4% versus last year’s second quarter, while year-to-date sales are up nearly 6% relative to 2023. We experienced solid top line results in all segments, setting records across the board, most notably within Temperature Control.”
Financial Achievements
Standard Motor Products Inc achieved significant milestones in Q2 2024. The Temperature Control segment saw a remarkable 28.2% increase in sales, setting an all-time quarterly sales record. Vehicle Control sales improved by 2.7%, and Engineered Solutions segment sales increased by 6.1%.
Adjusted EBITDA margin was 10.1% in the quarter, slightly up from 10.0% last year. Excluding $1.3 million of start-up costs related to the new distribution center in Shawnee, KS, Adjusted EBITDA was 10.4%.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $389.8 million | $353.1 million |
| Gross Profit | $111.4 million | $101.3 million |
| Operating Income | $25.0 million | $27.2 million |
| Net Earnings | $17.4 million | $9.2 million |
Analysis and Outlook
Standard Motor Products Inc's performance in Q2 2024 highlights its resilience and ability to grow sales across all segments. The company's strategic initiatives, including the acquisition of AX V Nissens III APS, are expected to further strengthen its market position. However, the company faces ongoing cost pressures, which it aims to mitigate through measures such as the early retirement program.
Mr. Sills commented, “While we are pleased with our sales results, we continue to work on our profitability, as cost pressures persist. To address this, we chose to implement an early retirement program launched in the second quarter. Benefits of this program will phase in over the next few quarters, and once fully realized, we anticipate achieving an estimated $10 million of annualized savings.”
For the full year of 2024, excluding any impact from the Nissens acquisition, Standard Motor Products Inc anticipates sales growth in the low- to mid-single digits and Adjusted EBITDA in the range of 9.0-9.5%.
For more detailed financial information, please refer to the company's 8-K filing.
Explore the complete 8-K earnings release (here) from Standard Motor Products Inc for further details.
