SMP(US:SMP)2024-08-01 16:07Financial Performance - Consolidated net sales for the three months ended June 30, 2024, were $389.8 million, an increase of $36.7 million, or 10.4%, compared to $353.1 million in the same period in 2023[111]. - Gross profit for the same period was $111.4 million, with a gross profit margin of 28.6%, slightly down from 28.7% in the prior year[111][113]. - Operating income decreased to $25.0 million, representing an operating margin of 6.4%, down from 7.7% in the same period last year[111][115]. - Consolidated net sales for Q2 2024 were $389.8 million, a 10.4% increase from $353.1 million in Q2 2023[124]. - Consolidated net sales for the first six months of 2024 were $721.2 million, a 5.9% increase from $681.1 million in the same period of 2023[139]. - Operating income was $39.6 million, or 5.5% of consolidated net sales, in the first six months of 2024, compared to $47.9 million, or 7% of consolidated net sales, in the same period in 2023[148]. Segment Performance - Temperature Control's net sales increased by $27.4 million, or 28.2%, to $124.5 million in Q2 2024 compared to $97.1 million in Q2 2023[125]. - Engineered Solutions' net sales rose by $4.4 million, or 6.1%, to $76.6 million in Q2 2024 compared to $72.2 million in Q2 2023[126]. - Vehicle Control segment net sales increased by $4.9 million, or 2.7%, to $188.7 million compared to $183.8 million in the same period of 2023[124]. - Temperature Control's net sales for the first six months of 2024 increased by $26.6 million, or 15.7%, to $196.1 million compared to $169.5 million in the same period of 2023[140]. - Engineered Solutions' net sales for the first six months of 2024 increased by $7.6 million, or 5.3%, to $150.9 million compared to $143.3 million in the same period of 2023[141]. Expenses and Margins - Selling, general and administrative expenses increased by $10.1 million to $83.9 million, or 21.5% of net sales, primarily due to acquisition-related costs and higher distribution expenses[115]. - Selling, general and administrative expenses increased to $83.9 million, or 21.5% of consolidated net sales, in Q2 2024 from $73.8 million, or 20.9%, in Q2 2023[130]. - Gross margins slightly decreased to 28.6% in Q2 2024 from 28.7% in Q2 2023, with Vehicle Control's gross margin down to 31.8%[128]. - Gross margins as a percentage of consolidated net sales decreased to 27.9% in the first six months of 2024, down from 28.3% in the same period of 2023[143]. Cash Flow and Financing - Cash used in operating activities was $10.1 million in the first six months of 2024, compared to cash provided of $39.4 million in the same period of 2023[156]. - Cash used in investing activities was $22.9 million in the first six months of 2024, compared to $9.4 million in the same period of 2023[157]. - Outstanding borrowings under the Credit Agreement were $208 million as of June 30, 2024, up from $156 million at December 31, 2023[166]. - The weighted average interest rate under the Credit Agreement increased to 5.7% as of June 30, 2024, compared to 5% at December 31, 2023[167]. - The company anticipates that cash flow from operations and available borrowings will be sufficient to meet liquidity needs for at least the next twelve months, assuming no adverse developments occur[178]. Strategic Initiatives - A new distribution facility in Shawnee, Kansas, is set to be fully operational by early 2025, expanding the company's distribution network to meet growing demands[117]. - Sustainability initiatives are being prioritized, focusing on reducing energy and water usage, waste generation, and greenhouse gas emissions[121]. - The company offered a voluntary retirement incentive program, incurring $2.6 million in expenses during Q2 2024, with an expected total cost of approximately $6.2 million[118]. Risks and Accounting Policies - The company faces risks from geopolitical disruptions, interest rate increases, and inflation that could materially impact financial estimates and results[181]. - The company has identified critical accounting policies related to the valuation of long-lived and intangible assets and asbestos litigation, which are essential for understanding financial results[180]. - There are no material changes to accounting policies and estimates from the previous annual report, indicating stability in financial reporting practices[180].