SMP(US:SMP)2025-04-30 15:52Financial Performance - Consolidated net sales for Q1 2025 were $413.4 million, an increase of $82 million, or 24.7%, compared to $331.4 million in Q1 2024[122]. - Gross profit for Q1 2025 was $124.7 million, with a gross profit margin of 30.2%, up from 27% in Q1 2024[122][124]. - Operating income for Q1 2025 was $24.5 million, representing an operating margin of 5.9%, compared to 4.4% in Q1 2024[122][125]. - Vehicle Control's net sales increased by $6.8 million, or 3.7%, to $192.3 million for the three months ended March 31, 2025, compared to $185.5 million in the same period of 2024[135]. - Temperature Control's net sales rose by $17.3 million, or 24.1%, to $88.9 million for the first quarter of 2025, up from $71.6 million in the same period of 2024[136]. - Engineered Solutions' net sales decreased by $8.3 million, or 11.2%, to $66 million for the three months ended March 31, 2025, compared to $74.3 million in the same period of 2024[137]. - Net earnings for Q1 2025 were $12.7 million, compared to $9 million in Q1 2024, reflecting a year-over-year increase[157]. Expenses and Costs - Selling, general and administrative expenses increased to $99.8 million, or 24.2% of net sales, in Q1 2025, up from $74.7 million, or 22.6%, in Q1 2024[125]. - Interest expense increased to $7.8 million in Q1 2025 from $2.1 million in Q1 2024, primarily due to higher borrowings for the acquisition of Nissens Automotive[151]. - The company recorded $0.4 million in expenses related to restructuring programs in Q1 2025[127]. - Selling, general and administrative expenses rose to $99.8 million, or 24.2% of consolidated net sales, in Q1 2025, compared to $74.7 million, or 22.6%, in Q1 2024[145]. - The gross margin percentage for the Nissens Automotive segment was 35.1%, but was negatively impacted by $4.6 million of amortization for inventory fair value adjustments[144]. Acquisitions and Segments - The newly acquired Nissens Automotive segment contributed $66.2 million in net sales during Q1 2025[123]. - The Engineered Solutions Segment supplies custom-engineered solutions across diverse global end-markets, including commercial vehicles and agriculture[119]. - The Nissens Automotive Segment, created in Q4 2024, focuses on thermal management and engine efficiency products, enhancing the Company's product offerings in the automotive aftermarket[120]. Liquidity and Cash Flow - Cash used in operating activities was $60.2 million in Q1 2025, compared to $45.7 million in Q1 2024, largely due to an increase in accounts receivable[156]. - Total liquidity decreased to $158.7 million as of March 31, 2025, down from $301.3 million at the end of 2024[156]. - Outstanding borrowings under the 2024 Credit Agreement were $631 million as of March 31, 2025, up from $545.4 million at December 31, 2024, reflecting an increase of approximately 15.7%[169]. - The Company anticipates that cash flow from operations, available cash, and borrowings will be adequate to meet liquidity needs for at least the next twelve months[179]. - The Company has an authorized stock repurchase program of up to $30 million, with approximately $19.6 million available for future purchases as of March 31, 2025[177]. Future Outlook and Risks - The company expects additional tariffs on imports to impact business starting in Q2 2025, which will be partially mitigated through price increases and cost reduction efforts[124]. - The company is optimistic about growth potential in the Nissens Automotive segment and the Engineered Solutions segment[126]. - Significant assumptions include the ability to mitigate supply chain disruptions, interest rate increases, and inflationary cost increases that cannot be passed to customers[179]. - The company warns that disruptions from geopolitical risks and macroeconomic uncertainty could materially affect estimates and business operations[182]. - Defaulting on indebtedness or breaching financial covenants could adversely affect the business[180]. Accounting and Compliance - The Company is in compliance with its debt covenants under the 2024 Credit Agreement, which includes customary covenants limiting additional indebtedness and other financial activities[172]. - The company has identified critical accounting policies related to the valuation of long-lived and intangible assets, which are essential for understanding its financial results[181]. - There have been no material changes to accounting policies and estimates from the previous Annual Report[181]. - The preparation of consolidated financial statements involves estimates and assumptions that may differ from actual results, potentially impacting financial condition and operations[182]. - For detailed information on recently issued accounting pronouncements, refer to the notes in the consolidated financial statements[183].