SMP(SMP) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights The company reported strong Q2 and YTD 2025 results, with significant sales growth and improved profitability, driven by the Nissens acquisition Second Quarter 2025 Financial Highlights Standard Motor Products, Inc. reported strong second-quarter 2025 results, with significant increases in net sales, earnings from continuing operations, and adjusted diluted EPS compared to the prior year. The company also saw a notable improvement in its adjusted EBITDA margin Q2 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Net Sales | $493.9M | $389.8M | 26.7% | | Net Sales (Excl. Nissens) | $403.4M | $389.8M | 3.5% | | GAAP Earnings from Continuing Ops | $26.3M | $18.0M | 46.1% | | GAAP Diluted EPS | $1.17 | $0.81 | 44.4% | | Adjusted Earnings from Continuing Ops | $28.9M | $21.7M | 33.2% | | Adjusted Diluted EPS | $1.29 | $0.98 | 31.6% | | Adjusted EBITDA Margin | 12.0% | 10.1% | +190 bps | Year-to-Date 2025 Financial Highlights For the first six months of 2025, the company achieved substantial growth in consolidated net sales and earnings from continuing operations, both on a GAAP and adjusted basis, demonstrating strong year-to-date performance YTD 2025 Key Financial Highlights (YoY) | Metric | YTD 2025 | YTD 2024 | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | | Consolidated Net Sales | $907.2M | $721.2M | 25.8% | | GAAP Earnings from Continuing Ops | $40.0M | $27.8M | 43.9% | | GAAP Diluted EPS | $1.79 | $1.25 | 43.2% | | Adjusted Earnings from Continuing Ops | $46.9M | $31.7M | 47.9% | | Adjusted Diluted EPS | $2.10 | $1.42 | 47.9% | CEO Commentary on Performance CEO Eric Sills expressed satisfaction with the strong second-quarter results, building on a record quarter last year. He highlighted significant sales and adjusted diluted EPS growth for both the quarter and year-to-date, emphasizing the positive impact of the Nissens acquisition - Sales for Q2 increased nearly 27%, or 3.5% excluding Nissens Automotive (Nissens)[6] - Year-to-date sales are up 26%, or 4.1% excluding Nissens[6] - Adjusted diluted earnings per share grew 31.6% for the quarter and 47.9% for the year[6] Segment Performance Segment performance was strong in North American Aftermarket and Nissens, driving overall growth, despite a sales decline in Engineered Solutions North American Aftermarket Segments The North American Aftermarket segments, including Vehicle Control and Temperature Control, demonstrated continued strong performance in Q2 2025, driven by robust customer order activity and favorable market conditions Vehicle Control Vehicle Control sales increased nearly 7% in Q2, driven by strong customer orders and solid sell-through, underscoring product necessity - Vehicle Control sales rose nearly 7% in the second quarter, continuing momentum from Q1[7] - Strong customer order activity and solid sell-through underscore the non-discretionary nature of products[7] Temperature Control Temperature Control sales increased 5.5% in Q2, despite a challenging comparison, with year-to-date growth reaching 12.3% - Temperature Control sales increased 5.5% in Q2, despite a challenging comparison to last year's 28% growth[7] - Year-to-date, the segment is up 12.3%, building on last year's 15.8% growth for the same period[7] Nissens Automotive Nissens, the newest segment, delivered another solid quarter, contributing significantly to sales and exceeding full-year adjusted EBITDA margin expectations. Integration efforts are progressing ahead of schedule, with initial cost reduction and growth synergies being realized Nissens Q2 2025 Performance | Metric | Value | | :-------------------- | :---------- | | Sales Contribution | $90.5 million | | Adjusted EBITDA Margin | 18.0% | - Nissens' adjusted EBITDA margin of 18.0% is ahead of full-year expectations of mid-teens[8] - Integration efforts are in full stride, with many initiatives tracking ahead of plan[8] - Confident in achieving $8-12 million in run-rate cost reduction synergies within 24 months of ownership[8] - Growth synergies are being implemented, with over 800 new items launched in North America[8] Engineered Solutions The Engineered Solutions segment experienced an 8.3% year-over-year sales decline due to continued softness in certain end markets. However, demand is believed to have stabilized, with easier comparisons expected in the second half of the year - Sales in the Engineered Solutions segment declined 8.3% year-over-year[9] - Decline reflects continued softness in certain end markets[9] - Demand is believed to have stabilized, with easier second-half comparisons expected[9] Financial Position & Operational Initiatives The company improved profitability, managed debt, expanded distribution, and implemented strategies to mitigate tariff impacts Profitability & Balance Sheet Overview Adjusted EBITDA significantly increased, driven by strong North American aftermarket performance and Nissens' contribution, leading to a higher margin. Net debt levels reflect the Nissens acquisition and seasonal working capital, with a target to reduce debt leverage by the end of 2026 Q2 2025 Adjusted EBITDA (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------- | :------ | :------ | :------- | | Adjusted EBITDA | $59.1M | $39.5M | +$19.6M | | Adjusted EBITDA Margin | 12.0% | 10.1% | +190 bps | - Adjusted EBITDA increase driven by strong North American aftermarket segments and $16.3 million from Nissens[10] - Total net debt at quarter-end was $577.8 million, primarily due to Nissens acquisition and seasonal working capital build[11] - Debt leverage declined in the quarter due to strong results[12] - Targeting debt levels to 2.0x Adjusted EBITDA by the end of 2026[12] New Distribution Center The company officially opened a new 575,000 square foot distribution center in Shawnee, Kansas, expanding its distribution footprint and enhancing capabilities to better serve customer fulfillment needs across the United States - Opened a new 575,000 square foot state-of-the-art distribution center (DC) in Shawnee, Kansas[13] - The facility increases total distribution footprint by over 200,000 net square feet and provides centralized coverage across the U.S[13] - Intends to exit the Edwardsville DC by year-end and sell the facility thereafter[13] Tariff Impact & Mitigation The company leverages its diverse global footprint, with over half of U.S. sales from tariff-free North American-made products. For other sourced products, a mitigation plan is in place, including cost-sharing, re-sourcing, and pass-through pricing, to offset tariff costs going forward - Over half of U.S. sales are from North American-made, USMCA-compliant products, which are largely tariff-free[14] - Mitigation plan includes cost containment through cost-sharing with suppliers, re-sourcing to lower-tariffed countries, and pass-through pricing to customers[14] - Experienced some tariff costs in Q2 without offsetting pricing due to timing delays, but expects ongoing costs to be offset with pricing going forward[14] Outlook & Shareholder Information The company raised full-year sales guidance, reaffirmed EBITDA margin, declared a dividend, and remains optimistic about long-term growth and efficiencies Updated 2025 Guidance The company raised its full-year sales growth guidance to the low-20s percent range, up from prior mid-teens expectations, reflecting strong first-half results. The adjusted EBITDA margin outlook of 10-11% was reaffirmed, with sales growth and other initiatives offsetting tariff-related margin compression - Raising full-year sales growth guidance to the low-20s percent range, up from prior mid-teens expectation[15] - Reaffirmed adjusted EBITDA margin outlook of 10-11%[15] - Revised guidance includes the impact of tariffs and mitigating actions, with sales growth and other initiatives offsetting margin rate compression from tariff pricing[16] Quarterly Dividend The Board of Directors approved a quarterly dividend of 31 cents per share, payable on September 2, 2025, to stockholders of record on August 15, 2025 Quarterly Dividend Details | Metric | Value | | :-------------------- | :---------- | | Dividend Per Share | $0.31 | | Payment Date | Sep 2, 2025 | | Record Date | Aug 15, 2025 | Closing Remarks CEO Eric Sills concluded by highlighting the first half of 2025 exceeding expectations, driven by strong performance in North American aftermarket segments and above-market growth from Nissens. He expressed optimism for long-term potential through growth and savings synergies with Nissens and ongoing operational efficiencies - First half of 2025 exceeded expectations despite a volatile macroeconomic environment[18] - North American aftermarket segments delivered the strongest first half in company history, demonstrating market strength and industry resilience[18] - Nissens continued to deliver above-market growth and holds a market-leading position in Europe[18] - Optimistic about long-term potential, led by growth and savings synergies with Nissens, and ongoing efforts to gain efficiencies[18] Conference Call Details Standard Motor Products, Inc. will host a conference call on August 5, 2025, at 11:00 AM ET to discuss Q2 2025 results, with webcast and dial-in options available, along with a replay - Conference call scheduled for Tuesday, August 5, 2025, at 11:00 AM Eastern Time[19] - Webcast accessible via www.smpcorp.com, with a replay available within 24 hours[19][20] - Dial-in numbers: 800-343-4136 (domestic) or 203-518-9843 (international), Conference ID: SMP2Q2025[19] Safe Harbor Statement The report includes forward-looking statements, which are based on management's expectations but are subject to risks and uncertainties that could cause actual results to differ materially. The company undertakes no obligation to update these statements - Forward-looking statements are based on management's expectations and are subject to risks and uncertainties[21] - Factors that could cause actual results to differ are detailed in prior press releases and SEC filings (Form 10-K, 10-Q)[21] - Standard Motor Products undertakes no obligation to update these statements after the release date[21] Consolidated Financial Statements (GAAP) This section presents the company's GAAP financial statements, detailing operations, segment performance, balance sheets, and cash flows Consolidated Statements of Operations The Consolidated Statements of Operations provide a detailed breakdown of the company's revenues, costs, and earnings for the three and six months ended June 30, 2025, and 2024, highlighting significant growth in net sales and net earnings Consolidated Statements of Operations (Selected Data, in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Net sales | $493,853 | $389,829 | $907,232 | $721,232 | | Gross profit | $150,889 | $111,447 | $275,611 | $200,969 | | Operating income | $42,836 | $24,986 | $67,298 | $39,605 | | Earnings from continuing operations | $26,595 | $18,324 | $40,475 | $28,353 | | Net earnings attributable to SMP | $25,242 | $17,063 | $37,808 | $25,887 | | Diluted EPS (Continuing operations) | $1.17 | $0.81 | $1.79 | $1.25 | | Dividend declared per common share | $0.31 | $0.29 | $0.62 | $0.58 | Segment Revenues Segment Revenues detail the sales performance across Vehicle Control, Temperature Control, Nissens Automotive, and Engineered Solutions for the three and six months ended June 30, 2025, and 2024, showing strong growth in most segments, particularly with the addition of Nissens Segment Revenues (in thousands) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Vehicle Control | $201,699 | $188,741 | $394,041 | $374,265 | | Temperature Control | $131,365 | $124,481 | $220,248 | $196,089 | | Nissens Automotive | $90,537 | — | $156,719 | — | | Engineered Solutions | $70,252 | $76,607 | $136,224 | $150,878 | | Total | $493,853 | $389,829 | $907,232 | $721,232 | Segment Operating Profit Segment Operating Profit provides insights into the gross margin and operating income performance of each business segment for the three and six months ended June 30, 2025, and 2024, highlighting Nissens' strong profitability and improvements in Temperature Control Segment Operating Income (in thousands) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Vehicle Control | $17,084 | $16,125 | $35,410 | $31,766 | | Temperature Control | $19,523 | $13,444 | $27,298 | $15,533 | | Nissens Automotive | $12,830 | — | $20,414 | — | | Engineered Solutions | $3,971 | $6,193 | $7,166 | $8,436 | | Total Operating Income | $42,836 | $24,986 | $67,298 | $39,605 | Segment Gross Margin Percentage | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Vehicle Control | 30.1% | 31.8% | 31.2% | 31.8% | | Temperature Control | 32.2% | 29.4% | 31.8% | 28.7% | | Nissens Automotive | 40.7% | — | 41.3% | — | | Engineered Solutions | 18.1% | 19.4% | 17.9% | 17.1% | Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets present the company's financial position as of June 2025, June 2024, and December 2024, showing significant increases in total assets and liabilities, largely influenced by the Nissens acquisition Condensed Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 2025 | June 2024 | Dec 2024 | | :-------------------------------- | :-------- | :-------- | :------- | | Total Current Assets | $1,065,064 | $816,655 | $921,924 | | Property, Plant And Equipment, Net | $183,508 | $131,921 | $168,735 | | Goodwill | $256,266 | $134,476 | $241,418 | | Total Assets | $2,007,348 | $1,374,328 | $1,814,126 | | Total Current Liabilities | $492,415 | $332,166 | $436,472 | | Long-term Debt | $605,811 | $203,162 | $535,197 | | Total Liabilities | $1,303,889 | $720,006 | $1,184,044 | | Total Stockholders' Equity | $703,459 | $654,322 | $630,082 | Condensed Consolidated Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025, and 2024, indicate a net cash outflow from operating activities but a net increase in cash due to significant cash provided by financing activities, primarily from changes in debt Condensed Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | YTD 2025 | YTD 2024 | | :-------------------------------- | :------- | :------- | | Net Cash Used In Operating Activities | $(5,903) | $(10,139) | | Net Cash Used In Investing Activities | $(16,323) | $(22,923) | | Net Cash Provided By Financing Activities | $32,624 | $28,471 | | Net Increase (Decrease) In Cash | $14,366 | $(6,370) | | Cash At End Of Period | $58,792 | $26,156 | Non-GAAP Reconciliations This section reconciles GAAP to non-GAAP financial measures, adjusting for special items at consolidated and segment levels for clearer performance Consolidated Non-GAAP Measures This section reconciles GAAP earnings from continuing operations, diluted EPS, operating income, and EBITDA to their non-GAAP equivalents, adjusting for special items like restructuring and acquisition & integration expenses, to provide a clearer view of ongoing operating results Consolidated GAAP to Non-GAAP Reconciliation (Selected Data, in thousands) | Metric | Q2 2025 GAAP | Q2 2025 Non-GAAP | YTD 2025 GAAP | YTD 2025 Non-GAAP | | :-------------------------------- | :----------- | :------------- | :------------ | :-------------- | | Earnings from Continuing Operations | $26,300 | $28,876 | $40,005 | $46,888 | | Diluted EPS from Continuing Operations | $1.17 | $1.29 | $1.79 | $2.10 | | Operating Income | $42,836 | $46,269 | $67,298 | $76,293 | | EBITDA | $55,636 | $59,118 | $92,613 | $101,915 | - Non-GAAP measures are adjusted for special items (restructuring, acquisition & integration expenses, and related tax effects) to provide a view of ongoing operating results[30] Segment Non-GAAP Measures (Q2) This section provides a segment-level reconciliation of GAAP operating income and EBITDA to non-GAAP measures for the three months ended June 30, 2025, and 2024, detailing adjustments for restructuring, acquisition & integration expenses, and other income/expense Q2 2025 Segment Non-GAAP Operating Income (in thousands) | Segment | GAAP Operating Income | Non-GAAP Operating Income | | :-------------------- | :-------------------- | :------------------------ | | Vehicle Control | $16,540 | $17,084 | | Temperature Control | $19,536 | $19,523 | | Nissens Automotive | $10,034 | $12,830 | | Engineered Solutions | $3,954 | $3,971 | | Consolidated | $42,836 | $46,269 | Q2 2025 Segment Non-GAAP EBITDA without Special Items (in thousands) | Segment | EBITDA | EBITDA without Special Items | | :-------------------- | :------- | :--------------------------- | | Vehicle Control | $21,065 | $21,544 | | Temperature Control | $21,148 | $21,201 | | Nissens Automotive | $13,491 | $16,313 | | Engineered Solutions | $6,958 | $6,997 | | Consolidated | $55,636 | $59,118 | | % of Net Sales | 10.7% | 12.0% | Segment Non-GAAP Measures (YTD) This section presents the segment-level reconciliation of GAAP operating income and EBITDA to non-GAAP measures for the six months ended June 30, 2025, and 2024, providing a year-to-date perspective on performance adjusted for special items YTD 2025 Segment Non-GAAP Operating Income (in thousands) | Segment | GAAP Operating Income | Non-GAAP Operating Income | | :-------------------- | :-------------------- | :------------------------ | | Vehicle Control | $34,322 | $35,410 | | Temperature Control | $27,436 | $27,298 | | Nissens Automotive | $12,621 | $20,414 | | Engineered Solutions | $7,130 | $7,166 | | Consolidated | $67,298 | $76,293 | YTD 2025 Segment Non-GAAP EBITDA without Special Items (in thousands) | Segment | EBITDA | EBITDA without Special Items | | :-------------------- | :------- | :--------------------------- | | Vehicle Control | $42,787 | $43,792 | | Temperature Control | $30,413 | $30,602 | | Nissens Automotive | $19,947 | $27,780 | | Engineered Solutions | $13,348 | $13,407 | | Consolidated | $92,613 | $101,915 | | % of Net Sales | 11.1% | 11.2% |