SMP(US:SMP)2020-08-02 06:49Financial Data and Key Metrics Changes - Consolidated net sales in Q2 2020 were $247.9 million, down $57.2 million or 18.8% compared to Q2 last year [24] - Consolidated gross margin in Q2 2020 was 26%, down from 29.1% last year, and for the first half, it was 26.8% versus 28.3% last year [28] - Diluted earnings per share for Q2 2020 were $0.52, down from $0.92 last year, and for the first half, it was $0.95 versus $1.49 in 2019 [32] Business Line Data and Key Metrics Changes - Engine management net sales in Q2 were $142.8 million, down $39 million or 21.5% [25] - Temperature Control net sales in Q2 2020 were $72.4 million, down $12 million or 14.2% [27] - Wire and cable net sales in Q2 were $34.7 million, down $5.8 million or 16.1% [26] Market Data and Key Metrics Changes - Customer POS showed favorable trends, with significant improvement month-over-month, particularly in June [11] - The company entered Q3 with a healthy order book, indicating a rebound in demand [10] Company Strategy and Development Direction - The company is focused on maintaining a healthy balance sheet and has implemented cost-cutting measures without impacting long-term growth plans [12][13] - The management emphasized the importance of adapting to the current environment and is looking for long-term savings while ensuring employee safety [22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery, noting that while business has improved, the nation is still facing challenges due to COVID-19 [15] - The company is committed to emerging from the crisis stronger and is focused on maintaining operational prudence [15] Other Important Information - The company suspended its dividend and stock buyback programs as part of its cost-saving measures [12] - The management is exploring opportunities in electric vehicles through a joint venture and is also focusing on alternative energy initiatives [71][74] Q&A Session Summary Question: Expense control and impact on financials - Management noted that SG&A costs are primarily fixed, and the cost reduction efforts contributed to improved financial metrics [44] Question: Supply chain and manufacturing updates - All facilities are currently operating at full capacity, with Poland performing well and experiencing reduced COVID-19 cases [46] Question: Cash deployment and M&A opportunities - The company is evaluating M&A opportunities and remains flexible with its cash position after paying down debt [49] Question: Customer orders and POS trends - Customer orders returned to normal levels in June, with POS exceeding previous year's levels across all divisions [54] Question: Gross margin targets - Management expects to improve gross margins progressively, targeting over 30% for engine management and 25-26% for temperature control in the future [61] Question: Electric vehicle initiatives - The company has entered a joint venture for electric vehicle components and is monitoring market trends for potential opportunities [71] Question: Dividend suspension - Management is continuously evaluating the situation regarding the dividend suspension and will discuss it with the Board [64]