SMP(US:SMP)2025-08-05 16:00Financial Data and Key Metrics Changes - The company reported a nearly 27% growth in revenue for Q2 2025, with a 3.5% increase in legacy business sales, and a year-to-date growth of approximately 26% [3][4] - Adjusted EBITDA increased by $20 million, up 190 basis points to 12% [4][22] - Non-GAAP diluted earnings per share rose by 31.6% for the quarter and 47.9% year-to-date [22] Business Line Data and Key Metrics Changes - Vehicle Control segment sales increased by 6.9% in Q2, with year-to-date growth of 5.3% [17] - Temperature Control segment sales rose by 5.5% in Q2, with year-to-date growth of 12.3% [19] - Nissens Automotive contributed $90.5 million in net sales and $16.3 million in adjusted EBITDA, exceeding expectations with an 18% EBITDA margin [20][21] - Engineered Solutions segment sales declined by 8.3%, reflecting a slowdown in certain end markets [21] Market Data and Key Metrics Changes - The North American aftermarket remains stable, with strong demand for nondiscretionary products [27][28] - Nissens is outperforming the European aftermarket, gaining market share and expanding into new categories [42][44] Company Strategy and Development Direction - The company is focusing on integrating Nissens to leverage synergies and expand product offerings [10][28] - A new distribution center in Shawnee, Kansas, is expected to enhance operational efficiency and capacity [12][60] - The company is adapting to the changing tariff landscape by relocating production and implementing cost-sharing strategies with suppliers [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging economic environment, with a bullish outlook for future growth [26][28] - The updated sales guidance for the full year is now in the low 20% range, reflecting strong performance and the impact of tariffs [24][25] Other Important Information - Cash used in operations decreased to $5.9 million from $10.1 million year-over-year, indicating improved cash flow management [22] - The company plans to continue monitoring interest rates for potential refinancing opportunities [56] Q&A Session Summary Question: Pricing trends in the second half and SKU inflation assumptions - Management indicated that pricing plans are in place to cover tariff costs, with expectations for nominal increases across the offering [33] Question: Comparison of POS to sell-in and inventory builds - Vehicle Control sales were up low to mid single digits, reflecting ongoing customer expansion rather than a reaction to price increases [34][35] Question: Timing of tariff impacts and segment breakdown - Higher costs were observed in Q2 due to inventory turnover with higher tariffs, but these are expected to be offset in the second half [40][41] Question: Performance of Nissens and European aftermarket - Nissens is exceeding expectations, gaining market share and expanding into new categories, with strong performance in temperature control products [42][44] Question: Expectations for margins and efficiency post-distribution center completion - Management expects better efficiencies and cost savings from the new distribution center, although some net higher costs are anticipated initially [60][61] Question: Future tariff costs and their impact - Current tariff costs are not expected to decrease significantly, with management prepared to adapt pricing strategies as needed [63][64]