SMP(US:SMP)2023-05-07 12:56Financial Data and Key Metrics Changes - The company reported cash used in operations in Q1 2023 of $20.4 million, an improvement of $83.6 million compared to $104 million last year, driven by a $74 million improvement in cash flows from inventory [2] - Consolidated net sales increased by 1.6% in Q1 2023 compared to the same quarter last year, reflecting growth primarily in Vehicle Control [38] - Adjusted EBITDA for the company was $29 million, down $6.4 million from last year, with a decline in both operating income and adjusted EBITDA due to increased factoring expenses [40][41] Business Line Data and Key Metrics Changes - Vehicle Control net sales in Q1 were $184.6 million, up 4.1% year-over-year, with adjusted EBITDA of $21.5 million, representing 11.6% of net sales, down 2.2 points from last year [33][34] - Temperature Control net sales were $72.4 million, down 0.9% year-over-year, with adjusted EBITDA of $3.3 million, down from last year and at 4.6% of net sales [35] - Engineered Solutions sales were $71 million, down 2% compared to last year, with adjusted EBITDA at 11.6%, a decrease of 1.1 points from last year [37] Market Data and Key Metrics Changes - The aftermarket business, which constitutes about 80% of total revenue, is experiencing favorable market conditions, with increasing vehicle age and miles driven nearing historic levels [16][17] - Customer inventory levels at the end of Q1 were roughly the same as the previous year, indicating stable demand and effective preseason order planning [78] Company Strategy and Development Direction - The company has launched a newly defined global strategy focusing on cross-selling opportunities across its combined portfolio, particularly in Engineered Solutions [8][20] - The company aims to reduce outstanding debt and return value to shareholders through increased dividends while investing in new technologies [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's position in the market, noting that the industry tends to perform well even in difficult economic times due to the nondiscretionary nature of their products [17][20] - The company anticipates full-year 2023 sales growth in the low single digits, maintaining expectations for adjusted EBITDA at approximately 10% [10][11] Other Important Information - The company has approved a quarterly dividend of $0.29 per share to be paid on June 1, 2023, reflecting confidence in cash flow improvements [13] - The company is focused on reducing inventory levels and expects to see operating cash flows return to healthy levels consistent with past years [22] Q&A Session Summary Question: Inquiry about downstream market share and share gains - Management indicated that they are outperforming the competition in most product categories and are gaining market share through strong partnerships [28][29] Question: Discussion on SG&A expenses and factoring costs - SG&A expenses were well controlled, and management expects better leverage in the second half of the year if factoring costs normalize [30][48] Question: Comments on customer relationships and inventory levels - Management noted that customer relationships are stronger than ever, and inventory levels are stable, with expectations for a good summer season [18][64] Question: Impact of U.S.-China relations on business - Management stated that it has been business as usual with their partners in China, while closely monitoring the situation [83][99] Question: Electric vehicle market and aftermarket potential - The company is preparing for the future by studying the aftermarket potential of electric vehicles while continuing to grow its combustion engine product lines [100][101]