Standard Motor Products Reports 3.3% Revenue Growth in Q3 2024, Net Sales Reach $399.3 Million

Standard Motor Products, Inc. (SMP) reported a solid performance for the third quarter and the first nine months of 2024, with net sales reaching $399.3 million for the three months ended September 30, 2024, a 3.3% increase from $386.4 million in the same period of 2023. For the nine months, net sales totaled $1.12 billion, up 4.7% from $1.07 billion in the prior year. The growth was driven by stable demand in the automotive aftermarket, particularly in the Temperature Control segment, which benefited from warmer weather conditions.

Gross profit for the third quarter was $121.4 million, compared to $114.8 million in 2023, while gross margins improved to 30.4% from 29.7%. Operating income for the quarter increased to $37.1 million, up from $34.8 million, although operating income for the nine months decreased to $76.7 million from $82.7 million in 2023, primarily due to higher selling, general, and administrative expenses.

Net earnings for the third quarter were $4.1 million, a decline from $6.7 million in the previous year, with net earnings attributable to SMP at $3.8 million, down from $6.7 million. For the nine months, net earnings attributable to SMP increased to $29.7 million from $27.7 million in 2023. Basic earnings per share from continuing operations for the third quarter rose to $1.22 from $1.14, while for the nine months, it decreased slightly to $2.50 from $2.58.

SMP's selling, general, and administrative expenses for the third quarter were $81.2 million, up from $79.8 million, attributed to increased rent and expenses related to a new distribution facility, higher distribution costs, and increased interest costs. The company is transitioning to a new 575,000 square foot distribution facility in Shawnee, Kansas, expected to be fully operational by early 2025.

In terms of strategic developments, SMP announced the acquisition of Nissens Automotive for approximately $388 million, expected to close by the end of 2024. The company is also implementing a Cost Reduction Initiative, which includes a sales force reduction and relocating product lines to Reynosa, Mexico, with anticipated restructuring costs of approximately $7.6 million.

As of September 30, 2024, total debt stood at $142.8 million, down from $156.2 million at the end of 2023. The company refinanced its credit agreement in September 2024, establishing a new five-year credit facility of approximately $750 million, which will be used for general corporate purposes and to finance the Nissens acquisition. Cash and cash equivalents decreased to $26.3 million from $32.5 million at the end of 2023.