SMP, a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three months ended March 31, 2023.
Net sales for the first quarter of 2023 were $328.0 million, compared to consolidated net sales of $322.8 million during the comparable quarter in 2022. Earnings from continuing operations for the first quarter of 2023 were $12.7 million or $0.57 per diluted share, compared to $20.6 million or $0.91 per diluted share in the first quarter of 2022. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the first quarter of 2023 were $13.4 million or $0.61 per diluted share, compared to $20.6 million or $0.92 per diluted share in the first quarter of 2022.
Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “We are pleased with our first quarter results, as sales increased 1.6% against a difficult comparison, as last year’s first quarter was up 17% from the previous year.”
By segment, Vehicle Control sales were up 4.1% in the quarter, reflecting continued strength in demand within the aftermarket. Our customers’ POS throughout the quarter also remained favorable, which bodes well for future demand.
Turning to Temperature Control, sales declined a modest 0.9% versus the almost 30% growth experienced during the same quarter last year. As a seasonal business, first quarter sales are heavily dependent on customer preseason ordering patterns, and therefore not indicative of the full year.
Engineered Solutions sales were 2% lower than last year’s first quarter, but 5% higher than the quarterly average sales level achieved in 2022. We expect this segment to be slightly lumpy quarter to quarter as a result of changes in customer order patterns. Based upon customer interest, we continue to believe long-term sales growth will be strong, though revenue growth from business wins is not linear.
Looking at profitability, consolidated non-GAAP operating profit margin was 6.6% in the quarter versus 8.3% in the first quarter last year. The decline in profit of $5.3 million was mainly the result of a $5.5 million increase in customer factoring program expense over last year, due to rising interest rates. Excluding these incremental factoring costs, our operating expenses would have been flat year over year at 19.5% of net sales. Adjusted EBITDA margin was 8.8% in the quarter versus 11.0% last year and was impacted by the above-mentioned factoring expense. We continue to implement both pricing and cost savings initiatives to help offset rising interest cost increases and lingering inflationary pressures on certain commodities and labor expense.
Our sales and profit expectations for the full year of 2023 remain unchanged with top line sales growth expected to be in the low single digits with an Adjusted EBITDA margin of approximately 10% of revenue, assuming current interest rates.
As part of our commitment to return value to shareholders, the Board of Directors has approved payment of a quarterly dividend of 29 cents per share on the common stock outstanding, which will be paid on June 1, 2023 to stockholders of record on May 15, 2023.
As we recently announced, we are pleased to have published our 2022 Corporate Sustainability report. This report outlines our commitment to being environmentally and socially responsible, and highlights the noticeable progress we have made to date. We remain committed to leveraging sustainability as a catalyst for positive change both within our organization and in the communities within which we operate.
In closing, Mr. Sills commented, “While uncertainty remains, we continue to be bullish on all of our markets. The aftermarket has a long history of stability in challenging economic times, and while still relatively new to us, we are excited about where we are heading with our Engineered Solutions business and the attention it has been getting from its customer base. We will continue to look for ways to drive growth, offset rising costs and deliver increasing value to all our customers and stakeholders alike.”