Standard Motor Products Q2 Earnings Call Highlights

Standard Motor Products reported solid second-quarter results, with consolidated sales up 6.7%, record adjusted EBITDA of $63.5 million, and significantly improved operating cash flow. The company maintained its 2026 outlook for low- to mid-single-digit sales growth and an adjusted EBITDA margin of 11% to 12%. Performance varied by segment: Temperature Control sales rose 15.7%, Engineered Solutions increased 16.8%, and Nissens Automotive grew 4.8%, while Vehicle Control declined 1.6% due to weaker wire-set sales and customer ordering patterns. The company reduced debt, ending the quarter with leverage at 2.5 times EBITDA, targeting 2 times by year-end 2026. A joint venture in Thailand with Techstrong was announced to manufacture sensors, aiming to strengthen supply-chain control and reduce exposure to China. Chief Executive Officer Eric Sills noted that top-line growth was nearly 7% after adjusting for tariff refund accounting treatment. Year-to-date adjusted sales growth was nearly 8%. Chief Financial Officer Nathan Iles explained that tariff refunds affected both sales and cost of goods sold. The Vehicle Control segment saw sales decline 1.6% to $198.6 million, attributed to customer ordering patterns and a secular decline in wire set sales. Despite this, year-to-date Vehicle Control sales were up 4.7%, supported by pipeline orders and engine management products. The segment’s adjusted EBITDA margin was 8.6%, lower than the prior year due to increased distribution costs, freight expenses, and inflation, which outweighed gross-margin improvements. Temperature Control posted sales of $152 million, up 15.7%, benefiting from the timing of preseason orders. The segment's adjusted EBITDA margin increased to 18.2% due to stronger volumes, higher gross margins, and improved operating expenses. Nissens Automotive, the European aftermarket business, increased sales by 4.8%, with growth in engine-efficiency products like turbochargers and engine-management parts.