Standard Motor Products, Inc.

Please stand by, your program is about to begin. Good day, everyone, and welcome to the Standard Motor Products first quarter 2023 earnings call. To enter full screen mode, hover over the slide and click the full screen icon in the center of the viewer. To exit full screen mode, press the escape key. During today's webcast, you can submit questions to the presenters. To ask a question today, please press the star and one on your touchtone phone. If you require technical assistance during today's event, you can reference the help link at the top of your screen. Please note today's call will be recorded and I will be standing by should you need any assistance. And it is now my pleasure to turn the conference over to Tony Cristello, Vice President of Investor Relations. Please go ahead.

Thank you, Chris. Good morning, everyone, and thank you for joining us on Standard Motor Products' first quarter 2023 earnings conference call. I'm Tony Cristello, and with me today are Eric Sills, President and CEO, Jim Burke, Chief Operating Officer, and Nathan Isles, Chief Financial Officer. On our call today, Eric will give an overview of our performance in the quarter, and Nathan will then discuss our financial results. Eric will then provide some concluding remarks and open the call up for Q&A. Before we begin this morning, I'd like to remind you that some of the material that we'll be discussing today may include forward-looking statements regarding our business and expected financial results. When we use words like anticipate, believe, estimate, or expect, these are generally forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they are based on information currently available to us and certain assumptions made by us, and we cannot assure you that they will prove correct. You should also read our filings with the Security and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward-looking statements. I'll now turn the call over to Eric Sills, our CEF.

Thank you, Tony, and good morning, everyone, and welcome to our first quarter earnings call. Overall, we are pleased with our top-line performance, especially considering the comparison. We are up 1.6%, and this is on top of last year's 17% growth. This will be the first quarter reporting by our new segments, so let me take a minute to remind you of the changes, and then we'll review each one. And if you would like a more thorough explanation, please see our resegmentation press release issued this past February. Previously, we had two segments, engine management and temperature control, and both were a blend of aftermarket volume and sales into other markets. We have now separated these non-aftermarket sales into their own segment called engineered solutions. This has left the other two segments solely reflective of aftermarket business. The other change was the renaming of engine management to vehicle control. As we reflected on the product categories covered within it, we came to the determination that the name engine management was no longer suitable as we had significant sales in non-engine-related categories, notably in powertrain-neutral safety and electrical products. We've recast our historical numbers along these new lines to make for apples-to-apples comparisons. So how are we doing? I'll start with vehicle control, the largest of the three. We saw strong performance here, up over 4%. There are various puts and takes here, including some benefits from pricing and some new business wins, offset by lower purchasing from a large bankrupt customer. But the overriding theme is ongoing demand strength in the marketplace. We are also pleased to see that customer POS remains positive for our large customers throughout the period, even against strong POS numbers last year. And this tends to be a good indication of their future purchases from us. Temperature control sales were slightly behind last year, which was a very tough comparison as last year was up nearly 30% over 2021. But more importantly, this is mostly a warm weather seasonal business, and we always caution not to read too much into first quarter sales as they mostly reflect preseason orders, and the real test is in the summer months. Lastly, let me speak to where we are with Engineered Solutions. Here we are off a couple of points from last year, but it is important to note that as compared to the aftermarket, we expect this business to vary slightly quarter to quarter. We are selling to vehicle and equipment manufacturers across a wide array of end markets, and as they vary their production schedules, it can move their purchases around a bit. It's also worth pointing out that last year's first quarter was a high watermark for this business, so it was a tough comparison, and if you compare this quarter to the quarterly average from last year, we're up 5%. Overall, we continue to be very excited about engineered solutions. Now that we have launched our newly defined global strategy and are going to market with our combined portfolio, we are experiencing the cross-selling opportunities we had hoped for. Though, as mentioned, new business awards can take some time before they show in revenue. Moving to profitability, earnings have continued to present a challenge. I'll touch on it, and Nathan will delve deeper. For the past several quarters, we experienced elevated costs across many inputs. Overall, these costs have largely stabilized, though at an elevated level. It's important to note that due to the diversity of our product offering, we are impacted by a host of different commodities with no single one dominating. Therefore, while we have seen some commodities peak and begin to subside, such as metals, others, such as electronics, have remained elevated, and needless to say, labor costs continue to rise. And interest rates, which have risen sharply since the middle of last year, have been affecting the cost of our customer factoring programs. The industry has been largely receptive to passing these costs through, though there was always a lag in timing. That represents the highlights of the quarter. I'll now turn it over to Nathan to review the numbers, after which I will speak to our views of the future. Nathan?