Standard Motor Products, Inc.

Good day, everyone, and welcome to the Standard Motor Products third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask the question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note today's call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Tony Cristevo, Vice President of Investor Relations. Please go ahead.

Thank you, Brittany. And good morning, everyone. And thank you for joining us on Standard Motor Products' third quarter 2024 earnings conference call. With me today are Larry Sills, Chairman Emeritus, Eric Sills, Chairman and Chief Executive Officer, 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 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 CEO.

Well, thank you, Tony, and good morning, everyone, and welcome to our third quarter earnings call. I'd like to start by thanking all of our employees around the world and recognizing them for the outstanding efforts in driving our company forward. They continue to do a fantastic job for us. Overall, we are very pleased with the quarter, posting a 3.3% increase over last year's record-setting quarter, putting us up almost 6% year-to-date. And this included revenue gains in all three operating segments, which I will discuss in greater detail. We were also pleased with the ongoing rebound of our profitability. Adjusted diluted EPS was up over 15% from last year's third quarter, and we are now nicely ahead on a year-to-date basis. While we continue to face elevated costs across a host of inputs, we were able to overcome some of it through our various cost reduction initiatives. Let me discuss the segment starting with vehicle control. Sales were up 5% in the quarter against a relatively easy comparison and up 3% on a year-to-date basis. Our customers continue to invest in our lines as they enhance their assortments, expand their footprint, and recognize the benefits of strong stocking positions in this largely non-discretionary category. Turning to temperature control, we are pleased to see continued strong demand in the quarter. I think it's always helpful to remind people of the sales cadence of this highly seasonal category as it can vary substantially year to year. 2023 had a slow start. but then in the third quarter it got quite hot across the country and we had a record-setting period. This year it got hot earlier and we were up 16% at the half. We knew the third quarter comp would be difficult, so we were quite pleased to see sales remain robust, allowing us to beat last year's strong numbers by nearly 2%, and year-to-date we are up now nearly 10%. As we head into the last few months of the year, it's worth reminding people that the fourth quarter is the lowest sales quarter, and thus can be the most volatile. Next, I'll address engineered solutions, our non-aftermarket segment selling products to vehicle and equipment manufacturers across multiple end markets. We continue to do well here, up nearly 1% in the quarter against a tough comparison, as last year's third quarter was up more than 8% over 2022. Here we do see some challenging market dynamics. The majority of our sales in this segment are geared towards new vehicle production and therefore are at the mercy of our customers' production schedules. Certain of these customers and end markets are beginning to show a slowdown, creating a headwind for us. We have always said that our success in this segment will be on achieving new contracts as we get known by these various global customers as a capable and committed supplier, and we are pleased that we have been more than able to offset the production slowdowns with the ramp-up of some new business wins. However, we do expect some market softness to continue and face another tough comp in the fourth quarter. Lastly, I want to spend a moment on a major acquisition announced in July. To remind you, we reached a definitive agreement to acquire Europe-based Nissan's automotive pending regulatory approval. We have now achieved this approval, and as such, we expect to complete the transaction soon. Let me provide you with a thumbnail sketch of the company and our plans. If you wish to dig deeper, please review the materials and transcript from our investor call on July 10th. Headquartered in Denmark, Nissans is a leading aftermarket supplier of both thermal management and engine efficiency products, with annual sales of approximately $260 million and EBITDA in the mid-teens. Both sides are eager to get started working on the synergies, which we believe will fall in three main buckets. First is growth. We have overlapping product categories, though with differing weights and strengths. We believe we can expand each other's portfolios and grow sales in our respective markets. Second is cost reduction. While there are many areas for cost savings across all functional areas for both Nissan's and S&P, we believe the biggest areas for savings is likely product cost as we leverage our purchases with third-party suppliers and in-source production where applicable. The third area for synergies is in helping each other become better companies and thus better suppliers to our customers. We can seek best practices across common functions. We can combine resources to tackle new technologies and pursue many other benefits through collaboration. We've been extremely impressed with the talents of the Nissen's team with the energy and excitement that they have demonstrated and truly believe we have matching cultures. So again, we are very eager to get started and we'll keep you posted on our progress. With that, I will turn it over to Nathan to dive into the numbers.