Standard Motor Products NYSE: SMP reported first-quarter 2026 results that management said reflected a “solid start” across all operating segments, led by double-digit growth in Vehicle Control, Nissens Automotive, and Engineered Solutions. Consolidated sales increased 9.1% year over year, and adjusted EBITDA improved by nearly $2 million versus the prior year to 9.9% of net sales, according to Chief Financial Officer Nathan Iles.
Management highlights: demand trends and segment performance
Chairman and Chief Executive Officer Eric Sills told investors the company was “quite pleased” with the quarter, noting top-line growth of “over 9%” and a continuation of demand trends seen over the past several quarters. He said both North American aftermarket segments benefited from a “nominal lift” related to tariff pass-through pricing that took effect in the second half of last year.
Vehicle Control posted net sales of $213.8 million, up 11.2% year over year, with Sills calling it a “terrific quarter” with sales up more than 11%. Iles said the growth reflected “a significant amount of orders to broaden our customers’ product assortments” during the quarter, along with the impact of slightly higher pricing from tariff pass-throughs. Adjusted EBITDA margin for the segment was 11.4%, “just slightly lower than last year,” Iles said, as higher volume and improved operating expenses were offset by gross margin compression from passing through tariffs at cost.
On the call’s Q&A, management described the assortment expansion as part of a typical customer collaboration rather than being driven by new products. In response to an analyst question, management said the quarter was “heavier than we’ve seen,” but framed it as part of an ongoing line review process focused on customers’ inventory positioning.
Temperature Control net sales increased 0.7% to $89.5 million, after a “extremely strong” year-ago quarter when the segment grew 24%, Sills said. He noted the segment’s first-half seasonality, explaining that preseason orders can fall across the first and second quarters; last year orders were “heavily in Q1,” while this year they were “more spread out,” and the company entered the second quarter with preseason orders left to ship. Adjusted EBITDA margin rose to 13.4%, which Iles attributed to good volumes, higher gross margin rate, and improved operating expenses.
During Q&A, management said it was pleased with stronger POS (point-of-sale) trends in Temperature Control and suggested the performance reflected both market demand and market share gains, while cautioning against drawing full-year conclusions from early-season conditions.
Nissens integration and European trends
The company’s European aftermarket business, Nissens Automotive, delivered reported sales growth of 12.4% in the quarter, with Iles attributing most of the $8.2 million increase to currency conversion. Sills said local-currency sales rose 2.7% against a difficult comparison, noting that the prior year’s first half was “unusually robust” due to customer order patterns, while 2026 has returned to a more normal cadence.
Nissens adjusted EBITDA was 12.5% of net sales, down from last year primarily due to currency transaction losses, Iles said. He explained the losses stemmed from sourcing activities in China, where the currency strengthened sharply in the first quarter but was returning to a more stable level. Iles also reminded investors that Nissens is seasonal given its temperature control exposure and that first-quarter profit is generally lower than other quarters.
Sills said Nissens had been part of Standard Motor Products for “a bit over a year” and was “exceeding our expectations.” He said the company’s initial focus was on savings expected to roll in over the course of 2026, alongside cross-selling initiatives to expand offerings in both Europe and North America. Sills highlighted two new categories launched in Europe late last year—ignition coils and air conditioning hoses—saying the company was “starting to gain some shelf space,” though it was still early.
When asked about sell-through indicators in Europe, management said it has less visibility into POS due to the region’s fragmented marketplace, but described trends as generally matching sell-in at “low to mid-single digits.”
Engineered Solutions rebound continues
Engineered Solutions, the company’s non-aftermarket segment, saw sales rise 12.6% year over year, with Sills saying the segment delivered strong results after being “rather soft” a year earlier. He said the rebound that began in mid-2025 continued due to strength among certain customers in commercial vehicle and powersports end markets.
Adjusted EBITDA margin for Engineered Solutions was 6.9%, down from last year. Iles attributed the margin decline to inflationary headwinds, amortization of manufacturing variances from late last year, and product mix, partly offset by improved operating expense leverage on higher sales.
Cash flow, leverage, and capital spending
Iles said cash used in operations was $41.9 million in the quarter, which was $18.3 million better than the prior year. He attributed the improvement to the company being “well prepared with inventory coming into the year to meet higher sales levels in Q1.”
Capital expenditures were $6.7 million, down from last year, as spending related to the company’s new distribution center was “mostly completed,” Iles said. Financing activity included $7.3 million in dividend payments and $44 million in borrowings under the company’s credit agreement.
Net debt ended the quarter at $599.4 million, flat with the year-ago period. Iles said the company finished the quarter with a leverage ratio of 3x EBITDA due to seasonality and remained on track to reach its target of 2x EBITDA by the end of 2026.
2026 outlook maintained; tariff approach reiterated
Management said its full-year 2026 expectations were unchanged. Iles said the company expects sales growth in the “low to mid-single digit percentage range,” driven by momentum in North America and Europe and more stable conditions in Engineered Solutions. The company’s adjusted EBITDA margin outlook remains 11% to 12% of net sales, reflecting benefits from sales growth alongside “some continued margin compression from passing through tariffs at cost.”
Iles added that the outlook does not account for ongoing changes in U.S. tariffs on imported goods, emphasizing that the tariff environment changes continuously. He said the company would continue to offset tariff-related cost impacts through a “$1 for $1 pass-through in pricing.”
For modeling purposes, Iles reiterated expectations for roughly $30 million of interest expense for 2026, an income tax rate of 27.5% to 28%, and depreciation and amortization expense of $45 million to $50 million as the company records a full year of depreciation on distribution center investments and continues to invest in the business.
Sills said the company believes its momentum will continue, citing structural advantages, customer relationships, and execution. He also pointed to uncertainties tied to the “conflict in the Middle East” and a shifting tariff landscape, but said Standard Motor Products has a track record of navigating such challenges with resilient supply chains and a favorable manufacturing footprint.
About Standard Motor Products NYSE: SMP
Standard Motor Products, Inc, headquartered in Long Island City, New York, is a leading manufacturer and distributor of aftermarket and original equipment automotive parts. Since its founding in 1919, the company has focused on engineering, testing, and supplying ignition and temperature management products for passenger cars and light trucks. Its product lineup includes ignition coils, spark plug wires, sensors, switches, heating and air conditioning controls, and related electronic components.
The company operates through two primary segments: Engine Management and Temperature Control.
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