Standard Motor Products NYSE: SMP reported second-quarter results marked by 6.7% consolidated sales growth, record adjusted EBITDA of $63.5 million and improved operating cash flow, while maintaining its full-year outlook amid tariff changes, weather-related demand variability and more difficult comparisons in the second half.
Chief Executive Officer Eric Sills said the company’s top-line growth was nearly 7% after adjusting for the accounting treatment of tariff refunds received during the quarter. Year-to-date adjusted sales growth was nearly 8%.
Chief Financial Officer Nathan Iles said the company received refunds during the quarter for tariffs previously paid under the IEPA tariff regime. Because Standard Motor Products treats tariffs as a pass-through cost, the refunds affected both sales and cost of goods sold. The company discussed its operating results excluding that accounting impact.
Segment Performance
Vehicle Control sales declined 1.6% to $198.6 million during the quarter. Sills attributed much of the decline to customer ordering patterns and a significant drop in wire set sales, a category he said is in secular decline at a mid-single-digit annual rate. Customer point-of-sale activity increased during the quarter, which Sills said indicated that the sales decline reflected purchasing patterns rather than end-market demand.
Vehicle Control sales were up 4.7% year-to-date, supported by strong first-quarter pipeline orders and growth in engine management products. The segment’s adjusted EBITDA margin was 8.6%, lower than a year earlier, as higher distribution costs related to the ramp-up of the company’s Shawnee, Kansas, warehouse, freight expense and inflation in selling, general and administrative costs outweighed gross-margin improvement.
Temperature Control posted sales of $152 million, up 15.7% from a year earlier. The segment benefited from the timing of preseason orders shifting more heavily into the second quarter. The gain offset slower selling-season demand during May and part of June, when Sills said weather was unseasonably cool and wet across much of the U.S.
Temperature Control adjusted EBITDA margin increased to 18.2%, reflecting stronger volumes, a higher gross-margin rate and improved operating expenses. Although point-of-sale activity was soft in the second quarter, Sills said it had rebounded as hotter weather developed across much of the country. He cautioned that it was still too early to predict the full-year outcome for the seasonal business.
Nissens Automotive, the company’s European aftermarket business, increased sales by $4.4 million, or 4.8%. The growth included a 2.3% increase in local currency and a benefit from currency conversion. Sills highlighted growth in engine-efficiency products, including turbochargers and engine-management parts, which he said reflected gains in shelf space.
Air-conditioning sales in Europe were affected by a late start to the summer, though Sills said record heat across the region had since supported expectations for a recovery in air-conditioning products. Nissens’ adjusted EBITDA margin rose to 19% of net sales, aided by higher gross margins, improved SG&A expenses and stabilization in currency transaction losses that had affected the first quarter.
Engineered Solutions sales increased 16.8%, with growth across most markets. Its adjusted EBITDA margin declined to 9.7% as inflationary pressures reduced gross margin, partly offset by better operating-expense leverage on higher revenue. Management said the segment’s growth rate is expected to moderate during the remainder of the year as it faces tougher comparisons.
Cash Flow, Debt and Operations
For the first six months of 2026, cash generated from operations totaled $58.3 million, an improvement of $64.2 million from the prior-year period. Iles said the increase was driven by lower inventory levels and the timing of tariff refunds. Capital expenditures were $14.9 million, lower than the previous year as spending tied to the new distribution center was completed.
The company paid $14.7 million in dividends and repaid $24 million under its credit agreements during the period. Net debt was $510.2 million at quarter-end, down significantly from the second quarter of 2025. Standard Motor Products ended the quarter with leverage of 2.5 times EBITDA and said it remains on track to reach its target of 2 times EBITDA by the end of 2026.
The company also announced a joint venture with longtime partner Techstrong, acquiring a 50% interest in Techstrong’s Thailand sensor-manufacturing operation. Sills said the investment will support Vehicle Control, strengthen supply-chain control and provide a low-cost manufacturing base that reduces exposure to China.
Separately, longtime Chief Operating Officer Jim Burke stepped down after more than 40 years with the company. Burke will remain an executive adviser and board member. Sunil Bhandari joined as chief operations officer, overseeing global manufacturing, distribution, engineering, procurement and supply chain.
Outlook Unchanged
Standard Motor Products reaffirmed its 2026 outlook for low- to mid-single-digit sales growth and an adjusted EBITDA margin of 11% to 12%.
- Interest expense is expected to be about $30 million for the full year.
- The income tax rate is projected at 27.5% to 28%.
- Depreciation and amortization are expected to rise to $45 million to $50 million.
Iles said the outlook assumes continued momentum in North America and Europe and more stable conditions in Engineered Solutions. However, management expects tougher second-half comparisons in Temperature Control and Engineered Solutions, while currency translation benefits for Nissens may diminish if the U.S. dollar-to-euro exchange rate stabilizes.
The outlook does not include potential effects from further tariff changes, inflationary pressures associated with the Middle East conflict or changes in interest rates affecting customer supply-chain financing programs. Sills said the company expects to share tariff refunds with customers because the tariffs were originally passed through, though he did not provide details on the mechanics of those discussions.
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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