Standard Motor Products Inc (SMP) 2024 Q1 法說會逐字稿

Good morning, everyone. Welcome to today's Standard Motor Products First Quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. (Operator Instructions) Also, today's call is being recorded, and I will be standing by if anyone should need any assistance.

大家，早安。歡迎參加今天的標準汽車產品 2024 年第一季財報電話會議。此時，所有參與者都處於只聽模式。隨後，您將有機會在問答環節中提問。 （操作員說明）另外，今天的通話正在錄音，如果有人需要任何幫助，我將隨時待命。

Now I'd like to turn the call over to Mr. Tony Cristello, Vice President of Investor Relations. Please go ahead, sir.

現在我想把電話轉給投資者關係副總裁托尼·克里斯泰洛先生。請繼續，先生。

Thank you, Bo, and good morning, everyone. Thank you for joining us on Standard Motor Products First 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 Iles, 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 up the call for Q&A.

謝謝你，Bo，大家早安。感謝您參加標準汽車產品 2024 年第一季財報電話會議。今天與我在一起的有名譽主席拉里·希爾斯 (Larry Sills)、董事長兼首席執行官埃里克·希爾斯 (Eric Sills)；吉姆·伯克，營運長；和財務長內森‧艾爾斯 (Nathan Iles)。今天我們通話。艾瑞克（Eric）將概述我們本季的業績，然後內森（Nathan）將討論我們的財務表現。然後埃里克將提供一些總結性評論並開始問答環節。

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 Securities and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward-looking statements.

在今天早上開始之前，我想提醒您，當我們使用“預期”、“相信”、“估計”或“期望”等詞語時，我們今天討論的一些材料可能包括有關我們業務和預期財務結果的前瞻性陳述這些通常是前瞻性陳述，儘管我們認為這些前瞻性陳述中所反映的預期是合理的。它們基於我們目前掌握的資訊以及我們所做的某些假設，我們無法向您保證它們將被證明是正確的。您還應該閱讀我們向美國證券交易委員會提交的文件，以了解可能導致我們的實際結果與前瞻性陳述不同的風險和不確定性的討論。

I'll now turn the call over to Eric Sills. Our see.

我現在將把電話轉給埃里克·希爾斯。我們所見。

Thank you, Tony, and good morning, everyone, and welcome to our first quarter earnings call. Let me open by thanking all of our employees around the world for their tireless efforts as we enter our 150 year. So it's fair to say that our first quarter results were mixed. We're pleased with our top line performance where we set a record for first quarter sales. However, as expected, our profitability continued to lag, demonstrating some of the challenges in keeping up with inflationary pressures.

謝謝托尼，大家早上好，歡迎參加我們的第一季財報電話會議。首先，我要感謝我們世界各地的所有員工在我們邁入 150 週年之際所做的不懈努力。因此，可以公平地說，我們第一季的業績好壞參半。我們對我們的營收表現感到滿意，創下了第一季銷售記錄。然而，正如預期的那樣，我們的獲利能力繼續落後，這表明在應對通膨壓力方面面臨一些挑戰。

Let me get into the details best explained at the segment level, starting with vehicle control after a soft fourth quarter, we are pleased to see a nice rebound in sales. We were up about 0.5 point over 2023, which was a challenging comp as Q1 of 2023 was very strong, up more than 4% over the previous year. After a soft end to last year, we were pleased to see a return to more normal demand. Customer POS was soft in the quarter, though, again, it's being compared to a very strong sell-through last year.

讓我詳細介紹一下在細分市場層面最能解釋的細節，從第四季度疲軟後的車輛控制開始，我們很高興看到銷售出現良好反彈。我們比 2023 年成長了約 0.5 個百分點，這是一個具有挑戰性的比較，因為 2023 年第一季非常強勁，比前一年增長了 4% 以上。經過去年的疲軟結束後，我們很高興看到需求恢復到更正常的水平。本季客戶 POS 銷售疲軟，但再次與去年非常強勁的銷售量進行比較。

Turning to temperature control. As you well know, the first quarter is not indicative of how the year will turn out. This is the time of year that we ship customers their preseason orders and then those can ship in late Q1 or early Q2 and whiplash numbers around. Ultimately, this division will depend on the total season and its dynamics when it gets hot, how hard it is and where and how long it stays that way. So let's see how the year behaves on to Engineered Solutions.

轉向溫度控制。眾所周知，第一季並不能預示今年的結果。每年的這個時候，我們都會向客戶發送季前訂單，然後這些訂單可以在第一季末或第二季初發貨，並且數量會大幅增加。最終，這個分區將取決於整個賽季以及天氣變熱時的動態、難度以及保持這種狀態的地點和時間。讓我們看看這一年工程解決方案的表現如何。

The year is off to a strong start for sales, up 4.5% hitting a single quarter record. As discussed, the segment is highly fragmented, multiple end markets, multiple geographies and a highly diverse customer base with no account greater than 10% of sales. As such, you can see some volatility quarter to quarter in terms of customer end market channel mix. So overall we're very pleased with how we're doing. As we've been saying over the last few years, we've been gaining real traction as we get known as a capable supplier of a broad array of products and technologies.

今年的銷售開局強勁，成長 4.5%，創下單季最高紀錄。如所討論的，該細分市場高度分散，擁有多個終端市場、多個地區和高度多樣化的客戶群，其中沒有一個客戶佔銷售額的比例超過 10%。因此，您可以看到客戶端市場通路組合逐季度出現一些波動。總的來說，我們對我們的表現非常滿意。正如我們在過去幾年中一直所說的那樣，隨著我們作為各種產品和技術的有能力的供應商而聞名，我們已經獲得了真正的吸引力。

As such, we've been being awarded new business and are continuously managing a very healthy pipeline of opportunities. It's important to note that we need to keep the funnel of these opportunities fall as items go through their life cycle much faster than the aftermarket. But I leave -- but I believe we are demonstrating our ability to do that and grow this new segment.

因此，我們不斷獲得新業務，並持續管理非常健康的機會管道。值得注意的是，我們需要保持這些機會的漏斗下降，因為物品的生命週期比售後市場快得多。但我離開了——但我相信我們正在展示我們做到這一點並發展這個新細分市場的能力。

I'd like to spend a minute talking about our progress on a new state-of-the-art distribution center in Shawnee, Kansas. We've been discussing this for the last few quarters, but I'll remind you of what we are building and why about a year ago, we came to the decision to expand our distribution capacity as we've been operating out of our existing footprint for many years. While our volume and SKU count has grown, we leased a brand new 575,000 square foot facility, about five miles from our existing Edwards go Kansas location, giving us about 200,000 additional square feet in a time. This will replace our Edwards location as we move that operation in.

我想花一點時間談談我們在堪薩斯州肖尼新建的最先進的配送中心的進展。過去幾季我們一直在討論這個問題，但我會提醒您我們正在建造什麼，以及為什麼大約一年前，我們決定擴大我們的分銷能力，因為我們一直在現有的基礎上運營多年的足跡。雖然我們的銷售量和 SKU 數量有所增長，但我們租用了一個全新的 575,000 平方英尺設施，距離我們現有的 Edwards go Kansas 工廠約 5 英里，一次性為我們增加了約 200,000 平方英尺。當我們搬入該工廠時，這將取代我們的愛德華茲工廠。

But additionally, we plan to distribute the A and B movers currently single pointed out of our Virginia and Texas DCs, which will allow us to provide better service to our customers in the west and north. It will also provide risk mitigation for us as we will move from single point to multipoint distribution. We're pleased to announce that we have started shipping vehicle control products to certain customers in April, and it's going very well. We've begun with manual operations while we build out our automation, which will take place over the balance of the year we then plan to move in phases over the course of 2025. And when complete, we will be able to sell our Edwards facility likely in 2026 in the near term, we are incurring additional expense, and Nathan will provide details. But once complete, we will exit many of the duplicate costs and will be well positioned for the future.

但此外，我們計劃將目前單點的 A 和 B 搬運工從我們的弗吉尼亞州和德克薩斯州 DC 分銷出去，這將使我們能夠為西部和北部的客戶提供更好的服務。當我們從單點分發轉向多點分發時，它還將為我們提供風險緩解。我們很高興地宣布，我們已於四月開始向某些客戶運送車輛控制產品，並且進展順利。我們已經開始進行手動操作，同時建立自動化，這將在今年餘下的時間裡進行，然後我們計劃在 2025 年分階段進行。將產生額外費用，Nathan 將提供詳細資訊。但一旦完成，我們將消除許多重複成本，並為未來做好準備。

Lastly, let me discuss some of the issues we've been experiencing on the cost side that are causing continues, continued pressure on profitability. I'll keep it at a high level and Nathan will provide more details. Overall, as expected, our profitability is down from last year, so for different reasons in the aftermarket for engineered solutions in the aftermarket, we are pleased that we've been able to maintain our gross margins. The pressures have been on SG&A, where we continue to experience elevated expenses tied to our receivables, factoring programs as well as certain other areas.

最後，讓我討論一下我們在成本方面遇到的一些問題，這些問題對獲利能力造成了持續的壓力。我會保持較高的水平，內森將提供更多細節。總體而言，正如預期的那樣，我們的獲利能力比去年有所下降，因此由於售後市場工程解決方案的不同原因，我們很高興能夠維持我們的毛利率。 SG&A 面臨壓力，我們的應收帳款、保理計畫以及某些其他領域的費用持續增加。

In Engineered Solutions, while operating expenses have remained stable, the downward pressure has been on our gross margins, which then drop through to the bottom line. We have been experiencing product cost inflation, partly for material costs, but more so related to significant wage increases in Mexico in Europe, where a great deal of our Engineered Solutions volume is produced. We have also seen a modest mix shift over the last two quarters, which can fluctuate based on normal ebbs and flows of demand. And this too is impacting our margins.

在工程解決方案中，雖然營運費用保持穩定，但我們的毛利率面臨下行壓力，然後下降到利潤。我們一直在經歷產品成本上漲，部分原因是材料成本，但更多的是與歐洲墨西哥的工資大幅上漲有關，我們的工程解決方案的大量生產都在墨西哥。我們也看到過去兩個季度出現了適度的組合轉變，這種轉變可能會根據需求的正常波動而波動。這也影響了我們的利潤。

Also To reiterate, we are experiencing a planned and temporary increase in spending on our new distribution center, both here and in the aftermarket. We continue to work aggressively at cost reduction and pricing with teams in place looking at all the levers and believe we will see incremental relief in the quarters to come.

另外要重申的是，我們正在計劃和暫時增加新配送中心的支出，無論是在此還是在售後市場。我們將繼續積極致力於降低成本和定價，並與適當的團隊一起研究所有槓桿，並相信我們將在未來幾季看到逐步緩解。

So with that, I'll turn it over to Nathan, who will dive in deeper.

因此，我會將其交給 Nathan，他將進行更深入的研究。

Thank you, Eric. As was noted earlier, the first quarter of the year largely turned out as expected as sales, operating profit and earnings per share were in line with the expectations we laid out in our last call as we go through the numbers, I'll first give some color on the results by segment and at the consolidated level, then cover some key balance sheet and cash flow metrics, and finally, provide a brief update on our financial outlook for the full year 2020 for First, looking at our vehicle controls segment.

謝謝你，埃里克。正如之前所指出的，今年第一季的業績基本上符合預期，因為銷售額、營業利潤和每股收益與我們在上次電話會議中列出的預期一致，因為我們在查看這些數字時，我首先給出對按部門和合併層面的結果進行一些說明，然後介紹一些關鍵的資產負債表和現金流量指標，最後，簡要介紹我們2020 年全年財務前景的最新情況，看看我們的車輛控制部門。

You can see on this slide that net sales of $185.5 million in Q1 were up 0.5% with the increase driven by solid demand for our products across all categories. Vehicle controls Adjusted EBITDA was 10.4% of net sales for the quarter and down from last year. Looking at the drivers of EBITDA for the quarter, the gross margin rate vehicle control in Q1 was flat with last year as cost savings and pricing offset inflation in cost of goods sold. However, SG&A expenses increased in the quarter, mainly due to inflationary increases I'll touch more on later. And factory expenses increased $0.9 million as a result of higher interest rates and those increases resulted in lower adjusted EBITDA in the quarter.

您可以在這張投影片中看到，第一季的淨銷售額為 1.855 億美元，成長了 0.5%，成長的推動因素是對我們所有類別產品的強勁需求。車輛控制 本季調整後 EBITDA 佔淨銷售額的 10.4%，較去年下降。從本季 EBITDA 的驅動因素來看，第一季車輛毛利率控制與去年持平，原因是成本節約和定價抵銷了銷售成本的上漲。然而，本季的銷售、管理及行政費用有所增加，主要是由於通貨膨脹的增加，我稍後會詳細討論。由於利率上升，工廠費用增加了 90 萬美元，這些增加導致本季調整後 EBITDA 下降。

Turning to temperature control, net sales in the quarter for that segment of $71.6 million were down 1.1% as we saw a slight variation in preseason ordering patterns versus last year. But keep in mind that the first quarter is not indicative of the full year and the seasonal business. Temperature controls adjusted EBITDA in Q1 of 4.7% was 0.1 points better than last year. The improvement was driven by a higher gross margin rate that was helped by savings initiatives, partly offset by inflation in SG&A costs.

至於溫度控制，該部門本季的淨銷售額為 7,160 萬美元，下降了 1.1%，因為我們發現季前訂購模式與去年相比略有變化。但請記住，第一季並不代表全年和季節性業務。第一季溫度控制調整後的 EBITDA 為 4.7%，比去年好 0.1 個百分點。這項改善是由於儲蓄措施帶來的毛利率提高所推動的，但銷售管理及行政費用的通膨部分抵銷了毛利率的提高。

Sales for Engineered Solutions segment in the quarter were up 4.5% as we were pleased to see our sales continue to increase as a result of strong demand and new business wins with both existing and new customers.

本季工程解決方案部門的銷售額成長了 4.5%，我們很高興看到由於強勁的需求以及現有和新客戶贏得的新業務，我們的銷售額持續成長。

Adjusted EBITDA for engineered solutions in the quarter was down from last year, primarily due to cost inflation, the drivers of which Eric noted before, an unfavorable customer sales mix in the quarter, which resulted in lower gross margin for the segment. We also saw some inflation in SG&A costs in this segment just as we saw in the aftermarket segments.

本季工程解決方案的調整後 EBITDA 較去年有所下降，主要是由於成本通膨（埃里克之前指出的驅動因素），即本季不利的客戶銷售組合，導致該部門的毛利率較低。正如我們在售後市場領域所看到的那樣，我們也發現該領域的銷售、管理和管理成本正在上漲。

Turning to our consolidated numbers, the change in our net sales and margin versus Q1 last year was the result of the changes in our segments as highlighted. Regarding consolidated SG&A expenses were up versus last year and were 19.5% of net sales in the quarter. I know that our costs were up in our segment results. So let me give a little more color on the drivers of the consolidated level.

談到我們的合併數據，我們的淨銷售額和利潤率與去年第一季相比的變化是由於我們強調的細分市場變化的結果。綜合 SG&A 費用比去年增加，佔本季淨銷售額的 19.5%。我知道我們的部門業績的成本上升。因此，讓我對綜合層面的驅動因素進行更多的闡述。

You can see on this slide that costs were up $4.2 million, and this included $1.1 million of startup costs related to our new distribution center. Excluding these costs expenses increased $3.1 million or about 5%. The increase included elevated distribution expenses across a number of costs, including higher lease expense and certain locations. As we look to offset some of the inflation headwinds on operating expenses. We'll be reviewing levers to reduce our costs going forward.

您可以在這張投影片上看到，成本增加了 420 萬美元，其中包括與我們的新配送中心相關的 110 萬美元啟動成本。排除這些費用，支出增加了 310 萬美元，約 5%。這一增長包括一系列成本的分銷費用增加，包括更高的租賃費用和某些地點的費用。當我們希望抵消營運支出方面的一些通膨阻力。我們將審查未來降低成本的手段。

One final note on our consolidated results, you can see the cost of customer factoring programs increased by $0.9 million in Q1. But I would point out that we can see the cost of those programs leveling out now that interest rates have been more steady, albeit at a much higher level than several years ago.

關於我們的綜合業績的最後一點是，您可以看到第一季客戶保理計畫的成本增加了 90 萬美元。但我想指出的是，我們可以看到這些計劃的成本現在已經趨於穩定，儘管利率水平比幾年前要高得多，但已經更加穩定。

Turning now to the balance sheet. Accounts receivable were $203.9 million at the end of the quarter and inventory levels finished Q1 at $520.7 million, with both balances in line with March last year. Increases in receivable and inventory from December 2023 relate to the seasonal increases in sales and preparation for temp control selling season.

現在轉向資產負債表。本季末應收帳款為 2.039 億美元，第一季末庫存水準為 5.207 億美元，兩項餘額與去年 3 月持平。自2023年12月起應收帳款和庫存的增加與銷售的季節性成長以及溫度控制銷售季節的準備有關。

Our cash flow statement reflects cash used in operations for the first quarter of $45.7 million as compared to cash used of $20.4 million last year. Cash used in operations last year was aided by a reduction in inventory balances that did not recur this year after we brought inventory back down to normal levels through the course of 2023, our investing activities show an increase in capital expenditures this year $5.7 billion, which includes $2.6 million of investment related to our new distribution center.

我們的現金流量表反映第一季營運中使用的現金為 4,570 萬美元，而去年使用的現金為 2,040 萬美元。去年營運中使用的現金得益於庫存餘額的減少，在我們到2023 年將庫存恢復到正常水平後，今年沒有出現這種情況。其中其中包括與我們的新配送中心相關的 260 萬美元投資。

Financing activity show borrowings on our revolving credit agreement of $58.7 million in the first quarter, which were used to fund operations, capital expenditures and pay $6.4 million of dividends. We also began repurchasing shares under an existing $30 million authorization from our Board and repurchased 2.6 million of shares during the quarter. We continue to purchase shares in the second quarter, and as we noted in our release this morning purchased an additional 3.5 million through April 29th for a total of 6.1 million repurchased so far this year. Our net debt of $187.7 million in Q1 was much lower than last year, and we finished the quarter with a leverage ratio of 1.6 times and lower than last year's ratio.

融資活動顯示，第一季我們的循環信貸協議借款為 5,870 萬美元，用於為營運、資本支出提供資金並支付 640 萬美元的股息。我們也根據董事會現有的 3,000 萬美元授權開始回購股票，並在本季回購了 260 萬股股票。我們在第二季度繼續購買股票，正如我們在今天上午的新聞稿中指出的那樣，截至 4 月 29 日，我們額外購買了 350 萬股，今年迄今回購總量為 610 萬股。第一季我們的淨債務為 1.877 億美元，遠低於去年，本季結束時我們的槓桿率為 1.6 倍，低於去年的水平。

Before I finish, I want to give an update on our sales and profit expectations for the full year 2024. Regarding our top line sales, we are maintaining the expectations we laid out before and expect full year 2024 sales will show flat to low single digit percentage growth. We're also maintaining our expectations for adjusted EBITDA which we expect to be in a range of 9% to 9.5% and essentially flat 2023. This estimate continues to include factoring expenses of $45 million to $48 million, largely flat with 2023 as we remain in a high and uncertain interest rate environment.

在結束之前，我想更新我們對 2024 年全年銷售額和利潤的預期。 。我們也維持對調整後EBITDA 的預期，預計將在9% 至9.5% 的範圍內，2023 年基本持平。因為我們仍然在高且不確定的利率環境中。

US dollar remains at a multiyear low against key currencies in Mexico and Poland. And some additional costs related to the expansion of distribution capabilities in our new warehouse in Kansas, which we estimate is $5 million to $6 million incremental costs in 2024.

美元兌墨西哥和波蘭主要貨幣仍處於多年低點。還有一些與堪薩斯州新倉庫配送能力擴展相關的額外成本，我們預計 2024 年增量成本將達到 500 萬至 600 萬美元。

In connection with our adjusted EBIT outlook, we expect our interest expense on outstanding debt to be on average about $3 million to $4 million each quarter, and we expect our income tax rate to be 25%. Borrowings are expected to remain roughly flat from December 2023 to December 2024, as cash flows normalize, and we look to invest approximately $25 million in our new DC and return cash to shareholders via dividends and share repurchases.

結合我們調整後的息稅前利潤前景，我們預計未償還債務的利息支出平均每季約為 300 萬至 400 萬美元，我們預計所得稅稅率為 25%。隨著現金流正常化，預計 2023 年 12 月至 2024 年 12 月期間借款將大致保持不變，我們希望向新 DC 投資約 2500 萬美元，並透過股息和股票回購向股東返還現金。

Regarding operating expenses for the full year, keep in mind, our operating expenses are incurred ratably across the year and do not necessarily vary with top line sales as the majority of these costs are fixed in nature. As such, we anticipate total operating expenses inclusive of factoring will range from $76 million to $82 million for each of the last three quarters of 2024.

關於全年的營運費用，請記住，我們的營運費用在全年中按比例發生，不一定隨營收變化，因為這些成本大部分是固定的。因此，我們預計 2024 年最後三個季度的總營運支出（包括保理）將在 7,600 萬美元至 8,200 萬美元之間。

To quickly wrap up, we were pleased to see our sales increase in Q1 despite slightly slower preseason orders in Temp Control and a turn in results in line with the forecast while also increasing shareholder returns through share repurchases in the quarter. Thank you for your attention, and I'll turn the call back to Eric for some final comments.

總而言之，我們很高興看到第一季的銷售額有所成長，儘管 Temp Control 的季前訂單略有放緩，而且結果符合預期，同時透過本季的股票回購增加了股東回報。感謝您的關注，我會將電話轉回給埃里克以徵求一些最終意見。

Well, thank you, Nate. And in closing, I'd like to spend a minute on how we are thinking about the future. The aftermarket continues to be a strong and stable market. All signs suggest that after a few years of unusual demand behavior coming out of the pandemic, it has returned to its historical long-term trend of low single digit growth, which makes sense when you consider the basic dynamics of the addressable market, where things change very slowly. But in the right direction, car park slowly gets larger and older miles driven has returned to stable levels.

嗯，謝謝你，內特。最後，我想花一點時間談談我們如何思考未來。售後市場仍然是一個強勁而穩定的市場。所有跡像都表明，在大流行帶來的幾年不尋常的需求行為之後，它已經恢復到低個位數增長的歷史長期趨勢，當你考慮潛在市場的基本動態時，這是有道理的，其中事情變化非常緩慢。但在正確的方向上，停車場慢慢變大，舊行駛里程也恢復到穩定水平。

People are keeping their cars longer, especially in light of the high cost of new vehicles. And when you put these together, they add up to slow growth. We recognize that the record inflation over these last few years have caused challenges to consumers and while this could dampen discretionary purchases, much of what we sell is nondiscretionary in nature, Engineered Solutions is more difficult to summarize, as it is so diverse and end market customer product and geography. But as we have been saying, we believe our sales trajectory will be less determined by ebbs and flows in these markets as it will be by gaining and launching new business wins and building on these wins, it's obviously not lost on us that we have work to do to return to our historic margins, and we are focusing diligently on this. So overall, when you put it all together, the long view remains quite positive.

人們的汽車保有時間越來越長，特別是考慮到新車的成本很高。當你把這些放在一起時，它們加起來就會導致增長緩慢。我們認識到，過去幾年創紀錄的通貨膨脹給消費者帶來了挑戰，雖然這可能會抑制可自由支配的購買，但我們銷售的大部分產品本質上都是非自由支配的，工程解決方案更難以總結，因為它是如此多樣化和終端市場客戶產品和地理位置。但正如我們一直所說的，我們相信我們的銷售軌跡將不再受這些市場的潮起潮落的影響，而是透過獲得和推出新的業務勝利並在這些勝利的基礎上再接再厲，我們顯然不會忘記我們有工作要回到我們的歷史邊緣，我們需要做些什麼，我們正在努力關注這一點。因此，總的來說，當你把所有這些放在一起時，長遠來看仍然相當積極。

So that concludes our prepared remarks. At this point, I will turn it back over to the moderator, and we'll open it up for questions.

我們準備好的發言就到此結束。此時，我會將其轉回給主持人，然後我們將開放它以供提問。

Thank you, Mr. Sills. (Operator Instructions) Scott Stember, ROTH MKM.

謝謝你，希爾斯先生。 （操作員說明）Scott Stember，ROTH MKM。

Good morning, guys. Thanks for taking my questions this morning, Scott. Eric, you talked about how, I guess, the weakness that we saw in Q4 sort of sort of reverse and that things are back to normal yet. On the other hand, you talked about POS being a little soft. Is that more just a function of tough year-over-year comparisons or is there something else going on?

早上好傢伙。謝謝你今天早上回答我的問題，斯科特。艾瑞克，我想你談到了我們在第四季度看到的弱點是如何逆轉的，而且事情已經恢復正常了。另一方面，您談到 POS 有點軟。這只是嚴格的逐年比較的結果，還是有其他原因？

I think that's a fair statement, Scott, that it is more about the fact that the first quarter of 2023 was really quite strong. If you think about the POS trends come in through the fourth quarter of last year and into this year and last year, we saw a sequential erosion of that POS month over month, and that continued a bit into January of this year. And now we start to see a bit of a rebound. So if you look at the whole quarter this year, POS was a bit soft, but I think that it also does reflect that more of that return to where we'd expect it to be.

Scott，我認為這是一個公平的說法，更多的是因為 2023 年第一季確實相當強勁。如果您考慮去年第四季、今年和去年的 POS 趨勢，我們會發現 POS 逐月連續下降，並且這種情況一直持續到今年 1 月。現在我們開始看到一些反彈。因此，如果你看看今年整個季度，POS 有點疲軟，但我認為這也確實反映出更多的情況回到了我們預期的水平。

So you say soft, are we talking flat or down slightly for the whole quarter?

所以你說軟，我們所說的整個季度是持平還是略有下降？

It moderated throughout the quarter. And overall it was roughly in that flat. There were some periods and some customers that were a little bit up or down from that. But overall, it's that that's what we saw.

它在整個季度有所放緩。總的來說，大概是在那間公寓裡。在某些時期和某些客戶中，情況會略有上升或下降。但總的來說，這就是我們所看到的。

Got it. And then on the engine solutions side, it looks like the other most of the growth came from the other segment. Is that UTV mostly? Or is there something else in there and what's driving that?

知道了。然後在引擎解決方案方面，看起來其他大部分成長來自其他領域。主要是UTV嗎？或者還有其他東西在裡面，是什麼在驅動它？

But we don't we don't go into the specifics of what's behind that and what's behind it that all other, there's many different end markets in there from motorsports to lawn and garden hydraulic stationary engines. There's a lot of different pieces in there. And as we always say, there's going to be some movement quarter to quarter based on the build schedules of the customers within the. So I wouldn't read too much in to the fact that any subsegment goes up or down in a quarter.

但我們不會深入探討背後的細節以及所有其他背後的細節，那裡有許多不同的終端市場，從賽車運動到草坪和花園液壓固定式引擎。裡面有很多不同的部分。正如我們常說的，根據客戶的建置計劃，每季都會有一些變化。因此，我不會過度解讀任何細分市場在一個季度內上漲或下跌的事實。

Got it. And then my last question is just on the margin side, you talked about, I guess, labor wages and things like that. How are you addressing that? And what is a good margin, I guess, where should we look for the margin to eventually land in a more normalized environment for this segment?

知道了。我的最後一個問題只是在邊際方面，我猜你談到了勞動工資之類的事情。你是如何解決這個問題的？我想，什麼是好的利潤率，我們應該在哪裡尋找利潤率，以最終使該細分市場進入更正常化的環境？

(inaudible) on the Engineered Solutions segment you're asking about.

（聽不清楚）您所詢問的工程解決方案部分。

Yeah. Thanks.

是的。謝謝。

So I think, Scott, the gross margin we'd be looking at and I guess to give a little bit of history before I started, if you go back several years, the gross margins have kind of ranged between 18% and 20% over time. And so as we look at offsetting cost headwinds and cost reductions in this area, we look to be getting back into that range. I think on the very bottom line, adjusted EBITDA and where we tend to talk about that number recently. We'd expect that segment to also continue to be in line with the aftermarket, but once the other headwinds are offset.

所以我認為，斯科特，我們會關注毛利率，我想在開始之前先介紹一下歷史，如果你回顧幾年，毛利率在 18% 到 20% 之間。因此，當我們考慮抵消該領域的成本阻力和成本削減時，我們希望回到這個範圍。我認為最重要的是，調整後的 EBITDA 以及我們最近傾向於談論這個數字。我們預計該細分市場也將繼續與售後市場保持一致，但一旦其他不利因素被抵消。

Bret Jordan, Jefferies.

布雷特·喬丹，杰弗里斯。

Hey, morning, guys. You bet, could you talk about temperature control inventory at the customer level ending Q1 and how we are year over year?

嘿，早上好，夥計們。您敢打賭，您能談談第一季末客戶層面的溫度控制庫存以及我們逐年的情況嗎？

Sure. And I think you can't just look at it after Q1, but as as they're building up their entirety of their preseason orders, which did continue into the beginning of Q2. And what I would say is that basically they're in good shape for the season, maybe slightly above where they were going into last selling season. But they're healthy and where they would want them to be. So Now ultimately, it's about what happens with the weather. And so really we're hoping that that begins over the next few weeks and lasts for a long time.

當然。我認為你不能只看第一季之後的情況，而是因為他們正在建立整個季前訂單，這確實持續到第二季​​初。我想說的是，基本上他們本季的狀況良好，可能略高於上個銷售季節的水平。但他們很健康，並且處於他們希望的狀態。所以現在歸根結底，這是關於天氣的變化。所以我們真的希望這種情況在接下來的幾週內開始並持續很長一段時間。

And you talked about new customers, was that primarily the engineered solutions or did you pick up new customers in the aftermarket as well?

您談到了新客戶，這主要是工程解決方案還是您也在售後市場吸引了新客戶？

That's correct, Brett, we were referring specifically to two within Engineered Solutions and not so much new customers as new awards with existing customers, although there is a little bit of that as well, one thing just to kind of characterize what happens in that industry is it's a lot of base hits. It's not like you're landing a new platform with a light vehicle manufacturer and all the segments of multi multimillion dollar award. It's a lot of base hits on and we have been -- that we have been getting those.

是的，布雷特，我們特別指的是工程解決方案中的兩個，與其說是新客戶，不如說是現有客戶的新獎項，儘管也有一點這樣的情況，一件事只是為了描述該行業發生的情況是有很多基礎點擊。這並不是說您正在與輕型汽車製造商建立一個新平台，並獲得數百萬美元獎勵的所有部分。這是很多基本點擊，我們一直在得到這些。

Okay. And then final question, I guess on pricing outlook, and we've seen most of the inflation pass through, or is there still some to come to offset the continued high rates?

好的。最後一個問題，我想是關於定價前景的，我們已經看到大部分通膨已經過去，或者是否仍有一些通膨可以抵消持續的高利率？

Yes. So it's a competitive market, as you well know. And so pricing is not easy to come by. We continue to work with all of our customers where we can to be able to share with them what we're experiencing with cost inflation on. So nothing specific to report. We continue to work on it, but it is getting tougher.

是的。眾所周知，這是一個競爭激烈的市場。因此定價並不容易。我們將繼續與所有客戶合作，與他們分享我們在成本通膨方面所經歷的情況。所以沒有什麼具體的報告。我們將繼續努力，但難度越來越高。

Thank you. (Operator Instructions) Carolina Jolly, Gabelli.

謝謝。 （操作員說明）Carolina Jolly、Gabelli。

So in terms of kind of industry commentary, it sounded like some areas that the industry there was have a weak start to the spring selling season. Would you, given your kind of inventory and category, mix have exposure to that underlying trend?

因此，就行業評論而言，聽起來該行業的某些領域在春季銷售季節開局疲軟。考慮到您的庫存類型和類別，您是否會接觸到這一潛在趨勢？

No, I'm not sure I completely understand your question that are you asking whether we're tracking with the overall numbers of the large public companies as they report?

不，我不確定我是否完全理解您的問題，您是在問我們是否正在追蹤大型上市公司報告中的總數？

Just in terms -- it did sound like there was more of a DIY.

就術語而言——聽起來確實更像是 DIY。

No, I see what you're saying. Most of our products are not DIY. There's certainly a bit of work there that certain shade tree mechanics are able to do, but the majority of our products are professionally installed and dumb. So I think it has less to do really with the DIY. customer versus the GIFM. customer. It has more to do with discretionary versus nondiscretionary type purchases and the majority of what we're selling is nondiscretionary. And so while I think you have some economically challenged consumers who are perhaps deferring things that they don't need our typically our types of products, our break fix and if the cars not work in it, they may have to buy.

不，我明白你在說什麼。我們的大部分產品都不是 DIY。當然，某些遮蔭樹機械師可以做一些工作，但我們的大多數產品都是專業安裝的，而且很笨拙。所以我認為這與 DIY 關係不大。客戶與 GIFM。顧客。它更多地與自由裁量型和非自由裁量型購買有關，而我們銷售的大部分產品都是非自由裁量型的。因此，雖然我認為有些經濟困難的消費者可能會推遲購買他們不需要的東西，我們通常需要我們的產品類型，我們的故障修復，如果汽車無法使用，他們可能必須購買。

(Operator Instructions) And gentlemen, it appears we have no further questions today. Mr. Cristello, I'd like to hand things back to you, sir, for any closing comments.

（操作員說明）先生們，看來我們今天沒有其他問題了。克里斯泰羅先生，先生，我想把事情交還給您，請您發表最後的意見。

Again, we want to thank everyone for participating in our conference call today. We understand there was a lot of information presented, and we'll be happy to answer any follow-up questions you may have. Our contact information is available on our press release or Investor Relations website. We hope you have a great day. Thank you.

我們再次感謝大家參加今天的電話會議。我們知道其中提供了大量信息，我們很樂意回答您可能提出的任何後續問題。我們的聯絡資訊可在我們的新聞稿或投資者關係網站上找到。我們希望您度過愉快的一天。謝謝。

Thank you.

謝謝。

Ladies and gentlemen, that will conclude the Standard Motor Products First Quarter Earnings Conference Call. Again, thanks so much for joining us. We wish you all a great day. Good bye.

女士們先生們，標準汽車產品公司第一季財報電話會議到此結束。再次非常感謝您加入我們。我們祝福大家有個愉快的一天。再見。