Good day, everyone, and welcome to the Standard Motor Products Third Quarter 2023 Earnings Call Webcast. 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 Escape. If you would like to ask a question, you must do so over the phone. Please press the star and one on your touch-tone keypad. You may remove yourself from the queue at any time by pressing star two. 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. It is now my pleasure to turn the conference over to Mr. Tony Cristello. Please go ahead, sir. Thank you, Cory. Good morning, everyone, and thank you for joining us on Standard Motor Products Third Quarter 2023 Earnings Conference Call. I'm Tony Cristello, Vice President of Investor Relations, and with me today are Larry Sills, Chairman Emeritus, Eric Sills, CEO and Chairman, 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 with an update on our annual guidance. Eric will 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 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. I'll now turn the call over to Eric Sills, our CEO. Well, thank you, Tony, and good morning, everyone. Welcome to our third quarter earnings call. Overall, we're pleased with our results. Our sales were up slightly, setting a record for a single quarter, and we saw a nice increase in earnings, even in the face of interest rate headwinds. Additionally, we continued to show strong cash flow improvement, allowing us to pay down about 1/3 of our outstanding debt. Let me address each segment separately. I'll first speak to the aftermarket, starting with Vehicle Control. Vehicle Control was essentially flat year- to- date and down 3.4% in the quarter. This was against a record quarter a year ago, which posted nearly 6% growth, so it was a difficult comparison. There were also two other notable drivers. First, as mentioned in the release, we continue to see the impact of the customer bankruptcy announced earlier in the year. After a half year of essentially no revenue, the business was acquired a few months ago by a handful of existing SMP customers. We believe that in the long run, the business will bounce back to historic levels, but we recognize that this could take a while as they absorb the acquired locations and inventories, and therefore we expect an ongoing drag on the business, which should diminish over time. Secondly, the third quarter of 2022 saw a greater amount of pipeline orders than this year. These tend to flex quarter- to- quarter and year- to- year as customers adjust their planograms and can therefore create a bit of noise. Importantly, we always look at customer POS as an indicator of true end user demand, and in aggregate, our large customers remained ahead of last year. Now let me turn to Temperature Control. Due to a cool spring, we experienced a very slow start to the season, especially when compared to 2022, and entered the third quarter down 5.2%. But as you know, it got quite hot across most of the country and remained so throughout the summer. Sales were up 5.3%, allowing us to post an all-time record for a quarter and bringing us back to within a point of last year's nine-month sales. Next, I'll speak to our Engineered Solutions segment, which is our non-aftermarket business, focused on selling to manufacturers of vehicles and equipment across various end markets globally. Sales in Engineered Solutions were up 8.4% in the quarter, reflecting a combination of generally strong demand from key accounts and the benefit of new business wins. We're very pleased with how this business is going. We have built a program with a great combination of diverse products and markets and geographies, and are gaining traction as a capable supplier to blue chip accounts, and we believe the sky is the limit. Turning to profitability, we are pleased to see strong gains, posting an EPS increase of 5.7% versus last year. Inflation persists, with costs remaining elevated across materials, labor, rent, and so on, as well as the significant impact from rising interest rates affecting both our customer factoring programs and our borrowings. But through a combination of initiatives, we have largely been able to cover these cost increases, and I'm very proud of all of our people's efforts in this regard. So with that, let me turn it over to Nathan Iles, who will dive a bit deeper into the numbers and what's behind them. All right, thank you, Eric. As noted before, our sales were up in the third quarter, with increases in both the Temp Control and Engineered Solutions segment, which along with other actions, helped drive improvement in operating profit over last year. We also continued to make great progress reducing our inventory levels. As I go through the numbers, I'll give some more color on these items and other key drivers for the quarter and first nine months, as well as provide an update on our financial outlook for the full year of 2023. First, looking at our Vehicle Control segment, you can see on the slide that net sales of $190.9 million in Q3 were down 3.4% versus the difficult comparison last year, with the decrease driven by the impact of a bankrupt customer, as well as some customer pipeline orders, which did not occur this year. For the first nine months of Vehicle Control, sales were down slightly by 0.3%, with the decline showing both the impact of the customer bankruptcy as well as lower Q3 pipeline orders. But excluding these impacts, we've seen growth for the year so far as a result of continued demand for our products and favorable sell-through. Vehicle Control's adjusted EBITDA was 11.4% of net sales for the quarter and 11.9% for the first nine months, with both areas down from last year. Looking at the drivers, we saw a nice expansion in the gross margin rate for Vehicle Control of 1.4 points in the quarter and 1.9 points for the first nine months. This expansion was the result of pricing and savings initiatives, which overcame cost inflation and the impact of lower production from lowering inventory levels. However, the improvement in gross margin was more than offset by a combination of higher factoring costs and lower operating expense leverage as a result of lower sales. While Vehicle Control's adjusted EBITDA is down year-over-year, I would point out that we've made a lot of progress offsetting the headwinds we faced recently, as our gross margin improvements outpaced the rising cost of factoring programs for both the quarter and the year so far. Turning to Temperature Control, net sales in the quarter for that segment of $123.6 million were up 5.3%, while sales for the first nine months were down by 1%, as we saw strong sales in the quarter, mostly offset what had been a slow start to the selling season. Temperature Control's Adjusted EBITDA was 11.9% of net sales in Q3 and slightly ahead of last year and was driven by two things primarily. First, strong sales combined with other initiatives to improve the gross margin rate. And second, the performance of our equity investments in our joint ventures in China, which fall below the operating profit line, but improved in the quarter. The combination of these two things overcame the higher cost of customer factoring programs in the third quarter. Temperature Control's adjusted EBITDA for the first nine months of 8.5% of net sales was down from last year, as a slightly higher gross margin rate was more than offset by higher factoring costs so far this year. Looking at it in more detail, the impact of pricing and cost savings actions benefited the gross margin rate, but was partly offset by lower production related to lowering inventory levels. So while gross margin improved by 0.2 points in this segment, this was more than offset by higher interest rates on factoring programs, as well as some lower leverage and SG&A costs due to lower sales. Looking at Engineered Solutions, sales for that segment in the quarter of $71.8 million were up 8.4%, and sales for the first nine months of $215.1 million were up 4%, and we were pleased to see our sales continue to increase as a result of strong demand and new business wins. Adjusted EBITDA for Engineered Solutions in the quarter came in at 15.6%, an increase of 4.6 points from last year, and for the first nine months, Adjusted EBITDA for Engineered Solutions was 13.4% and up 1.9 points from last year. The improvement for both the quarter and the year so far was the result of strong sales growth, good channel and customer mix, which improved the gross margin rate and better SG&A leverage given higher sales. Turning to our consolidated results, net sales in the quarter were up 1.3% due to higher sales in Temp Control and Engineered Solutions. For the first 9 months, sales were basically flat as growth in Engineered Solutions was offset by small declines in the aftermarket segment. Our consolidated gross margin rate improved for both the quarter and first nine months due to our initiatives that overcame other headwinds and resulted in gross margin dollar increases of 7.5% and 4.9% for the quarter and first 9 months, respectively. Regarding SG&A, excluding the cost of customer factoring programs, which are shown separately on the page, expenses were well controlled in the quarter at 16.9% of net sales and in line with last year. Looking at the bottom line, consolidated operating income of 9.1% and adjusted EBITDA of 11.4% in the quarter were higher than last year, as higher sales and an improved gross margin rate across all segments offset $4 million of higher factoring costs. This also drove an increase in earnings per share to $1.11 in the quarter. For the first nine months, consolidated operating income and adjusted EBITDA were down, as higher factoring costs were only partly offset by improvements in gross margin, and this also resulted in lower earnings per share for the year so far. However, I would also point out that while our operating profit is down $4.4 million in the first nine months, this is after absorbing a $14.2 million increase in factoring costs, which highlights the work we've done to offset the headwinds of rising interest rates. Turning now to the balance sheet and cash flows, the key item here is our inventory level, which finished Q3 at $479.8 million, down $48.9 million from December last year and down $54.5 million from September last year, as we continue to focus on reductions in this area. Our cash flow statement reflects cash generated from operations in the first nine months of $132.9 million as compared to cash used of $75.5 million last year, with the improvement driven by a $129.6 million improvement in cash flows from inventory during the first nine months. Our financing activities show significant progress made in paying down our credit facilities by $92.1 million as a result of improved operating cash flows, including a $75.6 million worth of repayments made in the quarter. We also paid $18.8 million of dividends during the first nine months. Our borrowings of $147.6 million at the end of Q3 were much lower than last year, and we finished the quarter with a leverage ratio of 0.8 times, lower than both September and December of last year. Before I finish, I want to give an update on our sales and profit expectations for the full year of 2023. Regarding our topline sales, we expect full year 2023 sales will show flat to low single-digit percentage growth versus last year, given performance to date and the fact that Temp Control season is now largely finished. Adjusted EBITDA is expected to be approximately 9.5% and unchanged from our estimate last quarter. This estimate includes the full year sales performance as noted, factoring expenses of [$48 million-$50 million] using the current outlook for rates, some additional costs related to the expansion of distribution facilities in our new warehouse in Shawnee, Kansas, and a weaker U.S. dollar that, while strengthening recently, is still lower against the Mexican peso versus last year. Next, with adjusted EBITDA, we expect depreciation and amortization expenses and our income tax rate to be in line with 2022. Further, we expect our interest expense on outstanding debt to be on average, about $4 million each quarter, given higher interest rates. To wrap up, we were pleased with our overall higher sales in the quarter and our Temp Control and Engineered Solutions segment, and our improved gross margin rates across all segments, as well as the continued significant improvements in cash flow that we saw. We very much appreciate the efforts of all of our team members in achieving these results. Thank you for your attention. I'll now turn the call back to Eric to wrap up. Well, thank you, Nathan. So just to close, let me reiterate how pleased we were with our quarterly results. We posted record sales and showed strong growth in earnings. North American aftermarket continues to show its stability as the basic demographics of the market remain favorable. The car park is growing and aging, miles driven have rebounded, and while there can always be some noise quarter- to- quarter, the fundamentals remain excellent. Technology shifts are surely coming, but there's nothing new about that, and we feel well positioned to evolve with it. So we really feel quite good about our future here. As for Engineered Solutions, we are obviously in a different stage of our journey. While we are well established in the aftermarket, here we are just getting known. But the moves we have made in the past few years in creating a cohesive global business is clearly hitting its stride. We continue to receive opportunities across a host of products and end markets, and are clearly seeing a strengthening in customer relationships that will surely open more doors. And as I always say, we're tackling with the best team out there, and I'm immensely grateful to all of our talented employees. And so that concludes our prepared remarks. At this point, we'll open it up for questions. So I will turn it back to you, operator. Thank you. At this time, if you would like to ask a question, please press the star and one on your touchtone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We'll take our first question from the line of Daniel Imbro with Stephens. Please go ahead. Hey, good morning, everybody, and congrats on the quarter. Thank you. Good morning. Eric, maybe, maybe I'll start at a higher level. In the script, I think you mentioned that large customers in aggregate are still up. Said that that kind of implies a positive industry backdrop. Are you seeing or how are you thinking there's any change in that outlook? Some participants are noting more repair deferrals. Curious if from your purview, where you see a lot of customers, are you seeing anything changing in terms of sales trends or volume trends in the industry? So that's a fair question, and what I would say is that in general, we are seeing that kind of ongoing low single-digit growth within. I'm speaking specifically to Vehicle Control. Temperature Control obviously has a lot of movement due to the weather. But we're -- I think we're basically back to that low single digit, long-term trend that the industry has always seen as it relates to any deferred maintenance and so on. You know, a lot of our categories are not really maintenance related. They're hard failure, and so really, if your car needs our products, you tend to not be able to defer it for very well. So we don't necessarily see any impacts from that, which could theoretically be caused in other categories by economic trends. We're really looking at the addressable market being stable and strong. Understood. That's great. Maybe a couple on the Engineered Solutions segment. You know, results were really strong there, impressive profit growth. First, maybe how are you thinking about the fourth quarter? I know you have some light vehicle and domestic exposure. Is there any potential disruption from the ongoing UAW strike embedded in the guide? And then, Nathan, when we look at the margin performance, was there anything anomalous in there, or is this mid-teen segment EBITDA margin sustainable? So as it relates to what we're seeing in Engineered Solutions right now, and I think you're specifically asking about any light vehicle impact, it's a relatively small portion of our overall sales, certainly and e ven with Engineered Solutions, we service so many other end markets. We have really seen very nominal impact as a result of this strike, and now it appears that at least with Ford it's resolving itself, and so any impact really would have been minor and short term, so we don't really expect anything out of that. Yeah, good morning, Daniel. So on the margin for Engineered Solutions, I just point out, like we said before, that the customer base in this segment is very diverse, and we do expect to have some changes in margin quarter- to- quarter, just because of the diverse mix of customers in the business. And so, as I remarked before, really a lot of the improvement was driven by an improved customer mix versus last year. On a long-term basis, I would just point you to the nine-month numbers for the segment, which there shows a gross margin of 20.6% and probably closer to where the business settles out on a long-term basis. So, I think that we would still believe that Engineered Solutions versus the aftermarket is comparable on an adjusted EBITDA basis. Great. That's helpful. Then last one for me, Nathan, on the guide, on the EBITDA margin outlook. I think you maintained it at 9.5%. Obviously, Q3 was stronger than that. So can you maybe help us understand the outlook? Maybe what are the headwinds coming in the fourth quarter that we should be aware of as you thought about kind of keeping that guide? Yeah. Yeah, so, so just the headwinds that I pointed out in the remarks around some of the incremental costs around a new warehouse, as well as the, the FX that, at least for the Mexican peso, is still a little bit against us in the fourth quarter. You know, I think to your point, obviously, just EBITDA is a bit stronger than the guide, coming out of Q3. But, the other thing that will swing Q4 around a bit is the temp control business and the season as that comes to an end. The fourth quarter is always a lower profit quarter, anyway. So, that's what's inside the expectation. Great. I appreciate all the color and best of luck, guys. Thank you. We'll take our next question from the line of Bret Jordan with Jefferies. Please go ahead. Hey, guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Sure. Good morning. How are you guys thinking about inventory levels as we head into 2024? Are we pretty close back to optimal or, or maybe some more work to be done there? Are you referring to, inventory on our shelves or our inventory sitting on customer shelves? Yeah, I suppose both would be helpful. You bet. So, I'll speak to customer inventories, and Jim can speak to ours. What we're really seeing is very rational, stable inventory on our customers' shelves. You know, you're always gonna have a little bit of flexing quarter- to- quarter, period- to- period, but basically it shows that their inventory is really where they want it to be. And we work closely with them, so we have pretty good visibility into what their intentions are. So, nothing really to note on customer shelves. Yeah, hi, this is Jim Burke. We're very pleased with the inventory performance that we had in the recent quarter and really year- to- date. So we took significant working capital down out of the business. At this point, going forward, we start to build inventories in the Temperature Control end. So Vehicle Control will probably be about neutral. Maybe we'll get a little bit of a benefit there, but from this point forward, we start to build and get ready for next season there. But I'd say it should. You should look at relatively reasonable levels, no significant changes. Got it. That's helpful. And then as we look at cadence throughout the quarter, it sounds like momentum picked up towards the end after the colder spring. How have things progressed into Q4, and how much more tailwind are you guys expecting from the summer heat? Well, really, the summer season at this point is largely over. So I wouldn't read too much into what happens in the, you know, the few weeks of October. But yes, it was a strong summer, really throughout the third quarter, which, as we said, allowed us to recover from the slow start. Great. Very helpful. That's all for us. Thanks, guys. Thank you. And again, if you would like to ask a question, please press the star and one on your touch tone keypad. Our next question comes from the line of Scott Stember with ROTH MKM. Please go ahead. Good afternoon, guys, and congrats on the quarter. Thank you, Scott. Some industry players have been talking about potential price disinflation. Are you starting to see any of that? I mean, obviously, you guys have put through a lot of price increases to cover raws, but -- and factoring costs. But what's your view on the pricing environment right now? Yeah, we're really not seeing it in our categories, partly because, you know, they are not commodity driven, and so we've seen that, the overall costs have not come down. Our costs have not come down. So, we're not really seeing much. You've obviously talked to the distributors as to what their pricing strategies are, and you're hearing as you said, some different things. But we are really not, not seeing anything, and we believe in our categories as non-discretionary hard failure parts. They're not that price sensitive industry. Got it. And back to the UAW strike. You talked about Engineered S olutions, but in vehicle control, is there any potential for benefit in the aftermarket side? So that's also a great question, and, the short answer is no, we really have not seen any impact. One of the things that we have been reading about is really that they had anticipated this and had stocked up their parts distribution ahead of it, and they are not at zero. They are, as we're reading it, I'm not saying anything that's not public information, but they have continued a kind of partial staff to operate those[departments]. So no, it really has not had any impact, on our whole channel, really. Got it. And then, the guide for top line a little bit lower, is that really pertaining to Vehicle Control and the customer loss, or is there anything else? No, I think that's really it. The fourth quarter can be somewhat volatile, as you know, as, the Temp Control season is largely over and there could be adjustments. So we're just taking a slightly conservative view on it and also looking at where we are after nine months. So yeah, that, that's really what's behind that. And then lastly, the bankruptcy. I think last quarter you might have given what the impact to the Vehicle Control sales were. Do you have that for this quarter? Yeah. It's -- w e were able to provide some rough numbers prior to the pieces getting acquired because we're able to show a specific zero revenue type situation. Now that it's been acquired by other accounts and, it really just kind of gets lost in the mix as to what that impact is, because it's been distributed across several different other customers and all the different dynamics within their businesses. So, yes, we're at this point and really going forward as well, unable to really specify what that impact is, but we just know that there is some, some overall softness as they rationalize what they have. Got it. That's all from me. Thanks, guys. Thank you, Scott. And there appears to be no further questions at this time. I'll hand the call back over to the speakers for any closing remarks. Thank you. We wanna thank everyone for participating in our conference call today. We understand there's a lot of information presented, and we'll be happy to answer any follow-up questions you may have. Contact information is available on our press release or our corporate website, and we hope you have a great day. Thank you. Thank you, everyone. This concludes today's conference. Thank you for your participation, and you may now disconnect.