Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Could you talk about how you see Nissan's contribution to your guided growth for 2025, and are there synergies in the North American business from adding that product to the portfolio? A: Nathan Iles, CFO, explained that while cost synergies from product cost reductions are expected, revenue synergies will take longer to materialize. Eric Sills, CEO, added that there is a timing lag before these synergies impact the P&L due to vendor lead times.
Q: Can you discuss customer inventory levels and whether there is any purchasing ahead of potential tariffs? A: Eric Sills noted that while there was strong POS in the temperature control segment, it was not as high as the 30% growth in sell-in, indicating inventory rebuilding. He mentioned that purchasing remains rational, with no significant pull-forward due to potential tariffs.
Q: How do you see inflation, excluding tariffs, impacting your business in 2025 compared to 2024? A: Nathan Iles stated that the inflationary environment is largely back to normal, excluding tariffs, and they expect to offset inflation with price adjustments. Eric Sills added that a low single-digit inflation rate is reasonable.
Q: Could you remind us of your exposure to tariffs across different regions? A: Eric Sills explained that as a global company, SMP has manufacturing and supply bases across multiple continents, including North America, Europe, and Asia. While there is exposure to tariffs, it is not overly concentrated in any specific area, and the company plans to pass through any tariff costs.
Q: With the addition of Nissan's, how are the segments of air conditioning, engine cooling, and energy efficiency performing? A: Eric Sills detailed that engine cooling is the largest segment, with radiators being a significant product. Air conditioning is the second largest, similar to SMP's temperature control division. The engine efficiency segment, which includes newer products like turbos and EGR valves, is performing well and gaining scale.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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