Standard Motor Products, Inc. Announces First Quarter 2014 Results and a Quarterly Dividend

01 May, 2014, 08:30 ET from Standard Motor Products, Inc.

NEW YORK, May 1, 2014 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months ending March 31, 2014.

Consolidated net sales for the first quarter of 2014 were $232.8 million, compared to consolidated net sales of $230.7 million during the comparable quarter in 2013.  Earnings from continuing operations for the first quarter of 2014 were $12.4 million or 53 cents per diluted share, compared to $9.6 million or 41 cents per diluted share in the first quarter of 2013. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the first quarter of 2014 were $12.4 million or 53 cents per diluted share, compared to $9.7 million or 42 cents per diluted share in the first quarter of 2013.

Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are pleased to report continued operational improvements which resulted in an increase in operating profit of 27% from $16 million to $20.4 million and in operational diluted earnings per share from continuing operations from 42 cents to 53 cents.

"The earnings growth resulted primarily from an increase in gross margin from 28.5% to 29.2% combined with a reduction in SG&A expense. In gross margin, we continue to reap the benefits of our initiatives of recent years – moving production to low cost areas, increased manufacturing, savings in purchasing, and successfully integrating our prior acquisitions. The savings in SG&A resulted from continued streamlining and cost reductions in our distribution centers, as well as cost control in other areas.

"Engine Management sales were up 2.2% from the prior year. This is on the low end of our publicly stated forecast for industry growth. However, it comes on the heels of a 14% increase in the fourth quarter of 2013, when certain customers moved pipeline orders forward into the fourth quarter. We believe industry demographics remain healthy, and we continue to forecast organic growth in the low to mid-single digit range.

"Temperature Control sales were down approximately 2% from the prior year. However, the first quarter for Temperature Control essentially represents pre-season stocking orders. 2013, you may recall, was a cool summer and a poor air conditioning season, and this, we believe, was reflected in slightly reduced pre-season orders.

"On April 21st we announced two transactions. First, a $14 million investment to create a 50/50 joint venture with Gwo Yng Enterprises, a China-based manufacturer of air conditioning accumulators, filter driers, hose assemblies, and switches. This investment will provide us with a low cost source of high quality temperature control products. It will also provide an entree into the rapidly growing China market.

"At the same time we acquired certain assets and liabilities of Annex Manufacturing, a distributor of a wide range of temperature control products, for $11.5 million. Annex's 2013 sales were roughly $22 million, and our Temperature Control division accounted for roughly 40% of the volume. After a transition period, the Annex operations will be transferred to our facility in Lewisville, Texas.

"As we said in the prior press release, we anticipate that, exclusive of one time transition costs, both of these transactions will be accretive to earnings in 2014.

"Earlier in the year we announced the acquisition of certain assets and liabilities of Pensacola Fuel Injection, a remanufacturer of diesel fuel injectors and other related products – a rapidly growing product line. We are in the process of relocating this operation to our facility in Grapevine, Texas.

"We are confident that all three of these transactions will make us a stronger company in 2014 and the years ahead."

The Board of Directors has approved payment of a quarterly dividend of thirteen cents per share on the common stock outstanding. The dividend will be paid on June 2, 2014 to stockholders of record on May 15, 2014.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, May 1, 2014.  The dial in number is 866-952-7524 (domestic) or 785-424-1829 (international). The playback number is 800-757-4768 (domestic) or 402-220-7227 (international). The conference ID # is STANDARD.

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Standard Motor Products cautions investors that any forward-looking statements made by the company, including those that may be made in this press release, are based on management's expectations at the time they are made, but they are subject to risks and uncertainties that may cause actual results, events or performance to differ materially from those contemplated by such forward-looking statements. Among the factors that could cause actual results, events or performance to differ materially from those risks and uncertainties discussed in this press release are those detailed from time-to-time in prior press releases and in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q.  By making these forward-looking statements, Standard Motor Products undertakes no obligation or intention to update these statements after the date of this release.

 

STANDARD MOTOR PRODUCTS, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

THREE MONTHS ENDED

MARCH 31,

2014

2013

(Unaudited)

NET SALES

$    232,752

$    230,708

COST OF SALES

164,842

164,880

GROSS PROFIT

67,910

65,828

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

47,594

49,610

RESTRUCTURING AND INTEGRATION EXPENSES

171

418

OTHER INCOME, NET

260

230

OPERATING INCOME 

20,405

16,030

OTHER NON-OPERATING EXPENSE, NET

(413)

(196)

INTEREST EXPENSE

308

572

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

19,684

15,262

PROVISION FOR INCOME TAXES

7,277

5,696

EARNINGS FROM CONTINUING OPERATIONS

12,407

9,566

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(682)

(392)

NET EARNINGS 

$      11,725

$         9,174

NET EARNINGS PER COMMON SHARE:

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$           0.54

$           0.42

   DISCONTINUED OPERATION

(0.03)

(0.02)

   NET EARNINGS PER COMMON SHARE - BASIC

$           0.51

$           0.40

   DILUTED EARNINGS FROM CONTINUING OPERATIONS

$           0.53

$           0.41

   DISCONTINUED OPERATION

(0.03)

(0.01)

   NET EARNINGS PER COMMON SHARE - DILUTED

$           0.50

$           0.40

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,947,241

22,853,494

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,224,698

23,095,490

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

(In thousands)

THREE MONTHS ENDED

March 31,

2014

2013

(Unaudited)

Revenues

Engine Management

$   179,294

$   175,509

Temperature Control

51,485

52,728

All Other

1,973

2,471

$   232,752

$   230,708

Gross Margin

Engine Management

$     53,195

29.7%

$     51,714

29.5%

Temperature Control

11,885

23.1%

10,986

20.8%

All Other

2,830

3,128

$     67,910

29.2%

$     65,828

28.5%

Selling, General & Administrative

Engine Management

$     28,651

16.0%

$     30,561

17.4%

Temperature Control

11,272

21.9%

11,359

21.5%

All Other

7,671

7,690

$     47,594

20.4%

$     49,610

21.5%

Operating Profit

Engine Management

$     24,544

13.7%

$     21,153

12.1%

Temperature Control

613

1.2%

(373)

-0.7%

All Other

(4,841)

(4,562)

20,316

8.7%

16,218

7.0%

Restructuring & Integration

(171)

-0.1%

(418)

-0.2%

Other Income, Net

260

0.1%

230

0.1%

$     20,405

8.8%

$     16,030

6.9%

 

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

THREE MONTHS ENDED

March 31,

2014

2013

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$12,407

$9,566

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

103

251

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(157)

(157)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$12,353

$9,660

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$    0.53

$  0.41

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

-

0.01

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

-

-

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$    0.53

$  0.42

 

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS  AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS, WHICH ARE NON-GAAP MEASUREMENTS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Balance Sheets

(In thousands)

March 31,

December 31,

2014

2013

(Unaudited)

ASSETS

CASH

$     4,423

$      5,559

ACCOUNTS RECEIVABLE, GROSS

132,990

132,170

ALLOWANCE FOR DOUBTFUL ACCOUNTS

7,089

6,969

ACCOUNTS RECEIVABLE, NET

125,901

125,201

INVENTORIES

284,468

269,447

OTHER CURRENT ASSETS

45,269

45,870

TOTAL CURRENT ASSETS

460,061

446,077

PROPERTY, PLANT AND EQUIPMENT, NET

63,955

63,646

GOODWILL AND OTHER INTANGIBLES, NET

84,183

72,866

OTHER ASSETS

32,722

32,934

TOTAL ASSETS

$ 640,921

$ 615,523

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE

$   33,023

$   21,406

CURRENT PORTION OF LONG TERM DEBT

27

59

ACCOUNTS PAYABLE

81,725

71,469

ACCRUED CUSTOMER RETURNS

37,803

31,464

OTHER CURRENT LIABILITIES

87,191

95,918

TOTAL CURRENT LIABILITIES

239,769

220,316

LONG-TERM DEBT

16

16

ACCRUED ASBESTOS LIABILITIES

23,643

23,919

OTHER LIABILITIES

21,662

21,840

 TOTAL LIABILITIES 

285,090

266,091

 TOTAL STOCKHOLDERS' EQUITY 

355,831

349,432

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$ 640,921

$ 615,523

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

THREE MONTHS ENDED

MARCH 31,

2014

2013

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS 

$ 11,725

$  9,174

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY (USED IN) OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION

4,084

4,273

OTHER

2,366

3,970

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE

(852)

(29,051)

INVENTORY 

(12,715)

(26,726)

ACCOUNTS PAYABLE

9,310

14,270

OTHER

(4,686)

(2,739)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

9,232

(26,829)

CASH FLOWS FROM INVESTING ACTIVITIES

CAPITAL EXPENDITURES

(2,763)

(2,581)

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

(12,225)

(12,760)

OTHER INVESTING ACTIVITIES

-

(596)

NET CASH USED IN INVESTING ACTIVITIES 

(14,988)

(15,937)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT

11,584

35,069

PURCHASE OF TREASURY STOCK

(4,526)

(602)

DIVIDENDS PAID

(2,984)

(2,510)

OTHER FINANCING ACTIVITIES

1,049

8,093

NET CASH PROVIDED BY FINANCING ACTIVITIES

5,123

40,050

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(503)

(636)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(1,136)

(3,352)

CASH AND CASH EQUIVALENTS at beginning of period

5,559

13,074

CASH AND CASH EQUIVALENTS at end of period

$   4,423

$  9,722

 

 

 

SOURCE Standard Motor Products, Inc.