Standard Motor Products, Inc. Announces Fourth Quarter and Year End 2012 Results

Mar 04, 2013, 08:30 ET from Standard Motor Products, Inc.

NEW YORK, March 4, 2013 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and for the year ended December 31, 2012.

Consolidated net sales for the fourth quarter of 2012 were $192.4 million, compared to consolidated net sales of $174.2 million during the comparable quarter in 2011. Earnings from continuing operations for the fourth quarter of 2012 were $6.3 million or 27 cents per diluted share, compared to $29.5 million or $1.29 per diluted share in the fourth quarter of 2011. Included in our fourth quarter 2011 (and year-end) results was a non-recurring, non-cash benefit in our tax provision of $24.3 million, primarily related to the reversal of a significant portion of our U.S. deferred tax valuation allowance and other tax adjustments. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the fourth quarter of 2012 were $6.5 million or 28 cents, compared to $3.9 million or 17 cents per diluted share in the fourth quarter of 2011.

Consolidated net sales for 2012 were $948.9 million, compared to consolidated net sales of $874.6 million in 2011.  Earnings from continuing operations for 2012 were $43 million or $1.86 per diluted share, compared to $64.3 million or $2.78 per diluted share in 2011.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for 2012 and 2011 were $42.3 million or $1.83 per diluted share and $36.1 million or $1.57 per diluted share, respectively.

Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Office, stated, "We are very pleased with our 2012 results. For the second year in a row we set records for sales, profit and cash flow. Further, we have taken steps which we believe will strengthen the Company in the years ahead.

"Sales were 10.4% ahead of 2011 for the fourth quarter and 8.5% ahead for the year. While the bulk of the increase came from our recent acquisitions, our major customers continue to report low single digit sales growth in our core product lines.

"Our gross margin increased more than a full point for the year, from 26.2% to 27.4%. This is the result of our continuing efforts to increase in-house manufacturing, expand production in low cost countries, and reduce purchase costs.

"We are pleased with our progress integrating our recent acquisitions.  We acquired Forecast Trading Corporation, a leader in economy line Engine Management products, towards the end of 2011. We have maintained the customer base, and achieved savings through consolidating our product lines and eliminating duplication in SG&A.

"Our acquisition of Compressor Works has been well received by our customers. By the end of the first quarter of 2013, we will have relocated their manufacturing to our existing compressor plant in Reynosa, Mexico, and their shipping to our distribution center in Lewisville, Texas. We anticipate margin improvements from these consolidations.

"In both of these acquisitions, the key employees have agreed to stay with the Company. We are confident they will make important contributions in the years ahead.

"Since the beginning of 2013 we have completed two additional transactions. In January we acquired a minority interest in Orange Electronic Co., Ltd., a manufacturer of Tire Pressure Monitoring System (TPMS) sensors, located in Taiwan. An industry market research organization predicts that this product line will triple over the next five years. Orange has been our primary supplier for TPMS sensors. We are pleased that we will now have an enhanced relationship with Orange, and we look forward to working together with them in this increasingly important product category.

"In February we acquired the Original Equipment business from Standard Motor Products Holdings Ltd., our former affiliate in the U.K. The business at present is relatively small, about $8 million annually, but we believe we will be in a position to grow this business. The bulk of the products are designed and manufactured in our factory in Bialystok, Poland, which offers both high technical skills and low operating costs. We will now have a more direct relationship with customers and prospects.

"Our cash flow remains strong. We generated roughly $94 million cash from operations in 2012 to fund our acquisitions, share buybacks and dividends. Net of these uses of cash, we also reduced total debt from $73 million at December 2011 to $41 million at December 2012.  As a result of our cash flow and our continued increase in profitability, we were pleased to raise the quarterly dividend from 9 cents to 11 cents, effective March 1. We are also initiating a new share buyback program for 2013 in the amount of $6 million. This is in addition to our outstanding authorization carry forward of $864 thousand from 2012.

"In summary, we are pleased to invest for the future while at the same time reward shareholders with increasing dividends and share repurchase programs."

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Monday, March 4, 2013.  The dial-in number is 866-952-1906 (domestic) or 785-424-1825 (international). The playback number is 800-283-4595 (domestic) or 402-220-0873 (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

TWELVE MONTHS ENDED

DECEMBER 31,

DECEMBER 31,

2012

2011

2012

2011

(Unaudited)

(Unaudited)

NET SALES

$       192,355

$       174,170

$       948,916

$       874,625

COST OF SALES

134,388

125,836

689,247

645,478

GROSS PROFIT

57,967

48,334

259,669

229,147

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

45,173

41,509

187,495

163,845

RESTRUCTURING AND INTEGRATION EXPENSES

658

601

1,437

1,344

OTHER INCOME, NET

240

152

694

941

OPERATING INCOME 

12,376

6,376

71,431

64,899

OTHER NON-OPERATING INCOME (EXPENSE), NET

(630)

2,697

(696)

3,370

INTEREST EXPENSE

531

662

2,788

3,821

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

11,215

8,411

67,947

64,448

PROVISION FOR (BENEFIT FROM) INCOME TAXES

4,905

(21,112)

24,978

121

EARNINGS FROM CONTINUING OPERATIONS

6,310

29,523

42,969

64,327

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(395)

(212)

(1,616)

(1,926)

NET EARNINGS 

$           5,915

$         29,311

$         41,353

$         62,401

NET EARNINGS PER COMMON SHARE:

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$             0.28

$             1.30

$             1.88

$             2.82

   DISCONTINUED OPERATION

(0.02)

(0.01)

(0.07)

(0.08)

   NET EARNINGS PER COMMON SHARE - BASIC

$             0.26

$             1.29

$             1.81

$             2.74

   DILUTED EARNINGS FROM CONTINUING OPERATIONS

$             0.27

$             1.29

$             1.86

$             2.78

   DISCONTINUED OPERATION

(0.01)

(0.01)

(0.07)

(0.08)

   NET EARNINGS PER COMMON SHARE - DILUTED

$             0.26

$             1.28

$             1.79

$             2.70

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,817,551

22,740,466

22,812,077

22,794,606

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,075,586

22,973,859

23,050,340

23,228,345

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

(In thousands)

THREE MONTHS ENDED

TWELVE MONTHS ENDED

December 31,

December 31,

2012

2011

2012

2011

(unaudited)

(unaudited)

Revenues

Engine Management

$       153,657

$       139,368

$       665,105

$       628,673

Temperature Control

35,248

31,781

268,804

233,723

All Other

3,450

3,021

15,007

12,229

$         192,355

$         174,170

$         948,916

$         874,625

Gross Margin

Engine Management

$         47,221

30.7%

$         37,080

26.6%

$       187,776

28.2%

$       160,930

25.6%

Temperature Control

6,979

19.8%

7,579

23.8%

58,583

21.8%

54,848

23.5%

All Other

3,767

3,675

13,310

13,369

$           57,967

30.1%

$           48,334

27.8%

$         259,669

27.4%

$         229,147

26.2%

Selling, General & Administrative

Engine Management

$         28,956

18.8%

$         26,974

19.4%

$         116,157

17.5%

$         103,457

16.5%

Temperature Control

8,832

25.1%

7,588

23.9%

43,537

16.2%

36,910

15.8%

All Other

7,385

6,947

27,801

23,478

$           45,173

23.5%

$           41,509

23.8%

$         187,495

19.8%

$         163,845

18.7%

Operating Profit

Engine Management

$         18,265

11.9%

$         10,106

7.3%

$           71,619

10.8%

$           57,473

9.1%

Temperature Control

(1,853)

-5.3%

(9)

0.0%

15,046

5.6%

17,938

7.7%

All Other

(3,618)

(3,272)

(14,491)

(10,109)

12,794

6.7%

6,825

3.9%

72,174

7.6%

65,302

7.5%

Restructuring & Integration

(658)

-0.3%

(601)

-0.3%

(1,437)

-0.2%

(1,344)

-0.2%

Other Income, Net

240

0.1%

152

0.1%

694

0.1%

941

0.1%

$           12,376

6.4%

$             6,376

3.7%

$           71,431

7.5%

$           64,899

7.4%

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

THREE MONTHS ENDED

TWELVE MONTHS ENDED

December 31,

December 31,

2012

2011

2012

2011

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$            6,310

$          29,523

$          42,969

$          64,327

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

395

361

862

806

GAIN FROM SALE OF JOINT VENTURE (NET OF TAX)

-

(1,485)

-

(1,485)

POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX)

-

-

-

(2,188)

NONRECURRING INCOME TAX ADJUSTMENT'S INCLUDING VALUATION ALLOWANCE REVERSAL

-

(24,301)

-

(24,755)

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

-

-

(774)

-

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(157)

(157)

(772)

(629)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$            6,548

$            3,941

$          42,285

$          36,076

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$              0.27

$              1.29

$              1.86

$              2.78

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

0.02

0.02

0.03

0.04

GAIN FROM SALE OF JOINT VENTURE (NET OF TAX)

-

(0.07)

-

(0.06)

POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX)

-

-

-

(0.09)

NONRECURRING INCOME TAX ADJUSTMENT'S INCLUDING VALUATION ALLOWANCE REVERSAL

-

(1.06)

-

(1.07)

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

-

-

(0.03)

-

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(0.01)

(0.01)

(0.03)

(0.03)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$              0.28

$              0.17

$              1.83

$              1.57

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)

December  31,

December 31,

2012

2011

(Unaudited)

ASSETS

CASH

$            13,074

$            10,871

ACCOUNTS RECEIVABLE, GROSS

104,689

110,824

ALLOWANCE FOR DOUBTFUL ACCOUNTS

6,124

6,709

ACCOUNTS RECEIVABLE, NET

98,565

104,115

INVENTORIES

267,468

248,097

OTHER CURRENT ASSETS

39,446

37,904

TOTAL CURRENT ASSETS

418,553

400,987

PROPERTY, PLANT AND EQUIPMENT, NET

64,422

64,039

GOODWILL AND OTHER INTANGIBLES, NET

72,373

57,842

OTHER ASSETS

21,246

27,854

TOTAL ASSETS

$          576,594

$          550,722

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE

$            40,453

$            73,000

CURRENT PORTION OF LONG TERM DEBT

120

109

ACCOUNTS PAYABLE

62,283

50,880

ACCRUED CUSTOMER RETURNS

29,033

25,074

OTHER CURRENT LIABILITIES

90,283

79,818

TOTAL CURRENT LIABILITIES

222,172

228,881

LONG-TERM DEBT

75

190

ACCRUED ASBESTOS LIABILITIES

25,110

26,141

OTHER LIABILITIES

21,650

23,557

 TOTAL LIABILITIES 

269,007

278,769

 TOTAL STOCKHOLDERS' EQUITY 

307,587

271,953

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$          576,594

$          550,722

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

TWELVE MONTHS ENDED

DECEMBER 31,

2012

2011

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS 

$        41,353

$        62,401

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION

16,466

14,145

TAX VALUATION ALLOWANCE

(669)

(21,625)

OTHER

16,205

18,093

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE

15,393

9,595

INVENTORY 

(1,556)

2,500

ACCOUNTS PAYABLE

3,287

(3,105)

OTHER

3,081

(6,697)

NET CASH PROVIDED BY OPERATING ACTIVITIES

93,560

75,307

CASH FLOWS FROM INVESTING ACTIVITIES

CAPITAL EXPENDITURES

(11,811)

(11,037)

ACQUISITIONS OF BUSINESSES AND ASSETS

(38,594)

(70,532)

OTHER INVESTING ACTIVITIES

493

5,679

NET CASH USED IN INVESTING ACTIVITIES 

(49,912)

(75,890)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT

(32,652)

7,703

PURCHASE OF TREASURY STOCK

(4,999)

(4,136)

DIVIDENDS PAID

(8,215)

(6,381)

OTHER FINANCING ACTIVITIES

3,079

3,380

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

(42,787)

566

EFFECT OF EXCHANGE RATE CHANGES ON CASH

1,342

(1,247)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

2,203

(1,264)

CASH AND CASH EQUIVALENTS at beginning of year

10,871

12,135

CASH AND CASH EQUIVALENTS at end of year

$        13,074

$        10,871

 

 

 

 

SOURCE Standard Motor Products, Inc.