Standard Motor Products, Inc. Announces Fourth Quarter and Year End 2015 Results

Feb 26, 2016, 08:30 ET from Standard Motor Products, Inc.

NEW YORK, Feb. 26, 2016 /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, 2015.

Consolidated net sales for the fourth quarter of 2015 were $205 million, compared to consolidated net sales of $218.1 million during the comparable quarter in 2014. Earnings from continuing operations for the fourth quarter of 2015 were $5.8 million or 25 cents per diluted share, compared to $11.5 million or 50 cents per diluted share in the fourth quarter of 2014. 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 2015 were $8.1 million or 35 cents, compared to $11.4 million or 49 cents per diluted share in the fourth quarter of 2014.

Consolidated net sales for 2015 were $972 million, compared to consolidated net sales of $980.4 million in 2014.  Earnings from continuing operations for 2015 were $48.1 million or $2.08 per diluted share, compared to $52.9 million or $2.28 per diluted share in 2014.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the year ended December 31, 2015 and 2014 were $49.4 million or $2.13 per diluted share and $58.7 million or $2.52 per diluted share, respectively.

Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are obviously disappointed in our results, both for the fourth quarter and for the year. However, we believe that much of the shortfall, both in sales and profits, are the result of specific events that are essentially behind us.

"Net sales for the fourth quarter were down $13.1 million or 6%. As we have previously reported, the fourth quarter of 2014 included two large customer pipeline orders that were not repeated in 2015.

"Net sales for the full year were down approximately one percent. Excluding the unfavorable effect of foreign exchange rates, our sales would have been essentially flat for the year.

"More importantly, in 2015 our customers reported sales increases in our product lines greater than this—approximately 3% in Engine Management and 10% in Temperature Control. By contrast, our net sales in Temperature Control were up only about 2%, as our customers reduced inventories left over from the prior two years' weak selling seasons. Typically, these differences balance out over time.

"Looking to 2016, we forecast sales increases in the low single digits, in line with industry averages, though the sales increases for the Temperature Control line can vary either up or down as a result of the weather.

"Turning to operating profit, as previously announced, much of the decline for the year–approximately $10 million—resulted from three specific events. The three were: unfavorable manufacturing variances in Temperature Control that carried forward into 2015; the costs of upgrading and enhancing our line of rebuilt diesel fuel injectors, which we acquired in 2014; and an unfavorable non-cash change in prior service costs related to elimination of our postretirement medical program in 2016. In addition, our fourth quarter and full year results include a net $3.5 million charge to reduce our accounts receivable related to a customer bankruptcy filing in January 2016.

"We continue to take steps to reduce our cost structure. We announced on February 24 that we will be closing our facility in Grapevine, Texas and relocating the operations to existing facilities in Greenville, South Carolina and Reynosa, Mexico. At the same time, we will shift the balance of our coil operation from Greenville to our primary coil manufacturing location in Bialystok, Poland.

"We anticipate that the moves will take place over the next two years, and be completed by year end 2017. We estimate a one-time cost of $9 million related to employee severance, equipment moves, and capital expenditures. Once the moves are complete, we estimate annual pre-tax savings of $6-7 million. We also plan to sell the building in Grapevine, which has been currently appraised at approximately $5 million.

"These are the hardest decisions we ever have to make. We have been manufacturing in Grapevine for 35 years, and many of our employees have been with us for 30 years or more. They have been an excellent work force. Needless to say, we will take steps to assist them in every way possible, through severance payments, extended medical coverage, and working with them to find positions in other SMP locations. So, again, these are very difficult decisions to make, but we feel they are necessary, as we operate in an increasingly competitive global environment.

"Our cash flow remains strong. In 2015, we generated cash from operations of $65 million. In keeping with our strategy of returning cash to shareholders, we recently announced an increase in our quarterly dividend from 15 cents to 17 cents. In January 2016, we completed our $20 million share buyback program implemented in 2015, representing roughly 562,000 shares repurchased.

"In conclusion, while we are disappointed in our results for the year, we remain optimistic about the future. Our one-time issues are behind us. Industry demographics are healthy—the average age of vehicles continues to rise, gas prices continue to fall, and miles driven are up. Our customers report solid sales increases in our lines. And we continue to take steps to grow our sales, reduce costs, and improve profitability going forward. We look forward to 2016 and beyond."

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Friday, February 26, 2016.  The dial-in number is 800-862-9098 (domestic) or 785-424-1051 (international). The playback number is 800-695-0671 (domestic) or 402-220-1397 (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,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

NET SALES

$       204,967

$       218,054

$       971,975

$       980,392

COST OF SALES

142,181

150,960

690,987

690,762

GROSS PROFIT

62,786

67,094

280,988

289,630

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

53,446

48,273

206,287

193,525

LITIGATION CHARGE

-

-

-

10,650

RESTRUCTURING AND INTEGRATION (INCOME) EXPENSES

(85)

128

(134)

1,197

OTHER INCOME , NET

251

279

1,025

1,080

OPERATING INCOME 

9,676

18,972

75,860

85,338

OTHER NON-OPERATING INCOME (EXPENSE), NET

(384)

(908)

(220)

(1,969)

INTEREST EXPENSE

299

411

1,537

1,616

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

8,993

17,653

74,103

81,753

PROVISION FOR INCOME TAXES

3,214

6,136

25,983

28,854

EARNINGS FROM CONTINUING OPERATIONS

5,779

11,517

48,120

52,899

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(553)

(419)

(2,102)

(9,870)

NET EARNINGS 

$           5,226

$         11,098

$         46,018

$         43,029

NET EARNINGS PER COMMON SHARE:

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$             0.26

$             0.50

$             2.11

$             2.31

   DISCONTINUED OPERATION

(0.03)

(0.02)

(0.09)

(0.43)

   NET EARNINGS PER COMMON SHARE - BASIC

$             0.23

$             0.48

$             2.02

$             1.88

   DILUTED EARNINGS FROM CONTINUING OPERATIONS

$             0.25

$             0.50

$             2.08

$             2.28

   DISCONTINUED OPERATION

(0.02)

(0.02)

(0.09)

(0.43)

   NET EARNINGS PER COMMON SHARE - DILUTED

$             0.23

$             0.48

$             1.99

$             1.85

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,651,279

22,892,645

22,811,862

22,899,516

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,001,238

23,256,486

23,142,394

23,239,925

 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

THREE MONTHS ENDED

TWELVE MONTHS ENDED

DECEMBER 31,

DECEMBER 31,

2015

2014

2015

2014

(unaudited)

(unaudited)

Revenues

Engine Management

$         167,579

$         175,875

$         698,021

$         709,263

Temperature Control

36,046

39,742

264,478

259,065

All Other

1,342

2,437

9,476

12,064

$         204,967

$         218,054

$         971,975

$         980,392

Gross Margin

Engine Management

$           52,794

31.5%

$           56,001

31.8%

$         212,021

30.4%

$         220,145

31.0%

Temperature Control

7,539

20.9%

7,403

18.6%

57,977

21.9%

55,838

21.6%

All Other

2,453

3,690

10,990

13,647

$           62,786

30.6%

$           67,094

30.8%

$         280,988

28.9%

$         289,630

29.5%

Selling, General & Administrative

Engine Management

$           30,349

18.1%

$           29,474

16.8%

$         121,404

17.4%

$         115,330

16.3%

Temperature Control

11,159

31.0%

10,817

27.2%

50,780

19.2%

49,174

19.0%

All Other

8,424

7,982

30,589

29,021

$           49,932

24.4%

$           48,273

22.1%

$         202,773

20.9%

$         193,525

19.7%

Customer Bankruptcy Charge

3,514

1.7%

-

0.0%

3,514

0.4%

-

0.0%

$           53,446

26.1%

$           48,273

22.1%

$         206,287

21.2%

$         193,525

19.7%

Operating Income

Engine Management

$           22,445

13.4%

$           26,527

15.1%

$           90,617

13.0%

$         104,815

14.8%

Temperature Control

(3,620)

-10.0%

(3,414)

-8.6%

7,197

2.7%

6,664

2.6%

All Other

(5,971)

(4,292)

(19,599)

(15,374)

12,854

6.3%

18,821

8.6%

78,215

8.0%

96,105

9.8%

Litigation Charge

-

0.0%

-

0.0%

-

0.0%

(10,650)

-1.1%

Restructuring & Integration

85

0.0%

(128)

-0.1%

134

0.0%

(1,197)

-0.1%

Customer Bankruptcy Charge

(3,514)

-1.7%

-

0.0%

(3,514)

-0.4%

-

0.0%

Other Income, Net

251

0.1%

279

0.1%

1,025

0.1%

1,080

0.1%

$             9,676

4.7%

$           18,972

8.7%

$           75,860

7.8%

$           85,338

8.7%

 

 

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,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$             5,779

$           11,517

$           48,120

$           52,899

LITIGATION CHARGE (NET OF TAX)

-

-

-

6,390

RESTRUCTURING AND INTEGRATION (INCOME) EXPENSES (NET OF TAX)

(51)

76

(81)

718

REVERSAL OF LT TAX LIABILITY

-

-

-

(350)

CUSTOMER BANKRUPTCY CHARGE (NET OF TAX)

2,108

-

2,108

-

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

-

-

(571)

(361)

DEFERRED FINANCING FEE WRITE-OFF (NET OF TAX)

464

-

464

-

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(157)

(157)

(629)

(629)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$             8,143

$           11,436

$           49,411

$           58,667

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$               0.25

$               0.50

$               2.08

$               2.28

LITIGATION CHARGE (NET OF TAX)

-

-

-

0.28

RESTRUCTURING AND INTEGRATION (INCOME) EXPENSES (NET OF TAX)

-

-

-

0.03

REVERSAL OF LT TAX LIABILITY

-

-

-

(0.02)

CUSTOMER BANKRUPTCY CHARGE (NET OF TAX)

0.09

-

0.09

-

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

-

-

(0.03)

(0.02)

DEFERRED FINANCING FEE WRITE-OFF (NET OF TAX)

0.02

-

0.02

-

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

$               0.35

$               0.49

$               2.13

$               2.52

OPERATING INCOME

GAAP OPERATING INCOME

$             9,676

$           18,972

$           75,860

$           85,338

LITIGATION CHARGE

-

-

-

10,650

RESTRUCTURING AND INTEGRATION EXPENSES

(85)

128

(134)

1,197

CUSTOMER BANKRUPTCY CHARGE

3,514

-

3,514

-

OTHER INCOME , NET

(251)

(279)

(1,025)

(1,080)

NON-GAAP OPERATING INCOME

$           12,854

$           18,821

$           78,215

$           96,105

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS, DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS, AND OPERATING INCOME, EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, 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,

2015

2014

(Unaudited)

ASSETS

CASH

$            18,800

$            13,728

ACCOUNTS RECEIVABLE, GROSS

128,099

132,893

ALLOWANCE FOR DOUBTFUL ACCOUNTS

4,246

6,369

ACCOUNTS RECEIVABLE, NET

123,853

126,524

INVENTORIES

285,793

278,051

OTHER CURRENT ASSETS

51,294

47,730

TOTAL CURRENT ASSETS

479,740

466,033

PROPERTY, PLANT AND EQUIPMENT, NET

68,882

64,611

GOODWILL AND OTHER INTANGIBLES, NET

84,267

89,377

OTHER ASSETS

48,175

53,530

TOTAL ASSETS

$          681,064

$          673,551

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE

$            47,427

$            56,558

CURRENT PORTION OF LONG TERM DEBT

16

175

ACCOUNTS PAYABLE

72,711

70,674

ACCRUED CUSTOMER RETURNS

38,812

30,621

OTHER CURRENT LIABILITIES

84,950

92,801

TOTAL CURRENT LIABILITIES

243,916

250,829

LONG-TERM DEBT

62

83

ACCRUED ASBESTOS LIABILITIES

32,185

33,462

OTHER LIABILITIES

12,922

15,024

 TOTAL LIABILITIES 

289,085

299,398

 TOTAL STOCKHOLDERS' EQUITY 

391,979

374,153

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$          681,064

$          673,551

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

TWELVE MONTHS ENDED

DECEMBER 31,

2015

2014

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS 

$        46,018

$        43,029

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION

17,637

17,295

OTHER

10,874

13,148

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE

(1,996)

1,755

INVENTORY 

(12,503)

(6,712)

ACCOUNTS PAYABLE

1,882

(4,329)

OTHER

3,259

(17,199)

NET CASH PROVIDED BY OPERATING ACTIVTIES

65,171

46,987

CASH FLOWS FROM INVESTING ACTIVITIES

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

-

(37,726)

CAPITAL EXPENDITURES

(18,047)

(13,904)

OTHER INVESTING ACTIVITIES

36

430

NET CASH USED IN INVESTING ACTIVITIES 

(18,011)

(51,200)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT

(9,301)

35,334

PURCHASE OF TREASURY STOCK

(19,623)

(10,000)

DIVIDENDS PAID

(13,697)

(11,905)

OTHER FINANCING ACTIVITIES

1,466

1,887

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

(41,155)

15,316

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(933)

(2,934)

NET INCREASE IN CASH AND CASH EQUIVALENTS

5,072

8,169

CASH AND CASH EQUIVALENTS at beginning of year

13,728

5,559

CASH AND CASH EQUIVALENTS at end of year

$        18,800

$        13,728

SOURCE Standard Motor Products, Inc.