Standard Motor Products, Inc. Announces Second Quarter 2011 Results and a Quarterly Dividend

27 Jul, 2011, 08:30 ET from Standard Motor Products, Inc.

NEW YORK, July 27, 2011 /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 six months ended June 30, 2011.

Consolidated net sales for the second quarter of 2011 were $244 million, compared to consolidated net sales of $231 million during the comparable quarter in 2010.  Earnings from continuing operations for the second quarter of 2011 were $13.7 million or 59 cents per diluted share, compared to $8.1 million or 35 cents per diluted share in the second quarter of 2010. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the second quarter of 2011 were $11.4 million or 49 cents per diluted share, compared to $8.7 million or 38 cents per diluted share in the second quarter of 2010.

Consolidated net sales for the six month period ended June 30, 2011 were $464.2 million, compared to consolidated net sales of $410.4 million during the comparable period in 2010.  Earnings from continuing operations for the six month period ended June 30, 2011 were $20.7 million or 90 cents per diluted share, compared to $10.9 million or 48 cents per diluted share in the comparable period of 2010.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the six months ended 2011 and 2010 were $18.5 million or 80 cents per diluted share and $11.8 million or 52 cents per diluted share, respectively.

Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "As we forecasted during our first quarter earnings call, our rate of sales increase moderated during the second quarter. Our first quarter increase of 23% benefited from a pre-season ordering program in Temperature Control, plus some buildup in customer inventories in other areas. As these inventories were absorbed, our sales increase in the second quarter moderated to 5.6%, leaving us with a still healthy 13% sales increase for the six month period.

"We continue to reap the benefit of our cost reduction efforts of recent years—moving to low cost manufacturing sites, purchasing product from low cost areas, reducing overhead, and manufacturing products we formerly purchased. As a result, our earnings per share, excluding one time gains, increased to 49 cents for the quarter and 80 cents for the six month period, substantially ahead of the comparable periods last year.

"Cash flow remains strong. Despite the acquisition of the BLD Engine Control business ($27 million), and the redemption of the remaining convertible debentures ($12.3 million), both of which occurred in the second quarter, our bank borrowings were $2 million below the comparable period of 2010.

"Finally, during the second quarter, we announced that we will be terminating our retiree medical benefits program at the end of 2016. This was a difficult and painful decision, but we felt we had no choice as these costs continue to grow.

"The approximately $23 million postretirement liability at December 2010 has been reduced to approximately $7 million at June 2011 and by 2016 will be reduced below $1 million. Our 2011 second quarter and year-to-date results reflect a one-time curtailment gain of $3.6 million. Excluding the curtailment gain, our postretirement expense is forecasted to be a benefit of $3.7 million in 2011, decreasing to approximately a $1-2 million benefit per year through 2014. In 2015 and 2016 the amortized postretirement expense is forecast to be unfavorable $1-2 million and then be virtually eliminated."

The Board of Directors has approved payment of a quarterly dividend of seven cents per share on the common stock outstanding. The dividend will be paid on September 1, 2011 to stockholders of record on August 15, 2011.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, July 27, 2011.  The dial in number is 800-895-1085 (domestic) or 785-424-1055 (international). The playback number is 800-283-8217 (domestic) or 402-220-0868 (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

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

NET SALES

$    244,005

$    231,048

$    464,235

$    410,399

COST OF SALES

180,832

172,659

347,910

308,192

GROSS PROFIT

63,173

58,389

116,325

102,207

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

40,016

41,803

80,656

78,468

RESTRUCTURING AND INTEGRATION EXPENSES

125

1,289

468

2,042

OTHER INCOME, NET

262

136

531

516

OPERATING INCOME

23,294

15,433

35,732

22,213

OTHER NON-OPERATING INCOME, NET

176

162

443

180

INTEREST EXPENSE

1,045

2,002

2,402

3,866

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

22,425

13,593

33,773

18,527

PROVISION FOR INCOME TAXES

8,732

5,532

13,069

7,599

EARNINGS FROM CONTINUING OPERATIONS

13,693

8,061

20,704

10,928

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(355)

(372)

(659)

(868)

NET EARNINGS

$      13,338

$        7,689

$      20,045

$      10,060

NET EARNINGS PER COMMON SHARE:

  BASIC EARNINGS FROM CONTINUING OPERATIONS

$          0.60

$          0.36

$          0.91

$          0.49

  DISCONTINUED OPERATION

(0.02)

(0.02)

(0.03)

(0.04)

  NET EARNINGS PER COMMON SHARE - BASIC

$          0.58

$          0.34

$          0.88

$          0.45

  DILUTED EARNINGS FROM CONTINUING OPERATIONS

$          0.59

$          0.35

$          0.90

$          0.48

  DISCONTINUED OPERATION

(0.01)

(0.01)

(0.03)

(0.03)

  NET EARNINGS PER COMMON SHARE - DILUTED

$          0.58

$          0.34

$          0.87

$          0.45

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,867,323

22,570,886

22,787,337

22,493,031

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,196,125

23,529,898

23,438,247

22,584,666

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

THREE MONTHS ENDED

SIX MONTHS ENDED

June 30,

June 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$ 13,693

$ 8,061

$ 20,704

$ 10,928

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

75

774

281

1,226

LOSS FROM EUROPE DIVESTITURE (NET OF TAX)

-

-

-

47

POSTRETIRMENT CURTAILMENT GAIN (NET OF TAX)

(2,188)

-

(2,188)

-

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(157)

(125)

(315)

(398)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$ 11,423

$ 8,710

$ 18,482

$ 11,803

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$     0.59

$   0.35

$     0.90

$     0.48

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

-

0.04

0.01

0.06

LOSS FROM EUROPE DIVESTITURE (NET OF TAX)

-

-

-

-

POSTRETIRMENT CURTAILMENT GAIN (NET OF TAX)

(0.09)

-

(0.09)

-

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(0.01)

(0.01)

(0.02)

(0.02)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$     0.49

$   0.38

$     0.80

$     0.52

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)

June 30,

December 31,

2011

2010

(Unaudited)

ASSETS

CASH

$    13,094

$        12,135

ACCOUNTS RECEIVABLE, GROSS

159,938

111,765

ALLOWANCE FOR DOUBTFUL ACCOUNTS

7,319

6,779

ACCOUNTS RECEIVABLE, NET

152,619

104,986

INVENTORIES

236,451

241,158

ASSETS HELD FOR SALE

216

216

OTHER CURRENT ASSETS

24,079

26,211

TOTAL CURRENT ASSETS

426,459

384,706

PROPERTY, PLANT AND EQUIPMENT, NET

61,240

60,666

GOODWILL AND OTHER INTANGIBLES, NET

31,379

12,487

OTHER ASSETS

25,929

34,942

TOTAL ASSETS

$  545,007

$      492,801

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE

$    67,805

$        52,887

CURRENT PORTION OF LONG TERM DEBT

108

12,402

ACCOUNTS PAYABLE

74,421

49,919

ACCRUED CUSTOMER RETURNS

37,306

23,207

OTHER CURRENT LIABILITIES

78,203

76,416

TOTAL CURRENT LIABILITIES

257,843

214,831

LONG-TERM DEBT

258

307

ACCRUED ASBESTOS LIABILITIES

25,533

24,792

OTHER LIABILITIES

24,247

42,988

TOTAL LIABILITIES

307,881

282,918

TOTAL STOCKHOLDERS' EQUITY

237,126

209,883

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$  545,007

$      492,801

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

(In thousands)

THREE MONTHS ENDED

SIX MONTHS ENDED

June 30,

June 30,

2011

2010

2011

2010

(unaudited)

(unaudited)

Revenues

Engine Management

$ 159,919

$ 152,815

$ 324,123

$ 289,912

Temperature Control

79,715

73,926

133,794

113,941

All Other

4,371

4,307

6,318

6,546

$ 244,005

$ 231,048

$ 464,235

$ 410,399

Gross Margin

Engine Management

$   40,012

25.0%

$   37,488

24.5%

$   80,016

24.7%

$   70,622

24.4%

Temperature Control

19,646

24.6%

17,707

24.0%

29,926

22.4%

25,960

22.8%

All Other

3,515

3,194

6,383

5,625

$   63,173

25.9%

$   58,389

25.3%

$ 116,325

25.1%

$ 102,207

24.9%

Selling, General & Administrative

Engine Management

$   26,435

16.5%

$   26,284

17.2%

$   51,257

15.8%

$   49,437

17.1%

Temperature Control

10,710

13.4%

10,002

13.5%

19,765

14.8%

17,910

15.7%

All Other

2,871

5,517

9,634

11,121

$   40,016

16.4%

$   41,803

18.1%

$   80,656

17.4%

$   78,468

19.1%

Operating Profit

Engine Management

$   13,577

8.5%

$   11,205

7.3%

$   28,759

8.9%

$   21,185

7.3%

Temperature Control

8,935

11.2%

7,705

10.4%

10,161

7.6%

8,050

7.1%

All Other

645

(2,324)

(3,251)

(5,496)

23,157

9.5%

16,586

7.2%

35,669

7.7%

23,739

5.8%

Restructuring & Integration

(125)

-0.1%

(1,289)

-0.6%

(468)

-0.1%

(2,042)

-0.5%

Other Income, Net

262

0.1%

136

0.1%

531

0.1%

516

0.1%

$   23,294

9.5%

$   15,433

6.7%

$   35,732

7.7%

$   22,213

5.4%

SOURCE Standard Motor Products, Inc.