Standard Motor Products, Inc. Announces Third Quarter 2013 Results and a Quarterly Dividend

Oct 31, 2013, 08:30 ET from Standard Motor Products, Inc.

NEW YORK, Oct. 31, 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 nine months ended September 30, 2013.

Consolidated net sales for the third quarter of 2013 were $264.2 million, compared to consolidated net sales of $276 million during the comparable quarter in 2012. Earnings from continuing operations for the third quarter of 2013 were $17.7 million or 76 cents per diluted share, compared to $17.4 million or 76 cents per diluted share in the third quarter of 2012. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the third quarter of 2013 were $18.3 million or 79 cents per diluted share, compared to $16.8 million or 73 cents per diluted share in the third quarter of 2012.

Consolidated net sales for the nine month period ended September 30, 2013 were $765 million, compared to consolidated net sales of $756.6 million during the comparable period in 2012.  Earnings from continuing operations for the nine month period ended September 30, 2013 were $43.7 million or $1.88 per diluted share, compared to $36.7 million or $1.59 per diluted share in the comparable period of 2012.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the nine months ended 2013 and 2012 were $44.3 million or $1.91 per diluted share and $35.7 million or $1.55 per diluted share, respectively.

Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We achieved an 8% increase in earnings per share for the quarter (excluding non-operational gains and losses), despite the sales decline caused by the weather-related drop in Temperature Control sales. We are now 23% above 2012 in earnings per share for the first nine months.

"The primary reason for the increase is our improvement in gross margin, which is up 2.1 points for the quarter and 2.5 points for the year. We are seeing the benefits of our continuing cost reduction efforts—manufacturing parts we formerly purchased, improved sourcing of finished goods and components, relocating labor intensive operations to low cost areas, and consolidating and integrating our recent acquisitions.

"Engine Management sales were ahead 1.2% for the quarter, and nearly 5% for the year—in line with, or slightly ahead of, industry averages.

"The major shortfall was in Temperature Control sales, which, after adjusting for the CompressorWorks acquisition, are down 10.9% for the quarter and 11.1% year to date. As we have previously discussed, air conditioning sales can vary 20% up or down in a given year, depending on the weather.  2012 was one of the hottest years on record; 2013 one of the coolest.

"We are pleased with the progress we have made in our Temperature Control division. The integration of CompressorWorks was completed on time and within budget. We have combined manufacturing locations, distribution centers, and product lines, and are on track to achieve all planned savings. We believe we are well positioned to take advantage of a more typical summer season.

"In further steps to reduce costs and improve efficiency, we offered a voluntary separation incentive program to certain eligible employees in our sales force. This resulted in an $1.8 million restructuring expense in the quarter with anticipated $1.5 million SG&A savings per year beginning in 2014.

"Cash flow was very strong in the third quarter reflecting a $26 million reduction in inventories that was built up earlier in the year to safeguard our CompressorWorks integration. In the quarter, we were able to reduce debt $36 million to close September 30 with total debt outstanding of $32 million."

The Board of Directors has approved payment of a quarterly dividend of eleven cents per share on the common stock outstanding. The dividend will be paid on December 2, 2013 to stockholders of record on November 15, 2013.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, October 31, 2013.  The dial-in number is 866-952-7524 (domestic) or 785-424-1829 (international). The playback number is 800-723-0498 (domestic) or 402-220-2652 (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

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2013

2012

2013

2012

(Unaudited)

(Unaudited)

NET SALES

$    264,162

$    275,975

$    764,996

$    756,561

COST OF SALES

184,081

198,167

541,291

554,859

GROSS PROFIT

80,081

77,808

223,705

201,702

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

50,615

50,937

150,813

142,322

RESTRUCTURING AND INTEGRATION EXPENSES

1,913

642

2,531

779

OTHER INCOME , NET

324

433

766

454

OPERATING INCOME 

27,877

26,662

71,127

59,055

OTHER NON-OPERATING INCOME (EXPENSE), NET

233

-

(27)

(66)

INTEREST EXPENSE

403

702

1,621

2,257

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

27,707

25,960

69,479

56,732

PROVISION FOR INCOME TAXES

10,021

8,516

25,827

20,073

EARNINGS FROM CONTINUING OPERATIONS

17,686

17,444

43,652

36,659

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(389)

(604)

(1,138)

(1,221)

NET EARNINGS 

$      17,297

$      16,840

$      42,514

$      35,438

NET EARNINGS PER COMMON SHARE:

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$           0.77

$           0.77

$           1.90

$           1.61

   DISCONTINUED OPERATION

(0.02)

(0.03)

(0.05)

(0.06)

   NET EARNINGS PER COMMON SHARE - BASIC

$           0.75

$           0.74

$           1.85

$           1.55

   DILUTED EARNINGS FROM CONTINUING OPERATIONS

$           0.76

$           0.76

$           1.88

$           1.59

   DISCONTINUED OPERATION

(0.02)

(0.02)

(0.05)

(0.05)

   NET EARNINGS PER COMMON SHARE - DILUTED

$           0.74

$           0.74

$           1.83

$           1.54

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,999,832

22,691,878

22,945,424

22,810,238

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,239,009

22,877,635

23,179,187

22,999,244

 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

(In thousands)

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2013

2012

2013

2012

(unaudited)

(unaudited)

Revenues

Engine Management

$ 177,939

$ 175,789

$ 535,498

$ 511,448

Temperature Control

84,840

95,229

224,228

233,556

All Other

1,383

4,957

5,270

11,557

$   264,162

$   275,975

$   764,996

$   756,561

Gross Margin

Engine Management

$   56,654

31.8%

$   51,285

29.2%

$ 162,748

30.4%

$ 140,555

27.5%

Temperature Control

20,496

24.2%

23,156

24.3%

51,824

23.1%

51,604

22.1%

All Other

2,931

3,367

9,133

9,543

$     80,081

30.3%

$     77,808

28.2%

$   223,705

29.2%

$   201,702

26.7%

Selling, General & Administrative

Engine Management

$   30,130

16.9%

$   29,870

17.0%

$     90,305

16.9%

$     87,201

17.0%

Temperature Control

12,994

15.3%

14,099

14.8%

37,767

16.8%

34,705

14.9%

All Other

7,491

6,968

22,741

20,416

$     50,615

19.2%

$     50,937

18.5%

$   150,813

19.7%

$   142,322

18.8%

Operating Profit

Engine Management

$   26,524

14.9%

$   21,415

12.2%

$     72,443

13.5%

$     53,354

10.4%

Temperature Control

7,502

8.8%

9,057

9.5%

14,057

6.3%

16,899

7.2%

All Other

(4,560)

(3,601)

(13,608)

(10,873)

29,466

11.2%

26,871

9.7%

72,892

9.5%

59,380

7.8%

Restructuring & Integration

(1,913)

-0.7%

(642)

-0.2%

(2,531)

-0.3%

(779)

-0.1%

Other Income, Net

324

0.1%

433

0.2%

766

0.1%

454

0.1%

$     27,877

10.6%

$     26,662

9.7%

$     71,127

9.3%

$     59,055

7.8%

 

 

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

THREE MONTHS ENDED

NINE MONTHS ENDED

September 30,

September 30,

2013

2012

2013

2012

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$17,686

$17,444

$43,652

$36,659

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

1,148

385

1,519

467

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

(374)

(774)

(374)

(774)

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(157)

(301)

(472)

(615)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$18,303

$16,754

$44,325

$35,737

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$    0.76

$    0.76

$    1.88

$    1.59

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

0.05

0.01

0.07

0.02

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD

(0.01)

(0.03)

(0.02)

(0.03)

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(0.01)

(0.01)

(0.02)

(0.03)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$    0.79

$    0.73

$    1.91

$    1.55

 

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)

September  30,

December 31,

2013

2012

(Unaudited)

ASSETS

CASH

$           10,097

$         13,074

ACCOUNTS RECEIVABLE, GROSS

149,000

104,689

ALLOWANCE FOR DOUBTFUL ACCOUNTS

7,021

6,124

ACCOUNTS RECEIVABLE, NET

141,979

98,565

INVENTORIES

269,205

267,468

OTHER CURRENT ASSETS

46,481

39,446

TOTAL CURRENT ASSETS

467,762

418,553

PROPERTY, PLANT AND EQUIPMENT, NET

63,883

64,422

GOODWILL AND OTHER INTANGIBLES, NET

74,221

72,373

OTHER ASSETS

30,025

21,246

TOTAL ASSETS

$         635,891

$       576,594

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE

$           32,187

$         40,453

CURRENT PORTION OF LONG TERM DEBT

82

120

ACCOUNTS PAYABLE

65,165

62,283

ACCRUED CUSTOMER RETURNS

46,721

29,033

OTHER CURRENT LIABILITIES

98,473

90,283

TOTAL CURRENT LIABILITIES

242,628

222,172

LONG-TERM DEBT

23

75

ACCRUED ASBESTOS LIABILITIES

24,223

25,110

OTHER LIABILITIES

21,728

21,650

 TOTAL LIABILITIES 

288,602

269,007

 TOTAL STOCKHOLDERS' EQUITY 

347,289

307,587

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$         635,891

$       576,594

 

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

NINE MONTHS ENDED

SEPTEMBER 30,

2013

2012

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS 

$ 42,514

$ 35,438

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

            DEPRECIATION AND AMORTIZATION

13,203

12,093

            OTHER

9,843

13,519

CHANGE IN ASSETS AND LIABILITIES:

            ACCOUNTS RECEIVABLE

(43,990)

(48,008)

            INVENTORY 

(5,345)

21,082

            ACCOUNTS PAYABLE

(450)

4,957

            OTHER

17,876

23,769

NET CASH PROVIDED BY OPERATING ACTIVTIES

33,651

62,850

CASH FLOWS FROM INVESTING ACTIVITIES

CAPITAL EXPENDITURES

(8,467)

(8,003)

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

(12,760)

(38,594)

OTHER INVESTING ACTIVITIES

(596)

9

NET CASH USED IN INVESTING ACTIVITIES 

(21,823)

(46,588)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT

(8,356)

(12,817)

PURCHASE OF TREASURY STOCK

(1,672)

(4,999)

DIVIDENDS PAID

(7,566)

(6,162)

OTHER FINANCING ACTIVITIES

3,350

6,339

NET CASH USED IN FINANCING ACTIVITIES

(14,244)

(17,639)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

(561)

1,393

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(2,977)

16

CASH AND CASH EQUIVALENTS at beginning of Period

13,074

10,871

CASH AND CASH EQUIVALENTS at end of Period

$ 10,097

$ 10,887

 

SOURCE Standard Motor Products, Inc.