Standard Motor Products, Inc. Announces Second Quarter 2015 Results and a Quarterly Dividend

Jul 30, 2015, 08:30 ET from Standard Motor Products, Inc.

NEW YORK, July 30, 2015 /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 ending June 30, 2015.

Consolidated net sales for the second quarter of 2015 were $269.4 million, compared to consolidated net sales of $272.5 million during the comparable quarter in 2014.  Earnings from continuing operations for the second quarter of 2015 were $13.8 million or 59 cents per diluted share, compared to $11.2 million or 48 cents per diluted share in the second quarter of 2014. The second quarter of 2014 included a one-time, non-recurring litigation charge. Excluding the litigation charge and other 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 2015 were $13.6 million or 59 cents per diluted share, compared to $17.7 million or 76 cents per diluted share in the second quarter of 2014.

Consolidated net sales for the six month period ended June 30, 2015 were $497 million, compared to consolidated net sales of $505.3 million during the comparable period in 2014.  Earnings from continuing operations for the six month period ended June 30, 2015 were $23.1 million or $1.00 per diluted share, compared to $23.6 million or $1.02 per diluted share in the comparable period of 2014.  The six month period ended June 30, 2014 included a one-time, non-recurring litigation charge. Excluding the litigation charge and other 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 June 30, 2015 and 2014 were $22.9 million or 98 cents per diluted share and $30.1 million or $1.30 per diluted share, respectively.

Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are obviously disappointed in our results for the first six months of the year, as we are behind 2014 in both sales and profit. However, we believe that the worst is behind us and we anticipate a stronger final six months.

"Turning first to sales, net sales in Engine Management were $9.4 million below 2014 through June. During this same period, our customers were reporting, on average, a slight increase in their sales of Engine Management. The difference is typically caused by a variety of factors—inventory consolidation as a result of acquisitions, different timing of pipeline orders, and other short term events. In time these have balanced out, and we anticipate a return to low single digit increases in Engine Management.

"In Temperature Control, we are finally having a warm summer after two cool summers in a row. Sales began to pick up in the latter part of June, and sales in July have been strong. We anticipate a sales increase in Temperature Control sales for the year.

"Three events had a significant impact on our profit shortfall for the first six months. All are short term in nature. Two are essentially behind us, and the third, a non-cash charge, will be over by the end of the year.

"The three are as follows: First is the incremental unfavorable manufacturing variances in our Temperature Control group related to reduced production in 2014 to bring inventory down after two cool seasons in a row. These carry forward variances have been fully recognized in our first half results. We are now achieving favorable variances, as we ramp up production to keep up with the increase in sales.

"Second are the one-time costs incurred as we revamped our rebuilt diesel fuel injection line, acquired from Pensacola Fuel Injection last year. This exercise is now mostly complete, and we are very optimistic about the future of this business.

"Third is the unfavorable non-cash change in prior service costs resulting from winding down of our retiree medical program. The program will end in December 2016.

"The total of all three in the first six months of the year was roughly $8.5 million which accounted for the bulk of the shortfall in profit.

"Our cash flow generated from operations was roughly $40 million in the second quarter and $26 million year to date. Cash generated in the quarter was used to reduce debt roughly $19 million and initiate $7 million in share repurchases.  In a separate release today we announced that our Board of Directors approved an additional $10 million increase in our share repurchase program from $10 million to $20 million.

"In summary, we are optimistic about the second half of 2015. Our market position remains strong; our recent acquisitions continue to show improvement; industry demographics are positive; some major one-time costs are behind us; and sales are improving. We look forward to the balance of the year."

The Board of Directors has approved payment of a quarterly dividend of fifteen cents per share on the common stock outstanding. The dividend will be paid on September 1, 2015 to stockholders of record on August 14, 2015.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, July 30, 2015.  The dial in number is 888-632-3384 (domestic) or 785-424-1675 (international). The playback number is 800-839-3612 (domestic) or 402-220-2972 (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,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

NET SALES

$       269,382

$       272,540

$       496,971

$       505,292

COST OF SALES

196,622

195,141

360,322

359,983

GROSS PROFIT

72,760

77,399

136,649

145,309

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

51,736

48,847

100,934

96,441

LITIGATION CHARGE

-

10,650

-

10,650

RESTRUCTURING AND INTEGRATION EXPENSES

(26)

555

31

726

OTHER INCOME , NET

262

273

543

533

OPERATING INCOME 

21,312

17,620

36,227

38,025

OTHER NON-OPERATING INCOME (EXPENSE), NET

548

307

699

(106)

INTEREST EXPENSE

480

457

906

765

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

21,380

17,470

36,020

37,154

PROVISION FOR INCOME TAXES

7,572

6,301

12,873

13,578

EARNINGS FROM CONTINUING OPERATIONS

13,808

11,169

23,147

23,576

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(430)

(529)

(821)

(1,211)

NET EARNINGS 

$         13,378

$         10,640

$         22,326

$         22,365

NET EARNINGS PER COMMON SHARE:

   BASIC EARNINGS FROM CONTINUING OPERATIONS

$             0.60

$             0.49

$             1.01

$             1.03

   DISCONTINUED OPERATION

(0.02)

(0.02)

(0.04)

(0.05)

   NET EARNINGS PER COMMON SHARE - BASIC

$             0.58

$             0.47

$             0.97

$             0.98

   DILUTED EARNINGS FROM CONTINUING OPERATIONS

$             0.59

$             0.48

$             1.00

$             1.02

   DISCONTINUED OPERATION

(0.01)

(0.02)

(0.04)

(0.06)

   NET EARNINGS PER COMMON SHARE - DILUTED

$             0.58

$             0.46

$             0.96

$             0.96

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,917,718

22,874,002

22,914,322

22,910,419

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,261,094

23,196,713

23,256,255

23,219,055

 

 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

THREE MONTHS ENDED

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2015

2014

2015

2014

(unaudited)

(unaudited)

Revenues

Engine Management

$       176,992

$       184,181

$       354,063

$       363,475

Temperature Control

89,079

85,660

137,807

137,145

All Other

3,311

2,699

5,101

4,672

$         269,382

$         272,540

$         496,971

$         505,292

Gross Margin

Engine Management

$         52,267

29.5%

$         56,059

30.4%

$       103,969

29.4%

$       109,254

30.1%

Temperature Control

17,303

19.4%

18,299

21.4%

27,130

19.7%

30,184

22.0%

All Other

3,190

3,041

5,550

5,871

$           72,760

27.0%

$           77,399

28.4%

$         136,649

27.5%

$         145,309

28.8%

Selling, General & Administrative

Engine Management

$         30,442

17.2%

$         28,447

15.4%

$           60,446

17.1%

$           57,098

15.7%

Temperature Control

14,138

15.9%

13,260

15.5%

25,328

18.4%

24,532

17.9%

All Other

7,156

7,140

15,160

14,811

$           51,736

19.2%

$           48,847

17.9%

$         100,934

20.3%

$           96,441

19.1%

Operating Income

Engine Management

$         21,825

12.3%

$         27,612

15.0%

$           43,523

12.3%

$           52,156

14.3%

Temperature Control

3,165

3.6%

5,039

5.9%

1,802

1.3%

5,652

4.1%

All Other

(3,966)

(4,099)

(9,610)

(8,940)

21,024

7.8%

28,552

10.5%

35,715

7.2%

48,868

9.7%

Litigation Charge

-

0.0%

(10,650)

-3.9%

-

0.0%

(10,650)

-2.1%

Restructuring & Integration

26

0.0%

(555)

-0.2%

(31)

0.0%

(726)

-0.1%

Other Income, Net

262

0.1%

273

0.1%

543

0.1%

533

0.1%

$           21,312

7.9%

$           17,620

6.5%

$           36,227

7.3%

$           38,025

7.5%

 

 

 

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,

2015

2014

2015

2014

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$            13,808

$            11,169

$            23,147

$            23,576

LITIGATION CHARGE (NET OF TAX)

-

6,390

-

6,390

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

(16)

333

18

436

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(158)

(157)

(315)

(315)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$            13,634

$            17,735

$            22,850

$            30,087

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$               0.59

$               0.48

$               1.00

$               1.02

LITIGATION CHARGE (NET OF TAX)

-

0.28

-

0.27

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

-

0.01

-

0.02

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

-

(0.01)

(0.02)

(0.01)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$               0.59

$               0.76

$               0.98

$               1.30

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,

2015

2014

(Unaudited)

ASSETS

CASH

$            12,704

$            13,728

ACCOUNTS RECEIVABLE, GROSS

166,753

132,893

ALLOWANCE FOR DOUBTFUL ACCOUNTS

6,135

6,369

ACCOUNTS RECEIVABLE, NET

160,618

126,524

INVENTORIES

277,261

278,051

OTHER CURRENT ASSETS

49,353

47,730

TOTAL CURRENT ASSETS

499,936

466,033

PROPERTY, PLANT AND EQUIPMENT, NET

68,263

64,611

GOODWILL AND OTHER INTANGIBLES, NET

86,835

89,377

OTHER ASSETS

54,225

53,530

TOTAL ASSETS

$          709,259

$          673,551

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE

$            52,916

$            56,558

CURRENT PORTION OF LONG TERM DEBT

69

175

ACCOUNTS PAYABLE

88,939

70,674

ACCRUED CUSTOMER RETURNS

39,285

30,621

OTHER CURRENT LIABILITIES

93,481

92,801

TOTAL CURRENT LIABILITIES

274,690

250,829

LONG-TERM DEBT

69

83

ACCRUED ASBESTOS LIABILITIES

33,294

33,462

OTHER LIABILITIES

14,609

15,024

 TOTAL LIABILITIES 

322,662

299,398

 TOTAL STOCKHOLDERS' EQUITY 

386,597

374,153

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 

$          709,259

$          673,551

 

 

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

SIX MONTHS ENDED

JUNE 30,

2015

2014

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS 

$        22,326

$        22,365

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION

8,552

8,440

OTHER

3,962

5,376

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE

(34,563)

(16,149)

INVENTORY 

(820)

(19,527)

ACCOUNTS PAYABLE

18,327

13,847

OTHER

8,388

3,266

NET CASH PROVIDED BY OPERATING ACTIVTIES

26,172

17,618

CASH FLOWS FROM INVESTING ACTIVITIES

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

-

(37,726)

CAPITAL EXPENDITURES

(10,184)

(6,379)

OTHER INVESTING ACTIVITIES

26

11

NET CASH USED IN INVESTING ACTIVITIES 

(10,158)

(44,094)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT

(3,761)

37,620

PURCHASE OF TREASURY STOCK

(7,046)

(5,860)

DIVIDENDS PAID

(6,876)

(5,955)

OTHER FINANCING ACTIVITIES

518

2,033

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

(17,165)

27,838

EFFECT OF EXCHANGE RATE CHANGES ON CASH

127

(704)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(1,024)

658

CASH AND CASH EQUIVALENTS at beginning of Period

13,728

5,559

CASH AND CASH EQUIVALENTS at end of Period

$        12,704

$           6,217

 

 

SOURCE Standard Motor Products, Inc.



RELATED LINKS

http://www.smpcorp.com