Standard Motor Products, Inc. Announces Third Quarter 2019 Results and a Quarterly Dividend

NEW YORK, Oct. 30, 2019 /PRNewswire/ -- Standard Motor Products, Inc. SMP, an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and nine months ending September 30, 2019.

Consolidated net sales for the third quarter of 2019 were $307.7 million, compared to consolidated net sales of $296.6 million during the comparable quarter in 2018. Earnings from continuing operations for the third quarter of 2019 were $22.7 million or $1.00 per diluted share, compared to $19.3 million or 84 cents per diluted share in the third quarter of 2018. 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 2019 were $23.1 million or $1.02 per diluted share, compared to $19.1 million or 83 cents per diluted share in the third quarter of 2018.

Consolidated net sales for the nine month period ended September 30, 2019, were $896.7 million, compared to consolidated net sales of $845.1 million during the comparable period in 2018.  Earnings from continuing operations for the nine month period ended September 30, 2019, were $56.3 million or $2.47 per diluted share, compared to $44.7 million or $1.95 per diluted share in the comparable period of 2018.  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 September 30, 2019 and 2018 were $57.3 million or $2.51 per diluted share and $46.7 million or $2.03 per diluted share, respectively. 

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are quite pleased with our third quarter and with our year overall. We posted record sales and earnings, with both of our operating divisions continuing to perform well.

"Engine Management sales rose approximately 9.3% for the quarter and 7.8% year-to-date. Excluding Wire and Cable which is in secular decline, Engine Management sales in the quarter were up almost 14%, or roughly $22 million. Revenue from the Pollak acquisition, previously announced, accounted for nearly $10 million of this gain. Our Engine Management segment, excluding Pollak and Wire and Cable, increased 7.8% for the quarter. The growth was primarily attributable to a combination of several customer pipelines, a benefit from pricing actions and pass-through of tariff costs, as well as low single digit organic growth.

"Our sales in Engine Management have exceeded our customers' low single digit POS growth all year, and this tends to even out over time. Excluding Pollak, we anticipate that Engine Management sales will likely be flat or down for the fourth quarter of 2019 as these sales move closer to our customers' POS numbers. However, we remain optimistic for the year as a whole.

"Engine Management gross margins in the quarter improved nearly two points from last year to 30.7%, with sequential quarterly improvements throughout 2019.  This margin improvement was the result of several factors – the completion of the integration of our wire operations in Mexico, a continued emphasis on cost reductions, as well as certain pricing actions, and was partially offset by the adverse impact of tariffs being passed through to customers at our cost.

"Temperature Control sales were 8.1% lower than the third quarter of 2018. However, a portion of the 2018 volume included working down a large order backlog, generated by some of the hottest spring months in history, plus some start-up inefficiencies as we introduced our new automated warehouse system in Lewisville, TX. Year-to-date our Temperature Control sales are 2% above 2018.

"Temperature Control gross margins decreased by 1.6 points in the quarter, reflecting the dampening effect of tariffs being passed through to customers at our cost. The improvement in SG&A expenses reflects savings in distribution costs as we continue to refine and improve our new automated warehouse system.

"On August 1st we acquired a minority position in Jiangsu Che Yijia New Energy Technology Co. (CYJ), a Chinese manufacturer of electric compressors for electric vehicles. Founded in 2016, the company is still in its early stages, but we are pleased to have a strategic partner focused on parts for electric vehicles in the fast-growing Chinese market.

"Finally, as previously announced, we are pleased to welcome Nathan Iles as our new Chief Financial Officer. We believe he is an excellent fit for SMP, and we look forward to his contributions."

Loss from discontinued operations, net of income taxes, in the third quarter of 2019 was $7.9 million compared to $3.5 million in the comparable period last year. The loss pertains to asbestos-related liabilities from a brake business, originally acquired in 1986 and subsequently divested in 1998, which are adjusted in the third quarter each year when the Company engages an independent actuary to assess the Company's exposure. In the third quarter of 2019, the Company increased its asbestos-related indemnity liability to $52 million by recording a non-cash $9.7 million provision, or $7.1 million net of taxes.

The Board of Directors has approved payment of a quarterly dividend of 23 cents per share on the common stock outstanding. The dividend will be paid on December 2, 2019, to stockholders of record on November 15, 2019.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, October 30, 2019.  The dial-in number is 877-876-9173 (domestic) or 785-424-1667 (international). The playback number is 800-839-5109 (domestic) or 402-220-2688 (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,









2019





2018







2019





2018









(Unaudited)







(Unaudited)





NET SALES



$       307,723





$       296,619







$       896,661





$       845,081



































COST OF SALES



215,635





209,313







637,705





603,897



































GROSS PROFIT



92,088





87,306







258,956





241,184



































SELLING, GENERAL & ADMINISTRATIVE EXPENSES



59,947





60,137







180,483





175,604





RESTRUCTURING AND INTEGRATION EXPENSES 



825





6







1,469





3,073





OTHER INCOME (EXPENSE), NET



(12)





15







(15)





328



































OPERATING INCOME 



31,304





27,178







76,989





62,835



































OTHER NON-OPERATING INCOME, NET



225





351







2,282





800



































INTEREST EXPENSE



1,508





1,254







4,319





3,137



































EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES



30,021





26,275







74,952





60,498



































PROVISION FOR INCOME TAXES



7,367





7,002







18,639





15,801



































EARNINGS FROM CONTINUING OPERATIONS



22,654





19,273







56,313





44,697



































LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES



(7,903)





(3,524)







(9,914)





(5,014)



































NET EARNINGS 



$         14,751





$         15,749







$         46,399





$         39,683

























































































































































































NET EARNINGS PER COMMON SHARE:



























































   BASIC EARNINGS FROM CONTINUING OPERATIONS



$              1.01





$              0.86







$              2.52





$              1.99





   DISCONTINUED OPERATION



(0.35)





(0.16)







(0.44)





(0.22)





   NET EARNINGS PER COMMON SHARE - BASIC



$              0.66





$              0.70







$              2.08





$              1.77

































































   DILUTED EARNINGS FROM CONTINUING OPERATIONS



$              1.00





$              0.84







$              2.47





$              1.95





   DISCONTINUED OPERATION



(0.35)





(0.15)







(0.44)





(0.22)





   NET EARNINGS PER COMMON SHARE - DILUTED



$              0.65





$              0.69







$              2.03





$              1.73

































































WEIGHTED AVERAGE NUMBER OF COMMON SHARES



22,329,835





22,424,962







22,359,637





22,464,697





WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES



22,754,440





22,938,925







22,814,228





22,954,649





 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income





















































(In thousands)

















































































THREE MONTHS ENDED





NINE MONTHS ENDED







SEPTEMBER 30,





SEPTEMBER 30,







2019





2018





2019





2018







(Unaudited)





(Unaudited)



Revenues

























Ignition, Emission Control, Fuel & Safety

























   Related System Products



$       180,826





$       159,101





$       538,718





$       482,640



Wire and Cable



35,147





38,469





108,486





117,847



        Engine Management



215,973





197,570





647,204





600,487





























Compressors



52,776





54,842





145,080





131,680



Other Climate Control Parts



35,525





41,237





96,551





105,000



        Temperature Control



88,301





96,079





241,631





236,680





























All Other



3,449





2,970





7,826





7,914



        Revenues



$         307,723





$         296,619





$         896,661





$         845,081





























Gross Margin

























Engine Management



$         66,264

30.7%



$         57,188

28.9%



$       189,737

29.3%



$       171,440

28.6%

Temperature Control



22,973

26.0%



26,523

27.6%



61,715

25.5%



60,990

25.8%

All Other



2,851





3,595





7,504





8,754



        Gross Margin



$           92,088

29.9%



$           87,306

29.4%



$         258,956

28.9%



$         241,184

28.5%



























Selling, General & Administrative

























Engine Management



$         35,950

16.6%



$         35,553

18.0%



$         110,723

17.1%



$         106,415

17.7%

Temperature Control



15,495

17.5%



17,961

18.7%



45,033

18.6%



46,511

19.7%

All Other



8,502





6,623





24,727





22,678



        Selling, General & Administrative



$           59,947

19.5%



$           60,137

20.3%



$         180,483

20.1%



$         175,604

20.8%





















































Operating Income

























Engine Management



$         30,314

14.0%



$         21,635

11.0%



$           79,014

12.2%



$           65,025

10.8%

Temperature Control



7,478

8.5%



8,562

8.9%



16,682

6.9%



14,479

6.1%

All Other



(5,651)





(3,028)





(17,223)





(13,924)



        Subtotal



32,141

10.4%



27,169

9.2%



78,473

8.8%



65,580

7.8%

Restructuring & Integration



(825)

-0.3%



(6)

0.0%



(1,469)

-0.2%



(3,073)

-0.4%

Other Income (Expense), Net



(12)

0.0%



15

0.0%



(15)

0.0%



328

0.0%

        Operating Income



$           31,304

10.2%



$           27,178

9.2%



$           76,989

8.6%



$           62,835

7.4%

 

 

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,





2019



2018





2019



2018



(Unaudited)



(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS







































GAAP EARNINGS FROM CONTINUING OPERATIONS



$            22,654



$            19,273





$            56,313



$            44,697





















RESTRUCTURING AND INTEGRATION EXPENSES



825



6





1,469



3,073

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD



(144)



(144)





(144)



(144)

GAIN FROM SALE OF BUILDINGS



-



-





-



(218)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS



(214)



(1)





(382)



(742)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS



$            23,121



$            19,134





$            57,256



$            46,666









































DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS







































GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS



$               1.00



$               0.84





$               2.47



$               1.95





















RESTRUCTURING AND INTEGRATION EXPENSES



0.04



-





0.06



0.13

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD



(0.01)



(0.01)





(0.01)



(0.01)

GAIN FROM SALE OF BUILDINGS



-



-





-



(0.01)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS



(0.01)



-





(0.01)



(0.03)





















NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS



$               1.02



$               0.83





$               2.51



$               2.03









































OPERATING INCOME







































GAAP OPERATING INCOME



$            31,304



$            27,178





$            76,989



$            62,835





















RESTRUCTURING AND INTEGRATION EXPENSES



825



6





1,469



3,073

OTHER (INCOME) EXPENSE, NET



12



(15)





15



(328)





















NON-GAAP OPERATING INCOME



$            32,141



$            27,169





$            78,473



$            65,580





























































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)













































September 30,







December  31,





2019







2018





(Unaudited)























ASSETS















CASH



$             13,259







$             11,138















ACCOUNTS RECEIVABLE, GROSS



174,969







163,222

ALLOWANCE FOR DOUBTFUL ACCOUNTS



6,001







5,687

ACCOUNTS RECEIVABLE, NET



168,968







157,535















INVENTORIES



340,231







349,811

UNRETURNED CUSTOMER INVENTORY



20,325







20,484

OTHER CURRENT ASSETS



14,273







7,256















TOTAL CURRENT ASSETS



557,056







546,224















PROPERTY, PLANT AND EQUIPMENT, NET



88,835







90,754

OPERATING LEASE RIGHT-OF-USE ASSETS



34,055







-

GOODWILL



77,664







67,321

OTHER INTANGIBLES, NET



66,857







48,411

DEFERRED INCOME TAXES



39,105







42,334

INVESTMENT IN UNCONSOLIDATED AFFILIATES



39,030







32,469

OTHER ASSETS



18,081







15,619















TOTAL ASSETS



$           920,683







$           843,132





























LIABILITIES AND STOCKHOLDERS' EQUITY





























NOTES PAYABLE



$             78,211







$             43,689

CURRENT PORTION OF OTHER DEBT



5,225







5,377

ACCOUNTS PAYABLE



71,139







94,357

ACCRUED CUSTOMER RETURNS



53,984







57,433

ACCRUED CORE LIABILITY



26,045







31,263

OTHER CURRENT LIABILITIES



95,056







80,467















TOTAL CURRENT LIABILITIES



329,660







312,586















OTHER LONG-TERM DEBT



132







153

NONCURRENT OPERATING LEASE LIABILITIES



27,214







-

ACCRUED ASBESTOS LIABILITIES



49,894







45,117

OTHER LIABILITIES



19,731







18,075















 TOTAL LIABILITIES 



426,631







375,931















 TOTAL STOCKHOLDERS' EQUITY 



494,052







467,201















 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 



$           920,683







$           843,132

 

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows







































(In thousands)





































NINE MONTHS ENDED





SEPTEMBER 30,





2019





2018





(Unaudited)















CASH FLOWS FROM OPERATING ACTIVITIES























NET EARNINGS 

$        46,399





$        39,683



ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH











PROVIDED BY OPERATING ACTIVITIES:











DEPRECIATION AND AMORTIZATION

19,261





17,745



OTHER

21,623





12,220



CHANGE IN ASSETS AND LIABILITIES:











ACCOUNTS RECEIVABLE

(16,583)





(23,428)



INVENTORIES

11,824





2,761



ACCOUNTS PAYABLE

(24,107)





5,193



PREPAID EXPENSES AND OTHER CURRENT ASSETS

(6,502)





1,202



SUNDRY PAYABLES AND ACCRUED EXPENSES 

(2,551)





12,828



OTHER

(6,260)





(619)



NET CASH PROVIDED BY OPERATING ACTIVITIES

43,104





67,585



























CASH FLOWS FROM INVESTING ACTIVITIES























ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

(43,490)





(9,852)



NET PROCEEDS FROM SALE OF FACILITY

4,801





-



CAPITAL EXPENDITURES

(12,329)





(15,633)



OTHER INVESTING ACTIVITIES

47





37



NET CASH USED IN INVESTING ACTIVITIES 

(50,971)





(25,448)



























CASH FLOWS FROM FINANCING ACTIVITIES























NET CHANGE IN DEBT

34,656





(10,537)



PURCHASE OF TREASURY STOCK

(10,738)





(9,271)



DIVIDENDS PAID

(15,429)





(14,144)



OTHER FINANCING ACTIVITIES

1,109





1,382



NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

9,598





(32,570)



























EFFECT OF EXCHANGE RATE CHANGES ON CASH

390





431



NET INCREASE IN CASH AND CASH EQUIVALENTS

2,121





9,998



CASH AND CASH EQUIVALENTS at beginning of Period

11,138





17,323



CASH AND CASH EQUIVALENTS at end of Period

$        13,259





$        27,321

 

 

Cision View original content:http://www.prnewswire.com/news-releases/standard-motor-products-inc-announces-third-quarter-2019-results-and-a-quarterly-dividend-300947715.html

SOURCE Standard Motor Products, Inc.

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