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Standard Motor Products, Inc. Announces Fourth Quarter and 2019 Year-End Results

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NEW YORK, Feb. 19, 2020 /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 twelve months ended December 31, 2019.

Consolidated net sales for the fourth quarter of 2019 were $241.3 million, compared to consolidated net sales of $247 million during the comparable quarter in 2018. Earnings from continuing operations for the fourth quarter of 2019 were $12.7 million or 56 cents per diluted share, compared to $12.2 million or 53 cents per diluted share in the fourth 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 fourth quarter of 2019 were $13.6 million or 59 cents per diluted share, compared to $11.8 million or 52 cents per diluted share in the fourth quarter of 2018.

Consolidated net sales for 2019 were $1,137.9 million, compared to consolidated net sales of $1,092.1 million during 2018.  Earnings from continuing operations for 2019 were $69.1 million or $3.03 per diluted share, compared to $56.9 million or $2.48 per diluted share in 2018.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the twelve months ended December 31, 2019 and 2018 were $70.8 million or $3.10 per diluted share and $58.5 million or $2.55 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are quite pleased with our 2019 results, as we set records for both sales and earnings. We achieved this despite some softness in sales in the fourth quarter, which was anticipated and previously announced.

"Engine Management sales were up 5.7% for the year. Excluding sales of $28 million from the Pollak acquisition, acquired on April 1, 2019, and wire and cable, a product line in secular decline, Engine Management sales were up 4.6% for the year. 

"In the fourth quarter, Engine Management sales, excluding Pollak and wire and cable, were down 3.9%. As we stated in our third quarter release, for much of the year and for a variety of reasons, Engine Management sales ran ahead of the reported customer POS volume. As we know, these balance out over time. The drop in the fourth quarter represented a migration to our customers' POS results and towards our long-term forecast for Engine Management of low single digit growth.

"Engine Management gross margins improved one percentage point for the year to 29.6% and 1.8 percentage points for the quarter to 30.6%. This reflects the completion of the integration of our wire operations in Mexico and a continued emphasis on cost reduction activities.  We are quite pleased with the progress we have made, returning to our historic margin levels.

"Temperature Control sales were flat for the year, as we were up against a very warm 2018. However, in the fourth quarter sales were down 12%. Temperature Control sales can vary significantly quarter to quarter based on the timing and size of pre-season orders and how hot it gets during the short selling season. For this product line, it is far more meaningful to look at the year as whole.

"The improvement in Temperature Control SG&A expenses in 2019 of $3.2 million primarily reflects savings in distribution costs as we continue to refine and improve our new automated warehouse system in Lewisville, Texas.

"We completed one acquisition and one business investment during 2019. In April, we acquired Pollak, a long time and highly respected manufacturer of sensors, switches and connectors, primarily for the OE, heavy duty and commercial vehicle markets. We have just completed moving the operation from Canton, Massachusetts and Juarez, Mexico to existing facilities in Reynosa, Mexico and Independence, Kansas, which will improve our cost structure. We plan to grow this product line in the years ahead.

"In August, we acquired a minority interest in Cheyijia New Energy Technology Co., Ltd.  (CYJ), a manufacturer of air conditioning compressors for electric vehicles, located in Changzhou, China. While CYJ is less than four years old and is still in its early stages, we are pleased that we are now in a position to provide compressors for the rapidly growing electric vehicle market.

"Our combined investment for these two businesses of less than $44 million was funded by the $77 million cash generated from operations in 2019. At year-end, our debt position was $57 million."

Finally, on January 31, 2020, the Board of Directors of Standard Motor Products approved an increase in its quarterly dividend from 23 cents per share to 25 cents per share, payable on March 2, 2020.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, February 19, 2020.  The dial-in number is 877-876-9176 (domestic) or 785-424-1670 (international). The playback number is 800-727-6189 (domestic) or 402-220-2671 (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,





2019



2018




2019



2018





(Unaudited)




(Unaudited)



NET SALES


$       241,252



$       246,970




$    1,137,913



$    1,092,051


















COST OF SALES


168,408



175,367




806,113



779,264


















GROSS PROFIT


72,844



71,603




331,800



312,787


















SELLING, GENERAL & ADMINISTRATIVE EXPENSES


54,232



55,732




234,715



231,336



RESTRUCTURING AND INTEGRATION EXPENSES 


1,116



1,437




2,585



4,510



OTHER INCOME (EXPENSE), NET


10



3,999




(5)



4,327


















OPERATING INCOME 


17,506



18,433




94,495



81,268


















OTHER NON-OPERATING INCOME (EXPENSE), NET


305



(1,211)




2,587



(411)


















INTEREST EXPENSE


967



889




5,286



4,026


















EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES


16,844



16,333




91,796



76,831


















PROVISION FOR INCOME TAXES


4,106



4,176




22,745



19,977


















EARNINGS FROM CONTINUING OPERATIONS


12,738



12,157




69,051



56,854


















LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES


(1,220)



(8,837)




(11,134)



(13,851)


















NET EARNINGS 


$         11,518



$           3,320




$         57,917



$         43,003





























































































NET EARNINGS PER COMMON SHARE:






























   BASIC EARNINGS FROM CONTINUING OPERATIONS


$              0.57



$              0.54




$              3.09



$              2.53



   DISCONTINUED OPERATION


(0.06)



(0.39)




(0.50)



(0.62)



   NET EARNINGS PER COMMON SHARE - BASIC


$              0.51



$              0.15




$              2.59



$              1.91

































   DILUTED EARNINGS FROM CONTINUING OPERATIONS


$              0.56



$              0.53




$              3.03



$              2.48



   DISCONTINUED OPERATION


(0.06)



(0.39)




(0.49)



(0.60)



   NET EARNINGS PER COMMON SHARE - DILUTED


$              0.50



$              0.14




$              2.54



$              1.88

































WEIGHTED AVERAGE NUMBER OF COMMON SHARES


22,434,134



22,432,095




22,378,414



22,456,480



WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES


22,882,235



22,941,271




22,818,451



22,931,723



 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income



























(In thousands)









































THREE MONTHS ENDED



TWELVE MONTHS ENDED




DECEMBER 31,



DECEMBER 31,




2019



2018



2019



2018




(Unaudited)



(Unaudited)


Revenues













Ignition, Emission Control, Fuel & Safety













   Related System Products


$       167,276



$       165,630



$       705,994



$       648,270


Wire and Cable


34,681



37,370



143,167



155,217


        Engine Management


201,957



203,000



849,161



803,487















Compressors


15,405



16,736



160,485



148,416


Other Climate Control Parts


21,319



25,040



117,870



130,040


        Temperature Control


36,724



41,776



278,355



278,456















All Other


2,571



2,194



10,397



10,108


        Revenues


$         241,252



$         246,970



$      1,137,913



$      1,092,051















Gross Margin













Engine Management


$         61,823

30.6%


$         58,509

28.8%


$       251,560

29.6%


$       229,949

28.6%

Temperature Control


8,349

22.7%


9,571

22.9%


70,064

25.2%


70,561

25.3%

All Other


2,672



3,523



10,176



12,277


        Gross Margin


$           72,844

30.2%


$           71,603

29.0%


$         331,800

29.2%


$         312,787

28.6%














Selling, General & Administrative













Engine Management


$         34,439

17.1%


$         34,588

17.0%


$         145,162

17.1%


$         141,003

17.5%

Temperature Control


11,364

30.9%


13,058

31.3%


56,397

20.3%


59,569

21.4%

All Other


8,429



8,086



33,156



30,764


        Selling, General & Administrative


$           54,232

22.5%


$           55,732

22.6%


$         234,715

20.6%


$         231,336

21.2%



























Operating Income













Engine Management


$         27,384

13.6%


$         23,921

11.8%


$         106,398

12.5%


$           88,946

11.1%

Temperature Control


(3,015)

-8.2%


(3,487)

-8.3%


13,667

4.9%


10,992

3.9%

All Other


(5,757)



(4,563)



(22,980)



(18,487)


        Subtotal


18,612

7.7%


15,871

6.4%


97,085

8.5%


81,451

7.5%

Restructuring & Integration


(1,116)

-0.5%


(1,437)

-0.6%


(2,585)

-0.2%


(4,510)

-0.4%

Other Income (Expense), Net


10

0.0%


3,999

1.6%


(5)

0.0%


4,327

0.4%

        Operating Income


$           17,506

7.3%


$           18,433

7.5%


$           94,495

8.3%


$           81,268

7.4%

 

 

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,



2019


2018



2019


2018


(Unaudited)


(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS




















GAAP EARNINGS FROM CONTINUING OPERATIONS


$            12,738


$            12,157



$            69,051


$            56,854











RESTRUCTURING AND INTEGRATION EXPENSES


1,116


1,437



2,585


4,510

IMPAIRMENT OF OUR INVESTMENT IN ORANGE ELECTRONICS CO.,LTD


-


1,683



-


1,683

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD


-


-



(144)


(144)

GAIN FROM SALE OF BUILDINGS


-


(3,940)



-


(4,158)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(291)


492



(673)


(250)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS


$            13,563


$            11,829



$            70,819


$            58,495





















DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS




















GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$               0.56


$               0.53



$               3.03


$               2.48











RESTRUCTURING AND INTEGRATION EXPENSES


0.05


0.06



0.11


0.20

IMPAIRMENT OF OUR INVESTMENT IN ORANGE ELECTRONICS CO.,LTD


-


0.07



-


0.07

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD


-


-



(0.01)


(0.01)

GAIN FROM SALE OF BUILDINGS


-


(0.17)



-


(0.18)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(0.02)


0.03



(0.03)


(0.01)











NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$               0.59


$               0.52



$               3.10


$               2.55





















OPERATING INCOME




















GAAP OPERATING INCOME


$            17,506


$            18,433



$            94,495


$            81,268











RESTRUCTURING AND INTEGRATION EXPENSES


1,116


1,437



2,585


4,510

OTHER (INCOME) EXPENSE, NET


(10)


(3,999)



5


(4,327)











NON-GAAP OPERATING INCOME


$            18,612


$            15,871



$            97,085


$            81,451































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,



2019




2018



(Unaudited)












ASSETS








CASH


$             10,372




$             11,138








ACCOUNTS RECEIVABLE, GROSS


140,728




163,222

ALLOWANCE FOR DOUBTFUL ACCOUNTS


5,212




5,687

ACCOUNTS RECEIVABLE, NET


135,516




157,535








INVENTORIES


368,221




349,811

UNRETURNED CUSTOMER INVENTORY


19,722




20,484

OTHER CURRENT ASSETS


15,602




7,256








TOTAL CURRENT ASSETS


549,433




546,224








PROPERTY, PLANT AND EQUIPMENT, NET


89,649




90,754

OPERATING LEASE RIGHT-OF-USE ASSETS


36,020




-

GOODWILL


77,802




67,321

OTHER INTANGIBLES, NET


64,861




48,411

DEFERRED INCOME TAXES


37,272




42,334

INVESTMENT IN UNCONSOLIDATED AFFILIATES


38,858




32,469

OTHER ASSETS


18,835




15,619








TOTAL ASSETS


$           912,730




$           843,132















LIABILITIES AND STOCKHOLDERS' EQUITY















NOTES PAYABLE


$             52,460




$             43,689

CURRENT PORTION OF OTHER DEBT


4,456




5,377

ACCOUNTS PAYABLE


92,535




94,357

ACCRUED CUSTOMER RETURNS


44,116




57,433

ACCRUED CORE LIABILITY


24,357




31,263

OTHER CURRENT LIABILITIES


91,540




80,467








TOTAL CURRENT LIABILITIES


309,464




312,586








OTHER LONG-TERM DEBT


129




153

NONCURRENT OPERATING LEASE LIABILITIES


28,376




-

ACCRUED ASBESTOS LIABILITIES


49,696




45,117

OTHER LIABILITIES


20,837




18,075








 TOTAL LIABILITIES 


408,502




375,931








 TOTAL STOCKHOLDERS' EQUITY 


504,228




467,201








 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 


$           912,730




$           843,132

 

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows




















(In thousands)



















TWELVE MONTHS ENDED



DECEMBER 31,



2019



2018



(Unaudited)








CASH FLOWS FROM OPERATING ACTIVITIES












NET EARNINGS 

$        57,917



$        43,003


ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH






PROVIDED BY OPERATING ACTIVITIES:






DEPRECIATION AND AMORTIZATION

25,809



24,104


DEFERRED INCOME TAXES

5,094



(10,024)


LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES

11,134



13,851


OTHER

11,359



11,749


CHANGE IN ASSETS AND LIABILITIES:






ACCOUNTS RECEIVABLE

17,929



(13,699)


INVENTORIES

(17,901)



(30,199)


ACCOUNTS PAYABLE

(1,950)



16,894


PREPAID EXPENSES AND OTHER CURRENT ASSETS

(8,296)



4,926


SUNDRY PAYABLES AND ACCRUED EXPENSES 

(18,097)



8,407


OTHER

(6,070)



1,246


NET CASH PROVIDED BY OPERATING ACTIVITIES

76,928



70,258














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

(16,185)



(20,141)


OTHER INVESTING ACTIVITIES

62



107


NET CASH USED IN INVESTING ACTIVITIES 

(54,812)



(29,886)














CASH FLOWS FROM FINANCING ACTIVITIES












NET CHANGE IN DEBT

7,860



(12,196)


PURCHASE OF TREASURY STOCK

(10,738)



(14,886)


DIVIDENDS PAID

(20,593)



(18,854)


OTHER FINANCING ACTIVITIES

93



(185)


NET CASH USED IN FINANCING ACTIVITIES

(23,378)



(46,121)














EFFECT OF EXCHANGE RATE CHANGES ON CASH

496



(436)


NET DECREASE IN CASH AND CASH EQUIVALENTS

(766)



(6,185)


CASH AND CASH EQUIVALENTS at beginning of year

11,138



17,323


CASH AND CASH EQUIVALENTS at end of year

$        10,372



$        11,138

 

 

Cision View original content:http://www.prnewswire.com/news-releases/standard-motor-products-inc-announces-fourth-quarter-and-2019-year-end-results-301007165.html

SOURCE Standard Motor Products, Inc.

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