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Standard Motor Products, Inc. Announces Second Quarter 2020 Results

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NEW YORK, July 29, 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 six months ended June 30, 2020.

Consolidated net sales for the second quarter of 2020 were $247.9 million, compared to consolidated net sales of $305.2 million during the comparable quarter in 2019. Earnings from continuing operations for the second quarter of 2020 were $11.8 million or 52 cents per diluted share, compared to $20.6 million or 90 cents per diluted share in the second quarter of 2019. 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 2020 were $11.8 million or 52 cents per diluted share, compared to $21.0 million or 92 cents per diluted share in the second quarter of 2019.

Consolidated net sales for the six months ended June 30, 2020, were $502.2 million, compared to consolidated net sales of $588.9 million during the comparable period in 2019.  Earnings from continuing operations for the six months ended June 30, 2020, were $21.5 million or 94 cents per diluted share, compared to $33.7 million or $1.47 per diluted share in the comparable period of 2019.  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 June 30, 2020 and 2019 were $21.6 million or 95 cents per diluted share and $34.1 million or $1.49 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "The second quarter was a period of dramatic transition, both for our company and our industry. We had a very difficult April, but are pleased with the month over month sales improvement since then.

"Beginning in mid-March, and continuing through April, businesses closed down, people sheltered at home, miles driven were dramatically curtailed, and we, and the aftermarket as a whole, saw a significant reduction in volume.  The industry started to recover in May, and in June business rebounded sharply to levels consistent with 2019 volumes. While our second quarter sales were down overall, the monthly cadence reflected positive trends, which bodes well as we enter the third quarter.  

"As we stated in our first quarter release, we had two primary goals as we entered this period. Our first was to guarantee the health and safety of our employees. Our second was to take steps to ensure that we emerge from the crisis as strong, or stronger, than we were when we entered it. We are pleased with our accomplishments to date in both areas.

"Regarding health and safety, we have taken steps to minimize risks in all locations. Our measures include temperature checking, continuous deep cleaning, facility modifications, updated policies for high risk employees, work-from-home allowances, and many other changes. Health and safety remains a high priority for us, and our management team focuses on it on a daily basis.

"As for the second goal, from the early days of the crisis, we began to implement programs to conserve cash and reduce costs.  As we believed this would be a temporary situation, these measures were always intended to be short term in nature and have no adverse effect on our long term strategy or growth. We drew down $75 million from our bank credit lines. We temporarily suspended our stock repurchase program and our quarterly dividend. We reduced compensation for our Board of Directors and senior management, and reduced or eliminated a host of discretionary expenses. However, we have not laid off any salaried staff, and we continue to fund capital projects and invest in new product development.

"As we begin our third quarter, we are pleased that our business is improving. Furthermore, our customers' POS sales are exceeding their comparable figures for 2019. However, the spike in COVID cases and continued high unemployment make the near future difficult to predict.  Accordingly, while we have repaid the $75 million draw down of our bank credit line, we have kept most of our other cost saving actions in place, at least for the short term.  We believe this is the prudent course of action.

"Looking further ahead, we are optimistic about our future. Industry demographics remain favorable, and we are fortunate that the majority of our products are non-discretionary. Most importantly, thanks to the dedication and efforts of our people, our position in the industry has never been stronger."

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, July 29, 2020.  The dial-in number is 888-632-3385 (domestic) or 785-424-1673 (international). The playback number is 800-938-0996 (domestic) or 402-220-1540 (international). The participant passcode is 76717.

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,



2020



2019




2020



2019



(Unaudited)




(Unaudited)

NET SALES


$       247,939



$    305,172




$       502,241



$    588,938














COST OF SALES


183,581



216,267




367,488



422,070














GROSS PROFIT


64,358



88,905




134,753



166,868














SELLING, GENERAL & ADMINISTRATIVE EXPENSES


48,328



60,536




104,201



120,536

RESTRUCTURING AND INTEGRATION EXPENSES


9



644




214



644

OTHER INCOME (EXPENSE), NET


-



3




6



(3)














OPERATING INCOME 


16,021



27,728




30,344



45,685














OTHER NON-OPERATING INCOME, NET


602



1,411




78



2,057














INTEREST EXPENSE


772



1,722




1,645



2,811














EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES


15,851



27,417




28,777



44,931














PROVISION FOR INCOME TAXES


4,009



6,862




7,314



11,272














EARNINGS FROM CONTINUING OPERATIONS


11,842



20,555




21,463



33,659














LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES


(875)



(1,123)




(1,869)



(2,011)














NET EARNINGS


$         10,967



$      19,432




$         19,594



$      31,648















































































NET EARNINGS PER COMMON SHARE:


























   BASIC EARNINGS FROM CONTINUING OPERATIONS


$              0.53



$           0.92




$              0.96



$           1.50

   DISCONTINUED OPERATION


(0.04)



(0.05)




(0.08)



(0.09)

   NET EARNINGS PER COMMON SHARE - BASIC


$              0.49



$           0.87




$              0.88



$           1.41



























   DILUTED EARNINGS FROM CONTINUING OPERATIONS


$              0.52



$           0.90




$              0.94



$           1.47

   DISCONTINUED OPERATION


(0.04)



(0.05)




(0.08)



(0.09)

   NET EARNINGS PER COMMON SHARE - DILUTED


$              0.48



$           0.85




$              0.86



$           1.38



























WEIGHTED AVERAGE NUMBER OF COMMON SHARES


22,330,476



22,328,292




22,384,281



22,374,785

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES


22,718,680



22,795,677




22,793,606



22,857,435

 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income



























(In thousands)





























THREE MONTHS ENDED



SIX MONTHS ENDED




JUNE 30,



JUNE 30,




2020



2019



2020



2019




(Unaudited)



(Unaudited)


Revenues













Ignition, Emission Control, Fuel & Safety Related System Products


$   142,787



$   181,831



$   307,313



$   357,892


Wire and Cable


30,366



36,211



66,958



73,339


        Engine Management


173,153



218,042



374,271



431,231















Compressors


44,878



52,493



70,226



92,304


Other Climate Control Parts


27,514



31,913



53,608



61,026


        Temperature Control


72,392



84,406



123,834



153,330















All Other


2,394



2,724



4,136



4,377


        Revenues


$   247,939



$   305,172



$   502,241



$   588,938















Gross Margin













Engine Management


$     46,230

26.7%


$     63,780

29.3%


$   102,935

27.5%


$   123,473

28.6%

Temperature Control


16,520

22.8%


22,551

26.7%


28,616

23.1%


38,742

25.3%

All Other


1,608



2,574



3,202



4,653


        Gross Margin


$     64,358

26.0%


$     88,905

29.1%


$   134,753

26.8%


$   166,868

28.3%














Selling, General & Administrative













Engine Management


$     29,499

17.0%


$     37,430

17.2%


$     64,572

17.3%


$     74,773

17.3%

Temperature Control


12,553

17.3%


15,397

18.2%


24,997

20.2%


29,538

19.3%

All Other


6,276



7,709



14,632



16,225


        Selling, General & Administrative


$     48,328

19.5%


$     60,536

19.8%


$   104,201

20.7%


$   120,536

20.5%



























Operating Income













Engine Management


$     16,731

9.7%


$     26,350

12.1%


$     38,363

10.3%


$     48,700

11.3%

Temperature Control


3,967

5.5%


7,154

8.5%


3,619

2.9%


9,204

6.0%

All Other


(4,668)



(5,135)



(11,430)



(11,572)


        Subtotal


16,030

6.5%


28,369

9.3%


30,552

6.1%


46,332

7.9%

Restructuring & Integration


(9)

0.0%


(644)

-0.2%


(214)

0.0%


(644)

-0.1%

Other Income (Expense), Net


-

0.0%


3

0.0%


6

0.0%


(3)

0.0%

        Operating Income


$     16,021

6.5%


$     27,728

9.1%


$     30,344

6.0%


$     45,685

7.8%

 

 

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,



2020


2019



2020


2019


(Unaudited)


(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS




















GAAP EARNINGS FROM CONTINUING OPERATIONS


$11,842


$20,555



$21,463


$33,659











RESTRUCTURING AND INTEGRATION EXPENSES


9


644



214


644

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(2)


(168)



(56)


(168)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS


$11,849


$21,031



$21,621


$34,135





















DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS




















GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$    0.52


$    0.90



$    0.94


$    1.47











RESTRUCTURING AND INTEGRATION EXPENSES


-


0.03



0.01


0.03

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


-


(0.01)



-


(0.01)











NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$    0.52


$    0.92



$    0.95


$    1.49





















OPERATING INCOME




















GAAP OPERATING INCOME


$16,021


$27,728



$30,344


$45,685











RESTRUCTURING AND INTEGRATION EXPENSES


9


644



214


644

OTHER (INCOME) EXPENSE, NET


-


(3)



(6)


3











NON-GAAP OPERATING INCOME


$16,030


$28,369



$30,552


$46,332


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)

















JUNE 30,




DECEMBER 31,



2020




2019



(Unaudited)












ASSETS








CASH


$    22,510




$              10,372








ACCOUNTS RECEIVABLE, GROSS


190,292




140,728

ALLOWANCE FOR DOUBTFUL ACCOUNTS


5,774




5,212

ACCOUNTS RECEIVABLE, NET


184,518




135,516








INVENTORIES


353,315




368,221

UNRETURNED CUSTOMER INVENTORY


18,868




19,722

OTHER CURRENT ASSETS


10,687




15,602








TOTAL CURRENT ASSETS


589,898




549,433








PROPERTY, PLANT AND EQUIPMENT, NET


88,022




89,649

OPERATING LEASE RIGHT-OF-USE ASSETS


32,536




36,020

GOODWILL


77,593




77,802

OTHER INTANGIBLES, NET


60,594




64,861

DEFERRED INCOME TAXES


37,040




37,272

INVESTMENT IN UNCONSOLIDATED AFFILIATES


39,319




38,858

OTHER ASSETS


19,763




18,835








TOTAL ASSETS


$  944,765




$           912,730















LIABILITIES AND STOCKHOLDERS' EQUITY















NOTES PAYABLE


$    85,000




$              52,460

CURRENT PORTION OF OTHER DEBT


6,084




4,456

ACCOUNTS PAYABLE


72,133




92,535

ACCRUED CUSTOMER RETURNS


64,803




44,116

ACCRUED CORE LIABILITY


19,440




24,357

OTHER CURRENT LIABILITIES


90,146




91,540








TOTAL CURRENT LIABILITIES


337,606




309,464








OTHER LONG-TERM DEBT


108




129

NONCURRENT OPERATING LEASE LIABILITIES


25,148




28,376

ACCRUED ASBESTOS LIABILITIES


47,708




49,696

OTHER LIABILITIES


23,539




20,837








 TOTAL LIABILITIES 


434,109




408,502








 TOTAL STOCKHOLDERS' EQUITY 


510,656




504,228








 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 


$  944,765




$           912,730

 

 

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows




















(In thousands)















SIX MONTHS ENDED



JUNE 30,



2020



2019



(Unaudited)








CASH FLOWS FROM OPERATING ACTIVITIES












NET EARNINGS 

$ 19,594



$ 31,648


ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH USED IN OPERATING ACTIVITIES:






DEPRECIATION AND AMORTIZATION

12,877



12,744


OTHER

9,666



9,621


CHANGE IN ASSETS AND LIABILITIES:






ACCOUNTS RECEIVABLE

(51,326)



(26,622)


INVENTORIES

12,725



(19,691)


ACCOUNTS PAYABLE

(21,804)



(6,994)


PREPAID EXPENSES AND OTHER CURRENT ASSETS

5,664



(6,406)


SUNDRY PAYABLES AND ACCRUED EXPENSES 

14,788



(7,545)


OTHER

(3,069)



(6,261)


NET CASH USED IN OPERATING ACTIVITIES

(885)



(19,506)














CASH FLOWS FROM INVESTING ACTIVITIES












ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

-



(38,427)


NET PROCEEDS FROM SALE OF FACILITY

-



4,801


CAPITAL EXPENDITURES

(9,026)



(7,578)


OTHER INVESTING ACTIVITIES

6



46


NET CASH USED IN INVESTING ACTIVITIES 

(9,020)



(41,158)














CASH FLOWS FROM FINANCING ACTIVITIES












NET CHANGE IN DEBT

34,349



85,956


PURCHASE OF TREASURY STOCK

(8,726)



(10,738)


DIVIDENDS PAID

(5,615)



(10,296)


OTHER FINANCING ACTIVITIES

1,818



1,691


NET CASH PROVIDED BY FINANCING ACTIVITIES

21,826



66,613














EFFECT OF EXCHANGE RATE CHANGES ON CASH

217



332


NET INCREASE IN CASH AND CASH EQUIVALENTS

12,138



6,281


CASH AND CASH EQUIVALENTS at beginning of Period

10,372



11,138


CASH AND CASH EQUIVALENTS at end of Period

$ 22,510



$ 17,419

 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/standard-motor-products-inc-announces-second-quarter-2020-results-301101744.html

SOURCE Standard Motor Products, Inc.

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