Standard Motor Products, Inc. Announces Second Quarter 2020 Results
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
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SOURCE Standard Motor Products, Inc.
