Standard Motor Products, Inc. Announces Third Quarter 2020 Results and Reinstates Quarterly Dividend
NEW YORK, Oct. 28, 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 nine months ended September 30, 2020.
Consolidated net sales for the third quarter of 2020 were $343.6 million, compared to consolidated net sales of $307.7 million during the comparable quarter in 2019. Earnings from continuing operations for the third quarter of 2020 were $36.2 million or $1.59 per diluted share, compared to $22.7 million or $1.00 per diluted share in the third 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 third quarter of 2020 were $36.2 million or $1.59 per diluted share, compared to $23.1 million or $1.02 per diluted share in the third quarter of 2019.
Consolidated net sales for the nine months ended September 30, 2020, were $845.9 million, compared to consolidated net sales of $896.7 million during the comparable period in 2019. Earnings from continuing operations for the nine months ended September 30, 2020, were $57.7 million or $2.53 per diluted share, compared to $56.3 million or $2.47 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 nine months ended September 30, 2020 and 2019 were $57.8 million or $2.53 per diluted share and $57.3 million or $2.51 per diluted share, respectively.
Loss from discontinued operations, net of income taxes, in the third quarter of 2020 was $7.6 million compared to $7.9 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.
Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are very pleased with our third quarter results as we set all-time records for both sales and profits in a single quarter. While sales have not fully caught up year-to-date, our profits are now roughly even with the first nine months of 2019, in this year of dramatic ups and downs. Perhaps more important in the long run is that sales--both for us and for the industry as a whole--rebounded so quickly from the April trough, confirming the resilience of our industry and how essential it is to the economy as a whole.
"These last few months also reconfirmed the strength and loyalty of our work force. With minimal precedent to guide us, our people were able to reconfigure our facilities, and establish safety protocols often more stringent than CDC requirements. In the midst of the crisis our frontline employees came to work every day, often six or seven days a week. As a result, we were able to keep our factories and distribution centers running, while protecting the health of our employees. We wish to publicly thank all of our people for their heroic efforts during the crisis.
"Our sales in the quarter were strong in both segments. Engine Management sales were up 6.3%, partially offsetting the missed sales at the height of the pandemic. Customer POS was strong throughout the quarter and has carried forward into October, which we believe reflects ongoing pent-up demand from earlier in the year. We anticipate demand ultimately normalizing towards our longer range forecast of low single digit growth. Our Temperature Control Sales were extremely strong in the quarter, up 25% over the third quarter last year, the result of very hot summer weather across most of the U.S., following light pre-season orders in the first half of the year.
"On the expense side, as previously announced, we instituted many temporary cost reductions, including limits on travel and other discretionary expenses, as well as a reduction in Executive and Board of Directors compensation, always making sure that none of these actions would affect the long-term health of our company. We anticipate that we will maintain some, but not all, of these reductions in the future.
"Though our crystal ball is somewhat cloudy, with coronavirus infection rates rising again and unemployment still at high levels, we are optimistic looking forward. Accordingly, the Board of Directors has approved a reinstatement of a quarterly dividend of 25 cents per share on common stock outstanding. The dividend will be paid on December 1, 2020, to stockholders of record on November 16, 2020. We have also reinstated our share purchase program, which has remaining authorization from our Board of Directors in the amount of $11.3 million."
Finally, the company announced that Lawrence Sills, Executive Chairman, is stepping down as an officer of the company and will continue in his role as Chairman of the Board, effective January 1, 2021. Mr. Sills stated, "This change in status reflects the fact that I will be stepping back from day-to-day duties, though I will remain closely involved with the Company as Board Chairman. I am very optimistic about the future. We have assembled an experienced and talented management team, which performed so well during the Covid-19 crisis, and am very confident that the team will continue its outstanding performance for many years ahead."
Conference Call
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, October 28, 2020. The dial-in number is 800-791-4813 (domestic) or 785-424-1102 (international). The playback number is 800-934-4851 (domestic) or 402-220-1181 (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
NINE MONTHS ENDED
SEPTEMBER 30,
SEPTEMBER 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
NET SALES $343,609 $307,723 $845,850 $896,661
COST OF SALES 235,861 215,635 603,349 637,705
GROSS PROFIT 107,748 92,088 242,501 258,956
SELLING, GENERAL & ADMINISTRATIVE
EXPENSES 59,497 59,947 163,698 180,483
RESTRUCTURING AND INTEGRATION EXPENSES 250 825 464 1,469
OTHER EXPENSE, NET 37 12 31 15
OPERATING INCOME 47,964 31,304 78,308 76,989
OTHER NON-OPERATING INCOME, NET 514 225 592 2,282
INTEREST EXPENSE 462 1,508 2,107 4,319
EARNINGS FROM CONTINUING OPERATIONS
BEFORE TAXES 48,016 30,021 76,793 74,952
PROVISION FOR INCOME TAXES 11,804 7,367 19,118 18,639
EARNINGS FROM CONTINUING OPERATIONS 36,212 22,654 57,675 56,313
LOSS FROM DISCONTINUED OPERATION, NET
OF INCOME TAXES (7,587) (7,903) (9,456) (9,914)
NET EARNINGS $28,625 $14,751 $48,219 $46,399
NET EARNINGS PER COMMON SHARE:
BASIC EARNINGS FROM CONTINUING
OPERATIONS $1.62 $1.01 $2.58 $2.52
DISCONTINUED OPERATION (0.34) (0.35) (0.42) (0.44)
NET EARNINGS PER COMMON SHARE -BASIC $1.28 $0.66 $2.16 $2.08
DILUTED EARNINGS FROM CONTINUING
OPERATIONS $1.59 $1.00 $2.53 $2.47
DISCONTINUED OPERATION (0.33) (0.35) (0.41) (0.44)
NET EARNINGS PER COMMON SHARE -DILUTED $1.26 $0.65 $2.12 $2.03
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES 22,349,093 22,329,835 22,372,466 22,359,637
WEIGHTED AVERAGE NUMBER OF COMMON AND
DILUTIVE SHARES 22,758,458 22,754,440 22,795,426 22,814,228
STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Income
(In thousands)
THREE MONTHS ENDED
NINE MONTHS ENDED
SEPTEMBER 30,
SEPTEMBER 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Revenues
---
Ignition, Emission Control, Fuel &
Safety
Related System Products $190,891 $180,826 $498,204 $538,718
Wire and Cable 38,663 35,147 105,621 108,486
Engine Management 229,554 215,973 603,825 647,204
Compressors 70,785 52,776 141,011 145,080
Other Climate Control Parts 39,608 35,525 93,216 96,551
Temperature Control 110,393 88,301 234,227 241,631
All Other 3,662 3,449 7,798 7,826
Revenues $343,609 $307,723 $845,850 $896,661
Gross Margin
---
Engine Management $72,361 31.5% $66,264 30.7% $175,296 29.0% $189,737 29.3%
Temperature Control 32,212 29.2% 22,973 26.0% 60,828 26.0% 61,715 25.5%
All Other 3,175 2,851 6,377 7,504
Gross Margin $107,748 31.4% $92,088 29.9% $242,501 28.7% $258,956 28.9%
Selling, General & Administrative
---
Engine Management $35,665 15.5% $35,950 16.6% $100,237 16.6% $110,723 17.1%
Temperature Control 15,571 14.1% 15,495 17.5% 40,568 17.3% 45,033 18.6%
All Other 8,261 8,502 22,893 24,727
Selling, General & Administrative $59,497 17.3% $59,947 19.5% $163,698 19.4% $180,483 20.1%
Operating Income
---
Engine Management $36,696 16.0% $30,314 14.0% $75,059 12.4% $79,014 12.2%
Temperature Control 16,641 15.1% 7,478 8.5% 20,260 8.6% 16,682 6.9%
All Other (5,086) (5,651) (16,516) (17,223)
Subtotal 48,251 14.0% 32,141 10.4% 78,803 9.3% 78,473 8.8%
Restructuring & Integration (250) -0.1% (825) -0.3% (464) -0.1% (1,469) -0.2%
Other Expense, Net (37) 0.0% (12) 0.0% (31) 0.0% (15) 0.0%
Operating Income $47,964 14.0% $31,304 10.2% $78,308 9.3% $76,989 8.6%
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,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS
---
GAAP EARNINGS FROM CONTINUING
OPERATIONS $36,212 $22,654 $57,675 $56,313
RESTRUCTURING AND INTEGRATION EXPENSES 250 825 464 1,469
CERTAIN TAX CREDITS AND PRODUCTION
DEDUCTIONS FINALIZED IN PERIOD (235) (144) (235) (144)
INCOME TAX EFFECT RELATED TO
RECONCILING ITEMS (65) (214) (121) (382)
NON-GAAP EARNINGS FROM CONTINUING
OPERATIONS $36,162 $23,121 $57,783 $57,256
DILUTED EARNINGS PER SHARE FROM
CONTINUING OPERATIONS
---
GAAP DILUTED EARNINGS PER SHARE FROM
CONTINUING OPERATIONS $1.59 $1.00 $2.53 $2.47
RESTRUCTURING AND INTEGRATION EXPENSES 0.01 0.04 0.02 0.06
CERTAIN TAX CREDITS AND PRODUCTION
DEDUCTIONS FINALIZED IN PERIOD (0.01) (0.01) (0.01) (0.01)
INCOME TAX EFFECT RELATED TO
RECONCILING ITEMS (0.01) (0.01) (0.01)
NON-GAAP DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS $1.59 $1.02 $2.53 $2.51
OPERATING INCOME
---
GAAP OPERATING INCOME $47,964 $31,304 $78,308 $76,989
RESTRUCTURING AND INTEGRATION EXPENSES 250 825 464 1,469
OTHER EXPENSE, NET 37 12 31 15
NON-GAAP OPERATING INCOME $48,251 $32,141 $78,803 $78,473
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,
2020 2019
(Unaudited)
ASSETS
---
CASH $16,781 $10,372
ACCOUNTS RECEIVABLE, GROSS 244,106 140,728
ALLOWANCE FOR DOUBTFUL ACCOUNTS 6,061 5,212
ACCOUNTS RECEIVABLE, NET 238,045 135,516
INVENTORIES 311,390 368,221
UNRETURNED CUSTOMER INVENTORY 19,964 19,722
OTHER CURRENT ASSETS 10,094 15,602
TOTAL CURRENT ASSETS 596,274 549,433
PROPERTY, PLANT AND EQUIPMENT, NET 88,288 89,649
OPERATING LEASE RIGHT-OF-USE ASSETS 30,910 36,020
GOODWILL 77,681 77,802
OTHER INTANGIBLES, NET 58,543 64,861
DEFERRED INCOME TAXES 39,807 37,272
INVESTMENT IN UNCONSOLIDATED AFFILIATES 38,945 38,858
OTHER ASSETS 20,549 18,835
TOTAL ASSETS $950,997 $912,730
LIABILITIES AND STOCKHOLDERS' EQUITY
---
NOTES PAYABLE $8,416 $52,460
CURRENT PORTION OF OTHER DEBT 3,580 4,456
ACCOUNTS PAYABLE 79,260 92,535
ACCRUED CUSTOMER RETURNS 75,279 44,116
ACCRUED CORE LIABILITY 19,981 24,357
OTHER CURRENT LIABILITIES 117,298 91,540
TOTAL CURRENT LIABILITIES 303,814 309,464
OTHER LONG-TERM DEBT 103 129
NONCURRENT OPERATING LEASE LIABILITIES 23,452 28,376
ACCRUED ASBESTOS LIABILITIES 53,164 49,696
OTHER LIABILITIES 25,560 20,837
TOTAL LIABILITIES 406,093 408,502
TOTAL STOCKHOLDERS' EQUITY 544,904 504,228
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $950,997 $912,730
STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
2020 2019
---
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
---
NET EARNINGS $48,219 $46,399
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 19,313 19,261
OTHER 19,098 21,623
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE (104,020) (16,583)
INVENTORIES 53,330 11,824
ACCOUNTS PAYABLE (13,117) (24,107)
PREPAID EXPENSES AND OTHER CURRENT ASSETS 5,634 (6,502)
SUNDRY PAYABLES AND ACCRUED EXPENSES 51,867 (2,551)
OTHER (1,719) (6,260)
NET CASH PROVIDED BY OPERATING ACTIVITIES 78,605 43,104
---
CASH FLOWS FROM INVESTING ACTIVITIES
---
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES (43,490)
NET PROCEEDS FROM SALE OF FACILITY 4,801
CAPITAL EXPENDITURES (13,170) (12,329)
OTHER INVESTING ACTIVITIES 14 47
NET CASH USED IN INVESTING ACTIVITIES (13,156) (50,971)
---
CASH FLOWS FROM FINANCING ACTIVITIES
---
NET CHANGE IN DEBT (44,852) 34,656
PURCHASE OF TREASURY STOCK (8,726) (10,738)
DIVIDENDS PAID (5,615) (15,429)
OTHER FINANCING ACTIVITIES 86 1,109
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (59,107) 9,598
---
EFFECT OF EXCHANGE RATE CHANGES ON CASH 67 390
---
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,409 2,121
CASH AND CASH EQUIVALENTS at beginning of
Period 10,372 11,138
CASH AND CASH EQUIVALENTS at end of Period $16,781 $13,259
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SOURCE Standard Motor Products, Inc.
