Standard Motor Products, Inc. Announces Third Quarter 2020 Results and Reinstates Quarterly Dividend

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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 salesboth for us and for the industry as a wholerebounded 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

Cision
Cision

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SOURCE Standard Motor Products, Inc.