Standard Motor Products, Inc. Announces Second Quarter 2017 Results And A Quarterly Dividend

NEW YORK, July 31, 2017 /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 ending June 30, 2017.

Consolidated net sales for the second quarter of 2017 were $312.7 million, compared to consolidated net sales of $289 million during the comparable quarter in 2016. Earnings from continuing operations for the second quarter of 2017 were $18.3 million or 78 cents per diluted share, compared to $19.9 million or 86 cents per diluted share in the second quarter of 2016. 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 2017 were $18.8 million or 81 cents per diluted share, compared to $20.2 million or 88 cents per diluted share in the second quarter of 2016.

Consolidated net sales for the six month period ended June 30, 2017, were $595.1 million, compared to consolidated net sales of $527.9 million during the comparable period in 2016. Earnings from continuing operations for the six month period ended June 30, 2017, were $34.6 million or $1.48 per diluted share, compared to $32.5 million or $1.41 per diluted share in the comparable period of 2016. 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, 2017, and 2016 were $36 million or $1.54 per diluted share and $32.8 million or $1.43 per diluted share, respectively.

Mr. Eric P. Sills, Standard Motor Products' Chief Executive Officer and President stated, "A key factor in the second quarter was the step back in Engine Management gross margin, from 32.1% in 2016 to 29.4% this year. This led to a decline in earnings in the second quarter, though we remain ahead of 2016 in both sales and earnings year-to-date. This gross margin decline is primarily the result of the previously announced plant moves. These are proceeding according to plan, and we are pleased with the progress.

"As we move ahead with the integration of the General Cable North American ignition wire acquisition, we have begun transferring all production from the acquired plant in Nogales, Mexico, to our facility in Reynosa, Mexico. In addition, starting last year, we transferred the balance of our ignition coil production to Bialystok, Poland, and diesel fuel injectors and pumps to Greenville, South Carolina, both of which are still in the process of achieving full benefits. Finally, we have begun the move of our electronics plant in Orlando, Florida, to our plant in Independence, Kansas.

"We plan to complete all of these moves, in stages, over the next 9-12 months. They will result in the closing of three facilities”Nogales, Mexico; Grapevine, Texas; and Orlando, Florida.

"In the short run, we are incurring additional costs, including ramp-up inefficiencies, duplication of overhead, and the expenses resulting from hiring and training hundreds of new employees. This is the primary cause of the decline in gross margin.

"As we work our way through this period, we anticipate a gradual return to our historical Engine Management gross margin of 31-32%, plus an additional $7-10 million in company-wide operational savings, including SG&A.

"In all other areas, we are pleased with our results. Sales continue to outpace 2016, up 8.2% for the quarter and 12.7% for the half. Excluding the sales from the incremental General Cable ignition wire business, acquired in May 2016, the quarter and half of 2017 are up over the previous year by 3.0% and 5.5% respectively.

"By segment, Engine Management sales increased 12.3% for the quarter and 14.5% year-to-date. Excluding the incremental General Cable business, the quarter and half of 2017 increased 4.8% and 4.4%, respectively. This was partly due to pipeline orders from certain customers, who continue to expand the breadth and depth of their inventories, as well as the growth of some of our newest product categories.

"Our Temperature Control division continues to post strong results. Sales are up 9.3% year-to-date, though second quarter sales were essentially flat. This was due to timing of pre-season orders, which hit heavier in the first quarter of 2017 than in the previous year, and therefore the year-to-date numbers are more meaningful. Temperature Control's second quarter gross margin of 26.4% is up almost 300 basis points compared with 2016, as we are seeing the benefits of our recent cost reduction initiatives.

"To conclude, while we are temporarily feeling the impact of costs associated with our strategic restructuring initiatives, we are confident of the benefits, and we are excited about our future. We are very proud of all of our people, and we thank them for their efforts and dedication as we work through these moves."

The Board of Directors has approved payment of a quarterly dividend of nineteen cents per share on the common stock outstanding. The dividend will be paid on September 1, 2017 to stockholders of record on August 15, 2017.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Monday, July 31, 2017. The dial-in number is 800-791-4813 (domestic) or 785-424-1102 (international). The playback number is 800-283-8520 (domestic) or 402-220-0870 (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




SIX MONTHS ENDED





JUNE 30,




JUNE 30,





2017



2016




2017



2016





(Unaudited)




(Unaudited)



NET SALES


$ 312,729



$ 288,977




$ 595,107



$ 527,888


















COST OF SALES


222,063



201,901




420,331



367,816


















GROSS PROFIT


90,666



87,076




174,776



160,072


















SELLING, GENERAL & ADMINISTRATIVE EXPENSES


60,076



54,758




117,436



107,756



RESTRUCTURING AND INTEGRATION EXPENSES


1,235



771




2,782



1,012



OTHER INCOME , NET


314



297




630



559


















OPERATING INCOME


29,669



31,844




55,188



51,863


















OTHER NON-OPERATING INCOME, NET


740



265




1,563



598


















INTEREST EXPENSE


722



394




1,190



705


















EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES


29,687



31,715




55,561



51,756


















PROVISION FOR INCOME TAXES


11,426



11,853




20,933



19,238


















EARNINGS FROM CONTINUING OPERATIONS


18,261



19,862




34,628



32,518


















LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES


(497)



(618)




(1,130)



(1,070)


















NET EARNINGS


$ 17,764



$ 19,244




$ 33,498



$ 31,448





























































































NET EARNINGS PER COMMON SHARE:






























BASIC EARNINGS FROM CONTINUING OPERATIONS


$ 0.80



$ 0.87




$ 1.52



$ 1.43



DISCONTINUED OPERATION


(0.02)



(0.02)




(0.05)



(0.04)



NET EARNINGS PER COMMON SHARE - BASIC


$ 0.78



$ 0.85




$ 1.47



$ 1.39

































DILUTED EARNINGS FROM CONTINUING OPERATIONS


$ 0.78



$ 0.86




$ 1.48



$ 1.41



DISCONTINUED OPERATION


(0.02)



(0.02)




(0.04)



(0.04)



NET EARNINGS PER COMMON SHARE - DILUTED


$ 0.76



$ 0.84




$ 1.44



$ 1.37

































WEIGHTED AVERAGE NUMBER OF COMMON SHARES


22,820,079



22,705,310




22,833,263



22,673,811



WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES


23,329,082



23,018,730




23,332,480



22,988,502



STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income



























(In thousands)









































THREE MONTHS ENDED



SIX MONTHS ENDED




JUNE 30,



JUNE 30,




2017



2016



2017



2016




(unaudited)



(unaudited)


Revenues













Engine Management


$ 223,349



$ 198,848



$ 434,663



$ 379,529


Temperature Control


87,391



87,503



157,681



144,269


All Other


1,989



2,626



2,763



4,090




$ 312,729



$ 288,977



$ 595,107



$ 527,888















Gross Margin













Engine Management


$ 65,599

29.4%


$ 63,831

32.1%


$ 129,723

29.8%


$ 121,107

31.9%

Temperature Control


23,111

26.4%


20,584

23.5%


40,818

25.9%


34,674

24.0%

All Other


1,956



2,661



4,235



4,291




$ 90,666

29.0%


$ 87,076

30.1%


$ 174,776

29.4%


$ 160,072

30.3%














Selling, General & Administrative













Engine Management


$ 38,180

17.1%


$ 33,192

16.7%


$ 74,208

17.1%


$ 66,249

17.5%

Temperature Control


14,544

16.6%


14,257

16.3%


27,550

17.5%


25,951

18.0%

All Other


7,352



7,309



15,678



15,556




$ 60,076

19.2%


$ 54,758

18.9%


$ 117,436

19.7%


$ 107,756

20.4%



























Operating Income













Engine Management


$ 27,419

12.3%


$ 30,639

15.4%


$ 55,515

12.8%


$ 54,858

14.5%

Temperature Control


8,567

9.8%


6,327

7.2%


13,268

8.4%


8,723

6.0%

All Other


(5,396)



(4,648)



(11,443)



(11,265)




30,590

9.8%


32,318

11.2%


57,340

9.6%


52,316

9.9%

Restructuring & Integration


(1,235)

-0.4%


(771)

-0.3%


(2,782)

-0.5%


(1,012)

-0.2%

Other Income, Net


314

0.1%


297

0.1%


630

0.1%


559

0.1%



$ 29,669

9.5%


$ 31,844

11.0%


$ 55,188

9.3%


$ 51,863

9.8%

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,



2017


2016



2017


2016


(Unaudited)


(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS




















GAAP EARNINGS FROM CONTINUING OPERATIONS


$ 18,261


$ 19,862



$ 34,628


$ 32,518











RESTRUCTURING AND INTEGRATION EXPENSES


1,235


771



2,782


1,012

GAIN FROM SALE OF BUILDINGS


(262)


(262)



(524)


(524)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(389)


(205)



(903)


(196)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS


$ 18,845


$ 20,166



$ 35,983


$ 32,810





















DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS




















GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$ 0.78


$ 0.86



$ 1.48


$ 1.41











RESTRUCTURING AND INTEGRATION EXPENSES


0.05


0.03



0.12


0.04

GAIN FROM SALE OF BUILDINGS


(0.01)


(0.01)



(0.02)


(0.02)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(0.01)


-



(0.04)


-











NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$ 0.81


$ 0.88



$ 1.54


$ 1.43





















OPERATING INCOME




















GAAP OPERATING INCOME


$ 29,669


$ 31,844



$ 55,188


$ 51,863











RESTRUCTURING AND INTEGRATION EXPENSES


1,235


771



2,782


1,012

OTHER INCOME, NET


(314)


(297)



(630)


(559)











NON-GAAP OPERATING INCOME


$ 30,590


$ 32,318



$ 57,340


$ 52,316































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,



2017




2016



(Unaudited)












ASSETS









CASH


$ 16,389




$ 19,796








ACCOUNTS RECEIVABLE, GROSS


193,642




139,055

ALLOWANCE FOR DOUBTFUL ACCOUNTS


5,883




4,425

ACCOUNTS RECEIVABLE, NET


187,759




134,630








INVENTORIES


340,886




312,477

OTHER CURRENT ASSETS


9,436




7,318








TOTAL CURRENT ASSETS


554,470




474,221








PROPERTY, PLANT AND EQUIPMENT, NET


81,973




78,499

GOODWILL


67,401




67,231

OTHER INTANGIBLES, NET


60,008




64,056

DEFERRED INCOME TAXES


50,407




51,127

OTHER ASSETS


36,174




33,563








TOTAL ASSETS


$ 850,433




$ 768,697















LIABILITIES AND STOCKHOLDERS' EQUITY
















NOTES PAYABLE


$ 78,946




$ 54,812

CURRENT PORTION OF LONG TERM DEBT


46




43

ACCOUNTS PAYABLE


104,074




83,878

ACCRUED CUSTOMER RETURNS


45,779




40,176

OTHER CURRENT LIABILITIES


106,307




104,932








TOTAL CURRENT LIABILITIES


335,152




283,841








LONG-TERM DEBT


101




120

ACCRUED ASBESTOS LIABILITIES


29,383




31,328

OTHER LIABILITIES


13,573




12,380








TOTAL LIABILITIES


378,209




327,669








TOTAL STOCKHOLDERS' EQUITY


472,224




441,028








TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$ 850,433




$ 768,697

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows




















(In thousands)



















SIX MONTHS ENDED



JUNE 30,



2017



2016



(Unaudited)








CASH FLOWS FROM OPERATING ACTIVITIES












NET EARNINGS

$ 33,498



$ 31,448


ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH






PROVIDED BY (USED IN) OPERATING ACTIVITIES:






DEPRECIATION AND AMORTIZATION

11,316



9,269


OTHER

7,498



8,085


CHANGE IN ASSETS AND LIABILITIES:






ACCOUNTS RECEIVABLE

(53,069)



(41,726)


INVENTORY

(27,048)



(20,819)


ACCOUNTS PAYABLE

17,475



18,989


OTHER

3,495



18,482


NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(6,835)



23,728














CASH FLOWS FROM INVESTING ACTIVITIES












ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

-



(67,289)


CAPITAL EXPENDITURES

(8,843)



(10,134)


OTHER INVESTING ACTIVITIES

2



5


NET CASH USED IN INVESTING ACTIVITIES

(8,841)



(77,418)














CASH FLOWS FROM FINANCING ACTIVITIES












NET CHANGE IN DEBT

24,113



52,676


PURCHASE OF TREASURY STOCK

(5,176)



(377)


DIVIDENDS PAID

(8,674)



(7,705)


OTHER FINANCING ACTIVITIES

1,488



2,609


NET CASH PROVIDED BY FINANCING ACTIVITIES

11,751



47,203














EFFECT OF EXCHANGE RATE CHANGES ON CASH

518



82


NET DECREASE IN CASH AND CASH EQUIVALENTS

(3,407)



(6,405)


CASH AND CASH EQUIVALENTS at beginning of Period

19,796



18,800


CASH AND CASH EQUIVALENTS at end of Period

$ 16,389



$ 12,395

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SOURCE Standard Motor Products, Inc.

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