Standard Motor Products, Inc. Announces First Quarter 2009 Results
NEW YORK, May 6, 2009: Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months ending March 31, 2009.
Consolidated net sales for the first quarter of 2009 were $172.2 million, compared to consolidated net sales of $208.1 million during the comparable quarter in 2008. Earnings from continuing operations for the first quarter of 2009 were $787 thousand or 4 cents per diluted share, compared to $13.3 million or 68 cents per diluted share in the first quarter of 2008. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the first quarter of 2009 were $1.3 million or 7 cents, compared to $3.1 million or 17 cents per diluted share in the first quarter of 2008.
Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "While our results, both in terms of sales and profits, are below those of the comparable quarter a year ago, we have seen a nice bounce back since the fourth quarter of 2008. For the last few months of 2008, our aftermarket customers dramatically reduced their purchases from us, while their sales to end users remained healthy. During the first quarter 2009, their purchases have begun to return to more historic levels.
"However, sales remain down from a year ago. During our fourth quarter conference call, we outlined the reasons for this decline. They include: the divestiture of our Blue Streak Electronics joint venture; a fall in the exchange rates in the U.K. and Canada; a significant drop in OE/OES volume (though this business currently represents only about 12% of our total); a loss of a major portion of Carquest's business, which occurred at the end of 2008; and, in Four Seasons, a conscious decision not to offer a pre-season dating program.
"On the positive side, looking forward, we have gained two major retail accounts for our Temperature Control line. Further, we recently finalized an agreement with Federal-Mogul to acquire their wire and cable product line. The sale will close in approximately four months and will be an excellent addition to our wire and cable business. The operation will be fully absorbed into our existing facilities, without assuming any Federal-Mogul employees or facilities, and will be accretive to earnings before integration costs.
"While our gross margin percentage is slightly lower than a year ago, we anticipate positive comparisons for the balance of the year, as we continue to add production hours and improve efficiency in our three Mexican plants. We are also in the process of implementing a round of price increases.
"We are pleased with our improvement in operating expenses, which are $8 million below a year ago. While some of this is volume related, we are also seeing the results of aggressive cost and headcount reduction. For example, we have reduced headcount by close to 800 from a year ago, a 20% reduction.
"During this period, our number one priority has been to increase cash flow and reduce debt. During the last 12 months, from March 2008 to March 2009, we have reduced total debt by over $85 million. This has been accomplished through a variety of measures, which include: sale of our Long Island City building; substantial reductions in inventory and accounts receivable; a salary freeze; temporarily suspending the quarterly dividend; and all the other cost reduction measures mentioned above.
"In addition, we successfully concluded an exchange offer on May 1, 2009 for $12.3 million of existing debentures due in July into 15% convertible debentures maturing in April 2011. While we continue to explore other means of outside financing, we are confident that with the steps we have taken we have sufficient availability in place to redeem the $32.1 million remaining bonds due in July."
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, May 6, 2009. The dial in number is 800-895-0198 (domestic) or 785-424-1053 (international). The playback number is 800-839-8389 (domestic) or 402-271-9156 (international). The conference ID # is STANDARD.