Standard Motor Products, Inc. Announces Third Quarter 2003 Earnings and a Quarterly Dividend
NEW YORK--Oct. 3, 20030, 2003--Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reported consolidated net sales for the third quarter of 2003, the three months ended September 30, 2003, of $214.5 million, compared to consolidated net sales of $183.6 million during the comparable quarter in 2002. Earnings from continuing operations for the third quarter of 2003 were $2.0 million or 11 cents per diluted share, compared to $9.8 million or 72 cents per diluted share, in the third quarter of 2002.Consolidated net sales for the nine month period ended September 30, 2003 were $516.3 million, compared to consolidated net sales of $490.6 million during the comparable period in 2002. Earnings from continuing operations for the nine month period ended September 30, 2003 were $5.7 million, or 39 cents per diluted share, compared to $14.2 million, or $1.14 per diluted share, for the comparable period in 2002.
Mr. James Burke, Standard Motor Products' Chief Financial Officer, said, "The consolidated statement of operations reflects the previously announced acquisition of Dana Corporation's Engine Management Division (DEM), effective as of June 30, 2003. Net sales for the quarter ended September 30, 2003 for DEM were $58.3 million."
Commenting on the results, Mr. Lawrence Sills, Standard Motor Products' Chief Executive Officer, said, "Net sales in the third quarter, excluding the addition of DEM volume, were down $7.9 million in our Engine Management division and down $20.8 million in Temperature Control.
"For the year, Temperature Control net sales are down $34.3 million or 15.2%, the result of the loss of AutoZone's business and one of the coolest summers on record. In Engine Management, net sales excluding DEM are down 1.6% for the year. Due to the DEM acquisition, we did not implement our usual 2-3% annual price increase, and this slight decline in Engine Management's units is in line with all our forecasts."
Mr. Sills added, "We continue to make good improvements in gross margin despite the reduction in net sales and the lack of an Engine Management price increase. The third quarter gross margin, excluding DEM, improved 0.5 points and the year-to-date increased 0.4 points versus the comparable periods in the prior year."
Regarding the integration of DEM, Mr. Sills stated, "We are extremely pleased with how the integration is progressing. We are proceeding on schedule with plans to close 7 of the 9 DEM facilities in the near future. We are comfortable with our original estimates to complete the integration before the end of 2004; $30-35 million for restructuring and integration costs over this period; and $55 million in annual savings by 2005."
Finally, we have recently re-examined the provisions of our revolving credit facility. Based on a possible interpretation of the applicable accounting rules, we may be required to reclassify our credit facility from long-term to short-term debt, from 2001 forward, though the existing credit facility does not mature until 2008. The issue is not yet fully resolved and at present, we are continuing to classify those borrowings as long-term debt. In any event, we remain in compliance with all of our debt covenants, and we believe that any reclassification of our revolving credit facility to short-term debt will have no effect on our liquidity, cash flows, debt amortization, profits or other terms within any of our debt facilities.
The Board of Directors has approved payment of a quarterly dividend of nine cents per share on the common stock outstanding. The dividend will be paid on December 1, 2003 to stockholders of record on November 14, 2003.
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Operations
(Dollars in thousands,
except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
NET SALES $214,479 $183,631 $516,329 $490,581
COST OF SALES 156,191 132,680 379,682 361,560
----------- ----------- ----------- -----------
GROSS PROFIT 58,288 50,951 136,647 129,021
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 50,072 33,859 115,563 99,441
----------- ----------- ----------- -----------
OPERATING INCOME 8,216 17,092 21,084 29,580
OTHER INCOME
(EXPENSE), NET (685) 969 (1,088) 1,725
INTEREST EXPENSE 4,070 3,606 10,276 10,877
----------- ----------- ----------- -----------
EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES 3,461 14,455 9,720 20,428
INCOME TAX EXPENSE 1,419 4,623 3,985 6,250
----------- ----------- ----------- -----------
EARNINGS FROM
CONTINUING OPERATIONS 2,042 9,832 5,735 14,178
LOSS FROM DISCONTINUED
OPERATION, NET OF TAX (591) (16,918) (1,372) (18,043)
----------- ----------- ----------- -----------
EARNINGS (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 1,451 (7,086) 4,363 (3,865)
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE,
NET OF TAX - - - (18,350)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $1,451 $(7,086) $4,363 $(22,215)
=========== =========== =========== ===========
NET EARNING (LOSS) PER
COMMON SHARE:
BASIC EARNINGS
(LOSS) FROM
CONTINUING
OPERATIONS $0.11 $0.82 $0.39 $1.19
DISCONTINUED
OPERATION (0.03) (1.41) (0.09) (1.52)
CUMULATIVE EFFECT
OF ACCOUNTING
CHANGE - - - (1.54)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS)
PER COMMON SHARE -
BASIC $0.08 $(0.59) $0.30 $(1.87)
=========== =========== =========== ===========
DILUTED EARNINGS
(LOSS) FROM
CONTINUING
OPERATIONS $0.11 $0.72 $0.39 $1.14
DISCONTINUED
OPERATION (0.03) (1.14) (0.09) (1.22)
CUMULATIVE EFFECT
OF ACCOUNTING
CHANGE - - - (1.24)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS)
PER COMMON SHARE -
DILUTED $0.08 $(0.42) $0.30 $(1.32)
=========== =========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES 19,194,121 11,954,928 14,580,042 11,900,800
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES AND DILUTIVE
SHARES 19,218,855 14,859,401 14,634,466 14,805,121
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATING BALANCE SHEETS
(Dollars in thousands)
ASSETS
September 30, December 31,
2003 2002
------------- ------------
Cash $16,967 $9,690
Marketable securities - 7,200
Accounts receivable, gross 243,152 122,526
Allowance for doubtful accounts 8,661 4,882
------------- ------------
Accounts receivable, net 234,491 117,644
Inventories 252,065 174,785
Other current assets 20,853 19,041
------------- ------------
Total current assets 524,376 328,360
------------- ------------
Property, plant and equipment, net 114,704 103,822
Goodwill 79,867 16,683
Other assets 40,993 41,893
------------- ------------
Total assets $759,940 $490,758
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LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $3,304 $3,369
Current portion of long term debt 3,854 4,108
Accounts payable trade 65,598 35,744
Accrued customer returns 41,187 16,341
Other current liabilities 100,278 51,866
------------- ------------
Total current liabilities 214,221 111,428
------------- ------------
Long-term debt 234,900 169,440
Accrued asbestos liabilities 24,939 25,595
Postretirement & other liabilities 54,510 30,414
------------- ------------
Total liabilities 528,570 336,877
------------- ------------
Total stockholders' equity 231,370 153,881
------------- ------------
Total liabilities and stockholders' equity $759,940 $490,758
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