Standard Motor Products, Inc. Announces Second Quarter 2004 Earnings and a Quarterly Dividend
NEW YORK--July 26, 2004--Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and six months ended June 30, 2004.Consolidated net sales for the second quarter of 2004 were $235 million, compared to consolidated net sales of $166.1 million during the comparable quarter in 2003. Earnings from continuing operations for the second quarter of 2004 were $7.5 million or 38 cents per diluted share, compared to $4.3 million or 34 cents per diluted share in the second quarter of 2003.
Consolidated net sales for the six month period ended June 30, 2004 were $439.8 million, compared to consolidated net sales of $301.9 million during the comparable period in 2003. Earnings from continuing operations for the six month period ended June 30, 2004 were $7 million or 36 cents per diluted share, compared to $3.7 million or 30 cents per diluted share for the comparable period in 2003.
Mr. Lawrence Sills, Standard Motor Products' Chief Executive Officer, commented that: "The consolidated net sales increase in the second quarter and the first half of 2004 was primarily related to the previously announced acquisition of Dana Corporation's Engine Management Division (DEM), effective as of June 30, 2003. Net sales generated in the second quarter from DEM were approximately $62 million. Excluding DEM net sales, our core Engine Management net sales increased $6.6 million or approximately 8% in the second quarter of 2004, compared to the comparable period in 2003. In our Temperature Control business, net sales were basically flat in the second quarter, but were approximately 4% higher in the first half of 2004, compared to the comparable period in 2003.
"Gross margins were 26.5% in the second quarter of 2004, compared to 26.4% in the comparable quarter of 2003 and 24.9% in the first quarter of 2004. We are beginning to see the benefits of the DEM integration, as well as our normal seasonal improvement in Temperature Control. Similar benefits were achieved in selling, general, and administrative (SG&A) expenses as we eliminated redundant costs from the DEM acquisition. SG&A expenses as a percentage of consolidated net sales were 19.6% in the second quarter of 2004, compared to 19.7% in the comparable quarter in 2003."
Mr. Sills added, "We remain on target for completing the DEM integration by year end. All manufacturing and customer/shipping moves have now been implemented, though we are still doing some packaging in Nashville. We have previously announced exit plans for seven DEM facilities; all will be completed by the end of the third quarter of 2004."
Mr. Sills concluded, "We continue to believe that the DEM integration will enable us to generate incremental profits throughout 2004 and an ongoing $40-45 million operating income from the acquisition beginning in 2005."
The Company also announced changes to the membership of its Board of Directors. Effective July 20, 2004, Mr. Arthur Davis and Ms. Marilyn Fife Cragin retired and have been replaced by Mr. Peter Sills and Mr. Richard S. Ward.
Mr. Larry Sills commented, "We sincerely thank Art and Marilyn for their years of service and excellent contributions to the growth of the Company. We now welcome Peter to the Board, where his knowledge of the Company and his legal background will be an excellent asset. Finally, we are pleased to announce that Richard Ward has joined our Board. Dick served as General Counsel, Executive Vice President, and Corporate Secretary of ITT Corporation, and he will bring an added dimension to our Board. Six of our nine Board members are now independent, with three from the founding family."
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 September 1, 2004 to stockholders of record on August 13, 2004.
Standard Motor Products, Inc. will hold a conference call at 11:00 a.m., Eastern Time, on Monday July 26, 2004. The dial in number is 800-362-0653. The playback number is 800-934-3941 (domestic) 402-220-1157 (international) and the 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, and 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
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
NET SALES $ 235,049 $ 166,125 $ 439,830 $ 301,850
COST OF SALES 172,781 122,306 326,602 223,491
----------- ----------- ----------- -----------
GROSS PROFIT 62,268 43,819 113,228 78,359
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 46,150 32,725 93,478 64,715
INTEGRATION COSTS 2,556 554 3,923 776
----------- ----------- ----------- -----------
OPERATING INCOME 13,562 10,540 15,827 12,868
OTHER INCOME
(EXPENSE), NET 700 (129) 943 (403)
INTEREST EXPENSE 4,205 3,188 7,439 6,206
----------- ----------- ----------- -----------
EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES 10,057 7,223 9,331 6,259
INCOME TAX EXPENSE 2,514 2,923 2,333 2,566
----------- ----------- ----------- -----------
EARNINGS FROM
CONTINUING OPERATIONS 7,543 4,300 6,998 3,693
LOSS FROM DISCONTINUED
OPERATION, NET OF TAX (851) (433) (1,276) (781)
----------- ----------- ----------- -----------
NET EARNINGS $ 6,692 $ 3,867 $ 5,722 $ 2,912
=========== =========== =========== ===========
NET EARNINGS PER
COMMON SHARE:
BASIC EARNINGS FROM
CONTINUING
OPERATIONS $ 0.39 $ 0.34 $ 0.36 $ 0.30
DISCONTINUED
OPERATION (0.04) (0.03) (0.06) (0.06)
----------- ----------- ----------- -----------
NET EARNINGS PER
COMMON SHARE -
BASIC $ 0.35 $ 0.31 $ 0.30 $ 0.24
=========== =========== =========== ===========
DILUTED EARNINGS
FROM CONTINUING
OPERATIONS $ 0.38 $ 0.34 $ 0.36 $ 0.30
DISCONTINUED
OPERATION (0.04) (0.03) (0.06) (0.06)
----------- ----------- ----------- -----------
NET EARNINGS PER
COMMON SHARE -
DILUTED $ 0.34 $ 0.31 $ 0.30 $ 0.24
=========== =========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES 19,346,553 12,493,796 19,290,048 12,234,764
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES AND DILUTIVE
SHARES 22,247,798 15,334,225 19,394,511 12,305,907
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
June 30, December 31,
2004 2003
-------------- --------------
Cash and cash equivalents $ 11,152 $ 19,647
Accounts receivable, gross 228,844 179,232
Allowance for doubtful accounts 6,556 5,009
-------------- --------------
Accounts receivable, net 222,288 174,223
Inventories 265,102 253,754
Other current assets 23,182 20,547
-------------- --------------
Total current assets 521,724 468,171
-------------- --------------
Property, plant and equipment, net 106,810 112,549
Goodwill and other intangibles 72,630 71,843
Other assets 41,879 41,962
-------------- --------------
Total assets $ 743,043 $ 694,525
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 124,418 $ 99,699
Current portion of long-term debt 534 3,354
Accounts payable trade 76,103 58,029
Accrued customer returns 26,516 24,115
Restructuring accrual 11,000 16,000
Other current liabilities 81,229 75,641
-------------- --------------
Total current liabilities 319,800 276,838
-------------- --------------
Long-term debt 114,507 114,757
Accrued asbestos liabilities 23,469 24,426
Postretirement & other liabilities 39,893 36,848
Restructuring accrual 15,588 15,615
-------------- --------------
Total liabilities 513,257 468,484
-------------- --------------
Total stockholders' equity 229,786 226,041
-------------- --------------
Total liabilities and stockholders'
equity $ 743,043 $ 694,525
============== ==============