Standard Motor Products, Inc. Announces Third Quarter 2004 Results
NEW YORK--Nov. 1, 20045, 2004--Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and nine months ended September 30, 2004.Consolidated net sales for the third quarter of 2004 were $203.5 million, compared to consolidated net sales of $214.5 million during the comparable quarter in 2003. Earnings from continuing operations for the third quarter of 2004 were $1.3 million or 7 cents per diluted share, compared to $2 million or 11 cents per diluted share in the third quarter of 2003.
Consolidated net sales for the nine month period ended September 30, 2004 were $643.3 million, compared to consolidated net sales of $516.3 million during the comparable period in 2003. Earnings from continuing operations for the nine month period ended September 30, 2004 were $8.3 million or 43 cents per diluted share, compared to $5.7 million or 39 cents per diluted share for the comparable period in 2003.
Lower sales in the third quarter occurred primarily in the Temperature Control segment. Temperature Control net sales were down by $ 14.4 million for the third quarter and $9 million for the nine months ended September 30, 2004, a result of one of the coldest summers in history. The segment worked aggressively to reduce costs in manufacturing and selling, general and administrative expenses to reflect the reduced sales levels.
As the acquisition of Dana Engine Management (DEM) occurred June 30, 2003, this was the first quarter where there were comparable numbers versus the prior year. Engine Management sales were approximately 2% ahead for the quarter, and operating profit, excluding integration costs, increased by $5.6 million to $13 million.
Mr. Lawrence Sills, Standard Motor Products' Chief Executive Officer, commented, "We are pleased that the integration has proceeded on schedule. All DEM operations - Manufacturing, Distribution, MIS, Finance, Sales and Marketing - have been transferred to SMP locations. As planned, we have exited seven of the acquired nine facilities, and this has been accomplished within our original time frame of twelve to eighteen months. The moves have been completed within budget, and thus far we have maintained all the DEM customers.
We are beginning to see the results of the cost savings within our Engine Management segment, as reflected in the improved operating profit before integration costs. However, we still have work to do, especially in the area of gross margin. We are confident that, as we achieve the planned material product cost savings, and our new employees achieve normal efficiency, we will accomplish our target of $55 million annual savings from the DEM acquisition. It is our goal to begin approaching this number by the second half of 2005."
The Company, in accordance with its accounting policy, recently conducted an actuarial study of its contingent liabilities associated with asbestos. As previously disclosed, in 1986 the Company acquired a brake business, which was subsequently sold in March 1998 and which is accounted for as a loss from discontinued operation on the consolidated financial statements. The updated study has estimated an undiscounted liability for settlement payments, excluding legal costs, ranging from $28.2 to $62.9 million for the period through 2049. The change from the prior year study was a $1.5 million increase for the low end of the range and a $7.9 million decrease for the high end of the range. As a result, in September 2004, an incremental $3 million provision was added to the asbestos accrual increasing the reserve to approximately $28.2 million. The Company will perform an actuarial analysis during the third quarter of each year.
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,
2004 2003 2004 2003
----------- ----------- ----------- -----------
NET SALES $203,487 $214,479 $643,317 $516,329
COST OF SALES 150,945 156,191 477,547 379,682
----------- ----------- ----------- -----------
GROSS PROFIT 52,542 58,288 165,770 136,647
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 43,436 48,956 137,438 113,671
INTEGRATION COSTS 4,669 1,926 8,592 2,702
----------- ----------- ----------- -----------
OPERATING INCOME 4,437 7,406 19,740 20,274
OTHER INCOME
(EXPENSE), NET 823 125 1,766 (278)
INTEREST EXPENSE 3,474 4,070 10,389 10,276
----------- ----------- ----------- -----------
EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES 1,786 3,461 11,117 9,720
INCOME TAX EXPENSE 446 1,419 2,779 3,985
----------- ----------- ----------- -----------
EARNINGS FROM
CONTINUING OPERATIONS 1,340 2,042 8,338 5,735
LOSS FROM DISCONTINUED
OPERATION, NET OF TAX (2,016) (591) (3,292) (1,372)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ (676) $ 1,451 $ 5,046 $ 4,363
=========== =========== =========== ===========
NET EARNINGS PER
COMMON SHARE:
BASIC EARNINGS FROM
CONTINUING
OPERATIONS $ 0.07 $ 0.11 $ 0.43 $ 0.39
DISCONTINUED OPERATION (0.10) (0.03) (0.17) (0.09)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS)
PER COMMON SHARE -
BASIC $ (0.03) $ 0.08 $ 0.26 $ 0.30
=========== =========== =========== ===========
DILUTED EARNINGS
FROM CONTINUING
OPERATIONS $ 0.07 $ 0.11 $ 0.43 $ 0.39
DISCONTINUED
OPERATION (0.10) (0.03) (0.17) (0.09)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS)
PER COMMON SHARE -
DILUTED $ (0.03) $ 0.08 $ 0.26 $ 0.30
=========== =========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES 19,356,423 19,194,121 19,312,334 14,580,042
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES AND
DILUTIVE SHARES 19,460,252 19,218,855 19,415,562 14,634,466
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
September 30, December 31,
2004 2003
------------- ------------
Cash and cash equivalents $ 16,905 $ 19,647
Accounts receivable, gross 182,958 179,232
Allowance for doubtful accounts 6,168 5,009
--------- ---------
Accounts receivable, net 176,790 174,223
Inventories 270,094 253,754
Other current assets 24,583 20,547
--------- ---------
Total current assets 488,372 468,171
--------- ---------
Property, plant and equipment, net 104,305 112,549
Goodwill and other intangibles 72,578 71,843
Other assets 41,989 41,962
--------- ---------
Total assets $707,244 $694,525
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $111,214 $ 99,699
Current portion of long term debt 534 3,354
Accounts payable trade 49,567 58,029
Accrued customer returns 29,453 24,115
Restructuring accrual 8,000 16,000
Other current liabilities 86,234 75,641
--------- ---------
Total current liabilities 285,002 276,838
--------- ---------
Long-term debt 114,381 114,757
Accrued asbestos liabilities 26,278 24,426
Postretirement & other liabilities 41,409 36,848
Restructuring accrual 15,028 15,615
--------- ---------
Total liabilities 482,098 468,484
--------- ---------
Total stockholders' equity 225,146 226,041
--------- ---------
Total liabilities and stockholders' equity $707,244 $694,525
========= =========