Standard Motor Products, Inc. Announces Fourth Quarter and Full Year 2005 Results
NEW YORK, March 15 -- Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and for the year ended December 31, 2005.
Consolidated net sales for the fourth quarter of 2005 were $172.1 million, compared to consolidated net sales of $181 million during the comparable quarter in 2004. Losses from continuing operations for the fourth quarter of 2005 were $5.7 million or 29 cents per diluted share, compared to $17.2 million or 89 cents per diluted share in the fourth quarter of 2004.
Consolidated net sales for 2005 were $830.4 million, compared to consolidated net sales of $824.3 million in 2004. Losses from continued operations for 2005 were $1.8 million or 9 cents per diluted share, compared to $8.9 million or 46 cents per diluted share in 2004.
Commenting on the results, Mr. Lawrence Sills, Standard Motor Products' Chairman and Chief Executive Officer, said, "While we are obviously not satisfied with the 2005 financial results, we are pleased to report that the integration of our Engine Management business is now essentially complete. During these past 2-1/2 years we have relocated seven of nine Dana facilities, merged all support functions, and combined and re-valued millions of dollars of inventory. This has been a long, arduous, and costly task -- we publicly commend all our people for their efforts -- but this task is now behind us. Importantly, we have maintained the entire customer base.
"We have achieved much of the savings we set out to accomplish. This is most apparent in SG&A, where we have reduced the figure from 22.6% in 2003 to 19.6% in 2005 (exclusive of integration expenses and the A/R draft program), a savings of approximately $23 million. The gross margin, however, was negatively impacted in 2005 by the following: price reductions early in the year to match OE; inventory writedowns as we merged the acquired inventories; and ongoing negative trends in product mix and channel mix.
"Now, with the integration process complete, and the one-time costs behind us, we will refocus our attention to gross margin improvement. We have plans in place to manufacture products we have been purchasing at premium prices, and to re-source others to low cost areas. We have also implemented price increases over the past 90 days. We are counting on these steps to lead to improved Engine Management gross margins in 2006."
Turning to 2005 results, Mr. Sills commented, "Engine Management net sales were down 2.8% for the year, with most of the reduction coming in the fourth quarter. On a positive note, Engine Management sales for the first two months of 2006 have been running ahead of 2005.
"Temperature Control, as expected, had a good year. We finally experienced a warm summer, after a series of cool ones, and the results showed in both improved sales and profits. Our goal in this division is to continue to work on cost reduction, so that we can achieve healthy profits in cool summers as well.
"There were other positive steps taken in 2005, which were previously announced. First, we amended our retiree medical program, with an estimated savings of $5 million per year. Second, at year-end, we finalized an agreement with Dana to pre-pay a $15 million note, and to buy back approximately 1.4 million shares of SMP stock."
Mr. Sills concluded, "While, again, we are disappointed in our 2005 financial results, now that the Engine Management integration is behind us, we feel we are well positioned for the future. It is now up to us to implement our plans for cost and profit improvement."
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2005 2004 2005 2004
NET SALES $172,137 $180,966 $830,413 $824,283
COST OF SALES 132,639 151,743 644,433 629,290
GROSS PROFIT 39,498 29,223 185,980 194,993
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 41,641 41,414 166,556 178,852
GOODWILL IMPAIRMENT - 6,429 - 6,429
INTEGRATION EXPENSES 722 2,857 5,342 11,449
OPERATING INCOME (LOSS) (2,865) (21,477) 14,082 (1,737)
OTHER INCOME (EXPENSE), NET 1,602 1,095 2,648 2,861
INTEREST EXPENSE 4,460 3,321 17,077 13,710
LOSS FROM CONTINUING
OPERATIONS BEFORE TAXES (5,723) (23,703) (347) (12,586)
PROVISION (BENEFIT) FOR
INCOME TAXES (18) (6,458) 1,423 (3,679)
LOSS FROM CONTINUING
OPERATIONS (5,705) (17,245) (1,770) (8,907)
DISCONTINUED OPERATION,
NET OF TAX (535) (617) (1,775) (3,909)
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE - (1,564) - (1,564)
NET LOSS $(6,240) $(19,426) $(3,545) $(14,380)
NET LOSS PER COMMON SHARE:
BASIC LOSS FROM
CONTINUING OPERATIONS $(0.29) $(0.89) $(0.09) $(0.46)
DISCONTINUED OPERATION (0.03) (0.03) (0.09) (0.20)
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE - (0.08) - (0.08)
NET LOSS PER COMMON
SHARE - BASIC $(0.32) $(1.00) $(0.18) $(0.74)
DILUTED LOSS FROM
CONTINUING OPERATIONS $(0.29) $(0.89) $(0.09) $(0.46)
DISCONTINUED OPERATION (0.03) (0.03) (0.09) (0.20)
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE - (0.08) - (0.08)
NET LOSS PER COMMON
SHARE - DILUTED $(0.32) $(1.00) $(0.18) $(0.74)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 19,504,191 19,388,015 19,507,818 19,331,358
WEIGHTED AVERAGE NUMBER OF
COMMON AND DILUTIVE
SHARES 19,504,191 19,388,015 19,507,818 19,331,358
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATING BALANCE SHEETS
(Dollars in thousands)
ASSETS
December 31, December 31,
2005 2004
Cash $14,046 $14,934
Accounts receivable, gross 185,868 160,706
Allowance for doubtful accounts 9,574 9,354
Accounts receivable, net 176,294 151,352
Inventories 243,297 258,641
Other current assets 22,053 22,289
Total current assets 455,690 447,216
Property, plant and equipment, net 85,805 97,425
Goodwill and other intangibles 67,402 69,911
Other assets 44,147 42,017
Total assets $653,044 $656,569
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $149,236 $109,416
Current portion of long term debt 542 534
Accounts payable trade 52,535 46,487
Accrued customer returns 22,346 23,127
Restructuring accrual 1,286 6,999
Other current liabilities 59,977 65,893
Total current liabilities 285,922 252,456
Long-term debt 98,549 114,236
Postretirement & other liabilities 45,962 44,111
Restructuring accrual 11,348 12,394
Accrued asbestos liability 25,556 26,060
Total liabilities 467,337 449,257
Total stockholders' equity 185,707 207,312
Total liabilities and stockholders' equity $653,044 $656,569