Standard Motor Products, Inc. Announces Second Quarter 2007 Results and a Quarterly Dividend
NEW YORK, Aug. 6, 2007 -- 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, 2007.
Consolidated net sales for the second quarter of 2007 were $217 million, compared to consolidated net sales of $229.2 million during the comparable quarter in 2006. The shortfall was primarily in Temperature Control. Earnings from continuing operations for the second quarter of 2007 were $5.7 million or 30 cents per diluted share, compared to $5.5 million or 30 cents per diluted share in the second quarter of 2006.
Consolidated net sales for the six month period ended June 30, 2007 were $416.8 million, compared to consolidated net sales of $439.3 million during the comparable period in 2006. Earnings from continuing operations for the six month period ended June 30, 2007 were $8.6 million or 46 cents per diluted share, compared to $8.1 million or 44 cents per diluted share in the comparable period of 2006.
Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "Engine Management, our largest division, had a satisfactory quarter. Sales rebounded from a decline in the first quarter, and were essentially flat in the second quarter. Gross margin continues to improve quarter by quarter. We reached 26.9% in the second quarter, compared to 26.3% in the first quarter, and 24.6% for the full year 2006.
We continue to solicit new business from original equipment (OE) and original equipment service providers (OES). In the last three months, we have been awarded incremental OE and OES business, which will amount to approximately $10 million annualized and will begin in 2008.
"Temperature Control, on the other hand, had a difficult quarter. Sales were down $8.7 million or 12% for the quarter, reflecting a 6% decrease for the six months 2007 compared to 2006. The primary reason was exceptionally cool and damp weather in the center of the country, our largest air conditioning market, and this weather pattern has continued through July. We have also experienced some sales erosion to low priced imports from China. We are in the process of relocating our compressor remanufacturing operations from Grapevine, Texas to Reynosa, Mexico, and we believe this will enable us to compete aggressively with Chinese imports in the future.
"Europe continues to improve. Sales showed a decline, but that is the result of exiting the air conditioning business at the end of 2006. For the first half 2007, gross margin and operating profit are ahead of 2006, and we look for continued improvements going forward.
"Finally, we are pleased to announce that, on July 31, we concluded the sale of our Ft. Worth, Texas facility for $4.5 million, with a pre-tax gain of $0.8 million which will be accounted for in the third quarter. The remaining operations in that location will be transferred to Mexico, outsourced to low cost markets, or relocated to other Four Seasons locations. The proceeds will be used to reduce our bank revolver debt."
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 4, 2007 to stockholders of record on August 15, 2007.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Monday, August 6, 2007. The dial in number is 800-909-5202 (domestic) or 785-830-7975 (international). The playback number is 800-934-8028 (domestic) or 402-220-6989 (international). The conference 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 are those 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,
2007 2006 2007 2006
NET SALES $216,950 $229,174 $416,765 $439,250
COST OF SALES 160,261 172,468 308,201 329,313
GROSS PROFIT 56,689 56,706 108,564 109,937
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 43,324 42,995 86,055 86,783
INTEGRATION EXPENSES 559 143 1,237 230
OPERATING INCOME 12,806 13,568 21,272 22,924
OTHER INCOME, NET 779 810 1,046 1,160
INTEREST EXPENSE 4,795 5,255 9,336 9,708
EARNINGS FROM CONTINUING
OPERATIONS BEFORE TAXES 8,790 9,123 12,982 14,376
INCOME TAX EXPENSE 3,134 3,668 4,390 6,323
EARNINGS FROM CONTINUING
OPERATIONS 5,656 5,455 8,592 8,053
DISCONTINUED OPERATION,
NET OF TAX (279) (289) (628) (1,053)
NET EARNINGS $5,377 $5,166 $7,964 $7,000
NET EARNINGS PER COMMON SHARE:
BASIC EARNINGS FROM
CONTINUING OPERATIONS $0.30 $0.30 $0.46 $0.44
DISCONTINUED OPERATION (0.01) (0.02) $(0.03) (0.06)
NET EARNINGS PER COMMON
SHARE - BASIC $0.29 $0.28 $0.43 $0.38
DILUTED EARNINGS FROM
CONTINUING OPERATIONS $0.30 $0.30 $0.46 $0.44
DISCONTINUED OPERATION (0.02) (0.02) (0.04) (0.06)
NET EARNINGS PER COMMON
SHARE - DILUTED $0.28 $0.28 $0.42 $0.38
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 18,781,388 18,297,155 18,617,453 18,245,253
WEIGHTED AVERAGE NUMBER OF
COMMON AND DILUTIVE
SHARES 18,940,962 18,327,895 18,774,430 18,260,708
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
June 30, December 31,
2007 2006
Cash $21,567 $22,348
Accounts receivable, gross 259,031 193,129
Allowance for doubtful accounts 10,245 9,465
Accounts receivable, net 248,786 183,664
Inventories 243,773 233,970
Other current assets 27,783 21,856
Total current assets 541,909 461,838
Property, plant and equipment, net 76,534 80,091
Goodwill and other intangibles 55,227 56,289
Other assets 38,188 41,874
Total assets $711,858 $640,092
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $181,552 $139,799
Current portion of long term debt 454 542
Accounts payable trade 65,112 53,783
Accrued customer returns 25,869 21,705
Restructuring accrual 666 703
Other current liabilities 64,692 61,993
Total current liabilities 338,345 278,525
Long-term debt 97,703 97,979
Accrued asbestos liability 20,290 20,828
Restructuring accrual 226 383
Postretirement & other liabilities 53,276 51,678
Total liabilities 509,840 449,393
Total stockholders' equity 202,018 190,699
Total liabilities and stockholders' equity $711,858 $640,092