Standard Motor Products, Inc. Announces Third Quarter 2009 Results
NEW YORK, Oct. 27, 2009 -- Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reports today its consolidated financial results for the three months and nine months ended September 30, 2009.
Consolidated net sales for the third quarter of 2009 were $205.6 million, compared to consolidated net sales of $202.9 million during the comparable quarter in 2008. Earnings from continuing operations for the third quarter of 2009 were $4.7 million or 25 cents per diluted share, compared to earnings of $397 thousand or 2 cents per diluted share in the third quarter of 2008. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the third quarter of 2009 were $6.6 million or 35 cents per diluted share, compared to earnings in the comparable quarter in 2008 of $499 thousand or 3 cents per diluted share. (Though the 2008 figure would have been 13 cents per share with a normalized 40% tax rate).
Consolidated net sales for the nine month period ended September 30, 2009 were $575.3 million, compared to consolidated net sales of $626.4 million during the comparable period in 2008. Earnings from continuing operations for the nine month period ended September 30, 2009 were $11.1 million or 59 cents per diluted share, compared to $13 million or 70 cents per diluted share in the comparable period of 2008. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the nine months ended 2009 and 2008 were $13.1 million or 70 cents per diluted share and $3.5 million or 19 cents per diluted share, respectively.
Cash flow generated from operating activities increased by $28 million in the third quarter 2009 and $97 million over the first nine months of this year. Total debt has been reduced by $119 million to $111 million at September 30, 2009 compared to $230 million at September 2008.
Today the Company also announces that it is engaged in exploratory discussions with the managers of its European business regarding their interest in acquiring the business via a management buy-out. Proposed terms of a transaction would include the sale of the European distribution business for pounds Sterling 1.8 million ($2.9 million) in cash and a promissory note and approximately pounds Sterling 1.8 million ($2.9 million) in assumed debt. In connection with the proposed sale, the Company would retain its manufacturing operation in Poland, certain land available for sale in the United Kingdom, and a small investment in a joint venture. If the transaction is consummated under the above terms, the estimated non-cash charges for the transaction would range from pounds Sterling 4.0 million ($6.4 million) to pounds Sterling 4.5 million ($7.2 million). (U.S. dollar equivalents are calculated at an assumed foreign currency exchange rate of GBP 1.60.)
Commenting on the results, Mr. Lawrence Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are quite pleased with our third quarter results. For the first time this year, sales were ahead of the comparable quarter of 2008, despite the continued headwinds of the loss of a major account at the end of 2008, the divestiture of Blue Streak Electronics, and the fall-off of OE sales. Contributing to the sales increase was new Temperature Control business from two major retailers, and pipeline orders for Engine Management for CSK, as stores and inventories were being upgraded as part of the O'Reilly acquisition. Sales for the nine months, however, remain behind 2008 for the reasons stated above.
"Gross margin percentage edged up slightly, for the quarter and the nine months, as our facilities in Mexico continue to grow and improve. We now have over 800 people in three plants in Reynosa, a significant increase over the last two years, with plans for increased growth in 2010.
"Our people continue to do an excellent job controlling Selling, General and Administrative (SG&A) expenses. SG&A expenses were $4 million below 2008 for the quarter and $18 million below 2008 for the nine months. A key part of the saving was a reduction of over 100 salaried employees over the last 12 months, roughly 10% of the total.
"All this added up to a substantial increase in earnings per share, excluding non-operational gains and losses.
"At the same time we were able to make significant improvements in our balance sheet. In July we retired the balance of our convertible bonds. Our total debt has been reduced by over 50% in the last twelve months, from $230 million to $111 million. In all, we are extremely proud of our people for what they have been able to accomplish.
"Looking at the balance of the year, due to the seasonal nature of our Temperature Control business, we typically budget a small loss for the fourth quarter. We expect that this fourth quarter will follow historical patterns.
"Finally, as stated above, we are in exploratory discussions to sell our European distribution business to our local management team. We have concluded that this does not represent a core business for the Company. However, we intend to keep our manufacturing operation in Bialystok, Poland. With a low cost structure, and the availability of highly skilled people, we believe this operation will play a major role in our future."
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Tuesday, October 27, 2009. The dial in number is 800-895-1241 (domestic) or 785-424-1056 (international). The playback number is 800-388-5895 (domestic) or 402-220-1110 (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
(In thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited) (Unaudited)
NET SALES $205,577 $202,938 $575,297 $626,365
COST OF SALES 155,774 154,166 438,195 477,740
------- ------- ------- -------
GROSS PROFIT 49,803 48,772 137,102 148,625
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 36,775 41,114 109,607 127,503
RESTRUCTURING AND
INTEGRATION EXPENSES 3,304 1,905 5,677 6,117
----- ----- ----- -----
OPERATING INCOME 9,724 5,753 21,818 15,005
OTHER INCOME, NET 783 1,293 4,310 21,665
INTEREST EXPENSE 2,423 3,289 7,225 11,005
----- ----- ----- ------
EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES 8,084 3,757 18,903 25,665
INCOME TAX EXPENSE 3,360 3,360 7,754 12,693
----- ----- ----- ------
EARNINGS FROM
CONTINUING OPERATIONS 4,724 397 11,149 12,972
LOSS FROM
DISCONTINUED
OPERATION, NET OF TAX (1,639) (1,579) (2,221) (2,228)
------ ------ ------ ------
NET EARNINGS (LOSS) $3,085 $(1,182) $8,928 $10,744
====== ======= ====== =======
NET EARNINGS (LOSS) PER
COMMON SHARE:
BASIC EARNINGS FROM
CONTINUING
OPERATIONS $0.25 $0.02 $0.59 $0.70
DISCONTINUED
OPERATION (0.09) (0.08) (0.11) (0.12)
----- ----- ----- -----
NET EARNINGS (LOSS)
PER COMMON SHARE -
BASIC $0.16 $(0.06) $0.48 $0.58
===== ====== ===== =====
DILUTED EARNINGS FROM
CONTINUING
OPERATIONS $0.25 $0.02 $0.59 $0.70
DISCONTINUED
OPERATION (0.09) (0.08) (0.11) (0.12)
----- ----- ----- -----
NET EARNINGS (LOSS)
PER COMMON SHARE -
DILUTED $0.16 $(0.06) $0.48 $0.58
===== ====== ===== =====
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES 18,895,299 18,558,330 18,769,791 18,479,817
WEIGHTED AVERAGE
NUMBER OF COMMON AND
DILUTIVE SHARES 19,088,673 18,617,724 18,790,155 18,512,475
STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
EARNINGS FROM September 30, September 30,
CONTINUING OPERATIONS 2009 2008 2008 2009 2008
---------------------- ---- ---- ---- ---- ----
(Unaudited) (Unaudited)
GAAP EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES $8,084 $3,757 $3,757 $18,903 $25,665
INCOME TAX EXPENSE 3,360 1,503* 3,360 7,754 12,693
----- ----- ----- ----- ------
EARNINGS FROM
CONTINUING OPERATIONS 4,724 2,254 397 11,149 12,972
RESTRUCTURING
EXPENSES (NET OF TAX) 2,042 1,204 1,204 3,871 3,734
GAIN FROM SALE OF
PREFERRED STOCK
INVESTMENT (NET OF
TAX) - - - (1,402) -
LOSS FROM
EXTINGUISHMENT OF
MORTGAGE (NET OF TAX) - - - - 882
GAIN FROM SALE OF
BUILDING (NET OF TAX) (157) (160) (160) (472) (13,180)
GAIN FROM DEBENTURE
REPURCHASE (NET OF
TAX) - (942) (942) (24) (942)
--- ---- ---- --- ----
NON-GAAP EARNINGS
FROM CONTINUING
OPERATIONS $6,609 $2,356 $499 $13,122 $3,466
====== ====== ==== ======= ======
DILUTED EARNINGS PER
SHARE FROM CONTINUING
OPERATIONS
----------------------
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS $0.25 $0.12 $0.02 $0.59 $0.70
RESTRUCTURING
EXPENSES (NET OF TAX) 0.11 0.07 0.07 0.21 0.20
GAIN FROM SALE OF
PREFERRED STOCK
INVESTMENT (NET OF
TAX) - - - (0.07) -
LOSS FROM
EXTINGUISHMENT OF
MORTGAGE (NET OF TAX) - - - - 0.05
GAIN FROM SALE OF
BUILDING (NET OF TAX) (0.01) (0.01) (0.01) (0.03) (0.71)
GAIN FROM DEBENTURE
REPURCHASE (NET OF
TAX) - (0.05) (0.05) - (0.05)
--- ----- ----- --- -----
NON-GAAP DILUTED
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS $0.35 $0.13 $0.03 $0.70 $0.19
===== ===== ===== ===== =====
* - @ 40% Statutory tax rate
MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS, WHICH
ARE NON-GAAP MEASUREMENTS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY
PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS.
SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT
TO AN UNDERSTANDING OF THE COMPANY'S OVERALL OPERATING RESULTS IN THE
PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE
VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.
STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2009 2008
---- ----
(Unaudited)
ASSETS
------
CASH $10,456 $6,608
ACCOUNTS RECEIVABLE, GROSS 180,443 184,422
ALLOWANCE FOR DOUBTFUL ACCOUNTS 8,149 10,021
----- ------
ACCOUNTS RECEIVABLE, NET 172,294 174,401
INVENTORIES 199,653 232,435
ASSETS HELD FOR SALE 1,291 1,654
OTHER CURRENT ASSETS 26,869 32,497
------- -------
TOTAL CURRENT ASSETS 410,563 447,595
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 63,869 66,901
GOODWILL AND OTHER INTANGIBLES 16,357 16,285
OTHER ASSETS 46,955 44,246
-------- --------
TOTAL ASSETS $537,744 $575,027
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
NOTES PAYABLE $92,521 $148,931
CURRENT PORTION OF LONG TERM DEBT 161 44,953
ACCOUNTS PAYABLE TRADE 77,367 68,312
ACCRUED CUSTOMER RETURNS 27,288 19,664
OTHER CURRENT LIABILITIES 81,571 61,136
------- -------
TOTAL CURRENT LIABILITIES 278,908 342,996
------- -------
LONG-TERM DEBT 18,179 273
ACCRUED ASBESTOS LIABILITY 24,860 23,758
OTHER LIABILITIES 42,652 44,455
------- -------
TOTAL LIABILITIES 364,599 411,482
------- -------
TOTAL STOCKHOLDERS' EQUITY 173,145 163,545
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $537,744 $575,027
======== ========
STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Profit
(In thousands)
THREE MONTHS ENDED
SEPTEMBER 30,
2009 2008
---- ----
(unaudited) (unaudited)
Revenues
--------
Engine Management $135,793 $135,502
Temperature Control 59,505 53,697
Europe 7,938 11,536
All Other 2,341 2,203
----- -----
$205,577 $202,938
======== ========
Gross Margin
------------
Engine Management $32,909 24.2% $32,381 23.9%
Temperature Control 13,056 21.9% 10,602 19.7%
Europe 1,663 20.9% 2,700 23.4%
All Other 2,175 3,089
----- -----
$49,803 24.2% $48,772 24.0%
======= =======
Selling, General & Administrative
---------------------------------
Engine Management $22,448 16.5% $23,784 17.6%
Temperature Control 8,211 13.8% 9,472 17.6%
Europe 1,905 24.0% 2,658 23.0%
All Other 4,211 5,200
----- -----
36,775 17.9% 41,114 20.3%
Restructuring & Integration 3,304 1.6% 1,905 0.8%
----- -----
$40,079 19.5% $43,019 21.1%
======= =======
Operating Profit
----------------
Engine Management $10,460 7.7% $8,597 6.3%
Temperature Control 4,845 8.1% 1,130 2.1%
Europe (241) -3.0% 42 0.4%
All Other (2,036) (2,111)
------ ------
13,028 6.3% 7,658 3.8%
Restructuring & Integration 3,304 1.6% 1,905 1.0%
----- -----
$9,724 4.7% $5,753 2.8%
====== ======
NINE MONTHS ENDED
SEPTEMBER 30,
2009 2008
---- ----
(unaudited) (unaudited)
Revenues
--------
Engine Management $380,550 $417,346
Temperature Control 165,426 164,759
Europe 23,355 35,343
All Other 5,966 8,917
----- -----
$575,297 $626,365
======== ========
Gross Margin
------------
Engine Management $94,511 24.8% $98,771 23.7%
Temperature Control 30,765 18.6% 30,498 18.5%
Europe 5,361 23.0% 8,943 25.3%
All Other 6,465 10,413
----- ------
$137,102 23.8% $148,625 23.7%
======== ========
Selling, General & Administrative
---------------------------------
Engine Management $66,316 17.4% $73,281 17.6%
Temperature Control 24,038 14.5% 26,465 16.1%
Europe 5,476 23.4% 8,025 22.7%
All Other 13,777 19,732
------ ------
109,607 19.1% 127,503 20.4%
Restructuring & Integration 5,677 0.9% 6,117 0.9%
----- -----
$115,284 20.0% $133,620 21.3%
======== ========
Operating Profit
----------------
Engine Management $28,195 7.4% $25,490 6.1%
Temperature Control 6,726 4.1% 4,033 2.4%
Europe (115) -0.5% 918 2.6%
All Other (7,311) (9,319)
------ ------
27,495 4.8% 21,122 3.4%
Restructuring & Integration 5,677 1.0% 6,117 1.0%
----- -----
$21,818 3.8% $15,005 2.4%
======= =======