Standard Motor Products Announces 3rd Quarter 1997 Earnings
17 October 1997
Standard Motor Products Announces 3rd Quarter 1997 Earnings
NEW YORK, Oct. 17 -- Standard Motor Products, Inc.
, automotive replacement parts manufacturer, reported that sales
for the third quarter of 1997, the three months ended September 30, 1997, were
$209.2 million, 11.4% higher than sales of $187.8 million during the
comparable quarter of a year ago. Excluding the revenues from acquisitions
not present in the quarter's results a year ago, sales increased 6.6% in the
third quarter, primarily in temperature control and brake products. Net
earnings for the third quarter of 1997 were $7.9 million or 60 cents per
share, 124% higher than last year's net earnings of $3.5 million or 27 cents
per share.
Sales for nine months in 1997 were $618.3 million, 9% higher than sales of
$567.5 million in 1996. Excluding revenues from acquisitions not present in
1996, revenues in the nine months of 1997 increased less than 1%, compared
with a year ago. Net earnings for the nine months in 1997 were $13.5 million
or $1.03 per share, 3.1% lower than net earnings of $13.9 million or $1.06 per
share in 1996.
Mr. Lawrence Sills, President said "although overall aftermarket sales
continued to be soft in the third quarter, Standard was able to achieve good
sales growth through our acquisition efforts and market share improvement.
Both the temperature control and brake businesses were strong. The sales
growth was coupled with continued efforts to accelerate synergies from our
recent acquisitions and to control costs. Our efforts during the quarter
resulted in nearly a 125% improvement in earnings compared with a year ago.
Earnings for the quarter were 60 cents per share."
He added "the results for the third quarter were very encouraging. They
reflected stable gross margins and meaningful improvements in working capital
management. Gross margins in the third quarter were essentially unchanged
from a year ago, while inventory was reduced by 13% or $29 million. Debt
decreased by $48 million during the quarter. We are now confident that our
inventory reductions in 1997 will exceed our targets by more than
$10 million."
He further stated "selling, general and administrative expenses (SG&A)
were well under control. The $2.2 million increase in SG&A compared to the
third quarter of a year ago is primarily due to SG&A related to the Filko
acquisition and variable expenses related to the $21.4 million sales growth.
SG&A expenses as a percent of net sales of 25.3% improved by 1.8 points versus
the comparable quarter in 1996. SG&A expenses are expected to show continued
improvement as ongoing strict controls on the expense of acquiring new
customers impact future quarters and the recently acquired Filko becomes fully
consolidated. Interest expense is relatively flat as compared to the third
quarter of a year ago reflecting higher interest rates offset by reductions in
debt. The Company had a lower tax rate this quarter, as we benefited from the
1996 tax loss carry forward in Canada."
During the third quarter, the Company moved to further strengthen its
emissions component product line by acquiring the oxygen sensor business of
AlliedSignal. This move permits Standard to be a basic manufacturer of this
high growth product. Oxygen sensors are one of the primary products that will
be replaced if a vehicle fails the IM240-mandated emission inspections. These
inspections are being implemented on an ever-increasing basis across the U.S.
Prior to this acquisition, Standard purchased for resale all of its oxygen
sensor requirements. The company will be working closely with AlliedSignal to
transition this product line to one of Standard's facilities. During this
transition period, AllledSignal will continue to operate the manufacturing
equipment for Standard.
Mr. Sills noted "we are, however, concerned with the continued weakness in
aftermarket sales. Late in the third quarter and early into the fourth
quarter sales softened further. This continued weakness has also affected the
financial strength of our customer base and there is a risk of delays in
receivable collections and higher bad debt expenses. We are committed to our
inventory and cost reductions programs and our EVA program, which is on target
for a January 1, 1998 implementation, will further support our efforts to
enhance shareholder value. If industry sales continue, at the current weak
pace it will be difficult to match the strong year-over-year performance of
the third quarter in the near term. We continue to believe our prospects for
further earnings improvements in 1998 are quite strong."
STANDARD MOTOR PRODUCTS, INC.
FINANCIAL SUMMARY
THREE MONTHS ENDED SEPTEMBER 30
1997 1996
NET SALES $209,238,000 $187,792,O00
COST OF SALES 141,584,000 127,022,000
GROSS PROFIT 67,654,000 60,770,000
SELLING, GENERAL & ADMINISTRATIVE
EXPENSES 53,037,000 50,867,000
OPERATING INCOME 14,617,000 9,903,000
OTHER INCOME (EXPENSE) - NET 352,000 251,000
TOTAL 14,969,000 10,154,000
INTEREST EXPENSE 5,306,000 5,251,000
EARNINGS BEFORE TAXES AND
MINORITY INTEREST 9,663,000 4,903,000
MINORITY INTEREST (77,000) (45,000)
TAXES BASED ON EARNINGS 1,669,000 1,324,000
NET INCOME $7,917,000 $3,534,000
EARNINGS PER SHARE* $0.60 $0.27
NINE MONTHS ENDED SEPTEMBER 30
1997 1996
NET SALES $618,285,000 $567,484,000
COST OF SALES 420,498,000 384,643,000
GROSS PROFIT 197,787,000 182,841,000
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 166,6l2,000 151,447,000
OPERATING INCOME 31,175,000 31,394,000
OTHER INCOME (EXPENSE) - NET 951,000 1,567,000
TOTAL 32,126,000 32,961,000
INTEREST EXPENSE 15,684,000 13,818,000
EARNINGS BEFORE TAXES AND
MINORITY INTEREST 16,442,000 19,143,000
MINORITY INTEREST (255,000) (45,000)
TAXES BASED ON EARNINGS 2,686,000 5,169,000
NET INCOME $13,501,000 $13,929,000
EARNINGS PER SHARE* $1.03 $1.06
*PER SHARE EARNINGS BASED UPON AVERAGE NUMBER OF SHARES OUTSTANDING DURING
THE PERIODS.
STANDARD MOTOR PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
ASSETS
September 30, December 3l,
1997 1996
Cash and investments $3.1 $4.7
Accounts receivable, net 216.6 156.8
Inventories 187.4 229.2
Other current assets 30.2 27.8
Total current assets 437.3 418.5
Property, plant and
equipment, net 127.5 126.9
Goodwill, net 41.1 34.4
Other assets 40.1 45.0
Total Assets $646.0 $624.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt (Banks & current
long-term debt) $78.3 $92.0
Other current liabilities 132.6 114.7
Total current liabilities 210.9 206.7
Long-term debt 175.2 172.4
Other liabilities 24.8 22.8
Total liabilities 410.9 401.9
Minority Interest (0.3) (0.4)
Total stockholders' equity 235.4 223.3
Total liabilities and
stockholders' equity $646.0 $624.8
SOURCE Standard Motor Products, Inc.