Standard Products Reports FY 1998 Third Quarter Results
21 April 1998
Standard Products Reports FY 1998 Third Quarter Results
DEARBORN, Mich., April 21 -- The Standard Products Co.
today announced results for its third quarter of fiscal 1998. Net
income for the quarter was $13.6 million, or $0.80 diluted earnings per share
of common stock, on sales of $277.9 million. The results compare with net
income of $0.5 million, or $0.03 diluted earnings per share, on sales of
$281.8 million in the third quarter a year ago. Last year's results included
a non-recurring charge and additional expenses related to the closure of two
automotive parts plants in North America. Excluding these charges, quarterly
net income was $11.6 million, or $0.69 diluted earnings per share.
Net income for the quarter of $13.6 million is the highest for any third
quarter in the Company's history. This was achieved despite an overall sales
decline of $3.8 million, or 1.4 percent, from the same period in fiscal 1997.
Ron Roudebush, Vice Chairman and Chief Executive Officer, said, "The third
quarter results were gratifying to us because they are the direct result of
specific actions that we have taken over the last year to improve our
operating performance. These actions include last year's plant closings,
improvements in supply chain management worldwide and process improvements
resulting from our Low Cost Producer Strategy. Third quarter results also
benefited from continued improvement in Brazil and strong year-over-year
performance at both Holm Industries and Oliver Rubber."
Significant new programs at the Company's NISCO joint venture and its
subsidiary in the United Kingdom continue to affect the Company's performance.
At the beginning of this fiscal year, the Company's NISCO joint venture was
commencing the launch of the new Honda Accord, while in the U.K. the Company
was beginning a major development phase in which it would replace or take on
new business in excess of $80 million over a two-year period. As of the end
of the third quarter, NISCO had completed the most intense phase of the Accord
program and expects to report improved operating earnings going forward. In
the U.K., heavy investment in new model programs and processes will reduce
overall operating performance through at least the rest of this fiscal year.
"We have demonstrated a consistent ability throughout this fiscal year to
exceed prior year performance despite the issues at NISCO and in the U.K.,"
Roudebush said. "While we believe our performance for this year's fourth
quarter can match last year's record fourth quarter earnings, we don't expect
to improve upon that achievement by any meaningful amount."
Third quarter sales of the Transportation Equipment segment were $247.0
million, a 1.9 percent decrease from fiscal 1997 third quarter sales of $251.7
million. North American automotive sales decreased $7.1 million, or 4.6
percent. This decrease was the result of lower volumes on several different
models, none of which were individually significant, and exchange rate changes
in the Canadian dollar which acted to reduce sales from prior year levels by
approximately $2.8 million.
Sales in Brazil for the quarter were $17.6 million, a 20.1 percent
increase from the third quarter of fiscal 1997. European sales in this
segment declined 3.1 percent, or roughly $1.9 million, from the same period in
fiscal 1997. This decrease was entirely related to currency translation
resulting from a weaker French franc.
Sales at Holm Industries were exceptionally strong for the quarter,
exceeding prior year levels by 8.8 percent. This was a direct result of
higher volumes with existing customers in the appliance manufacturing
business.
Sales in the Tread Rubber segment increased 5.6 percent. The majority of
this increase came from intercompany sales to the automotive group. Sales of
precure and retreading equipment accounted for the remainder of the increase.
Certain statements in this press release, especially those concerning the
Company's fourth quarter earnings, constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform Act of
1995. The achievement of the projections and estimates set forth is subject
to certain risks and uncertainties including general economic and industry
conditions that affect all international businesses, as well as matters that
are specific to the Company and the markets it serves.
Standard Products manufactures sealing, trimming and vibration control
systems for the automotive original equipment industry in North and South
America and Europe. Its Holm Industries subsidiary produces seals for
residential refrigerators, freezers, doors and windows. Its Oliver Rubber
subsidiary manufactures tread rubber and equipment for the retread industry.
THE STANDARD PRODUCTS COMPANY
Consolidated Earnings Summary (Unaudited) (000 omitted)
Three Months Nine Months
Periods ended March 31, 1998 1997 1998 1997
Net sales $277,942 $281,774 $806,660 $814,005
Costs and expenses:
Cost of goods sold 231,854 243,013 694,030 718,256
Selling, general and
administrative expenses 19,723 17,569 56,879 51,773
Non-recurring charge -- 17,661 -- 17,661
Interest expense 3,169 3,024 9,327 9,752
Other (income) expense 1,851 228 5,658 (981)
Income before taxes on income 21,345 279 40,766 17,544
Provision for taxes on income 7,786 (236) 15,635 9,289
Net income $ 13,559 $ 515 $ 25,131 $ 8,255
Per share of common stock:
Basic $ 0.80 $0.03 $ 1.49 $ 0.49
Diluted $ 0.80 $0.03 $ 1.48 $ 0.49
Dividends $ 0.17 $0.17 $ 0.51 $ 0.51
Average shares outstanding:
Basic 16,854 16,808 16,843 16,802
Diluted 16,987 16,829 16,943 16,830
SOURCE Standard Products Co.