Standard Motor Products Announces Q1 1998 Earning
24 April 1998
Standard Motor Products Announces First Quarter 1998 Earnings; Omission of Quarterly Dividend and Resignation of Co-Chairman
NEW YORK, April 24 -- Standard Motor Products, Inc.
, automotive replacement parts manufacturer and distributor,
reported its financial results for the first quarter of 1998, the three months
ended March 31, 1998. All results discussed solely reflect the Company's
continuing operations and as of March 28, 1998, the balance sheet reflects the
completion of the exchange of its brake business for the temperature control
business of Cooper Industries . The transaction had an immaterial
impact on sales and earnings for the quarter. Sales for the first quarter of
1998 were $126.0 million, 8.5% lower than sales of $137.7 million during the
comparable quarter of a year ago. Net earnings for the first quarter of 1998
were $2.7 million or 20 cents per share, compared to a loss of $141,O00
or 1 cent per share a year ago. Acquisitions had an immaterial impact on the
quarterly comparisons.
Mr. Lawrence Sills, President said, "We are pleased with our performance
in the first quarter. This performance signals that the actions we have
previously announced to focus the Company on its two strongest product lines,
to reduce costs and to more effectively utilize assets are already showing
favorable results. Although aftermarket sales continued to be soft in the
quarter, we have effectively reduced costs, worked to improve margins and
utilized less assets, all effective ways of improving EVA. An unusually mild
winter effected engine management sales and the elimination of a pre-season
stocking program reduced Four Season's volume. We have seen a material
improvement in the sales rate of our engine management business early in the
second quarter, but it is too early to predict a sustainable turnaround."
Mr. Sills added, "We saw improvements in every element of our business
during the quarter as improved operating efficiencies, continued favorable
material purchase costs and cost reductions increased gross margins to
34.7% in the first quarter, up just over three percentage points from a year
ago while we continued our inventory reduction program. We expect this trend
to continue, as the cost reduction focus accelerates, new pricing takes hold
in the second quarter and the manufacturing synergies from the Cooper Swap
begin. On the selling, general and administrative (SG & A) expense front,
costs of $37.5 million were $2.4 million or 6.1% below a year ago. Reductions
were achieved in most areas of our business. We also expect further
improvements in this area as the year progresses. Significant synergies also
will be achieved in SG&A expenses as we consolidate the Cooper temperature
control business into our Four Seasons division."
He further stated, "Our renewed focus on improved asset management
continues to show benefits. Even after absorbing approximately $20 million
more in inventory from the Cooper swap our inventories are $20.7 million below
a year ago. We believe our efforts can reduce inventories by at least another
$25 million by year end. The net result of our efforts is a nearly
$41 million reduction in debt levels at the end of the quarter, compared to a
year ago. These results will be translated into further bottom line
improvements, as our interest expense declines."
"The aspect of the first quarter's performance that was most gratifying,"
Mr. Sills added, "was that the Company delivered a 21 cent per share
improvement in earnings in a very soft market. Our efforts this quarter
combined with the acceleration of our actions to consolidate the temperature
control business positions the Company for further earnings improvements in
1998 and 1999."
The Board of Directors has decided to omit payment of the Company's second
quarter dividend. Although pleased with the Company's first quarter
performance, the Board continues to believe that it would be prudent to
conserve cash. The Board will review the reinstatement of a dividend at its
next regularly scheduled meeting.
The Company also announced that Mr. Bernard Fife, Co-Chairman and Co-Chief
Executive Officer of Standard Motor Products will resign from his position
effective May 20, 1998 and has decided not to stand for reelection to the
Company's Board of Directors. Larry Sills said, "The Company is greatly
saddened by Mr. Fife's departure. His contributions to Standard Motor
Products and the industry are lasting and his strong ethics, sense of fair
play and drive for excellence are imbedded in the culture of the Company.
Mr. Fife devoted his life to improving the Company and we will be forever
grateful for his efforts."
STANDARD MOTOR PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
March 31, March 31, December 31,
1998 1997 1997
(A)
Cash and investments $7,548 $2,419 $16,809
Accounts receivable, gross 184,899 202,717 169,680
Allowance for doubtful accounts 20,176 5,994 18,654
Accounts receivable, net 164,723 196,723 151,026
Inventories 210,002 230,667 189,006
Other current assets 34,807 32,250 33,635
Total current assets 417,080 462,059 390,476
Property, plant and equipment, net119,316 127,100 126,024
Deferred stocklift 3,950 11,003 5,032
Deferred new business 1,866 6,748 3,473
Goodwill 30,031 34,335 30,674
Other assets 23,483 28,465 21,458
Total assets $595,726 $699,710 $577,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $66,156 $99,866 $55,897
Current portion of long term debt20,696 17,215 24,373
Accounts payable trade 41,777 46,733 36,421
Accrued customer returns 18,562 17,595 17,955
Other current liabilities 80,092 71,386 78,405
Total current liabilities 227,283 252,795 213,051
Long-term debt 159,586 170,250 159,109
Post retirement &
other L.T. liabilities 21,237 23,824 21,559
Total liabilities 408,106 446,869 393,719
Minority Interest (246) (267) (364)
Total stockholders' equity 187,866 223,108 183,782
Total liabilities and
stockholders' equity $595,726 $669,710 $577,137
(A) March 1998 Includes Impact of SWAP (EIS Out/Cooper In)
STANDARD MOTOR PRODUCTS, INC. FINANCIAL SUMMARY
THREE MONTHS ENDED MARCH 31,
1998 1997
NET SALES $126,045,000 $137,734,000
COST OF SALES 82,255,000 94,154,000
GROSS PROFIT 43,790,000 43,580,000
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 37,505,000 39,935,000
OPERATING INCOME 6,285,000 3,645,000
OTHER INCOME (EXPENSE) - NET 232,000 533,000
INTEREST EXPENSE 3,375,000 3,531,000
NET EARNINGS FROM
CONTINUING OPERATIONS BEFORE
TAXES AND MINORITY INTEREST3,142,000 647,000
TAXES BASED ON EARNINGS 371,000 642,000
MINORITY INTEREST (118,000) (146,000)
NET EARNINGS FROM
CONTINUING OPERATIONS $2,653,000 (141,000)
INCOME (LOSS) FROM OPERATIONS OF
DISCONTINUED BRAKE GROUP 0 (347,000)
INCOME (LOSS) FROM OPERATIONS OF
DISCONTINUED SERVICE LINE GROUP 0 (447,000)
NET EARNINGS (LOSS) FROM DISCONTINUED
OPERATIONS 0 (794,000)
NET EARNINGS $2,653,000 ($935,000)
NET EARNINGS FROM CONTINUING OPERATIONS
PER COMMON SHARE:
BASIC $0.20 ($0.01)
DILUTED $0.20 ($0.01)
NET EARNINGS PER COMMON SHARE:
BASIC $0.20 ($0.07)
DILUTED $0.20 ($0.07)
SOURCE Standard Motor Products, Inc.