Standard Motor Products Announces Q2 Earmings
21 July 1998
Standard Motor Products Announces Second Quarter 1998 Earnings
NEW YORK, July 21 -- Standard Motor Products, Inc.
, automotive replacement parts manufacturer and distributor,
reported its financial results for the second quarter of 1998, the three
months ended June 30, 1998. All results reflect the Company's continuing
operations and, for the full quarter, the effects of the exchange of its
brake business for the temperature control business of Cooper Industries
.
Sales for the second quarter of 1998 were $208.8 million, 27.9% higher
than sales of $163.2 million during the comparable quarter of a year ago. The
acquisition of the Cooper Industries temperature control business added
$35 million to sales for the quarter. Excluding these sales, revenues for the
quarter increased by 6.5%. Net earnings for the second quarter of 1998 were
$8.6 million or 66 cents per basic share (65 cents per diluted share) an
increase of 55% compared to the $5.6 million or 42 cents per share earned in
the comparable quarter in 1997.
Sales for six months in 1998 were $334.8 million, 11.3% higher than sales
of $300.9 million in 1997. Net earnings for the six months in 1998 were
$11.3 million or 86 cents per share, 108.5% higher than net earnings of
$5.4 million or 41 cents per share in 1997.
Mr. Lawrence Sills, President, said, "Although the quarter began with weak
sales, momentum was gained during the quarter in both the temperature control
and engine management businesses. The hot weather across the southern United
States in June resulted in very strong demand for our products. In June,
sales were up 20% compared to a year ago and this strong performance has
carried forward into the third quarter. This sales performance, coupled with
accelerated synergies from the temperature control acquisition, effective
overhead expense control and significant inventory reductions has permitted
the Company to generate the 55% improvement in earnings for the quarter."
Mr. Sills stated "Gross margins as a percent of sales for the quarter of
30.2% were below the 32.8% margins of a year ago, primarily resulting from the
higher manufacturing costs of Cooper Industries' temperature control business.
This impact will be eliminated later this year as the acquired inventory is
depleted and the manufacturing synergies fully implemented." He added, "It is
important to note, that although the margin percent declined, the Company
earned $9.6 million more in gross margin from the higher volumes."
Mr. Sills said, "The Company is continuing to effectively manage its
overhead, as selling, general and administrative (SG & A) expenses of
$48.2 million were up $5.4 million or 12.6% from a year ago solely to support
the Cooper Industries temperature control business. As a percent of sales
SG & A was 23.1% in the quarter compared to 26.2% a year ago. Mr. Sills added
"We expect that significant SG & A leverage should be achieved in the second
half of 1998 and beyond."
Mr. Sills said, "Results in the second quarter were unfavorably impacted
by $3.9 million in reserves taken to write down to net realizable value, the
Company's OE, China and fuel pump businesses. The divestiture of the fuel
pump business is imminent and the Company is continuing to pursue the OE and
China businesses, but at a lower spending commitment. The Company is seeking
joint venture partners for two of the OE technologies. These projects have
all fallen short of meeting our EVA targets."
He further stated "Our commitment to better manage our assets was
evidenced in the quarter by additional reductions in inventory. Inventory of
$177.2 million at the end of the second quarter of 1998 was $38.8 million
below a year ago. Effective management of all assets this quarter has
resulted in a $79 million reduction in debt compared with a year ago. Further
improvements are planned for the remainder of 1998, which will have favorable
impacts on interest expense in 1998."
Mr. Sills said, "The cost improvements we have experienced in the second
quarter are sustainable. These elements, plus the additional cost reductions
and capital projects already planned bode well for continued profit
improvement in 1998 and 1999."
This release contains certain forward-looking statements that involve
risks and uncertainties. Actual results, events and performance could differ
materially from those contemplated by these forward-looking statements. Among
the factors that could cause actual results, events and performance to differ
materially are risks and uncertainties discussed in this release and those
detailed from time-to-time in prior public statements and the Company's
filings with the Securities and Exchange Commission, including the Company's
annual report on Form 10-K and the Company's quarterly reports on Form 10-Q.
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1998 1997 1998 1997
NET SALES $208,766 $163,181 $334,811 $300,915
COST OF SALES 145,694 109,723 227,949 203,877
GROSS PROFIT 63,072 53,458 106,862 97,038
SELLING, GENERAL
& ADMINISTRATIVE
EXPENSES 48,175 42,790 85,680 82,725
OPERATING INCOME 14,897 10,668 21,182 14,313
OTHER INCOME
(EXPENSE) - NET 115 61 347 594
INTEREST EXPENSE 5,105 3,797 8,480 7,328
NET EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES
AND MINORITY
INTEREST 9,907 6,932 13,049 7,579
TAXES BASED ON EARNINGS 1,251 1,329 1,622 1,971
MINORITY INTEREST (17) (32) (135) (178)
NET EARNINGS FROM
CONTINUING OPERATIONS 8,639 5,571 11,292 5,430
INCOME (LOSS)
FROM OPERATIONS OF
DISCONTINUED
BRAKE GROUP -- 1,178 -- 831
INCOME (LOSS) FROM
OPERATIONS OF
DISCONTINUED
SERVICE LINE GROUP -- (231) -- (678)
NET EARNINGS (LOSS)
FROM DISCONTINUED
OPERATIONS -- 947 -- 153
NET EARNINGS $8,639 $6,518 $11,292 $5,583
NET EARNINGS FROM
CONTINUING OPERATIONS
PER COMMON SHARE*
BASIC $0.66 $0.42 $0.86 $0.41
DILUTED $0.65 $O.42 $O.86 $0.41
NET EARNINGS PER
COMMON SHARE*
BASIC $0.66 $0.50 $0.86 $0.43
DILUTED $O.65 $0.50 $0.86 $0.43
* Per share earnings based upon the weighted-average number of shares
outstanding during the periods
STANDARD MOTOR PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
June 30, June 30, December 3l,
1998 1997 1997
Cash and investments $2,811 $2,090 $16,809
Accounts receivable gross 236,820 254,675 169,680
Allowance for doubtful accounts 21,862 7,512 18,654
Accounts receivable, net 214,958 247,163 151,026
Inventories 177,150 216,004 189,006
Other current assets 33,480 30,522 33,635
Total current assets 428,399 495,779 390,476
Property, plant and
equipment, net 122,719 127,690 126,024
Deferred stocklift 1,686 8,373 5,032
Deferred new business 2,257 5,636 3,473
Goodwill 29,484 33,759 30,674
Other assets 21,294 28,758 21,458
Total assets $605,839 $699,995 $577,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $42,958 $112,825 $55,897
Current portion
of long term debt 17,958 17,266 24,373
Accounts payable trade 47,842 53,377 36,421
Accrued customer returns 26,462 20,769 17,955
Other current liabilities 90,218 71,626 79,405
Total current liabilities 225,438 275,863 213,051
Long-term debt 161,956 171,552 159,109
Postretirement & other
L.T. liabilities 21,534 24,325 21,559
Total liabilities 408,928 471,740 393,719
Minority Interest (281) (353) (364)
Total stockholders' equity 197,192 228,608 183,782
Total liabilities
and stockholders' equity $605,839 $699,995 $577,137