Standard Motor Products Announces Q3 1998 Earnings
22 October 1998
Standard Motor Products Announces Third Quarter 1998 Earnings
NEW YORK, Oct. 22 -- Standard Motor Products, Inc.
, automotive replacement parts manufacturer and distributor,
reported its financial results for the third quarter of 1998, the three months
ended September 30, 1998. All results reflect the Company's continuing
operations and the effects of the exchange of its brake business for the
temperature control business of Cooper Industries .
Sales for the third quarter of 1998 were $201.3 million, 29.7% higher than
sales of $155.2 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 7.1%. Net earnings for the third quarter of 1998 were
$9.6 million, or 73 cents per basic share (72 cents per diluted share), an
increase of 38.4% compared to the $6.9 million, or 53 cents per share, earned
in the comparable quarter in 1997.
Sales for nine months in 1998 were $536.1 million, 17.5% higher than sales
of $456.2 million in 1997. Excluding $72 million of temperature control sales
from the acquisition for the nine month period ended September 30, 1998,
revenues increased 1.8%. Net earnings for the nine months in 1998 were
$20.9 million, or $1.59 per basic share ($1.58 per diluted share), 69% higher
than net earnings of $12.3 million, or 94 cents per share in 1997.
Mr. Lawrence Sills. President, said "Sales in the quarter were aided by
the very hot weather, as temperature control sales growth was double-digit.
Sales of engine management products remained soft. The strong sales, coupled
with synergies from the temperature control acquisition, effective overhead
expense control and further asset management improvements resulted in the
Company generating a 38% improvement in earnings for the quarter."
Mr. Sills stated, "Gross margins as a percent of sales for the quarter of
31.0% were below the 32.2% margins of a year ago, primarily resulting from the
higher manufacturing costs of Cooper Industries' temperature control business.
This impact will be eliminated early next year, as the acquired inventory is
depleted and the manufacturing synergies are fully implemented. The margins
for the quarter were also unfavorably impacted by lost production at our
Puerto Rico facility due to damage from Hurricane Georges. The facility is
now back at full production." He added, "It is important to note that,
although the margin percent declined, the Company earned $12.5 million more in
gross profit, primarily from the higher volumes."
Mr. Sills said, "I am very pleased with our continuing efforts to
effectively manage overhead expenses. Although selling, general and
administrative (SG & A) expenses were up $6.2 million or 15.8% from a year
ago, solely to support the growing temperature control business, as a percent
of sales SG & A expense was 22.4% in the quarter compared to 25.0% a year
ago." Mr. Sills added, "We expect that significant SG & A leverage should
continue to be achieved in the future."
Mr. Sills said, "The quarter was unfavorably impacted by $1.0 million in
charges taken to write down to net realizable value the Company's OE projects
and by higher interest expense due to higher rates."
He further stated, "Our earnings improvement was coupled with continued
success in improving asset management and our EVA performance. Inventory of
$151.6 million at the end of the third quarter of 1998 was $35.9 million below
a year ago. Effective management of all assets this quarter resulted in a
$57 million reduction in debt compared with a year ago and an increase of
$43 million in cash and current investments on hand. Through the third
quarter of 1998 the Company has experienced a $19 million improvement in its
EVA performance. The third quarter and early part of the fourth quarter also
marked the closing on the divestitures of two products lines, namely the
service line and fuel pumps. The redeployment of proceeds from these
divestitures into higher return investments will further improve our EVA."
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)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
NET SALES $201,293 $155,246 $536,104 $456,161
COST OF SALES 138,885 105,308 366,835 309,185
GROSS PROFIT 62,407 49,938 169,270 146,976
SELLING. GENERAL &
ADMINISTRATIVE
EXPENSES 45,026 38,867 130,706 121,591
OPERATING INCOME 17,381 11,071 38,584 25,305
OTHER INCOME
(EXPENSE) - NET (1,734) 521 (1,387) 1,115
INTEREST EXPENSE 4,348 3,601 12,826 10,930
NET EARNINGS FROM
CONTINUING OPERATIONS
BEFORE TAXES AND
MINORITY INTEREST 11,301 7,991 24,351 15,570
TAXES BASED ON EARNINGS 1,664 997 3,287 2,968
MINORITY INTEREST (64) (77) (198) (255)
NET EARNINGS FROM
CONTINUING OPERATIONS 9,574 6,917 20,866 12,347
INCOME (LOSS) FROM
OPERATIONS OF
DISCONTINUED BRAKE GROUP 0 1,272 0 2,103
INCOME (LOSS) FROM
OPERATIONS OF
DISCONTINUED SERVICE
LINE GROUP 0 (272) 0 (950)
NET EARNINGS (LOSS)
FROM DISCONTINUED
OPERATIONS 0 1,000 0 1,153
NET EARNINGS $9,574 $7,917 $20,866 $13,500
NET EARNINGS FROM
CONTINUING OPERATIONS
PER COMMON SHARE*
BASIC $0.73 $0.53 $1.59 $0.94
DILUTED $0.72 $0.53 $1.58 $0.94
NET EARNINGS PER
COMMON SHARE*
BASIC $0.73 $0.60 $1.59 $1.03
DILUTED $0.72 $0.60 $1.58 $1.03
* Per share earnings based upon the weight average number of shares
outstanding during the periods.
STANDARD MOTOR PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
Sept. 30, Sept. 30, Aug. 31, Dec. 31,
1998 1997 1998 1997
ACTUAL ACTUAL ACTUAL ACTUAL
Cash and investments $46,295 $3,140 $24,254 $16,809
Accounts receivable, gross 203,979 225,O26 236,171 169,680
Allowance for doubtful
accounts 22,135 8,475 22,694 18,654
Accounts receivable, net 181,844 216,551 213,477 151,026
Inventories 151,609 187,453 151,064 189,006
Other current assets 31,361 30,163 31,671 33,635
Total current assets 411,109 437,307 420,466 390,476
Property, plant and
equipment, net 107,467 127,489 119,689 126,024
Deferred stocklift 880 7,083 898 5,032
Deferred new business 1,883 5,044 2,170 3,473
Goodwill 40,145 41,061 29,087 30,674
Other assets 24,477 27,931 29,216 21,458
Total assets $585,961 $645,915 $601,526 $577,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $17,251 $54,764 $23,685 $55,897
Current portion of
long term debt 17,966 23,483 17,954 24,373
Accounts payable trade 38,741 43,671 47,699 36,421
Accrued customer returns 29,725 l7,800 32,415 17,955
Other current liabilities 96,725 71,157 95,602 78,405
Total current liabilities 200,408 210,875 217,355 213,051
Long-term debt 160,947 175,152 160,567 159,109
Postretirement & Other
L.T. liabilities 21,913 24,815 21,753 21,559
Total liabilities 383,263 410,842 399,675 393,719
Minority Interest (278) (318) (290) (364)
Total stockholders' equity 202,971 235,391 202,141 183,782
Total liabilities and
stockholders' equity $585,961 $645,915 $601,526 $577,137