Standard Motor Products, Inc. Announces Q4 1998 Earnings
4 March 1999
Standard Motor Products, Inc. Announces Fourth Quarter 1998 Earnings, an Acquisition and Quarterly Dividend
NEW YORK, March 3 -- Standard Motor Products, Inc.
automotive replacement parts manufacturer and distributor,
reported its financial results for the fourth quarter of 1998, the three
months ended December 31, 1998 and full year 1998. All results reflect the
Company's continuing operations. The results exclude the service line
and brake businesses and include the acquired Cooper Industries temperature
control business.
Sales for the fourth quarter of 1998 were $113.3 million, 9.3% higher than
sales of $103.7 million during the comparable quarter a year ago. Excluding
the $9.5 million in sales from the acquired Cooper Industries temperature
control business, not present in the prior year quarter, sales were flat
compared to a year ago. Net earnings for the fourth quarter of 1998 were
$1.4 million or 11 cents per share, compared to the $14.0 million, or
$1.07 per share loss incurred in the fourth quarter of 1997. Adjusting 1997
for the significant impacts of the $10.5 million APS bad debt reserve and the
$1.7 million severance reserve, the normalized loss for the fourth quarter of
1997 was $1.8 million or 13 cents per share, compared to the $1.4 million or
11 cents per share profit earned in 1998.
Sales for full year 1998 were $649.4 million, 16% higher than sales of
$559.8 million in 1997. Excluding $78 million in acquisition-related
temperature control sales, revenues in 1998 increased by 2.1% over 1997. Net
earnings in 1998 were $22.3 million or $1.70 per basic share ($1.69 per
diluted share), compared with a loss of $1.6 million or 12 cents per share in
1997. Normalized net earnings for 1997 were $10.6 million or 81 cents per
share compared with the $22.3 million or $1.70 per share net earnings in 1998,
a 110% increase.
Mr. Lawrence Sills, President, said, "We are pleased with our performance
in the fourth quarter and full year 1998 on all fronts. During 1998, in a
soft industry, with the Company's largest customer being sold off, the Company
was able to hold its sales flat in the fourth quarter and grow sales by 2% for
the year. Early signs in 1999 indicate accelerated sales growth."
Mr. Sills stated: "Gross margin as a percent of sales for the quarter was
32.1%, an improvement over the 31.4% in 1997. The improvement reflected
efficiencies throughout the Company. We expect this favorable trend to
continue in 1999." He added, "The Company also continued to effectively
manage its overhead spending during the fourth quarter, as selling general and
administrative expenses were reduced by $6.7 million, excluding the favorable
impact in bad debt expenses. The overhead spending reduction was widely
spread with the most significant impact in reduced new business expense,
fulfilling a promise we made a year ago. We expect this focus on cost
management to continue."
He further stated, "The Company continued with its efforts to improve its
balance sheet, with an additional $36.5 million in debt repayments made during
the fourth quarter. During 1998 the Company was able to reduce its total
outstanding debt balance by $80 million. The reduction in capital employed by
the Company coupled with our increased earnings has resulted in a
year-over-year improvement in EVA of $22 million and we remain committed to
further improvements."
Mr. Sills said, "We began the year announcing very ambitious plans to
restructure our business and dramatically improve our earnings and balance
sheet. Our results indicate we have succeeded in accomplishing our near term
goals and the Company now has very strong positions in two key product lines
with very favorable prospects for continued earnings growth for the Company."
Subject to approval of its bank group, which the Company reasonably
expects to receive, the Company has entered into an agreement to acquire
Eaglemotive Corporation, from Mark IV Industries, Inc. .
Eaglemotive Corporation manufactures and distributes fan clutches and oil
coolers. These products are part of the temperature control product line.
Mr. Sills said, "This acquisition is consistent with the Company's acquisition
strategy to expand within its two product lines. This acquisition is expected
to be accretive to earnings in 1999, with further earnings benefits in 2000 as
synergies are achieved between Eaglemotive and the Company's Hayden
operations."
The Board of Directors has approved payment of a quarterly dividend of
eight cents per share on the common stock outstanding. The dividend will be
paid on March 15, 1999 to stockholders of record on March 3, 1999.
This news 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 an Form 10-Q.
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
Net Sales $113,316 $103,662 $649,420 $559,823
Cost of Sales 76,963 71,150 443,798 380,335
Gross Profit 36,353 32,512 205,622 179,488
Selling, General &
Administrative Expenses 30,985 48,443 161,691 170,033
Operating Income 5,368 (15,931) 43,931 9,455
Other Income (Expense)
- Net (36) (117) (1,422) 998
Interest Expense 3,592 3,228 16,419 14,158
Net Earnings from
Continuing Operations
Before Taxes and
Minority Interest 1,740 (19,276) 26,090 (3,705)
Taxes Based on Earnings 291 (5,386) 3,577 (2,417)
Minority Interest (57) (77) (256) (332)
Net Earnings from
Continuing Operations 1,392 (13,967) 22,257 (1,620)
Income (Loss) from Operations
of Discontinued Brake Group 0 (17,171) 0 (15,068)
Income (Loss) from Operations
of Discontinued Service
Line Group 0 (16,886) 0 (17,836)
Net Earnings (Loss) from
Discontinued Operations 0 (34,057) 0 (32,904)
Net Earnings $1,392 ($48,024) $22,257 ($34,524)
Net Earnings from Continuing
Operations Per Common Share:
BASIC $0.11 ($1.07) $1.70 ($0.12)
DILUTED $0.11 ($1.07) $1.69 ($0.12)
Net Earnings Per Common Share:
BASIC $0.11 ($3.67) $1.70 ($2.63)
DILUTED $0.11 ($3.67) $1.69 ($2.63)
Average number of
common shares 13,049,665 13,084,641 13,077,392 13,119,404
Average number of
common and diluted
common shares 13,148,524 13,O84,641 13,167,842 13,119,404