Standard Motor Products, Inc. Announces Third Quarter 1999 Earnings and a Stock Repurchase
22 October 1999
Standard Motor Products, Inc. Announces Third Quarter 1999 Earnings and a Stock Repurchase
NEW YORK--Oct. 22, 1999--Standard Motor Products, Inc. , automotive replacement parts manufacturer and distributor, reported its financial results for the third quarter of 1999, the three months ending September 30, 1999.Sales for the third quarter of 1999 were $189.8 million, 5.7% lower than sales of $201.3 million during the comparable quarter of a year ago. Net earnings for the third quarter of 1999 were $9.5 million or 72 cents per basic share (67 cents per diluted share), a decrease of 0.6% compared to the $9.6 million or 73 cents per basic share (72 cents per diluted share) earned in the third quarter of 1998. Excluding $1.1 million in the third quarter of 1999 for a one-time prepayment penalty and write-off of unamortized fees for the retirement of an 8.6% Senior Note, earnings per basic share would have been 8 cents higher or 80 cents per basic share, resulting in a 9.6% increase as compared to a year ago.
Sales for nine months in 1999 were $572.3 million, 6.7% higher than sales of $536.1 million in the comparable period in 1998. This growth was primarily driven by the Company's acquisitions. Net earnings for the nine months in 1999 were $25.2 million or $1.92 per basic share ($1.86 per diluted share), an increase of 20.7% compared to the $20.9 million or $1.59 per basic share ($1.58 per diluted share) a year ago.
Mr. Lawrence Sills, President, said, "Temperature control sales were slightly lower in the third quarter than in the prior year, because of an aggressive pre-season dating program which shifted sales to the first and second quarters. Temperature control sales for the nine months in 1999 were ahead of 1998, even though 1998 was the warmest summer on record."
Mr. Sills added, "Engine management sales were slightly below 1998, both for the quarter and for the nine months. This reflects the divestiture of our fuel pump business and the gradual absorption in the field of substantial inventories resulting from the February 1998 APS bankruptcy. We believe that these inventories will be fully absorbed by mid-year 2000, and sales should return to normal levels."
Mr. Sills stated, "Gross margins for the quarter of 32.7% were 1.7 points better than the comparable quarter of the prior year. Most of the improvement came from temperature control, and resulted from the synergies achieved by consolidating the manufacturing operations of Cooper's temperature control business. Further improvements are expected in the years ahead. The Engine Management group, despite a period of reduced sales, also experienced improved margins."
Mr. Sills said, "We are pleased with the $1.7 million reduction in selling, general and administrative (SG&A) expenses from the comparable quarter of the prior year, reflecting continued focus on cost reduction efforts, though as a result of the reduced sales in the quarter, SG&A expenses increased as a percentage of sales from 22.4% to 22.9%. However, for the nine months, the SG&A expenses decreased, as a percentage of sales, 1.6 points from 24.4% to 22.8%."
On the balance sheet, Mr. Sills commented, "We successfully completed the issuance of a $90 million convertible debt offering in July 1999. The proceeds from the offering were partially used to prepay, in its entirety, an 8.6% Senior Note of approximately $38 million with most of the remaining balance targeted for general corporate purposes, including acquisitions, and the repurchase of company stock."
The Company's Board of Directors has authorized the repurchase of an additional 400,000 shares of the Company's Common Stock, bringing the total number of shares authorized for repurchase to approximately 525,000 shares. The shares will be used to meet the ongoing requirements of the Company's ESOP and stock option programs. The repurchase reflects the Company's continuing strong profit and cash flow performance.
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 on Form 10-Q. The Company undertakes no duty to update such forward-looking statements.
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
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NET SALES 189,759 201,293 572,262 536,104
COST OF SALES 127,627 138,885 391,821 366,834
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GROSS PROFIT 62,132 62,408 180,441 169,270
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 43,368 45,026 130,729 130,706
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OPERATING INCOME 18,764 17,382 49,712 38,564
OTHER INCOME (EXPENSE)
- NET 14 (815)
(1,734) (1,387)
INTEREST EXPENSE 5,308 4,346 13,551 12,826
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NET EARNINGS BEFORE TAXES
AND MINORITY INTEREST 13,470 11,302 35,346 24,351
TAXES BASED ON EARNINGS
3,881 1,664 9,897 3,287
MINORITY INTEREST (76) (64) (255) (198)
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NET EARNINGS 9,513 9,574 25,194 20,866
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NET EARNINGS FROM
CONTINUING OPERATIONS
PER COMMON SHARE:
BASIC 0.72 0.73 1.92 1.59
DILUTED 0.67 0.72 1.86 1.58
Weighted Average
Number of Common
Shares 13,157,864 13,080,996 13,127,581 13,086,736
Weighted Average
Number of Common and
Dilutive Shares 15,141,598 13,222,161 13,852,370 13,182,674