Standard Motor Products Announces Earnings & Stock Repurchase
7 March 2000
Fourth Quarter 1999 Earnings and a Stock Repurchase
NEW YORK--Standard Motor Products, Inc. automotive replacement parts manufacturer and distributor, reported its financial results for the fourth quarter of 1999, the three months ended December 31, 1999, and full year 1999.Net sales for the fourth quarter of 1999 were $86 million, 24.1% lower than net sales of $113.3 million during the comparable quarter of a year ago. Net losses for the fourth quarter of 1999 were $17.6 million or $1.36 per diluted share, compared to net earnings of $1.4 million, or 11 cents per diluted share in the fourth quarter of 1998. The fourth quarter 1999 net losses included $8 million from non-recurring items to cover the cost of consolidating the remaining Cooper inventories in the field, closing the Heat Battery joint venture in Canada, and the one-time cost of lay-offs to achieve cost reduction targets.
Net sales for the full year 1999 were $658.2 million, 1.4% higher than net sales of $649.4 million in 1998. Excluding $66.2 million in acquisition-related net sales, revenues in 1999 decreased by 8.8% compared to 1998. Net earnings in 1999 were $7.6 million or 58 cents per diluted share, compared to $22.3 million or $1.69 per diluted share in 1998. Excluding $9.1 million of non-recurring losses for the full year 1999, as discussed above, and $1.1 million from the loss on early extinguishment of debt, normalized net earnings were $17.8 million or $1.35 per diluted share.
Mr. Lawrence Sills, President, said, "The disappointing fourth quarter results were in line with the outlook released January 5, 2000. Net sales for the fourth quarter were $27 million below the comparable quarter in the prior year due to approximately $13 million shortfall in gross sales and $14 million increase in customer returns. The gross sales reduction impacted both engine management and temperature control sales as mild weather conditions prevailed in most of the country. The Four Seasons customer returns were a function of a weak air conditioning season, warranty returns, and the cost to consolidate the Four Seasons and Cooper inventories in the field."
Mr. Sills stated, "New customer return policies and procedures have been developed to limit overstock customer returns and significantly tighten the requirements for an authorized warranty return. We expect to revert to more normal levels of customer returns in the future."
Mr. Sills continued, "We remain fully confident of achieving our cost reduction initiatives for 2000, including the consolidation of three distribution centers into one for Four Seasons; merging the Eaglemotive fan clutch acquisition into Hayden; moving two US wire manufacturing plants to a single facility in Reynosa, Mexico; Four Seasons gross margin improvements; and exiting the Heat Battery business. These initiatives are slated for $12 million of cost improvements in 2000. These savings, plus the planned improvements in returns, make us optimistic about the coming year."
Further, the Company announced a plan to pre-pay a $14 million senior note, bearing interest at 10.22%, during the first quarter 2000. In connection with this prepayment, the Company will incur an extraordinary loss of approximately $500,000, net of taxes, for prepayment penalties and the write-off of deferred loan costs.
Mr. Sills concluded, "We will continue our program of purchasing our stock. We still have approximately 111,000 remaining from prior authorizations and our Board has approved the purchase of an additional 500,000 shares."
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,
1999 1998 1999 1998
-------- -------- -------- --------
NET SALES $ 85,979 $113,316 $658,241 $649,420
COST OF SALES 74,289 76,964 466,110 443,798
-------- -------- -------- --------
GROSS PROFIT 11,690 36,352 192,131 205,622
SELLING, GENERAL &
ADMINISTRATIVE
EXPENSES 32,334 30,985 162,587 161,691
-------- -------- -------- --------
OPERATING INCOME (20,644) 5,367 29,544 43,931
OTHER INCOME (EXPENSE)
- NET (392) (36) (1,207) (1,422)
INTEREST EXPENSE 3,691 3,592 15,951 16,419
-------- -------- -------- --------
NET EARNINGS BEFORE
TAXES, MINORITY
INTEREST AND
EXTRAORDINARY ITEM (24,727) 1,739 12,386 26,090
TAXES BASED ON EARNINGS (7,260) 291 3,344 3,577
MINORITY INTEREST (102) (57) (357) (256)
-------- -------- -------- --------
INCOME BEFORE
EXTRAORDINARY ITEM (17,569) 1,391 8,685 22,257
EXTRAORDINARY LOSS ON
EARLY EXTINGUISHMENT OF
DEBT, NET OF TAXES OF
$707 - - 1,060 -
-------- -------- -------- --------
NET INCOME ($17,569) $1,391 $7,625 $22,257
======== ======== ======== ========
NET EARNINGS PER COMMON
SHARE:
BASIC EARNINGS PER
COMMON SHARE BEFORE
EXTRAORDINARY ITEM ($1.36) $0.11 $0.66 $1.70
EXTRAORDINARY LOSS ON
EARLY RETIREMENT OF
DEBT - - ($0.08) -
-------- -------- -------- --------
NET EARNINGS PER
COMMON SHARE -
BASIC ($1.36) $0.11 $0.58 $1.70
DILUTED EARNINGS PER
SHARE BEFORE
EXTRAORDINARY ITEM ($1.36) $0.11 $0.66 $1.69
EXTRAORDINARY LOSS ON
EARLY RETIREMENT OF
DEBT - - ($0.08) -
-------- -------- -------- --------
NET EARNINGS PER
COMMON SHARE -
DILUTED ($1.36) $0.11 $0.58 $1.69
Weighted Average
Number of Common
Shares 12,912,114 13,049,665 13,073,272 13,077,392
Weighted Average
Number of Common and
Dilutive Shares 12,912,114 13,148,524 13,145,743 13,167,842
STANDARD MOTOR PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
December 31, December 31,
1999 1998
------------ ------------
Cash and investments $ 40,380 $ 23,457
Accounts receivable, gross 124,246 126,533
Allowance for doubtful accounts 4,611 4,525
------------ ------------
Accounts receivable, net 119,635 122,008
Inventories 188,400 174,092
Other current assets 26,278 22,954
------------ ------------
Total current assets 374,693 342,511
------------ ------------
Property, plant and equipment, net 106,578 109,404
Deferred stocklift 3,003 1,447
Deferred new business 2,998 1,975
Goodwill 41,619 39,232
Other assets 27,130 26,987
------------ ------------
Total assets $556,021 $521,556
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 2,645 $ 3,555
Current portion of long term debt 28,912 22,404
Accounts payable trade 41,708 48,414
Accrued customer returns 22,698 16,296
Other current liabilities 72,924 73,518
------------ ------------
Total current liabilities 168,887 164,187
------------ ------------
Long-term debt 163,868 133,749
Postretirement & other L.T. liabilities 19,748 18,595
------------ ------------
Total liabilities 352,503 316,531
------------ ------------
Total stockholders' equity 203,518 205,025
------------ ------------
Total liabilities and stockholders'
equity $556,021 $521,556
------------ ------------