Standard Motor Products, Inc. Announces Third Quarter 2011 Results and a Quarterly Dividend

November 1, 2011 Mergers & Acquisitions 0

Standard Motor Products, Inc. Announces Third Quarter 2011 Results and a Quarterly Dividend

PR Newswire

NEW YORK, Nov. 1, 2011

NEW YORK, Nov. 1, 2011 /PRNewswire/ — Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and nine months ended September 30, 2011.

Consolidated net sales for the third quarter of 2011 were $236.2 million, compared to consolidated net sales of $227.5 million during the comparable quarter in 2010. Earnings from continuing operations for the third quarter of 2011 were $14.1 million or 61 cents per diluted share, compared to $11.1 million or 48 cents per diluted share in the third quarter of 2010. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the third quarter of 2011 were $13.7 million or 59 cents, compared to $9.8 million or 43 cents per diluted share in the third quarter of 2010.

Consolidated net sales for the nine month period ended September 30, 2011 were $700.5 million, compared to consolidated net sales of $637.9 million during the comparable period in 2010. Earnings from continuing operations for the nine month period ended September 30, 2011 were $34.8 million or $1.51 per diluted share, compared to $22 million or 97 cents per diluted share in the comparable period of 2010. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the nine months ended 2011 and 2010 were $32.1 million or $1.39 per diluted share and $21.6 million or 96 cents per diluted share, respectively.

Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products’ Chairman and Chief Executive Officer, stated, “Engine Management sales increased 7.6% in the third quarter of 2011 and 10.3% for the full nine months of 2011.

“Temperature Control sales decreased 5.1% during the third quarter of 2011, reflecting a timing difference in customer buying patterns from the prior year. In 2011, we offered a pre-season dating program, and customers placed orders early in the year. In 2010, we did not offer such a program, and with the summer turning out to be one of the hottest on record, customers ordered heavily during the third quarter. Still, for the full nine months of 2011, Temperature Control sales were 8.7% above 2010.

“Total sales were 3.8% ahead for the third quarter and 9.8% ahead of 2010 for the full nine months. These figures are in line with our customers’ sales ‘out the door’ as the industry environment remains healthy.

“We continue to make progress in all areas of cost control. Our gross margin is up almost a full point from the comparable quarter a year ago – 27.3% vs. 26.4% – while operating expenses are nearly a point lower – 17.6% vs. 18.5%. The result is an operating profit improvement of $4.7 million, compared to the third quarter of 2010. Year to date the operating profit improvement is even stronger at $14.6 million, excluding the $3.6 million postretirement curtailment gain recorded in the second quarter 2011.

“These earnings improvements are reflected in cash flow. At the end of September 2011 our total debt was roughly $30 million below September 2010, despite the $27 million acquisition of the BLD Engine Control business earlier this year.

“Finally, as reported recently, we are pleased to announce the acquisition of Forecast Trading Corporation. Forecast is a leading supplier of value-priced Engine Management products, a segment that is growing as the vehicle population continues to age and the economic climate remains difficult.

“This acquisition will enable us to offer our Engine Management customers an excellent combination – the top OE quality line and the best value line. In addition, as we integrate the two companies, we anticipate synergistic improvements in product cost and operating expenses.

“The cost of the acquisition is approximately $44 million. However, with our cash flow continuing strong, we anticipate that we will end the year with a Debt:EBITDA ratio of approximately one to one. We believe the acquisition will be accretive to earnings in year one.”

The Board of Directors has approved payment of a quarterly dividend of seven cents per share on the common stock outstanding. The dividend will be paid on December 1, 2011 to stockholders of record on November 15, 2011.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Tuesday, November 1, 2011. The dial-in number is 800-895-0231 (domestic) or 785-424-1054 (international). The playback number is 800-695-0395 (domestic) or 402-220-1388 (international). The conference ID # is STANDARD.

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Standard Motor Products cautions investors that any forward-looking statements made by the company, including those that may be made in this press release, are based on management’s expectations at the time they are made, but they are subject to risks and uncertainties that may cause actual results, events or performance to differ materially from those contemplated by such forward looking statements. Among the factors that could cause actual results, events or performance to differ materially from those risks and uncertainties discussed in this press release are those detailed from time-to-time in prior press releases and in the company’s filings with the Securities and Exchange Commission, including the company’s annual report on Form 10-K and quarterly reports on Form 10-Q. By making these forward-looking statements, Standard Motor Products undertakes no obligation or intention to update these statements after the date of this release.

STANDARD MOTOR PRODUCTS, INC.

Consolidated Statements of Operations

(In thousands, except share and per share data)

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

NET SALES

$ 236,220

$ 227,540

$ 700,455

$ 637,939

COST OF SALES

171,732

167,526

519,642

475,718

GROSS PROFIT

64,488

60,014

180,813

162,221

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

41,680

41,991

122,336

120,459

RESTRUCTURING AND INTEGRATION EXPENSES

275

1,388

743

3,430

OTHER INCOME, NET

258

1,436

789

1,952

OPERATING INCOME

22,791

18,071

58,523

40,284

OTHER NON-OPERATING INCOME, NET

230

300

673

480

INTEREST EXPENSE

757

1,844

3,159

5,710

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES

22,264

16,527

56,037

35,054

PROVISION FOR INCOME TAXES

8,164

5,430

21,233

13,029

EARNINGS FROM CONTINUING OPERATIONS

14,100

11,097

34,804

22,025

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES

(1,055)

(1,441)

(1,714)

(2,309)

NET EARNINGS

$ 13,045

$ 9,656

$ 33,090

$ 19,716

NET EARNINGS PER COMMON SHARE:

BASIC EARNINGS FROM CONTINUING OPERATIONS

$ 0.62

$ 0.49

$ 1.53

$ 0.98

DISCONTINUED OPERATION

(0.05)

(0.06)

(0.08)

(0.10)

NET EARNINGS PER COMMON SHARE – BASIC

$ 0.57

$ 0.43

$ 1.45

$ 0.88

DILUTED EARNINGS FROM CONTINUING OPERATIONS

$ 0.61

$ 0.48

$ 1.51

$ 0.97

DISCONTINUED OPERATION

(0.04)

(0.06)

(0.08)

(0.10)

NET EARNINGS PER COMMON SHARE – DILUTED

$ 0.57

$ 0.42

$ 1.43

$ 0.87

WEIGHTED AVERAGE NUMBER OF COMMON SHARES

22,863,048

22,597,117

22,812,851

22,528,108

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES

23,042,981

23,472,411

23,299,363

22,604,344

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share data)

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS

$ 14,100

$ 11,097

$ 34,804

$ 22,025

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

165

832

446

2,058

LOSS FROM EUROPE DIVESTITURE (NET OF TAX)

–

–

–

47

POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX)

–

–

(2,188)

–

REVERSAL OF LT TAX LIABILITY

(454)

(1,084)

(454)

(1,084)

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

(157)

(1,033)

(472)

(1,431)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS

$ 13,654

$ 9,812

$ 32,136

$ 21,615

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$ 0.61

$ 0.48

$ 1.51

$ 0.97

RESTRUCTURING AND INTEGRATION EXPENSES (NET OF TAX)

–

0.03

0.02

0.09

LOSS FROM EUROPE DIVESTITURE (NET OF TAX)

–

–

–

–

POSTRETIREMENT CURTAILMENT GAIN (NET OF TAX)

–

–

(0.10)

–

REVERSAL OF LT TAX LIABILITY

(0.02)

(0.04)

(0.02)

(0.04)

GAIN FROM SALE OF BUILDINGS (NET OF TAX)

–

(0.04)

(0.02)

(0.06)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

$ 0.59

$ 0.43

$ 1.39

$ 0.96

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS, WHICH ARE NON-GAAP MEASUREMENTS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY’S OVERALL OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Balance Sheets

(In thousands)

September 30,

December 31,

2011

2010

(Unaudited)

ASSETS

CASH

$ 14,898

$ 12,135

ACCOUNTS RECEIVABLE, GROSS

144,557

111,765

ALLOWANCE FOR DOUBTFUL ACCOUNTS

7,036

6,779

ACCOUNTS RECEIVABLE, NET

137,521

104,986

INVENTORIES

233,995

241,158

ASSETS HELD FOR SALE

216

216

OTHER CURRENT ASSETS

22,269

26,211

TOTAL CURRENT ASSETS

408,899

384,706

PROPERTY, PLANT AND EQUIPMENT, NET

60,114

60,666

GOODWILL AND OTHER INTANGIBLES, NET

30,778

12,487

OTHER ASSETS

23,952

34,942

TOTAL ASSETS

$ 523,743

$ 492,801

LIABILITIES AND STOCKHOLDERS’ EQUITY

NOTES PAYABLE

$ 41,790

$ 52,887

CURRENT PORTION OF LONG TERM DEBT

107

12,402

ACCOUNTS PAYABLE

68,060

49,919

ACCRUED CUSTOMER RETURNS

32,626

23,207

OTHER CURRENT LIABILITIES

89,001

76,416

TOTAL CURRENT LIABILITIES

231,584

214,831

LONG-TERM DEBT

221

307

ACCRUED ASBESTOS LIABILITIES

26,248

24,792

OTHER LIABILITIES

22,697

42,988

TOTAL LIABILITIES

280,750

282,918

TOTAL STOCKHOLDERS’ EQUITY

242,993

209,883

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 523,743

$ 492,801

–

–

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Profit

(In thousands)

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2011

2010

2011

2010

(unaudited)

(unaudited)

Revenues

Engine Management

$ 165,182

$ 153,577

$ 489,305

$ 443,489

Temperature Control

68,148

71,774

201,942

185,714

All Other

2,890

2,189

9,208

8,736

$ 236,220

$ 227,540

$ 700,455

$ 637,939

Gross Margin

Engine Management

$ 43,834

26.5%

$ 39,785

25.9%

$ 123,850

25.3%

$ 110,407

24.9%

Temperature Control

17,343

25.4%

17,157

23.9%

47,269

23.4%

43,117

23.2%

All Other

3,311

3,072

9,694

8,697

$ 64,488

27.3%

$ 60,014

26.4%

$ 180,813

25.8%

$ 162,221

25.4%

Selling, General & Administrative

Engine Management

$ 25,226

15.3%

$ 25,468

16.6%

$ 76,483

15.6%

$ 74,905

16.9%

Temperature Control

9,557

14.0%

10,799

15.0%

29,322

14.5%

28,709

15.5%

All Other

6,897

5,724

16,531

16,845

$ 41,680

17.6%

$ 41,991

18.5%

$ 122,336

17.5%

$ 120,459

18.9%

Operating Profit

Engine Management

$ 18,608

11.3%

$ 14,317

9.3%

$ 47,367

9.7%

$ 35,502

8.0%

Temperature Control

7,786

11.4%

6,358

8.9%

17,947

8.9%

14,408

7.8%

All Other

(3,586)

(2,652)

(6,837)

(8,148)

22,808

9.7%

18,023

7.9%

58,477

8.3%

41,762

6.5%

Restructuring & Integration

(275)

-0.1%

(1,388)

-0.6%

(743)

-0.1%

(3,430)

-0.5%

Other Income, Net

258

0.1%

1,436

0.6%

789

0.1%

1,952

0.3%

$ 22,791

9.6%

$ 18,071

7.9%

$ 58,523

8.4%

$ 40,284

6.3%

SOURCE Standard Motor Products, Inc.

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