EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1
 

For Immediate Release
  
 
For more information, contact:
 
James J. Burke
 
Standard Motor Products, Inc.
 
(718) 392-0200

Standard Motor Products, Inc. Announces

Second Quarter 2017 Results and a Quarterly Dividend

New York, NY, July 31, 2017......Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and six months ending June 30, 2017.

Consolidated net sales for the second quarter of 2017 were $312.7 million, compared to consolidated net sales of $289 million during the comparable quarter in 2016. Earnings from continuing operations for the second quarter of 2017 were $18.3 million or 78 cents per diluted share, compared to $19.9 million or 86 cents per diluted share in the second quarter of 2016. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the second quarter of 2017 were $18.8 million or 81 cents per diluted share, compared to $20.2 million or 88 cents per diluted share in the second quarter of 2016.
 
37-18 Northern Blvd., Long Island City, NY  11101
(718) 392-0200
www.smpcorp.com
 
Consolidated net sales for the six month period ended June 30, 2017, were $595.1 million, compared to consolidated net sales of $527.9 million during the comparable period in 2016.  Earnings from continuing operations for the six month period ended June 30, 2017, were $34.6 million or $1.48 per diluted share, compared to $32.5 million or $1.41 per diluted share in the comparable period of 2016.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the six months ended June 30, 2017, and 2016 were $36 million or $1.54 per diluted share and $32.8 million or $1.43 per diluted share, respectively.

Mr. Eric P. Sills, Standard Motor Products’ Chief Executive Officer and President stated, “A key factor in the second quarter was the step back in Engine Management gross margin, from 32.1% in 2016 to 29.4% this year. This led to a decline in earnings in the second quarter, though we remain ahead of 2016 in both sales and earnings year-to-date. This gross margin decline is primarily the result of the previously announced plant moves. These are proceeding according to plan, and we are pleased with the progress.

“As we move ahead with the integration of the General Cable North American ignition wire acquisition, we have begun transferring all production from the acquired plant in Nogales, Mexico, to our facility in Reynosa, Mexico. In addition, starting last year, we transferred the balance of our ignition coil production to Bialystok, Poland, and diesel fuel injectors and pumps to Greenville, South Carolina, both of which are still in the process of achieving full benefits. Finally, we have begun the move of our electronics plant in Orlando, Florida, to our plant in Independence, Kansas.
 
“We plan to complete all of these moves, in stages, over the next 9-12 months. They will result in the closing of three facilities—Nogales, Mexico; Grapevine, Texas; and Orlando, Florida.

“In the short run, we are incurring additional costs, including ramp-up inefficiencies, duplication of overhead, and the expenses resulting from hiring and training hundreds of new employees. This is the primary cause of the decline in gross margin.

“As we work our way through this period, we anticipate a gradual return to our historical Engine Management gross margin of 31-32%, plus an additional $7-10 million in company-wide operational savings, including SG&A.

“In all other areas, we are pleased with our results. Sales continue to outpace 2016, up 8.2% for the quarter and 12.7% for the half. Excluding the sales from the incremental General Cable ignition wire business, acquired in May 2016, the quarter and half of 2017 are up over the previous year by 3.0% and 5.5% respectively.

“By segment, Engine Management sales increased 12.3% for the quarter and 14.5% year-to-date. Excluding the incremental General Cable business, the quarter and half of 2017 increased 4.8% and 4.4%, respectively. This was partly due to pipeline orders from certain customers, who continue to expand the breadth and depth of their inventories, as well as the growth of some of our newest product categories.
 
“Our Temperature Control division continues to post strong results. Sales are up 9.3% year-to-date, though second quarter sales were essentially flat. This was due to timing of pre-season orders, which hit heavier in the first quarter of 2017 than in the previous year, and therefore the year-to-date numbers are more meaningful. Temperature Control’s second quarter gross margin of 26.4% is up almost 300 basis points compared with 2016, as we are seeing the benefits of our recent cost reduction initiatives.

“To conclude, while we are temporarily feeling the impact of costs associated with our strategic restructuring initiatives, we are confident of the benefits, and we are excited about our future. We are very proud of all of our people, and we thank them for their efforts and dedication as we work through these moves.”

The Board of Directors has approved payment of a quarterly dividend of nineteen cents per share on the common stock outstanding. The dividend will be paid on September 1, 2017 to stockholders of record on August 15, 2017.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Monday, July 31, 2017.  The dial-in number is 800-791-4813 (domestic) or 785-424-1102 (international). The playback number is 800-283-8520 (domestic) or 402-220-0870 (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 per share amounts)

   
THREE MONTHS ENDED
JUNE 30,
    
SIX MONTHS ENDED
JUNE 30,
  
   
2017
    
2016
    
2017
    
2016
  
   
(Unaudited)
    
(Unaudited)
  
NET SALES
  
$
312,729
    
$
288,977
    
$
595,107
    
$
527,888
  
                                 
COST OF SALES
    
222,063
      
201,901
      
420,331
      
367,816
  
                                 
GROSS PROFIT
    
90,666
      
87,076
      
174,776
      
160,072
  
                                 
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
    
60,076
      
54,758
      
117,436
      
107,756
  
RESTRUCTURING AND INTEGRATION EXPENSES
    
1,235
      
771
      
2,782
      
1,012
  
OTHER INCOME , NET
    
314
      
297
      
630
      
559
  
                                 
OPERATING INCOME
    
29,669
      
31,844
      
55,188
      
51,863
  
                                 
OTHER NON-OPERATING INCOME, NET
    
740
      
265
      
1,563
      
598
  
                                 
INTEREST EXPENSE
    
722
      
394
      
1,190
      
705
  
                                 
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES
    
29,687
      
31,715
      
55,561
      
51,756
  
                                 
PROVISION FOR INCOME TAXES
    
11,426
      
11,853
      
20,933
      
19,238
  
                                 
EARNINGS FROM CONTINUING OPERATIONS
    
18,261
      
19,862
      
34,628
      
32,518
  
                                 
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES
    
(497
)
    
(618
)
    
(1,130
)
    
(1,070
)
                                 
NET EARNINGS
  
$
17,764
    
$
19,244
    
$
33,498
    
$
31,448
  
                                 
NET EARNINGS PER COMMON SHARE:
                                
                                 
BASIC EARNINGS FROM CONTINUING OPERATIONS
  
$
0.80
    
$
0.87
    
$
1.52
    
$
1.43
  
DISCONTINUED OPERATION
    
(0.02
)
    
(0.02
)
    
(0.05
)
    
(0.04
)
NET EARNINGS PER COMMON SHARE - BASIC
  
$
0.78
    
$
0.85
    
$
1.47
    
$
1.39
  
                                 
DILUTED EARNINGS FROM CONTINUING OPERATIONS
  
$
0.78
    
$
0.86
    
$
1.48
    
$
1.41
  
DISCONTINUED OPERATION
    
(0.02
)
    
(0.02
)
    
(0.04
)
    
(0.04
)
NET EARNINGS PER COMMON SHARE - DILUTED
  
$
0.76
    
$
0.84
    
$
1.44
    
$
1.37
  
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
    
22,820,079
      
22,705,310
      
22,833,263
      
22,673,811
  
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES
    
23,329,082
      
23,018,730
      
23,332,480
      
22,988,502
  
 
STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Income

(In thousands)

   
THREE MONTHS ENDED
JUNE 30,
        
SIX MONTHS ENDED
JUNE 30,
      
   
2017
        
2016
        
2017
        
2016
      
   
(unaudited)
        
(unaudited)
      
Revenues
                                        
Engine Management
  
$
223,349
        
$
198,848
        
$
434,663
        
$
379,529
      
Temperature Control
    
87,391
          
87,503
          
157,681
          
144,269
      
All Other
    
1,989
          
2,626
          
2,763
          
4,090
      
   
$
312,729
        
$
288,977
        
$
595,107
        
$
527,888
      
                                                 
Gross Margin
                                                
Engine Management
  
$
65,599
  
29.4
%
  
$
63,831
  
32.1
%
  
$
129,723
  
29.8
%
  
$
121,107
  
31.9
%
Temperature Control
    
23,111
  
26.4
%
    
20,584
  
23.5
%
    
40,818
  
25.9
%
    
34,674
  
24.0
%
All Other
    
1,956
          
2,661
          
4,235
          
4,291
      
   
$
90,666
  
29.0
%
  
$
87,076
  
30.1
%
  
$
174,776
  
29.4
%
  
$
160,072
  
30.3
%
                                                 
Selling, General & Administrative
                                                
Engine Management
  
$
38,180
  
17.1
%
  
$
33,192
  
16.7
%
  
$
74,208
  
17.1
%
  
$
66,249
  
17.5
%
Temperature Control
    
14,544
  
16.6
%
    
14,257
  
16.3
%
    
27,550
  
17.5
%
    
25,951
  
18.0
%
All Other
    
7,352
          
7,309
          
15,678
          
15,556
      
   
$
60,076
  
19.2
%
  
$
54,758
  
18.9
%
  
$
117,436
  
19.7
%
  
$
107,756
  
20.4
%
                                                 
Operating Income
                                                
Engine Management
  
$
27,419
  
12.3
%
  
$
30,639
  
15.4
%
  
$
55,515
  
12.8
%
  
$
54,858
  
14.5
%
Temperature Control
    
8,567
  
9.8
%
    
6,327
  
7.2
%
    
13,268
  
8.4
%
    
8,723
  
6.0
%
All Other
    
(5,396
)
        
(4,648
)
        
(11,443
)
        
(11,265
)
    
     
30,590
  
9.8
%
    
32,318
  
11.2
%
    
57,340
  
9.6
%
    
52,316
  
9.9
%
Restructuring & Integration
    
(1,235
)
-0.4
%
    
(771
)
-0.3
%
    
(2,782
)
-0.5
%
    
(1,012
)
-0.2
%
Other Income, Net
    
314
  
0.1
%
    
297
  
0.1
%
    
630
  
0.1
%
    
559
  
0.1
%
   
$
29,669
  
9.5
%
  
$
31,844
  
11.0
%
  
$
55,188
  
9.3
%
  
$
51,863
  
9.8
%
 
STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

   
THREE MONTHS ENDED
JUNE 30,
    
SIX MONTHS ENDED
JUNE 30,
  
   
2017
    
2016
    
2017
    
2016
  
   
(Unaudited)
    
(Unaudited)
  
EARNINGS FROM CONTINUING OPERATIONS
                        
                         
GAAP EARNINGS FROM CONTINUING OPERATIONS
  
$
18,261
    
$
19,862
    
$
34,628
    
$
32,518
  
                                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
1,235
      
771
      
2,782
      
1,012
  
GAIN FROM SALE OF BUILDINGS
    
(262
)
    
(262
)
    
(524
)
    
(524
)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
    
(389
)
    
(205
)
    
(903
)
    
(196
)
                                 
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS
  
$
18,845
    
$
20,166
    
$
35,983
    
$
32,810
  
                                 
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
                                
                                 
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
  
$
0.78
    
$
0.86
    
$
1.48
    
$
1.41
  
                                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
0.05
      
0.03
      
0.12
      
0.04
  
GAIN FROM SALE OF BUILDINGS
    
(0.01
)
    
(0.01
)
    
(0.02
)
    
(0.02
)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
    
(0.01
)
    
-
      
(0.04
)
    
-
  
                                 
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
  
$
0.81
    
$
0.88
    
$
1.54
    
$
1.43
  
                                 
OPERATING INCOME
                                
                                 
GAAP OPERATING INCOME
  
$
29,669
    
$
31,844
    
$
55,188
    
$
51,863
  
                                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
1,235
      
771
      
2,782
      
1,012
  
OTHER INCOME, NET
    
(314
)
    
(297
)
    
(630
)
    
(559
)
                                 
NON-GAAP OPERATING INCOME
  
$
30,590
    
$
32,318
    
$
57,340
    
$
52,316
  

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS, DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS, AND OPERATING INCOME, EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, 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)

   
June 30,
2017
    
December 31,
2016
  
   
(Unaudited)
        
             
ASSETS
        
             
CASH
  
$
16,389
    
$
19,796
  
                 
ACCOUNTS RECEIVABLE, GROSS
    
193,642
      
139,055
  
ALLOWANCE FOR DOUBTFUL ACCOUNTS
    
5,883
      
4,425
  
ACCOUNTS RECEIVABLE, NET
    
187,759
      
134,630
  
                 
INVENTORIES
    
340,886
      
312,477
  
OTHER CURRENT ASSETS
    
9,436
      
7,318
  
                 
TOTAL CURRENT ASSETS
    
554,470
      
474,221
  
                 
PROPERTY, PLANT AND EQUIPMENT, NET
    
81,973
      
78,499
  
GOODWILL
    
67,401
      
67,231
  
OTHER INTANGIBLES, NET
    
60,008
      
64,056
  
DEFERRED INCOME TAXES
    
50,407
      
51,127
  
OTHER ASSETS
    
36,174
      
33,563
  
                 
TOTAL ASSETS
  
$
850,433
    
$
768,697
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
          
                 
NOTES PAYABLE
  
$
78,946
    
$
54,812
  
CURRENT PORTION OF LONG TERM DEBT
    
46
      
43
  
ACCOUNTS PAYABLE
    
104,074
      
83,878
  
ACCRUED CUSTOMER RETURNS
    
45,779
      
40,176
  
OTHER CURRENT LIABILITIES
    
106,307
      
104,932
  
                 
TOTAL CURRENT LIABILITIES
    
335,152
      
283,841
  
                 
LONG-TERM DEBT
    
101
      
120
  
ACCRUED ASBESTOS LIABILITIES
    
29,383
      
31,328
  
OTHER LIABILITIES
    
13,573
      
12,380
  
                 
TOTAL LIABILITIES
    
378,209
      
327,669
  
                 
TOTAL STOCKHOLDERS' EQUITY
    
472,224
      
441,028
  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
850,433
    
$
768,697
  
 
STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows

(In thousands)

   
SIX MONTHS ENDED
JUNE 30,
  
   
2017
    
2016
  
   
(Unaudited)
  
             
CASH FLOWS FROM OPERATING ACTIVITIES
            
NET EARNINGS
  
$
33,498
    
$
31,448
  
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
                
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
                
DEPRECIATION AND AMORTIZATION
    
11,316
      
9,269
  
OTHER
    
7,498
      
8,085
  
CHANGE IN ASSETS AND LIABILITIES:
                
ACCOUNTS RECEIVABLE
    
(53,069
)
    
(41,726
)
INVENTORY
    
(27,048
)
    
(20,819
)
ACCOUNTS PAYABLE
    
17,475
      
18,989
  
OTHER
    
3,495
      
18,482
  
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
(6,835
)
    
23,728
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES
    
-
      
(67,289
)
CAPITAL EXPENDITURES
    
(8,843
)
    
(10,134
)
OTHER INVESTING ACTIVITIES
    
2
      
5
  
NET CASH USED IN INVESTING ACTIVITIES
    
(8,841
)
    
(77,418
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
NET CHANGE IN DEBT
    
24,113
      
52,676
  
PURCHASE OF TREASURY STOCK
    
(5,176
)
    
(377
)
DIVIDENDS PAID
    
(8,674
)
    
(7,705
)
OTHER FINANCING ACTIVITIES
    
1,488
      
2,609
  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    
11,751
      
47,203
  
                 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
518
      
82
  
NET DECREASE IN CASH AND CASH EQUIVALENTS
    
(3,407
)
    
(6,405
)
CASH AND CASH EQUIVALENTS at beginning of Period
    
19,796
      
18,800
  
CASH AND CASH EQUIVALENTS at end of Period
  
$
16,389
    
$
12,395