Standard Motor Products, Inc. Announces Fourth Quarter and 2017 Year End Results

NEW YORK, Feb. 20, 2018 /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 for the year ended December 31, 2017.

Consolidated net sales for the fourth quarter of 2017 were $240 million, compared to consolidated net sales of $229.8 million during the comparable quarter in 2016. Earnings (Loss) from continuing operations for the fourth quarter of 2017 were ($8.1) million or (36) cents per diluted share, compared to $8.8 million or 38 cents per diluted share in the fourth quarter of 2016. Excluding non-operational gains and losses and the impact of the Tax Cuts and Jobs Act identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the fourth quarter of 2017 were $12.4 million or 54 cents per diluted share, compared to $9.8 million or 42 cents per diluted share in the fourth quarter of 2016.

Consolidated net sales for 2017 were $1,116.1 million, compared to consolidated net sales of $1,058.5 million during the comparable period in 2016.  Earnings from continuing operations for 2017 were $43.6 million or $1.88 per diluted share, compared to $62.4 million or $2.70 per diluted share in 2016.  Excluding non-operational gains and losses and the impact of the Tax Cuts and Jobs Act identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the year ended December 31, 2017, and 2016 were $65.6 million or $2.83 per diluted share and $63.9 million or $2.77 per diluted share, respectively.

Mr. Eric P. Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are pleased with our results in the fourth quarter, as both net sales and non-GAAP diluted earnings per share from continuing operations were ahead of the fourth quarter of 2016. For the year as a whole, comparable net sales and non-GAAP earnings were also ahead of the prior year, though results were negatively impacted by a mild Temperature Control season and the one-time costs of plant moves.

"Engine Management net sales were up 8.3% for the year. However, excluding the effect of the General Cable ignition wire acquisition—we acquired this business in May 2016, and thus we had the benefit of a full year sales in 2017 compared to seven months in 2016—Engine Management sales were up 3.3% in line with our long-term expectations. Temperature Control sales were down 1.6% for the year because of a cool summer. However, our customers experienced sales declines closer to 4%. We anticipate that this will lead to lower pre-season orders this year as they are entering 2018 with heavier than normal inventories.

"For the full year, our Engine Management gross margin fell nearly two points in 2017—from 31.3% in 2016 to 29.4% in 2017, primarily because of the cost of the plant moves, discussed below. Temperature Control gross margin, despite the lower sales, increased from 25.6% to 26.2%, as our operations in Reynosa, Mexico, and Foshan, China, continue to show improvement.

"Looking beyond the numbers, we are pleased that during 2017 we continued to make progress towards achieving our long-term strategic goals. We made strong strides in our ambitious programs of plant consolidations and relocations. We exited our factory in Grapevine, Texas, moving some of the operations to Greenville, South Carolina, and others to Reynosa, Mexico. We are closing our electronics facility in Orlando, Florida, and relocating it to Independence, Kansas. And as a result of the General Cable ignition wire acquisition, we are relocating their assembly operations from Nogales, Mexico, to our facility in Reynosa.

"Some of the moves are complete, and the balance will be done by the second half of 2018. In the short run, these moves entail a significant amount of time, effort, and cost, but in the long run they will make us a stronger company. We thank all our people for their immense efforts here.

"We also made progress in our goal of strategic acquisitions. At the end of November, we entered into a joint venture with Foshan Guangdong Automotive Air Conditioning Co., Ltd. (FGD), a compressor manufacturer in Foshan, China. We look to them to be a high-quality, low-cost supplier to our North American business, and, in the future, to be an integral part of our plan to develop our Temperature Control business in China.

"Looking ahead to 2018, we are anticipating some headwinds in the first half of the year. In Temperature Control, we had a very strong start to the year in 2017, up 24% in the first quarter and 9% for the half, as our customers rebuilt their inventories after a hot 2016. This was followed by a mild 2017 summer, leaving our customers with higher than normal inventory levels. We therefore expect pre-season Temperature Control orders to be significantly lower than the prior year. However, the full year results will be determined, as always, by the weather during the season itself. In addition, within Engine Management, two of the plant moves will not be complete until the second half of the year, and we will continue to incur additional costs during the first and second quarters.

"However, these are essentially short-term issues. In the long run, with a strong market position, a healthy balance sheet, a growing and aging vehicle population—and most of all, a dedicated and talented workforce—we look forward to the future.

"As announced previously, we are increasing our quarterly dividend from 19 cents to 21 cents payable on March 1, 2018. This represents our ninth consecutive year of dividend increases."

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Tuesday, February 20, 2018.  The dial-in number is 888-632-3384 (domestic) or 785-424-1675 (international). The playback number is 800-839-5634 (domestic) or 402-220-2560 (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




TWELVE MONTHS ENDED





DECEMBER 31,




DECEMBER 31,





2017



2016




2017



2016





(Unaudited)




(Unaudited)



NET SALES


$       239,978



$       229,799




$   1,116,143



$   1,058,482


















COST OF SALES


170,633



163,028




789,487



735,995


















GROSS PROFIT


69,345



66,771




326,656



322,487


















SELLING, GENERAL & ADMINISTRATIVE EXPENSES


51,348



52,625




223,584



221,658



RESTRUCTURING AND INTEGRATION EXPENSES 


2,259



1,830




6,173



3,957



OTHER INCOME , NET


329



314




1,275



1,195


















OPERATING INCOME 


16,067



12,630




98,174



98,067


















OTHER NON-OPERATING INCOME (EXPENSE), NET


(1,285)



1,253




597



2,059


















INTEREST EXPENSE


544



350




2,329



1,556


















EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES


14,238



13,533




96,442



98,570


















PROVISION FOR INCOME TAXES


22,344



4,694




52,812



36,158


















EARNINGS (LOSS) FROM CONTINUING OPERATIONS


(8,106)



8,839




43,630



62,412


















LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES


(541)



(487)




(5,654)



(1,982)


















NET EARNINGS (LOSS)


$          (8,647)



$           8,352




$         37,976



$         60,430





























































































NET EARNINGS (LOSS) PER COMMON SHARE:






























   BASIC EARNINGS (LOSS) FROM CONTINUING OPERATIONS


$            (0.36)



$             0.39




$             1.92



$             2.75



   DISCONTINUED OPERATION


(0.02)



(0.02)




(0.25)



(0.09)



   NET EARNINGS (LOSS) PER COMMON SHARE - BASIC


$            (0.38)



$             0.37




$             1.67



$             2.66

































   DILUTED EARNINGS (LOSS) FROM CONTINUING OPERATIONS


$            (0.36)



$             0.38




$             1.88



$             2.70



   DISCONTINUED OPERATION


(0.02)



(0.02)




(0.24)



(0.08)



   NET EARNINGS (LOSS) PER COMMON SHARE - DILUTED


$            (0.38)



$             0.36




$             1.64



$             2.62

































WEIGHTED AVERAGE NUMBER OF COMMON SHARES


22,582,763



22,825,109




22,726,491



22,722,517



WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES


23,045,565



23,201,501




23,198,392



23,082,578


















 

 

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income



























(In thousands)









































THREE MONTHS ENDED



TWELVE MONTHS ENDED




DECEMBER 31,



DECEMBER 31,




2017



2016



2017



2016




(unaudited)



(unaudited)


Revenues













Engine Management


$       197,974



$       185,228



$       829,413



$       765,539


Temperature Control


40,286



42,652



279,127



283,740


All Other


1,718



1,919



7,603



9,203




$         239,978



$         229,799



$      1,116,143



$      1,058,482















Gross Margin













Engine Management


$         56,260

28.4%


$         51,754

27.9%


$       243,791

29.4%


$       239,710

31.3%

Temperature Control


10,715

26.6%


12,100

28.4%


73,254

26.2%


72,547

25.6%

All Other


2,370



2,917



9,611



10,230




$           69,345

28.9%


$           66,771

29.1%


$         326,656

29.3%


$         322,487

30.5%














Selling, General & Administrative













Engine Management


$         33,498

16.9%


$         33,682

18.2%


$         141,995

17.1%


$         136,590

17.8%

Temperature Control


10,665

26.5%


10,845

25.4%


51,880

18.6%


52,623

18.5%

All Other


7,185



8,098



29,709



32,445




$           51,348

21.4%


$           52,625

22.9%


$         223,584

20.0%


$         221,658

20.9%



























Operating Income













Engine Management


$         22,762

11.5%


$         18,072

9.8%


$         101,796

12.3%


$         103,120

13.5%

Temperature Control


50

0.1%


1,255

2.9%


21,374

7.7%


19,924

7.0%

All Other


(4,815)



(5,181)



(20,098)



(22,215)




17,997

7.5%


14,146

6.2%


103,072

9.2%


100,829

9.5%

Restructuring & Integration


(2,259)

-0.9%


(1,830)

-0.8%


(6,173)

-0.6%


(3,957)

-0.4%

Other Income, Net


329

0.1%


314

0.1%


1,275

0.1%


1,195

0.1%



$           16,067

6.7%


$           12,630

5.5%


$           98,174

8.8%


$           98,067

9.3%














 

 

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures









































(In thousands, except per share amounts)












THREE MONTHS ENDED



TWELVE MONTHS ENDED



DECEMBER 31,



DECEMBER 31,



2017


2016



2017


2016


(Unaudited)


(Unaudited)

EARNINGS (LOSS) FROM CONTINUING OPERATIONS




















GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS


$             (8,106)


$              8,839



$            43,630


$            62,412











RESTRUCTURING AND INTEGRATION EXPENSES


2,259


1,830



6,173


3,957

IMPAIRMENT OF OUR INVESTMENT IN ORANGE ELECTRONICS CO.,LTD


1,815


-



1,815


-

IMPACT OF TAX CUTS AND JOBS ACT


17,515


-



17,515


-

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD


-


-



(463)


(235)

GAIN FROM SALE OF BUILDINGS


(262)


(262)



(1,048)


(1,048)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(799)


(628)



(2,050)


(1,164)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS


$            12,422


$              9,779



$            65,572


$            63,922





















DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS




















GAAP DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS


$              (0.36)


$               0.38



$               1.88


$               2.70











RESTRUCTURING AND INTEGRATION EXPENSES


0.10


0.08



0.27


0.17

IMPAIRMENT OF OUR INVESTMENT IN ORANGE ELECTRONICS CO.,LTD


0.08


-



0.08


-

IMPACT OF TAX CUTS AND JOBS ACT


0.76


-



0.75


-

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD


-


-



(0.02)


(0.01)

GAIN FROM SALE OF BUILDINGS


(0.01)


(0.01)



(0.04)


(0.04)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS


(0.03)


(0.03)



(0.09)


(0.05)











NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS


$               0.54


$               0.42



$               2.83


$               2.77





















OPERATING INCOME




















GAAP OPERATING INCOME


$            16,067


$            12,630



$            98,174


$            98,067











RESTRUCTURING AND INTEGRATION EXPENSES


2,259


1,830



6,173


3,957

OTHER INCOME, NET


(329)


(314)



(1,275)


(1,195)











NON-GAAP OPERATING INCOME


$            17,997


$            14,146



$          103,072


$          100,829































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)























December  31,




December  31,



2017




2016



(Unaudited)












ASSETS









CASH


$            17,323




$            19,796








ACCOUNTS RECEIVABLE, GROSS


145,024




139,055

ALLOWANCE FOR DOUBTFUL ACCOUNTS


4,967




4,425

ACCOUNTS RECEIVABLE, NET


140,057




134,630








INVENTORIES


326,411




312,477

OTHER CURRENT ASSETS


12,300




7,318








TOTAL CURRENT ASSETS


496,091




474,221








PROPERTY, PLANT AND EQUIPMENT, NET


89,103




78,499

GOODWILL 


67,413




67,231

OTHER INTANGIBLES, NET


56,261




64,056

DEFERRED INCOME TAXES


32,420




51,127

OTHER ASSETS


46,279




33,563








TOTAL ASSETS


$          787,567




$          768,697















LIABILITIES AND STOCKHOLDERS' EQUITY
















NOTES PAYABLE


$            57,000




$            54,812

CURRENT PORTION OF OTHER DEBT


4,699




43

ACCOUNTS PAYABLE


77,990




83,878

ACCRUED CUSTOMER RETURNS


35,916




40,176

OTHER CURRENT LIABILITIES


110,292




104,932








TOTAL CURRENT LIABILITIES


285,897




283,841








LONG-TERM DEBT


79




120

ACCRUED ASBESTOS LIABILITIES


33,376




31,328

OTHER LIABILITIES


14,561




12,380








 TOTAL LIABILITIES 


333,913




327,669








 TOTAL STOCKHOLDERS' EQUITY 


453,654




441,028








 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 


$          787,567




$          768,697








 

 

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows




















(In thousands)



















TWELVE MONTHS ENDED



DECEMBER 31,



2017



2016



(Unaudited)








CASH FLOWS FROM OPERATING ACTIVITIES












NET EARNINGS 

$        37,976



$        60,430


ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH






PROVIDED BY OPERATING ACTIVITIES:






DEPRECIATION AND AMORTIZATION

23,916



20,457


OTHER

38,551



11,505


CHANGE IN ASSETS AND LIABILITIES:






ACCOUNTS RECEIVABLE

(5,100)



(8,826)


INVENTORY 

(13,901)



(20,155)


ACCOUNTS PAYABLE

(7,186)



7,345


PREPAID EXPENSES AND OTHER CURRENT ASSETS

(4,869)



3,475


SUNDRY PAYABLES AND ACCRUED EXPENSES 

(6,015)



20,990


OTHER

1,245



2,584


NET CASH PROVIDED BY OPERATING ACTIVITIES

64,617



97,805














CASH FLOWS FROM INVESTING ACTIVITIES












ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES

(6,808)



(67,289)


CAPITAL EXPENDITURES

(24,442)



(20,921)


OTHER INVESTING ACTIVITIES

22



192


NET CASH USED IN INVESTING ACTIVITIES 

(31,228)



(88,018)














CASH FLOWS FROM FINANCING ACTIVITIES












NET CHANGE IN DEBT

6,253



7,473


PURCHASE OF TREASURY STOCK

(24,376)



(377)


DIVIDENDS PAID

(17,287)



(15,447)


OTHER FINANCING ACTIVITIES

(534)



595


NET CASH USED IN FINANCING ACTIVITIES

(35,944)



(7,756)














EFFECT OF EXCHANGE RATE CHANGES ON CASH

82



(1,035)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(2,473)



996


CASH AND CASH EQUIVALENTS at beginning of Year

19,796



18,800


CASH AND CASH EQUIVALENTS at end of Year

$        17,323



$        19,796







 

 

Cision View original content:http://www.prnewswire.com/news-releases/standard-motor-products-inc-announces-fourth-quarter-and-2017-year-end-results-300600161.html

SOURCE Standard Motor Products, Inc.

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