Standard Motor Products, Inc. Announces Third Quarter 2016 Results and a Quarterly Dividend
NEW YORK, Oct. 27, 2016 /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, 2016.
Consolidated net sales for the third quarter of 2016 were $300.8 million, compared to consolidated net sales of $270 million during the comparable quarter in 2015. Earnings from continuing operations for the third quarter of 2016 were $21.1 million or 91 cents per diluted share, compared to $19.2 million or 83 cents per diluted share in the third quarter of 2015. 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 2016 were $21.3 million or 92 cents per diluted share, compared to $18.4 million or 80 cents per diluted share in the third quarter of 2015.
Consolidated net sales for the nine month period ended September 30, 2016, were $828.7 million, compared to consolidated net sales of $767 million during the comparable period in 2015. Earnings from continuing operations for the nine month period ended September 30, 2016, were $53.6 million or $2.32 per diluted share, compared to $42.3 million or $1.82 per diluted share in the comparable period of 2015. 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 September 30, 2016, and 2015 were $54.1 million or $2.35 per diluted share and $41.3 million or $1.78 cents per diluted share, respectively.
Mr. Eric P. Sills, Standard Motor Products' Chief Executive Officer and President, stated, "We are pleased with the results for the third quarter and year-to-date. For the quarter, consolidated net sales increased 11.4%, inclusive of $22.8 million from the acquisition of the General Cable North American ignition wire business. Excluding this, net sales were ahead 2.9% for the quarter.
"Our margins were higher as well. Gross margin increased from 30.2% to 31.8% for the quarter, while non-GAAP operating income before restructuring expenses grew roughly 16%. Some of the improvement is a function of increased sales, but much is the result of continuous operating improvement in all our locations. We compliment all our people for their efforts and achievements in this area.
"Turning to the operating divisions, Engine Management net sales increased 13.8% for the quarter. Excluding the wire acquisition, Engine Management sales were ahead approximately 1%. However, year-to-date, excluding the wire acquisition, net sales are up 3.5%, in line with our low to mid-single digit forecasts. As we have previously noted, sales can vary in any particular quarter, based on special one-time events, but over time they balance out.
"Temperature Control sales increased 6.8% for the quarter and 5.5% year-to-date. By contrast, our key customers reported POS sales increases through September of about 9% aided by the first warm summer in three years. This would indicate that our customers were able to reduce inventory during this time, much of which was carried over from the two prior cool summers. This should be a positive factor heading into 2017.
"Year-to-date results were positive for the company as a whole. Total consolidated net sales were up 8% (4% excluding the wire acquisition). Gross margin increased from 28.4% to 30.9% and non-GAAP operating income before restructuring expenses increased by approximately 33%. As you recall, we incurred approximately $10 million of one-time costs during the full year 2015 for our diesel enhancement program, unfavorable Temperature Control variances and postretirement medical expenses. Adjusting for the $9.5 million of these expenses incurred in the first nine months of 2015, our non-GAAP operating income improved roughly 16%.
"We have two major operating initiatives in progress and both are proceeding on schedule and on budget. The first is the integration of the wire acquisition. In October, we completed the consolidation of the General Cable Altoona, PA, distribution center into our existing wire distribution center in Edwardsville, KS. We are now announcing our plan to relocate all production from the acquired Nogales, Mexico, wire set assembly operation to our existing wire assembly business in Reynosa, Mexico. We anticipate completion by the end of 2017, at which point we will close the Nogales plant.
"The second initiative includes the closing of our Grapevine, TX, facility and the relocation of the production lines to Greenville, SC, and Reynosa, Mexico. We are also relocating certain production lines from Greenville, SC, to Bialystok, Poland. We anticipate that all will be complete by the end of 2017 and will result in significant synergies and cost savings."
The Board of Directors has approved payment of a quarterly dividend of seventeen cents per share on the common stock outstanding. The dividend will be paid on December 1, 2016, to stockholders of record on November 15, 2016.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, October 27, 2016. The dial-in number is 800-895-1241 (domestic) or 785-424-1056 (international). The playback number is 800-727-1367 (domestic) or 402-220-2669 (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.
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STANDARD MOTOR PRODUCTS, INC. | ||||||||||||
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Consolidated Statements of Operations | ||||||||||||
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(In thousands, except per share amounts) |
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|
THREE MONTHS ENDED |
NINE MONTHS ENDED | |||||||||||
|
SEPTEMBER 30, |
SEPTEMBER 30, | |||||||||||
|
2016 |
2015 |
2016 |
2015 | |||||||||
|
(Unaudited) |
(Unaudited) | |||||||||||
|
NET SALES |
$ 300,795 |
$ 270,037 |
$ 828,683 |
$ 767,008 | ||||||||
|
COST OF SALES |
205,151 |
188,484 |
572,967 |
548,806 | ||||||||
|
GROSS PROFIT |
95,644 |
81,553 |
255,716 |
218,202 | ||||||||
|
SELLING, GENERAL & ADMINISTRATIVE EXPENSES |
61,277 |
51,907 |
169,033 |
152,841 | ||||||||
|
RESTRUCTURING AND INTEGRATION EXPENSES (INCOME) |
1,115 |
(80) |
2,127 |
(49) | ||||||||
|
OTHER INCOME , NET |
322 |
231 |
881 |
774 | ||||||||
|
OPERATING INCOME |
33,574 |
29,957 |
85,437 |
66,184 | ||||||||
|
OTHER NON-OPERATING INCOME (EXPENSE), NET |
208 |
(535) |
806 |
164 | ||||||||
|
INTEREST EXPENSE |
501 |
332 |
1,206 |
1,238 | ||||||||
|
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES |
33,281 |
29,090 |
85,037 |
65,110 | ||||||||
|
PROVISION FOR INCOME TAXES |
12,226 |
9,896 |
31,464 |
22,769 | ||||||||
|
EARNINGS FROM CONTINUING OPERATIONS |
21,055 |
19,194 |
53,573 |
42,341 | ||||||||
|
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES |
(425) |
(728) |
(1,495) |
(1,549) | ||||||||
|
NET EARNINGS |
$ 20,630 |
$ 18,466 |
$ 52,078 |
$ 40,792 | ||||||||
|
NET EARNINGS PER COMMON SHARE: |
||||||||||||
|
BASIC EARNINGS FROM CONTINUING OPERATIONS |
$ 0.93 |
$ 0.84 |
$ 2.36 |
$ 1.85 | ||||||||
|
DISCONTINUED OPERATION |
(0.02) |
(0.03) |
(0.06) |
(0.07) | ||||||||
|
NET EARNINGS PER COMMON SHARE - BASIC |
$ 0.91 |
$ 0.81 |
$ 2.30 |
$ 1.78 | ||||||||
|
DILUTED EARNINGS FROM CONTINUING OPERATIONS |
$ 0.91 |
$ 0.83 |
$ 2.32 |
$ 1.82 | ||||||||
|
DISCONTINUED OPERATION |
(0.02) |
(0.03) |
(0.06) |
(0.06) | ||||||||
|
NET EARNINGS PER COMMON SHARE - DILUTED |
$ 0.89 |
$ 0.80 |
$ 2.26 |
$ 1.76 | ||||||||
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES |
22,716,279 |
22,770,865 |
22,688,071 |
22,865,978 | ||||||||
|
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES |
23,097,699 |
23,133,869 |
23,044,604 |
23,220,381 | ||||||||
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STANDARD MOTOR PRODUCTS, INC. | ||||||||||||
|
Segment Revenues and Operating Income | ||||||||||||
|
(In thousands) |
||||||||||||
|
THREE MONTHS ENDED |
NINE MONTHS ENDED |
|||||||||||
|
SEPTEMBER 30, |
SEPTEMBER 30, |
|||||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||||
|
(unaudited) |
(unaudited) |
|||||||||||
|
Revenues |
||||||||||||
|
Engine Management |
$ 200,782 |
$ 176,379 |
$ 580,311 |
$ 530,442 |
||||||||
|
Temperature Control |
96,819 |
90,625 |
241,088 |
228,432 |
||||||||
|
All Other |
3,194 |
3,033 |
7,284 |
8,134 |
||||||||
|
$ 300,795 |
$ 270,037 |
$ 828,683 |
$ 767,008 |
|||||||||
|
Gross Margin |
||||||||||||
|
Engine Management |
$ 66,849 |
33.3% |
$ 55,258 |
31.3% |
$ 187,956 |
32.4% |
$ 159,227 |
30.0% | ||||
|
Temperature Control |
25,773 |
26.6% |
23,308 |
25.7% |
60,447 |
25.1% |
50,438 |
22.1% | ||||
|
All Other |
3,022 |
2,987 |
7,313 |
8,537 |
||||||||
|
$ 95,644 |
31.8% |
$ 81,553 |
30.2% |
$ 255,716 |
30.9% |
$ 218,202 |
28.4% | |||||
|
Selling, General & Administrative |
||||||||||||
|
Engine Management |
$ 36,659 |
18.3% |
$ 30,609 |
17.4% |
$ 102,908 |
17.7% |
$ 91,055 |
17.2% | ||||
|
Temperature Control |
15,827 |
16.3% |
14,293 |
15.8% |
41,778 |
17.3% |
39,621 |
17.3% | ||||
|
All Other |
8,791 |
7,005 |
24,347 |
22,165 |
||||||||
|
$ 61,277 |
20.4% |
$ 51,907 |
19.2% |
$ 169,033 |
20.4% |
$ 152,841 |
19.9% | |||||
|
Operating Income |
||||||||||||
|
Engine Management |
$ 30,190 |
15.0% |
$ 24,649 |
14.0% |
$ 85,048 |
14.7% |
$ 68,172 |
12.9% | ||||
|
Temperature Control |
9,946 |
10.3% |
9,015 |
9.9% |
18,669 |
7.7% |
10,817 |
4.7% | ||||
|
All Other |
(5,769) |
(4,018) |
(17,034) |
(13,628) |
||||||||
|
34,367 |
11.4% |
29,646 |
11.0% |
86,683 |
10.5% |
65,361 |
8.5% | |||||
|
Restructuring & Integration |
(1,115) |
-0.4% |
80 |
0.0% |
(2,127) |
-0.3% |
49 |
0.0% | ||||
|
Other Income, Net |
322 |
0.1% |
231 |
0.1% |
881 |
0.1% |
774 |
0.1% | ||||
|
$ 33,574 |
11.2% |
$ 29,957 |
11.1% |
$ 85,437 |
10.3% |
$ 66,184 |
8.6% | |||||
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STANDARD MOTOR PRODUCTS, INC. | |||||||||
|
Reconciliation of GAAP and Non-GAAP Measures | |||||||||
|
(In thousands, except per share amounts) |
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THREE MONTHS ENDED |
NINE MONTHS ENDED | ||||||||
|
SEPTEMBER 30, |
SEPTEMBER 30, | ||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||
|
(Unaudited) |
(Unaudited) | ||||||||
|
EARNINGS FROM CONTINUING OPERATIONS |
|||||||||
|
GAAP EARNINGS FROM CONTINUING OPERATIONS |
$ 21,055 |
$ 19,194 |
$ 53,573 |
$ 42,341 | |||||
|
RESTRUCTURING AND INTEGRATION EXPENSES |
1,115 |
(80) |
2,127 |
(49) | |||||
|
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD |
(235) |
(571) |
(235) |
(571) | |||||
|
GAIN FROM SALE OF BUILDINGS |
(262) |
(262) |
(786) |
(786) | |||||
|
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS |
(340) |
137 |
(536) |
333 | |||||
|
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS |
$ 21,333 |
$ 18,418 |
$ 54,143 |
$ 41,268 | |||||
|
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS |
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|
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS |
$ 0.91 |
$ 0.83 |
$ 2.32 |
$ 1.82 | |||||
|
RESTRUCTURING AND INTEGRATION EXPENSES |
0.05 |
- |
0.09 |
- | |||||
|
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD |
(0.01) |
(0.03) |
(0.01) |
(0.03) | |||||
|
GAIN FROM SALE OF BUILDINGS |
(0.01) |
(0.01) |
(0.03) |
(0.03) | |||||
|
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS |
(0.02) |
0.01 |
(0.02) |
0.02 | |||||
|
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS |
$ 0.92 |
$ 0.80 |
$ 2.35 |
$ 1.78 | |||||
|
OPERATING INCOME |
|||||||||
|
GAAP OPERATING INCOME |
$ 33,574 |
$ 29,957 |
$ 85,437 |
$ 66,184 | |||||
|
RESTRUCTURING AND INTEGRATION EXPENSES |
1,115 |
(80) |
2,127 |
(49) | |||||
|
OTHER INCOME, NET |
(322) |
(231) |
(881) |
(774) | |||||
|
NON-GAAP OPERATING INCOME |
$ 34,367 |
$ 29,646 |
$ 86,683 |
$ 65,361 | |||||
|
MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS, DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS, AND OPERATING INCOME, |
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|
EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE |
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|
COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN |
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|
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. |
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STANDARD MOTOR PRODUCTS, INC. |
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|
Condensed Consolidated Balance Sheets |
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(In thousands) |
||||||
|
September 30, |
December 31, | |||||
|
2016 |
2015 | |||||
|
(Unaudited) |
||||||
|
ASSETS |
||||||
|
CASH |
$ 30,537 |
$ 18,800 | ||||
|
ACCOUNTS RECEIVABLE, GROSS |
166,349 |
128,099 | ||||
|
ALLOWANCE FOR DOUBTFUL ACCOUNTS |
4,623 |
4,246 | ||||
|
ACCOUNTS RECEIVABLE, NET |
161,726 |
123,853 | ||||
|
INVENTORIES |
302,598 |
285,793 | ||||
|
OTHER CURRENT ASSETS |
47,896 |
51,294 | ||||
|
TOTAL CURRENT ASSETS |
542,757 |
479,740 | ||||
|
PROPERTY, PLANT AND EQUIPMENT, NET |
77,081 |
68,882 | ||||
|
GOODWILL AND OTHER INTANGIBLES, NET |
133,469 |
84,267 | ||||
|
OTHER ASSETS |
44,869 |
48,175 | ||||
|
TOTAL ASSETS |
$ 798,176 |
$ 681,064 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||
|
NOTES PAYABLE |
$ 70,000 |
$ 47,427 | ||||
|
CURRENT PORTION OF LONG TERM DEBT |
44 |
16 | ||||
|
ACCOUNTS PAYABLE |
88,168 |
72,711 | ||||
|
ACCRUED CUSTOMER RETURNS |
46,424 |
38,812 | ||||
|
OTHER CURRENT LIABILITIES |
109,645 |
84,950 | ||||
|
TOTAL CURRENT LIABILITIES |
314,281 |
243,916 | ||||
|
LONG-TERM DEBT |
134 |
62 | ||||
|
ACCRUED ASBESTOS LIABILITIES |
31,884 |
32,185 | ||||
|
OTHER LIABILITIES |
13,338 |
12,922 | ||||
|
TOTAL LIABILITIES |
359,637 |
289,085 | ||||
|
TOTAL STOCKHOLDERS' EQUITY |
438,539 |
391,979 | ||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 798,176 |
$ 681,064 | ||||
|
- |
- | |||||
|
STANDARD MOTOR PRODUCTS, INC. | |||||
|
Condensed Consolidated Statements of Cash Flows | |||||
|
(In thousands) |
|||||
|
NINE MONTHS ENDED | |||||
|
SEPTEMBER 30, | |||||
|
2016 |
2015 | ||||
|
(Unaudited) | |||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||
|
NET EARNINGS |
$ 52,078 |
$ 40,792 | |||
|
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH |
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|
PROVIDED BY OPERATING ACTIVITIES: |
|||||
|
DEPRECIATION AND AMORTIZATION |
14,829 |
13,042 | |||
|
OTHER |
10,581 |
7,945 | |||
|
CHANGE IN ASSETS AND LIABILITIES: |
|||||
|
ACCOUNTS RECEIVABLE |
(35,192) |
(25,094) | |||
|
INVENTORY |
(7,422) |
4,761 | |||
|
ACCOUNTS PAYABLE |
9,900 |
8,383 | |||
|
OTHER |
38,194 |
23,003 | |||
|
NET CASH PROVIDED BY OPERATING ACTIVTIES |
82,968 |
72,832 | |||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||
|
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES |
(67,289) |
- | |||
|
CAPITAL EXPENDITURES |
(15,194) |
(14,612) | |||
|
OTHER INVESTING ACTIVITIES |
191 |
32 | |||
|
NET CASH USED IN INVESTING ACTIVITIES |
(82,292) |
(14,580) | |||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||
|
NET CHANGE IN DEBT |
22,672 |
(32,227) | |||
|
PURCHASE OF TREASURY STOCK |
(377) |
(15,519) | |||
|
DIVIDENDS PAID |
(11,566) |
(10,299) | |||
|
OTHER FINANCING ACTIVITIES |
736 |
131 | |||
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
11,465 |
(57,914) | |||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
(404) |
(707) | |||
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
11,737 |
(369) | |||
|
CASH AND CASH EQUIVALENTS at beginning of Period |
18,800 |
13,728 | |||
|
CASH AND CASH EQUIVALENTS at end of Period |
$ 30,537 |
$ 13,359 | |||
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SOURCE Standard Motor Products, Inc.