Le Lézard
Classified in: Transportation, Business
Subjects: ERN, CCA, DIV

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




 

 

SOURCE Standard Motor Products, Inc.


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