SMP
$43.59
Standard Motor Products
($.72)
(1.62%)
Earnings Details
2nd Quarter June 2017
Monday, July 31, 2017 8:30:00 AM
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Summary

Standard Motor Products (SMP) Recent Earnings

Standard Motor Products (SMP) reported 2nd Quarter June 2017 earnings of $0.81 per share on revenue of $312.7 million. The consensus earnings estimate was $0.99 per share on revenue of $310.7 million. Revenue grew 8.2% on a year-over-year basis.

Standard Motor Products Inc is an independent manufacturer and distributor of replacement parts for motor vehicles in the automotive aftermarket industry.

Results
Reported Earnings
$0.81
Earnings Whisper
-
Consensus Estimate
$0.99
Reported Revenue
$312.7 Mil
Revenue Estimate
$310.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Standard Motor Products, Inc. Announces Second Quarter 2017 Results and a Quarterly Dividend

Standard Motor Products, Inc. (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.

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
SIX MONTHS ENDED
JUNE 30,
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
SIX MONTHS ENDED
JUNE 30,
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
SIX MONTHS ENDED
JUNE 30,
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,
December
31,
2017
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

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SOURCE Standard Motor Products, Inc.

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