PR Newswire | Oct 28, 2020 08:31AM EDT

Reinstates Quarterly Dividend

10/28 07:30 CDT

Standard Motor Products, Inc. Announces Third Quarter 2020 Results and Reinstates Quarterly Dividend NEW YORK, Oct. 28, 2020

NEW YORK, Oct. 28, 2020 /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, 2020.

Consolidated net sales for the third quarter of 2020 were $343.6 million, compared to consolidated net sales of $307.7 million during the comparable quarter in 2019. Earnings from continuing operations for the third quarter of 2020 were $36.2 million or $1.59 per diluted share, compared to $22.7 million or $1.00 per diluted share in the third quarter of 2019. 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 2020 were $36.2 million or $1.59 per diluted share, compared to $23.1 million or $1.02 per diluted share in the third quarter of 2019.

Consolidated net sales for the nine months ended September 30, 2020, were $845.9 million, compared to consolidated net sales of $896.7 million during the comparable period in 2019. Earnings from continuing operations for the nine months ended September 30, 2020, were $57.7 million or $2.53 per diluted share, compared to $56.3 million or $2.47 per diluted share in the comparable period of 2019. 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, 2020 and 2019 were $57.8 million or $2.53 per diluted share and $57.3 million or $2.51 per diluted share, respectively.

Loss from discontinued operations, net of income taxes, in the third quarter of 2020 was $7.6 million compared to $7.9 million in the comparable period last year. The loss pertains to asbestos-related liabilities from a brake business, originally acquired in 1986 and subsequently divested in 1998, which are adjusted in the third quarter each year when the Company engages an independent actuary to assess the Company's exposure.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "We are very pleased with our third quarter results as we set all-time records for both sales and profits in a single quarter. While sales have not fully caught up year-to-date, our profits are now roughly even with the first nine months of 2019, in this year of dramatic ups and downs. Perhaps more important in the long run is that sales-both for us and for the industry as a whole-rebounded so quickly from the April trough, confirming the resilience of our industry and how essential it is to the economy as a whole.

"These last few months also reconfirmed the strength and loyalty of our work force. With minimal precedent to guide us, our people were able to reconfigure our facilities, and establish safety protocols often more stringent than CDC requirements. In the midst of the crisis our frontline employees came to work every day, often six or seven days a week. As a result, we were able to keep our factories and distribution centers running, while protecting the health of our employees. We wish to publicly thank all of our people for their heroic efforts during the crisis.

"Our sales in the quarter were strong in both segments. Engine Management sales were up 6.3%, partially offsetting the missed sales at the height of the pandemic. Customer POS was strong throughout the quarter and has carried forward into October, which we believe reflects ongoing pent-up demand from earlier in the year. We anticipate demand ultimately normalizing towards our longer range forecast of low single digit growth. Our Temperature Control Sales were extremely strong in the quarter, up 25% over the third quarter last year, the result of very hot summer weather across most of the U.S., following light pre-season orders in the first half of the year.

"On the expense side, as previously announced, we instituted many temporary cost reductions, including limits on travel and other discretionary expenses, as well as a reduction in Executive and Board of Directors compensation, always making sure that none of these actions would affect the long-term health of our company. We anticipate that we will maintain some, but not all, of these reductions in the future.

"Though our crystal ball is somewhat cloudy, with coronavirus infection rates rising again and unemployment still at high levels, we are optimistic looking forward. Accordingly, the Board of Directors has approved a reinstatement of a quarterly dividend of 25 cents per share on common stock outstanding. The dividend will be paid on December 1, 2020, to stockholders of record on November 16, 2020. We have also reinstated our share purchase program, which has remaining authorization from our Board of Directors in the amount of $11.3 million."

Finally, the company announced that Lawrence Sills, Executive Chairman, is stepping down as an officer of the company and will continue in his role as Chairman of the Board, effective January 1, 2021. Mr. Sills stated, "This change in status reflects the fact that I will be stepping back from day-to-day duties, though I will remain closely involved with the Company as Board Chairman. I am very optimistic about the future. We have assembled an experienced and talented management team, which performed so well during the Covid-19 crisis, and am very confident that the team will continue its outstanding performance for many years ahead."

Conference Call

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, October 28, 2020. The dial-in number is 800-791-4813 (domestic) or 785-424-1102 (international). The playback number is 800-934-4851 (domestic) or 402-220-1181 (international). The participant passcode is 76717.

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 pershare amounts)

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

NET SALES $ 343,609 $ 307,723 $ 845,850 $ 896,661

COST OF SALES 235,861 215,635 603,349 637,705

GROSS PROFIT 107,748 92,088 242,501 258,956

SELLING,GENERAL & 59,497 59,947 163,698 180,483ADMINISTRATIVEEXPENSES

RESTRUCTURINGAND 250 825 464 1,469INTEGRATIONEXPENSES

OTHER EXPENSE, 37 12 31 15NET

OPERATING 47,964 31,304 78,308 76,989INCOME

OTHERNON-OPERATING 514 225 592 2,282INCOME, NET

INTEREST 462 1,508 2,107 4,319EXPENSE

EARNINGS FROMCONTINUING 48,016 30,021 76,793 74,952OPERATIONSBEFORE TAXES

PROVISION FOR 11,804 7,367 19,118 18,639INCOME TAXES

EARNINGS FROMCONTINUING 36,212 22,654 57,675 56,313OPERATIONS

LOSS FROMDISCONTINUEDOPERATION, NET (7,587) (7,903) (9,456) (9,914)OF INCOMETAXES

NET EARNINGS $ 28,625 $ 14,751 $ 48,219 $ 46,399

NET EARNINGSPER COMMONSHARE:

BASICEARNINGS FROM $ 1.62 $ 1.01 $ 2.58 $ 2.52CONTINUINGOPERATIONS

DISCONTINUED (0.34) (0.35) (0.42) (0.44)OPERATION

NETEARNINGS PER $ 1.28 $ 0.66 $ 2.16 $ 2.08COMMON SHARE -BASIC

DILUTEDEARNINGS FROM $ 1.59 $ 1.00 $ 2.53 $ 2.47CONTINUINGOPERATIONS

DISCONTINUED (0.33) (0.35) (0.41) (0.44)OPERATION

NETEARNINGS PER $ 1.26 $ 0.65 $ 2.12 $ 2.03COMMON SHARE -DILUTED

WEIGHTEDAVERAGE NUMBER 22,349,093 22,329,835 22,372,466 22,359,637OF COMMONSHARES

WEIGHTEDAVERAGE NUMBEROF COMMON AND 22,758,458 22,754,440 22,795,426 22,814,228DILUTIVESHARES

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Revenues

Ignition,EmissionControl, Fuel& Safety

RelatedSystem $ 190,891 $ 180,826 $ 498,204 $ 538,718Products

Wire and Cable 38,663 35,147 105,621 108,486

Engine 229,554 215,973 603,825 647,204Management

Compressors 70,785 52,776 141,011 145,080

Other Climate 39,608 35,525 93,216 96,551Control Parts

Temperature 110,393 88,301 234,227 241,631Control

All Other 3,662 3,449 7,798 7,826

$ 343,609 $ 307,723 $ 845,850 $ 896,661Revenues

Gross Margin

Engine $ 72,361 31.5% $ 66,264 30.7% $ 175,296 29.0% $ 189,737 29.3%Management

Temperature 32,212 29.2% 22,973 26.0% 60,828 26.0% 61,715 25.5%Control

All Other 3,175 2,851 6,377 7,504

Gross $ 107,748 31.4% $ 92,088 29.9% $ 242,501 28.7% $ 258,956 28.9%Margin

Selling,General &Administrative

Engine $ 35,665 15.5% $ 35,950 16.6% $ 100,237 16.6% $ 110,723 17.1%Management

Temperature 15,571 14.1% 15,495 17.5% 40,568 17.3% 45,033 18.6%Control

All Other 8,261 8,502 22,893 24,727

Selling, $ 59,497 17.3% $ 59,947 19.5% $ 163,698 19.4% $ 180,483 20.1%General &Administrative

OperatingIncome

Engine $ 36,696 16.0% $ 30,314 14.0% $ 75,059 12.4% $ 79,014 12.2%Management

Temperature 16,641 15.1% 7,478 8.5% 20,260 8.6% 16,682 6.9%Control

All Other (5,086) (5,651) (16,516) (17,223)

48,251 14.0% 32,141 10.4% 78,803 9.3% 78,473 8.8%Subtotal

Restructuring (250) -0.1% (825) -0.3% (464) -0.1% (1,469) -0.2%& Integration

Other Expense, (37) 0.0% (12) 0.0% (31) 0.0% (15) 0.0%Net

Operating $ 47,964 14.0% $ 31,304 10.2% $ 78,308 9.3% $ 76,989 8.6%Income

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per shareamounts)

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

EARNINGS FROM CONTINUINGOPERATIONS

GAAP EARNINGS FROM CONTINUING $36,212 $22,654 $57,675 $56,313OPERATIONS

RESTRUCTURING AND INTEGRATION 250 825 464 1,469EXPENSES

CERTAIN TAX CREDITS ANDPRODUCTION DEDUCTIONS FINALIZED (235) (144) (235) (144)IN PERIOD

INCOME TAX EFFECT RELATED TO (65) (214) (121) (382)RECONCILING ITEMS

NON-GAAP EARNINGS FROM CONTINUING $36,162 $23,121 $57,783 $57,256OPERATIONS

DILUTED EARNINGS PER SHARE FROMCONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE $ 1.59 $ 1.00 $ 2.53 $ 2.47FROM CONTINUING OPERATIONS

RESTRUCTURING AND INTEGRATION 0.01 0.04 0.02 0.06EXPENSES

CERTAIN TAX CREDITS ANDPRODUCTION DEDUCTIONS FINALIZED (0.01) (0.01) (0.01) (0.01)IN PERIOD

INCOME TAX EFFECT RELATED TO - (0.01) (0.01) (0.01)RECONCILING ITEMS

NON-GAAP DILUTED EARNINGS PER $ 1.59 $ 1.02 $ 2.53 $ 2.51SHARE FROM CONTINUING OPERATIONS

OPERATING INCOME

GAAP OPERATING INCOME $47,964 $31,304 $78,308 $76,989

RESTRUCTURING AND INTEGRATION 250 825 464 1,469EXPENSES

OTHER EXPENSE, NET 37 12 31 15

NON-GAAP OPERATING INCOME $48,251 $32,141 $78,803 $78,473

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS, DILUTED EARNINGSPER SHARE FROM CONTINUING OPERATIONS, AND OPERATING INCOME, EACH OF WHICH ARENON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, ARE MEANINGFUL TOINVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOINGOPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THATARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL OPERATING RESULTS INTHE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZEDIN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BEVIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Balance Sheets

(In thousands)

SEPTEMBER 30, DECEMBER 31,

2020 2019

(Unaudited)

ASSETS

CASH $ 16,781 $ 10,372

ACCOUNTS RECEIVABLE, GROSS 244,106 140,728

ALLOWANCE FOR DOUBTFUL ACCOUNTS 6,061 5,212

ACCOUNTS RECEIVABLE, NET 238,045 135,516

INVENTORIES 311,390 368,221

UNRETURNED CUSTOMER INVENTORY 19,964 19,722

OTHER CURRENT ASSETS 10,094 15,602

TOTAL CURRENT ASSETS 596,274 549,433

PROPERTY, PLANT AND EQUIPMENT, NET 88,288 89,649

OPERATING LEASE RIGHT-OF-USE ASSETS 30,910 36,020

GOODWILL 77,681 77,802

OTHER INTANGIBLES, NET 58,543 64,861

DEFERRED INCOME TAXES 39,807 37,272

INVESTMENT IN UNCONSOLIDATED 38,945 38,858AFFILIATES

OTHER ASSETS 20,549 18,835

TOTAL ASSETS $ 950,997 $ 912,730

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE $ 8,416 $ 52,460

CURRENT PORTION OF OTHER DEBT 3,580 4,456

ACCOUNTS PAYABLE 79,260 92,535

ACCRUED CUSTOMER RETURNS 75,279 44,116

ACCRUED CORE LIABILITY 19,981 24,357

OTHER CURRENT LIABILITIES 117,298 91,540

TOTAL CURRENT LIABILITIES 303,814 309,464

OTHER LONG-TERM DEBT 103 129

NONCURRENT OPERATING LEASE 23,452 28,376LIABILITIES

ACCRUED ASBESTOS LIABILITIES 53,164 49,696

OTHER LIABILITIES 25,560 20,837

TOTAL LIABILITIES 406,093 408,502

TOTAL STOCKHOLDERS' EQUITY 544,904 504,228

TOTAL LIABILITIES AND $ 950,997 $ 912,730STOCKHOLDERS' EQUITY

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

NINE MONTHS ENDED

SEPTEMBER 30,

2020 2019

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS $ 48,219 $ 46,399

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION 19,313 19,261

OTHER 19,098 21,623

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE (104,020) (16,583)

INVENTORIES 53,330 11,824

ACCOUNTS PAYABLE (13,117) (24,107)

PREPAID EXPENSES AND OTHER CURRENT ASSETS 5,634 (6,502)

SUNDRY PAYABLES AND ACCRUED EXPENSES 51,867 (2,551)

OTHER (1,719) (6,260)

NET CASH PROVIDED BY OPERATING ACTIVITIES 78,605 43,104

CASH FLOWS FROM INVESTING ACTIVITIES

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES - (43,490)

NET PROCEEDS FROM SALE OF FACILITY - 4,801

CAPITAL EXPENDITURES (13,170) (12,329)

OTHER INVESTING ACTIVITIES 14 47

NET CASH USED IN INVESTING ACTIVITIES (13,156) (50,971)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT (44,852) 34,656

PURCHASE OF TREASURY STOCK (8,726) (10,738)

DIVIDENDS PAID (5,615) (15,429)

OTHER FINANCING ACTIVITIES 86 1,109

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (59,107) 9,598

EFFECT OF EXCHANGE RATE CHANGES ON CASH 67 390

NET INCREASE IN CASH AND CASH EQUIVALENTS 6,409 2,121

CASH AND CASH EQUIVALENTS at beginning of Period 10,372 11,138

CASH AND CASH EQUIVALENTS at end of Period $ 16,781 $ 13,259

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SOURCE Standard Motor Products, Inc.