PR Newswire | Feb 23, 2021 08:31AM EST

02/23 07:30 CST

Standard Motor Products, Inc. Announces Fourth Quarter and 2020 Year-End Results NEW YORK, Feb. 23, 2021

NEW YORK, Feb. 23, 2021 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), a leading automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and twelve months ended December 31, 2020.

Consolidated net sales for the fourth quarter of 2020 were $282.7 million, compared to consolidated net sales of $241.3 million during the comparable quarter in 2019. Earnings from continuing operations for the fourth quarter of 2020 were $22.7 million or $1.00 per diluted share, compared to $12.7 million or 56 cents per diluted share in the fourth 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 fourth quarter of 2020 were $24.7 million or $1.08 per diluted share, compared to $13.6 million or 59 cents per diluted share in the fourth quarter of 2019.

Consolidated net sales for the twelve months ended December 31, 2020, were $1,128.6 million, compared to consolidated net sales of $1,137.9 million during the comparable period in 2019. Earnings from continuing operations for the twelve months ended December 31, 2020, were $80.4 million or $3.52 per diluted share, compared to $69.1 million or $3.03 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 twelve months ended December 31, 2020 and 2019 were $82.4 million or $3.61 per diluted share and $70.8 million or $3.10 per diluted share, respectively.

Loss from discontinued operations, net of income taxes, in the fourth quarter of 2020 was $13.6 million compared to $1.2 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, and are adjusted at least annually, 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 fourth quarter results, as we achieved records in both sales and earnings from continuing operations. After a very difficult second quarter when we experienced a slowdown caused by the pandemic, business rebounded in the second half, and we ended within one percent of our 2019 full-year revenue, setting a new high for full-year earnings from continuing operations.

"By segment, Engine Management sales were up 14.8% in the quarter, due to a combination of carry-over of an order backlog coming out of the third quarter, and generally strong demand across our entire customer base. Customer POS was consistently up in the mid-single digits, reflecting ongoing positive sell-through. Temperature Control sales were up 30% in the quarter, as the warm weather continued into the period.

"Our strong profits for the quarter were mainly the result of increased absorption in our plants from elevated sales and production levels. For the full year, our record profits were primarily due to higher production levels in certain periods and annual savings initiatives, and to a lesser extent by certain non-recurring benefits from cost reduction initiatives and COVID-related government incentives, partially offset by COVID-related costs.

"Looking forward, we enter 2021 with many positives - our industry remains healthy and our customers' POS has remained strong. However, as previously announced in December, we were informed of the loss of a major account in our Engine Management segment. When we initially reported the loss, the timing was still uncertain. We now know that the business will be phased out over the course of the first quarter of 2021. As we said before, the loss was due to a shift in business strategy by the customer, and we are aggressively working to reduce costs accordingly while we seek to replace the business. We remain very confident in our go-to-market strategy, which continues to be very well received by the balance of our customers. In fact, we are delighted to announce that we just received the 2020 Supplier of the Year award from O'Reilly Auto Parts, in which they recognized the strength of our partnership.

"We are very excited to announce the publication of our inaugural Sustainability Report, now available on our website. We believe we have a long heritage of investing in our people, our communities, and our planet, and we are pleased to share the details publicly.

"As we continue to return value to our shareholders, our Board of Directors recently approved the payment of a quarterly dividend of 25 cents per share, payable on March 1, 2021. Our Board has also authorized an additional $20 million common stock repurchase plan, which when added to the amount remaining under the prior plan will allow us to repurchase up to $26.5 million of our outstanding shares. We repurchased shares of our common stock in the amount of $4.8 million during the fourth quarter of 2020."

Mr. Lawrence I. Sills, Chairman of the Board, then stated "Mr. Roger M. Widmann announced that he will retire from the Board this coming May, at the conclusion of his term. Roger has been a valuable member of our Board, where he has served since 2005, including as Chairman of our Compensation and Management Development Committee for the past nine years. He has been a major contributor in all areas, and he will be missed. We wish him a well-deserved retirement."

Mr. Eric Sills continued, "In conclusion, as we reflect back on a year unlike any in history, certain positives come to mind. First, we cannot be more proud of our employees, who helped us navigate uncharted waters with tremendous dedication and skill. We owe them a debt of gratitude. Second, it demonstrated once again the resiliency of the automotive aftermarket, proving how essential it is to the basic functioning of our country and its infrastructure. We remain very confident about our future."

Conference Call

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Tuesday, February 23, 2021. The dial-in number is 888-632-3389 (domestic) or 785-424-1674 (international). The playback number is 800-839-9725 (domestic) or 402-220-6093 (international). The participant passcode is 62175.

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,

2020 2019 2020 2019

(Unaudited) (Unaudited)

NET SALES $ 282,738 $ 241,252 $ 1,128,588 $ 1,137,913

COST OF SALES 188,584 168,408 791,933 806,113

GROSS PROFIT 94,154 72,844 336,655 331,800

SELLING, GENERAL & ADMINISTRATIVE EXPENSES 60,972 54,232 224,670 234,715

INTANGIBLE ASSET IMPAIRMENT 2,600 - 2,600 -

RESTRUCTURING AND INTEGRATION EXPENSES - 1,116 464 2,585

OTHER INCOME (EXPENSE), NET 5 10 (26) (5)

OPERATING INCOME 30,587 17,506 108,895 94,495

OTHER NON-OPERATING INCOME, NET 220 305 812 2,587

INTEREST EXPENSE 221 967 2,328 5,286

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES 30,586 16,844 107,379 91,796

PROVISION FOR INCOME TAXES 7,844 4,106 26,962 22,745

EARNINGS FROM CONTINUING OPERATIONS 22,742 12,738 80,417 69,051

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES (13,568) (1,220) (23,024) (11,134)

NET EARNINGS $ 9,174 $ 11,518 $ 57,393 $ 57,917

NET EARNINGS PER COMMON SHARE:

BASIC EARNINGS FROM CONTINUING OPERATIONS $ 1.02 $ 0.57 $ 3.59 $ 3.09

DISCONTINUED OPERATION (0.61) (0.06) (1.02) (0.50)

NET EARNINGS PER COMMON SHARE - BASIC $ 0.41 $ 0.51 $ 2.57 $ 2.59

DILUTED EARNINGS FROM CONTINUING OPERATIONS $ 1.00 $ 0.56 $ 3.52 $ 3.03

DISCONTINUED OPERATION (0.60) (0.06) (1.01) (0.49)

NET EARNINGS PER COMMON SHARE - DILUTED $ 0.40 $ 0.50 $ 2.51 $ 2.54

WEIGHTED AVERAGE NUMBER OF COMMON SHARES 22,379,056 22,434,134 22,374,123 22,378,414

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES 22,855,523 22,882,235 22,825,885 22,818,451

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

THREE MONTHS ENDED TWELVE MONTHS ENDED

DECEMBER 31, DECEMBER 31,

2020 2019 2020 2019

(Unaudited) (Unaudited)

Revenues

Ignition, Emission Control, Fuel & Safety

Related System Products $ 193,518 $ 167,276 $ 691,722 $ 705,994

Wire and Cable 38,342 34,681 143,963 143,167

Engine Management 231,860 201,957 835,685 849,161

Compressors 22,060 15,405 163,071 160,485

Other Climate Control Parts 25,667 21,319 118,883 117,870

Temperature Control 47,727 36,724 281,954 278,355

All Other 3,151 2,571 10,949 10,397

Revenues $ 282,738 $ 241,252 $ 1,128,588 $ 1,137,913

Gross Margin

Engine Management $ 76,451 33.0% $ 61,823 30.6% $ 251,747 30.1% $ 251,560 29.6%

Temperature Control 14,333 30.0% 8,349 22.7% 75,161 26.7% 70,064 25.2%

All Other 3,370 2,672 9,747 10,176

Gross Margin $ 94,154 33.3% $ 72,844 30.2% $ 336,655 29.8% $ 331,800 29.2%

Selling, General & Administrative

Engine Management $ 37,203 16.0% $ 34,439 17.1% $ 137,440 16.4% $ 145,162 17.1%

Temperature Control 13,297 27.9% 11,364 30.9% 53,865 19.1% 56,397 20.3%

All Other 10,472 8,429 33,365 33,156

Selling, General & Administrative $ 60,972 21.6% $ 54,232 22.5% $ 224,670 19.9% $ 234,715 20.6%

Operating Income

Engine Management $ 39,248 16.9% $ 27,384 13.6% $ 114,307 13.7% $ 106,398 12.5%

Temperature Control 1,036 2.2% (3,015) -8.2% 21,296 7.6% 13,667 4.9%

All Other (7,102) (5,757) (23,618) (22,980)

Subtotal 33,182 11.7% 18,612 7.7% 111,985 9.9% 97,085 8.5%

Intangible Asset Impairment (2,600) -0.9% - 0.0% (2,600) -0.2% - 0.0%

Restructuring & Integration - 0.0% (1,116) -0.5% (464) 0.0% (2,585) -0.2%

Other Income (Expense), Net 5 0.0% 10 0.0% (26) 0.0% (5) 0.0%

Operating Income $ 30,587 10.8% $ 17,506 7.3% $ 108,895 9.6% $ 94,495 8.3%

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,

2020 2019 2020 2019

(Unaudited) (Unaudited)

EARNINGS FROM CONTINUING OPERATIONS

GAAP EARNINGS FROM CONTINUING OPERATIONS $22,742 $12,738 $ 80,417 $69,051

RESTRUCTURING AND INTEGRATION EXPENSES - 1,116 464 2,585

INTANGIBLE ASSET IMPAIRMENT 2,600 - 2,600 -

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD - - (235) (144)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (676) (291) (797) (673)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS $24,666 $13,563 $ 82,449 $70,819

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 1.00 $ 0.56 $ 3.52 $ 3.03

RESTRUCTURING AND INTEGRATION EXPENSES - 0.05 0.02 0.11

INTANGIBLE ASSET IMPAIRMENT 0.11 - 0.11 -

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD - - (0.01) (0.01)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (0.03) (0.02) (0.03) (0.03)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 1.08 $ 0.59 $ 3.61 $ 3.10

OPERATING INCOME

GAAP OPERATING INCOME $30,587 $17,506 $108,895 $94,495

INTANGIBLE ASSET IMPAIRMENT 2,600 - 2,600 -

RESTRUCTURING AND INTEGRATION EXPENSES - 1,116 464 2,585

OTHER (INCOME) EXPENSE, NET (5) (10) 26 5

NON-GAAP OPERATING INCOME $33,182 $18,612 $111,985 $97,085

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS, DILUTEDEARNINGS PER SHARE FROM CONTINUING OPERATIONS, AND OPERATING INCOME, EACH OFWHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, AREMEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITHRESPECT TO ONGOING OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANTCHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'SOVERALL OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAPMEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTEDACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAPMEASURES OF PERFORMANCE.

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Balance Sheets

(In thousands)

DECEMBER 31, DECEMBER 31,

2020 2019

(Unaudited)

ASSETS

CASH $ 19,488 $ 10,372

ACCOUNTS RECEIVABLE, GROSS 203,861 131,852

ALLOWANCE FOR DOUBTFUL ACCOUNTS 5,822 5,212

ACCOUNTS RECEIVABLE, NET 198,039 126,640

INVENTORIES 345,502 368,221

UNRETURNED CUSTOMER INVENTORY 19,632 19,722

PREPAID EXPENSES AND OTHER CURRENT ASSETS 15,875 15,602

TOTAL CURRENT ASSETS 598,536 540,557

PROPERTY, PLANT AND EQUIPMENT, NET 89,105 89,649

OPERATING LEASE RIGHT-OF-USE ASSETS 29,958 36,020

GOODWILL 77,837 77,802

OTHER INTANGIBLES, NET 54,004 64,861

DEFERRED INCOME TAXES 44,770 37,272

INVESTMENT IN UNCONSOLIDATED AFFILIATES 40,507 38,858

OTHER ASSETS 21,823 18,835

TOTAL ASSETS $ 956,540 $ 903,854

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE $ 10,000 $ 52,460

CURRENT PORTION OF OTHER DEBT 135 4,456

ACCOUNTS PAYABLE 100,018 92,535

ACCRUED CUSTOMER RETURNS 40,982 35,240

ACCRUED CORE LIABILITY 22,014 24,357

ACCRUED REBATES 46,437 26,072

PAYROLL AND COMMISSIONS 35,938 26,649

SUNDRY PAYABLES AND ACCRUED EXPENSES 47,078 38,819

TOTAL CURRENT LIABILITIES 302,602 300,588

OTHER LONG-TERM DEBT 97 129

NONCURRENT OPERATING LEASE LIABILITIES 22,450 28,376

ACCRUED ASBESTOS LIABILITIES 55,226 49,696

OTHER LIABILITIES 25,929 20,837

TOTAL LIABILITIES 406,304 399,626

TOTAL STOCKHOLDERS' EQUITY 550,236 504,228

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 956,540 $ 903,854

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

TWELVE MONTHS ENDED

DECEMBER 31,

2020 2019

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS $ 57,393 $ 57,917

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION 26,323 25,809

DEFERRED INCOME TAXES (7,470) 5,094

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES 23,024 11,134

OTHER 18,768 11,359

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE (71,933) 2,789

INVENTORIES 17,984 (17,901)

ACCOUNTS PAYABLE 7,428 (1,950)

PREPAID EXPENSES AND OTHER CURRENT ASSETS (370) (8,296)

SUNDRY PAYABLES AND ACCRUED EXPENSES 40,651 (2,957)

OTHER (13,902) (6,070)

NET CASH PROVIDED BY OPERATING ACTIVITIES 97,896 76,928

CASH FLOWS FROM INVESTING ACTIVITIES

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

NET PROCEEDS FROM SALE OF FACILITY - 4,801

CAPITAL EXPENDITURES (17,820) (16,185)

OTHER INVESTING ACTIVITIES 21 62

NET CASH USED IN INVESTING ACTIVITIES (17,799) (54,812)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT (46,708) 7,860

PURCHASE OF TREASURY STOCK (13,482) (10,738)

DIVIDENDS PAID (11,218) (20,593)

OTHER FINANCING ACTIVITIES (108) 93

NET CASH USED IN FINANCING ACTIVITIES (71,516) (23,378)

EFFECT OF EXCHANGE RATE CHANGES ON CASH 535 496

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,116 (766)

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

CASH AND CASH EQUIVALENTS at end of year $ 19,488 $ 10,372

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SOURCE Standard Motor Products, Inc.