PR Newswire | Oct 28, 2021 08:31AM EDT

Repurchase Program and a Quarterly Dividend

10/28 07:30 CDT

Standard Motor Products, Inc. Announces Third Quarter 2021 Results, New Stock Repurchase Program and a Quarterly Dividend NEW YORK, Oct. 28, 2021

NEW YORK, Oct. 28, 2021 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three months and nine months ended September 30, 2021.

Consolidated net sales for the third quarter of 2021 were $370.3 million, compared to consolidated net sales of $343.6 million during the comparable quarter in 2020. Earnings from continuing operations for the third quarter of 2021 were $29.2 million or $1.29 per diluted share, compared to $36.2 million or $1.59 per diluted share in the third quarter of 2020. 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 2021 were $29.7 million or $1.32 per diluted share, compared to $36.2 million or $1.59 per diluted share in the third quarter of 2020.

Consolidated net sales for the nine months ended September 30, 2021, were $988.9 million, compared to consolidated net sales of $845.9 million during the comparable period in 2020. Earnings from continuing operations for the nine months ended September 30, 2021, were $79.3 million or $3.50 per diluted share, compared to $57.7 million or $2.53 per diluted share in the comparable period of 2020. 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, 2021 and 2020 were $80.4 million or $3.54 per diluted share and $57.8 million or $2.53 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President, stated, "We are extremely pleased with our third quarter results. We once again posted record sales, generating an increase of nearly 8% over a very strong third quarter of 2020 when business was surging as we emerged from pandemic-related lockdowns. Impressively, this quarter's sales were up 20% from 2019.

"Year-to-date, our sales are up 17% over 2020, though the first half of last year was adversely impacted by the pandemic. However, the first nine months of 2021 are up 10.3% over 2019.

"By division, Engine Management sales were up 7.7% as compared to 2020, and up nearly 15% vs. 2019, with several contributing factors. We experienced a combination of strong demand, continued success from customer initiatives, new business wins, and the impact of recent acquisitions.

"Our Temperature Control sales were up 7.9% as compared to 2020, and up nearly 35% over 2019. This was one of the longest and hottest summers on record, and our business remained robust throughout the quarter.

"Third quarter earnings are down from the third quarter of 2020, but the 2020 results included many unique non-recurring benefits, related to the Covid-19 pandemic. However, third quarter 2021 earnings did compare favorably on a two-year stack, up almost 30% from a more normalized 2019. Most importantly, year-to-date earnings are at record levels, exceeding both 2020 and 2019 by 40%."

"As anticipated and stated in our second quarter earnings announcement, we experienced some compression in our gross margin percentage in the third quarter, primarily in the Engine Management division. This was the result of two main factors. First, like many companies, we experienced a surge in various costs, including raw materials, labor and transportation. We will begin passing these costs on in the fourth quarter.

"The second component of our reduced gross margin percentage is related to our growth in non-aftermarket, specialized original equipment business, which we will discuss below. This business, which we believe has great potential for us, has a different margin profile than our aftermarket business - it has lower gross margins, but also lower SG&A expense, and thus generates comparable operating margins.

"Turning to acquisitions, on September 1st we announced that we had acquired Stabil Operative Group GmbH ("Stabil"), a European manufacturer of original equipment sensors, electronics, and clamping devices for passenger car and commercial vehicle applications. This marked our third acquisition this year, all geared towards expansion into specialized OE channels, including medium and heavy duty vehicles, construction and agricultural equipment, power sports, and other sub-segments. When combined with our legacy business in this arena, our non-aftermarket sales are approaching a run rate of $300 million annually. In addition to expanding beyond our core aftermarket business, it is also providing geographic expansion as we now have meaningful footprints to grow sales in Europe and Asia.

"We are extremely pleased with our efforts in growing our business in this channel. As we combine these different entities, we are able to take advantage of shared customer lists, product portfolios, manufacturing and engineering capabilities, and geographic reach. It is also important to note that much of this business is not beholden to internal combustion engines. Many of the products are either powertrain-neutral, or are geared toward electric and alternative energy vehicles. While we are still in the early days of integrating these businesses, the potential synergies and sales growth opportunities are very exciting.

"As we have continued to grow our business and post record results, we have also looked to return value to our shareholders. To this end, we repurchased shares of our common stock in the amount of $15.4 million during the quarter, bringing total repurchases to $26.5 million for the year so far. Further, our Board of Directors recently authorized an additional $30 million common stock repurchase plan. Finally, our Board also approved payment of a quarterly dividend of 25 cents per share on the common stock outstanding. The dividend will be paid on December 1, 2021 to stockholders of record on November 15, 2021.

"In closing, we are very pleased with our year thus far. We have posted record sales and earnings, have consummated three complementary acquisitions, and have garnered substantial new business wins with existing accounts. Our core market is doing very well and our relationships with our customers are strong. We have made major strides in expanding into new complementary markets with significant upside potential. As such, we are very excited about the future."

Conference Call

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, October 28, 2021. The dial-in number is 888-632-3389 (domestic) or 785-424-1674 (international). The playback number is 800-934-8524 (domestic) or 402-220-6999 (international). The participant passcode is 30385.

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 NINE MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

NET SALES $ 370,310 $ 343,609 $ 988,939 $ 845,850

COST OF SALES 265,105 235,861 700,678 603,349

GROSS PROFIT 105,205 107,748 288,261 242,501

SELLING, GENERAL & ADMINISTRATIVE EXPENSES 66,509 59,497 183,316 163,698

RESTRUCTURING AND INTEGRATION EXPENSES 166 250 166 464

OTHER INCOME (EXPENSE), NET 8 (37) 8 (31)

OPERATING INCOME 38,538 47,964 104,787 78,308

OTHER NON-OPERATING INCOME, NET 780 514 2,247 592

INTEREST EXPENSE 652 462 1,356 2,107

EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES 38,666 48,016 105,678 76,793

PROVISION FOR INCOME TAXES 9,481 11,804 26,315 19,118

EARNINGS FROM CONTINUING OPERATIONS 29,185 36,212 79,363 57,675

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES (5,122) (7,587) (7,139) (9,456)

NET EARNINGS 24,063 28,625 72,224 48,219

NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST 13 - 32 -

NET EARNINGS ATTRIBUTABLE TO SMP (a) $ 24,050 $ 28,625 $ 72,192 $ 48,219

NET EARNINGS ATTRIBUTABLE TO SMP

EARNINGS FROM CONTINUING OPERATIONS $ 29,172 $ 36,212 $ 79,331 $ 57,675

LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES (5,122) (7,587) (7,139) (9,456)

TOTAL $ 24,050 $ 28,625 $ 72,192 $ 48,219

NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP

BASIC EARNINGS FROM CONTINUING OPERATIONS $ 1.32 $ 1.62 $ 3.57 $ 2.58

DISCONTINUED OPERATION (0.23) (0.34) (0.32) (0.42)

NET EARNINGS PER COMMON SHARE - BASIC $ 1.09 $ 1.28 $ 3.25 $ 2.16

DILUTED EARNINGS FROM CONTINUING OPERATIONS $ 1.29 $ 1.59 $ 3.50 $ 2.53

DISCONTINUED OPERATION (0.22) (0.33) (0.32) (0.41)

NET EARNINGS PER COMMON SHARE - DILUTED $ 1.07 $ 1.26 $ 3.18 $ 2.12

WEIGHTED AVERAGE NUMBER OF COMMON SHARES 22,090,195 22,349,093 22,201,398 22,372,466

WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES 22,543,781 22,758,458 22,678,114 22,795,426

(a) "SMP" refers to Standard Motor Products, Inc. and subsidiaries.

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

Revenues

Ignition, Emission Control, Fuel & Safety

Related System Products $ 208,443 $ 190,891 $ 574,595 $ 498,204

Wire and Cable 38,708 38,663 117,790 105,621

Engine Management 247,151 229,554 692,385 603,825

Compressors $ 75,080 $ 70,785 $ 178,031 $ 141,011

Other Climate Control Parts 43,995 39,608 109,988 93,216

Temperature Control 119,075 110,393 288,019 234,227

All Other 4,084 3,662 8,535 7,798

Revenues $ 370,310 $ 343,609 $ 988,939 $ 845,850

Gross Margin

Engine Management $ 66,907 27.1% $ 72,361 31.5% $ 199,509 28.8% $ 175,296 29.0%

Temperature Control 33,815 28.4% 32,212 29.2% 78,468 27.2% 60,828 26.0%

All Other 4,676 3,175 10,562 6,377

Subtotal $ 105,398 28.5% $ 107,748 31.4% $ 288,539 29.2% $ 242,501 28.7%

One-Time Acquisition Costs (193) -0.1% - 0.0% (278) 0.0% - 0.0%

Gross Margin $ 105,205 28.4% $ 107,748 31.4% $ 288,261 29.1% $ 242,501 28.7%

Selling, General & Administrative

Engine Management $ 38,702 15.7% $ 35,665 15.5% $ 109,721 15.8% $ 100,237 16.6%

Temperature Control 17,120 14.4% 15,571 14.1% 44,952 15.6% 40,568 17.3%

All Other 10,029 8,261 27,315 22,893

Subtotal $ 65,851 17.8% $ 59,497 17.3% $ 181,988 18.4% $ 163,698 19.4%

One-Time Acquisition Costs 658 0.2% - 0.0% 1,328 0.1% - 0.0%

Selling, General & Administrative $ 66,509 18.0% $ 59,497 17.3% $ 183,316 18.5% $ 163,698 19.4%

Operating Income

Engine Management $ 28,012 11.3% $ 36,696 16.0% $ 89,510 12.9% $ 75,059 12.4%

Temperature Control 16,695 14.0% 16,641 15.1% 33,516 11.6% 20,260 8.6%

All Other (5,160) (5,086) (16,475) (16,516)

Subtotal 39,547 10.7% 48,251 14.0% 106,551 10.8% 78,803 9.3%

One-time Acquisition Costs (851) -0.2% - 0.0% (1,606) -0.2% - 0.0%

Restructuring & Integration (166) 0.0% (250) -0.1% (166) 0.0% (464) -0.1%

Other Income (Expense), Net 8 0.0% (37) 0.0% 8 0.0% (31) 0.0%

Operating Income $ 38,538 10.4% $ 47,964 14.0% $ 104,787 10.6% $ 78,308 9.3%

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30, SEPTEMBER 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP

GAAP EARNINGS FROM CONTINUING OPERATIONS $ 29,172 $ 36,212 $ 79,331 $ 57,675

RESTRUCTURING AND INTEGRATION EXPENSES 166 250 166 464

ONE-TIME ACQUISITION COSTS 851 - 1,606 -

CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD (259) (235) (259) (235)

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (265) (65) (461) (121)

NON-GAAP EARNINGS FROM CONTINUING OPERATIONS $ 29,665 $ 36,162 $ 80,383 $ 57,783

DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP

GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 1.29 $ 1.59 $ 3.50 $ 2.53

RESTRUCTURING AND INTEGRATION EXPENSES 0.01 0.01 - 0.02

ONE-TIME ACQUISITION COSTS 0.04 - 0.07 -

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

INCOME TAX EFFECT RELATED TO RECONCILING ITEMS (0.01) - (0.02) (0.01)

NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 1.32 $ 1.59 $ 3.54 $ 2.53

OPERATING INCOME

GAAP OPERATING INCOME $ 38,538 $ 47,964 $ 104,787 $ 78,308

ONE-TIME ACQUISITION COSTS 851 - 1,606 -

RESTRUCTURING AND INTEGRATION EXPENSES 166 250 166 464

OTHER (INCOME) EXPENSE, NET (8) 37 (8) 31

NON-GAAP OPERATING INCOME $ 39,547 $ 48,251 $ 106,551 $ 78,803

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTEDEARNINGS PER SHARE FROM CONTINUING OPERATIONS WHICH ARE ATTRIBUTABLE TO SMP,AND OPERATING INCOME, AS ADJUSTED FOR SPECIAL ITEMS, ARE NON-GAAP MEASUREMENTSAND ARE MEANINGFUL 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-GAAP MEASUREMENTSARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLESAND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE.

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Balance Sheets

(In thousands)

SEPTEMBER 30, DECEMBER 31,

2021 2020

(Unaudited)

ASSETS

CASH $ 33,144 $ 19,488

ACCOUNTS RECEIVABLE, GROSS 231,066 203,861

ALLOWANCE FOR DOUBTFUL ACCOUNTS 6,645 5,822

ACCOUNTS RECEIVABLE, NET 224,421 198,039

INVENTORIES 414,657 345,502

UNRETURNED CUSTOMER INVENTORY 23,367 19,632

OTHER CURRENT ASSETS 15,268 15,875

TOTAL CURRENT ASSETS 710,857 598,536

PROPERTY, PLANT AND EQUIPMENT, NET 100,787 89,105

OPERATING LEASE RIGHT-OF-USE ASSETS 42,458 29,958

GOODWILL 131,549 77,837

OTHER INTANGIBLES, NET 108,312 54,004

DEFERRED INCOME TAXES 34,790 44,770

INVESTMENT IN UNCONSOLIDATED AFFILIATES 42,123 40,507

OTHER ASSETS 24,857 21,823

TOTAL ASSETS $ 1,195,733 $ 956,540

LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE $ 128,938 $ 10,000

CURRENT PORTION OF OTHER DEBT 2,941 135

ACCOUNTS PAYABLE 128,808 100,018

ACCRUED CUSTOMER RETURNS 59,972 40,982

ACCRUED CORE LIABILITY 23,650 22,014

ACCRUED REBATES 43,110 46,437

PAYROLL AND COMMISSIONS 40,725 35,938

SUNDRY PAYABLES AND ACCRUED EXPENSES 50,227 47,078

TOTAL CURRENT LIABILITIES 478,371 302,602

OTHER LONG-TERM DEBT 68 97

NONCURRENT OPERATING LEASE LIABILITIES 33,246 22,450

ACCRUED ASBESTOS LIABILITIES 57,532 55,226

OTHER LIABILITIES 27,964 25,929

TOTAL LIABILITIES 597,181 406,304

TOTAL SMP STOCKHOLDERS' EQUITY 587,018 550,236

NONCONTROLLING INTEREST 11,534 -

TOTAL STOCKHOLDERS' EQUITY 598,552 550,236

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,195,733 $ 956,540

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

NINE MONTHS ENDED

SEPTEMBER 30,

2021 2020

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

NET EARNINGS $ 72,224 $ 48,219

ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

DEPRECIATION AND AMORTIZATION 20,160 19,313

OTHER 13,904 19,098

CHANGE IN ASSETS AND LIABILITIES:

ACCOUNTS RECEIVABLE (15,343) (83,878)

INVENTORIES (52,742) 53,330

ACCOUNTS PAYABLE 24,228 (13,117)

PREPAID EXPENSES AND OTHER CURRENT ASSETS 2,324 5,634

SUNDRY PAYABLES AND ACCRUED EXPENSES 18,905 31,725

OTHER (4,522) (1,719)

NET CASH PROVIDED BY OPERATING ACTIVITIES 79,138 78,605

CASH FLOWS FROM INVESTING ACTIVITIES

ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES (124,663) -

CAPITAL EXPENDITURES (19,406) (13,170)

OTHER INVESTING ACTIVITIES 29 14

NET CASH USED IN INVESTING ACTIVITIES (144,040) (13,156)

CASH FLOWS FROM FINANCING ACTIVITIES

NET CHANGE IN DEBT 121,854 (44,852)

PURCHASE OF TREASURY STOCK (26,518) (8,726)

DIVIDENDS PAID (16,678) (5,615)

OTHER FINANCING ACTIVITIES 455 86

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 79,113 (59,107)

EFFECT OF EXCHANGE RATE CHANGES ON CASH (555) 67

NET INCREASE IN CASH AND CASH EQUIVALENTS 13,656 6,409

CASH AND CASH EQUIVALENTS at beginning of Period 19,488 10,372

CASH AND CASH EQUIVALENTS at end of Period $ 33,144 $ 16,781

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SOURCE Standard Motor Products, Inc.