EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1


For Immediate Release
For more information, contact:
James J. Burke
Standard Motor Products, Inc.
(718) 392-0200

Standard Motor Products, Inc. Announces

Third Quarter 2019 Results and a Quarterly Dividend

New York, NY, October 30, 2019......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 ending September 30, 2019.
 
Consolidated net sales for the third quarter of 2019 were $307.7 million, compared to consolidated net sales of $296.6 million during the comparable quarter in 2018. Earnings from continuing operations for the third quarter of 2019 were $22.7 million or $1.00 per diluted share, compared to $19.3 million or 84 cents per diluted share in the third quarter of 2018. 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 2019 were $23.1 million or $1.02 per diluted share, compared to $19.1 million or 83 cents per diluted share in the third quarter of 2018.

37-18 Northern Blvd., Long Island City, NY  11101
(718) 392-0200
www.smpcorp.com

Consolidated net sales for the nine month period ended September 30, 2019, were $896.7 million, compared to consolidated net sales of $845.1 million during the comparable period in 2018.  Earnings from continuing operations for the nine month period ended September 30, 2019, were $56.3 million or $2.47 per diluted share, compared to $44.7 million or $1.95 per diluted share in the comparable period of 2018.  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, 2019 and 2018 were $57.3 million or $2.51 per diluted share and $46.7 million or $2.03 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “We are quite pleased with our third quarter and with our year overall. We posted record sales and earnings, with both of our operating divisions continuing to perform well.

“Engine Management sales rose approximately 9.3% for the quarter and 7.8% year-to-date. Excluding Wire and Cable which is in secular decline, Engine Management sales in the quarter were up almost 14%, or roughly $22 million. Revenue from the Pollak acquisition, previously announced, accounted for nearly $10 million of this gain. Our Engine Management segment, excluding Pollak and Wire and Cable, increased 7.8% for the quarter. The growth was primarily attributable to a combination of several customer pipelines, a benefit from pricing actions and pass-through of tariff costs, as well as low single digit organic growth.

“Our sales in Engine Management have exceeded our customers’ low single digit POS growth all year, and this tends to even out over time. Excluding Pollak, we anticipate that Engine Management sales will likely be flat or down for the fourth quarter of 2019 as these sales move closer to our customers’ POS numbers. However, we remain optimistic for the year as a whole.

“Engine Management gross margins in the quarter improved nearly two points from last year to 30.7%, with sequential quarterly improvements throughout 2019.  This margin improvement was the result of several factors – the completion of the integration of our wire operations in Mexico, a continued emphasis on cost reductions, as well as certain pricing actions, and was partially offset by the adverse impact of tariffs being passed through to customers at our cost.

 “Temperature Control sales were 8.1% lower than the third quarter of 2018. However, a portion of the 2018 volume included working down a large order backlog, generated by some of the hottest spring months in history, plus some start-up inefficiencies as we introduced our new automated warehouse system in Lewisville, TX. Year-to-date our Temperature Control sales are 2% above 2018.

 “Temperature Control gross margins decreased by 1.6 points in the quarter, reflecting the dampening effect of tariffs being passed through to customers at our cost. The improvement in SG&A expenses reflects savings in distribution costs as we continue to refine and improve our new automated warehouse system.

“On August 1st we acquired a minority position in Jiangsu Che Yijia New Energy Technology Co. (CYJ), a Chinese manufacturer of electric compressors for electric vehicles. Founded in 2016, the company is still in its early stages, but we are pleased to have a strategic partner focused on parts for electric vehicles in the fast-growing Chinese market.

“Finally, as previously announced, we are pleased to welcome Nathan Iles as our new Chief Financial Officer. We believe he is an excellent fit for SMP, and we look forward to his contributions.”

Loss from discontinued operations, net of income taxes, in the third quarter of 2019 was $7.9 million compared to $3.5 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. In the third quarter of 2019, the Company increased its asbestos-related indemnity liability to $52 million by recording a non-cash $9.7 million provision, or $7.1 million net of taxes.

The Board of Directors has approved payment of a quarterly dividend of 23 cents per share on the common stock outstanding. The dividend will be paid on December 2, 2019, to stockholders of record on November 15, 2019.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, October 30, 2019.  The dial-in number is 877-876-9173 (domestic) or 785-424-1667 (international). The playback number is 800-839-5109 (domestic) or 402-220-2688 (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
SEPTEMBER 30,
    
NINE MONTHS ENDED
SEPTEMBER 30,
  
   
2019
    
2018
    
2019
    
2018
  
   
(Unaudited)
    
(Unaudited)
  
NET SALES
  
$
307,723
    
$
296,619
    
$
896,661
    
$
845,081
  
                                 
COST OF SALES
    
215,635
      
209,313
      
637,705
      
603,897
  
                                 
GROSS PROFIT
    
92,088
      
87,306
      
258,956
      
241,184
  
                                 
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
    
59,947
      
60,137
      
180,483
      
175,604
  
RESTRUCTURING AND INTEGRATION EXPENSES
    
825
      
6
      
1,469
      
3,073
  
OTHER INCOME (EXPENSE), NET
    
(12
)
    
15
      
(15
)
    
328
  
                                 
OPERATING INCOME
    
31,304
      
27,178
      
76,989
      
62,835
  
                                 
OTHER NON-OPERATING INCOME, NET
    
225
      
351
      
2,282
      
800
  
                                 
INTEREST EXPENSE
    
1,508
      
1,254
      
4,319
      
3,137
  
                                 
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES
    
30,021
      
26,275
      
74,952
      
60,498
  
                                 
PROVISION FOR INCOME TAXES
    
7,367
      
7,002
      
18,639
      
15,801
  
                                 
EARNINGS FROM CONTINUING OPERATIONS
    
22,654
      
19,273
      
56,313
      
44,697
  
                                 
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES
    
(7,903
)
    
(3,524
)
    
(9,914
)
    
(5,014
)
                                 
NET EARNINGS
  
$
14,751
    
$
15,749
    
$
46,399
    
$
39,683
  
                                 
NET EARNINGS PER COMMON SHARE:
                                
                                 
BASIC EARNINGS FROM CONTINUING OPERATIONS
  
$
1.01
    
$
0.86
    
$
2.52
    
$
1.99
  
DISCONTINUED OPERATION
    
(0.35
)
    
(0.16
)
    
(0.44
)
    
(0.22
)
NET EARNINGS PER COMMON SHARE - BASIC
  
$
0.66
    
$
0.70
    
$
2.08
    
$
1.77
  
                                 
DILUTED EARNINGS FROM CONTINUING OPERATIONS
  
$
1.00
    
$
0.84
    
$
2.47
    
$
1.95
  
DISCONTINUED OPERATION
    
(0.35
)
    
(0.15
)
    
(0.44
)
    
(0.22
)
NET EARNINGS PER COMMON SHARE - DILUTED
  
$
0.65
    
$
0.69
    
$
2.03
    
$
1.73
  
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
    
22,329,835
      
22,424,962
      
22,359,637
      
22,464,697
  
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES
    
22,754,440
      
22,938,925
      
22,814,228
      
22,954,649
  

STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Income

(In thousands)

   
THREE MONTHS ENDED
SEPTEMBER 30,
          
NINE MONTHS ENDED
SEPTEMBER 30,
        
   
2019
          
2018
          
2019
          
2018
        
    (Unaudited)           (Unaudited)        
Revenues
                                                
Ignition, Emission Control, Fuel & Safety Related System Products
  
$
180,826
          
$
159,101
          
$
538,718
          
$
482,640
        
Wire and Cable
    
35,147
            
38,469
            
108,486
            
117,847
        
Engine Management
    
215,973
            
197,570
            
647,204
            
600,487
        
                                                         
Compressors
    
52,776
            
54,842
            
145,080
            
131,680
        
Other Climate Control Parts
    
35,525
            
41,237
            
96,551
            
105,000
        
Temperature Control
    
88,301
            
96,079
            
241,631
            
236,680
        
                                                         
All Other
    
3,449
            
2,970
            
7,826
            
7,914
        
Revenues
  
$
307,723
          
$
296,619
          
$
896,661
          
$
845,081
        
                                                         
Gross Margin
                                                        
Engine Management
  
$
66,264
    
30.7
 %

 
$
57,188
    
28.9
 %

 
$
189,737
    
29.3
 %

 
$
171,440
    
28.6
 %

Temperature Control
    
22,973
    
26.0
 %

   
26,523
    
27.6
 %

   
61,715
    
25.5
 %

   
60,990
    
25.8
 %

All Other
    
2,851
            
3,595
      
   
7,504
            
8,754
        
Gross Margin
  
$
92,088
    
29.9
 %

 
$
87,306
    
29.4
 %

 
$
258,956
    
28.9
 %

 
$
241,184
    
28.5
 %

                                                          
Selling, General & Administrative
                                                         
Engine Management
  
$
35,950
    
16.6
 %

 
$
35,553
    
18.0
 %

 
$
110,723
    
17.1
 %

 
$
106,415
    
17.7
 %
 
Temperature Control
    
15,495
    
17.5
 % 

   
17,961
    
18.7
 %

   
45,033
    
18.6
 %

   
46,511
    
19.7
 %

All Other
    
8,502
            
6,623
             
24,727
            
22,678
        
Selling, General & Administrative
  
$
59,947
    
19.5
 % 

 
$
60,137
    
20.3
 %
 
 
$
180,483
    
20.1
 %

 
$
175,604
    
20.8
 %

                                                          
Operating Income
                                                         
Engine Management
  
$
30,314
    
14.0
 % 

 
$
21,635
    
11.0
 %

 
$
79,014
    
12.2
 %

 
$
65,025
    
10.8
 %
 
Temperature Control
    
7,478
    
8.5
 % 
   
8,562
    
8.9
 %
 
   
16,682
    
6.9
 %

   
14,479
    
6.1
 %
 
All Other
    
(5,651
)
          
(3,028
)
           
(17,223
)
          
(13,924
)
      
Subtotal
    
32,141
    
10.4
 % 

   
27,169
    
9.2
 %

   
78,473
    
8.8
 %

   
65,580
    
7.8
 %

Restructuring & Integration
    
(825
)
  
-0.3
 % 

   
(6
)
  
0.0
 %

   
(1,469
)
  
-0.2
 %

   
(3,073
)
  
-0.4
 %

Other Income (Expense), Net
    
(12
)
  
0.0
 % 

   
15
    
0.0
 %

   
(15
)
  
0.0
 %

   
328
    
0.0
 %

Operating Income
  
$
31,304
    
10.2
 % 

 
$
27,178
    
9.2
 %

 
$
76,989
    
8.6
 %

 
$
62,835
    
7.4
 %


STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

   
THREE MONTHS ENDED
SEPTEMBER 30,
    
NINE MONTHS ENDED
SEPTEMBER 30,
  
   
2019
    
2018
    
2019
    
2018
  
   
(Unaudited)
    
(Unaudited)
  
EARNINGS FROM CONTINUING OPERATIONS
                        
                         
GAAP EARNINGS FROM CONTINUING OPERATIONS
  
$
22,654
    
$
19,273
    
$
56,313
    
$
44,697
  
                                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
825
      
6
      
1,469
      
3,073
  
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD
    
(144
)
    
(144
)
    
(144
)
    
(144
)
GAIN FROM SALE OF BUILDINGS
    
-
      
-
      
-
      
(218
)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
    
(214
)
    
(1
)
    
(382
)
    
(742
)
                                 
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS
  
$
23,121
    
$
19,134
    
$
57,256
    
$
46,666
  
                                 
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
                                
                                 
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
  
$
1.00
    
$
0.84
    
$
2.47
    
$
1.95
  
                                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
0.04
      
-
      
0.06
      
0.13
  
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD
    
(0.01
)
    
(0.01
)
    
(0.01
)
    
(0.01
)
GAIN FROM SALE OF BUILDINGS
    
-
      
-
      
-
      
(0.01
)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
    
(0.01
)
    
-
      
(0.01
)
    
(0.03
)
                                 
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
  
$
1.02
    
$
0.83
    
$
2.51
    
$
2.03
  
                                 
OPERATING INCOME
                                
                                 
GAAP OPERATING INCOME
  
$
31,304
    
$
27,178
    
$
76,989
    
$
62,835
  
                                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
825
      
6
      
1,469
      
3,073
  
OTHER (INCOME) EXPENSE, NET
    
12
      
(15
)
    
15
      
(328
)
                                 
NON-GAAP OPERATING INCOME
  
$
32,141
    
$
27,169
    
$
78,473
    
$
65,580
  

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)

   
September 30,
2019
    
December 31,
2018
  
   
(Unaudited)
        
             
ASSETS
  
             
CASH
  
$
13,259
    
$
11,138
  
                 
ACCOUNTS RECEIVABLE, GROSS
    
174,969
      
163,222
  
ALLOWANCE FOR DOUBTFUL ACCOUNTS
    
6,001
      
5,687
  
ACCOUNTS RECEIVABLE, NET
    
168,968
      
157,535
  
                 
INVENTORIES
    
340,231
      
349,811
  
UNRETURNED CUSTOMER INVENTORY
    
20,325
      
20,484
  
OTHER CURRENT ASSETS
    
14,273
      
7,256
  
                 
TOTAL CURRENT ASSETS
    
557,056
      
546,224
  
                 
PROPERTY, PLANT AND EQUIPMENT, NET
    
88,835
      
90,754
  
OPERATING LEASE RIGHT-OF-USE ASSETS
    
34,055
      
-
  
GOODWILL
    
77,664
      
67,321
  
OTHER INTANGIBLES, NET
    
66,857
      
48,411
  
DEFERRED INCOME TAXES
    
39,105
      
42,334
  
INVESTMENT IN UNCONSOLIDATED AFFILIATES
    
39,030
      
32,469
  
OTHER ASSETS
    
18,081
      
15,619
  
                 
TOTAL ASSETS
  
$
920,683
    
$
843,132
  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
  
                 
NOTES PAYABLE
  
$
78,211
    
$
43,689
  
CURRENT PORTION OF OTHER DEBT
    
5,225
      
5,377
  
ACCOUNTS PAYABLE
    
71,139
      
94,357
  
ACCRUED CUSTOMER RETURNS
    
53,984
      
57,433
  
ACCRUED CORE LIABILITY
    
26,045
      
31,263
  
OTHER CURRENT LIABILITIES
    
95,056
      
80,467
  
                 
TOTAL CURRENT LIABILITIES
    
329,660
      
312,586
  
                 
OTHER LONG-TERM DEBT
    
132
      
153
  
NONCURRENT OPERATING LEASE LIABILITIES
    
27,214
      
-
  
ACCRUED ASBESTOS LIABILITIES
    
49,894
      
45,117
  
OTHER LIABILITIES
    
19,731
      
18,075
  
                 
TOTAL LIABILITIES
    
426,631
      
375,931
  
                 
TOTAL STOCKHOLDERS’ EQUITY
    
494,052
      
467,201
  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
920,683
    
$
843,132
  

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows

(In thousands)

   
NINE MONTHS ENDED
SEPTEMBER 30,
  
   
2019
    
2018
  
   
(Unaudited)
  
             
CASH FLOWS FROM OPERATING ACTIVITIES
            
             
NET EARNINGS
  
$
46,399
    
$
39,683
  
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
                
DEPRECIATION AND AMORTIZATION
    
19,261
      
17,745
  
OTHER
    
21,623
      
12,220
  
CHANGE IN ASSETS AND LIABILITIES:
                
ACCOUNTS RECEIVABLE
    
(16,583
)
    
(23,428
)
INVENTORIES
    
11,824
      
2,761
  
ACCOUNTS PAYABLE
    
(24,107
)
    
5,193
  
PREPAID EXPENSES AND OTHER CURRENT ASSETS
    
(6,502
)
    
1,202
  
SUNDRY PAYABLES AND ACCRUED EXPENSES
    
(2,551
)
    
12,828
  
OTHER
    
(6,260
)
    
(619
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
    
43,104
      
67,585
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
                 
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES
    
(43,490
)
    
(9,852
)
NET PROCEEDS FROM SALE OF FACILITY
    
4,801
      
-
  
CAPITAL EXPENDITURES
    
(12,329
)
    
(15,633
)
OTHER INVESTING ACTIVITIES
    
47
      
37
  
NET CASH USED IN INVESTING ACTIVITIES
    
(50,971
)
    
(25,448
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
                 
NET CHANGE IN DEBT
    
34,656
      
(10,537
)
PURCHASE OF TREASURY STOCK
    
(10,738
)
    
(9,271
)
DIVIDENDS PAID
    
(15,429
)
    
(14,144
)
OTHER FINANCING ACTIVITIES
    
1,109
      
1,382
  
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
9,598
      
(32,570
)
                 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
390
      
431
  
NET INCREASE IN CASH AND CASH EQUIVALENTS
    
2,121
      
9,998
  
CASH AND CASH EQUIVALENTS at beginning of Period
    
11,138
      
17,323
  
CASH AND CASH EQUIVALENTS at end of Period
  
$
13,259
    
$
27,321