Exhibit 99.1
For Immediate Release
For more information, contact:
James J. Burke
Standard Motor Products, Inc.
(718) 392-0200
Standard Motor Products, Inc. Discusses
COVID-19 Business Impact and Announces
First Quarter 2020 Results
New York, NY, April 29, 2020......Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its
consolidated financial results for the three months ended March 31, 2020, and provided an update regarding the company’s response to the current COVID-19 pandemic and its impact on its business.
Consolidated net sales for the first quarter of 2020 were $254.3 million, compared to consolidated net sales of $283.8 million during the comparable quarter in 2019.
Earnings from continuing operations for the first quarter of 2020 were $9.6 million or 42 cents per diluted share, compared to $13.1 million or 57 cents per diluted share in the first 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 first quarter of 2020 were $9.8 million or 43 cents per diluted share, compared to $13.1 million or 57 cents per diluted share in
the first quarter of 2019.
37-18 Northern Blvd., Long Island City, NY 11101
(718) 392-0200
www.smpcorp.com
Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “Prior to a discussion of our first quarter results, it is important to address
the current COVID-19 pandemic crisis’ impact on the auto care industry in general, and on SMP in particular. When the U.S. began issuing guidelines in mid-March to slow the spread of the disease through ‘stay-at-home’ orders, certain industries
were identified as essential and could continue to operate. The auto care industry was included, as transportation is critical to the functioning of our nation, as we keep government, fleet, first responders and personal vehicles on our roads
operating safely and efficiently.
“Our first obligation is to the health and safety of our employees. We implemented a number of operational changes to improve social distancing within our facilities
and to substantially increase all cleaning and hygiene protocols, including the use of protective masks and daily temperature taking for all employees and guests entering our facilities. Thus far, our efforts have been successful, as only a few
of our employees globally have tested positive for the virus, and thankfully are all on the road to recovery. We cannot thank our employees enough for the fortitude and loyalty they have shown during these times.
“Turning to our first quarter results, sales lagged behind the first quarter of 2019, with declines in both divisions. The 2019 purchasing patterns of our customers
were very front-loaded in the year as compared to their POS. Our first quarter of 2019 was very strong – up 9% from 2018 in Engine Management (excluding wire and cable) and 14% in Temperature Control, making for difficult comps. This year Engine
Management had lower pipeline orders than in 2019, and sales returned to levels more closely aligned to our customers’ POS sales. This was anticipated and announced on previous calls. In the second half of March we began to see the effects of the
COVID-19 pandemic and sales began to fall further. In Temperature Control, the early part of the year is dominated by pre-season orders, which, for a variety of reasons, were below 2019. The success of the year is determined by how hot it gets
during the summer. We were pleased that both divisions were able to maintain historic gross margins despite the decline in sales.
“As we head into the second quarter, miles driven are down dramatically as businesses are closed and people are required to shelter at home. Our customers’ sales are
down accordingly. Their purchases from us are down even further, as they look to reduce inventory in line with their lower sales levels. April was a difficult month for us, with our incoming orders down 30-40%.
“While no one can predict the duration of the economic downturn resulting from the COVID-19 pandemic, we believe it will be a temporary situation. We enter it with a
strong balance sheet and ample liquidity, and our goal is to exit it just as strong. To do so we are taking steps to reduce expenses and conserve cash, making sure that none of our actions will affect the long term health of the Company. We have
drawn down an additional $75 million from our bank credit line, temporarily ceased our stock buyback program, and temporarily suspended our quarterly dividend. Our top executive officers and Board of Directors have agreed to a 25% reduction in
compensation for the balance of the year. All other senior executives will be taking a reduction in compensation as well. We will be taking a hard look at discretionary expenses. While we anticipate substantial savings from these actions, they
are all short term in nature, in line with our belief that this is a temporary situation. None of these will affect the long term strength of our Company.
“The automotive aftermarket is highly resilient. We are fortunate that the goods and services we provide are essential. Our addressable market – the hundreds of
millions of vehicles on our roads – remains unchanged. The majority of SMP’s products are non-discretionary – deferred repairs will need to be performed. Transportation is the lifeblood of our country – people need their vehicles to get to work,
shop, take their kids to school, and carry on with their lives.
“As for our company, with our strong position in the market, the brand loyalty of our customers, and our healthy balance sheet, and thanks to our wonderful group of
employees, we are confident we will emerge from this crisis and begin the second century of our history, stronger than ever.”
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, April 29, 2020. The dial-in number is 866-342-8588 (domestic) or
203-518-9865 (international). The playback number is 800-839-7408 (domestic) or 402-220-6066 (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 per share amounts)
|
THREE MONTHS ENDED
MARCH 31,
|
||||||||
|
2020
|
2019
|
|||||||
|
(Unaudited)
|
||||||||
|
NET SALES
|
$
|
254,302
|
$
|
283,766
|
||||
|
COST OF SALES
|
183,907
|
205,803
|
||||||
|
GROSS PROFIT
|
70,395
|
77,963
|
||||||
|
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
|
55,873
|
60,000
|
||||||
|
RESTRUCTURING AND INTEGRATION EXPENSES
|
205
|
-
|
||||||
|
OTHER INCOME (EXPENSE), NET
|
6
|
(6
|
)
|
|||||
|
OPERATING INCOME
|
14,323
|
17,957
|
||||||
|
OTHER NON-OPERATING INCOME (EXPENSE), NET
|
(524
|
)
|
646
|
|||||
|
INTEREST EXPENSE
|
873
|
1,089
|
||||||
|
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES
|
12,926
|
17,514
|
||||||
|
PROVISION FOR INCOME TAXES
|
3,305
|
4,410
|
||||||
|
EARNINGS FROM CONTINUING OPERATIONS
|
9,621
|
13,104
|
||||||
|
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES
|
(994
|
)
|
(888
|
)
|
||||
|
NET EARNINGS
|
$
|
8,627
|
$
|
12,216
|
||||
|
NET EARNINGS PER COMMON SHARE:
|
||||||||
|
BASIC EARNINGS FROM CONTINUING OPERATIONS
|
$
|
0.43
|
$
|
0.58
|
||||
|
DISCONTINUED OPERATION
|
(0.05
|
)
|
(0.04
|
)
|
||||
|
NET EARNINGS PER COMMON SHARE - BASIC
|
$
|
0.38
|
$
|
0.54
|
||||
|
DILUTED EARNINGS FROM CONTINUING OPERATIONS
|
$
|
0.42
|
$
|
0.57
|
||||
|
DISCONTINUED OPERATION
|
(0.04
|
)
|
(0.04
|
)
|
||||
|
NET EARNINGS PER COMMON SHARE - DILUTED
|
$
|
0.38
|
$
|
0.53
|
||||
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
|
22,438,087
|
22,421,795
|
||||||
|
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES
|
22,868,975
|
22,905,364
|
||||||
STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Income
(In thousands)
|
THREE MONTHS ENDED
MARCH 31,
|
||||||||||||||
|
2020
|
2019
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||
|
Revenues
|
||||||||||||||
|
Ignition, Emission Control, Fuel & Safety Related System Products
|
$
|
164,526
|
$
|
176,061
|
||||||||||
|
Wire and Cable
|
36,592
|
37,128
|
||||||||||||
|
Engine Management
|
201,118
|
213,189
|
||||||||||||
|
Compressors
|
25,348
|
39,811
|
||||||||||||
|
Other Climate Control Parts
|
26,094
|
29,113
|
||||||||||||
|
Temperature Control
|
51,442
|
68,924
|
||||||||||||
|
All Other
|
1,742
|
1,653
|
||||||||||||
|
Revenues
|
$
|
254,302
|
$
|
283,766
|
||||||||||
|
Gross Margin
|
||||||||||||||
|
Engine Management
|
$
|
56,705
|
28.2
|
%
|
$
|
59,693
|
28.0
|
%
|
||||||
|
Temperature Control
|
12,096
|
23.5
|
%
|
16,191
|
23.5
|
%
|
||||||||
|
All Other
|
1,594
|
2,079
|
||||||||||||
|
Gross Margin
|
$
|
70,395
|
27.7
|
%
|
$
|
77,963
|
27.5
|
%
|
||||||
|
Selling, General & Administrative
|
||||||||||||||
|
Engine Management
|
$
|
35,073
|
17.4
|
%
|
$
|
37,343
|
17.5
|
%
|
||||||
|
Temperature Control
|
12,444
|
24.2
|
%
|
14,141
|
20.5
|
%
|
||||||||
|
All Other
|
8,356
|
8,516
|
||||||||||||
|
Selling, General & Administrative
|
$
|
55,873
|
22.0
|
%
|
$
|
60,000
|
21.1
|
%
|
||||||
|
Operating Income
|
||||||||||||||
|
Engine Management
|
$
|
21,632
|
10.8
|
%
|
$
|
22,350
|
10.5
|
%
|
||||||
|
Temperature Control
|
(348
|
)
|
-0.7
|
%
|
2,050
|
3.0
|
%
|
|||||||
|
All Other
|
(6,762
|
)
|
(6,437
|
)
|
||||||||||
|
Subtotal
|
14,522
|
5.7
|
%
|
17,963
|
6.3
|
%
|
||||||||
|
Restructuring & Integration
|
(205
|
)
|
-0.1
|
%
|
-
|
0.0
|
%
|
|||||||
|
Other Income (Expense), Net
|
6
|
0.0
|
%
|
(6
|
)
|
0.0
|
%
|
|||||||
|
Operating Income
|
$
|
14,323
|
5.6
|
%
|
$
|
17,957
|
6.3
|
%
|
||||||
Reconciliation of GAAP and Non-GAAP Measures
(In thousands, except per share amounts)
|
THREE MONTHS ENDED
MARCH 31,
|
||||||||
|
2020
|
2019
|
|||||||
|
(Unaudited)
|
||||||||
|
EARNINGS FROM CONTINUING OPERATIONS
|
||||||||
|
GAAP EARNINGS FROM CONTINUING OPERATIONS
|
$
|
9,621
|
$
|
13,104
|
||||
|
RESTRUCTURING AND INTEGRATION EXPENSES
|
205
|
-
|
||||||
|
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
|
(53
|
)
|
-
|
|||||
|
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS
|
$
|
9,773
|
$
|
13,104
|
||||
|
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
|
||||||||
|
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
|
$
|
0.42
|
$
|
0.57
|
||||
|
RESTRUCTURING AND INTEGRATION EXPENSES
|
0.01
|
-
|
||||||
|
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
|
-
|
-
|
||||||
|
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
|
$
|
0.43
|
$
|
0.57
|
||||
|
OPERATING INCOME
|
||||||||
|
GAAP OPERATING INCOME
|
$
|
14,323
|
$
|
17,957
|
||||
|
RESTRUCTURING AND INTEGRATION EXPENSES
|
205
|
-
|
||||||
|
OTHER (INCOME) EXPENSE, NET
|
(6
|
)
|
6
|
|||||
|
NON-GAAP OPERATING INCOME
|
$
|
14,522
|
$
|
17,963
|
||||
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)
|
March 31,
2020
|
December 31,
2019
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
CASH
|
$
|
13,268
|
$
|
10,372
|
||||
|
ACCOUNTS RECEIVABLE, GROSS
|
171,332
|
140,728
|
||||||
|
ALLOWANCE FOR DOUBTFUL ACCOUNTS
|
5,647
|
5,212
|
||||||
|
ACCOUNTS RECEIVABLE, NET
|
165,685
|
135,516
|
||||||
|
INVENTORIES
|
370,935
|
368,221
|
||||||
|
UNRETURNED CUSTOMER INVENTORY
|
19,379
|
19,722
|
||||||
|
OTHER CURRENT ASSETS
|
15,422
|
15,602
|
||||||
|
TOTAL CURRENT ASSETS
|
584,689
|
549,433
|
||||||
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
88,573
|
89,649
|
||||||
|
OPERATING LEASE RIGHT-OF-USE ASSETS
|
34,292
|
36,020
|
||||||
|
GOODWILL
|
77,588
|
77,802
|
||||||
|
OTHER INTANGIBLES, NET
|
62,482
|
64,861
|
||||||
|
DEFERRED INCOME TAXES
|
36,631
|
37,272
|
||||||
|
INVESTMENT IN UNCONSOLIDATED AFFILIATES
|
38,572
|
38,858
|
||||||
|
OTHER ASSETS
|
17,884
|
18,835
|
||||||
|
TOTAL ASSETS
|
$
|
940,711
|
$
|
912,730
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
NOTES PAYABLE
|
$
|
105,000
|
$
|
52,460
|
||||
|
CURRENT PORTION OF OTHER DEBT
|
4,595
|
4,456
|
||||||
|
ACCOUNTS PAYABLE
|
81,266
|
92,535
|
||||||
|
ACCRUED CUSTOMER RETURNS
|
52,389
|
44,116
|
||||||
|
ACCRUED CORE LIABILITY
|
21,424
|
24,357
|
||||||
|
OTHER CURRENT LIABILITIES
|
83,533
|
91,540
|
||||||
|
TOTAL CURRENT LIABILITIES
|
348,207
|
309,464
|
||||||
|
OTHER LONG-TERM DEBT
|
111
|
129
|
||||||
|
NONCURRENT OPERATING LEASE LIABILITIES
|
26,841
|
28,376
|
||||||
|
ACCRUED ASBESTOS LIABILITIES
|
48,952
|
49,696
|
||||||
|
OTHER LIABILITIES
|
19,987
|
20,837
|
||||||
|
TOTAL LIABILITIES
|
444,098
|
408,502
|
||||||
|
TOTAL STOCKHOLDERS' EQUITY
|
496,613
|
504,228
|
||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
940,711
|
$
|
912,730
|
||||
STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
|
THREE MONTHS ENDED
MARCH 31,
|
||||||||
|
2020
|
2019
|
|||||||
|
(Unaudited)
|
||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
NET EARNINGS
|
$
|
8,627
|
$
|
12,216
|
||||
|
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
|
||||||||
|
USED IN OPERATING ACTIVITIES:
|
||||||||
|
DEPRECIATION AND AMORTIZATION
|
6,539
|
6,178
|
||||||
|
OTHER
|
6,034
|
5,303
|
||||||
|
CHANGE IN ASSETS AND LIABILITIES:
|
||||||||
|
ACCOUNTS RECEIVABLE
|
(32,681
|
)
|
(22,252
|
)
|
||||
|
INVENTORY
|
(5,339
|
)
|
(14,656
|
)
|
||||
|
ACCOUNTS PAYABLE
|
(11,883
|
)
|
1,181
|
|||||
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
1,303
|
(282
|
)
|
|||||
|
SUNDRY PAYABLES AND ACCRUED EXPENSES
|
(2,684
|
)
|
(12,911
|
)
|
||||
|
OTHER
|
(2,705
|
)
|
(1,503
|
)
|
||||
|
NET CASH USED IN OPERATING ACTIVITIES
|
(32,789
|
)
|
(26,726
|
)
|
||||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
|
NET PROCEEDS FROM SALE OF FACILITY
|
-
|
4,801
|
||||||
|
CAPITAL EXPENDITURES
|
(4,422
|
)
|
(3,084
|
)
|
||||
|
OTHER INVESTING ACTIVITIES
|
6
|
29
|
||||||
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
(4,416
|
)
|
1,746
|
|||||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
NET CHANGE IN DEBT
|
53,068
|
34,758
|
||||||
|
PURCHASE OF TREASURY STOCK
|
(8,726
|
)
|
(5,835
|
)
|
||||
|
DIVIDENDS PAID
|
(5,615
|
)
|
(5,159
|
)
|
||||
|
OTHER FINANCING ACTIVITIES
|
1,248
|
1,409
|
||||||
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
39,975
|
25,173
|
||||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
126
|
415
|
||||||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
2,896
|
608
|
||||||
|
CASH AND CASH EQUIVALENTS at beginning of period
|
10,372
|
11,138
|
||||||
|
CASH AND CASH EQUIVALENTS at end of period
|
$
|
13,268
|
$
|
11,746
|
||||