Standard Motor Products, Inc. Announces Second Quarter 2020 Results
Standard Motor Products reported a decline in consolidated net sales for Q2 2020 at $247.9 million, down from $305.2 million in Q2 2019. Earnings also fell to $11.8 million or 52 cents per diluted share, compared to $20.6 million or 90 cents per diluted share in the prior year. For the first half of 2020, net sales totalled $502.2 million versus $588.9 million in 2019, with earnings dropping from $33.7 million to $21.5 million. Despite these challenges, the company reports month-over-month sales improvement going into Q3.
- Month-over-month sales improvement observed in May and June 2020.
- No layoffs of salaried staff; investment in capital projects and new product development continues.
- Customer POS sales outpace comparable figures for 2019.
- Consolidated net sales decreased by 19% for Q2 2020 relative to Q2 2019.
- Earnings from continuing operations fell by 43% for Q2 compared to the previous year.
- Total earnings for the first half dropped by 36% year-over-year.
NEW YORK, July 29, 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 six months ended June 30, 2020.
Consolidated net sales for the second quarter of 2020 were
Consolidated net sales for the six months ended June 30, 2020, were
Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President stated, "The second quarter was a period of dramatic transition, both for our company and our industry. We had a very difficult April, but are pleased with the month over month sales improvement since then.
"Beginning in mid-March, and continuing through April, businesses closed down, people sheltered at home, miles driven were dramatically curtailed, and we, and the aftermarket as a whole, saw a significant reduction in volume. The industry started to recover in May, and in June business rebounded sharply to levels consistent with 2019 volumes. While our second quarter sales were down overall, the monthly cadence reflected positive trends, which bodes well as we enter the third quarter.
"As we stated in our first quarter release, we had two primary goals as we entered this period. Our first was to guarantee the health and safety of our employees. Our second was to take steps to ensure that we emerge from the crisis as strong, or stronger, than we were when we entered it. We are pleased with our accomplishments to date in both areas.
"Regarding health and safety, we have taken steps to minimize risks in all locations. Our measures include temperature checking, continuous deep cleaning, facility modifications, updated policies for high risk employees, work-from-home allowances, and many other changes. Health and safety remains a high priority for us, and our management team focuses on it on a daily basis.
"As for the second goal, from the early days of the crisis, we began to implement programs to conserve cash and reduce costs. As we believed this would be a temporary situation, these measures were always intended to be short term in nature and have no adverse effect on our long term strategy or growth. We drew down
"As we begin our third quarter, we are pleased that our business is improving. Furthermore, our customers' POS sales are exceeding their comparable figures for 2019. However, the spike in COVID cases and continued high unemployment make the near future difficult to predict. Accordingly, while we have repaid the
"Looking further ahead, we are optimistic about our future. Industry demographics remain favorable, and we are fortunate that the majority of our products are non-discretionary. Most importantly, thanks to the dedication and efforts of our people, our position in the industry has never been stronger."
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, July 29, 2020. The dial-in number is 888-632-3385 (domestic) or 785-424-1673 (international). The playback number is 800-938-0996 (domestic) or 402-220-1540 (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 | SIX MONTHS ENDED | |||||||||||
JUNE 30, | JUNE 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
NET SALES | $ 247,939 | $ 305,172 | $ 502,241 | $ 588,938 | ||||||||
COST OF SALES | 183,581 | 216,267 | 367,488 | 422,070 | ||||||||
GROSS PROFIT | 64,358 | 88,905 | 134,753 | 166,868 | ||||||||
SELLING, GENERAL & ADMINISTRATIVE EXPENSES | 48,328 | 60,536 | 104,201 | 120,536 | ||||||||
RESTRUCTURING AND INTEGRATION EXPENSES | 9 | 644 | 214 | 644 | ||||||||
OTHER INCOME (EXPENSE), NET | - | 3 | 6 | (3) | ||||||||
OPERATING INCOME | 16,021 | 27,728 | 30,344 | 45,685 | ||||||||
OTHER NON-OPERATING INCOME, NET | 602 | 1,411 | 78 | 2,057 | ||||||||
INTEREST EXPENSE | 772 | 1,722 | 1,645 | 2,811 | ||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | 15,851 | 27,417 | 28,777 | 44,931 | ||||||||
PROVISION FOR INCOME TAXES | 4,009 | 6,862 | 7,314 | 11,272 | ||||||||
EARNINGS FROM CONTINUING OPERATIONS | 11,842 | 20,555 | 21,463 | 33,659 | ||||||||
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES | (875) | (1,123) | (1,869) | (2,011) | ||||||||
NET EARNINGS | $ 10,967 | $ 19,432 | $ 19,594 | $ 31,648 | ||||||||
NET EARNINGS PER COMMON SHARE: | ||||||||||||
BASIC EARNINGS FROM CONTINUING OPERATIONS | $ 0.53 | $ 0.92 | $ 0.96 | $ 1.50 | ||||||||
DISCONTINUED OPERATION | (0.04) | (0.05) | (0.08) | (0.09) | ||||||||
NET EARNINGS PER COMMON SHARE - BASIC | $ 0.49 | $ 0.87 | $ 0.88 | $ 1.41 | ||||||||
DILUTED EARNINGS FROM CONTINUING OPERATIONS | $ 0.52 | $ 0.90 | $ 0.94 | $ 1.47 | ||||||||
DISCONTINUED OPERATION | (0.04) | (0.05) | (0.08) | (0.09) | ||||||||
NET EARNINGS PER COMMON SHARE - DILUTED | $ 0.48 | $ 0.85 | $ 0.86 | $ 1.38 | ||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES | 22,330,476 | 22,328,292 | 22,384,281 | 22,374,785 | ||||||||
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES | 22,718,680 | 22,795,677 | 22,793,606 | 22,857,435 | ||||||||
STANDARD MOTOR PRODUCTS, INC. | ||||||||||||
Segment Revenues and Operating Income | ||||||||||||
(In thousands) | ||||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||
JUNE 30, | JUNE 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
Revenues | ||||||||||||
Ignition, Emission Control, Fuel & Safety Related System Products | $ 142,787 | $ 181,831 | $ 307,313 | $ 357,892 | ||||||||
Wire and Cable | 30,366 | 36,211 | 66,958 | 73,339 | ||||||||
Engine Management | 173,153 | 218,042 | 374,271 | 431,231 | ||||||||
Compressors | 44,878 | 52,493 | 70,226 | 92,304 | ||||||||
Other Climate Control Parts | 27,514 | 31,913 | 53,608 | 61,026 | ||||||||
Temperature Control | 72,392 | 84,406 | 123,834 | 153,330 | ||||||||
All Other | 2,394 | 2,724 | 4,136 | 4,377 | ||||||||
Revenues | $ 247,939 | $ 305,172 | $ 502,241 | $ 588,938 | ||||||||
Gross Margin | ||||||||||||
Engine Management | $ 46,230 | $ 63,780 | $ 102,935 | $ 123,473 | ||||||||
Temperature Control | 16,520 | 22,551 | 28,616 | 38,742 | ||||||||
All Other | 1,608 | 2,574 | 3,202 | 4,653 | ||||||||
Gross Margin | $ 64,358 | $ 88,905 | $ 134,753 | $ 166,868 | ||||||||
Selling, General & Administrative | ||||||||||||
Engine Management | $ 29,499 | $ 37,430 | $ 64,572 | $ 74,773 | ||||||||
Temperature Control | 12,553 | 15,397 | 24,997 | 29,538 | ||||||||
All Other | 6,276 | 7,709 | 14,632 | 16,225 | ||||||||
Selling, General & Administrative | $ 48,328 | $ 60,536 | $ 104,201 | $ 120,536 | ||||||||
Operating Income | ||||||||||||
Engine Management | $ 16,731 | $ 26,350 | $ 38,363 | $ 48,700 | ||||||||
Temperature Control | 3,967 | 7,154 | 3,619 | 9,204 | ||||||||
All Other | (4,668) | (5,135) | (11,430) | (11,572) | ||||||||
Subtotal | 16,030 | 28,369 | 30,552 | 46,332 | ||||||||
Restructuring & Integration | (9) | (644) | - | (214) | (644) | - | ||||||
Other Income (Expense), Net | - | 3 | 6 | (3) | ||||||||
Operating Income | $ 16,021 | $ 27,728 | $ 30,344 | $ 45,685 | ||||||||
STANDARD MOTOR PRODUCTS, INC. | |||||||||
Reconciliation of GAAP and Non-GAAP Measures | |||||||||
(In thousands, except per share amounts) | |||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||
JUNE 30, | JUNE 30, | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||
(Unaudited) | (Unaudited) | ||||||||
EARNINGS FROM CONTINUING OPERATIONS | |||||||||
GAAP EARNINGS FROM CONTINUING OPERATIONS | |||||||||
RESTRUCTURING AND INTEGRATION EXPENSES | 9 | 644 | 214 | 644 | |||||
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS | (2) | (168) | (56) | (168) | |||||
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS | |||||||||
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | |||||||||
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | $ 0.52 | $ 0.90 | $ 0.94 | $ 1.47 | |||||
RESTRUCTURING AND INTEGRATION EXPENSES | - | 0.03 | 0.01 | 0.03 | |||||
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS | - | (0.01) | - | (0.01) | |||||
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | $ 0.52 | $ 0.92 | $ 0.95 | $ 1.49 | |||||
OPERATING INCOME | |||||||||
GAAP OPERATING INCOME | |||||||||
RESTRUCTURING AND INTEGRATION EXPENSES | 9 | 644 | 214 | 644 | |||||
OTHER (INCOME) EXPENSE, NET | - | (3) | (6) | 3 | |||||
NON-GAAP OPERATING INCOME | |||||||||
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) | ||||||
JUNE 30, | DECEMBER 31, | |||||
2020 | 2019 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
CASH | $ 22,510 | $ 10,372 | ||||
ACCOUNTS RECEIVABLE, GROSS | 190,292 | 140,728 | ||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 5,774 | 5,212 | ||||
ACCOUNTS RECEIVABLE, NET | 184,518 | 135,516 | ||||
INVENTORIES | 353,315 | 368,221 | ||||
UNRETURNED CUSTOMER INVENTORY | 18,868 | 19,722 | ||||
OTHER CURRENT ASSETS | 10,687 | 15,602 | ||||
TOTAL CURRENT ASSETS | 589,898 | 549,433 | ||||
PROPERTY, PLANT AND EQUIPMENT, NET | 88,022 | 89,649 | ||||
OPERATING LEASE RIGHT-OF-USE ASSETS | 32,536 | 36,020 | ||||
GOODWILL | 77,593 | 77,802 | ||||
OTHER INTANGIBLES, NET | 60,594 | 64,861 | ||||
DEFERRED INCOME TAXES | 37,040 | 37,272 | ||||
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 39,319 | 38,858 | ||||
OTHER ASSETS | 19,763 | 18,835 | ||||
TOTAL ASSETS | $ 944,765 | $ 912,730 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
NOTES PAYABLE | $ 85,000 | $ 52,460 | ||||
CURRENT PORTION OF OTHER DEBT | 6,084 | 4,456 | ||||
ACCOUNTS PAYABLE | 72,133 | 92,535 | ||||
ACCRUED CUSTOMER RETURNS | 64,803 | 44,116 | ||||
ACCRUED CORE LIABILITY | 19,440 | 24,357 | ||||
OTHER CURRENT LIABILITIES | 90,146 | 91,540 | ||||
TOTAL CURRENT LIABILITIES | 337,606 | 309,464 | ||||
OTHER LONG-TERM DEBT | 108 | 129 | ||||
NONCURRENT OPERATING LEASE LIABILITIES | 25,148 | 28,376 | ||||
ACCRUED ASBESTOS LIABILITIES | 47,708 | 49,696 | ||||
OTHER LIABILITIES | 23,539 | 20,837 | ||||
TOTAL LIABILITIES | 434,109 | 408,502 | ||||
TOTAL STOCKHOLDERS' EQUITY | 510,656 | 504,228 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 944,765 | $ 912,730 | ||||
STANDARD MOTOR PRODUCTS, INC. | |||||
Condensed Consolidated Statements of Cash Flows | |||||
(In thousands) | |||||
SIX MONTHS ENDED | |||||
JUNE 30, | |||||
2020 | 2019 | ||||
(Unaudited) | |||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
NET EARNINGS | |||||
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH USED IN OPERATING ACTIVITIES: | |||||
DEPRECIATION AND AMORTIZATION | 12,877 | 12,744 | |||
OTHER | 9,666 | 9,621 | |||
CHANGE IN ASSETS AND LIABILITIES: | |||||
ACCOUNTS RECEIVABLE | (51,326) | (26,622) | |||
INVENTORIES | 12,725 | (19,691) | |||
ACCOUNTS PAYABLE | (21,804) | (6,994) | |||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 5,664 | (6,406) | |||
SUNDRY PAYABLES AND ACCRUED EXPENSES | 14,788 | (7,545) | |||
OTHER | (3,069) | (6,261) | |||
NET CASH USED IN OPERATING ACTIVITIES | (885) | (19,506) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES | - | (38,427) | |||
NET PROCEEDS FROM SALE OF FACILITY | - | 4,801 | |||
CAPITAL EXPENDITURES | (9,026) | (7,578) | |||
OTHER INVESTING ACTIVITIES | 6 | 46 | |||
NET CASH USED IN INVESTING ACTIVITIES | (9,020) | (41,158) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
NET CHANGE IN DEBT | 34,349 | 85,956 | |||
PURCHASE OF TREASURY STOCK | (8,726) | (10,738) | |||
DIVIDENDS PAID | (5,615) | (10,296) | |||
OTHER FINANCING ACTIVITIES | 1,818 | 1,691 | |||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 21,826 | 66,613 | |||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 217 | 332 | |||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 12,138 | 6,281 | |||
CASH AND CASH EQUIVALENTS at beginning of Period | 10,372 | 11,138 | |||
CASH AND CASH EQUIVALENTS at end of Period | |||||
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SOURCE Standard Motor Products, Inc.
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