NEW YORK, March 11 /PRNewswire-FirstCall/ -- Standard Motor Products, Inc. , an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and for the year ended December 31, 2007.
Consolidated net sales for the fourth quarter of 2007 were $167.3 million, compared to consolidated net sales of $169 million during the comparable quarter in 2006. Losses from continuing operations for the fourth quarter of 2007 were $7.9 million or 43 cents per diluted share, compared to a loss of $1.5 million or 8 cents per diluted share in the fourth quarter of 2006. Excluding restructuring expenses for previously announced facility moves and the loss from our divestiture of our European Temperature Control business in 2006, losses from continuing operations for the fourth quarter 2007 were $3.6 million or 19 cents per diluted share compared to earnings in the fourth quarter 2006 of $2.6 million or 14 cents per diluted share.
Consolidated net sales for 2007 were $790.2 million, compared to consolidated net sales of $812 million during the comparable period in 2006. Earnings from continuing operations for 2007 were $5.4 million or 29 cents per diluted share, compared to $9.2 million or 50 cents per diluted share in 2006. Excluding restructuring expenses for previously announced facility moves, a gain from the sale of our Ft. Worth, Texas building in 2007 and the loss from our divestiture of our European Temperature Control business in 2006, earnings from continuing operations for 2007 and 2006 were $11.4 million or 61 cents per diluted share and $13.9 million or 76 cents per diluted share, respectively.
Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are obviously disappointed in our fourth quarter results. The primary culprit was heavy stock returns in Engine Management, which came in at the very end of the year. These returns lowered our Engine Management net sales for the quarter (Engine Management gross sales before deductions for the quarter were approximately $5 million ahead of the comparable quarter in 2006). More important, they reduced our Engine Management gross margin for the quarter to 21.7% and to 25.6% for the full year.
"There were two main components of these returns. First were heavy returns from key accounts, as many in the distribution channel looked to reduce their stock levels going into 2008. Second, were returns generated as we implemented a brand change for two major customers.
"Despite the poor fourth quarter, the annual figure of 25.6% gross margin for Engine Management represents a one point improvement over 2006, primarily the result of aggressive cost reductions and additional manufacturing savings. We are confident of achieving our stated target of 27-28% gross margin for Engine Management once the previously announced plant moves to Mexico are complete.
"In Temperature Control, earlier in the year we reduced prices in response to low price imports from China. We have instituted further price reductions in 2008, but we anticipate these will be offset as we continue to shift compressor production to Mexico.
"Looking to 2008, sales for the first two months are holding up satisfactorily. Further we will have a full year's benefit of new OES volume gained during 2007. We will also see cost reductions from the plant moves to Mexico, though the full benefit will not be felt until 2009. All moves are on or ahead of schedule.
"We recently concluded an agreement with Continental to acquire a portion of their OE/OES business. We will be purchasing equipment and inventory for various sensor lines from their factory in upstate New York and relocating it to our Independence, KS facility. Annual volumes are approximately $10-15 million, and we plan to begin shipments in the latter part of 2008. Customers include a wide range of car manufacturers, both domestic and import, for use in their service operations. We believe that OES is a major opportunity for us, and this is a good step in that direction."
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Tuesday, March 11, 2008. The dial in number is 800-895-1085 (domestic) or 785-424-1055 (international). The playback number is 800-723-0488 (domestic) or 402-220-2651 (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
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2007 2006 2007 2006
NET SALES $167,251 $169,019 $790,185 $812,024
COST OF SALES 128,182 123,067 587,910 606,803
GROSS PROFIT 39,069 45,952 202,275 205,221
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 40,034 41,228 168,950 168,050
RESTRUCTURING EXPENSES 7,066 1,028 10,933 1,856
OPERATING INCOME (LOSS) (8,031) 3,696 22,392 35,315
OTHER INCOME (EXPENSE),
NET 971 (2,363) 3,881 (383)
INTEREST EXPENSE 4,103 4,449 18,044 19,275
EARNINGS (LOSS) FROM
CONTINUING OPERATIONS
BEFORE TAXES (11,163) (3,116) 8,229 15,657
INCOME TAX EXPENSE
(BENEFIT) (3,220) (1,643) 2,798 6,494
EARNINGS (LOSS) FROM
CONTINUING OPERATIONS (7,943) (1,473) 5,431 9,163
DISCONTINUED OPERATION,
NET OF TAX (380) (355) (3,156) 248
NET EARNINGS (LOSS) $(8,323) $(1,828) $2,275 $9,411
NET EARNINGS (LOSS) PER
COMMON SHARE:
BASIC EARNINGS (LOSS)
FROM CONTINUING
OPERATIONS $(0.43) $(0.08) $0.29 $0.50
DISCONTINUED OPERATION (0.02) (0.02) $(0.17) 0.01
NET EARNINGS (LOSS) PER
COMMON SHARE - BASIC $(0.45) $(0.10) $0.12 $0.51
DILUTED EARNINGS (LOSS)
FROM CONTINUING
OPERATIONS $(0.43) $(0.08) $0.29 $0.50
DISCONTINUED OPERATION (0.02) (0.02) (0.17) 0.01
NET EARNINGS (LOSS) PER
COMMON SHARE - DILUTED $(0.45) $(0.10) $0.12 $0.51
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 18,296,957 18,336,891 18,530,548 18,283,707
WEIGHTED AVERAGENUMBER
OF COMMON AND DILUTIVE
SHARES 18,344,564 18,459,914 18,586,532 18,325,175
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
December 31, December 31,
2007 2006
Cash $13,261 $22,348
Accounts receivable, gross 213,409 193,129
Allowance for doubtful accounts 8,964 9,465
Accounts receivable, net 204,445 183,664
Inventories 252,277 233,970
Assets held for sale 5,373 -
Other current assets 27,381 21,856
Total current assets 502,737 461,838
Property, plant and equipment, net 71,775 80,091
Goodwill and other intangibles 57,891 56,289
Other assets 45,689 41,874
Total assets $678,092 $640,092
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $156,756 $139,799
Current portion of long term debt 583 542
Accounts payable trade 64,384 53,783
Accrued customer returns 23,149 21,705
Other current liabilities 67,723 62,696
Total current liabilities 312,595 278,525
Long-term debt 97,972 97,979
Accrued asbestos liability 22,651 20,828
Postretirement & other liabilities 56,510 52,061
Total liabilities 489,728 449,393
Total stockholders' equity 188,364 190,699
Total liabilities and stockholders'
equity $678,092 $640,092
STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
EARNINGS (LOSS) FROM
CONTINUING OPERATIONS 2007 2006 2007 2006
(Unaudited) (Unaudited)
GAAP EARNINGS (LOSS) FROM
CONTINUING OPERATIONS $(7,943) $(1,473) $5,431 $9,163
RESTRUCTURING EXPENSES
(NET OF TAX) 4,328 827 6,734 1,523
LOSS FROM DIVESTITURE OF
EUROPEAN TC BUSINESS - 3,209 - 3,209
GAIN FROM SALE OF FT. WORTH,
TEXAS BUILDING (NET OF TAX) - - (740) -
NON-GAAP EARNINGS (LOSS) FROM
CONTINUING OPERATIONS $(3,615) $2,563 $11,425 $13,895
DILUTED EARNINGS (LOSS) PER
SHARE FROM CONTINUING OPERATIONS
GAAP DILUTED EARNINGS (LOSS)
PER SHARE FROM CONTINUING
OPERATIONS $(0.43) $(0.08) $0.29 $0.50
RESTRUCTURING EXPENSES 0.24 0.05 0.36 0.08
LOSS FROM DIVESTITURE OF
EUROPEAN TC BUSINESS - 0.17 - 0.18
GAIN FROM SALE OF FT. WORTH,
TEXAS BUILDING - - (0.04) -
NON-GAAP DILUTED EARNINGS (LOSS)
PER SHARE FROM CONTINUING
OPERATIONS $(0.19) $0.14 $0.61 $0.76
MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE SPECIAL ITEMS, WHICH
ARE NON-GAAP MEASUREMENTS, 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.