Standard Motor Products, Inc. Announces
Second Quarter 2005 Results and a Quarterly Dividend
New York, NY, August 8, 2005......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, 2005.
Consolidated net sales for the second quarter of 2005 were
$226.5 million, compared to consolidated net sales of $235 million during the
comparable quarter in 2004. Losses from
continuing operations for the second quarter of 2005 were $1.3 million or 7
cents per diluted share, compared to earnings of $7.5 million or 38 cents per
diluted share in the second quarter of 2004.
Included in the results was a $3.5 million asset impairment charge of
which $3.4 million is non-cash, related to the decision to outsource previously
manufactured product in our Temperature Control business. Excluding the impact of this $3.5 million
charge in the second quarter 2005, earnings from continuing operations would
have been $819 thousand or 4 cents per diluted share.
Consolidated net sales for the six month period ended June
30, 2005 were $433.8 million, compared to consolidated net sales of $439.8
million during the comparable period in 2004.
Losses from continuing operations for the six month period ended June
30, 2005 were $228 thousand or 1 cent per diluted share, compared to earnings
of $7 million or 36 cents per diluted share in the comparable period of 2004. Excluding the impact of a $3.5 million asset
impairment charge for the six months 2005, earnings from continuing operations
would have been $1.9 million or 10 cents per diluted share.
Commenting on the results, Mr. Lawrence Sills, Standard Motor Products’ Chairman and Chief Executive Officer, said, “Regarding Engine Management, net sales were essentially flat for the first half 2005 compared to the same period in the prior year. There was actually a slight increase in units, as the 2005 sales include a 2.4% price reduction early in the year to implement a one-time price correction to match OE on certain slower moving items. We are achieving our targets in SG&A, with savings of 5% of sales ($20-25 million annually exclusive of plant closing costs) from pre-integration figures.
“The lagging area is gross margin, where improvement is taking longer than we originally anticipated. While we are beginning to see the benefits of integration, they have not yet been reflected in our financial results. Material cost savings and other planned operational improvements are starting to come to fruition and are expected to improve our financial performance towards the end of the year.
A significant area of improvement will be in pricing. In effect, including the recent price decrease, we have not had an Engine Management net price increase for over three years, as compared to our historical 2-3% annual price increase. We implemented a series of price increases over the past 60 days, which should generate roughly $1 million per month in improved margins, and we anticipate to implement additional increases in 2006.
To achieve our original $50-55 million savings targets we require $30 million improvement in gross margin from current levels. With our plans in place for improvements in material costs, manufacturing, and pricing we believe that these targets are achievable and that we will begin seeing the bulk of these in 2006.”
Mr. Sills added, “In Temperature Control, we began to see a pickup in business during the latter part of June as a result of the hot summer. This increase has continued into the third quarter as we experienced a 25% increase in volume for the month of July. Our six month figures are behind 2004, due to the lack of early season orders, but we anticipate sales holding at more favorable levels for the balance of the season.
During the second quarter 2005, we made a strategic
decision to outsource certain Temperature Control products previously
manufactured in our
The Board of Directors has approved payment of a quarterly dividend of nine cents per share on the common stock outstanding. The dividend will be paid on September 1, 2005 to stockholders of record on August 15, 2005.
Standard Motor Products, Inc. will hold a conference call at
11:00 AM, Eastern Time, on Monday, August 8, 2005. The dial in number is 800-362-0653. The
playback number is 800-839-5632 (domestic) or 402-220-2559 (international), and
the ID # is STANDARD.
STANDARD MOTOR PRODUCTS, INC.
Reconciliation of Net Earnings to
Pro Forma Earnings from Continuing Operations
(Dollars in thousands, except per share
amounts)
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THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
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2005 |
2004 |
2005 |
2004 |
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Net earnings (loss), as reported |
$ (1,665) |
$ 6,692 |
$ (1,019) |
$ 5,722 |
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Loss from discontinued
operations, net of tax |
(384) |
(851) |
(791) |
(1,276) |
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Net earnings (loss)
from continuing operations |
(1,281) |
7,543 |
(228) |
6,998 |
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Asset impairment and
integration expenses, net of taxes |
2,100 |
− |
2,100 |
− |
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Proforma net earnings
from continuing operations |
$ 819 |
$ 7,543 |
$ 1,872 |
$ 6,998 |
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Net Earnings (Loss)
Per Common Share: |
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Net earnings (loss)
per common share – diluted |
(0.09) |
0.34 |
(0.05) |
0.30 |
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Discontinued operation |
0.02 |
0.04 |
0.04 |
0.06 |
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Diluted earnings
(loss) from continuing operations – as reported |
$ (0.07) |
$ 0.38 |
$ (0.01) |
$ 0.36 |
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Effect of asset
impairment and integration expenses |
0.11 |
− |
0.11 |
− |
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Proforma diluted
earnings from continuing operations |
$ 0.04 |
$ 0.38 |
$ 0.10 |
$ 0.36 |
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Weighted average
number of common shares |
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- Basic shares |
19,538,269 |
19,346,553 |
19,489,583 |
19,290,048 |
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- Dilutive |
19,538,269 |
22,247,798 |
19,489,583 |
19,394,511 |
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.
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