2Q 2000 EARNINGS AND QUARTERLY DIVIDEND
New York, NY, July 20, 2000......Standard Motor Products, Inc. (NYSE:SMP), automotive replacement parts manufacturer and distributor, reported net sales for the second quarter of 2000, the three months ended June 30, 2000, were $176.3 million, 14.3% lower than net sales of $205.7 million during the comparable quarter a year ago. Net earnings for the second quarter of 2000 were $7.0 million or 54 cents per diluted share, as compared to the net earnings of $12.0 million or 91 cents per diluted share earned in the second quarter of 1999.
Sales for the six months in 2000 were $323.0 million, 15.5% lower than net sales of $382.5 million in the comparable period in 1999. Net earnings for the six months in 2000 were $6.9 million or 57 cents per diluted share, as compared to $15.7 million or $1.19 per diluted share a year ago. Excluding $501,000 for the extraordinary loss on early extinguishment of debt, net earnings for the six months in 2000 per diluted share would have been 4 cents higher or 61 cents per diluted share.
Lawrence Sills, President, said, "The sales shortfall was essentially in temperature control products and was primarily the result of our retail customers achieving substantial inventory reductions. From all indications, our customers’ sales are running equal to or slightly ahead of 1999, so we view this as a one-time sales adjustment."
Mr. Sills added, "The Company continues to accrue temperature control customer returns at the 1999 full year experience level while enforcing new customer return policies and procedures. To date, early customer return activity is trending favorably against the prior year but the full impact will not be known until the fourth quarter."
Mr. Sills stated, "Gross margins for the quarter continued the first quarter favorable trend at 32.7%, 1.1% better than the comparable quarter of the prior year. Year-to-date gross margins were 1.6% better at 32.5%, as compared to 30.9% in the prior year. These improvements reflect the previously announced $12 million cost reduction program implemented for 2000."
Mr. Sills said, "Selling, general and administrative expenses (SG&A) were $43.0 million, virtually flat as compared to $42.9 million in the second quarter 1999. Year-to-date SG&A expenses were $86.2 million in 2000 as compared to $87.4 million in 1999. Due to the reduced net sales volume, SG&A expenses in the first half of 2000 increased as a percentage of net sales from 22.8% to 26.7%."
Mr. Sills commented, "The Engine Management division achieved its operating profit and working capital targets in the first half of 2000. In addition, the division has been awarded a segment of the engine management line for a national warehouse distributor. This program will be launched in the fourth quarter of this year. Annualized volume for this new business is estimated at $20 million."
On the balance sheet, Mr. Sills commented, "Inventories increased approximately $34 million, entirely in temperature control products, due to the net sales shortfall. Temperature control production levels have been radically reduced for the balance of the year to improve working capital requirements."
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, 2000 to stockholders of record on August 15, 2000.
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