4Q 2001 EARNINGS
New York, NY, March 7, 2002......Standard Motor Products, Inc. (NYSE:SMP), automotive replacement parts manufacturer and distributor, reported its financial results for the fourth quarter of 2001, the three months ended December 31, 2001, and the full year 2001.
Net sales for the fourth quarter of 2001 were $101.9 million, 12.6% lower than net sales of $116.6 million during the comparable quarter of a year ago. Net losses for the fourth quarter of 2001 were $6.3 million or 54 cents per diluted share, compared to net losses of $2 million, or 18 cents per diluted share in the fourth quarter of 2000.
Net sales for the full year 2001 were $608.1 million, slightly higher than net sales of $604 million in 2000. Net losses in 2001 were $2.5 million or 21 cents per diluted share, compared to net earnings of $9.7 million or 81 cents per diluted share in 2000. Excluding extraordinary losses on the early extinguishment of debt in 2001 and 2000, net earnings for the full year 2001 were $312 thousand or 3 cents per diluted share, as compared to net earnings of $10.2 million or 85 cents per diluted share of a year ago.
Lawrence Sills, Chief Executive Officer, said, "The decrease in net sales in the fourth quarter was caused by a combination of overall market weakness at the manufacturer level plus the fact that the fourth quarter of 2001 contained less shipping days than 2000, and 2000 also included the large opening orders to NAPA for their second ignition line.
"Sales for the full year were slightly ahead of 2000, mostly as a result of new business. We had NAPA for the full 12 months, we regained a major retailer for our Temperature Control division, and we obtained substantial additional wire set business from a major group of warehouse distributors.
"Excluding this new business, sales to existing accounts were slightly down, primarily a result of another cool summer for air conditioning, and the continuing inventory reduction program on the part of many of our customers."
Mr. Sills continued, "The key to the fall-off in profits was our own successful inventory reduction program. We had an initial goal of a $40 million reduction, and we actually achieved $57 million. All the while we maintained high shipping levels to our customers. This was a significant operating achievement, but it had a severe negative effect on our gross margin. We estimate that the resulting unabsorbed overhead caused a drop in gross margin of approximately 1.5 to 2 points.
"On the positive side, we reduced selling general and administrative expenses by more than $3 million compared to 2000, achieved an operating cash flow of approximately $40 million and a year over year debt reduction of approximately $22 million."
Mr. Sills concluded, "Our single highest priority in 2001 was to reduce capital employed in the business and we exceeded our stated goals. The majority of this reduction is behind us and we anticipate gross margins returning to historic levels.
"2002 appears promising. We have been awarded about $25 million in new lines and new locations from two major accounts. We will begin shipping these orders during the second quarter. With the inventory reduction mostly behind us, expenses under control, and the newly awarded business, we look forward to 2002."
This news release contains certain forward-looking statements that involve risks and uncertainties. Actual results, events and performance could differ materially from those contemplated by these forward looking statements. Among the factors that could cause actual results, events and performance to differ materially are risks and uncertainties discussed in this release and those detailed from time-to-time in prior public statements and the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K and the Company’s quarterly reports on Form 10-Q.