Third Quarter 2005 Results and a Quarterly Dividend
New York, NY, November 1, 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 nine months ended September 30, 2005.
Consolidated net sales for the third quarter of 2005 were $224.4 million, compared to consolidated net sales of $203.5 million during the comparable quarter in 2004. Earnings from continuing operations for the third quarter of 2005 were $4.2 million or 21 cents per diluted share, compared to earnings of $1.3 million or 7 cents per diluted share in the third quarter of 2004. The third quarter improvement in earnings was primarily related to a $4.4 million reduction in integration expenses and a $4 million reduction in retiree medical expense (discussed further below).
Consolidated net sales for the nine month period ended September 30, 2005 were $658.3 million, compared to consolidated net sales of $643.3 million during the comparable period in 2004. Earnings from continuing operations for the nine month period ended September 30, 2005 were $3.9 million or 20 cents per diluted share, compared to earnings of $8.3 million or 43 cents per diluted share in the comparable period of 2004.
Commenting on the results, Mr. Lawrence Sills, Standard Motor Products’ Chairman and Chief Executive Officer, said, “On the Engine Management side of the business, while net sales and SGA expenses were roughly in line with projections, there was a major shortfall in gross margin. This was primarily caused by two factors. First, despite the recent round of price increases, which took effect in the third quarter, our pricing levels are still below 2004 on a cumulative basis. Second, we are incurring one-time, non-cash write-offs as we merge the Dana and Standard inventories.
“Looking forward, we have announced another round of price increases, beginning in mid-December. In addition, we are forecasting an additional $6-8 million in annualized cost savings, resulting from new manufacturing of previously purchased product and resourcing of existing purchased items. We anticipate all these being in place by year-end 2005, with benefits beginning in 2006.”
Turning to Temperature Control,
Mr. Sills commented, “Four Seasons had an excellent quarter. Sales were up 36% in the third quarter
primarily because of the hot summer.
However, year-to-date increases were only 7.3% because of the weak
pre-season orders. On the cost side, we
are continuing with our program of outsourcing product to the Far East, and
beginning the task of establishing a compressor rebuilding facility in
“Further, we continue to show gains on several fronts. We reduced inventory by $21 million in the third quarter, as Temperature Control had the benefit of the hot summer and we continued to integrate the DEM and Standard Engine Management inventories. Second, we are in the process of winding down our customer accounts receivable draft program, which will reduce interest expense and improve cash flow in 2006. Finally, as discussed above, we made substantial changes to our retiree medical program, which will result in a reduction of roughly $5 million to our annual expenses. $4 million of this reduction is included in our third quarter results, and the balance will be reflected in the fourth quarter.”
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 December 1, 2005 to stockholders of record on November 15, 2005.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Tuesday, November 1, 2005. The dial in number is 877-707-9628 (domestic) or 785-832-0326 (international). The playback number is 800-839-2435 (domestic) or 402-220-7212 international), and the 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.