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Standard Motor Products, Inc. Announces Fourth Quarter 2008 Results

Posted on: Friday, 6 March 2009, 07:30 CST

NEW YORK, March 6 /PRNewswire-FirstCall/ -- Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and for the year ended December 31, 2008.

Consolidated net sales for the fourth quarter of 2008 were $148.9 million, compared to consolidated net sales of $167.3 million during the comparable quarter in 2007. Losses from continuing operations for the fourth quarter of 2008 were $34.1 million or $1.84 per diluted share after taking into account a $39.4 million goodwill and intangibles impairment, compared to a loss of $7.9 million or 43 cents per diluted share in the fourth quarter of 2007. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, losses from continuing operations for the fourth quarter 2008 were $5.5 million or 29 cents per diluted share compared to losses in the fourth quarter 2007 of $3.6 million or 20 cents per diluted share.

Consolidated net sales for 2008 were $775.2 million, compared to consolidated net sales of $790.2 million during the comparable period in 2007. Losses from continuing operations for 2008 were $21.1 million or $1.14 per diluted share, compared to earnings of $5.4 million or 29 cents per diluted share in 2007. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, losses from continuing operations for 2008 were $2 million or 11 cents per diluted share, compared to earnings for 2007 of $11.4 million or 61 cents per diluted share.

The restructuring and integration expenses incurred in 2008 are part of a strategic plan for plant rationalization and streamlining operations while the impairment charge for goodwill and intangible assets is associated with business conditions and the recent market downturn.

Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "Sales in the fourth quarter were down 11%, consistent across all divisions, continuing a decline that began in September. As a result, though we had been running slightly above 2007 for three quarters, we wound up 2% below 2007 for the full year.

"However, reports from our customers and industry statistics indicate that sales to end users remained healthy throughout the period and have continued solid in early 2009. Accordingly, we have seen our aftermarket sales bounce back in the first two months of the year. Our sales to OE remain depressed as a result of cutbacks in OE production, but this represents a relatively small part of our overall business.

"The fourth quarter sales decline resulted in an operating loss, excluding special items, of 29 cents per diluted share for the quarter and 11 cents for the full year. These results, while disappointing, were impacted by two major events, both of which we believe are now behind us. First was the drop-off in fourth quarter sales. Second was the substantial costs incurred in closing Long Island City and Puerto Rico, two of our largest facilities, and the start-up costs in Reynosa, Mexico. With Long Island City and Puerto Rico now fully closed, and Reynosa increasing production and improving efficiency, we look forward to improved results in 2009.

"Our major focus in 2008 was generating cash and reducing debt, in anticipation of the $90 million in convertible debentures due in July 2009. During 2008, we repurchased roughly half the bonds, leaving a balance of $45 million due in July 2009. Overall, we reduced total debt by $61 million during the year through the sale of our Long Island City facility and reductions in inventory and accounts receivable.

"Cash generation remains our highest priority. Since January 2008, we have reduced our work force by 18%, approximately 700 people. Further, we have temporarily eliminated the quarterly dividend, frozen salaries, closed our Reno distribution center, and continued to reduce capital expenditures, inventory and accounts receivable.

"As a result of these and other steps, while we continue to pursue areas of outside financing, we expect to have sufficient availability within our current bank revolver to redeem the remaining bonds in July."

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Friday, March 6, 2009. The dial in number is 800-895-1085 (domestic) or 785-424-1055 (international). The playback number is 800-695-0671 (domestic) or 402-220-1397 (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, 2008 2007 2008 2007 ---- ---- ---- ---- NET SALES $148,876 $167,251 $775,241 $790,185 COST OF SALES 113,345 128,182 591,085 587,910 ------- ------- ------- ------- GROSS PROFIT 35,531 39,069 184,156 202,275 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 38,696 39,831 166,199 167,928 GOODWILL AND INTANGIBLE ASSET IMPAIRMENT 39,387 - 39,387 - RESTRUCTURING AND INTEGRATION EXPENSES 10,741 7,066 16,858 10,933 ------ ----- ------ ------ OPERATING (LOSS) INCOME (53,293) (7,828) (38,288) 23,414 OTHER INCOME, NET 1,005 971 22,670 3,881 INTEREST EXPENSE 2,580 4,306 13,585 19,066 ----- ----- ------ ------ EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES (54,868) (11,163) (29,203) 8,229 INCOME TAX EXPENSE (BENEFIT) (20,798) (3,220) (8,105) 2,798 ------- ------ ------ ----- EARNINGS (LOSS) FROM CONTINUING OPERATIONS (34,070) (7,943) (21,098) 5,431 EARNINGS (LOSS) FROM DISCONTINUED OPERATION, NET OF TAX 432 (380) (1,796) (3,156) --- ---- ------ ------ NET EARNINGS (LOSS) $(33,638) $(8,323) $(22,894) $2,275 ======== ======= ======== ====== NET EARNINGS (LOSS) PER COMMON SHARE: BASIC EARNINGS (LOSS) FROM CONTINUING OPERATIONS $(1.84) $(0.43) $(1.14) $0.29 DISCONTINUED OPERATION 0.03 (0.02) (0.10) (0.17) NET EARNINGS (LOSS) PER COMMON SHARE - BASIC $(1.81) $(0.45) $(1.24) $0.12 ====== ====== ====== ===== DILUTED EARNINGS (LOSS) FROM CONTINUING OPERATIONS $(1.84) $(0.43) $(1.14) $0.29 DISCONTINUED OPERATION 0.03 (0.02) (0.10) (0.17) NET EARNINGS (LOSS) PER COMMON SHARE - DILUTED $(1.81) $(0.45) $(1.24) $0.12 ====== ====== ====== ===== WEIGHTED AVERAGE NUMBER OF COMMON SHARES 18,560,068 18,296,957 18,500,229 18,530,548 WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES 18,560,068 18,344,564 18,531,148 18,586,532 STANDARD MOTOR PRODUCTS, INC. Reconciliation of GAAP and Non-GAAP Measures (Dollars in thousands, except per share amounts) THREE MONTHS TWELVE MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, EARNINGS (LOSS) FROM CONTINUING OPERATIONS 2008 2007 2008 2007 ------------------------------- ---- ---- ---- ---- (Unaudited) (Unaudited) GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES $(54,868) $(11,163) $(29,203) $8,229 INCOME TAX EXPENSE (BENEFIT) * (20,798) (3,220) (8,105) 2,798 ------- ------ ------ ----- EARNINGS (LOSS) FROM CONTINUING OPERATIONS (34,070) (7,943) (21,098) 5,431 RESTRUCTURING EXPENSES (NET OF TAX) 6,503 4,328 10,237 6,734 GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (NET OF TAX) 23,632 - 23,632 - LOSS FROM EXTINGUISHMENT OF MORTGAGE (NET OF TAX) - - 882 - GAIN FROM SALE OF BUILDING (NET OF TAX) (160) - (13,340) (740) GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) (1,366) - (2,308) - ------ ------- ------- ------- NON-GAAP EARNINGS (LOSS) FROM CONTINUING OPERATIONS $(5,461) $(3,615) $(1,995) $11,425 ======= ======= ======= ======= DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS --------------------------- EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS $(1.84) $(0.43) $(1.14) $0.29 RESTRUCTURING EXPENSES (NET OF TAX) 0.35 0.23 0.55 0.36 GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (NET OF TAX) 1.28 - 1.28 LOSS FROM EXTINGUISHMENT OF MORTGAGE (NET OF TAX) - - 0.05 - GAIN FROM SALE OF BUILDING (NET OF TAX) (0.01) - (0.73) (0.04) GAIN FROM DEBENTURE REPURCHASE (NET OF TAX) (0.07) - (0.12) - ----- ----- ----- ----- NON-GAAP DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS $(0.29) $(0.20) $(0.11) $0.61 ====== ====== ====== ===== 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. Condensed Consolidated Balance Sheets (Dollars in thousands) December 31, December 31, 2008 2007 ---- ---- ASSETS ------ CASH $6,608 $13,261 ACCOUNTS RECEIVABLE, GROSS 184,422 213,409 ALLOWANCE FOR DOUBTFUL ACCOUNTS 10,021 8,964 ------ ----- ACCOUNTS RECEIVABLE, NET 174,401 204,445 INVENTORIES 232,435 252,277 ASSETS HELD FOR SALE 1,654 5,373 OTHER CURRENT ASSETS 32,497 27,751 ------- ------- TOTAL CURRENT ASSETS 447,595 503,107 ------- ------- PROPERTY, PLANT AND EQUIPMENT, NET 66,901 71,775 GOODWILL AND OTHER INTANGIBLES 16,285 57,891 OTHER ASSETS 44,246 45,319 -------- -------- TOTAL ASSETS $575,027 $678,092 -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ NOTES PAYABLE $148,931 $156,756 CURRENT PORTION OF LONG TERM DEBT 44,953 8,021 ACCOUNTS PAYABLE TRADE 68,312 64,384 ACCRUED CUSTOMER RETURNS 19,664 23,149 OTHER CURRENT LIABILITIES 61,136 67,723 ------- ------- TOTAL CURRENT LIABILITIES 342,996 320,033 ------- ------- LONG-TERM DEBT 273 90,534 ACCRUED ASBESTOS LIABILITY 23,758 22,651 OTHER LIABILITIES 44,455 56,510 ------- ------- TOTAL LIABILITIES 411,482 489,728 ------- ------- TOTAL STOCKHOLDERS' EQUITY 163,545 188,364 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $575,027 $678,092 ======== ======== STANDARD MOTOR PRODUCTS, INC. Segment Revenues and Operating Profit (Dollars in thousands) THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2008 2007 2008 2007 ---- ---- ---- ---- Revenues -------- Engine Management $110,811 $121,202 $528,157 $527,241 Temperature Control 29,412 33,341 194,171 207,604 Europe 8,862 9,360 44,205 42,210 All Other (209) 3,348 8,708 13,130 ---- ----- ----- ------ $148,876 $167,251 $775,241 $790,185 ======== ======== ======== ======== Gross Margin ------- Engine Management $24,106 21.8% $26,315 21.7% $122,876 23.3% $134,723 25.6% Temperature Control 6,908 23.5% 8,422 25.3% 37,406 19.3% 45,203 21.8% Europe 1,853 20.9% 1,546 16.5% 10,796 24.4% 10,030 23.8% All Other 2,664 2,786 13,078 12,319 ----- ----- ------ ------ $35,531 23.9% $39,069 23.4% $184,156 23.8% $202,275 25.6% ======= ======= ======== ======== Selling, General & Administrative --------------- Engine Management $23,776 21.5% $24,164 19.9% $97,056 18.4% $97,194 18.4% Temperature Control 7,227 24.6% 6,572 19.7% 33,693 17.4% 33,875 16.3% Europe 1,955 22.1% 2,325 24.8% 9,980 22.6% 8,627 20.4% All Other 5,738 6,770 25,470 28,232 ----- ----- ------ ------ 38,696 26.0% 39,831 23.8% 166,199 21.4% 167,928 21.3% Asset Impairments 39,387 - 39,387 - Restructuring & Integration 10,741 7.2% 7,066 4.2% 16,858 2.2% 10,933 1.4% ------ ----- ------ ------ $88,824 59.7% $46,897 28.0% $222,444 28.7% $178,861 22.6% ======= ======= ======== ======== Operating Profit --------- Engine Management $329 0.3% $2,151 1.8% $25,820 4.9% $37,529 7.1% Temperature Control (319) -1.1% 1,850 5.5% 3,713 1.9% 11,328 5.5% Europe (102) -1.2% (779) -8.3% 816 1.8% 1,403 3.3% All Other (3,073) (3,984) (12,392) (15,913) ------ ------ ------- ------- (3,165) -2.1% (762) -0.5% 17,957 2.3% 34,347 4.3% Asset Impairments 39,387 - 39,387 - Restructuring & Integration 10,741 7.2% 7,066 4.2% 16,858 2.2% 10,933 1.4% ------ ----- ------ ------ $(53,293) -35.8% $(7,828) -4.7% $(38,288) -4.9% $23,414 3.0% ======== ======= ======== =======

SOURCE Standard Motor Products, Inc.

Source: PR Newswire

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