NEW YORK — 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 ending June 30, 2015.
Consolidated net sales for the second quarter of 2015 were $269.4 million, compared to consolidated net sales of $272.5 million during the comparable quarter in 2014. Earnings from continuing operations for the second quarter of 2015 were $13.8 million or 59 cents per diluted share, compared to $11.2 million or 48 cents per diluted share in the second quarter of 2014. The second quarter of 2014 included a one-time, non-recurring litigation charge. Excluding the litigation charge and other non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the second quarter of 2015 were $13.6 million or 59 cents per diluted share, compared to $17.7 million or 76 cents per diluted share in the second quarter of 2014.
Consolidated net sales for the six month period ended June 30, 2015 were $497 million, compared to consolidated net sales of $505.3 million during the comparable period in 2014. Earnings from continuing operations for the six month period ended June 30, 2015 were $23.1 million or $1.00 per diluted share, compared to $23.6 million or $1.02 per diluted share in the comparable period of 2014. The six month period ended June 30, 2014 included a one-time, non-recurring litigation charge. Excluding the litigation charge and other non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the six months ended June 30, 2015 and 2014 were $22.9 million or 98 cents per diluted share and $30.1 million or $1.30 per diluted share, respectively.
Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products’ Chairman and Chief Executive Officer, stated, “We are obviously disappointed in our results for the first six months of the year, as we are behind 2014 in both sales and profit. However, we believe that the worst is behind us and we anticipate a stronger final six months.
“Turning first to sales, net sales in Engine Management were $9.4 million below 2014 through June. During this same period, our customers were reporting, on average, a slight increase in their sales of Engine Management. The difference is typically caused by a variety of factors—inventory consolidation as a result of acquisitions, different timing of pipeline orders, and other short term events. In time these have balanced out, and we anticipate a return to low single digit increases in Engine Management.
“In Temperature Control, we are finally having a warm summer after two cool summers in a row. Sales began to pick up in the latter part of June, and sales in July have been strong. We anticipate a sales increase in Temperature Control sales for the year.
“Three events had a significant impact on our profit shortfall for the first six months. All are short term in nature. Two are essentially behind us, and the third, a non-cash charge, will be over by the end of the year.
“The three are as follows: First is the incremental unfavorable manufacturing variances in our Temperature Control group related to reduced production in 2014 to bring inventory down after two cool seasons in a row. These carry forward variances have been fully recognized in our first half results. We are now achieving favorable variances, as we ramp up production to keep up with the increase in sales.
“Second are the one-time costs incurred as we revamped our rebuilt diesel fuel injection line, acquired from Pensacola Fuel Injection last year. This exercise is now mostly complete, and we are very optimistic about the future of this business.
“Third is the unfavorable non-cash change in prior service costs resulting from winding down of our retiree medical program. The program will end in December 2016.
“The total of all three in the first six months of the year was roughly $8.5 million which accounted for the bulk of the shortfall in profit.
“Our cash flow generated from operations was roughly $40 million in the second quarter and $26 million year to date. Cash generated in the quarter was used to reduce debt roughly $19 million and initiate $7 million in share repurchases. In a separate release today we announced that our Board of Directors approved an additional $10 million increase in our share repurchase program from $10 million to $20 million.
“In summary, we are optimistic about the second half of 2015. Our market position remains strong; our recent acquisitions continue to show improvement; industry demographics are positive; some major one-time costs are behind us; and sales are improving. We look forward to the balance of the year.”
The Board of Directors has approved payment of a quarterly dividend of fifteen cents per share on the common stock outstanding. The dividend will be paid on September 1, 2015 to stockholders of record on August 14, 2015.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, July 30, 2015. The dial in number is 888-632-3384 (domestic) or 785-424-1675 (international). The playback number is 800-839-3612 (domestic) or 402-220-2972 (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.