Standard Motor Products (SMP) 8-K Fourth Quarter and Year End 2015 Results

Exhibit 99.1

  

For Immediate Release
	For more information, contact:
	James J. Burke
	Standard Motor Products, Inc.
	(718) 392-0200

Standard Motor Products, Inc. Announces

Fourth Quarter and Year End 2015 Results

New York, NY, February 26, 2016......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, 2015.

Consolidated net sales for the fourth quarter of 2015 were $205 million, compared to consolidated net sales of $218.1 million during the comparable quarter in 2014. Earnings from continuing operations for the fourth quarter of 2015 were $5.8 million or 25 cents per diluted share, compared to $11.5 million or 50 cents per diluted share in the fourth quarter of 2014. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the fourth quarter of 2015 were $8.1 million or 35 cents, compared to $11.4 million or 49 cents per diluted share in the fourth quarter of 2014.

37-18 Northern Blvd., Long Island City, NY  11101

(718) 392-0200

www.smpcorp.com

Consolidated net sales for 2015 were $972 million, compared to consolidated net sales of $980.4 million in 2014.  Earnings from continuing operations for 2015 were $48.1 million or $2.08 per diluted share, compared to $52.9 million or $2.28 per diluted share in 2014.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the year ended December 31, 2015 and 2014 were $49.4 million or $2.13 per diluted share and $58.7 million or $2.52 per diluted share, respectively.

Mr. Lawrence I. Sills, Standard Motor Products’ Chairman and Chief Executive Officer, stated, “We are obviously disappointed in our results, both for the fourth quarter and for the year. However, we believe that much of the shortfall, both in sales and profits, are the result of specific events that are essentially behind us.

“Net sales for the fourth quarter were down $13.1 million or 6%. As we have previously reported, the fourth quarter of 2014 included two large customer pipeline orders that were not repeated in 2015.

“Net sales for the full year were down approximately one percent. Excluding the unfavorable effect of foreign exchange rates, our sales would have been essentially flat for the year.

“More importantly, in 2015 our customers reported sales increases in our product lines greater than this—approximately 3% in Engine Management and 10% in Temperature Control. By contrast, our net sales in Temperature Control were up only about 2%, as our customers reduced inventories left over from the prior two years’ weak selling seasons. Typically, these differences balance out over time.

“Looking to 2016, we forecast sales increases in the low single digits, in line with industry averages, though the sales increases for the Temperature Control line can vary either up or down as a result of the weather.

“Turning to operating profit, as previously announced, much of the decline for the year–approximately $10 million—resulted from three specific events. The three were: unfavorable manufacturing variances in Temperature Control that carried forward into 2015; the costs of upgrading and enhancing our line of rebuilt diesel fuel injectors, which we acquired in 2014; and an unfavorable non-cash change in prior service costs related to elimination of our postretirement medical program in 2016. In addition, our fourth quarter and full year results include a net $3.5 million charge to reduce our accounts receivable related to a customer bankruptcy filing in January 2016.

“We continue to take steps to reduce our cost structure. We announced on February 24 that we will be closing our facility in Grapevine, Texas and relocating the operations to existing facilities in Greenville, South Carolina and Reynosa, Mexico. At the same time, we will shift the balance of our coil operation from Greenville to our primary coil manufacturing location in Bialystok, Poland.

“We anticipate that the moves will take place over the next two years, and be completed by year end 2017. We estimate a one-time cost of $9 million related to employee severance, equipment moves, and capital expenditures. Once the moves are complete, we estimate annual pre-tax savings of $6-7 million. We also plan to sell the building in Grapevine, which has been currently appraised at approximately $5 million.

“These are the hardest decisions we ever have to make. We have been manufacturing in Grapevine for 35 years, and many of our employees have been with us for 30 years or more. They have been an excellent work force. Needless to say, we will take steps to assist them in every way possible, through severance payments, extended medical coverage, and working with them to find positions in other SMP locations. So, again, these are very difficult decisions to make, but we feel they are necessary, as we operate in an increasingly competitive global environment.

“Our cash flow remains strong. In 2015, we generated cash from operations of $65 million. In keeping with our strategy of returning cash to shareholders, we recently announced an increase in our quarterly dividend from 15 cents to 17 cents. In January 2016, we completed our $20 million share buyback program implemented in 2015, representing roughly 562,000 shares repurchased.

“In conclusion, while we are disappointed in our results for the year, we remain optimistic about the future. Our one-time issues are behind us. Industry demographics are healthy—the average age of vehicles continues to rise, gas prices continue to fall, and miles driven are up. Our customers report solid sales increases in our lines. And we continue to take steps to grow our sales, reduce costs, and improve profitability going forward. We look forward to 2016 and beyond.”

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Friday, February 26, 2016.  The dial-in number is 800-862-9098 (domestic) or 785-424-1051 (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

(In thousands, except per share amounts)

	THREE MONTHS ENDED DECEMBER 31,						TWELVE MONTHS ENDED DECEMBER 31,
	2015			2014			2015			2014
	(Unaudited)						(Unaudited)
NET SALES	$	204,967		$	218,054		$	971,975		$	980,392
COST OF SALES		142,181			150,960			690,987			690,762
GROSS PROFIT		62,786			67,094			280,988			289,630
SELLING, GENERAL & ADMINISTRATIVE EXPENSES		53,446			48,273			206,287			193,525
LITIGATION CHARGE		-			-			-			10,650
RESTRUCTURING AND INTEGRATION (INCOME) EXPENSES		(85	)		128			(134	)		1,197
OTHER INCOME , NET		251			279			1,025			1,080
OPERATING INCOME		9,676			18,972			75,860			85,338
OTHER NON-OPERATING INCOME (EXPENSE), NET		(384	)		(908	)		(220	)		(1,969	)
INTEREST EXPENSE		299			411			1,537			1,616
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		8,993			17,653			74,103			81,753
PROVISION FOR INCOME TAXES		3,214			6,136			25,983			28,854
EARNINGS FROM CONTINUING OPERATIONS		5,779			11,517			48,120			52,899
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(553	)		(419	)		(2,102	)		(9,870	)
NET EARNINGS	$	5,226		$	11,098		$	46,018		$	43,029
NET EARNINGS PER COMMON SHARE:
BASIC EARNINGS FROM CONTINUING OPERATIONS	$	0.26		$	0.50		$	2.11		$	2.31
DISCONTINUED OPERATION		(0.03	)		(0.02	)		(0.09	)		(0.43	)
NET EARNINGS PER COMMON SHARE - BASIC	$	0.23		$	0.48		$	2.02		$	1.88
DILUTED EARNINGS FROM CONTINUING OPERATIONS	$	0.25		$	0.50		$	2.08		$	2.28
DISCONTINUED OPERATION		(0.02	)		(0.02	)		(0.09	)		(0.43	)
NET EARNINGS PER COMMON SHARE - DILUTED	$	0.23		$	0.48		$	1.99		$	1.85
WEIGHTED AVERAGE NUMBER OF COMMON SHARES		22,651,279			22,892,645			22,811,862			22,899,516
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES		23,001,238			23,256,486			23,142,394			23,239,925

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

	THREE MONTHS ENDED DECEMBER 31,								TWELVE MONTHS ENDED DECEMBER 31,
	2015				2014				2015				2014
	(unaudited)								(unaudited)
Revenues
Engine Management	$	167,579			$	175,875			$	698,021			$	709,263
Temperature Control		36,046				39,742				264,478				259,065
All Other		1,342				2,437				9,476				12,064
	$	204,967			$	218,054			$	971,975			$	980,392
Gross Margin
Engine Management	$	52,794		31.5%	$	56,001		31.8%	$	212,021		30.4%	$	220,145		31.0%
Temperature Control		7,539		20.9%		7,403		18.6%		57,977		21.9%		55,838		21.6%
All Other		2,453				3,690				10,990				13,647
	$	62,786		30.6%	$	67,094		30.8%	$	280,988		28.9%	$	289,630		29.5%
Selling, General & Administrative
Engine Management	$	30,349		18.1%	$	29,474		16.8%	$	121,404		17.4%	$	115,330		16.3%
Temperature Control		11,159		31.0%		10,817		27.2%		50,780		19.2%		49,174		19.0%
All Other		8,424				7,982				30,589				29,021
	$	49,932		24.4%	$	48,273		22.1%	$	202,773		20.9%	$	193,525		19.7%
Customer Bankruptcy Charge		3,514		1.7%		-		0.0%		3,514		0.4%		-		0.0%
	$	53,446		26.1%	$	48,273		22.1%	$	206,287		21.2%	$	193,525		19.7%
Operating Income
Engine Management	$	22,445		13.4%	$	26,527		15.1%	$	90,617		13.0%	$	104,815		14.8%
Temperature Control		(3,620	)	-10.0%		(3,414	)	-8.6%		7,197		2.7%		6,664		2.6%
All Other		(5,971	)			(4,292	)			(19,599	)			(15,374	)
		12,854		6.3%		18,821		8.6%		78,215		8.0%		96,105		9.8%
Litigation Charge		-		0.0%		-		0.0%		-		0.0%		(10,650	)	-1.1%
Restructuring & Integration		85		0.0%		(128	)	-0.1%		134		0.0%		(1,197	)	-0.1%
Customer Bankruptcy Charge		(3,514	)	-1.7%		-		0.0%		(3,514	)	-0.4%		-		0.0%
Other Income, Net		251		0.1%		279		0.1%		1,025		0.1%		1,080		0.1%
	$	9,676		4.7%	$	18,972		8.7%	$	75,860		7.8%	$	85,338		8.7%

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

	THREE MONTHS ENDED DECEMBER 31,						TWELVE MONTHS ENDED DECEMBER 31,
	2015			2014			2015			2014
	(Unaudited)						(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS
GAAP EARNINGS FROM CONTINUING OPERATIONS	$	5,779		$	11,517		$	48,120		$	52,899
LITIGATION CHARGE (NET OF TAX)		-			-			-			6,390
RESTRUCTURING AND INTEGRATION (INCOME) EXPENSES (NET OF TAX)		(51	)		76			(81	)		718
REVERSAL OF LT TAX LIABILITY		-			-			-			(350	)
CUSTOMER BANKRUPTCY CHARGE (NET OF TAX)		2,108			-			2,108			-
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD		-			-			(571	)		(361	)
DEFERRED FINANCING FEE WRITE-OFF (NET OF TAX)		464			-			464			-
GAIN FROM SALE OF BUILDINGS (NET OF TAX)		(157	)		(157	)		(629	)		(629	)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS	$	8,143		$	11,436		$	49,411		$	58,667
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.25		$	0.50		$	2.08		$	2.28
LITIGATION CHARGE (NET OF TAX)		-			-			-			0.28
RESTRUCTURING AND INTEGRATION (INCOME) EXPENSES (NET OF TAX)		-			-			-			0.03
REVERSAL OF LT TAX LIABILITY		-			-			-			(0.02	)
CUSTOMER BANKRUPTCY CHARGE (NET OF TAX)		0.09			-			0.09			-
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD		-			-			(0.03	)		(0.02	)
DEFERRED FINANCING FEE WRITE-OFF (NET OF TAX)		0.02			-			0.02			-
GAIN FROM SALE OF BUILDINGS (NET OF TAX)		(0.01	)		(0.01	)		(0.03	)		(0.03	)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.35		$	0.49		$	2.13		$	2.52
OPERATING INCOME
GAAP OPERATING INCOME	$	9,676		$	18,972		$	75,860		$	85,338
LITIGATION CHARGE		-			-			-			10,650
RESTRUCTURING AND INTEGRATION EXPENSES		(85	)		128			(134	)		1,197
CUSTOMER BANKRUPTCY CHARGE		3,514			-			3,514			-
OTHER INCOME , NET		(251	)		(279	)		(1,025	)		(1,080	)
NON-GAAP OPERATING INCOME	$	12,854		$	18,821		$	78,215		$	96,105

MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS, DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS, AND OPERATING INCOME, EACH OF WHICH ARE NON-GAAP MEASUREMENTS AND ARE ADJUSTED FOR SPECIAL ITEMS, 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

(In thousands)

	December 31, 2015		December 31, 2014
	(Unaudited)
ASSETS
CASH	$	18,800	$	13,728
ACCOUNTS RECEIVABLE, GROSS		128,099		132,893
ALLOWANCE FOR DOUBTFUL ACCOUNTS		4,246		6,369
ACCOUNTS RECEIVABLE, NET		123,853		126,524
INVENTORIES		285,793		278,051
OTHER CURRENT ASSETS		51,294		47,730
TOTAL CURRENT ASSETS		479,740		466,033
PROPERTY, PLANT AND EQUIPMENT, NET		68,882		64,611
GOODWILL AND OTHER INTANGIBLES, NET		84,267		89,377
OTHER ASSETS		48,175		53,530
TOTAL ASSETS	$	681,064	$	673,551
LIABILITIES AND STOCKHOLDERS' EQUITY
NOTES PAYABLE	$	47,427	$	56,558
CURRENT PORTION OF LONG TERM DEBT		16		175
ACCOUNTS PAYABLE		72,711		70,674
ACCRUED CUSTOMER RETURNS		38,812		30,621
OTHER CURRENT LIABILITIES		84,950		92,801
TOTAL CURRENT LIABILITIES		243,916		250,829
LONG-TERM DEBT		62		83
ACCRUED ASBESTOS LIABILITIES		32,185		33,462
OTHER LIABILITIES		12,922		15,024
TOTAL LIABILITIES		289,085		299,398
TOTAL STOCKHOLDERS' EQUITY		391,979		374,153
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	681,064	$	673,551

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

	TWELVE MONTHS ENDED DECEMBER 31,
	2015			2014
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS	$	46,018		$	43,029
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION		17,637			17,295
OTHER		10,874			13,148
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE		(1,996	)		1,755
INVENTORY		(12,503	)		(6,712	)
ACCOUNTS PAYABLE		1,882			(4,329	)
OTHER		3,259			(17,199	)
NET CASH PROVIDED BY OPERATING ACTIVTIES		65,171			46,987
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES		-			(37,726	)
CAPITAL EXPENDITURES		(18,047	)		(13,904	)
OTHER INVESTING ACTIVITIES		36			430
NET CASH USED IN INVESTING ACTIVITIES		(18,011	)		(51,200	)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CHANGE IN DEBT		(9,301	)		35,334
PURCHASE OF TREASURY STOCK		(19,623	)		(10,000	)
DIVIDENDS PAID		(13,697	)		(11,905	)
OTHER FINANCING ACTIVITIES		1,466			1,887
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(41,155	)		15,316
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(933	)		(2,934	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		5,072			8,169
CASH AND CASH EQUIVALENTS at beginning of year		13,728			5,559
CASH AND CASH EQUIVALENTS at end of year	$	18,800		$	13,728