Standard Motor Products (SMP) 8-K Standard Motor Products, Inc. Announces Third Quarter 2019 Results and a Quarterly Dividend

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

Third Quarter 2019 Results and a Quarterly Dividend

New York, NY, October 30, 2019......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 ending September 30, 2019.

Consolidated net sales for the third quarter of 2019 were $307.7 million, compared to consolidated net sales of $296.6 million during the comparable quarter in 2018. Earnings from continuing operations for the third quarter of 2019 were $22.7 million or $1.00 per diluted share, compared to $19.3 million or 84 cents per diluted share in the third quarter of 2018. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the third quarter of 2019 were $23.1 million or $1.02 per diluted share, compared to $19.1 million or 83 cents per diluted share in the third quarter of 2018.

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

(718) 392-0200

www.smpcorp.com

Consolidated net sales for the nine month period ended September 30, 2019, were $896.7 million, compared to consolidated net sales of $845.1 million during the comparable period in 2018.  Earnings from continuing operations for the nine month period ended September 30, 2019, were $56.3 million or $2.47 per diluted share, compared to $44.7 million or $1.95 per diluted share in the comparable period of 2018.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the nine months ended September 30, 2019 and 2018 were $57.3 million or $2.51 per diluted share and $46.7 million or $2.03 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “We are quite pleased with our third quarter and with our year overall. We posted record sales and earnings, with both of our operating divisions continuing to perform well.

“Engine Management sales rose approximately 9.3% for the quarter and 7.8% year-to-date. Excluding Wire and Cable which is in secular decline, Engine Management sales in the quarter were up almost 14%, or roughly $22 million. Revenue from the Pollak acquisition, previously announced, accounted for nearly $10 million of this gain. Our Engine Management segment, excluding Pollak and Wire and Cable, increased 7.8% for the quarter. The growth was primarily attributable to a combination of several customer pipelines, a benefit from pricing actions and pass-through of tariff costs, as well as low single digit organic growth.

“Our sales in Engine Management have exceeded our customers’ low single digit POS growth all year, and this tends to even out over time. Excluding Pollak, we anticipate that Engine Management sales will likely be flat or down for the fourth quarter of 2019 as these sales move closer to our customers’ POS numbers. However, we remain optimistic for the year as a whole.

“Engine Management gross margins in the quarter improved nearly two points from last year to 30.7%, with sequential quarterly improvements throughout 2019.  This margin improvement was the result of several factors – the completion of the integration of our wire operations in Mexico, a continued emphasis on cost reductions, as well as certain pricing actions, and was partially offset by the adverse impact of tariffs being passed through to customers at our cost.

 “Temperature Control sales were 8.1% lower than the third quarter of 2018. However, a portion of the 2018 volume included working down a large order backlog, generated by some of the hottest spring months in history, plus some start-up inefficiencies as we introduced our new automated warehouse system in Lewisville, TX. Year-to-date our Temperature Control sales are 2% above 2018.

 “Temperature Control gross margins decreased by 1.6 points in the quarter, reflecting the dampening effect of tariffs being passed through to customers at our cost. The improvement in SG&A expenses reflects savings in distribution costs as we continue to refine and improve our new automated warehouse system.

“On August 1^st we acquired a minority position in Jiangsu Che Yijia New Energy Technology Co. (CYJ), a Chinese manufacturer of electric compressors for electric vehicles. Founded in 2016, the company is still in its early stages, but we are pleased to have a strategic partner focused on parts for electric vehicles in the fast-growing Chinese market.

“Finally, as previously announced, we are pleased to welcome Nathan Iles as our new Chief Financial Officer. We believe he is an excellent fit for SMP, and we look forward to his contributions.”

Loss from discontinued operations, net of income taxes, in the third quarter of 2019 was $7.9 million compared to $3.5 million in the comparable period last year. The loss pertains to asbestos-related liabilities from a brake business, originally acquired in 1986 and subsequently divested in 1998, which are adjusted in the third quarter each year when the Company engages an independent actuary to assess the Company’s exposure.In the third quarter of 2019, the Company increased its asbestos-related indemnity liability to $52 million by recording a non-cash $9.7 million provision, or $7.1 million net of taxes.

The Board of Directors has approved payment of a quarterly dividend of 23 cents per share on the common stock outstanding. The dividend will be paid on December 2, 2019, to stockholders of record on November 15, 2019.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, October 30, 2019.  The dial-in number is 877-876-9173 (domestic) or 785-424-1667 (international). The playback number is 800-839-5109 (domestic) or 402-220-2688 (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 SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2019			2018			2019			2018
	(Unaudited)						(Unaudited)
NET SALES	$	307,723		$	296,619		$	896,661		$	845,081
COST OF SALES		215,635			209,313			637,705			603,897
GROSS PROFIT		92,088			87,306			258,956			241,184
SELLING, GENERAL & ADMINISTRATIVE EXPENSES		59,947			60,137			180,483			175,604
RESTRUCTURING AND INTEGRATION EXPENSES		825			6			1,469			3,073
OTHER INCOME (EXPENSE), NET		(12	)		15			(15	)		328
OPERATING INCOME		31,304			27,178			76,989			62,835
OTHER NON-OPERATING INCOME, NET		225			351			2,282			800
INTEREST EXPENSE		1,508			1,254			4,319			3,137
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES		30,021			26,275			74,952			60,498
PROVISION FOR INCOME TAXES		7,367			7,002			18,639			15,801
EARNINGS FROM CONTINUING OPERATIONS		22,654			19,273			56,313			44,697
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES		(7,903	)		(3,524	)		(9,914	)		(5,014	)
NET EARNINGS	$	14,751		$	15,749		$	46,399		$	39,683
NET EARNINGS PER COMMON SHARE:
BASIC EARNINGS FROM CONTINUING OPERATIONS	$	1.01		$	0.86		$	2.52		$	1.99
DISCONTINUED OPERATION		(0.35	)		(0.16	)		(0.44	)		(0.22	)
NET EARNINGS PER COMMON SHARE - BASIC	$	0.66		$	0.70		$	2.08		$	1.77
DILUTED EARNINGS FROM CONTINUING OPERATIONS	$	1.00		$	0.84		$	2.47		$	1.95
DISCONTINUED OPERATION		(0.35	)		(0.15	)		(0.44	)		(0.22	)
NET EARNINGS PER COMMON SHARE - DILUTED	$	0.65		$	0.69		$	2.03		$	1.73
WEIGHTED AVERAGE NUMBER OF COMMON SHARES		22,329,835			22,424,962			22,359,637			22,464,697
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES		22,754,440			22,938,925			22,814,228			22,954,649

STANDARD MOTOR PRODUCTS, INC.

Segment Revenues and Operating Income

(In thousands)

	THREE MONTHS ENDED SEPTEMBER 30,										NINE MONTHS ENDED SEPTEMBER 30,
	2019					2018					2019					2018
	(Unaudited)										(Unaudited)
Revenues
Ignition, Emission Control, Fuel & Safety Related System Products	$	180,826				$	159,101				$	538,718				$	482,640
Wire and Cable		35,147					38,469					108,486					117,847
Engine Management		215,973					197,570					647,204					600,487
Compressors		52,776					54,842					145,080					131,680
Other Climate Control Parts		35,525					41,237					96,551					105,000
Temperature Control		88,301					96,079					241,631					236,680
All Other		3,449					2,970					7,826					7,914
Revenues	$	307,723				$	296,619				$	896,661				$	845,081
Gross Margin
Engine Management	$	66,264		30.7	%	$	57,188		28.9	%	$	189,737		29.3	%	$	171,440		28.6	%
Temperature Control		22,973		26.0	%		26,523		27.6	%		61,715		25.5	%		60,990		25.8	%
All Other		2,851					3,595					7,504					8,754
Gross Margin	$	92,088		29.9	%	$	87,306		29.4	%	$	258,956		28.9	%	$	241,184		28.5	%
Selling, General & Administrative
Engine Management	$	35,950		16.6	%	$	35,553		18.0	%	$	110,723		17.1	%	$	106,415		17.7	%
Temperature Control		15,495		17.5	%		17,961		18.7	%		45,033		18.6	%		46,511		19.7	%
All Other		8,502					6,623					24,727					22,678
Selling, General & Administrative	$	59,947		19.5	%	$	60,137		20.3	%	$	180,483		20.1	%	$	175,604		20.8	%
Operating Income
Engine Management	$	30,314		14.0	%	$	21,635		11.0	%	$	79,014		12.2	%	$	65,025		10.8	%
Temperature Control		7,478		8.5	%		8,562		8.9	%		16,682		6.9	%		14,479		6.1	%
All Other		(5,651	)				(3,028	)				(17,223	)				(13,924	)
Subtotal		32,141		10.4	%		27,169		9.2	%		78,473		8.8	%		65,580		7.8	%
Restructuring & Integration		(825	)	-0.3	%		(6	)	0.0	%		(1,469	)	-0.2	%		(3,073	)	-0.4	%
Other Income (Expense), Net		(12	)	0.0	%		15		0.0	%		(15	)	0.0	%		328		0.0	%
Operating Income	$	31,304		10.2	%	$	27,178		9.2	%	$	76,989		8.6	%	$	62,835		7.4	%

STANDARD MOTOR PRODUCTS, INC.

Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2019			2018			2019			2018
	(Unaudited)						(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS
GAAP EARNINGS FROM CONTINUING OPERATIONS	$	22,654		$	19,273		$	56,313		$	44,697
RESTRUCTURING AND INTEGRATION EXPENSES		825			6			1,469			3,073
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD		(144	)		(144	)		(144	)		(144	)
GAIN FROM SALE OF BUILDINGS		-			-			-			(218	)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		(214	)		(1	)		(382	)		(742	)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS	$	23,121		$	19,134		$	57,256		$	46,666
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	1.00		$	0.84		$	2.47		$	1.95
RESTRUCTURING AND INTEGRATION EXPENSES		0.04			-			0.06			0.13
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD		(0.01	)		(0.01	)		(0.01	)		(0.01	)
GAIN FROM SALE OF BUILDINGS		-			-			-			(0.01	)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS		(0.01	)		-			(0.01	)		(0.03	)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	1.02		$	0.83		$	2.51		$	2.03
OPERATING INCOME
GAAP OPERATING INCOME	$	31,304		$	27,178		$	76,989		$	62,835
RESTRUCTURING AND INTEGRATION EXPENSES		825			6			1,469			3,073
OTHER (INCOME) EXPENSE, NET		12			(15	)		15			(328	)
NON-GAAP OPERATING INCOME	$	32,141		$	27,169		$	78,473		$	65,580

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)

	September 30, 2019		December 31, 2018
	(Unaudited)
ASSETS
CASH	$	13,259	$	11,138
ACCOUNTS RECEIVABLE, GROSS		174,969		163,222
ALLOWANCE FOR DOUBTFUL ACCOUNTS		6,001		5,687
ACCOUNTS RECEIVABLE, NET		168,968		157,535
INVENTORIES		340,231		349,811
UNRETURNED CUSTOMER INVENTORY		20,325		20,484
OTHER CURRENT ASSETS		14,273		7,256
TOTAL CURRENT ASSETS		557,056		546,224
PROPERTY, PLANT AND EQUIPMENT, NET		88,835		90,754
OPERATING LEASE RIGHT-OF-USE ASSETS		34,055		-
GOODWILL		77,664		67,321
OTHER INTANGIBLES, NET		66,857		48,411
DEFERRED INCOME TAXES		39,105		42,334
INVESTMENT IN UNCONSOLIDATED AFFILIATES		39,030		32,469
OTHER ASSETS		18,081		15,619
TOTAL ASSETS	$	920,683	$	843,132
LIABILITIES AND STOCKHOLDERS’ EQUITY
NOTES PAYABLE	$	78,211	$	43,689
CURRENT PORTION OF OTHER DEBT		5,225		5,377
ACCOUNTS PAYABLE		71,139		94,357
ACCRUED CUSTOMER RETURNS		53,984		57,433
ACCRUED CORE LIABILITY		26,045		31,263
OTHER CURRENT LIABILITIES		95,056		80,467
TOTAL CURRENT LIABILITIES		329,660		312,586
OTHER LONG-TERM DEBT		132		153
NONCURRENT OPERATING LEASE LIABILITIES		27,214		-
ACCRUED ASBESTOS LIABILITIES		49,894		45,117
OTHER LIABILITIES		19,731		18,075
TOTAL LIABILITIES		426,631		375,931
TOTAL STOCKHOLDERS’ EQUITY		494,052		467,201
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	920,683	$	843,132

STANDARD MOTOR PRODUCTS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

	NINE MONTHS ENDED SEPTEMBER 30,
	2019				2018
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS	$	46,399			$	39,683
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION		19,261				17,745
OTHER		21,623				12,220
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE		(16,583	)			(23,428	)
INVENTORIES		11,824				2,761
ACCOUNTS PAYABLE		(24,107	)			5,193
PREPAID EXPENSES AND OTHER CURRENT ASSETS		(6,502	)			1,202
SUNDRY PAYABLES AND ACCRUED EXPENSES		(2,551	)			12,828
OTHER		(6,260	)			(619	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		43,104				67,585
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES		(43,490	)			(9,852	)
NET PROCEEDS FROM SALE OF FACILITY		4,801				-
CAPITAL EXPENDITURES		(12,329	)			(15,633	)
OTHER INVESTING ACTIVITIES		47				37
NET CASH USED IN INVESTING ACTIVITIES		(50,971	)			(25,448	)
CASH FLOWS FROM FINANCING ACTIVITIES				��
NET CHANGE IN DEBT		34,656				(10,537	)
PURCHASE OF TREASURY STOCK		(10,738	)			(9,271	)
DIVIDENDS PAID		(15,429	)			(14,144	)
OTHER FINANCING ACTIVITIES		1,109				1,382
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		9,598				(32,570	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		390				431
NET INCREASE IN CASH AND CASH EQUIVALENTS		2,121				9,998
CASH AND CASH EQUIVALENTS at beginning of Period		11,138				17,323
CASH AND CASH EQUIVALENTS at end of Period	$	13,259			$	27,321