STANDARD (R)
Standard Motor Products, Inc.
FOR IMMEDIATE RELEASE
For more information, contact:
James J. Burke
Standard Motor Products, Inc.
(718) 392-0200
Jennifer Tio
Maximum Marketing Services, Inc.
(312) 226-4111 x2449
Jennifer.tio@maxmarketing.com
STANDARD MOTOR PRODUCTS, INC. ANNOUNCES
THIRD QUARTER 2006 RESULTS AND A QUARTERLY DIVIDEND
New York, NY, October 30, 2006......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, 2006.
Consolidated net sales for the third quarter of 2006 were $203.8 million,
compared to consolidated net sales of $224.4 million during the comparable
quarter in 2005. Earnings from continuing operations for the third quarter of
2006 were $2.6 million or 14 cents per diluted share, compared to earnings of
$4.2 million or 21 cents per diluted share in the third quarter of 2005. However
the third quarter of 2005 benefited from a $3.8 million reduction in retiree
medical expense, resulting in a $2.5 million pre-tax savings, or 8 cents per
diluted share, compared to third quarter 2006. Adjusting for that, on a
comparable basis, earnings per share for the third quarter of 2006 were slightly
ahead of 2005.
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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, 2006 were
$643 million, compared to consolidated net sales of $658.3 million during the
comparable period in 2005. Earnings from continuing operations for the nine
month period ended September 30, 2006 were $10.6 million or 58 cents per diluted
share, compared to earnings of $3.9 million or 20 cents per diluted share in the
comparable period of 2005.
Mr. Lawrence Sills, Standard Motor Products' Chairman and Chief Executive
Officer, commented, "After a strong first six months, we were disappointed in
our sales in the third quarter. In Engine Management, several of our large
accounts focused on inventory reduction, and so while their sales to their
customers were essentially flat, their net purchases from us were down. Year to
date, however, Engine Management sales are essentially equal to 2005. In
Temperature Control, sales were down from a very strong 2005, one of the hottest
summers in history, and were further inhibited, we believe, by the high energy
prices.
"On the other hand, we continue to make progress in gross margin. In Engine
Management, our third quarter gross margin was negatively impacted by higher
than average customer returns, but despite that we are running well ahead of
last year. We are ahead of plan in both purchase cost reduction and make vs.
buy, and we began implementing price increases at the tail end of the third
quarter. This should benefit the fourth quarter and into 2007.
"Gross margins in Temperature Control, despite the lower sales, are running
slightly ahead of 2005, thanks to improved costs.
"Significantly, we announced the closing of our Puerto Rican facility. Over the
next 24 months, the production lines will be shifted to facilities in
Independence, Kansas and Reynosa, Mexico. We have been manufacturing in Puerto
Rico for nearly 40 years, with an excellent and highly motivated work force, but
the demise of the 936 tax incentive made Puerto Rico an expensive place to do
business. We estimate one time costs of roughly $6 million and annual savings,
once the moves are fully implemented, of over $7 million.
"We have received our first new OES order, though small, and are in discussions
for additional product groups. We will advise when we receive firm orders.
"One final area of improvement is inventory reduction. Since January, we have
reduced Engine Management inventory by approximately $16 million. While this has
negatively impacted our gross margin, with less overhead absorption, it has
contributed to our overall cash flow improvement."
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, 2006 to stockholders of record on November 15, 2006.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern
Time, on Monday, October 30, 2006. The dial in number is 877-707-9628 (domestic)
or 785-832-2041 (international). The playback number is 800-753-5479 (domestic)
or 402-220-2675 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.
###
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006 2005
----------- ------------ ------------ ------------
NET SALES $ 203,755 $ 224,438 $ 643,005 $ 658,276
COST OF SALES 154,423 175,301 483,736 511,794
------------ ------------ ------------ ------------
GROSS PROFIT 49,332 49,137 159,269 146,482
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 40,039 39,134 126,822 124,915
INTEGRATION EXPENSES 598 218 828 4,620
------------ ------------ ------------ ------------
OPERATING INCOME 8,695 9,785 31,619 16,947
OTHER INCOME , NET 820 67 1,980 1,046
INTEREST EXPENSE 5,118 4,552 14,826 12,617
------------ ------------ ------------ ------------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE TAXES 4,397 5,300 18,773 5,376
INCOME TAX EXPENSE 1,814 1,137 8,137 1,441
------------ ------------ ------------ ------------
EARNINGS FROM CONTINUING
OPERATIONS 2,583 4,163 10,636 3,935
DISCONTINUED OPERATION,
NET OF TAX 1,656 (449) 603 (1,240)
------------ ------------ ------------ ------------
NET INCOME $ 4,239 $ 3,714 $ 11,239 $ 2,695
============ ============ ============ ============
NET EARNINGS PER COMMON SHARE:
BASIC EARNINGS FROM CONTINUING
OPERATIONS $ 0.14 $ 0.21 $ 0.58 $ 0.20
DISCONTINUED OPERATION 0.09 (0.02) 0.03 (0.06)
------------ ------------ ------------ ------------
NET INCOME PER COMMON SHARE -
BASIC $ 0.23 $ 0.19 $ 0.61 $ 0.14
============ ============ ============ ============
DILUTED EARNINGS FROM
CONTINUING OPERATIONS $ 0.14 $ 0.21 $ 0.58 $ 0.20
DISCONTINUED OPERATION 0.09 (0.02) 0.03 (0.06)
------------ ------------ ------------ ------------
NET INCOME PER COMMON SHARE -
DILUTED $ 0.23 $ 0.19 $ 0.61 $ 0.14
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 18,306,178 19,547,319 18,265,784 19,509,040
WEIGHTED AVERAGE NUMBER OF
COMMON AND DILUTIVE SHARES 18,371,435 19,577,972 18,297,979 19,546,261