STANDARD MOTOR PRODUCTS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 29, 2020

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Exhibit 99.1


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

Standard Motor Products, Inc. Discusses

COVID-19 Business Impact and Announces

First Quarter 2020 Results

New York, NY, April 29, 2020......Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months ended March 31, 2020, and provided an update regarding the company’s response to the current COVID-19 pandemic and its impact on its business.

Consolidated net sales for the first quarter of 2020 were $254.3 million, compared to consolidated net sales of $283.8 million during the comparable quarter in 2019. Earnings from continuing operations for the first quarter of 2020 were $9.6 million or 42 cents per diluted share, compared to $13.1 million or 57 cents per diluted share in the first quarter of 2019. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the first quarter of 2020 were $9.8 million or 43 cents per diluted share, compared to $13.1 million or 57 cents per diluted share in the first quarter of 2019.

37-18 Northern Blvd., Long Island City, NY  11101
(718) 392-0200
www.smpcorp.com

Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “Prior to a discussion of our first quarter results, it is important to address the current COVID-19 pandemic crisis’ impact on the auto care industry in general, and on SMP in particular.  When the U.S. began issuing guidelines in mid-March to slow the spread of the disease through ‘stay-at-home’ orders, certain industries were identified as essential and could continue to operate. The auto care industry was included, as transportation is critical to the functioning of our nation, as we keep government, fleet, first responders and personal vehicles on our roads operating safely and efficiently.

“Our first obligation is to the health and safety of our employees. We implemented a number of operational changes to improve social distancing within our facilities and to substantially increase all cleaning and hygiene protocols, including the use of protective masks and daily temperature taking for all employees and guests entering our facilities. Thus far, our efforts have been successful, as only a few of our employees globally have tested positive for the virus, and thankfully are all on the road to recovery. We cannot thank our employees enough for the fortitude and loyalty they have shown during these times.

“Turning to our first quarter results, sales lagged behind the first quarter of 2019, with declines in both divisions. The 2019 purchasing patterns of our customers were very front-loaded in the year as compared to their POS. Our first quarter of 2019 was very strong – up 9% from 2018 in Engine Management (excluding wire and cable) and 14% in Temperature Control, making for difficult comps.  This year Engine Management had lower pipeline orders than in 2019, and sales returned to levels more closely aligned to our customers’ POS sales. This was anticipated and announced on previous calls. In the second half of March we began to see the effects of the COVID-19 pandemic and sales began to fall further. In Temperature Control, the early part of the year is dominated by pre-season orders, which, for a variety of reasons, were below 2019.  The success of the year is determined by how hot it gets during the summer.  We were pleased that both divisions were able to maintain historic gross margins despite the decline in sales.

“As we head into the second quarter, miles driven are down dramatically as businesses are closed and people are required to shelter at home.  Our customers’ sales are down accordingly.  Their purchases from us are down even further, as they look to reduce inventory in line with their lower sales levels.  April was a difficult month for us, with our incoming orders down 30-40%.

“While no one can predict the duration of the economic downturn resulting from the COVID-19 pandemic, we believe it will be a temporary situation. We enter it with a strong balance sheet and ample liquidity, and our goal is to exit it just as strong.  To do so we are taking steps to reduce expenses and conserve cash, making sure that none of our actions will affect the long term health of the Company. We have drawn down an additional $75 million from our bank credit line, temporarily ceased our stock buyback program, and temporarily suspended our quarterly dividend. Our top executive officers and Board of Directors have agreed to a 25% reduction in compensation for the balance of the year. All other senior executives will be taking a reduction in compensation as well.  We will be taking a hard look at discretionary expenses.  While we anticipate substantial savings from these actions, they are all short term in nature, in line with our belief that this is a temporary situation. None of these will affect the long term strength of our Company.

“The automotive aftermarket is highly resilient. We are fortunate that the goods and services we provide are essential. Our addressable market – the hundreds of millions of vehicles on our roads – remains unchanged. The majority of SMP’s products are non-discretionary – deferred repairs will need to be performed. Transportation is the lifeblood of our country – people need their vehicles to get to work, shop, take their kids to school, and carry on with their lives.

“As for our company, with our strong position in the market, the brand loyalty of our customers, and our healthy balance sheet, and thanks to our wonderful group of employees, we are confident we will emerge from this crisis and begin the second century of our history, stronger than ever.”

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, April 29, 2020.  The dial-in number is 866-342-8588 (domestic) or 203-518-9865 (international). The playback number is 800-839-7408 (domestic) or 402-220-6066 (international). The participant passcode is 76717.

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
MARCH 31,
  
   
2020
    
2019
  
   
(Unaudited)
  
NET SALES
  
$
254,302
    
$
283,766
  
                 
COST OF SALES
    
183,907
      
205,803
  
                 
GROSS PROFIT
    
70,395
      
77,963
  
                 
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
    
55,873
      
60,000
  
RESTRUCTURING AND INTEGRATION EXPENSES
    
205
      
-
  
OTHER INCOME (EXPENSE), NET
    
6
      
(6
)
                 
OPERATING INCOME
    
14,323
      
17,957
  
                 
OTHER NON-OPERATING INCOME (EXPENSE), NET
    
(524
)
    
646
  
                 
INTEREST EXPENSE
    
873
      
1,089
  
                 
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES
    
12,926
      
17,514
  
                 
PROVISION FOR INCOME TAXES
    
3,305
      
4,410
  
                 
EARNINGS FROM CONTINUING OPERATIONS
    
9,621
      
13,104
  
                 
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES
    
(994
)
    
(888
)
                 
NET EARNINGS
  
$
8,627
    
$
12,216
  
                 
NET EARNINGS PER COMMON SHARE:
                
                 
BASIC EARNINGS FROM CONTINUING OPERATIONS
  
$
0.43
    
$
0.58
  
DISCONTINUED OPERATION
    
(0.05
)
    
(0.04
)
NET EARNINGS PER COMMON SHARE - BASIC
  
$
0.38
    
$
0.54
  
                 
DILUTED EARNINGS FROM CONTINUING OPERATIONS
  
$
0.42
    
$
0.57
  
DISCONTINUED OPERATION
    
(0.04
)
    
(0.04
)
NET EARNINGS PER COMMON SHARE - DILUTED
  
$
0.38
    
$
0.53
  
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
    
22,438,087
      
22,421,795
  
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES
    
22,868,975
      
22,905,364
  

STANDARD MOTOR PRODUCTS, INC.
Segment Revenues and Operating Income

(In thousands)

   
THREE MONTHS ENDED
MARCH 31,
        
     
   
2020
          
2019
        
   
(Unaudited)
        
Revenues
                        
Ignition, Emission Control, Fuel & Safety Related System Products
  
$
164,526
          
$
176,061
        
Wire and Cable
    
36,592
            
37,128
        
Engine Management
    
201,118
            
213,189
        
                             
Compressors
    
25,348
            
39,811
        
Other Climate Control Parts
    
26,094
            
29,113
        
Temperature Control
    
51,442
            
68,924
        
                             
All Other
    
1,742
            
1,653
        
Revenues
  
$
254,302
          
$
283,766
        
                             
Gross Margin
                            
Engine Management
  
$
56,705
    
28.2
%
  
$
59,693
    
28.0
%
Temperature Control
    
12,096
    
23.5
%
    
16,191
    
23.5
%
All Other
    
1,594
            
2,079
        
Gross Margin
  
$
70,395
    
27.7
%
  
$
77,963
    
27.5
%
                             
Selling, General & Administrative
                            
Engine Management
  
$
35,073
    
17.4
%
  
$
37,343
    
17.5
%
Temperature Control
    
12,444
    
24.2
%
    
14,141
    
20.5
%
All Other
    
8,356
            
8,516
        
Selling, General & Administrative
  
$
55,873
    
22.0
%
  
$
60,000
    
21.1
%
                             
                             
Operating Income
                            
Engine Management
  
$
21,632
    
10.8
%
  
$
22,350
    
10.5
%
Temperature Control
    
(348
)
  
-0.7
%
    
2,050
    
3.0
%
All Other
    
(6,762
)
          
(6,437
)
      
Subtotal
    
14,522
    
5.7
%
    
17,963
    
6.3
%
Restructuring & Integration
    
(205
)
  
-0.1
%
    
-
    
0.0
%
Other Income (Expense), Net
    
6
    
0.0
%
    
(6
)
  
0.0
%
Operating Income
  
$
14,323
    
5.6
%
  
$
17,957
    
6.3
%

STANDARD MOTOR PRODUCTS, INC.
Reconciliation of GAAP and Non-GAAP Measures

(In thousands, except per share amounts)

   
THREE MONTHS ENDED
MARCH 31,
  
   
2020
    
2019
  
   
(Unaudited)
  
EARNINGS FROM CONTINUING OPERATIONS
            
             
GAAP EARNINGS FROM CONTINUING OPERATIONS
  
$
9,621
    
$
13,104
  
                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
205
      
-
  
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
    
(53
)
    
-
  
                 
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS
  
$
9,773
    
$
13,104
  
                 
                 
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
                
                 
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
  
$
0.42
    
$
0.57
  
                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
0.01
      
-
  
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS
    
-
      
-
  
                 
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
  
$
0.43
    
$
0.57
  
                 
                 
OPERATING INCOME
                
                 
GAAP OPERATING INCOME
  
$
14,323
    
$
17,957
  
                 
RESTRUCTURING AND INTEGRATION EXPENSES
    
205
      
-
  
OTHER (INCOME) EXPENSE, NET
    
(6
)
    
6
  
                 
NON-GAAP OPERATING INCOME
  
$
14,522
    
$
17,963
  

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)

   
March 31,
2020
    
December 31,
2019
  
   
(Unaudited)
        
             
ASSETS
  
             
CASH
  
$
13,268
    
$
10,372
  
                 
ACCOUNTS RECEIVABLE, GROSS
    
171,332
      
140,728
  
ALLOWANCE FOR DOUBTFUL ACCOUNTS
    
5,647
      
5,212
  
ACCOUNTS RECEIVABLE, NET
    
165,685
      
135,516
  
                 
INVENTORIES
    
370,935
      
368,221
  
UNRETURNED CUSTOMER INVENTORY
    
19,379
      
19,722
  
OTHER CURRENT ASSETS
    
15,422
      
15,602
  
                 
TOTAL CURRENT ASSETS
    
584,689
      
549,433
  
                 
PROPERTY, PLANT AND EQUIPMENT, NET
    
88,573
      
89,649
  
OPERATING LEASE RIGHT-OF-USE ASSETS
    
34,292
      
36,020
  
GOODWILL
    
77,588
      
77,802
  
OTHER INTANGIBLES, NET
    
62,482
      
64,861
  
DEFERRED INCOME TAXES
    
36,631
      
37,272
  
INVESTMENT IN UNCONSOLIDATED AFFILIATES
    
38,572
      
38,858
  
OTHER ASSETS
    
17,884
      
18,835
  
                 
TOTAL ASSETS
  
$
940,711
    
$
912,730
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
  
                 
NOTES PAYABLE
  
$
105,000
    
$
52,460
  
CURRENT PORTION OF OTHER DEBT
    
4,595
      
4,456
  
ACCOUNTS PAYABLE
    
81,266
      
92,535
  
ACCRUED CUSTOMER RETURNS
    
52,389
      
44,116
  
ACCRUED CORE LIABILITY
    
21,424
      
24,357
  
OTHER CURRENT LIABILITIES
    
83,533
      
91,540
  
                 
TOTAL CURRENT LIABILITIES
    
348,207
      
309,464
  
                 
OTHER LONG-TERM DEBT
    
111
      
129
  
NONCURRENT OPERATING LEASE LIABILITIES
    
26,841
      
28,376
  
ACCRUED ASBESTOS LIABILITIES
    
48,952
      
49,696
  
OTHER LIABILITIES
    
19,987
      
20,837
  
                 
TOTAL LIABILITIES
    
444,098
      
408,502
  
                 
TOTAL STOCKHOLDERS' EQUITY
    
496,613
      
504,228
  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
940,711
    
$
912,730
  

STANDARD MOTOR PRODUCTS, INC.
Condensed Consolidated Statements of Cash Flows

(In thousands)

   
THREE MONTHS ENDED
MARCH 31,
  
   
2020
    
2019
  
   
(Unaudited)
  
             
CASH FLOWS FROM OPERATING ACTIVITIES
            
             
NET EARNINGS
  
$
8,627
    
$
12,216
  
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
                
USED IN OPERATING ACTIVITIES:
                
DEPRECIATION AND AMORTIZATION
    
6,539
      
6,178
  
OTHER
    
6,034
      
5,303
  
CHANGE IN ASSETS AND LIABILITIES:
                
ACCOUNTS RECEIVABLE
    
(32,681
)
    
(22,252
)
INVENTORY
    
(5,339
)
    
(14,656
)
ACCOUNTS PAYABLE
    
(11,883
)
    
1,181
  
PREPAID EXPENSES AND OTHER CURRENT ASSETS
    
1,303
      
(282
)
SUNDRY PAYABLES AND ACCRUED EXPENSES
    
(2,684
)
    
(12,911
)
OTHER
    
(2,705
)
    
(1,503
)
NET CASH USED IN OPERATING ACTIVITIES
    
(32,789
)
    
(26,726
)
                 
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
                 
NET PROCEEDS FROM SALE OF FACILITY
    
-
      
4,801
  
CAPITAL EXPENDITURES
    
(4,422
)
    
(3,084
)
OTHER INVESTING ACTIVITIES
    
6
      
29
  
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
(4,416
)
    
1,746
  
                 
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
                 
NET CHANGE IN DEBT
    
53,068
      
34,758
  
PURCHASE OF TREASURY STOCK
    
(8,726
)
    
(5,835
)
DIVIDENDS PAID
    
(5,615
)
    
(5,159
)
OTHER FINANCING ACTIVITIES
    
1,248
      
1,409
  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    
39,975
      
25,173
  
                 
                 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
126
      
415
  
NET INCREASE IN CASH AND CASH EQUIVALENTS
    
2,896
      
608
  
CASH AND CASH EQUIVALENTS at beginning of period
    
10,372
      
11,138
  
CASH AND CASH EQUIVALENTS at end of period
  
$
13,268
    
$
11,746
  


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