Standard Motor Products, Inc. Announces

Fourth Quarter and 2019 Year-End Results

New York, NY, February 19, 2020......Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and twelve months ended December 31, 2019.

Consolidated net sales for the fourth quarter of 2019 were $241.3 million, compared to consolidated net sales of $247 million during the comparable quarter in 2018. Earnings from continuing operations for the fourth quarter of 2019 were $12.7 million or 56 cents per diluted share, compared to $12.2 million or 53 cents per diluted share in the fourth 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 fourth quarter of 2019 were $13.6 million or 59 cents per diluted share, compared to $11.8 million or 52 cents per diluted share in the fourth quarter of 2018.

Consolidated net sales for 2019 were $1,137.9 million, compared to consolidated net sales of $1,092.1 million during 2018.  Earnings from continuing operations for 2019 were $69.1 million or $3.03 per diluted share, compared to $56.9 million or $2.48 per diluted share in 2018.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the twelve months ended December 31, 2019 and 2018 were $70.8 million or $3.10 per diluted share and $58.5 million or $2.55 per diluted share, respectively.

Mr. Eric Sills, Standard Motor Products’ Chief Executive Officer and President stated, “We are quite pleased with our 2019 results, as we set records for both sales and earnings. We achieved this despite some softness in sales in the fourth quarter, which was anticipated and previously announced.

“Engine Management sales were up 5.7% for the year. Excluding sales of $28 million from the Pollak acquisition, acquired on April 1, 2019, and wire and cable, a product line in secular decline, Engine Management sales were up 4.6% for the year.

“In the fourth quarter, Engine Management sales, excluding Pollak and wire and cable, were down 3.9%. As we stated in our third quarter release, for much of the year and for a variety of reasons, Engine Management sales ran ahead of the reported customer POS volume. As we know, these balance out over time. The drop in the fourth quarter represented a migration to our customers’ POS results and towards our long-term forecast for Engine Management of low single digit growth.

“Engine Management gross margins improved one percentage point for the year to 29.6% and 1.8 percentage points for the quarter to 30.6%. This reflects the completion of the integration of our wire operations in Mexico and a continued emphasis on cost reduction activities.  We are quite pleased with the progress we have made, returning to our historic margin levels.

“Temperature Control sales were flat for the year, as we were up against a very warm 2018. However, in the fourth quarter sales were down 12%. Temperature Control sales can vary significantly quarter to quarter based on the timing and size of pre-season orders and how hot it gets during the short selling season. For this product line, it is far more meaningful to look at the year as whole.

“The improvement in Temperature Control SG&A expenses in 2019 of $3.2 million primarily reflects savings in distribution costs as we continue to refine and improve our new automated warehouse system in Lewisville, Texas.

“We completed one acquisition and one business investment during 2019. In April, we acquired Pollak, a long time and highly respected manufacturer of sensors, switches and connectors, primarily for the OE, heavy duty and commercial vehicle markets. We have just completed moving the operation from Canton, Massachusetts and Juarez, Mexico to existing facilities in Reynosa, Mexico and Independence, Kansas, which will improve our cost structure. We plan to grow this product line in the years ahead.

“In August, we acquired a minority interest in Cheyijia New Energy Technology Co., Ltd.  (CYJ), a manufacturer of air conditioning compressors for electric vehicles, located in Changzhou, China. While CYJ is less than four years old and is still in its early stages, we are pleased that we are now in a position to provide compressors for the rapidly growing electric vehicle market.

“Our combined investment for these two businesses of less than $44 million was funded by the $77 million cash generated from operations in 2019. At year-end, our debt position was $57 million.”

Finally, on January 31, 2020, the Board of Directors of Standard Motor Products approved an increase in its quarterly dividend from 23 cents per share to 25 cents per share, payable on March 2, 2020.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, February 19, 2020.  The dial-in number is 877-876-9176 (domestic) or 785-424-1670 (international). The playback number is 800-727-6189 (domestic) or 402-220-2671 (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.

		THREE MONTHS ENDED DECEMBER 31,								TWELVE MONTHS ENDED DECEMBER 31,
		2019				2018				2019				2018
		(Unaudited)								(Unaudited)
NET SALES		$	241,252			$	246,970			$	1,137,913			$	1,092,051
COST OF SALES			168,408				175,367				806,113				779,264
GROSS PROFIT			72,844				71,603				331,800				312,787
SELLING, GENERAL & ADMINISTRATIVE EXPENSES			54,232				55,732				234,715				231,336
RESTRUCTURING AND INTEGRATION EXPENSES			1,116				1,437				2,585				4,510
OTHER INCOME (EXPENSE), NET			10				3,999				(5	)			4,327
OPERATING INCOME			17,506				18,433				94,495				81,268
OTHER NON-OPERATING INCOME (EXPENSE), NET			305				(1,211	)			2,587				(411	)
INTEREST EXPENSE			967				889				5,286				4,026
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES			16,844				16,333				91,796				76,831
PROVISION FOR INCOME TAXES			4,106				4,176				22,745				19,977
EARNINGS FROM CONTINUING OPERATIONS			12,738				12,157				69,051				56,854
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES			(1,220	)			(8,837	)			(11,134	)			(13,851	)
NET EARNINGS		$	11,518			$	3,320			$	57,917			$	43,003
NET EARNINGS PER COMMON SHARE:
BASIC EARNINGS FROM CONTINUING OPERATIONS		$	0.57			$	0.54			$	3.09			$	2.53
DISCONTINUED OPERATION			(0.06	)			(0.39	)			(0.50	)			(0.62	)
NET EARNINGS PER COMMON SHARE - BASIC		$	0.51			$	0.15			$	2.59			$	1.91
DILUTED EARNINGS FROM CONTINUING OPERATIONS		$	0.56			$	0.53			$	3.03			$	2.48
DISCONTINUED OPERATION			(0.06	)			(0.39	)			(0.49	)			(0.60	)
NET EARNINGS PER COMMON SHARE - DILUTED		$	0.50			$	0.14			$	2.54			$	1.88
WEIGHTED AVERAGE NUMBER OF COMMON SHARES			22,434,134				22,432,095				22,378,414				22,456,480
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES			22,882,235				22,941,271				22,818,451				22,931,723

		THREE MONTHS ENDED DECEMBER 31,														TWELVE MONTHS ENDED DECEMBER 31,
		2019							2018							2019							2018
		(Unaudited)														(Unaudited)
Revenues
Ignition, Emission Control, Fuel & Safety Related System Products		$	167,276						$	165,630						$	705,994						$	648,270
Wire and Cable			34,681							37,370							143,167							155,217
Engine Management			201,957							203,000							849,161							803,487
Compressors			15,405							16,736							160,485							148,416
Other Climate Control Parts			21,319							25,040							117,870							130,040
Temperature Control			36,724							41,776							278,355							278,456
All Other			2,571							2,194							10,397							10,108
Revenues		$	241,252						$	246,970						$	1,137,913						$	1,092,051
Gross Margin
Engine Management		$	61,823			30.6	%		$	58,509			28.8	%		$	251,560			29.6	%		$	229,949			28.6	%
Temperature Control			8,349			22.7	%			9,571			22.9	%			70,064			25.2	%			70,561			25.3	%
All Other			2,672							3,523							10,176							12,277
Gross Margin		$	72,844			30.2	%		$	71,603			29.0	%		$	331,800			29.2	%		$	312,787			28.6	%
Selling, General & Administrative
Engine Management		$	34,439			17.1	%		$	34,588			17.0	%		$	145,162			17.1	%		$	141,003			17.5	%
Temperature Control			11,364			30.9	%			13,058			31.3	%			56,397			20.3	%			59,569			21.4	%
All Other			8,429							8,086							33,156							30,764
Selling, General & Administrative		$	54,232			22.5	%		$	55,732			22.6	%		$	234,715			20.6	%		$	231,336			21.2	%
Operating Income
Engine Management		$	27,384			13.6	%		$	23,921			11.8	%		$	106,398			12.5	%		$	88,946			11.1	%
Temperature Control			(3,015	)		-8.2	%			(3,487	)		-8.3	%			13,667			4.9	%			10,992			3.9	%
All Other			(5,757	)						(4,563	)						(22,980	)						(18,487	)
Subtotal			18,612			7.7	%			15,871			6.4	%			97,085			8.5	%			81,451			7.5	%
Restructuring & Integration			(1,116	)		-0.5	%			(1,437	)		-0.6	%			(2,585	)		-0.2	%			(4,510	)		-0.4	%
Other Income (Expense), Net			10			0.0	%			3,999			1.6	%			(5	)		0.0	%			4,327			0.4	%
Operating Income		$	17,506			7.3	%		$	18,433			7.5	%		$	94,495			8.3	%		$	81,268			7.4	%

		THREE MONTHS ENDED DECEMBER 31,								TWELVE MONTHS ENDED DECEMBER 31,
		2019				2018				2019				2018
		(Unaudited)								(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS
GAAP EARNINGS FROM CONTINUING OPERATIONS		$	12,738			$	12,157			$	69,051			$	56,854
RESTRUCTURING AND INTEGRATION EXPENSES			1,116				1,437				2,585				4,510
IMPAIRMENT OF OUR INVESTMENT IN ORANGE ELECTRONICS CO.,LTD			-				1,683				-				1,683
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD			-				-				(144	)			(144	)
GAIN FROM SALE OF BUILDINGS			-				(3,940	)			-				(4,158	)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS			(291	)			492				(673	)			(250	)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS		$	13,563			$	11,829			$	70,819			$	58,495
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$	0.56			$	0.53			$	3.03			$	2.48
RESTRUCTURING AND INTEGRATION EXPENSES			0.05				0.06				0.11				0.20
IMPAIRMENT OF OUR INVESTMENT IN ORANGE ELECTRONICS CO.,LTD			-				0.07				-				0.07
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD			-				-				(0.01	)			(0.01	)
GAIN FROM SALE OF BUILDINGS			-				(0.17	)			-				(0.18	)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS			(0.02	)			0.03				(0.03	)			(0.01	)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$	0.59			$	0.52			$	3.10			$	2.55
OPERATING INCOME
GAAP OPERATING INCOME		$	17,506			$	18,433			$	94,495			$	81,268
RESTRUCTURING AND INTEGRATION EXPENSES			1,116				1,437				2,585				4,510
OTHER (INCOME) EXPENSE, NET			(10	)			(3,999	)			5				(4,327	)
NON-GAAP OPERATING INCOME		$	18,612			$	15,871			$	97,085			$	81,451

		December 31, 2019				December 31, 2018
		(Unaudited)
ASSETS
CASH		$	10,372			$	11,138
ACCOUNTS RECEIVABLE, GROSS			140,728				163,222
ALLOWANCE FOR DOUBTFUL ACCOUNTS			5,212				5,687
ACCOUNTS RECEIVABLE, NET			135,516				157,535
INVENTORIES			368,221				349,811
UNRETURNED CUSTOMER INVENTORY			19,722				20,484
OTHER CURRENT ASSETS			15,602				7,256
TOTAL CURRENT ASSETS			549,433				546,224
PROPERTY, PLANT AND EQUIPMENT, NET			89,649				90,754
OPERATING LEASE RIGHT-OF-USE ASSETS			36,020				-
GOODWILL			77,802				67,321
OTHER INTANGIBLES, NET			64,861				48,411
DEFERRED INCOME TAXES			37,272				42,334
INVESTMENT IN UNCONSOLIDATED AFFILIATES			38,858				32,469
OTHER ASSETS			18,835				15,619
TOTAL ASSETS		$	912,730			$	843,132
LIABILITIES AND STOCKHOLDERS' EQUITY
NOTES PAYABLE		$	52,460			$	43,689
CURRENT PORTION OF OTHER DEBT			4,456				5,377
ACCOUNTS PAYABLE			92,535				94,357
ACCRUED CUSTOMER RETURNS			44,116				57,433
ACCRUED CORE LIABILITY			24,357				31,263
OTHER CURRENT LIABILITIES			91,540				80,467
TOTAL CURRENT LIABILITIES			309,464				312,586
OTHER LONG-TERM DEBT			129				153
NONCURRENT OPERATING LEASE LIABILITIES			28,376				-
ACCRUED ASBESTOS LIABILITIES			49,696				45,117
OTHER LIABILITIES			20,837				18,075
TOTAL LIABILITIES			408,502				375,931
TOTAL STOCKHOLDERS' EQUITY			504,228				467,201
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	912,730			$	843,132

		TWELVE MONTHS ENDED DECEMBER 31,
		2019				2018
		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS		$	57,917			$	43,003
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION			25,809				24,104
DEFERRED INCOME TAXES			5,094				(10,024	)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES			11,134				13,851
OTHER			11,359				11,749
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE			17,929				(13,699	)
INVENTORIES			(17,901	)			(30,199	)
ACCOUNTS PAYABLE			(1,950	)			16,894
PREPAID EXPENSES AND OTHER CURRENT ASSETS			(8,296	)			4,926
SUNDRY PAYABLES AND ACCRUED EXPENSES			(18,097	)			8,407
OTHER			(6,070	)			1,246
NET CASH PROVIDED BY OPERATING ACTIVITIES			76,928				70,258
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			(16,185	)			(20,141	)
OTHER INVESTING ACTIVITIES			62				107
NET CASH USED IN INVESTING ACTIVITIES			(54,812	)			(29,886	)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CHANGE IN DEBT			7,860				(12,196	)
PURCHASE OF TREASURY STOCK			(10,738	)			(14,886	)
DIVIDENDS PAID			(20,593	)			(18,854	)
OTHER FINANCING ACTIVITIES			93				(185	)
NET CASH USED IN FINANCING ACTIVITIES			(23,378	)			(46,121	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH			496				(436	)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(766	)			(6,185	)
CASH AND CASH EQUIVALENTS at beginning of year			11,138				17,323
CASH AND CASH EQUIVALENTS at end of year		$	10,372			$	11,138

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