By a News Reporter-Staff News Editor at Investment Weekly News -- Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported its consolidated financial results for the three months and six months ended June 30, 2014.
Consolidated net sales for the second quarter of 2014 were $272.5 million, compared to consolidated net sales of $270.1 million during the comparable quarter in 2013. Earnings from continuing operations for the second quarter of 2014 were $11.2 million or 48 cents per diluted share, compared to $16.4 million or 71 cents per diluted share in the second quarter of 2013. The current quarter includes a one-time, non-recurring litigation charge discussed below. Excluding the litigation charge and other non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the second quarter of 2014 were $17.7 million or 76 cents per diluted share, compared to $16.4 million or 70 cents per diluted share in the second quarter of 2013.
Consolidated net sales for the six month period ended June 30, 2014 were $505.3 million, compared to consolidated net sales of $500.8 million during the comparable period in 2013. Earnings from continuing operations for the six month period ended June 30, 2014 were $23.6 million or $1.02 per diluted share, compared to $26 million or $1.12 per diluted share in the comparable period of 2013. Excluding the litigation charge and other non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the six months ended June 30, 2014 and 2013 were $30.1 million or $1.30 per diluted share and $26 million or $1.12 per diluted share, respectively.
The results for the second quarter of 2014 include a one-time, non-recurring litigation charge of $10.6 million, $6.4 million net of taxes, relating to a tentative settlement of a legal proceeding with a third party. The legal proceeding arose from a former supplier's default of their commercial loan and Standard Motor Products' subsequent purchases of products from a third party that was alleged to be a controlled company of the original supplier. The $10.6 million settlement is expected to be paid in the third quarter 2014.
Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are pleased that, as a result of ongoing improvements, we are able to achieve continued increases for the three month and six month periods in 2014--exclusive of the one-time litigation expense--in operating income and earnings per share.
"In the second quarter, non-GAAP operating income increased 4.9%, and similarly earnings per diluted share increased 8.6% to 76 cents per diluted share. Year-to-date non-GAAP operating income grew 12.5% while earnings per diluted share rose from $1.12 to $1.30, an increase of 16%.
"Engine Management gross margin continues to improve--a result of increased manufacturing, savings in purchasing, and the benefits of recent acquisitions. This increase has been offset by a decline in Temperature Control gross margin, as we have scaled back production to bring inventories into line. We look for Temperature Control gross margins to improve in the second half of the year.
"We have also achieved reductions in SG&A, as we strive for improved efficiency and cost control in all areas.
"Sales, however, have been somewhat disappointing. Overall, we are up marginally for the year, slightly less than one percent, including a slight decline in Temperature Control. On a positive note, we see that our customers are achieving increases in the low to mid-single digits in both Engine Management and Temperature Control. Typically, this leads to increased purchases from us in the future.
"In our previous press release, we announced three acquisitions finalized earlier in the year. The three were: Pensacola Fuel Injection, Inc., a remanufacturer of diesel fuel injectors; Annex Manufacturing, an importer and distributor of Temperature Control products; and the establishment of a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd., a China-based manufacturer of Temperature Control products.
"The integration of all three is proceeding on schedule, and, as previously announced, all three are expected to be accretive to earnings in 2014, exclusive of one-time transition costs.
Further, as a result of our positive cash flow, we have absorbed the combined investment of $37.7 million for all three acquisitions, and our total debt at the end of the second quarter is lower than the comparable figure from the prior year."
The Board of Directors has approved payment of a quarterly dividend of thirteen cents per share on the common stock outstanding. The dividend will be paid on September 2, 2014 to stockholders of record on August 15, 2014.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, July 30, 2014. The dial in number is 866-952-7523 (domestic) or 785-424-1828 (international). The playback number is 800-723-2156 (domestic) or 402-220-2660 (international). The conference ID # is STANDARD.
Keywords for this news article include: Legal Issues, Investment and Finance, Standard Motor Products Inc.
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