Standard Motor Products Inc. has reported its consolidated financial results for the three months ending March 31, 2017.
Consolidated net sales for the first quarter of 2017 were $282.4 million, compared to consolidated net sales of $238.9 million during the comparable quarter in 2016. Earnings from continuing operations for the first quarter of 2017 were $16.4 million or 70 cents per diluted share, compared to $12.7 million or 55 cents per diluted share in the first quarter of 2016. 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 2017 were $17.1 million or 74 cents per diluted share, compared to $12.6 million or 55 cents per diluted share in the first quarter of 2016.
Eric Sills, Standard Motor Products’ CEO and president, said, “We are very pleased with our first quarter results. Compared to the first quarter of 2016, net sales were up 18.2 percent, net income was ahead 28.9 percent, and earnings per share from continuing operations, excluding special items, increased from 55 cents to 74 cents, a gain of almost 35 percent.
“By segment, Engine Management net sales increased 17 percent from the first quarter of 2016. Excluding the General Cable North American ignition wire set business, which we did not acquire until May 2016, Engine Management net sales were ahead 4 percent. Additionally, the quarter included pipeline orders from certain customers, who are in the process of increasing the breadth and depth of their inventories.
“Engine Management gross margin dropped to 30.3 percent vs. 31.7 percent in the first quarter 2016. This was primarily caused by the lower gross margin in the business acquired from General Cable. We are in the process of relocating this operation from Nogales, Mexico, into our existing wire assembly facility in Reynosa, Mexico. As previously stated, we plan to complete this move by the end of Q1 2018, and expect substantial synergies when the integration is complete. In the meantime, we are incurring additional costs as a result of the transition.
“Our Temperature Control division also had an excellent first quarter, with a sales increase of 23.8 percent. However, this mostly represents an increase in pre-season stocking orders, which was anticipated, as 2016 was a strong air conditioning year. The key to the 2017 season will be how hot it gets over the next several months.
“Turning to operations, we are in the process of implementing several major moves. In addition to the General Cable integration, mentioned above, we will be relocating the balance of our Grapevine, Texas, operation to Reynosa, Mexico, to be complete by the end of the year, and our electronics plant in Orlando, Florida, to an existing facility in Independence, Kansas, to be complete by mid-2018. These moves will result in significant additional savings. However, because of the effect on our employees, we do not take these moves lightly. Several of the affected employees have already agreed to transfer to other SMP locations, and we are encouraging others to do so. The balance will be treated fairly and equitably as we have always done.
“Finally, we welcome Patrick McClymont to our board of directors. Patrick comes to us with a wealth of experience. He has been a partner and managing director of Goldman Sachs, an executive vice president and chief financial officer at Sotheby’s, and is currently an executive vice president and chief financial officer at IMAX. We are confident he will be a valuable member of our board.”
