Standard Motor Products (SMP) has reported its consolidated financial results for the three months and nine months ended Sept. 30, 2015.
Consolidated net sales for the third quarter of 2015 were $270 million, compared to consolidated net sales of $257 million during the comparable quarter in 2014. Earnings from continuing operations for the third quarter of 2015 were $19.2 million or 83 cents per diluted share, compared to $17.8 million or 77 cents per diluted share in the third quarter of 2014.
Consolidated net sales for the nine month period ended Sept. 30, 2015, were $767 million, compared to consolidated net sales of $762.3 million during the comparable period in 2014. Earnings from continuing operations for the nine month period ended September 30, 2015 were $42.3 million or $1.82 per diluted share, compared to $41.4 million or $1.79 per diluted share in the comparable period of 2014. The nine-month period ended Sept. 30, 2014, included a one-time, non-recurring litigation charge. Excluding the litigation charge and other non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, after tax earnings from continuing operations for the nine months ended September 30, 2015 and 2014 were $41.3 million or $1.78 per diluted share and $47.2 million or $2.04 per diluted share, respectively.
Commenting on the results, Lawrence Sills, Standard Motor Products’ chairman and CEO, stated, “We are pleased with our third quarter results. Net sales exceeded the third quarter of 2014 by 5.1 percent and we are now slightly ahead of 2014 for the nine month period.
“Engine Management net sales were up 3.8 percent for the quarter, but remain slightly behind 2014 year to date, primarily due to unfavorable foreign exchange rates and the one-time return for inspection of diesel fuel injectors, which occurred earlier in the year. Our customers continue to report, on average, sales increases in the low to mid-single digit range on Engine Management, in line with our expectations.
“Temperature Control benefited from the first warm summer in three years. Net sales were 10.3 percent ahead of 2014 for the quarter and are now ahead 4.2 percent for the year. Our customers are reporting somewhat larger sales increases than this, as they work down inventories carried over from the prior weak seasons. We anticipate that this will be a benefit to us heading into 2016.
“Non-GAAP operating income was ahead 4.3 percent for the quarter, but we remain roughly $12 million behind 2014 for nine months. The majority of this shortfall — approximately $9 million to 10 million and disclosed in prior releases — consists of the carry-forward of 2014 unfavorable manufacturing variances in Temperature Control; the cost of upgrading and enhancing our line of diesel fuel injectors; and an unfavorable non-cash change in prior service costs related to elimination of our post-retirement medical program in 2016. Except for the unfavorable post-retirement medical change, these costs are fully behind us.”
Sills, however, noted a word of caution regarding fourth quarter comparisons. “Our fourth quarter of 2014 benefited from two fairly large pipeline orders for Engine Management, which are unlikely to be repeated this year. Thus, fourth quarter sales comparisons will be challenging. These events, which occur from time to time, can create quarter-by-quarter distortions and are not indicative of long-term results.
“Finally, we are pleased to announce that we have entered into a new revolving credit facility with J.P. Morgan Chase Bank N.A., acting as agent for a syndicate of lenders. This new credit facility replaces our prior credit agreement with General Electric Capital Corporation. The new credit facility provides for a $250 million line of credit, allows us to lower our borrowing costs, and extends the maturity of our line of credit to October 2020. We believe that the new credit facility will provide us with greater flexibility to execute our strategic plans, which will be beneficial to our shareholders. We look forward to working with JPMorgan Chase, as well as all of our other bank partners.”
