Standard Motor Products Inc. (SMP) has reported its consolidated financial results for the three months and 12 months ended Dec. 31, 2020.
Consolidated net sales for the fourth quarter of 2020 were $282.7 million, compared to consolidated net sales of $241.3 million during the comparable quarter in 2019. Earnings from continuing operations for the fourth quarter of 2020 were $22.7 million or $1 per diluted share, compared to $12.7 million or 56 cents per diluted share in the fourth quarter of 2019. Excluding non-operational gains and losses, earnings from continuing operations for the fourth quarter of 2020 were $24.7 million or $1.08 per diluted share, compared to $13.6 million or 59 cents per diluted share in the fourth quarter of 2019.
Consolidated net sales for the 12 months were $1,128.6 million, compared to consolidated net sales of $1,137.9 million during the comparable period in 2019. Earnings from continuing operations for the 12 months were $80.4 million or $3.52 per diluted share, compared to $69.1 million or $3.03 per diluted share in the comparable period of 2019. Excluding non-operational gains and losses, earnings from continuing operations for the 12 months ended December 31, 2020 and 2019 were $82.4 million or $3.61 per diluted share and $70.8 million or $3.10 per diluted share, respectively.
Loss from discontinued operations, net of income taxes, in the fourth quarter of 2020 was $13.6 million compared to $1.2 million in the comparable period last year. The loss pertains to asbestos-related liabilities from a brake business, originally acquired in 1986 and subsequently divested in 1998, and are adjusted at least annually, when the company engages an independent actuary to assess the company’s exposure.
Eric Sills, Standard Motor Products’ CEO and President stated, “We are very pleased with our fourth quarter results, as we achieved records in both sales and earnings from continuing operations. After a very difficult second quarter when we experienced a slowdown caused by the pandemic, business rebounded in the second half, and we ended within one percent of our 2019 full-year revenue, setting a new high for full-year earnings from continuing operations.
“By segment, Engine Management sales were up 14.8% in the quarter, due to a combination of carry-over of an order backlog coming out of the third quarter, and generally strong demand across our entire customer base. Customer POS was consistently up in the mid-single digits, reflecting ongoing positive sell-through. Temperature Control sales were up 30% in the quarter, as the warm weather continued into the period.
“Our strong profits for the quarter were mainly the result of increased absorption in our plants from elevated sales and production levels. For the full year, our record profits were primarily due to higher production levels in certain periods and annual savings initiatives, and to a lesser extent by certain non-recurring benefits from cost reduction initiatives and COVID-related government incentives, partially offset by COVID-related costs.
“Looking forward, we enter 2021 with many positives – our industry remains healthy and our customers’ POS has remained strong. However, as previously announced in December, we were informed of the loss of a major account in our Engine Management segment. When we initially reported the loss, the timing was still uncertain. We now know that the business will be phased out over the course of the first quarter of 2021. As we said before, the loss was due to a shift in business strategy by the customer, and we are aggressively working to reduce costs accordingly while we seek to replace the business. We remain very confident in our go-to-market strategy, which continues to be very well received by the balance of our customers. In fact, we are delighted to announce that we just received the 2020 Supplier of the Year award from O’Reilly Auto Parts, in which they recognized the strength of our partnership.
“We are very excited to announce the publication of our inaugural Sustainability Report, now available on our website. We believe we have a long heritage of investing in our people, our communities, and our planet, and we are pleased to share the details publicly.
“As we continue to return value to our shareholders, our board of directors recently approved the payment of a quarterly dividend of 25 cents per share, payable on March 1, 2021. Our board has also authorized an additional $20 million common stock repurchase plan, which when added to the amount remaining under the prior plan will allow us to repurchase up to $26.5 million of our outstanding shares. We repurchased shares of our common stock in the amount of $4.8 million during the fourth quarter of 2020.”
Lawrence I. Sills, chairman of the board, then stated “Mr. Roger M. Widmann announced that he will retire from the board this coming May, at the conclusion of his term. Roger has been a valuable member of our board, where he has served since 2005, including as chairman of our Compensation and Management Development Committee for the past nine years. He has been a major contributor in all areas, and he will be missed. We wish him a well-deserved retirement.”
Eric Sills continued, “In conclusion, as we reflect back on a year unlike any in history, certain positives come to mind. First, we cannot be more proud of our employees, who helped us navigate uncharted waters with tremendous dedication and skill. We owe them a debt of gratitude. Second, it demonstrated once again the resiliency of the automotive aftermarket, proving how essential it is to the basic functioning of our country and its infrastructure. We remain very confident about our future.”