NEW YORK – Standard Motor Products (SMP) has reported its consolidated financial results for the three months and for the year ended Dec. 31, 2011.
Consolidated net sales for the fourth quarter of 2011 were $174.2 million, compared to consolidated net sales of $173 million during the comparable quarter in 2010.
Earnings from continuing operations for the fourth quarter of 2011 were $29.5 million or $1.29 per diluted share, compared to $2.7 million or 12 cents per diluted share in the fourth quarter of 2010. Included in SMP’s fourth quarter 2011 (and year-end) results is a non-recurring, non-cash benefit in the company’s tax provision of $24.3 million, primarily related to the reversal of a significant portion of our U.S. deferred tax valuation allowance and other tax adjustments. Excluding non-operational gains and losses, earnings from continuing operations for the fourth quarter of 2011 were $3.9 million or 17 cents, compared to $2.6 million or 11 cents per diluted share in the fourth quarter of 2010.
Consolidated net sales for 2011 were $874.6 million, compared to consolidated net sales of $810.9 million in 2010. Earnings from continuing operations for 2011 were $64.3 million or $2.78 per diluted share, compared to $24.7 million or $1.09 per diluted share in 2010. Excluding non-operational gains and losses, earnings from continuing operations for 2011 and 2010 were $36.1 million or $1.57 per diluted share and $24.2 million or $1.07 per diluted share, respectively.
Commenting on the results, Lawrence Sills, Standard Motor Products’ chairman and CEO, stated, "We are gratified by our results in 2011 as we set new company records for both sales and profit. Our 8 percent sales increase and in excess of 45 percent operating earnings per share increase were aided by positive industry trends, but much of the success came from the skill and efforts of our people. These are some of the highlights:
"Gross margin increased from 25.6 percent to 26.2 percent, as we achieved manufacturing and purchase cost reductions.
"We made two excellent acquisitions. In April 2011 we acquired the Engine Controls business of BLD Products Ltd., a basic manufacturer of critical engine management components. In October 2011 we acquired Forecast Trading Corp., the leading provider of economy line engine management products. Both of these acquisitions are fully integrated, will be accretive to earnings in 2012, and will be a key part of our future.
"Our cash flow from operations of $75 million enabled us to acquire these two companies for a combined cost of $71 million, with a minimal increase in total debt, while maintaining a healthy 1:1 Debt:EBITDA ratio.
"Looking ahead into 2012, we believe that our first quarter sales will be flat to slightly below our 2011 first quarter. Last year, if you recall, we were ahead 23 percent at the end of the first quarter, the result of significant pipeline orders in both Engine Management and Temperature Control. Our customers reduced these inventories during the balance of 2011, and we ended the year with an overall 8 percent sales increase. In 2012, we are seeing a return to historic patterns, with smaller early season pipeline orders, and this will affect the first quarter comparisons.
"In addition, one of our major accounts has begun buying certain air conditioning parts direct from China. We estimate the 2012 full year sales impact could be $15 million to $20 million. However, this is partially offset by new Engine Management business, which will begin in the second quarter, at an annualized rate of $8 million to $10 million.
"On balance, we are optimistic heading into 2012. The positive industry demographics will continue (though, in the near-term, these may be inhibited by the rise in gasoline prices). Our customers continue to report sales increases in our product lines. We continue to strive for cost improvement in all areas. Finally, we will have the full year benefit of our two acquisitions," Sills concluded.
