Consolidated net sales for the first quarter of 2007 were $199.8 million, compared to consolidated net sales of $210.1 million during the comparable quarter in 2006. Earnings from continuing operations for the first quarter of 2007 were $2.9 million or 16 cents per diluted share, compared to $2.6 million or 14 cents per diluted share in the first quarter of 2006.
First quarter 2007 consolidated net sales decreased by $10.3 million. Consolidated gross margins increased to 26% in the first quarter of 2007 compared to 25.3% in the first quarter of 2006. In addition, operating income decreased $0.9 million to $8.5 million in the first quarter of 2007 from $9.4 million in the comparable period in the prior year.
Commenting on the results, Mr. Lawrence Sills, Standard Motor Products' Chairman and Chief Executive Officer, said, "As we advised during our previous conference call, Engine Management sales in the first quarter were about $11 million or 7.7% below 2006, for two reasons: first, there were substantial pre-season orders during the first quarter of 2006, which were not repeated in 2007; and, second, a contract to supply fuel injectors to an OE customer expired at the end of 2006. We anticipate improved comparative results for the balance of 2007, especially as some of our new OE and OES business begins in the second half of 2007.
"Our Engine Management gross margin percentage continues to increase, as we achieved 26.3% for the first quarter of 2007, compared with 24.7% for the first quarter of 2006, and 24.6% for the full year 2006.
"Temperature Control sales were slightly ahead of last year for the first quarter, but the key to the year will be the second and third quarters. April was cooler than normal in most of the country, thus delaying our traditional seasonal increase.
"Our Temperature Control gross margin fell 1.4 points, from 22.6% to 21.2%, a result of selected price decreases to match off-shore competition. However, by working aggressively to reduce SG&A expenses, our operating profit slightly exceeded the first quarter of 2006. Improvements in gross margin are expected as we shift additional manufacturing to Reynosa, Mexico, and close our facility in Ft. Worth, Texas.
"Our European division continued its turnaround, as we went from a net loss to a net profit in the first quarter. We achieved improvements in all three major areas.sales, gross margin, and operating expenses."
The Board of Directors has approved payment of a quarterly dividend of nine cents per share on the common stock outstanding. The dividend will be paid on June 1, 2007 to stockholders of record on May 15, 2007.
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Wednesday, May 9, 2007. The dial in number is 800-795-1259 (domestic) or 785-832-0301 (international). The playback number is 800-938-2241 (domestic) or 402-220-1121 (international). The conference ID # is STANDARD.
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Standard Motor Products cautions investors that any forward-looking statements made by the company, including those that may be made in this press release, are based on management's expectations at the time they are made, but they are subject to risks and uncertainties that may cause actual results, events or performance to differ materially from those contemplated by such forward looking statements. Among the factors that could cause actual results, events or performance to differ materially from those risks and uncertainties discussed in this press release are those detailed from time-to-time in prior press releases and in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q. By making these forward- looking statements, Standard Motor Products undertakes no obligation or intention to update these statements after the date of this release.
STANDARD MOTOR PRODUCTS, INC. Consolidated Statements of Operations (Dollars in thousands, except per share amounts) THREE MONTHS ENDED MARCH 31, 2007 2006 NET SALES $199,815 $210,076 COST OF SALES 147,940 156,845 GROSS PROFIT 51,875 53,231 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 42,731 43,788 INTEGRATION EXPENSES 678 87 OPERATING INCOME 8,466 9,356 OTHER INCOME, NET 267 350 INTEREST EXPENSE 4,541 4,453 EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES 4,192 5,253 INCOME TAX EXPENSE 1,256 2,655 EARNINGS FROM CONTINUING OPERATIONS 2,936 2,598 DISCONTINUED OPERATION, NET OF TAX (349) (764) NET EARNINGS $2,587 $1,834 NET EARNINGS PER COMMON SHARE: BASIC EARNINGS FROM CONTINUING OPERATIONS $0.16 $0.14 DISCONTINUED OPERATION (0.02) (0.04) NET EARNINGS PER COMMON SHARE - BASIC $0.14 $0.10 DILUTED EARNINGS FROM CONTINUING OPERATIONS $0.16 $0.14 DISCONTINUED OPERATION (0.02) (0.04) NET EARNINGS PER COMMON SHARE - DILUTED $0.14 $0.10 WEIGHTED AVERAGE NUMBER OF COMMON SHARES 18,451,695 18,192,774 WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES 18,600,884 18,195,888 STANDARD MOTOR PRODUCTS CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) ASSETS March 31 December 31, 2007 2006 Cash $18,318 $22,348 Accounts receivable, gross 237,663 193,129 Allowance for doubtful accounts 9,962 9,46 Accounts receivable, net 227,701 183,664 Inventories 242,421 233,970 Other current assets 25,827 21,856 Total current assets 514,267 461,838 Property, plant and equipment, net 79,268 80,091 Goodwill and other intangibles 55,715 56,289 Other assets 39,458 41,874 Total assets $688,708 $640,092 LIABILITIES AND STOCKHOLDERS' EQUITY Notes payable $173,368 $139,799 Current portion of long term debt 454 54 Accounts payable trade 73,448 53,783 Accrued customer returns 21,493 21,705 Restructuring accrual 684 703 Other current liabilities 54,456 61,993 Total current liabilities 323,903 278,525 Long-term debt 97,832 97,979 Postretirement & other liabilities 52,145 51,678 Restructuring accrual 226 383 Accrued asbestos liability 20,748 20,828 Total liabilities 494,854 449,393 Total stockholders' equity 193,854 190,699 Total liabilities and stockholders' equity $688,708 $640,092
Source: Standard Motor Products, Inc.