Standard Motor Products, Inc. Announces

Second Quarter 2019 Results and a Quarterly Dividend

New York, NY, July 25, 2019......Standard Motor Products, Inc. (NYSE: SMP), an automotive replacement parts manufacturer and distributor, reported today its consolidated financial results for the three months and six months ending June 30, 2019.

Consolidated net sales for the second quarter of 2019 were $305.2 million, compared to consolidated net sales of $286.6 million during the comparable quarter in 2018. Earnings from continuing operations for the second quarter of 2019 were $20.6 million or 90 cents per diluted share, compared to $16.8 million or 73 cents per diluted share in the second quarter of 2018. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the second quarter of 2019 were $21 million or 92 cents per diluted share, compared to $17 million or 74 cents per diluted share in the second quarter of 2018.

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Consolidated net sales for the six month period ended June 30, 2019, were $588.9 million, compared to consolidated net sales of $548.5 million during the comparable period in 2018.  Earnings from continuing operations for the six month period ended June 30, 2019, were $33.7 million or $1.47 per diluted share, compared to $25.4 million or $1.11 per diluted share in the comparable period of 2018.  Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the six months ended June 30, 2019, and 2018 were $34.1 million or $1.49 per diluted share and $27.5 million or $1.20 per diluted share, respectively.

Mr. Eric P. Sills, Standard Motor Products’ Chief Executive Officer and President stated, “We are quite pleased with our second quarter, posting solid gains in sales, margins and earnings, with strong performance in both of our operating divisions.

“Engine Management sales were up approximately 7% for both the quarter and year to date. Excluding the wire and cable segment, Engine Management sales in the quarter increased almost 12%, or almost $20 million. The increase included three months of revenue from the Pollak acquisition, accounting for nearly $11 million. Excluding Pollak, our Engine Management business increased 5.3% for the quarter. The increase was attributable to a combination of strong demand in our OE business, which tends to be somewhat volatile, a benefit from pricing actions and tariffs, and low single digit organic growth.

“Engine Management gross margin was up 0.9 points from last year, and 1.3 points from the first quarter, reflecting our return to historic productivity in our Reynosa wire plant after the lengthy integration of the General Cable wire business.  This margin improvement also includes certain pricing actions offset by the adverse impact of tariffs being passed through to customers at our cost.

“Our Temperature Control sales were up 5% for the quarter and 9% year-to-date. April and May tend to reflect pre-season stocking activities, while June is the start of the summer selling season. Although we are pleased with the quarter’s results, it was a slow start to summer heat nationwide. The third quarter will be critical to full-year performance, as 2018 was a very hot summer and a challenging comparison.

“Temperature Control gross margin improved 0.8 points in the quarter and, as with Engine Management, was dampened by tariffs being passed through to customers at our cost. As previously discussed, within SG&A, we experienced improvements in our distribution expense as our new warehouse automation in Lewisville is now fully implemented.

“Finally, on April 1^st, we completed the acquisition of the Pollak business of Stoneridge, Inc., and it has contributed quite nicely to our performance. We will be relocating the acquired production lines to existing facilities over the course of the balance of the year, and expect significant savings once fully integrated and performing at full productivity some time in 2020. So far we are pleased with what we have seen, and believe it will be an excellent fit for SMP. We acquired a profitable and stable business with an excellent customer base, and we believe that with our combined skills, we will be able to advance our goal of increasing our presence in the heavy duty and commercial vehicle markets.”

The Board of Directors has approved payment of a quarterly dividend of 23 cents per share on the common stock outstanding. The dividend will be paid on September 3, 2019 to stockholders of record on August 15, 2019.

Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, July 25, 2019.  The dial-in number is 866-831-8713 (domestic) or 203-518-9822 (international). The playback number is 800-839-9562 (domestic) or 402-220-6090 (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.

(In thousands)
		THREE MONTHS ENDED JUNE 30,																SIX MONTHS ENDED JUNE 30,
		2019								2018								2019								2018
		(Unaudited)																(Unaudited)
Revenues
Ignition, Emission Control, Fuel & Safety Related System Products		$	181,831							$	162,462							$	357,892							$	323,539
Wire and Cable			36,211								40,967								73,339								79,378
Engine Management			218,042								203,429								431,231								402,917
Compressors			52,493								46,940								92,304								76,838
Other Climate Control Parts			31,913								33,430								61,026								63,763
Temperature Control			84,406								80,370								153,330								140,601
All Other			2,724								2,837								4,377								4,944
Revenues		$	305,172							$	286,636							$	588,938							$	548,462
Gross Margin
Engine Management		$	63,780				29.3	%		$	57,782				28.4	%		$	123,473				28.6	%		$	114,252				28.4	%
Temperature Control			22,551				26.7	%			20,800				25.9	%			38,742				25.3	%			34,467				24.5	%
All Other			2,574								2,707								4,653								5,159
Gross Margin		$	88,905				29.1	%		$	81,289				28.4	%		$	166,868				28.3	%		$	153,878				28.1	%
Selling, General & Administrative
Engine Management		$	37,430				17.2	%		$	34,598				17.0	%		$	74,773				17.3	%		$	70,862				17.6	%
Temperature Control			15,397				18.2	%			15,721				19.6	%			29,538				19.3	%			28,550				20.3	%
All Other			7,709								7,431								16,225								16,055
Selling, General & Administrative		$	60,536				19.8	%		$	57,750				20.1	%		$	120,536				20.5	%		$	115,467				21.1	%
Operating Income
Engine Management		$	26,350				12.1	%		$	23,184				11.4	%		$	48,700				11.3	%		$	43,390				10.8	%
Temperature Control			7,154				8.5	%			5,079				6.3	%			9,204				6.0	%			5,917				4.2	%
All Other			(5,135	)							(4,724	)							(11,572	)							(10,896	)
Subtotal			28,369				9.3	%			23,539				8.2	%			46,332				7.9	%			38,411				7.0	%
Restructuring & Integration			(644	)			-0.2	%			(231	)			-0.1	%			(644	)			-0.1	%			(3,067	)			-0.6	%
Other Income (Expense), Net			3				0.0	%			42				0.0	%			(3	)			0.0	%			313				0.1	%
Operating Income		$	27,728				9.1	%		$	23,350				8.1	%		$	45,685				7.8	%		$	35,657				6.5	%

(In thousands, except per share amounts)
		THREE MONTHS ENDED JUNE 30,								SIX MONTHS ENDED JUNE 30,
		2019				2018				2019				2018
		(Unaudited)								(Unaudited)
EARNINGS FROM CONTINUING OPERATIONS
GAAP EARNINGS FROM CONTINUING OPERATIONS		$	20,555			$	16,827			$	33,659			$	25,424
RESTRUCTURING AND INTEGRATION EXPENSES			644				231				644				3,067
GAIN FROM SALE OF BUILDINGS			-				-				-				(218	)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS			(168	)			(60	)			(168	)			(741	)
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS		$	21,031			$	16,998			$	34,135			$	27,532
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$	0.90			$	0.73			$	1.47			$	1.11
RESTRUCTURING AND INTEGRATION EXPENSES			0.03				0.01				0.03				0.13
GAIN FROM SALE OF BUILDINGS			-				-				-				(0.01	)
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS			(0.01	)			-				(0.01	)			(0.03	)
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS		$	0.92			$	0.74			$	1.49			$	1.20
OPERATING INCOME
GAAP OPERATING INCOME		$	27,728			$	23,350			$	45,685			$	35,657
RESTRUCTURING AND INTEGRATION EXPENSES			644				231				644				3,067
OTHER (INCOME) EXPENSE, NET			(3	)			(42	)			3				(313	)
NON-GAAP OPERATING INCOME		$	28,369			$	23,539			$	46,332			$	38,411

(In thousands)
		June 30, 2019				December 31, 2018
		(Unaudited)
ASSETS
CASH		$	17,419			$	11,138
ACCOUNTS RECEIVABLE, GROSS			185,476				163,222
ALLOWANCE FOR DOUBTFUL ACCOUNTS			6,090				5,687
ACCOUNTS RECEIVABLE, NET			179,386				157,535
INVENTORIES			375,258				349,811
UNRETURNED CUSTOMER INVENTORY			18,677				20,484
OTHER CURRENT ASSETS			14,972				7,256
TOTAL CURRENT ASSETS			605,712				546,224
PROPERTY, PLANT AND EQUIPMENT, NET			89,197				90,754
OPERATING LEASE RIGHT-OF-USE ASSETS			35,648				-
GOODWILL			77,728				67,321
OTHER INTANGIBLES, NET			69,017				48,411
DEFERRED INCOME TAXES			39,825				42,334
INVESTMENT IN UNCONSOLIDATED AFFILIATES			34,400				32,469
OTHER ASSETS			18,000				15,619
TOTAL ASSETS		$	969,527			$	843,132
LIABILITIES AND STOCKHOLDERS’ EQUITY
NOTES PAYABLE		$	130,000			$	43,689
CURRENT PORTION OF OTHER DEBT			5,085				5,377
ACCOUNTS PAYABLE			89,149				94,357
ACCRUED CUSTOMER RETURNS			53,420				57,433
ACCRUED CORE LIABILITY			26,671				31,263
OTHER CURRENT LIABILITIES			89,615				80,467
TOTAL CURRENT LIABILITIES			393,940				312,586
OTHER LONG-TERM DEBT			153				153
NONCURRENT OPERATING LEASE LIABILITIES			28,613				-
ACCRUED ASBESTOS LIABILITIES			41,104				45,117
OTHER LIABILITIES			20,452				18,075
TOTAL LIABILITIES			484,262				375,931
TOTAL STOCKHOLDERS’ EQUITY			485,265				467,201
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	969,527			$	843,132

(In thousands)
		SIX MONTHS ENDED JUNE 30,
		2019				2018
		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
NET EARNINGS		$	31,648			$	23,934
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION			12,744				11,706
OTHER			9,621				8,641
CHANGE IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE			(26,622	)			(34,524	)
INVENTORIES			(19,691	)			(6,650	)
ACCOUNTS PAYABLE			(6,994	)			15,684
PREPAID EXPENSES AND OTHER CURRENT ASSETS			(6,406	)			(2,988	)
SUNDRY PAYABLES AND ACCRUED EXPENSES			(7,545	)			(9,115	)
OTHER			(6,261	)			(2,502	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			(19,506	)			4,186
CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES			(38,427	)			(8,572	)
NET PROCEEDS FROM SALE OF FACILITY			4,801				-
CAPITAL EXPENDITURES			(7,578	)			(11,325	)
OTHER INVESTING ACTIVITIES			46				16
NET CASH USED IN INVESTING ACTIVITIES			(41,158	)			(19,881	)
CASH FLOWS FROM FINANCING ACTIVITIES
NET CHANGE IN DEBT			85,956				32,287
PURCHASE OF TREASURY STOCK			(10,738	)			(7,640	)
DIVIDENDS PAID			(10,296	)			(9,437	)
OTHER FINANCING ACTIVITIES			1,691				1,990
NET CASH PROVIDED BY FINANCING ACTIVITIES			66,613				17,200
EFFECT OF EXCHANGE RATE CHANGES ON CASH			332				(255	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			6,281				1,250
CASH AND CASH EQUIVALENTS at beginning of Period			11,138				17,323
CASH AND CASH EQUIVALENTS at end of Period		$	17,419			$	18,573