In addition to a jump in net sales for the first quarter 2008, Standard Motor Products, Inc. recently reported that it has made progress toward achieving its strategic plan, including winning more original equimpment business and relocating several key manufacturing facilities to low cost countries.
The company reported that its net sales for the first quarter of 2008 were $208.1 million, compared to consolidated net sales of $199.8 million during the comparable quarter in 2007. Earnings from continuing operations for the first quarter of 2008 were $13.3 million or 68 cents per diluted share, compared to $2.9 million or 16 cents per diluted share in the first quarter of 2007. Excluding restructuring expenses for previously announced facility moves, a gain from the sale and leaseback of its corporate facilities in Long Island City, New York and the associated defeasance costs on the building mortgage, earnings from continuing operations for the first quarter 2008 were $3.1 million or 17 cents per diluted share compared to earnings in the first quarter 2007 of $3.4 million or 18 cents per diluted share.
"We are pleased with our progress," says Lawrence I. Sills, the company's chairman and CEO. "As we have previously disclosed, we anticipate partial savings in the second half 2008, though we will incur the balance of the move costs this year. We still forecast $9 million annual savings from these two plant closings in 2009."
Sills acknowledges that the one area that is not performing as well as it could is the company's Temperature Control Division. Pre-season orders were lighter than usual, reflecting, the company believes, substantial field inventories as well as general
concern for the economy. Standard Motor Products is also competing with imports from China, and has implemented its second major price reduction in two years, which totals approximately $6 million annually.
"As a result of these reductions, we feel we are now competitive with the Chinese imports, but our margins are far from satisfactory," Sills says. "We are working aggressively to reduce cost. We continue to shift compressor remanufacturing to Mexico, and in 2008 we will produce 120,000 more units in Mexico than in 2007."
If all goes according to the company's strategic plan, Standard Motor Products will produce 80 to 90 percent of its rebuild compressors in Mexico by 2009, Sills concludes. These moves, along with an internal cost reduction program, will help offset lost margins due to price reductions.
The company also recently announced that its 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 2, 2008 to stockholders of record on May 15, 2008.
For more information about Standard Motor Products, visit the company's Web site.
