Standard Motor Products shares plunge on outlook
NEW YORK—Auto parts maker Standard Motor Products Inc. said Tuesday that a hefty tax gain sharply boosted fourth-quarter profit. But flat revenue and a weak sales outlook for the first quarter sent the stock tumbling 16 percent.
The company makes and distributes replacement parts for engines, such as fuel injectors and spark plugs, and for vehicle air conditioning and heating systems, among other items. Revenue during the quarter totaled $174.2 million, about flat with $173 million in the last three months of 2010, as higher engine management sales helped counter a drop in temperature control parts.
But looking ahead, CEO Lawrence Sills said first-quarter sales will be flat to slightly below 2011's $220.2 million. He noted that customers placed sizable orders in early 2011 to build up their inventories but reduced their stockpiles during the course of the year. Although they are reporting increased auto parts sales, customers are now returning to "historic patterns" with smaller early-season orders, he added. Furthermore, Sills said one major customer has begun buying certain air conditioning parts direct from China, a move that could trim $15 million to $20 million from Standard Motor's fiscal 2012 sales. The loss of revenue will be offset only in part by new engine management business.
During the quarter ended Dec. 31, Standard's net income was $29.3 million, or $1.28 per share, compared to $2.2 million, or 10 cents per share, during the same period a year before. Net income was boosted by a one-time accounting gain of $24.3 million, related to deferred tax adjustments.
For the full year, the company earned $62.4 million, or $2.70 per share, up from $22 million, or 97 cents per share, in 2010. Revenue grew to $874.6 million from $810.9 million in 2010.
Shares of Standard Motor Products dropped $3.86 to finish at $20.51, having fallen as low as $19.19 during the session.