Standard Motor Products, Inc., a New York-based manufacturer and distributor of auto parts, saw its earnings decrease in 2017 due to high costs of plants closures and consolidating production at its manufacturing plant in Reynosa, Tamaulipas, despite an improvement in operations in both Mexican and Chinese facilities.
The company reported consolidated net sales for the fourth quarter of 2017 of US$ 240 million, up 4.3% compared to consolidated net sales of US$ 229.8 million during the comparable quarter in 2016.
Excluding non-operational gains and losses and the impact of the Tax Cuts and Jobs Act, earnings from continuing operations for the fourth quarter of 2017 were US$ 12.4 million or 54 cents per diluted share, up 26.5% compared to US$ 9.8 million or 42 cents per diluted share in the fourth quarter of 2016.
Consolidated net sales for 2017 were US$ 1.1 billion, a nearly flat result compared to consolidated net sales of US$ 1.06 billion during the comparable period in 2016. Earnings from continuing operations for 2017 were US$ 43.6 million or US$ 1.88 per diluted share, down 30.1% compared to US$ 62.4 million or US$ 2.70 per diluted share in 2016.
Excluding non-operational gains and losses and the impact of the Tax Cuts and Jobs Act, earnings from continuing operations for the year ended December 31, 2017 were US$ 65.6 million or US$ 2.83 per diluted share, up 2.6% compared to US$ 63.9 million or US$ 2.77 per diluted share in 2016.
"For the full year, our Engine Management gross margin fell nearly two points in 2017—from 31.3% in 2016 to 29.4% in 2017, primarily because of the cost of the plant moves. Temperature Control gross margin, despite the lower sales, increased from 25.6% to 26.2%, as our operations in Reynosa, Mexico, and Foshan, China, continue to show improvement,” Eric P. Sills, Standard Motor Products' Chief Executive Officer and President stated.
"Looking beyond the numbers, we are pleased that during 2017 we continued to make progress towards achieving our long-term strategic goals. We made strong strides in our ambitious programs of plant consolidations and relocations. We exited our factory in Grapevine, Texas, moving some of the operations to Greenville, South Carolina, and others to Reynosa, Mexico. We are closing our electronics facility in Orlando, Florida, and relocating it to Independence, Kansas. And as a result of the General Cable ignition wire acquisition, we are relocating their assembly operations from Nogales, Mexico, to our facility in Reynosa.”
"Some of the moves are complete, and the balance will be done by the second half of 2018. In the short run, these moves entail a significant amount of time, effort, and cost, but in the long run they will make us a stronger company. We thank all our people for their immense efforts here,” the official concluded.