☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New York
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11-1362020
|
||
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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37-18 Northern Blvd., Long Island City, New York
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11101
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||
(Address of principal executive offices)
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(Zip Code)
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||
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||
Registrant’s telephone number, including area code:
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(718) 392-0200
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||
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||
Securities registered pursuant to Section 12(b) of the Act:
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||
Title of each class
|
Trading Symbol(s)
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Name of each exchange on which registered
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|
Common Stock, par value $2.00 per share
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SMP
|
New York Stock Exchange LLC
|
Securities registered pursuant to Section 12(g) of the Act:
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None
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Large Accelerated Filer ☑
|
Accelerated Filer ☐
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Non-Accelerated Filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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PART I.
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Page No.
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|
Item 1.
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3
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Item 1A.
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13
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Item 1B.
|
22
|
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Item 2.
|
23
|
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Item 3.
|
23
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Item 4.
|
23
|
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PART II.
|
||
Item 5.
|
24
|
|
Item 6.
|
26
|
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Item 7.
|
28
|
|
Item 7A.
|
44
|
|
Item 8.
|
45
|
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Item 9.
|
88
|
|
Item 9A.
|
88
|
|
Item 9B.
|
89
|
|
PART III.
|
||
Item 10.
|
89
|
|
Item 11.
|
89
|
|
Item 12.
|
89
|
|
Item 13.
|
89
|
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Item 14.
|
90
|
|
PART IV.
|
||
Item 15.
|
90
|
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Item 16.
|
90
|
|
94
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ITEM 1. |
BUSINESS
|
• |
the number of vehicles on the road;
|
• |
the average age of vehicles on the road; and
|
• |
the total number of miles driven per year.
|
• |
Maintain Our Strong Competitive Position in our Engine Management and Temperature Control Businesses. We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management and Temperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.
|
• |
providing our customers with full-line coverage of high quality engine management and temperature control products and new technologies for all years, makes and models of vehicles on the road;
|
• |
supporting our products with the highest level of value-added services;
|
• |
supply chain excellence through supplier and customer focused initiatives, and continuing to maximize our production, supply chain and distribution efficiencies;
|
• |
continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and
|
• |
focusing on our engineering development efforts including a focus on bringing more product manufacturing in-house.
|
• |
Provide Superior Value-Added Services and Product Availability. Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability and offering a product portfolio that provides comprehensive coverage for all vehicle applications. Our marketing support provides insightful customer category management, technical support and award-winning programs, and our technically skilled sales personnel provide our customers with product selection, assortment and application support related to our products. In addition, we have a team dedicated to providing technical training on diagnosing and repairing vehicles equipped with complex systems.
|
• |
Expand Our Product Lines. Vehicle manufacturers continue to introduce new technologies and systems creating opportunities for us to expand our product lines. In addition, we intend to increase our sales by continuing to develop internally, or through potential acquisitions, the range of engine management and temperature control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture product lines that incorporate the latest technologies, including product lines relating to safety, advanced driver assistance and collision avoidance systems.
|
• |
Broaden Our Customer Base and Diversify our Business. We seek to increase our customer base and diversify our business primarily by (a) leveraging our manufacturing and distribution capabilities to secure additional business globally with original equipment vehicle and equipment manufacturers and their service part operations, as well as our existing customer base of large retailers, program distribution groups, warehouse distributors, other manufacturers and export customers, (b) supporting the service part operations of vehicle and equipment manufacturers with value-added services and product support for the life of the part, (c) developing new product lines that compliment our existing product offering and have the potential for high growth within the automotive aftermarket and (d) expand our product offering in the heavy duty and commercial vehicle markets.
|
• |
Improve Operating Efficiency and Cost Position. Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates.
|
• |
Cash Utilization. We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, expand our product lines by investing in new tooling and equipment, grow revenues through potential acquisitions, and repurchase shares of our common stock. Commencing in the second quarter of 2020, we implemented many programs to conserve cash and reduce costs in response to the impact of the COVID-19 pandemic on our business, including by borrowing an additional $75 million under our amended credit agreement, and temporarily suspending our quarterly cash dividend payments and stock repurchases. In June 2020, we repaid the additional $75 million of borrowed funds. In September 2020, our Board of Directors approved to reinstate our stock repurchase program, and in October 2020, our Board of Directors approved the reinstatement of our quarterly cash dividend payments.
|
Engine
Management
|
|
|
• |
Automotive aftermarket retailers, such as O’Reilly Automotive, Inc. (“O’Reilly”), Advance Auto Parts, Inc. (operating under the trade names Advance Auto Parts, Autopart International, Carquest and Worldpac) (“Advance”), AutoZone, Inc. (“AutoZone”), and Canadian Tire Corporation, Limited.
|
• |
Automotive aftermarket distributors, including warehouse distributors and program distribution groups, such as Genuine Parts Co. and National Automotive Parts Association (“NAPA”), Auto Value and All Pro/Bumper to Bumper (Aftermarket Auto Parts Alliance, Inc.), Automotive Distribution Network LLC, The National Pronto Association (“Pronto”), Federated Auto Parts Distributors, Inc. (“Federated”), Pronto and Federated’s affiliate, the Automotive Parts Services Group or The Group, and Icahn Automotive Group LLC (doing business as Pep Boys, Auto Plus, AAMCO and Precision Tune Auto Care).
|
• |
Original equipment manufacturers and original equipment service part operations, such as General Motors Co., FCA US LLC (formerly known as Chrysler Group LLC), Ford Motor Co., Woodward, Inc., Deere & Company and Red Dot Corporation.
|
• |
a value‑added, knowledgeable sales force;
|
• |
continuous product development, engineering & technical advancement;
|
• |
extensive product coverage in conjunction with market leading brands;
|
• |
rigorous product qualification standards to ensure that our parts meet or exceed exacting performance specifications;
|
• |
sophisticated parts cataloging systems, including catalogs available online through our website and our mobile application;
|
• |
inventory levels and logistical systems sufficient to meet the rapid delivery requirements of customers;
|
• |
breadth of manufacturing capabilities; and
|
• |
award-winning marketing programs, sales support and technical training.
|
ITEM 1A. |
RISK FACTORS
|
• |
respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products and services;
|
• |
engage in more extensive research and development;
|
• |
sell products at a lower price than we do;
|
• |
undertake more extensive marketing campaigns; and
|
• |
make more attractive offers to existing and potential customers and strategic partners.
|
• |
general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control;
|
• |
the ability of our customers to pay timely the amounts we have billed; and
|
• |
our ability to sell receivables under supply chain financing arrangements.
|
• |
deferring, reducing or eliminating future cash dividends;
|
• |
reducing or delaying capital expenditures or restructuring activities;
|
• |
reducing or delaying research and development efforts;
|
• |
selling assets;
|
• |
deferring or refraining from pursuing certain strategic initiatives and acquisitions;
|
• |
refinancing our indebtedness; and
|
• |
seeking additional funding.
|
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
Location
|
|
State or
Country
|
|
Principal Business Activity
|
|
Approx.
Square
Feet
|
|
Owned or
Expiration
Date
of Lease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ft. Lauderdale
|
|
FL
|
|
Distribution
|
|
23,300
|
|
Owned
|
Ft. Lauderdale
|
|
FL
|
|
Distribution
|
|
30,000
|
|
Owned
|
Mishawaka
|
|
IN
|
|
Manufacturing
|
|
153,100
|
|
Owned
|
Edwardsville
|
|
KS
|
|
Distribution
|
|
363,500
|
|
Owned
|
Independence
|
|
KS
|
|
Manufacturing
|
|
337,400
|
|
Owned
|
Long Island City
|
|
NY
|
|
Administration
|
|
75,800
|
|
2023
|
Greenville
|
|
SC
|
|
Manufacturing
|
|
184,500
|
|
Owned
|
Disputanta
|
|
VA
|
|
Distribution
|
|
411,000
|
|
Owned
|
Reynosa
|
|
Mexico
|
|
Manufacturing
|
|
175,000
|
|
2025
|
Reynosa
|
|
Mexico
|
|
Manufacturing
|
|
153,000
|
|
2023
|
Bialystok
|
|
Poland
|
|
Manufacturing
|
|
111,300
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temperature Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lewisville
|
|
TX
|
|
Administration and Distribution
|
|
415,000
|
|
2024
|
St. Thomas
|
|
Canada
|
|
Manufacturing
|
|
40,000
|
|
Owned
|
Reynosa
|
|
Mexico
|
|
Manufacturing
|
|
82,000
|
|
2026
|
Reynosa
|
|
Mexico
|
|
Manufacturing
|
|
118,000
|
|
2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mississauga
|
|
Canada
|
|
Administration and Distribution
|
|
82,400
|
|
2023
|
Irving
|
|
TX
|
|
Training Center
|
|
13,400
|
|
2021
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period
|
Total Number of
Shares Purchased (1)
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (2)
|
Maximum Number (or
Approximate Dollar
Value) of Shares that
may yet be Purchased
Under the Plans or
Programs (2)
|
||||||||||||
October 1-31, 2020
|
5,000
|
$
|
46.31
|
5,000
|
$
|
11,042,286
|
||||||||||
November 1-30, 2020
|
81,606
|
46.99
|
81,606
|
7,207,845
|
||||||||||||
December 1-31, 2020
|
14,520
|
47.49
|
14,520
|
6,518,228
|
||||||||||||
Total
|
101,126
|
$
|
47.03
|
101,126
|
$
|
6,518,228
|
(1)
|
All shares were purchased through the publicly announced stock repurchase programs in open market transactions.
|
(2) |
In March 2020, our Board of Directors authorized the purchase of up to $20 million of our common stock, under a stock repurchase program. Under this program, during the year ended December 31, 2020, we repurchased 323,867 shares of our common stock, at a total cost of $13.5 million. As of December 31, 2020, there was approximately $6.5 million available for future stock purchases under the program. In February 2021, our Board of Directors authorized the purchase of up to an additional $20 million of our common stock under a new stock repurchase program, thereby increasing the amount available for future stock purchases to approximately $26.5 million. Stock will be purchased under the programs from time to time, in the open market or through private transactions, as market conditions warrant.
|
|
SMP
|
S&P 500
|
S&P 1500 Auto
Parts &
Equipment
Index
|
|||||||||
2015
|
100
|
100
|
100
|
|||||||||
2016
|
142
|
112
|
106
|
|||||||||
2017
|
122
|
136
|
139
|
|||||||||
2018
|
134
|
130
|
95
|
|||||||||
2019
|
150
|
171
|
127
|
|||||||||
2020
|
115
|
203
|
157
|
ITEM 6. |
SELECTED FINANCIAL DATA
|
|
Year Ended
December 31,
|
|||||||||||||||||||
2020
|
2019
|
2018
|
2017
|
2016
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Net sales
|
$
|
1,128,588
|
$
|
1,137,913
|
$
|
1,092,051
|
$
|
1,116,143
|
$
|
1,058,482
|
||||||||||
Gross profit
|
336,655
|
331,800
|
312,787
|
326,656
|
322,487
|
|||||||||||||||
Intangible asset impairment (1)
|
2,600
|
—
|
—
|
—
|
—
|
|||||||||||||||
Operating income (2)
|
108,895
|
94,495
|
81,268
|
97,521
|
98,789
|
|||||||||||||||
Earnings from continuing operations (3)
|
80,417
|
69,051
|
56,854
|
43,630
|
62,412
|
|||||||||||||||
Loss from discontinued operations, net of income tax benefit (4)
|
(23,024
|
)
|
(11,134
|
)
|
(13,851
|
)
|
(5,654
|
)
|
(1,982
|
)
|
||||||||||
Net earnings (3) (4)
|
57,393
|
57,917
|
43,003
|
37,976
|
60,430
|
|||||||||||||||
Per Share Data:
|
||||||||||||||||||||
Earnings from continuing operations (3):
|
||||||||||||||||||||
Basic
|
$
|
3.59
|
$
|
3.09
|
$
|
2.53
|
$
|
1.92
|
$
|
2.75
|
||||||||||
Diluted
|
3.52
|
3.03
|
2.48
|
1.88
|
2.70
|
|||||||||||||||
Earnings per common share (3) (4):
|
||||||||||||||||||||
Basic
|
2.57
|
2.59
|
1.91
|
1.67
|
2.66
|
|||||||||||||||
Diluted
|
2.51
|
2.54
|
1.88
|
1.64
|
2.62
|
|||||||||||||||
Cash dividends per common share (5)
|
0.50
|
0.92
|
0.84
|
0.76
|
0.68
|
|||||||||||||||
Other Data:
|
||||||||||||||||||||
Depreciation and amortization
|
$
|
26,323
|
$
|
25,809
|
$
|
24,104
|
$
|
23,916
|
$
|
20,457
|
||||||||||
Capital expenditures
|
17,820
|
16,185
|
20,141
|
24,442
|
20,921
|
|||||||||||||||
Dividends (5)
|
11,218
|
20,593
|
18,854
|
17,287
|
15,447
|
|||||||||||||||
Cash Flows Provided By (Used In):
|
||||||||||||||||||||
Operating activities
|
$
|
97,896
|
$
|
76,928
|
$
|
70,258
|
$
|
64,617
|
$
|
97,805
|
||||||||||
Investing activities
|
(17,799
|
)
|
(54,812
|
)
|
(29,886
|
)
|
(31,228
|
)
|
(88,018
|
)
|
||||||||||
Financing activities
|
(71,516
|
)
|
(23,378
|
)
|
(46,121
|
)
|
(35,944
|
)
|
(7,756
|
)
|
||||||||||
Balance Sheet Data (at period end):
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
19,488
|
$
|
10,372
|
$
|
11,138
|
$
|
17,323
|
$
|
19,796
|
||||||||||
Working capital
|
295,934
|
239,969
|
233,638
|
210,194
|
190,380
|
|||||||||||||||
Total assets (6)
|
956,540
|
903,854
|
819,116
|
782,601
|
760,485
|
|||||||||||||||
Total debt
|
10,232
|
57,045
|
49,219
|
61,778
|
54,975
|
|||||||||||||||
Long‑term debt (excluding current portion)
|
97
|
129
|
153
|
79
|
120
|
|||||||||||||||
Stockholders’ equity
|
550,236
|
504,228
|
467,201
|
453,654
|
441,028
|
(1)
|
In December 2020, a large retail customer informed us of its decision to pursue a private brand strategy for its engine management product line. As a result of this development, we anticipate that revenues sold under the BWD trademark will be significantly reduced and uncertain beyond the first quarter of 2021. In connection with the decision, we recorded an impairment charge of $2.6 million in 2020.
|
(2) |
On January 1, 2018, we adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Pursuant to the adoption, net periodic benefit cost (credit) for the years ended December 31, 2017 and 2016 has been reclassified from selling, general and administrative expenses to other non-operating income (expense), net.
|
(3) |
During 2017, we recorded an increase of $17.5 million to the provision for income taxes resulting from the remeasurement of our deferred tax assets, and the tax on deemed repatriated earnings of our foreign subsidiaries as a result of the enactment of the Tax Cuts and Jobs Act.
|
(4) |
We recorded an after tax charge of $23 million, $11.1 million, $13.9 million, $5.7 million, and $2 million as loss from discontinued operations to account for legal expenses and potential costs associated with our asbestos‑related liability for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively. Such costs were also separately disclosed in the operating activity section of the consolidated statements of cash flows for those same years.
|
(5) |
In April 2020, we temporarily suspended our $0.25 per share quarterly cash dividend in response to the impact of the COVID-19 pandemic on our business; and in October 2020, we reinstated the $0.25 per quarterly cash dividend, which was paid on December 1, 2020.
|
(6) |
On January 1, 2019 we adopted ASU 2016-02, Leases, which resulted in the recording of operating lease right-of-use assets and operating lease liabilities on our consolidated balance sheet.
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
• |
Maintain Our Strong Competitive Position in our Engine Management and Temperature Control Businesses. We are a leading independent manufacturer and distributor serving North America and other geographic areas in our core businesses of Engine Management and Temperature Control. We believe that our success is attributable to our emphasis on product quality, the breadth and depth of our product lines for both domestic and import vehicles, and our reputation for outstanding value-added services.
|
• |
providing our customers with full-line coverage of high quality engine management and temperature control products and new technologies for all years, makes and models of vehicles on the road;
|
• |
supporting our products with the highest level of value-added services;
|
• |
supply chain excellence through supplier and customer focused initiatives, and continuing to maximize our production, supply chain and distribution efficiencies;
|
• |
continuing to improve our cost position through increased global sourcing, increased manufacturing at our low-cost plants, and strategic transactions with manufacturers in low-cost regions; and
|
• |
focusing on our engineering development efforts including a focus on bringing more product manufacturing in-house.
|
• |
Provide Superior Value-Added Services and Product Availability. Our goal is to increase sales to existing and new customers by leveraging our skills in rapidly filling orders, maintaining high levels of product availability and offering a product portfolio that provides comprehensive coverage for all vehicle applications. Our marketing support provides insightful customer category management, technical support and award-winning programs, and our technically skilled sales personnel provide our customers with product selection, assortment and application support related to our products. In addition, we have a team dedicated to providing technical training on diagnosing and repairing vehicles equipped with complex systems.
|
• |
Expand Our Product Lines. Vehicle manufacturers continue to introduce new technologies and systems creating opportunities for us to expand our product lines. In addition, we intend to increase our sales by continuing to develop internally, or through potential acquisitions, the range of engine management and temperature control products that we offer to our customers. We are committed to investing the resources necessary to maintain and expand our technical capability to manufacture product lines that incorporate the latest technologies, including product lines relating to safety, advanced driver assistance and collision avoidance systems.
|
• |
Broaden Our Customer Base and Diversify our Business. We seek to increase our customer base and diversify our business primarily by (a) leveraging our manufacturing and distribution capabilities to secure additional business globally with original equipment vehicle and equipment manufacturers and their service part operations, as well as our existing customer base of large retailers, program distribution groups, warehouse distributors, other manufacturers and export customers, (b) supporting the service part operations of vehicle and equipment manufacturers with value-added services and product support for the life of the part, (c) developing new product lines that compliment our existing product offering and have the potential for high growth within the automotive aftermarket and (d) expand our product offering in the heavy duty and commercial vehicle markets.
|
• |
Improve Operating Efficiency and Cost Position. Our management places significant emphasis on improving our financial performance by achieving operating efficiencies and improving asset utilization, while maintaining product quality and high customer order fill rates.
|
• |
Cash Utilization. We intend to apply any excess cash flow from operations and the management of working capital primarily to reduce our outstanding indebtedness, pay dividends to our shareholders, expand our product lines by investing in new tooling and equipment, grow revenues through potential acquisitions, and repurchase shares of our common stock. Commencing in the second quarter of 2020, we implemented many programs to conserve cash and reduce costs in response to the impact of the COVID-19 pandemic on our business, including by borrowing an additional $75 million under our amended credit agreement, and temporarily suspending our quarterly cash dividend payments and stock repurchases. In June 2020, we repaid the additional $75 million of borrowed funds. In September 2020, our Board of Directors approved to reinstate our stock repurchase program, and in October 2020, our Board of Directors approved the reinstatement of our quarterly cash dividend payments.
|
• |
the number of vehicles on the road;
|
• |
the average age of vehicles on the road; and
|
• |
the total number of miles driven per year.
|
|
Year Ended December 31,
|
|||||||
2020
|
2019
|
|||||||
Engine Management:
|
||||||||
Ignition, Emission Control, Fuel & Safety Related System Products
|
$
|
691,722
|
$
|
705,994
|
||||
Wire and Cable
|
143,963
|
143,167
|
||||||
Total Engine Management
|
835,685
|
849,161
|
||||||
Temperature Control:
|
||||||||
Compressors
|
163,071
|
160,485
|
||||||
Other Climate Control Parts
|
118,883
|
117,870
|
||||||
Total Temperature Control
|
281,954
|
278,355
|
||||||
All Other
|
10,949
|
10,397
|
||||||
Total
|
$
|
1,128,588
|
$
|
1,137,913
|
Year Ended
December 31,
|
Engine
Management
|
Temperature
Control
|
Other
|
Total
|
||||||||||||
2020
|
||||||||||||||||
Net sales (a)
|
$
|
835,685
|
$
|
281,954
|
$
|
10,949
|
$
|
1,128,588
|
||||||||
Gross margins
|
251,747
|
75,161
|
9,747
|
336,655
|
||||||||||||
Gross margin percentage
|
30.1
|
%
|
26.7
|
%
|
—
|
%
|
29.8
|
%
|
||||||||
2019
|
||||||||||||||||
Net sales (a)
|
$
|
849,161
|
$
|
278,355
|
$
|
10,397
|
$
|
1,137,913
|
||||||||
Gross margins
|
251,560
|
70,064
|
10,176
|
331,800
|
||||||||||||
Gross margin percentage
|
29.6
|
%
|
25.2
|
%
|
—
|
%
|
29.2
|
%
|
(a) |
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
(In thousands)
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
2025
|
|
|
2026-2028
|
|
|
Total
|
|
|||||||
Operating lease obligations
|
|
$
|
8,945
|
|
|
$
|
7,231
|
|
|
$
|
5,819
|
|
|
$
|
3,931
|
|
|
$
|
2,960
|
|
|
$
|
5,551
|
|
|
$
|
34,437
|
|
Postretirement benefits
|
|
|
32
|
|
|
|
29
|
|
|
|
25
|
|
|
|
25
|
|
|
|
25
|
|
|
|
25
|
|
|
|
161
|
|
Severance payments related to restructuring and integration
|
|
|
146
|
|
|
|
32
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
179
|
|
Total commitments
|
|
$
|
9,123
|
|
|
$
|
7,292
|
|
|
$
|
5,845
|
|
|
$
|
3,956
|
|
|
$
|
2,985
|
|
|
$
|
5,576
|
|
|
$
|
34,777
|
|
(a) |
Indebtedness under our revolving credit facilities is not included in the table above as it is reported as a current liability in our consolidated balance sheets. As of December 31, 2020, amounts outstanding under our revolving credit facility was $10 million.
|
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page No.
|
|
|
Management’s Report on Internal Control over Financial Reporting
|
46
|
|
|
Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting
|
47
|
|
|
Report of Independent Registered Public Accounting Firm—Consolidated Financial Statements
|
48
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018
|
50
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
|
51
|
|
|
Consolidated Balance Sheets as of December 31, 2020 and 2019
|
52
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
|
53
|
|
|
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018
|
54
|
|
|
Notes to Consolidated Financial Statements
|
55
|
• |
evaluating the future claim filings assumption by developing an independent expectation and comparing it against the Company’s future claim filing assumption
|
• |
evaluating the closed with pay ratios, closed with pay lag patterns, settlement values, large claims, and ratios of ALAE to indemnity by comparing them to the Company’s historical experience
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
|
(Dollars in thousands,
except share and per share data)
|
|||||||||||
Net sales
|
$
|
1,128,588
|
$
|
1,137,913
|
$
|
1,092,051
|
||||||
Cost of sales
|
791,933
|
806,113
|
779,264
|
|||||||||
Gross profit
|
336,655
|
331,800
|
312,787
|
|||||||||
Selling, general and administrative expenses
|
224,670
|
234,715
|
231,336
|
|||||||||
Intangible asset impairment
|
2,600
|
—
|
—
|
|||||||||
Restructuring and integration expenses
|
464
|
2,585
|
4,510
|
|||||||||
Other income (expense), net
|
(26
|
)
|
(5
|
)
|
4,327
|
|||||||
Operating income
|
108,895
|
94,495
|
81,268
|
|||||||||
Other non-operating income (expense), net
|
812
|
2,587
|
(411
|
)
|
||||||||
Interest expense
|
2,328
|
5,286
|
4,026
|
|||||||||
Earnings from continuing operations before taxes
|
107,379
|
91,796
|
76,831
|
|||||||||
Provision for income taxes
|
26,962
|
22,745
|
19,977
|
|||||||||
Earnings from continuing operations
|
80,417
|
69,051
|
56,854
|
|||||||||
Loss from discontinued operations, net of income tax benefit of $8,089, $3,912 and $4,866
|
(23,024
|
)
|
(11,134
|
)
|
(13,851
|
)
|
||||||
Net earnings
|
$
|
57,393
|
$
|
57,917
|
$
|
43,003
|
||||||
Net earnings per common share – Basic:
|
||||||||||||
Earnings from continuing operations
|
$
|
3.59
|
$
|
3.09
|
$
|
2.53
|
||||||
Discontinued operations
|
(1.02
|
)
|
(0.50
|
)
|
(0.62
|
)
|
||||||
Net earnings per common share – Basic
|
$
|
2.57
|
$
|
2.59
|
$
|
1.91
|
||||||
Net earnings per common share – Diluted:
|
||||||||||||
Earnings from continuing operations
|
$
|
3.52
|
$
|
3.03
|
$
|
2.48
|
||||||
Discontinued operations
|
(1.01
|
)
|
(0.49
|
)
|
(0.60
|
)
|
||||||
Net earnings per common share – Diluted
|
$
|
2.51
|
$
|
2.54
|
$
|
1.88
|
||||||
Dividends declared per share
|
$
|
0.50
|
$
|
0.92
|
$
|
0.84
|
||||||
Average number of common shares
|
22,374,123
|
22,378,414
|
22,456,480
|
|||||||||
Average number of common shares and dilutive common shares
|
22,825,885
|
22,818,451
|
22,931,723
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
|
(In thousands)
|
|||||||||||
Net earnings
|
$
|
57,393
|
$
|
57,917
|
$
|
43,003
|
||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Foreign currency translation adjustments
|
2,929
|
1,024
|
(5,473
|
)
|
||||||||
Pension and postretirement plans
|
(16
|
)
|
(19
|
)
|
(12
|
)
|
||||||
Total other comprehensive income (loss), net of tax
|
2,913
|
1,005
|
(5,485
|
)
|
||||||||
Comprehensive income
|
$
|
60,306
|
$
|
58,922
|
$
|
37,518
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(Dollars in thousands,
except share data)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
19,488
|
$
|
10,372
|
||||
Accounts receivable, less allowances for discounts and doubtful accounts of $5,822 and $5,212 in 2020 and 2019, respectively
|
198,039
|
126,640
|
||||||
Inventories
|
345,502
|
368,221
|
||||||
Unreturned customer inventories
|
19,632
|
19,722
|
||||||
Prepaid expenses and other current assets
|
15,875
|
15,602
|
||||||
Total current assets
|
598,536
|
540,557
|
||||||
|
||||||||
Property, plant and equipment, net
|
89,105
|
89,649
|
||||||
Operating lease right-of-use assets
|
29,958
|
36,020
|
||||||
Goodwill
|
77,837
|
77,802
|
||||||
Other intangibles, net
|
54,004
|
64,861
|
||||||
Deferred incomes taxes
|
44,770
|
37,272
|
||||||
Investments in unconsolidated affiliates
|
40,507
|
38,858
|
||||||
Other assets
|
21,823
|
18,835
|
||||||
Total assets
|
$
|
956,540
|
$
|
903,854
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Notes payable
|
$
|
10,000
|
$
|
52,460
|
||||
Current portion of other debt
|
135
|
4,456
|
||||||
Accounts payable
|
100,018
|
92,535
|
||||||
Sundry payables and accrued expenses
|
47,078
|
38,819
|
||||||
Accrued customer returns
|
40,982
|
35,240
|
||||||
Accrued core liability
|
22,014
|
24,357
|
||||||
Accrued rebates
|
46,437
|
26,072
|
||||||
Payroll and commissions
|
35,938
|
26,649
|
||||||
Total current liabilities
|
302,602
|
300,588
|
||||||
|
||||||||
Long-term debt
|
97
|
129
|
||||||
Noncurrent operating lease liabilities
|
22,450
|
28,376
|
||||||
Other accrued liabilities
|
25,929
|
20,837
|
||||||
Accrued asbestos liabilities
|
55,226
|
49,696
|
||||||
Total liabilities
|
406,304
|
399,626
|
||||||
Commitments and contingencies
|
|
|
||||||
|
||||||||
Stockholders’ equity:
|
||||||||
Common Stock - par value $2.00 per share:
|
||||||||
Authorized 30,000,000 shares, issued 23,936,036 shares
|
47,872
|
47,872
|
||||||
Capital in excess of par value
|
105,084
|
102,742
|
||||||
Retained earnings
|
463,612
|
417,437
|
||||||
Accumulated other comprehensive income
|
(5,676
|
)
|
(8,589
|
)
|
||||
Treasury stock - at cost (1,586,923 shares and 1,477,594 shares in 2020 and 2019, respectively)
|
(60,656
|
)
|
(55,234
|
)
|
||||
Total stockholders’ equity
|
550,236
|
504,228
|
||||||
Total liabilities and stockholders’ equity
|
$
|
956,540
|
$
|
903,854
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
|
(In thousands)
|
|||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net earnings
|
$
|
57,393
|
$
|
57,917
|
$
|
43,003
|
||||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
26,323
|
25,809
|
24,104
|
|||||||||
Amortization of deferred financing cost
|
228
|
225
|
333
|
|||||||||
Increase (decrease) to allowance for doubtful accounts
|
396
|
(295
|
)
|
330
|
||||||||
Increase to inventory reserves
|
5,962
|
4,858
|
3,978
|
|||||||||
Amortization of deferred gain on sale of buildings
|
—
|
—
|
(218
|
)
|
||||||||
Gain on sale of property, plant and equipment
|
—
|
—
|
(3,997
|
)
|
||||||||
Intangible asset impairment
|
2,600
|
—
|
—
|
|||||||||
Equity (income) loss from joint ventures
|
(820
|
)
|
(2,865
|
)
|
768
|
|||||||
Employee Stock Ownership Plan allocation
|
2,301
|
2,519
|
2,557
|
|||||||||
Stock-based compensation
|
8,101
|
6,917
|
7,998
|
|||||||||
(Increase) decrease in deferred income taxes
|
(8,334
|
)
|
4,736
|
(10,046
|
)
|
|||||||
Increase in tax valuation allowance
|
864
|
358
|
22
|
|||||||||
Loss on discontinued operations, net of tax
|
23,024
|
11,134
|
13,851
|
|||||||||
Change in assets and liabilities:
|
||||||||||||
(Increase) decrease in accounts receivable
|
(71,933
|
)
|
2,789
|
5,351
|
||||||||
(Increase) decrease in inventories
|
17,984
|
(17,901
|
)
|
(30,199
|
)
|
|||||||
(Increase) decrease in prepaid expenses and other current assets
|
(370
|
)
|
(8,296
|
)
|
4,926
|
|||||||
Increase (decrease) in accounts payable
|
7,428
|
(1,950
|
)
|
16,894
|
||||||||
Increase (decrease) in sundry payables and accrued expenses
|
40,651
|
(2,957
|
)
|
(10,643
|
)
|
|||||||
Net changes in other assets and liabilities
|
(13,902
|
)
|
(6,070
|
)
|
1,246
|
|||||||
Net cash provided by operating activities
|
97,896
|
76,928
|
70,258
|
|||||||||
|
||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Acquisitions of and investments in businesses
|
—
|
(43,490
|
)
|
(9,852
|
)
|
|||||||
Net proceeds from sale of Grapevine, Texas facility
|
—
|
4,801
|
—
|
|||||||||
Capital expenditures
|
(17,820
|
)
|
(16,185
|
)
|
(20,141
|
)
|
||||||
Other investing activities
|
21
|
62
|
107
|
|||||||||
Net cash used in investing activities
|
(17,799
|
)
|
(54,812
|
)
|
(29,886
|
)
|
||||||
|
||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net borrowings (repayments) under line-of-credit agreements
|
(42,460
|
)
|
8,771
|
(13,311
|
)
|
|||||||
Net borrowings (repayments) of other debt and lease obligations
|
(4,248
|
)
|
(911
|
)
|
1,115
|
|||||||
Purchase of treasury stock
|
(13,482
|
)
|
(10,738
|
)
|
(14,886
|
)
|
||||||
Increase (decrease) in overdraft balances
|
(108
|
)
|
93
|
275
|
||||||||
Payments of debt issuance costs
|
—
|
—
|
(460
|
)
|
||||||||
Dividends paid
|
(11,218
|
)
|
(20,593
|
)
|
(18,854
|
)
|
||||||
Net cash used in financing activities
|
(71,516
|
)
|
(23,378
|
)
|
(46,121
|
)
|
||||||
Effect of exchange rate changes on cash
|
535
|
496
|
(436
|
)
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
9,116
|
(766
|
)
|
(6,185
|
)
|
|||||||
CASH AND CASH EQUIVALENTS at beginning of year
|
10,372
|
11,138
|
17,323
|
|||||||||
CASH AND CASH EQUIVALENTS at end of year
|
$
|
19,488
|
$
|
10,372
|
$
|
11,138
|
||||||
|
||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
2,187
|
$
|
5,030
|
$
|
3,738
|
||||||
Income taxes
|
$
|
24,640
|
$
|
22,267
|
$
|
15,353
|
||||||
Noncash investing activity:
|
||||||||||||
Receivable related to net proceeds from sale of Grapevine, Texas facility
|
$
|
—
|
$
|
—
|
$
|
4,801
|
|
Common
Stock
|
Capital in
Excess of
Par Value
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury
Stock
|
Total
|
||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2017
|
$
|
47,872
|
$
|
100,057
|
$
|
357,153
|
$
|
(4,109
|
)
|
$
|
(47,319
|
)
|
$
|
453,654
|
||||||||||
Cumulative effect adjustment
|
—
|
—
|
(1,189
|
)
|
—
|
—
|
(1,189
|
)
|
||||||||||||||||
Net earnings
|
—
|
—
|
43,003
|
—
|
—
|
43,003
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
(5,485
|
)
|
—
|
(5,485
|
)
|
||||||||||||||||
Cash dividends paid ($0.84 per share)
|
—
|
—
|
(18,854
|
)
|
—
|
—
|
(18,854
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(14,483
|
)
|
(14,483
|
)
|
||||||||||||||||
Stock-based compensation
|
—
|
1,648
|
—
|
—
|
6,350
|
7,998
|
||||||||||||||||||
Employee Stock Ownership Plan
|
—
|
765
|
—
|
—
|
1,792
|
2,557
|
||||||||||||||||||
|
||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2018
|
47,872
|
102,470
|
380,113
|
(9,594
|
)
|
(53,660
|
)
|
467,201
|
||||||||||||||||
Net earnings
|
—
|
—
|
57,917
|
—
|
—
|
57,917
|
||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
1,005
|
—
|
1,005
|
||||||||||||||||||
Cash dividends paid ($0.92 per share)
|
—
|
—
|
(20,593
|
)
|
—
|
—
|
(20,593
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(10,738
|
)
|
(10,738
|
)
|
||||||||||||||||
Stock-based compensation
|
—
|
(473
|
)
|
—
|
—
|
7,390
|
6,917
|
|||||||||||||||||
Employee Stock Ownership Plan
|
—
|
745
|
—
|
—
|
1,774
|
2,519
|
||||||||||||||||||
|
||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2019
|
47,872
|
102,742
|
417,437
|
(8,589
|
)
|
(55,234
|
)
|
504,228
|
||||||||||||||||
Net earnings
|
—
|
—
|
57,393
|
—
|
—
|
57,393
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
2,913
|
—
|
2,913
|
||||||||||||||||||
Cash dividends paid ($0.50 per share)
|
—
|
—
|
(11,218
|
)
|
—
|
—
|
(11,218
|
)
|
||||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
(13,482
|
)
|
(13,482
|
)
|
||||||||||||||||
Stock-based compensation
|
—
|
1,712
|
—
|
—
|
6,389
|
8,101
|
||||||||||||||||||
Employee Stock Ownership Plan
|
—
|
630
|
—
|
—
|
1,671
|
2,301
|
||||||||||||||||||
|
||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2020
|
$
|
47,872
|
$
|
105,084
|
$
|
463,612
|
$
|
(5,676
|
)
|
$
|
(60,656
|
)
|
$
|
550,236
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Estimated Life
|
Buildings
|
25 to 33-1/2 years
|
Building improvements
|
10 to 25 years
|
Machinery and equipment
|
5 to 12 years
|
Tools, dies and auxiliary equipment
|
3 to 8 years
|
Furniture and fixtures
|
3 to 12 years
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
Standard
|
|
Description
|
|
Date of
adoption
|
|
Effects on the financial
statements or other significant
matters
|
|
||||||
ASU 2017-04, Simplifying the Test for Goodwill Impairment
|
|
This standard simplifies the accounting for goodwill impairment. ASU 2017-04 removes Step 2 of the test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
|
|
January 1, 2020
|
|
We applied the new standard in the fourth quarter of 2020 when we performed our annual impairment test of goodwill. In performing our impairment test, we concluded that the fair value for each of our reporting units exceeded its carrying value and, as such, the adoption of the new standard did not impact the manner in which we performed the 2020 goodwill quantitative impairment test.
|
|
|
|
|
|
|
|
ASU 2016-13, Financial Instruments – Credit Losses
|
|
This standard creates a single model to measure impairment of financial assets, which includes trade accounts receivable. An estimate of expected credit losses on trade accounts receivable over their contractual life will be required to be recorded at inception, based on historical information, current conditions, and reasonable and supportable forecasts.
|
|
January 1, 2020
|
|
The adoption of the standard did not have a material impact on the manner in which we estimate our allowance for doubtful accounts on trade accounts receivable, or on our consolidated financial statements.
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
Standard
|
|
Description
|
|
Date of
adoption /
Effective
date
|
|
Effects on the financial
statements or other
significant matters
|
|
||||||
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
|
|
This standard is intended to simplify the accounting for income taxes by removing certain ASC Topic 740 exceptions in performing intra-period tax allocations among income statement components, in calculating certain deferred tax liabilities related to outside basis differences, and in calculating income taxes in interim periods with year-to-date losses. In addition, this standard is also intended to improve consistency and add simplification by clarifying and amending the reporting of franchise taxes and other taxes partially based on income, the recognition of deferred income taxes related to the step-up in tax basis goodwill, and the reporting in interim periods of the recognition of the enactment of tax laws or rate changes.
|
|
January 1, 2021, with early adoption permitted
|
|
The new standard clarifies the accounting for income taxes in certain technical areas that will not impact all companies. We anticipate that the adoption of the technical clarifications in this standard will not materially impact our accounting for income taxes, our consolidated financial statements and related disclosures. The new standard can be applied on a prospective basis in certain instances and in other instances on a retrospective or modified retrospective basis.
|
|
|
|
|
|
|
|
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
|
|
This standard is intended to provide optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The new standard is applicable to contracts that reference LIBOR, or another reference rate, expected to be discontinued due to reference rate reform.
|
|
Effective March 12, 2020 through December 31, 2022
|
|
The new standard may be applied as of the beginning of an interim period that includes March 12, 2020 through December 31, 2022. As certain of our contracts reference LIBOR, including our revolving credit facility and supply chain financing arrangements, we are currently reviewing the optional guidance in the standard to determine its impact upon the discontinuance of LIBOR. At this time, we do not believe that the new guidance, nor the discontinuance of LIBOR, will have a material impact on our consolidated financial statements and related disclosures.
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
Purchase Price
|
$
|
38,427
|
||||||
Assets acquired and liabilities assumed:
|
||||||||
Inventory
|
$
|
3,331
|
||||||
Property, plant and equipment, net
|
45
|
|||||||
Intangible assets
|
24,650
|
|||||||
Goodwill
|
10,401
|
|||||||
Net assets acquired
|
$
|
38,427
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Workforce
Reduction
|
Other Exit
Costs
|
Total
|
|||||||||
Exit activity liability at December 31, 2018
|
$
|
742
|
$
|
—
|
$
|
742
|
||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2019 (1)
|
—
|
2,585
|
2,585
|
|||||||||
Cash payments
|
(406
|
)
|
(1,688
|
)
|
(2,094
|
)
|
||||||
Reclassification of environmental liability (1)
|
—
|
(386
|
)
|
(386
|
)
|
|||||||
Reclassification of inventory reserves
|
—
|
(511
|
)
|
(511
|
)
|
|||||||
Exit activity liability at December 31, 2019
|
$
|
336
|
$
|
—
|
$
|
336
|
||||||
Restructuring and integration costs:
|
||||||||||||
Amounts provided for during 2020 (1)
|
—
|
464
|
464
|
|||||||||
Cash payments
|
(157
|
)
|
(214
|
)
|
(371
|
)
|
||||||
Reclassification of environmental liability (1)
|
—
|
(250
|
)
|
(250
|
)
|
|||||||
Exit activity liability at December 31, 2020
|
$
|
179
|
$
|
—
|
$
|
179
|
(1) |
Included in restructuring and integration costs in 2020 and 2019 is a $0.3 million and $0.4 million increase, respectively, in environmental cleanup costs related to ongoing monitoring and remediation in connection with the prior closure of our manufacturing operations at our Long Island City, New York location. The environmental liability has been reclassed to accrued liabilities as of December 31, 2020 and 2019, respectively.
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
December 31,
2020
|
December 31,
2019
|
||||||
|
(In thousands)
|
|||||||
|
||||||||
Finished goods
|
$
|
225,523
|
$
|
241,472
|
||||
Work-in-process
|
10,711
|
11,138
|
||||||
Raw materials
|
109,268
|
115,611
|
||||||
Subtotal
|
345,502
|
368,221
|
||||||
Unreturned customer inventories
|
19,632
|
19,722
|
||||||
Total inventories
|
$
|
365,134
|
$
|
387,943
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(In thousands)
|
|||||||
Land, buildings and improvements
|
$
|
38,833
|
$
|
38,299
|
||||
Machinery and equipment
|
148,578
|
142,531
|
||||||
Tools, dies and auxiliary equipment
|
60,102
|
54,843
|
||||||
Furniture and fixtures
|
30,347
|
30,470
|
||||||
Leasehold improvements
|
11,948
|
11,711
|
||||||
Construction-in-progress
|
13,691
|
11,271
|
||||||
Total property, plant and equipment
|
303,499
|
289,125
|
||||||
Less accumulated depreciation
|
214,394
|
199,476
|
||||||
Total property, plant and equipment, net
|
$
|
89,105
|
$
|
89,649
|
December 31,
|
||||||||
Balance Sheet Information
|
2020
|
2019
|
||||||
Assets
|
||||||||
Operating lease right-of-use assets
|
$
|
29,958
|
$
|
36,020
|
||||
|
||||||||
Liabilities
|
||||||||
Sundry payables and accrued expenses
|
$
|
8,719
|
$
|
8,739
|
||||
Noncurrent operating lease liabilities
|
22,450
|
28,376
|
||||||
Total operating lease liabilities
|
$
|
31,169
|
$
|
37,115
|
||||
|
||||||||
Weighted Average Remaining Lease Term
|
||||||||
Operating leases
|
5 Years
|
5.6 Years
|
||||||
|
||||||||
Weighted Average Discount Rate
|
||||||||
Operating leases
|
3.6
|
%
|
3.7
|
%
|
Year Ended, December 31,
|
||||||||
Expense and Cash Flow Information
|
2020
|
2019
|
||||||
Lease Expense
|
||||||||
Operating lease expense (a)
|
$
|
9,203
|
$
|
8,940
|
||||
Supplemental Cash Flow Information
|
||||||||
Cash Paid for the amounts included in the measurement of lease liabilities:
|
||||||||
Operating cash flows from operating leases
|
$
|
9,087
|
$
|
8,758
|
||||
Right-of-use assets obtained in exchange for new lease obligations:
|
||||||||
Operating leases
|
$
|
2,986
|
$
|
4,663
|
(a) |
Excludes expenses of approximately $2.5 million and 2.4 million for the years ended December 31, 2020 and 2019, respectively, related to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less, which is not material..
|
2021
|
$
|
8,945
|
||
2022
|
7,231
|
|||
2023
|
5,819
|
|||
2024
|
3,931
|
|||
2025
|
2,960
|
|||
Thereafter
|
5,551
|
|||
Total lease payments
|
$
|
34,437
|
||
Less: Interest
|
(3,268
|
)
|
||
Present value of lease liabilities
|
$
|
31,169
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Engine
Management
|
Temperature
Control
|
Total
|
|||||||||
Balance as of December 31, 2018:
|
||||||||||||
Goodwill
|
$
|
91,539
|
$
|
14,270
|
$
|
105,809
|
||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
|
$
|
53,051
|
$
|
14,270
|
$
|
67,321
|
||||||
Activity in 2019
|
||||||||||||
Acquisition of Pollak Business of Stoneridge, Inc.
|
10,401
|
—
|
10,401
|
|||||||||
Foreign currency exchange rate change
|
80
|
—
|
80
|
|||||||||
Balance as of December 31, 2019:
|
||||||||||||
Goodwill
|
102,020
|
14,270
|
116,290
|
|||||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
|
$
|
63,532
|
$
|
14,270
|
$
|
77,802
|
||||||
Activity in 2020
|
||||||||||||
Foreign currency exchange rate change
|
35
|
—
|
35
|
|||||||||
Balance as of December 31, 2020:
|
||||||||||||
Goodwill
|
102,055
|
14,270
|
116,325
|
|||||||||
Accumulated impairment losses
|
(38,488
|
)
|
—
|
(38,488
|
)
|
|||||||
|
$
|
63,567
|
$
|
14,270
|
$
|
77,837
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(In thousands)
|
|||||||
Customer relationships
|
$
|
111,701
|
$
|
111,692
|
||||
Trademarks and trade names
|
6,980
|
6,980
|
||||||
Non-compete agreements
|
3,272
|
3,276
|
||||||
Patents
|
723
|
723
|
||||||
Supply agreements
|
800
|
800
|
||||||
Leaseholds
|
160
|
160
|
||||||
Total acquired intangible assets
|
123,636
|
123,631
|
||||||
Less accumulated amortization (1)
|
(70,221
|
)
|
(59,431
|
)
|
||||
Net acquired intangible assets
|
$
|
53,415
|
$
|
64,200
|
(1) |
Applies to all intangible assets, except for related trademarks and trade names totaling $2.6 million and $5.2 million as of December 31, 2020 and 2019, respectively, which have indefinite useful lives and, as such, are not being amortized.
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(In thousands)
|
|||||||
Foshan GWOYNG SMP Vehicle Climate Control & Cooling Products Co. Ltd.
|
$
|
18,869
|
$
|
18,099
|
||||
Foshan FGD SMP Automotive Compressor Co. Ltd
|
15,036
|
13,633
|
||||||
Foshan Che Yijia New Energy Technology Co., Ltd.
|
4,174
|
4,883
|
||||||
Orange Electronic Co. Ltd
|
2,428
|
2,243
|
||||||
Total
|
$
|
40,507
|
$
|
38,858
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(In thousands)
|
|||||||
Deferred compensation
|
$
|
20,775
|
$
|
17,519
|
||||
Deferred financing costs, net
|
431
|
656
|
||||||
Other
|
617
|
660
|
||||||
Total other assets, net
|
$
|
21,823
|
$
|
18,835
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(In thousands)
|
|||||||
Revolving credit facilities
|
$
|
10,000
|
$
|
52,460
|
||||
Other (1)
|
232
|
4,585
|
||||||
Total debt
|
$
|
10,232
|
$
|
57,045
|
||||
|
||||||||
Current maturities of debt
|
$
|
10,135
|
$
|
56,916
|
||||
Long-term debt
|
97
|
129
|
||||||
Total debt
|
$
|
10,232
|
$
|
57,045
|
(1) |
Other includes borrowings under our Polish overdraft facility of Zloty 0.4 million (approximately $0.1 million) and Zloty 16.7 million (approximately $4.4 million) as of December 31, 2020 and 2019, respectively.
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
(In thousands)
|
||||
2021
|
$
|
225
|
||
2022
|
225
|
|||
2023
|
206
|
|||
Total amortization
|
$
|
656
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Shares
|
Weighted Average
Grant Date Fair
Value per Share
|
||||||
Balance at December 31, 2018
|
870,041
|
$
|
34.59
|
|||||
Granted
|
204,650
|
42.05
|
||||||
Vested
|
(188,693
|
)
|
38.08
|
|||||
Forfeited (1)
|
(33,458
|
)
|
43.32
|
|||||
Balance at December 31, 2019
|
852,540
|
$
|
35.26
|
|||||
Granted
|
208,200
|
38.21
|
||||||
Vested
|
(161,054
|
)
|
39.23
|
|||||
Forfeited (1)
|
(60,000
|
)
|
42.25
|
|||||
Balance at December 31, 2020
|
839,686
|
$
|
34.77
|
|
U.S. Defined
Contribution
|
|||
Year ended December 31,
|
||||
2020
|
$
|
9,457
|
||
2019
|
9,080
|
|||
2018
|
8,928
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
|
(In thousands)
|
|||||||||||
Interest and dividend income
|
$
|
109
|
$
|
97
|
$
|
80
|
||||||
Equity income (loss) from joint ventures (1)
|
820
|
2,865
|
(768
|
)
|
||||||||
Gain (loss) on foreign exchange
|
(350
|
)
|
(502
|
)
|
(120
|
)
|
||||||
Postretirement plan net periodic benefit credit (cost)
|
27
|
25
|
262
|
|||||||||
Other non-operating income, net
|
206
|
102
|
135
|
|||||||||
Total other non-operating income (expense), net
|
$
|
812
|
$
|
2,587
|
$
|
(411
|
)
|
(1) |
Year ended December 31, 2018 includes a noncash impairment charge of approximately $1.7 million related to our minority interest investment in Orange Electronic Co., Ltd. See Note 9, “Investments in Unconsolidated Affiliates” for additional information.
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
Current:
|
||||||||||||
Domestic
|
$
|
30,368
|
$
|
14,632
|
$
|
26,821
|
||||||
Foreign
|
4,064
|
3,019
|
3,180
|
|||||||||
Total current
|
34,432
|
17,651
|
30,001
|
|||||||||
|
||||||||||||
Deferred:
|
||||||||||||
Domestic
|
(7,418
|
)
|
4,677
|
(10,132
|
)
|
|||||||
Foreign
|
(52
|
)
|
417
|
108
|
||||||||
Total deferred
|
(7,470
|
)
|
5,094
|
(10,024
|
)
|
|||||||
Total income tax provision
|
$
|
26,962
|
$
|
22,745
|
$
|
19,977
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
U.S. Federal income tax rate of 21%
|
$
|
22,550
|
$
|
19,277
|
$
|
16,135
|
||||||
Increase (decrease) in tax rate resulting from:
|
||||||||||||
State and local income taxes, net of federal income tax benefit
|
3,781
|
3,328
|
2,781
|
|||||||||
Income tax (tax benefits) attributable to foreign income
|
330
|
191
|
1,598
|
|||||||||
Other non-deductible items, net
|
(563
|
)
|
(409
|
)
|
(559
|
)
|
||||||
Change in valuation allowance
|
864
|
358
|
22
|
|||||||||
Provision for income taxes
|
$
|
26,962
|
$
|
22,745
|
$
|
19,977
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
Deferred tax assets:
|
||||||||
Inventories
|
$
|
12,773
|
$
|
12,077
|
||||
Allowance for customer returns
|
13,804
|
11,969
|
||||||
Postretirement benefits
|
42
|
50
|
||||||
Allowance for doubtful accounts
|
1,412
|
1,262
|
||||||
Accrued salaries and benefits
|
12,984
|
9,826
|
||||||
Tax credit carryforwards
|
1,451
|
609
|
||||||
Accrued asbestos liabilities
|
15,372
|
13,132
|
||||||
Other
|
170
|
148
|
||||||
|
58,008
|
49,073
|
||||||
Valuation allowance
|
(1,621
|
)
|
(757
|
)
|
||||
Total deferred tax assets
|
56,387
|
48,316
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
7,710
|
7,706
|
||||||
Other
|
3,907
|
3,338
|
||||||
Total deferred tax liabilities
|
11,617
|
11,044
|
||||||
|
||||||||
Net deferred tax assets
|
$
|
44,770
|
$
|
37,272
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
Basic Net Earnings Per Common Share:
|
||||||||||||
Earnings from continuing operations
|
$
|
80,417
|
$
|
69,051
|
$
|
56,854
|
||||||
Loss from discontinued operations
|
(23,024
|
)
|
(11,134
|
)
|
(13,851
|
)
|
||||||
Net earnings available to common stockholders
|
$
|
57,393
|
$
|
57,917
|
$
|
43,003
|
||||||
|
||||||||||||
Weighted average common shares outstanding
|
22,374
|
22,378
|
22,456
|
|||||||||
|
||||||||||||
Earnings from continuing operations per common share
|
$
|
3.59
|
$
|
3.09
|
$
|
2.53
|
||||||
Loss from discontinued operations per common share
|
(1.02
|
)
|
(0.50
|
)
|
(0.62
|
)
|
||||||
Basic net earnings per common share
|
$
|
2.57
|
$
|
2.59
|
$
|
1.91
|
||||||
|
||||||||||||
Diluted Net Earnings Per Common Share:
|
||||||||||||
Earnings from continuing operations
|
$
|
80,417
|
$
|
69,051
|
$
|
56,854
|
||||||
Loss from discontinued operations
|
(23,024
|
)
|
(11,134
|
)
|
(13,851
|
)
|
||||||
Net earnings available to common stockholders
|
$
|
57,393
|
$
|
57,917
|
$
|
43,003
|
||||||
|
||||||||||||
Weighted average common shares outstanding
|
22,374
|
22,378
|
22,456
|
|||||||||
Plus incremental shares from assumed conversions:
|
||||||||||||
Dilutive effect of restricted stock and performance-based stock
|
452
|
440
|
476
|
|||||||||
Weighted average common shares outstanding – Diluted
|
22,826
|
22,818
|
22,932
|
|||||||||
|
||||||||||||
Earnings from continuing operations per common share
|
$
|
3.52
|
$
|
3.03
|
$
|
2.48
|
||||||
Loss from discontinued operations per common share
|
(1.01
|
)
|
(0.49
|
)
|
(0.60
|
)
|
||||||
Diluted net earnings per common share
|
$
|
2.51
|
$
|
2.54
|
$
|
1.88
|
|
2020
|
2019
|
2018
|
|||||||||
Restricted and performance shares
|
268
|
255
|
249
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
Net sales (a):
|
||||||||||||
Engine Management
|
$
|
835,685
|
$
|
849,161
|
$
|
803,487
|
||||||
Temperature Control
|
281,954
|
278,355
|
278,456
|
|||||||||
Other
|
10,949
|
10,397
|
10,108
|
|||||||||
Total net sales
|
$
|
1,128,588
|
$
|
1,137,913
|
$
|
1,092,051
|
||||||
|
||||||||||||
Intersegment sales (a):
|
||||||||||||
Engine Management
|
$
|
15,952
|
$
|
19,569
|
$
|
23,367
|
||||||
Temperature Control
|
6,162
|
6,545
|
8,160
|
|||||||||
Other
|
(22,114
|
)
|
(26,114
|
)
|
(31,527
|
)
|
||||||
Total intersegment sales
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Depreciation and Amortization:
|
||||||||||||
Engine Management
|
$
|
20,417
|
$
|
19,463
|
$
|
17,858
|
||||||
Temperature Control
|
4,035
|
4,568
|
4,704
|
|||||||||
Other
|
1,871
|
1,778
|
1,542
|
|||||||||
Total depreciation and amortization
|
$
|
26,323
|
$
|
25,809
|
$
|
24,104
|
||||||
|
||||||||||||
Operating income (loss):
|
||||||||||||
Engine Management
|
$
|
111,217
|
$
|
103,808
|
$
|
84,844
|
||||||
Temperature Control
|
21,296
|
13,667
|
14,586
|
|||||||||
Other
|
(23,618
|
)
|
(22,980
|
)
|
(18,162
|
)
|
||||||
Total operating income
|
$
|
108,895
|
$
|
94,495
|
$
|
81,268
|
||||||
|
||||||||||||
Investment in unconsolidated affiliates:
|
||||||||||||
Engine Management
|
$
|
2,428
|
$
|
2,243
|
$
|
2,158
|
||||||
Temperature Control
|
38,079
|
36,615
|
30,311
|
|||||||||
Other
|
—
|
—
|
—
|
|||||||||
Total investment in unconsolidated affiliates
|
$
|
40,507
|
$
|
38,858
|
$
|
32,469
|
||||||
|
||||||||||||
Capital expenditures:
|
||||||||||||
Engine Management
|
$
|
13,496
|
$
|
12,593
|
$
|
11,435
|
||||||
Temperature Control
|
1,988
|
2,273
|
7,245
|
|||||||||
Other
|
2,336
|
1,319
|
1,461
|
|||||||||
Total capital expenditures
|
$
|
17,820
|
$
|
16,185
|
$
|
20,141
|
||||||
|
||||||||||||
Total assets:
|
||||||||||||
Engine Management
|
$
|
618,210
|
$
|
594,953
|
$
|
532,092
|
||||||
Temperature Control
|
230,111
|
216,591
|
202,411
|
|||||||||
Other
|
108,219
|
92,310
|
84,613
|
|||||||||
Total assets
|
$
|
956,540
|
$
|
903,854
|
$
|
819,116
|
(a)
|
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
|
Year Ended December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
|
(In thousands)
|
|||||||||||
Operating income
|
$
|
108,895
|
$
|
94,495
|
$
|
81,268
|
||||||
Other non-operating income (expense), net
|
812
|
2,587
|
(411
|
)
|
||||||||
Interest expense
|
2,328
|
5,286
|
4,026
|
|||||||||
Earnings from continuing operations before taxes
|
107,379
|
91,796
|
76,831
|
|||||||||
Income tax expense
|
26,962
|
22,745
|
19,977
|
|||||||||
Earnings from continuing operations
|
80,417
|
69,051
|
56,854
|
|||||||||
Discontinued operations, net of tax
|
(23,024
|
)
|
(11,134
|
)
|
(13,851
|
)
|
||||||
Net earnings
|
$
|
57,393
|
$
|
57,917
|
$
|
43,003
|
|
December 31,
|
|||||||||||
|
2020
|
2019
|
2018
|
|||||||||
Long-lived assets (a):
|
(In thousands)
|
|||||||||||
United States
|
$
|
241,053
|
$
|
253,384
|
$
|
198,494
|
||||||
Canada
|
4,470
|
4,659
|
2,718
|
|||||||||
Mexico
|
10,586
|
12,036
|
4,012
|
|||||||||
Asia
|
40,621
|
38,942
|
32,470
|
|||||||||
Europe
|
16,504
|
17,004
|
16,880
|
|||||||||
Total long-lived assets
|
$
|
313,234
|
$
|
326,025
|
$
|
254,574
|
(a) |
Long-lived assets are attributed to countries based upon the location of the assets.
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
Year Ended December 31, 2020 (a)
|
Engine
Management
|
Temperature
Control
|
Other (b)
|
Total
|
||||||||||||
Geographic Area:
|
||||||||||||||||
United States
|
$
|
738,521
|
$
|
268,680
|
$
|
—
|
$
|
1,007,201
|
||||||||
Canada
|
25,842
|
11,679
|
10,949
|
48,470
|
||||||||||||
Mexico
|
19,336
|
271
|
—
|
19,607
|
||||||||||||
Asia
|
35,079
|
165
|
—
|
35,244
|
||||||||||||
Europe
|
12,255
|
351
|
—
|
12,606
|
||||||||||||
Other foreign
|
4,652
|
808
|
—
|
5,460
|
||||||||||||
Total
|
$
|
835,685
|
$
|
281,954
|
$
|
10,949
|
$
|
1,128,588
|
||||||||
Major Product Group:
|
||||||||||||||||
Ignition, emission control, fuel and safety related system products
|
$
|
691,722
|
$
|
—
|
$
|
8,172
|
$
|
699,894
|
||||||||
Wire and cable
|
143,963
|
—
|
159
|
144,122
|
||||||||||||
Compressors
|
—
|
163,071
|
812
|
163,883
|
||||||||||||
Other climate control parts
|
—
|
118,883
|
1,806
|
120,689
|
||||||||||||
Total
|
$
|
835,685
|
$
|
281,954
|
$
|
10,949
|
$
|
1,128,588
|
||||||||
Major Sales Channel:
|
||||||||||||||||
Aftermarket
|
$
|
682,874
|
$
|
255,716
|
$
|
10,949
|
$
|
949,539
|
||||||||
OE/OES
|
133,942
|
25,070
|
—
|
159,012
|
||||||||||||
Export
|
18,869
|
1,168
|
—
|
20,037
|
||||||||||||
Total
|
$
|
835,685
|
$
|
281,954
|
$
|
10,949
|
$
|
1,128,588
|
Year Ended December 31, 2019 (a)
|
Engine
Management
|
Temperature
Control
|
Other (b)
|
Total
|
||||||||||||
Geographic Area:
|
||||||||||||||||
United States
|
$
|
760,134
|
$
|
263,769
|
$
|
—
|
$
|
1,023,903
|
||||||||
Canada
|
27,439
|
12,322
|
10,397
|
50,158
|
||||||||||||
Mexico
|
19,330
|
705
|
—
|
20,035
|
||||||||||||
Asia
|
24,838
|
130
|
—
|
24,968
|
||||||||||||
Europe
|
13,341
|
534
|
—
|
13,875
|
||||||||||||
Other foreign
|
4,079
|
895
|
—
|
4,974
|
||||||||||||
Total
|
$
|
849,161
|
$
|
278,355
|
$
|
10,397
|
$
|
1,137,913
|
||||||||
Major Product Group:
|
||||||||||||||||
Ignition, emission control, fuel and safety related system products
|
$
|
705,994
|
$
|
—
|
$
|
6,381
|
$
|
712,375
|
||||||||
Wire and cable
|
143,167
|
—
|
477
|
143,644
|
||||||||||||
Compressors
|
—
|
160,485
|
1,338
|
161,823
|
||||||||||||
Other climate control parts
|
—
|
117,870
|
2,201
|
120,071
|
||||||||||||
Total
|
$
|
849,161
|
$
|
278,355
|
$
|
10,397
|
$
|
1,137,913
|
||||||||
Major Sales Channel:
|
||||||||||||||||
Aftermarket
|
$
|
702,872
|
$
|
248,420
|
$
|
10,397
|
$
|
961,689
|
||||||||
OE/OES
|
124,665
|
27,915
|
—
|
152,580
|
||||||||||||
Export
|
21,624
|
2,020
|
—
|
23,644
|
||||||||||||
Total
|
$
|
849,161
|
$
|
278,355
|
$
|
10,397
|
$
|
1,137,913
|
Year Ended December 31, 2018 (a)
|
Engine
Management
|
Temperature
Control
|
Other (b)
|
Total
|
||||||||||||
Geographic Area:
|
||||||||||||||||
United States
|
$
|
714,402
|
$
|
261,628
|
$
|
—
|
$
|
976,030
|
||||||||
Canada
|
33,475
|
13,877
|
10,108
|
57,460
|
||||||||||||
Mexico
|
19,397
|
817
|
—
|
20,214
|
||||||||||||
Asia
|
17,869
|
279
|
—
|
18,148
|
||||||||||||
Europe
|
13,054
|
630
|
—
|
13,684
|
||||||||||||
Other foreign
|
5,290
|
1,225
|
—
|
6,515
|
||||||||||||
Total
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
||||||||
Major Product Group:
|
||||||||||||||||
Ignition, emission control, fuel and safety related system products
|
$
|
648,270
|
$
|
—
|
$
|
5,829
|
$
|
654,099
|
||||||||
Wire and cable
|
155,217
|
—
|
454
|
155,671
|
||||||||||||
Compressors
|
—
|
148,416
|
1,853
|
150,269
|
||||||||||||
Other climate control parts
|
—
|
130,040
|
1,972
|
132,012
|
||||||||||||
Total
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
||||||||
Major Sales Channel:
|
||||||||||||||||
Aftermarket
|
$
|
684,242
|
$
|
246,112
|
$
|
10,108
|
$
|
940,462
|
||||||||
OE/OES
|
97,205
|
30,275
|
—
|
127,480
|
||||||||||||
Export
|
22,040
|
2,069
|
—
|
24,109
|
||||||||||||
Total
|
$
|
803,487
|
$
|
278,456
|
$
|
10,108
|
$
|
1,092,051
|
(a) |
Segment net sales include intersegment sales in our Engine Management and Temperature Control segments.
|
(b) |
Other consists of the elimination of intersegment sales from our Engine Management and Temperature Control segments as well as sales from our Canadian business unit that does not meet the criteria of a reportable operating segment.
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
Total
|
Real Estate
|
Other
|
|||||||||
2020 (1)
|
$
|
11,669
|
$
|
8,290
|
$
|
3,379
|
||||||
2019 (1)
|
11,382
|
7,909
|
3,473
|
|||||||||
2018
|
12,605
|
9,272
|
3,333
|
(1) |
Includes expenses of approximately $2.5 million and $2.4 million for the years ended December 31, 2020 and 2019, respectively, related to non-lease components such as maintenance, property taxes, etc., and operating lease expense for leases with an initial term of 12 months or less, which is not material.
|
|
December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
(In thousands)
|
|||||||
Balance, beginning of period
|
$
|
17,175
|
$
|
16,663
|
||||
Liabilities accrued for current year sales
|
87,116
|
99,304
|
||||||
Settlements of warranty claims
|
(86,628
|
)
|
(98,792
|
)
|
||||
Balance, end of period
|
$
|
17,663
|
$
|
17,175
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
STANDARD MOTOR PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
2020 Quarter Ended
|
|||||||||||||||
|
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
||||||||||||
|
(In thousands, except per share amounts)
|
|||||||||||||||
Net sales
|
$
|
282,738
|
$
|
343,609
|
$
|
247,939
|
$
|
254,302
|
||||||||
Gross profit
|
94,154
|
107,748
|
64,358
|
70,395
|
||||||||||||
Earnings from continuing operations
|
22,742
|
36,212
|
11,842
|
9,621
|
||||||||||||
Loss from discontinued operations, net of taxes
|
(13,568
|
)
|
(7,587
|
)
|
(875
|
)
|
(994
|
)
|
||||||||
Net earnings
|
$
|
9,174
|
$
|
28,625
|
$
|
10,967
|
$
|
8,627
|
||||||||
Net earnings from continuing operations per common share:
|
||||||||||||||||
Basic
|
$
|
1.02
|
$
|
1.62
|
$
|
0.53
|
$
|
0.43
|
||||||||
Diluted
|
$
|
1.00
|
$
|
1.59
|
$
|
0.52
|
$
|
0.42
|
||||||||
Net earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.41
|
$
|
1.28
|
$
|
0.49
|
$
|
0.38
|
||||||||
Diluted
|
$
|
0.40
|
$
|
1.26
|
$
|
0.48
|
$
|
0.38
|
|
2019 Quarter Ended
|
|||||||||||||||
|
Dec. 31
|
Sept. 30
|
June 30
|
Mar. 31
|
||||||||||||
|
(In thousands, except per share amounts)
|
|||||||||||||||
Net sales
|
$
|
241,252
|
$
|
307,723
|
$
|
305,172
|
$
|
283,766
|
||||||||
Gross profit
|
72,844
|
92,088
|
88,905
|
77,963
|
||||||||||||
Earnings from continuing operations
|
12,738
|
22,654
|
20,555
|
13,104
|
||||||||||||
Loss from discontinued operations, net of taxes
|
(1,220
|
)
|
(7,903
|
)
|
(1,123
|
)
|
(888
|
)
|
||||||||
Net earnings
|
$
|
11,518
|
$
|
14,751
|
$
|
19,432
|
$
|
12,216
|
||||||||
Net earnings from continuing operations per common share:
|
||||||||||||||||
Basic
|
$
|
0.57
|
$
|
1.01
|
$
|
0.92
|
$
|
0.58
|
||||||||
Diluted
|
$
|
0.56
|
$
|
1.00
|
$
|
0.90
|
$
|
0.57
|
||||||||
Net earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.51
|
$
|
0.66
|
$
|
0.87
|
$
|
0.54
|
||||||||
Diluted
|
$
|
0.50
|
$
|
0.65
|
$
|
0.85
|
$
|
0.53
|
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A. |
CONTROLS AND PROCEDURES
|
(a) |
Evaluation of Disclosure Controls and Procedures.
|
(b) |
Management’s Report on Internal Control Over Financial Reporting.
|
(c) |
Attestation Report of Independent Registered Public Accounting Firm.
|
(d) |
Changes in Internal Control Over Financial Reporting.
|
ITEM 9B. |
OTHER INFORMATION
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11. |
EXECUTIVE COMPENSATION
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a) | (1) | The Index to Consolidated Financial Statements of the Registrant under Item 8 of this Report is incorporated herein by reference as the list of Financial Statements required as part of this Report. |
(2) |
The following financial schedule and related report for the years 2020, 2019 and 2018 is submitted herewith:
|
(3) |
Exhibits.
|
ITEM 16. |
FORM 10-K SUMMARY
|
Exhibit
Number
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
Exhibit
Number
|
|
|
|
10.9
|
|
|
|
10.10
|
|
|
|
10.11
|
|
|
|
10.12
|
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
21
|
|
|
|
23
|
|
|
|
24
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
101.INS**
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
101.SCH**
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL**
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.LAB**
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE**
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
101.DEF**
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
STANDARD MOTOR PRODUCTS, INC.
|
(Registrant)
|
|
/s/ Eric P. Sills
|
|
Eric P. Sills
|
|
Chief Executive Officer and President
|
|
/s/ Nathan R. Iles
|
|
Nathan R. Iles
|
|
Chief Financial Officer
|
|
New York, New York
|
|
February 24, 2021
|
February 24, 2021
|
/s/ Eric P. Sills
|
|
|
|
|
Eric P. Sills
|
|
|
|
Chief Executive Officer and President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
February 24, 2021
|
/s/ Nathan R. Iles
|
|
|
|
|
Nathan R. Iles
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
February 24, 2021
|
/s/ Lawrence I. Sills
|
|
|
|
|
Lawrence I. Sills, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ John P. Gethin
|
|
|
|
|
John P. Gethin, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ Pamela Forbes Lieberman
|
|
|
|
|
Pamela Forbes Lieberman, Director
|
|
February 24, 2021
|
/s/ Patrick S. McClymont
|
|
|
|
|
Patrick S. McClymont, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ Joseph W. McDonnell
|
|
|
|
|
Joseph W. McDonnell, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ Alisa C. Norris
|
|
|
|
|
Alisa C. Norris, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ William H. Turner
|
|
|
|
|
William H. Turner, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ Richard S. Ward
|
|
|
|
|
Richard S. Ward, Director
|
|
|
|
|
|
February 24, 2021
|
/s/ Roger M. Widmann
|
|
|
|
|
Roger M. Widmann, Director
|
|
|
Additions
|
|||||||||||||||||||
|
||||||||||||||||||||
Description
|
Balance at
beginning
of year
|
Charged to
costs and
expenses
|
Other
|
Deductions
|
Balance at
end of year
|
|||||||||||||||
|
||||||||||||||||||||
Year ended December 31, 2020:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
4,244,000
|
$
|
392,000
|
$
|
—
|
$
|
230,000
|
$
|
4,406,000
|
||||||||||
Allowance for discounts
|
968,000
|
11,488,000
|
—
|
11,040,000
|
1,416,000
|
|||||||||||||||
|
$
|
5,212,000
|
$
|
11,880,000
|
$
|
—
|
$
|
11,270,000
|
$
|
5,822,000
|
||||||||||
|
||||||||||||||||||||
Allowance for sales returns
|
$
|
35,240,000
|
$
|
135,448,000
|
$
|
—
|
$
|
129,706,000
|
$
|
40,982,000
|
||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Year ended December 31, 2019:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
4,488,000
|
$
|
(295,000
|
)
|
$
|
—
|
$
|
(51,000
|
)
|
$
|
4,244,000
|
||||||||
Allowance for discounts
|
1,199,000
|
10,660,000
|
—
|
10,891,000
|
968,000
|
|||||||||||||||
|
$
|
5,687,000
|
$
|
10,365,000
|
$
|
—
|
$
|
10,840,000
|
$
|
5,212,000
|
||||||||||
|
||||||||||||||||||||
Allowance for sales returns
|
$
|
33,417,000
|
$
|
136,777,000
|
$
|
—
|
$
|
134,954,000
|
$
|
35,240,000
|
||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Year ended December 31, 2018:
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$
|
3,824,000
|
$
|
325,000
|
$
|
—
|
$
|
(339,000
|
)
|
$
|
4,488,000
|
|||||||||
Allowance for discounts
|
1,143,000
|
10,359,000
|
—
|
10,303,000
|
1,199,000
|
|||||||||||||||
|
$
|
4,967,000
|
$
|
10,684,000
|
$
|
—
|
$
|
9,964,000
|
$
|
5,687,000
|
||||||||||
|
||||||||||||||||||||
Allowance for sales returns
|
$
|
30,950,000
|
$
|
132,390,000
|
$
|
6,670,000
|
(1)
|
$
|
136,593,000
|
$
|
33,417,000
|
(1) |
The other addition to the allowance for sales returns represents the cumulative effect of the changes made to our consolidated balance sheet as of January 1, 2018 for the adoption of ASU 2014-09, Revenue from Contracts with Customers.
|
CONSULTANT
|
STANDARD MOTOR PRODUCTS, INC.
|
|
/s/ John P. Gethin
|
By:
|
/s/ James J. Burke |
John P. Gethin
|
Name: James J. Burke | |
Title: Chief Operating Officer
|
Name
|
State or
Country of
Incorporation
|
Percent
of Voting
Securities
Owned
|
||
Motortronics, Inc.
|
New York
|
100
|
||
SMP Automotive de Mexico,
|
Mexico
|
100
|
||
S.A. de C.V.(1)
|
||||
SMP Engine Management de Mexico,
|
Mexico
|
100
|
||
S. de R.L. de C.V.(1)
|
||||
SMP Four Seasons de Mexico,
|
Mexico
|
100
|
||
S. de R.L. de C.V.(1)
|
||||
SMP Motor Products Limited
|
Canada
|
100
|
||
SMP Poland sp. z o.o.(2)
|
Poland
|
100
|
||
Standard Motor Products de Mexico,
|
Mexico
|
100
|
||
S. de R.L. de C.V.(1)
|
||||
Standard Motor Products (Hong Kong) Limited
|
Hong Kong
|
100
|
(1) |
Standard Motor Products, Inc. owns approximately 99% and Motortronics, Inc. owns approximately 1% of these companies.
|
(2) |
SMP Poland sp. z o.o. is a wholly-owned subsidiary of Standard Motor Products (Hong Kong) Limited.
|
1.
|
I have reviewed this annual report on Form 10-K of Standard Motor Products, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Eric P. Sills
|
|
Eric P. Sills
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this annual report on Form 10-K of Standard Motor Products, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Nathan R. Iles
|
|
Nathan R. Iles
|
|
Chief Financial Officer
|
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ Eric P. Sills
|
|
Eric P. Sills
|
|
Chief Executive Officer and President
|
|
February 24, 2021
|
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|