SMP(US:SMP)2021-02-24 20:17Sales and Revenue - Replacement parts for ignition, emission, fuel, and safety-related systems accounted for approximately $691.7 million, or 61%, of consolidated net sales in 2020[24]. - Wire and cable parts accounted for approximately $144 million, or 13%, of consolidated net sales in 2020[28]. - Compressors accounted for approximately $163.1 million, or 14%, of consolidated net sales in 2020[31]. - Other climate control parts accounted for approximately $118.9 million, or 11%, of consolidated net sales in 2020[32]. - The five largest individual customers accounted for approximately 68% of consolidated net sales in 2020[40]. - The company's five largest customers accounted for approximately 68% of consolidated net sales in 2020, with O'Reilly, NAPA, Advance, and AutoZone contributing 26%, 15%, 14%, and 11% respectively[81]. - Consolidated net sales for 2020 were $1,128.6 million, a decrease of $9.3 million, or 0.8%, compared to $1,137.9 million in 2019[176]. - Engine Management's net sales decreased by $13.5 million, or 1.6%, to $835.7 million for 2020, while Temperature Control's net sales increased by $3.6 million, or 1.3%, to $282 million[177][178]. Financial Performance - Net sales for the year ended December 31, 2020, were $1,128,588, a decrease of 0.3% compared to $1,137,913 in 2019[147]. - Gross profit increased to $336,655 in 2020 from $331,800 in 2019, representing a growth of 1.1%[147]. - Operating income rose to $108,895 in 2020, up 15.3% from $94,495 in 2019[147]. - Earnings from continuing operations increased to $80,417, a 16.5% rise from $69,051 in 2019[147]. - Net earnings for 2020 were $57,393, slightly down from $57,917 in 2019, reflecting a decrease of 0.9%[147]. - Basic earnings per share from continuing operations increased to $3.59 in 2020, up from $3.09 in 2019, marking a growth of 16.2%[147]. - Total assets at the end of 2020 were $956,540, an increase from $903,854 in 2019, representing a growth of 5.8%[147]. - Total debt decreased significantly to $10,232 in 2020 from $57,045 in 2019, a reduction of 82.0%[147]. - Cash provided by operating activities increased to $97.9 million in 2020 from $76.9 million in 2019, a year-over-year increase of 27.5%[193]. - Cash used in investing activities was $17.8 million in 2020, significantly lower than $54.8 million in 2019, reflecting a decrease of 67.6%[195]. - Cash used in financing activities rose to $71.5 million in 2020 from $23.4 million in 2019, an increase of 205.1% due to share repurchases and debt repayments[197]. - Dividends paid decreased to $11.2 million in 2020 from $20.6 million in 2019, a reduction of 45.5%[199]. Operational Strategies - The company plans to expand its product lines in response to new vehicle technologies, including Advanced Driver Assistance Systems (ADAS) components[23]. - The company aims to improve its cost position through strategic transactions with manufacturers in low-cost regions, including joint ventures in China[30]. - The company emphasizes supply chain excellence and aims to maximize production and distribution efficiencies[20]. - The company has made changes to its inventory management system to reduce inventory requirements, utilizing a pack-to-order distribution system[54]. - The company established a committee to oversee risk management strategies related to the COVID-19 pandemic, focusing on inventory management, cost reduction, and employee safety[165]. Market Conditions - The automotive aftermarket is highly competitive, with the company competing on product quality, availability, and value-added services[42]. - The automotive aftermarket industry is highly competitive, with significant competition from both domestic and international suppliers, which may impact market share and pricing[86]. - Seasonal fluctuations in sales are significant, with the highest demand typically occurring in the second and third quarters, particularly for Temperature Control products[90]. - The company faces ongoing pressure to lower prices and extend payment terms due to competitive conditions, which has affected operating margins and increased working capital needs[85]. Customer Relations - A large retail customer informed the company of its decision to pursue a private brand strategy, historically purchasing $140 million of engine management products annually[41]. - A large retail customer, which historically purchased $140 million of engine management products annually, is shifting to a private brand strategy, impacting future sales[82]. Environmental and Compliance Issues - The company is exposed to risks related to environmental compliance and potential liabilities, which may have a material adverse effect on its financial condition[128]. - The company’s operations are subject to various environmental laws and regulations, which may impose liabilities that could adversely affect financial condition and results[126]. - The reserve balance related to environmental clean-up at one facility is $1.7 million as of December 31, 2020[128]. Workforce and Community Engagement - The company trains approximately 60,000 technicians annually through its accredited training program, with around 16,000 technicians registered for online sessions[50]. - Approximately 50% of the company's hires and promotions over the last 5 years have been women or individuals of diverse backgrounds[69]. - The company has raised over $100,000 in donations to local hospitals, schools, and shelters in response to the COVID-19 pandemic[78]. Risks and Uncertainties - The COVID-19 pandemic has created significant volatility and uncertainty, potentially impacting customer demand and preferences, which could lead to production volume adjustments[117]. - Severe weather and natural disasters could adversely impact operations at manufacturing and distribution facilities, affecting the ability to supply customers[102]. - The company faces risks from potential changes in U.S. trade policy, particularly regarding tariffs on imports, which could increase sourcing costs[125]. - The company is exposed to risks related to supply chain financing arrangements, which could adversely affect financial condition and cash flows if payment terms are extended or collection delays occur[107]. - The company’s operations could be materially affected by interruptions or breaches in information technology systems, which are critical for day-to-day operations[105]. Stock and Shareholder Information - The last reported sale price of the company's common stock on the NYSE was $42.47 per share on February 22, 2021[140]. - The company reinstated its quarterly cash dividend payment to $0.25 per share in October 2020 after a temporary suspension in Q2 2020[141]. - A total of 101,126 shares were repurchased in Q4 2020 at an average price of $47.03 per share, with a total cost of approximately $4.75 million[143]. - The company has approximately $6.5 million available for future stock purchases under its stock repurchase program as of December 31, 2020[143]. - The cumulative total return on the company's common stock was 115% in 2020 compared to 203% for the S&P 500[145].