Standard Motor Products, Inc. Announces Third Quarter 2021 Results, New Stock Repurchase Program and a Quarterly Dividend
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PR Newswire
NEW YORK, Oct. 28, 2021
NEW YORK, Oct. 28, 2021 /PRNewswire/ -- Standard Motor Products, Inc. (NYSE: SMP), a leading automotive parts manufacturer and distributor, reported today its consolidated financial results for the three months and nine months ended September 30, 2021.
Consolidated net sales for the third quarter of 2021 were $370.3 million, compared to consolidated net sales of $343.6 million during the comparable quarter in 2020. Earnings from continuing operations for the third quarter of 2021 were $29.2 million or $1.29 per diluted share, compared to $36.2 million or $1.59 per diluted share in the third quarter of 2020. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the third quarter of 2021 were $29.7 million or $1.32 per diluted share, compared to $36.2 million or $1.59 per diluted share in the third quarter of 2020.
Consolidated net sales for the nine months ended September 30, 2021, were $988.9 million, compared to consolidated net sales of $845.9 million during the comparable period in 2020. Earnings from continuing operations for the nine months ended September 30, 2021, were $79.3 million or $3.50 per diluted share, compared to $57.7 million or $2.53 per diluted share in the comparable period of 2020. Excluding non-operational gains and losses identified on the attached reconciliation of GAAP and non-GAAP measures, earnings from continuing operations for the nine months ended September 30, 2021 and 2020 were $80.4 million or $3.54 per diluted share and $57.8 million or $2.53 per diluted share, respectively.
Mr. Eric Sills, Standard Motor Products' Chief Executive Officer and President, stated, "We are extremely pleased with our third quarter results. We once again posted record sales, generating an increase of nearly 8% over a very strong third quarter of 2020 when business was surging as we emerged from pandemic-related lockdowns. Impressively, this quarter's sales were up 20% from 2019.
"Year-to-date, our sales are up 17% over 2020, though the first half of last year was adversely impacted by the pandemic. However, the first nine months of 2021 are up 10.3% over 2019.
"By division, Engine Management sales were up 7.7% as compared to 2020, and up nearly 15% vs. 2019, with several contributing factors. We experienced a combination of strong demand, continued success from customer initiatives, new business wins, and the impact of recent acquisitions.
"Our Temperature Control sales were up 7.9% as compared to 2020, and up nearly 35% over 2019. This was one of the longest and hottest summers on record, and our business remained robust throughout the quarter.
"Third quarter earnings are down from the third quarter of 2020, but the 2020 results included many unique non-recurring benefits, related to the Covid-19 pandemic. However, third quarter 2021 earnings did compare favorably on a two-year stack, up almost 30% from a more normalized 2019. Most importantly, year-to-date earnings are at record levels, exceeding both 2020 and 2019 by 40%."
"As anticipated and stated in our second quarter earnings announcement, we experienced some compression in our gross margin percentage in the third quarter, primarily in the Engine Management division. This was the result of two main factors. First, like many companies, we experienced a surge in various costs, including raw materials, labor and transportation. We will begin passing these costs on in the fourth quarter.
"The second component of our reduced gross margin percentage is related to our growth in non-aftermarket, specialized original equipment business, which we will discuss below. This business, which we believe has great potential for us, has a different margin profile than our aftermarket business – it has lower gross margins, but also lower SG&A expense, and thus generates comparable operating margins.
"Turning to acquisitions, on September 1st we announced that we had acquired Stabil Operative Group GmbH ("Stabil"), a European manufacturer of original equipment sensors, electronics, and clamping devices for passenger car and commercial vehicle applications. This marked our third acquisition this year, all geared towards expansion into specialized OE channels, including medium and heavy duty vehicles, construction and agricultural equipment, power sports, and other sub-segments. When combined with our legacy business in this arena, our non-aftermarket sales are approaching a run rate of $300 million annually. In addition to expanding beyond our core aftermarket business, it is also providing geographic expansion as we now have meaningful footprints to grow sales in Europe and Asia.
"We are extremely pleased with our efforts in growing our business in this channel. As we combine these different entities, we are able to take advantage of shared customer lists, product portfolios, manufacturing and engineering capabilities, and geographic reach. It is also important to note that much of this business is not beholden to internal combustion engines. Many of the products are either powertrain-neutral, or are geared toward electric and alternative energy vehicles. While we are still in the early days of integrating these businesses, the potential synergies and sales growth opportunities are very exciting.
"As we have continued to grow our business and post record results, we have also looked to return value to our shareholders. To this end, we repurchased shares of our common stock in the amount of $15.4 million during the quarter, bringing total repurchases to $26.5 million for the year so far. Further, our Board of Directors recently authorized an additional $30 million common stock repurchase plan. Finally, our Board also approved payment of a quarterly dividend of 25 cents per share on the common stock outstanding. The dividend will be paid on December 1, 2021 to stockholders of record on November 15, 2021.
"In closing, we are very pleased with our year thus far. We have posted record sales and earnings, have consummated three complementary acquisitions, and have garnered substantial new business wins with existing accounts. Our core market is doing very well and our relationships with our customers are strong. We have made major strides in expanding into new complementary markets with significant upside potential. As such, we are very excited about the future."
Conference Call
Standard Motor Products, Inc. will hold a conference call at 11:00 AM, Eastern Time, on Thursday, October 28, 2021. The dial-in number is 888-632-3389 (domestic) or 785-424-1674 (international). The playback number is 800-934-8524 (domestic) or 402-220-6999 (international). The participant passcode is 30385.
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Standard Motor Products cautions investors that any forward-looking statements made by the company, including those that may be made in this press release, are based on management's expectations at the time they are made, but they are subject to risks and uncertainties that may cause actual results, events or performance to differ materially from those contemplated by such forward looking statements. Among the factors that could cause actual results, events or performance to differ materially from those risks and uncertainties discussed in this press release are those detailed from time-to-time in prior press releases and in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q. By making these forward-looking statements, Standard Motor Products undertakes no obligation or intention to update these statements after the date of this release.
STANDARD MOTOR PRODUCTS, INC. | ||||||||||||||
Consolidated Statements of Operations | ||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||
SEPTEMBER 30, | SEPTEMBER 30, | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
NET SALES | $ 370,310 | $ 343,609 | $ 988,939 | $ 845,850 | ||||||||||
COST OF SALES | 265,105 | 235,861 | 700,678 | 603,349 | ||||||||||
GROSS PROFIT | 105,205 | 107,748 | 288,261 | 242,501 | ||||||||||
SELLING, GENERAL & ADMINISTRATIVE EXPENSES | 66,509 | 59,497 | 183,316 | 163,698 | ||||||||||
RESTRUCTURING AND INTEGRATION EXPENSES | 166 | 250 | 166 | 464 | ||||||||||
OTHER INCOME (EXPENSE), NET | 8 | (37) | 8 | (31) | ||||||||||
OPERATING INCOME | 38,538 | 47,964 | 104,787 | 78,308 | ||||||||||
OTHER NON-OPERATING INCOME, NET | 780 | 514 | 2,247 | 592 | ||||||||||
INTEREST EXPENSE | 652 | 462 | 1,356 | 2,107 | ||||||||||
EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES | 38,666 | 48,016 | 105,678 | 76,793 | ||||||||||
PROVISION FOR INCOME TAXES | 9,481 | 11,804 | 26,315 | 19,118 | ||||||||||
EARNINGS FROM CONTINUING OPERATIONS | 29,185 | 36,212 | 79,363 | 57,675 | ||||||||||
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES | (5,122) | (7,587) | (7,139) | (9,456) | ||||||||||
NET EARNINGS | 24,063 | 28,625 | 72,224 | 48,219 | ||||||||||
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 13 | - | 32 | - | ||||||||||
NET EARNINGS ATTRIBUTABLE TO SMP (a) | $ 24,050 | $ 28,625 | $ 72,192 | $ 48,219 | ||||||||||
NET EARNINGS ATTRIBUTABLE TO SMP | ||||||||||||||
EARNINGS FROM CONTINUING OPERATIONS | $ 29,172 | $ 36,212 | $ 79,331 | $ 57,675 | ||||||||||
LOSS FROM DISCONTINUED OPERATION, NET OF INCOME TAXES | (5,122) | (7,587) | (7,139) | (9,456) | ||||||||||
TOTAL | $ 24,050 | $ 28,625 | $ 72,192 | $ 48,219 | ||||||||||
NET EARNINGS PER COMMON SHARE ATTRIBUTABLE TO SMP | ||||||||||||||
BASIC EARNINGS FROM CONTINUING OPERATIONS | $ 1.32 | $ 1.62 | $ 3.57 | $ 2.58 | ||||||||||
DISCONTINUED OPERATION | (0.23) | (0.34) | (0.32) | (0.42) | ||||||||||
NET EARNINGS PER COMMON SHARE - BASIC | $ 1.09 | $ 1.28 | $ 3.25 | $ 2.16 | ||||||||||
DILUTED EARNINGS FROM CONTINUING OPERATIONS | $ 1.29 | $ 1.59 | $ 3.50 | $ 2.53 | ||||||||||
DISCONTINUED OPERATION | (0.22) | (0.33) | (0.32) | (0.41) | ||||||||||
NET EARNINGS PER COMMON SHARE - DILUTED | $ 1.07 | $ 1.26 | $ 3.18 | $ 2.12 | ||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES | 22,090,195 | 22,349,093 | 22,201,398 | 22,372,466 | ||||||||||
WEIGHTED AVERAGE NUMBER OF COMMON AND DILUTIVE SHARES | 22,543,781 | 22,758,458 | 22,678,114 | 22,795,426 | ||||||||||
(a) "SMP" refers to Standard Motor Products, Inc. and subsidiaries. | ||||||||||||||
STANDARD MOTOR PRODUCTS, INC. | ||||||||||||
Segment Revenues and Operating Income | ||||||||||||
(In thousands) | ||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||
SEPTEMBER 30, | SEPTEMBER 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
(Unaudited) | (Unaudited) | |||||||||||
Revenues | ||||||||||||
Ignition, Emission Control, Fuel & Safety | ||||||||||||
Related System Products | $ 208,443 | $ 190,891 | $ 574,595 | $ 498,204 | ||||||||
Wire and Cable | 38,708 | 38,663 | 117,790 | 105,621 | ||||||||
Engine Management | 247,151 | 229,554 | 692,385 | 603,825 | ||||||||
Compressors | $ 75,080 | $ 70,785 | $ 178,031 | $ 141,011 | ||||||||
Other Climate Control Parts | 43,995 | 39,608 | 109,988 | 93,216 | ||||||||
Temperature Control | 119,075 | 110,393 | 288,019 | 234,227 | ||||||||
All Other | 4,084 | 3,662 | 8,535 | 7,798 | ||||||||
Revenues | $ 370,310 | $ 343,609 | $ 988,939 | $ 845,850 | ||||||||
Gross Margin | ||||||||||||
Engine Management | $ 66,907 | 27.1% | $ 72,361 | 31.5% | $ 199,509 | 28.8% | $ 175,296 | 29.0% | ||||
Temperature Control | 33,815 | 28.4% | 32,212 | 29.2% | 78,468 | 27.2% | 60,828 | 26.0% | ||||
All Other | 4,676 | 3,175 | 10,562 | 6,377 | ||||||||
Subtotal | $ 105,398 | 28.5% | $ 107,748 | 31.4% | $ 288,539 | 29.2% | $ 242,501 | 28.7% | ||||
One-Time Acquisition Costs | (193) | -0.1% | - | 0.0% | (278) | 0.0% | - | 0.0% | ||||
Gross Margin | $ 105,205 | 28.4% | $ 107,748 | 31.4% | $ 288,261 | 29.1% | $ 242,501 | 28.7% | ||||
Selling, General & Administrative | ||||||||||||
Engine Management | $ 38,702 | 15.7% | $ 35,665 | 15.5% | $ 109,721 | 15.8% | $ 100,237 | 16.6% | ||||
Temperature Control | 17,120 | 14.4% | 15,571 | 14.1% | 44,952 | 15.6% | 40,568 | 17.3% | ||||
All Other | 10,029 | 8,261 | 27,315 | 22,893 | ||||||||
Subtotal | $ 65,851 | 17.8% | $ 59,497 | 17.3% | $ 181,988 | 18.4% | $ 163,698 | 19.4% | ||||
One-Time Acquisition Costs | 658 | 0.2% | - | 0.0% | 1,328 | 0.1% | - | 0.0% | ||||
Selling, General & Administrative | $ 66,509 | 18.0% | $ 59,497 | 17.3% | $ 183,316 | 18.5% | $ 163,698 | 19.4% | ||||
Operating Income | ||||||||||||
Engine Management | $ 28,012 | 11.3% | $ 36,696 | 16.0% | $ 89,510 | 12.9% | $ 75,059 | 12.4% | ||||
Temperature Control | 16,695 | 14.0% | 16,641 | 15.1% | 33,516 | 11.6% | 20,260 | 8.6% | ||||
All Other | (5,160) | (5,086) | (16,475) | (16,516) | ||||||||
Subtotal | 39,547 | 10.7% | 48,251 | 14.0% | 106,551 | 10.8% | 78,803 | 9.3% | ||||
One-time Acquisition Costs | (851) | -0.2% | - | 0.0% | (1,606) | -0.2% | - | 0.0% | ||||
Restructuring & Integration | (166) | 0.0% | (250) | -0.1% | (166) | 0.0% | (464) | -0.1% | ||||
Other Income (Expense), Net | 8 | 0.0% | (37) | 0.0% | 8 | 0.0% | (31) | 0.0% | ||||
Operating Income | $ 38,538 | 10.4% | $ 47,964 | 14.0% | $ 104,787 | 10.6% | $ 78,308 | 9.3% | ||||
STANDARD MOTOR PRODUCTS, INC. | |||||||||
Reconciliation of GAAP and Non-GAAP Measures | |||||||||
(In thousands, except per share amounts) | |||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||
SEPTEMBER 30, | SEPTEMBER 30, | ||||||||
2021 | 2020 | 2021 | 2020 | ||||||
(Unaudited) | (Unaudited) | ||||||||
EARNINGS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP | |||||||||
GAAP EARNINGS FROM CONTINUING OPERATIONS | $ 29,172 | $ 36,212 | $ 79,331 | $ 57,675 | |||||
RESTRUCTURING AND INTEGRATION EXPENSES | 166 | 250 | 166 | 464 | |||||
ONE-TIME ACQUISITION COSTS | 851 | - | 1,606 | - | |||||
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD | (259) | (235) | (259) | (235) | |||||
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS | (265) | (65) | (461) | (121) | |||||
NON-GAAP EARNINGS FROM CONTINUING OPERATIONS | $ 29,665 | $ 36,162 | $ 80,383 | $ 57,783 | |||||
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS ATTRIBUTABLE TO SMP | |||||||||
GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | $ 1.29 | $ 1.59 | $ 3.50 | $ 2.53 | |||||
RESTRUCTURING AND INTEGRATION EXPENSES | 0.01 | 0.01 | - | 0.02 | |||||
ONE-TIME ACQUISITION COSTS | 0.04 | - | 0.07 | - | |||||
CERTAIN TAX CREDITS AND PRODUCTION DEDUCTIONS FINALIZED IN PERIOD | (0.01) | (0.01) | (0.01) | (0.01) | |||||
INCOME TAX EFFECT RELATED TO RECONCILING ITEMS | (0.01) | - | (0.02) | (0.01) | |||||
NON-GAAP DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS | $ 1.32 | $ 1.59 | $ 3.54 | $ 2.53 | |||||
OPERATING INCOME | |||||||||
GAAP OPERATING INCOME | $ 38,538 | $ 47,964 | $ 104,787 | $ 78,308 | |||||
ONE-TIME ACQUISITION COSTS | 851 | - | 1,606 | - | |||||
RESTRUCTURING AND INTEGRATION EXPENSES | 166 | 250 | 166 | 464 | |||||
OTHER (INCOME) EXPENSE, NET | (8) | 37 | (8) | 31 | |||||
NON-GAAP OPERATING INCOME | $ 39,547 | $ 48,251 | $ 106,551 | $ 78,803 | |||||
MANAGEMENT BELIEVES THAT EARNINGS FROM CONTINUING OPERATIONS AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS WHICH ARE ATTRIBUTABLE TO SMP, AND OPERATING INCOME, AS ADJUSTED FOR SPECIAL ITEMS, ARE NON-GAAP MEASUREMENTS AND ARE MEANINGFUL TO INVESTORS BECAUSE THEY PROVIDE A VIEW OF THE COMPANY WITH RESPECT TO ONGOING OPERATING RESULTS. SPECIAL ITEMS REPRESENT SIGNIFICANT CHARGES OR CREDITS THAT ARE IMPORTANT TO AN UNDERSTANDING OF THE COMPANY'S OVERALL OPERATING RESULTS IN THE PERIODS PRESENTED. SUCH NON-GAAP MEASUREMENTS ARE NOT RECOGNIZED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND SHOULD NOT BE VIEWED AS AN ALTERNATIVE TO GAAP MEASURES OF PERFORMANCE. |
STANDARD MOTOR PRODUCTS, INC. | ||||||
Condensed Consolidated Balance Sheets | ||||||
(In thousands) | ||||||
SEPTEMBER 30, | DECEMBER 31, | |||||
2021 | 2020 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
CASH | $ 33,144 | $ 19,488 | ||||
ACCOUNTS RECEIVABLE, GROSS | 231,066 | 203,861 | ||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 6,645 | 5,822 | ||||
ACCOUNTS RECEIVABLE, NET | 224,421 | 198,039 | ||||
INVENTORIES | 414,657 | 345,502 | ||||
UNRETURNED CUSTOMER INVENTORY | 23,367 | 19,632 | ||||
OTHER CURRENT ASSETS | 15,268 | 15,875 | ||||
TOTAL CURRENT ASSETS | 710,857 | 598,536 | ||||
PROPERTY, PLANT AND EQUIPMENT, NET | 100,787 | 89,105 | ||||
OPERATING LEASE RIGHT-OF-USE ASSETS | 42,458 | 29,958 | ||||
GOODWILL | 131,549 | 77,837 | ||||
OTHER INTANGIBLES, NET | 108,312 | 54,004 | ||||
DEFERRED INCOME TAXES | 34,790 | 44,770 | ||||
INVESTMENT IN UNCONSOLIDATED AFFILIATES | 42,123 | 40,507 | ||||
OTHER ASSETS | 24,857 | 21,823 | ||||
TOTAL ASSETS | $ 1,195,733 | $ 956,540 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
NOTES PAYABLE | $ 128,938 | $ 10,000 | ||||
CURRENT PORTION OF OTHER DEBT | 2,941 | 135 | ||||
ACCOUNTS PAYABLE | 128,808 | 100,018 | ||||
ACCRUED CUSTOMER RETURNS | 59,972 | 40,982 | ||||
ACCRUED CORE LIABILITY | 23,650 | 22,014 | ||||
ACCRUED REBATES | 43,110 | 46,437 | ||||
PAYROLL AND COMMISSIONS | 40,725 | 35,938 | ||||
SUNDRY PAYABLES AND ACCRUED EXPENSES | 50,227 | 47,078 | ||||
TOTAL CURRENT LIABILITIES | 478,371 | 302,602 | ||||
OTHER LONG-TERM DEBT | 68 | 97 | ||||
NONCURRENT OPERATING LEASE LIABILITIES | 33,246 | 22,450 | ||||
ACCRUED ASBESTOS LIABILITIES | 57,532 | 55,226 | ||||
OTHER LIABILITIES | 27,964 | 25,929 | ||||
TOTAL LIABILITIES | 597,181 | 406,304 | ||||
TOTAL SMP STOCKHOLDERS' EQUITY | 587,018 | 550,236 | ||||
NONCONTROLLING INTEREST | 11,534 | - | ||||
TOTAL STOCKHOLDERS' EQUITY | 598,552 | 550,236 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,195,733 | $ 956,540 | ||||
STANDARD MOTOR PRODUCTS, INC. | ||||
Condensed Consolidated Statements of Cash Flows | ||||
(In thousands) | ||||
NINE MONTHS ENDED | ||||
SEPTEMBER 30, | ||||
2021 | 2020 | |||
(Unaudited) | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
NET EARNINGS | $ 72,224 | $ 48,219 | ||
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH | ||||
PROVIDED BY OPERATING ACTIVITIES: | ||||
DEPRECIATION AND AMORTIZATION | 20,160 | 19,313 | ||
OTHER | 13,904 | 19,098 | ||
CHANGE IN ASSETS AND LIABILITIES: | ||||
ACCOUNTS RECEIVABLE | (15,343) | (83,878) | ||
INVENTORIES | (52,742) | 53,330 | ||
ACCOUNTS PAYABLE | 24,228 | (13,117) | ||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 2,324 | 5,634 | ||
SUNDRY PAYABLES AND ACCRUED EXPENSES | 18,905 | 31,725 | ||
OTHER | (4,522) | (1,719) | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 79,138 | 78,605 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES | (124,663) | - | ||
CAPITAL EXPENDITURES | (19,406) | (13,170) | ||
OTHER INVESTING ACTIVITIES | 29 | 14 | ||
NET CASH USED IN INVESTING ACTIVITIES | (144,040) | (13,156) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
NET CHANGE IN DEBT | 121,854 | (44,852) | ||
PURCHASE OF TREASURY STOCK | (26,518) | (8,726) | ||
DIVIDENDS PAID | (16,678) | (5,615) | ||
OTHER FINANCING ACTIVITIES | 455 | 86 | ||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 79,113 | (59,107) | ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (555) | 67 | ||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 13,656 | 6,409 | ||
CASH AND CASH EQUIVALENTS at beginning of Period | 19,488 | 10,372 | ||
CASH AND CASH EQUIVALENTS at end of Period | $ 33,144 | $ 16,781 | ||
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SOURCE Standard Motor Products, Inc.
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