You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: My name is Larry Sills, Chairman of the Board.
Our agenda for today is we'll start with Eric who'll review the highlights of the fourth quarter and the year.
Jim will then review some operations and Nathan will then give a more detailed review of the numbers.
When that's complete we will switch over to -- we will start our Q&A session, so a lot to cover.
I truly believe we would not have been nearly as successful in navigating these uncharted waters without their dedication and skills.
I truly could not be more proud of how they guided us through it.
Okay, on to business, we are extremely pleased with our fourth quarter results as we set records for both sales and profits.
Our sales were up $41 million or 17% with both divisions contributing record numbers.
Engine Management was up 15% and was far and away our largest fourth quarter on record.
Some of this was due to entering the period with an order backlog.
As you recall, the third quarter was also quite strong and due to some manpower shortages in our distribution centers we did not fully catch-up until early in the fourth quarter.
But beyond that, incoming volume from our customers continued to be robust throughout the period as well.
I would note that our customer's sell-through in the fourth quarter was in the mid single-digits and we are pleased to see that the positive trend is continued into 2021.
Temperature Controls also had a record, up 30% though the fourth quarter is the lowest sales period of this highly seasonal category.
We enjoyed a very warm summer and similar to Engine Management we ended the quarter with a bit of a backlog.
In addition to this backlog, the warmth continued into the fourth quarter prolonging the selling season.
Customer POS was robust throughout but again this is a light period for the Air Conditioning business.
Reflecting back this was a -- this year was a tale of two halves.
At mid-year we were down nearly 15% due to the sales drop off and the pandemic.
And with the third and fourth quarters strengthening sequentially on a full year basis we were nearly flat with 2019 with Engine Management slightly behind and Temperature Control slightly ahead.
From a profitability standpoint the trend was similar.
After the first half our earnings from continuing operations were down almost 37% and with the record third and fourth quarters, we ended the year up 16%.
Nathan will provide much more detail later in the call.
But overall, we are quite pleased with our year and proud of our performance.
Although we enter 2021 with many positives as previously announced, we were recently informed of a loss of a major account within our Engine Management segment.
At the time of the announcement we knew that the annualized impact was an approximate loss of $140 million that we had yet to finalize any details including timing.
We now know that this business is phasing out over the course of the first quarter of this year during which we expect approximately $20 million in revenue and it will then be totally absent beginning in the second quarter and thereafter.
This account has chosen to pursue a private label strategy as they have with other product categories before and it is our understanding that they have split the business between several suppliers both domestic and overseas.
We now turn our attention to rightsizing our cost structure accordingly meanwhile we seek to replace the volume.
First off we have many exciting opportunities with various customers that are actively in discussion.
And secondly installers all have many sources for their parts needs.
Many of whom we believe to be loyal to our brands.
And we plan to work aggressively in the field helping them find our products.
While this account decided to pursue a different approach, we strongly believe that our full-line, full-service strategy continues to resonate with our other customers as well as with the installers and end consumers.
As evidence of this and of the strength of our partnerships, we are honored to have recently received O'Reilly Auto Parts top honors as their 2020 Supplier of the Year.
I'd next like to speak for a moment about some of our other areas of business that complement our North American aftermarket focus.
First is original equipment; while we do enjoy some OE business for the passenger car market our larger emphasis has been more toward the heavy duty industrial and agricultural arenas.
We believe these are a better fit for us.
The product lifecycle tends to be a bit longer and frankly tend to be a bit more profitable than OE for passenger cars.
In general, the OE market was slower to recover from the pandemic than the aftermarket as new vehicle production and sales were more adversely impacted.
But I'm pleased to report that it has now rebounded quite nicely and we are seeing good run rates entering 2021.
Included in this is our recent Pollak acquisition of which 75% is OE and largely commercial vehicle.
Not only are we seeing a rebound of the acquired product lines, this acquisition has opened new doors for us which we're actively pursuing.
Another original equipment area that has been a real highlight for us has been our compressed natural gas injectors, which are utilized in heavy duty commercial vehicles largely in Asia.
As that region focuses on alternative energy vehicles we have seen strong growth as they build out systems that operate cleaner than conventional power trains.
We sold over a million natural gas injectors last year and the order book remains very strong.
Next, regarding the heavy duty aftermarket portion of the acquired Pollak business we saw the same rapid recovery that we saw in our legacy aftermarket.
But as you'll recall, our intent with this is to focus on reinvigorating what has been a somewhat neglected business from its former owner.
We have added hundreds of SKUs, are refreshing all marketing materials and are building out an organization to aggressively pursue the heavy-duty aftermarket for both Engine Management and Temperature Control.
We see this as a very complementary channel for us.
There are many similar products to what we offer elsewhere and we have acquired a well-known and highly regarded brand on which to build.
Lastly, I'd like to address our Chinese operations.
To remind you, we have three joint ventures all within Temperature Control.
While they provide us with access to high quality, low cost products for our North American aftermarket business there are other purposes to pursue Chinese original equipment business, which is the largest new vehicle market in the world.
As of now about 30% of what we sell out of these JVs is for in-country OE.
Now while these businesses are still quite small the growth potential is substantial.
One that we are really excited about is called CYJ, which manufactures electric compressors for electric vehicles both passenger car and heavy duty truck and bus.
Similar to the natural gas injector discussion a few moments ago, we see real potential in being a basic manufacturer of products for alternative energy vehicles and are excited to be in at the ground floor.
So in summary, 2020 was a rollercoaster of a year.
After a difficult first half, the second half showed the resilience of our industry and we were able to make up essentially all of the lost ground.
And while the ongoing pandemic will continue to cause uncertainty, looking forward to 2021 we see many positives.
Industry trends are all favorable.
Among them average age of vehicles has hit a record 12 years.
Gas prices remain relatively low.
And as mile driven recovers, we expect DIFM, which is our core business will strengthen as well.
Our strong customer sell-through from the second half of 2020 has continued into the first quarter of '21 and while we will feel the near-term impact of the lost business, our relationships in the marketplace have never been stronger.
And with that, I will hand it over to Jim to talk about our operations.
That is Jim Burke and I'd like to touch on two topics from operations today.
First is our supply chain.
2020 was like no other year and I'm very proud of all our team members enduring everything that was thrown at us.
We are deemed an essential business to the transportation industry and we remained open to meet our customer demands.
This entailed retrofitting all of our facilities for safety precautions and social distancing.
We endured wild demand swings dropping 30% to 40% followed by positive swings up 10% to 20%.
At the same time, we were faced with a labor shortage.
Many customers were very complimentary recognizing our employee efforts.
A more recent topic around supply chain has been the disruption in the auto sector from lack in availability of semiconductor chips.
Fortunately, we believe we have an adequate inventory supply and deem this to be a minor risk.
Another supply chain challenge has been the logistics of moving product primarily from the Far East to the U.S. Fortunately we have a very large manufacturing footprint in North America and Poland and are less exposed than others who source a 100% from Asia.
The logistic challenge reflects a combination of container shortages, availability of shipping vessels and ultimately congestion at local domestic ports.
We have been managing through this process by forward booking containers and vessels to meet our needs.
While definitely a challenge, we were able to alleviate more of this risk than others with our North American and Poland manufacturing locations.
Closer to home I would be remiss without addressing the recent storms across the U.S. and in particular Texas.
The polar blast with snow and ice instilled significant hardship and devastation across the midsection of the U.S. affecting many of our plants.
However, Texas was hit hardest where we have our Temperature Control headquarters and distribution center.
We are assessing employee needs to recover and our facility reopened after being shut for four days.
Fortunately, this time of the year we are focused on pre-season orders and will be able to make up the lost days with overtime and weekends.
Our global teams have met all these supply chain challenges head on with pride and are driven to meet our customer needs.
Turning to my final topic, I would like to highlight our SMP inaugural Social Responsibility and Sustainability Report.
For over 100 years SMP has nurtured a culture focused on all our stakeholders including our employees, customers and our communities.
With solely internal resources, our team members produced this outstanding ES&G report which can be found on our website.
With a focus on environmental and social responsibility our report highlights the products we produce that reduce auto emissions, efforts to reduce our carbon footprint in our operations, increasing diversification and inclusion throughout our organization addressing the health and safety of our employees and being engaged in the communities where we are located.
Many of these efforts have been captured under our SMP Cares banner focusing on all stakeholders and striving for continuous improvement.
And I will pass the call over to Nathan for our financial wrap-up.
Now turning to the numbers; I'll walk through the operating results for the fourth quarter and the full year, cover some key balance sheet and cash flow metrics and then also talk a little about our expectations for the year of 2021.
Looking first at the P&L, consolidated net sales in Q4 2020 were $282.7 million, up $41.5 million or 17.2% versus Q4 last year.
Our consolidated net sales for the full year were $1.13 billion finishing down just 0.8% after recovering in the last half of the year as Eric noted earlier.
Looking at it by segment, Engine Management net sales in Q4 excluding Wire and Cable sales were $193.5 million, up $26.2 million versus the same quarter of last year.
This 15.7% increase was driven mainly by catching up on a large order backlog we've carried into the fourth quarter that stemmed from the sharp rebound in business activity after COVID lockdowns were lifted.
For the full year, Engine Management's net sales were down 2% to $691.7 million, a strong second half volume helped offset the pandemic induced declines we saw earlier in the year and brought the segment's full year sales to a level just slightly below 2019.
Wire and Cable net sales in Q4 were $38.3 million, up $3.7 million or 10.6% but for the full year were relatively flat finishing up 0.6% at a $144 million.
Sales during the quarter and for all of 2020 were positively impacted by an increase in DIY sales as consumers stayed at home during the pandemic.
While the Wire and Cable business performed very well in 2020, the business remains in secular decline and we believe sales will be lower by 6% to 8% on an annual basis.
Our Temperature Control net sales in Q4 2020 were $47.7 million, up 30% versus the fourth quarter last year driven by an extended selling season as weather stayed warm well into the fourth quarter across most of the U.S. Like Engine Management, Temp Controls full year sales were more in line with last year ending the year up 1.3% at $282 million as the strong seasonal sales helped the segment finish slightly ahead of 2019.
Looking now at gross margins, our consolidated gross margin in Q4 2020 was 33.3% versus 30.2% last year, up 3.1 points and for the full year it was 29.8% versus 29.2% last year, up 0.6 points.
Looking at the segments, fourth quarter gross margin for Engine Management was 33%, up 2.4 points from Q4 last year.
And for Temperature Control was 30%, an increase of 7.3 points from 22.7% from last year.
The very strong margins in both segments reflect the higher sales volumes we experienced as well as the positive impacts of high fixed cost absorption resulting from increased production.
For the full year gross margins in both segments more closely aligned with long-term trends.
Engine Management gross margin was up 0.5 points to 30.1% while Temp Control was up 1.5 points to 26.7%.
These full year margins reflect strong second half sales and fixed cost absorption and also incremental improvements achieved from our continuous savings programs.
Moving now to SG&A expenses, our consolidated SG&A expenses in Q4 were $61 million ending at 21.6% of sales versus 22.5% last year.
For the full year, SG&A spending was $224.7 million, down $10 million at 19.9% of net sales versus 20.6% last year.
The improvement as a percentage of sales in the quarter mainly reflected improved expense leverage as sales volumes increased.
Lower overall SG&A expenses for the year were helped by cost reduction plans put in place earlier in the year and lower interest rates on accounts receivable factoring programs and to a lesser extent COVID-related government incentives.
Consolidated operating income before restructuring and integration expenses and other income net in Q4 2020 was $33.2 million or 11.7% of net sales, up 4 full points from Q4 2019 and for the full year it was 9.9% of sales, up 1.4 points from last year.
As we note on our GAAP to non-GAAP reconciliation of operating income, our performance result in fourth quarter 2020 diluted earnings per share of $1.08 versus $0.59 last year and for the full year diluted earnings per share of $3.61 versus $3.10 last year.
The increase in our operating profit for the quarter was mainly due to higher sales volumes while the increase for the year mainly reflects higher gross margins and lower SG&A expenses across the company, which overcame the impact of slightly lower sales volumes.
Turning now to the balance sheet, accounts receivable at the end of the quarter were $198 million, up $62.5 million from December 2019 with the increase over last year due both to higher sales in the fourth quarter and management of our supply chain factoring arrangements.
Inventory levels finished the quarter at $345.5 million, down $22.7 million from December 2019 with the decrease from last year mainly reflecting the sharp recovery in sales we experienced in the second half of the year after having lower production levels earlier in the year.
Our cash flow statement reflects cash generated from operations for the year of $97.9 million as compared to a generation of $76.9 million last year.
The $21 million improvement was driven by an increase in our operating income as noted earlier but also by changes in working capital.
The changes in working capital in 2020 were mainly a result of strong second hand half sales and related timing.
Inventory balances finished lower, but accounts payable were higher as we tried to replenish our shelves.
Further, accrued customer returns and rebates were also higher due to timing of sales in the back half of the year.
These favorable movements were partly offset by an increase in accounts receivable as highlighted before.
As we said last quarter we expect this timing around cash flows to normalize as sales and production levels stabilize.
During the year we continued to invest in our business and used $17.8 million of cash for capital expenditures which was more than the $16.2 million used in 2019.
Financing activities included $11.2 million of dividends paid and $13.5 million paid for repurchases of our common stock.
Financing activities also included $46.7 million of payments on our revolving credit facilities.
We finished the year with total outstanding borrowings of $10 million and available capacity under our revolving credit facility of $237 million.
To that end our Board of Directors has approved the quarterly dividend of $0.25 per share on common stock outstanding, which is payable on March 1.
Further, our Board has also authorized an additional $20 million common stock repurchase plan.
This new authorization is on top of the $6.5 million remaining under our existing plan and when added together will allow us to repurchase up to 26.5 million of additional shares.
Lastly, let me talk about our expectations for 2021.
As I said earlier, sales in the last half of 2020 and in the fourth quarter in particular were very strong leading to very favorable gross margin performance.
But as you've heard we -- as we head into the first quarter of 2021 facing the loss of a customer who will be working through cost reductions for the balance of the year while we seek to replace the volume.
While gross margins will vary across the quarters we expect full year 2021 gross margins for Engine to be 29%-plus.
For our Temp Control segment we continue to target gross margins of 26%-plus for the full year in 2021.
Looking at our SG&A cost in 2021, we expect expenses to be in the range of $52 million to $56 million each quarter.
And finally, with regard to working capital we expect balances to normalize as noted earlier.
As a result, we expect cash flows to be driven by using cash to build our inventory back to appropriate levels and to pay customer rebates earned during 2020 and offset by cash generated from the collection of accounts receivable.
Brittany, are you there?

user
q4 earnings per share $1.08 from continuing operations excluding items.
q4 sales $282.7 million versus refinitiv ibes estimate of $254.3 million.

assistant