Standard Motor (SMP) Q2 Earnings Miss, '23 EBITDA View Cut
Standard Motor Products SMP reported second-quarter 2023 adjusted earnings of 84 cents per share, which declined from 93 cents in the prior-year quarter and lagged the Zacks Consensus Estimate of 97 cents. Lower-than-anticipated revenues from Vehicle Control and Temperature control units largely resulted in the underperformance.
Total revenues inched down from $359 million in the second quarter of 2022 to $353.1 million in the quarter under review. The reported figure lagged the consensus mark of $372 million. Gross profit rose to $101.3 million from the year-ago quarter’s $96.4 million. Operating income fell to $27.2 million from $27.9 million reported in the year-ago quarter.
Standard Motor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Standard Motor Products, Inc. Price, Consensus and EPS Surprise
Standard Motor Products, Inc. price-consensus-eps-surprise-chart | Standard Motor Products, Inc. Quote
Segmental Results
During the reported quarter, revenues from the Vehicle Control segment totaled $183.8 million, down 1% year over year, and missed our estimate of $194 million. Customer bankruptcy had the greatest influence on this particular segment, resulting in a 2.2% decline during the quarter. Operating income was $19.4 million, up from the prior-year quarter’s $16 million.
During the reported quarter, revenues from the Engineered Solutions segment totaled $72.2 million, up 6% year over year, and topped our estimate of $69 million on stronger-than-expected demand from existing customers as well as new business wins. Operating income was $6.2 million, up from the prior-year quarter’s $5.1 million.
Revenues from the Temperature Control segment came in at $97.1 million, declining from the year-ago quarter’s $105.6 million as well as missing our projection of $107.6 million. Against a backdrop of challenging comparisons to the previous year, cooler and wetter spring weather adversely impacted the demand for this seasonal product category. The segment registered an operating income of $5.9 million, down from $10.5 million reported in the year-ago period.
Operating loss from the Other segment was $4.05 million, wider than $3.79 million recorded in the year-ago quarter.
Financial Position
Standard Motor had $23 million in cash as of Jun 30, 2023, compared with $21.1 million as of Dec 31, 2022. Long-term debt totaled $164.5 million at quarter end. Net cash outflow from operating activities totaled $18.9 million in the second quarter of 2023. SG&A expenses flared up 7.7% to $73.8 million.
The company approved a quarterly dividend of 29 cents per share, which will be paid out on Sep 1, 2023 to stockholders of record as of Aug 15, 2023.
View
For full-year 2023, the company expects sales to grow by a low single-digit number. Standard Motor has revised its outlook for adjusted EBITDA at around 9.5% of total revenues, which is down from the previous estimate of roughly 10%. This projection takes into account several factors, including an anticipated increase in expenses linked to customer factoring programs that are estimated to range between $48 million and $50 million based on current rates. Additionally, the outlook considers the influence of startup costs and duplicated overhead costs associated with the recently established distribution center mentioned earlier. Furthermore, the company’s international operations are expected to face a headwind due to the depreciation of the U.S. dollar.
Peer Releases
Genuine Parts Company GPC delivered second-quarter 2023 adjusted earnings of $2.44 per share, up 10.9% year over year. The bottom line also surpassed the Zacks Consensus Estimate of $2.33 per share. High year-over-year operating profits across the Automotive segment and Industrial Parts segment resulted in the outperformance. The company reported net sales of $5,915 million, lagging the Zacks Consensus Estimate of $5,938 million. The top line, however, rose 5.6% year over year.
Genuine Parts had cash and cash equivalents worth $530.1 million as of Jun 30, 2023, down from $653.5 million as of Dec 31, 2022. Long-term debt decreased to $2,986 million from $3,077 million as of Dec 31, 2022.
LKQ Corporation LKQ reported adjusted earnings of $1.09 per share for second-quarter 2023, same as the year-ago period. Earnings outpaced the Zacks Consensus Estimate of $1.06. The outperformance stemmed from better-than-expected revenues from the Wholesale North American unit and the European unit. The aftermarket auto parts distributor registered quarterly revenues of $3,448 million, surpassing the Zacks Consensus Estimate of $3,418 million. The top line also grew from the year-ago level of $3,341 million.
LKQ had cash and cash equivalents of $1,904 million on Jun 30, 2023, up from $278 million recorded as of Dec 31, 2022. The long-term obligations (excluding the current portion) amounted to $3,421 million as of Jun 30, 2023, up from $2,622 million recorded on Dec 31, 2022. As of Jun 30, 2023, LKQ’s balance sheet reflected a total debt of $4 billion.
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