Standard Motor (SMP) Q3 Earnings Top Estimates, Revenues Miss
Standard Motor Products SMP reported third-quarter 2023 adjusted earnings of $1.11 per share, which rose from $1.05 in the prior-year quarter and outpaced the Zacks Consensus Estimate of 99 cents.
Total revenues rose from $381.4 million in the third quarter of 2022 to $386.4 million in the quarter under review. The reported figure, however, lagged the consensus mark of $391 million. Gross profit rose to $114.8 million from the year-ago quarter’s $106.8 million. Operating income increased to $34.8 million from $33.6 million reported in the year-ago quarter.
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 $190.9 million, down 3.4% year over year and missing our estimate of $199.1 million. Customer bankruptcy and certain 2022 customer pipeline orders that did not recur this year resulted in the decline. Operating income was $18.1 million, down from the prior-year quarter’s $21.1 million.
Revenues from the Engineered Solutions segment totaled $71.8 million, up 8.3% year over year on stronger-than-expected demand from existing customers as well as new business wins. However, the metric lagged our estimate of $72.3 million. Operating income was $7.3 million, up from the prior-year quarter’s $3.3 million.
Revenues from the Temperature Control segment came in at $123.6 million, rising from the year-ago quarter’s $117.4 million, as well as topping our projection of $119.4 million due to a warm summer that resulted in increased demand for this seasonal product category. The segment registered an operating income of $13.2 million, down from $13.4 million reported in the year-ago period.
Operating loss from the Other segment was $3.6 million, narrower than $4.2 million recorded in the year-ago quarter.
Financial Position
Standard Motor had $28.5 million in cash as of Sep 30, 2023 compared with $21.2 million as of Dec 31, 2022.
Long-term debt totaled $95.2 million as of Sep 30, 2023 compared with $184.6 million as of Dec 31, 2022.
Net cash inflow from operating activities totaled $132.9 million at the end of the third quarter of 2023. SG&A expenses flared up 9% to $79.8 million.
The company approved a quarterly dividend of 29 cents per share, which will be paid out on Dec 1, 2023, to stockholders of record as of Nov 15, 2023.
Guidance 2023
For full-year 2023, the company expects sales growth to be flat to low single-digit. Standard Motor has revised its outlook for adjusted EBITDA at around 9.5% of total revenues. 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 during the second quarter.
Zacks Rank & Key Picks
SMP currently carries a Zacks Rank #3 (Hold).
Some top-ranked players in the auto space are Toyota Motor TM, Honda Motor Co., Ltd. HMC and Volvo VLVLY, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.6% and 27.6%, respectively. The EPS estimates for 2023 and 2024 have increased by 4 cents and 21 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for HMC’s 2023 sales and earnings suggests year-over-year improvements of 7.7% and 29.4%, respectively. The EPS estimate for 2023 has moved up by a cent in the past 30 days. The EPS estimate for 2024 increased by 1 penny in the past seven days.
The Zacks Consensus Estimate for VLVLY’s 2023 sales and earnings indicates year-over-year rises of 4.6% and 64.4%, respectively. The EPS estimates for 2023 and 2024 have increased by 16 cents and 12 cents, respectively, in the past seven days.
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