Standard Motor Buys Forecast Trading

Standard Motor Products Inc. (SMP - Analyst Report) recently announced that it has acquired the full capital stock of Florida-based Forecast Trading Corporation for an approximate price of $44 million.

Forecast is a well-known supplier and distributor of value-priced engine management products including ignition coils, ignition modules, switches and sensors, and filters. The company’s distribution facilities are primarily located in Fort Lauderdale, Florida.

Forecast boosts a strong track record of sourcing value-priced engine management products from low-cost areas. As a result, Standard Motor is expected to drive synergies based on the expertise of the company in this space, and thus improving its financial results for the upcoming quarters.  

Moreover, Standard Motor also believes that this acquisition will strengthen its position as the leading supplier of Engine Management parts to the aftermarket in a weak economy and an aging vehicle population.

In the third quarter of 2011, the company reported adjusted earnings of $13.7 million or 59 cents per share as against $9.8 million or 43 cents per share in the year-ago quarter. Consolidated net sales in the quarter grew 3.8% year over year to $236.2 million, driven by improved performance of the Engine Management segment, partly offset by lower sales from the Temperature Control segment.

Revenues from the Engine Management segment escalated 7.6% to $165.2 million, while revenues from the Temperature Control segment amounted to $68.1 million.

The Long Island, New York-based Standard Motor, a Zacks #3 Rank (Hold rating) stock, is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. The company’s key competitors include Federal-Mogul Corporation (FDML - Snapshot Report), Robert Bosch Corporation and Visteon Corporation (VC - Snapshot Report).

The major competitive advantages of the company are its trained sales force, extensive product range, sophisticated parts-cataloging systems and effective inventory management.

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