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Standard Motors (SMP) Beats on Q3 Earnings, Boosts Buyback

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Standard Motor Products, Inc. (SMP - Free Report) reported third-quarter 2021 adjusted earnings of $1.32 per share, beating the Zacks Consensus Estimate of $1.07.  However, the bottom line declined from the prior-year quarter’s $1.59 per share due to high SG&A expenses and weaker profits from the Engine Management unit.

Total revenues jumped 7.8% year over year to $370.3 million, surpassing the Zacks Consensus Estimate of $341.5 million. Gross profit fell to $105.2 million from the year-ago quarter’s $107.7 million. Operating income declined 19.8% to $38.5 million. A surge in various costs, mainly in the Engine Management segment, and the low gross margins in the company’s non-aftermarket business are the primary reasons for the fall in profit margins.

The board approved a dividend of 25 cents per share, payable on Dec 1 to stockholders on record as of Nov 15, 2021. The company repurchased common shares worth $15.4 million during the quarter and authorized an additional buyback program of $30 million.

Segmental Results

During the September quarter, revenues from the Engine Management segment totaled $247.2 million, up 7.7% year over year. The upside was driven by a combination of strong demand, continued success from customer initiatives, new business wins, and the positive impact of recent acquisitions. However, the operating income was $28 million compared with the prior-year quarter’s $36.7 million.

Revenues from the Temperature Control segment rose 7.9% year over year to $119.1 million. The segment registered an operating income of $16.7 million, marginally rising from $16.6 million.

Revenues from the All Other segment came in at $4.1 million, rising from $3.7 million in the prior-year period. However, the segment reported an operating loss of $5.2 million, marginally wider than the loss of $5.1 million posted in the corresponding quarter of 2020.

Financial Position

Standard Motor — which shares space with LKQ Corp. (LKQ - Free Report) , Genuine Parts (GPC - Free Report) , and Dorman Products (DORM - Free Report) — had cash and cash equivalents of $33.1 million as of Sep 30, 2021, compared with $19.5 million as of Dec 31, 2020. Long-term debt was $68,000 compared with $97,000 recorded as of Dec 31, 2020. For the nine months ended Sep 30, 2021, net cash provided by operating activities totaled $79.1 million compared with $78.6 million used in the corresponding period last year.

Standard Motor currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.