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Auto Roundup: LEA's Twin Buyouts, GPI's Investor-Friendly Moves and More
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Last week, the European Automobile Manufacturers Association (“ACEA”) released data for passenger car registrations for April 2022. The European Union (EU) passenger vehicle market contracted 20.6% in April to 684,506 units amid chip woes aggravated by the Russia-Ukraine war. Most of the countries in the EU witnessed a double-digit drop in registrations, including four key markets. Registrations in Italy, Germany, Spain and France witnessed a yearly decline of 33%, 21.5%, 12.1% and 22.6%, respectively. During the first four months of 2022, new car registrations contracted 14.4% from the prior-year period to 2,930,366 units. All four major EU markets saw declines, with Italy suffering the steepest fall of 26.5%. Registrations in France, Spain and Germany declined 18.6%, 11.8% and 9%, respectively, over the same timeframe.
On the news front, Lear Corporation (LEA - Free Report) announced the acquisition of Thagora to boost productivity. It also inked a deal to buy IGB to bolster thermal comfort offerings. Another auto equipment provider, Meritor, Inc. entered into a pact with Siemens to acquire its Commercial Vehicles business. Meanwhile, auto retailer Group 1 Automotive (GPI - Free Report) cheered investors with a dividend hike and buyback boost. The online auto auction leader Copart, Inc. (CPRT - Free Report) unveiled its third-quarter fiscal 2022 results. Auto giant, Ford (F - Free Report) also made it to the top stories as it issued triple recalls for different reasons.
Last Week’s Key News
1. Lear acquired Thagora Technology SRL, a privately held company specializing in material utilization hardware and software technologies. Thagora's Industry 4.0 technology will boost manufacturing operations through engineering and logistics, including improved material traceability and facility footprint utilization. Lear noted that the acquisition will offer it access to scalable, smart-manufacturing tools, which can be leveraged to drive innovation and quality.
Lear also announced that it inked a €140 million deal to acquire I.G. Bauerhin (“IGB”), a private supplier of automotive seat heating, ventilation, active cooling, steering wheel heating, seat sensors and electronic control modules. The transaction, subject to customary closing conditions, is expected to be closed in the next six to nine months. The deal promises to expand its product capabilities into active cooling and complement its existing offerings.
2. Group 1 increased its first-quarter 2022 dividend to 37 cents per share, marking a 2.8% hike from the fourth quarter of 2022. Driven by the strong cash flow and healthy balance sheet, the company decided to hike the quarterly dividend. The dividend is payable on Jun 15, 2022, to shareholders of record on Jun 1, 2022.
Group 1 also boosted its share repurchase authorization to $250 million. From Jan 1 through May 18, Penske repurchased 796,060 shares worth $143.1 million, representing 4.6% of Group 1's outstanding share count as of Jan 1, 2022. Group 1 currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. Copart reported third-quarter fiscal 2022 (ended Apr 30, 2022) adjusted earnings per share of $1.17, topping the Zacks Consensus Estimate of $1.15. The outperformance was due to higher-than-anticipated revenues from the service and vehicle segments. The bottom line also rose 7.3% year over year from $1.09 reported in the prior-year quarter. The company generated revenues of $939.9 million, beating the Zacks Consensus Estimate of $860.4 million. The top line also increased 28.1% from the year-ago reported figure of $786.9 million.
Copart had cash and cash equivalents of $1,454.8 million as of Apr 30, 2022, compared with $1,048.3 million as of Jul 31, 2021. Long-term debt was $402.7 million at the end of the reported quarter, increasing from $397.6 million as of Jul 31, 2022.
4. Ford issued triple recalls covering 350,000 vehicles on separate issues.The first recall includes 39,000 vehicles that face the risk of engine fires, and owners have been instructed to park the vehicles outdoors. The company stated that the fires can happen even while the engines are shut down.
Ford also is recalling about 310,000 heavy-duty trucks because the driver’s airbag may not inflate in a crash.The second recall covers certain 2016 F-250, 350, 450 and 550 trucks that face the risk of dust accumulating into the airbag wiring in the steering wheel that eventually disconnects the electricity. The third recall impacting 464 electric Mustang Mach-E SUVs from 2021 concerns a software issue that can cause unwanted acceleration, deceleration or a loss of drive power in all-wheel-drive vehicles.
5. Meritor announced that it has entered into an agreement with Siemens to take over its Commercial Vehicles business for nearly €190 million in an all-cash deal. The transaction is expected to close by the calendar year-end, subject to regulatory approvals. The buyout will enhance Meritor’s offerings of superior electric solutions to the global commercial vehicle market by leveraging Siemens Commercial Vehicles business’ capabilities and technology. The rising demand for zero-carbon solutions calls for an opportunity to strengthen Meritor's electric solutions business.
Siemens’ offerings include direct-drive and transmission-based remote mount electric motors, inverters, software and related services, which will enable Meritor to offer a wider range of electrified product solutions across the commercial vehicle, transit, off-highway and specialty markets. These will also bolster its electronic portfolio.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on April 2022 commercial vehicle registrations to be released by the ACEA soon. Meanwhile, stay tuned for any update on how automakers will tackle the semiconductor shortage — compounded by the Russia-Ukraine war and COVID-19 restrictions in China — and make changes in business operations.
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Auto Roundup: LEA's Twin Buyouts, GPI's Investor-Friendly Moves and More
Last week, the European Automobile Manufacturers Association (“ACEA”) released data for passenger car registrations for April 2022. The European Union (EU) passenger vehicle market contracted 20.6% in April to 684,506 units amid chip woes aggravated by the Russia-Ukraine war. Most of the countries in the EU witnessed a double-digit drop in registrations, including four key markets. Registrations in Italy, Germany, Spain and France witnessed a yearly decline of 33%, 21.5%, 12.1% and 22.6%, respectively. During the first four months of 2022, new car registrations contracted 14.4% from the prior-year period to 2,930,366 units. All four major EU markets saw declines, with Italy suffering the steepest fall of 26.5%. Registrations in France, Spain and Germany declined 18.6%, 11.8% and 9%, respectively, over the same timeframe.
On the news front, Lear Corporation (LEA - Free Report) announced the acquisition of Thagora to boost productivity. It also inked a deal to buy IGB to bolster thermal comfort offerings. Another auto equipment provider, Meritor, Inc. entered into a pact with Siemens to acquire its Commercial Vehicles business. Meanwhile, auto retailer Group 1 Automotive (GPI - Free Report) cheered investors with a dividend hike and buyback boost. The online auto auction leader Copart, Inc. (CPRT - Free Report) unveiled its third-quarter fiscal 2022 results. Auto giant, Ford (F - Free Report) also made it to the top stories as it issued triple recalls for different reasons.
Last Week’s Key News
1. Lear acquired Thagora Technology SRL, a privately held company specializing in material utilization hardware and software technologies. Thagora's Industry 4.0 technology will boost manufacturing operations through engineering and logistics, including improved material traceability and facility footprint utilization. Lear noted that the acquisition will offer it access to scalable, smart-manufacturing tools, which can be leveraged to drive innovation and quality.
Lear also announced that it inked a €140 million deal to acquire I.G. Bauerhin (“IGB”), a private supplier of automotive seat heating, ventilation, active cooling, steering wheel heating, seat sensors and electronic control modules. The transaction, subject to customary closing conditions, is expected to be closed in the next six to nine months. The deal promises to expand its product capabilities into active cooling and complement its existing offerings.
2. Group 1 increased its first-quarter 2022 dividend to 37 cents per share, marking a 2.8% hike from the fourth quarter of 2022. Driven by the strong cash flow and healthy balance sheet, the company decided to hike the quarterly dividend. The dividend is payable on Jun 15, 2022, to shareholders of record on Jun 1, 2022.
Group 1 also boosted its share repurchase authorization to $250 million. From Jan 1 through May 18, Penske repurchased 796,060 shares worth $143.1 million, representing 4.6% of Group 1's outstanding share count as of Jan 1, 2022. Group 1 currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. Copart reported third-quarter fiscal 2022 (ended Apr 30, 2022) adjusted earnings per share of $1.17, topping the Zacks Consensus Estimate of $1.15. The outperformance was due to higher-than-anticipated revenues from the service and vehicle segments. The bottom line also rose 7.3% year over year from $1.09 reported in the prior-year quarter. The company generated revenues of $939.9 million, beating the Zacks Consensus Estimate of $860.4 million. The top line also increased 28.1% from the year-ago reported figure of $786.9 million.
Copart had cash and cash equivalents of $1,454.8 million as of Apr 30, 2022, compared with $1,048.3 million as of Jul 31, 2021. Long-term debt was $402.7 million at the end of the reported quarter, increasing from $397.6 million as of Jul 31, 2022.
4. Ford issued triple recalls covering 350,000 vehicles on separate issues.The first recall includes 39,000 vehicles that face the risk of engine fires, and owners have been instructed to park the vehicles outdoors. The company stated that the fires can happen even while the engines are shut down.
Ford also is recalling about 310,000 heavy-duty trucks because the driver’s airbag may not inflate in a crash.The second recall covers certain 2016 F-250, 350, 450 and 550 trucks that face the risk of dust accumulating into the airbag wiring in the steering wheel that eventually disconnects the electricity. The third recall impacting 464 electric Mustang Mach-E SUVs from 2021 concerns a software issue that can cause unwanted acceleration, deceleration or a loss of drive power in all-wheel-drive vehicles.
5. Meritor announced that it has entered into an agreement with Siemens to take over its Commercial Vehicles business for nearly €190 million in an all-cash deal. The transaction is expected to close by the calendar year-end, subject to regulatory approvals. The buyout will enhance Meritor’s offerings of superior electric solutions to the global commercial vehicle market by leveraging Siemens Commercial Vehicles business’ capabilities and technology. The rising demand for zero-carbon solutions calls for an opportunity to strengthen Meritor's electric solutions business.
Siemens’ offerings include direct-drive and transmission-based remote mount electric motors, inverters, software and related services, which will enable Meritor to offer a wider range of electrified product solutions across the commercial vehicle, transit, off-highway and specialty markets. These will also bolster its electronic portfolio.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on April 2022 commercial vehicle registrations to be released by the ACEA soon. Meanwhile, stay tuned for any update on how automakers will tackle the semiconductor shortage — compounded by the Russia-Ukraine war and COVID-19 restrictions in China — and make changes in business operations.