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Standard Motor (SMP) Q2 Earnings Miss, Revenues Increase Y/Y

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Standard Motor Products, Inc. (SMP - Free Report) reported second-quarter 2022 adjusted earnings of 93 cents per share, missing the Zacks Consensus Estimate of $1.21. Lower-than-anticipated income from the Engine Management and Temperature Control segments resulted in the downslide. Also, the bottom line declined 26.2% from the prior-year quarter’s $1.26 a share.

Total revenues rose 5% year over year to $359.4 million, surpassing the Zacks Consensus Estimate of $353 million. Gross profit fell to $96.4 million from the year-ago quarter’s $99.4 million. Operating income declined 26% to $27.9 million, owing to an escalation in SG&A expenses, which flared up 11% year over year. SMP lowered its expected consolidated gross margin to nearly 27% from the previous band of 28-29% for 2022.

The board approved a dividend of 27 cents per share, payable on Sep 1, 2022, to stockholders of record on Aug 15, 2022. The company repurchased common shares worth $19.6 million during the quarter under review. Year to date, the company has exhausted the remaining balance of the prior $30 million share repurchase authorization and has authorized a new $30 million common share buyback plan.

Segmental Results

During the reported quarter, revenues from the Engine Management segment totaled $241.9 million, up 3.7% year over year. The upside was driven by the positive impact of acquisitions made in 2021 and the benefit of price increases implemented in the quarter. The figure matched the Zacks Consensus Estimate. The operating income was $21.09 million, down from the prior-year quarter’s $30.5 million and missed the consensus mark of $29.55 million.

Revenues from the Temperature Control segment rose 7.5% year over year to $114.4 million, led by strong pre-season orders, new business wins, price increases and robust customer demand. The figure beat the consensus metric of $108 million. The segment registered an operating income of $12.27 million, down from $13.2 million and missed the consensus mark of $12.64 million.

Revenues from the All Other segment came in at $3.1 million, rising from $2.4 million in the prior-year period and surpassing the consensus mark of $2.5 million. The segment reported an operating loss of $5.47 million, narrower than a loss of $6 million in the corresponding quarter of 2021 and the Zacks Consensus Estimate of a loss of $6 million.

Financial Position

Standard Motor had $14.2 million in cash as of Jun 30, 2022, compared with $21.8 million as of Dec 31, 2021. Net cash provided by operating activities totaled $8.6 million in the second quarter of 2022 against $34.5 million net cash used in operating activities in the corresponding period last year.

In the quarter, the company announced a new five-year $500 million credit facility that includes a $100 million term loan and a $400 million revolving credit facility. This will further bolster its focus on returning value to shareholders.

Zacks Rank & Key Picks

SMP carries a Zacks Rank #5 (Strong Sell), currently.

Better-ranked players in the auto space include Harley-Davidson (HOG - Free Report) , Genuine Parts Company (GPC - Free Report) and PACCAR Inc. (PCAR - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Harley-Davidson has an expected earnings growth rate of 6.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 7% upward in the past 30 days.

Harley-Davidson’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. HOG pulled off a trailing four-quarter earnings surprise of 49.52%, on average. The stock has declined 6.2% in the past year.

Genuine Parts has an expected earnings growth rate of 15% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.3% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 21.7% over the past year.

PACCAR has an expected earnings growth rate of 45.3% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 7.4% upward in the past 30 days.

PACCAR’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. PCAR pulled off a trailing four-quarter earnings surprise of 7.44%, on average. The stock has risen 14.1% in the past year.