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Auto Roundup: WGO's Q1 Earnings Beat, AN's $190M Buyout & More
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Last week, the European Automobile Manufacturers Association (“ACEA”) released data on passenger car registrations for November 2022. The European Union (“EU”) passenger vehicle market soared 16.3% last month to 829,527 units, marking the fourth straight month of growth this year. Registrations in Italy, Germany, Spain and France witnessed a year-over-year rise of 14.7%, 31.4%, 10.3% and 9.8%, respectively. During the first 11 months of 2022, new car registrations contracted 6.1% from the prior-year period, owing to declining registrations from January to July. During the first 11 months, all the major EU markets witnessed a decline in registrations, including Italy (11.6%), France (8.7%), Spain (4.4%) and Germany (2.4%).
Leading truck engine maker Cummins Inc. (CMI - Free Report) inked an agreement with chemical firm Linde to supply the latter 35-megawatt (MW) electrolyzer. Auto retailer AutoNation (AN - Free Report) is set to buy RepairSmith in a $190 million deal which will enhance the former’s speed to frontline readiness and expedite deliveries to customers. AN’s close peer Lithia Motors (LAD - Free Report) continued with its buyout spree and purchased a Stellantis dealership in Kentucky. Meanwhile, recreational vehicle (RV) maker Winnebago Industries (WGO - Free Report) reported first-quarter fiscal 2023 results, wherein earnings fell year over year but surpassed estimates. Finally, auto equipment solutions provider Allison Transmission (ALSN - Free Report) also made it to the top stories with its new business win in the Defense unit.
Last Week’s Top Stories
Cummins collaborated with Linde to supply a 35-MW proton exchange membrane (PEM) electrolyzer system to the latter’s hydrogen production plant in Niagara Falls, NY. Linde is a leader in the production and distribution of hydrogen, boasting the world’s largest liquid hydrogen capacity and distribution system. The PEM electrolyzer will be powered by hydropower to create green hydrogen for the North American market.Once operational by 2025, this hydrogen plant will be Linde’s largest in the United States.
Cummins’ New Power segment president said, “This project is not only a milestone for Cummins, but also for the energy transition in the U.S.Adding the 35MW of this Linde plant to our electrolyzer project footprint highlights our commitment to scaling the green hydrogen economy and our ability to support large-scale renewable hydrogen production with market-leading innovation.” Cummins is fast adapting to the changing dynamics of the auto space. The company’s efforts to ramp up its capabilities in electrification, fuel cell and hydrogen production technology are praiseworthy.
AutoNation inked a deal to acquire RepairSmith for $190 million in a bid to strengthen its after-sales business. Los Angeles-based RepairSmith is a full-service mobile solution for automotive repair and maintenance, carrying operations in the southeastern and western United States. The buyout will add another channel to AN’s after-sales business, which would not just provide service to existing customers but also introduce additional vehicle owners who have not purchased vehicles from the AutoNation dealerships. RepairSmith will offer repair and services at the customer’s preferred place, be it home, workplace or on-site.
Subject to satisfactory closing conditions and regulatory approvals, the deal is scheduled to close in first-quarter 2023. The company is actively focused on expanding its business to boost its top-and bottom-line growth. This year, the company added captive financing capabilities and commenced the development of mobility solutions to bolster offerings. AN’s CEO Mike Manley said, “RepairSmith is the next step in our plan. It expands AutoNation's ability to penetrate the extensive After-Sales service market and conveniently respond to our customers’ needs by broadening the reach of our existing After-Sales network."
Lithia forayed into Kentucky with the purchase of Glenn’s Freedom CJDR (Chrysler, Dodge, Jeep, Ram) dealership in Lexington. This marks the 33rd store Lithia bought this year. It expects the dealership to generate around $140 million in annualized revenues. The acquisition is part of LAD's nationwide network expansion initiative under the company's 2025 plan, wherein it targets $50 billion in revenues and EPS in the range of $55-$60.
Lithia’s strategic buyouts are helping the auto retailer increase its market share and boost its portfolio. The spree of acquisitions brought the firm’s total expected annualized revenues acquired to $7 billion in 2021, keeping it ahead of schedule laid out in the five-year plan rolled out in July 2020. Its total expected annualized revenues acquired in 2022 have reached $3.5 billion. LAD currently carries a Zacks Rank #4 (Sell.).
Winnebago reported adjusted earnings of $2.07 per share in first-quarter fiscal 2023 (ended Nov 26, 2022), which topped the Zacks Consensus Estimate of $1.83 on share higher-than-anticipated revenues and EBITDA from the Marine segment. The bottom line, however, plunged 41% year over year. The RV giant reported revenues of $952.2 million in the quarter under review, crossing the Zacks Consensus Estimate of $899 million. Nonetheless, the top line fell 17.6% year over year.
Winnebago had cash and cash equivalents of $203 million as of Nov 26, 2022. The long-term debt (excluding current maturities) increased to $590.4 million from $545.9 million recorded on Aug 27, 2022. The company approved a dividend of 27 cents a share, to be paid on Jan 25, 2023, to shareholders of record at the close of business on Jan 11, 2023.
Allison clinched a contract for the X1100-3B1 transmission and tech support for the Abrams Main Battle Tank used by the U.S. Army. The value of the contract is estimated at $51 million. The agreement also entails support for Foreign Military Sales customers.Deliveries and technical support under the scope of this contract will commence in January 2023 and continue through March 2024.
In recent times, Allison has recorded unprecedented growth in the global defense market. Its Defense Program vice-president Dana Pittard said, “Our internal investments have led to growth in the defense end market, with new contracts in the last six months for Abrams, the US Army’s newest light tank, mobile protected firepower, M88A3 HERCULES, and India’s future infantry combat vehicle.”Allison has long been in a niche position in developing defense propulsion solutions that function efficiently in the toughest conditions. The multiple partnerships make the company poised to provide a premium customer experience in the future.
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 November commercial vehicle registrations to be released by the ACEA soon.
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Auto Roundup: WGO's Q1 Earnings Beat, AN's $190M Buyout & More
Last week, the European Automobile Manufacturers Association (“ACEA”) released data on passenger car registrations for November 2022. The European Union (“EU”) passenger vehicle market soared 16.3% last month to 829,527 units, marking the fourth straight month of growth this year. Registrations in Italy, Germany, Spain and France witnessed a year-over-year rise of 14.7%, 31.4%, 10.3% and 9.8%, respectively. During the first 11 months of 2022, new car registrations contracted 6.1% from the prior-year period, owing to declining registrations from January to July. During the first 11 months, all the major EU markets witnessed a decline in registrations, including Italy (11.6%), France (8.7%), Spain (4.4%) and Germany (2.4%).
Leading truck engine maker Cummins Inc. (CMI - Free Report) inked an agreement with chemical firm Linde to supply the latter 35-megawatt (MW) electrolyzer. Auto retailer AutoNation (AN - Free Report) is set to buy RepairSmith in a $190 million deal which will enhance the former’s speed to frontline readiness and expedite deliveries to customers. AN’s close peer Lithia Motors (LAD - Free Report) continued with its buyout spree and purchased a Stellantis dealership in Kentucky. Meanwhile, recreational vehicle (RV) maker Winnebago Industries (WGO - Free Report) reported first-quarter fiscal 2023 results, wherein earnings fell year over year but surpassed estimates. Finally, auto equipment solutions provider Allison Transmission (ALSN - Free Report) also made it to the top stories with its new business win in the Defense unit.
Last Week’s Top Stories
Cummins collaborated with Linde to supply a 35-MW proton exchange membrane (PEM) electrolyzer system to the latter’s hydrogen production plant in Niagara Falls, NY. Linde is a leader in the production and distribution of hydrogen, boasting the world’s largest liquid hydrogen capacity and distribution system. The PEM electrolyzer will be powered by hydropower to create green hydrogen for the North American market.Once operational by 2025, this hydrogen plant will be Linde’s largest in the United States.
Cummins’ New Power segment president said, “This project is not only a milestone for Cummins, but also for the energy transition in the U.S.Adding the 35MW of this Linde plant to our electrolyzer project footprint highlights our commitment to scaling the green hydrogen economy and our ability to support large-scale renewable hydrogen production with market-leading innovation.” Cummins is fast adapting to the changing dynamics of the auto space. The company’s efforts to ramp up its capabilities in electrification, fuel cell and hydrogen production technology are praiseworthy.
AutoNation inked a deal to acquire RepairSmith for $190 million in a bid to strengthen its after-sales business. Los Angeles-based RepairSmith is a full-service mobile solution for automotive repair and maintenance, carrying operations in the southeastern and western United States. The buyout will add another channel to AN’s after-sales business, which would not just provide service to existing customers but also introduce additional vehicle owners who have not purchased vehicles from the AutoNation dealerships. RepairSmith will offer repair and services at the customer’s preferred place, be it home, workplace or on-site.
Subject to satisfactory closing conditions and regulatory approvals, the deal is scheduled to close in first-quarter 2023. The company is actively focused on expanding its business to boost its top-and bottom-line growth. This year, the company added captive financing capabilities and commenced the development of mobility solutions to bolster offerings. AN’s CEO Mike Manley said, “RepairSmith is the next step in our plan. It expands AutoNation's ability to penetrate the extensive After-Sales service market and conveniently respond to our customers’ needs by broadening the reach of our existing After-Sales network."
Lithia forayed into Kentucky with the purchase of Glenn’s Freedom CJDR (Chrysler, Dodge, Jeep, Ram) dealership in Lexington. This marks the 33rd store Lithia bought this year. It expects the dealership to generate around $140 million in annualized revenues. The acquisition is part of LAD's nationwide network expansion initiative under the company's 2025 plan, wherein it targets $50 billion in revenues and EPS in the range of $55-$60.
Lithia’s strategic buyouts are helping the auto retailer increase its market share and boost its portfolio. The spree of acquisitions brought the firm’s total expected annualized revenues acquired to $7 billion in 2021, keeping it ahead of schedule laid out in the five-year plan rolled out in July 2020. Its total expected annualized revenues acquired in 2022 have reached $3.5 billion. LAD currently carries a Zacks Rank #4 (Sell.).
You can see the complete list of today’s Zacks Rank #1 (Strong) stocks here.
Winnebago reported adjusted earnings of $2.07 per share in first-quarter fiscal 2023 (ended Nov 26, 2022), which topped the Zacks Consensus Estimate of $1.83 on share higher-than-anticipated revenues and EBITDA from the Marine segment. The bottom line, however, plunged 41% year over year. The RV giant reported revenues of $952.2 million in the quarter under review, crossing the Zacks Consensus Estimate of $899 million. Nonetheless, the top line fell 17.6% year over year.
Winnebago had cash and cash equivalents of $203 million as of Nov 26, 2022. The long-term debt (excluding current maturities) increased to $590.4 million from $545.9 million recorded on Aug 27, 2022. The company approved a dividend of 27 cents a share, to be paid on Jan 25, 2023, to shareholders of record at the close of business on Jan 11, 2023.
Allison clinched a contract for the X1100-3B1 transmission and tech support for the Abrams Main Battle Tank used by the U.S. Army. The value of the contract is estimated at $51 million. The agreement also entails support for Foreign Military Sales customers.Deliveries and technical support under the scope of this contract will commence in January 2023 and continue through March 2024.
In recent times, Allison has recorded unprecedented growth in the global defense market. Its Defense Program vice-president Dana Pittard said, “Our internal investments have led to growth in the defense end market, with new contracts in the last six months for Abrams, the US Army’s newest light tank, mobile protected firepower, M88A3 HERCULES, and India’s future infantry combat vehicle.”Allison has long been in a niche position in developing defense propulsion solutions that function efficiently in the toughest conditions. The multiple partnerships make the company poised to provide a premium customer experience in the future.
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 November commercial vehicle registrations to be released by the ACEA soon.