Standard Motor Beats on Earnings, Misses Revs - Analyst Blog


Standard Motor Products Inc. ( SMP ) reported an 8.2% rise in adjusted earnings per share to 79 cents in the third quarter of 2013 from 73 cents in the year-ago quarter. Earnings per share surpassed the Zacks Consensus Estimate of 76 cents. Profits went up 8.9% to $18.3 million from $16.8 million in the year-ago quarter.

Including non-operational gains and losses, earnings on a reported basis amounted to $17.7 million or 76 cents per share, compared with $17.4 million or 76 cents in the year-ago quarter.

Total revenue declined 4.3% to $264.2 million, missing the Zacks Consensus Estimate of $279 million. The decline was attributable to lower revenues from Temperature Control and All Other segments, partially offset by better performance in the Engine Management segment.

Gross profit improved 2.9% to $80.1 million or 30.3% of sales from $77.8 million or 28.2% of sales in the third quarter of 2012.

Operating income increased 4.6% to $27.9 million from $26.7 million in the third quarter of 2012. Operating margin improved to 10.6% from 9.7% in the year-ago quarter.

Segment Results

Revenues from the Engine Management segment rose 1.2% to $177.9 million. Operating profit grew 23.9% to $26.5 million from $21.4 million in the corresponding quarter last year.

Revenues from the Temperature Control segment declined 10.9% to $84.8 million due to the unfavorable impact of weather conditions. The company recorded an operating income of $7.5 million compared with $9.1 million in the third quarter of 2012.

Revenues from All Other segment declined 72.1% to $1.4 million from $5 million a year ago.

Financial Position

Standard Motor had cash balance of $10.1 million as of Sep 30, 2013, compared with $13.1 million on Dec 31, 2012. Long-term debt of the company was $105,000 as of Sep 30, 2013, down from $195,000 as of Dec 31, 2012.

In the first nine months of fiscal 2013, the company had cash flow of $33.7 million from operating activities compared with $62.9 million in the year-ago period. Capital expenditures increased to $8.5 million from $8 million a year ago.

Dividend Update

Standard Motor announced a quarterly dividend of 11 cents per share, payable on Dec 2, 2013, to shareholders of record as of Nov 15, 2013.

Our Take

Standard Motor, based in Long Island City, New York, is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. The company enjoys strong brand recognition globally and a less cyclical end-market within the auto and auto parts industry.

However, we are concerned about Standard Motor's high dependence on some major customers like Advance Auto Parts Inc. ( AAP ) and O'Reilly Automotive Inc. ( ORLY ) as well as the price competition prevailing in the market.

Another player in the automotive replacement parts industry, Genuine Parts Company ( GPC ) reported a 1% year over year increase in earnings per share to $1.12 in the third quarter of 2013 from $1.11. However, the reported earnings missed the Zacks Consensus Estimate by 8 cents.

Standard Motor currently retains a Zacks Rank #1 (Strong Buy).

ADVANCE AUTO PT (AAP): Free Stock Analysis Report

GENUINE PARTS (GPC): Free Stock Analysis Report

O REILLY AUTO (ORLY): Free Stock Analysis Report

STANDARD MOTOR (SMP): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAP , GPC , ORLY , SMP

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