Standard Motor Products Inc. (SMP) reported a 50% rise in adjusted earnings per share to 42 cents in the fourth quarter of 2013 from 28 cents in the year-ago quarter. Earnings per share surpassed the Zacks Consensus Estimate of 33 cents. Profits went up 49.2% to $9.7 million from $6.5 million in the year-ago quarter.
Including non-operational gains and losses, earnings on a reported basis amounted to $9.4 million or 40 cents per share, compared with $6.3 million or 27 cents in the prior-year quarter.
Total revenue increased 13.7% to $218.7 million, beating the Zacks Consensus Estimate of $193 million. The improvement was attributable to rising demand from the Engine Management customers who are expanding the product lines of their commercial business.
Gross profit improved 15.2% to 66.7 million or 30.5% of sales from $58 million or 30.1% of sales in the fourth quarter of 2012. Operating income increased 27.2% to $15.7 million from $12.4 million in the fourth quarter of 2012. Operating margin improved to 7.2% from 6.4% in the year-ago quarter.
Fiscal 2013 Performance
Standard Motor’s adjusted earnings increased 26.8% to $2.32 per share for full-year 2013 from $1.83 in 2012, exceeding the Zacks Consensus Estimate of $2.24. Revenues for full-year 2013 rose 3.7% to $983.7 million from $948.9 million in 2012.
Segment Results
Revenues from the Engine Management segment climbed 14.4% to $175.7 million. Operating profit rose 32.9% to $24.3 million from $18.3 million in the corresponding quarter last year.
Revenues from the Temperature Control segment improved 8.7% to $38.3 million. The segment recorded an operating loss of $3.8 million compared with $1.9 million in the fourth quarter of 2012.
Revenues from All Other segment increased 34.8% to $4.7 million from $3.5 million a year ago. The segment recorded an operating loss of $4.2 million against $3.6 million in the fourth quarter of 2012.
Financial Position
Standard Motor had cash balance of $5.6 million as of Dec 31, 2013, compared with $13.1 million on Dec 31, 2012. Long-term debt of the company was $75,000 as of Dec 31, 2013, down from $195,000 as of Dec 31, 2012.
In fiscal 2013, the company had cash flow of $57.6 million from operating activities versus $93.6 million in the year-ago period. Capital expenditures decreased to $11.4 million from $11.8 million a year ago.
Dividend Update
On Feb 3, 2014, Standard Motor announced an increase in the quarterly dividend to 13 cents per share from 11 cents. The dividend is payable on Mar 3, 2014, to shareholders of record as of Feb 18, 2014.
Share Repurchase
The board of directors of Standard Motor authorized a $10 million increase in the company’s stock repurchase program. This repurchase is an addition to the $6 million repurchase authorized in Feb 2013, which has been utilized completely. The repurchase will be financed by the revolving credit facility of the company.
Acquisition
Standard Motor completed the acquisition of the assets of Pensacola Fuel Injection for around $12.2 million in Jan 2014. Based in Florida, Pensacola remanufactures and distributes a variety of diesel injectors, diesel pumps and turbo chargers. The company expects that mounting diesel equipped light vehicles demand in North America will boost demand for diesel injectors and pumps. This will in turn boost the company’s earnings.
Outlook
Standard Motor expects low to mid single digit growth rate in 2014.
Zacks Rank
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. Standard Motor currently retains a Zacks Rank #3 (Hold).
Other well-performing stocks worth considering include Motorcar Parts of America Inc. (MPAA), Remy International, Inc. (REMY) and Dorman Products, Inc. (DORM). While Motorcar and Remy sport a Zacks Rank #1 (Strong Buy), Dorman carries a Zacks Rank #2 (Buy).
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