Share price of Standard Motor Products Inc. (SMP) increased 8.6% to $42.61 on Feb 25, after the company reported a 16.7% rise in adjusted earnings per share to 49 cents in the fourth quarter of 2014 from 42 cents in the year-ago quarter. The earnings surpassed the Zacks Consensus Estimate by 3 cents. Profits went up 17.5% to $11.4 million from $9.7 million in the year-ago quarter.
Including non-operational gains and losses, earnings amounted to $11.5 million or 50 cents per share, compared with $9.4 million or 40 cents in the prior-year quarter.
Total revenue decreased marginally to $218.1 million from $218.7 million a year ago, missing the Zacks Consensus Estimate of $220 million.
Gross profit inched up 0.5% to $67.1 million (30.8% of sales) from $66.7 million (30.5%) in the fourth quarter of 2013. Operating income increased 20.6% to $18.9 million from $15.7 million in the fourth quarter of 2013.
2014 Performance
Standard Motor’s adjusted earnings increased 8.6% to $2.52 per share for full-year 2014 from $2.32 in 2013, exceeding the Zacks Consensus Estimate of $2.49. Revenues for full-year 2014 dropped marginally to $980.4 billion from $983.7 billion in 2013. Also, revenues missed the Zacks Consensus Estimate of $982 million.
Segment Results
Revenues at the Engine Management segment inched up to $175.9 million in the reported quarter from $175.8 million a year ago. Operating profit was $26.5 million (15.1% of sales), compared with $24.3 million (13.8% of sales) in the corresponding quarter last year. Gross profit was $56 million (31.8% of sales) compared with $55.5 million (31.6%) a year ago.
Revenues at the Temperature Control segment increased 3.7% to $39.7 million. The segment recorded an operating loss of $3.4 million (8.6% of sales), narrower than a loss of $3.8 million (9.8%) in the fourth quarter of 2013. Gross margin increased to 18.6% from 16.5% a year ago.
Revenues at the All Other segment decreased significantly to $2.4 million from $4.7 million a year ago. The segment recorded an operating loss of $4.3 million, marginally wider than a loss of $4.2 million in the fourth quarter of 2013.
Financial Position
Standard Motor had cash balance of $13.7 million as of Dec 31, 2014, compared with $5.6 million as of Dec 31, 2013. Long-term debt of the company stood at $258, 000 as of Dec 31, 2014, versus $75, 000 as of Dec 31, 2013.
In 2014, the company had cash flow of $47 million from operating activities versus $57.6 million in the year-ago period. Capital expenditures rose to $13.9 million from $11.4 million a year ago.
Capital Deployment
On Feb 2, 2015, Standard Motor announced an increase in quarterly dividend to 15 cents per share from the prior payout of 13 cents.
In addition, the Board of Directors authorized the repurchase of up to an additional $10 million of its shares under the stock repurchase program. This increase is in addition to the previous $10 million repurchase program, which was authorized in Feb 2014. The company plans to finance the repurchase through its revolving credit facility.
Acquisitions and Joint Venture
In 2014, Standard Motor announced three acquisitions. The first takeover was that of Pensacola Fuel Injection, a re-manufacturer of diesel fuel. The company also acquired certain assets and liabilities of Annex Manufacturing, a distributor of a wide range of temperature control products. Further, Standard Motor announced a 50/50 joint venture with Gwo Yng Enterprises – a China-based manufacturer of air conditioning accumulators, filter driers, hose assemblies and switches. The company expects the acquisitions to boost earnings, excluding the one-time transition costs, in the future.
Zacks Rank
Standard Motor, based in Long Island City, NY, is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. The company currently carries a Zacks Rank #1 (Strong Buy).
Other well-performing stocks in the same industry include Superior Industries International, Inc. (SUP), Wabash National Corp. (WNC) and Allison Transmission Holdings, Inc. (ALSN), all sporting a Zacks Rank #1.
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