Share price of Standard Motor Products Inc. SMP increased 1.1% to close at $40.76 on Oct 29, after the company reported its third-quarter 2015 results. Standard Motor recorded an 8.1% increase in adjusted earnings per share to 80 cents in the third quarter of 2015 from 74 cents earned in the prior-year quarter. However, earnings missed the Zacks Consensus Estimate of 83 cents. Earnings from continuing operations rose 7.6% to $18.4 million from $17.1 million in the year-ago quarter.
Earnings from continuing operations, on a reported basis, amounted to $19.2 million or 83 cents per share, compared with $17.8 million or 77 cents in the prior-year quarter.
Total revenue increased 5.1% to $270 million from $257 million a year ago, beating the Zacks Consensus Estimate of $266 million.
Gross profit improved 5.6% to $81.6 million (30.2% of sales) from $77.2 million (30% of sales) in the third quarter of 2014. Operating income grew 5.7% to $30 million from $28.3 million in the year-ago quarter.
Segment Results
Revenues at the Engine Management segment went up 3.8% to $176.4 million in the reported quarter from $169.9 million a year ago. Operating profit was $24.6 million (14% of sales) compared with $26.1 million (15.4% of sales) in the prior-year quarter.
Revenues at the Temperature Control segment increased 10.3% to $90.6 million. The segment recorded an operating income of $9.0 million (9.9% of sales), down from $4.43 million (5.4% of sales) in the third quarter of 2014.
Revenues at the All Other segment decreased to $3.03 million from $4.95 million a year ago. The segment recorded an operating loss of $4.02 million, wider than an operating loss of $2.14 million in the third quarter of 2014.
Financial Position
Standard Motor had cash balance of $13.36 million as of Sep 30, 2015, compared with $13.7 million as of Dec 31, 2014. Long-term debt of the company stood at $81,000 as of Sep 30, 2015, against $258,000 as of Dec 31, 2014.
In the first nine months of 2015, Standard Motor had cash flow of $72.8 million from operating activities compared with $32.7 million in the year-ago period. Capital expenditures rose to $14.6 million from $9.3 million a year ago.
Financial Update
Standard Motor entered into a new revolving credit facility where J.P. Morgan Chase Bank N.A. will be acting as the agent for the lenders. The new credit facility provides a line of credit worth $250 million and permits the company to lower its borrowing costs, in addition to extending the maturity of line of credit to Oct 2020. The company expects that this new credit facility will provide it with greater financial flexibility.
Dividend Update
Standard Motor’s board approved a quarterly dividend of 15 cents per share. The dividend will be paid on Dec 1, to stockholders on record as of Nov 16, 2015.
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 #2 (Buy).
Other favorably ranked automobile stocks include General Motors Company GM, Superior Industries International, Inc. SUP and Lithia Motors Inc. LAD. All these stocks carry a Zacks Rank #2.
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