Auto Roundup: Key Tidbits From Q1 Releases of CMI, BWA, GT, LEA & SMP

The auto-tires-trucks sector has reached its tail end for the earnings season. Last week, a host of auto companies came out with their first-quarter 2022 earnings release. Both the S&P 500 auto companies reported quarterly results last week — including the truck engine giant Cummins CMI and auto equipment provider BorgWarner BWA — delivered earnings beat. BorgWarner for The Bottom Line, however, declined year-over-year, while the Cummins remained flat compared to the year 2021.

One of the leading tiremakers, Goodyear Tire GT, a manufacturer of automotive seating and electronic systems Lear Corp. LEA and auto components supplier Standard Motor Products SMP also topped first-quarter earnings estimates but witnessed a year-over-year decline in their bottom lines.

Last week, a number of automakers released their vehicle sales data for April. Most of them saw double-digit declines in sales volumes owing to the chip crisis, supply-chain disruptions and inventory dearth. Per the Automotive News Research & Data Center, cumulative US vehicle sales (for automakers who reported sales figures) fell by more than 21% on a year-over-year basis. LMC Automotive estimated that the industry volume declined 17% year-over-month.

Meanwhile, passenger vehicle sales in China also plunged 36% year-over-year to 1.06 million units, marking the biggest decline since March 2020. The resurgence of COVID-19 cases and subsequent lockdown restrictions impacted production and kept buyers away from showrooms. Per China Passenger Car Association, 54% of sales plummeting with a massive blow to luxury cars for production and demand. In contrast, sales of new energy vehicles rose by more than 50% as customers rose to the same level of anticipated rising prices.

Last Week’s Top Stories

Cummins $ 4.04 per share of reported first-quarter 2022 earnings, flat year over year. The figure is topped by the Zacks Consensus Estimate of $ 3.55. Cummins’ revenues totaled $ 6,385 million, up from $ 6,092 million recorded in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $ 6,026 million.

Cummins’ cash and cash equivalents were $ 2,276 million as of March 31, 2022, down from $ 2,592 million on Dec. 31, 2021. Long-term debt totaled $ 3,502 million, down from $ 3,579 million on Dec. 31, 2021. CMI raised its 2022 guidance revenues. It expects revenues to grow 8% year-over-year compared to the previous estimate of 6%. The EBITDA forecast remains unchanged at 15.5% of sales.

BorgWarner Reported adjusted earnings of $ 1.05 per share in the first-quarter 2022, declining from $ 1.21 in the prior-year quarter. The bottom line, however, is the Beat the Zacks Consensus Estimate of 80 cents per share. Outperformance in all segments across higher-than-expected revenues. Net sales of $ 3,874 million outpaced the Zacks Consensus Estimate of $ 3,639.8 million but declined 3.4% year over year.

As of March 31, 2022, BorgWarner had $ 1,501 million in cash equivalents and $ 4,223 million in long-term debt.For full-year 2022, the company anticipates net sales of $ 15.5- $ 16 billion, indicating a reduction in the guided range of $ 15.9 – $ 16.5 billion. Adjusted operating margin is expected to be 9.8-10.2% of the band, down from the previous range of 10.2-10.7%. Adjusted net earnings per share are estimated at $ 3.9- $ 4.25, up from $ 3.71- $ 4.19 expected earlier. The Free Cash Flow is $ 650- $ 750 million in the band’s forecast, down from $ 700- $ 800 million in the previous forecast.

Goodyear Reported first-quarter 2022 adjusted earnings per share of 37 cents, surpassing the Zacks Consensus Estimate of 18 cents. Higher-than-expected revenues and operating income across Europe, Middle East and Africa and the Americas segments, respectively, buoyed the results. The bottom line is down 14% from the year-ago figure of 43 cents. The company registered net revenues of $ 4,908 million, surging 39.8% on a year-over-year basis and the Zacks Consensus Estimate of $ 4,893.2 million.

In the reported quarter, the tire volume was 45 million units, up 29% from the year-ago period. Replacement Tire Shipments Increased by 35%, Benefit from the Buyout of Cooper Tire. GT had cash and cash equivalents of $ 1,053 million as of March 31, 2022. Long-term debt and finance leases amounted to $ 7,450 million. The quarter in capital expenditure was $ 276 million, up from $ 185 million in the year-ago quarter.

Lear $ 1.80 per share of reported first-quarter 2022 adjusted earnings, which plunged 51.7% year-over-year. The bottom line, however, is the surpassed Zacks Consensus Estimate of $ 1.56 per share. The upside is that the company’s segments are both led by higher-than-expected sales. In the reported quarter, revenues declined 2.7% year-over-year to $ 5,208.4 million. The top line beat The Zacks Consensus Estimate of $ 4,957.8 million.

The company had $ 1,162 million in cash / cash equivalents of $ 2,595.8 million in quarter-end and long-term debt. Lear has downwardly revised its full-year net sales guidance from $ 20.4- $ 21.2 billion to the previous range of $ 20.8- $ 22.3 billion. Lear’s anticipated FCF has been reduced from $ 225- $ 425 million to $ 300- $ 600 million. $ 650- $ 700 million within the capital spending forecast. Adjusted EBITDA estimates have been lowered to $ 1,365- $ 1,565 million from $ 1,500- $ 1,800 million.

Standard Motor Reported first-quarter 2022 Adjusted Earnings of 92 cents per share, beating the Zacks Consensus Estimate of 81 cents. However, the bottom line declined from the previous year’s quarterly 97 cents. Total revenues rose 16.6% year over year to $ 323 million, surpassing the Zacks Consensus Estimate of $ 311 million. Gross profit rose to $ 89.8 million from the year-ago quarter’s $ 83.8 million. SMP expects its consolidated gross margin of 28-29% of the band to 2022.

Standard Motor had $ 19.9 million in cash as of March 31, 2022, compared to $ 21.8 million in December 31, 2021. Net cash used in operating activities totaled $ 103.9 million in the first quarter of 2022, compared to $ 11.4 million used in the corresponding period Last year.The board approved a dividend of 27 cents per share, payable on June 1, 2022, to stockholders of record as of May 16, 2022.

Price Performance

The following table shows the last week and six-month period over some of the major auto players in the price movement.


Image source: Zacks Investment Research

What’s Next in the Auto Space?

Japanese auto giants of the quarterly results for Stay tuned. Also, watch out for any update on how automakers will tackle the semiconductor shortage — the Russia-Ukraine war and rising COVID-19 infections — and make changes in business operations.

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The views and opinions expressed herein are those of the author and do not reflect those of Nasdaq, Inc.

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