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

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The earnings season for the Auto-Tires-Trucks sector has reached its tail end. Last week, a host of auto companies came out with their first-quarter 2022 earnings release. Both the S&P 500 auto firms that reported quarterly results last week— including the truck engine giant Cummins CMI and auto equipment provider BorgWarner BWA— delivered earnings beat. The bottom line for BorgWarner, however, declined year over year, while that of Cummins remained flat compared with the corresponding quarter of 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 U.S. vehicles sales (for the automakers who reported sales figures) fell more than 21% on a year-over-year basis. LMC Automotive estimated that the industry volume declined 17% year on year last 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 the subsequent lockdown restrictions impacted production and kept buyers away from showrooms. Per China Passenger Car Association, production and demand for luxury cars suffered a massive blow, with sales plummeting 54%. In contrast, sales of new energy vehicles rose more than 50% as customers were quick to place orders for the same in anticipation of rising prices.

Last Week’s Top Stories

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

Cummins’ cash and cash equivalents were $2,276 million as of Mar 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 for revenues. It expects revenues to grow 8% year over year compared with 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 first-quarter 2022, declining from $1.21 recorded in the prior-year quarter. The bottom line, however, beat the Zacks Consensus Estimate of 80 cents per share. Higher-than-anticipated revenues across all segments resulted in the outperformance. 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 Mar 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 within $15.5-$16 billion, indicating a decrease from the previously guided range of $15.9-$16.5 billion. Adjusted operating margin is expected in the band of 9.8-10.2%, down from the earlier range of 10.2-10.7%. Adjusted net earnings per share are estimated to be within $3.9-$4.25, up from $3.71-$4.19 expected earlier. Free cash flow is projected in the band of $650-$750 million, down from the previous forecast of $700-$800 million.

Goodyear reported first-quarter 2022 adjusted earnings per share of 37 cents, surpassing the Zacks Consensus Estimate of 18 cents. Higher-than anticipated revenues and operating income across the Europe, Middle East and Africa and the Americas segments, respectively, buoyed the results. The bottom line decreased 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 as well as beating the Zacks Consensus Estimate of $4,893.2 million.

In the reported quarter, tire volume was 45 million units, up 29% from the year-ago period. Replacement tire shipments increased 35%, benefiting from the buyout of Cooper Tire. GT had cash and cash equivalents of $1,053 million as of Mar 31, 2022. Long-term debt and finance leases amounted to $7,450 million. Capital expenditure in the quarter was $276 million, up from $185 million in the year-ago quarter.

Lear reported first-quarter 2022 adjusted earnings of $1.80 per share, which plunged around 51.7% year over year. The bottom line, however, surpassed the Zacks Consensus Estimate of $1.56 per share. Higher-than-expected sales from both the company’s segments led to the upside. In the reported quarter, revenues declined around 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 of cash/cash equivalents at the quarter-end and long-term debt of $2,595.8 million. Lear has downwardly revised its full-year net sales guidance to the band of $20.4-$21.2 billion from the previous range of $20.8-$22.3 billion. Lear’s anticipated FCF has been lowered to the band of $225-$425 million from $300-$600 million. Capital spending forecast remains constant within $650-$700 million. Adjusted EBITDA estimation has 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 prior-year quarter’s 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 in the band of 28-29% for 2022.

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

Price Performance

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

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Zacks Investment Research


Image Source: Zacks Investment Research

What’s Next in the Auto Space?

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


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BorgWarner Inc. (BWA) : Free Stock Analysis Report

Cummins Inc. (CMI) : Free Stock Analysis Report

The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report

Standard Motor Products, Inc. (SMP) : Free Stock Analysis Report

Lear Corporation (LEA) : Free Stock Analysis Report

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