Genuine Parts Beats Q1 Earnings by a Penny
Genuine Parts Company’s (GPC) earnings per share increased 9.7% year over year to $1.02 in the first quarter of 2014 from 93 cents reported in the year-ago quarter. The earnings marginally surpassed the Zacks Consensus Estimate by a penny. Net income for the quarter stood at $157.5 million, up 9.1% from $144.4 million recorded in the year-ago quarter.
Revenues in the quarter rose 13.3% year over year to $3.62 billion, marginally beating the Zacks Consensus Estimate of $3.59 billion. The year-over-year improvement can be attributed to the benefits from acquisitions and sales increase, partially offset by currency headwinds.
Operating profit increased 16% to $282.6 million from $243.6 million in the first quarter of 2012. Selling, general and administrative expenses rose 19.3% to $803.8 million from $673.6 million a year ago.
Revenues in the Automotive Parts segment grew 22.9% to $1.9 billion. The upside was driven by benefits from the GPC Asia Pacific acquisition partially offset by a negative translation effect. The segment’s operating profit augmented 24% to $150.1 million in the quarter from $121.0 million a year ago.
Revenues in the Motion Industries or Industrial segment went up 3.7% to $1.14 billion on benefits from acquisitions, partially offset by translation effect. S. P. Richards or Office Products segment revenues fell 0.5% to $418.1 million while Electrical segment or EIS segment revenues rose 29.6% to $180.3 million. The year over year increase in revenues from the EIS segment was due to the favorable impacts from the acquisitions.
Operating profits at the Motion Industries or Industrial segment soared 5.3% to $83.1 million. Operating profits at the S. P. Richards or Office Products segment increased marginally to $33.9 million from $33.2 million a year ago. In the Electrical segment or EIS segment, operating profit grew 48.6% to $15.5 million in the quarter.
Financial Position
Genuine Parts had cash and cash equivalents of $103.5 million as of Mar 31, 2014, substantially down from $841.9 million as of Mar 31, 2013. Long-term debt decreased to $899.8 million as of Mar 31, 2014, from $914.7 million as of Mar 31, 2013.
During the first three months of 2014, Genuine Parts’ net cash flow from operations dropped to $59.8 million from $116.4 million in the same period last year. Capital expenditures increased to $18.4 million from $12.9 million in the same period in 2013.
Our Take
Genuine Parts has undertaken various initiatives to boost sales and earnings in the quarter and generated better operating margin. It is also poised to record better results in the future based on significant opportunities. Strong balance sheet and cash flow will also support the company’s future expansion strategies.
Genuine Parts Company is a prominent player in the automotive replacement parts industry with a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the same industry are Remy International, Inc. (REMY), Motorcar Parts of America Inc. (MPAA) and Douglas Dynamics, Inc. (PLOW). All the stocks carry a Zacks Rank #1 (Strong Buy).
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