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Genuine Parts Company (GPC - Analyst Report) reported more than 28% rise in earnings to $216.4 million or $1.39 per share in the second quarter of the year from $168.6 million or $1.08 in the year-ago quarter. With this, earnings per share exceeded the Zacks Consensus Estimate by 18 cents. The increase was mainly attributable impressive growth in GPC’s Automotive business.
Revenues in the quarter grew 10% to $3.68 billion, which was also higher than the Zacks Consensus Estimate of $3.64 billion. Operating profit increased 12.1% to $790.4 million, despite an 11% rise in selling, general and administrative expenses to $753.5 million during the quarter.
Revenues in the Automotive Parts segment grew 22% to $2.01 billion. Thanks to the core North American growth of nearly 6% and the positive impact from the acquisition of the remaining 70% interest in GPC Asia Pacific (formerly Exego). Operating profit in the segment rose 22% to $186.4 million in the quarter.
GPC’s other businesses continued to face weak market conditions during the quarter. Revenues in the Motion Industries or Industrial segment slid 1% to $1.13 billion, S. P. Richards or Office Products segment fell 3% to $402.3 million and Electrical segment or EIS segment decreased 4% to $143.0 million.
Operating profits in the Motion Industries or Industrial segment dipped 6.5% to $88.9 million, S. P. Richards or Office Products segment fell 3% to $29.8 million and Electrical segment or EIS segment decreased 5.5% to $12.2 million in the quarter
Genuine Parts had cash and cash equivalents of $196.8 million as of Jun 30, 2013, up from $171.6 million as of Jun 30, 2012. Long-term debt increased to $900.1 million as of Jun 30, 2013 from $500.0 million as of Jun 30, 2012. Consequently, debt-to-capitalization ratio rose to 22.6% as of Jun 30, 2013 from 14.8% as of Jun 30, 2012.
During the first six months of 2013, Genuine Parts’ net cash flow from operations improved 11% to $467.1 million, mainly due to higher earnings. Meanwhile, capital expenditures decreased marginally to $50.8 million from $51.4 million in the first half of 2012.
Genuine Parts has undertaken various initiatives to boost sales and earnings, such as product line expansion, penetration into new markets and cost-saving activities. The company relies on a diverse product portfolio for top-line and bottom-line growth.
Currently, Genuine Parts Company retains a Zacks Rank #4 on its stock, which translates to a “Sell” rating for the short term (1–3 months). But other stocks that are performing well in the industry where GPC operates include Standard Motor Products Inc. (SMP - Analyst Report) with a Zacks Rank #1 (Strong Buy), and LKQ Corp. (LKQ - Snapshot Report) and Motorcar Parts of America Inc. (MPAA - Snapshot Report), each with a Zacks Rank #2 (Buy).