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Genuine Parts (GPC) Q2 Earnings Top, Sales Lag, Comps Decline

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Genuine Parts Company (GPC - Free Report) reported adjusted earnings of $1.32 per share in second-quarter 2020 results, beating the Zacks Consensus Estimate of $1. The bottom line, however, declined from the year-ago profit of $1.47 a share. Weak contribution across both segments of the company induced this underperformance. High operating costs also dragged down profits.

Genuine Parts reported net sales of $3,823.2 million, missing the Zacks Consensus Estimate of $4,450 million. The top line also decreased 14% year over year. Net sales included contribution of 4.2% from prior-year acquisitions, offset by a 13.7% comparable sales decrease, a 0.6% negative impact from foreign-currency translation and a 4.1% impact of the divestiture of certain businesses.

Genuine Parts Company Price, Consensus and EPS Surprise

Genuine Parts Company Price, Consensus and EPS Surprise

Genuine Parts Company price-consensus-eps-surprise-chart | Genuine Parts Company Quote

Key Takeaways

The Automotive segment’s net sales came in at $2,495.8 million, down from $2776.2 million in the prior-year quarter. The segment’s comparable sales declined 12.6% in the second quarter. The segment’s operating profit decreased to $218.9 million in the reported quarter from the prior year’s $228.7 million.

The Industrial Parts segment’s net sales dropped 21.1% from the year-ago quarter to $1,327.4 million. The segment’s comparable sales declined 16.7% in the period. Resultantly, operating profit fell to $108.9 million from the year-earlier quarter’s $136.3 million.

Total operating expenses rose 32.3% during the quarter under review, primarily due to goodwill impairment charge and restructuring costs of $506.7 million and $25 million, respectively.

Genuine Parts had cash and cash equivalents worth$983.8 million as of Jun 30, 2020. Long-term debt decreased to $2,727.9 million from $2,871.1 million recorded in the year-ago period.

The company returned $114 million to its shareholders during the reported quarter in the form of quarterly dividends. However, it suspended its existing share-repurchase program until further notice amid the coronavirus crisis.

The auto parts maker also refrained from providing full-year guidance amid coronavirus-led uncertainty.

Zacks Rank & Stocks to Consider

Genuine Parts currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto sector are Sonic Automotive Inc. (SAH - Free Report) , Lithia Motors (LAD - Free Report) and AutoNation (AN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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