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Genuine Parts Posts In-Line Q4 Earnings, Revenues Up Y/Y

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Genuine Parts Company (GPC - Free Report) reported earnings of $1.07 per share in fourth-quarter 2014 that were in line with the Zacks Consensus Estimate. Earnings were up 10.3% from earnings of 97 cents in the year-ago comparable quarter.
 

 

Genuine Parts recorded net income of $165.6 million in the fourth quarter of 2014, compared with $150.5 million in the year-ago quarter.

Revenues in the quarter rose 8.7% year over year to $3.82 billion, beating the Zacks Consensus Estimate of $3.73 billion. The year-over-year improvement can be attributed to benefits from acquisitions and increased sales, partially offset by currency headwinds. Revenues also benefited from improved performance by all the reporting segments.

Operating profit increased 9.6% to $297 million from $271 million in the fourth quarter of 2013. On the other hand, selling, general and administrative expenses rose 2.6% to $841.5 million from $820.6 million a year ago.

Revenues in the Automotive Parts segment grew 3.7% to $1.99 billion. The upside was driven by core automotive growth along with benefits from acquisitions, partially offset by headwinds from currency translation. However, the segment’s operating profit declined 2.3% to $150.3 million in the quarter from $153.9 million a year ago.

Revenues in the Motion Industries or Industrial segment went up 10.4% to $1.2 billion on benefits from acquisitions and better performance, partially offset by currency headwinds. S. P. Richards or Office Products segment revenues rose 21.7% to $469.3 million on the back of synergies from acquisitions and an overall improvement in performance. Electrical or EIS segment revenues surged 23.3% to $177.4 million on the back of synergies from acquisitions and an overall improvement in performance.

Operating profits at the Motion Industries or Industrial segment soared 31.3% to $96.3 million. Meanwhile, operating profits at the S. P. Richards or Office Products segment increased 12.2% to $35.3 million from $31.4 million a year ago. In the Electrical or EIS segment, operating profit grew 23.1% to $15.1 million in the quarter under review.

2014 Performance

Genuine Parts’ earnings increased 10% year over year to $4.61 per share for full-year 2014 from adjusted earnings of $4.19 recorded in 2013. Earnings also surpassed the Zacks Consensus Estimate of $4.60. Revenues for full-year 2014 increased 9% to $15.34 billion from $14.08 billion in 2013, marginally surpassing the Zacks Consensus Estimate of $15.25 billion.  

Financial Position

Genuine Parts had cash and cash equivalents of $137.7 million as of Dec 31, 2014, substantially down from $196.9 million as of Dec 31, 2013. Long-term debt increased to $765.5 million as of Dec 31, 2014, from $764.7 million as of Dec 31, 2013.

During 2014, Genuine Parts’ net cash flow from operations declined to $790.1 million from $1.1 billion in the same period last year. Capital expenditures contracted to $107.7 million from $124.1 million in 2013.

Dividend

Genuine Parts announced a 7% increase in the quarterly dividend for 2015. The company will be paying annual dividend of $2.46 per share, higher than $2.30 per share paid previously. Thus, Genuine Parts will be paying quarterly dividend of 61.5 cents on Apr 1, 2015 to shareholders of record as on Mar 6. This increase in dividend marks the 59th consecutive year of dividend hike by the company.

Our Take

Genuine Parts has been undertaking 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- and bottom-line growth. Genuine Parts is also actively undertaking acquisitions to expand its business.

Notably, Genuine Parts is a prominent player in the automotive replacement parts industry and currently carries a Zacks Rank #3 (Hold).

Other well-performing stocks in the same industry include Douglas Dynamics, Inc. (PLOW - Free Report) , Superior Industries International, Inc. (SUP - Free Report) , and Accuride Corp. , all sporting a Zacks Rank #1 (Strong Buy).




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