Genuine Parts Profits In Line

Zacks

Genuine Parts Company (GPC) reported an 11% rise in profits to $168.6 million in the second quarter of the year from $151.8 million in the year-ago quarter. Earnings per share went up 12.5% to $1.08 from 96 cents in the comparable quarter of 2011. It was in line with the Zacks Consensus Estimate.

Revenues in the quarter grew 5% to $3.3 billion, slightly lower than the Zacks Consensus Estimate of $3.4 billion. Operating profit also increased 4.5% to $705.0 million from $674.6 million a year ago, despite a 4% rise in selling, general and administrative expenses to $680.2 million during the quarter.

Revenues in the Automotive Parts segment grew 4% to $1.6 billion despite sluggish growth in the automotive aftermarket. Operating profit in the segment rose 10% to $153.0 million.

Revenues in the Motion Industries or Industrial segment increased 8% to $1.1 billion while operating profit improved 11% to $95.1 million.

Revenues in the Electrical segment or EIS appreciated 9% to $149.4 million while operating profit surged 41% to $12.9 million.

The company’s S. P. Richards or Office Products segment continues to face challenging conditions in the market. Revenues in the segment slipped 1% to $413.3 million while operating profit slid 2% to $30.6 million.

Genuine Parts had cash and cash equivalents of $171.6 million as of June 30, 2012, down from $516.7 million as of June 30, 2011. Long-term debt remained unchanged at $500 million as of June 30, 2012 compared with the year-ago level.

During the first six months of 2012, Genuine Parts’ net cash flow from operations improved to $421.3 million from $250.0 million in the prior-year period, due to higher profit and favorable changes in operating assets and liabilities. Meanwhile, capital expenditures increased to $51.4 million from $41.7 million in the first half of 2011.

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.

Its major competitors include Advance Auto Parts (AAP), AutoZone (AZO) and W.W. Grainger (GWW). Currently, the company retains a Zacks #2 Rank on its stock, which translates to a Buy rating for the short term (1–3 months).

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