Genuine Parts Co (GPC) has reported a 9.65 percent rise in profit for the quarter ended Sep. 30, 2014. The company has earned $190.52 million, or $1.24 a share in the quarter, compared with $173.75 million, or $1.12 a share for the same period last year.
Revenue during the quarter grew 8.16 percent to $3,985.91 million from $3,685.24 million in the previous year period. Gross margin for the quarter contracted 18 basis points over the previous year period to 29.69 percent. Total expenses were 92.52 percent of quarterly revenues, down from 92.63 percent for the same period last year. This has led to an improvement of 11 basis points in operating margin to 7.48 percent.
Operating income for the quarter was $298.28 million, compared with $271.75 million in the previous year period.
In review of the third quarter, Gallagher commented, "We are pleased to report another quarter of record sales as well as a solid 10% comparative earnings increase. Our 8% total sales increase includes approximately 5.4% underlying sales growth and a 3.3% contribution from acquisitions offset by a currency headwind of approximately 0.5%. Our overall sales growth was also supported by increases in each of our four business segments, with sales for the Automotive Group up 4%, which essentially represents our core automotive growth for the quarter. Sales at Motion Industries, our Industrial Group, were up 10% including 8% underlying growth and 3% from acquisitions offset by a currency headwind of approximately 1%. Sales at EIS, our Electrical/Electronic Group, increased by 35% due to acquisitions. Sales for S. P. Richards, our Office Products Group, were up 15% and include 8% underlying growth and 7% from acquisitions."
Gallagher concluded, "In the third quarter, we achieved sales and earnings growth, produced operating margin improvement, generated solid cash flows and maintained a strong balance sheet. These are important and ongoing core objectives for us and the Company is well positioned to show continued improvement in these areas in the periods ahead."
Cash Flow
Genuine Parts Co has generated cash of $589.32 million from operating activities during the nine month period, down 29.63 percent or $248.16 million, when compared with the last year period. The company has spent $349.08 million cash to meet investing activities during the nine month period as against cash outgo of $698.26 million in the last year period. It has incurred net capital expenditure of $73.78 million on net basis during the nine month period, down 12.32 percent or $10.37 million from year ago period.
Free cash flow was 87.48 percent of operating cash flow for the nine month period, compared with 89.95 percent in the last year period.
The company has spent $297.94 million cash to carry out financing activities during the nine month period as against cash outgo of $212.95 million in the last year period. It has borrowed net of $57.97 million through debt during the nine month period. It has spent net of $95.55 million on repurchase of common stocks. It has increased payment of cash dividend by 6.62 percent or $16.10 million over prior year period to $259.36 million. Dividend payment was 44.01 percent of nine-month operating cash flow compared with 29.05 percent for the previous year period.
Cash and cash equivalents stood at $135.54 million as on Sep. 30, 2014, down 57.76 percent or $185.33 million from $320.87 million on Sep. 30, 2013.
Working Capital
Genuine Parts Co has recorded an increase in the working capital over the last year. It stood at $1,949.60 million as at Sep. 30, 2014, up 5.88 percent or $108.21 million from $1,841.38 million on Sep. 30, 2013. Current ratio was at 1.54 as on Sep. 30, 2014, up from 1.53 on Sep. 30, 2013.
Cash conversion cycle (CCC) has decreased to 61 days for the quarter from 68 days for the last year period. Days sales outstanding were almost stable at 45 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 99 days for the quarter compared with 100 days for the previous year period. At the same time, days payable outstanding went up to 83 days for the quarter from 76 for the same period last year.
Debt Story
Genuine Parts Co has witnessed an increase in total debt over the last one year. It stood at $835.39 million as on Sep. 30, 2014, up 0.18 percent or $1.50 million from $833.90 million on Sep. 30, 2013. Total debt was 10.01 percent of total assets as on Sep. 30, 2014, compared with 10.50 percent on Sep. 30, 2013. Debt to equity ratio was at 0.26 as on Sep. 30, 2013.
