Genuine Parts Q3 Earnings: Industrial Weakness And Europe Drag On Profit, Margins Shrink, Lowers Annual Outlook

Genuine Parts Co GPC stock plunged after the company reported mixed third-quarter earnings and a grim outlook. Adjusted EPS of $1.88 missed the analyst consensus of $2.42.

The automotive and industrial replacement parts provider reported third-quarter sales growth of 2.5% year-on-year to $5.97 billion, marginally beating the analyst consensus estimate of $5.94 billion.

The company attributed the sales growth to a 3.2% benefit from acquisitions, partially offset by a 0.8% decrease in comparable sales.

Automotive Parts Group sales grew 4.8% Y/Y. This segment's profit margin contracted 200 basis points to 6.9%.

Sales for the Industrial Parts Group declined 1.2%, and the segment's profit margin contracted 100 basis points to 11.9%.

Gross profit increased 4.2% Y/Y to $2.2 billion. Selling, administrative and other expenses were $1.7 billion, an 11.0% rise Y/Y.

Cash and equivalents totaled $1.08 billion as of September 30. Net cash generated from operating activities for the first nine months was $1.1 billion.

CEO Will Stengel: "Our results were below our expectations, primarily driven by continued weakness in market conditions in Europe and our Industrial business."

Outlook: Genuine Parts lowered fiscal 2024 revenue growth outlook to 1%-2% or $23.32 billion-$23.55 billion (prior 1%-3% or $23.32 billion-$23.78 billion) versus $23.48 billion consensus.

It lowered the fiscal 2024 adjusted EPS outlook to $8.00-$8.20 (prior $9.30-$9.50), compared to the consensus of $9.36.

The company still expects fiscal 2024 free cash flow of $800 million—$1.0 billion and operating cash flow of $1.3 billion—$1.5 billion.

Price Action: GPC stock is trading lower by 18.50% at $116.69 at the last check on Tuesday.