Genuine Parts Q4 Profit Down 6%, But Revenues Beat View; Hikes Dividend

(RTTNews) - Automotive replacement parts distributor Genuine Parts Co. (GPC) on Tuesday reported a 6 percent decline in profit for the fourth quarter from last year, as higher operating expenses more than offset double-digit revenue growth. In addition, the prior-year quarter's results included a one-time pension gain.

However, revenue for the latest quarter beat analysts' expectations. The company also announced a 7 percent increase in the regular quarterly cash dividend for 2014.

Tom Gallagher, Chairman and Chief Executive Officer of Genuine Parts said, "Revenue growth in the fourth quarter proved to be the strongest of the year, with acquisitions contributing 10% to our sales growth and our underlying sales were up 4%, which was offset by a 1% currency headwind."

Sales for the Automotive Group climbed 25 percent in the quarter from the year-ago period to $1.92 billion, while industrial sales increased 4 percent to $1.09 billion and electrical/electronic materials sales rose 6 percent to $143.90 million. However, office products sales declined 4 percent to $385.76 million.

Genuine Parts' net income for the fourth quarter was $150.47 million or $0.97 per share, down from $160.23 million or $1.03 per share in the prior year. The prior-year quarter's results include a one-time pension gain of $23.5 million or $0.10 per share.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.93 per share for the latest quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter grew 13 percent to $3.52 billion from $3.12 billion in the same period last year and beat analysts' consensus revenue estimate of $3.43 billion.

Operating expenses for the quarter rose 30 percent to $856.45 million from $658.73 million in the year-ago period.

For fiscal 2013, Genuine Parts' net income rose to $684.96 million or $4.40 per share from $648.04 million or $4.14 per share in the previous year.

The latest period's results include one-time positive purchase accounting adjustments of $0.21 net of taxes on a per share basis, associated with the company's acquisition in April 2013 of GPC Asia Pacific, formerly Exego. The prior year's results include the curtailment gain of $0.09 per share.

Net sales for the year increased 8 percent to $14.08 billion from $13.01 billion last year.

Street expected the company to earn $4.13 per share for the year on revenues of $13.99 billion.

Looking ahead, Gallagher said, "We remain committed to our core objectives of growing sales and earnings, showing continued operating margin improvement, generating solid cash flows and maintaining a strong balance sheet. Further progress in each of these areas will keep the Company moving ahead and help to ensure another successful year in 2014."

Genuine Parts said that at the February 17, 2014 board meeting, its board of directors increased the cash dividend payable to an annual rate of $2.30 per share from the previous dividend of $2.15 per share. The quarterly cash dividend of $0.575 per share is payable on April 1, 2014 to shareholders of record March 7, 2014.

In addition, Genuine Parts said that Bruce Clayton has informed the company's management of his plan to retire as Senior Vice President of Human Resources for the company, effective April 1, 2014. Accordingly, the company named James Neill to succeed Clayton upon his retirement. Currently, Neill serves as Senior Vice President of Employee Development and HR Services for the company.

GPC closed Friday's trading at $85.95, up $1.31 on a volume of 949,300 shares.