EPS of $0.96 decreased by 57.7% from previous year
Gross margin of 35.9%
Net income of 133.06M
"" -
Genuine Parts Company (0IUX.L) QQ4 2024 Earnings Review: Modest Top-Line Growth Obscured by Margin Contraction and Levered Balance Sheet
Executive Summary
Genuine Parts Company (0IUX.L) reported a mixed QQ4 2024, with revenue of $5.77 billion marking a 3.3% year-over-year uptick, but a material decline in profitability, evidenced by a drop in net income to $133.1 million and EPS to $0.96, down about 58% YoY. The quarter benefited from a modest expansion in gross margin (approx. 35.9%), yet operating income and EBITDA declined sharply; EBITDA fell to $308.5 million from $519.9 million in the prior-year period, delivering an EBITDARatio of 5.35% and operating margin of 4.31%. The drop in earnings was driven by a substantial deterioration in total other income/expenses and higher operating costs, despite a still favorable gross margin. Free cash flow for the quarter was negative at roughly $(26.7) million despite positive operating cash flow of $155.0 million, as capex and acquisitions weighed on cash generation. Net debt remained elevated at approximately $5.26 billion, with a total debt-to-capitalization of about 58.4% and interest coverage around 7.3x, signaling leverage risk against a still sizable cash-generating base. The balance sheet shows robust asset accumulation (Total assets ~ $19.28B) and a strong current base (current ratio ~1.16, quick ratio ~0.51), but liquidity dynamics and working capital efficiency warrant close monitoring. The stock trades at a headline P/E around 30x, suggesting premium valuation given the earnings volatility. In sum, near-term earnings quality is challenged, yet the company retains a durable distribution network, scale, and long-run aftermarket opportunities that could support a path toward margin stabilization and deleveraging, contingent on operating-expenditure discipline and working-capital optimization.
Key Performance Indicators
Revenue
5.77B
QoQ: -3.35% | YoY:3.30%
Gross Profit
2.07B
35.88% margin
QoQ: -5.83% | YoY:6.45%
Operating Income
248.98M
QoQ: -31.39% | YoY:-40.53%
Net Income
133.06M
QoQ: -41.28% | YoY:-58.01%
EPS
0.96
QoQ: -41.10% | YoY:-57.71%
Revenue Trend
Margin Analysis
Key Insights
Q4 2024 revenue: $5.770B, up 3.30% YoY; QoQ: -3.35%
Gross profit: $2.070B; gross margin ≈ 35.9% (grossProfitRatio 0.3588; gross margin data corroborates a stable to modestly improving gross margin path vs. prior year)
Operating income: $248.98M; operating margin ≈ 4.31% (down sharply YoY; QoQ decline also evident: -31.39% QoQ in operating income ratio)
EBITDA: $308.52M; EBITDA margin ≈ 5.35%
Net income: $133.06M; net margin ≈ 2.31%; EPS: $0.96; diluted $0.96 (YoY EPS down ~57.7%; QoQ down ~41.1%)
Financial Highlights
Revenue performance:
- Q4 2024 revenue: $5.770B, up 3.30% YoY; QoQ: -3.35%
- Gross profit: $2.070B; gross margin ≈ 35.9% (grossProfitRatio 0.3588; gross margin data corroborates a stable to modestly improving gross margin path vs. prior year)
- Operating income: $248.98M; operating margin ≈ 4.31% (down sharply YoY; QoQ decline also evident: -31.39% QoQ in operating income ratio)
- EBITDA: $308.52M; EBITDA margin ≈ 5.35%
- Net income: $133.06M; net margin ≈ 2.31%; EPS: $0.96; diluted $0.96 (YoY EPS down ~57.7%; QoQ down ~41.1%)
- Interest expense: $29.40M; tax expense: $33.94M; total other income/expense: $(81.98)M (vs. a net positive in the prior year), a major driver of the bottom-line swing
Profitability and mix:
- Gross margin improvement vs. prior year supports a favorable product mix and pricing discipline, but operating-cost and non-operating expense reversals offset this gain, resulting in a material drop in operating income and net income YoY.
- Operating cash flow: $155.0M; capex: $(181.7)M; free cash flow: $(26.7)M; FCF trajectory remains negative for the quarter despite positive CFO, reflecting heavy ongoing capex and acquisition activity.
Liquidity and balance sheet:
- Cash and equivalents: $480.0M; total assets: ~$19.28B; total liabilities: ~$14.93B; total equity: ~$4.34B
- Working capital efficiency: current ratio 1.16, quick ratio 0.51; DSO ~49.2 days, DIO ~130.2 days, DPO ~139.9 days; cash conversion cycle ~39.6 days
- Leverage: total debt ~$5.74B; net debt ~$5.26B; debt-to-capitalization ~58.4%; debt ratio ~31.6%; interest coverage ~7.3x
- Shareholder cash return: dividends paid ~$143.5M; share repurchases ~$37.5M; weighted-average shares ~139.0M
Valuation and market context:
- Valuation multiples (as of QQ4 2024 data): P/E ≈ 30.4x; price-to-book ≈ 3.73x; price-to-sales ≈ 2.81x; dividend yield ≈ 0.89%
- Compared with select peers in the dataset, GPC trades at a premium multiple (e.g., P/E in the mid-teens to low-20s for some peers), reflecting its entrenched distribution footprint and diversified industrial/automotive parts mix. The earnings volatility in 2024 supports caution on multiple expansion without clear near-term margin resilience.
Overall takeaway:
- Revenue modestly grew, but profitability deteriorated materially in QQ4 2024. The combination of negative free cash flow for the quarter, a heavy capex/ acquisitions footprint, and high leverage underscores near-term earnings quality risk. The company’s strengths – a broad, durable distribution network and a large installed base in both automotive and industrial parts – provide a base for potential future margin stabilization and deleveraging, but only if the company can improve cost discipline, working capital efficiency, and sustain cash generation.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
5.77B
3.30%
-3.35%
Gross Profit
2.07B
6.45%
-5.83%
Operating Income
248.98M
-40.53%
-31.39%
Net Income
133.06M
-58.01%
-41.28%
EPS
0.96
-57.71%
-41.10%
Key Financial Ratios
currentRatio
1.16
grossProfitMargin
33.9%
operatingProfitMargin
4.39%
netProfitMargin
2.31%
returnOnAssets
0.69%
returnOnEquity
3.07%
debtEquityRatio
1.4
operatingCashFlowPerShare
$1.12
freeCashFlowPerShare
$-0.19
dividendPayoutRatio
107.9%
priceToBookRatio
3.73
priceEarningsRatio
30.43
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript dataset provided with this request is empty. Consequently, there are no management quotes or thematic highlights available to extract. If a transcript becomes available, this section should group insights by themes (strategy, operations, market conditions) and include context and significance for investors.
—
—
Forward Guidance
There is no explicit management-provided guidance in the supplied QQ4 2024 dataset. Given the results, a prudent forward view centers on margin stabilization, deleveraging, and cash-flow optimization. Key factors to monitor include: (1) operating expense discipline and SG&A leverage as revenue recovers; (2) working-capital dynamics, particularly inventory turns (inventory turnover ~0.691x) and days payable/receivable efficiency; (3) capital allocation trajectory (capex pace, acquisitions, and potential share repurchases) and their impact on free cash flow; (4) leverage trajectory and interest coverage as debt amortization progresses; (5) changes in mix between Automotive Parts Group and Industrial Parts Group and any-margin expansion from higher-margin product lines or premium service offerings. Industry trends to watch include the aftermarket demand cycle, vehicle parc evolution (especially EV penetration and electrified powertrains), and macroeconomic conditions affecting fleet maintenance spend. Absent concrete guidance, investors should-model multiple scenarios with margin reversion at +50–150 bps in 2025, a modest organic revenue gain, and potential deleveraging under disciplined capital allocation.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0IUX.L Focus
35.88%
4.39%
3.07%
30.43%
0L9E.L
31.20%
8.70%
2.24%
15.57%
0R33.L
51.30%
17.10%
4.60%
0.00%
0J8W.L
42.90%
26.20%
22.60%
24.96%
0JQQ.L
6.16%
1.87%
2.56%
10.57%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
From an earnings-quality perspective, GPC presents a mixed near-term picture. The QQ4 2024 results show revenue resilience but a meaningful margin/earnings deterioration, with negative free cash flow and a sizable net debt burden. The stock’s valuation appears premium (P/E ~30x) relative to some peers, suggesting investors are pricing long-run scale and diversification, but the lack of near-term guidance and the earnings volatility warrants caution. The investment thesis hinges on: (1) tangible deleveraging progress and stabilization of free cash flow, (2) continued margin normalization via cost discipline and mix optimization, and (3) the realization of any accretive benefits from acquisitions and international expansion. Investors should monitor cash conversion cycle improvements, capex/ acquisition discipline, and debt-reduction progress. If management can demonstrate a path to sustained FCF positive years with meaningful debt reduction, the multiple could compress toward peers with steadier earnings. In the interim, a cautious stance with a bias toward value-supportive catalysts—such as deleveraging milestones or improved working capital efficiency—appears prudent.
Key Investment Factors
Growth Potential
Moderate top-line growth potential driven by the large US and international aftermarket installed base, ongoing expansion in Industrial Parts Group, and potential tailwinds from EV-related aftermarket demand. Long-term revenue trajectory could improve if working capital efficiency and cost controls tighten and if acquisitions integrate smoothly to lift margins.
Profitability Risk
Key risks include sustained earnings volatility due to non-operating items and higher operating costs, elevated leverage (net debt ≈ $5.26B; debt-to-capitalization ≈ 58.4%), and negative free cash flow in the near term. Weak working-capital efficiency (DIO ~130 days) and a heavy capex/ acquisition cadence pressure quarterly cash flow. Competitive intensity and potential FX headwinds (given the cross-border listing and global footprint) could pressure margins further.
Financial Position
Balance sheet shows strong asset base and liquidity headroom (cash ~$480M; current ratio 1.16) but significant leverage (total debt ~$5.74B; interest coverage ~7.3x) and a high debt-to-capitalization. Profitability metrics are pressured in the near term (net margin ~2.31%; operating margin ~4.31%) despite a modest gross-margin improvement YoY. Ongoing capital allocation (dividends, modest buybacks, and acquisitions) shapes FCF trajectory and equity value.
SWOT Analysis
Strengths
Extensive, diversified distribution network across Automotive Parts and Industrial Parts Groups.
Global footprint with scale in the US and international markets supporting stable aftermarket demand.
Established relationships with repair shops, fleet operators, dealers, and industrial customers.
Positive gross margin trend YoY provides room for margin expansion with improved operating leverage.
Weaknesses
Material earnings deterioration in QQ4 2024 (net income down ~58% YoY; EPS down ~57.7%), despite revenue growth.
Significant negative free cash flow in the quarter driven by capex and acquisitions; leverage remains high.