Core Viewpoint - Genuine Parts Company (GPC) reported mixed financial results for the first quarter of 2025, with adjusted earnings per share beating estimates but declining year-over-year, while net sales exceeded expectations and showed slight growth compared to the previous year [1][2]. Financial Performance - Adjusted earnings for Q1 2025 were $1.75 per share, surpassing the Zacks Consensus Estimate of $1.66 but down from $2.22 per share in the same quarter last year [1]. - Net sales reached $5.87 billion, exceeding the Zacks Consensus Estimate of $5.82 billion and reflecting a year-over-year increase of 1.4%, driven by a 3% contribution from acquisitions [2]. - Cash and cash equivalents decreased to $420.4 million from $490 million as of December 31, 2024, while long-term debt rose to $3.78 billion from $3.74 billion [5]. Segmental Performance - The Automotive segment generated net sales of $3.7 billion, a 2.5% increase year-over-year, surpassing estimates, although comparable sales fell by 0.8% [3]. - The Industrial Parts segment's net sales declined by 0.4% year-over-year to $2.20 billion, missing estimates, with comparable sales down by 1% [4]. - Operating profit for the Automotive segment decreased by 10.7% to $286 million, while the Industrial Parts segment's operating profit remained flat at $279 million [3][4]. Guidance - For 2025, the company anticipates revenue growth of 2-4% for both automotive and industrial segments, with overall sales growth projected in the same range compared to 1.6% growth in 2024 [6]. - Adjusted earnings per share are expected to be between $7.75 and $8.25, compared to $8.16 in 2024, with operating cash flow projected between $1.2 billion and $1.4 billion [6].

Core Insights - Genuine Parts (GPC) reported revenue of $5.87 billion for the quarter ended March 2025, marking a year-over-year increase of 1.4% and exceeding the Zacks Consensus Estimate by 0.77% [1] - The company's EPS for the same period was $1.75, down from $2.22 a year ago, but it surpassed the consensus EPS estimate of $1.66 by 5.42% [1] Revenue Performance - Automotive net sales reached $3.66 billion, exceeding the average analyst estimate of $3.62 billion, reflecting a year-over-year increase of 2.5% [4] - Industrial net sales were reported at $2.20 billion, matching the average estimate but showing a year-over-year decline of 0.4% [4] EBITDA Metrics - Segment EBITDA for Industrial was $278.71 million, surpassing the average estimate of $262.50 million [4] - Segment EBITDA for Automotive was reported at $285.51 million, aligning with the average estimate [4] Stock Performance - Genuine Parts shares have returned -7.3% over the past month, compared to a -8.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total GPC sales for Q1 2025 were $5.9 billion, an increase of 1.4% compared to the same period last year, driven primarily by acquisitions and improving sales in the industrial business [11][27] - Gross margin expanded by 120 basis points to 37.1%, reflecting benefits from acquisitions and strategic pricing initiatives [12][28] - Adjusted EPS for Q1 was $1.75, down 21% year-over-year, impacted by one less selling day, lower pension income, and higher depreciation and interest expenses [26][30] Business Line Data and Key Metrics Changes - Global Industrial segment sales were approximately flat at $2.2 billion, with comparable sales decreasing less than 1%, negatively impacted by one less selling day [12][14] - Global Automotive segment sales increased by 2.5%, with comparable sales down 0.8%, also affected by one less selling day [15][16] - Sales from value-added services in the industrial segment were flat to slightly down, indicating a notable improvement compared to the previous year [13] Market Data and Key Metrics Changes - In the industrial market, growth was observed in pulp and paper, aggregate and cement, and DC and logistics, while sectors like iron and steel, automotive, and oil and gas remained pressured [13] - In the U.S. automotive market, total sales increased approximately 4%, while comparable sales declined about 3% [17] - Canadian sales increased approximately 5% in local currency, with comparable sales up about 4%, showcasing strong performance despite a softer macroeconomic environment [19][20] Company Strategy and Development Direction - The company is focused on enhancing customer service and executing strategic initiatives to improve operational efficiency and agility in a dynamic external environment [7][9] - The rollout of the modernized e-commerce platform, NAPA ProLink, aims to improve customer experience and drive sales growth in the B2B segment [10] - The company is committed to leveraging its scale and diversified global presence to navigate market challenges and capitalize on growth opportunities [22][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of tariffs, trade, and geopolitical factors on the operating landscape, while expressing confidence in the company's ability to adapt [7][9] - The outlook for 2025 remains unchanged, with expected diluted EPS in the range of $6.95 to $7.45 and adjusted diluted EPS between $7.75 and $8.25 [32][39] - Management highlighted the importance of agility and responsiveness to market conditions, particularly regarding potential tariff impacts and overall economic recovery [36][38] Other Important Information - The company incurred restructuring costs of $55 million in Q1, with an expected benefit of $100 million to $125 million from restructuring efforts when fully annualized in 2026 [30][41] - The company plans to invest approximately $120 million in capital expenditures and $75 million in strategic acquisitions during the quarter [31][43] Q&A Session Summary Question: Can you discuss inflation impacts in both motion and automotive businesses? - Inflation was slightly less than a point across both businesses, with SG&A costs increasing around 2% primarily due to salaries and rent [50][51] Question: Are you seeing share gains in Europe automotive? - The company is experiencing outsized growth in NAPA branded products in Europe, with share performance in line with or slightly better than the market [52][54] Question: What is the status of North American auto acquisitions? - The company added approximately 40-45 stores in the quarter and will continue to focus on running great stores while moderating acquisition efforts [58][59] Question: Can you size the cost impact of tariffs on cost of goods? - The complexity of tariffs makes it difficult to quantify the exact impact, but a specific SKU could see a potential cost increase of about 30% due to various tariff permutations [83][84] Question: How are independents navigating the current environment? - There has not been a significant rush to stock up on inventory among independent owners, and the company continues to support them with analytics for inventory management [94][95]

Core Insights - Genuine Parts (GPC) reported quarterly earnings of $1.75 per share, exceeding the Zacks Consensus Estimate of $1.66 per share, but down from $2.22 per share a year ago, indicating a 21.1% year-over-year decline [1] - The company achieved revenues of $5.87 billion for the quarter, surpassing the Zacks Consensus Estimate by 0.77% and showing a slight increase from $5.78 billion year-over-year [2] - Genuine Parts has outperformed the S&P 500, with a year-to-date loss of about 4.2% compared to the S&P 500's decline of 12.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.10, with expected revenues of $6.07 billion, while the estimate for the current fiscal year is $7.89 on revenues of $24.08 billion [7] - The trend of estimate revisions for Genuine Parts has been unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Automotive - Retail and Wholesale - Parts industry is currently ranked in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Total GPC sales for Q1 2025 were $5.9 billion, up 0.4% year-over-year, primarily driven by acquisitions and improving sales in the industrial business, partially offset by one less selling day impacting sales growth by 110 basis points [18] - Adjusted EPS for Q1 2025 was $1.75, down 21% from the prior year, influenced by one less selling day, lower pension income, higher depreciation and interest expense, and foreign currency headwinds [36] - Gross margin increased by 120 basis points to 37.1% in Q1 2025, driven by acquisitions and favorable vendor rebates [38] Business Segment Performance Changes - Global industrial segment sales were approximately flat at $2.2 billion, with comparable sales decreasing less than 1%, negatively impacted by one less selling day [19] - Global automotive segment sales increased by 0.5%, with comparable sales decreasing by 0.8%, also affected by one less selling day [24] - In the automotive segment, total sales in the U.S. were up approximately 4%, while comparable sales declined approximately 3% [25] Market Performance Changes - In Canada, total sales increased approximately 5% in local currency, with comparable sales up approximately 4% [28] - European total sales increased approximately 3% in local currency, with comparable sales essentially flat [29] - Asia Pacific delivered double-digit growth in local currency, with total sales up approximately 12% and comparable sales growth of approximately 3% [30] Company Strategy and Industry Competition - The company is focused on enhancing customer service and executing strategic initiatives to improve operational efficiency [12][15] - The rollout of the modernized e-commerce platform, Napa ProLink, is aimed at improving customer experience and driving sales growth [16] - The company continues to pursue acquisitions to strengthen its market position, with 44 stores acquired from independent owners and competitors [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a dynamic external environment influenced by tariffs, trade, inflation, and interest rates, which are creating a cautious demand backdrop [12][13] - The company maintains its outlook for 2025, expecting diluted EPS in the range of $6.95 to $7.45 and adjusted diluted EPS between $7.75 and $8.25 [45] - Management expressed cautious optimism about a potential recovery in the second half of 2025, despite current market softness [51] Other Important Information - The company incurred $69 million in pre-tax adjustments related to restructuring and acquisitions during Q1 2025 [35] - Cash from operations was down $41 million, and free cash flow decreased by approximately $160 million due to investments in inventory and capital expenditures [42][43] - The company returned approximately $135 million to shareholders through dividends during the quarter [44] Q&A Session Summary Question: What was the inflation impact in Q1 for both motion and automotive businesses? - Inflation was slightly less than one point across both businesses, with SG&A costs increasing around 2% [65][66] Question: How is the performance in Europe Automotive relative to the market? - The company is seeing growth in Napa branded products, with market share in line or slightly better than the market [69][70] Question: Update on North American auto and independent store acquisitions? - The company added approximately 40-45 stores and will continue to focus on running great stores while moderating acquisition pace [74][76] Question: Is there a scenario that could improve the tariff situation? - If tariffs are resolved quickly, it could lead to a more robust second half, but currently, the company is in a wait-and-see mode [80][81] Question: What is the cost impact of current tariffs on goods? - The complexity of tariffs makes it difficult to quantify the exact cost impact, as it varies by product and country of origin [107][110] Question: How are independent owners navigating the current environment? - There has not been a significant rush to stock up on inventory due to tariffs, and the company is working with owners to ensure they are appropriately stocked [125][126]

Financial Performance - First quarter global sales increased by 1.4% to $5.9 billion, impacted by one less day[11] - Adjusted EBITDA decreased by 8.4% to $473 million, with an adjusted EBITDA margin of 8.1%, a decrease of 80 bps[12] - Adjusted diluted EPS decreased by 21.2% to $1.75[12] - Free cash flow was negative $161 million[13] Segment Performance - Industrial global sales decreased by 0.4% to $2.2 billion, with global comps down 0.7%, impacted by one less day[15] - Industrial segment EBITDA was $279 million, in-line with prior year, with a segment EBITDA margin of 12.7%, improved 10 bps[15] - Automotive global sales increased by 2.5% to $3.7 billion, with global comps down 0.8%, impacted by one less day[18] - Automotive segment EBITDA decreased by 10.7% to $286 million, with a segment EBITDA margin of 7.8%, decreased 110 bps[18] 2025 Outlook - Reaffirmed total sales growth of 2% to 4% for both Automotive and Industrial segments[34] - Reaffirmed adjusted diluted EPS guidance of $7.75 to $8.25, representing an adjusted EPS growth of (5%) to 1%[34] - Reaffirmed free cash flow guidance of $800 million to $1 billion[34]

[Q1 2025 Financial and Operational Highlights](index=1&type=section&id=Genuine%20Parts%20Company%20Reports%20First%20Quarter%202025%20Results%20and%20Reaffirms%20Full-Year%20Outlook) [Overall Performance Summary](index=1&type=section&id=First%20Quarter%202025%20Results) Genuine Parts Company reported Q1 2025 sales of **$5.9 billion**, a **1.4%** increase, with net and adjusted net income declining Q1 2025 Financial Summary | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Sales** | $5.9 billion | $5.8 billion | | **Net Income** | $194 million | $249 million | | **Diluted EPS** | $1.40 | $1.78 | | **Adjusted Net Income** | $243 million | $311 million | | **Adjusted Diluted EPS** | $1.75 | $2.22 | - Sales grew by **1.4%**, primarily due to a **3.0%** benefit from acquisitions, partially offset by a **0.8%** decrease in comparable sales and **0.8%** unfavorable foreign currency impact[4](index=4&type=chunk) - One less selling day in the U.S. negatively impacted overall and comparable sales growth by approximately **1.1%**[4](index=4&type=chunk) [Segment Performance](index=2&type=section&id=First%20Quarter%202025%20Segment%20Highlights) [Automotive Parts Group](index=2&type=section&id=Automotive%20Parts%20Group) Global Automotive sales increased by **2.5%** to **$3.7 billion** driven by acquisitions, despite comparable sales decline, while EBITDA and margin decreased Automotive Parts Group Performance | Metric | Q1 2025 | Change (YoY) | | :--- | :--- | :--- | | **Sales** | $3.7 billion | +2.5% | | **Comparable Sales** | | -0.8% | | **Acquisition Benefit** | | +4.1% | | **Segment EBITDA** | $286 million | -10.7% | | **Segment EBITDA Margin** | 7.8% | -110 bps | [Industrial Parts Group](index=2&type=section&id=Industrial%20Parts%20Group) Industrial segment sales decreased by **0.4%** to **$2.2 billion**, offset by acquisitions, while EBITDA remained stable and margin improved Industrial Parts Group Performance | Metric | Q1 2025 | Change (YoY) | | :--- | :--- | :--- | | **Sales** | $2.2 billion | -0.4% | | **Comparable Sales** | | -0.7% | | **Acquisition Benefit** | | +1.3% | | **Segment EBITDA** | $279 million | In-line with prior year | | **Segment EBITDA Margin** | 12.7% | +10 bps | [Financial Condition and Cash Flow](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%20and%20Capital%20Allocation) [Balance Sheet and Cash Flow Analysis](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%20and%20Capital%20Allocation) Operating cash flow decreased by **$41 million**, leading to a **$161 million** decline in free cash flow, while liquidity remained strong with **$420 million** cash and **$2 billion** undrawn credit - Operating cash flow decreased by **$41 million** in the first three months of 2025[11](index=11&type=chunk) - Free cash flow for the first three months of 2025 was negative, decreasing by **$161 million** year-over-year[11](index=11&type=chunk) - As of March 31, 2025, the company held **$420 million** in cash and **$2 billion** in undrawn revolving credit capacity[12](index=12&type=chunk) [Full-Year 2025 Outlook](index=2&type=section&id=2025%20Outlook) [Reaffirmed Full-Year Guidance](index=2&type=section&id=2025%20Outlook) The company reaffirmed its full-year 2025 guidance, projecting **2% to 4%** sales growth and adjusted diluted EPS of **$7.75 to $8.25**, excluding tariff and pension termination impacts 2025 Full-Year Outlook | Metric | 2025 Full-Year Outlook | | :--- | :--- | | **Total Sales Growth** | 2% to 4% | | **Automotive Sales Growth** | 2% to 4% | | **Industrial Sales Growth** | 2% to 4% | | **Diluted EPS** | $6.95 to $7.45 | | **Adjusted Diluted EPS** | $7.75 to $8.25 | | **Operating Cash Flow** | $1.2 billion to $1.4 billion | | **Free Cash Flow** | $800 million to $1.0 billion | - Guidance excludes impacts from new U.S. tariffs announced in Q1 and potential reciprocal tariffs[14](index=14&type=chunk) - Outlook excludes a one-time, non-cash charge of approximately **$735 million** (**$540 million** net of tax) for a U.S. pension plan termination[14](index=14&type=chunk)[16](index=16&type=chunk) [Consolidated Financial Statements (Unaudited)](index=6&type=section&id=GENUINE%20PARTS%20COMPANY%20AND%20SUBSIDIARIES%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20%28UNAUDITED%29) [Condensed Consolidated Statements of Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Q1 2025 net sales increased to **$5.87 billion**, but higher operating expenses and interest led to a decline in net income to **$194.4 million** and diluted EPS to **$1.40** Condensed Consolidated Statements of Income ($ in thousands) | (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net sales** | $5,866,069 | $5,783,631 | | **Gross profit** | $2,173,684 | $2,074,655 | | **Income before income taxes** | $251,637 | $325,181 | | **Net income** | $194,392 | $248,894 | | **Diluted earnings per share** | $1.40 | $1.78 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets increased to **$19.82 billion** and total liabilities to **$15.35 billion**, with total equity rising to **$4.46 billion** Condensed Consolidated Balance Sheets ($ in thousands) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $10,214,388 | $9,852,584 | | **Total assets** | $19,817,205 | $19,282,705 | | **Total current liabilities** | $8,885,200 | $8,525,380 | | **Total liabilities** | $15,352,642 | $14,930,854 | | **Total equity** | $4,464,563 | $4,351,851 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Q1 2025 saw a net cash outflow from operations of **$40.8 million**, with investing activities using **$154.8 million**, resulting in a **$59.5 million** net cash decrease Condensed Consolidated Statements of Cash Flows ($ in thousands) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(40,827) | $318,306 | | **Net cash used in investing activities** | $(154,818) | $(178,444) | | **Net cash provided by (used in) financing activities** | $128,742 | $(175,223) | | **Net decrease in cash and cash equivalents** | $(59,544) | $(52,419) | [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=RECONCILIATION%20OF%20GAAP%20NET%20INCOME%20TO%20ADJUSTED%20NET%20INCOME%20AND%20GAAP%20DILUTED%20NET%20INCOME%20PER%20COMMON%20SHARE%20TO%20ADJUSTED%20DILUTED%20NET%20INCOME%20PER%20COMMON%20SHARE%20%28UNAUDITED%29) [Reconciliation of Net Income and EPS](index=10&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income) Q1 2025 GAAP Net Income of **$194.4 million** was adjusted to **$243.1 million** for non-recurring costs, resulting in an Adjusted Diluted EPS of **$1.75** Reconciliation of GAAP Net Income to Adjusted Net Income and EPS ($ in thousands, except per share data) | (in thousands, except per share data) | Q1 2025 | | :--- | :--- | | **GAAP net income** | $194,392 | | Restructuring and other costs | $54,770 | | Acquisition and integration related costs | $14,035 | | Tax impact of adjustments | $(20,124) | | **Adjusted net income** | **$243,073** | | **GAAP diluted EPS** | **$1.40** | | **Adjusted diluted EPS** | **$1.75** | [Reconciliation of Free Cash Flow](index=11&type=section&id=RECONCILIATION%20OF%20GAAP%20NET%20CASH%20PROVIDED%20BY%20OPERATING%20ACTIVITIES%20TO%20FREE%20CASH%20FLOW%20%28UNAUDITED%29) Q1 2025 operating cash outflow of **$40.8 million** and capital expenditures led to a negative Free Cash Flow of **$160.7 million** Reconciliation of Free Cash Flow ($ in thousands) | (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(40,827) | $318,306 | | **Purchases of property, plant and equipment** | $(119,840) | $(115,690) | | **Free Cash Flow** | **$(160,667)** | **$202,616** |

Core Viewpoint - Genuine Parts Company reported a solid start to 2025, with a focus on customer service and strategic initiatives despite challenges from tariffs and trade dynamics [2] Financial Performance - Sales for Q1 2025 were $5.9 billion, a 1.4% increase from $5.8 billion in Q1 2024, driven by a 3.0% benefit from acquisitions, offset by a 0.8% decrease in comparable sales and a 0.8% unfavorable impact from foreign currency [2] - Net income was $194 million, or $1.40 per diluted share, compared to $249 million, or $1.78 per diluted share in the prior year [3] - Adjusted net income was $243 million, or $1.75 per diluted share, down from $311 million, or $2.22 per diluted share in the prior year [4] Segment Highlights - **Automotive Parts Group**: Global automotive sales reached $3.7 billion, up 2.5% from the previous year, with a segment EBITDA of $286 million, a decrease of 10.7% [5] - **Industrial Parts Group**: Industrial sales were $2.2 billion, down 0.4% from the previous year, with segment EBITDA remaining stable at $279 million [6] Cash Flow and Capital Allocation - Cash flow from operations decreased by $41 million in Q1 2025, primarily due to lower net income and working capital changes [7] - Net cash used in investing activities was $155 million, including $120 million for capital expenditures and $74 million for acquisitions [7] - Free cash flow decreased by $161 million for the first three months of 2025 [7] Balance Sheet - As of March 31, 2025, the company had $420 million in cash and cash equivalents and $2 billion in undrawn capacity on its Revolving Credit Agreement [8] 2025 Outlook - The company reaffirmed its full-year 2025 guidance, expecting total sales growth of 2% to 4% and adjusted diluted EPS of $7.75 to $8.25 [11][12]

Group 1 - Genuine Parts Company (NYSE: GPC) has experienced a significant decline, with its stock down double-digits over the past year [1]

Group 1: Market Overview - The stock market has recently experienced a significant decline due to concerns regarding the impact of tariffs on the economy [1] - Falling stock prices have led to increased dividend yields, allowing investors to secure higher returns on quality dividend stocks [1] Group 2: VICI Properties - VICI Properties' stock has decreased over 10% from its recent peak, resulting in a dividend yield of 5.7%, significantly higher than the S&P 500's yield of 1.5% [3][4] - The REIT benefits from stable cash flow generated from high-quality experiential real estate, such as casinos and entertainment complexes [3] - VICI Properties has a strong financial profile, having raised its dividend for seven consecutive years at a 7% compound annual rate, outperforming its peers [5] Group 3: Verizon - Verizon's shares have fallen more than 7%, increasing its dividend yield to 6.3% [6] - The company generated $36.9 billion in cash flow from operations and $19.8 billion in free cash flow last year, comfortably covering its $11.2 billion dividend payout [7] - Verizon is acquiring Frontier Communications for $20 billion to enhance its broadband network, positioning itself for future revenue and cash flow growth [8] Group 4: Genuine Parts Company - Genuine Parts Company has seen its stock drop over 30%, raising its dividend yield to 3.7% [9] - Despite potential tariff impacts on the automotive sector, the company has a history of resilience, having increased its dividend for 69 consecutive years [10] - The company produced $1.3 billion in cash flow from operations and $684 million in free cash flow last year, exceeding its $555 million dividend payments [11]