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GENUINE PARTS CO (GPC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 sales rose 3.3% to $5.77B; GAAP diluted EPS fell to $0.96, primarily due to $62M inventory write‑down and $59.7M restructuring costs; adjusted diluted EPS was $1.61 .
  • Automotive grew 6.1% to $3.7B with segment EBITDA margin 7.8% (-100 bps YoY); Industrial declined 1.2% to $2.1B with segment EBITDA margin 12.9% (-40 bps YoY) .
  • 2025 outlook: total revenue +2% to +4%; adjusted EPS $7.75–$8.25; GAAP EPS $6.95–$7.45; tax ~24%; CFO $1.2–$1.4B; FCF $0.8–$1.0B; dividend increased 3% to $1.03/qtr ($4.12 annual) .
  • Management signaled additional $100–$125M cost savings in 2025 (cumulative $200M annualized by 2026), but noted H1 2025 earnings down 15–20% before H2 recovery; FX and lower pension income are headwinds ($0.43 EPS impact) .

What Went Well and What Went Wrong

What Went Well

  • Automotive topline grew (+6.1%), aided by acquisitions and a modest comp (+0.2%); adjusted gross margin expanded 50 bps to 36.9% on pricing and sourcing initiatives .
  • Asia Pacific delivered strong Q4 local‑currency growth (+14%) and ~+6% comps; commercial and retail both grew with notable retail strength .
  • Execution progress: DC service levels improved ~800 bps in 2024; technology investments (Google Cloud catalog/search) made search 4x faster, 2x more accurate at half the cost; Poland Tech Center scaled to ~300 engineers .
  • “We’re targeting an additional $100 to $125 million of savings in 2025…position us for approximately $200 million in annualized cost savings beginning in 2026.” — Will Stengel .

What Went Wrong

  • GAAP EPS compressed to $0.96 vs $2.26 prior year on non‑recurring charges and inflationary pressure; adjusted EPS down to $1.61 vs $2.26 prior year .
  • Industrial demand remained soft (avg daily sales down in Oct/Nov low single digits, December mid‑single digits), and Europe comps were -1% in Q4 LC; SG&A deleveraged ~210 bps YoY on inflation, acquired business mix, and product liability reserve .
  • U.S. DIY remained weak (down low single digits for 2024), discretionary categories down mid‑single digits; management acknowledged underperformance versus some peers and ongoing work to lift store performance .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$5.586 $5.963 $5.970 $5.770
GAAP Diluted EPS ($)$2.26 $2.11 $1.62 $0.96
Adjusted Diluted EPS ($)$2.26 $2.44 $1.88 $1.61
Gross Profit ($USD Billions)$2.033 $2.180 $2.198 $2.070
Gross Margin % (reported)36.4% 36.6% (calc: 2,180,303/5,962,567) 36.8% (calc: 2,198,441/5,970,198) 35.9%
Gross Margin % (adjusted)———36.9%

Segment breakdown (note: segment profit measure changed to EBITDA in Q4 2024):

Segment MetricQ3 2024Q4 2024
Automotive Sales ($USD Billions)$3.800 $3.7
Automotive Profit MetricSegment Profit $262M; Margin 6.9% Segment EBITDA $285M; Margin 7.8%
Industrial Sales ($USD Billions)$2.170 $2.1
Industrial Profit MetricSegment Profit $259M; Margin 11.9% Segment EBITDA $271M; Margin 12.9%

KPIs:

KPIQ3 2024Q4 2024
Comparable Sales (Total)-0.8% -0.5%
Comparable Sales (Automotive)+0.2% +0.2%
Comparable Sales (Industrial)-2.4% -1.7%
Additional U.S. Selling Day Impact (Total)~+1.1% ~+1.1%
Additional U.S. Selling Day Impact (Automotive)~+0.9% ~+0.9%
Additional U.S. Selling Day Impact (Industrial)~+1.4% ~+1.5%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Sales GrowthFY 20243%–5% (prior) 1%–3% (Q2 update) Lowered
Adjusted Diluted EPSFY 2024$9.80–$9.95 (prior) $9.30–$9.50 (Q2 update) Lowered
Total Sales GrowthFY 20241%–3% (Q2) 1%–2% (Q3 update) Lowered
Adjusted Diluted EPSFY 2024$9.30–$9.50 (Q2) $8.00–$8.20 (Q3 update) Lowered
Total Sales GrowthFY 2025—2%–4% New
Automotive Sales GrowthFY 2025—2%–4% New
Industrial Sales GrowthFY 2025—2%–4% New
GAAP Diluted EPSFY 2025—$6.95–$7.45 (ex‑pension settlement) New
Adjusted Diluted EPSFY 2025—$7.75–$8.25 New
Effective Tax RateFY 2025—~24% New
Cash from OperationsFY 2025—$1.2B–$1.4B New
Free Cash FlowFY 2025—$800M–$1,000M New
Automotive Segment EBITDA MarginFY 2025—Flat to +10 bps YoY New
Industrial Segment EBITDA MarginFY 2025—+20–40 bps YoY New
SG&A (Company)FY 2025—Deleverage 20–40 bps New
Dividend2025$1.00/qtr ($4.00 annual) 2024 $1.03/qtr ($4.12 annual), +3% Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Technology investmentsReleases focused on market softness and guidance revisions; limited detail on tech in press releases Google Cloud catalog/search enhancements (4x faster, 2x more accurate, half cost); Poland Tech Center ~300 engineers; global HR rollout (Workday) Increased emphasis on tech execution
Supply chain/DC operationsNot highlighted in Q2/Q3 releases DC service level metric improved ~800 bps; Indianapolis DC expansion with automation Improving operational metrics
Tariffs/macroTariffs/macro risks noted in forward‑looking statements Detailed tariff exposure: ~7% China; <5% Mexico/Canada; prepared to pass through price; cautious tone Better quantified; watch policy risk
Product performance mixNot detailed in press releases Non‑discretionary up low‑single; general maintenance up low‑single; discretionary down mid‑single Mix favors nondiscretionary
Regional trendsWeakness in Industrial and Europe cited; U.S./EU auto softness APAC strong (+14% LC); Europe +3% LC but comps -1%; Canada +1% LC APAC strength; Europe still soft
Pension plan terminationNot in prior releases 1x non‑cash settlement excluded from 2025 GAAP EPS guide; ~$735M AOCI losses (pre‑tax) as of 12/31/24 Clarity on treatment and timing

Management Commentary

  • “Adjusted gross margin was 36.9% in the fourth quarter, an increase of 50 basis points from last year…driven by acquisitions, primarily at U.S. Automotive.” — CFO .
  • “We’re targeting an additional $100 million to $125 million of savings in 2025…approximately $200 million in annualized cost savings beginning in 2026.” — CEO .
  • “Our search results are now 4x faster, 2x more accurate all at half the cost.” — CEO on Google Cloud investments .
  • “Our tariff exposure as a percent of purchases is about 7% in China and less than 5% in Mexico and Canada…we’re prepared to react accordingly.” — CEO .
  • “First half earnings to be down 15%–20% and second half earnings to be up 15%–20%.” — CFO .

Q&A Highlights

  • Comps cadence: Management expects sequential improvement through 2025 with H1 down, H2 up; recovery hinges on PMI/IP trends and industrial/Europe demand .
  • Tariffs: Vendor/customer discussions ongoing; diversified supply chain analysis across ~800k SKUs; ability to pass through price while balancing gross margin dollars vs rate .
  • Market share debate: U.S. auto underperformance acknowledged; focus on inventory, supply chain, talent and store execution; Motion North America seen as competitive with improved margin over 5 years .
  • Tools & equipment relaunch: Streamlined two‑tier brand strategy targeting professional technicians; $10B+ industry opportunity; inventory write‑down tied to rebranding initiative .
  • SG&A and cost actions: 2025 SG&A deleverage (20–40 bps) expected amid inflation and acquisition mix; restructuring savings partly offset .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates (EPS, revenue, EBITDA) for Q4 2024 and prior periods, but the data was unavailable at the time of analysis due to provider request limits; therefore, beat/miss vs consensus cannot be assessed here [functions.GetEstimates error].
  • Near‑term sell‑side models may need to reflect management’s guidance for H1 2025 earnings down 15–20% and FX/pension headwinds totaling ~$(0.43) per share, as well as expected gross margin expansion of 40–60 bps for FY 2025 .

Key Takeaways for Investors

  • Q4 headline: solid revenue growth (+3.3%) but earnings compression from non‑recurring charges and inflation; adjusted EPS at $1.61 with adjusted gross margin up 50 bps .
  • Automotive unit performing better than Industrial near‑term; APAC strong while Europe remains soft; U.S. DIY weak, nondiscretionary categories resilient .
  • 2025 setup: modest topline growth (+2%–+4%), margin work continues, but H1 EPS down 15–20% before H2 improvement; FX and lower pension income are key drags; restructuring savings ramp offsets part of headwinds .
  • Capital allocation remains balanced: dividend increased for 69th consecutive year; capex moderated to $400–$450M; M&A deployment expected at $300–$350M in 2025 .
  • Watch catalysts: execution on NAPA store integrations (55% integrated), tool/equipment relaunch, Industrial demand recovery as PMI/IP sustain >50, and tariff developments .
  • Segment margin guidance points to stability/improvement: Auto EBITDA margin flat to +10 bps; Industrial +20–40 bps, supported by restructuring and pricing/sourcing .
  • Risk monitor: FX (EUR/CAD/AUD), wage/rent/freight inflation, product liability reserve changes, tariff policy shifts; pension plan settlement timing (late 2025/early 2026) excluded from adjusted EPS .

Citations:
Primary sources include GPC’s Q4 2024 8‑K (Item 2.02) and press release , Q4 earnings call transcript –, and prior‑quarter press releases – –.