Executive Summary
Genuine Parts Company reported QQ2 2025 revenue of USD 6.164B, delivering a modest top-line expansion of 3.39% year-over-year and 5.09% quarter-over-quarter. Gross profit rose 6.6% YoY to USD 2.324B, delivering a robust gross margin of 37.7%, underscoring solid product mix and pricing discipline amid a still-challenging operating environment. However, net income declined 13.8% YoY to USD 254.9M and EPS held at USD 1.83, reflecting a substantial net negative impact from non-operating items and a higher effective tax rate relative to prior periods. The operating margin remained resilient at 6.85% (USD 422.6M operating income) despite higher operating expenses, with QoQ operating income up 23.3%, signaling some seasonality and expense management benefit from Q2 sequential dynamics.
The balance sheet shows a strong asset base and sizable international exposure, but notable leverage: total debt USD 6.42B and net debt USD 5.96B, with net debt to EBITDA around the high teens to low double digits given an EBITDA of USD ~0.502B. Cash flow remains positive, with USD 209.9M operating cash flow and USD 80.96M free cash flow for the quarter, supporting dividend payments (USD 142.95M) and capex (USD 128.98M). The company maintains a modest liquidity cushion (cash USD 458M) but faces leverage and coverage considerations (interest coverage ~9.19x).
Key takeaways for investors: (1) Revenue momentum and stable gross margins suggest durable demand for Genuine Parts’ automotive and industrial replacement parts, (2) earnings progression is pressured by non-operating items despite solid operating cash flow, (3) leverage remains a meaningful consideration for longer-term capital allocation and risk management, (4) ongoing free cash flow supports dividends and capex, with potential to deleverage over time if operating conditions persist.
Key Performance Indicators
QoQ: 31.12% | YoY:-13.76%
QoQ: 30.71% | YoY:-13.68%
Key Insights
Revenue: USD 6,164,425,000; YoY +3.39%; QoQ +5.09%
Gross Profit: USD 2,324,388,000; YoY +6.61%; QoQ +6.93%; Gross Margin 37.7%
Operating Income: USD 422,550,000; YoY -1.27%; QoQ +23.29%; Operating Margin 6.85%
Net Income: USD 254,880,000; YoY -13.76%; QoQ +31.12%; Net Margin 4.13%
EPS: USD 1.83; YoY -13.68%; QoQ +30.71%
EBITDA: USD 501,786,000; EBITDA Margin 8.14%
Free Cash Flow: USD 80,960,000; Operating Cash Flow USD 209,942,000; Capex USD 128,982,000
Cash/Balance Sheet: Cash & Equivalents...
Financial Highlights
Revenue: USD 6,164,425,000; YoY +3.39%; QoQ +5.09%
Gross Profit: USD 2,324,388,000; YoY +6.61%; QoQ +6.93%; Gross Margin 37.7%
Operating Income: USD 422,550,000; YoY -1.27%; QoQ +23.29%; Operating Margin 6.85%
Net Income: USD 254,880,000; YoY -13.76%; QoQ +31.12%; Net Margin 4.13%
EPS: USD 1.83; YoY -13.68%; QoQ +30.71%
EBITDA: USD 501,786,000; EBITDA Margin 8.14%
Free Cash Flow: USD 80,960,000; Operating Cash Flow USD 209,942,000; Capex USD 128,982,000
Cash/Balance Sheet: Cash & Equivalents USD 457,993,000; Total Assets USD 20.431B; Total Debt USD 6.421B; Net Debt USD 5.963B; Current Ratio 1.14; Quick Ratio 0.51; Debt/Equity 1.37; Dividend Payout Ratio 56.1%; Dividend Yield 0.85%
Shareholder Metrics: Weighted Avg Shares ~138.8–139.2M; P/E ~16.5x; P/B ~3.58x; P/S ~2.73x; FCF per share USD 0.58; OCF per share USD 1.51; Cash per share USD 3.30
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
6.16B |
3.39% |
5.09% |
| Gross Profit |
2.32B |
6.61% |
6.93% |
| Operating Income |
422.55M |
-1.27% |
23.29% |
| Net Income |
254.88M |
-13.76% |
31.12% |
| EPS |
1.83 |
-13.68% |
30.71% |
Key Financial Ratios
operatingProfitMargin
6.85%
operatingCashFlowPerShare
$1.51
freeCashFlowPerShare
$0.58
dividendPayoutRatio
56.1%
Management Commentary
Transcript data not provided in the input. The following highlights synthesize likely themes based on the QQ2 2025 results and standard investor concerns, without direct quotes:
- Revenue and margin resilience: The company posted USD 6.164B revenue with a stable gross margin (~37.7%), suggesting continued demand for automotive replacement parts and industrial components despite macro headwinds.
- Earnings dynamics: Net income declined YoY due to non-operating items and a higher effective tax rate, even as operating cash flow remained positive and QoQ operating income rose meaningfully, indicating favorable operating leverage that can translate into improved profitability if non-operating headwinds abate.
- Cash generation and capital allocation: Free cash flow of USD 80.96M and operating cash flow of USD 209.94M support a dividend payout (~USD 143M) and moderate capex (~USD 129M). The balance sheet shows meaningful leverage, but cash flow remains capable of funding distributions while potential deleveraging remains a longer-term objective.
- Strategic considerations: With a diversified mix of Automotive Parts Group and Industrial Parts Group, the company may benefit from secular demand for replacement parts and industrial maintenance, including opportunities in EV-related aftermarket parts and international growth, though currency and cross-border dynamics introduce variability.
- Risks and sensitivity: Leverage and coverage metrics (net debt to EBITDA and interest coverage) imply that debt management and earnings stability will be key over the next several quarters, particularly in a potentially uneven auto cycle and with currency translation effects from international operations.
Forward Guidance
The data provided does not include explicit forward guidance. Given the QQ2 2025 results, the following qualitative assessment can serve as a framework for investor expectations:
- Near-term outlook: Expect ongoing demand stability in core replacement parts, with cyclicality tied to vehicle miles and new vehicle sales. Revenue growth is likely to remain modest while gross margins stay resilient due to pricing discipline and favorable product mix.
- Profitability trajectory: Operating margins appear resilient at mid-single digits; net income performance will continue to hinge on the balance between operating performance and any persistent non-operating items or tax effects.
- Capital allocation and leverage: With net debt around USD 5.96B and EBITDA near USD 0.50B, deleveraging remains a priority for longer-term investors unless operating cash flow improves materially. The company’s dividend policy (~56% payout of net income) indicates a commitment to capital returns, but future buybacks would depend on cash flow and leverage trajectories.
- Key factors to monitor: (1) US and international demand for automotive and industrial parts, (2) EV aftermarket opportunities and supplier cost dynamics, (3) currency exposure from international operations, (4) supply chain efficiency and procurement costs, (5) any changes to the dividend policy or debt repayment schedule.