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8-K - LIVE FILING - GENUINE PARTS COhtm_50170.htm

GENUINE PARTS COMPANY

NEWS RELEASE

FOR IMMEDIATE RELEASE

     
Contacts:  
Carol B. Yancey, Executive Vice President and CFO – (770) 612-2044
Sidney G. Jones, Vice President — Investor Relations – (770) 818-4628

GENUINE PARTS COMPANY
REPORTS SALES AND EARNINGS FOR THE SECOND QUARTER ENDED JUNE 30, 2014

- Company Generates Record Sales of $3.9 Billion and Earnings Per Share of $1.28 -

- EPS Up 9% Before One-Time Adjustment in Prior Year -

Atlanta, Georgia, July 21, 2014 — Genuine Parts Company (NYSE: GPC) reports sales and earnings for the second quarter and six months ended June 30, 2014.

Thomas C. Gallagher, Chairman and Chief Executive Officer, announced today that record sales totaling $3.9 billion were up 6% compared to the second quarter of 2013. Net income for the quarter was $197.7 million compared to $216.4 million recorded in the same period of the previous year. Earnings per share on a diluted basis were $1.28 compared to $1.39 for the second quarter last year. Before the one-time adjustment in 2013 described below, second quarter net income of $197.7 million and earnings per share on a diluted basis of $1.28 were both up 9% compared to the same period in 2013.

In association with the April 1, 2013 acquisition of the remaining 70% interest in GPC Asia Pacific, the Company’s initial 30% investment was remeasured and, net of certain one-time purchase accounting costs, amounted to a pre-tax income adjustment of approximately $36 million recorded in the second quarter of 2013. This adjustment, combined with the lower tax rate for the remeasurement, favorably impacted diluted earnings per share in the second quarter of 2013 by $0.22.

For the six months ended June 30, 2014, sales totaled $7.5 billion, up 10% compared to the same period in 2013. Net income for the six months was $355.2 million compared to $360.7 million recorded in the previous year. Earnings per share on a diluted basis were $2.30 compared to $2.31 for the same period last year.

Before the one-time adjustment in 2013, net income for the six months of $355.2 million was up 9% compared to the previous year. Earnings per share on a diluted basis of $2.30 were up 10% compared to the same period in 2013 excluding the adjustment.

In review of the second quarter, Mr. Gallagher commented, “We are pleased to report record sales as well as a solid 9% comparative earnings increase. Our 6% total sales increase includes 5% underlying sales growth and a 2.5% contribution from acquisitions offset by a currency headwind of approximately 1%. Our progress in the quarter was also supported by sales growth in all four of our business segments, with sales for the Automotive Group up 5% including 7% underlying growth offset by a 2% currency headwind. Sales at Motion Industries, our Industrial Group, were up 7% including 4% underlying growth and 3% from acquisitions. Sales at EIS, our Electrical/Electronic Group, increased by 32% due to acquisitions.  Sales for S. P. Richards, our Office Products Group, were up 4% and includes 2% underlying growth along with 2% from acquisitions.”

Mr. Gallagher concluded, “In the second quarter, we again achieved our core objectives of growing sales and earnings, producing operating margin improvement, generating solid cash flows while maintaining a strong balance sheet. We are both proud of and encouraged by this accomplishment and, looking ahead, we enter the second half of 2014 poised to demonstrate ongoing progress in driving improved results. We remain optimistic about our prospects for growth in each of our four businesses.”

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Conference Call

Genuine Parts Company will hold a conference call today at 11:00 a.m. Eastern time to discuss the results of the quarter and the future outlook. Interested parties may listen to the call on the Company’s website, www.genpt.com, by clicking “Investor Services”, or by dialing 877-331-5106, conference ID 66908522. A replay of the call will also be available on the Company’s website or at 855-859-2056, conference ID 66908522, after the completion of the conference call until 12:00 a.m. Eastern time on August 4, 2014.

Forward Looking Statements

Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission (SEC) or otherwise release to the public and in materials that we make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. Forward-looking statements may relate, for example, to future operations, prospects, strategies, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, slowing demand for the Company’s products, changes in general economic conditions, including, unemployment, inflation or deflation, high energy costs, uncertain credit markets and other macro-economic conditions, the ability to maintain favorable vendor arrangements and relationships, disruptions in our vendors’ operations, competitive product, service and pricing pressures, the Company’s ability to successfully implement its business initiatives in each of its four business segments, the Company’s ability to successfully integrate its acquired businesses, the uncertainties and costs of litigation, as well as other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for 2013 and from time to time in the Company’s subsequent filings with the SEC.

Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K and other reports to the SEC.

About Genuine Parts Company

Genuine Parts Company is a distributor of automotive replacement parts in the U.S., Canada, Mexico and Australasia. The Company also distributes industrial replacement parts in the U.S., Canada and Mexico through its Motion Industries subsidiary. S. P. Richards Company, the Office Products Group, distributes business products nationwide in the U.S. and Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S., Canada and Mexico.

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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2014   2013   2014   2013
    (Unaudited)
    (in thousands, except per share data)
Net sales
  $ 3,908,387   $ 3,675,997   $ 7,533,284   $ 6,874,799
Cost of goods sold
  2,729,219   2,570,889   5,269,486   4,847,943
 
                               
Gross profit
  1,179,168   1,105,108   2,263,798   2,026,856
Operating expenses:
                               
Selling, administrative & other expenses
  832,205   753,527   1,636,006   1,427,139
Depreciation and amortization
  36,783   36,853   73,640   62,852
 
                               
 
  868,988   790,380   1,709,646   1,489,991
Income before income taxes
  310,180   314,728   554,152   536,865
Income taxes
  112,453   98,371   198,941   176,119
 
                               
Net income
  $ 197,727   $ 216,357   $ 355,211   $ 360,746
 
                               
Basic net income per common share
  $ 1.29   $ 1.40   $ 2.31   $ 2.33
Diluted net income per common share
  $ 1.28   $ 1.39   $ 2.30   $ 2.31
Weighted average common shares outstanding
  153,463   155,050   153,595   154,971
Dilutive effect of stock options and
                               
non-vested restricted stock awards
  1,069   1,094   1,063   1,075
 
                               
Weighted average common shares outstanding –
                               
assuming dilution
  154,532   156,144   154,658   156,046
 
                               

   

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GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS

                                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2014   2013   2014   2013
    (Unaudited)
    (in thousands)
Net sales:
                               
Automotive
  $ 2,110,396   $ 2,011,802   $ 4,008,911   $ 3,556,339
Industrial
  1,209,235   1,132,032   2,352,509   2,234,112
Office Products
  418,785   402,272   836,883   822,400
Electrical/Electronic Materials
  188,034   142,970   368,365   282,155
Other (1)
  (18,063 )   (13,079 )   (33,384 )   (20,207 )
 
                               
Total net sales
  $ 3,908,387   $ 3,675,997   $ 7,533,284   $ 6,874,799
 
                               
Operating profit:
                               
Automotive
  $ 206,683   $ 186,382   $ 356,793   $ 307,425
Industrial
  95,428   88,891   178,478   167,786
Office Products
  31,183   29,768   65,129   62,960
Electrical/Electronic Materials
  16,463   12,221   31,992   22,672
 
                               
Total operating profit
  349,757   317,262   632,392   560,843
Interest expense, net
  (6,224 )   (7,852 )   (12,430 )   (11,205 )
Intangible amortization
  (8,498 )   (8,986 )   (17,374 )   (12,761 )
Other, net
  (24,855 )   14,304   (48,436 )   (12 )
 
                               
Income before income taxes
  $ 310,180   $ 314,728   $ 554,152   $ 536,865
 
                               
Capital expenditures
  $ 21,536   $ 37,883   $ 39,923   $ 50,807
 
                               
Depreciation and amortization
  $ 36,783   $ 36,853   $ 73,640   $ 62,852
 
                               

(1) Represents the net effect of discounts, incentives and freight billed reported as a component of net sales.

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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

                 
    June 30,   June 30,
    2014   2013
    (Unaudited)
    (in thousands)
ASSETS
               
CURRENT ASSETS
               
Cash and cash equivalents
  $ 152,863     $ 196,770  
Trade accounts receivable, net
    1,909,268       1,759,176  
Merchandise inventories, net
    2,987,143       2,799,150  
Prepaid expenses and other current assets
    463,087       352,645  
 
               
TOTAL CURRENT ASSETS
    5,512,361       5,107,741  
Goodwill and other intangible assets, less accumulated amortization
    1,432,862       1,270,447  
Deferred tax assets
    89,196       179,850  
Other assets
    555,825       459,320  
Net property, plant and equipment
    661,304       642,955  
 
               
TOTAL ASSETS
  $ 8,251,548     $ 7,660,313  
 
               
 
LIABILITIES AND EQUITY
               
CURRENT LIABILITIES
               
Trade accounts payable
  $ 2,489,570     $ 2,064,878  
Current portion of debt
    306,358       650,102  
Income taxes payable
    22,639       10,865  
Dividends payable
    88,211       83,407  
Other current liabilities
    600,076       513,695  
 
               
TOTAL CURRENT LIABILITIES
    3,506,854       3,322,947  
Long-term debt
    500,000       250,000  
Retirement and other post-retirement benefit liabilities
    137,616       494,572  
Deferred tax liabilities
    85,584        
Other long-term liabilities
    484,000       506,655  
Common stock
    153,306       154,859  
Retained earnings and other
    3,725,279       3,521,735  
Accumulated other comprehensive loss
    (351,415 )     (600,223 )
 
               
TOTAL PARENT EQUITY
    3,527,170       3,076,371  
Noncontrolling interests in subsidiaries
    10,324       9,768  
 
               
TOTAL EQUITY
    3,537,494       3,086,139  
 
               
TOTAL LIABILITIES AND EQUITY
  $ 8,251,548     $ 7,660,313  
 
               

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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                 
    Six Months Ended June 30,
    2014   2013
    (Unaudited)
    (in thousands)
OPERATING ACTIVITIES:
               
Net income
  $ 355,211     $ 360,746  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    73,640       62,852  
Share-based compensation
    7,855       5,455  
Excess tax benefits from share-based compensation
    (5,948 )     (9,410 )
Other
    753       (51,051 )
Changes in operating assets and liabilities
    (64,409 )     98,486  
 
               
NET CASH PROVIDED BY OPERATING ACTIVITIES
    367,102       467,078  
INVESTING ACTIVITIES:
               
Purchases of property, plant and equipment
    (39,923 )     (50,807 )
Acquisitions and other investing activities
    (178,889 )     (596,105 )
 
               
NET CASH USED IN INVESTING ACTIVITIES
    (218,812 )     (646,912 )
FINANCING ACTIVITIES:
               
Proceeds from debt
    1,246,613       1,269,550  
Payments on debt
    (1,214,169 )     (1,098,998 )
Share-based awards exercised, net of taxes paid
    (6,754 )     (10,948 )
Excess tax benefits from share-based compensation
    5,948       9,410  
Dividends paid
    (171,171 )     (159,908 )
Purchase of stock
    (53,769 )     (26,318 )
 
               
NET CASH USED IN FINANCING ACTIVITIES
    (193,302 )     (17,212 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    982       (9,279 )
 
               
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (44,030 )     (206,325 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    196,893       403,095  
 
               
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 152,863     $ 196,770  
 
               

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