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| 8-K - LIVE FILING - GENUINE PARTS CO | htm_54150.htm |
GENUINE PARTS COMPANY
NEWS RELEASE
FOR IMMEDIATE RELEASE
GENUINE PARTS COMPANY
REPORTS SALES AND EARNINGS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2016
- Company Reports Sales of $3.94 Billion and Earnings Per Share of $1.24 -
Atlanta, Georgia, October 19, 2016 — Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the third quarter and nine months ended September 30, 2016.
Sales for the third quarter ended September 30, 2016 were $3.94 billion compared to $3.92 billion for the same period in 2015. Net income for the third quarter was $185.3 million compared to $188.0 million recorded for the same period in the previous year. Earnings per share on a diluted basis were $1.24, equal to the earnings per share for the third quarter last year.
Paul Donahue, President and Chief Executive Officer, commented, “Total sales in the third quarter were up 0.5% from the prior year, inclusive of a 3.5% contribution from acquisitions. Currency exchange was neutral to our overall results, with the slightly favorable Canadian and Australian currencies offsetting the ongoing weakness in the Mexican Peso. Sales for the Automotive Group were up 1.5%, consisting of a 2.5% contribution from acquisitions and a currency tailwind of 0.5%, offset by a 1.5% core sales decrease. Sales at Motion Industries, our Industrial Group, were down 0.7%, including a 2.5% underlying sales decrease and an approximate 2% benefit from acquisitions. Sales at EIS, our Electrical/Electronic Group, were down approximately 9%, and sales for S. P. Richards, our Office Products Group, were up 5%, consisting of an 11% contribution from acquisitions offset by a 6% underlying sales decrease.”
Mr. Donahue stated, “Our third quarter results fell short of our expectations. We continue to operate in a tough sales environment, but our teams are working hard to overcome these challenges and generate growth. We recognize there is room for improvement and are working towards that in all aspects of our business. Our goal is to show improved results in the quarters ahead and better position the Company for sustainable growth well into the future. We have a strong balance sheet and excellent cash flows to support our efforts.”
Sales for the nine months ended September 30, 2016 were $11.56 billion compared to $11.60 billion for the same period in 2015. Net income for the nine months was $534.7 million, down 2% from 2015, and earnings per share on a diluted basis were $3.56, equal to the same nine month period of the prior year.
2016 Outlook
For the full year 2016, the Company is updating its sales guidance to Flat to up 1% from up 1% to 2%. Diluted earnings per share is expected to be $4.55 to $4.60 as compared to prior guidance of $4.70 to $4.75 per share.
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EDT 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 “Investors”, or by dialing 877-718-5098, conference ID 3577037. A replay will also be available on the Company’s website or at 877-870-5176, conference ID 3577037, two hours after the completion of the call until 12:00 a.m. Eastern time on November 3, 2016.
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, the Company’s ability to successfully implement its business initiatives in each of its four business segments; slowing demand for the Company’s products; changes in general economic conditions, including, unemployment, inflation or deflation; volatile exchange rates; high energy costs; uncertain credit markets and other macro-economic conditions; competitive product, service and pricing pressures; the ability to maintain favorable vendor arrangements and relationships; disruptions in our vendors’ operations; the Company’s ability to successfully integrate its acquired businesses; the uncertainties and costs of litigation; disruptions caused by a failure or breach of the Company’s information systems, as well as other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for 2015 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 in the U.S. and Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S., Canada and Mexico.
Contacts
Carol B. Yancey, Executive Vice President and CFO – (678) 934-5044
Sidney G. Jones, Vice President — Investor Relations – (678) 934-5628
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
Net sales |
$ | 3,941,743 | $ | 3,921,802 | $ | 11,559,648 | $ | 11,598,254 | ||||||||
Cost of goods sold |
2,743,142 | 2,752,577 | 8,091,124 | 8,137,880 | ||||||||||||
Gross profit |
1,198,601 | 1,169,225 | 3,468,524 | 3,460,374 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling, administrative & other
expenses |
869,562 | 834,372 | 2,522,223 | 2,492,537 | ||||||||||||
Depreciation and amortization |
37,682 | 34,278 | 108,247 | 105,764 | ||||||||||||
| 907,244 | 868,650 | 2,630,470 | 2,598,301 | |||||||||||||
Income before income taxes |
291,357 | 300,575 | 838,054 | 862,073 | ||||||||||||
Income taxes |
106,031 | 112,559 | 303,334 | 317,674 | ||||||||||||
Net income |
$ | 185,326 | $ | 188,016 | $ | 534,720 | $ | 544,399 | ||||||||
Basic net income per common share |
$ | 1.24 | $ | 1.24 | $ | 3.58 | $ | 3.58 | ||||||||
Diluted net income per common share |
$ | 1.24 | $ | 1.24 | $ | 3.56 | $ | 3.56 | ||||||||
Weighted average common shares
outstanding |
148,899 | 151,354 | 149,243 | 152,043 | ||||||||||||
Dilutive effect of stock options and |
||||||||||||||||
non-vested restricted stock awards |
828 | 789 | 781 | 847 | ||||||||||||
Weighted average common shares
outstanding – assuming dilution |
149,727 | 152,143 | 150,024 | 152,890 | ||||||||||||
GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
Net sales: |
||||||||||||||||
Automotive |
$ | 2,095,030 | $ | 2,064,099 | $ | 6,115,186 | $ | 6,065,733 | ||||||||
Industrial |
1,162,224 | 1,170,252 | 3,482,246 | 3,540,106 | ||||||||||||
Office Products |
535,175 | 510,825 | 1,493,434 | 1,478,878 | ||||||||||||
Electrical/Electronic Materials |
178,448 | 196,837 | 538,803 | 573,584 | ||||||||||||
Other (1) |
(29,134 | ) | (20,211 | ) | (70,021 | ) | (60,047 | ) | ||||||||
Total net sales |
$ | 3,941,743 | $ | 3,921,802 | $ | 11,559,648 | $ | 11,598,254 | ||||||||
Operating profit: |
||||||||||||||||
Automotive |
$ | 197,874 | $ | 201,986 | $ | 555,156 | $ | 560,070 | ||||||||
Industrial |
85,608 | 90,081 | 255,704 | 266,726 | ||||||||||||
Office Products |
30,257 | 36,406 | 97,101 | 107,431 | ||||||||||||
Electrical/Electronic Materials |
14,277 | 19,988 | 45,105 | 54,019 | ||||||||||||
Total operating profit |
328,016 | 348,461 | 953,066 | 988,246 | ||||||||||||
Interest expense, net |
(5,244 | ) | (5,055 | ) | (14,731 | ) | (16,056 | ) | ||||||||
Intangible amortization |
(10,339 | ) | (8,545 | ) | (28,324 | ) | (25,945 | ) | ||||||||
Other, net |
(21,076 | ) | (34,286 | ) | (71,957 | ) | (84,172 | ) | ||||||||
Income before income taxes |
$ | 291,357 | $ | 300,575 | $ | 838,054 | $ | 862,073 | ||||||||
Capital expenditures |
$ | 36,939 | $ | 24,531 | $ | 86,650 | $ | 61,994 | ||||||||
Depreciation and amortization |
$ | 37,682 | $ | 34,278 | $ | 108,247 | $ | 105,764 | ||||||||
(1) Represents the net effect of discounts, incentives and freight billed reported as a component of net sales.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| Sept. 30, | Sept. 30, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 225,177 | $ | 199,294 | ||||
Trade accounts receivable, net |
2,032,548 | 1,963,158 | ||||||
Merchandise inventories, net |
3,146,157 | 2,967,724 | ||||||
Prepaid expenses and other current assets |
504,600 | 493,306 | ||||||
TOTAL CURRENT ASSETS |
5,908,482 | 5,623,482 | ||||||
Goodwill and other intangible assets, less
accumulated amortization |
1,550,435 | 1,328,431 | ||||||
Deferred tax assets |
109,679 | 136,618 | ||||||
Other assets |
491,925 | 486,136 | ||||||
Net property, plant and equipment |
688,851 | 628,461 | ||||||
TOTAL ASSETS |
$ | 8,749,372 | $ | 8,203,128 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Trade accounts payable |
$ | 3,099,438 | $ | 2,851,022 | ||||
Current portion of debt |
475,000 | 125,000 | ||||||
Income taxes payable |
32,594 | 6,643 | ||||||
Dividends payable |
97,955 | 92,905 | ||||||
Other current liabilities |
696,544 | 688,498 | ||||||
TOTAL CURRENT LIABILITIES |
4,401,531 | 3,764,068 | ||||||
Long-term debt |
300,000 | 500,000 | ||||||
Pension and other post-retirement benefit liabilities |
202,131 | 248,709 | ||||||
Deferred tax liabilities |
51,472 | 62,419 | ||||||
Other long-term liabilities |
458,944 | 456,908 | ||||||
Common stock |
148,737 | 150,763 | ||||||
Retained earnings |
4,038,985 | 3,922,609 | ||||||
Accumulated other comprehensive loss |
(865,510 | ) | (914,586 | ) | ||||
TOTAL PARENT EQUITY |
3,322,212 | 3,158,786 | ||||||
Noncontrolling interests in subsidiaries |
13,082 | 12,238 | ||||||
TOTAL EQUITY |
3,335,294 | 3,171,024 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 8,749,372 | $ | 8,203,128 | ||||
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended Sept. 30, | ||||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 534,720 | $ | 544,399 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||
Depreciation and amortization |
108,247 | 105,764 | ||||||
Share-based compensation |
15,362 | 13,582 | ||||||
Excess tax benefits from share-based compensation |
(10,475 | ) | (5,381 | ) | ||||
Changes in operating assets and liabilities |
93,498 | 237,623 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES |
741,352 | 895,987 | ||||||
INVESTING ACTIVITIES: |
||||||||
Purchases of property, plant and equipment |
(86,650 | ) | (61,994 | ) | ||||
Acquisitions and other investing activities |
(365,545 | ) | (115,414 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES |
(452,195 | ) | (177,408 | ) | ||||
FINANCING ACTIVITIES: |
||||||||
Proceeds from debt |
3,020,000 | 2,537,224 | ||||||
Payments on debt |
(2,870,000 | ) | (2,680,191 | ) | ||||
Share-based awards exercised, net of taxes paid |
(11,942 | ) | (6,030 | ) | ||||
Excess tax benefits from share-based compensation |
10,475 | 5,381 | ||||||
Dividends paid |
(288,909 | ) | (275,379 | ) | ||||
Purchase of stock |
(143,810 | ) | (225,175 | ) | ||||
NET CASH USED IN FINANCING ACTIVITIES |
(284,186 | ) | (644,170 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
8,575 | (12,845 | ) | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
13,546 | 61,564 | ||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
211,631 | 137,730 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 225,177 | $ | 199,294 | ||||