Second Quarter 2014

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

Jul 21, 2014
9:00am

ATLANTA, July 21, 2014 /PRNewswire/ -- 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."

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.

 

 

 

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

 

 

 

 

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.

 

 

 

 

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

 

 

 

 

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

 

 

 

Logo - http://photos.prnewswire.com/prnh/20081002/CLTH108LOGO 

SOURCE Genuine Parts Company

Carol B. Yancey, Executive Vice President and CFO - (770) 612-2044; or Sidney G. Jones, Vice President - Investor Relations - (770) 818-4628


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