Third Quarter 2011

Genuine Parts Company Reports Record Sales and Earnings for the Third Quarter Ended September 30, 2011

- Sales Up 11% and EPS Up 17% -

PR Newswire
ATLANTA
Oct 18, 2011
5:09am

ATLANTA, Oct. 18, 2011 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the third quarter and nine months ended September 30, 2011.  Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $3.3 billion were up 11% compared to the third quarter of 2010.  Net income for the quarter was $151.8 million, an increase of 15% from $131.8 million recorded in the same period of the previous year.  Earnings per share on a diluted basis were 97 cents, up 17% compared to 83 cents for the third quarter last year.

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For the nine months ended September 30, 2011, sales totaled $9.4 billion, up 12% compared to the same period in 2010.  Net income for the nine months was $430.2 million, an increase of 21% from $356.9 million recorded in the previous year.  Earnings per share on a diluted basis were $2.72, up 21% compared to $2.25 for the same period last year.

In review of the quarter, Mr. Gallagher commented, "We are pleased to report another period of record sales and earnings for Genuine Parts Company.  The Automotive Group posted its fourth consecutive quarter of 9% sales growth.  Automotive's strong and consistent growth reflects the positive impact of our sales initiatives and the sound fundamentals that continue to be evident in the automotive aftermarket.  Our Industrial and Electrical businesses once again produced the strongest growth among our four business segments.  Sales for Motion Industries, our Industrial Group, reached over $1 billion for the second straight quarter and were up 18%.  EIS, our Electrical Group, generated a 22% sales increase.  Both Motion Industries and EIS sell into the manufacturing sector of the economy, which has performed well over the last seven quarters and current customer demand continues to be encouraging.  S.P. Richards, our Office Products Group, showed a 3% sales increase for the quarter, marking their fourth consecutive period of sales growth.  This positive sales trend is encouraging and reflects the ongoing benefits of their internal growth initiatives, as demand across the office products industry remains relatively weak."

Mr. Gallagher added, "Our balance sheet as of September 30, 2011 remains in excellent condition.  We ended the period with cash of $535 million and we continue to generate strong cash flows as a result of our working capital, asset management and cost reduction initiatives.  Our strong cash position offers us tremendous opportunities and we continue to use our cash in several key areas to maximize the total return to shareholders.  Our priorities for cash remain the dividends paid to shareholders, the ongoing reinvestment back into each of our four businesses, strategic acquisitions and share repurchases."

Mr. Gallagher concluded, "We are pleased with the record level of sales and earnings achieved in the third quarter and for the first nine months in 2011.  Turning to the last quarter of the year, we remain optimistic that our businesses will show continued progress.  While we are aware of the general economic factors that could lead to more challenging market conditions, our management team remains committed to sustaining good revenue growth, further improving operating margins, generating solid cash flows and maintaining a strong balance sheet."

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 toll-free at 877-331-5106, conference ID 14714880.  A replay will also be available on the Company's website or by dialing toll-free at 855-859-2056, conference ID 14714880, two hours after the completion of the conference call until 12:00 a.m. Eastern time on November 1, 2011.

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 uncertainties and costs of litigation, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2010 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, Form 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 and Mexico. 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 Sept. 30,

Nine Months Ended Sept. 30,


2011

2010

2011

2010


(Unaudited)


(in thousands, except per share data)






Net sales

$3,285,560

$2,950,560

$9,444,742

$8,399,861

Cost of goods sold

2,337,028

2,097,529

6,731,302

5,964,045

Gross profit

948,532

853,031

2,713,440

2,435,816











Operating expenses:





Selling, administrative & other expenses

679,967

618,449

1,965,871

1,792,997

Depreciation and amortization

21,465

22,093

66,938

67,422


701,432

640,542

2,032,809

1,860,419











Income before income taxes

247,100

212,489

680,631

575,397

Income taxes

95,268

80,704

250,472

218,536

Net income

$151,832

$131,785

$430,159

$356,861











Basic net income per common share

$ .97

$ .84

$ 2.74

$ 2.26

Diluted net income per common share

$ .97

$ .83

$ 2.72

$ 2.25











Weighted average common shares outstanding

156,206

157,573

157,024

158,197

Dilutive effect of stock options and





  non-vested restricted stock awards

942

407

965

398

Weighted average common shares outstanding –





  assuming dilution

157,148

157,980

157,989

158,595




GENUINE PARTS COMPANY and SUBSIDIARIES

SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS



Three Months Ended Sept. 30,

Nine Months Ended Sept. 30,


2011

2010

2011

2010


(Unaudited)


(in thousands)






Net sales:





  Automotive

$1,611,333

$1,481,294

$4,601,272

$4,231,367

  Industrial

1,089,826

921,162

3,140,855

2,606,697

  Office Products

447,310

434,513

1,297,965

1,246,984

  Electrical/Electronic Materials

143,342

117,290

419,936

324,167

  Other (1)

(6,251)

(3,699)

(15,286)

(9,354)

     Total net sales

$3,285,560

$2,950,560

$9,444,742

$8,399,861






Operating profit:





  Automotive

$141,233

$124,059

$377,927

$338,986

  Industrial

97,191

72,856

248,489

181,820

  Office Products

27,204

26,657

95,975

93,670

  Electrical/Electronic Materials

11,138

8,393

30,380

22,156

  Total operating profit

276,766

231,965

752,771

636,632

  Interest expense, net

(6,244)

(6,562)

(18,980)

(19,988)

  Other, net

(23,422)

(12,914)

(53,160)

(41,247)

     Income before income taxes

$247,100

$212,489

$680,631

$575,397






Capital expenditures

$22,184

$31,019

$63,932

$58,931






Depreciation and amortization

$21,465

$22,093

$66,938

$67,422






(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,


2011

2010


(Unaudited)


(in thousands)

ASSETS



CURRENT ASSETS



Cash and cash equivalents

$  534,801

$  531,731

Trade accounts receivable, net

1,531,046

1,394,870

Merchandise inventories, net

2,250,309

2,182,413

Prepaid expenses and other current assets

330,157

282,287




  TOTAL CURRENT ASSETS

4,646,313

4,391,301




Goodwill and other intangible assets, less accumulated amortization

277,924

207,237

Deferred tax asset

153,319

152,248

Other assets

227,615

184,548

Net property, plant and equipment

479,547

478,436




TOTAL ASSETS

$5,784,718

$5,413,770


LIABILITIES AND EQUITY



CURRENT LIABILITIES



Trade accounts payable

$1,587,326

$1,371,718

Current portion of debt

250,000

-

Income taxes payable

44,812

46,144

Dividends payable

70,134

64,584

Other current liabilities

288,388

238,439




  TOTAL CURRENT LIABILITIES

2,240,660

1,720,885




Long-term debt

250,000

500,000

Retirement and other post-retirement benefit liabilities

212,876

239,326

Other long-term liabilities

189,791

175,777




Common stock

155,653

157,535

Retained earnings and other

3,051,467

2,880,155

Accumulated other comprehensive loss

(325,392)

(268,502)

  TOTAL PARENT EQUITY

2,881,728

2,769,188




Noncontrolling interests in subsidiaries

9,663

8,594




  TOTAL EQUITY

2,891,391

2,777,782




TOTAL LIABILITIES AND EQUITY

$5,784,718

$5,413,770




GENUINE PARTS COMPANY and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Nine Months Ended Sept. 30,


2011

2010


(Unaudited)


(in thousands)




OPERATING ACTIVITIES:



  Net income

$430,159

$356,861

  Adjustments to reconcile net income to net cash provided by operating activities:



  Depreciation and amortization

66,938

67,422

  Share-based compensation

5,835

4,674

  Excess tax benefits from share-based compensation

(2,446)

(1,500)

  Other

(952)

663

  Changes in operating assets and liabilities

(2,126)

140,302




NET CASH PROVIDED BY OPERATING ACTIVITIES

497,408

568,422




INVESTING ACTIVITIES:



  Purchases of property, plant and equipment

(63,932)

(58,931)

  Acquisitions and other

(105,129)

(83,080)




NET CASH USED IN INVESTING ACTIVITIES

(169,061)

(142,011)




FINANCING ACTIVITIES:



  Stock options exercised

1,638

7,177

  Excess tax benefits from share-based compensation

2,446

1,500

  Dividends paid

(206,236)

(193,313)

  Purchase of stock

(113,359)

(69,438)




NET CASH USED IN FINANCING ACTIVITIES

(315,511)

(254,074)




EFFECT OF EXCHANGE RATE CHANGES ON CASH

(8,003)

22,591




NET INCREASE IN CASH AND CASH EQUIVALENTS

4,833

194,928




CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

529,968

336,803




CASH AND CASH EQUIVALENTS AT END OF PERIOD

$534,801

$531,731




SOURCE Genuine Parts Company


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