Third Quarter 2014

Genuine Parts Company Reports Sales And Earnings For The Third Quarter Ended September 30, 2014

- Company Generates Record Sales of $4.0 Billion -

- Earnings Per Share of $1.24 Up 11% -

PR Newswire
ATLANTA
Oct 20, 2014
4:53am

ATLANTA, Oct. 20, 2014 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) reports sales and earnings for the third quarter and nine months ended September 30, 2014. 

Thomas C. Gallagher, Chairman and Chief Executive Officer, announced today that record sales totaling $4.0 billion were up 8% compared to the third quarter of 2013.  Net income for the quarter was $190.5 million compared to $173.7 million recorded in the same period of the previous year.  Earnings per share on a diluted basis were $1.24 compared to $1.12 for the third quarter last year, up 11%.  

For the nine months ended September 30, 2014, sales totaled $11.5 billion, up 9% compared to the same period in 2013.  Net income for the nine months was $545.7 million compared to $534.5 million recorded in the previous year.  Earnings per share on a diluted basis were $3.53 compared to $3.43 for the same period last year.

As previously disclosed, in association with the April 1, 2013 acquisition of GPC Asia Pacific, the Company's initial investment was remeasured and, net of certain one-time purchase accounting costs, amounted to a pre-tax income adjustment of approximately $36 million, or $0.22 diluted earnings per share, in the second quarter of 2013.  Additionally, a pre-tax expense adjustment of $3 million, or $0.01 diluted earnings per share, was recorded in the third quarter of 2013.

Before the one-time adjustment in 2013, net income for the nine months of $545.7 million was up 9% compared to the previous year.  Earnings per share on a diluted basis of $3.53 were up 10% compared to the same period in 2013 excluding the adjustment.

In review of the third quarter, Mr. Gallagher commented, "We are pleased to report another quarter of record sales as well as a solid 10% comparative earnings increase.  Our 8% total sales increase includes approximately 5.4% underlying sales growth and a 3.3% contribution from acquisitions offset by a currency headwind of approximately 0.5%.  Our overall sales growth was also supported by increases in each of our four business segments, with sales for the Automotive Group up 4%, which essentially represents our core automotive growth for the quarter.  Sales at Motion Industries, our Industrial Group, were up 10% including 8% underlying growth and 3% from acquisitions offset by a currency headwind of approximately 1%.  Sales at EIS, our Electrical/Electronic Group, increased by 35% due to acquisitions.  Sales for S. P. Richards, our Office Products Group, were up 15% and include 8% underlying growth and 7% from acquisitions."

Mr. Gallagher concluded, "In the third quarter, we achieved sales and earnings growth, produced operating margin improvement, generated solid cash flows and maintained a strong balance sheet.  These are important and ongoing core objectives for us and the Company is well positioned to show continued improvement in these areas in the periods ahead."

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 12374803.  A replay of the call will also be available on the Company's website or at 855-859-2056, conference ID 12374803, after the completion of the conference call until 12:00 a.m. Eastern time on November 3, 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 Sept. 30,

Nine Months Ended Sept. 30,


2014

2013

2014

2013


(Unaudited)


(in thousands, except per share data)






Net sales

$3,985,909

$3,685,243

$11,519,193

$10,560,042

Cost of goods sold

2,802,487

2,584,320

8,071,973

7,432,263

Gross profit

1,183,422

1,100,923

3,447,220

3,127,779











Operating expenses:





Selling, administrative & other expenses

850,156

793,957

2,486,162

2,221,096

Depreciation and amortization

34,983

35,220

108,623

98,072


885,139

829,177

2,594,785

2,319,168











Income before income taxes

298,283

271,746

852,435

808,611

Income taxes

107,767

98,000

306,708

274,119

Net income

$   190,516

$  173,746

$    545,727

$    534,492











Basic net income per common share

$1.25

$1.12

$3.56

$3.45

Diluted net income per common share

$1.24

$1.12

$3.53

$3.43











Weighted average common shares outstanding

153,018

154,567

153,401

154,835

Dilutive effect of stock options and





   non-vested restricted stock awards

1,080

1,096

1,062

1,082

Weighted average common shares outstanding –





   assuming dilution

154,098

155,663

154,463

155,917

 

 

GENUINE PARTS COMPANY and SUBSIDIARIES

SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS








Three Months Ended Sept. 30,

Nine Months Ended Sept. 30,


2014

2013

2014

2013


(Unaudited)


(in thousands)






Net sales:





Automotive

$2,099,518

$2,016,076

$  6,108,429

$  5,572,415

Industrial

1,220,539

1,110,309

3,573,048

3,344,421

Office Products

496,572

430,457

1,333,455

1,252,857

Electrical/Electronic Materials

193,321

142,818

561,686

424,973

Other (1)

(24,041)

(14,417)

(57,425)

(34,624)

Total net sales

$3,985,909

$3,685,243

$11,519,193

$10,560,042






Operating profit:





Automotive

$   193,258

$   180,166

$     550,051

$     487,591

Industrial

95,262

79,596

273,740

247,382

Office Products

33,318

28,094

98,447

91,054

Electrical/Electronic Materials

17,766

12,625

49,758

35,297

Total operating profit

339,604

300,481

971,996

861,324

Interest expense, net

(6,283)

(7,031)

(18,713)

(18,236)

Intangible amortization

(8,947)

(7,726)

(26,321)

(20,487)

Other, net

(26,091)

(13,978)

(74,527)

(13,990)

Income before income taxes

$  298,283

$   271,746

$    852,435

$    808,611






Capital expenditures

$    33,862

$     33,338

$      73,785

$      84,146






Depreciation and amortization

$    34,983

$     35,220

$    108,623

$      98,072






(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,



2014

2013



(Unaudited)



(in thousands)


ASSETS




CURRENT ASSETS




Cash and cash equivalents

$   135,537

$   320,870


Trade accounts receivable, net

1,976,056

1,759,517


Merchandise inventories, net

3,014,102

2,832,108


Prepaid expenses and other current assets

459,682

382,980






TOTAL CURRENT ASSETS

5,585,377

5,295,475






Goodwill and other intangible assets, less accumulated amortization

1,444,356

1,280,182


Deferred tax assets

90,539

257,571


Other assets

558,932

462,172


Net property, plant and equipment

662,253

648,503






TOTAL ASSETS

$8,341,457

$7,943,903





LIABILITIES AND EQUITY




CURRENT LIABILITIES




Trade accounts payable

$2,549,193

$2,213,190


Current portion of debt

335,394

583,896


Income taxes payable

24,481

19,176


Dividends payable

87,906

82,982


Other current liabilities

638,808

554,850






TOTAL CURRENT LIABILITIES

3,635,782

3,454,094






Long-term debt

500,000

250,000


Retirement and other post-retirement benefit liabilities

135,407

481,333


Deferred tax liabilities

79,690

90,584


Other long-term liabilities

482,430

514,717






Common stock

152,857

154,357


Retained earnings and other

3,791,172

3,570,356


Accumulated other comprehensive loss

(446,854)

(581,652)


TOTAL PARENT EQUITY

3,497,175

3,143,061






Noncontrolling interests in subsidiaries

10,973

10,114






TOTAL EQUITY

3,508,148

3,153,175






TOTAL LIABILITIES AND EQUITY

$8,341,457

$7,943,903


 

 

GENUINE PARTS COMPANY and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS






Nine Months Ended Sept. 30,


2014

2013


(Unaudited)


(in thousands)




OPERATING ACTIVITIES:



Net income

$545,727

$534,492

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



Depreciation and amortization

108,623

98,072

Share-based compensation

12,641

8,932

Excess tax benefits from share-based compensation

(7,269)

(12,020)

Other

1,267

(50,608)

Changes in operating assets and liabilities

(71,666)

258,617




NET CASH PROVIDED BY OPERATING ACTIVITIES

589,323

837,485




INVESTING ACTIVITIES:



Purchases of property, plant and equipment

(73,785)

(84,146)

Acquisitions and other investing activities

(275,295)

(614,109)




NET CASH USED IN INVESTING ACTIVITIES

(349,080)

(698,255)




FINANCING ACTIVITIES:



Proceeds from debt

2,032,550

2,094,550

Payments on debt

(1,974,581)

(1,990,204)

Share-based awards exercised, net of taxes paid

(8,266)

(14,313)

Excess tax benefits from share-based compensation

7,269

12,020

Dividends paid

(259,365)

(243,262)

Purchase of stock

(95,546)

(71,738)




NET CASH USED IN FINANCING ACTIVITIES

(297,939)

(212,947)




EFFECT OF EXCHANGE RATE CHANGES ON CASH

(3,660)

(8,508)




NET DECREASE IN CASH AND CASH EQUIVALENTS

(61,356)

(82,225)




CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

196,893

403,095




CASH AND CASH EQUIVALENTS AT END OF PERIOD

$135,537

$320,870

 

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SOURCE Genuine Parts Company


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