Third Quarter 2005

Genuine Parts Company Reports Record Sales and Earnings for Third Quarter and Nine Months of 2005

Oct 18, 2005
11:16am

Contact: Jerry W. Nix, Executive Vice President - Finance 
(770) 612-2048

Atlanta, Georgia, October 18, 2005 -- Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the third quarter and nine months ended September 30, 2005. Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.6 billion were up 9% compared to the third quarter of 2004. Net income was $110.9 million, an increase of 13%, compared to $97.9 million for the third quarter of 2004. On a per share diluted basis, net income was 63 cents, up 12.5% compared to 56 cents for the third quarter last year. 

For the nine months ended September 30, 2005, sales totaled $7.4 billion, up 8% compared to the same period in 2004. Net income for the nine months was $328.4 million, an increase of 10% over $299.2 million recorded in the previous year. Earnings per share on a diluted basis were $1.87, up 9% compared to $1.71 for the same period last year.

Mr. Gallagher stated: “The third quarter was our strongest quarter thus far in 2005, and it continues the positive growth pattern we have experienced in each of our business segments dating back to early 2004.

Motion Industries, our Industrial Group, grew sales by 12%, the sixth consecutive quarter of double-digit revenue increases for this group. S.P. Richards, our Office Products Group, had an 8% increase in sales, and this follows a 6% increase in the first quarter and an 8% increase in the second quarter. We are encouraged by another period of steady growth for this group. The Automotive Group produced its strongest quarter of the year, with sales up 8% in the third quarter after reporting increases of 4% and 6% in the first and second quarters, respectively. EIS, our Electrical Group, also contributed to our growth this quarter, with sales up 2%. Excluding the impact of the sale of their Circuit Supply division earlier this year, the on-going operations at EIS improved 10% in the period.”

Mr. Gallagher further commented: “Our financial position has strengthened in 2005 through improvements in working capital and strong earnings growth. The balance sheet at September 30, 2005 remains in excellent condition and we continue to generate strong cash flows.”

Mr. Gallagher concluded: “As we look ahead to the fourth quarter, we continue to maintain a positive outlook on the growth opportunities for our businesses. Our initiatives in the Automotive Group are proving successful and the market conditions in the aftermarket remain favorable for us. In addition, the manufacturing indices for Industrial and Electrical/Electronic reflect continued expansion and the employment numbers for the service sector fit well with our initiatives in the Office Products Group. So, we feel good about the growth potential of the North American markets we serve and we will continue executing our strategies and initiatives to capitalize on this potential and finish the year strong.”

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 by dialing 877-422-4780, conference ID 1036960. A replay will also be available at 800-642-1687, conference ID 1036960, until 12:00 a.m. EDT on November 1, 2005.

Forward Looking Statements

Some statements in this release constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that its forward-looking statements involve risks and uncertainties. The Company undertakes no duty to update its forward-looking statements, which reflect the Company's beliefs, expectations, and plans as of the present. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors include, but are not limited to, changes in general economic conditions, the growth rate of the market for the Company's products and services, the ability to maintain favorable supplier arrangements and relationships, competitive product and pricing pressures, including internet-related initiatives, the effectiveness of the Company's promotional, marketing and advertising programs, changes in laws and regulations, including changes in accounting and taxation guidance, the uncertainties of litigation, as well as other risks and uncertainties discussed from time to time in the Company's filings with the Securities and Exchange Commission.

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. and Canada 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
CONSOLIDATED STATEMENTS OF INCOME

 

  Three Months Ended
September 30,
Nine Months Ended
September 30,
  2005 2004 2005 2004
                (Unaudited)

              (in thousands, except per share data)  
     
Net sales $2,555,503 $2,349,283 $7,373,361 $6,843,960
Cost of goods sold 1,777,001 1,649,890 5,097,122 4,764,591
  778,502 699,393 2,276,239 2,079,369
Selling, administrative & other expenses 598,403 541,675 1,744,092 1,595,321
Income before income taxes 180,099 157,718 532,147 484,048
Income taxes 69,223 59,825 203,706 184,810
         
Net income $110,876 $97,893 $328,441 $299,238
         
Basic net income per common share $.64 $.56 $1.88 $1.71
Diluted net income per common share $.63 $.56 $1.87 $1.71
         
Weighted average common shares outstanding 173,929 174,792 174,320 174,648
         
Dilutive effect of stock options and non-vested restricted stock awards 956 1,021 968 842
         
Weighted average common shares outstanding - assuming dilution 174,885 175,813 175,288 175,490


 
 
 

GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS

  Three Months Ended
September 30,
Nine Months Ended
September 30,
  2005 2004 2005 2004
                (Unaudited)
                
                (in thousands, except ratio analysis)
Net Sales:        
   Automotive $1,329,083 $1,229,943 $3,792,821 $3,575,189
   Industrial 711,201 636,693 2,100,532 1,874,599
   Office Products 437,799 406,101 1,250,321 1,165,245
   Electrical/Electronic Materials 87,041 85,357 255,078 254,263
   Other (1) (9,621) (8,811) (25,391) (25,336)
      Total net sales $2,555,503 $2,349,283 $7,373,361 $6,843,960
         
Operating profit:        
   Automotive $108,551 $101,942 $314,638 $304,695
   Industrial 53,680 40,851 152,288 125,149
   Office Products 33,638 32,203 115,276 108,651
   Electrical/Electronic Materials 4,694 3,780 12,716 11,300
      Total operating profit 200,563 178,776 594,918 549,795
   Interest expense (8,159) (9,307) (23,369) (29,154)
   Other, net (12,305) (11,751) (39,402) (36,593)
      Income before income taxes $180,099 $157,718 $532,147 $484,048
         
Capital expenditures $18,986 $20,979 $59,310 $46,550
         
Depreciation and amortization $17,169 $16,584 $51,429 $49,775
         
Current ratio     2.9/1 2.9/1
         
Total debt to total capitalization     15.9% 20.2%
     
(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

 

  September 30, September 30,
  2005 2004
 
                    (unaudited)
                      (in thousands)
ASSETS
CURRENT ASSETS    

Cash and cash equivalents

$339,505 $284,704

Trade accounts receivable

1,227,836 1,146,965

Inventories

2,157,824 2,163,049

Prepaid expenses and other current assets

167,958 141,848
     

TOTAL CURRENT ASSETS

3,893,123 3,736,566

Goodwill and other intangible assets

62,478 57,761

Other assets

430,400 339,077

Total property, plant and equipment, net

383,292 339,397
     

TOTAL ASSETS

$4,769,293 $4,472,801
     


LIABILITIES AND SHAREHOLDERS' EQUITY
   
CURRENT LIABILITIES    

Accounts payable

$1,041,335 $861,557

Current portion of long-term debt and other borrowings

908 125,841

Income taxes payable

50,994 60,869

Dividends payable

54,357 52,425

Other current liabilities

183,822 167,426
     

TOTAL CURRENT LIABILITIES

1,331,416 1,268,118

Long-term debt

500,000 500,000

Other long-term liabilities

109,888 60,739

Deferred income taxes

121,160 113,259

Minority interests in subsidiaries

56,362 52,091
     

Common stock

173,522 174,630

Retained earnings and other

2,476,945 2,303,964

TOTAL SHAREHOLDERS' EQUITY

$2,650,467 $2,478,594
     

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$4,769,293 $4,472,801

Note: Certain balance sheet reclassifications have been made to prior year amounts to conform to current year presentation.

 
 
 

GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

              Nine Months
            Ended September 30,
  2005 2004
                    (Unaudited)
                    (in thousands)
     
OPERATING ACTIVITIES:    
Net income $328,441 $299,238
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 51,429 49,775
Other 6,706 3,337
Changes in operating assets and liabilities 107,251 117,857
     
NET CASH PROVIDED BY OPERATING ACTIVITIES 493,827 470,207
     
INVESTING ACTIVITIES:    
Purchase of property, plant and equipment (59,310) (46,550)
Other 11,428 -- 
     
NET CASH USED IN INVESTING ACTIVITIES (47,882) (46,550)
     
FINANCING ACTIVITIES:    
Net payments on credit facilities (59) (9,559)

Stock options exercised

16,021 31,649
Dividends paid (161,536) (156,150)
Purchase of stock (95,806) (20,286)
     
NET CASH USED IN FINANCING ACTIVITIES (241,380) (154,346)
     
NET INCREASE IN CASH AND CASH EQUIVALENTS 204,565 269,311
     
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 134,940 15,393
     
CASH AND CASH EQUIVALENTS AT END OF PERIOD $339,505 $284,704

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