Second Quarter 2005

Genuine Parts Company Reports Record Sales and Earnings for Second Quarter and First Half of 2005

Jul 19, 2005
11:17am

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

Atlanta, Georgia, July 19, 2005 -- Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the second quarter and six months ended June 30, 2005. Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.5 billion were up 8% compared to the second quarter of 2004. Net income was $111.0 million, an increase of 10%, compared to $101.1 million for the second quarter of 2004. On a per share diluted basis, net income was 63 cents, up 9% compared to 58 cents for the second quarter last year. 

For the six months ended June 30, 2005, sales totaled $4.8 billion, up 7% compared to the same period in 2004. Net income for the six months was $217.6 million, an increase of 8% over $201.3 million recorded in the previous year. Earnings per share on a diluted basis were $1.24, up 8% compared to $1.15 for the same period last year.

Mr. Gallagher stated: "Our overall results reflect the positive direction established in each of our businesses over the past eighteen months and all four of our business segments continue to contribute to the Company's success.

The strongest sales performance in the quarter came from Motion Industries, our Industrial Group. They were up 12% and business conditions remain favorable for the industrial operations. S.P. Richards, our Office Products Group, reported another period of consistent results with sales up 8%. The Automotive Group produced a solid 6% increase and EIS, our Electrical Group, was down 2% in the quarter. The EIS results reflect the impact of the sale of certain Electronic operations in the first quarter and the ongoing EIS business was actually up 5% in the period."

Mr. Gallagher further commented: "Our balance sheet remains in excellent condition and we continue to generate strong cash flows. We expect our working capital initiatives and earnings growth to further strengthen our financial position in the periods ahead."

Mr. Gallagher concluded: "We continue to maintain a positive outlook for each of our businesses for 2005. The demographics for the Automotive Aftermarket appear positive for some time to come, the manufacturing indices for Industrial and Electrical/Electronic remain strong and the increasing employment figures bode well for the Office Products Group. Our strategy is to continue to consistently execute our growth initiatives, in each of our businesses, in order to capitalize on these favorable market conditions. At the same time, we will be maintaining our expense control and asset management initiatives to meet our Sales and Earnings targets for 2005."

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 7252241. A replay will also be available at 800-642-1687, conference ID 7252241, until 12:00 a.m. EDT on August 2, 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 June 30, Six Months Ended June 30,
  2005 2004 2005 2004
                (Unaudited)

              (in thousands, except per share data)  
     
Net sales $2,475,657 $2,297,686 $4,817,858 $4,494,677
Cost of goods sold 1,714,400 1,604,621 3,320,121 3,114,701
  761,257 693,065 1,497,737 1,379,976
Selling, administrative & other expenses 581,419 529,132 1,145,689 1,053,646
Income before income taxes 179,838 163,933 352,048 326,330
Income taxes 68,871 62,787 134,483 124,985
         
Net income $110,967 $101,146 $217,565 $201,345
         
Basic net income per common share $.64 $.58 $1.25 $1.15
Diluted net income per common share $.63 $.58 $1.24 $1.15
         
Weighted average common shares outstanding 174,270 174,829 174,519 174,575
         
Dilutive effect of stock options and non-vested restricted stock awards 962 815 971 694
         
Weighted average common shares outstanding - assuming dilution 175,232 175,644 175,490 175,269


 
 
 

GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS

  Three Months Ended June 30, Six Months Ended June 30,
  2005 2004 2005 2004
                (Unaudited)
                (in thousands, except ratio analysis)
Net sales:        
   Automotive $1,294,783 $1,218,695 $2,463,738 $2,345,246
   Industrial 702,591 629,402 1,389,331 1,237,906
   Office Products 401,593 372,354 812,522 759,144
   Electrical/Electronic Materials 83,748 85,827 168,037 168,906
   Other (1) (7,058) (8,592) (15,770) (16,525)
      Total net sales $2,475,657 $2,297,686 $4,817,858 $4,494,677
         
Operating profit:        
   Automotive $110,780 $109,492 $206,087 $202,753
   Industrial 50,355 38,179 98,608 84,298
   Office Products 35,611 32,694 81,638 76,448
   Electrical/Electronic Materials 4,713 4,300 8,022 7,520
      Total operating profit 201,459 184,665 394,355 371,019
   Interest expense (7,263) (9,870) (15,210) (19,847)
   Other, net (14,358) (10,862) (27,097) (24,842)
      Income before income taxes $179,838 $163,933 $352,048 $326,330
         
Capital expenditures $19,556 $13,514 $40,324 $25,571
         
Depreciation and amortization $17,189 $16,998 $34,260 $33,191
         
Current ratio       3.1/1
         
Total debt to total capitalization       16.2%
     
(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

 

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

Cash and cash equivalents

$260,538 $127,732

Trade accounts receivable

1,225,674 1,152,458

Inventories

2,125,366 2,139,207

Prepaid expenses and other current assets

152,571 131,485
     

TOTAL CURRENT ASSETS

3,764,149 3,550,882

Goodwill and other intangible assets

62,615 57,850

Other assets

403,335 346,116

Total property, plant and equipment, net

380,692 332,863

 

   

TOTAL ASSETS

$4,610,791 $4,287,711


LIABILITIES AND SHAREHOLDERS' EQUITY
   
CURRENT LIABILITIES    

Accounts payable

$974,846 $779,492

Current portion of long-term debt and other borrowings

929 127,172

Income taxes payable

43,606 45,386

Dividends payable

54,450 52,483

Other current liabilities

154,522 137,427

 

   

TOTAL CURRENT LIABILITIES

1,228,353 1,141,960

Long-term debt

500,000 500,000

Other long-term liabilities

110,954 55,162

Deferred income taxes

116,809 113,254

Minority interests in subsidiaries

55,243 51,514
     

Common stock

174,061 174,993

Retained earnings and other

2,425,371 2,250,828
     

TOTAL SHAREHOLDERS' EQUITY

$2,599,432 $2,425,821

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$4,610,791 $4,287,711

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

 

              Six Months
            Ended June 30,
  2005 2004
                    (Unaudited)
                    (in thousands)
     
OPERATING ACTIVITIES:    
Net income $217,565 $201,345
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 34,260 33,191
Other 2,188 1,656
Changes in operating assets and liabilities 63,214 1,483
     
NET CASH PROVIDED BY OPERATING ACTIVITIES 317,227 237,675
     
INVESTING ACTIVITIES:    
Purchase of property, plant and equipment (40,324) (25,571)
Other 6,271 -- 
     
NET CASH USED IN INVESTING ACTIVITIES (34,053) (25,571)
     
FINANCING ACTIVITIES:    
Net payments on credit facilities (37) (21,900)

Stock options exercised

11,569 28,918
Dividends paid (107,125) (103,667)
Purchase of stock (61,983) (3,116)
     
NET CASH USED IN FINANCING ACTIVITIES (157,576) (99,765)
     
NET INCREASE IN CASH AND CASH EQUIVALENTS 125,598 112,339
     
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 134,940 15,393
     
CASH AND CASH EQUIVALENTS AT END OF PERIOD 260,538 127,732

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