Second Quarter 2017

Genuine Parts Company Reports Sales And Earnings For The Second Quarter Ended June 30, 2017

- Company Reports Record Sales of $4.1 Billion -

- Earnings Per Share of $1.29 -

- Updates 2017 Outlook -

Jul 20, 2017
8:56am

ATLANTA, July 20, 2017 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the second quarter and six months ended June 30, 2017.

GPC Logo. (PRNewsFoto/Genuine Parts Company)

Sales for the second quarter ended June 30, 2017 were $4.1 billion, a new record and a 5% increase compared to $3.9 billion for the same period in 2016.  Net income for the second quarter was $190.0 million compared to $191.4 million recorded for the same period in the previous year.  Earnings per share on a diluted basis were $1.29, up 1% from $1.28 for the second quarter last year. 

Paul Donahue, President and Chief Executive Officer, commented, "We are encouraged by the steady and consistent total sales increase thus far in 2017, which reflects the diversified aspects of our Company combined with an ongoing strategy to drive both organic and acquisitive growth.  This represents our second consecutive quarter of 5% total sales growth for the Company and includes sales increases in each of our four distribution businesses, with our strongest performances in the Industrial and Electrical segments."

Second quarter sales for the Automotive Group were up 4%, including an approximate 1.5% comparable sales increase.  Sales at Motion Industries, our Industrial Group, were up 7%, including a 5% comparable sales increase, and sales at EIS, our Electrical/Electronic Group, grew 11%, with comparable sales down 1%.  Sales for S.P. Richards, our Office Products Group, were up 5% for the quarter, including a 4% decrease in comparable sales.

Sales for the six months ended June 30, 2017 were $8.0 billion, also a new record and a 5% increase compared to $7.6 billion for the same period in 2016.  Net income for the six months was $350.1 million compared to $349.4 million in 2016, and earnings per share on a diluted basis were $2.36, up 1% compared to $2.33 in 2016.

Mr. Donahue concluded, "Our teams are committed to generating sustainable sales growth, while also streamlining our cost structure to improve profitability.  We believe our focus in these areas, along with a strong balance sheet, solid cash flows and effective capital allocation, will drive long-term growth for the Company and serve to maximize shareholder value."

2017 Outlook

For the full year 2017, the Company continues to expect total sales to be up 3% to 4%.  The Company expects diluted earnings per share to range from $4.70 to $4.75 compared to the prior outlook of $4.75 to $4.85.

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 to the call on the Company's website, www.genpt.com, by clicking "Investors", or by dialing 877-741-4245, conference ID 6054876.  A replay will also be available on the Company's website or at 844-512-2921, conference ID 6054876, two hours after the completion of the call until 12:00 a.m. Eastern time on August 4, 2017.

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, the Company's ability to successfully implement its business initiatives in each of its four business segments; slowing demand for the Company's products; changes in legislation or government regulations or policies; changes in general economic conditions, including unemployment, inflation or deflation; changes in tax policies; volatile exchange rates; high energy costs; uncertain credit markets and other macro-economic conditions; competitive product, service and pricing pressures; the ability to maintain favorable vendor arrangements and relationships; disruptions in our vendors' operations; the Company's ability to successfully integrate its acquired businesses; the uncertainties and costs of litigation; disruptions caused by a failure or breach of the Company's information systems, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2016 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 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,


2017


2016


2017


2016


(Unaudited)


(in thousands, except per share data)









Net sales

$4,100,178


$3,899,638


$8,005,819


$7,617,905

Cost of goods sold

2,860,466


2,734,186


5,610,386


5,347,982

Gross profit

1,239,712


1,165,452


2,395,433


2,269,923









Operating expenses:








Selling, administrative & other expenses

903,343


829,489


1,777,157


1,652,661

Depreciation and amortization

39,232


35,911


77,364


70,565


942,575


865,400


1,854,521


1,723,226









Income before income taxes

297,137


300,052


540,912


546,697

Income taxes

107,165


108,683


190,780


197,303









Net income

$   189,972


$   191,369


$   350,132


$   349,394









Basic net income per common share

$1.29


$1.28


$2.37


$2.34









Diluted net income per common share

$1.29


$1.28


$2.36


$2.33









Weighted average common shares outstanding

147,079


149,241


147,613


149,417









Dilutive effect of stock options and








   non-vested restricted stock awards

571


788


598


761









Weighted average common shares outstanding –
assuming dilution

147,650


150,029


148,211


150,178

 

 

GENUINE PARTS COMPANY and SUBSIDIARIES

SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS



Three Months Ended June 30,


Six Months Ended June 30,


2017


2016


2017


2016


(Unaudited)


(in thousands)









Net sales:








Automotive

$2,164,104


$2,087,978


$4,162,487


$4,020,156

Industrial

1,252,867


1,167,395


2,484,949


2,320,022

Office Products

504,401


481,605


1,023,406


958,259

Electrical/Electronic Materials

204,628


184,508


389,045


360,355

Other (1)

(25,822)


(21,848)


(54,068)


(40,887)

Total net sales

$4,100,178


$3,899,638


$8,005,819


$7,617,905









Operating profit:








Automotive

$   207,332


$   203,572


$   359,089


$   357,282

Industrial

96,300


88,263


186,674


170,096

Office Products

30,091


32,640


61,210


66,844

Electrical/Electronic Materials

15,533


15,987


29,168


30,828

Total operating profit

349,256


340,462


636,141


625,050

Interest expense, net

(6,878)


(4,665)


(13,052)


(9,487)

Intangible amortization

(11,434)


(9,225)


(22,240)


(17,985)

Other, net

(33,807)


(26,520)


(59,937)


(50,881)

Income before income taxes

$   297,137


$   300,052


$   540,912


$   546,697









Capital expenditures

$     29,289


$     38,041


$    54,095


$     49,711









Depreciation and amortization

$     39,232


$     35,911


$    77,364


$     70,565



(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,


2017


2016


(Unaudited)


 (in thousands)

ASSETS




CURRENT ASSETS




Cash and cash equivalents

$   203,145


$   233,627

Trade accounts receivable, net

2,169,970


2,031,094

Merchandise inventories, net

3,330,189


3,062,673

Prepaid expenses and other current assets

598,112


538,748





TOTAL CURRENT ASSETS

6,301,416


5,866,142





Goodwill and other intangible assets, less accumulated
amortization

1,677,748


1,478,298

Deferred tax assets

126,299


112,316

Other assets

565,905


491,968

Net property, plant and equipment

740,776


685,385





TOTAL ASSETS

$9,412,144


$8,634,109





LIABILITIES AND EQUITY




CURRENT LIABILITIES




Trade accounts payable

$3,302,969


$3,075,769

Current portion of debt

580,000


525,000

Income taxes payable

28,300


28,451

Dividends payable

99,109


97,975

Other current liabilities

790,789


678,975





TOTAL CURRENT LIABILITIES

4,801,167


4,406,170









Long-term debt

550,000


250,000

Pension and other post-retirement benefit liabilities

272,394


217,052

Deferred tax liabilities

48,256


51,708

Other long-term liabilities

438,984


458,950





Common stock

146,831


148,914

Retained earnings

4,062,682


3,970,870

Accumulated other comprehensive loss

(921,389)


(882,165)





TOTAL  PARENT EQUITY

3,288,124


3,237,619





Noncontrolling interests in subsidiaries

13,219


12,610





TOTAL  EQUITY

3,301,343


3,250,229





TOTAL LIABILITIES AND EQUITY

$9,412,144


$8,634,109

 

 

GENUINE PARTS COMPANY and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Six Months Ended June 30,


2017


2016


(Unaudited)


(in thousands)





OPERATING ACTIVITIES:




Net income

$350,132


$349,394

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




Depreciation and amortization

77,364


70,565

Share-based compensation

8,086


10,002

Excess tax benefits from share-based compensation

(2,245)


(7,540)

Changes in operating assets and liabilities

(88,053)


108,071









NET CASH PROVIDED BY OPERATING ACTIVITIES

345,284


530,492





INVESTING ACTIVITIES:




Purchases of property, plant and equipment

(54,095)


(49,711)

Acquisitions and other investing activities

(240,216)


(305,435)





NET CASH USED IN INVESTING ACTIVITIES

(294,311)


(355,146)





FINANCING ACTIVITIES:




Proceeds from debt

2,250,000


1,950,000

Payments on debt

(1,995,000)


(1,800,000)

Share-based awards exercised, net of taxes paid

(3,014)


(8,627)

Excess tax benefits from share-based compensation


7,540

Dividends paid

(197,408)


(190,934)

Purchase of stock

(153,508)


(119,397)





NET CASH USED IN FINANCING ACTIVITIES

(98,930)


(161,418)





EFFECT OF EXCHANGE RATE CHANGES ON CASH

8,223


8,068





NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(39,734)


21,996





CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

242,879


211,631





CASH AND CASH EQUIVALENTS AT END OF PERIOD

$203,145


$233,627

 

 

SOURCE Genuine Parts Company

For further information: Carol B. Yancey, Executive Vice President and CFO, (678) 934-5044; Sidney G. Jones, Senior Vice President, Investor Relations, (678) 934-5628


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