First Quarter 2019

Genuine Parts Company Reports Sales And Earnings For The First Quarter Ended March 31, 2019

- Sales of $4.7 billion, Up 3.3% -

- Diluted EPS $1.09 and Adjusted EPS $1.28 Excluding Transaction and Other Costs -

- Company Reaffirms 2019 Revenue and Earnings Outlook --

Apr 18, 2019
8:32am

ATLANTA, April 18, 2019 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the first quarter ended March 31, 2019.

GPC Logo. (PRNewsFoto/Genuine Parts Company)

Sales for the first quarter ended March 31, 2019 were $4.7 billion, a 3.3% increase compared to $4.6 billion for the same period in 2018.  Total sales for the first quarter included 3.3% comparable growth, approximately 2% from acquisitions, and an approximate 2% negative impact from foreign currency translation.  Net income for the first quarter was $160.3 million and earnings per share on a diluted basis were $1.09.  Before the impact of realized currency losses and transaction and other costs primarily related to the sale of the Grupo Auto Todo business in Mexico, adjusted net income was $187.2 million, or $1.28 per diluted share.

First quarter sales for the Automotive Parts Group were up 2.3%, including a 3.1% comparable sales increase, a 2.9% benefit from acquisitions and an unfavorable foreign currency translation of 3.4%. In addition, automotive sales were impacted by 0.3% due to the sale of Grupo Auto Todo.  Sales for the Industrial Parts Group were up 5.7%, including a 4.2% comparable sales increase, 1.8% from acquisitions, and a slightly unfavorable foreign currency translation. Sales for the Business Products Group were up 1.0%, consisting primarily of comparable sales growth.

Paul Donahue, President and Chief Executive Officer, commented, "We were pleased to produce another quarter of positive sales comps across each of our business segments while also benefiting from the favorable impact of ongoing strategic acquisitions.  Our sales performance was indicative of the continued improvement in our U.S. automotive business and the steady growth we continue to generate in our Australasian and Canadian operations.  Our strength in these areas offset the pressure on our core automotive results in Europe related to mild winter weather and economic considerations.  Our industrial business remains strong and we made further progress in stabilizing the Business Products Group.  Overall, we performed in-line with our expectations for the first quarter, despite the headwinds of foreign currency translation and one less selling day, and remain confident in the additional growth opportunities we see for GPC."

Mr. Donahue concluded, "We enter the second quarter of 2019 focused on the further strengthening of our global platform, driving strong and sustainable sales growth and improving our operating results.  As always, we plan to support these objectives with a strong balance sheet, continued strong cash flows and effective capital allocation.  We believe our focus in these areas will create significant value for our shareholders."

2019 Outlook

The Company is reaffirming its full year 2019 sales and earnings guidance and continues to expect sales to increase 3% to 4%, or up an adjusted 4% to 5% before an expected headwind from currency translation of 1%.  The Company expects diluted earnings per share to range from $5.56 to $5.71 and is reiterating its outlook for adjusted diluted earnings per share, which excludes any first quarter and future transaction and other costs, of $5.75 to $5.90, or $5.81 to $5.96 adjusted for the impact of the 1% currency headwind. Additionally, the Company continues to expect a tax rate of approximately 25% in 2019.

Non-GAAP Information

This release contains certain financial information not derived in accordance with United States generally accepted accounting principles ("GAAP"). These items include adjusted net income and adjusted diluted earnings per share. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The Company believes that the presentation of adjusted net income and adjusted diluted earnings per share provides meaningful supplemental information to both management and investors that is indicative of the Company's core operations. The Company has included a reconciliation of this additional information to the most comparable GAAP measure following the financial statements below.

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 "Investors," or by dialing 877-407-0789, conference ID 13689066. A replay will also be available on the Company's website or at 844-512-2921, conference ID 13689066, two hours after the completion of the call until 12:00 a.m. Eastern time on May 2, 2019.

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 the anticipated strategic benefits, synergies and other attributes resulting from acquisitions, as well as 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 integrate acquired companies into the Company, including the challenges associated with the integration of processes to ensure the adequacy of our internal controls in regard to the Alliance Automotive Group business, and to realize the anticipated synergies and benefits; changes in the European aftermarket; the Company's ability to successfully implement its business initiatives in each of its three business segments; slowing demand for the Company's products; changes in national and international legislation or government regulations or policies, including new import tariffs and data security policies and requirements; changes in general economic conditions, including unemployment, inflation (including the impact of potential tariffs) or deflation and the United Kingdom's referendum to exit from the European Union, commonly known as Brexit; changes in tax policies; volatile exchange rates; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; labor shortages; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; the ability to maintain favorable vendor arrangements and relationships; disruptions in our vendors' operations, including the impact of tariffs and trade considerations on their operations and output, as required to meet product demand; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting; 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 2018 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, Australasia, France, the U.K., Germany and Poland. The Company also distributes industrial replacement parts and electrical specialty materials in the U.S., Canada and Mexico through its Industrial Parts Group.  S.P. Richards Company, the Business Products Group, distributes a variety of business products in the U.S. and Canada.  Further information is available at www.genpt.com.

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)




Three Months Ended
March 31,

(in thousands, except per share data)


2019


2018

Net sales


$

4,736,833


$

4,586,294

Cost of goods sold


3,228,665


3,150,487

Gross profit


1,508,168


1,435,807

Operating expenses:





Selling, administrative and other expenses


1,197,220


1,133,771

Depreciation and amortization


61,977


58,363

Provision for doubtful accounts


3,969


2,701

Total operating expenses


1,263,166


1,194,835

Non-operating expenses (income):





Interest expense


23,883


24,109

Other


9,607


(12,456)

Total non-operating expenses (income)


33,490


11,653

Income before income taxes


211,512


229,319

Income taxes


51,262


52,743

Net income


$

160,250


$

176,576

Basic net income per common share


$

1.10


$

1.20

Diluted net income per common share


$

1.09


$

1.20

Dividends declared per common share


$

.7625


$

.7200

Weighted average common shares outstanding


145,981


146,727

Dilutive effect of stock options and non-vested restricted stock awards


713


595

Weighted average common shares outstanding – assuming dilution


146,694


147,322

 

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

SEGMENT INFORMATION

(UNAUDITED)




Three Months Ended March 31,

(in thousands)


2019


2018

Net sales:





Automotive


$

2,622,345


$

2,564,259

Industrial


1,635,423


1,547,944

Business products


479,065


474,091

Total net sales


$

4,736,833


$

4,586,294

Operating profit:





Automotive


$

179,228


$

184,706

Industrial


121,028


112,191

Business products


21,220


21,601

Total operating profit


321,476


318,498

Interest expense, net


(23,029)


(23,307)

Intangible asset amortization


(22,584)


(21,403)

Corporate expense (1)


(64,351)


(44,469)

Income before income taxes


$

211,512


$

229,319



(1)

Includes $34,114 of expense for the three months ended March 31, 2019 from realized currency losses and transaction and other costs. The realized currency losses of $27,037 resulted from the March 7, 2019 sale of Grupo Auto Todo, a Mexican subsidiary within Automotive.




Includes $13,009 for the three months ended March 31, 2018, in transaction and other costs related to the November 2017 Alliance Automotive Group ("AAG") acquisition and the attempted spin-off of the Business Products Group (the attempted spin-off was subsequently terminated in September 2018).

 

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


 (in thousands, except share and per share data)


March 31,
2019


March 31,
2018

Assets





Current assets:





Cash and cash equivalents


$

356,925


$

325,973

Trade accounts receivable, less allowance for doubtful accounts


2,741,916


2,641,151

Merchandise inventories, net


3,684,580


3,772,919

Prepaid expenses and other current assets


1,102,970


841,569

Total current assets


7,886,391


7,581,612

Goodwill


2,192,143


2,202,634

Other intangible assets, less accumulated amortization


1,449,852


1,415,792

Deferred tax assets


21,178


39,830

Property, plant and equipment, less accumulated depreciation


1,044,788


931,288

Operating lease assets


953,553


Other assets


522,625


588,238

Total assets


$

14,070,530


$

12,759,394


Liabilities and equity





Current liabilities:





Trade accounts payable


$

4,058,211


$

3,773,149

Current portion of debt


1,032,382


751,614

Dividends payable


111,355


105,649

Other current liabilities


1,343,386


1,127,060

Total current liabilities


6,545,334


5,757,472

Long-term debt


2,389,244


2,564,111

Operating lease liabilities


716,677


Pension and other post–retirement benefit liabilities


222,415


200,253

Deferred tax liabilities


194,178


184,383

Other long-term liabilities


429,850


491,794






Equity:





Common stock


146,064


146,738

Additional paid-in capital


77,424


67,550

Retained earnings


4,517,430


4,115,049

Accumulated other comprehensive loss


(1,189,987)


(819,258)

Total parent equity


3,550,931


3,510,079

Noncontrolling interests in subsidiaries


21,901


51,302

Total equity


3,572,832


3,561,381

Total liabilities and equity


$

14,070,530


$

12,759,394

 

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)




Three Months Ended
March 31,

(in thousands)


2019


2018

Operating activities:





Net income


$

160,250


$

176,576

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





Depreciation and amortization


61,977


58,363

Share-based compensation


6,010


3,686

Excess tax benefits from share-based compensation


(3,812)


(2,517)

Realized currency losses on divestiture


27,037


Changes in operating assets and liabilities


(189,732)


(97,741)

Net cash provided by operating activities


61,730


138,367

Investing activities:





Purchases of property, plant and equipment


(45,621)


(31,633)

Acquisition of businesses and other investing activities


(138,417)


(38,588)

Net cash used in investing activities


(184,038)


(70,221)

Financing activities:





Proceeds from debt


1,350,002


1,201,441

Payments on debt


(1,092,115)


(1,153,750)

Share-based awards exercised


(6,839)


(4,176)

Dividends paid


(105,369)


(99,000)

Net cash provided by (used in) financing activities


145,679


(55,485)

Effect of exchange rate changes on cash and cash equivalents


7


(1,587)

Net increase in cash and cash equivalents


23,378


11,074

Cash and cash equivalents at beginning of period


333,547


314,899

Cash and cash equivalents at end of period


$

356,925


$

325,973

 

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME

(UNAUDITED)




Three Months Ended March 31,

(in thousands, except per share data)


2019


2018

GAAP net income


$

160,250


$

176,576

Diluted net income per common share


$

1.09


$

1.20






Adjustments:





Realized currency losses


$

27,037


$

Transaction and other costs


7,077


13,009

Tax impact of adjustments


(7,150)


(3,126)

Adjusted net income


$

187,214


$

186,459

Adjusted diluted net income per common share


$

1.28


$

1.27

 

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

RECONCILIATION OF 2019 FORECASTED GAAP NET INCOME TO FORECASTED ADJUSTED NET INCOME

(UNAUDITED)


(in thousands, except per share data)


Low End


High End

Forecasted GAAP net income


$

814,000


$

836,000

Forecasted diluted net income per common share


$

5.56


$

5.71






Add forecasted after-tax adjustments:





Forecasted transaction and other costs


26,964


26,964

Forecasted adjusted net income


$

840,964


$

862,964

Forecasted adjusted diluted net income per common share


$

5.75


$

5.90

 

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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