ATLANTA, July 21, 2014 /PRNewswire/ -- Genuine Parts
Company (NYSE: GPC) reports sales and earnings for the second
quarter and six months ended June 30,
2014.
Thomas C. Gallagher, Chairman and
Chief Executive Officer, announced today that record sales totaling
$3.9 billion were up 6% compared to
the second quarter of 2013. Net income for the quarter was
$197.7 million compared to
$216.4 million recorded in the same
period of the previous year. Earnings per share on a diluted
basis were $1.28 compared to
$1.39 for the second quarter last
year. Before the one-time adjustment in 2013 described below,
second quarter net income of $197.7
million and earnings per share on a diluted basis of
$1.28 were both up 9% compared to the
same period in 2013.
In association with the April 1,
2013 acquisition of the remaining 70% interest in GPC Asia
Pacific, the Company's initial 30% investment was remeasured and,
net of certain one-time purchase accounting costs, amounted to a
pre-tax income adjustment of approximately $36 million recorded in the second quarter of
2013. This adjustment, combined with the lower tax rate for
the remeasurement, favorably impacted diluted earnings per share in
the second quarter of 2013 by $0.22.
For the six months ended June 30,
2014, sales totaled $7.5
billion, up 10% compared to the same period in 2013.
Net income for the six months was $355.2
million compared to $360.7
million recorded in the previous year. Earnings per
share on a diluted basis were $2.30
compared to $2.31 for the same period
last year.
Before the one-time adjustment in 2013, net income for the six
months of $355.2 million was up 9%
compared to the previous year. Earnings per share on a
diluted basis of $2.30 were up 10%
compared to the same period in 2013 excluding the adjustment.
In review of the second quarter, Mr. Gallagher commented, "We
are pleased to report record sales as well as a solid 9%
comparative earnings increase. Our 6% total sales increase
includes 5% underlying sales growth and a 2.5% contribution from
acquisitions offset by a currency headwind of approximately
1%. Our progress in the quarter was also supported by sales
growth in all four of our business segments, with sales for the
Automotive Group up 5% including 7% underlying growth offset by a
2% currency headwind. Sales at Motion Industries, our
Industrial Group, were up 7% including 4% underlying growth and 3%
from acquisitions. Sales at EIS, our Electrical/Electronic
Group, increased by 32% due to acquisitions. Sales for
S. P. Richards, our Office Products
Group, were up 4% and includes 2% underlying growth along with 2%
from acquisitions."
Mr. Gallagher concluded, "In the second quarter, we again
achieved our core objectives of growing sales and earnings,
producing operating margin improvement, generating solid cash flows
while maintaining a strong balance sheet. We are both proud
of and encouraged by this accomplishment and, looking ahead, we
enter the second half of 2014 poised to demonstrate ongoing
progress in driving improved results. We remain optimistic
about our prospects for growth in each of our four businesses."
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 66908522. A replay of the call
will also be available on the Company's website or at 855-859-2056,
conference ID 66908522, after the completion of the conference call
until 12:00 a.m. Eastern time on
August 4, 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
June 30,
|
Six Months Ended June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$3,908,387
|
|
$3,675,997
|
|
$7,533,284
|
|
$6,874,799
|
|
Cost of goods
sold
|
2,729,219
|
|
2,570,889
|
|
5,269,486
|
|
4,847,943
|
|
Gross
profit
|
1,179,168
|
|
1,105,108
|
|
2,263,798
|
|
2,026,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
administrative & other expenses
|
832,205
|
|
753,527
|
|
1,636,006
|
|
1,427,139
|
|
Depreciation and
amortization
|
36,783
|
|
36,853
|
|
73,640
|
|
62,852
|
|
|
868,988
|
|
790,380
|
|
1,709,646
|
|
1,489,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
310,180
|
|
314,728
|
|
554,152
|
|
536,865
|
|
Income
taxes
|
112,453
|
|
98,371
|
|
198,941
|
|
176,119
|
|
Net income
|
$ 197,727
|
|
$ 216,357
|
|
$ 355,211
|
|
$ 360,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
common share
|
$1.29
|
|
$1.40
|
|
$2.31
|
|
$2.33
|
|
Diluted net income
per common share
|
$1.28
|
|
$1.39
|
|
$2.30
|
|
$2.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
153,463
|
|
155,050
|
|
153,595
|
|
154,971
|
|
Dilutive effect of
stock options and
|
|
|
|
|
|
|
|
|
non-vested restricted stock awards
|
1,069
|
|
1,094
|
|
1,063
|
|
1,075
|
|
Weighted average
common shares outstanding –
|
|
|
|
|
|
|
|
|
assuming
dilution
|
154,532
|
|
156,144
|
|
154,658
|
|
156,046
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
Six Months Ended June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Automotive
|
$2,110,396
|
|
$2,011,802
|
|
$4,008,911
|
|
$3,556,339
|
|
Industrial
|
1,209,235
|
|
1,132,032
|
|
2,352,509
|
|
2,234,112
|
|
Office
Products
|
418,785
|
|
402,272
|
|
836,883
|
|
822,400
|
|
Electrical/Electronic
Materials
|
188,034
|
|
142,970
|
|
368,365
|
|
282,155
|
|
Other (1)
|
(18,063)
|
|
(13,079)
|
|
(33,384)
|
|
(20,207)
|
|
Total net
sales
|
$3,908,387
|
|
$3,675,997
|
|
$7,533,284
|
|
$6,874,799
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
Automotive
|
$ 206,683
|
|
$ 186,382
|
|
$ 356,793
|
|
$ 307,425
|
|
Industrial
|
95,428
|
|
88,891
|
|
178,478
|
|
167,786
|
|
Office
Products
|
31,183
|
|
29,768
|
|
65,129
|
|
62,960
|
|
Electrical/Electronic
Materials
|
16,463
|
|
12,221
|
|
31,992
|
|
22,672
|
|
Total operating
profit
|
349,757
|
|
317,262
|
|
632,392
|
|
560,843
|
|
Interest expense,
net
|
(6,224)
|
|
(7,852)
|
|
(12,430)
|
|
(11,205)
|
|
Intangible
amortization
|
(8,498)
|
|
(8,986)
|
|
(17,374)
|
|
(12,761)
|
|
Other, net
|
(24,855)
|
|
14,304
|
|
(48,436)
|
|
(12)
|
|
Income before income
taxes
|
$ 310,180
|
|
$ 314,728
|
|
$ 554,152
|
|
$ 536,865
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$ 21,536
|
|
$ 37,883
|
|
$ 39,923
|
|
$ 50,807
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$ 36,783
|
|
$ 36,853
|
|
$ 73,640
|
|
$ 62,852
|
|
(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,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
(in
thousands)
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$ 152,863
|
|
$ 196,770
|
|
Trade accounts
receivable, net
|
1,909,268
|
|
1,759,176
|
|
Merchandise
inventories, net
|
2,987,143
|
|
2,799,150
|
|
Prepaid expenses and
other current assets
|
463,087
|
|
352,645
|
|
|
|
|
|
|
TOTAL CURRENT
ASSETS
|
5,512,361
|
|
5,107,741
|
|
|
|
|
|
|
Goodwill and other
intangible assets, less accumulated amortization
|
1,432,862
|
|
1,270,447
|
|
Deferred tax
assets
|
89,196
|
|
179,850
|
|
Other
assets
|
555,825
|
|
459,320
|
|
Net property, plant
and equipment
|
661,304
|
|
642,955
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$8,251,548
|
|
$7,660,313
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Trade accounts
payable
|
$2,489,570
|
|
$2,064,878
|
|
Current portion of
debt
|
306,358
|
|
650,102
|
|
Income taxes
payable
|
22,639
|
|
10,865
|
|
Dividends
payable
|
88,211
|
|
83,407
|
|
Other current
liabilities
|
600,076
|
|
513,695
|
|
|
|
|
|
|
TOTAL CURRENT
LIABILITIES
|
3,506,854
|
|
3,322,947
|
|
|
|
|
|
|
Long-term
debt
|
500,000
|
|
250,000
|
|
Retirement and other
post-retirement benefit liabilities
|
137,616
|
|
494,572
|
|
Deferred tax
liabilities
|
85,584
|
|
–
|
|
Other long-term
liabilities
|
484,000
|
|
506,655
|
|
|
|
|
|
|
Common
stock
|
153,306
|
|
154,859
|
|
Retained earnings and
other
|
3,725,279
|
|
3,521,735
|
|
Accumulated other
comprehensive loss
|
(351,415)
|
|
(600,223)
|
|
TOTAL PARENT
EQUITY
|
3,527,170
|
|
3,076,371
|
|
|
|
|
|
|
Noncontrolling
interests in subsidiaries
|
10,324
|
|
9,768
|
|
TOTAL
EQUITY
|
3,537,494
|
|
3,086,139
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$8,251,548
|
|
$7,660,313
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
(in
thousands)
|
|
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
Net income
|
$355,211
|
|
$360,746
|
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
73,640
|
|
62,852
|
|
Share-based
compensation
|
7,855
|
|
5,455
|
|
Excess tax benefits
from share-based compensation
|
(5,948)
|
|
(9,410)
|
|
Other
|
753
|
|
(51,051)
|
|
Changes in operating
assets and liabilities
|
(64,409)
|
|
98,486
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
367,102
|
|
467,078
|
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Purchases of property,
plant and equipment
|
(39,923)
|
|
(50,807)
|
|
Acquisitions and other
investing activities
|
(178,889)
|
|
(596,105)
|
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
(218,812)
|
|
(646,912)
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Proceeds from
debt
|
1,246,613
|
|
1,269,550
|
|
Payments on
debt
|
(1,214,169)
|
|
(1,098,998)
|
|
Share-based awards
exercised, net of taxes paid
|
(6,754)
|
|
(10,948)
|
|
Excess tax benefits
from share-based compensation
|
5,948
|
|
9,410
|
|
Dividends
paid
|
(171,171)
|
|
(159,908)
|
|
Purchase of
stock
|
(53,769)
|
|
(26,318)
|
|
|
|
|
|
|
NET CASH USED IN
FINANCING ACTIVITIES
|
(193,302)
|
|
(17,212)
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
982
|
|
(9,279)
|
|
|
|
|
|
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
(44,030)
|
|
(206,325)
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
196,893
|
|
403,095
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$152,863
|
|
$196,770
|
|
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SOURCE Genuine Parts Company