ATLANTA, Oct. 18, 2018 /PRNewswire/ -- Genuine Parts
Company (NYSE: GPC) announced today sales and earnings for the
third quarter and nine months ended September 30, 2018.
![GPC Logo. (PRNewsFoto/Genuine Parts Company) GPC Logo. (PRNewsFoto/Genuine Parts Company)](https://mma.prnewswire.com/media/76327/genuine_parts_company_logo.jpg)
Sales for the third quarter ended September 30, 2018 were $4.7 billion, a 15.3% increase compared to
$4.1 billion for the same period in
2017. Net income for the third quarter was $220.2 million and earnings per share on a
diluted basis were $1.49.
Before the net impact of certain transaction and other costs
incurred related to the Company's fourth quarter 2017 acquisition
of Alliance Automotive Group (AAG) in Europe and the attempted transaction to
spin-off the Company's Business Products Group, S.P. Richards, and
the favorable impact of a $12 million
termination fee, adjusted net income was $217.6 million, or $1.48 per diluted share. Total sales for
the third quarter included 4.3% comparable growth, approximately
12% from acquisitions, including AAG, and an approximate 1%
negative impact from foreign currency translation.
Third quarter sales for the Automotive Group were up 23.3%,
including an approximate 3% comparable sales increase and the
benefit of acquisitions, partially offset by unfavorable foreign
currency translation of approximately 2%. Sales for the
Industrial Group were up 8.3%, including an approximate 7%
comparable sales increase, and sales for the Business Products
Group were up 1.3% consisting primarily of comparable sales
growth.
Paul Donahue, President and Chief
Executive Officer, commented, "We are pleased to report the further
strengthening of our sales, driven by positive sales comps across
all our business segments and the favorable impact of strategic
acquisitions. In addition, our teams made progress in driving
operating improvement, resulting in an improved operating margin
for the automotive and industrial segments and the Company
overall. We also did an excellent job of managing our working
capital, which contributed to the strong cash flows for the
quarter."
Sales for the nine months ended September
30, 2018 were $14.1 billion, a
16.8% increase compared to $12.1
billion for the same period in 2017. Net income for
the nine months was $623.8 million
and earnings per share on a diluted basis were $4.23. Before the transaction and other
costs discussed above, adjusted net income was $637.6 million, or $4.33 per diluted share, for the nine months.
Mr. Donahue concluded, "We enter the fourth quarter of 2018 with
positive momentum and plans for continued sales and earnings
growth. We remain focused on the further strengthening of our
core sales growth, maximizing the benefits of our acquisitions and
improving our operating results to further enhance our long-term
sales and profit outlook. As always, we will support these
initiatives with a strong balance sheet and continued strong cash
flows."
2018 Outlook
The Company is raising its sales guidance to be up 14% to 15%,
an increase from the prior guidance of up 13% to 14%. The Company
expects diluted earnings per share to range from $5.50 to $5.60 and
is updating its guidance for adjusted diluted earnings per share,
which excludes any transaction-related costs, to $5.60 to $5.70 from
$5.60 to $5.75. The Company continues to expect a
full-year tax rate of approximately 25.0%.
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. 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 877-407-0789, conference ID
13683506. A replay will also be available on the Company's website
or at 844-512-2921, conference ID 13683506, two hours after the
completion of the call until 12:00 a.m.
EDT on November 2, 2018.
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 impact of Essendant Inc.'s ("Essendant") election
to terminate the proposed business combination transaction between
the Company and Essendant in which the Company would have spun off
its Business Products Group and combined it with Essendant or the
acquisition of AAG and the anticipated strategic benefits,
synergies and other attributes resulting from this and other
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 AAG into
the Company 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; changes in tax policies;
volatile exchange rates; 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; the Company's ability to successfully integrate its
other 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 2017 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 and electronic
materials in the U.S., Canada and
Mexico through its Industrial
Products Group, comprised of Motion Industries and EIS, Inc. S.P.
Richards Company, the Business Products Group, distributes a
variety of business products in the U.S. and Canada.
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
(in thousands, except
share and per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales
|
|
$
|
4,722,922
|
|
|
$
|
4,095,906
|
|
|
$
|
14,131,281
|
|
|
$
|
12,101,725
|
|
Cost of goods
sold
|
|
3,238,687
|
|
|
2,869,016
|
|
|
9,689,653
|
|
|
8,479,402
|
|
Gross
profit
|
|
1,484,235
|
|
|
1,226,890
|
|
|
4,441,628
|
|
|
3,622,323
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
administrative and other expenses
|
|
1,119,266
|
|
|
931,500
|
|
|
3,401,254
|
|
|
2,715,799
|
|
Depreciation and
amortization
|
|
61,082
|
|
|
40,276
|
|
|
177,896
|
|
|
117,640
|
|
Provision for
doubtful accounts
|
|
4,939
|
|
|
3,508
|
|
|
11,306
|
|
|
9,182
|
|
Total operating
expenses
|
|
1,185,287
|
|
|
975,284
|
|
|
3,590,456
|
|
|
2,842,621
|
|
Non-operating
expenses (income):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
25,084
|
|
|
9,038
|
|
|
75,669
|
|
|
23,263
|
|
Other
|
|
(17,871)
|
|
|
(3,787)
|
|
|
(45,822)
|
|
|
(30,828)
|
|
Total non-operating
expenses (income)
|
|
7,213
|
|
|
5,251
|
|
|
29,847
|
|
|
(7,565)
|
|
Income before income
taxes
|
|
291,735
|
|
|
246,355
|
|
|
821,325
|
|
|
787,267
|
|
Income
taxes
|
|
71,508
|
|
|
87,913
|
|
|
197,550
|
|
|
278,693
|
|
Net income
|
|
$
|
220,227
|
|
|
$
|
158,442
|
|
|
$
|
623,775
|
|
|
$
|
508,574
|
|
Basic net income per
common share
|
|
$
|
1.50
|
|
|
$
|
1.08
|
|
|
$
|
4.25
|
|
|
$
|
3.45
|
|
Diluted net income
per common share
|
|
$
|
1.49
|
|
|
$
|
1.08
|
|
|
$
|
4.23
|
|
|
$
|
3.44
|
|
Dividends declared
per common share
|
|
$
|
.7200
|
|
|
$
|
.6750
|
|
|
$
|
2.160
|
|
|
$
|
2.025
|
|
Weighted average
common shares outstanding
|
|
146,763
|
|
|
146,720
|
|
|
146,746
|
|
|
147,312
|
|
Dilutive effect of
stock options and non-vested
restricted stock awards
|
|
690
|
|
|
502
|
|
|
574
|
|
|
561
|
|
Weighted average
common shares outstanding –
assuming dilution
|
|
147,453
|
|
|
147,222
|
|
|
147,320
|
|
|
147,873
|
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
SEGMENT
INFORMATION
(UNAUDITED)
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales:
(1)
|
|
|
|
|
|
|
|
|
Automotive
|
|
$
|
2,649,716
|
|
|
$
|
2,149,865
|
|
|
$
|
7,950,176
|
|
|
$
|
6,271,233
|
|
Industrial
(2)
|
|
1,577,329
|
|
|
1,456,651
|
|
|
4,727,938
|
|
|
4,359,819
|
|
Business
products
|
|
495,877
|
|
|
489,390
|
|
|
1,453,167
|
|
|
1,470,673
|
|
Total net
sales
|
|
$
|
4,722,922
|
|
|
$
|
4,095,906
|
|
|
$
|
14,131,281
|
|
|
$
|
12,101,725
|
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
|
Automotive
|
|
$
|
226,742
|
|
|
$
|
178,202
|
|
|
$
|
655,059
|
|
|
$
|
537,291
|
|
Industrial
(2)
|
|
119,153
|
|
|
108,142
|
|
|
356,535
|
|
|
323,984
|
|
Business
products
|
|
19,846
|
|
|
23,974
|
|
|
62,869
|
|
|
85,184
|
|
Total operating
profit
|
|
365,741
|
|
|
310,318
|
|
|
1,074,463
|
|
|
946,459
|
|
Interest expense,
net
|
|
(21,881)
|
|
|
(8,202)
|
|
|
(70,713)
|
|
|
(21,254)
|
|
Intangible
amortization
|
|
(23,593)
|
|
|
(11,845)
|
|
|
(66,802)
|
|
|
(34,085)
|
|
Other, net
(3)
|
|
(28,532)
|
|
|
(43,916)
|
|
|
(115,623)
|
|
|
(103,853)
|
|
Income before income
taxes
|
|
$
|
291,735
|
|
|
$
|
246,355
|
|
|
$
|
821,325
|
|
|
$
|
787,267
|
|
|
|
|
|
(1)
|
The net effect of
discounts, incentives, and freight billed to customers has been
allocated to their respective segments for the current and
prior periods. Previously, the net effect of such items were
captured and presented separately in a line item entitled
"Other."
|
|
|
(2)
|
Effective January 1,
2018, the electrical/electronic materials segment became a division
of the industrial segment. These two reporting
segments became a single reporting segment, the Industrial Parts
Group. The change in segment reporting is presented
retrospectively.
|
|
|
(3)
|
The three and nine
months ended September 30, 2018 include $3.1 million of income and
$19.0 million of expenses, respectively, from
transaction and other costs incurred related to the Alliance
Automotive Group ("AAG") acquisition and the attempted S.P.
Richards spin-off,
net of a $12 million termination fee received in the third
quarter.
|
|
|
|
The three and nine
months ended September 30, 2017 include $18.6 million in
transaction and other costs primarily related to the AAG
acquisition.
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
September
30,
|
|
September
30,
|
(in
thousands)
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
359,105
|
|
|
$
|
210,082
|
|
Trade accounts
receivable, net
|
|
2,655,888
|
|
|
2,155,948
|
|
Merchandise
inventories, net
|
|
3,536,503
|
|
|
3,354,178
|
|
Prepaid expenses and
other current assets
|
|
998,999
|
|
|
596,400
|
|
Total current
assets
|
|
7,550,495
|
|
|
6,316,608
|
|
|
|
|
|
|
Goodwill and other
intangible assets, less accumulated amortization
|
|
3,518,470
|
|
|
1,713,569
|
|
Deferred tax
assets
|
|
22,898
|
|
|
122,797
|
|
Net property, plant
and equipment
|
|
937,740
|
|
|
760,213
|
|
Other
assets
|
|
627,516
|
|
|
581,047
|
|
Total
assets
|
|
$
|
12,657,119
|
|
|
$
|
9,494,234
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
|
4,036,006
|
|
|
$
|
3,275,155
|
|
Current portion of
debt
|
|
450,493
|
|
|
595,000
|
|
Dividends
payable
|
|
105,673
|
|
|
98,959
|
|
Income taxes
payable
|
|
23,964
|
|
|
26,666
|
|
Other current
liabilities
|
|
1,045,053
|
|
|
806,887
|
|
Total current
liabilities
|
|
5,661,189
|
|
|
4,802,667
|
|
Long-term
debt
|
|
2,463,452
|
|
|
550,000
|
|
Pension and other
post-retirement benefit liabilities
|
|
200,558
|
|
|
260,243
|
|
Deferred tax
liabilities
|
|
188,467
|
|
|
50,106
|
|
Other long-term
liabilities
|
|
480,374
|
|
|
441,090
|
|
Equity:
|
|
|
|
|
Common
stock
|
|
146,759
|
|
|
146,613
|
|
Retained
earnings
|
|
4,426,572
|
|
|
4,108,556
|
|
Accumulated other
comprehensive loss
|
|
(962,277)
|
|
|
(876,934)
|
|
Total parent
equity
|
|
3,611,054
|
|
|
3,378,235
|
|
Noncontrolling
interests in subsidiaries
|
|
52,025
|
|
|
11,893
|
|
Total
equity
|
|
3,663,079
|
|
|
3,390,128
|
|
Total liabilities and
equity
|
|
$
|
12,657,119
|
|
|
$
|
9,494,234
|
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
|
2018
|
|
2017
|
Operating
activities:
|
|
|
|
|
Net income
|
|
$
|
623,775
|
|
|
$
|
508,574
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
177,896
|
|
|
117,640
|
|
Share-based
compensation
|
|
15,417
|
|
|
12,912
|
|
Excess tax benefits
from share-based compensation
|
|
(3,079)
|
|
|
(2,504)
|
|
Changes in operating
assets and liabilities
|
|
111,517
|
|
|
(94,265)
|
|
Net cash provided by
operating activities
|
|
925,526
|
|
|
542,357
|
|
Investing
activities:
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(91,942)
|
|
|
(97,181)
|
|
Acquisitions and
other investing activities
|
|
(153,988)
|
|
|
(289,353)
|
|
Net cash used in
investing activities
|
|
(245,930)
|
|
|
(386,534)
|
|
Financing
activities:
|
|
|
|
|
Proceeds from
debt
|
|
3,406,975
|
|
|
3,420,000
|
|
Payments on
debt
|
|
(3,710,934)
|
|
|
(3,150,000)
|
|
Share-based awards
exercised
|
|
(5,860)
|
|
|
(3,289)
|
|
Dividends
paid
|
|
(310,310)
|
|
|
(296,517)
|
|
Purchases of
stock
|
|
(1,918)
|
|
|
(171,884)
|
|
Net cash used in
financing activities
|
|
(622,047)
|
|
|
(201,690)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(13,343)
|
|
|
13,070
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
44,206
|
|
|
(32,797)
|
|
Cash and cash
equivalents at beginning of period
|
|
314,899
|
|
|
242,879
|
|
Cash and cash
equivalents at end of period
|
|
$
|
359,105
|
|
|
$
|
210,082
|
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
RECONCILIATION OF
GAAP NET INCOME TO ADJUSTED NET INCOME
(UNAUDITED)
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
(in thousands, except
per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
GAAP net
income
|
|
$
|
220,227
|
|
|
$
|
158,442
|
|
|
$
|
623,775
|
|
|
$
|
508,574
|
|
Diluted net income
per common share
|
|
$
|
1.49
|
|
|
$
|
1.08
|
|
|
$
|
4.23
|
|
|
$
|
3.44
|
|
|
|
|
|
|
|
|
|
|
Add after-tax
adjustments:
|
|
|
|
|
|
|
|
|
Transaction and other
costs
|
|
6,453
|
|
|
11,584
|
|
|
22,918
|
|
|
11,585
|
|
Termination
fee
|
|
(9,045)
|
|
|
—
|
|
|
(9,045)
|
|
|
—
|
|
Adjusted net
income
|
|
$
|
217,635
|
|
|
$
|
170,026
|
|
|
$
|
637,648
|
|
|
$
|
520,159
|
|
Adjusted diluted net
income per common share
|
|
$
|
1.48
|
|
|
$
|
1.15
|
|
|
$
|
4.33
|
|
|
$
|
3.52
|
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
RECONCILIATION OF
2018 FORECASTED GAAP NET INCOME TO FORECASTED ADJUSTED
NET INCOME
(UNAUDITED)
|
|
|
(in thousands, except
per share data)
|
|
Low End
|
|
High End
|
Forecasted GAAP net
income
|
|
$
|
810,500
|
|
|
$
|
825,500
|
|
Forecasted diluted
net income per common share
|
|
$
|
5.50
|
|
|
$
|
5.60
|
|
|
|
|
|
|
Add forecasted
after-tax adjustments:
|
|
|
|
|
Forecasted transaction
and other costs, net of termination fee
|
|
13,873
|
|
|
13,873
|
|
Forecasted adjusted
net income
|
|
$
|
824,373
|
|
|
$
|
839,373
|
|
Forecasted adjusted
diluted net income per common share
|
|
$
|
5.60
|
|
|
$
|
5.70
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/genuine-parts-company-reports-sales-and-earnings-for-the-third-quarter-ended-september-30-2018-300733595.html
SOURCE Genuine Parts Company