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