ATLANTA, Oct. 17, 2019 /PRNewswire/ -- Genuine Parts
Company (NYSE: GPC) announced today sales and earnings for the
third quarter and nine months ended September 30, 2019.
Sales for the third quarter ended September 30, 2019 were a record $5.0 billion, a 6.2% increase compared to
$4.7 billion for the same period in
2018. Total sales for the third quarter included the contribution
of 1.2% comparable growth and 6.7% from acquisitions, offset by a
1.0% negative impact from foreign currency translation and 0.7% due
primarily to the sale of Grupo Auto Todo in the first quarter of
2019. Net income for the third quarter was $227.5 million and earnings per share on a
diluted basis were $1.56. Before the
impact of certain transaction costs and other income primarily
related to the acquisition of Inenco Group (Inenco) and the sale of
EIS, Inc. (EIS), the Electrical Specialties Group of Motion
Industries, adjusted net income was $219.0
million, or $1.50 per diluted
share.
Third quarter sales for the Automotive Parts Group were up 5.3%,
including a 1.8% comparable sales increase, a 6.5% benefit from
acquisitions and an unfavorable foreign currency translation of
1.8%. In addition, automotive sales were impacted by 1.2% due
primarily to the sale of Grupo Auto Todo. Sales for the Industrial
Parts Group were up 9.9%, including a 0.9% comparable sales
increase and 9.0% from acquisitions. Sales for the Business
Products Group were down 0.9%, consisting primarily of the change
in comparable sales growth.
Paul Donahue, Chairman and Chief
Executive Officer, commented, "Our third quarter results were
highlighted by several accomplishments, including our achieving the
$5 billion sales mark for the first
time in the history of the Company. In addition, we were pleased to
report positive comparable sales in our U.S., Canadian and
Australasian automotive businesses as well as our Industrial
operations, and we further improved our gross margin. This
translated to operating margin expansion in the Industrial and
Business Products segments, an improved overall margin performance
and strong cash flows for the quarter."
Mr. Donahue added, "Our team was also active executing on our
strategy to further optimize our portfolio. We closed on the Inenco
industrial acquisition and the Sparesbox ecommerce investment on
July 1st, and we divested of Motion's
Electrical Specialties Group on September
30th. We also made significant progress on our action plans
to accelerate our ongoing cost savings efforts and develop expense
reduction initiatives designed to more effectively address our cost
structure, drive meaningful savings and deliver incremental
value."
Sales for the nine months ended September
30, 2019 were $14.7 billion, a
3.9% increase compared to $14.1
billion for the same period in 2018. Net income for the nine
months was $612.2 million and
earnings per share on a diluted basis were $4.18. Before transaction costs and other income,
adjusted net income was $636.5
million, or $4.34 per diluted
share, for the nine months.
Mr. Donahue concluded, "We were pleased to perform in-line with
our expectations for the quarter and are committed to our growth
strategy and cost savings initiatives over the near and longer
terms. We believe our focus in these areas will serve to deliver
improved results and create significant long-term value for our
shareholders."
2019 Outlook
In consideration of our results thus far in 2019, as well as the
impact of the sale of EIS on September 30,
2019, the Company now expects sales to increase
approximately 3.5%. This updated sales outlook represents a change
from the Company's previous guidance for a 4.5% to 5.5% sales
increase.
The Company expects diluted earnings per share to range from
$5.44 to $5.52 and is updating its outlook for adjusted
diluted earnings per share, which excludes any nine month and
future transaction and other costs and income, to $5.60 to $5.68.
This is a change from the Company's prior guidance of $5.65 to $5.75 and
is primarily due to the sale of EIS. 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 believes that the presentation of adjusted net
income and adjusted net income per common share, which are not
calculated in accordance with GAAP, when considered together with
the corresponding GAAP financial measures and the reconciliations
to those measures, provide meaningful supplemental information to
both management and investors that is indicative of the Company's
core operations. The Company considers these metrics useful to
investors because they provide greater transparency into
management's view and assessment of the Company's ongoing operating
performance by removing items management believes are not
representative of our continuing operations and may distort our
longer-term operating trends. We believe these measures to be
useful to enhance the comparability of our results from period to
period and with our competitors, as well as to show ongoing results
from operations distinct from items that are infrequent or not
associated with the Company's core operations. 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 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 13694686. A replay will also be available on the
Company's website or at 844-512-2921, conference ID 13694686, two
hours after the completion of the call until 12:00 a.m. Eastern time on November 1, 2019.
Forward Looking Statements
Some statements in this press release, 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 businesses
into the Company, including the challenges associated with the
integration of processes and systems 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 the
unpredictability of additional 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 filed with 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, Poland, the
Netherlands and Belgium.
The Company also distributes industrial replacement parts in the
U.S., Canada, Mexico and Australasia through its Industrial
Parts Group. S.P. Richards Company, the Business Products Group,
distributes a variety of business products in the U.S. and in
Canada. Further information is
available at www.genpt.com.
GENUINE PARTS COMPANY
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(UNAUDITED)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in thousands, except
per share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales
|
|
$
|
5,015,023
|
|
$
|
4,722,922
|
|
$
|
14,686,116
|
|
$
|
14,131,281
|
Cost of goods
sold
|
|
3,390,597
|
|
3,238,687
|
|
9,954,941
|
|
9,689,653
|
Gross
profit
|
|
1,624,426
|
|
1,484,235
|
|
4,731,175
|
|
4,441,628
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
administrative and other expenses
|
|
1,269,893
|
|
1,119,266
|
|
3,684,026
|
|
3,401,254
|
Depreciation and
amortization
|
|
68,922
|
|
61,082
|
|
197,053
|
|
177,896
|
Provision for
doubtful accounts
|
|
1,693
|
|
4,939
|
|
11,624
|
|
11,306
|
Total operating
expenses
|
|
1,340,508
|
|
1,185,287
|
|
3,892,703
|
|
3,590,456
|
Non-operating
(income) expenses:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
26,485
|
|
25,084
|
|
73,664
|
|
75,669
|
Other
|
|
(47,100)
|
|
(17,871)
|
|
(53,366)
|
|
(45,822)
|
Total non-operating
(income) expenses
|
|
(20,615)
|
|
7,213
|
|
20,298
|
|
29,847
|
Income before income
taxes
|
|
304,533
|
|
291,735
|
|
818,174
|
|
821,325
|
Income
taxes
|
|
77,046
|
|
71,508
|
|
206,007
|
|
197,550
|
Net income
|
|
$
|
227,487
|
|
$
|
220,227
|
|
$
|
612,167
|
|
$
|
623,775
|
Basic net income per
common share
|
|
$
|
1.56
|
|
$
|
1.50
|
|
$
|
4.20
|
|
$
|
4.25
|
Diluted net income
per common share
|
|
$
|
1.56
|
|
$
|
1.49
|
|
$
|
4.18
|
|
$
|
4.23
|
Dividends declared
per common share
|
|
$
|
.7625
|
|
$
|
.7200
|
|
$
|
2.2875
|
|
$
|
2.1600
|
Weighted average
common shares outstanding
|
|
145,572
|
|
146,763
|
|
145,875
|
|
146,746
|
Dilutive effect of
stock options and non-vested restricted stock awards
|
|
617
|
|
690
|
|
654
|
|
574
|
Weighted average
common shares outstanding – assuming dilution
|
|
146,189
|
|
147,453
|
|
146,529
|
|
147,320
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
|
SEGMENT
INFORMATION
|
(UNAUDITED)
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales:
|
|
|
|
|
|
|
|
|
Automotive
|
|
$
|
2,790,607
|
|
$
|
2,649,716
|
|
$
|
8,187,760
|
|
$
|
7,950,176
|
Industrial
|
|
1,732,831
|
|
1,577,329
|
|
5,049,975
|
|
4,727,938
|
Business
products
|
|
491,585
|
|
495,877
|
|
1,448,381
|
|
1,453,167
|
Total net
sales
|
|
$
|
5,015,023
|
|
$
|
4,722,922
|
|
$
|
14,686,116
|
|
$
|
14,131,281
|
Operating
profit:
|
|
|
|
|
|
|
|
|
Automotive
|
|
$
|
222,100
|
|
$
|
226,742
|
|
$
|
629,713
|
|
$
|
655,059
|
Industrial
|
|
137,525
|
|
119,153
|
|
394,887
|
|
356,535
|
Business
products
|
|
21,611
|
|
19,846
|
|
63,727
|
|
62,869
|
Total operating
profit
|
|
381,236
|
|
365,741
|
|
1,088,327
|
|
1,074,463
|
Interest expense,
net
|
|
(24,770)
|
|
(21,881)
|
|
(70,313)
|
|
(70,713)
|
Intangible asset
amortization
|
|
(26,224)
|
|
(23,593)
|
|
(72,725)
|
|
(66,802)
|
Corporate expense
(1)
|
|
(25,709)
|
|
(28,532)
|
|
(127,115)
|
|
(115,623)
|
Income before income
taxes
|
|
$
|
304,533
|
|
$
|
291,735
|
|
$
|
818,174
|
|
$
|
821,325
|
|
|
(1)
|
Includes $12,413 of
income and $25,809 of expense for the three and nine months ended
September 30, 2019, respectively, in certain transaction and other
costs related to acquisitions and dispositions. Also includes the
realized currency losses incurred on the March 7, 2019 sale of
Grupo Auto Todo and the September 30, 2019 sale of EIS, net of a
gain from remeasuring the Company's preexisting 35% equity
investment to fair value upon acquiring the remaining equity of
Inenco on July 1, 2019.
|
|
|
|
Includes $3,104 of
income and $19,010 of expense for the three and nine months ended
September 30, 2018, respectively, in certain transaction and other
costs related to the acquisition of Alliance Automotive Group and
the attempted Business Products Group spin-off, net of a $12,000
termination fee received in the third quarter of 2018.
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED)
|
|
(in thousands, except
share and per share data)
|
|
September 30,
2019
|
|
September 30,
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
451,275
|
|
$
|
359,105
|
Trade accounts
receivable, less allowance for doubtful accounts (2019 – $32,374;
2018 – $23,584)
|
|
2,739,971
|
|
2,655,888
|
Merchandise
inventories, net
|
|
3,718,307
|
|
3,536,503
|
Prepaid expenses and
other current assets
|
|
1,149,118
|
|
998,999
|
Total current
assets
|
|
8,058,671
|
|
7,550,495
|
Goodwill
|
|
2,278,066
|
|
2,097,990
|
Other intangible
assets, less accumulated amortization
|
|
1,523,656
|
|
1,420,480
|
Deferred tax
assets
|
|
30,301
|
|
22,898
|
Property, plant and
equipment, less accumulated depreciation (2019 – $1,341,995; 2018 –
$1,177,952)
|
|
1,118,912
|
|
937,740
|
Operating lease
assets
|
|
1,048,462
|
|
—
|
Other
assets
|
|
455,122
|
|
627,516
|
Total
assets
|
|
$
|
14,513,190
|
|
$
|
12,657,119
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
|
4,195,869
|
|
$
|
4,036,006
|
Current portion of
debt
|
|
622,132
|
|
450,493
|
Dividends
payable
|
|
110,784
|
|
105,673
|
Other current
liabilities
|
|
1,444,028
|
|
1,069,017
|
Total current
liabilities
|
|
6,372,813
|
|
5,661,189
|
Long-term
debt
|
|
2,795,878
|
|
2,463,452
|
Operating lease
liabilities
|
|
797,166
|
|
—
|
Pension and other
post–retirement benefit liabilities
|
|
202,188
|
|
200,558
|
Deferred tax
liabilities
|
|
236,064
|
|
188,467
|
Other long-term
liabilities
|
|
444,344
|
|
480,374
|
Equity:
|
|
|
|
|
Preferred stock, par
value – $1 per share; authorized – 10,000,000 shares; none
issued
|
|
—
|
|
—
|
Common stock, par
value – $1 per share; authorized – 450,000,000 shares; issued and
outstanding – 2019 – 145,293,115 shares; 2018 – 146,759,273
shares
|
|
145,293
|
|
146,759
|
Additional paid-in
capital
|
|
90,560
|
|
77,558
|
Retained
earnings
|
|
4,674,918
|
|
4,349,014
|
Accumulated other
comprehensive loss
|
|
(1,268,580)
|
|
(962,277)
|
Total parent
equity
|
|
3,642,191
|
|
3,611,054
|
Noncontrolling
interests in subsidiaries
|
|
22,546
|
|
52,025
|
Total
equity
|
|
3,664,737
|
|
3,663,079
|
Total liabilities and
equity
|
|
$
|
14,513,190
|
|
$
|
12,657,119
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
|
2019
|
|
2018
|
Operating
activities:
|
|
|
|
|
Net income
|
|
$
|
612,167
|
|
$
|
623,775
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
197,053
|
|
177,896
|
Share-based
compensation
|
|
19,820
|
|
15,417
|
Excess tax benefits
from share-based compensation
|
|
(4,054)
|
|
(3,079)
|
Other non-operating
activities
|
|
(22,329)
|
|
—
|
Changes in operating
assets and liabilities
|
|
(57,445)
|
|
111,517
|
Net cash provided by
operating activities
|
|
745,212
|
|
925,526
|
Investing
activities:
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(182,612)
|
|
(91,942)
|
Proceeds from
divestitures of businesses
|
|
416,784
|
|
—
|
Acquisitions of
businesses and other investing activities
|
|
(625,565)
|
|
(153,988)
|
Net cash used in
investing activities
|
|
(391,393)
|
|
(245,930)
|
Financing
activities:
|
|
|
|
|
Proceeds from
debt
|
|
3,928,716
|
|
3,406,975
|
Payments on
debt
|
|
(3,749,509)
|
|
(3,710,934)
|
Share-based awards
exercised
|
|
(7,495)
|
|
(5,860)
|
Dividends
paid
|
|
(328,106)
|
|
(310,310)
|
Purchases of
stock
|
|
(73,052)
|
|
(1,918)
|
Net cash used in
financing activities
|
|
(229,446)
|
|
(622,047)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(6,645)
|
|
(13,343)
|
Net increase in cash
and cash equivalents
|
|
117,728
|
|
44,206
|
Cash and cash
equivalents at beginning of period
|
|
333,547
|
|
314,899
|
Cash and cash
equivalents at end of period
|
|
$
|
451,275
|
|
$
|
359,105
|
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)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
GAAP net
income
|
|
$
|
227,487
|
|
$
|
220,227
|
|
$
|
612,167
|
|
$
|
623,775
|
Diluted net income
per common share
|
|
$
|
1.56
|
|
$
|
1.49
|
|
$
|
4.18
|
|
$
|
4.23
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Realized currency
losses
|
|
$
|
7,664
|
|
$
|
—
|
|
$
|
34,701
|
|
$
|
—
|
Termination
fee
|
|
—
|
|
(12,000)
|
|
—
|
|
(12,000)
|
Gain on equity
investment
|
|
(38,663)
|
|
—
|
|
(38,663)
|
|
—
|
Transaction and other
costs
|
|
18,586
|
|
8,896
|
|
29,771
|
|
31,010
|
Total
adjustments
|
|
$
|
(12,413)
|
|
$
|
(3,104)
|
|
$
|
25,809
|
|
$
|
19,010
|
Tax impact of
adjustments
|
|
3,973
|
|
512
|
|
(1,450)
|
|
(5,137)
|
Adjusted net
income
|
|
$
|
219,047
|
|
$
|
217,635
|
|
$
|
636,526
|
|
$
|
637,648
|
Adjusted diluted net
income per common share
|
|
$
|
1.50
|
|
$
|
1.48
|
|
$
|
4.34
|
|
$
|
4.33
|
|
The table below
clarifies where the items adjusted above are presented in the
consolidated statements of income.
|
|
|
|
Three Months Ended
September
30,
|
|
Nine Months Ended
September
30,
|
(in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Line item:
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
$
|
4,521
|
|
$
|
—
|
|
$
|
7,481
|
|
$
|
5,779
|
Selling,
administrative and other expenses
|
|
15,879
|
|
(3,104)
|
|
24,103
|
|
13,231
|
Non-operating
(income): Other
|
|
(32,813)
|
|
—
|
|
(5,775)
|
|
—
|
Total
adjustments
|
|
$
|
(12,413)
|
|
$
|
(3,104)
|
|
$
|
25,809
|
|
$
|
19,010
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
|
CHANGE IN NET SALES
SUMMARY
|
(UNAUDITED)
|
|
|
|
Three Months Ended
September 30, 2019
|
|
|
Comparable
Sales
|
|
Acquisitions
|
|
Divestitures
and Other
|
|
Foreign
Currency
|
|
Total Net
Sales
|
Automotive
|
|
1.8
|
%
|
|
6.5
|
%
|
|
(1.2)
|
%
|
|
(1.8)
|
%
|
|
5.3
|
%
|
Industrial
|
|
0.9
|
%
|
|
9.0
|
%
|
|
—
|
%
|
|
—
|
%
|
|
9.9
|
%
|
Business
Products
|
|
(0.9)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.9)
|
%
|
Total Net
Sales
|
|
1.2
|
%
|
|
6.7
|
%
|
|
(0.7)
|
%
|
|
(1.0)
|
%
|
|
6.2
|
%
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2019
|
|
|
Comparable
Sales
|
|
Acquisitions
|
|
Divestitures and
Other
|
|
Foreign
Currency
|
|
Total Net
Sales
|
Automotive
|
|
2.1
|
%
|
|
4.3
|
%
|
|
(0.8)
|
%
|
|
(2.6)
|
%
|
|
3.0
|
%
|
Industrial
|
|
2.7
|
%
|
|
4.3
|
%
|
|
—
|
%
|
|
(0.2)
|
%
|
|
6.8
|
%
|
Business
Products
|
|
(0.2)
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.1)
|
%
|
|
(0.3)
|
%
|
Total Net
Sales
|
|
2.1
|
%
|
|
3.9
|
%
|
|
(0.6)
|
%
|
|
(1.5)
|
%
|
|
3.9
|
%
|
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
|
|
$
|
796,500
|
|
$
|
809,000
|
Forecasted diluted
net income per common share
|
|
$
|
5.44
|
|
$
|
5.52
|
|
|
|
|
|
Add forecasted
after-tax adjustments:
|
|
|
|
|
Forecasted transaction
and other costs
|
|
24,359
|
|
24,359
|
Forecasted adjusted
net income
|
|
$
|
820,859
|
|
$
|
833,359
|
Forecasted adjusted
diluted net income per common share
|
|
$
|
5.60
|
|
$
|
5.68
|
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SOURCE Genuine Parts Company