Jerry W. Nix, Executive Vice President — Finance (770) 612-2048
GENUINE PARTS COMPANY REPORTS RECORD SALES AND EARNINGS FOR SECOND QUARTER AND FIRST HALF OF 2005
Atlanta, Georgia, July 19, 2005 — Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the second quarter and six months ended June 30, 2005. Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.5 billion were up 8% compared to the second quarter of 2004. Net income was $111.0 million, an increase of 10%, compared to $101.1 million for the second quarter of 2004. On a per share diluted basis, net income was 63 cents, up 9% compared to 58 cents for the second quarter last year.
For the six months ended June 30, 2005, sales totaled $4.8 billion, up 7% compared to the same period in 2004. Net income for the six months was $217.6 million, an increase of 8% over $201.3 million recorded in the previous year. Earnings per share on a diluted basis were $1.24, up 8% compared to $1.15 for the same period last year.
Mr. Gallagher stated: “Our overall results reflect the positive direction established in each of our businesses over the past eighteen months and all four of our business segments continue to contribute to the Company’s success.
The strongest sales performance in the quarter came from Motion Industries, our Industrial Group. They were up 12% and business conditions remain favorable for the industrial operations. S.P. Richards, our Office Products Group, reported another period of consistent results with sales up 8%. The Automotive Group produced a solid 6% increase and EIS, our Electrical Group, was down 2% in the quarter. The EIS results reflect the impact of the sale of certain Electronic operations in the first quarter and the ongoing EIS business was actually up 5% in the period.”
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Mr. Gallagher further commented: “Our balance sheet remains in excellent condition and we continue to generate strong cash flows. We expect our working capital initiatives and earnings growth to further strengthen our financial position in the periods ahead.”
Mr. Gallagher concluded: “We continue to maintain a positive outlook for each of our businesses for 2005. The demographics for the Automotive Aftermarket appear positive for some time to come, the manufacturing indices for Industrial and Electrical/Electronic remain strong and the increasing employment figures bode well for the Office Products Group. Our strategy is to continue to consistently execute our growth initiatives, in each of our businesses, in order to capitalize on these favorable market conditions. At the same time, we will be maintaining our expense control and asset management initiatives to meet our Sales and Earnings targets for 2005.”
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 by dialing 877-422-4780, conference ID 7252241. A replay will also be available at 800-642-1687, conference ID 7252241, until 12:00 a.m. EDT on August 2, 2005.
Forward Looking Statements
Some statements in this release constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that its forward-looking statements involve risks and uncertainties. The Company undertakes no duty to update its forward-looking statements, which reflect the Company’s beliefs, expectations, and plans as of the present. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors include, but are not limited to, changes in general economic conditions, the growth rate of the market for the Company’s products and services, the ability to maintain favorable supplier arrangements and relationships, competitive product and pricing pressures, including internet-related initiatives, the effectiveness of the Company’s promotional, marketing and advertising programs, changes in laws and regulations, including changes in accounting and taxation guidance, the uncertainties of litigation, as well as other risks and uncertainties discussed from time to time in the Company’s filings with the Securities and Exchange Commission.
About Genuine Parts Company
Genuine Parts Company is a distributor of automotive replacement parts in the U.S., Canada and Mexico. The Company also distributes industrial replacement parts in the U.S. and Canada 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.
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GENUINE PARTS COMPANY and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
(Unaudited)
(in thousands, except per share data)
Net sales
$
2,475,657
$
2,297,686
$
4,817,858
$
4,494,677
Cost of goods sold
1,714,400
1,604,621
3,320,121
3,114,701
761,257
693,065
1,497,737
1,379,976
Selling, administrative & other expenses
581,419
529,132
1,145,689
1,053,646
Income before income taxes
179,838
163,933
352,048
326,330
Income taxes
68,871
62,787
134,483
124,985
Net income
$
110,967
$
101,146
$
217,565
$
201,345
Basic net income per common share
$
.64
$
.58
$
1.25
$
1.15
Diluted net income per common share
$
.63
$
.58
$
1.24
$
1.15
Weighted average common shares outstanding
174,270
174,829
174,519
174,575
Dilutive effect of stock options and
non-vested restricted stock awards
962
815
971
694
Weighted average common shares outstanding –
175,232
175,644
175,490
175,269
assuming dilution
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GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
(Unaudited)
(in thousands, except ratio analysis)
Net sales:
Automotive
$
1,294,783
$
1,218,695
$
2,463,738
$
2,345,246
Industrial
702,591
629,402
1,389,331
1,237,906
Office Products
401,593
372,354
812,522
759,144
Electrical/Electronic Materials
83,748
85,827
168,037
168,906
Other (1)
(7,058
)
(8,592
)
(15,770
)
(16,525
)
Total net sales
$
2,475,657
$
2,297,686
$
4,817,858
$
4,494,677
Operating profit:
Automotive
$
110,780
$
109,492
$
206,087
$
202,753
Industrial
50,355
38,179
98,608
84,298
Office Products
35,611
32,694
81,638
76,448
Electrical/Electronic Materials
4,713
4,300
8,022
7,520
Total operating profit
201,459
184,665
394,355
371,019
Interest expense
(7,263
)
(9,870
)
(15,210
)
(19,847
)
Other, net
(14,358
)
(10,862
)
(27,097
)
(24,842
)
Income before income taxes
$
179,838
$
163,933
$
352,048
$
326,330
Capital expenditures
$
19,556
$
13,514
$
40,324
$
25,571
Depreciation and amortization
$
17,189
$
16,998
$
34,260
$
33,191
Current ratio
3.1/1
Total debt to total capitalization
16.2
%
(1)
Represents the net effect of discounts, incentives and freight billed reported as a component of net sales.
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
June 30,
2005
2004
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
260,538
$
127,732
Trade accounts receivable
1,225,674
1,152,458
Inventories
2,125,366
2,139,207
Prepaid expenses and other current assets
152,571
131,485
TOTAL CURRENT ASSETS
3,764,149
3,550,882
Goodwill and other intangible assets
62,615
57,850
Other assets
403,335
346,116
Total property, plant and equipment, net
380,692
332,863
TOTAL ASSETS
$
4,610,791
$
4,287,711
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
974,846
$
779,492
Current portion of long-term debt and other borrowings
929
127,172
Income taxes payable
43,606
45,386
Dividends payable
54,450
52,483
Other current liabilities
154,522
137,427
TOTAL CURRENT LIABILITIES
1,228,353
1,141,960
Long-term debt
500,000
500,000
Other long-term liabilities
110,954
55,162
Deferred income taxes
116,809
113,254
Minority interests in subsidiaries
55,243
51,514
Common stock
174,061
174,993
Retained earnings and other
2,425,371
2,250,828
TOTAL SHAREHOLDERS’ EQUITY
2,599,432
2,425,821
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
4,610,791
$
4,287,711
Note: Certain balance sheet reclassifications have been made to prior year amounts to conform to current year presentation.
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2005
2004
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
217,565
$
201,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
34,260
33,191
Other
2,188
1,656
Changes in operating assets and liabilities
63,214
1,483
NET CASH PROVIDED BY OPERATING ACTIVITIES
317,227
237,675
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
(40,324
)
(25,571
)
Other
6,271
—
NET CASH USED IN INVESTING ACTIVITIES
(34,053
)
(25,571
)
FINANCING ACTIVITIES:
Net payments on credit facilities
(37
)
(21,900
)
Stock options exercised
11,569
28,918
Dividends paid
(107,125
)
(103,667
)
Purchase of stock
(61,983
)
(3,116
)
NET CASH USED IN FINANCING ACTIVITIES
(157,576
)
(99,765
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
125,598
112,339
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
134,940
15,393
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
260,538
$
127,732
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