Jerry W. Nix, Executive Vice President — Finance (770) 612-2048
GENUINE PARTS COMPANY REPORTS RECORD SALES AND EARNINGS FOR THIRD QUARTER AND NINE MONTHS OF 2005
Atlanta, Georgia, October 18, 2005 — Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the third quarter and nine months ended September 30, 2005. Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.6 billion were up 9% compared to the third quarter of 2004. Net income was $110.9 million, an increase of 13%, compared to $97.9 million for the third quarter of 2004. On a per share diluted basis, net income was 63 cents, up 12.5% compared to 56 cents for the third quarter last year.
For the nine months ended September 30, 2005, sales totaled $7.4 billion, up 8% compared to the same period in 2004. Net income for the nine months was $328.4 million, an increase of 10% over $299.2 million recorded in the previous year. Earnings per share on a diluted basis were $1.87, up 9% compared to $1.71 for the same period last year.
Mr. Gallagher stated: “The third quarter was our strongest quarter thus far in 2005, and it continues the positive growth pattern we have experienced in each of our business segments dating back to early 2004.
Motion Industries, our Industrial Group, grew sales by 12%, the sixth consecutive quarter of double-digit revenue increases for this group. S.P. Richards, our Office Products Group, had an 8% increase in sales, and this follows a 6% increase in the first quarter and an 8% increase in the second quarter. We are encouraged by another period of steady growth for this group. The Automotive Group produced its strongest quarter of the year, with sales up 8% in the third quarter after reporting increases of 4% and 6% in the first and second quarters, respectively. EIS, our Electrical Group, also contributed to our growth this quarter, with sales up 2%. Excluding the impact of the sale of their Circuit Supply division earlier this year, the on-going operations at EIS improved 10% in the period.”
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Mr. Gallagher further commented: “Our financial position has strengthened in 2005 through improvements in working capital and strong earnings growth. The balance sheet at September 30, 2005 remains in excellent condition and we continue to generate strong cash flows.”
Mr. Gallagher concluded: “As we look ahead to the fourth quarter, we continue to maintain a positive outlook on the growth opportunities for our businesses. Our initiatives in the Automotive Group are proving successful and the market conditions in the aftermarket remain favorable for us. In addition, the manufacturing indices for Industrial and Electrical/Electronic reflect continued expansion and the employment numbers for the service sector fit well with our initiatives in the Office Products Group. So, we feel good about the growth potential of the North American markets we serve and we will continue executing our strategies and initiatives to capitalize on this potential and finish the year strong.”
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 1036960. A replay will also be available at 800-642-1687, conference ID 1036960, until 12:00 a.m. ET on November 1, 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 September 30,
Nine Months Ended September 30,
2005
2004
2005
2004
(Unaudited)
(in thousands, except per share data)
Net sales
$
2,555,503
$
2,349,283
$
7,373,361
$
6,843,960
Cost of goods sold
1,777,001
1,649,890
5,097,122
4,764,591
778,502
699,393
2,276,239
2,079,369
Selling, administrative & other expenses
598,403
541,675
1,744,092
1,595,321
Income before income taxes
180,099
157,718
532,147
484,048
Income taxes
69,223
59,825
203,706
184,810
Net income
$
110,876
$
97,893
$
328,441
$
299,238
Basic net income per common share
$
.64
$
.56
$
1.88
$
1.71
Diluted net income per common share
$
.63
$
.56
$
1.87
$
1.71
Weighted average common shares outstanding
173,929
174,792
174,320
174,648
Dilutive effect of stock options and
non-vested restricted stock awards
956
1,021
968
842
Weighted average common shares outstanding –
174,885
175,813
175,288
175,490
assuming dilution
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GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended Sept. 30,
Nine Months Ended Sept. 30,
2005
2004
2005
2004
(Unaudited)
(in thousands, except ratio analysis)
Net sales:
Automotive
$
1,329,083
$
1,229,943
$
3,792,821
$
3,575,189
Industrial
711,201
636,693
2,100,532
1,874,599
Office Products
437,799
406,101
1,250,321
1,165,245
Electrical/Electronic Materials
87,041
85,357
255,078
254,263
Other (1)
(9,621
)
(8,811
)
(25,391
)
(25,336
)
Total net sales
$
2,555,503
$
2,349,283
$
7,373,361
$
6,843,960
Operating profit:
Automotive
$
108,551
$
101,942
$
314,638
$
304,695
Industrial
53,680
40,851
152,288
125,149
Office Products
33,638
32,203
115,276
108,651
Electrical/Electronic Materials
4,694
3,780
12,716
11,300
Total operating profit
200,563
178,776
594,918
549,795
Interest expense
(8,159
)
(9,307
)
(23,369
)
(29,154
)
Other, net
(12,305
)
(11,751
)
(39,402
)
(36,593
)
Income before income taxes
$
180,099
$
157,718
$
532,147
$
484,048
Capital expenditures
$
18,986
$
20,979
$
59,310
$
46,550
Depreciation and amortization
$
17,169
$
16,584
$
51,429
$
49,775
Current ratio
2.9/1
2.9/1
Total debt to total capitalization
15.9
%
20.2
%
(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
September 30,
September 30,
2005
2004
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
339,505
$
284,704
Trade accounts receivable
1,227,836
1,146,965
Inventories
2,157,824
2,163,049
Prepaid expenses and other current assets
167,958
141,848
TOTAL CURRENT ASSETS
3,893,123
3,736,566
Goodwill and other intangible assets
62,478
57,761
Other assets
430,400
339,077
Total property, plant and equipment, net
383,292
339,397
TOTAL ASSETS
$
4,769,293
$
4,472,801
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$
1,041,335
$
861,557
Current portion of long-term debt and other borrowings
908
125,841
Income taxes payable
50,994
60,869
Dividends payable
54,357
52,425
Other current liabilities
183,822
167,426
TOTAL CURRENT LIABILITIES
1,331,416
1,268,118
Long-term debt
500,000
500,000
Other long-term liabilities
109,888
60,739
Deferred income taxes
121,160
113,259
Minority interests in subsidiaries
56,362
52,091
Common stock
173,522
174,630
Retained earnings and other
2,476,945
2,303,964
TOTAL SHAREHOLDERS’ EQUITY
2,650,467
2,478,594
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
4,769,293
$
4,472,801
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
Nine Months Ended September 30,
2005
2004
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
328,441
$
299,238
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
51,429
49,775
Other
6,706
3,337
Changes in operating assets and liabilities
107,251
117,857
NET CASH PROVIDED BY OPERATING ACTIVITIES
493,827
470,207
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
(59,310
)
(46,550
)
Other
11,428
—
NET CASH USED IN INVESTING ACTIVITIES
(47,882
)
(46,550
)
FINANCING ACTIVITIES:
Net payments on credit facilities
(59
)
(9,559
)
Stock options exercised
16,021
31,649
Dividends paid
(161,536
)
(156,150
)
Purchase of stock
(95,806
)
(20,286
)
NET CASH USED IN FINANCING ACTIVITIES
(241,380
)
(154,346
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
204,565
269,311
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
134,940
15,393
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
339,505
$
284,704
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