Jerry W. Nix, Vice Chairman and CFO (770) 612-2048
GENUINE PARTS COMPANY REPORTS RECORD FIRST QUARTER RESULTS
Atlanta, Georgia, April 17, 2006 — Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the first quarter ended March 31, 2006. Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.6 billion were up 9% compared to the first quarter of 2005. Net income for the quarter was $113.9 million, an increase of 7% over $106.6 million recorded in the same period of the previous year. Earnings per share on a diluted basis were 66 cents, up 8% compared to 61 cents for the first quarter last year.
Mr. Gallagher commented, “We are pleased to report good sales and earnings growth for the first quarter of 2006. As has been the pattern for the past few years, each of our four business segments contributed to our overall sales growth for the quarter. Motion Industries, our Industrial Group, grew sales by 12%. This follows double-digit sales increases in 2005 and 2004 and we anticipate another good year from our industrial operations. The Automotive Group reported a 5% sales increase for the quarter. Within this group, the core NAPA business was actually a bit stronger, posting a 7% sales increase. S.P. Richards, our Office Products Group, generated a 13% sales increase for the quarter and EIS, our Electrical Group, was up 13% also.”
Mr. Gallagher added, “The balance sheet at March 31, 2006 remains in excellent condition and we continue to strengthen our financial position through strong earnings growth and initiatives to improve working capital. The Company also continues to generate consistent and strong cash flows and our cash position is quite strong.”
Mr. Gallagher concluded, “We are encouraged by the opportunity to have another good year in 2006. The outlook for continued growth in each of our businesses remains positive. Favorable market conditions combined with the proper execution of our growth initiatives should enable us to produce another year of steady sales growth and, in turn, solid earnings results.”
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Conference Call
Genuine Parts Company will hold a conference call today at 2:00 p.m. Eastern time to discuss the results of the quarter and the future outlook. Interested parties may listen by dialing 877-422-4780, conference ID 7017461. A replay will also be available at 800-642-1687, conference ID 7017461, two hours after the completion of the conference call until 12:00 a.m. Eastern time on May 1, 2006.
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 time. 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 in Canada through its Motion Industries subsidiary. S. P. Richards Company, the Office Products Group, distributes product nationwide in the U.S. and in Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S. and in Canada and Mexico.
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
2006
2005
(Unaudited)
(in thousands, except per share data)
Net sales
$
2,553,552
$
2,342,201
Cost of goods sold
1,750,075
1,605,721
803,477
736,480
Selling, administrative & other expenses
618,982
564,270
Income before income taxes
184,495
172,210
Income taxes
70,570
65,612
Net income
$
113,925
$
106,598
Basic net income per common share
$
.66
$
.61
Diluted net income per common share
$
.66
$
.61
Weighted average common shares outstanding
172,773
174,772
Dilutive effect of stock options and non-vested restricted stock awards
912
1,264
Weighted average common shares outstanding – assuming dilution
173,685
176,036
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GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended March 31,
2006
2005
(Unaudited)
(in thousands, except ratio analysis)
Net sales:
Automotive
$
1,227,789
$
1,168,955
Industrial
771,227
686,740
Office Products
465,955
410,929
Electrical/Electronic Materials
95,469
84,289
Other (1)
(6,888
)
(8,712
)
Total net sales
$
2,553,552
$
2,342,201
Operating profit:
Automotive
$
95,856
$
95,307
Industrial
57,515
48,253
Office Products
47,696
46,027
Electrical/Electronic Materials
4,853
3,309
Total operating profit
205,920
192,896
Interest expense, net
(7,172
)
(7,947
)
Other, net
(14,253
)
(12,739
)
Income before income taxes
$
184,495
$
172,210
Capital expenditures
$
27,521
$
20,768
Depreciation and amortization
$
17,623
$
17,071
Current ratio
3.1/1
3.1/1
Total debt to total capitalization
15.5
%
16.3
%
(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
March 31,
March 31,
2006
2005
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
150,171
$
157,817
Trade accounts receivable
1,297,836
1,195,034
Merchandise inventories
2,184,823
2,149,814
Prepaid expenses and other current assets
198,591
186,837
TOTAL CURRENT ASSETS
3,831,421
3,689,502
Goodwill and other intangible assets
62,611
57,583
Other assets
520,930
404,300
Total property, plant and equipment, net
400,444
379,587
TOTAL ASSETS
$
4,815,406
$
4,530,972
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
954,276
$
878,640
Other borrowings
-0-
897
Income taxes payable
83,517
98,994
Dividends payable
58,288
54,630
Other current liabilities
153,757
147,165
TOTAL CURRENT LIABILITIES
1,249,838
1,180,326
Long-term debt
500,000
500,000
Other long-term liabilities
119,224
112,305
Deferred income taxes
156,814
116,689
Minority interests in subsidiaries
57,571
53,052
Common stock
172,678
174,450
Retained earnings and other
2,559,281
2,394,150
TOTAL SHAREHOLDERS’ EQUITY
2,731,959
2,568,600
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
4,815,406
$
4,530,972
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months
Ended March 31,
2006
2005
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
113,925
$
106,598
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
17,623
17,071
Other
2,017
2,525
Changes in operating assets and liabilities
(73,510
)
(9,983
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
60,055
116,211
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
(27,521
)
(20,768
)
Other
1,733
6,804
NET CASH USED IN INVESTING ACTIVITIES
(25,788
)
(13,964
)
FINANCING ACTIVITIES:
Net payments on credit facilities
(881
)
(71
)
Stock options exercised
3,209
4,162
Excess tax benefits from share-based compensation
1,349
-0-
Dividends paid
(54,141
)
(52,495
)
Purchase of stock
(22,543
)
(30,966
)
NET CASH USED IN FINANCING ACTIVITIES
(73,007
)
(79,370
)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(38,740
)
22,877
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
188,911
134,940
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
150,171
$
157,817
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