Jerry W. Nix, Vice Chairman and CFO (770) 612-2048
GENUINE PARTS COMPANY REPORTS RECORD SALES AND EARNINGS FOR SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2007
Atlanta, Georgia, July 19, 2007 — Genuine Parts Company (NYSE: GPC) reported record sales and earnings for the second quarter and six months ended June 30, 2007. Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.77 billion were up 4% compared to the second quarter of 2006. Net income for the quarter was $130.1 million, an increase of 8% over $120.7 million recorded in the same period of the previous year. Earnings per share on a diluted basis were 76 cents, up 9% compared to 70 cents for the second quarter last year.
For the six months ended June 30, 2007, sales totaled $5.42 billion, up 4% compared to the same period in 2006. Net income for the six months was $251.7 million, an increase of 7% over $234.6 million recorded in the previous year. Earnings per share on a diluted basis were $1.47, up 9% compared to $1.35 for the same period last year.
Mr. Gallagher stated, “We are pleased that all four of our business segments contributed to our revenue growth in the 2nd Quarter. Motion Industries, our Industrial Group, had the strongest performance, increasing sales by 9%. EIS, our Electrical Group, had solid results as they produced a 7% increase. The Industrial and Electrical Groups are performing well and with the current favorable conditions in each of these industries, we are encouraged by their prospects over the remainder of the year. The Automotive Group reported a 2% increase for the quarter and our Office Products Group was up 1%. Market conditions continued to be challenging for each of these businesses in the quarter but, through the combination of internal revenue initiatives and improving industry fundamentals, we anticipate a bit stronger growth in Automotive and Office Products over the 2nd half of the year.”
Mr. Gallagher added, “The balance sheet at June 30, 2007 remains in excellent condition and we continue to strengthen our financial position and generate steady and consistent cash flows. We have used cash in several key areas, such as the dividend and share repurchase program as well as investing in our businesses, to maximize the total return to shareholders.”
Mr. Gallagher concluded, “At mid-year 2007, we continue to be optimistic about our prospects for the remainder of the year. Each of our four businesses has initiatives in place to enable them to generate solid revenue increases in the months ahead.”
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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 by dialing 877-422-4780, conference ID 5258238. A replay will also be available at 800-642-1687, conference ID 5258238, two hours after the completion of the conference call until 11:59 p.m. Eastern time on July 26, 2007.
Forward Looking Statements
Some statements in this 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 our 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 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 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. You are advised, however, to review any further disclosures we make on related subjects in our Forms 10-Q and Form 8-K reports to the SEC.
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.
2
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,
Six Months Ended June 30,
2007
2006
2007
2006
(Unaudited)
(in thousands, except per share data)
Net sales
$
2,769,527
$
2,661,805
$
5,418,370
$
5,215,357
Cost of goods sold
1,899,942
1,836,623
3,716,841
3,586,698
869,585
825,182
1,701,529
1,628,659
Selling, administrative & other expenses
659,769
629,688
1,295,603
1,248,670
Income before income taxes
209,816
195,494
405,926
379,989
Income taxes
79,695
74,814
154,252
145,384
Net income
$
130,121
$
120,680
$
251,674
$
234,605
Basic net income per common share
$
.76
$
.70
$
1.48
$
1.36
Diluted net income per common share
$
.76
$
.70
$
1.47
$
1.35
Weighted average common shares outstanding
170,318
172,186
170,392
172,478
Dilutive effect of stock options and
non-vested restricted stock awards
1,062
893
1,039
925
Weighted average common shares outstanding –
assuming dilution
171,380
173,079
171,431
173,403
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GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
Six Months Ended June 30,
2007
2006
2007
2006
(Unaudited)
(in thousands, except ratio analysis)
Net sales:
Automotive
$
1,395,054
$
1,362,230
$
2,656,561
$
2,590,019
Industrial
839,652
773,553
1,673,044
1,544,780
Office Products
430,665
427,229
882,507
893,184
Electrical/Electronic Materials
110,820
104,021
217,553
199,490
Other (1)
(6,664
)
(5,228
)
(11,295
)
(12,116
)
Total net sales
$
2,769,527
$
2,661,805
$
5,418,370
$
5,215,357
Operating profit:
Automotive
$
114,830
$
113,399
$
210,667
$
209,255
Industrial
70,069
59,073
134,661
116,588
Office Products
37,652
38,523
85,869
86,219
Electrical/Electronic Materials
8,319
6,272
15,539
11,125
Total operating profit
230,870
217,267
446,736
423,187
Interest expense, net
(5,173
)
(6,415
)
(11,844
)
(13,587
)
Other, net
(15,881
)
(15,358
)
(28,966
)
(29,611
)
Income before income taxes
$
209,816
$
195,494
$
405,926
$
379,989
Capital expenditures
$
29,083
$
31,070
$
52,766
$
58,591
Depreciation and amortization
$
21,318
$
17,632
$
42,020
$
35,255
Current ratio
3.1/1
3.1/1
(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,
2007
2006
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
274,560
$
189,145
Trade accounts receivable, net
1,322,973
1,307,071
Merchandise inventories, net
2,223,066
2,162,405
Prepaid expenses and other current assets
219,688
192,477
TOTAL CURRENT ASSETS
4,040,287
3,851,098
Goodwill and other intangible assets, less accumulated amortization
61,960
62,504
Other assets
177,650
516,216
Net property, plant and equipment
445,179
416,135
TOTAL ASSETS
$
4,725,076
$
4,845,953
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
1,028,705
$
1,018,914
Income taxes payable
21,535
30,881
Dividends payable
62,195
58,104
Other current liabilities
172,903
148,024
TOTAL CURRENT LIABILITIES
1,285,338
1,255,923
Long-term debt
500,000
500,000
Other long-term liabilities
179,056
116,765
Deferred income taxes
-0-
159,304
Minority interests in subsidiaries
63,153
58,635
Common stock
169,930
171,308
Retained earnings and other
2,527,599
2,584,018
TOTAL SHAREHOLDERS’ EQUITY
2,697,529
2,755,326
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
4,725,076
$
4,845,953
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2007
2006
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
251,674
$
234,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
42,020
35,255
Other
9,348
6,781
Changes in operating assets and liabilities
53,370
(30,627
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
356,412
246,014
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(52,766
)
(58,591
)
Other
(6,329
)
2,816
NET CASH USED IN INVESTING ACTIVITIES
(59,095
)
(55,775
)
FINANCING ACTIVITIES:
Net payments on credit facilities
-0-
(881
)
Stock options exercised
9,214
5,157
Excess tax benefits from share-based compensation
3,784
1,620
Dividends paid
(119,719
)
(112,426
)
Purchase of stock
(52,009
)
(83,475
)
NET CASH USED IN FINANCING ACTIVITIES
(158,730
)
(190,005
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
138,587
234
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
135,973
188,911
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
274,560
$
189,145
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