FOR IMMEDIATE RELEASE
Contact: | 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.
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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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