FOR IMMEDIATE RELEASE
| Contact: | Jerry W. Nix, Vice Chairman and CFO (770) 612-2048 |
GENUINE PARTS COMPANY
REPORTS FIRST QUARTER 2008 RESULTS
SALES INCREASED 3%, EPS INCREASED 6%
Atlanta, Georgia, April 17, 2008 — Genuine Parts Company (NYSE: GPC) reported sales and earnings for the first quarter ended March 31, 2008. Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.74 billion were up 3% compared to the first quarter of 2007. Net income for the quarter was $123.5 million, an increase of 2% over $121.6 million recorded in the same period of the previous year. Earnings per share on a diluted basis were 75 cents, up 6% compared to 71 cents for the first quarter last year.
Mr. Gallagher stated, “We are pleased to report that the 1st Quarter of 2008 was another period of sales and earnings growth for Genuine Parts Company. EIS, our Electrical Group, had another fine quarter, generating the strongest sales growth among our four business segments. They were up 7% in the quarter and continue their trend of solid progress. Motion Industries, our Industrial Group, also reported strong results, with a 6% sales increase for the quarter. We believe that both EIS and Motion are positioned to have another good year in 2008. The Automotive Group reported a 4% increase in the quarter and this is their highest percentage growth since the second quarter of 2006, which is encouraging. S.P. Richards, our Office Products Group, was down 2% for the quarter, reflecting continued softness in the office products industry. Despite their decrease in the first quarter, and the ongoing industry sluggishness, we do feel that S.P. Richards has the initiatives in place to show improved performance over the remainder of the year.”
Mr. Gallagher added, “The Company is also generating strong cash flows and our cash position remains in good shape. We have used cash in several key areas to maximize the total return to shareholders. First and foremost is the dividend paid to shareholders, and cash dividends for 2008 were increased by 7% to $1.56 on an annual basis, representing our 52nd consecutive year of increased dividends. Another priority for cash has been opportunistic share repurchases and as part of our share repurchase program, we have purchased approximately 2.4 million shares of our Company stock thus far in 2008. This follows the purchase of 5.0 million shares in 2007. Other key uses for cash remain the ongoing reinvestment in each of our businesses and strategic complimentary types of acquisitions. During the quarter, Automotive acquired a 100% stake in Altrom Canada and Altrom America, effective January 1st, Motion Industries acquired Mill Supply Corporation in March, and S.P. Richards completed the acquisition of O’Henry, a regional office products distributor, as of April 1st.”
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Mr. Gallagher concluded, “As we move forward in 2008, we recognize that we are operating in an uncertain and challenging economic environment. However, our focus remains on the crisp execution of our growth and operational strategies in each of our businesses, as well as our ongoing initiatives to further strengthen the Balance Sheet.”
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 to the call on the Company’s website,www.genpt.com, by clicking “Investor Services”, or by dialing 877-422-4780, conference ID 41745364. A replay will also be available on the Company’s website or at 800-642-1687, conference ID 41745364, two hours after the completion of the conference call until 12:00 a.m. Eastern time on May 1, 2008.
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 except as required by law. 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 March 31, | ||||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
| (in thousands, except per share data) | ||||||||
| Net sales | $ | 2,739,473 | $ | 2,648,843 | ||||
| Cost of goods sold | 1,919,990 | 1,858,899 | ||||||
| 819,483 | 789,944 | |||||||
| Selling, administrative & other expenses | 627,802 | 593,834 | ||||||
| Income before income taxes | 191,681 | 196,110 | ||||||
| Income taxes | 68,138 | 74,557 | ||||||
| Net income | $ | 123,543 | $ | 121,553 | ||||
| Basic net income per common share | $ | .75 | $ | .71 | ||||
| Diluted net income per common share | $ | .75 | $ | .71 | ||||
| Weighted average common shares outstanding | 164,977 | 170,466 | ||||||
| Dilutive effect of stock options and non-vested restricted stock awards | 729 | 1,035 | ||||||
| Weighted average common shares outstanding – assuming dilution | 165,706 | 171,501 | ||||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
| Three Months Ended March 31, | ||||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| Net sales: | ||||||||
| Automotive | $ | 1,305,887 | $ | 1,261,507 | ||||
| Industrial | 881,213 | 833,392 | ||||||
| Office Products | 442,392 | 451,842 | ||||||
| Electrical/Electronic Materials | 114,301 | 106,733 | ||||||
| Other (1) | (4,320 | ) | (4,631 | ) | ||||
| Total net sales | $ | 2,739,473 | $ | 2,648,843 | ||||
| Operating profit: | ||||||||
| Automotive | $ | 90,644 | $ | 95,837 | ||||
| Industrial | 68,992 | 64,592 | ||||||
| Office Products | 43,932 | 48,217 | ||||||
| Electrical/Electronic Materials | 9,010 | 7,220 | ||||||
| Total operating profit | 212,578 | 215,866 | ||||||
| Interest expense, net | (7,154 | ) | (6,671 | ) | ||||
| Other, net | (13,743 | ) | (13,085 | ) | ||||
| Income before income taxes | $ | 191,681 | $ | 196,110 | ||||
| Capital expenditures | $ | 21,762 | $ | 23,683 | ||||
| Depreciation and amortization | $ | 22,684 | $ | 20,702 | ||||
| (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, | |||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 161,519 | $ | 250,082 | ||||
| Trade accounts receivable, net | 1,303,787 | 1,296,800 | ||||||
| Merchandise inventories, net | 2,314,536 | 2,201,446 | ||||||
| Prepaid expenses and other current assets | 245,891 | 214,116 | ||||||
| TOTAL CURRENT ASSETS | 4,025,733 | 3,962,444 | ||||||
| Goodwill and intangible assets, less accumulated amortization | 114,489 | 62,136 | ||||||
| Other assets | 195,371 | 170,676 | ||||||
| Net property, plant and equipment | 419,825 | 430,807 | ||||||
| TOTAL ASSETS | $ | 4,755,418 | $ | 4,626,063 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Trade accounts payable | $ | 1,002,742 | $ | 971,400 | ||||
| Current portion of debt | 250,000 | -0- | ||||||
| Income taxes payable | 78,994 | 86,004 | ||||||
| Dividends payable | 64,283 | 62,254 | ||||||
| Other current liabilities | 173,433 | 164,653 | ||||||
| TOTAL CURRENT LIABILITIES | 1,569,452 | 1,284,311 | ||||||
| Long-term debt | 250,000 | 500,000 | ||||||
| Other long-term liabilities | 200,830 | 171,754 | ||||||
| Minority interests in subsidiaries | 65,462 | 61,615 | ||||||
| Common stock | 163,818 | 170,378 | ||||||
| Retained earnings and other | 2,505,856 | 2,438,005 | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 2,669,674 | 2,608,383 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,755,418 | $ | 4,626,063 | ||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months | ||||||||
| Ended March 31, | ||||||||
| 2008 | 2007 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 123,543 | $ | 121,553 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 22,684 | 20,702 | ||||||
| Other | 892 | 2,139 | ||||||
| Changes in operating assets and liabilities | (2,527 | ) | 62,556 | |||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 144,592 | 206,950 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (21,762 | ) | (23,683 | ) | ||||
| Other | (39,003 | ) | 672 | |||||
| NET CASH USED IN INVESTING ACTIVITIES | (60,765 | ) | (23,011 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Stock options exercised | 752 | 6,305 | ||||||
| Excess tax benefits from share-based compensation | 217 | 2,300 | ||||||
| Dividends paid | (60,789 | ) | (57,545 | ) | ||||
| Purchase of stock | (94,325 | ) | (20,890 | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | (154,145 | ) | (69,830 | ) | ||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (70,318 | ) | 114,109 | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 231,837 | 135,973 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 161,519 | $ | 250,082 | ||||
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