FOR IMMEDIATE RELEASE
| Contacts: | Jerry W. Nix, Vice Chairman and CFO – (770) 612-2048 Sidney G. Jones, Vice President-Investor Relations – (770) 818-4628 |
GENUINE PARTS COMPANY
REPORTS SALES AND EARNINGS
FOR THE THIRD QUARTER AND NINE MONTHS
ENDED SEPTEMBER 30, 2009
Atlanta, Georgia, October 16, 2009 — Genuine Parts Company (NYSE: GPC) reported sales and earnings for the third quarter and nine months ended September 30, 2009. Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.6 billion were down 10% compared to the third quarter of 2008. Net income for the quarter was $107.6 million, a decrease of 18% from $131.0 million recorded in the same period of the previous year. Earnings per share on a diluted basis were 67 cents, down 17% compared to 81 cents for the third quarter last year.
For the nine months ended September 30, 2009, sales totaled $7.6 billion, down 11% compared to the same period in 2008. Net income for the nine months was $300.4 million, a decrease of 23% from $387.6 million recorded in the previous year. Earnings per share on a diluted basis were $1.88, down 20% compared to $2.36 for the same period last year.
In review of the quarter, Mr. Gallagher commented, “The Automotive Group reported a 1% decrease in sales for the quarter, which is improved from the 7% and 5% sales declines reported for this group in the first and second quarters, respectively. S.P. Richards, our Office Products Group, was down 5% and this compares to a 7% sales decrease in the first quarter and a 6% decrease last quarter. Sales for the Industrial and Electrical Groups were down significantly, but they were consistent with their results for the second quarter, which we believe is a reflection of stabilizing conditions in the manufacturing segment of the economy. Motion Industries, our Industrial Group, had a 22% sales decrease in the quarter, and EIS, our Electrical Group, had a 30% decrease.”
Mr. Gallagher added, “The balance sheet at September 30, 2009 remains in excellent condition and we continue to strengthen our financial position through working capital and asset management initiatives, cost reduction efforts and steady and strong cash flows. The Company’s sound cash position provides us with significant financial flexibility and our priorities for cash in several key areas serve to maximize the total return to shareholders.”
Mr. Gallagher concluded, “2009 has proven to be a challenging year for GPC. However, we continue to have confidence in the long-term positive fundamentals for all four of our business segments. Our primary focus currently is to keep the balance sheet strong and to position each of our businesses to show improved sales and earnings results as the economy begins to improve.”
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 877-316-2549, conference ID 85294980. A replay will also be available on the Company’s website or at 800-642-1687, conference ID 85294980, two hours after the completion of the conference call until 12:00 a.m. Eastern time on October 31, 2009.
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, the ability to maintain favorable supplier arrangements and relationships, changes in general economic conditions, the growth rate of the market for the Company’s products and services, competitive product, service and pricing pressures, including internet related initiatives, the effectiveness of the Company’s promotional, marketing and advertising programs, changes in financial markets, including particularly the capital and credit markets, 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 Form 10-Q, 10-K, 8-K and other 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.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 2,606,757 | $ | 2,882,115 | $ | 7,586,298 | $ | 8,495,073 | ||||||||
| Cost of goods sold | 1,841,511 | 2,033,110 | 5,343,996 | 5,974,372 | ||||||||||||
| 765,246 | 849,005 | 2,242,302 | 2,520,701 | |||||||||||||
| Selling, administrative & other expenses | 594,540 | 638,163 | 1,760,878 | 1,902,467 | ||||||||||||
| Income before income taxes | 170,706 | 210,842 | 481,424 | 618,234 | ||||||||||||
| Income taxes | 63,067 | 79,825 | 181,016 | 230,601 | ||||||||||||
| Net income | $ | 107,639 | $ | 131,017 | $ | 300,408 | $ | 387,633 | ||||||||
| Basic net income per common share | $ | .67 | $ | .81 | $ | 1.88 | $ | 2.37 | ||||||||
| Diluted net income per common share | $ | .67 | $ | .81 | $ | 1.88 | $ | 2.36 | ||||||||
| Weighted average common shares outstanding | 159,541 | 161,603 | 159,500 | 163,324 | ||||||||||||
| Dilutive effect of stock options and | ||||||||||||||||
| Non-vested restricted stock awards | 335 | 673 | 268 | 689 | ||||||||||||
| Weighted average common shares outstanding – | ||||||||||||||||
| assuming dilution | 159,876 | 162,276 | 159,768 | 164,013 | ||||||||||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
| Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Net sales: | ||||||||||||||||
| Automotive | $ | 1,381,578 | $ | 1,393,118 | $ | 3,960,743 | $ | 4,127,518 | ||||||||
| Industrial | 711,471 | 907,015 | 2,149,200 | 2,686,297 | ||||||||||||
| Office Products | 436,287 | 458,968 | 1,255,169 | 1,332,167 | ||||||||||||
| Electrical/Electronic Materials | 89,364 | 126,827 | 256,106 | 363,712 | ||||||||||||
| Other (1) | (11,943 | ) | (3,813 | ) | (34,920 | ) | (14,621 | ) | ||||||||
| Total net sales | $ | 2,606,757 | $ | 2,882,115 | $ | 7,586,298 | $ | 8,495,073 | ||||||||
| Operating profit: | ||||||||||||||||
| Automotive | $ | 107,735 | $ | 111,730 | $ | 312,919 | $ | 317,888 | ||||||||
| Industrial | 36,495 | 77,220 | 102,113 | 222,781 | ||||||||||||
| Office Products | 26,692 | 33,426 | 99,081 | 114,721 | ||||||||||||
| Electrical/Electronic Materials | 6,802 | 10,272 | 17,560 | 29,175 | ||||||||||||
| Total operating profit | 177,724 | 232,648 | 531,673 | 684,565 | ||||||||||||
| Interest expense, net | (6,662 | ) | (7,391 | ) | (20,510 | ) | (21,877 | ) | ||||||||
| Other, net | (356 | ) | (14,415 | ) | (29,739 | ) | (44,454 | ) | ||||||||
| Income before income taxes | $ | 170,706 | $ | 210,842 | $ | 481,424 | $ | 618,234 | ||||||||
| Capital expenditures | $ | 12,405 | $ | 15,761 | $ | 49,360 | $ | 60,091 | ||||||||
| Depreciation and amortization | $ | 22,562 | $ | 21,768 | $ | 67,494 | $ | 66,469 | ||||||||
| (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
| Sept. 30, | Sept. 30, | |||||||
| 2009 | 2008 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 363,133 | $ | 124,428 | ||||
| Trade accounts receivable, net | 1,250,575 | 1,350,568 | ||||||
| Merchandise inventories, net | 2,188,133 | 2,318,215 | ||||||
| Prepaid expenses and other current assets | 232,450 | 279,932 | ||||||
| TOTAL CURRENT ASSETS | 4,034,291 | 4,073,143 | ||||||
| Goodwill and other intangible assets, less accumulated amortization | 171,573 | 147,940 | ||||||
| Other assets | 285,730 | 185,420 | ||||||
| Net property, plant and equipment | 485,647 | 412,755 | ||||||
| TOTAL ASSETS | $ | 4,977,241 | $ | 4,819,258 | ||||
| | ||||||||
LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Trade accounts payable | $ | 1,124,276 | $ | 1,070,513 | ||||
| Current portion of debt | — | 250,000 | ||||||
| Income taxes payable | 56,997 | 18,506 | ||||||
| Dividends payable | 63,819 | 63,003 | ||||||
| Other current liabilities | 199,419 | 223,634 | ||||||
| TOTAL CURRENT LIABILITIES | 1,444,511 | 1,625,656 | ||||||
| Long-term debt | 500,000 | 250,000 | ||||||
| Other long-term liabilities | 128,729 | 115,027 | ||||||
| Retirement and other post-retirement benefit liabilities | 289,659 | 91,031 | ||||||
| Noncontrolling interests in subsidiaries | 7,447 | 68,439 | ||||||
| Common stock | 159,552 | 160,557 | ||||||
| Retained earnings and other | 2,447,343 | 2,508,548 | ||||||
| TOTAL EQUITY | 2,614,342 | 2,737,544 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 4,977,241 | $ | 4,819,258 | ||||
NOTE: Certain prior period amounts have been reclassified to conform to current year presentation.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended | ||||||||
| Sept. 30, | ||||||||
| 2009 | 2008 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 300,408 | $ | 387,633 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 67,494 | 66,469 | ||||||
| Other | 8,563 | 13,067 | ||||||
| Changes in operating assets and liabilities | 390,038 | 1,836 | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 766,503 | 469,005 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (49,360 | ) | (60,091 | ) | ||||
| Acquisitions and other | (123,047 | ) | (98,735 | ) | ||||
| Purchase of properties under construction and lease agreement | (72,811 | ) | — | |||||
| NET CASH USED IN INVESTING ACTIVITIES | (245,218 | ) | (158,826 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Stock options exercised | 2,178 | 1,364 | ||||||
| Excess tax benefits from share-based compensation | 63 | 313 | ||||||
| Dividends paid | (189,739 | ) | (188,805 | ) | ||||
| Changes in cash overdraft position | (52,000 | ) | — | |||||
| Purchase of stock | (159 | ) | (228,863 | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | (239,657 | ) | (415,991 | ) | ||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 13,728 | (1,597 | ) | |||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 295,356 | (107,409 | ) | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 67,777 | 231,837 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 363,133 | $ | 124,428 | ||||
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