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 RECORD SALES UP 12% AND
RECORD EARNINGS PER SHARE UP 23%
FOR THE SECOND QUARTER
ENDED JUNE 30, 2011
Atlanta, Georgia, July 15, 2011 — Genuine Parts Company (NYSE: GPC) reported sales and earnings for the second quarter and six months ended June 30, 2011. Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $3.2 billion were up 12% compared to the second quarter of 2010. Net income for the quarter was $151.8 million, an increase of 22% from $124.5 million recorded in the same period of the previous year. Earnings per share on a diluted basis were 96 cents, up 23% compared to 78 cents for the second quarter last year.
In reviewing the quarter, Mr. Gallagher commented, “We are especially pleased to report record sales and earnings for the second quarter. The Automotive Group produced another period of solid growth, with sales up 9% for the third consecutive quarter. We remain encouraged by the ongoing positive impact of our sales initiatives and the sound fundamentals of the aftermarket. Our Industrial and Electrical businesses continue to produce the strongest growth among our four business segments. Sales for Motion Industries, our Industrial Group, reached the $1 billion mark for the first time in their history and were up 19% in the quarter. EIS, our Electrical Group, generated a 28% sales increase. Both Motion Industries and EIS sell into the manufacturing sector of the economy, which continues to perform well today. S.P. Richards, our Office Products Group, showed a 4% sales increase for the quarter, marking their third consecutive period of sales growth, despite the continued moderation in demand in the office products industry. We believe this positive sales trend reflects the ongoing benefits of their internal growth initiatives.”
For the six months ended June 30, 2011, sales totaled $6.2 billion, up 13% compared to the same period in 2010. Net income for the six months was $278.3 million, an increase of 24% from the same period in 2010. Earnings per share on a diluted basis were $1.76, up 24% compared to $1.42 for the same period last year.
Mr. Gallagher added, “In addition to these fine results for the quarter and six months, our balance sheet as of June 30, 2011 remains in excellent condition. We ended the period with cash of $517 million and we continue to generate strong cash flows as a result of our working capital, asset management and cost
reduction initiatives. Our priorities for cash include the dividends paid to shareholders, the ongoing reinvestment back into each of our four businesses, strategic acquisitions and share repurchases.”
Mr. Gallagher concluded, “We are encouraged by the sales and earnings growth achieved in the second quarter and for the first six months in 2011. We also remain optimistic that our businesses will show continued progress over the balance of the year. Our management team remains committed to sustaining good revenue growth, further improving operating margins, generating solid cash flows and maintaining a strong 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 877-331-5106, conference ID 78938316. A replay of the call will also be available on the Company’s website or at 800-642-1687, conference ID 78938316, after the completion of the conference call until 12:00 a.m. Eastern time on July 30, 2011.
Forward Looking Statements
Some statements in this report, 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 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 may include, among other things, slowing demand for the Company’s products, changes in general economic conditions, including, unemployment, inflation or deflation, high energy costs, uncertain credit markets and other macro-economic conditions, the ability to maintain favorable vendor arrangements and relationships, disruptions in our vendors’ operations, competitive product, service and pricing pressures, the Company’s ability to successfully implement its business initiatives in each of its four business segments, the uncertainties and costs of litigation, as well as other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for 2010 and from time to time in the Company’s subsequent 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 subsequent Forms 10-K, 10-Q, Form 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., Canada and Mexico 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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 3,184,984 | $ | 2,847,186 | $ | 6,159,182 | $ | 5,449,301 | ||||||||
| Cost of goods sold | 2,268,870 | 2,024,876 | 4,394,274 | 3,866,516 | ||||||||||||
| Gross profit | 916,114 | 822,310 | 1,764,908 | 1,582,785 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, administrative & other expenses | 651,635 | 598,331 | 1,285,904 | 1,174,548 | ||||||||||||
| Depreciation and amortization | 22,928 | 23,186 | 45,473 | 45,329 | ||||||||||||
| 674,563 | 621,517 | 1,331,377 | 1,219,877 | |||||||||||||
| Income before income taxes | 241,551 | 200,793 | 433,531 | 362,908 | ||||||||||||
| Income taxes | 89,739 | 76,326 | 155,204 | 137,832 | ||||||||||||
| Net income | $ | 151,812 | $ | 124,467 | $ | 278,327 | $ | 225,076 | ||||||||
| Basic net income per common share | $ | .97 | $ | .79 | $ | 1.77 | $ | 1.42 | ||||||||
| Diluted net income per common share | $ | .96 | $ | .78 | $ | 1.76 | $ | 1.42 | ||||||||
| Weighted average common shares outstanding | 157,248 | 158,260 | 157,439 | 158,514 | ||||||||||||
| Dilutive effect of stock options and | ||||||||||||||||
| non-vested restricted stock awards | 995 | 402 | 988 | 403 | ||||||||||||
| Weighted average common shares outstanding – | ||||||||||||||||
| assuming dilution | 158,243 | 158,662 | 158,427 | 158,917 | ||||||||||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Net sales: | ||||||||||||||||
| Automotive | $ | 1,585,074 | $ | 1,459,672 | $ | 2,989,939 | $ | 2,750,073 | ||||||||
| Industrial | 1,051,258 | 882,233 | 2,051,029 | 1,685,535 | ||||||||||||
| Office Products | 417,989 | 401,960 | 850,655 | 812,471 | ||||||||||||
| Electrical/Electronic Materials | 136,780 | 106,579 | 276,594 | 206,877 | ||||||||||||
| Other (1) | (6,117 | ) | (3,258 | ) | (9,035 | ) | (5,655 | ) | ||||||||
| Total net sales | $ | 3,184,984 | $ | 2,847,186 | $ | 6,159,182 | $ | 5,449,301 | ||||||||
| Operating profit: | ||||||||||||||||
| Automotive | $ | 138,795 | $ | 126,022 | $ | 236,694 | $ | 214,927 | ||||||||
| Industrial | 85,289 | 60,118 | 151,298 | 108,964 | ||||||||||||
| Office Products | 31,367 | 30,454 | 68,771 | 67,013 | ||||||||||||
| Electrical/Electronic Materials | 9,172 | 6,948 | 19,242 | 13,763 | ||||||||||||
| Total operating profit | 264,623 | 223,542 | 476,005 | 404,667 | ||||||||||||
| Interest expense, net | (6,236 | ) | (6,693 | ) | (12,736 | ) | (13,426 | ) | ||||||||
| Other, net | (16,836 | ) | (16,056 | ) | (29,738 | ) | (28,333 | ) | ||||||||
| Income before income taxes | $ | 241,551 | $ | 200,793 | $ | 433,531 | $ | 362,908 | ||||||||
| Capital expenditures | $ | 27,213 | $ | 18,062 | $ | 41,748 | $ | 27,912 | ||||||||
| Depreciation and amortization | $ | 22,928 | $ | 23,186 | $ | 45,473 | $ | 45,329 | ||||||||
| (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, | |||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 516,728 | $ | 411,872 | ||||
| Trade accounts receivable, net | 1,565,889 | 1,353,918 | ||||||
| Merchandise inventories, net | 2,251,595 | 2,164,548 | ||||||
| Prepaid expenses and other current assets | 299,079 | 280,159 | ||||||
| TOTAL CURRENT ASSETS | 4,633,291 | 4,210,497 | ||||||
| Goodwill and other intangible assets, less accumulated amortization | 227,935 | 201,326 | ||||||
| Deferred tax asset | 151,042 | 164,657 | ||||||
| Other assets | 218,450 | 173,730 | ||||||
| Net property, plant and equipment | 486,283 | 469,150 | ||||||
| TOTAL ASSETS | $ | 5,717,001 | $ | 5,219,360 | ||||
| | ||||||||
LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Trade accounts payable | $ | 1,492,041 | $ | 1,286,681 | ||||
| Current portion of debt | 250,000 | — | ||||||
| Income taxes payable | 33,520 | 35,494 | ||||||
| Dividends payable | 70,755 | 64,687 | ||||||
| Other current liabilities | 261,099 | 188,511 | ||||||
| TOTAL CURRENT LIABILITIES | 2,107,415 | 1,575,373 | ||||||
| Long-term debt | 250,000 | 500,000 | ||||||
| Retirement and other post-retirement benefit liabilities | 243,928 | 296,823 | ||||||
| Other long-term liabilities | 184,362 | 173,957 | ||||||
| Common stock | 156,767 | 157,613 | ||||||
| Retained earnings and other | 3,023,737 | 2,815,427 | ||||||
| Accumulated other comprehensive loss | (258,480 | ) | (308,540 | ) | ||||
| TOTAL PARENT EQUITY | 2,922,024 | 2,664,500 | ||||||
| Noncontrolling interests in subsidiaries | 9,272 | 8,707 | ||||||
| TOTAL EQUITY | 2,931,296 | 2,673,207 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 5,717,001 | $ | 5,219,360 | ||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June | ||||||||
| 30, | ||||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 278,327 | $ | 225,076 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 45,473 | 45,329 | ||||||
| Share-based compensation | 4,023 | 3,133 | ||||||
| Excess tax benefits from share-based compensation | (1,802 | ) | (1,085 | ) | ||||
| Other | (594 | ) | (401 | ) | ||||
| Changes in operating assets and liabilities | (75,476 | ) | 80,400 | |||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 249,951 | 352,452 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (41,748 | ) | (27,912 | ) | ||||
| Acquisitions and other | (38,126 | ) | (67,693 | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (79,874 | ) | (95,605 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Stock options exercised | 1,302 | 5,384 | ||||||
| Excess tax benefits from share-based compensation | 1,802 | 1,085 | ||||||
| Dividends paid | (135,550 | ) | (128,627 | ) | ||||
| Purchase of stock | (55,416 | ) | (63,137 | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | (187,862 | ) | (185,295 | ) | ||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 4,545 | 3,517 | ||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (13,240 | ) | 75,069 | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 529,968 | 336,803 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 516,728 | $ | 411,872 | ||||
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