Jerry W. Nix, Vice Chairman and CFO – (770) 612-2048 Carol B. Yancey, Executive Vice President-Finance – (770) 612-2044 Sidney G. Jones, Vice President-Investor Relations – (770) 818-4628
GENUINE PARTS COMPANY REPORTS FOURTH QUARTER AND FULL YEAR RESULTS FOR 2012
- 4th Quarter Sales up 3.5% and EPS up 20% - - Record Sales and Earnings for 2012 -
Atlanta, Georgia, February 19, 2013 — Genuine Parts Company (NYSE: GPC) reports fourth quarter results and record sales and earnings for the year ended December 31, 2012.
Tom Gallagher, Chairman and Chief Executive Officer, announced today that sales in 2012 were $13.0 billion, up 4.5% compared to 2011. Net income for the year was $648 million, an increase of 15% compared to $565 million in 2011. Earnings per share on a diluted basis were $4.14, up 16% compared to $3.58 in 2011.
In December 2012 the Company’s pension plan was amended to freeze future benefit accruals for all participants as of December 31, 2013. In connection with this amendment, the Company recorded a one-time noncash curtailment gain of $23.5 million, which is included in our earnings results for the quarter and year.
Mr. Gallagher stated, “The record level of earnings achieved in 2012 reflects the third consecutive year of double-digit earnings growth for the Company. We further strengthened our financial condition with increased net income, an expanded operating margin and a continued emphasis on effectively managing the balance sheet. The progress in these areas produced record cash from operations for the year.”
Mr. Gallagher added, “Our total sales increase for the year was driven by respectable sales growth in three of our four businesses. The Automotive Group reported a 4% sales increase, led by solid progress in NAPA AutoCare and Major Accounts, our two primary commercial initiatives, combined with the incremental volume from the Quaker City acquisition. Motion Industries, our Industrial Group, increased sales by 7% for the year, driven by the combination of effective growth initiatives and a generally healthy industrial economy, although we did observe slower levels of manufacturing growth over the latter part of 2012. EIS, our Electrical/Electronic Group, was up 5% for the year. S.P. Richards, our Office Products Group, reported flat revenues in 2012 relative to 2011, as the industry-wide slowdown in office products consumption continued to pressure this segment.”
Fourth Quarter 2012
Sales increased 3.5% to $3.1 billion in the fourth quarter ended December 31, 2012, compared to sales of $3.0 billion for the same period in 2011. Net income in the fourth quarter was $160 million, an increase of 19% compared to $135 million in 2011. Diluted earnings per share in the fourth quarter were $1.03, up 20% compared to 86 cents per share for the fourth quarter of 2011.
In reviewing the quarter, Mr. Gallagher commented, “Revenue growth in 2012 proved to be more challenging as the year progressed, and is reflective of slowing industry trends across our businesses. However, despite these industry trends, we were able to report Automotive sales up 5% for the fourth quarter and Industrial Group sales were up 2%. The Electrical Group sales were down 2% and the Office Products Group produced its strongest quarterly sales results for the year, up 3% over the fourth quarter in 2011.”
Mr. Gallagher concluded, “As we turn our focus to the new year, we remain committed to our core objectives of growing sales and earnings, showing continued operating margin improvement, generating solid cash flows and maintaining a strong balance sheet. Further progress in each of these important areas will ensure another successful year in 2013.”
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EST to discuss the results of the quarter, the year 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 92943087. A replay will also be available on the Company’s website or at 855-859-2056, conference ID 92943087, two hours after the completion of the call until 12:00 a.m. Eastern time on March 6, 2013.
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 Company’s ability to successfully integrate its acquired businesses, 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 2011 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, 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.
1
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Dec. 31,
Year Ended Dec. 31,
2012
2011
2012
2011
(in thousands, except per share data)
Net sales
$
3,118,966
$
3,014,135
$
13,013,868
$
12,458,877
Cost of goods sold
2,208,308
2,121,535
9,235,777
8,852,837
Gross profit
910,658
892,600
3,778,091
3,606,040
Operating expenses:
Selling, administrative & other expenses
633,678
660,428
2,660,776
2,626,298
Depreciation and amortization
25,054
21,997
98,383
88,936
658,732
682,425
2,759,159
2,715,234
Income before income taxes
251,926
210,175
1,018,932
890,806
Income taxes
91,701
75,218
370,891
325,690
Net income
$
160,225
$
134,957
$
648,041
$
565,116
Basic net income per common share
$
1.03
$
.87
$
4.17
$
3.61
Diluted net income per common share
$
1.03
$
.86
$
4.14
$
3.58
Weighted average common shares outstanding
154,952
155,567
155,413
156,656
Dilutive effect of stock options and
non-vested restricted stock awards
943
1,095
1,007
1,004
Weighted average common shares outstanding –
assuming dilution
155,895
156,662
156,420
157,660
2
GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended Dec. 31,
Year Ended Dec. 31,
2012
2011
2012
2011
(in thousands)
Net sales:
Automotive
$
1,531,624
$
1,460,152
$
6,320,882
$
6,061,424
Industrial
1,054,773
1,032,719
4,453,574
4,173,574
Office Products
402,942
391,403
1,686,690
1,689,368
Electrical/Electronic Materials
135,387
137,601
582,820
557,537
Other (1)
(5,760
)
(7,740
)
(30,098
)
(23,026
)
Total net sales
$
3,118,966
$
3,014,135
$
13,013,868
$
12,458,877
Operating profit:
Automotive
$
122,491
$
89,879
$
540,678
$
467,806
Industrial
78,117
89,139
352,119
337,628
Office Products
36,373
38,149
134,441
134,124
Electrical/Electronic Materials
12,456
10,283
50,910
40,663
Total operating profit
249,437
227,450
1,078,148
980,221
Interest expense, net
(4,914
)
(5,628
)
(19,619
)
(24,608
)
Intangible amortization
(3,811
)
(1,942
)
(12,991
)
(6,774
)
Other, net
11,214
(9,705
)
(26,606
)
(58,033
)
Income before income taxes
$
251,926
$
210,175
$
1,018,932
$
890,806
Capital expenditures
$
30,360
$
39,537
$
101,987
$
103,469
Depreciation and amortization
$
25,054
$
21,997
$
98,383
$
88,936
(1) Represents the net effect of discounts, incentives and freight billed reported as a component of net sales.
3
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31,
Dec. 31,
2012
2011
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
403,095
$
525,054
Trade accounts receivable, net
1,490,028
1,461,011
Merchandise inventories, net
2,602,560
2,440,111
Prepaid expenses and other current assets
324,448
328,534
TOTAL CURRENT ASSETS
4,820,131
4,754,710
Goodwill and other intangible assets, less accumulated amortization
497,839
279,775
Deferred tax asset
279,463
261,608
Other assets
643,263
406,477
Net property, plant and equipment
566,365
500,204
TOTAL ASSETS
$
6,807,061
$
6,202,774
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
1,681,900
$
1,440,762
Current portion of debt
250,000
—
Income taxes payable
4,354
21,081
Dividends payable
76,641
70,021
Other current liabilities
474,743
480,684
TOTAL CURRENT LIABILITIES
2,487,638
2,012,548
Long-term debt
250,000
500,000
Retirement and other post-retirement benefit liabilities
572,988
493,721
Other long-term liabilities
488,256
442,914
Common stock
154,841
155,651
Retained earnings and other
3,344,538
3,070,394
Accumulated other comprehensive loss
(501,492
)
(482,038
)
TOTAL PARENT EQUITY
2,997,887
2,744,007
Noncontrolling interests in subsidiaries
10,292
9,584
TOTAL EQUITY
3,008,179
2,753,591
TOTAL LIABILITIES AND EQUITY
$
6,807,061
$
6,202,774
4
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Dec. 31,
2012
2011
(in thousands)
OPERATING ACTIVITIES:
Net income
$
648,041
$
565,116
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
98,383
88,936
Share-based compensation
10,747
7,547
Excess tax benefits from share-based compensation
(11,018
)
(5,356
)
Other
10,808
(5,349
)
Changes in operating assets and liabilities
149,477
(25,967
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
906,438
624,927
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(101,987
)
(103,469
)
Acquisitions and other
(549,880
)
(128,028
)
NET CASH USED IN INVESTING ACTIVITIES
(651,867
)
(231,497
)
FINANCING ACTIVITIES:
Proceeds from debt
750,000
250,000
Payments on debt
(750,000
)
(250,000
)
Stock options exercised
(7,043
)
(1,049
)
Excess tax benefits from share-based compensation
11,018
5,356
Dividends paid
(300,983
)
(276,369
)
Purchase of stock
(81,826
)
(122,078
)
NET CASH USED IN FINANCING ACTIVITIES
(378,834
)
(394,140
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
2,304
(4,204
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(121,959
)
(4,914
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
525,054
529,968
CASH AND CASH EQUIVALENTS AT END OF YEAR
$
403,095
$
525,054
5
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