Carol B. Yancey, Executive Vice President and CFO – (770) 612-2044 Sidney G. Jones, Vice President — Investor Relations – (770) 818-4628
GENUINE PARTS COMPANY REPORTS RECORD SALES AND EARNINGS FOR THE SECOND QUARTER ENDED JUNE 30, 2013
- Sales Up 10% and EPS Up 29% -
Atlanta, Georgia, July 18, 2013 — Genuine Parts Company (NYSE: GPC) reports sales and earnings for the second quarter and six months ended June 30, 2013.
Thomas C. Gallagher, Chairman and Chief Executive Officer, announced today that record sales totaling $3.68 billion were up 10% compared to the second quarter of 2012. Net income for the quarter was $216.4 million, an increase of 28% from $168.6 million recorded in the same period of the previous year. Earnings per share on a diluted basis were $1.39, up 29% compared to $1.08 for the second quarter last year.
On April 1, 2013, the Company acquired the remaining 70% interest in GPC Asia Pacific (formerly Exego). The Company’s 30% investment, originated on January 1, 2012, was remeasured and, net of certain one-time purchase accounting costs, amounted to a positive pre-tax adjustment of approximately $36 million recorded in the second quarter. This adjustment, combined with a lower tax rate for the remeasurement, favorably impacted diluted earnings per share by $0.22.
For the six months ended June 30, 2013, sales totaled $6.87 billion, up 5% compared to the same period in 2012. Net income for the six months was $360.7 million, an increase of 15% from $314.9 million recorded in the previous year. Earnings per share on a diluted basis were $2.31, up 15% compared to $2.01 for the same period last year.
In review of the quarter, Mr. Gallagher commented, “We are pleased to report record levels of sales and earnings for the second quarter. The progress in our operations was driven by the improved results in our automotive business. Sales for the Automotive Group were up 22%, consisting of core North American growth of approximately 6% and the positive impact of the Australasian acquisition. We were encouraged by the sequential improvement in our core sales growth in the quarter. Likewise, GPC Asia Pacific performed as planned for the quarter and we continue to be excited about the growth opportunities we see in the Australasian aftermarket.”
Mr. Gallagher added, “Our non-automotive businesses remain our most challenging, as their end markets were relatively weak throughout the second quarter. Sales for Motion Industries, our Industrial Group, were down approximately 1%, and EIS, our Electrical/Electronic Group, showed sales down 4%. S.P. Richards, our Office Products Group, had a 3% decrease in sales. We continue to expect a stronger second half of the year for these businesses, but likely at a slower rate of growth than previously anticipated.”
Mr. Gallagher concluded, “As always, 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. Our cash flows are proving very strong again this year and the Company is in excellent financial condition. We look forward to reporting our continued progress in the quarters ahead.”
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 10933272. A replay of the call will also be available on the Company’s website or at 855-859-2056, conference ID 10933272, after the completion of the conference call until 12:00 a.m. Eastern time on August 2, 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 2012 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.
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About Genuine Parts Company
Genuine Parts Company is a distributor of automotive replacement parts in the U.S., Canada, Mexico and Australasia. 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.
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,
Six Months Ended June 30,
2013
2012
2013
2012
(Unaudited)
(in thousands, except per share data)
Net sales
$
3,675,997
$
3,337,836
$
6,874,799
$
6,519,124
Cost of goods sold
2,570,889
2,365,550
4,847,943
4,627,727
Gross profit
1,105,108
972,286
2,026,856
1,891,397
Operating expenses:
Selling, administrative & other expenses
753,527
680,246
1,427,139
1,348,204
Depreciation and amortization
36,853
24,735
62,852
47,720
790,380
704,981
1,489,991
1,395,924
Income before income taxes
314,728
267,305
536,865
495,473
Income taxes
98,371
98,687
176,119
180,600
Net income
$
216,357
$
168,618
$
360,746
$
314,873
Basic net income per common share
$
1.40
$
1.08
$
2.33
$
2.02
Diluted net income per common share
$
1.39
$
1.08
$
2.31
$
2.01
Weighted average common shares outstanding
155,050
155,753
154,971
155,781
Dilutive effect of stock options and
non-vested restricted stock awards
1,094
1,019
1,075
1,073
Weighted average common shares outstanding –
assuming dilution
156,144
156,772
156,046
156,854
3
GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
Six Months Ended June 30,
2013
2012
2013
2012
(Unaudited)
(in thousands)
Net sales:
Automotive
$
2,011,802
$
1,644,902
$
3,556,339
$
3,138,401
Industrial
1,132,032
1,138,724
2,234,112
2,259,947
Office Products
402,272
413,340
822,400
839,493
Electrical/Electronic Materials
142,970
149,440
282,155
296,556
Other (1)
(13,079
)
(8,570
)
(20,207
)
(15,273
)
Total net sales
$
3,675,997
$
3,337,836
$
6,874,799
$
6,519,124
Operating profit:
Automotive
$
186,382
$
152,978
$
307,425
$
267,539
Industrial
88,891
95,053
167,786
179,381
Office Products
29,768
30,611
62,960
68,126
Electrical/Electronic Materials
12,221
12,933
22,672
24,899
Total operating profit
317,262
291,575
560,843
539,945
Interest expense, net
(7,852
)
(5,019
)
(11,205
)
(9,734
)
Intangible amortization
(8,986
)
(3,641
)
(12,761
)
(5,752
)
Other, net
14,304
(15,610
)
(12
)
(28,986
)
Income before income taxes
$
314,728
$
267,305
$
536,865
$
495,473
Capital expenditures
$
37,883
$
34,478
$
50,807
$
51,368
Depreciation and amortization
$
36,853
$
24,735
$
62,852
$
47,720
(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,
2013
2012
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
196,770
$
171,577
Trade accounts receivable, net
1,759,176
1,605,696
Merchandise inventories, net
2,799,150
2,511,706
Prepaid expenses and other current assets
352,645
312,510
TOTAL CURRENT ASSETS
5,107,741
4,601,489
Goodwill and other intangible assets, less accumulated amortization
1,270,447
498,288
Deferred tax asset
179,850
250,963
Other assets
459,320
590,359
Net property, plant and equipment
642,955
567,013
TOTAL ASSETS
$
7,660,313
$
6,508,112
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
2,064,878
$
1,599,695
Current portion of debt
650,102
—
Income taxes payable
10,865
18,603
Dividends payable
83,407
77,081
Other current liabilities
513,695
483,352
TOTAL CURRENT LIABILITIES
3,322,947
2,178,731
Long-term debt
250,000
500,000
Retirement and other post-retirement benefit liabilities
494,572
485,317
Other long-term liabilities
506,655
451,470
Common stock
154,859
155,101
Retained earnings and other
3,521,735
3,185,924
Accumulated other comprehensive loss
(600,223
)
(458,444
)
TOTAL PARENT EQUITY
3,076,371
2,882,581
Noncontrolling interests in subsidiaries
9,768
10,013
TOTAL EQUITY
3,086,139
2,892,594
TOTAL LIABILITIES AND EQUITY
$
7,660,313
$
6,508,112
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June
30,
2013
2012
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
360,746
$
314,873
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
62,852
47,720
Share-based compensation
5,455
5,099
Excess tax benefits from share-based compensation
(9,410
)
(7,174
)
Other
(51,051
)
(703
)
Changes in operating assets and liabilities
98,486
61,498
NET CASH PROVIDED BY OPERATING ACTIVITIES
467,078
421,313
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(50,807
)
(51,368
)
Acquisitions and other investing activities
(596,105
)
(525,901
)
NET CASH USED IN INVESTING ACTIVITIES
(646,912
)
(577,269
)
FINANCING ACTIVITIES:
Proceeds from debt
1,269,550
550,000
Payments on debt
(1,098,998
)
(550,000
)
Share-based awards exercised, net of taxes paid
(10,948
)
(2,903
)
Excess tax benefits from share-based compensation
9,410
7,174
Dividends paid
(159,908
)
(147,187
)
Purchase of stock
(26,318
)
(55,015
)
NET CASH USED IN FINANCING ACTIVITIES
(17,212
)
(197,931
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(9,279
)
410
NET DECREASE IN CASH AND CASH EQUIVALENTS
(206,325
)
(353,477
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
403,095
525,054
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
196,770
$
171,577
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