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 SALES AND EARNINGS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2013
- Sales Up 9% and EPS Up 1% -
Atlanta, Georgia, October 18, 2013 — Genuine Parts Company (NYSE: GPC) reported sales and earnings for the third quarter and nine months ended September 30, 2013.
Thomas C. Gallagher, Chairman and Chief Executive Officer, announced today that sales totaling $3.69 billion were up 9% compared to the third quarter of 2012. Net income for the quarter was $173.7 million, up slightly from $172.9 million recorded in the same period of the previous year. Earnings per share on a diluted basis were $1.12, up 1% compared to $1.11 for the third quarter last year.
For the nine months ended September 30, 2013, sales totaled $10.56 billion, up 7% compared to the same period in 2012. Net income for the nine months was $534.5 million, an increase of 10% from $487.8 million recorded in the previous year. Earnings per share on a diluted basis were $3.43, up 10% compared to $3.11 for the same period last year.
In review of the quarter, Mr. Gallagher commented, “While we achieved another quarter of record sales for the Company, the third quarter proved to be challenging for us. This was especially true in our non-automotive businesses, as the demand patterns across these segments decelerated in the quarter. Fortunately, our Automotive Group performed reasonably well for us and continues to report solid progress in their operations.”
Mr. Gallagher added, “In the third quarter, sales for the Automotive Group were up 22% for the second consecutive period. This increase includes core North American growth of approximately 5% and the positive impact of the Australasian acquisition. We were pleased by the ongoing positive sales trends in both North America and at GPC Asia Pacific. Sales for Motion Industries, our Industrial Group, were down by 2.5%; and EIS, our Electrical/Electronic Group, showed sales down approximately 5%. S. P. Richards, our Office Products Group, had a 3% sales decrease for the quarter.”
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Mr. Gallagher concluded, “In these challenging times, we are especially focused on our sales initiatives and expense controls across all of our businesses. For the long-term we remain committed to our core objectives of growing sales and earnings, showing operating margin improvement, generating solid cash flows and maintaining a strong balance sheet. Our cash flows are very strong again this year and the Company is in excellent financial condition.”
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 toll-free at 877-331-5106, conference ID 72999067. A replay of the call will also be available on the Company’s website or by dialing toll-free at 855-859-2056, conference ID 72999067, after the completion of the conference call until 12:00 a.m. Eastern time on November 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.
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 Sept. 30,
Nine Months Ended Sept. 30,
2013
2012
2013
2012
(Unaudited)
(in thousands, except per share data)
Net sales
$
3,685,243
$
3,375,778
$
10,560,042
$
9,894,902
Cost of goods sold
2,584,320
2,399,742
7,432,263
7,027,469
Gross profit
1,100,923
976,036
3,127,779
2,867,433
Operating expenses:
Selling, administrative & other expenses
793,957
678,894
2,221,096
2,027,098
Depreciation and amortization
35,220
25,609
98,072
73,329
829,177
704,503
2,319,168
2,100,427
Income before income taxes
271,746
271,533
808,611
767,006
Income taxes
98,000
98,590
274,119
279,190
Net income
$
173,746
$
172,943
$
534,492
$
487,816
Basic net income per common share
$
1.12
$
1.11
$
3.45
$
3.14
Diluted net income per common share
$
1.12
$
1.11
$
3.43
$
3.11
Weighted average common shares outstanding
154,567
155,147
154,835
155,568
Dilutive effect of stock options and
non-vested restricted stock awards
1,096
988
1,082
1,038
Weighted average common shares outstanding –
assuming dilution
155,663
156,135
155,917
156,606
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GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended Sept. 30,
Nine Months Ended Sept. 30,
2013
2012
2013
2012
(Unaudited)
(in thousands)
Net sales:
Automotive
$
2,016,076
$
1,650,857
$
5,572,415
$
4,789,258
Industrial
1,110,309
1,138,854
3,344,421
3,398,801
Office Products
430,457
444,255
1,252,857
1,283,748
Electrical/Electronic Materials
142,818
150,877
424,973
447,433
Other (1)
(14,417
)
(9,065
)
(34,624
)
(24,338
)
Total net sales
$
3,685,243
$
3,375,778
$
10,560,042
$
9,894,902
Operating profit:
Automotive
$
180,166
$
150,648
$
487,591
$
418,187
Industrial
79,596
94,621
247,382
274,002
Office Products
28,094
29,942
91,054
98,068
Electrical/Electronic Materials
12,625
13,555
35,297
38,454
Total operating profit
300,481
288,766
861,324
828,711
Interest expense, net
(7,031
)
(4,971
)
(18,236
)
(14,705
)
Intangible amortization
(7,726
)
(3,428
)
(20,487
)
(9,180
)
Other, net
(13,978
)
(8,834
)
(13,990
)
(37,820
)
Income before income taxes
$
271,746
$
271,533
$
808,611
$
767,006
Capital expenditures
$
33,338
$
20,259
$
84,146
$
71,627
Depreciation and amortization
$
35,220
$
25,609
$
98,072
$
73,329
(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
Sept. 30,
Sept. 30,
2013
2012
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
320,870
$
398,118
Trade accounts receivable, net
1,759,517
1,606,297
Merchandise inventories, net
2,832,108
2,529,435
Prepaid expenses and other current assets
382,980
308,839
TOTAL CURRENT ASSETS
5,295,475
4,842,689
Goodwill and other intangible assets, less accumulated amortization
1,280,182
504,192
Deferred tax asset
257,571
243,547
Other assets
462,172
617,737
Net property, plant and equipment
648,503
560,900
TOTAL ASSETS
$
7,943,903
$
6,769,065
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
2,213,190
$
1,754,253
Current portion of debt
583,896
—
Income taxes payable
19,176
12,496
Dividends payable
82,982
76,814
Other current liabilities
554,850
458,529
TOTAL CURRENT LIABILITIES
3,454,094
2,302,092
Long-term debt
250,000
500,000
Retirement and other post-retirement benefit liabilities
481,333
476,108
Deferred tax liability
90,584
—
Other long-term liabilities
514,717
463,924
Common stock
154,357
155,131
Retained earnings and other
3,570,356
3,282,289
Accumulated other comprehensive loss
(581,652
)
(420,845
)
TOTAL PARENT EQUITY
3,143,061
3,016,575
Noncontrolling interests in subsidiaries
10,114
10,366
TOTAL EQUITY
3,153,175
3,026,941
TOTAL LIABILITIES AND EQUITY
$
7,943,903
$
6,769,065
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended Sept. 30,
2013
2012
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
534,492
$
487,816
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
98,072
73,329
Share-based compensation
8,932
8,098
Excess tax benefits from share-based compensation
(12,020
)
(9,239
)
Other
(50,608
)
(1,011
)
Changes in operating assets and liabilities
258,617
205,827
NET CASH PROVIDED BY OPERATING ACTIVITIES
837,485
764,820
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(84,146
)
(71,627
)
Acquisitions and other investing activities
(614,109
)
(545,378
)
NET CASH USED IN INVESTING ACTIVITIES
(698,255
)
(617,005
)
FINANCING ACTIVITIES:
Proceeds from debt
2,094,550
750,000
Payments on debt
(1,990,204
)
(750,000
)
Share-based awards exercised, net of taxes paid
(14,313
)
(4,008
)
Excess tax benefits from share-based compensation
12,020
9,239
Dividends paid
(243,262
)
(224,170
)
Purchase of stock
(71,738
)
(58,808
)
NET CASH USED IN FINANCING ACTIVITIES
(212,947
)
(277,747
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(8,508
)
2,996
NET DECREASE IN CASH AND CASH EQUIVALENTS
(82,225
)
(126,936
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
403,095
525,054
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
320,870
$
398,118
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