GENUINE PARTS COMPANY
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contacts
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 FOURTH QUARTER AND FULL YEAR RESULTS FOR 2013
- Record Sales and Earnings for 2013 -
Atlanta, Georgia, February 18, 2014 — Genuine Parts Company (NYSE: GPC) reports fourth quarter results and record sales and earnings for the year ended December 31, 2013.
Tom Gallagher, Chairman and Chief Executive Officer, announced today that sales in 2013 were $14.1 billion, up 8% compared to 2012. Net income for the year was $685 million, an increase of 6% compared to $648 million in 2012. Earnings per share on a diluted basis were $4.40, up 6% compared to $4.14 in 2012.
Included in the Company’s full year 2013 results are the previously recognized one-time positive purchase accounting adjustments of $33 million, or $0.21 net of taxes on a per share diluted basis. These adjustments are associated with the April 1, 2013 acquisition of GPC Asia Pacific, formerly Exego.
Additionally, 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, effective in December 2012, the Company recorded a one-time noncash curtailment gain of $23.5 million, or $0.10 and $0.09 net of taxes on a per share diluted basis for the fourth quarter and full year 2012, respectively.
Mr. Gallagher stated, “We are pleased to report that 2013 was another year of record sales and earnings for Genuine Parts Company. Our overall results reflect the good job that was done by the GPC Team in 2013, despite the challenging market conditions that were experienced by our non-automotive business segments. We further strengthened our financial condition with increased net income and a continued emphasis on effectively managing the balance sheet. Our progress in these areas produced record cash flows for us in 2013, with cash from operations at $1.1 billion and free cash flow of approximately $600 million.”
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Mr. Gallagher added, “The Company’s revenue growth in 2013 was driven by an 18.5% Automotive sales increase, offset by a combined 1% sales decrease for our non-automotive businesses. Acquisitions for the Automotive Group drove the high-teen revenue growth, while our underlying sales were up approximately 4% for the year. Our strongest sales results came from our commercial business and, in particular, solid results in NAPA AutoCare and Major Accounts, our two primary commercial initiatives. Sales at Motion Industries, our Industrial Group, were down slightly for the year, our Electrical/Electronic Group was down 2% and our Office Group sales were down 3% in 2013. Weak demand patterns challenged these three industries throughout the year.”
Fourth Quarter 2013
Sales increased 13% to $3.5 billion in the fourth quarter ended December 31, 2013, compared to sales of $3.1 billion for the same period in 2012. Net income in the fourth quarter was $150 million, or $0.97 per share on a diluted basis, compared to $160 million, or $1.03 per diluted share, in 2012. The 2012 results include the $23.5 million one-time pension gain, or $0.10 per diluted share, previously disclosed. Excluding the gain, diluted earnings per share in the fourth quarter of 2013 were up 4% from 2012.
In reviewing the quarter, Mr. Gallagher commented, “Revenue growth in the fourth quarter proved to be the strongest of the year, with acquisitions contributing 10% to our sales growth and our underlying sales were up 4%, which was offset by a 1% currency headwind. Automotive sales were up 25% in the quarter, including 7% underlying growth, offset by a 1% negative translation effect. Industrial Group sales were up 3% and sales for the Electrical/Electronic Group increased by 6%, which includes a 10% contribution from acquisitions. Sales for the Office business were down 4%.”
Mr. Gallagher concluded, “We faced a number of challenges in each of our four business segments in 2013 and, as previously stated, our Automotive business fared the best with their 18.5% sales increase. In all four businesses, key decisions were made and actions taken that position each segment for solid performances in the year ahead, and we look forward to reporting on our progress. 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 areas will keep the Company moving ahead and help to ensure another successful year in 2014.”
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 39491974. A replay will also be available on the Company’s website or at 855-859-2056, conference ID 39491974, two hours after the completion of the call until 12:00 a.m. Eastern time on March 5, 2014.
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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, including GPC Asia Pacific, 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 Dec. 31, | Year Ended Dec. 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 3,517,801 | $ | 3,118,966 | $ | 14,077,843 | $ | 13,013,868 | ||||||||
| Cost of goods sold | 2,425,660 | 2,208,308 | 9,857,923 | 9,235,777 | ||||||||||||
| Gross profit | 1,092,141 | 910,658 | 4,219,920 | 3,778,091 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, administrative & other expenses | 820,563 | 633,678 | 3,041,659 | 2,660,776 | ||||||||||||
| Depreciation and amortization | 35,885 | 25,054 | 133,957 | 98,383 | ||||||||||||
| 856,448 | 658,732 | 3,175,616 | 2,759,159 | |||||||||||||
| Income before income taxes | 235,693 | 251,926 | 1,044,304 | 1,018,932 | ||||||||||||
| Income taxes | 85,226 | 91,701 | 359,345 | 370,891 | ||||||||||||
| Net income | $ | 150,467 | $ | 160,225 | $ | 684,959 | $ | 648,041 | ||||||||
| Basic net income per common share | $ | 0.98 | $ | 1.03 | $ | 4.43 | $ | 4.17 | ||||||||
| Diluted net income per common share | $ | 0.97 | $ | 1.03 | $ | 4.40 | $ | 4.14 | ||||||||
| Weighted average common shares outstanding | 154,047 | 154,952 | 154,636 | 155,413 | ||||||||||||
| Dilutive effect of stock options and | ||||||||||||||||
| non-vested restricted stock awards | 1,075 | 943 | 1,078 | 1,007 | ||||||||||||
| Weighted average common shares outstanding – | ||||||||||||||||
| assuming dilution | 155,122 | 155,895 | 155,714 | 156,420 | ||||||||||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
| Three Months Ended Dec. 31, | Year Ended Dec. 31, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net sales: | ||||||||||||||||
| Automotive | $ | 1,916,771 | $ | 1,531,624 | $ | 7,489,186 | $ | 6,320,882 | ||||||||
| Industrial | 1,085,555 | 1,054,773 | 4,429,976 | 4,453,574 | ||||||||||||
| Office Products | 385,761 | 402,942 | 1,638,618 | 1,686,690 | ||||||||||||
| Electrical/Electronic Materials | 143,899 | 135,387 | 568,872 | 582,820 | ||||||||||||
| Other (1) | (14,185 | ) | (5,760 | ) | (48,809 | ) | (30,098 | ) | ||||||||
| Total net sales | $ | 3,517,801 | $ | 3,118,966 | $ | 14,077,843 | $ | 13,013,868 | ||||||||
| Operating profit: | ||||||||||||||||
| Automotive | $ | 153,901 | $ | 122,491 | $ | 641,492 | $ | 540,678 | ||||||||
| Industrial | 73,338 | 78,117 | 320,720 | 352,119 | ||||||||||||
| Office Products | 31,438 | 36,373 | 122,492 | 134,441 | ||||||||||||
| Electrical/Electronic Materials | 12,287 | 12,456 | 47,584 | 50,910 | ||||||||||||
| Total operating profit | 270,964 | 249,437 | 1,132,288 | 1,078,148 | ||||||||||||
| Interest expense, net | (6,094 | ) | (4,914 | ) | (24,330 | ) | (19,619 | ) | ||||||||
| Intangible amortization | (8,500 | ) | (3,811 | ) | (28,987 | ) | (12,991 | ) | ||||||||
| Other, net | (20,677 | ) | 11,214 | (34,667 | ) | (26,606 | ) | |||||||||
| Income before income taxes | $ | 235,693 | $ | 251,926 | $ | 1,044,304 | $ | 1,018,932 | ||||||||
| Capital expenditures | $ | 39,917 | $ | 30,360 | $ | 124,063 | $ | 101,987 | ||||||||
| Depreciation and amortization | $ | 35,885 | $ | 25,054 | $ | 133,957 | $ | 98,383 | ||||||||
(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
| Dec. 31, | Dec. 31, | |||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 196,893 | $ | 403,095 | ||||
| Trade accounts receivable, net | 1,664,819 | 1,490,028 | ||||||
| Merchandise inventories, net | 2,946,021 | 2,602,560 | ||||||
| Prepaid expenses and other current assets | 413,758 | 324,448 | ||||||
| TOTAL CURRENT ASSETS | 5,221,491 | 4,820,131 | ||||||
| Goodwill and other intangible assets, less accumulated amortization | 1,289,356 | 497,839 | ||||||
| Deferred tax assets | 97,555 | 279,463 | ||||||
| Other assets | 401,834 | 643,263 | ||||||
| Net property, plant and equipment | 670,061 | 566,365 | ||||||
| TOTAL ASSETS | $ | 7,680,297 | $ | 6,807,061 | ||||
| | ||||||||
LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Trade accounts payable | $ | 2,269,671 | $ | 1,681,900 | ||||
| Current portion of debt | 264,658 | 250,000 | ||||||
| Income taxes payable | 9,237 | 4,354 | ||||||
| Dividends payable | 82,746 | 76,641 | ||||||
| Other current liabilities | 556,732 | 474,743 | ||||||
| TOTAL CURRENT LIABILITIES | �� | 3,183,044 | 2,487,638 | |||||
| Long-term debt | 500,000 | 250,000 | ||||||
| Retirement and other post-retirement benefit liabilities | 140,171 | 572,988 | ||||||
| Deferred tax liabilities | 83,316 | – | ||||||
| Other long-term liabilities | 414,998 | 488,256 | ||||||
| Common stock | 153,773 | 154,841 | ||||||
| Retained earnings and other | 3,592,956 | 3,344,538 | ||||||
| Accumulated other comprehensive loss | (397,655 | ) | (501,492 | ) | ||||
| TOTAL PARENT EQUITY | 3,349,074 | 2,997,887 | ||||||
| Noncontrolling interests in subsidiaries | 9,694 | 10,292 | ||||||
| TOTAL EQUITY | 3,358,768 | 3,008,179 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 7,680,297 | $ | 6,807,061 | ||||
| | ||||||||
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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended Dec. 31, | ||||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 684,959 | $ | 648,041 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 133,957 | 98,383 | ||||||
| Share-based compensation | 12,648 | 10,747 | ||||||
| Excess tax benefits from share-based compensation | (12,905 | ) | (11,018 | ) | ||||
| Gain on GPC Asia Pacific equity investment | (59,000 | ) | – | |||||
| Other | (26,351 | ) | 10,808 | |||||
| Changes in operating assets and liabilities | 323,423 | 149,477 | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,056,731 | 906,438 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (124,063 | ) | (101,987 | ) | ||||
| Acquisitions and other investing activities | (701,516 | ) | (549,880 | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (825,579 | ) | (651,867 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from debt | 3,019,931 | 750,000 | ||||||
| Payments on debt | (2,995,335 | ) | (750,000 | ) | ||||
| Share-based awards exercised, net of taxes paid | (15,728 | ) | (7,043 | ) | ||||
| Excess tax benefits from share-based compensation | 12,905 | 11,018 | ||||||
| Dividends paid | (326,217 | ) | (300,983 | ) | ||||
| Purchase of stock | (120,673 | ) | (81,826 | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | (425,117 | ) | (378,834 | ) | ||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | (12,237 | ) | 2,304 | |||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (206,202 | ) | (121,959 | ) | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 403,095 | 525,054 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 196,893 | $ | 403,095 | ||||
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