Carol B. Yancey, Executive Vice President — Finance – (770) 612-2044 Sidney G. Jones, Vice President — Investor Relations – (770) 818-4628
GENUINE PARTS COMPANY REPORTS SALES AND EARNINGS FOR THE FIRST QUARTER ENDED MARCH 31, 2014
- Sales Up 13% and EPS Up 10% -
Atlanta, Georgia, April 22, 2014 — Genuine Parts Company (NYSE: GPC) reports sales and earnings for the first quarter ended March 31, 2014.
Thomas C. Gallagher, Chairman and Chief Executive Officer, announced today that sales for the first quarter ended March 31, 2014, were $3.6 billion, up 13% compared to $3.2 billion in the first quarter of 2013. Net income for the quarter was $157.5 million, up 9% from $144.4 million recorded in the same period of the previous year. Earnings per share on a diluted basis were $1.02, up 10% compared to 93 cents for the first quarter last year.
Mr. Gallagher stated, “We are encouraged by our results in the first quarter and pleased to report a solid start to 2014. Our total sales increase included a 10% contribution from acquisitions and 4% underlying sales growth offset by a 1% headwind from currency. Automotive sales remained the strongest among our segments, up 23% and driven by a 17% contribution from the GPC Asia Pacific acquisition and underlying growth of approximately 7%. These strong results were offset by a negative translation effect of 1.6%. Sales at Motion Industries, our Industrial Group, were up 4% and include 3% from acquisitions less a 1% translation effect. Sales at EIS, our Electrical/Electronic Group, increased by 30% due primarily to acquisitions. Sales for S. P. Richards, our Office Products Group, were down slightly in the quarter, although a small acquisition in the quarter positively impacted the results.”
Mr. Gallagher concluded, “During the first quarter, we achieved our core objectives of growing sales and earnings, producing operating margin improvement, generating solid cash flows and maintaining a strong balance sheet. Looking ahead, we are well positioned to demonstrate continued progress in driving improved results and remain optimistic about our prospects for growth in each of our four businesses.” Page 2
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EDT 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 19450861. A replay will also be available on the Company’s website or at 855-859-2056, conference ID 19450861, two hours after the completion of the call until 12:00 a.m. EDT on May 7, 2014.
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 2013 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.
1
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
2014
2013
(Unaudited)
(in thousands, except per share data)
Net sales
$
3,624,897
$
3,198,802
Cost of goods sold
2,540,267
2,277,054
Gross profit
1,084,630
921,748
Operating expenses:
Selling, administrative & other expenses
803,802
673,612
Depreciation and amortization
36,856
25,999
840,658
699,611
Income before income taxes
243,972
222,137
Income taxes
86,488
77,748
Net income
$
157,484
$
144,389
Basic net income per common share
$
1.02
$
.93
Diluted net income per common share
$
1.02
$
.93
Weighted average common shares outstanding
153,729
154,891
Dilutive effect of stock options and non-vested restricted stock awards
1,067
1,040
Weighted average common shares outstanding – assuming dilution
154,796
155,931
2
GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended March 31,
2014
2013
(Unaudited)
(in thousands)
Net sales:
Automotive
$
1,898,515
$
1,544,537
Industrial
1,143,274
1,102,080
Office Products
418,098
420,128
Electrical/Electronic Materials
180,331
139,185
Other (1)
(15,321
)
(7,128
)
Total net sales
$
3,624,897
$
3,198,802
Operating profit:
Automotive
$
150,110
$
121,043
Industrial
83,050
78,895
Office Products
33,946
33,192
Electrical/Electronic Materials
15,529
10,451
Total operating profit
282,635
243,581
Interest expense, net
(6,206
)
(3,353
)
Intangible amortization
(8,876
)
(3,775
)
Other, net
(23,581
)
(14,316
)
Income before income taxes
$
243,972
$
222,137
Capital expenditures
$
18,387
$
12,924
Depreciation and amortization
$
36,856
$
25,999
(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
March 31,
March 31,
2014
2013
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
103,472
$
841,894
Trade accounts receivable, net
1,828,309
1,624,954
Merchandise inventories, net
2,974,306
2,560,077
Prepaid expenses and other current assets
440,344
324,679
TOTAL CURRENT ASSETS
5,346,431
5,351,604
Goodwill and other intangible assets, less accumulated amortization
1,409,812
492,756
Deferred tax assets
92,539
273,488
Other assets
468,903
639,335
Net property, plant and equipment
664,689
581,279
TOTAL ASSETS
$
7,982,374
$
7,338,462
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
2,335,327
$
1,800,726
Current portion of debt
399,756
664,742
Income taxes payable
76,682
68,375
Dividends payable
88,421
83,267
Other current liabilities
522,552
406,204
TOTAL CURRENT LIABILITIES
3,422,738
3,023,314
Long-term debt
500,000
250,000
Retirement and other post-retirement benefit liabilities
137,638
505,543
Deferred tax liabilities
87,726
–
Other long-term liabilities
423,063
485,162
Common stock
153,604
154,966
Retained earnings and other
3,641,920
3,407,317
Accumulated other comprehensive loss
(393,762
)
(497,934
)
TOTAL PARENT EQUITY
3,401,762
3,064,349
Noncontrolling interests in subsidiaries
9,447
10,094
TOTAL EQUITY
3,411,209
3,074,443
TOTAL LIABILITIES AND EQUITY
$
7,982,374
$
7,338,462
4
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months
Ended March 31,
2014
2013
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
157,484
$
144,389
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
36,856
25,999
Share-based compensation
3,073
2,477
Excess tax benefits from share-based compensation
(4,106
)
(3,840
)
Other
13
(67
)
Changes in operating assets and liabilities
(133,541
)
(52,580
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
59,779
116,378
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(18,387
)
(12,924
)
Acquisitions and other investing activities
(156,853
)
(6,745
)
NET CASH USED IN INVESTING ACTIVITIES
(175,240
)
(19,669
)
FINANCING ACTIVITIES:
Proceeds from debt
740,012
439,742
Payments on debt
(610,604
)
(25,000
)
Share-based awards exercised, net of taxes paid
(4,736
)
(4,425
)
Excess tax benefits from share-based compensation
4,106
3,840
Dividends paid
(82,750
)
(76,641
)
Purchase of stock
(22,709
)
(110
)
NET CASH PROVIDED BY FINANCING ACTIVITIES
23,319
337,406
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(1,279
)
4,684
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(93,421
)
438,799
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
196,893
403,095
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
103,472
$
841,894
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