GENUINE PARTS COMPANY REPORTS FOURTH QUARTER AND FULL YEAR RESULTS FOR 2014
- 4th Quarter Sales up 9%; 4th Quarter EPS up 10% - - Record Sales and Earnings for 2014 –
Atlanta, Georgia, February 17, 2015 — Genuine Parts Company (NYSE: GPC) announced today fourth quarter results and record sales and earnings for the year ended December 31, 2014.
Sales in the fourth quarter ended December 31, 2014 increased 9% to $3.8 billion, compared to sales of $3.5 billion for the same period in 2013. Net income in the fourth quarter was $166 million, or $1.07 per share on a diluted basis, compared to $150 million, or $0.97 per diluted share, in 2013, up 10%.
In review of the fourth quarter, Tom Gallagher, Chairman and Chief Executive Officer, commented, “We are pleased to report another solid quarter of sales and earnings growth for Genuine Parts Company. Our 9% total sales increase includes approximately 7.6% underlying sales growth and a 2.7% contribution from acquisitions, offset by a currency headwind of approximately 1.6%. Our overall sales growth was supported by increases in each of our four business segments. Sales for the Automotive Group were up 4%, consisting of core automotive growth of 6% and a 0.5% contribution from acquisitions. These items were offset by a 2.5% negative impact of currency. Sales at Motion Industries, our Industrial Group, were up 10%, including 9% underlying growth and 2% from acquisitions offset by a currency headwind of approximately 1%. Sales at EIS, our Electrical/Electronic Group, increased by 23% and include a 20% contribution from acquisitions and 3% underlying growth. Sales for S. P. Richards, our Office Products Group, were up 22%, consisting of 14% underlying growth and 8% from acquisitions.”
Sales for the year ended December 31, 2014 were $15.3 billion, up 9% compared to 2013. Net income for the year was $711 million, an increase of 4% compared to $685 million in 2013. Earnings per share on a diluted basis were $4.61, up 5% compared to $4.40 in 2013.
As previously disclosed, in association with the April 1, 2013 acquisition of GPC Asia Pacific, the Company’s initial investment was remeasured and, net of certain one-time purchase accounting costs, amounted to a pre-tax income adjustment of approximately $36 million, or $0.22 diluted earnings per share, in the second quarter of 2013. Additionally, a pre-tax expense adjustment of $3 million, or $0.01 diluted earnings per share, was recorded in the third quarter of 2013.
Before the one-time adjustment in 2013, net income for the full year in 2014 of $711 million, was up 9% compared to the previous year. Earnings per share on a diluted basis of $4.61 were up 10% compared to the same period in 2013 excluding the adjustment.
Mr. Gallagher stated, “2014 was another year of record sales and earnings, and we are especially pleased that each of our four business segments contributed to these records. We also improved our operating margin for the year and further improved our financial strength with effective asset management and solid cash flows.”
Mr. Gallagher added, “Industry fundamentals were favorable in the automotive aftermarket during 2014, and we also experienced improving industry conditions across our non-automotive businesses during the year. These factors, combined with our internal sales initiatives, drove sales growth of approximately 5% for the year, while acquisitions also contributed approximately 5% to sales. These items were offset by a currency headwind of approximately 1%. Automotive sales were up 8% for the year, including approximately 6% underlying sales growth and a 4% contribution from acquisitions, offset by a currency headwind of approximately 2%. Industrial Group sales increased by 8%, consisting of 6% underlying growth and 3% from acquisitions, offset by the negative impact of currency of approximately 1%. Electrical/Electronic sales increased by 30% for the year, primarily due to acquisitions. Sales for the Office Products business were up 10%, with approximately 5% coming from underlying growth and another 5% from acquisitions.”
Mr. Gallagher concluded, “The Company showed progress in a number of key areas in 2014 and we are proud of the GPC Team’s accomplishments. With that said, we recognize there is still room for further improvement in our operations as we move forward. To this end, 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. Progress in each of these important areas will keep the Company moving ahead and will help to ensure another successful year in 2015.”
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 “Investors”, or by dialing 844-857-1770, conference ID 66755202. A replay will also be available on the Company’s website or at 855-859-2056, conference ID 66755202, two hours after the completion of the call until 12:00 a.m. Eastern time on March 4, 2015.
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 in the U.S. and Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S., Canada and Mexico.
Contacts
Carol B. Yancey, Executive Vice President and CFO – (770) 612-2044 Sidney G. Jones, Vice President — Investor Relations – (770) 818-4628
1
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Dec. 31,
Year Ended Dec. 31,
2014
2013
2014
2013
(in thousands, except per share data)
Net sales
$
3,822,454
$
3,517,801
$
15,341,647
$
14,077,843
Cost of goods sold
2,675,913
2,425,660
10,747,886
9,857,923
Gross profit
1,146,541
1,092,141
4,593,761
4,219,920
Operating expenses:
Selling, administrative & other expenses
841,546
820,563
3,327,709
3,041,659
Depreciation and amortization
39,691
35,885
148,313
133,957
881,237
856,448
3,476,022
3,175,616
Income before income taxes
265,304
235,693
1,117,739
1,044,304
Income taxes
99,745
85,226
406,453
359,345
Net income
$
165,559
$
150,467
$
711,286
$
684,959
Basic net income per common share
$
1.08
$
0.98
$
4.64
$
4.43
Diluted net income per common share
$
1.07
$
0.97
$
4.61
$
4.40
Weighted average common shares outstanding
152,996
154,047
153,299
154,636
Dilutive effect of stock options and
non-vested restricted stock awards
1,088
1,075
1,076
1,078
Weighted average common shares outstanding –
assuming dilution
154,084
155,122
154,375
155,714
2
GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended Dec. 31,
Year Ended Dec. 31,
2014
2013
2014
2013
(in thousands)
Net sales:
Automotive
$
1,988,448
$
1,916,771
$
8,096,877
$
7,489,186
Industrial
1,198,032
1,085,555
4,771,080
4,429,976
Office Products
469,299
385,761
1,802,754
1,638,618
Electrical/Electronic Materials
177,433
143,899
739,119
568,872
Other (1)
(10,758
)
(14,185
)
(68,183
)
(48,809
)
Total net sales
$
3,822,454
$
3,517,801
$
15,341,647
$
14,077,843
Operating profit:
Automotive
$
150,335
$
153,901
$
700,386
$
641,492
Industrial
96,303
73,338
370,043
320,720
Office Products
35,280
31,438
133,727
122,492
Electrical/Electronic Materials
15,126
12,287
64,884
47,584
Total operating profit
297,044
270,964
1,269,040
1,132,288
Interest expense, net
(5,479
)
(6,094
)
(24,192
)
(24,330
)
Intangible amortization
(10,546
)
(8,500
)
(36,867
)
(28,987
)
Other, net
(15,715
)
(20,677
)
(90,242
)
(34,667
)
Income before income taxes
$
265,304
$
235,693
$
1,117,739
$
1,044,304
Capital expenditures
$
33,897
$
39,917
$
107,681
$
124,063
Depreciation and amortization
$
39,691
$
35,885
$
148,313
$
133,957
(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,
2014
2013
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
137,730
$
196,893
Trade accounts receivable, net
1,872,365
1,664,819
Merchandise inventories, net
3,043,848
2,946,021
Prepaid expenses and other current assets
538,582
413,758
TOTAL CURRENT ASSETS
5,592,525
5,221,491
Goodwill and other intangible assets, less accumulated amortization
1,386,590
1,289,356
Deferred tax assets
145,331
97,555
Other assets
451,690
401,834
Net property, plant and equipment
670,102
670,061
TOTAL ASSETS
$
8,246,238
$
7,680,297
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
2,554,759
$
2,269,671
Current portion of debt
265,466
264,658
Dividends payable
88,039
82,746
Other accrued expenses
675,851
565,969
TOTAL CURRENT LIABILITIES
3,584,115
3,183,044
Long-term debt
500,000
500,000
Pension and other post-retirement benefit liabilities
329,531
140,171
Deferred tax liabilities
72,479
83,316
Other long-term liabilities
447,749
414,998
Common stock
153,113
153,773
Retained earnings
3,868,346
3,592,956
Accumulated other comprehensive loss
(720,211
)
(397,655
)
TOTAL PARENT EQUITY
3,301,248
3,349,074
Noncontrolling interests in subsidiaries
11,116
9,694
TOTAL EQUITY
3,312,364
3,358,768
TOTAL LIABILITIES AND EQUITY
$
8,246,238
$
7,680,297
4
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended Dec. 31,
2014
2013
(in thousands)
OPERATING ACTIVITIES:
Net income
$
711,286
$
684,959
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
148,313
133,957
Share-based compensation
16,239
12,648
Excess tax benefits from share-based compensation
(17,766
)
(12,905
)
Gain on GPC Asia Pacific equity investment
—
(59,000
)
Other
50,600
(26,351
)
Changes in operating assets and liabilities
(118,527
)
323,423
NET CASH PROVIDED BY OPERATING ACTIVITIES
790,145
1,056,731
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(107,681
)
(124,063
)
Acquisitions and other investing activities
(279,034
)
(701,516
)
NET CASH USED IN INVESTING ACTIVITIES
(386,715
)
(825,579
)
FINANCING ACTIVITIES:
Proceeds from debt
2,727,924
3,019,931
Payments on debt
(2,735,862
)
(2,995,335
)
Share-based awards exercised, net of taxes paid
(22,051
)
(15,728
)
Excess tax benefits from share-based compensation
17,766
12,905
Dividends paid
(347,271
)
(326,217
)
Purchase of stock
(95,946
)
(120,673
)
NET CASH USED IN FINANCING ACTIVITIES
(455,440
)
(425,117
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(7,153
)
(12,237
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(59,163
)
(206,202
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
196,893
403,095
CASH AND CASH EQUIVALENTS AT END OF YEAR
$
137,730
$
196,893
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