GENUINE PARTS COMPANY REPORTS SALES AND EARNINGS FOR THE SECOND QUARTER ENDED JUNE 30, 2015
- Company Reports Sales of $3.9 Billion and Earnings Per Share of $1.28 -
Atlanta, Georgia, July 20, 2015 — Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the second quarter and six months ended June 30, 2015.
Sales for the second quarter ended June 30, 2015, increased 1% to $3.94 billion compared to sales of $3.91 billion for the same period in 2014. Net income for the second quarter was $195.4 million compared to $197.7 million recorded for the same period in the previous year. Earnings per share on a diluted basis were $1.28, equal to the earnings per share for the second quarter last year.
Tom Gallagher, Chairman and Chief Executive Officer, commented, “Our results reflect the moderation in our sales and earnings growth rates in the second quarter, primarily due to the ongoing choppiness in the economy. This is especially the case for our Industrial business. Overall, our 1% second quarter sales increase included underlying sales growth of 2.2% and a 1.3% contribution from acquisitions, offset by an expected currency headwind of 2.7%. Sales for the Automotive Group were essentially flat with the prior year and consisted of core automotive growth of approximately 4% offset by the impact of currency. Sales at Motion Industries, our Industrial Group, decreased by approximately 2%, which basically represents the underlying growth for this business, as a 1% contribution from acquisitions was offset by an equal currency headwind. Sales at EIS, our Electrical/Electronic Group, increased by 3.5% and included approximately 6% growth from acquisitions, net of a 2% decrease in core sales and a 0.5% negative impact of copper pricing. Sales for S. P. Richards, our Office Products Group, were up 14%, consisting of 9% underlying growth and approximately 5% from acquisitions.”
Sales for the six months ended June 30, 2015 were $7.68 billion, up 2% compared to 2014. Net income for the six months was $356.4 million, basically unchanged from 2014, and earnings per share on a diluted basis were $2.33, up 1% compared to $2.30 in 2014.
Mr. Gallagher concluded, “In the midst of the challenging sales environment, two important highlights thus far in 2015 include the further strengthening of our balance sheet and improved cash flows, which position us well for future growth. Our teams are very focused on driving improved results over the balance of the year. We believe the initiatives we have put in place should contribute to our growth in each of our four distribution businesses as we move ahead.”
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 “Investors”, or by dialing 844-857-1770, conference ID 77046416. A replay will also be available on the Company’s website or at 855-859-2056, conference ID 77046416, two hours after the completion of the call until 12:00 a.m. Eastern time on August 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 2014 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 June 30,
Six months Ended June 30,
2015
2014
2015
2014
(Unaudited)
(in thousands, except per share data)
Net sales
$
3,940,401
$
3,908,387
$
7,676,452
$
7,533,284
Cost of goods sold
2,762,071
2,729,219
5,385,303
5,269,486
Gross profit
1,178,330
1,179,168
2,291,149
2,263,798
Operating expenses:
Selling, administrative & other expenses
832,610
832,205
1,658,164
1,636,006
Depreciation and amortization
35,603
36,783
71,487
73,640
868,213
868,988
1,729,651
1,709,646
Income before income taxes
310,117
310,180
561,498
554,152
Income taxes
114,744
112,453
205,115
198,941
Net income
$
195,373
$
197,727
$
356,383
$
355,211
Basic net income per common share
$
1.28
$
1.29
$
2.34
$
2.31
Diluted net income per common share
$
1.28
$
1.28
$
2.33
$
2.30
Weighted average common shares outstanding
152,134
153,463
152,394
153,595
Dilutive effect of stock options and
non-vested restricted stock awards
855
1,069
880
1,063
Weighted average common shares outstanding – assuming dilution
152,989
154,532
153,274
154,658
2
GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
Six Months Ended June 30,
2015
2014
2015
2014
(Unaudited)
(in thousands)
Net sales:
Automotive
$
2,103,126
$
2,110,396
$
4,001,634
$
4,008,911
Industrial
1,188,031
1,209,235
2,369,854
2,352,509
Office Products
477,755
418,785
968,053
836,883
Electrical/Electronic Materials
194,701
188,034
376,747
368,365
Other (1)
(23,212
)
(18,063
)
(39,836
)
(33,384
)
Total net sales
$
3,940,401
$
3,908,387
$
7,676,452
$
7,533,284
Operating profit:
Automotive
$
207,443
$
206,683
$
358,084
$
356,793
Industrial
88,876
95,428
176,645
178,478
Office Products
34,501
31,183
71,025
65,129
Electrical/Electronic Materials
18,568
16,463
34,031
31,992
Total operating profit
349,388
349,757
639,785
632,392
Interest expense, net
(5,674
)
(6,224
)
(11,001
)
(12,430
)
Intangible amortization
(8,796
)
(8,498
)
(17,400
)
(17,374
)
Other, net
(24,801
)
(24,855
)
(49,886
)
(48,436
)
Income before income taxes
$
310,117
$
310,180
$
561,498
$
554,152
Capital expenditures
$
21,037
$
21,536
$
37,464
$
39,923
Depreciation and amortization
$
35,603
$
36,783
$
71,487
$
73,640
(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
June 30,
June 30,
2015
2014
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
223,840
$
152,863
Trade accounts receivable, net
2,008,445
1,909,268
Merchandise inventories, net
3,025,165
2,987,143
Prepaid expenses and other current assets
506,070
463,087
TOTAL CURRENT ASSETS
5,763,520
5,512,361
Goodwill and other intangible assets, less accumulated amortization
1,382,766
1,432,862
Deferred tax assets
139,928
89,196
Other assets
486,885
555,825
Net property, plant and equipment
640,534
661,304
TOTAL ASSETS
$
8,413,633
$
8,251,548
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
2,743,444
$
2,489,570
Current portion of debt
350,000
306,358
Income taxes payable
1,069
22,639
Dividends payable
93,496
88,211
Other accrued expenses
679,613
600,076
TOTAL CURRENT LIABILITIES
3,867,622
3,506,854
Long-term debt
500,000
500,000
Pension and other post-retirement benefit liabilities
261,783
137,616
Deferred tax liabilities
68,428
85,584
Other long-term liabilities
460,302
484,000
Common stock
151,709
153,306
Retained earnings
3,901,607
3,725,279
Accumulated other comprehensive loss
(809,501
)
(351,415
)
TOTAL PARENT EQUITY
3,243,815
3,527,170
Noncontrolling interests in subsidiaries
11,683
10,324
TOTAL EQUITY
3,255,498
3,537,494
TOTAL LIABILITIES AND EQUITY
$
8,413,633
$
8,251,548
4
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2015
2014
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
356,383
$
355,211
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
71,487
73,640
Share-based compensation
8,646
7,855
Excess tax benefits from share-based compensation
(5,300
)
(5,948
)
Changes in operating assets and liabilities
22,892
(63,656
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
454,108
367,102
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(37,464
)
(39,923
)
Acquisitions and other investing activities
(80,140
)
(178,889
)
NET CASH USED IN INVESTING ACTIVITIES
(117,604
)
(218,812
)
FINANCING ACTIVITIES:
Proceeds from debt
1,634,587
1,246,613
Payments on debt
(1,552,554
)
(1,214,169
)
Share-based awards exercised, net of taxes paid
(5,914
)
(6,754
)
Excess tax benefits from share-based compensation
5,300
5,948
Dividends paid
(181,883
)
(171,171
)
Purchase of stock
(145,219
)
(53,769
)
NET CASH USED IN FINANCING ACTIVITIES
(245,683
)
(193,302
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(4,711
)
982
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
86,110
(44,030
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
137,730
196,893
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
223,840
$
152,863
5
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