GENUINE PARTS COMPANY REPORTS SALES AND EARNINGS FOR THE SECOND QUARTER ENDED JUNE 30, 2016
- Company Reports Sales of $3.9 Billion and Earnings Per Share of $1.28 -
Atlanta, Georgia, July 19, 2016 — Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the second quarter and six months ended June 30, 2016.
Sales for the second quarter ended June 30, 2016 were $3.90 billion compared to $3.94 billion for the same period in 2015. Net income for the second quarter was $191.4 million compared to $195.4 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.
Paul Donahue, President and Chief Executive Officer, commented, “Total sales in the second quarter were down 1% from the prior year, inclusive of a 2% contribution from acquisitions less a currency headwind of 1%. Sales for the Automotive Group were down 0.7%, consisting of a 1% core sales decline, a 1.5% currency headwind and an approximate 2% contribution from acquisitions. Sales at Motion Industries, our Industrial Group, were down 1.7%, including a 3% underlying sales decrease and an approximate 0.5% currency headwind, offset by a 2% benefit from acquisitions. Sales at EIS, our Electrical/Electronic Group, were down approximately 5%, including a 1% negative impact of copper pricing. Sales for S. P. Richards, our Office Products Group, were up 1%, consisting of a 5% contribution from acquisitions offset by a 4% underlying sales decrease.”
Mr. Donahue stated, “This quarter our automotive sales along with our other distribution businesses were all impacted by the challenging sales environment. We offset some of this impact with key sales and gross margin initiatives as well as tight expense controls. Importantly, we also further improved the strength of our balance sheet and cash flows with effective working capital management. We expect the combination of these efforts to support stronger growth for the Company over the long-term.”
Sales for the six months ended June 30, 2016 were $7.62 billion compared to $7.68 billion for the same period in 2015. Net income for the six months was $349.4 million, down 2% from 2015, and earnings per share on a diluted basis were $2.33, equal to the same six month period of the prior year.
2016 Outlook
For the full year 2016, the Company is maintaining its guidance for 1% to 2% total sales growth and is updating diluted earnings per share to $4.70 to $4.75 from $4.70 to $4.80.
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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 888-471-3831, conference ID 2490635. A replay will also be available on the Company’s website or at 877-870-5176, conference ID 2490635, two hours after the completion of the call until 12:00 a.m. Eastern time on August 3, 2016.
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, the Company’s ability to successfully implement its business initiatives in each of its four business segments; slowing demand for the Company’s products; changes in general economic conditions, including, unemployment, inflation or deflation; volatile exchange rates; high energy costs; uncertain credit markets and other macro-economic conditions; competitive product, service and pricing pressures; the ability to maintain favorable vendor arrangements and relationships; disruptions in our vendors’ operations; the Company’s ability to successfully integrate its acquired businesses; the uncertainties and costs of litigation; disruptions caused by a failure or breach of the Company’s information systems, as well as other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for 2015 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 – (678) 934-5044 Sidney G. Jones, Vice President — Investor Relations – (678) 934-5628
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,
Six Months Ended June 30,
2016
2015
2016
2015
(Unaudited)
(in thousands, except per share data)
Net sales
$
3,899,638
$
3,940,401
$
7,617,905
$
7,676,452
Cost of goods sold
2,734,186
2,762,071
5,347,982
5,385,303
Gross profit
1,165,452
1,178,330
2,269,923
2,291,149
Operating expenses:
Selling, administrative & other expenses
829,489
832,610
1,652,661
1,658,164
Depreciation and amortization
35,911
35,603
70,565
71,487
865,400
868,213
1,723,226
1,729,651
Income before income taxes
300,052
310,117
546,697
561,498
Income taxes
108,683
114,744
197,303
205,115
Net income
$
191,369
$
195,373
$
349,394
$
356,383
Basic net income per common share
$
1.28
$
1.28
$
2.34
$
2.34
Diluted net income per common share
$
1.28
$
1.28
$
2.33
$
2.33
Weighted average common shares outstanding
149,241
152,134
149,417
152,394
Dilutive effect of stock options and
non-vested restricted stock awards
788
855
761
880
Weighted average common shares outstanding – assuming dilution
150,029
152,989
150,178
153,274
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GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
Six Months Ended June 30,
2016
2015
2016
2015
(Unaudited)
(in thousands)
Net sales:
Automotive
$
2,087,978
$
2,103,126
$
4,020,156
$
4,001,634
Industrial
1,167,395
1,188,031
2,320,022
2,369,854
Office Products
481,605
477,755
958,259
968,053
Electrical/Electronic Materials
184,508
194,701
360,355
376,747
Other (1)
(21,848
)
(23,212
)
(40,887
)
(39,836
)
Total net sales
$
3,899,638
$
3,940,401
$
7,617,905
$
7,676,452
Operating profit:
Automotive
$
203,572
$
207,443
$
357,282
$
358,084
Industrial
88,263
88,876
170,096
176,645
Office Products
32,640
34,501
66,844
71,025
Electrical/Electronic Materials
15,987
18,568
30,828
34,031
Total operating profit
340,462
349,388
625,050
639,785
Interest expense, net
(4,665
)
(5,674
)
(9,487
)
(11,001
)
Intangible amortization
(9,225
)
(8,796
)
(17,985
)
(17,400
)
Other, net
(26,520
)
(24,801
)
(50,881
)
(49,886
)
Income before income taxes
$
300,052
$
310,117
$
546,697
$
561,498
Capital expenditures
$
38,041
$
21,037
$
49,711
$
37,464
Depreciation and amortization
$
35,911
$
35,603
$
70,565
$
71,487
(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
June 30,
June 30,
2016
2015
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
233,627
$
223,840
Trade accounts receivable, net
2,031,094
2,008,445
Merchandise inventories, net
3,062,673
3,025,165
Prepaid expenses and other current assets
538,748
506,070
TOTAL CURRENT ASSETS
5,866,142
5,763,520
Goodwill and other intangible assets, less accumulated amortization
1,478,298
1,382,766
Deferred tax assets
112,316
139,928
Other assets
491,968
486,885
Net property, plant and equipment
685,385
640,534
TOTAL ASSETS
$
8,634,109
$
8,413,633
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
3,075,769
$
2,743,444
Current portion of debt
525,000
350,000
Income taxes payable
28,451
1,069
Dividends payable
97,975
93,496
Other current liabilities
678,975
679,613
TOTAL CURRENT LIABILITIES
4,406,170
3,867,622
Long-term debt
250,000
500,000
Pension and other post-retirement benefit liabilities
217,052
261,783
Deferred tax liabilities
51,708
68,428
Other long-term liabilities
458,950
460,302
Common stock
148,914
151,709
Retained earnings
3,970,870
3,901,607
Accumulated other comprehensive loss
(882,165
)
(809,501
)
TOTAL PARENT EQUITY
3,237,619
3,243,815
Noncontrolling interests in subsidiaries
12,610
11,683
TOTAL EQUITY
3,250,229
3,255,498
TOTAL LIABILITIES AND EQUITY
$
8,634,109
$
8,413,633
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GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2016
2015
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
349,394
$
356,383
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
70,565
71,487
Share-based compensation
10,002
8,646
Excess tax benefits from share-based compensation
(7,540
)
(5,300
)
Changes in operating assets and liabilities
111,077
22,892
NET CASH PROVIDED BY OPERATING ACTIVITIES
533,498
454,108
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(49,711
)
(37,464
)
Acquisitions and other investing activities
(308,441
)
(80,140
)
NET CASH USED IN INVESTING ACTIVITIES
(358,152
)
(117,604
)
FINANCING ACTIVITIES:
Proceeds from debt
1,950,000
1,634,587
Payments on debt
(1,800,000
)
(1,552,554
)
Share-based awards exercised, net of taxes paid
(8,627
)
(5,914
)
Excess tax benefits from share-based compensation
7,540
5,300
Dividends paid
(190,934
)
(181,883
)
Purchase of stock
(119,397
)
(145,219
)
NET CASH USED IN FINANCING ACTIVITIES
(161,418
)
(245,683
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
8,068
(4,711
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
21,996
86,110
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
211,631
137,730
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
233,627
$
223,840
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