GENUINE PARTS COMPANY REPORTS SALES AND EARNINGS FOR THE SECOND QUARTER ENDED JUNE 30, 2017
- Company Reports Record Sales of $4.1 Billion - - Earnings Per Share of $1.29 - - Updates 2017 Outlook -
Atlanta, Georgia, July 20, 2017 — Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the second quarter and six months ended June 30, 2017.
Sales for the second quarter ended June 30, 2017 were $4.1 billion, a new record and a 5% increase compared to $3.9 billion for the same period in 2016. Net income for the second quarter was $190.0 million compared to $191.4 million recorded for the same period in the previous year. Earnings per share on a diluted basis were $1.29, up 1% from $1.28 for the second quarter last year.
Paul Donahue, President and Chief Executive Officer, commented, “We are encouraged by the steady and consistent total sales increase thus far in 2017, which reflects the diversified aspects of our Company combined with an ongoing strategy to drive both organic and acquisitive growth. This represents our second consecutive quarter of 5% total sales growth for the Company and includes sales increases in each of our four distribution businesses, with our strongest performances in the Industrial and Electrical segments.”
Second quarter sales for the Automotive Group were up 4%, including an approximate 1.5% comparable sales increase. Sales at Motion Industries, our Industrial Group, were up 7%, including a 5% comparable sales increase, and sales at EIS, our Electrical/Electronic Group, grew 11%, with comparable sales down 1%. Sales for S.P. Richards, our Office Products Group, were up 5% for the quarter, including a 4% decrease in comparable sales.
Sales for the six months ended June 30, 2017 were $8.0 billion, also a new record and a 5% increase compared to $7.6 billion for the same period in 2016. Net income for the six months was $350.1 million compared to $349.4 million in 2016, and earnings per share on a diluted basis were $2.36, up 1% compared to $2.33 in 2016.
Mr. Donahue concluded, “Our teams are committed to generating sustainable sales growth, while also streamlining our cost structure to improve profitability. We believe our focus in these areas, along with a strong balance sheet, solid cash flows and effective capital allocation, will drive long-term growth for the Company and serve to maximize shareholder value.”
2017 Outlook
For the full year 2017, the Company continues to expect total sales to be up 3% to 4%. The Company expects diluted earnings per share to range from $4.70 to $4.75 compared to the prior outlook of $4.75 to $4.85.
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 877-741-4245, conference ID 6054876. A replay will also be available on the Company’s website or at 844-512-2921, conference ID 6054876, two hours after the completion of the call until 12:00 a.m. Eastern time on August 4, 2017.
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 legislation or government regulations or policies; changes in general economic conditions, including unemployment, inflation or deflation; changes in tax policies; 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 2016 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, Senior Vice President — Investor Relations – (678) 934-5628
1
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30,
Six Months Ended June 30,
2017
2016
2017
2016
(Unaudited)
(in thousands, except per share data)
Net sales
$
4,100,178
$
3,899,638
$
8,005,819
$
7,617,905
Cost of goods sold
2,860,466
2,734,186
5,610,386
5,347,982
Gross profit
1,239,712
1,165,452
2,395,433
2,269,923
Operating expenses:
Selling, administrative & other expenses
903,343
829,489
1,777,157
1,652,661
Depreciation and amortization
39,232
35,911
77,364
70,565
942,575
865,400
1,854,521
1,723,226
Income before income taxes
297,137
300,052
540,912
546,697
Income taxes
107,165
108,683
190,780
197,303
Net income
$
189,972
$
191,369
$
350,132
$
349,394
Basic net income per common share
$
1.29
$
1.28
$
2.37
$
2.34
Diluted net income per common share
$
1.29
$
1.28
$
2.36
$
2.33
Weighted average common shares outstanding
147,079
149,241
147,613
149,417
Dilutive effect of stock options and
non-vested restricted stock awards
571
788
598
761
Weighted average common shares outstanding – assuming dilution
147,650
150,029
148,211
150,178
2
GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30,
Six Months Ended June 30,
2017
2016
2017
2016
(Unaudited)
(in thousands)
Net sales:
Automotive
$
2,164,104
$
2,087,978
$
4,162,487
$
4,020,156
Industrial
1,252,867
1,167,395
2,484,949
2,320,022
Office Products
504,401
481,605
1,023,406
958,259
Electrical/Electronic Materials
204,628
184,508
389,045
360,355
Other (1)
(25,822
)
(21,848
)
(54,068
)
(40,887
)
Total net sales
$
4,100,178
$
3,899,638
$
8,005,819
$
7,617,905
Operating profit:
Automotive
$
207,332
$
203,572
$
359,089
$
357,282
Industrial
96,300
88,263
186,674
170,096
Office Products
30,091
32,640
61,210
66,844
Electrical/Electronic Materials
15,533
15,987
29,168
30,828
Total operating profit
349,256
340,462
636,141
625,050
Interest expense, net
(6,878
)
(4,665
)
(13,052
)
(9,487
)
Intangible amortization
(11,434
)
(9,225
)
(22,240
)
(17,985
)
Other, net
(33,807
)
(26,520
)
(59,937
)
(50,881
)
Income before income taxes
$
297,137
$
300,052
$
540,912
$
546,697
Capital expenditures
$
29,289
$
38,041
$
54,095
$
49,711
Depreciation and amortization
$
39,232
$
35,911
$
77,364
$
70,565
(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,
2017
2016
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
203,145
$
233,627
Trade accounts receivable, net
2,169,970
2,031,094
Merchandise inventories, net
3,330,189
3,062,673
Prepaid expenses and other current assets
598,112
538,748
TOTAL CURRENT ASSETS
6,301,416
5,866,142
Goodwill and other intangible assets, less accumulated amortization
1,677,748
1,478,298
Deferred tax assets
126,299
112,316
Other assets
565,905
491,968
Net property, plant and equipment
740,776
685,385
TOTAL ASSETS
$
9,412,144
$
8,634,109
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable
$
3,302,969
$
3,075,769
Current portion of debt
580,000
525,000
Income taxes payable
28,300
28,451
Dividends payable
99,109
97,975
Other current liabilities
790,789
678,975
TOTAL CURRENT LIABILITIES
4,801,167
4,406,170
Long-term debt
550,000
250,000
Pension and other post-retirement benefit liabilities
272,394
217,052
Deferred tax liabilities
48,256
51,708
Other long-term liabilities
438,984
458,950
Common stock
146,831
148,914
Retained earnings
4,062,682
3,970,870
Accumulated other comprehensive loss
(921,389
)
(882,165
)
TOTAL PARENT EQUITY
3,288,124
3,237,619
Noncontrolling interests in subsidiaries
13,219
12,610
TOTAL EQUITY
3,301,343
3,250,229
TOTAL LIABILITIES AND EQUITY
$
9,412,144
$
8,634,109
4
GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2017
2016
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income
$
350,132
$
349,394
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
77,364
70,565
Share-based compensation
8,086
10,002
Excess tax benefits from share-based compensation
(2,245
)
(7,540
)
Changes in operating assets and liabilities
(88,053
)
108,071
NET CASH PROVIDED BY OPERATING ACTIVITIES
345,284
530,492
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(54,095
)
(49,711
)
Acquisitions and other investing activities
(240,216
)
(305,435
)
NET CASH USED IN INVESTING ACTIVITIES
(294,311
)
(355,146
)
FINANCING ACTIVITIES:
Proceeds from debt
2,250,000
1,950,000
Payments on debt
(1,995,000
)
(1,800,000
)
Share-based awards exercised, net of taxes paid
(3,014
)
(8,627
)
Excess tax benefits from share-based compensation
—
7,540
Dividends paid
(197,408
)
(190,934
)
Purchase of stock
(153,508
)
(119,397
)
NET CASH USED IN FINANCING ACTIVITIES
(98,930
)
(161,418
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
8,223
8,068
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(39,734
)
21,996
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
242,879
211,631
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
203,145
$
233,627
5
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