ATLANTA, Oct. 19, 2017 /PRNewswire/ -- Genuine Parts
Company (NYSE: GPC) announced today sales and earnings for the
third quarter and nine months ended September 30, 2017.
Sales for the third quarter ended September 30, 2017 were $4.1 billion, a 4% increase compared to
$3.9 billion for the same period in
2016. Net income for the third quarter was $158.4 million compared to $185.3 million recorded for the same period in
the previous year. Earnings per share on a diluted basis were
$1.08 compared to $1.24 in the third quarter last year.
Before the impact of certain transaction costs primarily related to
the Company's pending $2.0 billion
European acquisition recorded in the third quarter of 2017,
adjusted net income was $170 million,
or $1.16 per diluted share.
Third quarter sales for the Automotive Group were up 3.6%
including an approximate 1% comparable sales increase. Sales
at Motion Industries, the Industrial Group, were up 7.1%, including
a 4% comparable sales increase, and sales at EIS, the
Electrical/Electronic Group, grew 11.6%, with comparable sales down
1%. Sales for S.P. Richards,
the Office Products Group, were down 4.7% for the quarter in both
total and comparable sales.
Paul Donahue, President and Chief
Executive Officer, commented, "The third quarter presented us with
both opportunities and challenges. We were excited to
announce our entry into Europe
with the pending acquisition of one of the leading automotive
distributors in that region, Alliance Automotive Group, which we
expect to close in November. While, domestically, we
continued to operate in a challenging sales environment across
three of the key industries we serve, U.S. Automotive, Office and
Electrical, our Industrial and international Automotive businesses
produced stronger year over year growth. In total, we
generated a 4% total sales increase, despite one less billing day
in the quarter and the disruption from unprecedented natural
disasters, including hurricanes and earthquakes. This was
achieved via organic growth of 1%, 2% from acquisitions and a 1%
foreign exchange benefit."
Mr. Donahue added, "Our third quarter profitability was impacted
by lower gross margin and higher operating expenses, as our
initiatives to drive margin expansion did not meet our
expectations. To that point, our plans and initiatives are
underway to expedite corrective action."
Sales for the nine months ended September
30, 2017 were $12.1 billion, a
4.7% increase compared to $11.6
billion for the same period in 2016. Net income for
the nine months was $509 million
compared to $535 million in 2016, and
earnings per share on a diluted basis were $3.44 compared to $3.56 in 2016. Before the transaction costs
recorded in the third quarter of 2017 noted above, adjusted net
income was $520 million and adjusted
earnings per diluted share were $3.52.
Mr. Donahue concluded, "We enter the fourth quarter focused on
generating stronger organic sales growth as well as maximizing the
benefits of our acquisitions. We are also intensely focused
on the plans and initiatives underway to cut costs and improve our
profitability. While we are disappointed with this quarter's
results, we are excited about the opportunities ahead and we move
forward with a deep sense of urgency as we focus on maximizing
shareholder value and positioning the Company for long-term
success."
2017 Outlook
For the full year 2017, the Company is increasing its sales
guidance from up 3% to 4% to up 4% to 4.5%. The Company is
also updating diluted earnings per share to range from $4.47 to $4.52 and adjusted diluted earnings per
share to range from $4.55 to
$4.60. This compares to the prior outlook of
$4.70 to $4.75. Adjusted
diluted earnings per share excludes any fourth quarter 2017
revenue, earnings or expenses, including transaction costs,
associated with the pending acquisition of Alliance Automotive
Group, as well as the transaction costs recorded in the third
quarter of 2017 noted above.
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 877-857-6161, conference ID
8518758. A replay will also be available on the Company's
website or at 844-512-2921, conference ID 8518758, two hours after
the completion of the call until 12:00 a.m.
Eastern time on November 2,
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 the financing, timing and completion of the acquisition
of Alliance Automotive Group (AAG) and the anticipated synergies
and benefits of the transaction, as well as 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 inability to complete
the acquisition due to failure to satisfy the customary closing
conditions and/or the delay of or inability to obtain all
regulatory approvals related to the acquisition, the Company's
ability to successfully integrate AAG into the Company and to
realize the anticipated synergies and benefits, changes in the
European aftermarket, 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.
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months Ended
Sept. 30,
|
Nine Months Ended Sept.
30,
|
|
2017
|
2016
|
2017
|
2016
|
|
(Unaudited)
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
Net sales
|
$4,095,906
|
$3,941,743
|
$12,101,725
|
$11,559,648
|
Cost of goods
sold
|
2,869,016
|
2,743,142
|
8,479,402
|
8,091,124
|
Gross
profit
|
1,226,890
|
1,198,601
|
3,622,323
|
3,468,524
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling,
administrative & other expenses
|
940,259
|
869,562
|
2,717,416
|
2,522,223
|
Depreciation and
amortization
|
40,276
|
37,682
|
117,640
|
108,247
|
|
980,535
|
907,244
|
2,835,056
|
2,630,470
|
|
|
|
|
|
Income before income
taxes
|
246,355
|
291,357
|
787,267
|
838,054
|
Income
taxes
|
87,913
|
106,031
|
278,693
|
303,334
|
|
|
|
|
|
Net income
|
$ 158,442
|
$ 185,326
|
$ 508,574
|
$ 534,720
|
|
|
|
|
|
Basic net income per
common share
|
$1.08
|
$1.24
|
$3.45
|
$3.58
|
|
|
|
|
|
Diluted net income
per common share
|
$1.08
|
$1.24
|
$3.44
|
$3.56
|
|
|
|
|
|
Weighted average
common shares outstanding
|
146,720
|
148,899
|
147,312
|
149,243
|
|
|
|
|
|
Dilutive effect of
stock options and
|
|
|
|
|
non-vested restricted stock awards
|
502
|
828
|
561
|
781
|
|
|
|
|
|
Weighted average
common shares outstanding –
assuming
dilution
|
147,222
|
149,727
|
147,873
|
150,024
|
|
|
|
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
SEGMENT
INFORMATION AND FINANCIAL HIGHLIGHTS
|
|
|
Three Months Ended
Sept. 30,
|
Nine Months Ended
Sept. 30,
|
|
2017
|
2016
|
2017
|
2016
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
|
Net sales:
|
|
|
|
|
Automotive
|
$2,171,008
|
$2,095,030
|
$
6,333,495
|
$
6,115,186
|
Industrial
|
1,244,234
|
1,162,224
|
3,729,183
|
3,482,246
|
Office
Products
|
509,966
|
535,175
|
1,533,372
|
1,493,434
|
Electrical/Electronic
Materials
|
199,236
|
178,448
|
588,281
|
538,803
|
Other (1)
|
(28,538)
|
(29,134)
|
(82,606)
|
(70,021)
|
Total net
sales
|
$4,095,906
|
$3,941,743
|
$12,101,725
|
$11,559,648
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
Automotive
|
$
178,202
|
$
197,874
|
$
537,291
|
$
555,156
|
Industrial
|
94,595
|
85,608
|
281,269
|
255,704
|
Office
Products
|
23,974
|
30,257
|
85,184
|
97,101
|
Electrical/Electronic
Materials
|
13,547
|
14,277
|
42,715
|
45,105
|
Total operating
profit
|
310,318
|
328,016
|
946,459
|
953,066
|
Interest expense,
net
|
(8,202)
|
(5,244)
|
(21,254)
|
(14,731)
|
Intangible
amortization
|
(11,845)
|
(10,339)
|
(34,085)
|
(28,324)
|
Other, net
|
(43,916)
|
(21,076)
|
(103,853)
|
(71,957)
|
Income before income
taxes
|
$
246,355
|
$
291,357
|
$
787,267
|
$
838,054
|
|
|
|
|
|
Capital
expenditures
|
$
43,086
|
$
36,939
|
$
97,181
|
$
86,650
|
|
|
|
|
|
Depreciation and
amortization
|
$
40,276
|
$
37,682
|
$
117,640
|
$
108,247
|
|
|
|
|
|
(1) Represents the net
effect of discounts, incentives and freight billed reported as a
component of net sales.
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
Sept. 30,
|
Sept. 30,
|
|
2017
|
2016
|
|
(Unaudited)
|
|
(in
thousands)
|
ASSETS
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
$
210,082
|
$
225,177
|
Trade accounts
receivable, net
|
2,155,948
|
2,032,548
|
Merchandise
inventories, net
|
3,354,178
|
3,146,157
|
Prepaid expenses and
other current assets
|
596,400
|
504,600
|
|
|
|
TOTAL CURRENT
ASSETS
|
6,316,608
|
5,908,482
|
|
|
|
Goodwill and other
intangible assets, less
accumulated amortization
|
1,713,569
|
1,550,435
|
Deferred tax
assets
|
122,797
|
109,679
|
Other
assets
|
581,047
|
491,925
|
Net property, plant
and equipment
|
760,213
|
688,851
|
|
|
|
TOTAL
ASSETS
|
$9,494,234
|
$8,749,372
|
|
LIABILITIES AND EQUITY
|
|
|
CURRENT
LIABILITIES
|
|
|
Trade accounts
payable
|
$3,275,155
|
$3,099,438
|
Current portion of
debt
|
595,000
|
475,000
|
Income taxes
payable
|
26,666
|
32,594
|
Dividends
payable
|
98,959
|
97,955
|
Other current
liabilities
|
806,887
|
696,544
|
|
|
|
TOTAL CURRENT
LIABILITIES
|
4,802,667
|
4,401,531
|
|
|
|
|
|
|
Long-term
debt
|
550,000
|
300,000
|
Pension and other
post-retirement benefit liabilities
|
260,243
|
202,131
|
Deferred tax
liabilities
|
50,106
|
51,472
|
Other long-term
liabilities
|
441,090
|
458,944
|
|
|
|
Common
stock
|
146,613
|
148,737
|
Retained
earnings
|
4,108,556
|
4,038,985
|
Accumulated other
comprehensive loss
|
(876,934)
|
(865,510)
|
|
|
|
TOTAL PARENT
EQUITY
|
3,378,235
|
3,322,212
|
|
|
|
Noncontrolling
interests in subsidiaries
|
11,893
|
13,082
|
|
|
|
TOTAL
EQUITY
|
3,390,128
|
3,335,294
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$9,494,234
|
$8,749,372
|
|
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Nine Months Ended
Sept. 30,
|
|
2017
|
2016
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
Net income
|
$508,574
|
$534,720
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
Depreciation and
amortization
|
117,640
|
108,247
|
Share-based
compensation
|
12,912
|
15,362
|
Excess tax benefits
from share-based
compensation
|
(2,504)
|
(10,475)
|
Changes in operating
assets and liabilities
|
(94,265)
|
93,498
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
542,357
|
741,352
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
Purchases of property,
plant and equipment
|
(97,181)
|
(86,650)
|
Acquisitions and other
investing activities
|
(289,353)
|
(365,545)
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
(386,534)
|
(452,195)
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
Proceeds from
debt
|
3,420,000
|
3,020,000
|
Payments on
debt
|
(3,150,000)
|
(2,870,000)
|
Share-based awards
exercised, net of taxes
paid
|
(3,289)
|
(11,942)
|
Excess tax benefits
from share-based compensation
|
-
|
10,475
|
Dividends
paid
|
(296,517)
|
(288,909)
|
Purchase of
stock
|
(171,884)
|
(143,810)
|
|
|
|
NET CASH USED IN
FINANCING ACTIVITIES
|
(201,690)
|
(284,186)
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
13,070
|
8,575
|
|
|
|
NET (DECREASE)
INCREASE IN CASH AND CASH
EQUIVALENTS
|
(32,797)
|
13,546
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
242,879
|
211,631
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$210,082
|
$225,177
|
|
|
|
|
|
|
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SOURCE Genuine Parts Company