ATLANTA, April 19, 2018 /PRNewswire/ -- Genuine Parts
Company (NYSE: GPC) announced today sales and earnings for the
first quarter ended March 31,
2018.
Sales for the first quarter ended March
31, 2018 were a record $4.6
billion, a 17.4% increase compared to $3.9 billion for the same period in 2017.
Net income for the first quarter was $176.6
million and earnings per share on a diluted basis were
$1.20. Before the impact of
certain transaction-related costs incurred for the Company's fourth
quarter 2017 acquisition of Alliance Automotive Group (AAG) in
Europe and a recently announced
agreement to spin-off the Company's Business Products Group, S.P.
Richards, adjusted net income was $186.5
million, or $1.27 per diluted
share. Total sales for the first quarter included 2% organic
growth, 14% from acquisitions, including AAG, and a 1% benefit from
foreign currency translation.
First quarter sales for the Automotive Group were up 29.6%,
including an approximate 1.5% comparable sales increase as well as
the benefit of acquisitions and favorable foreign currency
translation. Sales for the Industrial Group, which includes
both Motion Industries and EIS, were up 8.3%, including a 5%
comparable sales increase, and sales for the Business Products
Group were down 4.8% for the quarter in both total and comparable
sales.
Paul Donahue, President and Chief
Executive Officer, commented, "We were pleased to complete the
first quarter of 2018 with double-digit total sales growth, driven
by increases in our core global automotive and industrial
businesses. While our operating margins were challenged, we
remain focused on the execution of our plans to drive additional
operating improvement and better position the Company for sustained
long-term growth and profitability. With our recent
announcement to spin-off the Business Products Group, we took an
important step that will allow us to commit more resources and
increase our focus on our core growth and higher-margin global
businesses. This is an exciting time for Genuine Parts, and
we look forward to effectively executing on the opportunities
ahead.
2018 Outlook
The Company is maintaining its initial sales and earnings
guidance and continues to expect sales to be up 12% to 13% and
adjusted diluted earnings per share, which excludes any first
quarter and future transaction-related costs, to be $5.60 to $5.75. The Company currently expects a tax
rate of approximately 26.0%, which is down slightly from the
initial guidance of 26.0 to 27.0% in 2018.
Non-GAAP Information
This release contains certain financial information not derived
in accordance with United States
generally accepted accounting principles ("GAAP"). These items
include adjusted net income and adjusted diluted earnings per
share. The Company does not, nor does it suggest investors should,
consider such non-GAAP financial measures in isolation from, or as
a substitute for, GAAP financial information. The Company believes
that the presentation of adjusted net income and diluted earnings
per share provides meaningful supplemental information to both
management and investors that is indicative of the Company's core
operations. The Company has included a reconciliation of this
additional information to the most comparable GAAP measure
following the financial statements below.
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 888-394-8218, conference ID
5092677. A replay will also be available on the Company's
website or at 844-512-2921, conference ID 5092677, two hours after
the completion of the call until 12:00 a.m.
Eastern time on May 3,
2018.
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 proposed business combination transaction between
the Company and Essendant, Inc. ("Essendant") in which the Company
will spin-off its Business Products Group and combine this business
with Essendant or the acquisition of Alliance Automotive Group
(AAG) and the anticipated strategic benefits, synergies and other
attributes of these transactions, 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 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 complete the transaction to
spin-off its Business Products Group; the Company's ability to
successfully implement its business initiatives in each of its
three 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 2017 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, Australasia, France, the U.K., Germany and Poland. The Company also
distributes industrial replacement parts and electrical and
electronic materials in the U.S., Canada and Mexico through its Industrial Products Group,
comprised of Motion Industries and EIS, Inc. S.P. Richards
Company, the Business Products Group, distributes a variety of
business products in the U.S. and Canada.
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(in thousands, except
per share data)
|
|
|
|
|
Net sales
|
$
|
4,586,294
|
|
|
$
|
3,905,641
|
|
Cost of goods
sold
|
3,150,487
|
|
|
2,749,920
|
|
Gross
profit
|
1,435,807
|
|
|
1,155,721
|
|
|
|
|
|
Operating and
non-operating expenses:
|
|
|
|
Selling,
administrative & other expenses
|
1,148,125
|
|
|
873,814
|
|
Depreciation and
amortization
|
58,363
|
|
|
38,132
|
|
|
1,206,488
|
|
|
911,946
|
|
|
|
|
|
Income before income
taxes
|
229,319
|
|
|
243,775
|
|
Income
taxes
|
52,743
|
|
|
83,615
|
|
|
|
|
|
Net income
|
$
|
176,576
|
|
|
$
|
160,160
|
|
|
|
|
|
Basic net income per
common share
|
$
|
1.20
|
|
|
$
|
1.08
|
|
|
|
|
|
Diluted net income
per common share
|
$
|
1.20
|
|
|
$
|
1.08
|
|
|
|
|
|
Weighted average
common shares outstanding
|
146,727
|
|
|
148,154
|
|
|
|
|
|
Dilutive effect of
stock options and non-vested restricted stock awards
|
595
|
|
|
634
|
|
|
|
|
|
Weighted average
common shares outstanding – assuming dilution
|
147,322
|
|
|
148,788
|
|
|
|
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
SEGMENT
INFORMATION AND FINANCIAL HIGHLIGHTS
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
Net sales:
(1)
|
|
|
|
Automotive
|
$
|
2,564,259
|
|
|
$
|
1,978,446
|
|
Industrial
(2)
|
1,547,944
|
|
|
1,428,959
|
|
Business
Products
|
474,091
|
|
|
498,236
|
|
Total net
sales
|
$
|
4,586,294
|
|
|
$
|
3,905,641
|
|
|
|
|
|
Operating
profit:
|
|
|
|
Automotive
|
$
|
184,706
|
|
|
$
|
151,757
|
|
Industrial
(2)
|
112,191
|
|
|
104,009
|
|
Business
Products
|
21,601
|
|
|
31,119
|
|
Total operating
profit
|
318,498
|
|
|
286,885
|
|
Interest expense,
net
|
(23,307)
|
|
|
(6,174)
|
|
Intangible
amortization
|
(21,403)
|
|
|
(10,806)
|
|
Other, net
(3)
|
(44,469)
|
|
|
(26,130)
|
|
Income before income
taxes
|
$
|
229,319
|
|
|
$
|
243,775
|
|
|
|
|
|
Capital
expenditures
|
$
|
31,633
|
|
|
$
|
24,806
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
58,363
|
|
|
$
|
38,132
|
|
(1) The net effect of discounts, incentives, freight billed to
customers has been allocated to their respective segments for the
current and prior period. Previously, the net effect of such
items were captured and presented separately in a line item
entitled "Other".
(2) Effective January 1, 2018, the
Electrical/electronic material segment became a division of the
Industrial segment. These two reporting segments became a single
reporting segment, the Industrial Parts Group. The change in
segment is presented retrospectively.
(3) Includes $13.0 million for the
three months ended March 31, 2018,
respectively, in transaction-related costs associated with Alliance
Automotive Group and the pending combination of S.P. Richards with
Essendant.
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
March 31,
|
|
March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(in
thousands)
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
325,973
|
|
|
$
|
177,917
|
|
Trade accounts
receivable, net
|
2,641,151
|
|
|
2,084,871
|
|
Merchandise
inventories, net
|
3,772,919
|
|
|
3,287,042
|
|
Prepaid expenses and
other current assets
|
841,569
|
|
|
644,232
|
|
|
|
|
|
TOTAL CURRENT
ASSETS
|
7,581,612
|
|
|
6,194,062
|
|
|
|
|
|
Goodwill and other
intangible assets, less accumulated amortization
|
3,618,426
|
|
|
1,608,466
|
|
Deferred tax
assets
|
39,830
|
|
|
129,539
|
|
Other
assets
|
588,238
|
|
|
497,553
|
|
Net property, plant
and equipment
|
931,288
|
|
|
737,206
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
12,759,394
|
|
|
$
|
9,166,826
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Trade accounts
payable
|
$
|
3,773,149
|
|
|
$
|
3,230,985
|
|
Current portion of
debt
|
751,614
|
|
|
475,000
|
|
Income taxes
payable
|
28,144
|
|
|
65,270
|
|
Dividends
payable
|
105,649
|
|
|
99,824
|
|
Other current
liabilities
|
1,098,916
|
|
|
708,754
|
|
|
|
|
|
TOTAL CURRENT
LIABILITIES
|
5,757,472
|
|
|
4,579,833
|
|
|
|
|
|
Long-term
debt
|
2,564,111
|
|
|
550,000
|
|
Pension and other
post-retirement benefit liabilities
|
200,253
|
|
|
287,589
|
|
Deferred tax
liabilities
|
184,383
|
|
|
49,328
|
|
Other long-term
liabilities
|
491,794
|
|
|
467,732
|
|
|
|
|
|
Common
stock
|
146,738
|
|
|
147,394
|
|
Retained
earnings
|
4,182,599
|
|
|
4,021,848
|
|
Accumulated other
comprehensive loss
|
(819,258)
|
|
|
(950,269)
|
|
|
|
|
|
TOTAL PARENT
EQUITY
|
3,510,079
|
|
|
3,218,973
|
|
|
|
|
|
Noncontrolling
interests in subsidiaries
|
$
|
51,302
|
|
|
$
|
13,371
|
|
|
|
|
|
TOTAL
EQUITY
|
3,561,381
|
|
|
3,232,344
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$
|
12,759,394
|
|
|
$
|
9,166,826
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(in
thousands)
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net income
|
$
|
176,576
|
|
|
$
|
160,160
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
58,363
|
|
|
38,132
|
|
Share-based
compensation
|
3,686
|
|
|
2,717
|
|
Excess tax benefits
from share-based compensation
|
(2,517)
|
|
|
(1,546)
|
|
Changes in operating
assets and liabilities
|
(97,741)
|
|
|
(97,643)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
138,367
|
|
|
101,820
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchases of property,
plant and equipment
|
(31,633)
|
|
|
(24,806)
|
|
Acquisitions and other
investing activities
|
(38,588)
|
|
|
(106,236)
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
(70,221)
|
|
|
(131,042)
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
debt
|
1,201,441
|
|
|
1,005,000
|
|
Payments on
debt
|
(1,153,750)
|
|
|
(855,000)
|
|
Share-based awards
exercised, net of taxes paid
|
(4,176)
|
|
|
(1,624)
|
|
Dividends
paid
|
(99,000)
|
|
|
(97,584)
|
|
Purchase of
stock
|
—
|
|
|
(91,984)
|
|
|
|
|
|
NET CASH USED IN
FINANCING ACTIVITIES
|
(55,485)
|
|
|
(41,192)
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
(1,587)
|
|
|
5,452
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
11,074
|
|
|
(64,962)
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
314,899
|
|
|
242,879
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
|
325,973
|
|
|
$
|
177,917
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
|
Reconciliation of
GAAP Net Income to Adjusted Net Income
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(in thousands, except
per share data)
|
|
|
|
|
GAAP net
income
|
$
|
176,576
|
|
|
$
|
160,160
|
|
Diluted net income
per common share
|
$
|
1.20
|
|
|
$
|
1.08
|
|
|
|
|
|
Add after-tax
adjustments:
|
|
|
|
Transaction-related
costs
|
9,883
|
|
|
—
|
|
|
|
|
|
Adjusted net
income
|
$
|
186,459
|
|
|
$
|
160,160
|
|
Adjusted diluted net
income per common share
|
$
|
1.27
|
|
|
$
|
1.08
|
|
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SOURCE Genuine Parts Company