ATLANTA, Feb. 20, 2018 /PRNewswire/ -- Genuine Parts
Company (NYSE: GPC) announced today sales and earnings for the
fourth quarter and twelve months ended December 31, 2017.
Sales for the fourth quarter ended December 31, 2017 were $4.2 billion, an 11.3% increase compared to
$3.8 billion for the same period in
2016. Net income for the fourth quarter was $108.2 million and earnings per share on a
diluted basis were $0.73.
Alliance Automotive Group (AAG), the Company's European acquisition
which closed on November 2, 2017,
contributed 6.8% to sales and $0.07
in earnings per diluted share during the fourth quarter.
Before the impact of AAG's operations as discussed above, as
well as excluding fourth quarter transaction-related costs and the
expense for transition tax and the revaluation of deferred taxes
resulting from the U.S. Tax Cuts and Jobs Act, adjusted net income
was $165.5 million, or $1.12 per diluted share. Including the
$0.07 contribution from AAG's
operations, adjusted earnings per diluted share were $1.19 for the fourth quarter of 2017.
Fourth quarter sales for the Automotive Group were up 16.7%
including an approximate 1% comparable sales increase and a 4%
total sales increase before the additional 13% sales contribution
from AAG. Sales at Motion Industries, the Industrial Group,
were up 7.4%, including a 5% comparable sales increase, and sales
at EIS, the Electrical/Electronic Group, grew 8.9%, with comparable
sales down 2%. Sales for S.P. Richards, the Business Products
Group, were down 2.2% for the quarter in both total and comparable
sales.
Paul Donahue, President and Chief
Executive Officer, commented, "We were pleased to complete the
fourth quarter with a 4.5% sales increase before the added benefit
of the AAG acquisition. Additionally, the two month
performance at AAG was in-line with our initial plan, and we remain
excited for the growth prospects we see for this business across
Europe. Overall, total sales for the fourth quarter included
2% organic growth, 8.5% from acquisitions and an approximate 1%
foreign exchange benefit."
Mr. Donahue added, "Importantly, our plans and initiatives to
accelerate actions to improve our operating performance, which we
emphasized following our third quarter results, had a positive
impact on our fourth quarter. While we continue to focus on
these efforts to drive further improvement, we are encouraged by
our early progress."
Sales for the twelve months ended December 31, 2017 were $16.3 billion, a 6.3% increase compared to
$15.3 billion for the same period in
2016. Net income for the twelve months was $617 million and earnings per share on a diluted
basis were $4.18. AAG
contributed 1.7% to sales and $0.07
in earnings per diluted share for the year.
Before the impact of AAG as discussed above, as well as
transaction-related costs recorded in the third and fourth quarters
of 2017 and the tax expense resulting from the Tax Cuts and Jobs
Act recorded in the fourth quarter of 2017, adjusted net income was
$686 million and adjusted earnings
per diluted share were $4.64.
Including the $0.07 contribution from
AAG's operations, adjusted earnings per diluted share were
$4.71 for the year.
Mr. Donahue concluded, "Reflecting on 2017, GPC's 90th year, we
surpassed $16 billion in revenues, a
new record for us. In addition, we better positioned the
Company for sustained long-term growth, with significant
investments in our existing businesses as well as new ones, both in
North America and abroad. Our
balance sheet is in excellent condition, our cash flows are strong
and our plans are in place for the year ahead."
2018 Outlook
The Company is establishing its full year 2018 sales guidance at
up 12% to 13% and diluted earnings per share is expected to be
$5.60 to $5.75, including the benefit of a full year of
operations with AAG and approximately $80 to $90 million
in lower income taxes related to the Tax Cuts and Jobs Act.
The Company currently expects a tax rate of approximately 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. EST 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 800-289-0438, conference ID
3643063. A replay will also be available on the Company's
website or at 844-512-2921, conference ID 3643063, two hours after
the completion of the call until 12:00 a.m.
Eastern time on March 6,
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 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
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, 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 Motion Industries and EIS,
Inc. subsidiaries. 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 Dec.
31,
|
|
Year Ended Dec.
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
4,207,076
|
|
|
$
|
3,780,065
|
|
|
$
|
16,308,801
|
|
|
$
|
15,339,713
|
|
Cost of goods
sold
|
2,923,001
|
|
|
2,648,982
|
|
|
11,402,403
|
|
|
10,740,106
|
|
Gross
profit
|
1,284,075
|
|
|
1,131,083
|
|
|
4,906,398
|
|
|
4,599,607
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling,
administrative & other expenses
|
1,012,023
|
|
|
855,557
|
|
|
3,729,439
|
|
|
3,377,780
|
|
Depreciation and
amortization
|
50,051
|
|
|
39,240
|
|
|
167,691
|
|
|
147,487
|
|
|
1,062,074
|
|
|
894,797
|
|
|
3,897,130
|
|
|
3,525,267
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
222,001
|
|
|
236,286
|
|
|
1,009,268
|
|
|
1,074,340
|
|
Income
taxes
|
113,818
|
|
|
83,766
|
|
|
392,511
|
|
|
387,100
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
108,183
|
|
|
$
|
152,520
|
|
|
$
|
616,757
|
|
|
$
|
687,240
|
|
|
|
|
|
|
|
|
|
Basic net income per
common share
|
$
|
0.74
|
|
|
$
|
1.03
|
|
|
$
|
4.19
|
|
|
$
|
4.61
|
|
|
|
|
|
|
|
|
|
Diluted net income
per common share
|
$
|
0.73
|
|
|
$
|
1.02
|
|
|
$
|
4.18
|
|
|
$
|
4.59
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
146,629
|
|
|
148,478
|
|
|
147,140
|
|
|
149,051
|
|
|
|
|
|
|
|
|
|
Dilutive effect of
stock options and non-vested
restricted stock awards
|
582
|
|
|
699
|
|
|
561
|
|
|
753
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
– assuming dilution
|
147,211
|
|
|
149,177
|
|
|
147,701
|
|
|
149,804
|
|
|
|
|
|
|
|
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
SEGMENT
INFORMATION AND FINANCIAL HIGHLIGHTS
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
Automotive
|
$
|
2,329,201
|
|
|
$
|
1,996,325
|
|
|
$
|
8,662,696
|
|
|
$
|
8,111,511
|
|
Industrial
|
1,237,335
|
|
|
1,151,966
|
|
|
4,966,518
|
|
|
4,634,212
|
|
Business
Products
|
465,574
|
|
|
475,971
|
|
|
1,998,946
|
|
|
1,969,405
|
|
Electrical/Electronic
Materials
|
192,647
|
|
|
176,847
|
|
|
780,928
|
|
|
715,650
|
|
Other (1)
|
(17,681)
|
|
|
(21,044)
|
|
|
(100,287)
|
|
|
(91,065)
|
|
Total net
sales
|
$
|
4,207,076
|
|
|
$
|
3,780,065
|
|
|
$
|
16,308,801
|
|
|
$
|
15,339,713
|
|
|
|
|
|
|
|
|
|
Operating
profit:
|
|
|
|
|
|
|
|
Automotive
|
$
|
183,174
|
|
|
$
|
159,998
|
|
|
$
|
720,465
|
|
|
$
|
715,154
|
|
Industrial
|
102,978
|
|
|
80,904
|
|
|
384,247
|
|
|
336,608
|
|
Business
Products
|
13,698
|
|
|
19,934
|
|
|
98,882
|
|
|
117,035
|
|
Electrical/Electronic
Materials
|
13,492
|
|
|
15,434
|
|
|
56,207
|
|
|
60,539
|
|
Total operating
profit
|
313,342
|
|
|
276,270
|
|
|
1,259,801
|
|
|
1,229,336
|
|
Interest expense,
net
|
(17,423)
|
|
|
(4,794)
|
|
|
(38,677)
|
|
|
(19,525)
|
|
Intangible
amortization
|
(17,909)
|
|
|
(12,546)
|
|
|
(51,993)
|
|
|
(40,870)
|
|
Other, net
(2)
|
(56,009)
|
|
|
(22,644)
|
|
|
(159,863)
|
|
|
(94,601)
|
|
Income before income
taxes
|
$
|
222,001
|
|
|
$
|
236,286
|
|
|
$
|
1,009,268
|
|
|
$
|
1,074,340
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
|
54,579
|
|
|
$
|
73,993
|
|
|
$
|
156,760
|
|
|
$
|
160,643
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
50,050
|
|
|
$
|
39,240
|
|
|
$
|
167,691
|
|
|
$
|
147,487
|
|
|
(1) Represents the
net effect of discounts, incentives and freight billed reported as
a component of net sales.
|
|
(2) Includes $30.6
million and $49.1 million for the three months and year ended
December 31, 2017, respectively, in transaction-related costs
primarily associated with the acquisition of Alliance Automotive
Group.
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
Dec. 31,
|
|
Dec. 31,
|
|
2017
|
|
2016
|
|
|
|
(in
thousands)
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
314,899
|
|
|
$
|
242,879
|
|
Trade accounts
receivable, net
|
2,421,563
|
|
|
1,938,562
|
|
Merchandise
inventories, net
|
3,771,089
|
|
|
3,210,320
|
|
Prepaid expenses and
other current assets
|
805,342
|
|
|
556,670
|
|
|
|
|
|
TOTAL CURRENT
ASSETS
|
7,312,893
|
|
|
5,948,431
|
|
|
|
|
|
Goodwill and other
intangible assets, less accumulated amortization
|
3,554,380
|
|
|
1,574,663
|
|
Deferred tax
assets
|
40,158
|
|
|
132,652
|
|
Other
assets
|
568,248
|
|
|
475,530
|
|
Net property, plant
and equipment
|
936,702
|
|
|
728,124
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
12,412,381
|
|
|
$
|
8,859,400
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Trade accounts
payable
|
$
|
3,634,859
|
|
|
$
|
3,081,111
|
|
Current portion of
debt
|
694,989
|
|
|
325,000
|
|
Income taxes
payable
|
10,736
|
|
|
0
|
|
Dividends
payable
|
99,000
|
|
|
97,584
|
|
Other current
liabilities
|
1,034,441
|
|
|
740,455
|
|
|
|
|
|
TOTAL CURRENT
LIABILITIES
|
5,474,025
|
|
|
4,244,150
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
2,550,020
|
|
|
550,000
|
|
Pension and other
post-retirement benefit liabilities
|
229,868
|
|
|
341,510
|
|
Deferred tax
liabilities
|
193,308
|
|
|
48,326
|
|
Other long-term
liabilities
|
501,004
|
|
|
468,058
|
|
|
|
|
|
Common
stock
|
146,653
|
|
|
148,410
|
|
Retained
earnings
|
4,118,091
|
|
|
4,058,339
|
|
Accumulated other
comprehensive loss
|
(852,592)
|
|
|
(1,013,021)
|
|
|
|
|
|
TOTAL PARENT
EQUITY
|
3,412,152
|
|
|
3,193,728
|
|
|
|
|
|
Noncontrolling
interests in subsidiaries
|
$
|
52,004
|
|
|
$
|
13,628
|
|
|
|
|
|
TOTAL
EQUITY
|
3,464,156
|
|
|
3,207,356
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$
|
12,412,381
|
|
|
$
|
8,859,400
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Year Ended Dec.
31,
|
|
2017
|
|
2016
|
|
|
|
(in
thousands)
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net income
|
$
|
616,757
|
|
|
$
|
687,240
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
167,691
|
|
|
147,487
|
|
Share-based
compensation
|
16,892
|
|
|
19,719
|
|
Excess tax benefits
from share-based compensation
|
(3,134)
|
|
|
(12,021)
|
|
Changes in operating
assets and liabilities
|
16,837
|
|
|
103,653
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
815,043
|
|
|
946,078
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchases of property,
plant and equipment
|
(156,760)
|
|
|
(160,643)
|
|
Acquisitions and other
investing activities
|
(1,473,520)
|
|
|
(433,356)
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
(1,630,280)
|
|
|
(593,999)
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
debt
|
6,630,294
|
|
|
4,350,000
|
|
Payments on
debt
|
(5,183,997)
|
|
|
(4,100,000)
|
|
Share-based awards
exercised, net of taxes paid
|
(5,239)
|
|
|
(16,147)
|
|
Excess tax benefits
from share-based compensation
|
—
|
|
|
12,021
|
|
Dividends
paid
|
(395,475)
|
|
|
(386,863)
|
|
Purchase of
stock
|
(173,524)
|
|
|
(181,417)
|
|
|
|
|
|
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES
|
872,059
|
|
|
(322,406)
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
|
15,198
|
|
|
1,575
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
72,020
|
|
|
31,248
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
242,879
|
|
|
211,631
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$
|
314,899
|
|
|
$
|
242,879
|
|
GENUINE PARTS
COMPANY and SUBSIDIARIES
Reconciliation of
GAAP Net Income to Adjusted Net Income
|
|
|
Three Months Ended
Dec. 31,
|
|
Year Ended Dec.
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$
|
108,183
|
|
|
$
|
152,520
|
|
|
$
|
616,757
|
|
|
$
|
687,240
|
|
Diluted net income
per common share
|
$
|
0.73
|
|
|
$
|
1.02
|
|
|
$
|
4.18
|
|
|
$
|
4.59
|
|
|
|
|
|
|
|
|
|
Add after-tax
adjustments:
|
|
|
|
|
|
|
|
Transition tax and
deferred tax revaluation
|
50,986
|
|
|
—
|
|
|
50,986
|
|
|
—
|
|
Transaction-related
costs
|
16,454
|
|
|
—
|
|
|
28,039
|
|
|
—
|
|
Adjusted net income
including AAG
|
$
|
175,623
|
|
|
$
|
152,520
|
|
|
$
|
695,782
|
|
|
$
|
687,240
|
|
Adjusted diluted net
income per common
share including AAG
|
$
|
1.19
|
|
|
$
|
1.02
|
|
|
$
|
4.71
|
|
|
$
|
4.59
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
AAG operations - 2
months
|
(10,168)
|
|
|
—
|
|
|
(10,168)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$
|
165,455
|
|
|
$
|
152,520
|
|
|
$
|
685,614
|
|
|
$
|
687,240
|
|
Adjusted diluted net
income per common share
|
$
|
1.12
|
|
|
$
|
1.02
|
|
|
$
|
4.64
|
|
|
$
|
4.59
|
|
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SOURCE Genuine Parts Company