Genuine Parts Company Reports Record Sales and Earnings for the Second Quarter Ended June 30, 2013 - Sales Up 10% and EPS Up 29% -

ATLANTA, July 18, 2013 /PRNewswire/ -- Genuine Parts Company (NYSE:  GPC) reports sales and earnings for the second quarter and six months ended June 30, 2013. 

(Logo:  http://photos.prnewswire.com/prnh/20081002/CLTH108LOGO)

Thomas C. Gallagher, Chairman and Chief Executive Officer, announced today that record sales totaling $3.68 billion were up 10% compared to the second quarter of 2012.  Net income for the quarter was $216.4 million, an increase of 28% from $168.6 million recorded in the same period of the previous year.  Earnings per share on a diluted basis were $1.39, up 29% compared to $1.08 for the second quarter last year.

On April 1, 2013, the Company acquired the remaining 70% interest in GPC Asia Pacific (formerly Exego). The Company's 30% investment, originated on January 1, 2012, was remeasured and, net of certain one-time purchase accounting costs, amounted to a positive pre-tax adjustment of approximately $36 million recorded in the second quarter.  This adjustment, combined with a lower tax rate for the remeasurement, favorably impacted diluted earnings per share by $0.22.

For the six months ended June 30, 2013, sales totaled $6.87 billion, up 5% compared to the same period in 2012.  Net income for the six months was $360.7 million, an increase of 15% from $314.9 million recorded in the previous year.  Earnings per share on a diluted basis were $2.31, up 15% compared to $2.01 for the same period last year.

In review of the quarter, Mr. Gallagher commented, "We are pleased to report record levels of sales and earnings for the second quarter.  The progress in our operations was driven by the improved results in our automotive business.  Sales for the Automotive Group were up 22%, consisting of core North American growth of approximately 6% and the positive impact of the Australasian acquisition.  We were encouraged by the sequential improvement in our core sales growth in the quarter.  Likewise, GPC Asia Pacific performed as planned for the quarter and we continue to be excited about the growth opportunities we see in the Australasian aftermarket."

Mr. Gallagher added, "Our non-automotive businesses remain our most challenging, as their end markets were relatively weak throughout the second quarter.  Sales for Motion Industries, our Industrial Group, were down approximately 1%, and EIS, our Electrical/Electronic Group, showed sales down 4%.  S.P. Richards, our Office Products Group, had a 3% decrease in sales.  We continue to expect a stronger second half of the year for these businesses, but likely at a slower rate of growth than previously anticipated."

Mr. Gallagher concluded, "As always, we remain committed to our core objectives of growing sales and earnings, showing continued operating margin improvement, generating solid cash flows and maintaining a strong balance sheet.  Our cash flows are proving very strong again this year and the Company is in excellent financial condition.  We look forward to reporting our continued progress in the quarters ahead."

Conference Call

Genuine Parts Company will hold a conference call today at 11:00 a.m. Eastern time 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 "Investor Services", or by dialing 877-331-5106, conference ID 10933272.  A replay of the call will also be available on the Company's website or at 855-859-2056, conference ID 10933272, after the completion of the conference call until 12:00 a.m. Eastern time on August 2, 2013.

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, slowing demand for the Company's products, changes in general economic conditions, including, unemployment, inflation or deflation, high energy costs, uncertain credit markets and other macro-economic conditions, the ability to maintain favorable vendor arrangements and relationships, disruptions in our vendors' operations, competitive product, service and pricing pressures, the Company's ability to successfully implement its business initiatives in each of its four business segments, the Company's ability to successfully integrate its acquired businesses, the uncertainties and costs of litigation, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2012 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 nationwide 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 June 30,

Six Months Ended June 30,


2013

2012

2013

2012


(Unaudited)







(in thousands, except per share data)






Net sales

$3,675,997

$3,337,836

$6,874,799

$6,519,124

Cost of goods sold

2,570,889

2,365,550

4,847,943

4,627,727

Gross profit

1,105,108

972,286

2,026,856

1,891,397











Operating expenses:





Selling, administrative & other expenses

753,527

680,246

1,427,139

1,348,204

Depreciation and amortization

36,853

24,735

62,852

47,720


790,380

704,981

1,489,991

1,395,924











Income before income taxes

314,728

267,305

536,865

495,473

Income taxes

98,371

98,687

176,119

180,600

Net income

$  216,357

$  168,618

$  360,746

$  314,873











Basic net income per common share

$1.40

$1.08

$2.33

$2.02

Diluted net income per common share

$1.39

$1.08

$2.31

$2.01











Weighted average common shares outstanding

155,050

155,753

154,971

155,781

Dilutive effect of stock options and





   non-vested restricted stock awards

1,094

1,019

1,075

1,073

Weighted average common shares outstanding –





   assuming dilution

156,144

156,772

156,046

156,854






 


GENUINE PARTS COMPANY and SUBSIDIARIES

SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS



Three Months Ended June 30,

Six Months Ended June 30,


2013

2012

2013

2012


(Unaudited)


(in thousands)






Net sales:





Automotive

$2,011,802

$1,644,902

$3,556,339

$3,138,401

Industrial

1,132,032

1,138,724

2,234,112

2,259,947

Office Products

402,272

413,340

822,400

839,493

Electrical/Electronic Materials

142,970

149,440

282,155

296,556

Other (1)

(13,079)

(8,570)

(20,207)

(15,273)

              Total net sales

$3,675,997

$3,337,836

$6,874,799

$6,519,124






Operating profit:





Automotive

$ 186,382

$ 152,978

$ 307,425

$ 267,539

Industrial

88,891

95,053

167,786

179,381

Office Products

29,768

30,611

62,960

68,126

Electrical/Electronic Materials

12,221

12,933

22,672

24,899

Total operating profit

317,262

291,575

560,843

539,945

Interest expense, net

(7,852)

(5,019)

(11,205)

(9,734)

Intangible amortization

(8,986)

(3,641)

(12,761)

(5,752)

Other, net

14,304

(15,610)

(12)

(28,986)

               Income before income taxes

$ 314,728

$ 267,305

$ 536,865

$ 495,473






Capital expenditures

$ 37,883

$ 34,478

$ 50,807

$ 51,368






Depreciation and amortization

$ 36,853

$ 24,735

$ 62,852

$ 47,720







        (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



June 30,

June 30,


2013

2012


(Unaudited)


(in thousands)

ASSETS



CURRENT ASSETS



Cash and cash equivalents

$   196,770

$   171,577

Trade accounts receivable, net

1,759,176

1,605,696

Merchandise inventories, net

2,799,150

2,511,706

Prepaid expenses and other current assets

352,645

312,510




TOTAL CURRENT ASSETS

5,107,741

4,601,489




Goodwill and other intangible assets, less accumulated amortization

1,270,447

498,288

Deferred tax asset

179,850

250,963

Other assets

459,320

590,359

Net property, plant and equipment

642,955

567,013




TOTAL ASSETS

$7,660,313

$6,508,112


LIABILITIES AND EQUITY



CURRENT LIABILITIES



Trade accounts payable

$2,064,878

$1,599,695

Current portion of debt

650,102

-

Income taxes payable

10,865

18,603

Dividends payable

83,407

77,081

Other current liabilities

513,695

483,352




TOTAL CURRENT LIABILITIES

3,322,947

2,178,731




Long-term debt

250,000

500,000

Retirement and other post-retirement benefit liabilities

494,572

485,317

Other long-term liabilities

506,655

451,470




Common stock

154,859

155,101

Retained earnings and other

3,521,735

3,185,924

Accumulated other comprehensive loss

(600,223)

(458,444)

TOTAL PARENT EQUITY

3,076,371

2,882,581




Noncontrolling interests in subsidiaries

9,768

10,013

TOTAL EQUITY

3,086,139

2,892,594




TOTAL LIABILITIES AND EQUITY

$7,660,313

$6,508,112




 


GENUINE PARTS COMPANY and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



Six Months Ended June 30,


2013

2012


(Unaudited)


(in thousands)




OPERATING ACTIVITIES:



Net income

$360,746

$314,873

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

62,852

47,720

Share-based compensation

5,455

5,099

Excess tax benefits from share-based compensation

(9,410)

(7,174)

Other

(51,051)

(703)

Changes in operating assets and liabilities

98,486

61,498







NET CASH PROVIDED BY OPERATING ACTIVITIES

467,078

421,313




INVESTING ACTIVITIES:



Purchases of property, plant and equipment

(50,807)

(51,368)

Acquisitions and other investing activities

(596,105)

(525,901)




NET CASH USED IN INVESTING ACTIVITIES

(646,912)

(577,269)




FINANCING ACTIVITIES:



Proceeds from debt

1,269,550

550,000

Payments on debt

(1,098,998)

(550,000)

Share-based awards exercised, net of taxes paid

(10,948)

(2,903)

Excess tax benefits from share-based compensation

9,410

7,174

Dividends paid

(159,908)

(147,187)

Purchase of stock

(26,318)

(55,015)




NET CASH USED IN FINANCING ACTIVITIES

(17,212)

(197,931)




EFFECT OF EXCHANGE RATE CHANGES ON CASH

(9,279)

410




NET DECREASE IN CASH AND CASH EQUIVALENTS

(206,325)

(353,477)




CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

403,095

525,054




CASH AND CASH EQUIVALENTS AT END OF PERIOD

$196,770

$171,577




SOURCE Genuine Parts Company



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