Genuine Parts Company Reports Sales Up 13%, Earnings Up 22% and EPS Up 24% for the Third Quarter Ended September 30, 2010

Oct 15, 2010, 08:50 ET from Genuine Parts Company

ATLANTA, Oct. 15 /PRNewswire-FirstCall/ -- Genuine Parts Company (NYSE: GPC) reported sales and earnings for the third quarter and nine months ended September 30, 2010.  Thomas C. Gallagher, Chairman, President and Chief Executive Officer, announced today that sales totaling $2.95 billion were up 13% compared to the third quarter of 2009.  Net income for the quarter was $131.8 million, an increase of 22% from $107.6 million recorded in the same period of the previous year.  Earnings per share on a diluted basis were 83 cents, up 24% compared to 67 cents for the third quarter last year.

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For the nine months ended September 30, 2010, sales totaled $8.4 billion, up 11% compared to the same period in 2009.  Net income for the nine months was $356.9 million, an increase of 19% from $300.4 million recorded in the previous year.  Earnings per share on a diluted basis were $2.25, up 20% compared to $1.88 for the same period last year.

In review of the quarter, Mr. Gallagher commented, "We are pleased to report another period of solid sales and earnings growth for Genuine Parts Company.  Our Industrial and Electrical businesses continue to turn in the strongest results among our four business segments.  Sales for Motion Industries, our Industrial Group, were up 29% in the quarter, and EIS, our Electrical Group, generated a 31% increase.  Both Motion Industries and EIS sell into the manufacturing sector of the economy, which has experienced a nice recovery in 2010 and is performing well today.  Our Automotive Group produced another solid quarter, with sales for this group up 7% for the second consecutive quarter.  The ongoing improvement that we have seen in our Automotive results over the past several quarters is encouraging.  S.P. Richards, our Office Products Group, ended the quarter down slightly from last year, consistent with the first two quarters of the year.  Their results were in line with our expectations and they reflect the challenge of lackluster office employment, which has impacted the office products industry for some time now."

Mr. Gallagher added, "Our balance sheet as of September 30, 2010 remains in excellent condition.  We continue to generate strong cash flows as a result of our working capital, asset management and cost reduction initiatives.  Our strong cash position offers us tremendous opportunities and we continue to use our cash in several key areas to maximize the total return to shareholders.  These include the dividends paid to shareholders, the ongoing reinvestment back into each of our four businesses, strategic complimentary types of acquisitions and share repurchases."

Mr. Gallagher concluded, "We are encouraged by the sales and earnings growth achieved in the third quarter and through the first nine months in 2010, and we are optimistic that our businesses will show continued progress over the balance of the year.  Our management team remains focused on achieving our four primary objectives for 2010:  producing solid sales results; improving operating margins; generating strong cash flows; and maintaining the strength of our balance sheet."

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 877-316-2549, conference ID 14449908.  A replay will also be available on the Company's website or at 800-642-1687, conference ID 14449908, two hours after the completion of the conference call until 12:00 a.m. Eastern time on October 30, 2010.

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 include, but are not limited to, the ability to maintain favorable supplier arrangements and relationships, changes in general economic conditions, the growth rate of the market demand for the Company's products and services, competitive product, service and pricing pressures, including internet related initiatives, changes in financial markets, including particularly the capital and credit markets, impairment of financial institutions with which we do business, the effectiveness of the Company's promotional, marketing and advertising programs, changes in laws and regulations, including changes in accounting and taxation guidance, the uncertainties of litigation, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2009 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, Form 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 and Mexico. 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 Sept. 30,

Nine Months Ended Sept. 30,

2010

2009

2010

2009

(Unaudited)

(in thousands, except per share data)

Net sales

$2,950,560

$2,606,757

$8,399,861

$7,586,298

Cost of goods sold

2,097,529

1,841,511

5,964,045

5,343,996

Gross profit

853,031

765,246

2,435,816

2,242,302

Operating Expenses:

Selling, administrative & other expenses

618,449

571,978

1,792,997

1,693,384

Depreciation and amortization

22,093

22,562

67,422

67,494

640,542

594,540

1,860,419

1,760,878

Income before income taxes

212,489

170,706

575,397

481,424

Income taxes

80,704

63,067

218,536

181,016

Net income

$131,785

$107,639

$356,861

$300,408

Basic net income per common share

$ .84

$ .67

$ 2.26

$ 1.88

Diluted net income per common share

$ .83

$ .67

$ 2.25

$ 1.88

Weighted average common shares outstanding

157,573

159,541

158,197

159,500

Dilutive effect of stock options and

  non-vested restricted stock awards

407

335

398

268

Weighted average common shares outstanding –

  assuming dilution

157,980

159,876

158,595

159,768

GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS

Three Months Ended Sept. 30,

Nine Months Ended Sept. 30,

2010

2009

2010

2009

(Unaudited)

(in thousands)

Net sales:

  Automotive

$1,481,294

$1,381,578

$4,231,367

$3,960,743

  Industrial

921,162

711,471

2,606,697

2,149,200

  Office Products

434,513

436,287

1,246,984

1,255,169

  Electrical/Electronic Materials

117,290

89,364

324,167

256,106

  Other (1)

(3,699)

(11,943)

(9,354)

(34,920)

     Total net sales

$2,950,560

$2,606,757

$8,399,861

$7,586,298

Operating profit:

  Automotive

$124,059

$107,735

$338,986

$312,919

  Industrial

72,856

36,495

181,820

102,113

  Office Products

26,657

26,692

93,670

99,081

  Electrical/Electronic Materials

8,393

6,802

22,156

17,560

  Total operating profit

231,965

177,724

636,632

531,673

  Interest expense, net

(6,562)

(6,662)

(19,988)

(20,510)

  Other, net

(12,914)

(356)

(41,247)

(29,739)

     Income before income taxes

$212,489

$170,706

$575,397

$481,424

Capital expenditures

$31,019

$12,405

$58,931

$49,360

Depreciation and amortization

$22,093

$22,562

$67,422

$67,494

(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,

2010

2009

(Unaudited)

(in thousands)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$  531,731

$  363,133

Trade accounts receivable, net

1,394,870

1,250,575

Merchandise inventories, net

2,182,413

2,188,133

Prepaid expenses and other current assets

282,287

232,450

  TOTAL CURRENT ASSETS

4,391,301

4,034,291

Goodwill and other intangible assets, less accumulated amortization

207,237

171,573

Deferred tax asset

152,248

152,787

Other assets

184,548

132,943

Net property, plant and equipment

478,436

485,647

TOTAL ASSETS

$5,413,770

$4,977,241

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Trade accounts payable

$1,371,718

$1,124,276

Income taxes payable

46,144

56,997

Dividends payable

64,584

63,819

Other current liabilities

238,439

199,419

  TOTAL CURRENT LIABILITIES

1,720,885

1,444,511

Long-term debt

500,000

500,000

Retirement and other post-retirement benefit liabilities

239,326

289,659

Other long-term liabilities

175,777

128,729

Common stock

157,535

159,552

Retained earnings and other

2,880,155

2,761,131

Accumulated other comprehensive loss

(268,502)

(313,788)

  TOTAL PARENT EQUITY

2,769,188

2,606,895

Noncontrolling interests in subsidiaries

8,594

7,447

  TOTAL EQUITY

2,777,782

2,614,342

TOTAL LIABILITIES AND EQUITY

$5,413,770

$4,977,241

GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended Sept. 30,

2010

2009

(Unaudited)

(in thousands)

OPERATING ACTIVITIES:

  Net income

$356,861

$300,408

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

  Depreciation and amortization

67,422

67,494

  Share-based compensation

4,674

6,709

  Excess tax benefits from share-based compensation

(1,500)

(63)

  Other

663

1,917

  Changes in operating assets and liabilities

140,302

390,038

NET CASH PROVIDED BY OPERATING ACTIVITIES

568,422

766,503

INVESTING ACTIVITIES:

  Purchases of property, plant and equipment

(58,931)

(49,360)

  Acquisitions and other

(83,080)

(123,047)

  Purchase of properties under construction and lease agreement

  -

(72,811)

NET CASH USED IN INVESTING ACTIVITIES

(142,011)

(245,218)

FINANCING ACTIVITIES:

  Stock options exercised

7,177

2,178

  Excess tax benefits from share-based compensation

1,500

63

  Dividends paid

(193,313)

(189,739)

  Changes in cash overdraft position

-

(52,000)

  Purchase of stock

(69,438)

(159)

NET CASH USED IN FINANCING ACTIVITIES

(254,074)

(239,657)

EFFECT OF EXCHANGE RATE CHANGES ON CASH

22,591

13,728

NET INCREASE IN CASH AND CASH EQUIVALENTS

194,928

295,356

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

336,803

67,777

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$531,731

$363,133

SOURCE Genuine Parts Company



RELATED LINKS

http://www.genpt.com