GENUINE PARTS ATLANTA, Oct. 19, 2016 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the third quarter and nine months ended September 30, 2016.
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Sales for the third quarter ended September 30, 2016 were $3.94 billion compared to $3.92 billion for the same period in 2015. Net income for the third quarter was $185.3 million compared to $188.0 million recorded for the same period in the previous year. Earnings per share on a diluted basis were $1.24, equal to the earnings per share for the third quarter last year.
Paul Donahue, President and Chief Executive Officer, commented, "Total sales in the third quarter were up 0.5% from the prior year, inclusive of a 3.5% contribution from acquisitions. Currency exchange was neutral to our overall results, with the slightly favorable Canadian and Australian currencies offsetting the ongoing weakness in the Mexican Peso. Sales for the Automotive Group were up 1.5%, consisting of a 2.5% contribution from acquisitions and a currency tailwind of 0.5%, offset by a 1.5% core sales decrease. Sales at Motion Industries, our Industrial Group, were down 0.7%, including a 2.5% underlying sales decrease and an approximate 2% benefit from acquisitions. Sales at EIS, our Electrical/Electronic Group, were down approximately 9%, and sales for S. P. Richards, our Office Products Group, were up 5%, consisting of an 11% contribution from acquisitions offset by a 6% underlying sales decrease."
Mr. Donahue stated, "Our third quarter results fell short of our expectations. We continue to operate in a tough sales environment, but our teams are working hard to overcome these challenges and generate growth. We recognize there is room for improvement and are working towards that in all aspects of our business. Our goal is to show improved results in the quarters ahead and better position the Company for sustainable growth well into the future. We have a strong balance sheet and excellent cash flows to support our efforts."
Sales for the nine months ended September 30, 2016 were $11.56 billion compared to $11.60 billion for the same period in 2015. Net income for the nine months was $534.7 million, down 2% from 2015, and earnings per share on a diluted basis were $3.56, equal to the same nine month period of the prior year.
2016 Outlook
For the full year 2016, the Company is updating its sales guidance to Flat to up 1% from up 1% to 2%. Diluted earnings per share is expected to be $4.55 to $4.60 as compared to prior guidance of $4.70 to $4.75 per share.
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 877-718-5098, conference ID 3577037. A replay will also be available on the Company's website or at 877-870-5176, conference ID 3577037, two hours after the completion of the call until 12:00 a.m. Eastern time on November 3, 2016.
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, 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 general economic conditions, including, unemployment, inflation or deflation; 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 2015 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
-------------------------------------------
Nine Months Ended Sept. 30,
Three Months Ended Sept.
30,
2016 2015 2016 2015
---- ---- ---- ----
(Unaudited)
(in thousands, except per share data)
Net sales $3,941,743 $3,921,802 $11,559,648 $11,598,254
Cost of goods sold 2,743,142 2,752,577 8,091,124 8,137,880
--------- --------- --------- ---------
Gross profit 1,198,601 1,169,225 3,468,524 3,460,374
Operating expenses:
Selling, administrative & other expenses 869,562 834,372 2,522,223 2,492,537
Depreciation and amortization 37,682 34,278 108,247 105,764
------ ------ ------- -------
907,244 868,650 2,630,470 2,598,301
Income before income taxes 291,357 300,575 838,054 862,073
Income taxes 106,031 112,559 303,334 317,674
------- ------- ------- -------
Net income $185,326 $188,016 $534,720 $544,399
======== ======== ======== ========
Basic net income per common share $1.24 $1.24 $3.58 $3.58
Diluted net income per common share $1.24 $1.24 $3.56 $3.56
Weighted average common shares outstanding 148,899 151,354 149,243 152,043
Dilutive effect of stock options and
non-vested restricted stock awards 828 789 781 847
--- --- --- ---
Weighted average common shares outstanding - assuming dilution 149,727 152,143 150,024 152,890
======= ======= ======= =======
GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
--------------------------------------------
Three Months Ended Sept.
30, Nine Months Ended Sept. 30,
2016 2015 2016 2015
---- ---- ---- ----
(Unaudited)
(in thousands)
Net sales:
Automotive $2,095,030 $2,064,099 $6,115,186 $6,065,733
Industrial 1,162,224 1,170,252 3,482,246 3,540,106
Office Products 535,175 510,825 1,493,434 1,478,878
Electrical/Electronic Materials 178,448 196,837 538,803 573,584
Other (1) (29,134) (20,211) (70,021) (60,047)
------- ------- ------- -------
Total net sales $3,941,743 $3,921,802 $11,559,648 $11,598,254
========== ========== =========== ===========
Operating profit:
Automotive $197,874 $201,986 $555,156 $560,070
Industrial 85,608 90,081 255,704 266,726
Office Products 30,257 36,406 97,101 107,431
Electrical/Electronic Materials 14,277 19,988 45,105 54,019
------ ------ ------ ------
Total operating profit 328,016 348,461 953,066 988,246
Interest expense, net (5,244) (5,055) (14,731) (16,056)
Intangible amortization (10,339) (8,545) (28,324) (25,945)
Other, net (21,076) (34,286) (71,957) (84,172)
------- ------- ------- -------
Income before income taxes $291,357 $300,575 $838,054 $862,073
======== ======== ======== ========
Capital expenditures $36,939 $24,531 $86,650 $61,994
======= ======= ======= =======
Depreciation and amortization $37,682 $34,278 $108,247 $105,764
======= ======= ======== ========
(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,
2016 2015
---- ----
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash
equivalents $225,177 $199,294
Trade accounts
receivable,
net 2,032,548 1,963,158
Merchandise
inventories,
net 3,146,157 2,967,724
Prepaid
expenses and
other current
assets 504,600 493,306
------- -------
TOTAL CURRENT
ASSETS 5,908,482 5,623,482
Goodwill and
other
intangible
assets, less
accumulated
amortization
1,550,435 1,328,431
Deferred tax
assets 109,679 136,618
Other assets 491,925 486,136
Net property,
plant and
equipment 688,851 628,461
------- -------
TOTAL ASSETS $8,749,372 $8,203,128
========== ==========
LIABILITIES
AND EQUITY
CURRENT
LIABILITIES
Trade accounts
payable $3,099,438 $2,851,022
Current
portion of
debt 475,000 125,000
Income taxes
payable 32,594 6,643
Dividends
payable 97,955 92,905
Other current
liabilities 696,544 688,498
------- -------
TOTAL CURRENT
LIABILITIES 4,401,531 3,764,068
Long-term debt 300,000 500,000
Pension and
other post-
retirement
benefit
liabilities 202,131 248,709
Deferred tax
liabilities 51,472 62,419
Other long-
term
liabilities 458,944 456,908
Common stock 148,737 150,763
Retained
earnings 4,038,985 3,922,609
Accumulated
other
comprehensive
loss (865,510) (914,586)
-------- --------
TOTAL PARENT
EQUITY 3,322,212 3,158,786
Noncontrolling
interests in
subsidiaries 13,082 12,238
------ ------
TOTAL EQUITY 3,335,294 3,171,024
--------- ---------
TOTAL
LIABILITIES
AND EQUITY $8,749,372 $8,203,128
========== ==========
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
Nine Months Ended Sept. 30,
2016 2015
---- ----
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income $534,720 $544,399
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 108,247 105,764
Share-based compensation 15,362 13,582
Excess tax benefits from share-based compensation (10,475) (5,381)
Changes in operating assets and liabilities 93,498 237,623
------ -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 741,352 895,987
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (86,650) (61,994)
Acquisitions and other investing activities (365,545) (115,414)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (452,195) (177,408)
FINANCING ACTIVITIES:
Proceeds from debt 3,020,000 2,537,224
Payments on debt (2,870,000) (2,680,191)
Share-based awards exercised, net of taxes paid (11,942) (6,030)
Excess tax benefits from share-based compensation 10,475 5,381
Dividends paid (288,909) (275,379)
Purchase of stock (143,810) (225,175)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (284,186) (644,170)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 8,575 (12,845)
----- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,546 61,564
CASH AND CASH EQUIVALENTS AT BEGINNING OF 211,631 137,730
PERIOD
CASH AND CASH EQUIVALENTS AT END OF PERIOD $225,177 $199,294
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SOURCE Genuine Parts Company
