Genuine Parts Company
For the nine months ended September 30, 2008, sales totaled $8.5 billion, up 3% compared to the same period in 2007. Net income for the nine months was $387.6 million, an increase of 2% over $380.3 million recorded in the previous year. Earnings per share on a diluted basis were $2.36, up 6% compared to $2.23 for the same period last year.
In review of the quarter, Mr. Gallagher commented, "We are pleased to report that the 3rd Quarter of 2008 was another period of steady and consistent sales and earnings growth for Genuine Parts Company. EIS, our Electrical Group, reported another excellent quarter and, once again, generated the strongest sales growth among our four business segments. They were up 13% in the quarter, following a 7% increase in the first quarter and 11% growth in the second quarter. Motion Industries, our Industrial Group, is also performing well, with their sales increasing 7% for the second consecutive quarter, following a 6% sales increase in the first quarter. We expect to see both EIS and Motion continue their positive sales trends in the fourth quarter. Our two most challenging businesses currently are Automotive and Office Products. The Automotive Group reported a 1% sales increase in the quarter and S.P. Richards, our Office Products Group, ended the quarter even with the prior year. Our results in each of these segments are reflective of the overall slowdown in their respective industries and, while we do not anticipate a quick recovery in either case, we do remain optimistic about our prospects in each of these businesses in the quarters ahead."
Mr. Gallagher added, "The Balance Sheet at September 30, 2008 remains in excellent condition and we continue to strengthen our financial position through steady and consistent earnings growth as well as working capital and asset management initiatives. The Company also continues to generate strong cash flows and our cash position remains sound. We have used cash in several key areas to maximize the total return to shareholders, including the dividends paid to shareholders, which we have increased for 52 consecutive years. Another priority for cash has been opportunistic share repurchases and as part of our share repurchase program, we have purchased approximately 6.7 million shares of our Company stock thus far in 2008. Other key uses for cash remain the ongoing reinvestment in our four business segments and strategic complimentary types of acquisitions in each of the businesses."
Mr. Gallagher concluded, "As we enter the last quarter of 2008, we are witnessing heightened levels of economic uncertainty, which are having an impact on all businesses, GPC included. Our Company remains in sound condition, however, and we believe that our continued focus on the consistent execution of our short and long term growth plans, as well as our ongoing initiatives to further strengthen our balance sheet, will pull our Company through the difficult economy. This proven strategy has allowed us to show steady and consistent progress over our 80-year history and we look forward to reporting another year of record sales and earnings in 2008."
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, http://www.genpt.com/ , by clicking "Investor Services", or by dialing 877-422- 4780, conference ID 67330418. A replay will also be available on the Company's website or at 800-642-1687, conference ID 67330418, two hours after the completion of the conference call until 12:00 a.m. Eastern time on November 1, 2008.
Forward Looking Statements
Some statements in this release, 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 our 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, changes in general economic conditions, the growth rate of the market for the Company's products and services, the ability to maintain favorable supplier arrangements and relationships, competitive product and pricing pressures, including internet related initiatives, 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 from time to time in the Company's 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 Form 10-Q, 10-K, 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. and Canada 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 Nine Months Ended Sept. 30, Sept. 30, 2008 2007 2008 2007 (Unaudited) (in thousands, except per share data) Net sales $2,882,115 $2,797,556 $8,495,073 $8,215,926 Cost of goods sold 2,033,110 1,973,068 5,974,372 5,776,909 849,005 824,488 2,520,701 2,439,017 Selling, administrative & other expenses 638,163 617,101 1,902,467 1,825,704 Income before income taxes 210,842 207,387 618,234 613,313 Income taxes 79,825 78,807 230,601 233,059 Net income $131,017 $128,580 $387,633 $380,254 Basic net income per common share $.81 $.76 $2.37 $2.24 Diluted net income per common share $.81 $.76 $2.36 $2.23 Weighted average common shares outstanding 161,603 168,819 163,324 169,862 Dilutive effect of stock options and non-vested restricted stock awards 673 1,006 689 1,022 Weighted average common shares outstanding - assuming dilution 162,276 169,825 164,013 170,884 GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS Three Months Ended Nine Months Ended Sept. 30, Sept. 30, 2008 2007 2008 2007 (Unaudited) (in thousands) Net sales: Automotive $1,393,118 $1,381,007 $4,127,518 $4,037,568 Industrial 907,015 849,631 2,686,297 2,522,675 Office Products 458,968 460,425 1,332,167 1,342,932 Electrical/Electronic Materials 126,827 111,863 363,712 329,416 Other (1) (3,813) (5,370) (14,621) (16,665) Total net sales $2,882,115 $2,797,556 $8,495,073 $8,215,926 Operating profit: Automotive $111,730 $115,023 $317,888 $325,690 Industrial 77,220 69,669 222,781 204,330 Office Products 33,426 33,183 114,721 119,052 Electrical/Electronic Materials 10,272 7,685 29,175 23,224 Total operating profit 232,648 225,560 684,565 672,296 Interest expense, net (7,391) (4,706) (21,877) (16,550) Other, net (14,415) (13,467) (44,454) (42,433) Income before income taxes $210,842 $207,387 $618,234 $613,313 Capital expenditures $15,761 $31,015 $60,091 $83,781 Depreciation and amortization $21,768 $21,994 $66,469 $64,014 (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, 2008 2007 (Unaudited) (in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $124,428 $330,052 Trade accounts receivable, net 1,350,568 1,334,309 Merchandise inventories, net 2,318,215 2,225,718 Prepaid expenses and other current assets 279,932 243,296 TOTAL CURRENT ASSETS 4,073,143 4,133,375 Goodwill and other intangible assets, less accumulated amortization 147,940 70,539 Other assets 185,420 172,583 Net property, plant and equipment 412,755 458,597 TOTAL ASSETS $4,819,258 $4,835,094 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $1,070,513 $1,088,201 Current portion of debt 250,000 - Income taxes payable 18,506 19,559 Dividends payable 63,003 61,318 Other current liabilities 223,634 199,529 TOTAL CURRENT LIABILITIES 1,625,656 1,368,607 Long-term debt 250,000 500,000 Other long-term liabilities 206,058 191,750 Minority interests in subsidiaries 68,439 64,774 Common stock 160,557 167,900 Retained earnings and other 2,508,548 2,542,063 TOTAL SHAREHOLDERS' EQUITY 2,669,105 2,709,963 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,819,258 $4,835,094 GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended Sept. 30, 2008 2007 (Unaudited) (in thousands) OPERATING ACTIVITIES: Net income $387,633 $380,254 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 66,469 64,014 Other 11,470 19,435 Changes in operating assets and liabilities 1,836 154,249 NET CASH PROVIDED BY OPERATING ACTIVITIES 467,408 617,952 INVESTING ACTIVITIES: Purchases of property, plant and equipment (60,091) (83,781) Acquisitions and other (98,735) (20,316) NET CASH USED IN INVESTING ACTIVITIES (158,826) (104,097) FINANCING ACTIVITIES: Stock options exercised 1,364 10,134 Excess tax benefits from share-based compensation 313 4,176 Dividends paid (188,805) (181,925) Purchase of stock (228,863) (152,161) NET CASH USED IN FINANCING ACTIVITIES (415,991) (319,776) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (107,409) 194,079 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 231,837 135,973 CASH AND CASH EQUIVALENTS AT END OF PERIOD $124,428 $330,052
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SOURCE: Genuine Parts Company
CONTACT: Jerry W. Nix, Vice Chairman and CFO of Genuine Parts Company,
Web site: http://www.genpt.com/