Genuine Parts Company
Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that sales in 2008 were $11.0 billion, up 2% compared to 2007. Net income for the year was $475.4 million, a decrease of 6% compared to $506.3 million in 2007. Earnings per share on a diluted basis were $2.92, down 2% compared to $2.98 in 2007.
Mr. Gallagher stated, "In line with our announcement on January 23, 2009, 2008 proved to be an interesting, as well as challenging, year for Genuine Parts Company. We are, however, pleased to report that 2008 represents another record level of revenues for us. Again for 2008, the Company's strongest sales improvements came from our two business segments serving the manufacturing sector of the economy. Motion Industries, our Industrial Group, reported a 5% increase for the year and EIS, our Electrical/Electronics Group, reported a 7% increase. The Automotive Group and S.P. Richards, our Office Products Group, continued to experience slower industry demand, with Automotive reporting just a slight sales increase in 2008 and our Office Group reporting a 2% decrease for the year."
Mr. Gallagher added, "We are disappointed that earnings did not improve over the prior year, with all of the shortfall coming in the final quarter. Fortunately, we were able to maintain a strong balance sheet and generate solid cash flows, which we returned to our shareholders in the form of dividends and share repurchases."
Fourth Quarter 2008
Sales decreased 4% to $2.5 billion in the fourth quarter ended December 31, 2008, compared to $2.6 billion for the same period in 2007. Diluted earnings per share in the fourth quarter were 55 cents, down 27% compared to 75 cents per share for the fourth quarter of 2007.
Mr. Gallagher commented, "After reporting steady and consistent results through the first three quarters of the year, we experienced a weakening in demand across all of our business segments during the final quarter, reflecting the effects of reduced consumer spending, declining industrial production and higher unemployment. In the fourth quarter of 2008, our Automotive sales were down 6%, our Industrial Group sales were unchanged, our Electrical/Electronics Group was down 4% and our Office Products Group was down 5%."
Mr. Gallagher concluded, "Due to all of the current economic uncertainties, our outlook for the near term is a bit more cautious than it might be in more normal times. However, we continue to be quite optimistic about the longer-term prospects for GPC and for each of our businesses. We believe the underlying fundamentals and demographics in all four business segments remain long term positive and each industry should return to historical growth levels as we work our way through the current economic downturn."
Genuine Parts Company will hold a conference call today at 11:00 a.m. EST to discuss the results of the quarter, the year 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 877-422-4780, conference ID 23660. A replay will also be available on the Company's website or at 800-642-1687, conference ID 23660, two hours after the completion of the conference call until 12:00 a.m. EST on March 4, 2009.
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, the ability to maintain favorable supplier arrangements and relationships, changes in general economic conditions, the growth rate of the market for the Company's products and services, competitive product and pricing pressures, including internet related initiatives, the effectiveness of the Company's promotional, marketing and advertising programs, changes in financial markets, including particularly the capital and credit markets, 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 Dec. 31, Year Ended Dec. 31, 2008 2007 2008 2007 (Unaudited) (in thousands, except per share data) Net sales $2,520,190 $2,627,269 $11,015,263 $10,843,195 Cost of goods sold 1,768,401 1,849,063 7,742,773 7,625,972 751,789 778,206 3,272,490 3,217,223 Selling, administrative & other expenses 601,555 574,774 2,504,022 2,400,478 Income before income taxes 150,234 203,432 768,468 816,745 Income taxes 62,450 77,347 293,051 310,406 Net income $87,784 $126,085 $475,417 $506,339 Basic net income per common share $ .55 $ .76 $ 2.93 $ 2.99 Diluted net income per common share $ .55 $ .75 $ 2.92 $ 2.98 Weighted average common shares outstanding 159,452 166,955 162,351 169,129 Dilutive effect of stock options and non-vested restricted stock awards 457 976 635 1,006 Weighted average common shares outstanding - assuming dilution 159,909 167,931 162,986 170,135 GENUINE PARTS COMPANY and SUBSIDIARIES SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS Three Months Ended Dec. 31, Year Ended Dec. 31, 2008 2007 2008 2007 (Unaudited) (in thousands) Net sales: Automotive $1,194,018 $1,274,305 $5,321,536 $5,311,873 Industrial 828,364 828,279 3,514,661 3,350,954 Office Products 400,347 422,123 1,732,514 1,765,055 Electrical/Electronic Materials 102,177 106,902 465,889 436,318 Other (1) (4,716) (4,340) (19,337) (21,005) Total net sales $2,520,190 $2,627,269 $11,015,263 $10,843,195 Operating profit: Automotive $67,468 $87,490 $385,356 $413,180 Industrial 71,871 77,432 294,652 281,762 Office Products 29,406 37,729 144,127 156,781 Electrical/Electronic Materials 7,546 7,211 36,721 30,435 Total operating profit 176,291 209,862 860,856 882,158 Interest expense, net (7,970) (4,506) (29,847) (21,056) Other, net (18,087) (1,924) (62,541) (44,357) Income before income taxes $150,234 $203,432 $768,468 $816,745 Capital expenditures $44,935 $31,867 $105,026 $115,648 Depreciation and amortization $22,229 $23,688 $88,698 $87,702 (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 Dec. 31, Dec. 31, 2008 2007 (in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $67,777 $231,837 Trade accounts receivable, net 1,224,525 1,216,220 Merchandise inventories, net 2,316,880 2,335,716 Prepaid expenses and other current assets 262,238 269,239 TOTAL CURRENT ASSETS 3,871,420 4,053,012 Goodwill and other intangible assets, less accumulated amortization 158,825 82,453 Deferred tax asset 218,503 35,778 Other assets 114,337 176,837 Net property, plant and equipment 423,265 425,989 TOTAL ASSETS $4,786,350 $4,774,069 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $1,009,423 $989,816 Current portion of debt 0 250,000 Income taxes payable 24,685 45,578 Dividends payable 62,148 60,789 Other current liabilities 190,847 201,793 TOTAL CURRENT LIABILITIES 1,287,103 1,547,976 Long-term debt 500,000 250,000 Other long-term liabilities 103,264 101,988 Retirement benefits liabilities 502,605 91,159 Minority interests in subsidiaries 69,046 66,230 Common stock 159,443 166,065 Retained earnings and other 2,164,889 2,550,651 TOTAL SHAREHOLDERS' EQUITY 2,324,332 2,716,716 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,786,350 $4,774,069 NOTE: Certain prior period amounts have been reclassified to conform to the current year presentation. GENUINE PARTS COMPANY and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended Dec. 31, 2008 2007 (in thousands) OPERATING ACTIVITIES: Net income $475,417 $506,339 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 88,698 87,702 Other (23,985) 4,521 Changes in operating assets and liabilities (9,821) 42,909 NET CASH PROVIDED BY OPERATING ACTIVITIES 530,309 641,471 INVESTING ACTIVITIES: Purchases of property, plant and equipment (105,026) (115,648) Acquisitions and other (109,308) 28,050 NET CASH USED IN INVESTING ACTIVITIES (214,334) (87,598) FINANCING ACTIVITIES: Net payments on debt 0 0 Stock options exercised 821 10,530 Excess tax (expense) benefits from share-based compensation (586) 4,438 Dividends paid (251,808) (243,244) Purchase of stock (273,000) (241,220) Other 52,000 0 NET CASH USED IN FINANCING ACTIVITIES (472,573) (469,496) EFFECT OF EXCHANGE RATE CHANGES ON CASH (7,462) 11,487 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (164,060) 95,864 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 231,837 135,973 CASH AND CASH EQUIVALENTS AT END OF YEAR $67,777 $231,837
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SOURCE: Genuine Parts Company
CONTACT: Jerry W. Nix, Vice Chairman and CFO, +1-770-612-2048, or
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Genuine Parts Company
Web site: http://www.genpt.com/