Genuine Parts Company Reports Sales up 12% and Earnings up 20% for the Second Quarter Ended June 30, 2010
Genuine Parts Company
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For the six months ended June 30, 2010, sales totaled $5.4 billion, up 9% compared to the same period in 2009. Net income for the six months was $225.1 million, an increase of 17% from the same period in 2009. Earnings per share on a diluted basis were $1.42, up 17% compared to $1.21 for the same period last year.
In reviewing the quarter, Mr. Gallagher commented, "We are pleased to report another quarter of solid sales and earnings growth in 2010. In looking at the results by segment, our Industrial and Electrical businesses turned in the strongest results. Sales for Motion Industries, our Industrial Group, were up 26% in the quarter and EIS, our Electrical Group, generated a 32% increase. Both Motion and EIS sell into the manufacturing sector of the economy, which is performing well at this time. Our Automotive Group produced another solid quarter. Sales for this group were up 7%, following a 6% increase in the first quarter and we are encouraged by the sequential improvement that we have seen in our Automotive results over the past several quarters. S.P. Richards, our Office Products Group, ended the quarter down 1%. This is in line with overall office products industry trends and it is reflective of the reduction in office employment over the past two years."
Mr. Gallagher added, "Our balance sheet as of June 30, 2010 also remains in excellent condition. We ended the period with a sound cash position and we continue to generate strong cash flows as a result of our working capital, asset management and cost reduction initiatives."
Mr. Gallagher concluded, "We are encouraged by our sales and earnings growth in the second quarter and through the first six months in 2010. As we look forward, we are optimistic that we can show continued progress over the balance of the year."
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 84340470. A replay will also be available on the Company's website or at 800-642-1687, conference ID 84340470, after the completion of the conference call until 12:00 a.m. Eastern time on July 31, 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, 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 June Six Months Ended June
30, 30,
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited)
(in thousands, except per share data)
Net sales $2,847,186 $2,535,045 $5,449,301 $4,979,541
Cost of goods
sold 2,024,876 1,790,190 3,866,516 3,502,485
--------- --------- --------- ---------
Gross profit 822,310 744,855 1,582,785 1,477,056
Operating
Expenses:
Selling,
administrative
& other
expenses 598,331 556,394 1,174,548 1,121,406
Depreciation and
amortization 23,186 22,411 45,329 44,932
------ ------ ------ ------
621,517 578,805 1,219,877 1,166,338
Income before
income taxes 200,793 166,050 362,908 310,718
Income taxes 76,326 62,440 137,832 117,949
------ ------ ------- -------
Net income $124,467 $103,610 $225,076 $192,769
======== ======== ======== ========
Basic net income
per common
share $.79 $.65 $1.42 $1.21
Diluted net
income per
common share $.78 $.65 $1.42 $1.21
Weighted average
common shares
outstanding 158,260 159,513 158,514 159,479
Dilutive effect
of stock
options and
non-vested
restricted
stock awards 402 253 403 225
--- --- --- ---
Weighted average
common shares
outstanding -
assuming
dilution 158,662 159,766 158,917 159,704
======= ======= ======= =======
GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended June 30, Six Months Ended June 30,
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited)
(in thousands)
Net sales:
Automotive $1,459,672 $1,360,037 $2,750,073 $2,579,165
Industrial 882,233 701,228 1,685,535 1,437,729
Office
Products 401,960 406,134 812,471 818,882
Electrical/
Electronic
Materials 106,579 80,609 206,877 166,742
Other (1) (3,258) (12,963) (5,655) (22,977)
------ ------- ------ -------
Total net
sales $2,847,186 $2,535,045 $5,449,301 $4,979,541
========== ========== ========== ==========
Operating
profit:
Automotive $126,022 $117,777 $214,927 $205,184
Industrial 60,118 31,443 108,964 65,618
Office
Products 30,454 33,661 67,013 72,389
Electrical/
Electronic
Materials 6,948 5,090 13,763 10,758
----- ----- ------ ------
Total
operating
profit 223,542 187,971 404,667 353,949
Interest
expense,
net (6,693) (6,752) (13,426) (13,848)
Other, net (16,056) (15,169) (28,333) (29,383)
------- ------- ------- -------
Income
before
income
taxes $200,793 $166,050 $362,908 $310,718
======== ======== ======== ========
Capital
expenditures $18,062 $22,858 $27,912 $36,955
======= ======= ======= =======
Depreciation
and
amortization $23,186 $22,411 $45,329 $44,932
======= ======= ======= =======
(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,
2010 2009
---- ----
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $411,872 $238,589
Trade accounts receivable, net 1,353,918 1,239,318
Merchandise inventories, net 2,164,548 2,215,709
Prepaid expenses and other current assets 280,159 222,399
------- -------
TOTAL CURRENT ASSETS 4,210,497 3,916,015
Goodwill and other intangible assets, less
accumulated amortization 201,326 166,683
Deferred tax asset 164,657 160,581
Other assets 173,730 124,358
Net property, plant and equipment 469,150 487,307
------- -------
TOTAL ASSETS $5,219,360 $4,854,944
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable $1,286,681 $1,063,260
Income taxes payable 35,494 44,687
Dividends payable 64,687 63,813
Other current liabilities 188,511 240,807
------- -------
TOTAL CURRENT LIABILITIES 1,575,373 1,412,567
Long-term debt 500,000 500,000
Retirement and other post-retirement benefit
liabilities 296,823 305,525
Other long-term liabilities 173,957 121,168
Common stock 157,613 159,531
Retained earnings and other 2,815,427 2,715,304
Accumulated other comprehensive loss (308,540) (366,973)
-------- --------
TOTAL PARENT EQUITY 2,664,500 2,507,862
Noncontrolling interests in subsidiaries 8,707 7,822
----- -----
TOTAL EQUITY 2,673,207 2,515,684
--------- ---------
TOTAL LIABILITIES AND EQUITY $5,219,360 $4,854,944
========== ==========
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
Six Months Ended June
30,
2010 2009
---- ----
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income $225,076 $192,769
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 45,329 44,932
Share-based compensation 3,133 4,739
Excess tax benefits from share-based
compensation 1,085 -
Other (401) 1,657
Changes in operating assets and liabilities 80,400 244,734
------ -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 354,622 488,831
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (27,912) (36,955)
Acquisitions and other (67,693) (107,405)
------- --------
NET CASH USED IN INVESTING ACTIVITIES (95,605) (144,360)
FINANCING ACTIVITIES:
Stock options exercised 5,384 2,160
Excess tax benefits from share-based
compensation (1,085) -
Dividends paid (128,627) (125,926)
Changes in cash overdraft position - (52,000)
Purchase of stock (63,137) (136)
------- ----
NET CASH USED IN FINANCING ACTIVITIES (187,465) (175,902)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,517 2,243
----- -----
NET INCREASE IN CASH AND CASH EQUIVALENTS 75,069 170,812
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 336,803 67,777
------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $411,872 $238,589
======== ========
First Call Analyst:
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SOURCE: Genuine Parts Company
CONTACT: Jerry W. Nix, Vice Chairman and CFO, +1-770-612-2048, or Sidney
G. Jones, Vice President-Investor Relations, +1-770-818-4628, both of Genuine
Parts Company
Web Site: http://www.genpt.com/
