Genuine Parts Company reports record first quarter, Automotive up 29.6%

by | Apr 19, 2018 | 0 comments

Genuine Parts Company has announced sales and earnings for the first quarter ended March 31, 2018.

Sales for the first quarter ended March 31, 2018 were a record $4.6 billion, a 17.4% increase compared to $3.9 billion for the same period in 2017.  Net income for the first quarter was $176.6 million and earnings per share on a diluted basis were $1.20.  Before the impact of certain transaction-related costs incurred for the Company’s fourth quarter 2017 acquisition of Alliance Automotive Group (AAG) in Europe and a recently announced agreement to spin-off the Company’s Business Products Group, S.P. Richards, adjusted net income was $186.5 million, or $1.27 per diluted share.  Total sales for the first quarter included 2% organic growth, 14% from acquisitions, including AAG, and a 1% benefit from foreign currency translation.

First quarter sales for the Automotive Group were up 29.6%, including an approximate 1.5% comparable sales increase as well as the benefit of acquisitions and favourable foreign currency translation.  Sales for the Industrial Group, which includes both Motion Industries and EIS, were up 8.3%, including a 5% comparable sales increase, and sales for the Business Products Group were down 4.8% for the quarter in both total and comparable sales.

Paul Donahue, President and Chief Executive Officer, commented, “We were pleased to complete the first quarter of 2018 with double-digit total sales growth, driven by increases in our core global automotive and industrial businesses.  While our operating margins were challenged, we remain focused on the execution of our plans to drive additional operating improvement and better position the Company for sustained long-term growth and profitability.  With our recent announcement to spin-off the Business Products Group, we took an important step that will allow us to commit more resources and increase our focus on our core growth and higher-margin global businesses.  This is an exciting time for Genuine Parts, and we look forward to effectively executing on the opportunities ahead.

2018 Outlook

The Company is maintaining its initial sales and earnings guidance and continues to expect sales to be up 12% to 13% and adjusted diluted earnings per share, which excludes any first quarter and future transaction-related costs, to be $5.60 to $5.75.  The Company currently expects a tax rate of approximately 26.0%, which is down slightly from the initial guidance of 26.0 to 27.0% in 2018.

 

GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
2018 2017
(Unaudited)
(in thousands, except per share data)
Net sales $ 4,586,294 $ 3,905,641
Cost of goods sold 3,150,487 2,749,920
Gross profit 1,435,807 1,155,721
Operating and non-operating expenses:
Selling, administrative & other expenses 1,148,125 873,814
Depreciation and amortization 58,363 38,132
1,206,488 911,946
Income before income taxes 229,319 243,775
Income taxes 52,743 83,615
Net income $ 176,576 $ 160,160
Basic net income per common share $ 1.20 $ 1.08
Diluted net income per common share $ 1.20 $ 1.08
Weighted average common shares outstanding 146,727 148,154
Dilutive effect of stock options and non-vested restricted stock awards 595 634
Weighted average common shares outstanding – assuming dilution 147,322 148,788

 

GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended March 31,
2018 2017
(Unaudited)
(in thousands)
Net sales: (1)
Automotive $ 2,564,259 $ 1,978,446
Industrial (2) 1,547,944 1,428,959
Business Products 474,091 498,236
Total net sales $ 4,586,294 $ 3,905,641
Operating profit:
Automotive $ 184,706 $ 151,757
Industrial (2) 112,191 104,009
Business Products 21,601 31,119
Total operating profit 318,498 286,885
Interest expense, net (23,307) (6,174)
Intangible amortization (21,403) (10,806)
Other, net (3) (44,469) (26,130)
Income before income taxes $ 229,319 $ 243,775
Capital expenditures $ 31,633 $ 24,806
Depreciation and amortization $ 58,363 $ 38,132

(1) The net effect of discounts, incentives, freight billed to customers has been allocated to their respective segments for the current and prior period.  Previously, the net effect of such items were captured and presented separately in a line item entitled “Other”.

(2) Effective January 1, 2018, the Electrical/electronic material segment became a division of the Industrial segment. These two reporting segments became a single reporting segment, the Industrial Parts Group. The change in segment is presented retrospectively.

(3) Includes $13.0 million for the three months ended March 31, 2018, respectively, in transaction-related costs associated with Alliance Automotive Group and the pending combination of S.P. Richards with Essendant.

GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, March 31,
2018 2017
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 325,973 $ 177,917
Trade accounts receivable, net 2,641,151 2,084,871
Merchandise inventories, net 3,772,919 3,287,042
Prepaid expenses and other current assets 841,569 644,232
TOTAL CURRENT ASSETS 7,581,612 6,194,062
Goodwill and other intangible assets, less accumulated amortization 3,618,426 1,608,466
Deferred tax assets 39,830 129,539
Other assets 588,238 497,553
Net property, plant and equipment 931,288 737,206
TOTAL ASSETS $ 12,759,394 $ 9,166,826
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 3,773,149 $ 3,230,985
Current portion of debt 751,614 475,000
Income taxes payable 28,144 65,270
Dividends payable 105,649 99,824
Other current liabilities 1,098,916 708,754
TOTAL CURRENT LIABILITIES 5,757,472 4,579,833
Long-term debt 2,564,111 550,000
Pension and other post-retirement benefit liabilities 200,253 287,589
Deferred tax liabilities 184,383 49,328
Other long-term liabilities 491,794 467,732
Common stock 146,738 147,394
Retained earnings 4,182,599 4,021,848
Accumulated other comprehensive loss (819,258) (950,269)
TOTAL  PARENT EQUITY 3,510,079 3,218,973
Noncontrolling interests in subsidiaries $ 51,302 $ 13,371
TOTAL  EQUITY 3,561,381 3,232,344
TOTAL LIABILITIES AND EQUITY $ 12,759,394 $ 9,166,826

 

GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2018 2017
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income $ 176,576 $ 160,160
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 58,363 38,132
Share-based compensation 3,686 2,717
Excess tax benefits from share-based compensation (2,517) (1,546)
Changes in operating assets and liabilities (97,741) (97,643)
NET CASH PROVIDED BY OPERATING ACTIVITIES 138,367 101,820
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (31,633) (24,806)
Acquisitions and other investing activities (38,588) (106,236)
NET CASH USED IN INVESTING ACTIVITIES (70,221) (131,042)
FINANCING ACTIVITIES:
Proceeds from debt 1,201,441 1,005,000
Payments on debt (1,153,750) (855,000)
Share-based awards exercised, net of taxes paid (4,176) (1,624)
Dividends paid (99,000) (97,584)
Purchase of stock (91,984)
NET CASH USED IN FINANCING ACTIVITIES (55,485) (41,192)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,587) 5,452
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,074 (64,962)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 314,899 242,879
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 325,973 $ 177,917

 

GENUINE PARTS COMPANY and SUBSIDIARIES
Reconciliation of GAAP Net Income to Adjusted Net Income
Three Months Ended March 31,
2018 2017
(Unaudited)
(in thousands, except per share data)
GAAP net income $ 176,576 $ 160,160
Diluted net income per common share $ 1.20 $ 1.08
Add after-tax adjustments:
Transaction-related costs 9,883
Adjusted net income $ 186,459 $ 160,160
Adjusted diluted net income per common share $ 1.27 $ 1.08

 

SOURCE Genuine Parts Company

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