Genuine Parts Company financial results for the fourth quarter and twelve months ended December 31, 2019 showed strong performance and record sales for the year, with a highlighted performance in Q4 Automotive Group sales that were up by 8.7%.
Sales for the fourth quarter were $4.7 billion, a 2.2% increase compared to $4.6 billion for the same period in 2018. Total sales included 0.5% comparable growth and approximately 6.7% from acquisitions, offset by a 4.2% decline due to the sale of EIS, Inc (EIS) and Grupo Auto Todo and a 0.8% negative impact from foreign currency. Net income was $8.9 million and diluted earnings per share was $0.06. Excluding the impact of restructuring and special termination costs, goodwill impairment and certain transaction costs, adjusted net income was $196.7 million, or $1.35 per diluted share. In addition, net income and adjusted net income for the fourth quarter of 2019 excludes any profit contribution from EIS. Refer to the reconciliation of GAAP net income to adjusted net income for more information.
Fourth quarter sales for the Automotive Group were up 8.7%, including an approximate 2.9% comparable sales increase, a 7.2% net benefit from acquisitions, divestitures and other adjustments and unfavorable foreign currency of 1.4%. Sales for the Industrial Group were down 5.9%, including a 1.2% comparable sales decrease and a 12.3% decrease due to the sale of EIS, partially offset by a 7.6% increase from acquisitions. Sales for the Business Products Group were down 6.3%.
Paul Donahue, Chairman and Chief Executive Officer, commented, ”Our fourth quarter results were driven by total sales growth of approximately 7% excluding the impact of EIS, which we sold on September 30th. The quarter was highlighted by the continued improvement in gross margin, solid sales and operating results in our U.S. and Australasian automotive businesses and continued operating margin expansion in Industrial.”
Donahue added, “We also closed on the Todd automotive and Fluid Power House industrial acquisitions in the fourth quarter and, effective January 1, 2020, sold our Canadian business products operations to further strengthen our portfolio. Our team was busy executing on our growth strategy while also focused on the cost savings initiatives announced last quarter. We are in the midst of streamlining functional areas across the organization, reducing the total number of distribution facilities and implementing greater use of automation within our facilities and back-office functions. We remain confident in our ability to achieve our targeted $100 million cost savings run-rate by the end of 2020.”
Full Year 2019 Results
Sales for the twelve months ended December 31, 2019 were $19.4 billion, a 3.5% increase compared to $18.7 billion for the same period in 2018. Net income for the twelve months was $621.1 million and diluted earnings per share was $4.24. Excluding items which impact comparability with prior periods, as noted above, adjusted net income was $833.2 million, or $5.69 per share, for the twelve months ended December 31, 2019. Refer to the reconciliation of GAAP net income to adjusted net income for more information.
Donahue concluded, “2019 represents the third consecutive year of record sales for Genuine Parts Company, with positive comparable sales and the benefit of several key acquisitions. We also streamlined our operations with the sale of various non-core businesses. Combined, these efforts served to further optimize our portfolio, and we expect to continue our strategic transformation in 2020. We enter the new year with plans and initiatives to drive sales and profitability, working capital improvement and significant value for all our stakeholders.”
The Company is establishing its full year 2020 sales guidance at Flat to up 1.0%, or up an adjusted 3.0% to 4.0% excluding the impact of the EIS and SPR Canada divestitures. The company’s guidance for diluted earnings per share is $5.80 to $5.90, an increase of 2% to 4%, or an adjusted 5% to 7% excluding the divestitures noted above. Further details regarding the Company’s full-year 2020 guidance is outlined below (Figures in USD):
|Year Ended 12/31/2020|
|Total sales growth (1)||3% to 4%|
|Automotive sales growth||4% to 5%|
|Industrial sales growth (1)||2% to 3%|
|Business Products sales growth (1)||-1% to -2%|
|Diluted earnings per share||$5.80 to $5.90|
|Effective tax rate||24.0% to 26.0%|
|Net cash provided by operating activities||$1.0 billion to $1.1 billion|
|Capital expenditures||$275 million to $325 million|
|(1) Sales growth excludes the 2019 sales for EIS and SPR Canada|
Genuine Parts Company conference call replay is available on the company’s website or at 844-512-2921, conference ID 13698286, until 12:00 a.m. EDT on March 4, 2020. Visit https://www.genpt.com/