Genuine Parts Company (GPC) announced sales for the second quarter ended June 30, 2018 were a record $4.8 billion, a 17.6% increase compared to $4.1 billion for the same period in 2017.
Net income for the second quarter was $227.0 million and earnings per share on a diluted basis were $1.54, also a new record. Before the impact of certain transaction and other costs incurred related to the Company’s fourth quarter 2017 acquisition of Alliance Automotive Group (AAG) in Europe and the pending transaction to spin-off the Company’s Business Products Group, S.P. Richards, adjusted net income was $233.6 million, or$1.59 per diluted share. Total sales for the second quarter included 3% comparable growth, 14% from acquisitions, including AAG, and a 0.5% benefit from foreign currency translation.
All figures in U.S. dollars.
Second quarter sales for the Automotive Group were up 27.7%, including a 2.1% comparable sales increase as well as the benefit of acquisitions and a slightly favourable foreign currency translation. Sales for the Industrial Group were up 8.7%, including a 6.5% comparable sales increase, and sales for the Business Products Group were flat with the prior year quarter in both total and comparable sales.
Paul Donahue, President and Chief Executive Officer, commented, “We are pleased to report another quarter of record sales, driven by the favorable impact of strategic acquisitions and improved organic sales trends across our business segments. The positive shift in the underlying sales environment in the automotive business is especially encouraging and, combined with the execution of our plans to drive operating improvement, including plans to address our automotive margin, we are optimistic for improved margin trends as we move ahead.”
Sales for the six months ended June 30, 2018 were $9.4 billion, a 17.5% increase compared to $8.0 billion for the same period in 2017. Net income for the six months was $403.5 million and earnings per share on a diluted basis were $2.74. Before the transaction and other costs discussed above, adjusted net income was $420.0 million, or $2.85 per diluted share, for the six months.
Donahue concluded, “We enter the second half of 2018 excited for the opportunities ahead at GPC. As we move forward with the planned spin-off of our Business Products Group, we remain committed to our core growth and higher-margin global automotive and industrial businesses. To this end, we are focused on the further strengthening of our core sales growth, maximizing the benefits of our acquisitions and effectively reducing our cost structure to improve our operating results and enhance our long-term sales and profit outlook.”
The company is raising its sales guidance to be up 13% to 14%, an increase from the prior guidance of up 12% to 13%. The Company expects diluted earnings per share to range from $5.49 to $5.64 and is reiterating its earnings guidance for adjusted diluted earnings per share, which excludes any transaction-related costs, of $5.60 to $5.75. The Company currently expects a tax rate of approximately 25.0%, which is down slightly from the prior guidance of approximately 26.0% for 2018.