Genuine Parts Company Reports 2018 Sales and Earnings for the Fourth Quarter and Full Year
ATLANTA, Feb. 19, 2019 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) announced today sales and earnings for the fourth quarter and twelve months ended December 31, 2018.
Sales for the fourth quarter ended December 31, 2018 were $4.6 billion, a 9.4% increase compared to $4.2 billion for the same period in 2017. Net income for the fourth quarter was $186.7 million and earnings per share on a diluted basis were $1.27. Before the impact of certain transaction and other costs incurred primarily related to the Company's acquisition of Alliance Automotive Group ("AAG"), adjusted net income was $198.4 million, or $1.35 per diluted share. Total sales for the fourth quarter included 4.6% comparable growth, approximately 6% from acquisitions and an approximate 1.2% negative impact from foreign currency translation.
Fourth quarter sales for the Automotive Group were up 11.4%, including an approximate 4% comparable sales increase, an approximate 9% benefit from acquisitions and an unfavorable foreign currency translation of approximately 2%. Sales for the Industrial Group were up 8.7%, including an approximate 7% comparable sales increase and 2% from acquisitions. Sales for the Business Products Group were up 1.6% consisting primarily of comparable sales growth.
Paul Donahue, President and Chief Executive Officer, commented, "We are pleased to report another solid quarter of improved results at Genuine Parts Company. For the second consecutive quarter, each of our business segments grew their revenues with positive core sales comparisons and, combined with the added benefit of our accretive acquisitions which are performing well, we further improved our operating results and posted an overall increase in operating margin. We ended the fourth quarter with positive momentum and it is encouraging to see our teams execute on our plans and initiatives to drive continued sales and earnings growth."
Sales for the twelve months ended December 31, 2018 were $18.7 billion, a 15% increase compared to $16.3 billion for the same period in 2017. Net income for the twelve months was $810.5 million and earnings per share on a diluted basis were $5.50. Before the impact of the transaction and other costs primarily related to AAG (discussed above) and the attempted transaction to spin-off the Company's Business Products Group, S.P. Richards, net of the favorable impact of a $12 million termination fee received, adjusted net income was $836.1 million, or $5.68 per diluted share, for the twelve months ended December 31, 2018.
Mr. Donahue concluded, "In 2018, we set new sales and earnings records, and our team did an excellent job of improving working capital and generating strong cash flows. We also completed our first full year of operations in Europe and successfully combined EIS into Motion Industries to form a larger and stronger industrial business. With these and other accomplishments, and our plans in place for the new year, we are well-positioned to further strengthen our global platform in 2019, driving long-term sustainable growth and significant value for our shareholders."
2019 Outlook
The Company is establishing its full year 2019 sales guidance at up 3% to 4%, or up an adjusted 4% to 5% before an expected headwind from currency translation of 1%. The Company's guidance for diluted earnings per share is $5.75 to $5.90, or an adjusted $5.81 to $5.96 before the impact of the 1% currency headwind. The Company currently expects a tax rate of approximately 25.0% in 2019.
Non-GAAP Information
This release contains certain financial information not derived in accordance with United States generally accepted accounting principles ("GAAP"). These items include adjusted net income and adjusted diluted earnings per share. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The Company believes that the presentation of adjusted net income and adjusted diluted earnings per share provides meaningful supplemental information to both management and investors that is indicative of the Company's core operations. The Company has included a reconciliation of this additional information to the most comparable GAAP measure following the financial statements below.
Conference Call
Genuine Parts Company will hold a conference call today at 11:00 a.m. EST 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 "Investors", or by dialing 877-407-0789, conference ID 13686721. A replay will also be available on the Company's website or at 844-512-2921, conference ID 13686721, two hours after the completion of the call until 12:00 a.m. EST on March 5, 2019.
Forward Looking Statements
Some statements in this press 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 the anticipated strategic benefits, synergies and other attributes resulting from acquisitions, including Alliance Automotive Group, as well as 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 may include, among other things, the Company's ability to successfully integrate acquired companies into the Company and to realize the anticipated synergies and benefits; changes in the European aftermarket; the Company's ability to successfully implement its business initiatives in each of its three business segments; slowing demand for the Company's products; changes in national and international legislation or government regulations or policies, including new import tariffs and data security policies and requirements; changes in general economic conditions, including unemployment, inflation (including the impact of potential tariffs) or deflation and the United Kingdom's referendum to exit from the European Union, commonly known as Brexit; changes in tax policies; volatile exchange rates; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; labor shortages; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; the ability to maintain favorable vendor arrangements and relationships; disruptions in our vendors' operations, including the impact of tariffs and trade considerations on their operations and output, as required to meet product demand; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting; the uncertainties and costs of litigation; disruptions caused by a failure or breach of the Company's information systems, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2017 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, 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, Mexico, Australasia, France, the U.K., Germany and Poland. The Company also distributes industrial replacement parts and electrical specialty materials in the U.S., Canada and Mexico through its Industrial Parts Group. S. P. Richards Company, the Business Products Group, distributes a variety of business products in the U.S. and in Canada. Further information is available at www.genpt.com.
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
---
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(in thousands, except per share data) 2018 2017 2018 2017
---
Net sales $
4,603,792 $
4,207,076 $
18,735,073 $
16,308,801
Cost of goods sold 3,061,633 2,923,001 12,751,286 11,402,403
Gross profit 1,542,159 1,284,075 5,983,787 4,906,398
Operating expenses:
Selling, administrative, and other expenses 1,214,036 1,010,434 4,615,290 3,726,233
Depreciation and amortization 63,739 50,051 241,635 167,691
Provision for doubtful accounts 5,841 4,750 17,147 13,932
Total operating expenses 1,283,616 1,065,235 4,874,072 3,907,856
Non-operating expenses (income):
Interest expense 26,256 18,223 101,925 41,486
Other (22,000) (21,384) (67,822) (52,212)
Total non-operating expenses (income) 4,256 (3,161) 34,103 (10,726)
Income before income taxes 254,287 222,001 1,075,612 1,009,268
Income taxes 67,588 113,818 265,138 392,511
Net income $
186,699 $
108,183 $
810,474 $
616,757
Basic net income per common share $
1.28 $
0.74 $
5.53 $
4.19
Diluted net income per common share $
1.27 $
0.73 $
5.50 $
4.18
Dividends declared per common share $
.7200 $
.6750 $
2.880 $
2.700
Weighted average common shares outstanding 146,392 146,629 146,657 147,140
Dilutive effect of stock options and nonvested restricted stock awards 707 582 584 561
Weighted average common shares outstanding - assuming dilution 147,099 147,211 147,241 147,701
GENUINE PARTS COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
---
Three Months Ended
Twelve Months Ended
December 31, December 31,
(in thousands) 2018 2017 2018 2017
---
Net sales: (1)
Automotive $
2,576,344 $
2,312,084 $
10,526,520 $
8,583,317
Industrial (2) 1,570,646 1,445,193 6,298,584 5,805,012
Business products 456,802 449,799 1,909,969 1,920,472
Total net sales $
4,603,792 $
4,207,076 $
18,735,073 $
16,308,801
Operating profit:
Automotive $
199,330 $
183,174 $
854,389 $
720,465
Industrial (2) 130,825 116,470 487,360 440,454
Business products 25,887 13,698 88,756 98,882
Total operating profit 356,042 313,342 1,430,505 1,259,801
Interest expense, net (21,380) (17,423) (92,093) (38,677)
Intangible amortization (22,170) (17,909) (88,972) (51,993)
Other, net (3) (58,205) (56,009) (173,828) (159,863)
Income before income taxes $
254,287 $
222,001 $
1,075,612 $
1,009,268
(1) The net effect of discounts, incentives, and
freight billed to customers has been
allocated to their respective segments for
the current and prior periods. 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 materials 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 reporting is
presented retrospectively.
(3) The three and twelve months ended December
31, 2018 include $17.1 million and $36.1
million of expenses, respectively, from
transaction and other costs incurred related
to the AAG acquisition and the attempted
S.P. Richards spin-off, net of a $12
million termination fee received in the
third quarter.
The three and twelve months ended December
31, 2017 include $30.6 million and $49.1
million of expenses, respectively, from
transaction and other costs primarily
related to the AAG acquisition.
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
---
December 31, December 31,
(in thousands) 2018 2017
---
Assets
Current assets:
Cash and cash equivalents $
333,547 $
314,899
Trade accounts receivable, net 2,493,636 2,421,563
Merchandise inventories, net 3,609,389 3,771,089
Prepaid expenses and other current
assets 1,139,118 805,342
Total current assets 7,575,690 7,312,893
Goodwill 2,128,776 2,153,988
Other intangible assets, less
accumulated amortization 1,411,642 1,400,392
Deferred tax assets 29,509 40,158
Other assets 510,192 568,248
Property, plant, and equipment, net 1,027,231 936,702
Total assets $
12,683,040 $
12,412,381
Liabilities and equity
Current liabilities:
Trade accounts payable $
3,995,789 $
3,634,859
Current portion of debt 711,147 694,989
Other current liabilities 1,088,428 1,045,177
Dividends payable 105,369 99,000
Total current liabilities 5,900,733 5,474,025
Long-term debt 2,432,133 2,550,020
Pension and other post-retirement
benefit liabilities 235,228 229,868
Deferred tax liabilities 196,843 193,308
Other long-term liabilities 446,112 501,004
Equity:
Common stock 145,937 146,653
Additional paid-in capital 78,380 68,126
Accumulated other comprehensive
loss (1,115,078) (852,592)
Retained earnings 4,341,212 4,049,965
Total parent equity 3,450,451 3,412,152
Noncontrolling interests in
subsidiaries 21,540 52,004
Total equity 3,471,991 3,464,156
Total liabilities and equity $
12,683,040 $
12,412,381
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
---
Year Ended December 31
(in thousands) 2018 2017 2016
---
Operating activities
Net income $
810,474 $
616,757 $
687,240
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 241,635 167,691 147,487
Excess tax benefits from share-based
compensation (4,232) (3,134) (12,021)
Loss (gain) on sale of property, plant,
and equipment 1,579 (3,989) (15,237)
Deferred income taxes 3,891 65,990 33,226
Share-based compensation 20,716 16,892 19,719
Foreign exchange gain (14,051)
Changes in operating assets and
liabilities:
Trade accounts receivable, net (72,041) (19,273) (53,544)
Merchandise inventories, net (73,173) (9,923) (64,214)
Trade accounts payable 364,639 61,474 240,717
Other short-term assets and liabilities (97,864) (1,544) 37,271
Other long-term assets and liabilities (50,460) (61,847) (74,566)
334,690 198,286 258,838
Net cash provided by operating activities 1,145,164 815,043 946,078
Investing activities
Purchases of property, plant and equipment (232,422) (156,760) (160,643)
Proceeds from sale of property, plant, and
equipment 14,665 21,275 28,811
Acquisition of businesses and other
investing activities (278,367) (1,494,795) (462,167)
Net cash used in investing activities (496,124) (1,630,280) (593,999)
Financing activities
Proceeds from debt 5,064,291 6,630,294 4,350,000
Payments on debt (5,124,265) (4,350,222) (4,100,000)
Payments on acquired debt (833,775)
Share-based awards exercised (10,227) (5,239) (16,147)
Excess tax benefits from share-based
compensation 12,021
Dividends paid (415,983) (395,475) (386,863)
Purchase of stock (91,983) (173,524) (181,417)
Other financing activities (30,663)
Net cash (used in) provided by financing
activities (608,830) 872,059 (322,406)
Effect of exchange rate changes on cash (21,562) 15,198 1,575
Net increase in cash and cash equivalents 18,648 72,020 31,248
Cash and cash equivalents at beginning of
year 314,899 242,879 211,631
Cash and cash equivalents at end of year $
333,547 $
314,899 $
242,879
Supplemental disclosures of cash flow
information
Cash paid during the year for:
Income taxes $
236,536 $
298,827 $
374,865
Interest $
102,131 $
38,401 $
19,043
GENUINE PARTS COMPANY AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME
(UNAUDITED)
---
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(in thousands, except per share data) 2018 2017 2018 2017
---
GAAP net income $
186,699 $
108,183 $
810,474 $
616,757
Diluted net income per common share $
1.27 $
0.73 $
5.50 $
4.18
Add after-tax adjustments:
Provisional transition tax and deferred tax revaluation 50,986 50,986
Transaction and other costs 11,735 16,454 34,653 28,039
Termination fee (9,045)
Adjusted net income $
198,434 $
175,623 $
0 $
836,082 $
695,782
Adjusted diluted net income per common share $
1.35 $
1.19 $
5.68 $
4.71
View original content to download multimedia:http://www.prnewswire.com/news-releases/genuine-parts-company-reports-2018-sales-and-earnings-for-the-fourth-quarter-and-full-year-300797872.html
SOURCE Genuine Parts Company
