Genuine Parts Company Reports 2018 Sales and Earnings for the Fourth Quarter and Full Year

Dienstag, 19.02.2019 14:30 von PR Newswire - Aufrufe: 38

PR Newswire

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.

GPC Logo. (PRNewsFoto/Genuine Parts Company)

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

December 31,


Twelve Months Ended

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
December 31,


Twelve Months Ended
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

December 31,


Twelve Months Ended

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





















 

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SOURCE Genuine Parts Company

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