Genuine Parts Company Reports Record Sales and Earnings for Second Quarter and First Half of 2006
ATLANTA--July 19, 2006--Genuine Parts Company reported record sales and earnings for the second quarter and six months ended June 30, 2006. Tom Gallagher, Chairman, President and Chief Executive Officer, announced today that second quarter sales totaling $2.7 billion were up 8% compared to the second quarter of 2005. Net income was $120.7 million, an increase of 9%, compared to $111.0 million for the second quarter of 2005. On a per share diluted basis, net income was 70 cents, up 11% compared to 63 cents for the second quarter last year.For the six months ended June 30, 2006, sales totaled $5.2 billion, up 8% compared to the same period in 2005. Net income for the six months was $234.6 million, an increase of 8% over $217.6 million recorded in the previous year. Earnings per share on a diluted basis were $1.35, up 9% compared to $1.24 for the same period last year.
Mr. Gallagher stated, "We are pleased to report record sales and earnings for the 2nd Quarter of 2006. We continued to experience positive growth patterns in each of our four business segments. Motion Industries, our Industrial Group, grew sales by 10% and EIS, our Electrical Group, posted a 24% sales increase for the quarter. Business conditions remain strong for the industrial and electrical operations and we anticipate more good results from these groups in the second half of the year. S.P. Richards, our Office Products Group, generated a 6% sales increase for the quarter and the Automotive Group reported a 5% sales increase for the quarter. Our sales initiatives, combined with positive employment figures, GDP expansion and favorable aftermarket demographics, provide each of our segments with additional growth opportunities over the balance of 2006 and we anticipate solid performances from all four groups."
Mr. Gallagher further commented, "The balance sheet at June 30, 2006 remains in excellent condition and we continue to strengthen our financial position through strong earnings growth as well as working capital and asset management initiatives."
Mr. Gallagher added, "The Company also continues to generate consistent and steady cash flows and our cash position remains strong. Our priorities for cash include the dividend, opportunistic share repurchases, the ongoing investment in each of our businesses and strategic bolt-on types of acquisitions. As part of our share repurchase program, we have purchased 2.0 million shares of our Company stock in 2006."
Mr. Gallagher concluded, "We are pleased with our progress thus far in 2006 and we are encouraged by the opportunities for continued sales and earnings improvements over the last half of the year."
About Genuine Parts Company
Genuine Parts Company is a distributor of automotive replacement parts in the U.S., Canada and Mexico. The Company also distributes industrial replacement parts in the U.S. and in Canada through its Motion Industries subsidiary. S. P. Richards Company, the Office Products Group, distributes office products nationwide in the U.S. and Canada. The Electrical/Electronic Group, EIS, Inc., distributes electrical and electronic components throughout the U.S., Canada and Mexico.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
(Unaudited)
(in thousands, except per share data)
Net sales $2,661,805 $2,475,657 $5,215,357 $4,817,858
Cost of goods sold 1,836,623 1,714,400 3,586,698 3,320,121
---------- ---------- ---------- ----------
825,182 761,257 1,628,659 1,497,737
Selling, administrative &
other expenses 629,688 581,419 1,248,670 1,145,689
---------- ---------- ---------- ----------
Income before income taxes 195,494 179,838 379,989 352,048
Income taxes 74,814 68,871 145,384 134,483
---------- ---------- ---------- ----------
Net income $ 120,680 $ 110,967 $ 234,605 $ 217,565
========== ========== ========== ==========
Basic net income per
common share $ .70 $ .64 $ 1.36 $ 1.25
Diluted net income per
common share $ .70 $ .63 $ 1.35 $ 1.24
Weighted average common
shares outstanding 172,186 174,270 172,478 174,519
Dilutive effect of stock
options and
non-vested restricted
stock awards 893 962 925 971
---------- ---------- ---------- ----------
Weighted average common
shares outstanding -
assuming dilution 173,079 175,232 173,403 175,490
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GENUINE PARTS COMPANY and SUBSIDIARIES
SEGMENT INFORMATION AND FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
(Unaudited)
(in thousands, except ratio analysis)
Net sales:
Automotive $1,362,230 $1,294,783 $2,590,019 $2,463,738
Industrial 773,553 702,591 1,544,780 1,389,331
Office Products 427,229 401,593 893,184 812,522
Electrical/Electronic
Materials 104,021 83,748 199,490 168,037
Other (1) (5,228) (7,058) (12,116) (15,770)
---------- ---------- ---------- ----------
Total net sales $2,661,805 $2,475,657 $5,215,357 $4,817,858
========== ========== ========== ==========
Operating profit:
Automotive $ 113,399 $ 110,780 $ 209,255 $ 206,087
Industrial 59,073 50,355 116,588 98,608
Office Products 38,523 35,611 86,219 81,638
Electrical/Electronic
Materials 6,272 4,713 11,125 8,022
---------- ---------- ---------- ----------
Total operating profit 217,267 201,459 423,187 394,355
Interest expense, net (6,415) (7,263) (13,587) (15,210)
Other, net (15,358) (14,358) (29,611) (27,097)
---------- ---------- ---------- ----------
Income before
income taxes $ 195,494 $ 179,838 $ 379,989 $ 352,048
========== ========== ========== ==========
Capital expenditures $ 31,070 $ 19,556 $ 58,591 $ 40,324
========== ========== ========== ==========
Depreciation and
amortization $ 17,632 $ 17,189 $ 35,255 $ 34,260
========== ========== ========== ==========
Current ratio 3.1/1 3.1/1
========== ==========
Total debt to total
capitalization 15.4% 16.2%
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(1) Represents the net effect of discounts, incentives and freight billed reported as a component of net sales.
GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, June 30,
2006 2005
---------- ----------
(Unaudited)
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 189,145 $ 260,538
Trade accounts receivable 1,307,071 1,225,674
Merchandise inventories 2,162,405 2,125,366
Prepaid expenses and other current assets 192,477 152,571
---------- ----------
TOTAL CURRENT ASSETS 3,851,098 3,764,149
Goodwill and other intangible assets 62,504 62,615
Other assets 516,216 403,335
Total property, plant and equipment, net 416,135 380,692
---------- ----------
TOTAL ASSETS $4,845,953 $4,610,791
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $1,018,914 $ 974,846
Other borrowings -0- 929
Income taxes payable 30,881 43,606
Dividends payable 58,104 54,450
Other current liabilities 148,024 154,522
---------- ----------
TOTAL CURRENT LIABILITIES 1,255,923 1,228,353
Long-term debt 500,000 500,000
Other long-term liabilities 116,765 110,954
Deferred income taxes 159,304 116,809
Minority interests in subsidiaries 58,635 55,243
Common stock 171,308 174,061
Retained earnings and other 2,584,018 2,425,371
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 2,755,326 2,599,432
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,845,953 $4,610,791
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GENUINE PARTS COMPANY and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2006 2005
--------- ---------
(Unaudited)
(in thousands)
OPERATING ACTIVITIES:
Net income $ 234,605 $ 217,565
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 35,255 34,260
Other 6,781 2,188
Changes in operating assets and liabilities (30,627) 63,214
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 246,014 317,227
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (58,591) (40,324)
Other 2,816 6,271
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (55,775) (34,053)
FINANCING ACTIVITIES:
Net payments on credit facilities (881) (37)
Stock options exercised 5,157 11,569
Excess tax benefits from share-based
compensation 1,620 -0-
Dividends paid (112,426) (107,125)
Purchase of stock (83,475) (61,983)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (190,005) (157,576)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 234 125,598
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 188,911 134,940
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 189,145 $ 260,538
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