Genuine Parts Company announced today sales and earnings for the third quarter and nine months ended September 30, 2017.
Sales for the third quarter ended September 30, 2017 were $4.1 billion, a 4% increase compared to $3.9 billion for the same period in 2016. Net income for the third quarter was $158.4 million compared to $185.3 million recorded for the same period in the previous year.
Earnings per share on a diluted basis were $1.08 compared to $1.24 in the third quarter last year. Before the impact of certain transaction costs primarily related to the company's pending $2.0 billion European acquisition recorded in the third quarter of 2017, adjusted net income was $170 million, or $1.16 per diluted share.
Third quarter sales for the Automotive Group were up 3.6% including an approximate 1% comparable sales increase. Sales at Motion Industries, the Industrial Group, were up 7.1%, including a 4% comparable sales increase, and sales at EIS, the Electrical/Electronic Group, grew 11.6%, with comparable sales down 1%. Sales for S.P. Richards, the Office Products Group, were down 4.7% for the quarter in both total and comparable sales.
Paul Donahue, President and Chief Executive Officer, said, "The third quarter presented us with both opportunities and challenges. We were excited to announce our entry into Europe with the pending acquisition of one of the leading automotive distributors in that region, Alliance Automotive Group, which we expect to close in November. While, domestically, we continued to operate in a challenging sales environment across three of the key industries we serve, U.S. Automotive, Office and Electrical, our Industrial and international Automotive businesses produced stronger year over year growth. In total, we generated a 4% total sales increase, despite one less billing day in the quarter and the disruption from unprecedented natural disasters, including hurricanes and earthquakes. This was achieved via organic growth of 1%, 2% from acquisitions and a 1% foreign exchange benefit."
Donahue added, "Our third quarter profitability was impacted by lower gross margin and higher operating expenses, as our initiatives to drive margin expansion did not meet our expectations. To that point, our plans and initiatives are underway to expedite corrective action."
Sales for the nine months ended September 30, 2017 were $12.1 billion, a 4.7% increase compared to $11.6 billion for the same period in 2016. Net income for the nine months was $509 million compared to $535 million in 2016, and earnings per share on a diluted basis were $3.44 compared to $3.56 in 2016. Before the transaction costs recorded in the third quarter of 2017 noted above, adjusted net income was $520 million and adjusted earnings per diluted share were $3.52.
Donahue concluded, "We enter the fourth quarter focused on generating stronger organic sales growth as well as maximizing the benefits of our acquisitions. We are also intensely focused on the plans and initiatives underway to cut costs and improve our profitability. While we are disappointed with this quarter's results, we are excited about the opportunities ahead and we move forward with a deep sense of urgency as we focus on maximizing shareholder value and positioning the company for long-term success."
2017 Outlook
For the full year 2017, the company is increasing its sales guidance from up 3% to 4% to up 4% to 4.5%. The Company is also updating diluted earnings per share to range from $4.47 to $4.52 and adjusted diluted earnings per share to range from $4.55 to $4.60. This compares to the prior outlook of $4.70 to $4.75. Adjusted diluted earnings per share excludes any fourth quarter 2017 revenue, earnings or expenses, including transaction costs, associated with the pending acquisition of Alliance Automotive Group, as well as the transaction costs recorded in the third quarter of 2017 noted above.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
