ATLANTA (Feb. 19, 2014) — NAPA Auto Parts' parent firm, Genuine Parts Co., ended 2013 with record sales and earnings, thanks mostly to its automotive segment.
Genuine Parts boosted its annual net earnings 5.7 percent to $685 million as sales jumped 8.2 percent to $14.1 billion, compared with 2012.
The company's Automotive Group—its largest segment, which includes NAPA—increased its annual operating profit 18.6 percent to $641.5 million on an 18.5-percent surge in sales to $7.49 billion.
"We are pleased to report that 2013 was another year of record sales and earnings for Genuine Parts Co. Our overall results reflect the good job that was done by the GPC team in 2013, despite the challenging market conditions that were experienced by our non-automotive business segments," said Chairman and CEO Tom Gallagher.
"We further strengthened our financial condition with increased net income and a continued emphasis on effectively managing the balance sheet. Our progress in these areas produced record cash flows for us in 2013, with cash from operations at $1.1 billion and free cash flow of approximately $600 million."
"The company's revenue growth in 2013 was driven by an 18.5-percent automotive sales increase, offset by a combined 1 percent sales decrease for our non-automotive businesses," Mr. Gallagher continued. "Acquisitions for the Automotive Group drove the high-teen revenue growth, while our underlying sales were up approximately 4 percent for the year.
"Our strongest sales results came from our commercial business and, in particular, solid results in NAPA AutoCare and Major Accounts, our two primary commercial initiatives. Sales at Motion Industries, our Industrial Group, were down slightly for the year, our Electrical/Electronic Group was down 2 percent and our Office Group sales were down 3 percent in 2013. Weak demand patterns challenged these three industries throughout the year."
For the fourth quarter, Genuine Parts' net income fell 6.1 percent to $150.5 million despite a 12.8-percent jump in sales to $3.52 billion, compared with the year-ago period. The automotive unit increased its operating profit 25.6 percent to $153.9 million on a 25.1 percent surge in sales to $1.92 billion for the period.
The company noted that the 2012 quarterly results include a $23.5 million one-time pension gain, or $0.10 per diluted share. Excluding the gain, diluted earnings per share in the fourth quarter of 2013 were up 4 percent from 2012.
"Revenue growth in the fourth quarter proved to be the strongest of the year, with acquisitions contributing 10 percent to our sales growth and our underlying sales were up 4 percent, which was offset by a 1-percent currency headwind," Mr. Gallagher said.
"We faced a number of challenges in each of our four business segments in 2013 and, as previously stated, our automotive business fared the best with their 18.5-percent sales increase. In all four businesses, key decisions were made and actions taken that position each segment for solid performances in the year ahead, and we look forward to reporting on our progress.
"We remain committed to our core objectives of growing sales and earnings, showing continued operating margin improvement, generating solid cash flows and maintaining a strong balance sheet. Further progress in each of these areas will keep the company moving ahead and help to ensure another successful year in 2014."
Based on its annual results, the company is offering a 7-percent increase in its regular quarterly cash dividend for 2014 to an annual rate of $2.30 per share compared with the previous dividend of $2.15 per share. The company said it has paid a cash dividend every year since going public in 1948 and 2014 marks the 58th consecutive year of increased dividends paid to shareholders.
In other business, Genuine Parts named James R. Neill, currently senior vice president of employee development and HR services, as senior vice president of human resources, succeeding Bruce Clayton, who is retiring April 1.
What is the most pressing issue facing your dealership in 2017?
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