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February 26, 2018 01:00 AM

NAPA parent suffers drop in earnings, despite sales boost in 2017

Tire Business Staff
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    ATLANTA — Genuine Parts Co., parent of NAPA Auto Parts, suffered a 10-percent drop in net income to $616.8 million despite a 6.3-percent increase in sales to $16.3 billion for 2017, compared with 2016.

    Its automotive segment, which includes NAPA, increased its operating income by 0.7 percent to $720.5 million as net sales edged up 6.7 percent to $8.66 billion for the year.

    Alliance Automotive Group (AAG), the company's European acquisition that closed on Nov. 2, contributed 1.7 percent to sales. Before the impact of AAG, as well as transaction-related costs recorded in the third and fourth quarters of 2017 and the tax expense resulting from the federal Tax Cuts and Jobs Act recorded in the fourth quarter of 2017, adjusted net income was $686 million.

    "Reflecting on 2017, GPC's 90th year, we surpassed $16 billion in revenues, a new record for us," said Paul Donahue, GPC president and CEO.

    "In addition, we better positioned the company for sustained long-term growth, with significant investments in our existing businesses, as well as new ones, both in North America and abroad. Our balance sheet is in excellent condition, our cash flows are strong and our plans are in place for the year ahead."

    Corporate sales for the fourth quarter, ended December 31, jumped 11.3 percent to $4.2 billion, compared with the year-ago period, however net income plummeted 29 percent to $108.2 million.

    AAG contributed 6.8 percent to corporate sales during the fourth quarter.

    Before the impact of AAG's operations, as well as excluding fourth-quarter transaction-related costs and the expense for transition tax and the revaluation of deferred taxes resulting from the U.S. Tax Cuts and Jobs Act, adjusted net income tallied $165.5 million.

    Fourth-quarter sales for the Automotive Group jumped 16.7 percent to $2.33 billion, including an approximate 1-percent comparable sales increase and a 4-percent total sales increase before the additional 13-percent sales contribution from AAG, the company said.

    The Automotive Group's operating profit increased 14.5 percent to $183.2 million for the quarter.

    GPC said it is establishing its full year 2018 sales guidance at up to 12 to 13 percent with about $80 million to $90 million in lower income taxes related to the Tax Cuts and Jobs Act. The company expects a tax rate of about 26 to 27 percent in 2018.

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