Investor Presentation All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Safe Harbor Statement Some of the comments made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. These statements include projections of revenue, earnings, capital structure, and other financial items; statements on the plans and objectives of the Company and its management; statements of future economic performance and assumptions underlying the statements regarding the Company and its business. The Company's actual results could differ materially from any forward-looking statements due to several important factors, including, among other things, slowing demand for the Company’s products, changes in general economic conditions, including, unemployment, inflation or deflation, high energy costs, uncertain credit markets and other macro- economic conditions, the ability to maintain favorable vendor arrangements and relationships, disruptions in our vendors’ operations, competitive product, service and pricing pressures, the Company’s ability to successfully implement its business initiatives in each of its four business segments, the uncertainties and costs of litigation, as well as other risks and uncertainties described in the Company's latest SEC filings. The Company assumes no obligation to update any forward-looking statements made during this presentation or in these materials except as required by law. 2 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Investment Highlights Leading distributor in diversified end markets Proven track record of steady growth Solid balance sheet with meaningful free cash flow generation Committed to increasing shareholder value Opportunity for market share growth in fragmented industries Large customer base built upon long-standing relationships 3 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Company Overview Founded in 1928 % Net Sales by Segment Leader in supplying 12-Mos. Ended December 31, 2014 fragmented end-markets: Automotive Parts (APG) - Industrial Parts (Motion Industries) - Office Products (S.P. Richards) - 5% 11% Electrical / Electronic Materials (EIS) - 53% Critical partner to 31% our customers: Best in class operating and - distribution efficiencies Industry leading coverage of - $15.3 Billion consumable/replacement items Outstanding just-in-time service #1 or #2 in Every Segment - Technology solutions - 4 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Track Record of Success Dividend growth Strong history of sales & profit growth - 2015 marks GPC’s 59th - Sales have increased in 63 of the last 65 years consecutive year of - Profit has increased in 50 of the last 54 years dividend increases GPC Founded Acquired Motion GPC Record Sales Traded on NYSE: Industries 1976 & Earnings “GPC” 1968 1928 NAPA Acquired Acquired IPO 1948 S.P. Richards 1975 EIS 1998 Established 1925 1925 1925 1945 1945 1955 1955 1965 1965 1975 1975 1985 1985 1995 1995 2005 2005 2014 2014 GPC = Quality + Consistency + Growth 5 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Ten Year Sales History $ Billions Record Sales and EPS in 2014 15.5 ** 5 th Consecutive Year ** 14.5 +9.0% 13.5 +8.2% 12.5 +4.5% 11.5 +11.2% 10.5 +7.5% +6.9% +3.7% +1.6% +11.4% 9.5 -8.7% 8.5 7.5 2005 2006 2007 2008 2009 Profit 2010 Profit 2011 Profit Profit 2012 +11% Profit 2013 +9% Profit 2014 +6.5% -6% Profit Profit -16% Profit +19% Profit +19% +16% +6%* +10%* * Comparative Results 6 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Automotive Parts Group Highlights Largest auto parts network in North America NAPA Established 1925 2014 Sales at $8.1 billion - US: 60 DC’s & ~ 6,000 stores (1,100 Co. owned) 53% - Canada:12 DC’s & ~ 700 stores (200 Co. owned) - Mexico: 11 DC’s & 15 Co. Owned stores - Balkamp: Parts Re-Packager - Rayloc: Brake Products Distributor - Altrom: OE Import Parts - Heavy Vehicle Parts Group: Class 6,7,8 trucks 8 DC’s & 481 Store footprint in Australia and New Zealand Superior NAPA brand name Highly acclaimed customer service Positioned to benefit from positive industry trends 7 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Quarterly Sales History Sales Billions $2.25 +5% +4% +22% +22% +4% $2.00 +23% +25% +4% +2.5% $1.75 +9% +9% +5% +3% +6% +6% +7% +7% Sales $1.50 +9% +9% -5% -1% YOY +6% +6% -7% $1.25 $1.00 $0.75 $0.50 $0.25 $- 2009 -2% 2010 +7% 2011 +8% 2013 +18.5% 2014 +8% 8 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Automotive Parts Group Overview Sell primarily (90%) NAPA Major Competitors branded products to the U.S . - AutoZone, Advance Auto Parts & O’Reilly automotive aftermarket Canada - Uni-Select & AAP/Carquest Differentiators: product quality and breadth, service Australasia - Supercheap, Burson & Autobarn capabilities & technology offering Commercial/DIFM customers Major Account Customers represent professional service repair facilities and account for 70-75% of NAPA sales 15,000+ NAPA AutoCare Centers Major Accounts: AAA, Goodyear, Firestone, TBC, Midas, CBAdvantage Retail/DIY customers represent the individual consumer and account for 25-30% of NAPA sales 9 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
The Automotive Aftermarket Market Trends Favoring the Larger DIFM Segment DIFM billions DIY $100 $90 $102B* $80 +3.5% $91B 5-Yr $70 CAGR $60 $54B* $50 $49B +3.3% $40 5-Yr CAGR $30 $20 $10 $0 2002 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017* 10 Source: Auto Care Association * Forecasted All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
The Vehicle Fleet Steady and Consistent Trend Total Vehicle Registrations 280 7 7 8 8 1%+ CAGR 8 240 8 8 8 7 8 Estimated 200 thru 2020 Vehicles in Millions 115 120 123 127 128 127 128 160 129 130 132 120 279 Heavy 80 Light Trucks 128 127 126 125 125 123 40 Cars 122 120 119 120 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2020 260M Vehicles 11 +1.5% YOY Source: Auto Care Association, BB&T All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Average Age of Vehicles Increasing 12 Average Age All Light Vehicles 11.5 11.4 Years 11 11.4 10.5 10 9.5 Passenger Cars and Light 9 Trucks at 11.4 Years in 2014 8.5 8 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Light Trucks Passenger Cars Source: AAIA / R.L. Polk & Co. 12 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Vehicle Fleet Trends Consumers Are Maintaining Older Vehicles Prime Years for Aftermarket Repair $1,000 Start in Year 6 Annual Spend per Vehicle $800 Avg. Repair $600 Cost/Year 1-5 Yr = $555 $400 $403 $484 $573 $644 $671 $741 $776 $829 $868 $861 $873 $857 6-12 Yr = $829 $776 $802 $812 > 12 Yr = $797 $200 Vehicles 6+ Years of Age $0 >75% of Fleet 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15+ Vehicle Age 13 Source: IMR, Inc. Automotive Research, BB&T All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Vehicle Miles Driven Miles Driven in U.S. – Strengthening Trends Miles Driven: +0.3% in 2012 Historical Positive Correlation for Industry +0.6% in 2013 +1.4% thru 3.10 November 2014 Historical Peak 3.03 3.01 2.99 3.00 Annual Miles in Trillions 2.98 3.0T 2.96 2.97 3.00 2.90 2.95 2.97 2.95 2.80 2.70 2.60 2.50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: US DOT 14 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Gas Prices v. Miles Driven Stable Gas Prices = More Miles Driven ~ Industry can absorb gradual price increases, but sharp spikes can have an impact ~ Gas Prices & Miles Driven - % Change from Same Mo. Prior Year Miles Gas 4% 50% 3% 40% 2% 30% 1% 20% 0% 10% -1% 0% -2% -10% -3% -20% -4% -30% -5% -40% -50% -6% Miles Gas Prices Source: US DOT/EIA 15 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Automotive Parts Group - Growth Opportunities Key Areas of Focus NAPA Initiatives • Plans for New NAPA AUTOPARTS stores; Expansion in New Distribution Australasia and at NAPA Mexico • 15,000+ Independent AutoCare Members NAPA AutoCare • Approx. $1.2 Billion in 2014 & 10%+ Growth • Nearly $1.9 Billion in 2014 & 10%+ Growth Major Accounts • Adding Outside Sales Representatives Outside Sales • Adding Installer Connectivity Connectivity • Heavy Duty Parts, Import Parts, Paint, Tools & Equipment Special Markets • Ongoing program to consistently refresh and upgrade stores Store Resets & Upgrades 16 All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
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