All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Presentation All Content is Company Confidential and Exclusive - - PowerPoint PPT Presentation
Presentation All Content is Company Confidential and Exclusive - - PowerPoint PPT Presentation
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
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
- bligation to update any forward-looking statements made during this
presentation or in these materials except as required by law.
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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
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Company Overview
Founded in 1928 Leader in supplying
fragmented end-markets:
- Automotive Parts (APG)
- Industrial Parts (Motion Industries)
- Office Products (S.P. Richards)
- Electrical / Electronic Materials (EIS)
Critical partner to
- ur customers:
- Best in class operating and
distribution efficiencies
- Industry leading coverage of
consumable/replacement items
- Outstanding just-in-time service
- Technology solutions
% Net Sales by Segment 12-Mos. Ended December 31, 2014
$15.3 Billion
#1 or #2 in Every Segment 11% 31% 5% 53%
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Traded on NYSE: “GPC” 1968
Track Record of Success
Acquired Motion Industries 1976
GPC Founded 1928
GPC Record Sales & Earnings Acquired EIS 1998 Acquired S.P. Richards 1975
NAPA Established 1925
IPO 1948
GPC = Quality + Consistency + Growth
Strong history of sales & profit growth
- Sales have increased in 63 of the last 65 years
- Profit has increased in 50 of the last 54 years
1925 1925 1945 1945 1955 1955 1965 1965 1975 1975 1985 1985 1995 1995 2005 2005 2014 2014
Dividend growth
- 2015 marks GPC’s 59th
consecutive year of dividend increases
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Ten Year Sales History
7.5 8.5 9.5 10.5 11.5 12.5 13.5 14.5 15.5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
+9.0%
Profit +11%
$ Billions
Profit +9% Profit +6.5% Profit
- 6%
Profit
- 16%
Profit +19% Profit +19% Profit +16% Profit +6%* Profit +10%*
+7.5% +6.9% +3.7% +1.6%
- 8.7%
+11.4% +11.2% +4.5% +8.2% Record Sales and EPS in 2014 ** 5th Consecutive Year **
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* Comparative Results
All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Automotive Parts Group Highlights
Largest auto parts network in North America 2014 Sales at $8.1 billion
- US: 60 DC’s & ~ 6,000 stores (1,100 Co. owned)
- 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
53%
NAPA Established 1925
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Quarterly Sales History
$- $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25
2011 +8% 2009 -2% 2010 +7% 2013 +18.5% 2014 +8%
Sales Billions
- 5% -1%
+6% +6% +7% +7% +9% +9% +9% +9% +6% +6% +4% +2.5% +5% +3% +22% +23% +4%
Sales YOY
+25% +22%
- 7%
+5%
+4% 8
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Automotive Parts Group Overview
Sell primarily (90%) NAPA
branded products to the automotive aftermarket
Differentiators: product
quality and breadth, service capabilities & technology offering
Commercial/DIFM 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 Major Competitors
U.S. - AutoZone, Advance Auto Parts & O’Reilly Canada - Uni-Select & AAP/Carquest Australasia - Supercheap, Burson & Autobarn
Major Account Customers
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The Automotive Aftermarket
Market Trends Favoring the Larger DIFM Segment
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100
2002 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017*
DIFM DIY
Source: Auto Care Association 10
* Forecasted
billions
$102B* $54B*
$91B $49B
+3.5% 5-Yr CAGR +3.3% 5-Yr CAGR
All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
The Vehicle Fleet
40 80 120 160 200 240 280
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2020
128 127 126 125 125 123 122 120 119 120 279 115 120 123 127 128 127 128 129 130 132 7 7 8 8 8 8 8 8 7 8 Vehicles in Millions
Heavy Light Trucks Cars
Steady and Consistent Trend Total Vehicle Registrations
11
1%+ CAGR Estimated thru 2020
260M Vehicles +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
8 8.5 9 9.5 10 10.5 11 11.5 12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Light Trucks Passenger Cars
Passenger Cars and Light Trucks at 11.4 Years in 2014 Average Age All Light Vehicles 11.4 Years
Source: AAIA / R.L. Polk & Co.
11.4
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Vehicle Fleet Trends
$0 $200 $400 $600 $800 $1,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15+
$403 $484 $573 $644 $671 $741 $776 $829 $868 $861 $873 $857 $776 $802 $812
Annual Spend per Vehicle Vehicle Age
Consumers Are Maintaining Older Vehicles
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Prime Years for Aftermarket Repair Start in Year 6
Vehicles 6+ Years of Age >75% of Fleet
- Avg. Repair
Cost/Year
1-5 Yr = $555 6-12 Yr = $829 > 12 Yr = $797
Source: IMR, Inc. Automotive Research, BB&T
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Vehicle Miles Driven
2.50 2.60 2.70 2.80 2.90 3.00 3.10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2.99 3.01 3.03 2.98 2.96 2.97 2.95 2.95 2.97 3.00
Annual Miles in Trillions
Historical Peak
Miles Driven in U.S. – Strengthening Trends
Miles Driven: +0.3% in 2012 +0.6% in 2013 +1.4% thru November 2014
3.0T Historical Positive Correlation for Industry
Source: US DOT 14
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Stable Gas Prices = More Miles Driven
~ Industry can absorb gradual price increases, but sharp spikes can have an impact ~
Gas Prices v. Miles Driven
- 6%
- 5%
- 4%
- 3%
- 2%
- 1%
0% 1% 2% 3% 4%
- 50%
- 40%
- 30%
- 20%
- 10%
0% 10% 20% 30% 40% 50%
Gas Prices & Miles Driven - % Change from Same Mo. Prior Year Gas Miles
Miles Gas Prices
Source: US DOT/EIA 15
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Automotive Parts Group - Growth Opportunities
Key Areas of Focus NAPA Initiatives New Distribution
- Plans for New NAPA AUTOPARTS stores; Expansion in
Australasia and at NAPA Mexico
NAPA AutoCare
- 15,000+ Independent AutoCare Members
- Approx. $1.2 Billion in 2014 & 10%+ Growth
Major Accounts
- Nearly $1.9 Billion in 2014 & 10%+ Growth
Outside Sales
- Adding Outside Sales Representatives
Connectivity
- Adding Installer Connectivity
Special Markets
- Heavy Duty Parts, Import Parts, Paint, Tools & Equipment
Store Resets & Upgrades
- Ongoing program to consistently refresh and upgrade stores
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Exego / Australasian Acquisition
Renamed GPC Asia Pacific
Market Share Leader in
Australia and New Zealand
- Performing as Planned
Added 50+ stores
since April 1, 2013
- 481 Company owned
stores today
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Motion Industries – Industrial Parts Group
Industrial Parts Group Highlights
Leading industrial parts MRO
distributor in North America
2014 Sales at $4.8 billion
- 15 DC’s and 562 branches and service
centers in the U.S., Canada and Mexico
Proven track record with > 67 yrs.
in the industry
Efficient supply chain and
vendor partnerships
High customer service levels
and technical sales support
Industry leading E-Business capabilities Access to over 5.6 million products
- Global manufacturing base
Very large and fragmented industry
31%
Founded 1946 Acquired 1976
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Quarterly Sales History
$400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200
Sales Millions 2011 +19% 2009 -18% 2010 +22% 2012 +7% 2013 -0-% 2014 +8%
- 16%
- 22% -22%
- 11%
+9% +26% +29% +24% +19% +18% +13% +12% +8% +4.5% +2%
- 2% -1% -2.5% +3%
+4% +7% Sales YOY +24% +10% +10% 19
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Suppliers: SKF, Baldor, Gates,
Rexnord, Timken and Eaton
Customers represent all industry
groups, including Equipment & Machinery, Food Products, Iron & Steel, Pulp & Paper and Mining & Aggregate
Industrial Parts Group Overview
Sales by Product Category
Bearings & Power Transmission 39%
Industrial & Safety 15% Other 9% Hose 5% Hydraulics & Pneumatic 14% Electrical & Automation 8%
Major Competitors
Applied Industrial Technologies
Kaman (Industrial Technologies Div.) DXP Enterprises
20
Material Handling 8%
All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Top Industries
Industrial Parts Group
OEM Food Products Pulp & Paper Iron & Steel Fabricated Metals
Automotive Chemicals & Allied Products Coal, Aggregate & Cement Lumber & Wood Rubber & Plastic Products Oil & Gas Utilities Equipment Rental & Leasing Ports & Rail
Growth Industries
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Industrial Parts Group
60.00 65.00 70.00 75.00 80.00 85.00 90.00 95.00 100.00 105.00
Industry Demand Drivers Relatively Stable
Strengthening trends following lows in June 2009
101.9 78.1
Manufacturing Industrial Production Manufacturing Capacity Utilization
Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14
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Industrial Parts Group
Growth Opportunities
Product Category Expansion
- Automation
- Process Pumps
- Safety
Acquisitions (CSI, AST, Paragon) Growth Industries Repair, Fabrication and Assembly E-Commerce Vending, VMI and Store
Room Management
Only 6% share of market – estimated at $70 billion
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Office Products Group Highlights
S.P Richards is the nation’s second largest
distributor of business products, office furniture and computer supplies
2014 Sales at $1.8 billion
- 44 DC’s in U.S. and Canada
Long history of serving the independent
reseller and “mega” dealer
Access to over 55,000 products
- >500 leading manufacturers
- Global sourcing includes 8
proprietary product brands
Superior fill rates, accurate and timely
shipments and competitive pricing
Database management,
logistical support, e-commerce and a comprehensive array of marketing programs
11%
Founded 1848 Acquired 1975
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Quarterly Sales History
$300 $325 $350 $375 $400 $425 $450 $475 $500
- 2%
- 1%
- 1%
+3% +4% Sales YOY
- 7%
- 6%
- 4%
- 1%
- 5%
- 1%
Sales Millions
- 0-
+3% +5% +4% +3%
- 1%
2011 +3% 2009 -5% 2010 -0-% 2012 -0-%
- 1%
- 3%
2013 -3%
- 3%
- 4%
2014 +10%
- 0-
+15% +22% 25
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Office Products Group Overview
Suppliers: Hewlett Packard, Avery
Dennison, 3M, Smead, Fellowes and HON
Customers: Thousands of business
product resellers
- 82% of sales to Independent Dealers
- 18% of sales to National A/C’s
Major Sales Categories
Office Supplies 44% Tech Products 29% Facility/Breakroom Solutions 12% Office Furniture 15%
Major Competitors
United Stationers
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Demand Drivers Relatively Stable, but Lagging
100 200 300 400 500 600 700 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 Q4'13 Q2'14 Q4'14
Service-Providing Employment
Source: BLS.gov
- 4.5M in 08/09
+1.3M in 10 +2.0M in 11 & 12 +2.1M in 2013
Total Workers in 2014 Back to 2007 Levels
U.S. GDP and Employment Levels
+2.3M 2014
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- 2.0
- 1.0
0.0 1.0 2.0 3.0 4.0 5.0 Q4'10 Q2'11 Q4'11 Q2'12 Q4'12 Q2'13 Q4'13 Q2'14 Q4'15
U.S. GDP (% Change)
Source: BEA.gov
- 3.1% in 09
+2.3% in 12 +2.5% in 10 +1.6% in 11
GDP Expected to Improve Further in 2015
+2.4% in 2014 +2.2% in 13
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Office Products Group
Growth Opportunities
Market Share Initiatives Product Line Expansion New Products Private Brand Expansion Enhanced Marketing and
Electronic Content
Alternate Channel Growth
- GCN and Impact Acquisitions
Only 5% share of market – estimated at $60 billion (Retail)
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Electrical/Electronic Group Highlights
EIS is a leading distributor to electrical
& electronic manufacturers
2014 Sales at $739 million
- 56 locations in U.S., Mexico, Canada, Puerto Rico
and Dominican Republic
Highly developed supply chain Long-standing partnerships Sophisticated information technology
and e-business capabilities
Knowledgeable employees with
product, technical and service solutions
Focus on several growth initiatives, including
new products, new fabrication opportunities and new services
5% Founded 1950 Acquired 1998
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$- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200
+5% +5%
2009 -26% 2010 +30% 2011 +24% 2012 +5% 2013 -2% 2014 +30% Sales Millions
Sales YOY
- 25%
- 34%
- 30% -12%
+16% +32% +31% +40% +39% +28% +22% +10% +9%
- 2%
- 4%
- 5%
- 5% +6%
+30% +32% +23% +35%
Quarterly Sales History
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Electrical/Electronic Group – Overview
Access to over 100,000
products, including:
- Magnet Wire, Pressure Sensitive Tapes,
Solder & Chemicals, Wire and Cable, Varnishes & Resins, Hand Tools, Industrial MRO Materials and Value Added Fabricated Parts
Customers: More than 20,000
customers in the Electrical/Electronic, Fabrication & Coating and Specialty Wire & Cable markets, such as:
- General Electric, Baldor, First Solar,
Emerson, Northrup Grumman, Square D, Celestica, Hewlett Packard and Flextronics
Major Competitors
Essex/Brownell
(a Division of Superior Essex)
Anixter Houston Wire & Cable
Suppliers
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Electrical/Electronic Group
Demand Drivers Showing Mfg. Expansion
Institute for Supply Management - Purchasing Managers Index
50
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Electrical / Electronic Group
Growth Opportunities
New Products New Markets Acquisitions
- Tekra
- Electro-Wire
- IWI
7% share of market – estimated at $10.0 billion
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Drivers and Opportunities
Demand Drivers Opportunities and Initiatives
Automotive
- Total vehicles > 6 years old
- Complexity of vehicles/ # Trucks & SUV’s
- Average age of cars & light trucks
- Gas Prices/Miles driven on roads each
year
- 9-10% share of total market – est. at $100+ billion (Retail)
- Nearly 460,000 Products & Tens of Thousands
- f Customers
- New Distribution, NAPA AutoCare, Major A/C’s, O/S Sales,
Connectivity, Niche Markets – Heavy Duty, Imports, Paints and Tools & Equipment, Store Resets and Upgrades Industrial
- Manufacturing industrial production
- Capacity utilization rates
- Capital expenditure budgets/expansion
- Manufacturing employment in U.S.
- 6% share of market – estimated at $70 billion
- Approx. 5.6 million Products & > 150,000 Customers
- Growth via product line expansion, acquisitions and
targeted industries – e.g. Waste Water Treatment, Power Generation, Municipalities and Transportation & Ports Office Products
- U.S. gross domestic product (GDP)
- White collar employment numbers
- Office occupancy rates in U.S.
- 5% share of market – est. at $60 billion (Retail)
- More than 55,000 Products & Approx. 4,300 Customers
- Growth via market share initiatives, product line expansion
(including proprietary brands), new products, private brand expansion, enhanced marketing/electronic content and new
- r alternate channels
Electrical/Electronic
- Manufacturing expansion (ISM’s PMI)
- Capacity utilization rates
- 7% share of market – estimated at $10.0 billion
- Over 100,000 Products & > 20,000 Customers
- Growth via new products (including wire & cable and
new fabrication opportunities), new markets & acquisitions
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Financial Focus
P&L Financial Highlights
Record Sales and Earnings in 2014 2014 2013 2014
- v. '13
2013
- v. '12
Net Sales (billions) $15.34 +9% $14.08 +8% Net Income (millions) $711 +9%* $685 +6% Diluted EPS $4.61 +10%* $4.40 +6%
* Comparative Results
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7.0 7.2 7.4 7.6 7.8 8.0 8.2 8.4
Operating Margin
Continue to Target 8.0-8.5% Operating Margin 8.3% 8.1%
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
All Content is Company Confidential and Exclusive Property of Genuine Parts Company.
Opportunities for Continued Improvement!
3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
After Tax Before Tax
Net Profit Margin Trends
6.99% 7.29% 4.64% 4.35%
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Strong cash position
- Approx. $138 million at December 31, 2014
Prudent working capital management
- Continuous improvement in working capital levels
Solid after-tax return on invested capital (ROIC)
- 16.1% ROIC for 2014
High after-tax return on assets (ROAA)
- 9.0% for 2014
Comfortable with capital structure
- Relatively modest 19% total debt to total capitalization
Financial Focus
Balance Sheet Highlights
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$0 $200 $400 $600 $800 $1,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 $265 $0 $250 $0 $0 $0 $0 $0 $0 $250
Debt Trend
Financial Focus – Capital Structure
Maturity Schedule
$0 $200 $400 $600 $800 $1,000
$893 $792 $678 $500 $765 $765
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0.0 5.0 10.0 15.0 20.0 25.0 30.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ROAA W/C Efficiency
W/C Efficiency and ROAA Trends
Source: AAIA / R.L. Polk & Co.
27.5% 14.0% ROAA 13.8% 14.8% W/C Eff. Positioned to improve with effective asset management and sales and earnings growth
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10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0
Return On Invested Capital
Continue to target investments with > 15% ROIC
16.1% 12.7%
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Financial Focus – Strong Cash Flows
100 200 300 400 500 600 700 800 900 1,000 1,100 2008 2009 2010 2011 2012 2013 2014 Free Cash Flow Capital Expenditures Dividend Payout
$790M
$335M $108M $347M 42
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Commitment to Shareholders
Priorities for Cash
Dividends Reinvestment in
Businesses
Share Repurchases Acquisitions
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Commitment to Shareholders
0.5 1 1.5 2 2.5
2015
Dividend Record
2015 Annual Dividend $2.46 2.6% Yield and +7% from 2014 59 Consecutive Years of Increased Dividends
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Commitment to Shareholders
Share Repurchases History
9.1 Million Shares Remaining to be Repurchased (in millions)
# Shares Cash Paid 1994 – 2004 24.0 $649.9 2005 – 2009 18.2 782.3 2010 – 2013 7.1 399.4 2014 1.1 95.9 YTD 2015 0.5 45.7 TOTAL 50.9 $1,973.2 Consistent History Of Returning Cash To Shareholders
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GPC Accomplishments & Objectives
- Sales Growth of 9%
- Operating Margin up 30 Bps
- Earnings per Share up 10%
- Solid Cash Flow Generation
- Strengthened Bal. Sheet
Areas of Improvement in 2014
- Improve Sales by 6-8%
- Increase Operating Margin
- Grow EPS by 7-10%
- Generate Solid Cash Flows
- Maintain Strong Bal. Sheet
Key Long Term Annual Objectives
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Total Return to Shareholders
Periods Ending December 31, 2014
Compound Average
1 YEAR 3 YEAR 5 YEAR 7 YEAR 10 YEAR GPC
31.4% 23.8% 26.9% 16.6% 12.9%
S&P 500
13.7% 20.4% 15.5% 7.3% 7.7%
DOW JONES
10.0% 16.3% 14.2% 7.2% 7.9%
NASDAQ
14.8% 23.6% 17.2% 9.8% 9.2%
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0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50 4.75 5.00 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 110.00 80 82 84 86 88 90 92 94 96 98 2 4 6 8 10 12 14
P/E Stock Price EPS Dividend
Market Capitalization $16.3 Billion @ December 31, 2014 $12.8B @ 12/31/13 & $10B @ 12/31/12
P/E, Stock Price, EPS & Dividend Trends
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Thank You!
Contact Information:
Carol Yancey - EVP & CFO: 770-612-2044 Carol_yancey@genpt.com Sid Jones - VP IR: 770-818-4628 Sid_jones@genpt.com