Genuine Parts Company announced recently a business update in response to the impact from novel coronavirus (COVID-19). The company has also prepared a COVID-19 deck to supplement this announcement which can be found at http://genuineparts.investorroom.com. This presentation is based on its current assessment of information available as of April 6.
The company also plans to release first quarter 2020 earnings on May 6. In addition, its board of directors declared a regular quarterly cash dividend of 79 cents ($0.79) per share on the company’s common stock. The dividend is payable July 1 to shareholders of record June 5.
In response to the rapidly evolving COVID-19 outbreak and pandemic, the company has implemented preparedness plans to keep its employees and customers healthy and safe, as well as to ensure continued operations and business continuity across our global network. Each of its automotive, industrial and business products segments have been classified as “essential” businesses and its operations remain substantially open to serve our customers through this pandemic, with the exception of France and New Zealand due to preemptive government mandates. Additionally, its supply chain partners have been very supportive and continue to do their part to ensure that service levels to its customers remain strong.
Paul Donahue, chairman and CEO of Genuine Parts Company, commented, “We continue to take aggressive and necessary measures to keep our workplaces safe while also searching for prudent and innovative ways to maintain our high standard of operation. Protecting our people and keeping our operations up and running remains critical. GPC plays an essential role in keeping major facets of our economy and infrastructure operating, and we will continue to challenge ourselves to meet the needs of our customers.
Donahue concluded, “We believe the steps we are taking to stabilize our business in these unprecedented times will position the company for strong sales and earnings growth as we exit this global pandemic.”
Genuine Parts Company maintains a strong balance sheet and is conserving cash by taking steps to reduce cash outflows associated with capital expenditures and M&A, and suspending share repurchase activity in the current environment. In addition, it has expanded its original $100 million cost savings plan announced last October to include a variety of additional measures to reduce labor and other costs, as appropriate. Finally, while its current liquidity remains strong, with approximately $1.0 billion in cash and unused credit as of March 31, it continues to work with its banking and other partners for alternative forms of financing and to remain in continued compliance with its debt covenants. Through these actions and its on-going working capital initiatives, the company has the liquidity to operate through these uncertain times as well as continue to pay the dividend.
Since its last guidance update on February 19, the growing uncertainties around COVID-19 have rapidly evolved and significantly affected the market conditions across its global operations. While it is uncertain as to its full impact, it expects COVID-19 to negatively impact its financial results, and do not expect to achieve its previously stated full-year 2020 guidance. As a result, the company is withdrawing all of its previous guidance metrics. It will be reevaluating its guidance metrics as it prepares for our first quarter 2020 earnings release on May 6.