純正零件 (GPC) 2005 Q1 法說會逐字稿

Good morning. My name is Felicia (ph), and I will be your conference facilitator. At this time I would like to welcome everyone to the Genuine Parts Company first-quarter results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (OPERATOR INSTRUCTIONS) At this time I would like to turn the call over to Ms. Carol Yancey, Vice President of Finance and Corporate Secretary. Thank you. Ms. Yancey, you may begin your conference.

Thank you. Good morning and we appreciate you joining us today for the Genuine Parts first-quarter earnings conference call to discuss our results as well as the 2005 outlook. Before we begin this morning, please be advised that this call may involve forward-looking statements such as projections of revenue, earnings, capital structure, and other financial items; statements on the plans and objectives of the Company or 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 described in the Company's latest SEC filings. The Company assumes no obligation to update any forward-looking statements made during this call.

We will begin this morning with remarks from Tom Gallagher, our Chairman, President and CEO.

Thank you, Carol, and good morning to each of you joining us today. We appreciate you taking the time to be with us. Jerry Nix, our Executive Vice President and Chief Financial Officer and I will share the duties this morning and once we have completed our remarks, we will be pleased to answer any questions that you may have.

We released our first-quarter results earlier this morning and perhaps some of you have had an opportunity to see them. Sales for the quarter were 2,342,000,000 which was up 7%. Net income was 106.6 million, up 6%, and earnings per share were $0.61 this year versus $0.57 last year and up 7%. These results were in line with where we had planned to be at the end of the quarter, getting us off to a solid start to the year and it put us in a position for another good performance in 2005.

Looking at the sales results by segment, the Industrial Group continues to generate the strongest results. They were up 13% in the quarter and this is the fourth consecutive quarter of double-digit increases for our Industrial operations. Within the group, the increases for the quarter are pretty consistent geographically as well as across broad customer and product categories and we think that this is reflective of the overall strength in the manufacturing segment of the economy right now.

Both industrial production and capacity utilization figures continue to look quite positive and these have historically been good leading indicators for our business.

So in summary, we feel good about the performance of our Industrial operations and they are off to a strong start to the year. But for planning purposes, we're saying 8 to 10% growth over the remainder of the year. Our thinking here is influenced somewhat by their strong performance last year when they were up 11% in the second-quarter, then 14% in the third and 13% in the fourth quarter. So the comps get a little more challenging. And while our Industrial business continues to perform well, we do want to stay on the conservative side this early in the year.

Moving on to EIS, they were only up 1% for the quarter but I want to quickly add that their results were negatively impacted by the sale of the Circuit Supply division during the quarter. Circuit Supply was the segment that sold to the printed circuit board industry and this is a business that we didn't feel fit us for the long-term. It was just different from the other parts of EIS and the EIS management team did a fine job in selling this business.

Volume for Circuit Supply was $35 million in 2004, but they generated no profit. So while EIS's sales increases will be affected over the remainder of the year, this will really not affect the overall profit. At the same time, EIS is taking some of the proceeds from the Circuit Supply sale and they plan to purchase a small single location electrical distributor in Ontario, Canada. And this will occur in the second quarter. This is a $9 million per year business that fits nicely into the core EIS electrical segment, and this is the first step in establishing a Canadian division for the electrical side of EIS. And we are optimistic about the growth prospects in Canada over the next several years.

Looking out over the remainder of this year, we expect the underlying EIS business to grow in the 4 to 5% range and we will benefit from the sales from the Canadian acquisition over the second half of the year. But when we offset this with the loss of the Circuit Supply volume, we anticipate EIS being down 3 to 4% for the year.

Moving on to office products, it was another solid quarter for this group. Sales were up 6% and as with the Industrial Group, we experienced good, solid growth geographically and consistent growth across our customer and product categories as well. We think that the office products team is benefiting from a stable economy and the continued increase in job creation in the service sector.

They are also experiencing good results in certain product specific initiatives, categories like furniture and break room and cleaning supplies, as well as from the introduction of their new catalog, which was distributed in the first quarter. This will help to drive sales in the months ahead. So we feel good about the performance in the Office Products Group and we expect their increases to be in the 5 to 6% range over the remainder of the year.

And finally Automotive. We were up 4% for the quarter with a bit stronger increase in the NAPA business, offset somewhat by weaker performances in Mexico and Johnson Industries. Mexico was impacted by the Easter holiday being in March this year versus April last, and our results thus far this month have improved.

At Johnson Industries, our AC Delco Motorcraft distributor, we continue to be impacted by the AC Delco distribution agreement, which has had an affect in our business for a little over a year now. This would be an appropriate time to mention that we have entered into an agreement to sell four of the Johnson Industry locations. These four locations have combined annual volume of $36 million and we expect to close on the sale at the end of the month.

As far as the remaining Johnson locations are concerned, we will continue to assess our options, but these operations are profitable and our focus currently is to run them as well as we possibly can and to have them contribute in a positive way to our overall Automotive results.

As mentioned a moment ago, the NAPA business performed a bit better than the overall 4% Automotive increase and pretty much in line with our expectations. We knew going into the quarter that we had our work cut out for us because the first quarter 2004 was our best quarter of the year with a combined Automotive Group being up 10% and the NAPA operations being up just a bit more. So it was a strong quarter and it makes for a challenging comparison, but we think that the NAPA team came through the first quarter in pretty good shape and the comparisons are not quite as challenging in the quarters ahead.

In prior calls we've given you an update on the seven key initiatives in our growth strategy and we are pleased to report that progress was made in the quarter in the areas of NAPA Auto Care, major accounts, Pipeline Plus and store resets, outside sales representation, customer connectivity, and especially markets of heavy-duty tooling equipment and PVE. The one that was not quite as strong was in the area of new distribution.

We ended the quarter with a net increase of three new stores. And looking back over the quarter we had very little activity in January and February, but we did have a good month in March and if our Automotive management team will keep the March pace going over the next nine months, they will hit their new store commitment for the year and we're certainly counting on them to do it.

Before leaving the Automotive segment, we thought you might find it interesting to know that our Company store group was up 7% in the quarter. This is a group of roughly 900 stores and we think that the 7% increase shows good progress being made. And looking a little further into the results of the Company store group, we were especially pleased to see a 9% increase on the commercial side of the business. This is a segment of our business that is awfully important to us and we think that the 9% increase indicates that our commercial initiatives are working pretty well for us right now.

On the cash side of the business, the Company store group was up 5% for the quarter. Not as much as the commercial side, but still a good performance on the cash side we think. So again we feel good about the progress made by the NAPA team and we are optimistic about the year but for planning purposes we want to stay on the cautious side and we are anticipating that the Automotive Group will generate increases in the 4 to 6% range for the remainder of the year.

That covers the sales results for the quarter and at this point we will ask Jerry to cover the financials, after which will do a brief recap and then open it up to your questions. Jerry?

Thank you Tom. Good morning. We do appreciate you joining us. We will first review the incomes statement and segment information, then touch on a few key balance sheet and other financial items. We will be brief and then open the call up to your questions.

A review of the income statement shows total sales were up 7%, a solid start to the year. This is comparable to our 8% sales increase in the fourth quarter and for the full year of 2004. Gross profit for the quarter was 31.44% compared to 31.27 last year, up 17 basis points. We continue to focus on improving our gross margins and we are pleased to report continued progress in this area. We have plans in place to continue to improve these margins in the periods ahead.

SG&A as a percent of sales increased 22 basis points from 23.87% to 24.09. Effectively managing our costs remains an important initiative for us, especially as recent run rates and items such as employee benefits including health care and pension, insurance, and legal and professional costs, have trended up over the last few quarters. Over the balance of 2005, we expect these costs to level off on a comparative basis, so we should show some progress in reducing our expenses as a percent of sales for the year. We have our work cut out for us in this area and must do a better job in bringing our expenses down.

Net income of $106.6 million was up 6% compared to 100.2 million earned in the first quarter last year. EPS was $0.61 compared to $0.57 recorded in 2004, up 7%.

Now let's discuss the operating results by segment. Automotive had revenue of 1,169,000,000, representing 50% of the total. That was up 4% with operating profit of 95.3 million up 2%, operating margins at 8.2%, relative flat with last year.

Industrial Group had revenue of 686.7 million, representing 29% of the total. That was up 13%. Operating profit 48.3 million, and that's up 5%. The operating margin went from a 7.6% first quarter of '04 to 7.0% in the first quarter of this year.

And as you are aware, we have discussed in previous conference calls they have an inventory reduction program in place and that is to take another 45 to $50 million of inventory out this year and that cost us about $10 million annually on volume incentives, so 2.5 million of that affected us in the first quarter. And the other portion of that is they had 3.3% in price increases for the quarter and were not able to pass those along as quickly as we would like because of national contracts with some major accounts. We believe they are doing a very good job in their SG&A area and we feel like for the year we will see margin improvement in the Industrial Group.

Office Products we had revenue of 410.9 million, represents 17% of the total; up 6%, operating profit, 46.0 million, up 5%. Operating margins remain outstanding at 11.2%.

Electrical Group had 84.3 million, 4% of the total. They were up 2% in revenue; operating profit, 3.3 million, up 3%. So the operating margin because of the small numbers stayed at 3.9%, same as the prior year. And looking at total revenue then, we had 2 billion 342.2 million, up 7%, operating profit 192.9 million, up 4%. So slight margin deterioration there from 8.5 to 8.2 but we do feel as mentioned earlier we'll get this back and show some improvement for the full calendar year of '05.

We had interest expense in the quarter of $7.9 million, which is down approximately $2 million or 20% from the prior year due to the reduction of debt in 2004. The other category was 12.7 million for the quarter. That's down 1.2 million for the first quarter of '04. This category mainly represents corporate expense at 11.9 million and the remainder is the amortization of intangibles of minority interest.

Now let's touch base on a few key balance sheet items. Cash at March 31 was $158 million is up $130 million from same period last year and up 23 million from 12/31. Our cash position improved significantly beginning with the second quarter in 2004 and continues into 2005 due to our stronger income, improved working capital position, and cash flow from the exercise of stock options. We are encouraged by the continued improvement of our cash position and the possibilities it provides the Company.

Cash receivables increased 5% on a 7% sales increase. So we continue to do a good job maintaining the level of receivables below our growth rate in sales. We also feel good about the quality of our receivables at the current time. Inventory was up 1% from the prior year and down 2% of $49 million from year end. We feel good about this inventory level relative to our sales growth and we will continue to focus on our inventory management initiatives to further improve our inventory numbers as we look forward into 2005.

Accounts payable increased 26% from last year due to increased purchase related to increased sales volume, as well as the effect of extended terms established with our vendors. We made significant progress in this area in the last 12 months and have plans for more improvement this year.

Working capital was $2.5 billion at quarter end, up only 1% compared to 2.4 billion for the same period last year. At this level of increase relative to sales, we continue to improve our working capital efficiency, something that has been and will continue to be an important initiative for us. Our current ratio is 3.1 to 1 versus 3.5 to 1 for the prior year and the balance sheet remains in excellent condition.

Total debt of $501 million was down 161 million from the same period last year, which represents 16% of total capitalization compared to 22% last year. The continued reduction in debt has been a high priority for us over the last several years.

Looking ahead, we expect our debt to remain at this current level of 500 million until our first 250 million credit facility is due in 2008. The second 250 million is due in 2011. Prepayment of our debt would be cost prohibitive due to the make-whole provision included in the debt agreements.

Capital expenditures was $24.8 (ph) million, up from the 12.1 million in the first quarter last year and we continue to project our capital expenditures for the year to be in the 80 to $90 million range. Depreciation and amortization of 17.1 million for the quarter and we'd would expect this to be approximately 70 to 75 million for the year.

Finally I would add that opportunistic share repurchases have also been a priority for us and as part of our share repurchase program, we did repurchase approximately 750,000 shares of our Company's stock in the first quarter. This leaves us with 5.3 million shares authorized for repurchase as of March 31, 2005. We remain active in the program as we continue to see that an investment in GPC stock will provide a good return to our shareholders.

We are pleased with our first-quarter results in the first quarter, but we also recognize there is much work to the done to get the results we are looking for over the long term. Fortunately we are in good, sound businesses and our outlook for the balance of 2005 remains positive. Our strategy is to continue to emphasize sales and earnings growth, effective cost management, and a continued generation of strong cash flows. Of course we will maintain a healthy balance sheet as we execute our plans.

I'll turn it back to Tom at this point.

Thank you, Jerry. We knew at the beginning of the year that the first quarter would be our toughest comparison because of the strong first quarter last year when combined GPC sales were up 9% and earnings were up 13%. So we are pleased to come in with a solid performance in the first quarter this year, right in line with our own expectations and we feel that it gets us off to a good start to the year.

Earlier in our comments we gave you our current estimates for sales growth for each of the individual business units. When you put it all together, it works out to a combined 5 to 7% increase for GPC over the remainder of the year. And with revenue growth in this range, we would expect earnings to be in the 240 to 245 per share range which would put us up 7 to 9% for the year.

At this point, we'll turn it over to Felicia and we will take any questions that you may have.

(OPERATOR INSTRUCTIONS) John Casesa of Merrill Lynch.

Thank you. Good morning everybody. Tom, I wanted to just ask you about Johnson Industries. Can you tell us how many locations you have left and what the revenue base of those locations is?

Yes, John. There are eight left and annual revenue is right at $200 million.

Okay and then as you exit some of these businesses, is this just a net loss to revenue? Does any of this business flow through NAPA? How does this work? What are the implications for the ongoing Autosegment?

None of this revenue flows directly through NAPA, so it would just come off the top line.

Okay and then just, Jerry, I wanted to ask you about with the outlook now being for steadier growth at the Company, is it fair to assume that you continue to believe that buybacks are going to play a bigger role in redeploying your excess cash than acquisitions would play?

Yes, I believe that is a fair assumption. You know, John, we feel like we can do both. We believe we can make this smaller bolt-on strategic type acquisitions that we need to make and still have enough cash to purchase the stock.

Do you have any view as to how much acquisition opportunity there is in your core businesses? I mean is there a point or two of growth potential in each of these businesses through small acquisitions or is it bigger than or less than that or can't say?

John, this is Tom. I would say that a point or two would be a reasonable expectation if we can work the plans that each of the businesses have in place.

Just finally, I don't want to hog the call here, what is the environment like in Office, in Industrial, in Auto for acquisitions? Is it attractive? What is it?

I think some of the best opportunities would certainly be in the Industrial segment to find some perhaps smaller regional distributors that may want to align with a national company like Motion Industries. And then within the Automotive, there will be some opportunities perhaps to consolidate at the store level and bring some of that into the NAPA organization.

In the Office Products business, it's a little bit more challenging to find an appropriate fit, but the team there has done a good job in looking across the market and trying to identify where opportunities may exist and we hope that they will be successful. But they have the biggest challenge of all.

Thanks and finally, Jerry, can you just recap pricing in the three businesses?

Sure. In the Automotive sector we had a -0.03%. And in Industrial Group we had 3.3%. As we mentioned, Office Products had 0.09% and basically flat at EIS.

And in auto, do you view this as sort of a change here or what do you think is going on in the Auto right now?

John, we had that same number at this point last year in the Automotive side, we were at -0.03% at the end of the first quarter. We ended up with 1.2 for the full year and at this point we would still be expecting to see 1 to 2% price increases for the full year.

Okay, thanks everybody.

Darren Kimball of Lehman Brothers.

First could you just speak to the corporate/other outlook? You had that bump up in provisions in the fourth quarter and then I guess my impression was that we probably step up to a little higher level in the first quarter from what you were doing prior to last year's fourth quarter. Is what you saw in the first quarter typical of what we might see for the rest of the year?

I don't think so, Darren. I think we're probably going to see that number come in flat for the year and some of that is going to depend on how much expense we see associated with the Sarbanes-Oxley and then some of the legal and professional categories. But at this point I would say you could expect to see corporate flat for the year.

Okay, so that would imply a quarterly number may be closer to high teens in the rest of the third quarter for the rest of the year?

I think so. That's probably right.

I was just wondering about the Auto segment. What is the math? I mean, can you fill in some of the blanks in terms of how the company-owned stores are up 7. The total is up 3.8%. Can you fill in some of the blanks in terms of maybe how much Johnson detracted, and Mexico detracted, and maybe what your distribution sales to job are and that kind of thing?

Darren, I can't fill in right now the Johnson and Mexico but I can tell you that the distribution centers sales to the independent side were up 3% in the quarter.

Keep in mind, Darren, we also have Mexico and Canada included in that number.

In the 3%?

That's correct. Not in the distribution center number but in the sales number that we reported, the 4% for the Automotive.

Okay, and the gap there is just that your company-owned stores are more productive right now?

I think we may be a little further along in the execution of some of the strategies and certainly what we consider to be an awfully good performance on the commercial side would indicate that they are working. And I think we look forward to the next three quarters because as these initiatives get further embraced in the independent side, we would hope and expect that they will start to drive some additional revenue for the independent stores as well.

Okay, and on the commercial versus retail numbers, there was a gap there that was reasonably significant. I am just wondering if you think this reflects the differential in the market growth for those two segments or it has more to do with a temporary success of some of your commercial oriented initiatives?

Certainly the fact is that the commercial side of the business, the larger segment of the aftermarket is growing at a little faster rate than the cash side of the business. The other thing we think that had an effect is the Easter holiday this year, quite honestly. We think may have had a slight impact because our cash business was a little bit stronger in January and February and was running a little bit stronger in the early part of March and then tapered off just a bit toward the end of March. So this month will give us a better read on that as we cycle through the Easter holiday.

Just lastly on pricing, the 3.3% input pricing increase, do you suspect that it is just a timing issue or do you now have a subset of your customer base that may not take all of your price increases?

We think it is more a timing issue. With the contract that we have, we've got provisions that will allow us to pass these on, but we have to go and actually work with each of the customers and work them through. What we would expect is that we will see some of these price increases with those accounts passing through in April, May, June. And that will offset some of the pressure we experienced in the first quarter.

Okay, thanks very much.

David Siino with Gabelli & Co.

Were the selling days equal in the first quarter to a year ago?

Yes, they were. The only exception to that, David, was in Mexico. We had fewer selling days this first quarter than we had first quarter last, but we get those back this month.

Okay, and last question for Jerry, the Johnson business that you are selling, is that profitable?

No, it is not. So that will help enhance our margins a little bit by selling that business. And likewise selling the Circuit Supply business at EIS will be the same thing.

And what were the gross proceeds there?

I don't have that number. Just right at $6 million. And keep in mind we don't have any proceeds on the Johnson sale yet because that is not effective until the first of May.

Right, okay. Thanks.

Jonathan Steinmetz of Morgan Stanley.

A few questions. First of all on the follow up to March weakening a little bit at the end on the commercial side, have you seen any type of bounce back there in April?

Jonathan, I may have misstated. We didn't see that weakening on the commercial side (multiple speakers).

I'm sorry, on the DIY size.

On the DIY -- and we expect that that will correct itself here in April.

Okay, Jerry, on the payables can you talk a little bit about which of the four businesses you're seeing the biggest extension and perhaps where you have the biggest opportunity going forward?

Thus far we have seen the most improvement in the Automotive Group. That's where we got started with it first and we have taken it to all the business segments. So the Office Products and Industrial have the greatest potential of the remaining business units, but we still have opportunity left in the Automotive side.

Do you have any target in terms of days payable or anything that you'd want to share?

No, we don't.

Finally on the 16% debt to capital, you talked about not wanting to pay off the debt until '08. Any sort of leverage target -- perhaps maybe the other direction in terms of any desire to increase leverage?

There is no desire to increase leverage. We're going to leave that 500 million there and we are comfortable with that. But there is no intent of adding any debt back to the balance sheet.

Great, thank you very much.

Frank Brown of SunTrust.

Good morning. I was going to circle back on the commercial just for a second and see if there is any way that you could characterize that growth in that business in terms of one, in the company-owned stores what the store base was at quarter end versus prior year? And then if you could give us some characterization of how some of your initiatives have impacted that growth, say heavy-duty or others of those initiatives?

I will try to take that. As far as the store counts, they are basically even and the increase is pretty much a comp store increase because of the larger base and the fact that we did not have that many stores that opened.

As far as where the increases came from, they came across the commercial segment. We had good growth with major accounts. Our heavy-duty business is running along well for us right now. NAPA Auto Care we continue to make very good progress. We're pleased with the results there. And I think it is just a combination of factors. I talk about the connectivity which accomplishes a couple of things. It improves efficiencies and it also helps to drive volume. We made good progress in the quarter in the area of conductivity.

So I think we just felt good about the fact that we experienced pretty good results across the spectrum, and we think that bodes well for the quarters ahead.

Okay great. And could I just ask about the Office Products business and are there opportunities for distributors to increase business in that segment? Is there anything you see out there that you could talk about?

I'm sorry, I was listening to something else, Frank. As far as opportunities to increase that and get additional throughput, we have mentioned in the past that the Office Products team has focused on a couple of product categories in particular because they see some real growth opportunities there. I mentioned in my comments that they are doing a really good job with furniture right now, the midmarket type furniture and we're really pleased with the progress being made there.

In the area of break room and cleaning supplies, that is another focus market for them that it is a huge market in terms of total market. And we think that there is a lot of upside in that segment and they are doing a good job in continuing to grow that business.

We mentioned in a prior call or two about the healthcare consumable type items, things like cotton swabs and disinfectant hand soap, things like that. These are not items that we would expect the Office Products dealer to be able to go to the larger medical complexes and sell, but more where they can go to the smaller medical and dental offices in their communities and sell these products along with the office supplies that they are selling to these accounts. While small in terms of total volume, the growth there is very, very good. We feel good about our opportunity to continue to grow that at an attractive rate.

So they might be just some examples of some of the things that the team is looking at.

Thank you for taking my question.

Gerry Marks of Raymond James.

To clarify Jonathan's question from earlier, the increase in payables then, the 20 some-odd percent that we saw year-over-year, most of that came from the Automotive segment, Jerry, is that correct?

That would be correct. As far as the extended terms, some of it is just due to the improved business and payables being up because of that. But the extended terms portion of it is attributable primarily to the Automotive.

Okay, and in terms of your growth can you talk a little on Motion Office in your Auto segment? If more of it is just industry related or if you're gaining some market share in those segments?

I would take that one, Jerry. I think it may be a little combination of both, but you know the economy is going along reasonably well right now and as we look at what some of our publicly-traded competitors are doing, they are doing a pretty good job in both of those segments currently. So I think we are all benefiting from improved an economic situation and maybe we are taking just a little bit of share, but it is just a good time to be in those businesses currently.

Okay. Last question, Jerry, you mentioned that $30 million or so that you spent on share purchases. Your share column was basically unchanged from the fourth quarter and up on a year-over-year basis and it didn't look like there were a large amount of options that were exercised in the quarter, about $4.2 million. I am just kind of confused why that disparity is happening where you're buying back shares but your share count is going up?

Jerry, we did have people exercise options in '04 in that's some of where that cash -- excess cash was generated from. But the reason for the increase in the first quarter is just the way you calculate that with a higher stock price.

Okay, thanks.

David Siino of Gabelli & Co.

You mentioned maybe in one of your previous calls ramping up the relationship with Sam's Club on the Office side. Can you elaborate on that? How many of those stores you're actually shipping to now and how many are left to go?

I don't have the number in terms of stores. We are actually doing this through their mail-order division. And what happens is on their website there are office products there and we are acting as a fulfillment arm for them. So it is ramping up and I think our team continues to feel very, very encouraged by the results thus far and we like what we see currently.

Any idea how big that could be or it's too early in the game to say that?

I think it's too early to say. I know one thing, if I listen to the customer, the customer gives one number but our team gives us a different number and our team gives us a much lower number when they are trying to set budgets. But both numbers are attractive and we would be happy if our team hits their expectation with it, quite honestly.

Thanks.

(OPERATOR INSTRUCTIONS) Fadi Chamoun from UBS.

Good morning gentlemen. Could you comment possibly on regional strength in the Auto business?

Yes, we can tell you that we saw the strongest results in the quarter in the Southeastern part of the country and the Midwest part of the country. The results were not quite as strong out on the West Coast and in the Northeast and we also know that at this time last year both of those areas, the West Coast and the Northeast, were enjoying the strongest results. So they had perhaps the more challenging comps in the quarter. But currently we'd say that the Southeast and the middle part of the country continue to generate the best increases for us.

Great, that helpful. In terms of the competitive environment in that sector, do you guys see any changes?

Nothing significant really. It continues to be a very competitive marketplace and for us it's a matter of just executing as best we can on the strategies that we've got in place.

Okay and then lastly in the Office Product sector, could you comment on trends chronologically throughout the quarter? Did demand stay at the same level throughout the quarter?

Reasonably consistent. We saw just a little bit of moderation coming into the Easter holiday because of offices being closed, but pretty consistent for the quarter.

And did things pick back up in April?

April is looking pretty good for us right now.

That’s helpful. Thank you very much.

Matthew Cullen (ph) of Clovis Capital (ph).

Sort of big picture question. When you look at kind of what the other best in class distribution companies have as net working capital as a percentage of sales, I can think of some that are kind of in the low double-digit range. You have made fantastic improvement here year-over-year but how do you think about working capital as a percentage of sales longer-term? Do you think you could ever get down into the high teens? And if so how do you get there?

I would say that the way that we view it is we think we have done a reasonably good job over the last year or two and improving but we also would say that we think we can do a better job yet in continuing to drive that number down. So I don't know exactly where we can ultimately get to but I know we can improve from where we are today. How we get there, it's the inventory side of things. It's the payables side of things and just doing a better job managing the different initiatives that we've got going currently.

When you think about it, it's not like we think we can take turns up a full point -- we think we can extend DSO or -- excuse me -- shorten DSO by X days, extend days payable by Y days? It's more just keep doing what we're doing?

I think that's fair.

We have initiatives in each one of those items you mentioned to improve them, but we do not have a target that says we're going to increase our inventory turns one time or anything like that. But certainly we're looking at improving each one of those categories.

Given the nature of your portfolio of businesses, is one of them easier than the other?

We get better return on assets in the Office Products side.

Okay, that helpful. Thank you.

At this time there are no further questions.

Thank you, Felicia. We appreciate your help this morning and we appreciate all of you joining us and we appreciate your continued interest in and support of Genuine Parts Company.

This concludes today's Genuine Parts Company first-quarter results conference call. You may disconnect at this time.