純正零件 (GPC) 2015 Q1 法說會逐字稿

Good morning. My name is Jackie and I will be your conference operator today. At this time, I would like to welcome everyone to the Genuine Parts Company first quarter 2015 earnings conference call.

(Operator Instructions)

I would now like to turn the call over to Sid Jones, Vice President of Investor Relations. Please go ahead, Sir.

Good morning and thank you for joining us today for the Genuine Parts first quarter 2015 conference call to discuss our earnings results and outlook for the full year.

Before we begin this morning, please be advised that this call may involve forward-looking statements regarding the Company and its businesses. 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'll begin this morning with comments from Tom Gallagher, our Chairman and CEO. Tom?

Thank you, Sid. I would like to add my welcome to each of you on the call today and to say that we appreciate you taking the time to be with us this morning. Paul Donahue, our President, and Carol Yancey, our Executive Vice President and Chief Financial Officer, are both on the call as well. Each of us has a few prepared remarks. Once completed, we'll look forward to answering any specific questions that you may have.

Earlier this morning we released our first quarter 2015 results and, hopefully, you've had an opportunity to review them. For those who may not have seen the numbers as yet, a quick recap shows that sales for the quarter were $3.736 billion, which was up 3%. Net income was $161 million, which was up 2% and earnings per share were $1.05 this year compared to $1.02 in the first quarter last year and the EPS increase was 3%.

Although these sales and earnings growth rates have moderated from the results in recent quarters, they are pretty much in line with what we anticipated for the quarter and as such, we feel that we came through the quarter in pretty good shape. We knew at the beginning of the quarter that we were facing tough comparisons with first quarter 2014 revenues up 13% and earnings per share up 10%.

Additionally, we felt that the strength of the US dollar would be a significant headwind for us and as it turned out, this cost us 2% on the revenue line in the quarter and $0.02 in earnings per share. And then weather had a bit of negative impact as did the deceleration in the oil and gas segment of the economy. So all in, we feel that our teams did a pretty good job in navigating their way through the quarter and we remain optimistic about the remainder of the year.

Turning to the sales results by segment, I'll make a few comments on each of the three non-automotive businesses and then Paul will give you an update on the automotive operations. Starting with office products, S.P. Richards turned in another strong quarter of plus 17%.

Acquisitions completed in 2014 certainly helped, as did the enhanced first call relationship with one of the mega companies. Importantly, the underlying business performed well also, with solid growth in both the mega and independent reseller channels. The e-commerce and alternate channel customers performed well in the quarter, as well.

From a product category perspective, all four categories, technology, facility and break room, furniture and core office products each showed nice growth in the quarter and we are pleased with the balance and the composition of our office products growth, both from a customer and a product category perspective. We feel that the office products team is positioned to turn in a solid performance over the remainder of the year.

Moving on to the industrial segment, Motion Industries ended the quarter up 3%. 11 of our top 12 product categories generated positive results in the quarter and 9 of our top 12 customer groups grew nicely in the quarter. Our strongest results came from customers in automotive, coal aggregate and cement, lumber and wood products and rubber and plastics products, and this follows the relative strength of each of these segments in the overall economy. We had weaker results in oil and gas, pulp and paper and steel, again mirroring what we see happening in the overall economy.

As we look ahead, we're mindful of the deceleration that we have seen in the industrial production, capacity utilization and purchasing managers index over the course of the first quarter and each of these have been reliable leading demand indicators for our industrial business, so we are watching them closely. Despite the modest deceleration, it's important to note that each remain at historically healthy levels and at this point, our industrial team remains optimistic about the remainder of the year, perhaps partly driven by the fact that our pending project work is up substantially over the same period last year, which is encouraging.

Moving on to the third of our non-automotive businesses, EIS was up 1% in the quarter. Some of the same factors that impacted our industrial business were headwinds for the electrical segment as well, things like the deceleration in the oil and gas customer segment, the strength of the dollar impact on export related customers, lower defense spending this year versus last and the lower copper pricing again this year.

To one degree or another, each of these will continue to be factors in the quarters ahead. However, we were encouraged to close out the first quarter with a solid performance in March and that our team feels that they are starting to build a bit of momentum as we enter Q2. Additionally, they completed the acquisition of Connect Air into their wire and cable segment as of April 1 and this will add about $28 million to their annual revenue.

So that's a quick overview of the non-automotive business and we will now ask Paul to comment on the automotive segments. Paul?

Thank you, Tom. Good morning, everyone, and let me add my welcome to our first-quarter conference call. I'm pleased to join you today and to have an opportunity to provide you an update on the first-quarter performance of our automotive business.

For the quarter ending March 31, our global automotive business sales were flat year over year. This performance consists of approximately 3% core automotive growth, the benefit of just less than 1% from recent acquisitions, which are offset by approximately 4% of currency adjustments. The currency adjustment was in line with our expectations for the quarter.

When reviewing our quarterly performance, we knew going into the quarter we were up against strong comps from one year ago, in part driven by the extreme cold winter weather. Unfortunately, Mother Nature did not cooperate this past winter. We saw little benefit as a result of the winter temps and in fact, the heavy snow and ice experienced in places like Boston and a good portion of the Northeast created challenges for our operations and our customers. In addition, like many businesses, we felt the impact of the West Coast port slowdown and the effect it had on our overall supply chain.

During the first quarter, we saw our US team post a 3% sales increase, while our international businesses, including Canada, Mexico, Australia and New Zealand, grew mid-single digits in their local currencies. Overall, we are pleased to see steady growth in all of our markets and expect to see steady growth for the balance of 2015. In the US, all regions of the country are positively contributing to our revenue growth, with the exception of a few of the more energy-dependent areas of the country. As we saw in the fourth quarter, we experienced continued strength in the Atlantic division, Midwest and Western divisions. In addition, our Southern division had a solid first quarter.

Now, let's turn to our same-store sales numbers. Our US Company-owned store group grew comp same-store sales in the first quarter by 3%. This 3% is on top of an 8% increase generated in a strong first quarter of 2014, which gives us a two-year stack of 11%. This performance was not unexpected due to the tough comps we were up against, but we'd also like to point out that we expect this number to improve as the year progresses. Our 3% sales increase in first quarter was driven by a combination of solid sales on both our commercial wholesale side of the business and on our retail side of the business.

So let's start with our retail business. As mentioned in previous calls, we have put a renewed focus on this segment of our business. We are pleased to report these initiatives are continuing to pay dividends. Our team did a good job in the quarter, driving a 6% increase in our retail business, which was on top of a 9% increase one year ago. Retail basics, such as extended store hours, proper staffing, dedicated retail associates, planogram compliance and increased training, have all had a hand in our recent improved performance.

We continue to push for increases with both the size of our average ticket and the number of tickets flowing through our stores. In the first quarter, we experienced an increase in our average retail ticket and an increase in the number of retail tickets. This performance was consistent with our fourth-quarter metrics, so it's encouraging to see our efforts taking hold.

We'd like to compliment both our retail team at headquarters as well as all of our associates in our stores for stepping up and embracing our retail initiatives. We still have a great deal of heavy lifting yet to do, but it's clear we are on the right track and the opportunity for growth is there.

Now let's turn to our commercial wholesale business, or our do-it-for-me segment. This segment turned in a 3% increase in the first quarter. Highlights for the quarter include solid performances by our two major wholesale initiatives, NAPA AutoCare and major accounts.

Starting with our major account business, this strategic segment delivered its seventh consecutive quarter of low-double-digit growth, a terrific accomplishment by our entire major accounts team. Our NAPA AutoCare centers, now totaling over 15,000 nationwide, posted strong single-digit sales increases in the quarter.

We would also like to report on our fleet business. After reporting a solid increase in this important segment in 2014, we posted a mid-single-digit increase in the first quarter of 2015. We are pleased to see the continued growth in this important segment of our business. We can also report solid trends in our average wholesale ticket value, which registered positive growth in the month with no inflation support. We also saw positive year-over-year growth in the average number of tickets flowing through our stores.

Now let's take a look at a few of our key product categories and review some of the trends we experienced in the first quarter. We are pleased to report continued growth in both our brakes business as well as our tool and equipment business. In addition, our NAPA import parts business was up low-double digits once again this quarter.

One additional product category worth noting is our all-important electrical business, including our rotating electrical product lines and our battery business. Despite double-digit growth in the month of March, we were up just over 1% for the quarter. It's a clear illustration of the strong prior-year comps that we faced in the January and February timeframe.

It is worth noting that we experienced supply-chain interruptions with one of our key under car lines in the first quarter that has now carried over into the second quarter. This interruption had an impact on our operations and our customers' business in the quarter. We are diligently working toward a solution and anticipate improvement in the weeks ahead.

Despise the slower start to the year, we continue to be encouraged by the automotive after-market fundamentals. The average age of the fleet remains in excess of 11 years. The size of the fleet continues to grow and not surprisingly, the all-important miles-driven metric recorded its largest growth in the past five years.

As we reported last quarter, miles driven was up 1.4% through 11 months of 2014. In the month of December, miles driven increased by 5% and the most recent figures for January show a 4.9% gain. This growth is a direct result of the lowest fuel prices in almost a decade and bodes well for future demand.

In summary, our first quarter was pretty much in line with where we thought we would end up. Foreign currency, as expected, was a significant headwind and we expect this to continue for several more quarters. That said, our business in our international markets continues to perform well in their respective local currencies. As expected, we experienced some softness in areas of the US that are more energy dependent.

Lastly, we knew going into the new year that we would be up against strong comps in the first quarter and we would need to weather the storm. We feel we did just that. We are encouraged with our same-store sales and we remain optimistic with the outlook for the balance of the year.

In closing, we want to thank our management teams in North America as well as our team on the ground in Australia/Asia for a solid first quarter for the GPC automotive business. That completes our overview of the GPC automotive business and at this time, I'll hand the call over to Carol to get us started with a review of our financial results. Carol?

Thank you, Paul, and good morning. We'll begin this morning with a review of our income statement and the segment information and then we'll review some balance sheet and other financial items. Tom will come back up to wrap it up and then we'll take your questions.

As Tom mentioned, our total revenues of $3.7 billion for the first quarter, an increase of 3.1%, consisted of our underlying sales growth of 3.8% and a 1.5% increase from acquisitions. These items were offset by a strong currency headwind of 2.2%.

Our gross profit for the first quarter was 29.8%, and this compares to 29.9% gross margin last year. This was in line with our expectations for a relatively constant gross margin in 2015 as the margin initiatives across all of our businesses are intended to offset the ongoing customer and product mix shifts that continue to pressure our gross margins. With that said, this slight decline in our first-quarter gross margin directly relates to the customer mix shift that we are facing in our office products segment.

Looking ahead, we continue to expect a relatively constant gross margin in 2015, but this area has our full attention and we are committed to making progress toward an enhanced gross margin for the long-term. Our gross margin initiatives are also critical in offsetting the low inflationary environment that has persisted across all of our businesses for several years now, especially in automotive. Our supplier pricing thus far in 2015 indicates that we should expect more of the same lack of deflation again this year. Our cumulative supplier price increases through March were down 0.4% in automotive, up 0.4% in industrial, up 0.6% in office products and up 0.2% in electrical.

Turning to our SG&A, our total expenses were $861 million in the first quarter, which is up 2.5% from 2014. This represents 23.1% of sales, which is slightly improved from the 23.2% last year and encouraging, giving the underlying sales growth of approximately 4% for the quarter. We attribute this progress to the benefits of our ongoing emphasis on effective cost management and we expect to show continued progress on our SG&A line in the periods ahead.

Now we will review our results by segment. Our automotive revenue for the first quarter was $1.9 billion, which was flat with the prior year and 51% of total sales. Our operating profit of $151 million is up 0.4%, so their margin held constant with 2014 at 7.9%. This is in line with what we would expect on a 3% comparative sales increase.

Our industrial sales were $1.18 billion in the first quarter, which is up 3.4% for 2014 and 31% of our total revenues. Our operating profit of $88 million is up 6% and our operating margin improved 10 basis points to 7.4%. We are pleased to see the expanded margin, given a 3% sales increase and we would add that this was driven by a slightly improved gross margin for the quarter as well as an improvement in their SG&A.

Our office product revenues were $490.3 million in the quarter, up a strong 17% and represents 13% of our total revenues. Our operating profit of $36.5 million is up 8%, so their margin was down 70 basis points to 7.4% as the customer mix shift pressuring our gross margins continues to impact the net margin for this business.

The electrical electronic group had sales in the first quarter of $182 million, a 1% increase and 5% of our total revenue. Our operating profit of $15.5 million is down 0.4%, so their margin was down 10 basis points but remained strong at 8.5%.

In total, our operating profit increased 3% in the first quarter, which is in line with our sales growth. Our operating profit margin held constant with last year at 7.8% and this follows a 30 basis point expansion in our operating margin for the full year in 2014 and we remain focused on our initiatives to show further expansion in the periods ahead.

We had net interest expense of $5.3 million in the first quarter, which is down from $6.2 million last year. We continue to expect net interest expense of approximately $22 million to $24 million for the full year. Our total amortization expense was $8.6 million for the first quarter, which is fairly consistent with last year. We currently estimate $40 million to $42 million in total amortization expense for the full year.

The other line which reflects our corporate expense was $25 million expense for the first quarter, which is up slightly from the $23.6 million in the first quarter last year. We continue to expect corporate expense to be in the $85 million to $95 million range for the full year.

Our tax rate was approximately 36% for the first quarter, which is up slightly from the 35.5% last year. For the full year, we now expect our tax rate to trend in the 36.7% to 37.0% range. Our net income for the quarter of $161 million compared to the $157.5 million, or 2% improvement, and as Tom mentioned, our EPS was $1.05 compared to last year's $1.02.

Now we will discuss a few key balance sheet items. Our cash at March 31 was $166 million, an increase of approximately -- an increase from the approximate $103 million at March of last year. We continue to use our cash to support the growth initiatives in each of our businesses and we remain comfortable with our cash position.

Our accounts receivable of $2.0 billion at March 31 increased 8% from the prior year on a 4% core sales increase for the first quarter. We remain focused on our goal of growing receivables at a rate less than the revenue growth and will be working hard to achieve this objective in the periods ahead. We continue to be satisfied with the quality of our receivables at this time.

Our inventory at the end of the quarter was $3.0 billion, which is up approximately 1% from March of 2014 and actually down 1% from year end. Our team continues to do a very good job of managing our inventory levels and will remain focused on maintaining this key investment at the appropriate levels in the periods ahead.

Our accounts payable balance at March 31 was $2.6 billion, up 12% from the prior year, due to the positive impact of improved payment terms and other payables initiatives established with our vendors. We've shown continued improvement in this area for several periods now, and we are encouraged by its positive impact on our working capital and our days and payables.

Our working capital of $1.9 billion is down 3% from last year and effectively managing our working capital and, in particular, accounts receivable inventory and accounts payable, is a very high priority for our Company. Our ongoing efforts with these key accounts have resulted in solid improvement in our working capital position and cash flow for the last several years and our balance sheet remains in excellent condition at March 31 of 2015.

Our total debt of $894 million at March 31 is basically unchanged from the prior year. This represents approximately 22% of our total capitalization. Our total debt includes two $250 million term notes, as well as another $394 million in borrowings under our multi-currency syndicated credit facility agreement. We are comfortable with our capital structure at this time.

We continue to generate solid cash flows and we're well positioned for the balance of 2015. For the full year, we expect cash from operations to be in the $800 million to $850 million range and free cash flow, which deducts capital expenditures and dividends, to be in the $350 million range. We remain committed to several ongoing priorities for the use of our cash, which we believe serve to maximize shareholder value.

Our first priority for the cash is the dividend, which we've paid every year since going public in 1948 and we have now raised for 59 consecutive years, a record that continues to distinguish Genuine Parts from other companies. The 2015 annual dividend of $2.46 per share represents a 7% increase from the $2.30 per share paid in 2014, and is approximately 53% of our 2014 earnings per share, which is well within our goal of a payout of 50% to 55% payout ratio. Our goal would be to maintain this level of payout ratio going forward.

Our other priorities for cash include the ongoing reinvestment in each of our four businesses, strategic acquisitions and share repurchases. Our investment in capital expenditures was $16 million for the first quarter, which is down slightly from the $18 million in the first quarter of 2014. We expect our expenditures to increase as the year progresses and we continue to look for CapEx spending to be in the range of $125 million to $145 million for the full year.

As usual, the vast majority of our investments will continue to be weighted towards productivity-enhancing projects, primarily in technology.

Our depreciation and amortization was $36 million in the first quarter and looking ahead, we are projecting depreciation and amortization to be approximately $155 million to $165 million for the full year in 2015.

Our strategic acquisitions continue to be an ongoing and important use of cash for us and they are integral to the growth plans for our Company. As reported in our year-end call in February, we made a few small acquisitions in the industrial and office business early in the first quarter and these are performing well for us. Effective April 1, we closed on two additional acquisitions, one for automotive and one for electrical, and we expect these two operations to contribute annual revenues of $35 million, or approximately $25 million in 2015. We will continue to seek new acquisitions across our business segments to further enhance our prospects for future growth, generally targeting those bolt-on types of acquisitions with annual revenues in the $25 million to $125 million range.

Finally, during the quarter we used our cash to repurchase approximately 870,000 shares of our common stock under the Company's share repurchase program. Today, we have 8.7 million shares authorized and available for purchase. We have no set pattern for these repurchases, but we expect to remain active in the program in the periods ahead as we continue to believe that our stock is an attractive investment and, combined with the dividend, provides the best return to our shareholders.

That concludes our financial update on the first quarter of 2015. Overall, solid results and in line with our expectations. We're pleased with the first three months of the year and encouraged by the opportunities before us.

We look forward to updating you on our future progress when we report again in July and, in closing, I'd like to thank all of our GPC associates for the outstanding job that they do each day. That concludes our financial review and I'll now turn it back over to Tom.

Thank you, Carol. Thanks to you and Paul for your comprehensive updates. That will conclude our prepared comments on the quarter and as mentioned earlier, we ended the quarter pretty much in line with where we thought we would be.

With that in mind, we would like to reaffirm our full-year guidance that we provided back in February and just as a reminder, at that time, we guided for automotive revenues to be up 2% to 3%, which includes an estimated 4% negative impact from currency exchange.

We guided office products to be up 6% to 7%, industrial and electrical to each be up 5% to 6% and based upon the current trends and the external indices as well as a softness in the energy and export sectors, our current bias would be toward the bottom end of the range for both industrial and electrical. Putting all this together would give us an overall GPC sales increase of 3% to 4%, which includes 2.5% to 3% negative currency impact.

On the earnings side, our guidance remains for EPS to come in between $4.70 and $4.80, and as a reminder, this includes approximately $0.15 per share impact from unfavorable exchange rates and the related increase in our overall tax rate. That will conclude our remarks at this point and we'll turn the call back to Jackie to take your questions. Jackie?

(Operator Instructions)

Seth Basham with Wedbush Securities.

My question is on the auto business. I'm trying to get a sense of your view of the slowdown in comps sequentially from the last quarter, given the miles-driven strength. Do you think it's an industry-wide phenomenon, or do you think some of your supply chain issues were the primary factor hurting you this quarter?

Seth, I'd take it in, maybe in a couple of buckets. Certainly, we are up against some really tough comps. We knew that going in.

First quarter was our strongest quarter of the year last year, so I'd certainly say that was -- had an impact.

Two, I'd say some of the key product line disruptions that we experienced, along with the West Coast port issues, cost us in the first quarter. I don't think that will be strictly relegated to GPC and NAPA. I think that will be felt by others, as well.

The energy sector had an impact for sure, Seth. Some of the -- certainly Texas, which is what everybody thinks about when they think about the energy sector, but parts of the mountain division for us, as well as some parts of Canada. Certainly Alberta, Canada were impacted, as well.

Then last but not least, the one that we always chat about and that's the weather. The weather really was of no help at all to us, we don't think, in the first quarter.

That's helpful. Could you quantify those three buckets in any way, shape or form?

I don't think we are prepared to do this at -- do that at this point in time, Seth.

All right. No problem. Thank you very much.

Greg Melich with Evercore ISI.

I wanted to follow up a little bit about the auto trends and tie it through to margins and working capital. Given that retail is driving a lot of the growth, I would sort of expect gross margin to maybe be better, given that there's basically deflation in the buy. Could you help us understand why margins are not expanding in auto? And then to tie it into working capital, there we had this nice increase in payables. Should we assume this is a good run rate? Is there a steady point of an AP ratio that you target, Carol?

I will start with the margin first. We mentioned the decline in gross margin on a consolidated basis was solely related to the office products decline that you saw in their operating margin. What that would lead you to assume, and while we don't disclose it separately, is that the non-office businesses were either flat to up slightly.

We actually were pleased with the automotive gross margins this quarter and the progress we've made, so I would say that a lot of our initiatives and some of the impact that we talked about earlier with the transactional FX headwinds that we had in Q4, our teams did a lot of hard work in that area.

We continue to have the usual customer product mix, but I think a lot of our initiatives are helping us show that improvement. Honestly, when we only have a 3% sales increase, it's hard for us to get that operating margin up 10 or 20 basis points, so we would still look for that on balance for the rest of the year. But I think we were pleased to keep the margins flat in automotive in light of what the comp sales increase was.

The second question on the working capital, we were pleased with the progress that we made and I think when we are looking out at the rest of the year, we would say that there would be improvement. We've reiterated our guidance on the working capital and the cash flow, but I think we saw some better results coming through on the first quarter. If we can continue to do the job with payables and inventory, I think you'll see continued improvement.

Then on the receivables, is there any particular thing driving the growth there? Was it a certain category or new terms to certain customers?

Really nothing specific. I think, again, as we look toward what we're seeing in receivables, we just try to make sure that, again, if it's customers or certain programs, that we're getting the corresponding offset on the payables side with our vendors. (Multiple speakers) and I'll let someone else -- yes.

Greg, I would just add to that. I think we would expect that the receivables will improve sequentially and be more in line with the overall revenue growth as we get toward the second half of the year.

Then, Tom, you mentioned if there's one area where you think it's on the lower end it's industrial and electrical. Could you point us to why, specifically, that is, other than maybe energy a little bit? Is there industrial production or other things that you think look a little softer? Thank you.

Yes, in fact, we do think oil and gas will continue to be a headwind. That's got a fairly long tail. It's not just the number of rigs that are running. When you think about that, it also extends into steel, for instance. I referenced steel in my comments earlier. None of those pipes are being purchased to go down in the wells, and it extends into some of the other customer segments, additionally. So, that would be one thing.

Then with industrial production and capacity utilization and the purchasing managers index, we did see some moderation as the quarter progressed. We were pleased to see a slight uptick in the March industrial production from the revised February industrial production. But we just want to be a bit cautious. As I mentioned that my comments, we do track, to the best of our ability, what we would refer to as project work and we are a bit encouraged by the fact that both the number of projects in-house and the dollar amount are showing nice increases. Hopefully, they'll work their way through the income statement in the months ahead.

Great. Thanks a lot.

Aram Rubinson with Wolfe Research.

This is actually Chris Bottiglieri on for Aram Rubinson. I just had a quick question on the automotive business. Can you give us an update on the independents, if you are seeing any kind of pickup in the number of independents switching on to the NAPA brand, or if you're seeing any increase in number of conversations being held?

Chris, this is Paul. For sure, the -- look, we've got a good deal of activity that is continuing on that our team is involved in, in the field. Honestly, we are quite pleased with the progress that we've seen, both really in the second half of last year, as well as the first quarter of this year. I would tell you that we don't see that activity slowing down at all. Matter of fact, we are optimistic with what we see ahead of us in 2015.

Got it. Thanks.

One longer term question I have. Can you just give us an overall sense on your long-term view of the independent business as some of these business owners begin to retire? Are you seeing them pass down their businesses within the family to selling to other independents, or do you think ultimately this can become a pipeline for GPC Company-owned stores down the road?

I'll try to answer that, Chris. This is Tom.

I think it's a combination of all the things you referenced. The way we work with our independent owners is that we try to stay very close to them; not just operationally, but also with their succession planning. If they don't have someone in mind to pass the business down to, another family member perhaps, or a good, long-term employee, then we'll work with them to identify another independent that might have an interest in buying their business and we have several different programs available to help facilitate that. Then if, in fact, we don't come up with someone that's suitable to buy the business, we'll certainly step in and buy it, and in many cases, we'll run it for a period of time until we find a good locally-based independent to run the business from that point on.

Very helpful. Thanks for your time.

Mark Becks with JPMorgan.

Can you talk about the cadence in automotive over the quarter and, perhaps, into April, if you're willing to address it? I know March was -- last year was strong. Just interested in the trend and trying to get a better understanding of why you're expecting that business to accelerate from here?

Mark, this is Paul. I would tell you that throughout the first quarter, it was pretty consistent from January to February to March. We did see a little bit of a lift in the final two weeks of March, for sure. Which, really, that along with the extra selling day that we had in the month of March, gave us a record sales month. Not prepared to talk about April, but we would hope to see that performance move into Q2.

As a quick follow-up to that, can you talk about the trend in the Northeast, that business? Did that experience a similar rebound to the overall business? Or is that still tracking pretty softly?

I think most of our regions showed some pickup in the second half of March, as Paul referenced. Also, as he referenced, we continue to see headwinds in the energy-related areas. But much of what we experienced in the first quarter was transitory. If you think about the comps, the comps get a little bit easier. They were strong all year long but they get a little bit easier as we work our way through the year.

Certainly, the impact of the weather will moderate as we work our way through the year and the impact, just for clarification, the impact this year is that we did not have the extreme temperatures over the period of time that we had in the early part of Q1 last year. What we did have is a lot of ice and a lot of snow that had a negative impact on all of our businesses, frankly, because we had a number of closures, both our own facilities as well as customers' facilities.

We're through that, at this point. Some of the supply-chain disruption that Paul referenced will moderate as we work our way over the next couple of months.

We gave you the number for the quarter. We also gave you the guidance for the year. The guidance for the year suggests that we expect our automotive business to pick up in the remaining three quarters of the year.

So just to be clear, it seems like the port shutdown and the supplier issues, while still not completely gone, they're, at the margin, improving?

They are improving, somewhat. That's right.

Okay. Just last housekeeping. Can you remind us what the Texas exposure in NAPA and then the overall MI exposure to oil and gas is?

We don't give that out. We have said in the past that the direct exposure for motion industries is low-single digit, but the hard number to really get to is the indirect exposure.

What I mean by that, I referenced earlier that, certainly, the rig operators, our business with them is down. But then if you go into the steel side of things, all of the demand for new piping to go down-hole, that's gone. Some of the pumps and motor demand that would be there normally, that's diminished.

Then what we don't, and can't, quantify is that when you have the massive number of layoffs specific to that segment, you have all of those workers that are, for the most part, moving into other areas, but that takes the demand out of the areas that they were in and it doesn't get replaced one-for-one into the areas that they moved to, so you see the ripple effect of that and we see that back up on other manufacturing customers. It's hard to get a true number, but, the direct, absolute impact, we know is in the low-single digits and then it ripples beyond that.

Okay. Thanks for those comments and good luck.

Chandni Luthra with Goldman Sachs.

This is Chandni Luthra on behalf of Max Astor. Really quickly, could you contextualize if there was any impact from shift of Easter?

Certainly, we'll see that impact in April, but not really much in Q1.

Got it. The 3% growth that you talked about on comps, that's inclusive of the extra selling day in the month of March, right?

Yes, it is.

Perfect. Then, lastly, could you throw some color on your DIY initiative that helped your margins to hold their own?

I think Paul might reiterate the comments he made earlier about some of the things we're doing.

Yes. Thanks for the question. Basically, some of the things that we're doing on the retail side, really, it's not rocket science. We are focused on the basics. The basics, as I mentioned in my opening comments, simply are to ensure our stores are well-stocked, ensure our planograms are up-to-date, ensure our people are well-trained on the floor, and ensure our stores are open when customers want to shop them.

It's many of those basics that we have reinforced with our team and our Company-owned stores. We are pleased with the progress that we're seeing. We saw it throughout last year and we continue to see it in the first quarter of 2015.

I'd also -- I want to go back on the question about did the comps include the extra day in March. Yes, they did, but in the quarter, we had the same number of days for the quarter. We were short one day earlier in the quarter and we picked it up in the month of March, so the comps are comparable.

Got it. Thank you.

Ladies and gentlemen, we have one more caller on the line. Your final question comes from the line of Bret Jordan with BB&T Capital Markets.

Carol, if we looked at accounts payable to inventory for the auto segment alone, where would that number be?

Good question, Bret. We don't give it out by segment. I would tell you that, as you know, it's more prevalent in the automotive industry with the extended terms, the programs with the suppliers, so a lot of our improvement is coming by way of the automotive segment. But I would tell you also that all of the segments have programs going on and when we visited with our teams and each one of them, be it office, be it industrial, all have programs going on with their suppliers. We looked at our AP to inventory and it's 87% at the end of the quarter, it was 84% at the end of the year and 79% a year ago. I would tell you again that we don't give it out by automotive, but theirs would certainly higher than that.

Okay. And then a question for Paul. As you look at the quarter, and it didn't have as much temperature-driven product sales as last year in auto, if you looked at the extreme weather and what we did to things like road condition, do you think that the net impact of the first quarter's weather will be positive in that under-car and ride control and some of the categories that might benefit in the second quarter will pull through? Or do you think it's just a net negative in weather for 2015?

Bret, great question. Honestly, we're banking on some of that improvement coming in, in the second quarter. I think I mentioned to you, we saw our battery business really take off in the month of March, which we did not have in January and February. We would hope for the same in some of the other key, more weather-related products, as well.

Okay. Getting a little bit more granular, if you look at things that might be seasonally positive, how are we looking nationally on things like temperature control right now? Are we setting up -- we've had warmer weather on the West Coast, for a favorable year-over-year comparison in some of those summer categories? Or is it just too early to know?

Too early to tell, Bret. I would tell you that, that category was down slightly in the first quarter. Again, we all keep an eye on the weather charts and we are hoping for some warmer weather this summer. If we get it, we think our owners and our stores will be well-stocked with heating and air-conditioning type products and we'll take advantage of it.

Okay. One last question for Tom, I guess. You'd mentioned that pending projects were up substantially, I think, for motion. Can you give us a little color on maybe what's driving that?

Well, I think our customer base -- let me back up first, Bret. What we call project work is, a lot of times, our customers will have plans to do some major refurbishment on a piece of equipment or take a line down to refurbish the line. They let us know in advance of what their plans are, so that they can be sure that we've got all of the product that they may need when they get into the actual work.

We try to track as best we can the number of those that we've been notified of and also, the estimated value of the work. We see a nice increase both in terms of numbers as well as in terms of the dollar value.

Now, not all of them come to fruition. We have seen some over time. We've seen some that were planned get deferred. But with the increase that we see right now, it would lead us to believe that over the next quarter or two, we are going see some nice project work flow through the revenue line. What's driving that is we've got an aging base of equipment that's out there. You've got all customers are looking to be more efficient in what they do. So I think it's being driven by the business demands that they see with their end markets and wanting to be sure that they are in a position to avoid any downtime, going forward. Unplanned downtime.

Okay. Thank you.

I would now like to turn the floor back over to Management for any additional or closing remarks.

We'd like to thank you for your participation in the call today and we thank you for your continued support of Genuine Parts Company. We look forward to reporting back out in July with our second-quarter numbers. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.