Napa Auto Parts 2014 Annual Report Download - page 25

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and expanded product lines, geographic expansion, sales to new markets, enhanced customer marketing pro-
grams and a variety of gross margin and cost savings initiatives. We discuss these initiatives further below.
With regard to the December 31, 2014 consolidated balance sheet, the Company’s cash balance of $138
million compares to cash of $197 million at December 31, 2013. The Company continues to maintain a strong
cash position, supported by the increase in net income and effective asset management in 2014. Accounts receiv-
able increased by approximately 12%, which compares to a 9% sales increase in the fourth quarter of the year,
and inventory was up by approximately 3%, or 1% before the impact of acquisitions. Accounts payable increased
$285 million or 13% from the prior year, due primarily to improved payment terms with certain suppliers. Total
debt outstanding at December 31, 2014 was $765 million, consistent with total debt at December 31, 2013.
RESULTS OF OPERATIONS
Our results of operations are summarized below for the three years ended December 31, 2014, 2013 and
2012.
Year Ended December 31,
2014 2013 2012
(In thousands except per share data)
Net Sales .................................... $15,341,647 $14,077,843 $13,013,868
Gross Profit .................................. 4,593,761 4,219,920 3,778,091
Net Income .................................. 711,286 684,959 648,041
Diluted Earnings Per Share ...................... 4.61 4.40 4.14
Net Sales
Consolidated net sales for the year ended December 31, 2014 totaled $15.3 billion, a 9% increase from 2013
and driven by revenue growth in each of our four business segments. The increase in sales volume and acquis-
itions across our four businesses each contributed 5% to our total sales growth, while currency negatively
impacted total sales by 1%. The impact of product inflation varied by business in 2014 and, cumulatively, prices
were flat in the Automotive segment, up approximately 1.5% in the Industrial segment, up approximately 1.4%
in the Office segment and up approximately 0.3% in the Electrical/Electronic segment. The Company is well
positioned to improve sales in 2015.
Consolidated net sales for the year ended December 31, 2013 totaled $14.1 billion, an 8% increase from
2012 driven by an 18.5% increase in the Automotive segment and offset by a 1% sales decrease in our non-
automotive businesses. Acquisitions, primarily in Automotive, but also in the Industrial and Electrical/Electronic
businesses, contributed 7% to our total sales growth and increased sales volume accounted for the remaining 1%.
The impact of product inflation varied by business in 2013 and, cumulatively, prices were flat in the Automotive
segment, up approximately 1% in the Industrial and Electrical/Electronic segments and up approximately 0.5% in
the Office segment.
Automotive Group
Net sales for the Automotive Group (“Automotive”) were $8.1 billion in 2014, an increase of 8% from
2013. The increase in sales for the year consists of a positive comparable store sales increase of approximately
6% and approximately 4% from acquisitions. These increases were offset by a 2% negative impact of currency
associated with our automotive businesses in Canada, Australasia and Mexico. Automotive sales were not
materially impacted by product inflation. In 2014, Automotive revenues were up 23% in the first quarter, up 5%
in the second quarter and up 4% in the third and fourth quarters. The first quarter sales increase includes the
impact of the GPC Asia Pacific acquisition, which was anniversaried on April 1, 2014. We believe that the
underlying fundamentals in the automotive aftermarket, including the overall number and age of the vehicle
population, remain solid and will serve to drive sustained demand for automotive aftermarket maintenance and
supply items in 2015. Based on these fundamentals and the internal growth initiatives in our Automotive busi-
ness, we expect to grow our sales for this group again in 2015.
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