- Sales of $5.8 billion, Up
0.3%
- Diluted EPS of $1.78, Down
16.8%
- Adjusted Diluted EPS of $2.22,
Up 3.7%
- Updates 2024 Outlook:
- Reaffirms Revenue Growth of 3% to 5%
- Updates Adjusted Diluted EPS to $9.80 to $9.95 from
$9.70 to $9.90
ATLANTA, April 18,
2024 /PRNewswire/ -- Genuine Parts Company
(NYSE: GPC), a leading global distributor of automotive and
industrial replacement parts, announced today its results for the
first quarter ended March 31,
2024.
"Our performance in the quarter highlights the value of our
business mix paired with our geographic diversity as our teams
delivered profits that were ahead of our expectations," said
Paul Donahue, Chairman and Chief
Executive Officer. "We did this by staying focused on both our
near- and long-term strategic initiatives to improve our business
and drive profitable growth. I want to take a moment to thank our
GPC teammates across the globe for their hard work and dedication
to delivering value for our customers."
First Quarter 2024 Results
Sales were $5.8 billion, a 0.3%
increase compared to $5.8 billion in
the same period of the prior year. The sales result is attributable
to a 1.9% benefit from acquisitions, offset by a 0.9% decrease in
comparable sales and 0.7% unfavorable impact of foreign currency
and other.
Net income was $249 million, or
$1.78 per diluted earnings per share.
This compares to net income of $304
million, or $2.14 per diluted
share in the prior year period.
Adjusted net income, which excludes a net expense of
$62 million after tax adjustments, or
$0.44 per diluted share, in
non-recurring costs related to our global restructuring, was
$311 million. This compares to net
income of $304 million for the same
three-month period of the prior year, an increase of 2.3%. On a per
share diluted basis, adjusted net income was $2.22, an increase of 3.7% compared to diluted
earnings per share of $2.14 last
year. Refer to the reconciliation of GAAP net income to adjusted
net income and GAAP diluted earnings per share to adjusted diluted
earnings per share for more information.
First Quarter 2024 Segment Highlights
Automotive Parts Group ("Automotive")
Global Automotive sales were $3.6
billion, up 1.9% from the same period in 2023, reflecting a
0.2% increase in comparable sales and a 2.8% benefit from
acquisitions, partially offset by 1.1% unfavorable impact of
foreign currency and other. Segment profit of $273 million increased 3.2%, with segment profit
margin of 7.6%, up 10 basis points from last year.
Industrial Parts Group ("Industrial")
Industrial sales were $2.2
billion, down 2.2% from the same period in 2023, with a 0.5%
benefit from acquisitions, offset by a 2.6% decrease in comparable
sales and 0.1% unfavorable impact of foreign currency. Segment
profit of $271 million increased
3.4%, with segment profit margin of 12.3%, up 70 basis points from
the same period of the prior year.
"We are pleased with the start to 2024, which was highlighted by
operating discipline that delivered improved overall earnings
against a backdrop of low sales growth," said Will Stengel, President and Chief Operating
Officer. "In Industrial, sales decreased low-single-digits, in-line
with our expectations, as we were up against our most difficult
comparative period for the year. In Automotive, the actions taken
in our U.S. Automotive business are gaining traction, and we are
encouraged by the sequential improvement in performance. This
improvement, coupled with the solid performance of our other
businesses, is reflected in our reaffirmed sales growth and
improved earnings outlook for 2024."
Balance Sheet, Cash Flow and Capital Allocation
The company generated cash flow from operations of $318
million for the first three months of 2024. We used $178 million in cash for investing activities,
including $116 million for capital expenditures
and $135 million for M&A. We also used $175 million in cash for financing activities,
including $133 million for quarterly
dividends paid to shareholders and $38
million for stock repurchases. Free cash flow was
$203 million for the first three
months of 2024. Refer to the reconciliation of GAAP net cash
provided by operating activities to free cash flow for more
information.
The company ended the quarter with $2.5
billion in total liquidity, consisting of $1.5 billion availability on the revolving credit
facility and $1.0 billion in cash and
cash equivalents.
2024 Outlook
The company is updating full-year 2024 guidance previously
provided in its earnings release on February
15, 2024. The company considered its recent business trends
and financial results, current growth plans, strategic initiatives,
global economic outlook, geopolitical conflicts and the potential
impact on results in updating its guidance, which is outlined in
the table below.
|
|
For the Year Ending
December 31, 2024
|
|
|
Previous
Outlook
|
|
Updated
Outlook
|
Total sales
growth
|
|
3% to 5%
|
|
3% to 5%
|
Automotive sales
growth
|
|
2% to 4%
|
|
2% to 4%
|
Industrial sales
growth
|
|
3% to 5%
|
|
3% to 5%
|
Diluted earnings per
share
|
|
$8.95 to
$9.15
|
|
$9.05 to
$9.20
|
Adjusted diluted
earnings per share
|
|
$9.70 to
$9.90
|
|
$9.80 to
$9.95
|
Effective tax
rate
|
|
Approximately
24%
|
|
Approximately
24%
|
Net cash provided by
operating activities
|
|
$1.3 billion to $1.5
billion
|
|
$1.3 billion to $1.5
billion
|
Free cash
flow
|
|
$800 million to $1.0
billion
|
|
$800 million to $1.0
billion
|
Non-GAAP Information
This release contains certain financial information not derived
in accordance with United States
("U.S.") generally accepted accounting principles ("GAAP"). These
items include adjusted net income, adjusted diluted earnings per
share and free cash flow. We believe that the presentation of
adjusted net income, adjusted diluted earnings per share and free
cash flow, when considered together with the corresponding
GAAP financial measures and the reconciliations to those measures,
provide meaningful supplemental information to both management and
investors that is indicative of our core operations. We considered
these metrics useful to investors because they provide greater
transparency into management's view and assessment of our ongoing
operating performance by removing items management believes are not
representative of our operations and may distort our longer-term
operating trends. We believe these measures are useful and enhance
the comparability of our results from period to period and with our
competitors, as well as show ongoing results from operations
distinct from items that are infrequent or not associated with our
core operations. We do not, nor do we suggest investors should,
consider such non-GAAP financial measures as superior to, in
isolation from, or as a substitute for, GAAP financial information.
We have included a reconciliation of this additional information to
the most comparable GAAP measure following the financial statements
below. We do not provide forward-looking guidance for certain
financial measures on a GAAP basis because we are unable to predict
certain items contained in the GAAP measures without unreasonable
efforts. These items may include acquisition-related costs,
litigation charges or settlements, impairment charges, and certain
other unusual adjustments.
Comparable Sales
Comparable sales is a key metric that refers to
period-over-period comparisons of our sales excluding the impact of
acquisitions, foreign currency and other. Our calculation of
comparable sales is computed using total business days for the
period. The company considers this metric useful to investors
because it provides greater transparency into management's view and
assessment of the company's core ongoing operations. This is a
metric that is widely used by analysts, investors and competitors
in our industry, although our calculation of the metric may not be
comparable to similar measures disclosed by other companies,
because not all companies and analysts calculate this metric in the
same manner.
Conference Call
Genuine Parts Company will hold a conference call today at
8:30 a.m. Eastern Time to discuss the
results of the quarter. A supplemental earnings deck will also be
available for reference. Interested parties may listen to the call
and view the supplemental earnings deck on the company's investor
relations website. The call is also available by dialing
800-836-8184. A replay of the call will be available on the
company's website or toll-free at 888-660-6345, conference ID
28852#, two hours after the completion of the call.
About Genuine Parts Company
Established in 1928, Genuine Parts Company is a leading global
service organization specializing in the distribution of automotive
and industrial replacement parts. Our Automotive Parts Group
operates across the U.S., Canada,
Mexico, Australasia, France, the U.K., Ireland, Germany, Poland, the
Netherlands, Belgium,
Spain and Portugal, while our Industrial Parts Group
serves customers in the U.S., Canada, Mexico and Australasia. We keep the world
moving with a vast network of over 10,700 locations spanning 17
countries supported by more than 60,000 teammates. Learn more at
genpt.com.
Forward-Looking Statements
Some statements in this release, as well as in other materials
we file with the Securities and Exchange Commission (SEC), release
to the public, or make available on our website, constitute
forward-looking statements that are subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
All statements in the future tense and all statements accompanied
by words such as "expect," "likely," "outlook," "forecast,"
"preliminary," "would," "could," "should," "position," "will,"
"project," "intend," "plan," "on track," "anticipate," "to come,"
"may," "possible," "assume," or similar expressions are intended to
identify such forward-looking statements. These forward-looking
statements include our view of business and economic trends for the
remainder of the year, our expectations regarding our ability to
capitalize on these business and economic trends and to execute our
strategic priorities, and the updated full-year 2024 financial
guidance provided above. Senior officers may also make verbal
statements to analysts, investors, the media and others that are
forward-looking.
We caution you that all forward-looking statements involve risks
and uncertainties, and while we believe that our expectations for
the future are reasonable in view of currently available
information, you are cautioned not to place undue reliance on our
forward-looking statements. Actual results or events may differ
materially from those indicated as a result of various important
factors. Such factors may include, among other things, changes in
general economic conditions, including unemployment, inflation
(including the impact of tariffs) or deflation, financial
institution disruptions and geopolitical conflicts such as the
conflict between Russia and
Ukraine, the conflict in the
Gaza strip and other unrest in the
Middle East; volatility in oil
prices; significant cost increases, such as rising fuel and freight
expenses; public health emergencies, including the effects on the
financial health of our business partners and customers, on supply
chains and our suppliers, on vehicle miles driven as well as other
metrics that affect our business, and on access to capital and
liquidity provided by the financial and capital markets; our
ability to maintain compliance with our debt covenants; our ability
to successfully integrate acquired businesses into our operations
and to realize the anticipated synergies and benefits; our ability
to successfully implement our business initiatives in our two
business segments; slowing demand for our products; the ability to
maintain favorable supplier arrangements and relationships; changes
in national and international legislation or government regulations
or policies, including changes to import tariffs, environmental and
social policy, infrastructure programs and privacy legislation, and
their impact to us, our suppliers and customers; changes in tax
policies; volatile exchange rates; our ability to successfully
attract and retain employees in the current labor market; uncertain
credit markets and other macroeconomic conditions; competitive
product, service and pricing pressures; failure or weakness in our
disclosure controls and procedures and internal controls over
financial reporting, including as a result of the work from home
environment; the uncertainties and costs of litigation; disruptions
caused by a failure or breach of our information systems, as well
as other risks and uncertainties discussed in our Annual Report on
Form 10-K for 2023 and from time to time in our subsequent filings
with the SEC.
Forward-looking statements speak only as of the date they are
made, and we undertake no duty to update any forward-looking
statements except as required by law. You are advised, however, to
review any further disclosures we make on related subjects in our
subsequent Forms 10-K, 10-Q, 8-K and other reports filed with the
SEC.
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
|
Three Months Ended
March 31,
|
(in thousands, except per share data)
|
|
2024
|
|
2023
|
Net sales
|
|
$ 5,783,631
|
|
$ 5,765,118
|
Cost of goods
sold
|
|
3,708,976
|
|
3,751,717
|
Gross profit
|
|
2,074,655
|
|
2,013,401
|
Operating
expenses:
|
|
|
|
|
Selling,
administrative and other expenses
|
|
1,574,927
|
|
1,511,244
|
Depreciation and
amortization
|
|
90,610
|
|
87,215
|
Provision for doubtful
accounts
|
|
6,211
|
|
5,639
|
Restructuring and
other costs
|
|
83,042
|
|
—
|
Total operating
expenses
|
|
1,754,790
|
|
1,604,098
|
Non-operating (income)
expense:
|
|
|
|
|
Interest expense,
net
|
|
17,690
|
|
16,864
|
Other
|
|
(23,006)
|
|
(11,967)
|
Total non-operating
(income) expense
|
|
(5,316)
|
|
4,897
|
Income before income
taxes
|
|
325,181
|
|
404,406
|
Income taxes
|
|
76,287
|
|
100,449
|
Net income
|
|
$
248,894
|
|
$
303,957
|
Dividends declared per
common share
|
|
$
1.000
|
|
$
0.950
|
Basic earnings per
share
|
|
$
1.79
|
|
$
2.16
|
Diluted earnings per
share
|
|
$
1.78
|
|
$
2.14
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
SEGMENT INFORMATION
(UNAUDITED)
|
|
|
|
Three Months Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
Net sales:
|
|
|
|
|
Automotive
|
|
$ 3,574,020
|
|
$ 3,505,827
|
Industrial
|
|
2,209,611
|
|
2,259,291
|
Total net
sales
|
|
$ 5,783,631
|
|
$ 5,765,118
|
Segment
profit:
|
|
|
|
|
Automotive
|
|
$
272,936
|
|
$
264,420
|
Industrial
|
|
270,839
|
|
261,987
|
Total segment
profit
|
|
543,775
|
|
526,407
|
Interest expense,
net
|
|
(17,690)
|
|
(16,864)
|
Intangible asset
amortization
|
|
(34,100)
|
|
(39,122)
|
Corporate
expense
|
|
(83,762)
|
|
(66,015)
|
Other unallocated costs
(1)
|
|
(83,042)
|
|
—
|
Income before income
taxes
|
|
$
325,181
|
|
$
404,406
|
|
(1)
The following table presents a summary of the other
unallocated costs:
|
|
|
|
Three Months Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
Other unallocated
costs:
|
|
|
|
|
Restructuring and
other costs (2)
|
|
$
(83,042)
|
|
$
—
|
Total other unallocated
costs
|
|
$
(83,042)
|
|
$
—
|
|
|
(2)
|
Amount reflects the
global restructuring initiative, which includes costs related to a
voluntary
retirement offer in the U.S. and rationalization and optimization
of certain distribution centers,
stores and other facilities.
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
(in thousands, except
share and per share data)
|
|
March 31,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,049,588
|
|
$
1,102,007
|
Trade accounts
receivable, less allowance for doubtful accounts
(2024 – $60,326; 2023 – $56,608)
|
|
2,425,043
|
|
2,223,431
|
Merchandise
inventories, net
|
|
4,736,108
|
|
4,676,686
|
Prepaid expenses and
other current assets
|
|
1,595,566
|
|
1,603,728
|
Total current
assets
|
|
9,806,305
|
|
9,605,852
|
Goodwill
|
|
2,736,841
|
|
2,734,681
|
Other intangible
assets, less accumulated amortization
|
|
1,772,359
|
|
1,792,913
|
Property, plant and
equipment, less accumulated depreciation
(2024 – $1,620,069; 2023 –
$1,592,658)
|
|
1,665,920
|
|
1,616,785
|
Operating lease
assets
|
|
1,363,075
|
|
1,268,742
|
Other assets
|
|
992,013
|
|
949,481
|
Total assets
|
|
$ 18,336,513
|
|
$ 17,968,454
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
5,725,745
|
|
$
5,499,536
|
Current portion of
debt
|
|
845,055
|
|
355,298
|
Dividends
payable
|
|
139,385
|
|
132,635
|
Other current
liabilities
|
|
1,929,301
|
|
1,839,640
|
Total current
liabilities
|
|
8,639,486
|
|
7,827,109
|
Long-term
debt
|
|
3,029,610
|
|
3,550,930
|
Operating lease
liabilities
|
|
1,070,462
|
|
979,938
|
Pension and other
post–retirement benefit liabilities
|
|
219,791
|
|
219,644
|
Deferred tax
liabilities
|
|
452,455
|
|
437,674
|
Other long-term
liabilities
|
|
507,533
|
|
536,174
|
Equity:
|
|
|
|
|
Preferred stock, par
value – $1 per share; authorized –
10,000,000 shares; none issued
|
|
—
|
|
—
|
Common stock, par value
– $1 per share; authorized –
450,000,000 shares; issued and outstanding –
2024 –
139,335,342 shares; 2023 – 139,567,071
shares
|
|
139,335
|
|
139,567
|
Additional paid-in
capital
|
|
179,349
|
|
173,025
|
Accumulated other
comprehensive loss
|
|
(1,053,904)
|
|
(976,872)
|
Retained
earnings
|
|
5,137,597
|
|
5,065,327
|
Total parent
equity
|
|
4,402,377
|
|
4,401,047
|
Noncontrolling
interests in subsidiaries
|
|
14,799
|
|
15,938
|
Total equity
|
|
4,417,176
|
|
4,416,985
|
Total liabilities and
equity
|
|
$ 18,336,513
|
|
$ 17,968,454
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
(in
thousands)
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
Operating
activities:
|
|
|
|
|
Net income
|
|
$
248,894
|
|
$
303,957
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
90,610
|
|
87,215
|
Share-based
compensation
|
|
8,564
|
|
8,646
|
Excess tax benefits
from share-based compensation
|
|
(3,461)
|
|
(584)
|
Other operating
activities, including changes in operating assets and
liabilities
|
|
(26,301)
|
|
(201,727)
|
Net cash provided by
operating activities
|
|
318,306
|
|
197,507
|
Investing
activities:
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
(115,690)
|
|
(88,100)
|
Proceeds from sale of
property, plant and equipment
|
|
68,462
|
|
1,971
|
Proceeds from
divestitures of businesses
|
|
3,381
|
|
—
|
Proceeds from sale of
investments
|
|
—
|
|
80,482
|
Acquisitions and other
investing activities
|
|
(134,597)
|
|
(39,589)
|
Net cash used in
investing activities
|
|
(178,444)
|
|
(45,236)
|
Financing
activities:
|
|
|
|
|
Proceeds from
debt
|
|
14
|
|
693,400
|
Payments on
debt
|
|
(660)
|
|
(652,138)
|
Shares issued from
employee incentive plans
|
|
(2,211)
|
|
(1,265)
|
Dividends
paid
|
|
(132,635)
|
|
(126,191)
|
Purchases of
stock
|
|
(37,500)
|
|
(67,501)
|
Other financing
activities
|
|
(2,231)
|
|
(4,118)
|
Net cash used in
financing activities
|
|
(175,223)
|
|
(157,813)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(17,058)
|
|
3,262
|
Net decrease in cash
and cash equivalents
|
|
(52,419)
|
|
(2,280)
|
Cash and cash
equivalents at beginning of period
|
|
1,102,007
|
|
653,463
|
Cash and cash
equivalents at end of period
|
|
$ 1,049,588
|
|
$
651,183
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME AND
GAAP
DILUTED NET INCOME PER COMMON SHARE TO ADJUSTED DILUTED NET INCOME
PER
COMMON SHARE
(UNAUDITED)
|
|
|
|
Three Months Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
GAAP net
income
|
|
$
248,894
|
|
$
303,957
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Restructuring and
other costs (1)
|
|
83,042
|
|
—
|
Total
adjustments
|
|
83,042
|
|
—
|
Tax impact of
adjustments (2)
|
|
(21,038)
|
|
—
|
Adjusted net
income
|
|
$
310,898
|
|
$
303,957
|
|
The table below
represent amounts per common share assuming dilution:
|
|
|
|
Three Months Ended
March 31,
|
(in thousands, except
per share data)
|
|
2024
|
|
2023
|
GAAP diluted earnings
per share
|
|
$
1.78
|
|
$
2.14
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Restructuring and
other costs (1)
|
|
0.59
|
|
—
|
Total
adjustments
|
|
0.59
|
|
—
|
Tax impact of
adjustments (2)
|
|
(0.15)
|
|
—
|
Adjusted diluted
earnings per share
|
|
$
2.22
|
|
$
2.14
|
Weighted average common
shares outstanding – assuming dilution
|
|
140,096
|
|
141,725
|
|
|
(1)
|
Amount reflects the
global restructuring initiative, which includes costs related to a
voluntary
retirement offer in the U.S. and rationalization and optimization
of certain distribution centers,
stores and other facilities.
|
(2)
|
We determine the tax
effect of non-GAAP adjustments by considering the tax laws and
statutory
income tax rates applicable in the tax jurisdictions of the
underlying non-GAAP adjustments,
including any related valuation allowances. For the three months
ended March 31, 2024, we
applied the statutory income tax rates to the taxable portion of
all of our adjustments, which
resulted in a tax impact of $21 million.
|
The table below
clarifies where the items that have been adjusted above to improve
comparability of the
financial information from period to period are presented in the
condensed consolidated statements of
income.
|
|
|
|
Three Months Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
Line item:
|
|
|
|
|
Restructuring and
other costs
|
|
$
83,042
|
|
$
—
|
Total
adjustments
|
|
$
83,042
|
|
$
—
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
CHANGE IN NET SALES SUMMARY
(UNAUDITED)
|
|
|
|
Three Months Ended
March 31, 2024
|
|
|
Comparable
Sales
|
|
Acquisitions
|
|
Foreign
Currency
|
|
Other
|
|
GAAP Total
Net Sales
|
Automotive
|
|
0.2 %
|
|
2.8 %
|
|
0.2 %
|
|
(1.3) %
|
|
1.9 %
|
Industrial
|
|
(2.6) %
|
|
0.5 %
|
|
(0.1) %
|
|
— %
|
|
(2.2) %
|
Total Net
Sales
|
|
(0.9) %
|
|
1.9 %
|
|
0.1 %
|
|
(0.8) %
|
|
0.3 %
|
GENUINE PARTS COMPANY
AND SUBSIDIARIES
RECONCILIATION OF GAAP NET CASH PROVIDED BY OPERATING ACTIVITIES TO
FREE
CASH FLOW
(UNAUDITED)
|
|
|
|
Three Months Ended
March 31,
|
(in
thousands)
|
|
2024
|
|
2023
|
Net cash provided by
operating activities
|
|
$
318,306
|
|
$
197,507
|
Purchases of property,
plant and equipment
|
|
(115,690)
|
|
(88,100)
|
Free Cash
Flow
|
|
$
202,616
|
|
$
109,407
|
|
|
|
For the Year Ending
December 31, 2024
|
|
|
Previous
Outlook
|
|
Updated
Outlook
|
Net cash provided by
operating activities
|
|
$1.3 billion to $1.5
billion
|
|
$1.3 billion to $1.5
billion
|
Purchases of property,
plant and equipment
|
|
~$500
million
|
|
~$500
million
|
Free Cash
Flow
|
|
$800 million to $1.0
billion
|
|
$800 million to $1.0
billion
|
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SOURCE Genuine Parts Company