Genuine Parts Company announced its results for the third quarter ended September 30, 2022.

“The GPC team delivered record results, with double-digit sales and earnings growth driven by the execution of effective strategies and continued resilience of our Automotive and Industrial businesses,” said Paul Donahue, Chairman and Chief Executive Officer.

“We are pleased with the continued strength of our results for 2022 and are proud of the great work by all our 53,000 teammates who are at the core of our success.”

Highlights

• Record Sales of $5.7 billion, Up 17.8%
• Diluted EPS of $2.20, Up 38.4%
• Adjusted Diluted EPS of $2.23, Up 18.6%
• Significant Progress on Integration of Kaman Distribution Group
• Raising 2022 Outlook for Revenue Growth and Diluted and Adjusted Diluted EPS

Third Quarter 2022 Results

Sales were $5.7 billion, a 17.8% increase compared to $4.8 billion in the same period of the prior year. The sales growth reflects a 12.7% increase in comparable sales and a 9.1% benefit from acquisitions, partially offset by a 4.0% net unfavorable impact of foreign currency and other.

Net income was $312 million, or $2.20 per diluted earnings per share. This compares to net income of $229 million, or $1.59 per diluted share, in the prior year period.

Adjusted net income, which excludes a net expense of $5 million, or $0.03 per diluted share, in non-recurring costs related to the integration of Kaman Distribution Group (KDG), was $317 million, an increase of 17.3% compared to adjusted net income of $270 million for the same period of the prior year. On a per share diluted basis, adjusted net income was $2.23, an increase of 18.6% compared to $1.88 per diluted share last year. Refer to the reconciliation of GAAP net income to adjusted net income for more information.

Third Quarter 2022 Segment Highlights

Automotive Parts Group

Automotive sales were $3.5 billion, up 8.9% from the same period in 2021, consisting of a 9.2% increase in global comparable sales and a 5.3% contribution from acquisitions, net of a 5.6% unfavorable impact of foreign currency and other. Segment profit of $309 million increased 10.0%, with a segment profit margin of 8.9%, up 10 basis points from the same period of the prior year.

Industrial Parts Group

Industrial sales were $2.2 billion, up 35.3% from the same period in 2021, and reflecting a 19.6% increase in comparable sales and a 16.6% contribution from the acquisition of KDG, slightly offset by a 0.9% unfavorable impact of foreign currency. Segment profit of $243 million increased 46.3%, with profit margin of 11.1%, up 80 basis points from the same period of the prior year.

Will Stengel, President, stated, “Our third quarter results were driven by sound industry fundamentals and execution of our key strategic initiatives to deliver accelerated sales growth and margin expansion in both segments. We were also pleased to further strengthen our balance sheet and generate continued strong cash flow.

“The solid growth in Automotive was broad-based, with double-digit total sales growth in local currency in each of our global operations. Likewise, the continued strength in Industrial led to its sixth consecutive quarter of double-digit sales comps,” said Mr. Stengel.

Nine Months 2022 Results

Sales for the nine months ended September 30, 2022 were $16.6 billion, a 17.8% increase from $14.1 billion for the same period in 2021. Net income for the nine months was $931 million, or $6.53 per diluted share. The Company’s adjusted net income was $896 million, or $6.29 per diluted share, an increase of 22.9% compared to $5.12 per diluted share last year.

Balance Sheet, Cash Flow and Capital Allocation

The Company generated operating cash flow from operations of $1.2 billion for the nine months ended September 30, 2022, an increase from $1.0 billion in the same period last year driven primarily by higher net income and effective management of our working capital. We used $1.7 billion in cash for investing activities, primarily in connection with the acquisition of KDG, in addition to $244 million for capital expenditures. We also had $386 million in cash provided by financing activities, which includes $961 million of net proceeds from debt, primarily related to the KDG acquisition. This was partially offset by quarterly dividends of $369 million paid to shareholders and $173 million of share repurchases. Free cash flow was $1.0 billion for the nine months ended September 30, 2022, a 15% increase from $870 million for the nine months in 2021.

The Company ended the quarter with $2.1 billion in total liquidity, consisting of $1.5 billion availability on the revolving credit facility and $629 million in cash and cash equivalents. 

2022 Outlook

In consideration of several factors, the Company is updating full-year 2022 guidance previously provided in its earnings release on July 27, 2022. 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 establishing its updated guidance, which is outlined in the table below.

		For the Year Ending December 31, 2022
		Previous Outlook		Updated Outlook
Total sales growth		12% to 14%		15% to 16%
Automotive sales growth		6% to 8%		7% to 8%
Industrial sales growth		26% to 28%		31% to 32%
Diluted earnings per share		$8.08 to $8.23		$8.29 to $8.39
Adjusted diluted earnings per share		$7.80 to $7.95		$8.05 to $8.15
Effective tax rate		Approximately 25%		Approximately 25%
Net cash provided by operating activities		$1.5 billion to $1.7 billion		$1.5 billion to $1.7 billion
Free cash flow		$1.2 billion to $1.4 billion		$1.2 billion to $1.4 billion

“Our teams continue to operate well in a challenging environment, and going forward, we will remain energized and focused on our strategic initiatives in our day-to-day operations. Our outlook for the full-year reflects the continued confidence in our businesses to deliver market share gains and drive ongoing momentum in our top and bottom-line results,” Donahue concluded.

Conference Call

The company held a conference call today at 11:00 a.m. Eastern time to discuss the results of the quarter. A supplemental earnings deck was also available for reference. Interested parties may listen to the call and view the supplemental earnings deck at website at http://genuineparts.investorroom.com. The call is also available by dialing 888-317-6003, conference ID 9205347. A replay will also be available on the website or at 877-344-7529, conference ID 7447739, two hours after the completion of the call.