GPC 10-Q

Genuine Parts Co (GPC)

10-Q 2023-04-20 For: 2023-03-31

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Added on April 04, 2026

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GA						58-0254510
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Table of Contents

PART I		Page

Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20

PART II

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 6.	Exhibits	22
	Signatures	23


(in thousands, except share and per share data)	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	651,183	$	653,463
Trade accounts receivable, less allowance for doubtful accounts (2023 – $56,236; 2022 – $53,872)	2,420,848		2,188,868
Merchandise inventories, net	4,579,590		4,441,649
Prepaid expenses and other current assets	1,532,810		1,532,759
Total current assets	9,184,431		8,816,739
Goodwill	2,599,770		2,588,113
Other intangible assets, less accumulated amortization	1,790,120		1,812,510
Property, plant and equipment, less accumulated depreciation (2023 – $1,476,073; 2022 – $1,435,677)	1,373,541		1,326,014
Operating lease assets	1,121,007		1,104,678
Other assets	838,663		847,325
Total assets	$	16,907,532	$	16,495,379

Liabilities and equity
Current liabilities:
Trade accounts payable	$	5,677,134	$	5,456,550
Current portion of debt	290,326		252,029
Dividends payable	133,737		126,191
Other current liabilities	1,816,327		1,851,340
Total current liabilities	7,917,524		7,686,110
Long-term debt	3,094,319		3,076,794
Operating lease liabilities	844,174		836,019
Pension and other post–retirement benefit liabilities	198,552		197,879
Deferred tax liabilities	391,526		391,163
Other long-term liabilities	521,801		502,967
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 – 2023 – 140,545,475 shares; 2022 – 140,941,649 shares	140,545		140,941
Additional paid-in capital	147,690		140,324
Accumulated other comprehensive loss	(1,006,801)		(1,032,542)
Retained earnings	4,644,770		4,541,640
Total parent equity	3,926,204		3,790,363
Noncontrolling interests in subsidiaries	13,432		14,084
Total equity	3,939,636		3,804,447
Total liabilities and equity	$	16,907,532	$	16,495,379


	Three Months Ended March 31,
(in thousands, except per share data)	2023		2022
Net sales	$	5,765,118	$	5,294,635
Cost of goods sold	3,751,717		3,468,688
Gross profit	2,013,401		1,825,947
Operating expenses:
Selling, administrative and other expenses	1,511,244		1,403,979
Depreciation and amortization	87,215		87,369
Provision for doubtful accounts	5,639		4,494
Total operating expenses	1,604,098		1,495,842
Non-operating expense (income):
Interest expense, net	16,864		19,850
Other	(11,967)		(15,461)
Total non-operating expense (income)	4,897		4,389
Income before income taxes	404,406		325,716
Income taxes	100,449		79,878
Net income	$	303,957	$	245,838
Dividends declared per common share	$	0.950	$	0.895
Basic earnings per share	$	2.16	$	1.73
Diluted earnings per share	$	2.14	$	1.72


	Three Months Ended March 31,
(in thousands)	2023		2022
Net income	$	303,957	$	245,838
Other comprehensive income, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2023 — $5,255; 2022 — $8,411	23,827		42,132
Cash flow hedge adjustments, net of income taxes in 2023 — $0; 2022 — $1,384	—		3,741
Pension and postretirement benefit adjustments, net of income taxes in 2023 — $703; 2022 — $2,580	1,914		6,989
Other comprehensive income, net of income taxes	25,741		52,862
Comprehensive income	$	329,698	$	298,700


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31, 2023
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2023	140,941,649	$	140,941	$	140,324	$	(1,032,542)	$	4,541,640	$	3,790,363	$	14,084	$	3,804,447
Net income	—	—		—		—		303,957		303,957		—		303,957
Other comprehensive income, net of tax	—	—		—		25,741		—		25,741		—		25,741
Cash dividend declared, $0.9500 per share	—	—		—		—		(133,737)		(133,737)		—		(133,737)
Shares issued from employee incentive plans	14,832	15		(1,280)		—		—		(1,265)		—		(1,265)
Share-based compensation	—	—		8,646		—		—		8,646		—		8,646
Purchase of stock	(411,006)	(411)		—		—		(67,090)		(67,501)		—		(67,501)
Noncontrolling interest activities	—	—		—		—		—		—		(652)		(652)
March 31, 2023	140,545,475	$	140,545	$	147,690	$	(1,006,801)	$	4,644,770	$	3,926,204	$	13,432	$	3,939,636


	Three Months Ended March 31, 2022
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2022	142,180,683	$	142,181	$	119,975	$	(857,739)	$	4,086,325	$	3,490,742	$	12,548	$	3,503,290
Net income	—	—		—		—		245,838		245,838		—		245,838
Other comprehensive income, net of tax	—	—		—		52,862		—		52,862		—		52,862
Cash dividend declared, $0.8950 per share	—	—		—		—		(126,891)		(126,891)		—		(126,891)
Shares issued from employee incentive plans	18,670	19		(1,082)		—		—		(1,063)		—		(1,063)
Share-based compensation	—	—		7,171		—		—		7,171		—		7,171
Purchase of stock	(571,604)	(572)		—		—		(72,347)		(72,919)		—		(72,919)
Noncontrolling interest activities	—	—		—		—		—		—		(412)		(412)
March 31, 2022	141,627,749	$	141,628	$	126,064	$	(804,877)	$	4,132,925	$	3,595,740	$	12,136	$	3,607,876


		March 31, 2023				December 31, 2022
Instrument	Balance Sheet Location	Notional		Balance		Notional		Balance
Net investment hedges:
Forward contracts	Prepaid expenses and other current assets	$	606,950	$	45,189	$	606,950	$	46,670
Forward contract	Other current liabilities	$	106,800	$	3,748	$	106,800	$	3,064
Foreign currency debt	Long-term debt	€	700,000	$	763,420	€	700,000	$	749,280


	(Loss) Gain Recognized in AOCL before Reclassifications				Gain Recognized in Interest Expense for Excluded Components
(in thousands)	2023		2022		2023		2022
Three Months Ended March 31,
Net investment hedges:
Forward contracts	$	(5,324)	$	19,393	$	3,158	$	7,565
Foreign currency debt	(14,140)		11,760		—		—
Total	$	(19,464)	$	31,153	$	3,158	$	7,565


	Pension Benefits
(in thousands)	2023		2022
Service cost	$	1,494	$	2,616
Interest cost	26,117		18,867
Expected return on plan assets	(41,240)		(37,672)
Amortization of prior service cost	173		172
Amortization of actuarial loss	2,341		9,279
Net periodic benefit income	$	(11,115)	$	(6,738)


	Changes in Accumulated Other Comprehensive Loss by Component
(in thousands)	Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation		Total
Beginning balance, January 1, 2023	$	(506,610)	$	(2,572)	$	(523,360)	$	(1,032,542)
Other comprehensive income before reclassifications	—		—		23,827		23,827
Amounts reclassified from accumulated other comprehensive loss	1,914		—		—		1,914
Other comprehensive income, net of income taxes	1,914		—		23,827		25,741
Ending balance, March 31, 2023	$	(504,696)	$	(2,572)	$	(499,533)	$	(1,006,801)


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
January 1, 2023 through January 31, 2023	94,118	$167.66	89,543	10,203,455
February 1, 2023 through February 28, 2023	91,471	$174.42	81,834	10,121,621
March 1, 2023 through March 31, 2023	247,236	$159.77	239,629	9,881,992
Totals	432,825	$164.58	411,006	9,881,992


Exhibit 3.1						Amended and Restated Articles of Incorporation of the Company, dated April 23, 2007 (incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 23, 2007)

Exhibit 3.2						By-Laws of the Company, as amended and restated November 19, 2018 (incorporated herein by reference from Exhibit 3.2 to the Company’s Current Report on Form 8-K dated November 19, 2018)

Exhibit 10.1						Second Amendment, dated as of March 14, 2023, to Genuine Parts Company Syndicated Facility Agreement dated October 30, 2020 among Genuine Parts Company, UAP, Inc., and Certain Designated Subsidiaries as Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent, Domestic Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A., acting through its Toronto Bank, as Canadian Swing Line Lender and the other Lenders and L/C Issuers party thereto.

Exhibit 31.1						Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Executive Officer – filed herewith

Exhibit 31.2						Certification pursuant to SEC Rule 13a-14(a) signed by the Chief Financial Officer – filed herewith

Exhibit 32						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer and Chief Financial Officer – furnished herewith

Exhibit 101.INS						XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Exhibit 101.SCH						XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

Exhibit 101.LAB						XBRL Taxonomy Extension Labels Linkbase Document

Exhibit 101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104						The cover page from this Quarterly Report on Form 10-Q for the period ended March 31, 2023 formatted in Inline XBRL


	Three Months Ended March 31,
(in thousands)	2023		2022
North America:
Automotive	$	2,205,385	$	2,130,873
Industrial	2,130,715		1,910,433
Total North America	$	4,336,100	$	4,041,306
Australasia:
Automotive	$	406,762	$	378,909
Industrial	128,576		108,581
Total Australasia	$	535,338	$	487,490
Europe – Automotive	$	893,680	$	765,839
Total net sales	$	5,765,118	$	5,294,635


	Three Months Ended March 31,
(in thousands, except per share data)	2023			2022			$ Change		% Change
Diluted EPS	$	2.14		$	1.72		$	0.42	24.4	%
Total adjusted EBITDA	$	508,485		$	458,850		$	49,635	10.8	%
Automotive segment profit	$	264,420		$	264,573		$	(153)	(0.1)	%
Industrial segment profit	$	261,987		$	188,353		$	73,634	39.1	%
Total segment profit	$	526,407		$	452,926		$	73,481	16.2	%
Automotive segment margin	7.5		%	8.1		%
Industrial segment margin	11.6		%	9.3		%
Total segment margin	9.1		%	8.6		%


	Three Months Ended March 31,
(in thousands)	2023		2022
Automotive:
Segment Profit	$	264,420	$	264,573
Depreciation	38,109		36,254
Other costs (2)	—		8,927
Automotive segment EBITDA	302,529		309,754

Industrial:
Segment Profit	261,987		188,353
Depreciation	7,050		7,951
Other costs (2)	—		5,587
Industrial segment EBITDA	269,037		201,891

Corporate:
Corporate expense	(66,015)		(41,751)
Depreciation	2,934		3,470
Other costs (2)	—		(14,514)
Other unallocated costs (1)	—		(25,915)
Corporate EBITDA	(63,081)		(78,710)
Total adjustments (1)	—		25,915
Corporate adjusted EBITDA	(63,081)		(52,795)

Adjusted EBITDA	$	508,485	$	458,850


						Genuine Parts Company (Registrant)

Date: April 20, 2023						/s/ Bert Nappier
						Bert Nappier
						Executive Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)