Genuine Parts Company posts $23B USD in sales, announces ‘global restructuring’

by | Feb 15, 2024 | 0 comments

Genuine Parts Company, automotive aftermarket and industrial replacement parts, announced that fourth quarter and full year sales were both up, in 2023, with total sales surpassing $23 billion USD.

It also announced a ‘global restructuring’ that the company says will result in $20 million to $40 million in savings in 2024.

“We are pleased to report that GPC delivered on our financial commitments in 2023 and finished the year with a solid fourth quarter. We reported mid-single-digit total sales growth and our third consecutive year of double-digit earnings growth,” said Paul Donahue, Chairman and Chief Executive Officer.

“We achieved these results despite a more challenging environment and are confident we are investing in the right areas of our business to deliver long-term profitable growth. Thank you to all our teammates and vendor partners across the globe for the ongoing commitment to serving our customers.”

Highiights include (in USD):

  • Q4 Sales of $5.6 billion, Up 1.1%
  • Q4 Diluted EPS of $2.26, Up 27.7%, or Up 10.2% from Adjusted Diluted EPS in 2022
  • Full Year Sales of $23.1 billion, Up 4.5%
  • Full year diluted EPS of $9.33, Up 12.3%, or Up 11.9% from Adjusted Diluted EPS in 2022
  • Cash from Operations of $1.4 billion; Free Cash Flow of $923 million
  • Returning $788 million to Shareholders via Cash Dividends and Share Repurchases

Fourth Quarter 2023 Results

Sales were $5.6 billion, a 1.1% increase compared to $5.5 billion in the same period of the prior year. The improvement is attributable to a 2.0% benefit from acquisitions, 0.3% favorable impact of foreign currency and other, partially offset by a 1.2% decrease in comparable sales. All figures quoted in USD.

Net income was $317 million, an increase of 25.8% compared to prior year net income of $252 million or 8.7% when compared to prior year period adjusted net income of $292 million. Diluted earnings per share was $2.26, an increase of 27.7% compared to prior year period diluted earnings per share of $1.77 or 10.2% when compared to prior year period adjusted diluted earnings per share of $2.05. 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.

Fourth Quarter 2023 Segment Highlights

Automotive Parts Group (“Automotive”)

Global Automotive sales were $3.5 billion, up 0.8% from the same period in 2022, with a 2.9% benefit from acquisitions, 0.6% favorable impact of foreign currency and other, partially offset by a 2.7% decrease in comparable sales. Segment profit of $259 million decreased 12.2%, with profit margin of 7.5%, down 110 basis points to last year.

Industrial Parts Group (“Industrial”)

Industrial sales were $2.1 billion, up 1.7% from the same period in 2022, reflecting a 1.2% increase in comparable sales, 0.5% benefit from acquisitions and no impact of foreign currency. Segment profit of $275 million increased 19.3% with segment profit margin of 12.9%, up 190 basis points from the same period of the prior year.

“The value and benefit of our diverse business were evident in our fourth quarter and full-year results,” said Will Stengel, President and Chief Operating Officer. “Our Industrial and International Automotive businesses outperformed our expectations in 2023, offsetting softer results in our U.S. Automotive business. We took accelerated action on targeted priorities during the year to improve U.S. Automotive and have seen positive impacts from these efforts. Around the world, we are focused on our near- and long-term strategic initiatives to deliver value for our customers every day.”

Full-Year 2023 Results

Sales for the twelve months ended December 31, 2023 were $23.1 billion, up 4.5% from the same period in 2022. Net income for the twelve months was $1.3 billion, or $9.33 per diluted share, an increase of 12.3% compared to $8.31 per diluted share in 2022 or an increase of 11.9% when compared to adjusted diluted earnings per share of $8.34 in 2022.

Balance Sheet, Cash Flow and Capital Allocation

The company generated cash flow from operations of $1.4 billion for the twelve months of 2023. We used $706 million in cash for investing activities, including $513 million in capital expenditures primarily in supply chain, facilities and technology, $25 million proceeds from the sale of property, plant and equipment, $309 million for acquisitions of business and other investing activities, and $80 million in proceeds from the sale of our remaining investment in S.P. Richards and other investments. We also used $292 million for financing activities, including $527 million for quarterly dividends paid to shareholders and $261 million for stock repurchases. Included in financing activities is $531 million of net proceeds from debt primarily from the Senior Notes offering. Free cash flow was $923 million for the twelve months in 2023.

The company ended the quarter and year with $2.6 billion in total liquidity, consisting of $1.5 billion availability on the revolving credit facility and $1.1 billion in cash and cash equivalents.

Dividend Declaration

GPC’s Board of Directors approved an approximately 5% increase in its regular quarterly cash dividend for 2024. This increased the cash dividend payable to an annual rate of $4.00 per share from $3.80 per share in 2023. The quarterly cash dividend of $1.00 per share is payable April 1, 2024 to shareholders of record March 1, 2024. The company has paid a cash dividend every year since going public in 1948, and 2024 marks the 68th consecutive year of increased dividends paid to shareholders.

Global Restructuring

The company is introducing a global restructuring designed to better align the company’s assets and further improve the efficiency of the business. This initiative includes an announced voluntary retirement offer in the U.S., along with a rationalization and optimization of certain distribution centers, stores and other facilities. GPC expects to incur costs of approximately $100 million to $200 million related to the restructuring efforts in 2024 and will report these costs as a non-recurring expense. Through these efforts, the company expects to realize approximately $20 million to $40 million of savings in 2024, and approximately $45 million to $90 million on an annualized basis.

“We continuously pursue initiatives to simplify and streamline our business, enhance our service proposition and align with the market environments. Our coordinated global restructuring program is designed to improve service for customers and create value for our shareholders. We are focused on what we can control and will execute with discipline to deliver on our long-term financial targets,” Stengel concluded.

2024 Outlook

In consideration of several factors, the company is establishing full-year 2024 guidance. 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 guidance, which is outlined in the table below.

2024 Outlook Year Ended 12/31/2024 (USD)
Total sales growth3% to 5%
Automotive sales growth2% to 4%
Industrial sales growth3% to 5%
Diluted earnings per share$8.95 to $9.15
Adjusted diluted earnings per share$9.70 to $9.90
Effective tax rateApprox. 24%
Net cash provided by operating activities$1.3 billion to $1.5 billion
Free cash flow$800 million to $1 billion

Conference Call

Genuine Parts Company scheduled a conference call February 15 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 30941#, two hours after completion of the call.


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