Genuine Parts Company Reports Results For the Fourth Quarter and Full Year 2022
Genuine Parts Company (GPC) reported strong financial results for Q4 2022, with sales of $5.5 billion, a 15.0% increase year-over-year, driven by an 11.1% gain in comparable sales and contributions from acquisitions. Diluted EPS stood at $1.77, while adjusted diluted EPS reached $2.05, up 14.5%.
For the full year, GPC achieved record sales of $22.1 billion (up 17.1%), with a net income of $1.2 billion. The company returned $719 million to shareholders through dividends and buybacks. Looking ahead, GPC forecasts a 4% to 6% sales growth for 2023, projecting diluted EPS of $8.80 to $8.95.
- Sales growth of 15.0% in Q4 2022 to $5.5 billion.
- Record full-year sales of $22.1 billion, up 17.1%.
- Adjusted diluted EPS increased 14.5% to $2.05 in Q4 2022.
- Full-year adjusted diluted EPS reached $8.34, a 20.7% increase.
- Free cash flow of $1.1 billion, up 13.6% from 2021.
- Returned $719 million to shareholders via dividends and share repurchases.
- Net income for Q4 2022 decreased to $252 million from $256 million in the prior year.
- Unfavorable foreign currency impact of 4.1% on Q4 sales.
Fourth Quarter 2022 Highlights
- Sales of
, Up$5.5 billion 15.0% - Diluted EPS of
$1.77 - Adjusted Diluted EPS of
, Up$2.05 14.5%
Full Year 2022 Highlights
- Record sales of
, Up$22.1 billion 17.1% - Segment Profit Margin of
9.4% , Up 60 basis points - Diluted EPS of
$8.31 - Adjusted Diluted EPS of
, Up$8.34 20.7% and a New Record - Cash From Operations of
, Up$1.5 billion 16.6% ; Free Cash Flow of , Up$1.1 billion 13.6% - Returned
to Shareholders via Cash Dividends and Share Repurchases$719 million
2023 Outlook
- Revenue Growth of
4% to6% - Diluted EPS of
to$8.80 $8.95
"The GPC team capped off a record-setting year with a strong fourth quarter highlighted by double-digit sales and earnings growth and continued margin expansion. We are incredibly proud of our progress throughout the year and thankful to our teammates across the globe for their ongoing commitment to excellence," said
Fourth Quarter 2022 Results
Sales were
Net income was
Adjusted net income, which excludes an expense of
Fourth Quarter 2022 Segment Highlights
Industrial sales were
"The strength in Automotive sales was broad-based, with double-digit total sales growth in local currency in each of our global operations," said
Full Year 2022 Results
Sales in 2022 were
Balance Sheet, Cash Flow and Capital Allocation
The company generated cash flow from operations of
The company ended the quarter and year with
2023 Outlook
In consideration of several factors, the company is establishing full-year 2023 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.
Year Ended | ||
Total sales growth | ||
Automotive sales growth | ||
Industrial sales growth | ||
Diluted earnings per share | ||
Adjusted diluted earnings per share | ||
Effective tax rate | Approx. | |
Net cash provided by operating activities | ||
Free cash flow |
"We had an exceptional 2022 which included celebrating our 95th year of operations. We have quickly turned our attention to the year ahead and, while the macro-environment remains uncertain, we are confident in our strategic plans to drive sustained sales and earnings growth, continued margin expansion and strong cash flow. We believe our progress in these key areas, combined with a strong balance sheet, position GPC with the financial strength and flexibility to pursue strategic growth opportunities while also returning capital to shareholders,"
Non-GAAP Information
This release contains certain financial information not derived in accordance with
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. 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
About
Founded in 1928,
Forward Looking Statements
Some statements in this release, as well as in materials the company files with the
The company cautions that all forward-looking statements involve risks and uncertainties, and while the company believes that its 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 and geopolitical conflicts such as the conflict between
Forward-looking statements speak only as of the date they are made, and the company undertakes 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
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||
(UNAUDITED) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
(in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||
Net sales | $ 5,523,650 | $ 4,803,209 | ||||||
Cost of goods sold | 3,549,959 | 3,109,760 | 14,355,869 | 12,236,374 | ||||
Gross profit | 1,973,691 | 1,693,449 | 7,740,104 | 6,634,136 | ||||
Operating expenses: | ||||||||
Selling, administrative and other expenses | 1,531,883 | 1,279,265 | 5,758,295 | 5,162,506 | ||||
Depreciation and amortization | 87,997 | 72,594 | 347,819 | 290,971 | ||||
Provision for doubtful accounts | 6,252 | 3,509 | 19,791 | 17,739 | ||||
Total operating expenses | 1,626,132 | 1,355,368 | 6,125,905 | 5,471,216 | ||||
Non-operating expenses (income): | ||||||||
Interest expense, net | 15,569 | 14,297 | 73,887 | 62,150 | ||||
Other | (5,393) | (22,122) | (32,290) | (99,576) | ||||
Total non-operating expenses (income) | 10,176 | (7,825) | 41,597 | (37,426) | ||||
Income before income taxes | 337,383 | 345,906 | 1,572,602 | 1,200,346 | ||||
Income taxes | 85,407 | 89,907 | 389,901 | 301,556 | ||||
Net income (loss) | $ 251,976 | $ 255,999 | $ 1,182,701 | $ 898,790 | ||||
Dividends declared per common share | $ 0.895 | $ 0.815 | $ 3.580 | $ 3.260 | ||||
Basic earnings per share | $ 1.79 | $ 1.80 | $ 8.36 | $ 6.27 | ||||
Diluted earnings per share | $ 1.77 | $ 1.79 | $ 8.31 | $ 6.23 | ||||
Weighted average common shares outstanding | 141,049 | 142,275 | 141,468 | 143,435 | ||||
Dilutive effect of stock options and non-vested restricted | 923 | 778 | 854 | 786 | ||||
Weighted average common shares outstanding — | 141,972 | 143,053 | 142,322 | 144,221 |
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||||||
SEGMENT INFORMATION | ||||||||
(UNAUDITED) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | ||||
Net sales: | ||||||||
Automotive | $ 3,433,057 | $ 3,190,133 | ||||||
Industrial | 2,090,593 | 1,613,076 | 8,429,339 | 6,326,379 | ||||
Total net sales | $ 5,523,650 | $ 4,803,209 | ||||||
Segment profit: | ||||||||
Automotive | $ 295,199 | $ 265,841 | $ 1,191,674 | $ 1,073,427 | ||||
Industrial | 230,306 | 153,773 | 886,636 | 595,232 | ||||
Total segment profit | 525,505 | 419,614 | 2,078,310 | 1,668,659 | ||||
Interest expense, net | (15,568) | (14,297) | (73,886) | (62,150) | ||||
Corporate expense | (81,481) | (44,813) | (269,364) | (174,842) | ||||
Intangible asset amortization | (38,697) | (25,034) | (157,437) | (103,273) | ||||
Other unallocated costs | (52,376) | 10,436 | (5,021) | (128,048) | ||||
Income before income taxes | $ 337,383 | $ 345,906 | $ 1,572,602 | $ 1,200,346 | ||||
The following table presents a summary of the other unallocated costs: | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | ||||
Other unallocated costs: | ||||||||
Gain on sales of real estate | $ — | $ — | $ 102,803 | $ — | ||||
Gain on insurance proceeds | — | 3,862 | 1,507 | 3,862 | ||||
Product liability adjustment | (28,730) | — | (28,730) | — | ||||
Product liability damages award | — | — | — | (77,421) | ||||
Loss on software disposal | — | — | — | (61,063) | ||||
Gain on equity investment | — | 10,229 | — | 10,229 | ||||
Transaction and other costs | (23,646) | (3,655) | (80,601) | (3,655) | ||||
Total other unallocated costs (1) | $ (52,376) | $ 10,436 | $ (5,021) | $ (128,048) |
(1) Refer to the reconciliation of GAAP net income to adjusted net income for explanation of adjustments. |
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(UNAUDITED) | ||||
As of | ||||
(in thousands, except share and per share data) | 2022 | 2021 | ||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 653,463 | $ 714,701 | ||
Trade accounts receivable, less allowance for doubtful accounts (2022 – | 2,188,868 | 1,797,955 | ||
Merchandise inventories, net | 4,441,649 | 3,889,919 | ||
Prepaid expenses and other current assets | 1,532,759 | 1,353,847 | ||
Total current assets | 8,816,739 | 7,756,422 | ||
2,588,113 | 1,915,307 | |||
Other intangible assets, net | 1,812,510 | 1,406,401 | ||
Property, plant and equipment, less accumulated depreciation (2022 – | 1,326,014 | 1,234,399 | ||
Operating lease assets | 1,104,678 | 1,053,689 | ||
Other assets | 847,325 | 985,884 | ||
Total assets | ||||
Liabilities and equity | ||||
Current liabilities: | ||||
Trade accounts payable | $ 5,456,550 | $ 4,804,939 | ||
Current portion of debt | 252,029 | — | ||
Other current liabilities | 1,851,340 | 1,660,768 | ||
Dividends payable | 126,191 | 115,876 | ||
Total current liabilities | 7,686,110 | 6,581,583 | ||
Long-term debt | 3,076,794 | 2,409,363 | ||
Operating lease liabilities | 836,019 | 789,175 | ||
Pension and other post-retirement benefit liabilities | 197,879 | 265,134 | ||
Deferred tax liabilities | 391,163 | 280,778 | ||
Other long-term liabilities | 502,967 | 522,779 | ||
Equity: | ||||
Preferred stock, par value | — | — | ||
Common stock, par value | 140,941 | 142,181 | ||
Additional paid-in capital | 140,324 | 119,975 | ||
Accumulated other comprehensive loss | (1,032,542) | (857,739) | ||
Retained earnings | 4,541,640 | 4,086,325 | ||
Total parent equity | 3,790,363 | 3,490,742 | ||
Noncontrolling interests in subsidiaries | 14,084 | 12,548 | ||
Total equity | 3,804,447 | 3,503,290 | ||
Total liabilities and equity |
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(UNAUDITED) | ||||
Year Ended | ||||
(in thousands) | 2022 | 2021 | ||
Operating activities: | ||||
Net income | $ 1,182,701 | $ 898,790 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 347,819 | 290,971 | ||
Deferred income taxes | 2,220 | 31,676 | ||
Share-based compensation | 38,058 | 25,597 | ||
Gain on sale of real estate | (102,803) | — | ||
Other operating activities | 18,377 | 22,575 | ||
Changes in operating assets and liabilities: | ||||
Trade accounts receivable, net | (244,371) | (258,994) | ||
Merchandise inventories, net | (380,420) | (329,237) | ||
Trade accounts payable | 676,406 | 777,318 | ||
Other assets and liabilities | (71,016) | (200,411) | ||
Net cash provided by operating activities | 1,466,971 | 1,258,285 | ||
Investing activities: | ||||
Purchases of property, plant and equipment | (339,632) | (266,136) | ||
Proceeds from sale of property, plant and equipment | 145,007 | 26,549 | ||
Proceeds from divestitures of businesses | 33,604 | 17,738 | ||
Proceeds from settlement of net investment hedge | 158,441 | — | ||
Acquisitions and other investing activities | (1,681,660) | (284,315) | ||
Net cash used in investing activities | (1,684,240) | (506,164) | ||
Financing activities: | ||||
Proceeds from debt | 5,108,641 | 892,694 | ||
Payments on debt | (4,147,773) | (1,053,423) | ||
Share-based awards exercised | (17,377) | (22,346) | ||
Dividends paid | (495,917) | (465,649) | ||
Purchase of stock | (222,726) | (333,599) | ||
Other financing activities | (19,747) | (7,209) | ||
Net cash provided by (used in) financing activities | 205,101 | (989,532) | ||
Effect of exchange rate changes on cash and cash equivalents | (49,070) | (38,054) | ||
Net decrease in cash and cash equivalents | (61,238) | (275,465) | ||
Cash and cash equivalents at beginning of year | 714,701 | 990,166 | ||
Cash and cash equivalents at end of year | $ 653,463 | $ 714,701 | ||
Supplemental disclosures of cash flow information | ||||
Cash paid during the year for: | ||||
Income taxes | $ 362,859 | $ 305,326 | ||
Interest | $ 73,368 | $ 65,732 |
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||||||
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME AND GAAP DILUTED NET INCOME PER | ||||||||
(UNAUDITED) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | ||||
GAAP net income | $ 251,976 | $ 255,999 | $ 898,790 | |||||
Adjustments: | ||||||||
Gain on sales of real estate (1) | — | — | (102,803) | — | ||||
Gain on insurance proceeds (2) | — | (3,862) | (1,507) | (3,862) | ||||
Product liability adjustment (3) | 28,730 | — | 28,730 | — | ||||
Product liability damages award (4) | — | — | — | 77,421 | ||||
Loss on software disposal (5) | — | — | — | 61,063 | ||||
Gain on equity investment (6) | — | (10,229) | — | (10,229) | ||||
Transaction and other costs (7) | 23,646 | 3,655 | 80,601 | 3,655 | ||||
Total adjustments | 52,376 | (10,436) | 5,021 | 128,048 | ||||
Tax impact of adjustments | (12,788) | 10,661 | (137) | (29,828) | ||||
Adjusted net income | $ 291,564 | $ 256,224 | $ 997,010 |
The table below represent amounts per common share assuming dilution: | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
(in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||
GAAP net income per common share | $ 1.77 | $ 1.79 | $ 8.31 | $ 6.23 | ||||
Adjustments: | ||||||||
Gain on sales of real estate (1) | — | — | (0.72) | — | ||||
Gain on insurance proceeds (2) | — | (0.03) | (0.01) | (0.03) | ||||
Product liability adjustment (3) | 0.20 | — | 0.20 | — | ||||
Product liability damages award (4) | — | — | — | 0.54 | ||||
Loss on software disposal (5) | — | — | — | 0.42 | ||||
Gain on equity investment (6) | — | (0.07) | — | (0.07) | ||||
Transaction and other costs (7) | 0.17 | 0.03 | 0.56 | 0.03 | ||||
Total adjustments | 0.37 | (0.07) | 0.03 | 0.89 | ||||
Tax impact of adjustments | (0.09) | 0.07 | — | (0.21) | ||||
Adjusted diluted net income per common share | $ 2.05 | $ 1.79 | $ 8.34 | $ 6.91 | ||||
Weighted average common shares outstanding - assuming | 141,972 | 143,053 | 142,322 | 144,221 |
The table below clarifies where the items that have been adjusted above to improve comparability of the financial | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | ||||
Cost of goods sold | $ — | $ — | $ 5,000 | $ — | ||||
Selling, administrative and other expenses | 43,376 | 3,655 | (7,472) | 142,139 | ||||
Restructuring costs | — | — | — | — | ||||
— | — | — | — | |||||
Non-operating (income): Other | 9,000 | (14,091) | 7,493 | (14,091) | ||||
Total adjustments | $ 52,376 | $ (10,436) | $ 5,021 | $ 128,048 |
(1) | Adjustment reflects a gain on the sale of real estate that had been leased to |
(2) | Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs. |
(3) | Adjustment to remeasure the product liability reserve for a revised estimate of the number of claims to be incurred in future periods, among other assumptions. |
(4) | Adjustment reflects damages reinstated by the |
(5) | Adjustment reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies. |
(6) | Adjustment relates to gains recognized upon remeasurement of certain equity investments to fair value upon acquiring the remaining equity of those entities. |
(7) | Adjustment for 2022 primarily includes costs of |
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||||||||
CHANGE IN NET SALES SUMMARY | ||||||||||
(UNAUDITED) | ||||||||||
Three Months Ended | ||||||||||
Comparable | Acquisitions | Foreign | Other | GAAP Total | ||||||
Automotive | 8.2 % | 4.8 % | (5.5) % | 0.1 % | 7.6 % | |||||
Industrial | 16.7 % | 14.3 % | (1.4) % | — % | 29.6 % | |||||
Total | 11.1 % | 8.0 % | (4.2) % | 0.1 % | 15.0 % | |||||
Twelve Months Ended | ||||||||||
Comparable | Acquisitions | Foreign | Other | GAAP Total | ||||||
Automotive | 9.0 % | 4.5 % | (4.5) % | (0.1) % | 8.9 % | |||||
Industrial | 17.3 % | 16.8 % | (0.9) % | — % | 33.2 % | |||||
Total | 11.8 % | 8.6 % | (3.3) % | — % | 17.1 % |
GENUINE PARTS COMPANY AND SUBSIDIARIES | ||||
RECONCILIATION OF GAAP NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | ||||
(UNAUDITED) | ||||
Twelve Months Ended | ||||
(in thousands) | 2022 | 2021 | ||
Net cash provided by operating activities | $ 1,466,971 | $ 1,258,285 | ||
Purchases of property, plant and equipment | (339,632) | (266,136) | ||
Free Cash Flow | $ 1,127,339 | $ 992,149 |
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