Genuine Parts pany(GPC) - 2024 Q4 - Annual Report

Financial Performance - In 2024, the company's net sales reached $23.5 billion, reflecting a 1.7% year-over-year increase, primarily driven by acquisitions in the Automotive segment and two additional selling days[145]. - Net income for 2024 totaled$ 904 million, a decrease of 31.3% compared to the previous year, largely due to costs associated with a global restructuring program[146]. - The Automotive segment generated net sales of $14.8 billion in 2024, a 3.7% increase from 2023, supported by strategic acquisitions of over 500 stores in the U.S.[151]. - The Industrial segment reported net sales of$ 8.7 billion in 2024, a 1.4% decrease from 2023, impacted by a 2.1% decline in comparable sales[153]. - Adjusted net income was $1.1 billion in 2024, down 13.4% from$ 1.3 billion in 2023, with adjusted diluted EPS at $8.16, down$ 1.17 from the previous year[166]. - Comprehensive income for 2024 was $619.205 million, down from$ 1,372.194 million in 2023, a decrease of 54.8%[256]. - Basic earnings per share for 2024 was $6.49, down from$ 9.38 in 2023, reflecting a decline of 30.3%[313]. Expenses and Costs - Selling, administrative, and other expenses rose to $6.6 billion, representing 28.3% of sales, an increase of 7.7% from the previous year[149]. - The company incurred$ 221 million in restructuring and other costs in 2024 as part of its global restructuring program[146]. - SG&A expenses increased by $476 million, or 7.7%, in 2024, with 50% of the increase driven by personnel expenses and 10% by higher rent expenses[158]. - SG&A as a percentage of sales rose to 28.3% in 2024 from 26.7% in 2023, primarily due to inflationary pressures and increased operating expenses from acquisitions[159]. - Total adjustments in the consolidated statement of income for 2024 amounted to$ 315.7 million, with cost of goods sold at $69.1 million and restructuring costs at$ 213.5 million[183]. Cash Flow and Liquidity - The cash balance decreased to $480 million in 2024 from$ 1.1 billion in 2023, while total debt increased to $4.3 billion, up$ 378 million from the previous year[187]. - Operating activities generated $1.25 billion in cash, a decrease of 12.8% from$ 1.44 billion in 2023, primarily due to lower net income and higher inventory levels[190]. - Investing activities saw a significant increase in cash outflow to $1.51 billion, up 113.6% from$ 705.8 million in 2023, driven by $1.1 billion for acquisitions[190]. - Financing activities reflected a net cash outflow of$ 333.9 million, including $555 million in dividends paid and$ 150 million in share repurchases[193]. - Total liquidity at year-end 2024 was $2.0 billion, comprising$ 1.5 billion available on the revolving credit facility and $480 million in cash[199]. Inventory and Assets - Inventory increased by$ 838 million, or 17.9%, from December 31, 2023, due to U.S. automotive acquisitions and strategic product assortment investments[187]. - Total assets as of December 31, 2024, were $19,282.705 million, up from$ 17,968.454 million in 2023, indicating a growth of 7.3%[251]. - Automotive segment assets rose to $10,843,729 thousand in 2024, up from$ 9,845,644 thousand in 2023, reflecting a growth of about 10.1%[330]. - Industrial segment assets grew to $2,765,504 thousand in 2024, compared to$ 2,535,404 thousand in 2023, marking an increase of approximately 9.1%[330]. - Goodwill and other intangible assets increased to $4,696,301 thousand in 2024 from$ 4,527,594 thousand in 2023, showing a growth of approximately 3.7%[330]. Restructuring and Strategic Initiatives - A strategic initiative for inventory rebranding is set to launch in 2025, aiming to streamline product offerings and enhance market penetration[156]. - The company expects to incur additional restructuring costs of $150 to$ 180 million in 2025, with anticipated savings of $100 to$ 125 million from these initiatives[161]. - The company is executing a restructuring initiative that includes voluntary retirement offers and optimization of distribution centers and stores[330]. - The company recognized a $62 million non-cash charge to write down inventory as part of the new global branding initiative[157]. - The company incurred$ 7 million in inventory liquidation costs due to facility closures as part of its global restructuring initiative[330]. Pension and Benefits - The benefit obligation for the pension plan was approximately $735 million as of December 31, 2024, with a non-cash, pre-tax pension settlement charge expected in 2025 or early 2026[194]. - The U.S. pension plan is well-funded with a funded status of 128% as of December 31, 2024[212]. - Net periodic benefit income for defined benefit pension plans was$ 54 million, $44 million, and$ 27 million for the years ended December 31, 2024, 2023, and 2022, respectively[219]. - A 25 basis point increase in the discount rate would decrease the projected benefit obligation by approximately $38 million[218]. - The expected rate of return on plan assets for measuring 2025 pension income is 5.33%[216]. Market and Economic Factors - Inflationary pressures in 2024 and 2023 included increases in product costs and higher operating costs[235]. - A 10% shift in exchange rates would impact translated net sales by approximately$ 829 million in 2024 and $797 million in 2023[233]. - A 100 basis point increase in interest rates would increase fees on the A/R Sales Agreement by$ 10 million[234]. - The company monitors foreign currency exposures and uses currency forward contracts to manage risks[232].