Genuine Parts pany(GPC) - 2024 Q2 - Quarterly Results

Genuine Parts Company Q2 2024 Earnings Release Financial Highlights The company reported modest Q2 sales growth to $6.0 billion but lowered its full-year 2024 outlook due to softer market conditions Q2 2024 Key Metrics | Metric | Q2 2024 Result | Change (YoY) | | :--- | :--- | :--- | | Sales | $6.0 billion | +0.8% | | Diluted EPS | $2.11 | -13.5% | | Adjusted Diluted EPS | $2.44 | In-line | 2024 Outlook Revision | 2024 Outlook | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Revenue Growth | 3% to 5% | 1% to 3% | | Adjusted Diluted EPS | $9.80 to $9.95 | $9.30 to $9.50 | Management Commentary Management acknowledged softer market conditions impacting demand but remains focused on long-term strategic execution - Quarterly results reflect softer than expected market conditions, tempering demand in Industrial and U.S. and European Automotive businesses[4] - The company remains focused on executing its long-term strategic initiatives despite the challenging macro-environment[4] Performance Review Q2 sales grew 0.8% to $6.0 billion driven by acquisitions, while six-month sales increased 0.6% to $11.7 billion Second Quarter 2024 Results | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Sales | $6.0 billion | $5.9 billion | +0.8% | | Net Income | $296 million | $344 million | -14.0% | | Diluted EPS | $2.11 | $2.44 | -13.5% | | Adjusted Net Income | $342 million | $344 million | -0.9% | | Adjusted Diluted EPS | $2.44 | $2.44 | In-line | - Sales growth of 0.8% was driven by a 2.2% benefit from acquisitions, partially offset by a 0.9% decrease in comparable sales and a 0.5% unfavorable foreign currency impact[5] - Adjusted net income for Q2 2024 excludes a net expense of $46 million after-tax ($0.33 per diluted share) related to restructuring and acquisition initiatives[6] Segment Performance (Q2 2024) | Segment | Sales | Sales Change (YoY) | Comparable Sales | Segment Profit | Profit Margin | Margin Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Automotive | $3.7 billion | +2.0% | -0.6% | $314 million | 8.4% | -60 bps | | Industrial | $2.2 billion | -1.1% | -1.6% | $277 million | 12.4% | -10 bps | - Automotive sales growth was primarily due to a 3.1% benefit from acquisitions[8] - Industrial sales declined due to a 1.6% decrease in comparable sales, which was not fully offset by a 0.7% benefit from acquisitions[9] Six Months 2024 Results | Metric | Six Months 2024 | Six Months 2023 | Change | | :--- | :--- | :--- | :--- | | Sales | $11.7 billion | $11.7 billion | +0.6% | | Net Income | $544 million | $648 million | -16.0% | | Diluted EPS | $3.89 | $4.58 | -15.1% | | Adjusted Net Income | $652 million | $648 million | +0.6% | | Adjusted Diluted EPS | $4.66 | $4.58 | +1.7% | Financial Position and Cash Flow The company generated $353 million in free cash flow in H1 2024 and ended the quarter with $2.0 billion in total liquidity | Cash Flow Metric (Six Months 2024) | Amount | | :--- | :--- | | Cash Flow from Operations | $612 million | | Capital Expenditures | ($259 million) | | Free Cash Flow | $353 million | | M&A | ($580 million) | | Dividends Paid | ($272 million) | | Stock Repurchases | ($75 million) | - The company ended Q2 2024 with $2.0 billion of total liquidity, comprising $555 million in cash and $1.4 billion available on its revolving credit facility[12] Revised 2024 Full-Year Outlook The company lowered its full-year 2024 guidance for sales growth to 1-3% and adjusted diluted EPS to $9.30-$9.50 | Guidance Metric | Previous 2024 Outlook | Updated 2024 Outlook | | :--- | :--- | :--- | | Total sales growth | 3% to 5% | 1% to 3% | | Automotive sales growth | 2% to 4% | 1% to 3% | | Industrial sales growth | 3% to 5% | 0% to 2% | | Diluted earnings per share | $9.05 to $9.20 | $8.55 to $8.75 | | Adjusted diluted EPS | $9.80 to $9.95 | $9.30 to $9.50 | | Net cash from operating activities | $1.3B to $1.5B | Unchanged | | Free cash flow | $800M to $1.0B | Unchanged | - The updated guidance considers recent business trends, current growth plans, strategic initiatives, and the global economic outlook[13] Financial Statements and Reconciliations This section provides unaudited consolidated financial statements and reconciliations of non-GAAP financial measures Consolidated Statements of Income | (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net sales | $5,962,567 | $11,746,198 | | Gross profit | $2,180,303 | $4,254,958 | | Income before income taxes | $386,201 | $711,382 | | Net income | $295,544 | $544,438 | Segment Information | (in thousands) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Sales | | | | Automotive | $3,726,991 | $7,301,011 | | Industrial | $2,235,576 | $4,445,187 | | Segment Profit | | | | Automotive | $313,975 | $586,911 | | Industrial | $276,841 | $547,680 | Consolidated Balance Sheets | (in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $555,277 | $1,102,007 | | Merchandise inventories, net | $5,103,644 | $4,676,686 | | Total current assets | $9,796,698 | $9,605,852 | | Total assets | $18,869,393 | $17,968,454 | | Total current liabilities | $8,766,413 | $7,827,109 | | Long-term debt | $3,027,491 | $3,550,930 | | Total equity | $4,556,123 | $4,416,985 | Consolidated Statements of Cash Flows | (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $611,915 | $457,003 | | Net cash used in investing activities | ($762,026) | ($226,120) | | Net cash used in financing activities | ($382,326) | ($357,750) | | Net decrease in cash | ($546,730) | ($123,358) | Non-GAAP Reconciliations Reconciliation of GAAP to Adjusted Diluted EPS (Q2 2024) | Per Share Data | Q2 2024 | | :--- | :--- | | GAAP diluted EPS | $2.11 | | Restructuring and other costs | $0.27 | | Acquisition and integration costs | $0.17 | | Tax impact of adjustments | ($0.11) | | Adjusted diluted EPS | $2.44 | Reconciliation to Free Cash Flow (Six Months Ended June 30) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $611,915 | $457,003 | | Purchases of property, plant and equipment | ($259,245) | ($205,336) | | Free Cash Flow | $352,670 | $251,667 |