Annual Statements Open main menu
  1. Annual Statements
  2. » Companies
  3. » GENUINE PARTS CO
  4. » Quarter Report: 2024 March (Form 10-Q)

GENUINE PARTS CO - Quarter Report: 2024 March (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number:
  __________________________________________ 
MPANY
(Exact name of registrant as specified in its charter)
   __________________________________________ 
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
 
(Address of principal executive offices) (Zip Code)
-
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of each exchange on which registered
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
There were shares of common stock outstanding as of April 15, 2024.


Table of Contents
Page
   
2
2
3
4
5
6
7
15
21
21
  
  
23
23
23
23
24
25

1
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)March 31, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$ $ 
Trade accounts receivable, less allowance for doubtful accounts (2024 – $; 2023 – $)
  
Merchandise inventories, net   
Prepaid expenses and other current assets  
Total current assets  
Goodwill  
Other intangible assets, less accumulated amortization  
Property, plant and equipment, less accumulated depreciation (2024 – $; 2023 – $)
  
Operating lease assets  
Other assets  
Total assets$ $ 
Liabilities and equity
Current liabilities:
Trade accounts payable$ $ 
Current portion of debt  
Dividends payable  
Other current liabilities  
Total current liabilities  
Long-term debt  
Operating lease liabilities  
Pension and other post–retirement benefit liabilities  
Deferred tax liabilities  
Other long-term liabilities  
Equity:
Preferred stock, par value – $ per share; authorized – shares; issued
  
Common stock, par value – $ per share; authorized – shares; issued and outstanding – 2024 – shares; 2023 – shares
  
Additional paid-in capital  
Accumulated other comprehensive loss()()
Retained earnings  
Total parent equity  
Noncontrolling interests in subsidiaries  
Total equity  
Total liabilities and equity$ $ 
See accompanying Notes to Condensed Consolidated Financial Statements.
2
Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Three Months Ended March 31,
(in thousands, except per share data)20242023
Net sales$ $ 
Cost of goods sold  
Gross profit  
Operating expenses:
Selling, administrative and other expenses  
Depreciation and amortization  
Provision for doubtful accounts  
Restructuring and other costs   
Total operating expenses  
Non-operating (income) expense:
Interest expense, net  
Other()()
Total non-operating (income) expense () 
Income before income taxes  
Income taxes  
Net income$ $ 
Dividends declared per common share$ $ 
Basic earnings per share$ $ 
Diluted earnings per share$ $ 
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended March 31,
(in thousands)20242023
Net income$ $ 
Other comprehensive (loss) income, net of income taxes:
Foreign currency translation adjustments() 
Pension and postretirement benefit adjustments, net of income taxes in 2024 — $; 2023 — $
  
Other comprehensive (loss) income, net of income taxes() 
Comprehensive income$ $ 
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Three Months Ended March 31, 2024
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2024 $ $ $()$ $ $ $ 
Net income— — — —   —  
Other comprehensive loss, net of tax— — — ()— ()— ()
Cash dividend declared, $ per share
— — — — ()()— ()
Shares issued from employee incentive plans  ()— — ()— ()
Share-based compensation— —  — —  —  
Purchase of stock()()— — ()()— ()
Noncontrolling interest activities— — — — — — ()()
March 31, 2024 $ $ $()$ $ $ $ 

Three Months Ended March 31, 2023
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2023$ $ $()$ $ $ $ 
Net income— — — —   —  
Other comprehensive income, net of tax— — —  —  —  
Cash dividend declared, $ per share
— — — — ()()— ()
Shares issued from employee incentive plans  ()— — ()— ()
Share-based compensation— —  — —  —  
Purchase of stock()()— — ()()— ()
Noncontrolling interest activities— — — — — — ()()
March 31, 2023 $ $ $()$ $ $ $ 
See accompanying Notes to Condensed Consolidated Financial Statements.

5
Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Three Months Ended March 31,
(in thousands)20242023
Operating activities:
Net income$ $ 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization  
Share-based compensation  
Excess tax benefits from share-based compensation()()
Other operating activities, including changes in operating assets and liabilities()()
Net cash provided by operating activities  
Investing activities:
Purchases of property, plant and equipment()()
Proceeds from sale of property, plant and equipment  
Proceeds from divestitures of businesses  
Proceeds from sale of investments  
Acquisitions and other investing activities()()
Net cash used in investing activities()()
Financing activities:
Proceeds from debt  
Payments on debt()()
Shares issued from employee incentive plans()()
Dividends paid()()
Purchases of stock()()
Other financing activities()()
Net cash used in financing activities()()
Effect of exchange rate changes on cash and cash equivalents() 
Net decrease in cash and cash equivalents()()
Cash and cash equivalents at beginning of period  
Cash and cash equivalents at end of period$ $ 
See accompanying Notes to Condensed Consolidated Financial Statements.
6
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.
The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results for the year ended December 31, 2024. We have evaluated subsequent events through the date the unaudited Condensed Consolidated Financial Statements covered by this quarterly report were issued.
7
Table of Contents
 $ Consideration receivable from vendors  Other current assets  Total prepaid expenses and other current assets$ $ 
$$$Forward contractOther current liabilities$$$$Foreign currency debt Long-term debt€$€$ $()$ $ Foreign currency debt  ()  Total$ $()$ $ 
 billion, which are designated as Level 2 in the fair value hierarchy.
As of March 31, 2024, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $ million. These loans generally mature over periods from one to . We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents and affiliates that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral
8
Table of Contents
As of March 31, 2024, we have recognized certain assets and liabilities amounting to $ million each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the Condensed Consolidated Balance Sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.
to days. The suppliers sell goods or services, as applicable, to us and they issue the associated invoices to us based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. In turn, we direct payment to the financial institutions, rather than the suppliers, for the invoices sold to the financial institutions. No guarantees are provided by us or any of our subsidiaries on third-party performance under the SCF program; however, we guarantee the payment by our subsidiaries to the financial institutions participating in the SCF program for the applicable invoices. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable in our Condensed Consolidated Balance Sheets.
As of March 31, 2024 and December 31, 2023, the outstanding payment obligations to the financial institutions are $ billion and $ billion, respectively. The amount settled through the SCF program was $ billion and $ billion for the three months ended March 31, 2024 and March 31, 2023, respectively.
 Invoices confirmed during the year Confirmed invoices paid during the year()Confirmed obligations outstanding at the end of the year$ 
9
Table of Contents
Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material. $ Weighted average common shares outstanding  Dilutive effect of stock options and non-vested restricted stock awards  Weighted average common shares outstanding – assuming dilution  Basic earnings per share$ $ Diluted earnings per share$ $ 
2.
 $ Industrial  Total net sales$ $ Segment profit:Automotive$ $ Industrial  Total segment profit  Interest expense, net()()Intangible asset amortization()()Corporate expense()()Other unallocated costs (1)() Income before income taxes$ $ 

(1)     The following table presents a summary of the other unallocated costs:

Three Months Ended March 31,
(in thousands)20242023
Other unallocated costs:
Restructuring and other costs (2)$()$ 
Total other unallocated costs$()$ 

(2)    Please refer to the Restructuring Footnote in the Notes to Condensed Consolidated Financial Statements for more information.

Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected
10
Table of Contents
 $ Industrial  Total North America $ $ Australasia:Automotive$ $ Industrial  Total Australasia$ $ Europe – Automotive$ $ Total net sales$ $ 
3.
term expiring in January 2025, which we intend to renew.
We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutions by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institutions so that the total principal amount outstanding of receivables sold is approximately $ billion at any point in time (which is the maximum amount allowed under the agreement as amended on January 3, 2022).
The total principal amount outstanding of receivables sold is approximately $ billion as of both March 31, 2024 and December 31, 2023. The amount of receivables pledged as collateral as of March 31, 2024 and December 31, 2023 is approximately $ billion and $ billion, respectively.
 $ Cash collected on sold receivables$ $ 
 million and $ million for the three months ended March 31, 2024 and 2023, respectively, are recorded within other non-operating expense (income) in the Condensed Consolidated Statements of Income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institutions any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of March 31, 2024 and December 31, 2023 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.
11
Table of Contents
4.
 $ Interest cost  Expected return on plan assets()()Amortization of prior service cost  Amortization of actuarial loss  Net periodic benefit income$()$()
5.
 million and $ million, net of cash acquired, during the three months ended March 31, 2024 and March 31, 2023, respectively. During the three months ended March 31, 2024, we recognized approximately $ million and $ million of revenue, net of store closures, related to our current year Automotive and Industrial acquisitions, respectively. We recorded approximately $ million of goodwill and other intangible assets associated with these acquisitions, primarily related to our European Automotive acquisitions. Other intangible assets acquired of $ million consisted of customer relationships with a weighted average amortization lives of years. For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. The results of operations for acquired businesses are included in our Condensed Consolidated Statements of Income beginning on their respective acquisition dates.
6.
)$ $()$()Other comprehensive income (loss) before reclassifications  ()()Amounts reclassified from accumulated other comprehensive loss    Other comprehensive income (loss), net of income taxes  ()()Ending balance, March 31, 2024$()$ $()$()
12
Table of Contents
)$()$()$()Other comprehensive income before reclassifications    Amounts reclassified from accumulated other comprehensive loss    Other comprehensive income, net of income taxes    Ending balance, March 31, 2023$()$()$()$()
The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote. Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.
7.
pending product liability lawsuits resulting from our national distribution of automotive parts and supplies. Many of these involve claims of personal injury allegedly resulting from the use of automotive parts we distributed. The amount accrued for pending and future claims was $ million as of March 31, 2024, which represents our best estimate of the liability within our calculated range of $ million to $ million, discounted using a discount rate of %. The amount accrued for pending and future claims was $ million as of December 31, 2023, which represents our best estimate of the liability within our calculated range of $ million to $ million, discounted using a discount rate of %. Our undiscounted product liability was $ million and $ million as of March 31, 2024 and December 31, 2023, respectively. There have been no significant developments to the information presented in our 2023 Annual Report on Form 10-K with respect to litigation or commitments and contingencies.
Environmental Liabilities
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed an applied threshold not to exceed $1 million. Applying this threshold, there are no environmental matters to disclose for this period.
13
Table of Contents
8.
 million in restructuring and other costs. We expect to incur total costs up to $ million related to the global restructuring efforts in 2024 and to substantially complete the initiative by the end of 2025. We may incur additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of these initiatives.
The global restructuring was approved and funded by our corporate office and therefore these costs are not allocated to our segments.
 $ $ Restructuring and other costs   Cash payments()()()Non-cash charges ()()Translation() ()Liability as of March 31, 2024$ $ $ 
14
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying notes contained herein and with the audited Consolidated Financial Statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results for the year ended December 31, 2024.
Forward-Looking Statements
Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission (“SEC”), release to the public, or make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in the future tense and all statements accompanied by words such as “expect,” “likely,” “outlook,” “forecast,” “preliminary,” “would,” “could,” “should,” “position,” “will,” “project,” “intend,” “plan,” “on track,” “anticipate,” “to come,” “may,” “possible,” “assume,” or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include our view of business and economic trends for the remainder of the year and our expectations regarding our ability to capitalize on these business and economic trends and to execute our strategic priorities. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.
We caution you that all forward-looking statements involve risks and uncertainties, and while we believe that our 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, financial institution disruptions and geopolitical conflicts such as the conflict between Russia and Ukraine, the conflict in the Gaza strip and other unrest in the Middle East; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; public health emergencies, including the effects on the financial health of our business partners and customers, on supply chains and our suppliers, on vehicle miles driven as well as other metrics that affect our business, and on access to capital and liquidity provided by the financial and capital markets; our ability to maintain compliance with our debt covenants; our ability to successfully integrate acquired businesses into our operations and to realize the anticipated synergies and benefits; our ability to successfully implement our business initiatives in our two business segments; slowing demand for our products; the ability to maintain favorable supplier arrangements and relationships; changes in national and international legislation or government regulations or policies, including changes to import tariffs, environmental and social policy, infrastructure programs and privacy legislation, and their impact to us, our suppliers and customers; changes in tax policies; volatile exchange rates; our ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting, including as a result of the work from home environment; the uncertainties and costs of litigation; disruptions caused by a failure or breach of our information systems, as well as other risks and uncertainties discussed in our 2023 Annual Report on Form 10-K and from time to time in our subsequent filings with the SEC.
Forward-looking statements speak only as of the date they are made, and we undertake 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 SEC.
Overview
Genuine Parts Company is a service organization engaged in the global distribution of automotive and industrial replacement parts. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. We conduct business in North America, Europe and Australasia from a network of more than 10,700 locations.
Our Automotive Parts Group ("Automotive") operates in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand, and accounted for approximately 62% of total revenues for the three months ended March 31, 2024. Our Industrial Parts Group ("Industrial") operates in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore, and accounted for approximately 38% of our total revenues for the three months ended March 31, 2024.
15
Table of Contents
Key Performance Indicators
We consider a variety of performance and financial measures in assessing our business, and the key performance indicators used to measure our results are Comparable Sales, Gross Profit and Gross Margin, Selling, Administrative and Other Expenses ("SG&A"), Segment Profit and Segment Margin, and Net Income and EBITDA along with their adjusted measures. For more information regarding our key performance indicators please reference the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Results of Operations
Our first quarter net sales grew slightly year-over-year, as our Automotive segment sales increased, which was mostly offset by lower sales in our Industrial segment. Automotive segment sales increased due to the performance of our European and Australasia businesses, the benefit of prior year acquisitions, mostly in Europe, offset by year-over-year moderation in the benefit from inflation in the pricing environment. Our industrial segment sales declined, as customers reduced their maintenance spending in light of weaker economic conditions. Our continued execution of strategic pricing and sourcing initiatives drove a 100 basis point gross margin increase year over year.
First quarter net income was down 18.1% year over year, primarily due to restructuring and other costs of $83 million from the global restructuring we approved and initiated in February 2024. Adjusted net income, which excludes restructuring costs, was up 2.3%, reflecting improved profitability in both of our segments due to the operating discipline in our operations.
Our first quarter results of operations are summarized below for the three months ended March 31, 2024 and 2023.
 Three Months Ended March 31,
20242023
(in thousands)$% of Sales$% of Sales$ Change% Change
Net sales$5,783,631 100.0 %$5,765,118 100.0 %$18,513 0.3 %
Cost of goods sold3,708,976 64.1 %3,751,717 65.1 %(42,741)(1.1)%
Gross profit2,074,655 35.9 %2,013,401 34.9 %61,254 3.0 %
Operating expense:
Selling, administrative and other expenses1,574,927 27.2 %1,511,244 26.2 %63,683 4.2 %
Depreciation and amortization90,610 1.6 %87,215 1.5 %3,395 3.9 %
Provision for doubtful accounts6,211 0.1 %5,639 0.1 %572 10.1 %
Restructuring and other costs 83,042 1.4 %— — %83,042 — %
Total operating expense1,754,790 30.3 %1,604,098 27.8 %150,692 9.4 %
Non-operating (income) expense:
Interest expense, net17,690 0.3 %16,864 0.3 %826 4.9 %
Other(23,006)(0.4)%(11,967)(0.2)%(11,039)92.2 %
Total non-operating (income) expense(5,316)(0.1)%4,897 0.1 %(10,213)(208.6)%
Income before income taxes325,181 5.6 %404,406 7.0 %(79,225)(19.6)%
Income taxes76,287 1.3 %100,449 1.7 %(24,162)(24.1)%
Net income$248,894 4.3 %$303,957 5.3 %$(55,063)(18.1)%

16
Table of Contents
Three Months Ended March 31,
(in thousands, except per share data)20242023$ Change% Change
Diluted EPS$1.78$2.14$(0.36)(16.8)%
Total adjusted EBITDA$516,523$508,485$8,038 1.6 %
Automotive segment profit$272,936$264,420$8,516 3.2 %
Industrial segment profit$270,839$261,987$8,852 3.4 %
Total segment profit$543,775$526,407$17,368 3.3 %
Automotive segment margin7.6 %7.5 %
Industrial segment margin12.3 %11.6 %
Total segment margin9.4 %9.1 %
Net Sales
Our first quarter 2024 net sales increased slightly compared to 2023. We experienced a 1.9% benefit from acquisitions, offset by a 0.9% decrease in comparable sales and a net unfavorable impact of foreign currency and other of 0.7%.
The decrease in comparable sales is primarily driven by a sales decline in our Industrial business due to the impact of weaker macro-economic conditions on our customers in 2024 and a difficult year-over-year comparison.
Automotive
First quarter net sales for Automotive were $3.6 billion, an increase of 1.9% from 2023. The increase consisted of a 2.8% benefit from acquisitions, a 0.2% increase in comparable sales and a 1.1% unfavorable impact of foreign currency and other. The modest increase in comparable sales includes the positive contribution of continued demand for automotive parts in Europe and Australasia.
Industrial
First quarter net sales for Industrial were $2.2 billion, a decrease of 2.2% compared to 2023. The decrease reflects a 2.6% decrease in comparable sales and a 0.1% unfavorable impact of foreign currency, slightly offset by a 0.5% benefit from acquisitions.
The decrease in comparable sales reflects moderation in demand in certain customer sectors and longer than expected softness in industrial production, partially offset by the positive impact of pricing initiatives. We experienced an adverse macro-economic environment when compared to 2023, which caused slowing global industrial demand.
Gross Profit and Gross Margin
Gross profit increased $61 million, or 3.0%, during the first quarter of 2024 compared to last year, and gross margin increased 100 basis points to 35.9% compared to that same period of the previous year. These increases reflect the positive contributions of our strategic pricing and sourcing initiatives. These initiatives include enhancing technology to generate better pricing data and analytics, which allows us to respond in real time to shifting pricing dynamics across each market we serve as well as strategies related to sourcing product more efficiently.
Operating Expenses
SG&A expenses represent 27.2% of sales in the first quarter of 2024 compared to 26.2% last year. We experienced increased personnel and rent costs primarily due to annual merit wage increases and inflation, as well as made investments in information technology to support our ongoing strategic initiatives.
In addition, we incurred $83 million of restructuring and other costs from the global restructuring we approved and initiated in February 2024. Refer to the Restructuring Footnote in the Notes to Condensed Consolidated Financial Statements for more information.
Segment Profit
Automotive
Automotive segment profit increased 3.2% in the first quarter compared to 2023, and Automotive segment profit margin increased to 7.6% compared to 7.5% last year. These increases are driven by continued execution on our global growth and productivity initiatives. These benefits were partially offset by higher personnel and rent costs in 2024 due to inflationary pressures.
17
Table of Contents
Industrial
Industrial segment profit increased 3.4% in the first quarter compared to 2023, and Industrial segment profit margin increased to 12.3% compared to 11.6% last year. These improvements occurred, despite a year-over-year sales decline of 2.2%, primarily due to expense management and the ongoing execution of our supply chain initiatives and other strategic category management and pricing initiatives.
Income Taxes
Our effective income tax rates were 23.5% and 24.8% for first quarter 2024 and 2023, respectively. The rate decrease from 2023 is primarily due to a shift in the mix of earnings across our international businesses and expanded investment benefits.
Net Income
First quarter 2024 net income was $249 million, a decrease of 18.1% compared to net income of $304 million for the same three month period of the prior year. On a per share diluted basis, net income was $1.78, a decrease of 16.8% compared to $2.14 in 2023. These decreases are primarily due to restructuring and other costs of $83 million from the global restructuring we approved and initiated in February 2024.
First quarter 2024 adjusted net income of $311 million increased 2.3% compared to 2023. On a per share basis, first quarter 2024 net income on an adjusted basis of $2.22, increased 3.7% compared to $2.14 in 2023. First quarter 2024 adjusted EBITDA was $517 million, an increase of 1.6% from $508 million from 2023.
The increases in these adjusted measures reflects the positive effects of executing our strategic pricing and other initiatives, as discussed more fully in the commentary above.
Non-GAAP Financial Measures
Adjusted net income, adjusted diluted EPS, adjusted EBITDA, total segment profit, total segment margin, and adjusted EBITDA for each segment are non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
The following tables set forth reconciliations of net income and diluted EPS to adjusted net income and adjusted diluted EPS, respectively, to account for the impact of adjustments. We also include reconciliations from net income to adjusted EBITDA, net income to total segment profit and total segment margin and segment profit to segment EBITDA and adjusted EBITDA for each segment. We believe that the presentation of adjusted net income, adjusted diluted EPS, total segment profit and adjusted EBITDA, which are not calculated in accordance with GAAP, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of our core operations. We consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating performance by removing items management believes are not representative of our operations and may distort our longer-term operating trends. In the case of adjusted EBITDA by segment, we believe this additional metric is useful to investors as it provides further insight into the performance of our segments. We believe the non-GAAP metrics included herein also enhance the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not associated with our core operations. We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.
Three Months Ended March 31,
(in thousands)20242023
GAAP net income$248,894 $303,957 
Adjustments:
Restructuring and other costs (1)83,042 — 
Total adjustments83,042 — 
Tax impact of adjustments (2)(21,038)— 
Adjusted net income$310,898 $303,957 
18
Table of Contents
The table below represents amounts per common share assuming dilution:
Three Months Ended March 31,
(in thousands, except per share data)20242023
GAAP diluted earnings per share$1.78 $2.14 
Adjustments:
Restructuring and other costs (1)0.59 — 
Total adjustments0.59 — 
Tax impact of adjustments (2)(0.15)— 
Adjusted diluted earnings per share$2.22 $2.14 
Weighted average common shares outstanding – assuming dilution140,096 141,725 
(1)    Amount reflects the global restructuring initiative which includes a voluntary retirement offer in the U.S., and rationalization and optimization of certain distribution centers, stores and other facilities.
(2)    We determine the tax effect of non-GAAP adjustments by considering the tax laws and statutory income tax rates applicable in the tax jurisdictions of the underlying non-GAAP adjustments, including any related valuation allowances. For the three months ended March 31, 2024, we applied the statutory income tax rates to the taxable portion of all of our adjustments, which resulted in a tax impact of $21 million.
The table below represents a reconciliation from GAAP net income to adjusted EBITDA:
Three Months Ended March 31,
(in thousands)20242023
GAAP net income$248,894 $303,957 
Depreciation and amortization90,610 87,215 
Interest expense, net17,690 16,864 
Income taxes76,287 100,449 
EBITDA433,481 508,485 
Total adjustments (1)83,042 — 
Adjusted EBITDA$516,523 $508,485 
(1)    Amounts are the same as adjustments included within the adjusted net income table above.
The table below clarifies where the adjusted items are presented in the Condensed Consolidated Statements of Income:
Three Months Ended March 31,
(in thousands)20242023
Line item:
Restructuring and other costs $83,042 $— 
Total adjustments$83,042 $— 
The table below represents a reconciliation from GAAP net income to total segment profit:
19
Table of Contents
Three Months Ended March 31,
(in thousands)20242023
GAAP net income$248,894$303,957
Income taxes 76,287100,449
Income before income taxes325,181404,406
Interest expense, net17,69016,864
Corporate expense 83,76239,122
Intangible asset amortization 34,10066,015
Other unallocated (loss) income, net (1)83,042—
Total segment profit$543,775$526,407
GAAP net sales$5,783,631$5,765,118
GAAP net income margin (2)4.3 %5.3 %
Total segment profit margin (3)9.4 %9.1 %
(1)    Amounts are the same as adjustments included within the adjusted net income table above.
(2)     Represents GAAP net income as a percentage of GAAP net sales.
(3)    Represents total segment profit as a percentage of GAAP net sales.

The table below represents a reconciliation from segment profit to segment EBITDA and adjusted EBITDA:
Three Months Ended March 31,
(in thousands)20242023
Automotive:
Segment Profit$272,936 $264,420 
Depreciation46,740 38,109 
Other costs (2)— — 
Automotive segment EBITDA319,676 302,529 
Industrial:
Segment Profit270,839 261,987 
Depreciation8,148 7,050 
Other costs (2)— — 
Industrial segment EBITDA278,987 269,037 
Corporate:
Corporate expense(83,762)(66,015)
Depreciation1,622 2,934 
Other unallocated costs (1)83,042 — 
Corporate EBITDA902 (63,081)
Total adjustments (1)(83,042)— 
Corporate adjusted EBITDA(82,140)(63,081)
Adjusted EBITDA$516,523 $508,485 
(1)    Amounts are the same as adjustments included within the adjusted net income table above.
20
Table of Contents
Financial Condition
Our cash balance was $1.0 billion as of March 31, 2024, a decrease of $52 million from December 31, 2023. For the three months ended March 31, 2024, we had net cash provided by operating activities of $318 million, net cash used in investing activities of $178 million and net cash used in financing activities of $175 million.
The cash provided by operating activities decreased as compared to prior year primarily driven by changes in working capital. We had $178 million in net cash used for investing activities primarily for capital expenditures and acquisitions and other investing activities of $250 million. The financing activities consisted primarily of $133 million for dividends paid to our shareholders and $38 million of stock repurchases.
Accounts receivable increased $202 million, or 9.1%, from December 31, 2023. Inventory increased $59 million, or 1.3%. Accounts receivable and inventory were both impacted by first quarter increase in revenues and related product demand. Accounts payable increased $226 million, or 4.1% from December 31, 2023, in line with the increase in inventory. Total debt of $3.9 billion at March 31, 2024 decreased $32 million, or 0.8%, from December 31, 2023.
Liquidity and Capital Resources
We ended the quarter with $2.5 billion of total liquidity (comprising $1.5 billion availability on the revolving credit facility and $1.0 billion of cash and cash equivalents). From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk. We currently believe that the existing lines of credit and cash generated from operations will be sufficient to fund anticipated operations for the foreseeable future.
We have a strong cash position and solid financial strength to pursue strategic growth opportunities through disciplined, strategic capital deployment. Our key priorities include the reinvestment in our businesses through capital expenditures, mergers and acquisitions, the dividend and share repurchases. We have plans for additional investments in our businesses to drive growth, improve efficiencies and productivity, and drive shareholder value.
We expect to be able to continue to borrow funds at reasonable rates over the long term. At March 31, 2024, our total average cost of debt was 3.17%, and we remain in compliance with all covenants connected with our borrowings.
Any failure to comply with our debt covenants or restrictions could result in a default under our financing arrangements or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could create cross defaults under other debt arrangements and have a material adverse effect on our business, financial condition, results of operations and cash flows.
On February 15, 2024, we announced a 5.3% increase in the regular quarterly cash dividend for 2024. Our Board of Directors increased the cash dividend payable to an annual rate of $4.00 per share compared with the prior year dividend of $3.80 per share. We have paid a cash dividend every year since going public in 1948, and 2024 will mark the 68th consecutive year of increased dividends paid to shareholders.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of our 2023 Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, 2023.
Item 4. Controls and Procedures
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by us in the reports that we file or furnish under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
21
Table of Contents
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the SEC that occurred during our last quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
22
Table of Contents
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to our legal proceedings may be found in the Commitments and Contingencies Footnote in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I, which is incorporated herein by reference.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2023 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about the purchases of shares of our common stock during the three months ended March 31, 2024:
ISSUER PURCHASES OF EQUITY SECURITIES
PeriodTotal Number of Shares Purchased (1)Average Price Paid Per ShareTotal 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, 2024 through January 31, 2024141,717$139.65108,3248,429,721
February 1, 2024 through February 29, 2024122,284$144.6299,8778,329,844
March 1, 2024 through March 31, 202470,340$152.1452,3398,277,505
Totals334,341$144.10260,5408,277,505
(1)Includes shares surrendered by employees to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of share appreciation rights and/or tax withholding obligations.
(2)On August 21, 2017, the Board of Directors announced that it had authorized the repurchase of 15 million shares. The authorization for the repurchase continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 8.3 million shares authorized remain available to be repurchased. There were no other repurchase plans announced as of March 31, 2024.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended March 31, 2024, none of the Company’s directors or executive officers , modified or any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
23
Table of Contents
Item 6. Exhibits
(a) The following exhibits are filed or furnished as part of this report:
Exhibit 3.1
Exhibit 3.2
Exhibit 10.1
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32
Exhibit 101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema Document
Exhibit 101.CALXBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEFXBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LABXBRL Taxonomy Extension Labels Linkbase Document
Exhibit 101.PREXBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104
The cover page from this Quarterly Report on Form 10-Q for the period ended March 31, 2024 formatted in Inline XBRL

24
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Genuine Parts Company
(Registrant)
Date: April 18, 2024/s/ Bert Nappier
Bert Nappier
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and
Accounting Officer)

25

Similar companies

See also Charging Robotics Inc. - Annual report 2022 (10-K 2022-12-31) Annual report 2023 (10-Q 2023-09-30)