Genuine Parts Company (NYSE: GPC), a leading global distributor of automotive and industrial replacement parts, announced today its results for the second quarter ended June 30, 2023

"We are pleased to report another solid quarter, which includes record sales and double-digit adjusted earnings growth. Our second quarter performance, once again, highlights the value and benefit of our global Automotive and Industrial business mix and geographic diversity, which we believe are competitive advantages that differentiate GPC in the marketplace," said Paul Donahue, Chairman and Chief Executive Officer. "Our global team remains focused on the strategic initiatives we highlighted at our Investor Day in March, and we believe our One GPC Team approach is contributing to our strong financial performance. We want to thank all our GPC teammates for their hard work and continued dedication to serving our customers."

Second Quarter 2023 Results

Sales were $5.9 billion, a 5.6% increase compared to $5.6 billion in the same period of the prior year. The growth in sales is attributable to a 4.9% increase in comparable sales and a 1.8% benefit from acquisitions, partially offset by a 1.1% net unfavorable impact of foreign currency and other.

Net income was $344 million, or a diluted EPS of $2.44. This compares to net income of $373 million, or $2.62 per diluted share in the prior year period.

Net income of $344 million compares to adjusted net income of $313 million for the same three-month period of the prior year, an increase of 10.0%. On a per share diluted basis, net income was $2.44, an increase of 10.9% compared to adjusted diluted earnings per share of $2.20 last year. Refer to the reconciliation of GAAP net income to adjusted net income and GAAP diluted earnings per share and adjusted diluted earnings per share for more information.

Second Quarter 2023 Segment Highlights

Automotive Parts Group ("Automotive")

Global Automotive sales were $3.7 billion, up 5.4% from the same period in 2022, consisting of a 4.3% increase in comparable sales and a 2.6% benefit from acquisitions, net of a 1.5% unfavorable impact of foreign currency and other. Segment profit of $329 million increased 2.1%, with segment profit margin of 9.0% down 30 basis points from last year.

Industrial Parts Group ("Industrial")

Industrial sales were $2.3 billion, up 5.9% from the same period in 2022, and reflecting a 6.0% increase in comparable sales and a 0.6% benefit from acquisitions, slightly offset by a 0.7% unfavorable impact of foreign currency. Segment profit of $283 million increased 25.7%, with segment profit margin of 12.5% up 190 basis points from the same period of the prior year.

"Global Automotive sales continue to benefit from our global diversification, as our businesses outside the U.S. posted mid-single-digit to double-digit growth in local currency in the second quarter," said Will Stengel, President and Chief Operating Officer. "Our Industrial sales growth was broad based, with all product categories and major industries served growing from the prior year, allowing the Industrial team to post its twelfth consecutive quarter of margin expansion. The global GPC team delivered a solid second quarter and our teams remain focused on the consistent execution of our strategic initiatives. We believe our investments in our people, customer solutions, technology, supply chain and emerging technology will continue to enhance our capabilities and leadership positions."

Six Months 2023 Results

Sales for the six months ended June 30, 2023 were $11.7 billion, up 7.2% from the same period in 2022. Net income for the six months was $648 million, or $4.58 per diluted share, an increase of 5.5% compared to $4.34 per diluted share in 2022. Net income of $648 million, or $4.58 per diluted share, compares to adjusted net income of $579 million, or adjusted diluted earnings per share of $4.06, in 2022, an increase of 12.8%.

Balance Sheet, Cash Flow and Capital Allocation

The company generated cash flow from operations of $457 million for the first six months of 2023. We used $226 million in cash for investing activities, including $205 million for capital expenditures and $106 million for acquisitions, net of $80 million in proceeds from the sale of our remaining investment in S.P. Richards and other investments. We also used $358 million in cash for financing activities, including $260 million  for quarterly dividends paid to shareholders and $135 millionfor stock repurchases. Free cash flow was $252 million for the first six months of 2023. Refer to the reconciliation of GAAP net cash provided by operating activities to free cash flow for more information.

The company ended the quarter with $2.0 billion in total liquidity, consisting of $1.4 billion availability on the revolving credit facility and $530 million in cash and cash equivalents.

2023 Outlook

The company is updating full-year 2023 guidance previously provided in its earnings release on April 20, 2023. 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 updating its guidance, which is outlined in the table below.

"We are very pleased with the solid start to 2023. And, with the strong earnings growth in the second quarter, we are once again raising our outlook for 2023 earnings per share. As we look forward, we remain confident in our strategic plans and will continue to invest to strengthen our business and achieve both our near-term and long-term financial targets while returning capital to shareholders through the dividend and share repurchases," Mr. Donahue concluded.