Genuine Parts Company (NYSE: GPC), a leading global service provider of automotive and industrial replacement parts and value-added solutions, announced today its results for the third quarter ended September 30, 2024.

"I would like to thank our global GPC teammates for their hard work in serving our customers during the third quarter," said Will Stengel, President and Chief Executive Officer. "Our results were below our expectations, primarily driven by continued weakness in market conditions in Europe and our Industrial business. While the external environment remains challenging for the balance of 2024, we expect the combination of near-term actions and long-term investments to better position us when market conditions improve."

Third Quarter 2024 Results

Sales were $6.0 billion, a 2.5% increase compared to $5.8 billion in the same period of the prior year. The growth in sales is attributable to a 3.2% benefit from acquisitions and a net 0.1% favorable impact of foreign currency and other, partially offset by a 0.8% decrease in comparable sales. The third quarter included one additional selling day in the U.S. versus the same period of the prior year, which positively impacted sales growth by approximately 1.1%.

Net income was $227 million, or $1.62 per diluted earnings per share. This compares to net income of $351 million, or $2.49 per diluted share in the prior year period.

Adjusted net income was $263 million which excludes a net expense of $36 million after tax adjustments, or $0.26 per diluted share, in costs related to our global restructuring initiative and the acquisition and integration of independent stores. This compares to net income of $351 million for the same period of the prior year, a decrease of 25.1%. On a per share diluted basis, adjusted net income was $1.88, a decrease compared to $2.49 in the same period of the prior year. Refer to the reconciliation of GAAP net income to adjusted net income and GAAP diluted earnings per share to adjusted diluted earnings per share for more information.

Third Quarter 2024 Segment Highlights

Automotive Parts Group ("Automotive")

Global Automotive sales were $3.8 billion, up 4.8% from the same period in 2023, consisting of a 4.4% benefit from acquisitions which was primarily driven by the acquisition of automotive stores in the U.S., a 0.2% increase in comparable sales and a net 0.2% favorable impact of foreign currency and other. The additional selling day in the U.S. positively impacted Global Automotive sales growth by approximately 0.9%. Segment profit of $262 million decreased 18.6%, with segment profit margin of 6.9%, down 200 basis points from last year.

Industrial Parts Group ("Industrial")

Global Industrial sales were $2.2 billion, down 1.2% from the same period in 2023, with a 1.3% benefit from acquisitions, offset by a 2.4% decrease in comparable sales and 0.1% unfavorable impact of foreign currency. The additional selling day in the U.S. positively impacted Global Industrial sales growth by approximately 1.4%. Segment profit of $259 million decreased 8.5%, with a segment profit margin of 11.9%, down 100 basis points from the same period of the prior year.

Nine Months 2024 Results

Sales for the nine months ended September 30 were $17.7 billion, up 1.2% from the same period in 2023. Net income for the nine months was $771 million, or $5.51 per diluted share, compared to $7.08 per diluted share in the prior year period. Adjusted net income decreased 8.4% to $915 million compared to net income of $1 billion in the prior year period. Adjusted diluted earnings per share was $6.55 compared to $7.08 in the prior year period, a decrease of 7.5%.

Balance Sheet, Cash Flow and Capital Allocation

The company generated cash flow from operations of $1.1 billion for the first nine months of 2024. Net cash used in investing activities was $1.2 billion, including $386 million for capital expenditures and $954 million for M&A. The company also used $125 million in cash for financing activities, including $411 million for quarterly dividends paid to shareholders and $112 million for stock repurchases. Free cash flow was $711 million for the first nine months of 2024. 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 $2.6 billion of total liquidity. Total liquidity consists of $1.1 billion in cash and cash equivalents and $1.5 billion available on the revolving credit facility.

2024 Outlook

The company is revising full-year 2024 guidance previously provided in its earnings release on July 23, 2024. 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.

Non-GAAP Information

This release contains certain financial information not derived in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP"). These items include adjusted net income, adjusted diluted earnings per share and free cash flow. We believe that the presentation of adjusted net income, adjusted diluted earnings per share and free cash flow, 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 considered 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. For example, for the three and nine months ended September 30, 2024, adjusted net income and adjusted diluted earnings per share exclude costs relating to our global restructuring initiative and acquisition of Motor Parts and Equipment Corporation, which are one-time events that do not recur in the ordinary course of our business. We believe these measures are useful and enhance the comparability of our results from period to period and with our competitors, as well as 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 as superior to, in isolation from, or as a substitute for, GAAP financial information. We have included a reconciliation of this additional information to the most comparable GAAP measure following the financial statements below. We do not provide forward-looking guidance for certain financial measures on a GAAP basis because we are unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include acquisition-related costs, litigation charges or settlements, impairment charges, and certain other unusual adjustments.

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. Our calculation of comparable sales is computed using total business days for the period. 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

Genuine Parts Company will hold a conference call today at 8:30 a.m. Eastern Time to discuss the results of the quarter. A supplemental earnings deck will also be available for reference. Interested parties may listen to the call and view the supplemental earnings deck on the company's investor relations website. The call is also available by dialing 800-836-8184. A replay of the call will be available on the company's website or toll-free at 888-660-6345, conference ID 72988#, two hours after the completion of the call.