Genuine Parts Company
CEO : Mr. Paul D. Donahue
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 15.0% YoY | 2.8% | -0.6% | 2023-02-23 |
Will Stengel says,
Global Automotive Segment
- Total sales for the global automotive segment were $3.4 billion, an increase of approximately $243 million or 7.6% versus the same period in 2021
- For fiscal year 2022, Global Automotive segment sales was $13.7 billion, an increase of 8.9% from 2021
- Mid to high single digit levels of inflation were experienced during the fourth quarter
- U.S. Automotive business grew sales by approximately 11% with comparable sales growth of approximately 8%
- Canadian business grew sales approximately 15% in local currency, with comparable sales growth of approximately 13%
- European team delivered sales growth of 19% with comparable sales growth of approximately 8%
- Asian Pacific automotive business, sales in the fourth quarter increased approximately 10% in local currency from the same period in the prior year with comparable sales growth of approximately 7%
Global Industrial Segment
- Total sales at Motion were $2.1 billion, an increase of approximately $478 million or 29.6%
- Comparable sales growth, which excludes the benefit of KDG, increased approximately 17% in the fourth quarter versus last year
- Sales at Motion were $8.4 billion, an increase of $2.1 billion or 33.2%
- Global Industrial segment profit was approximately $887 million, and segment operating margin was a record 10.5%, an increase of 110 basis points from 2021 and up 240 basis points from 2019
- We completed several bolt-on acquisitions primarily consisting of small automotive store groups during the fourth quarter that increased local market density in existing geographies
Strategic Initiatives
- Investment and focus in strategic initiative pillars translate into a better customer experience, profitable growth, operational excellence and a differentiated team culture
- Category management strategic initiatives had an ongoing positive impact
- Improved insights are driving data-driven decisions around strategic pricing and sourcing, which have contributed to margin expansion performance
- Strategic initiatives around pricing, category management and supply chain are driving increased productivity and profitability, which is reflected in the strong margin expansion delivered in 2022
- Our acquisition pipeline is active, and we will remain disciplined to pursue transactions that advance our strategy, deliver profitable growth and create long-term value
Financial Performance
- Global Automotive segment operating margin was 8.6%, an increase of 30 basis points versus the same period in 2021
- Global Automotive segment profit was $1.2 billion and segment operating margin was 8.7%, an increase of 10 basis points from 2021 and up 110 basis points from 2019
- Industrial segment profit in the fourth quarter was $230 million or 11% of sales, representing a 150 basis point increase from the same period last year
Bert Nappier says,
Total Sales Growth
- Total GPC sales were up 15% or $720 million to $5.5 billion in Q4 2022, reflecting an 11.1% improvement in comparable sales, including mid-single-digit levels of inflation and an 8% contribution from acquisitions.
- Sales for the full year were $22.1 billion, up 17.1% from 2021, driven by our core business combined with acquisitions
- We expect total sales growth for 2023 to be in the range of 4% to 6%, with Automotive and Industrial segments expecting a 4% to 6% increase in comparable sales.
Gross Margin
- Gross margin expanded approximately 50 basis points in Q4 2022 to 35.7%, driven by ongoing investments in pricing and sourcing initiatives.
- The gains were partially offset by moderating year-over-year supplier incentives, a shift in the mix of sales based on the strength of the industrial business, foreign currency, and inflation.
- Gross margin for the full year was 35.1%, slightly above expectations and essentially in line with the prior year.
Adjusted Net Income and EPS
- Q4 2022 adjusted net income was $292 million or $2.05 per diluted share, up 15% from 2021.
- 2022 adjusted net income was $1.2 billion or $8.34 per diluted share, up 21% from 2021.
Capital Allocation
- The debt to adjusted EBITDA is 1.7 times, which highlights financial strength and flexibility.
- $340 million was invested in capital expenditures in 2022, and $3 billion was invested in KDG.
- $719 million was returned to shareholders in the form of dividends and share repurchases.
Outlook for 2023
- We expect diluted earnings per share to be in the range of $8.80 to $8.95, representing an increase of 6% to 7% from 2022 adjusted diluted earnings per share.
- Total sales growth for 2023 is expected to be in the range of 4% to 6%.
- Capital expenditures are expected to be in the range of $375 million to $400 million in 2023.
- The Board approved a $3.80 per share annual dividend for 2023, representing a 6% increase from 2022, and our 67th consecutive annual increase in the dividend.
Q & A sessions,
Overall Guidance
- Expecting 4% to 6% top line growth, driving EPS up 6% to 7%, in the range of $8.80 to $8.95
- Margin expansion expected from both segments
- Full-year guidance looks good with solid industry fundamentals for both businesses
- Expecting growth to moderate and normalize
Cadence of the Year
- Automotive growth expected to be consistent across quarters
- Industrial stronger in the first half with high single-digit outlook, more low single digit in the second half
Margin Expansion
- Expecting gross margins to be up in the range of 20 to 40 basis points for 2023
- Teams executing core strategies on pricing and sourcing capabilities
- SG&A deleverage of 30 to 40 basis points in total offset by other efficiencies
OpEx and CapEx
- Expecting a little bit of deleverage next year due to investments in tech and talent focused on the long term
- Freight expected to see inflationary pressure, but should abate in the second half of the year
- Mid-single-digit wage increase this year, absorbing costs on the health care side
- Investments in IT to improve capabilities and modernize platforms, driving leverage outside of those investments
- Expecting a slight increase in capital next year, focused on automation and modernization of DCs in the supply chain and IT platforms
No bad stock 