Genuine Parts Co. (GPC) has announced today its results for the first quarter ended March 31, 2021.
“We are pleased with the strong start to 2021 and the ongoing recovery in our Automotive and Industrial businesses,” said Paul Donahue, chairman and CEO of Genuine Parts Co. “The GPC team remained focused on execution and demonstrated agility in delivering strong financial results. We also operated through the quarter with continued focus on the physical and mental well-being of our employees, as our 50,000 teammates are the core of our success.”
First Quarter 2021 Results
Sales from continuing operations were $4.5 billion, a 9.1% increase compared to $4.1 billion in the same period of the prior year. The increase is attributable to a 4.6% increase in comparable sales, a 3.7% net benefit of foreign currency and other, and a 0.8% benefit from acquisitions.
Net income from continuing operations on both a GAAP and adjusted basis was $217.7 million, or a diluted earnings per share of $1.50. This compares to net income from continuing operations of $122.3 million, or $0.84 per diluted share in the prior year period, an increase of 79%, and compares to adjusted net income from continuing operations of $116.8 million last year1, or adjusted diluted earnings per share of $0.80, an increase of 88%.
Donahue stated, “Our positive sales growth was driven by a number of factors, including the overall strengthening economy, stimulus and execution of key initiatives. The Automotive business posted our strongest growth, with positive sales comps in each region of our operations, and Industrial continued its recovery with the third consecutive quarter of improving sales trends. In addition, we executed very well, producing our 14th consecutive quarter of gross margin expansion and managing our expenses through ongoing cost actions and the carryover of expense reductions implemented last year. Our progress in these areas drove a substantial increase in operating profit and net earnings, and we expect to build on this positive momentum as we move forward through the year.”
Automotive Parts Group
Automotive sales were $3 billion, up 14.3% from the first quarter of 2020, representing 66% of total Company revenues. The increase consisted of an 8.3% increase in comparable sales, a 5.1% net benefit of foreign currency and other and a 0.9% contribution from acquisitions. Segment profit of $235.7 million increased 65.3%, with a segment profit margin of 8.0%, up 250 basis points from 2020.
Industrial Parts Group
Industrial sales were $1.5 billion, up 0.1% from the first quarter of 2020, representing 34% of total company revenues. The increase includes a 1.3% benefit of foreign currency and a 0.6% contribution from acquisitions, mostly offset by a 1.8% decrease in comparable sales. Segment profit of $125.3 million increased 10.0%, with profit margin of 8.3%, up 80 basis points from 2020.
Balance Sheet, Cash Flow and Capital Allocation
The company generated operating cash flow from continuing operations of $300.9 million during the first three months of 2021, an increase from $27.9 million in the prior year, driven primarily by higher net income and the effective management of our working capital. The Company used $40.7 million in cash for investing activities, including $48.4 million for capital expenditures in the quarter. The Company also used $116.0 million in cash for financing activities which includes quarterly dividends of $114.0 million paid to shareholders. Free cash flow was $252.6 million for the first three months of 20211.
The company ended the quarter with $2.6 billion in total liquidity, consisting of $1.5 billion availability on the revolving credit facility and $1.1 billion in cash and cash equivalents. The Company is in compliance with all covenants connected to its notes and other borrowings.
“We have a strong cash position and ample financial strength to pursue strategic growth opportunities through our disciplined capital allocation strategy. Looking ahead, GPC is well-positioned to benefit from a strong economic recovery, favorable sales trends and clear strategic plan to capture profitable growth, generate strong cash flow and create shareholder value,” Donahue concluded.
In consideration of several factors, the company is updating its full-year 2021 guidance previously provided in its earnings release on February 17, 2021. The company considered its recent business trends and financial results, current growth plans, strategic initiatives, global economic outlook and the continued uncertainty of COVID-19 and its potential impact on our results in its updated guidance, as outlined in the table below. The company will continue to update full-year guidance during 2021, as appropriate.
|For the Year Ended December 31, 2021|
|Previous Outlook||Updated Outlook|
|Total sales growth||4% to 6%||5% to 7%|
|Automotive sales growth||4% to 6%||5% to 7%|
|Industrial sales growth||3% to 5%||4% to 6%|
|Diluted earnings per share||$5.55 to $5.75||$5.85 to $6.05|
|Effective tax rate||24.5% to 25.5%||24.5% to 25.5%|
|Net cash provided by operating activities||$1.0 billion to $1.2 billion||$1.0 billion to $1.2 billion|
|Free cash flow||$700 million to $900 million||$700 million to $900 million|