Genuine Parts Co. has announced its results for the first quarter ended March 31, 2022.
“We are pleased with the continued strength in our results to start the year, and we could not be prouder of the hard work by all our 52,000 teammates,” said Paul Donahue, chairman and CEO. “The first quarter was highlighted by new sales records for GPC and our Automotive and Industrial segments, margin expansion and our seventh consecutive quarter of double-digit earnings growth. The GPC team successfully navigated through ongoing supply chain challenges and inflationary pressures at levels we haven’t seen in 40 years.”
First Quarter 2022 Results
Sales were $5.3 billion, an 18.6% increase compared to $4.5 billion in the same period of the prior year. The sales growth is attributable to a 12.3% increase in comparable sales and an 8.1% benefit from acquisitions, partially offset by a 1.8% net unfavorable impact of foreign currency and other.
Net income was $245.8 million, or a diluted earnings per share of $1.72. This compares to net income of $217.7 million, or $1.50 per diluted share, in the prior year period.
Adjusted net income was $265.7 million, an increase of 22% compared to adjusted net income of $217.7 million for the same three-month period of the prior year. On a per share diluted basis, adjusted net income was $1.86, an increase of 24.0% compared to $1.50 per diluted share last year.
First Quarter 2022 Segment Highlights
Automotive Parts Group
Automotive sales were $3.3 billion, up 10.9% from the first quarter of 2021, and representing 62% of total company revenues. The improvement consisted of a 10.3% global increase in comparable sales and a 3.1% contribution from acquisitions, net of a 2.5% unfavorable impact of foreign currency and other. Segment profit of $264.6 million increased 12.3%, with a segment profit margin of 8.1%, up 10 basis points from 2021.
Industrial Parts Group
Industrial sales were $2 billion, up 33.6% from the first quarter of 2021, and representing 38% of total company revenues. The sales increase reflects a 17.9% contribution from the acquisition of Kaman Distribution Group (KDG) and a 16.1% increase in comparable sales, slightly offset by a 0.4% unfavorable impact of foreign currency. Segment profit of $188.4 million increased 50.3%, with profit margin of 9.3%, up 100 basis points from 2021.
Donahue added, “The continued strength in Automotive reflects solid growth across our operations, with 12% and 13% comparable sales increases in the U.S. and Canada, respectively, and high-single digit comps in Europe and Australasia. Additionally, Industrial posted its fourth consecutive quarter of double-digit sales comps, driven by strengthening sales trends throughout the quarter.”
“Our focus on key strategic priorities helped to deliver profitable sales growth, expand margins and generate strong cash flow in the quarter,” added Will Stengel, president. “We are also pleased with the progress to integrate Kaman Distribution Group which is trending ahead of plan.”
In consideration of several factors, the Company is updating full-year 2022 guidance previously provided in its earnings release on February 17, 2022. 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 establishing its updated guidance, which is outlined in the table below. Consistent with the previous outlook, the Company has also accounted for an approximate 2% headwind from foreign currency translation. The Company will continue to update full-year guidance during 2022, as appropriate.
|For the Year Ending December 31, 2022|
|Previous Outlook||Updated Outlook|
|Total sales growth||9% to 11%||10% to 12%|
|Automotive sales growth||4% to 6%||5% to 7%|
|Industrial sales growth||20% to 22%||21% to 23%|
|Diluted earnings per share||$7.45 to $7.60||$7.56 to $7.71|
|Adjusted diluted earnings per share||$7.45 to $7.60||$7.70 to $7.85|
|Effective tax rate||Approximately 25%||Approximately 25%|
|Net cash provided by operating activities||$1.5 billion to $1.7 billion||$1.5 billion to $1.7 billion|
|Free cash flow||$1.2 billion to $1.4 billion||$1.2 billion to $1.4 billion|
“The increase in our sales and earnings outlook reflects the confidence in our plans for accelerated growth and profitability as we build on the positive momentum in our Automotive and Industrial businesses. While cognizant of the many uncertainties in the global economy, we believe GPC is well-positioned with the financial strength and flexibility to support our growth plans and provide for disciplined, value-creating capital allocation while enhancing shareholder value,” Donahue concluded.