Genuine Parts Co. (GPC) has announced results for the fourth quarter and 12 months ended Dec. 31, 2021.
“The GPC team finished the year with a strong fourth quarter, further building on the positive momentum of the first nine months of 2021. We are proud of our progress through the year and thankful to our 52,000 teammates for their hard work and ongoing commitment to excellence,” said Paul Donahue, chairman and CEO of Genuine Parts Co. “Strong sales growth combined with ongoing initiatives to improve gross margin and control expenses in an inflationary environment drove an 18% increase in adjusted earnings per share, which along with our continued focus on working capital improvement, helped us to deliver strong cash flow. Our capital allocation priorities remain investing for enhanced productivity and growth, while also returning capital to shareholders via the dividend and share repurchases.”
Fourth Quarter 2021 Results
Sales were $4.8 billion, a 13% increase compared to $4.3 billion in the same period of the prior year. The improvement is attributable to an 11.3% increase in comparable sales and a 1.9% benefit from acquisitions, partially offset by a slightly unfavorable impact of foreign currency and other.
Net income from continuing operations was $256 million, or a diluted earnings per share of $1.79. This compares to net income from continuing operations of $171.6 million, or $1.18 per diluted share in the prior year period. The company’s adjusted net income from continuing operations was $256.2 million, an increase of 16% as compared to $221 million a year ago. On a per share diluted basis, adjusted net income from continuing operations was $1.79, an increase of 17.8% compared to $1.52 per diluted share last year.
Fourth Quarter 2021 Segment Highlights
Automotive Parts Group
Sales for the Automotive Group were $3.2 billion in the fourth quarter, up 13.1% from 2020 and representing 66% of total company revenues. The improvement was due to a 10.6% global increase in comparable sales and a 2.8% benefit from acquisitions, net of a slightly unfavorable impact of foreign currency and other. Segment profit of $265.8 million was up 10.7% and the profit margin was 8.3% compared to 8.5% in the same period of 2020.
Industrial Parts Group
Sales for the Industrial Parts Group were $1.6 billion, up 12.8% from 2020 and representing 34% of total company revenues. The improvement reflects a 12.5% increase in comparable sales and a 0.3% favorable impact from foreign currency. Segment profit of $153.8 million was up 15.3% and the profit margin was 9.5% compared to 9.3% in 2020, up 20 basis points.
“The double-digit sales and earnings growth for the Automotive and Industrial businesses is a reflection of strong global demand and the diligent execution of our initiatives to accelerate growth and improve profitability,” Donahue said. “The strength in Automotive was broad-based across our operations, with 13% sales comps in the U.S. and high-single digit sales comps in Canada, Europe and Australasia. Likewise, we had strong growth in both our North American and Australasian Industrial businesses, which drove the third consecutive quarter of double-digit comps for this segment.”
Full Year 2021 Results
Sales in 2021 were $18.9 billion, a 14.1% increase from $16.5 billion for the same period in 2020. Net income from continuing operations for the twelve months was $898.8 million, or $6.23 per diluted share. The company’s adjusted net income from continuing operations was $997 million, or $6.91 per diluted share, an increase of 31.1% compared to $5.27 per diluted share last year.
Balance Sheet Cash Flow and Capital Allocation
The company generated cash flow from continuing operations of $1.3 billion in 2021, and free cash flow was $1.0 billion. The company used $506.2 million in cash for investing activities, including $284.3 million in acquisitions and other investing activities and $266.1 million for capital expenditures in 2021. Cash used for financing activities in 2021 was $1 billion, with $799.2 million returned to shareholders, including $465.6 million in dividends and $333.6 million in share repurchases.
The company ended the quarter and year with $2.2 billion in total liquidity, consisting of $1.5 billion availability on the revolving credit facility and $714.7 million in cash and cash equivalents.
“2021 was an exceptional year for GPC. Following the unprecedented challenges of 2020, our team was focused on advancing the strategic priorities for our global automotive and industrial businesses. With the backdrop of the economic recovery and strong industry fundamentals, we generated double-digit sales and earnings growth and significantly improved our profit margin, resulting in strong cash flow and further supporting our balance sheet strength and capital allocation priorities,” Donahue said. “Looking ahead, we remain confident in our plans for accelerated growth and profitability as we build on the underlying momentum in our automotive and industrial operations and begin to realize the benefits from our recent industrial acquisition of Kaman Distribution Group.”
The company considered its past performance, business trends, current growth plans, strategic initiatives, global economic outlook and the continued uncertainty of COVID-19 and its potential impact on our results, in establishing its full-year 2022 guidance as outlined in the table below. In addition, the company has accounted for an approximate 2% headwind from foreign currency translation. The company will update full-year guidance during 2022, as appropriate.
|Year Ended 12/31/2022|
|Total sales growth||9% to 11%|
|Automotive sales growth||4% to 6%|
|Industrial sales growth||20% to 22%|
|Diluted earnings per share||$7.45 to $7.60|
|Adjusted diluted earnings per share||$7.45 to $7.60|
|Effective tax rate||Approx. 25%|
|Net cash provided by operating activities||$1.5 billion to $1.7 billion|
|Free cash flow||$1.2 billion to $1.4 billion|