Genuine Parts Co. (GPC) has announced its results for the third quarter and nine months ended Sept. 30, 2021.
“We are pleased to report strong financial results in the third quarter, as the combination of our growth initiatives and the global market recovery drove positive sales trends, gross margin gains and improved operational efficiencies. Consistent execution of our strategic priorities also led to margin expansion and a second consecutive quarter of record earnings. The GPC team was largely able to manage through supply chain disruptions, allowing us to deliver quality customer service. In addition, we further improved our balance sheet and generated strong cash flow which allows for the ongoing deployment of capital for growth and productivity investments, bolt-on acquisitions, the dividend and share repurchases,” said Paul Donahue, chairman and CEO of Genuine Parts Co.
Third Quarter 2021 Results
Sales were $4.8 billion, a 10.3% increase compared to $4.4 billion in the same period of the prior year. The improvement is attributable to a 7.6% increase in comparable sales, a 1.8% benefit from acquisitions and a 0.9% net favorable impact of foreign currency and other.
“The positive momentum in our Automotive and Industrial operations is encouraging,” Donahue said. “As expected, our Automotive sales comparisons normalized to the mid- to high-single digit range, with our U.S. Automotive business generating the strongest growth among our regional operations. Industrial posted very strong sales growth, generating mid-teen sales comps for the second consecutive quarter, as the industrial economy continues its steady rebound. We also produced our 16th consecutive quarter of gross margin expansion and took additional steps towards a more productive operating structure.”
Third Quarter 2021 Segment Highlights
Automotive Parts Group
Sales for the Automotive Group were $3.2 billion in the third quarter, up 8.2% from 2020 and representing 66% of total company revenues. The improvement was due to a 4.8% global increase in comparable sales, a 2.4% benefit from acquisitions and a 1.0% net favorable impact of foreign currency and other. Segment profit of $281.2 million was up 5.6% and the profit margin was 8.8% compared to 9.0% in the same period of 2020.
Industrial Parts Group
Sales for the Industrial Parts Group were $1.6 billion, up 14.5% from 2020 and representing 34% of total company revenues. The improvement reflects a 13.4% increase in comparable sales, a 0.8% favorable impact from foreign currency and a 0.3% benefit from acquisitions. Segment profit of $165.8 million was up 31.9% and the profit margin was 10.3% compared to 8.9% in 2020, up 140 basis points.
Nine Months 2021 Results
Sales from continuing operations for the nine months ended September 30, 2021 were $14.1 billion, a 14.5% increase from $12.3 billion for the same period in 2020. Net income from continuing operations for the nine months was $642.8 million, or $4.44 per diluted share. The company’s adjusted net income from continuing operations was $740.8 million, or $5.12 per diluted share, an increase of 36% compared to $3.76 per diluted share last year1.
Balance Sheet Cash Flow and Capital Allocation
The company generated cash flow from continuing operations of $1.0 billion during the nine months ended September 30, 2021. The company used $239.9 million in cash for investing activities, including $142.6 million in acquisitions and other investing activities and $138.2 million for capital expenditures in the nine months September 30, 2021. Cash used for financing activities for the nine months ended September 30, 2021 was $818.7 million, and $633.2 million of this was returned to shareholders, including $349.3 million in dividends and $283.9 million in share repurchases. Free cash flow was $870.0 million for the nine months September 30, 2021.
The company ended the quarter with $2.4 billion in total liquidity, consisting of $1.5 billion availability on the revolving credit facility and $919.1 million in cash and cash equivalents.
“Through nine months in 2021, we are pleased with our progress in driving profitable growth, strong cash flow and shareholder value. As we look ahead, the company is well-positioned with the financial strength and flexibility to pursue strategic growth opportunities via investments in organic and acquisitive growth, while also returning capital to shareholders through the dividend and share repurchases. We are optimistic for the continued recovery in our Automotive and Industrial segments and improving fundamentals, and we are confident in our strategic plans to deliver long-term growth and margin expansion,” Donahue said.
2021 Outlook
In consideration of several factors, the company is updating its full-year 2021 guidance previously provided in its earnings release on July 22, 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.
| For the Year Ending December 31, 2021 | ||||
| Current Outlook | Previous Outlook | |||
| Total sales growth | 12% to 13% | 10% to 12% | ||
| Automotive sales growth | 14% to 15% | 11% to 13% | ||
| Industrial sales growth | 10% to 11% | 6% to 8% | ||
| Diluted earnings per share | $5.92 to $5.97 | $5.81 to $5.96 | ||
| Adjusted diluted earnings per share | $6.60 to $6.65 | $6.20 to $6.35 | ||
| Effective tax rate | Approx. 25% | Approx. 25% | ||
| Net cash provided by operating activities | $1.2 billion to $1.4 billion | $1.2 billion to $1.4 billion | ||
| Free cash flow | $950 million to $1.15 billion | $900 million to $1.1 billion |
