Genuine Parts Co. (GPC) announced today its results for the second quarter and six months ended June 30, 2021.
“We are pleased to report a strong financial performance driven by the consistent execution of our strategic priorities and the ongoing recovery in the global markets. The second quarter was highlighted by strong sales trends, gross margin gains and improved operational efficiencies that drove margin expansion and record quarterly earnings. In addition, we effectively deployed capital for growth and productivity investments, bolt-on acquisitions, the dividend and share repurchases,” said Paul Donahue, chairman and CEO of GPC.
Second Quarter 2021 Results
Sales were $4.8 billion, a 25.1% increase compared to $3.8 billion in the same period of the prior year. The improvement is attributable to a 19.5% increase in comparable sales, a 4.1% net favorable impact of foreign currency and other and a 1.5% benefit from acquisitions.
Net income from continuing operations was $196.5 million, or a diluted earnings per share of $1.36. This compares to a net loss from continuing operations of $363.5 million, or $2.52 per diluted share in the prior year period. The company’s adjusted net income from continuing operations was $252.6 million, an increase of 33% as compared to $190.5 million a year ago. On a per share diluted basis, adjusted net income from continuing operations was $1.74, an increase of 32% compared to $1.32 per diluted share last year1.
“Our 25% total sales growth reflects the benefits of a strengthening global economy and positive sales environment in both our Automotive and Industrial businesses,” Mr. Donahue said. “Automotive posted our strongest growth, with record sales and double-digit sales comps in each region of our operations. Industrial sales were also strong, highlighted by an accelerated recovery and its fourth consecutive quarter of improving sales trends. Our team also executed well and produced our 15th consecutive quarter of gross margin expansion while further improving our productivity via ongoing expense initiatives. Our global teamwork and disciplined focus in these areas enabled us to report strong operating results.”
Second Quarter 2021 Segment Highlights
Automotive Parts Group
Sales for the Automotive Group were $3.2 billion in the second quarter, up 28.1% from 2020 and representing 67% of total Company revenues. The improvement was due to a 21.1% increase in comparable sales, a 5.1% net favorable impact of foreign currency and other and a 1.9% benefit from acquisitions. Segment profit of $290.8 million was up 32.8% and the profit margin was 9.1%, 30 basis points higher than the same period of 2020.
Industrial Parts Group
Sales for the Industrial Parts Group were $1.6 billion, up 19.6% from 2020 and representing 33% of total Company revenues. The improvement reflects a 16.4% increase in comparable sales, a 2.4% favorable impact from foreign currency and a 0.8% benefit from acquisitions. Segment profit of $150.4 million was up 38.1% and the profit margin was 9.5%, up 130 basis points from 2020.
Six Months 2021 Results
Sales from continuing operations for the six months ended June 30, 2021 were $9.2 billion, a 16.8% increase from $7.9 billion for the same period in 2020. Net income from continuing operations for the six months was $414.2 million, or $2.85 per diluted share. The company’s adjusted net income from continuing operations was $470.3 million, or $3.24 per diluted share, an increase of 53% compared to $2.12 per diluted share last year.
Balance Sheet Cash Flow and Capital Allocation
The company ended the quarter with $2.5 billion in total liquidity, consisting of $1.5 billion availability on the revolving credit facility and $1.0 billion in cash and cash equivalents.
“Our exceptional balance sheet provides us with the financial 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. The GPC team is focused on executing our growth strategy and operational initiatives to further enhance our financial performance in the remainder of 2021 and beyond,” Donahue said.
2021 Outlook
In consideration of several factors, GPC is updating its full-year 2021 guidance previously provided in its earnings release on April 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. GPC says it will continue to update full-year guidance during 2021, as appropriate.
| For the Year Ended Dec. 31, 2021 | ||||
| Current Outlook | Previous Outlook | |||
| Total sales growth | 10% to 12% | 5% to 7% | ||
| Automotive sales growth | 11% to 13% | 5% to 7% | ||
| Industrial sales growth | 6% to 8% | 4% to 6% | ||
| Diluted earnings per share | $5.81 to $5.96 | $5.85 to $6.05 | ||
| Adjusted diluted earnings per share | $6.20 to $6.35 | $5.85 to $6.05 | ||
| Effective tax rate | Approx. 25% | 24.5% to 25.5% | ||
| Net cash provided by operating activities | $1.2 billion to $1.4 billion | $1.0 billion to $1.2 billion | ||
| Free cash flow | $900 million to $1.1 billion | $700 million to $900 million |
