Genuine Parts reports 17th quarter of year-to-year gross margin improvement, with Q4 net income of US$256M, up from US$171.6M in 2020, and sales up 13.0% at US$4.8B; Q4 automotive sales up 13.1% from 2020, industrial up 12.8%, due to strong global demand

Sample article from our Automobile Industry

ATLANTA, Georgia , February 22, 2022 (press release) –

Fourth Quarter 2021 Highlights

  • Sales of $4.8 billion, Up 13.0%
  • Diluted EPS from Continuing Operations $1.79
  • Adjusted Diluted EPS from Continuing Operations $1.79, Up 17.8%
  • 17th Consecutive Quarter of Year-Over-Year Gross Margin Improvement
  • Announced Acquisition of Kaman Distribution Group; Completed January 3, 2022

Full Year 2021 Highlights

  • Sales of $18.9 billion, Up 14.1%
  • Segment Profit Margin of 8.8%, Up 60 basis points
  • Diluted EPS from Continuing Operations $6.23
  • Adjusted Diluted EPS from Continuing Operations $6.91, Up 31.1% and a New Record
  • Returned $800 million to Shareholders via Cash Dividends and Share Repurchases
  • Cash Flow from Operations of $1.3 billion and Free Cash Flow of $1.0 billion

2022 Outlook

  • Revenue Growth of 9% to 11%
  • Diluted EPS of $7.45 to $7.60

Genuine Parts Company (NYSE: GPC) announced today its results for the fourth quarter and twelve months ended December 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 Chief Executive Officer of Genuine Parts Company. "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 13.0% 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 $256.0 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 16.0% as compared to $221.0 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 year1.

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," Mr. 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 $997.0 million, or $6.91 per diluted share, an increase of 31.1% compared to $5.27 per diluted share last year1.

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 billion1. 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 $1.0 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," Mr. 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."

2022 Outlook

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

Non-GAAP Information

This release contains certain financial information not derived in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP"). These items include adjusted net income from continuing operations, adjusted diluted net income from continuing operations per common share and free cash flow. The Company believes that the presentation of adjusted net income from continuing operations, adjusted diluted net income from continuing operations per common share and free cash flow, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of the Company's core operations. The Company considers these metrics useful to investors because they provide greater transparency into management's view and assessment of the Company's ongoing operating performance by removing items management believes are not representative of our continuing operations and may distort our longer-term operating trends. We believe these measures are useful and enhance the comparability of our results from period to period and with our competitors, as well as show ongoing results from operations distinct from items that are infrequent or not associated with the Company's core operations. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures as superior to, in isolation from, or as a substitute for, GAAP financial information. The Company has included a reconciliation of this additional information to the most comparable GAAP measure following the financial statements below.

Comparable Sales

Comparable sales is a key metric that refers to period-over-period comparisons of our sales excluding the impact of acquisitions, foreign currency and other. The Company considers this metric useful to investors because it provides greater transparency into management's view and assessment of the Company's core ongoing operations. This is a metric that is widely used by analysts, investors and competitors in our industry, although our calculation of the metric may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate this metric in the same manner.

Conference Call

Genuine Parts Company will hold a conference call today at 11:00 a.m. Eastern time to discuss the results of the quarter. A supplemental earnings deck will also be available for reference. Interested parties may listen to the call and view the supplemental earnings deck on the Company's investor relations website. The call is also available by dialing 888-317-6003, conference ID 8600891. A replay will also be available on the Company's website or at 877-344-7529 conference ID 6848555, two hours after the completion of the call.

About Genuine Parts Company

Founded in 1928, Genuine Parts Company is a global service organization engaged in the distribution of automotive and industrial replacement parts. The Company's Automotive Parts Group distributes automotive replacement parts in the U.S., Canada, Mexico, Australasia, France, the United Kingdom, Ireland, Germany, Poland, the Netherlands and Belgium. The Company's Industrial Parts Group distributes industrial replacement parts in the U.S., Canada, Mexico and Australasia. In total, the Company serves its global customers from an extensive network of more than 10,000 locations in 15 countries and has approximately 52,000 employees. Further information is available at www.genpt.com.

Forward Looking Statements

Some statements in this release, as well as in materials the Company files with the Securities and Exchange Commission (SEC), release to the public or make available on the Company's website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in the future tense and all statements accompanied by words such as "expect," "likely," "outlook," "forecast," "preliminary," "would," "could," "should," "position," "will," "project," "intend," "plan," "on track," "anticipate," "to come," "may," "possible," "assume," or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include the Company's view of business and economic trends for the coming year, the Company's ability to execute our strategic priorities and capitalize in light of these business and economic trends, and the established full-year 2022 financial guidance for the Company provided above. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.

The Company cautions that all forward-looking statements involve risks and uncertainties, and while the Company believes that its expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, the extent and duration of the disruption to the Company's business operations caused by the global health crisis associated with the COVID-19 pandemic, including the effects on the financial health of the Company's business partners and customers, on supply chains and the Company's suppliers, on vehicle miles driven as well as other metrics that affect the Company's business, and on access to capital and liquidity provided by the financial and capital markets; the Company's ability to maintain compliance with its debt covenants; the Company's ability to successfully integrate acquired businesses into the Company's operations and to realize the anticipated synergies and benefits; the Company's ability to successfully implement its business initiatives in its two business segments; changes in demand for the Company's products; the ability to maintain favorable supplier arrangements and relationships; disruptions in global supply chains and in the operations of the Company's suppliers, including as a result of the impact of COVID-19 on our suppliers and our supply chain; changes in national and international legislation or government regulations or policies, including changes to import tariffs, environmental and social policy, infrastructure programs and privacy legislation, and their impact to the Company and its suppliers and customers; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation; changes in tax policies; volatile exchange rates; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; the Company's ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; failure or weakness in the Company's disclosure controls and procedures and internal controls over financial reporting, including as a result of the work from home environment; the uncertainties and costs of litigation; disruptions caused by a failure or breach of the Company's information systems, as well as other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2021 and from time to time in the Company's subsequent filings with the SEC.

Forward-looking statements speak only as of the date they are made, and the Company undertakes no duty to update any forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K and other reports filed with the SEC.

_____________________________________

1 Adjusted net income from continuing operations, adjusted diluted net income from continuing operations per common share and free cash flow referred in this press release are non-GAAP financial measures. Please refer to the supplemental information presented below for reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP financial measure and related disclosures.

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

 
   

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

(in thousands, except per share data)

 

2021

 

2020

 

2021

 

2020

Net sales

 

$  4,803,209

 

$  4,251,594

 

$ 18,870,510

 

$ 16,537,433

Cost of goods sold

 

3,109,760

 

2,803,484

 

12,236,374

 

10,882,592

Gross profit

 

1,693,449

 

1,448,110

 

6,634,136

 

5,654,841

Operating expenses:

               

Selling, administrative and other expenses

 

1,279,265

 

1,132,297

 

5,162,506

 

4,386,739

Depreciation and amortization

 

72,594

 

69,758

 

290,971

 

272,842

Provision for doubtful accounts

 

3,509

 

125

 

17,739

 

23,577

Restructuring costs

 

 

11,010

 

 

50,019

Goodwill impairment charge

 

 

 

 

506,721

Total operating expenses

 

1,355,368

 

1,213,190

 

5,471,216

 

5,239,898

Non-operating (income) expenses:

               

Interest expense, net

 

14,297

 

21,083

 

62,150

 

91,048

Other

 

(22,122)

 

(11,709)

 

(99,576)

 

(55,473)

Total non-operating (income) expenses

 

(7,825)

 

9,374

 

(37,426)

 

35,575

Income before income taxes

 

345,906

 

225,546

 

1,200,346

 

379,368

Income taxes

 

89,907

 

53,914

 

301,556

 

215,973

Net income from continuing operations

 

255,999

 

171,632

 

898,790

 

163,395

Net loss from discontinued operations

 

 

(428)

 

 

(192,497)

Net income (loss)

 

$     255,999

 

$     171,204

 

$     898,790

 

$       (29,102)

Dividends declared per common share

 

$         0.815

 

$         0.790

 

$         3.260

 

$           3.160

Basic earnings (loss) per share:

               

Continuing operations

 

$           1.80

 

$           1.19

 

$           6.27

 

$             1.13

Discontinued operations

 

 

 

 

(1.33)

Basic earnings (loss) per share

 

$           1.80

 

$           1.19

 

$           6.27

 

$           (0.20)

Diluted earnings (loss) per share:

               

Continuing operations

 

$           1.79

 

$           1.18

 

$           6.23

 

$             1.13

Discontinued operations

 

 

 

 

(1.33)

Diluted earnings (loss) per share

 

$           1.79

 

$           1.18

 

$           6.23

 

$           (0.20)

                 

Weighted average common shares outstanding

 

142,275

 

144,313

 

143,435

 

144,474

Dilutive effect of stock options and non-vested restricted
  stock awards

 

778

 

847

 

786

 

641

Weighted average common shares outstanding —
 assuming dilution

 

143,053

 

145,160

 

144,221

 

145,115

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

SEGMENT INFORMATION

(UNAUDITED)

 
   

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

(in thousands)

 

2021

 

2020

 

2021

 

2020

Net sales:

               

Automotive

 

$  3,190,133

 

$  2,821,832

 

$ 12,544,131

 

$ 10,860,695

Industrial

 

1,613,076

 

1,429,762

 

6,326,379

 

5,676,738

Total net sales

 

$  4,803,209

 

$  4,251,594

 

$ 18,870,510

 

$ 16,537,433

Segment profit:

               

Automotive

 

$     265,841

 

$     240,135

 

$  1,073,427

 

$     867,743

Industrial

 

153,773

 

133,373

 

595,232

 

481,854

Total segment profit

 

419,614

 

373,508

 

1,668,659

 

1,349,597

Interest expense, net

 

(14,297)

 

(21,083)

 

(62,150)

 

(91,048)

Corporate expense

 

(44,813)

 

(32,701)

 

(174,842)

 

(149,754)

Intangible asset amortization

 

(25,034)

 

(24,743)

 

(103,273)

 

(94,962)

Other unallocated costs

 

10,436

 

(69,435)

 

(128,048)

 

(634,465)

Income before income taxes from continuing
  operations

 

$     345,906

 

$     225,546

 

$  1,200,346

 

$     379,368

The following table presents a summary of the other unallocated costs:

   

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

(in thousands)

 

2021

 

2020

 

2021

 

2020

Other unallocated costs:

               

Loss on software disposal

 

$              —

 

$              —

 

$      (61,063)

 

$              —

Product liability damages award

 

 

 

(77,421)

 

Goodwill impairment charge

 

 

 

 

(506,721)

Restructuring costs

 

 

(11,010)

 

 

(50,019)

Realized currency and other divestiture losses

 

 

 

 

(11,356)

Gain on insurance proceeds related to SPR fire

 

3,862

 

 

3,862

 

13,448

Gain on equity investments

 

10,229

 

 

10,229

 

Inventory adjustment

 

 

(40,000)

 

 

(40,000)

Transaction and other costs

 

(3,655)

 

(18,425)

 

(3,655)

 

(39,817)

Total other unallocated costs (1)

 

$       10,436

 

$      (69,435)

 

$    (128,048)

 

$    (634,465)

   

(1)

Refer to the reconciliation of GAAP net income from continuing operations to adjusted net income from continuing operations for explanation of adjustments.

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
   

As of December 31,

(in thousands, except share and per share data)

 

2021

 

2020

Assets

       

Current assets:

       

Cash and cash equivalents

 

$     714,701

 

$     990,166

Trade accounts receivable, less allowance for doubtful accounts (2021 – $44,425;
  2020 – $36,622)

 

1,797,955

 

1,556,966

Merchandise inventories, net

 

3,889,919

 

3,506,271

Prepaid expenses and other current assets

 

1,353,847

 

1,060,360

Total current assets

 

7,756,422

 

7,113,763

Goodwill

 

1,915,307

 

1,917,477

Other intangible assets, net

 

1,406,401

 

1,498,257

Deferred tax assets

 

829

 

65,658

Property, plant and equipment, less accumulated depreciation (2021 – $1,339,706;
  2020 – $1,398,095)

 

1,234,399

 

1,162,043

Operating lease assets

 

1,053,689

 

1,038,877

Other assets

 

985,055

 

644,140

Total assets

 

$ 14,352,102

 

$ 13,440,215

         

Liabilities and equity

       

Current liabilities:

       

Trade accounts payable

 

$  4,804,939

 

$  4,128,084

Current portion of debt

 

 

160,531

Other current liabilities

 

1,660,768

 

1,491,426

Dividends payable

 

115,876

 

114,043

Total current liabilities

 

6,581,583

 

5,894,084

Long-term debt

 

2,409,363

 

2,516,614

Operating lease liabilities

 

789,175

 

789,294

Pension and other post-retirement benefit liabilities

 

265,134

 

265,687

Deferred tax liabilities

 

280,778

 

212,910

Other long-term liabilities

 

522,779

 

543,623

Equity:

       

Preferred stock, par value $1 per share — authorized 10,000,000 shares; none issued

 

 

Common stock, par value $1 per share - authorized 450,000,000 shares; issued and
  outstanding - 2021 - 142,180,683 shares and 2020 - 144,354,335 shares

 

142,181

 

144,354

Additional paid-in capital

 

119,975

 

117,165

Accumulated other comprehensive loss

 

(857,739)

 

(1,036,502)

Retained earnings

 

4,086,325

 

3,979,779

Total parent equity

 

3,490,742

 

3,204,796

Noncontrolling interests in subsidiaries

 

12,548

 

13,207

Total equity

 

3,503,290

 

3,218,003

Total liabilities and equity

 

$ 14,352,102

 

$ 13,440,215

 

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

   
   

Year Ended December 31

(in thousands)

 

2021

 

2020

 

2019

Operating activities:

           

Net income (loss)

 

$  898,790

 

$   (29,102)

 

$  621,085

Net loss from discontinued operations

 

 

(192,497)

 

(25,390)

Net income from continuing operations

 

898,790

 

163,395

 

646,475

Adjustments to reconcile net income from continuing operations to net cash
  provided by operating activities:

           

Depreciation and amortization

 

290,971

 

272,842

 

257,263

Excess tax benefit from share-based compensation

 

(7,076)

 

(677)

 

(4,920)

Deferred income taxes

 

31,676

 

(27,722)

 

(55,939)

Share-based compensation

 

25,597

 

22,621

 

28,703

Loss on software disposal

 

61,063

 

 

Realized currency and other divestiture losses

 

 

11,356

 

34,701

Gain on equity investments

 

(10,229)

 

 

(38,663)

Goodwill impairment charge

 

 

506,721

 

Other operating activities

 

(21,183)

 

12,569

 

(17,589)

Changes in operating assets and liabilities:

           

Trade accounts receivable, net

 

(258,994)

 

957,514

 

(134,163)

Merchandise inventories, net

 

(329,237)

 

58,462

 

(54,765)

Trade accounts payable

 

777,318

 

89,350

 

82,739

Other short-term assets and liabilities

 

(148,089)

 

(109,812)

 

11,740

Other long-term assets and liabilities

 

(52,322)

 

57,903

 

76,937

Net cash provided by operating activities from continuing operations

 

1,258,285

 

2,014,522

 

832,519

Investing activities:

           

Purchases of property, plant and equipment

 

(266,136)

 

(153,502)

 

(277,873)

Proceeds from sale of property, plant and equipment

 

26,549

 

18,064

 

24,387

Proceeds from divestitures of businesses

 

17,738

 

387,379

 

434,609

Acquisitions of businesses and other investing activities

 

(284,315)

 

(69,173)

 

(724,718)

Net cash (used in) provided by investing activities from continuing operations

 

(506,164)

 

182,768

 

(543,595)

Financing activities:

           

Proceeds from debt

 

892,694

 

2,638,014

 

5,037,168

Payments on debt

 

(1,053,423)

 

(3,533,017)

 

(4,897,769)

Share-based awards exercised

 

(22,346)

 

(4,120)

 

(11,413)

Dividends paid

 

(465,649)

 

(453,277)

 

(438,890)

Purchase of stock

 

(333,599)

 

(96,215)

 

(74,187)

Other financing activities

 

(7,209)

 

(65,150)

 

(871)

Net cash used in financing activities from continuing operations

 

(989,532)

 

(1,513,765)

 

(385,962)

Cash flows from discontinued operations:

           

Net cash flows provided by operating activities from discontinued operations

 

 

5,039

 

59,491

Net cash used in investing activities from discontinued operations

 

 

(11,131)

 

(19,611)

Net cash provided by financing activities from discontinued operations

 

 

 

Net cash (used in) provided by discontinued operations

 

 

(6,092)

 

39,880

Effect of exchange rate changes on cash and cash equivalents

 

(38,054)

 

35,741

 

603

Net (decrease) increase in cash and cash equivalents

 

(275,465)

 

713,174

 

(56,555)

Cash and cash equivalents at beginning of year

 

990,166

 

276,992

 

333,547

Cash and cash equivalents at end of year

 

$  714,701

 

$  990,166

 

$  276,992

             

Supplemental disclosures of cash flow information

           

Cash paid during the year for:

           

Income taxes

 

$  305,326

 

$  223,019

 

$  303,736

Interest

 

$    65,732

 

$    91,344

 

$    95,281

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME FROM CONTINUING OPERATIONS AND GAAP DILUTED NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE TO ADJUSTED DILUTED NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE

(UNAUDITED)

 
   

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

(in thousands)

 

2021

 

2020

 

2021

 

2020

GAAP net income from continuing operations

 

$    255,999

 

$    171,632

 

$    898,790

 

$    163,395

                 

Adjustments:

               

Loss on software disposal (1)

 

 

 

61,063

 

Product liability damages award (2)

 

 

 

77,421

 

Goodwill impairment charge (3)

 

 

 

 

506,721

Restructuring costs (4)

 

 

11,010

 

 

50,019

Realized currency and other divestiture losses (5)

 

 

 

 

11,356

Gain on insurance proceeds related to SPR fire (6)

 

(3,862)

 

 

(3,862)

 

(13,448)

Gain on equity investments (7)

 

(10,229)

 

 

(10,229)

 

Inventory adjustment (8)

 

 

40,000

 

 

40,000

Transaction and other costs (9)

 

3,655

 

18,425

 

3,655

 

39,817

Total adjustments

 

(10,436)

 

69,435

 

128,048

 

634,465

Tax impact of adjustments

 

10,661

 

(20,089)

 

(29,828)

 

(32,822)

Adjusted net income from continuing operations

 

$    256,224

 

$    220,978

 

$    997,010

 

$    765,038

The table below represent amounts per common share assuming dilution:

   

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

(in thousands, except per share data)

 

2021

 

2020

 

2021

 

2020

GAAP net income from continuing operations per common
  share

 

$         1.79

 

$         1.18

 

$         6.23

 

$         1.13

                 

Adjustments:

               

Loss on software disposal (1)

 

 

 

0.42

 

Product liability damages award (2)

 

 

 

0.54

 

Goodwill impairment charge (3)

 

 

 

 

3.49

Restructuring costs (4)

 

 

0.08

 

 

0.34

Realized currency and other divestiture losses (5)

 

 

 

 

0.08

Gain on insurance proceeds related to SPR fire (6)

 

(0.03)

 

 

(0.03)

 

(0.09)

Gain on equity investments (7)

 

(0.07)

 

 

(0.07)

 

Inventory adjustment (8)

 

 

0.28

 

 

0.28

Transaction and other costs (9)

 

0.03

 

0.12

 

0.03

 

0.27

Total adjustments

 

(0.07)

 

0.48

 

0.89

 

4.37

Tax impact of adjustments

 

0.07

 

(0.14)

 

(0.21)

 

(0.23)

Adjusted diluted net income from continuing operations
  per common share

 

$         1.79

 

$         1.52

 

$         6.91

 

$         5.27

Weighted average common shares outstanding -
  assuming dilution

 

143,053

 

145,160

 

144,221

 

145,115

The table below clarifies where the items that have been adjusted above to improve comparability of the financial information from period to period are presented in the consolidated statements of income (loss).

   

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

(in thousands)

 

2021

 

2020

 

2021

 

2020

Cost of goods sold

 

$             —

 

$      40,000

 

$             —

 

$      53,495

Selling, administrative and other expenses

 

3,655

 

1,881

 

142,139

 

10,094

Restructuring costs

 

 

11,010

 

 

50,019

Goodwill impairment charge

 

 

 

 

506,721

Non-operating (income): Other

 

(14,091)

 

16,544

 

(14,091)

 

14,136

Total adjustments

 

$     (10,436)

 

$      69,435

 

$    128,048

 

$    634,465

   

(1)

Adjustment reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies. 

(2)

Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.

(3)

Adjustment reflects a goodwill impairment charge related to the Company's European reporting unit.

(4)

Adjustment reflects restructuring costs related to the execution of the 2019 Cost Savings Plan. The costs are primarily associated with severance and other employee costs, including a voluntary retirement program, and facility and closure costs related to the consolidation of operations.

(5)

Adjustment reflects realized currency losses related to divestitures.

(6)

Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs related to the S.P. Richards Headquarters and Distribution Center.

(7)

Adjustment relates to gains recognized upon remeasurement of certain equity investments to fair value upon acquiring the remaining equity of those entities.

(8)

Adjustment reflects an increase to cost of goods sold due to the correction of an immaterial error related to the accounting in prior years for consideration received from vendors.

(9)

Adjustment for the twelve months ended December 31, 2021 include transaction and other costs related to acquisitions. For the twelve months ended December 31, 2020, adjustment includes a $17 million loss on investment, $10 million of incremental costs associated with COVID-19 and costs associated with certain divestitures. COVID-19 related costs include incremental costs incurred relating to fees to cancel marketing events and increased cleaning and sanitization materials, among other things.

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

CHANGE IN NET SALES SUMMARY

(UNAUDITED)

 
   

Three Months Ended December 31, 2021

   

Comparable Sales

 

Acquisitions

 

Foreign Currency

 

Other

 

GAAP Total Net Sales

Automotive

 

10.6 %

 

2.8 %

 

(0.2) %

 

(0.1) %

 

13.1 %

Industrial

 

12.5 %

 

— %

 

0.3 %

 

— %

 

12.8 %

Total Net Sales

 

11.3 %

 

1.9 %

 

(0.1) %

 

(0.1) %

 

13.0 %

 
   

Twelve Months Ended December 31, 2021

   

Comparable Sales

 

Acquisitions

 

Foreign Currency

 

Other

 

GAAP Total Net Sales

Automotive

 

11.0 %

 

2.0 %

 

3.0 %

 

(0.5) %

 

15.5 %

Industrial

 

9.7 %

 

0.4 %

 

1.3 %

 

— %

 

11.4 %

Total Net Sales

 

10.5 %

 

1.5 %

 

2.4 %

 

(0.3) %

 

14.1 %

 

GENUINE PARTS COMPANY AND SUBSIDIARIES

RECONCILIATION OF GAAP NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO FREE CASH FLOW

 (UNAUDITED)

 
   

Twelve Months Ended December 31,

(in thousands)

 

2021

 

2020

Net cash provided by operating activities from continuing operations

 

$          1,258,285

 

$          2,014,522

Purchases of property, plant and equipment

 

(266,136)

 

(153,502)

Free Cash Flow

 

$             992,149

 

$          1,861,020

 

SOURCE Genuine Parts Company

For further information: Investor Contact: Sid Jones, (678) 934-5628, Senior Vice President - Investor Relations; Media Contact: Heather Ross, (678) 934-5220, Senior Director - Strategic Communications

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