gpc-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-5690

__________________________________________

GENUINE PARTS COMPANY

(Exact name of registrant as specified in its charter)

__________________________________________


GA						58-0254510
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2999 WILDWOOD PARKWAY,

30339

ATLANTA,

(Address of principal executive offices)

(Zip Code)

678-934-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Stock, $1.00 par value per share

GPC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 141,595,187 shares of common stock outstanding as of April 18, 2022.


Table of Contents

PART I		Page

Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20

PART II

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 6.	Exhibits	23
	Signatures	24


(in thousands, except share and per share data)	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	610,776	$	714,701
Trade accounts receivable, less allowance for doubtful accounts (2022 – $49,644; 2021 – $44,425)	2,137,806		1,797,955
Merchandise inventories, net	4,211,496		3,889,919
Prepaid expenses and other current assets	1,467,356		1,353,847
Total current assets	8,427,434		7,756,422
Goodwill	2,534,521		1,915,307
Other intangible assets, less accumulated amortization	1,935,153		1,406,401
Property, plant and equipment, less accumulated depreciation (2022 – $1,386,714; 2021 – $1,339,706)	1,239,046		1,234,399
Operating lease assets	1,125,803		1,053,689
Other assets	1,011,354		985,884
Total assets	$	16,273,311	$	14,352,102

Liabilities and equity
Current liabilities:
Trade accounts payable	$	5,214,540	$	4,804,939
Current portion of debt	120,000		—
Dividends payable	126,891		115,876
Other current liabilities	1,788,101		1,660,768
Total current liabilities	7,249,532		6,581,583
Long-term debt	3,387,851		2,409,363
Operating lease liabilities	847,342		789,175
Pension and other post–retirement benefit liabilities	263,257		265,134
Deferred tax liabilities	400,980		280,778
Other long-term liabilities	516,473		522,779
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 – 2022 – 141,627,749 shares; 2021 – 142,180,683 shares	141,628		142,181
Additional paid-in capital	126,064		119,975
Accumulated other comprehensive loss	(804,877)		(857,739)
Retained earnings	4,132,925		4,086,325
Total parent equity	3,595,740		3,490,742
Noncontrolling interests in subsidiaries	12,136		12,548
Total equity	3,607,876		3,503,290
Total liabilities and equity	$	16,273,311	$	14,352,102


	Three Months Ended March 31,
(in thousands, except per share data)	2022		2021
Net sales	$	5,294,635	$	4,464,714
Cost of goods sold	3,468,688		2,923,899
Gross profit	1,825,947		1,540,815
Operating expenses:
Selling, administrative and other expenses	1,403,979		1,195,164
Depreciation and amortization	87,369		72,296
Provision for doubtful accounts	4,494		4,909
Total operating expenses	1,495,842		1,272,369
Non-operating expense (income):
Interest expense, net	19,850		18,324
Other	(15,461)		(35,737)
Total non-operating expense (income)	4,389		(17,413)
Income before income taxes	325,716		285,859
Income taxes	79,878		68,149
Net income	$	245,838	$	217,710
Dividends declared per common share	$	0.8950	$	0.8150
Basic earnings per share	$	1.73	$	1.51
Diluted earnings per share	$	1.72	$	1.50

Weighted average common shares outstanding	141,916		144,413
Dilutive effect of stock options and non-vested restricted stock awards	926		887
Weighted average common shares outstanding – assuming dilution	142,842		145,300


	Three Months Ended March 31,
(in thousands)	2022		2021
Net income	$	245,838	$	217,710
Other comprehensive income, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2022 — $8,411; 2021 — $21,185	42,132		(295)
Cash flow hedge adjustments, net of income taxes in 2022 — $1,384; 2021 — $1,384	3,741		3,741
Pension and postretirement benefit adjustments, net of income taxes in 2022 — $2,580; 2021 — $3,421	6,989		9,296
Other comprehensive income, net of income taxes	52,862		12,742
Comprehensive income	$	298,700	$	230,452


	Three Months Ended March 31, 2022
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2022	142,180,683	$	142,181	$	119,975	$	(857,739)	$	4,086,325	$	3,490,742	$	12,548	$	3,503,290
Net income	—	—		—		—		245,838		245,838		—		245,838
Other comprehensive income, net of tax	—	—		—		52,862		—		52,862		—		52,862
Cash dividend declared, $0.8950 per share	—	—		—		—		(126,891)		(126,891)		—		(126,891)
Share-based awards exercised, including tax benefit of $714	18,670	19		(1,082)		—		—		(1,063)		—		(1,063)
Share-based compensation	—	—		7,171		—		—		7,171		—		7,171
Purchase of stock	(571,604)	(572)		—		—		(72,347)		(72,919)		—		(72,919)
Noncontrolling interest activities	—	—		—		—		—		—		(412)		(412)
March 31, 2022	141,627,749	$	141,628	$	126,064	$	(804,877)	$	4,132,925	$	3,595,740	$	12,136	$	3,607,876


	Three Months Ended March 31, 2021
(in thousands, except share and per share data)	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Parent Equity		Non-controlling Interests in Subsidiaries		Total Equity
January 1, 2021	144,354,335	$	144,354	$	117,165	$	(1,036,502)	$	3,979,779	$	3,204,796	$	13,207	$	3,218,003
Net income	—	—		—		—		217,710		217,710		—		217,710
Other comprehensive income, net of tax	—	—		—		12,742		—		12,742		—		12,742
Cash dividend declared, $0.8150 per share	—	—		—		—		(117,714)		(117,714)		—		(117,714)
Share-based awards exercised, including tax benefit of $1,764	103,722	104		(5,533)		—		—		(5,429)		—		(5,429)
Share-based compensation	—	—		6,235		—		—		6,235		—		6,235
Cumulative effect from adoption of ASU 2019-12 (1)	—	—		—		—		6,223		6,223		—		6,223
Noncontrolling interest activities	—	—		—		—		—		—		(1,661)		(1,661)
March 31, 2021	144,458,057	$	144,458	$	117,867	$	(1,023,760)	$	4,085,998	$	3,324,563	$	11,546	$	3,336,109


		March 31, 2022				December 31, 2021
Instrument	Balance Sheet Location	Notional		Balance		Notional		Balance
Net investment hedges:
Forward contracts	Prepaid expenses and other current assets	$	1,406,950	$	97,842	$	925,810	$	73,819
Forward contracts	Other current liabilities	$	—	$	—	$	235,180	$	2,935
Foreign currency debt	Long-term debt	€	700,000	$	781,060	€	700,000	$	792,820


	Gain Recognized in AOCL before Reclassifications				Gain Recognized in Interest Expense for Excluded Components
(in thousands)	2022		2021		2022		2021
Three Months Ended March 31,
Net investment hedges:
Forward contracts	$	19,393	$	37,515	$	7,565	$	6,574
Foreign currency debt	11,760		40,950		—		—
Total	$	31,153	$	78,465	$	7,565	$	6,574


	Pension Benefits
(in thousands)	2022		2021
Service cost	$	2,616	$	3,041
Interest cost	18,867		17,906
Expected return on plan assets	(37,672)		(38,732)
Amortization of prior service cost	172		172
Amortization of actuarial loss	9,279		12,456
Net periodic benefit income	$	(6,738)	$	(5,157)


(in thousands)	As of January 3, 2022
Trade accounts receivable	$	156,000
Merchandise inventories	166,000
Prepaid expenses and other current assets	39,000
Property, plant and equipment	26,000
Operating lease assets	49,000
Other assets	1,000
Total identifiable assets acquired (excluding other intangible assets and goodwill)	437,000
Trade accounts payable	85,000
Other current liabilities	32,000
Operating lease liabilities	17,000
Deferred tax liabilities	121,000
Other long-term liabilities	39,000
Total liabilities assumed	294,000
Net identifiable assets acquired (excluding other intangible assets and goodwill)	143,000
Other intangible assets and goodwill	1,166,000
Net assets acquired	$	1,309,000


	Changes in Accumulated Other Comprehensive Loss by Component
(in thousands)	Pension and Other Post-Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation		Total
Beginning balance, January 1, 2022	$	(463,227)	$	(15,042)	$	(379,470)	$	(857,739)
Other comprehensive income before reclassifications	—		—		42,132		42,132
Amounts reclassified from accumulated other comprehensive loss	6,989		3,741		—		10,730
Other comprehensive income, net of income taxes	6,989		3,741		42,132		52,862
Ending balance, March 31, 2022	$	(456,238)	$	(11,301)	$	(337,338)	$	(804,877)


	Three Months Ended March 31,
(in thousands)	2022		2021
North America:
Automotive	$	2,130,873	$	1,862,805
Industrial	1,910,433		1,399,399
Total North America	$	4,041,306	$	3,262,204
Australasia:
Automotive	$	378,909	$	367,869
Industrial	108,581		112,150
Total Australasia	$	487,490	$	480,019
Europe – Automotive	$	765,839	$	722,491
Total net sales	$	5,294,635	$	4,464,714

SEC Form 10-Q filed by Genuine Parts Company