First Quarter 2025 Earnings Presentation April 22, 2025 Safe Harbor Statement FORWARD-LOOKING STATEMENTS: Some statements in this presentation, as well as in other materials we file with the Securities and Exchange Commission (SEC), release to the public, or make available on our 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 ...

Financial Performance - First Quarter 2025 sales were $5.9 billion, a 1.4% increase from $5.8 billion in the same period last year[4] - Net income for the first quarter was $194 million, or $1.40 per diluted share, compared to $249 million, or $1.78 per diluted share in the prior year[5] - Adjusted net income was $243 million, or $1.75 per diluted share, down from $311 million, or $2.22 per diluted share in the prior year[6] - Net sales for Q1 2025 increased to $5,866,069 thousand, up 1.4% from $5,783,631 thousand in Q1 2024[27] - Gross profit rose to $2,173,684 thousand, compared to $2,074,655 thousand in the previous year, reflecting a gross margin improvement[27] - Net income decreased to $194,392 thousand, down 22% from $248,894 thousand in Q1 2024[27] - Basic and diluted earnings per share were both $1.40, down from $1.79 and $1.78 respectively in Q1 2024[27] - Adjusted net income for Q1 2025 was $243,073 thousand, compared to $310,898 thousand in Q1 2024, reflecting a decrease in profitability[35] Segment Performance - Global Automotive sales reached $3.7 billion, a 2.5% increase, while Industrial sales were $2.2 billion, down 0.4%[9][10] - Segment EBITDA for Automotive was $286 million, a decrease of 10.7%, with an EBITDA margin of 7.8%[9] - Industrial segment EBITDA was $279 million, consistent with the prior year, and the EBITDA margin improved to 12.7%[10] - Automotive segment net sales grew to $3,664,888 thousand, a 2.5% increase, while the Industrial segment saw a slight decline of 0.4%[29] Expenses and Cash Flow - Total operating expenses increased to $1,885,739 thousand, up from $1,754,790 thousand in the prior year, driven by higher selling, administrative, and other expenses[27] - Cash flow from operations decreased by $41 million in the first quarter, primarily due to lower net income and working capital changes[11] - For Q1 2025, the company reported a net cash used in operating activities of $(40,827) thousand, a significant decrease from $318,306 thousand in Q1 2024[41] - Free Cash Flow for Q1 2025 was $(160,667) thousand, compared to $202,616 thousand in Q1 2024[41] Outlook and Guidance - The company reaffirms its 2025 outlook with total sales growth projected at 2% to 4% and adjusted diluted EPS guidance of $7.75 to $8.25[7][16] - For the year ending December 31, 2025, the company expects net cash provided by operating activities to be between $1.2 billion and $1.4 billion[41] - The company anticipates purchases of property, plant, and equipment to range from $400 million to $450 million for the year ending December 31, 2025[41] - Free Cash Flow for the year ending December 31, 2025, is projected to be between $800 million and $1.0 billion[41] Dividends and Assets - The company declared dividends of $1.03 per common share, up from $1.00 in the previous year[27] - Cash and cash equivalents at the end of Q1 2025 were $420,447 thousand, down from $479,991 thousand at the end of Q4 2024[34] - Total assets increased to $19,817,205 thousand, compared to $19,282,705 thousand at the end of the previous year[33] Challenges and Strategic Focus - The company is navigating challenges from tariffs and trade dynamics while focusing on customer service and strategic initiatives[4]

Core Viewpoint - Genuine Parts Company reported a solid start to 2025, with a focus on customer service and strategic initiatives despite challenges from tariffs and trade dynamics [2] Financial Performance - Sales for Q1 2025 were $5.9 billion, a 1.4% increase from $5.8 billion in Q1 2024, driven by a 3.0% benefit from acquisitions, offset by a 0.8% decrease in comparable sales and a 0.8% unfavorable impact from foreign currency [2] - Net income was $194 million, or $1.40 per diluted share, compared to $249 million, or $1.78 per diluted share in the prior year [3] - Adjusted net income was $243 million, or $1.75 per diluted share, down from $311 million, or $2.22 per diluted share in the prior year [4] Segment Highlights - **Automotive Parts Group**: Global automotive sales reached $3.7 billion, up 2.5% from the previous year, with a segment EBITDA of $286 million, a decrease of 10.7% [5] - **Industrial Parts Group**: Industrial sales were $2.2 billion, down 0.4% from the previous year, with segment EBITDA remaining stable at $279 million [6] Cash Flow and Capital Allocation - Cash flow from operations decreased by $41 million in Q1 2025, primarily due to lower net income and working capital changes [7] - Net cash used in investing activities was $155 million, including $120 million for capital expenditures and $74 million for acquisitions [7] - Free cash flow decreased by $161 million for the first three months of 2025 [7] Balance Sheet - As of March 31, 2025, the company had $420 million in cash and cash equivalents and $2 billion in undrawn capacity on its Revolving Credit Agreement [8] 2025 Outlook - The company reaffirmed its full-year 2025 guidance, expecting total sales growth of 2% to 4% and adjusted diluted EPS of $7.75 to $8.25 [11][12]

Group 1 - Genuine Parts Company (NYSE: GPC) has experienced a significant decline, with its stock down double-digits over the past year [1]

Group 1: Market Overview - The stock market has recently experienced a significant decline due to concerns regarding the impact of tariffs on the economy [1] - Falling stock prices have led to increased dividend yields, allowing investors to secure higher returns on quality dividend stocks [1] Group 2: VICI Properties - VICI Properties' stock has decreased over 10% from its recent peak, resulting in a dividend yield of 5.7%, significantly higher than the S&P 500's yield of 1.5% [3][4] - The REIT benefits from stable cash flow generated from high-quality experiential real estate, such as casinos and entertainment complexes [3] - VICI Properties has a strong financial profile, having raised its dividend for seven consecutive years at a 7% compound annual rate, outperforming its peers [5] Group 3: Verizon - Verizon's shares have fallen more than 7%, increasing its dividend yield to 6.3% [6] - The company generated $36.9 billion in cash flow from operations and $19.8 billion in free cash flow last year, comfortably covering its $11.2 billion dividend payout [7] - Verizon is acquiring Frontier Communications for $20 billion to enhance its broadband network, positioning itself for future revenue and cash flow growth [8] Group 4: Genuine Parts Company - Genuine Parts Company has seen its stock drop over 30%, raising its dividend yield to 3.7% [9] - Despite potential tariff impacts on the automotive sector, the company has a history of resilience, having increased its dividend for 69 consecutive years [10] - The company produced $1.3 billion in cash flow from operations and $684 million in free cash flow last year, exceeding its $555 million dividend payments [11]

Company Overview - Genuine Parts Company is a leading global service provider of automotive and industrial replacement parts and value-added solutions, established in 1928 [2] - The company operates its Automotive Parts Group across multiple countries including the U.S., Canada, Mexico, and several European nations, while its Industrial Parts Group serves customers primarily in North America and Australasia [2] - Genuine Parts Company has a vast network of over 10,700 locations in 17 countries, supported by more than 63,000 employees [2] Upcoming Financial Results - The company plans to release its first quarter financial results on April 22, 2025 [1] - Following the release, management will host a conference call at 8:30 a.m. ET, which will be accessible via webcast and by phone [1] - A replay of the conference call will be available on the company's website two hours after the call's completion [1]

Company Overview - Genuine Parts (GPC) shares have increased by approximately 2.1% over the past month, outperforming the S&P 500 index [1] - The most recent earnings report indicates a need to analyze the catalysts affecting the stock's performance [1] Earnings Estimates - Fresh estimates for Genuine Parts have trended downward, with the consensus estimate decreasing by 14.93% [2] - The stock currently holds a Zacks Rank of 4 (Sell), indicating expectations for below-average returns in the coming months [4] VGM Scores - Genuine Parts has a subpar Growth Score of D and a Momentum Score of F, while it received a B grade for value, placing it in the second quintile for this investment strategy [3] - The aggregate VGM Score for the stock is D, which is significant for investors not focused on a single strategy [3] Industry Performance - Genuine Parts is part of the Zacks Automotive - Retail and Wholesale - Parts industry, where O'Reilly Automotive (ORLY) has seen a 3.4% increase in stock price over the past month [5] - O'Reilly Automotive reported revenues of $4.1 billion for the last quarter, reflecting a year-over-year growth of 6.9% [5] - The expected earnings per share for O'Reilly Automotive for the current quarter is $9.84, representing a year-over-year increase of 7% [6]

Core Insights - The international operations of Genuine Parts Company (GPC) are crucial for assessing its financial resilience and growth prospects, especially in the context of its expansive global footprint [1][2] Revenue Performance - GPC's total revenue for the quarter ended December 2024 was $5.77 billion, reflecting a 3.3% increase from the same quarter last year [4] - International revenue trends reveal that Europe contributed $940.47 million (16.30%) to total revenue, surpassing analyst expectations of $937.31 million, and showing a slight decrease from $960.03 million (16.08%) in the previous quarter [5] - Australasia accounted for $589.3 million (10.21%) of total revenue, exceeding expectations of $565.77 million, and showing growth from $532.13 million (9.53%) in the same quarter last year [6] Future Projections - Analysts forecast GPC's total revenue for the current fiscal quarter to be $5.83 billion, indicating a 0.9% increase year-over-year, with expected contributions from Europe and Australasia at $973.22 million (16.7%) and $533.49 million (9.1%) respectively [7] - For the full year, GPC is projected to achieve total revenue of $24.1 billion, a 2.6% increase from the previous year, with Europe expected to contribute $3.93 billion (16.3%) and Australasia $2.3 billion (9.6%) [8] Strategic Considerations - The reliance on international markets presents both opportunities and challenges for GPC, making the analysis of international revenue trends essential for forecasting the company's future outlook [9][10]

Core Viewpoint - Genuine Parts Company (GPC) is positioned as a strong long-term investment opportunity due to its current stock price being at long-term lows, a solid dividend yield, and ongoing growth initiatives aimed at enhancing business performance in 2025 [3][4]. Financial Performance - GPC reported net revenue of $5.8 billion for the fiscal fourth quarter, reflecting a 3.3% increase year-over-year, driven by acquisitions and a favorable foreign exchange impact [4]. - The company experienced a slight decline in comparable sales of 0.5%, primarily due to weakness in the Industrial segment, while the Automotive segment showed growth [4]. - Adjusted earnings were reported at $1.61, with positive free cash flow and guidance indicating improvement for 2025 [5][6]. Dividend Information - GPC offers a dividend yield of 3.39%, with an annual dividend of $4.12 and a strong track record of 70 years of dividend increases [5]. - The annualized three-year dividend growth rate stands at 7.06%, with a payout ratio of 63.68% [5]. Growth Strategy - The company is focusing on technology, expanding into new categories, and enhancing customer accessibility and satisfaction as part of its repositioning efforts [4]. - Guidance for 2025 includes expectations for organic growth in both segments, aligning with a consensus estimate of a 3% revenue increase, although earnings targets are forecasted to be below consensus [6][7]. Cash Flow and Balance Sheet - GPC's cash flow and balance sheet reflect the impact of acquisitions and repositioning, with increased assets and steady equity, allowing for debt repayment and capital returns to shareholders [8]. - Free cash flow is expected to grow by a double-digit percentage, enhancing the company's financial flexibility [7]. Market Activity - Institutional buying of GPC stock has increased significantly in Q1 2025, reaching a multiyear high, which is seen as a bullish indicator for the stock [9]. - Analysts currently rate GPC as a "Hold," but sentiment suggests a potential upside of 15% based on consensus estimates [9][10].

Financial Performance - In 2024, the company's net sales reached $23.5 billion, reflecting a 1.7% year-over-year increase, primarily driven by acquisitions in the Automotive segment and two additional selling days[145]. - Net income for 2024 totaled $904 million, a decrease of 31.3% compared to the previous year, largely due to costs associated with a global restructuring program[146]. - The Automotive segment generated net sales of $14.8 billion in 2024, a 3.7% increase from 2023, supported by strategic acquisitions of over 500 stores in the U.S.[151]. - The Industrial segment reported net sales of $8.7 billion in 2024, a 1.4% decrease from 2023, impacted by a 2.1% decline in comparable sales[153]. - Adjusted net income was $1.1 billion in 2024, down 13.4% from $1.3 billion in 2023, with adjusted diluted EPS at $8.16, down $1.17 from the previous year[166]. - Comprehensive income for 2024 was $619.205 million, down from $1,372.194 million in 2023, a decrease of 54.8%[256]. - Basic earnings per share for 2024 was $6.49, down from $9.38 in 2023, reflecting a decline of 30.3%[313]. Expenses and Costs - Selling, administrative, and other expenses rose to $6.6 billion, representing 28.3% of sales, an increase of 7.7% from the previous year[149]. - The company incurred $221 million in restructuring and other costs in 2024 as part of its global restructuring program[146]. - SG&A expenses increased by $476 million, or 7.7%, in 2024, with 50% of the increase driven by personnel expenses and 10% by higher rent expenses[158]. - SG&A as a percentage of sales rose to 28.3% in 2024 from 26.7% in 2023, primarily due to inflationary pressures and increased operating expenses from acquisitions[159]. - Total adjustments in the consolidated statement of income for 2024 amounted to $315.7 million, with cost of goods sold at $69.1 million and restructuring costs at $213.5 million[183]. Cash Flow and Liquidity - The cash balance decreased to $480 million in 2024 from $1.1 billion in 2023, while total debt increased to $4.3 billion, up $378 million from the previous year[187]. - Operating activities generated $1.25 billion in cash, a decrease of 12.8% from $1.44 billion in 2023, primarily due to lower net income and higher inventory levels[190]. - Investing activities saw a significant increase in cash outflow to $1.51 billion, up 113.6% from $705.8 million in 2023, driven by $1.1 billion for acquisitions[190]. - Financing activities reflected a net cash outflow of $333.9 million, including $555 million in dividends paid and $150 million in share repurchases[193]. - Total liquidity at year-end 2024 was $2.0 billion, comprising $1.5 billion available on the revolving credit facility and $480 million in cash[199]. Inventory and Assets - Inventory increased by $838 million, or 17.9%, from December 31, 2023, due to U.S. automotive acquisitions and strategic product assortment investments[187]. - Total assets as of December 31, 2024, were $19,282.705 million, up from $17,968.454 million in 2023, indicating a growth of 7.3%[251]. - Automotive segment assets rose to $10,843,729 thousand in 2024, up from $9,845,644 thousand in 2023, reflecting a growth of about 10.1%[330]. - Industrial segment assets grew to $2,765,504 thousand in 2024, compared to $2,535,404 thousand in 2023, marking an increase of approximately 9.1%[330]. - Goodwill and other intangible assets increased to $4,696,301 thousand in 2024 from $4,527,594 thousand in 2023, showing a growth of approximately 3.7%[330]. Restructuring and Strategic Initiatives - A strategic initiative for inventory rebranding is set to launch in 2025, aiming to streamline product offerings and enhance market penetration[156]. - The company expects to incur additional restructuring costs of $150 to $180 million in 2025, with anticipated savings of $100 to $125 million from these initiatives[161]. - The company is executing a restructuring initiative that includes voluntary retirement offers and optimization of distribution centers and stores[330]. - The company recognized a $62 million non-cash charge to write down inventory as part of the new global branding initiative[157]. - The company incurred $7 million in inventory liquidation costs due to facility closures as part of its global restructuring initiative[330]. Pension and Benefits - The benefit obligation for the pension plan was approximately $735 million as of December 31, 2024, with a non-cash, pre-tax pension settlement charge expected in 2025 or early 2026[194]. - The U.S. pension plan is well-funded with a funded status of 128% as of December 31, 2024[212]. - Net periodic benefit income for defined benefit pension plans was $54 million, $44 million, and $27 million for the years ended December 31, 2024, 2023, and 2022, respectively[219]. - A 25 basis point increase in the discount rate would decrease the projected benefit obligation by approximately $38 million[218]. - The expected rate of return on plan assets for measuring 2025 pension income is 5.33%[216]. Market and Economic Factors - Inflationary pressures in 2024 and 2023 included increases in product costs and higher operating costs[235]. - A 10% shift in exchange rates would impact translated net sales by approximately $829 million in 2024 and $797 million in 2023[233]. - A 100 basis point increase in interest rates would increase fees on the A/R Sales Agreement by $10 million[234]. - The company monitors foreign currency exposures and uses currency forward contracts to manage risks[232].