PR Newswire | Feb 17, 2021 08:21AM EST

02/17 07:20 CST

Genuine Parts Company Reports Results For The Fourth Quarter And Full Year 2020Fourth Quarter 2020 Highlights- Sales of $4.3 billion, Down 0.7%- Diluted EPS from Continuing Operations $1.18, Up 119%- Adjusted Diluted EPS from Continuing Operations $1.52, Up 19.7%Full Year 2020 Highlights- Sales $16.5 billion, Down 5.6%; Excluding Divestitures, Down 2.3%- Diluted EPS from Continuing Operations $1.13, Down 74%- Adjusted Diluted EPS from Continuing Operations $5.27, Down 0.8%- Cash Flow from Operations of $2.0 billion- Returned $549 million to Shareholders via Cash Dividends and Share Repurchases- Introduces 2021 Outlook for Revenue Growth of 4% to 6% and Diluted EPS of $5.55 to $5.75 ATLANTA, Feb. 17, 2021

ATLANTA, Feb. 17, 2021 /PRNewswire/ -- Genuine Parts Company (NYSE: GPC) announced today its results for the fourth quarter and twelve months ended December 31, 2020.

"Our fourth quarter results reflect the benefit of our ongoing strategic actions, despite the continued challenges of COVID-19. The GPC team was agile in adapting to dynamic conditions and executed on our initiatives to deliver customer value, operational efficiencies and strong financial results. We are grateful to our 50,000 associates for their unwavering commitment to excellence while responding to unprecedented business and economic conditions," said Paul Donahue, Chairman and Chief Executive Officer of Genuine Parts Company.

Fourth Quarter 2020 Results

Sales from continuing operations were $4.3 billion, a 0.7% decrease from the same period in 2019. The decrease in sales was primarily attributable to a 2.8% decline in comparable sales, partially offset by a 0.8% benefit from acquisitions and a 1.3% net benefit of foreign currency and other.

Net income from continuing operations was $171.6 million, or a diluted earnings per share of $1.18. This compares to net income from continuing operations of $79.0 million, or $0.54 per diluted share in the prior year period. Excluding the impact of restructuring, an inventory adjustment, and transaction and other costs, adjusted net income from continuing operations was $221.0 million compared to $185.7 million a year ago. Adjusted net income per diluted share from continuing operations was $1.52, a 19.7% increase compared to $1.27 per diluted share last year1.

Mr. Donahue continued, "Automotive sales were led by strong growth in Australasia, while the pace of recovery slowed in Europe and North America relative to the previous quarter. In response, our team was focused on our strategic priorities to strengthen our supply chain, improve our inventory availability and enable our sales team to build positive sales momentum. Industrial sales were much improved from the prior quarter and grew progressively stronger through the last three months of the year. These top line results, combined with further gross margin improvement and lower operating expenses, drove expanded operating margins in both our automotive and industrial businesses and strong earnings growth. We also finished the year with a strong balance sheet, ample liquidity and robust cash flow."

Fourth Quarter 2020 Segment Results

Automotive Parts Group

Automotive sales were $2.8 billion in the fourth quarter, up 0.7% from 2019 and representing 66% of total Company revenues. The increase consisted of a 0.9% contribution from acquisitions and a 1.8% net benefit of foreign currency, offset by a 2.0% decrease in comparable sales. Segment profit of $240.1 million increased 19.4%, with profit margin of 8.5%, up 130 basis points from 2019.

Industrial Parts Group

Industrial sales were $1.4 billion in the fourth quarter, down 3.3% from 2019 and representing 34% of total Company revenues. The decrease in sales was comprised of a 4.4% decrease in comparable sales, partially offset by a 0.6% contribution from acquisitions and a 0.5% net benefit of foreign currency. Segment profit of $133.4 million increased 5.1%, with profit margin of 9.3%, up 70 basis points from 2019.

Full Year 2020 Results

Sales from continuing operations for the twelve months ended December 31, 2020 were $16.5 billion, a 5.6% decrease compared to $17.5 billion in 2019. Excluding divestitures, net sales from continuing operations were down 2.3% for the twelve months. Net income from continuing operations was $163.4 million and diluted earnings per share were $1.13 for the twelve months, compared to $646.5 million, or $4.42 per share in 2019. Excluding items which impact comparability with prior periods, the Company's adjusted net income from continuing operations was $765.0 million, or $5.27 per share, compared to $776.8 million, or $5.31 per share in 2019.

Balance Sheet, Cash Flow and Capital Allocation

The Company generated operating cash flow from continuing operations of $2.0 billion in 2020, an increase from $833 million in 2019, driven primarily by working capital initiatives, including the sale of accounts receivable that increased operating cash flows by $800 million. Free cash flow was $1.9 billion, an increase from $555 million in 2019. The Company also generated $183 million in cash flow from investing activities and used $1.5 billion of cash flow in financing activities.

The Company improved its debt position in the fourth quarter by issuing $500 million in public debt and refinancing its revolving credit facility. The Company ended the year with $2.9 billion in total liquidity, consisting of $1.9 billion in unused credit capacity and $1.0 billion in cash and cash equivalents. For the year, the Company reduced debt by $749 million, or 22%, and is in compliance with all its debt covenants.

"While we chose to prudently conserve cash and carefully monitor our capital deployment through much of 2020 due to COVID-19, we reinvested in our businesses via essential capital expenditures and a few bolt-on acquisitions. The Company also returned $549 million to shareholders, including $453 million in dividends and $96 million in share repurchases," said Carol Yancey, Executive Vice President and Chief Financial Officer. "We enter 2021 with an excellent balance sheet, including a strong cash position and ample liquidity, to support our growth plans and provide for disciplined, value creating capital allocation. As we gain greater visibility into the macro environment, we expect to resume more normal levels of capital allocation, including the reinvestment in our business."

"The year 2020 was extraordinary in every respect," Mr. Donahue concluded. "The COVID-19 pandemic has been incredibly challenging, but the global GPC team proved resilient and up to the challenge. Despite economic and market uncertainties, we remained focused on our strategic growth initiatives and cost actions. Notably, we further streamlined our operations with the divestiture of our Business Products segment, which helped optimize our portfolio and strengthened our focus on the global automotive and industrial businesses. We are extremely proud of our team for their many accomplishments in a difficult year and excited to move forward into 2021 as a stronger, more agile Company well-positioned to drive strong sales growth, earnings and cash flow."

2021 Outlook

The Company is reinstating its practice of providing full-year guidance. The Company considered its current growth plans, strategic initiatives, recent business trends, global economic outlook and the continued uncertainty of COVID-19 and its potential impact on our results, in establishing its full-year 2021 guidance as outlined in the table below. The Company will update full-year guidance during 2021, as appropriate.

Year Ended 12/31/2021

Total sales growth 4% to 6%

Automotive sales growth 4% to 6%

Industrial sales growth 3% to 5%

Diluted earnings per share $5.55 to $5.75

Effective tax rate 24.5% to 25.5%

Net cash provided by operating activities$1.0 billion to $1.2 billion

Capital expenditures $275 million to $325 million

Certain Non-GAAP Information

This release contains certain financial information not derived in accordance with the United States ("U.S.") generally accepted accounting principles ("GAAP"). These items include changes in sales excluding divestitures, adjusted net (loss) income from continuing operations, adjusted diluted net (loss) income from continuing operations per common share and free cash flow. The Company believes that the presentation of changes in sales excluding divestitures, adjusted net (loss) income from continuing operations, adjusted diluted net (loss) income from continuing operations per common share and free cash flow, which are not calculated in accordance with GAAP, 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 that 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, divestitures and foreign currency. 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 metric 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.

Daily Sales

Daily sales is a key metric that represents the amounts invoiced to the Company's customers each day. Daily sales do not represent GAAP-based sales because, among other things, invoices are not always generated at the same time goods and services are delivered to customers and the amounts do not include adjustments for estimates of returns, rebates or other forms of variable consideration. Management uses this metric to monitor demand trends at each of its subsidiaries throughout each month for the purposes of monitoring performance against forecasts and to make operational decisions. The Company considers this metric useful to investors because it provides greater transparency into management's view and assessment of the Company's ongoing operations. The calculation of this 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 and future outlook. 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 website at http://genuineparts.investorroom.com. The call is also available by dialing 877-407-0789, conference ID 13715052. A replay will also be available on the Company's website or at 844-512-2921, conference ID 13715052, two hours after the completion of the call until 12:00 a.m. Eastern time on March 3, 2021.

Forward Looking Statements

Some statements in this press release, as well as in other materials we file with the Securities and Exchange Commission (SEC) or otherwise release to the public and in materials that we 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 as "expect," "likely," "outlook," "forecast," "preliminary," "would," "could," "should," "position," "will," "project," "intend," "plan," "on track," "anticipate," "to come," "may," "possible," "assume," and variations of such words and similar expressions are intended to identify such forward-looking statements. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking. These forward-looking statements include, without limitation, statements regarding our growth plans, capital allocations and reinvestment in our business during the coming year, as well as statements under the heading "2021 Outlook" above.

The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our 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 our business operations caused by the global health crisis associated with the COVID-19 outbreak, including the effects on the financial health of our business partners and customers, on supply chains and our suppliers, on vehicle miles driven as well as other metrics that affect our 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 and to realize the anticipated synergies and benefits; the Company's ability to successfully divest businesses and realize the expected benefits of those divestitures; 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 our suppliers' operations, including the impact of COVID-19 on our suppliers as well as our supply chain; changes in national and international legislation or government regulations or policies, including changes to import tariffs, short term government subsidies, and the unpredictability of such changes and their impact to the Company and its suppliers and customers, data security policies and requirements as well as privacy legislation; changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation and the United Kingdom's (U.K.) exit from the European Union and the unpredictability of the impact of such exit; changes in tax laws, regulations, treaties and policies, including the interpretation and enforcement of any of the foregoing; 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 our 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; and the other risks and uncertainties discussed in the Company's Annual Report on Form 10-K for 2020 (all of which risks may be amplified by the COVID-19 outbreak) and from time to time in the Company's subsequent filings with the SEC.

Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its 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.

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 U.K., 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 14 countries. Further information is available at www.genpt.com.

1Adjusted net income from continuing operations, adjusted diluted net income from continuing operations per common share, sales excluding divestitures 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 (UNAUDITED)



Three Months Ended Twelve Months Ended December 31, December 31,

(in thousands, except per share 2020 2019 2020 2019 data)

Net sales $4,251,594$4,279,890$16,537,433$17,522,234

Cost of goods sold 2,803,484 2,800,942 10,882,592 11,662,551

Gross profit 1,448,110 1,478,948 5,654,841 5,859,683

Operating expenses:

Selling, administrative and 1,132,297 1,163,196 4,386,739 4,577,610 other expenses

Depreciation and 69,758 70,295 272,842 257,263 amortization

Provision for 125 3,446 23,577 13,876 doubtful accounts

Restructuring costs11,010 100,023 50,019 100,023

Goodwill impairment- - 506,721 - charge

Total operating 1,213,190 1,336,960 5,239,898 4,948,772 expenses

Non-operating expenses (income):

Interest expense 21,495 22,016 93,713 95,583

Other (12,121) (23,975) (58,138) (86,712)

Special termination- 42,757 - 42,757 costs

Total non-operating9,374 40,798 35,575 51,628 expenses (income)

Income before 225,546 101,190 379,368 859,283 income taxes

Income taxes 53,914 22,174 215,973 212,808

Net income from continuing 171,632 79,016 163,395 646,475 operations

Net loss from discontinued (428) (70,098) (192,497) (25,390) operations

Net income (loss) $171,204 $8,918 $(29,102) $621,085

Basic earnings (loss) per share:

Continuing $1.19 $0.54 $1.13 $4.44 operations

Discontinued - (0.48) (1.33) (0.18) operations

Basic earnings $1.19 $0.06 $(0.20) $4.26 (loss) per share

Diluted earnings (loss) per share:

Continuing $1.18 $0.54 $1.13 $4.42 operations

Discontinued - (0.48) (1.33) (0.18) operations

Diluted earnings $1.18 $0.06 $(0.20) $4.24 (loss) per share

Weighted average common shares 144,313 145,325 144,474 145,736 outstanding

Dilutive effect of stock options and non-vested 847 780 641 681 restricted stock awards

Weighted average common shares 145,160 146,105 145,115 146,417 outstanding - assuming dilution

GENUINE PARTS COMPANY AND SUBSIDIARIES SEGMENT INFORMATION (UNAUDITED)



Three Months Ended Twelve Months Ended December 31, December 31,

(in thousands) 2020 2019 2020 2019

Net sales:

Automotive $2,821,832$2,801,533$10,860,695$10,993,902

Industrial 1,429,762 1,478,357 5,676,738 6,528,332

Total net sales $4,251,594$4,279,890$16,537,433$17,522,234

Segment profit:

Automotive $240,135 $201,086 $867,743 $831,951

Industrial 133,373 126,943 481,854 521,830

Total segment 373,508 328,029 1,349,597 1,353,781 profit

Interest expense, (21,083) (20,922) (91,048) (91,405) net

Corporate expense (32,701) (37,233) (149,754) (140,815)

Intangible asset (24,743) (23,421) (94,962) (92,206) amortization

Other unallocated (69,435) (145,263) (634,465) (170,072) costs (1)

Income before income taxes from $225,546 $101,190 $379,368 $859,283 continuing operations





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



Three Months Ended Twelve Months Ended December 31, December 31,

(in thousands) 2020 2019 2020 2019

Other unallocated costs:

Goodwill impairment$- $- $(506,721) $- charge

Restructuring costs(11,010) (100,023) (50,019) (100,023)

Special termination- (42,757) - (42,757) costs

Realized currency and other - - (11,356) (34,701) divestiture losses

Gain on insurance proceeds related to- - 13,448 - SPR fire

Inventory (40,000) - (40,000) - adjustment

Gain on equity - - - 38,663 investment

Transaction and (18,425) (2,483) (39,817) (31,254) other costs

Total other $(69,435) $(145,263)$(634,465) $(170,072) unallocated costs

GENUINE PARTS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)



As of December 31,

(in thousands) 2020 2019

Assets

Current assets:

Cash and cash equivalents $990,166 $276,992

Trade accounts receivable, less allowance for doubtful accounts (2020 - $36,622; 2019 - 1,556,966 2,440,252 $35,047)

Merchandise inventories, net 3,506,271 3,443,876

Prepaid expenses and other current assets 1,060,360 1,063,245

Current assets of discontinued operations - 714,251

Total current assets 7,113,763 7,938,616

Goodwill 1,917,477 2,293,519

Other intangible assets, net 1,498,257 1,492,097

Deferred tax assets 65,658 45,921

Property, plant and equipment, less accumulated depreciation (2020 - $1,398,095; 2019 - 1,162,043 1,173,688 $1,200,688)

Operating lease assets 1,038,877 995,667

Other assets 644,140 457,350

Noncurrent assets of discontinued operations - 248,771

Total assets $13,440,215$14,645,629



Liabilities and equity

Current liabilities:

Trade accounts payable $4,128,084 $3,948,000

Current portion of debt 160,531 624,043

Dividends payable 114,043 110,851

Other current liabilities 1,491,426 1,493,109

Current liabilities of discontinued operations - 218,117

Total current liabilities 5,894,084 6,394,120

Long-term debt 2,516,614 2,802,056

Operating lease liabilities 789,294 756,519

Pension and other post-retirement benefit 265,687 249,832 liabilities

Deferred tax liabilities 212,910 233,044

Other long-term liabilities 543,623 445,652

Noncurrent liabilities of discontinued - 68,906 operations

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 144,354 145,378 outstanding - 2020 - 144,354,335 shares and 2019 - 145,378,158 shares

Additional paid-in capital 117,165 98,777

Accumulated other comprehensive loss (1,036,502) (1,141,308)

Retained earnings 3,979,779 4,571,860

Total parent equity 3,204,796 3,674,707

Noncontrolling interests in subsidiaries 13,207 20,793

Total equity 3,218,003 3,695,500

Total liabilities and equity $13,440,215$14,645,629

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



Year Ended December 31

(in thousands) 2020 2019 2018

Operating activities:

Net (loss) income $(29,102) $621,085 $810,474

Net (loss) income from discontinued(192,497) (25,390) 60,940 operations

Net income from continuing 163,395 646,475 749,534 operations

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

Depreciation and amortization 272,842 257,263 227,584

Excess tax benefit from share-based(677) (4,920) (4,232) compensation

Deferred income taxes (27,722) (55,939) 1,593

Share-based compensation 22,621 28,703 17,737

Realized currency and other 11,356 34,701 - divestiture losses

Gain on equity investment - (38,663) -

Goodwill impairment charge 506,721 - -

Other operating activities 12,569 (17,589) 1,648

Changes in operating assets and liabilities:

Trade accounts receivable, net 957,514 (134,163) (62,103)

Merchandise inventories, net 58,462 (54,765) (74,148)

Trade accounts payable 89,350 82,739 357,097

Other short-term assets and (109,812) 11,740 (100,616) liabilities

Other long-term assets and 57,903 76,937 (57,372) liabilities

Net cash provided by operating activities from continuing 2,014,522 832,519 1,056,722 operations

Investing activities:

Purchases of property, plant and (153,502) (277,873) (226,506) equipment

Proceeds from sale of property, 18,064 24,387 14,391 plant and equipment

Proceeds from divestitures of 387,379 434,609 - businesses

Acquisitions of businesses and (69,173) (724,718) (257,823) other investing activities

Net cash provided by (used in) investing activities from 182,768 (543,595) (469,938) continuing operations

Financing activities:

Proceeds from debt 2,638,014 5,037,168 5,064,291

Payments on debt (3,533,017)(4,897,769)(5,124,265)

Stock options exercised (4,120) (11,413) (10,227)

Dividends paid (453,277) (438,890) (415,983)

Purchase of stock (96,215) (74,187) (91,983)

Other financing activities (65,150) (871) (30,663)

Net cash used in financing activities from continuing (1,513,765)(385,962) (608,830) operations

Cash flows from discontinued operations:

Net cash flows provided by operating activities from 5,039 59,491 88,442 discontinued operations

Net cash used in investing activities from discontinued (11,131) (19,611) (26,186) operations

Net cash provided by financing activities from discontinued - - - operations

Net cash (used in) provided by (6,092) 39,880 62,256 discontinued operations

Effect of exchange rate changes on 35,741 603 (21,562) cash and cash equivalents

Net increase (decrease) in cash and713,174 (56,555) 18,648 cash equivalents

Cash and cash equivalents at 276,992 333,547 314,899 beginning of year

Cash and cash equivalents at end of$990,166 $276,992 $333,547 year



Supplemental disclosures of cash flow information

Cash paid during the year for:

Income taxes $223,019 $303,736 $236,536

Interest $91,344 $95,281 $102,131

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 CONTINUINGOPERATIONS PER COMMON SHARE TO ADJUSTED DILUTED NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE (UNAUDITED)



Three Months Ended Twelve Months Ended December 31, December 31,

(in thousands, except per 2020 2019 2020 2019 share data)

GAAP net income from $171,632$79,016 $163,395$646,475continuing operations



Adjustments:

Goodwill impairment charge - - 506,721 - (1)

Restructuring (2) 11,010 142,780 50,019 142,780

Realized currency loss (3) - - 11,356 34,701

Gain on insurance proceeds - - (13,448) - related to SPR Fire (4)

Gain on equity investment (5)- - - (38,663)

Inventory adjustment (6) 40,000 - 40,000 -

Transaction and other costs 18,425 2,483 39,817 31,254 (7)

Total adjustments 69,435 145,263 634,465 170,072

Tax impact of adjustments (20,089) (38,564) (32,822) (39,704)

Adjusted net income from $220,978$185,715$765,038$776,843continuing operations





The table below represents amounts per common share assuming dilution:



Three Months Ended Twelve Months Ended December 31, December 31,

(in thousands, except per 2020 2019 2020 2019 share data)

GAAP net income from $1.18 $0.54 $1.13 $4.42 continuing operations



Adjustments:

Goodwill impairment charge - - 3.49 - (1)

Restructuring (2) 0.08 0.98 0.34 0.98

Realized currency and other - - 0.08 0.24 divestiture losses (3)

Gain on insurance proceeds - - (0.09) - related to SPR Fire (4)

Gain on equity investment (5)- - - (0.26)

Inventory adjustment (6) 0.28 - 0.28 -

Transaction and other costs 0.12 0.01 0.27 0.20 (7)

Total adjustments 0.48 0.99 4.37 1.16

Tax impact of adjustments (0.14) (0.26) (0.23) (0.27)

Adjusted net income from $1.52 $1.27 $5.27 $5.31 continuing operations

Weighted average common shares outstanding - assuming145,160 146,105 145,115 146,417 dilution





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.



Three Months Ended Twelve Months Ended December 31, December 31,

(in thousands) 2020 2019 2020 2019

Line item:

Cost of goods sold $40,000$2,127 $53,495 $9,608

Selling, administrative and 1,881 665 10,094 23,768 other expenses

Goodwill impairment charge - - 506,721 -

Restructuring costs 11,010 100,023 50,019 100,023

Non-operating expenses (income): Special termination - 42,757 - 42,757 costs

Non-operating expenses 16,544 (309) 14,136 (6,084) (income): Other

Total adjustments $69,435$145,263$634,465$170,072

(1) Adjustment reflects a second quarter goodwill impairment charge related toour European reporting unit.

(2) Adjustment reflects restructuring and special termination costs related tothe 2019 Cost Savings Plan announced in the fourth quarter of 2019. The costsare primarily associated with severance and other employee costs, including avoluntary retirement program, and facility and closure costs related to theconsolidation of operations.

(3) Adjustment reflects realized currency losses related to divestitures.

(4) Adjustment reflects insurance recoveries in excess of losses incurred oninventory, property, plant and equipment and other fire-related costs relatedto the S.P. Richards Headquarters and Distribution Center.

(5) Adjustment relates to the gain recognized upon remeasuring the Company'spreexisting 35% equity investment to fair value upon acquiring the remainingequity of Motion Asia Pacific on July 1, 2019.

(6) Adjustment reflects a $40 million increase to cost of goods sold recordedduring the quarter ended December 31, 2020 due to the correction of animmaterial error related to the accounting in prior years for considerationreceived from vendors.

(7) Adjustment includes a $17 million loss on investment, $10 million ofincremental costs associated with COVID-19 and costs associated with certaindivestitures. COVID-19 related costs include incremental costs incurredrelating to fees to cancel marketing events and increased cleaning andsanitization materials, among other things. For the three and twelve monthsended December 31, 2019, adjustment reflects transaction and other costsrelated to acquisitions and divestitures.

GENUINE PARTS COMPANY AND SUBSIDIARIES RECONCILIATION OF CHANGES IN GAAP TOTAL NET SALES TO NET SALES EXCLUDING DIVESTITURES (UNAUDITED)



Three Months Ended December 31, 2020

GAAP Total Net Sales Divestitures Net Sales Excluding Divestitures

Automotive 0.7 % - % 0.7 %

Industrial (3.3) % - % (3.3) %

Total Net Sales(0.7) % - % (0.7) %





Twelve Months Ended December 31, 2020

GAAP Total Net Sales Divestitures Net Sales Excluding Divestitures

Automotive (1.2) % (0.1) % (1.1) %

Industrial (13.0) % (8.5) % (4.5) %

Total Net Sales(5.6) % (3.3) % (2.3) %

GENUINE PARTS COMPANY AND SUBSIDIARIES CHANGE IN NET SALES SUMMARY (UNAUDITED)



Three Months Ended December 31, 2020

Comparable Foreign Total Sales AcquisitionsDivestituresCurrencyOther Net Sales

Automotive(2.0)% 0.9 % - % 2.3% (0.5)%0.7 %

Industrial(4.4)% 0.6 % - % 0.5% - %(3.3) %

Total Net (2.8)% 0.8 % - % 1.7% (0.4)%(0.7) %Sales





Twelve Months Ended December 31, 2020

Comparable Foreign Total Sales AcquisitionsDivestituresCurrencyOther Net Sales

Automotive(4.4)% 2.7 % (0.1) % 0.3% 0.3 %(1.2) %

Industrial(8.4)% 3.8 % (8.5) % 0.1% - %(13.0)%

Total Net (5.6)% 3.0 % (3.3) % 0.2% 0.1 %(5.6) %Sales

GENUINE PARTS COMPANY AND SUBSIDIARIES RECONCILIATION OF GAAP CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO FREE CASH FLOW (UNAUDITED)



Twelve Months Ended December 31,

(in thousands) 2020 2019

Net cash provided by operating activities $ 2,014,522 $ 832,519 from continuing operations

Purchases of property, plant and equipment (153,502) (277,873)

Free Cash Flow $ 1,861,020 $ 554,646

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SOURCE Genuine Parts Company