Genuine Parts Company · NYSE:GPC
Genuine Parts — Investor Day (March 2023)
87 slides from Genuine Parts's investor day presentation, Mar 23, 2023
Slide 1: Investor Day 2023
EPC INVESTOR > DAY 2023 WE KEEP THE WORLD MOVING
Slide 2: Welcome
Welcome Sid Jones Senior Vice President, Investor Relations 2
Slide 3: Safe Harbor Statement
Safe Harbor Statement Some of the comments made and information contained in this presentation will be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include projections of revenue, earnings, capital structure, and other financial items;
Slide 4: Agenda
Agenda Financial 1 Welcome 5 Outlook Leadership 2 6 Q&A Key Messages Initiative 3 7 Closing Showcase 4 Panel 8 Lunch Discussion w/ Management 4
Slide 5: We Are GPC
We Are GPC Paul Donahue Chairman & CEO 5
Slide 6: Key Objectives for the Day
Key Objectives for the Day 1 2 3 4 5 Understand Showcase Highlight Our Share Our Enhance Our Culture Our Strategy Talented 3-Year Confidence in and How We and Management Financial GPC as a Drive Value Initiatives Team Targets Differentiated Investment 6
Slide 7: GPC Snapshot
GPC Snapshot Global Footprint 2022 Revenue by Region $22.1B 95 YEARS Founded 1928 Headquarters Atlanta, GA Countries Served 17 Locations ~10,600 14% Europe • Distribution Centers ~205 • Warehouses ~765 77% North America • Retail ~9,630 (Owned/Independent) Employees ~58,000 9% Australasia Market Capi
Slide 8: Significant Transformation of Portfolio Since 2019
Significant Transformation of Portfolio Since 2019 Progress since 2019 2022 2019 Established transformation office 3% Divested EIS and SPR 9% ~$150M cost reduction 38% 31% Recruited new talent 57% Established global investment pillars 62% Acquisition of KDG Automotive Industrial SPR EIS Continued ef
Slide 9: 2019-2022 Growth Drove Superior Returns
2019-2022 Growth Drove Superior Returns Total Sales CAGR 3-Yr Total Shareholder Return $22,096 9.3% 21.2% $18,871 $16,920* $16,537 +$5B Revenues 2019 2020 2021 2022 Adj. EPS* CAGR 7.7% $5.25 $5.27 $6.91 $8.34 16.7% +$3.09 2019 2020 2021 2022 S&P 500 GPC * Non-GAAP financial measure, see appendix for
Slide 10: Together, Our Business Mix Creates Value
Together, Our Business Mix Creates Value Each are value-added, service- Commercial and talent best practice oriented distribution businesses sharing given similar strategic initiatives Numerous shared vendor relationships End market and cash flow dynamics globally and across industries are complemen
Slide 11: Our Market-Leading Global Automotive Business
Our Market-Leading Global Automotive Business Largest network of parts and care Diversification of Business Sales by Region 10% Canada 56% U.S. 12% Australasia ~9,600 ~30,000 Stores Global Repair Center 22% Customer Partnerships Europe Strong Results (2019 to 2022)* ~80% ~20% ~85% Sales CAGR of 110b
Slide 12: Our Market-Leading Industrial Business
Our Market-Leading Industrial Business Growing Services/Solutions Offering: Leading industrial parts distributor and solutions Automation provider in North America and Australasia…meeting needs for industrial Conveyance manufacturing applications and processes ~800 Access to Fluid Power Branches and
Slide 13: The Power of One GPC
The Power of One GPC Operating Leverages Capture Based on its Translate into strategy shared values opportunities global business differentiated that … and teamwork uniquely available mix and scale performance and to … to GPC … that … shareholder value One GPC Team working together to create custome
Slide 14: Building a Sustainable Future
Building a Sustainable Future 14
Slide 15: The New GPC Team
The New GPC Team Paul Donahue Will Stengel Bert Nappier Naveen Krishna Chairman & CEO President & COO EVP & CFO EVP & CIDO Randy Breaux Rob Cameron Franck Baduel President, Managing Director CEO, European North American and Group CEO, Automotive Industrial Australasia Kevin Herron Alain Masse Presid
Slide 16: Supportive Board of Directors With Diverse Expertise and Experience
Supportive Board of Directors With Diverse Expertise and Experience Board Composition 85% 31% 46% 9.5 Years Independent Women Diverse1 Average Directors Tenure Expertise and Experience CEO / Leadership Position 85% Government / Regulatory 54% Finance and Accounting 46% Automotive 31% International 3
Slide 17: GPC as Investment of Choice
GPC as Investment of Choice Talented team Size and scale Leading positions Clear strategic Continued with deep across diverse in large and plan underpinned delivery of strong expertise to drive industries and fragmented by M&A for financial results value geographies to automotive and robust growth t
Slide 18: Strategic Investments
Strategic Investments Will Stengel President & Chief Operating Officer 18
Slide 19: Our Purpose: We Keep the World MOVING
Our Purpose: We Keep the World MOVING Our Our Our Mission Vision Values BE THE Employer of Choice Be the leading global Serve BE THE automotive and industrial Perform Supplier of Choice parts distributor and Influence solutions provider. BE A Respect Valued Customer Innovate BE A Good Corporate Citi
Slide 20: Large, Fragmented Growth Markets
Large, Fragmented Growth Markets Total Addressable Market Opportunity Automotive Industrial SHARE: SHARE: ~8% ~6% $200B+ $150B+ Others: Others: ~92% ~94% 20
Slide 21: Diversified and Complementary Markets
Diversified and Complementary Markets Automotive Industrial Positive long-term growth outlook for Nearshoring given disruptions in global miles driven supply chain Growing and aging of car parc Strong outlook for automation and robotics solutions Complexity of vehicles increasing, Need for industria
Slide 22: Established and Diverse Customer Relationships
Established and Diverse Customer Relationships Automotive Industrial Purchasing Local Local Procurement 80% 20% Executives Engineers Managers Professional Repair DIY Auto Technicians Enthusiasts Operational Buyers 1.5M 0.9M Customer Locations Customer Locations 10 15 Customer Types, examples include
Slide 23: Industry-Leading and Iconic Brands
Industry-Leading and Iconic Brands Ranked #2 on Industrial Distribution List in 2022 90% of U.S. Consumers are Aware of NAPA 90% and 97% Awareness With Retail and Commercial Customers, Respectively, in Australia 23
Slide 24: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Automotive Automotive DCs 24
Slide 25: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Automotive Automotive DCs Company Stores 25
Slide 26: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Automotive Automotive DCs Company Stores Independent Stores 26
Slide 27: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Automotive Automotive DCs Company Stores Independent Stores Auto Care Centers 27
Slide 28: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Industrial Industrial DCs 28
Slide 29: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Industrial Industrial DCs Branches 29
Slide 30: Scaled Network With Local Service Coverage
Scaled Network With Local Service Coverage Industrial Industrial DCs Branches Customer Locations 30
Slide 31: GPC Operating Principles
GPC Operating Principles One GPC Team working together to create customer success How We Play and stakeholder value Earn strategic leadership positions in industries, geographies, Where We Play customers and suppliers with opportunities to profitably grow Invest and differentiate in Talent & Culture
Slide 32: How We Win
How We Win Foundational Priorities for Strategic Investments Talent & Sales Supply Emerging Technology Culture Effectiveness Chain Technology Develop high potential Utilize data and analytics Enhance data and Modernize operations Lead in emerging talent and infuse to understand our digital capabilit
Slide 33: Talent & Culture
Talent & Culture Three Words to Describe GPC’s Culture 78% 81% 78% Global I’m proud to GPC is a great Engagement work for this place to work Score company 2022 U.S. Technology Hires: 71% 32% Diverse Female 33
Slide 34: Customer Solutions: Automotive
Customer Solutions: Automotive Deliver innovative programs through the world’s largest network of automotive workshops Offer differentiated technology to our workshop partners Provide extensive, technical training for automotive technicians 34
Slide 35: Customer Solutions: Industrial
Customer Solutions: Industrial Specialize in automation, robotics, conveyance and fluid power technologies Offer full-value solutions to our customers Help industrial manufacturers optimize their operations 35
Slide 36: Digital
Digital New photo coming Integrate the customer experience in a unique solutions ecosystem Map the customer journey to craft omni- channel experiences Utilize digital capabilities and unmatched global networks as a competitive advantage 36
Slide 37: Pricing
Pricing Utilize a targeted approach to pricing to align with our customers’ needs and behaviors Optimize customer-specific pricing with increased visibility into service levels and cost-to-serve Build the capabilities and talent of our global pricing teams 37
Slide 38: Supply Chain
Supply Chain Consolidate facilities across our operations to improve supply chain effectiveness Automate facilities by investing in technology to increase capacity, productivity and efficiency Optimize supply chain by fully integrating our supplier, distribution, transportation and store networks 38
Slide 39: EV Market Assessment: A Global Evolution Over Time
EV Market Assessment: A Global Evolution Over Time Estimated Market Impact From EV EV % car parc 2022 2030 +/- 1% Europe 2% 16% Growing and aging car parc Canada 1% 13% Additional new products, e.g. ADAS Price inflation from repair complexity Fewer parts given EV U.S. 1% 8% Fewer collision given ADA
Slide 40: Emerging Technology
Emerging Technology Build a global EV network offering the tools and training techs need to service EVs Roll out NexDrive, powered by NAPA, the network of qualified workshops for next generation of cars Serve customers with the right parts, equipment and marketing expertise 40
Slide 41: Mergers & Acquisitions
Mergers & Acquisitions Accelerate Sales With New Extend strategic leadership positions in and Existing Customers large, fragmented markets Supply Chain Vendor Leverage Harmonization M&A Create value and leverage scale, relationships, Value Creation products and technology Extended Payment Terms SG&A
Slide 42: GPC M&A Execution
GPC M&A Execution Acquisition Evaluation Screen: Acquire strategic assets to extend market-leading positions and enhance product and service offerings Culture across both automotive and industrial markets Talent, Value Alignment Strategic Strategy Alignment, Value Creation Potential $270M Centralize
Slide 43: How We Win
M&A Talent & Culture How We Win Emerging Sales Technology Effectiveness Supply Chain Technology 43
Slide 44: Technology
Technology Naveen Krishna Executive Vice President & Chief Information & Digital Officer 44
Slide 45: Role of Technology
Role of Technology • Utilitarian • Limited Innovation • Digital Efficiencies • Simplify & Automate Operations • Service Delivery Efficiencies • Data Driven Innovation Bring the ‘Art of the Possible’ to our customers and operations 45
Slide 46: Transforming the Customer Experience
Transforming the Customer Experience Frictionless and consistent customer experiences that delight our customers throughout their journey every single time. 46
Slide 47: Transforming the Customer Experience
Transforming the Customer Experience ~9,600 1.5M+ Table Stakes • Product Assortment Stores Auto Repair & Commercial Locations • Supplier Partnerships • Pricing • Inventory Share of Addressable Spend • Distribution Network 12-15% 25%+ • Execution Discipline Automotive Industrial 47
Slide 48: Transforming the Customer Experience
Transforming the Customer Experience Strengthen Drive Recurring Modernize Foundations Growth and Competitive Loyalty Advantage 48
Slide 49: Foundational Platforms
Foundational Platforms Customer Catalog Data Solutions Automotive Aftermarket Supply Chain Search Industrial Solutions Data Digital & Payments Commerce Global Cloud-first Talent Collaboration Mindset 49
Slide 50: Foundational Platforms
Foundational Platforms Data Catalog Increased Automotive Aftermarket Efficiencies for GPC and Supplier Industrial Solutions Partners Data 50
Slide 51: Foundational Platforms
Foundational Platforms Data Best-in-Industry Automotive Aftermarket Search Search With Google Industrial Solutions Data 51
Slide 52: Foundational Platforms
Foundational Platforms Data Automotive Aftermarket Interconnected Digital Experience Industrial Solutions Data Digital & Commerce 52
Slide 53: Foundational Platforms
Foundational Platforms Data Differentiated Automotive Aftermarket Customer Experience and Industrial Solutions Stickiness Payments Data 53
Slide 54: Foundational Platforms
Foundational Platforms Data Optimized Supply Automotive Aftermarket Inventory and Chain Delivery Industrial Solutions Efficiency Data 54
Slide 55: Foundational Platforms
Foundational Platforms Customer Data Solutions Customer Specific Automotive Aftermarket Solutions to Drive Loyalty Industrial Solutions Data 55
Slide 56: Foundational Platforms
Foundational Platforms Efficiencies for GPC and Customer Catalog Solutions Data Supplier Partners Best-in-Industry Search Automotive Aftermarket Interconnected Digital Supply Chain Search Experience Industrial Solutions Optimized Inventory and Digital & Delivery Efficiency Data Payments Commerce Dif
Slide 57: Recurring Growth and Loyalty (Automotive)
Recurring Growth and Loyalty (Automotive) Integrated Parts and Repair Platforms Customer Integration Solutions 57
Slide 58: Integrated Parts & Repair Platforms (Automotive)
Integrated Parts & Repair Platforms (Automotive) Repair Shops Transition 1.5+ Million to EV market Repair Centers Foundational Platforms + Repair Shops Data + Management Solutions Repair Solutions Largest network of integrated Parts & Repair 58 58
Slide 59: Customer Integration Solutions (Automotive)
Customer Integration Solutions (Automotive) Seamless Integration Into Procure-to-Pay Systems Extensible to Global Customer Operations Value-Added Solutions 59
Slide 60: Recurring Growth and Loyalty (Industrial)
Recurring Growth and Loyalty (Industrial) Establish a Digital Twin Create a Curated Marketplace 60
Slide 61: Digital Twin (Industrial)
Digital Twin (Industrial) GPC IoT (Internet of Things) Platform Customer’s Operational Telemetries Advanced Data Analytics 61
Slide 62: Curated Marketplace (Industrial)
Curated Marketplace (Industrial) Suppliers Direct • Cutting Tools • Power Tools • Other…. Wholesale Distributors GPC Industrial Catalog • Safety Wear • Janitorial & Sanitation • Other…. 62
Slide 63: Competitive Advantage Through Our Data
Competitive Advantage Through Our Data Data Auto Repair Centers Automotive Commercial & Fleet Distribution Data Network DIY Customers Data Suppliers & Machinery OEM Owned Industrial Brands Distribution Manufacturing Plants Network 63
Slide 64: Competitive Advantage Through Our Data
Competitive Advantage Through Our Data Data Data Auto Repair Centers Automotive Commercial & Fleet Data Distribution Data Network DIY Customers Data Data Data Suppliers & Machinery OEM Owned Industrial Brands Distribution Manufacturing Plants Network Leveraging unique datasets to unlock ‘Art of the
Slide 65: Transforming the Customer Experience
Transforming the Customer Experience Strengthen Drive Recurring Modernize Foundations Growth and Competitive Loyalty Advantage 65
Slide 66: Business Unit Panel
Business Unit Panel Will Stengel Franck Baduel Randy Breaux Rob Cameron Kevin Herron Alain Masse President & COO CEO, European President, Managing Director President, President, Canadian Automotive North American and Group CEO, U.S. Automotive Automotive Industrial Australasia 66
Slide 67: Financial Outlook
Financial Outlook Bert Nappier Executive Vice President & Chief Financial Officer 67
Slide 68: Strong Legacy, Financial Discipline, Bright Future
Strong Legacy Financial Discipline Bright Future 68
Slide 69: GPC Has Delivered Strong Financial Results
GPC Has Delivered Strong Financial Results Sales (USD $ in billions) Since 2019 Sales CAGR* = 9.3% & Adj. EPS CAGR* = 16.7% “COVID 19” $22.1 $18.9 $16.8 $16.9 $16.5 $15.3 $15.3 $15.3 “The Great Recession” $14.1 $14.4 $12.5 $13.0 “The Dot Com Bubble” $11.2 $10.5 $10.8 $11.0 $10.1 $9.8 $9.1 $8.2 $8.3
Slide 70: Key Value Delivery Since 2019
Key Value Delivery Since 2019 8 Quarters 3 Years 9.3% Sales CAGR* of consecutive top line growth of EBITDA margin expansion 16.7% Adj. EPS CAGR* 3-year average ROIC* Delivered a total $2.1B 34.3% shareholder return of 21.2% Returned to shareholders in dividends and share repurchases * Non-GAAP finan
Slide 71: 2025 Financial Targets
2025 Financial Targets Sales $26.5 - $27.0 (USD in $ billions) $22.1 ~6-7% Adj. EPS $11.00 - $11.50 CAGR 2022 2025 $8.34 ~10-11% CAGR Adj. EBITDA* (USD in $ billions) $2.65 - $2.75 $2.0 ~10-11% 10%+ 9% CAGR Adj. EBITDA Adj. EBITDA Margin* Margin* 2022* 2025 2022* 2025 *Non-GAAP financial measure; se
Slide 72: GPC Growth Forecast
GPC Growth Forecast Sales Adj. EBITDA* (USD in $ billions) (USD in $ billions) $26.5 - $27.0 $2.65 - $2.75 +1% $22.1 +2-3% $2.0 +3% 2022A Market Core M&A 2025E 2022A Gross Profit SG&A 2025E Leverage Adj. EBITDA 2022 - 2025 = ~6-7% CAGR Margin* 9% +100bps 10%+ *Non-GAAP financial measure; see appendi
Slide 73: Double-Digit Adj. EBITDA Margins by 2025
Double-Digit Adj. EBITDA Margins by 2025 Automotive* Industrial* Total GPC* 10%+ 12%+ 10%+ Strong Segment Margins 9%+ 12%+ 10%+ *Non-GAAP financial measure; see appendix for more information Execution of strategic initiatives contributes to long-term profitable growth 73
Slide 74: A Strong Foundation Provides Flexibility for the Future
A Strong Foundation Provides Flexibility for the Future Capital Allocation Priorities $2.2B Liquidity Baa1/BBB Rated Dividend will consistently grow as profit expands, recognizing Higher cash balances provide First IG rating attained in 2020 permanent nature of dividend and flexibility for the futur
Slide 75: Sustainable Investment in High ROIC Opportunities
Sustainable Investment in High ROIC Opportunities Capital Expenditures 10% CAGR $450 ROIC* (USD $ in millions) $340 38.7% 35.9% 28.2% ~$200 2013-2022 avg 2022 2025 2020 2021 2022 % of Net Sales 1.2% 1.5% 1.7% * Non-GAAP financial measure, see appendix for more information Incremental investments in
Slide 76: Consistent Dividend Growth
Consistent Dividend Growth $3.80 $3.58 $3.16 $3.26 $3.05 2019 2020 2021 2022 2023 2023 marks the 67th year in a row that GPC has raised the dividend Dividend growth 4-year CAGR of +6% Committed to dividend as we continue to grow and expand profitability 76
Slide 77: Key Financial Takeaways
Key Financial Takeaways Double-digit adj. Double-digit adj. earnings per EBITDA margins share growth over the 3-year period* by 2025* Significant operating and Strong balance sheet free cash flow generation allows for and investment grade disciplined capital allocation enabling growth credit rating
Slide 78: Key Takeaways
Key Takeaways 1 2 3 4 5 Understand Showcase Highlight Our Share Our Enhance Our Culture Our Strategy Talented 3-Year Confidence in and How We and Management Financial GPC as a Drive Value Initiatives Team Targets Differentiated Investment 78
Slide 79: Appendix
EPC APPENDIX WE KEEP THE WORLD MOVING
Slide 80: Executive Management & Business Unit Presidents
Executive Management & Business Unit Presidents Paul Donahue Will Stengel Bert Nappier Naveen Krishna Chairman & CEO President & COO EVP & CFO EVP & CIDO Franck Baduel Randy Breaux Rob Cameron Kevin Herron Alain Masse CEO, European President, Managing Director and President, President, Canadian Auto
Slide 81: Initiative Showcase Leaders
Initiative Showcase Leaders Wayne Bryant Bret Robyck Jeff England Joe Limbaugh Cameron Kevin Stone CEO, Automotive Division EVP, Sales EVP, Chief Supply EVP, Supply Chain, Richardson VP, Corporate GPC Asia Pacific U.S. Automotive Group Chain Officer Operations Support, SVP, Retail, Consumer Accounts
Slide 82: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Appendix A Reconciliation of 2019 Net Sales Excluding Divestitures For the Year Ended December 31, 2019 Net Sales of Businesses Net Sales Excluding (in thousands) GAAP Total Net Sales Divested in 2019 (1) Divestitures Automotive $ 10,993,902 $ 15,900 $ 1
Slide 83: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Appendix A Reconciliation of 2019-2022 GAAP net income to adjusted net income Year Ended December 31, (in thousands) 2019 2020 2021 2022 GAAP net income* $ 646,475 $ 163,395 $ 898,790 $ 1,182,701 Adjustments**: Goodwill impairment charge (1) - 506,721 -
Slide 84: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Appendix A Reconciliation of 2019-2022 GAAP diluted EPS to adjusted diluted EPS Year Ended December 31, 2019 2020 2021 2022 GAAP diluted EPS $ 4.42 $ 1.13 $ 6.23 $ 8.31 Adjustments*: Goodwill impairment charge (1) - 3.49 - - Restructuring (2) 0.98 0.34 -
Slide 85: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Appendix A Reconciliation of 2022 GAAP net income to adjusted EBITDA Year Ended December 31, (in thousands) 2022 GAAP net income $ 1,182,701 Depreciation and amortization 347,819 Interest expense, net 73,887 Income taxes 389,901 EBITDA 1,994,308 Adjustme
Slide 86: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Appendix A Reconciliation of return on invested capital Year Ended December 31, (in millions) 2020 2021 2022 GAAP net income from continuing operations $ 163 $ 899 $ 1,183 Adjustments* 634 128 5 Interest expense, net 91 62 74 Tax impact of interest expen
Slide 87: Explanation of Adjustments
Explanation of Adjustments Appendix B (1) Goodwill impairment charge: Adjustment reflects a second quarter goodwill impairment charge related to our European reporting unit. (2) Restructuring: Adjustment reflects restructuring and special termination costs related to the 2019 Cost Savings Plan annou