Genuine Parts Company

Good day, ladies and gentlemen. Welcome to the Genuine Parts Company second quarter 2022 earnings conference call. Today's call is being recorded. If you need assistance, please signal a conference specialist by pressing star, then zero. A question and answer session will follow the presentation, and instructions will be given at that time. At this time, I would like to turn the conference over to Sid Jones, Senior Vice President, Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining us today for the Genuine Parts Company second quarter 2022 earnings conference call. With me today are Paul Donahue, our chairman and chief executive officer, Will Stengel, our president, and Bert Napier, our executive vice president and chief financial officer. As a reminder, today's conference call and webcast include a slide presentation that can be found on the Genuine Parts Company Investor Relations website. Please be advised this call may include certain non-GAAP financial measures which may be referred to during today's discussion of our results as reported under generally accepted accounting principles. A reconciliation of these measures is provided in the earnings press release issued this morning, which is also posted in the investor section of our website. Today's call may also involve forward-looking statements regarding the company and its businesses. The company's actual results could differ materially from any forward-looking statements due to several important factors described in the company's latest SEC filing, including this morning's press release. The company assumes no obligation to update any forward-looking statements made during this call. Now, I'll turn the call over to Paul for his remarks.

Thank you, Sid, and good morning. Welcome to our second quarter 2022 earnings conference call. As Sid mentioned, I'm here with Will as well as Bert, who was on his first earnings call as CFO. Welcome to the call, Bert. We are pleased to report continued strong results from Genuine Parts Company in the second quarter of 2022. The GPC team had another record quarter consisting of double-digit sales and earnings increases and a steady cadence of continued growth throughout April, May, and June. Total sales were $5.6 billion, up 17%. and adjusted earnings per share was $2.20, up 26% from last year. We continue to benefit from the resiliency of our automotive and industrial businesses and the strategic mix of our operations. We would like to thank our 53,000 talented GPC teammates for their exceptional work and commitment to excellence. A few highlights in the quarter include Another quarterly sales record for GPC and our automotive and industrial segments. Segment operating margin expansion in both segments and for GPC overall. Record quarterly earnings and double-digit EPS growth for the eighth consecutive quarter. And strong cash flow generation and the further strengthening of our balance sheet. We continue to execute our key strategic initiatives to deliver market share gains and drive positive momentum in our top and bottom line results, despite ongoing macroeconomic pressures. Our teams are doing an excellent job of navigating supply chain disruptions, enabling our business with the product we need to serve our customers and capture market share. For example, we are investing in our businesses to enhance forecast accuracy for product demand, improve fill rates, and optimize our network footprint. Our size and global scale continue to be an advantage as we work to have the right parts in the right place at the right time. Likewise, our pricing strategies have proven valuable in substantially offsetting product inflation and rising freight costs. Our M&A strategy has also been effective. As you will hear from Will, the accelerated integration of KDG has been executed with a high degree of precision and has had a meaningful impact on our industrial performance. In addition, our global automotive teams have been active with ongoing strategic bolt-on acquisitions, such as the addition of canola, which rounds out our national footprint in Germany, the largest economy in Europe. We continue to explore a healthy pipeline of acquisition targets, and M&A remains an important part of our global growth strategy. Additionally, we are benefiting from ongoing initiatives such as accelerating the rollout of the NAPA brand or international markets, as well as further investing in B2B and B2C omnichannel enhancements to both our catalog data and technology platforms. We also continue to upgrade our pricing and product category management strategies to further extend our leadership positions in the global automotive and industrial markets. As we look at the operating environment more broadly, our automotive and industrial business are benefiting from several tailwinds. The continued increase in miles driven and the average age of vehicles, limited new car inventory, and elevated used car prices are supporting demand in the automotive aftermarket and driving continued strength in the DIFM segment. In industrial, PMI continues to signal manufacturing expansion and industrial production showed gains again in the second quarter, representing the eighth consecutive quarter of growth. We are closely monitoring potential consumer headwinds, including the effect of historically high inflation and its impact on gas prices, freight, and wages. However, we will stay focused on our strategic initiatives and remain agile in the execution of our business on a day-to-day basis. The enthusiasm and momentum in our business was on full display last week when, for the first time in seven years, we hosted our 2022 Napa Expo in Las Vegas. This gathering brought together more than 15,000 global attendees, including Napa Auto Care customers, independent Napa store owners, Napa store managers, key suppliers, and leaders across our operations. It was an extraordinary event packed with seminars, insights, business building strategies, and an extensive trade show featuring our global suppliers and key business partners. We took the opportunity to introduce our new Napa brand campaign, Get Up and Go, and you could feel the positive energy and excitement for the future of Napa and the automotive aftermarket overall. The biggest takeaway is that the Napa team in the U.S. and across the globe is well positioned for the future. During the quarter, we also had the opportunity to spend time in the field with our motion leadership team. We visited our operations and customers across the Midwest and saw firsthand the momentum in our industrial business and the progress of the KDG acquisition. As we mentioned in our last call, we have been active in 2022 building on our commitment to responsible ESG business practices. This has included formalizing our carbon emission reduction strategy, as well as driving continued progress in DE&I. We look forward to providing additional details on our progress in these areas later this year as we publish our 2022 Corporate Sustainability Report. So again, we thank each of our GPC teammates for taking great care of our customers and delivering another quarter of record results. Now, I'll turn the call over to Will.