Genuine Parts Company

Good day, ladies and gentlemen. Welcome to the Genuine Parts Company third quarter 2022 earnings conference call. Today's call will be recorded. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star then two. 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 Third Quarter 2022 Earnings Conference Call. With me today are Paul Donahue, our Chairman and Chief Executive Officer, Will Stengel, our president, and Bert Napier, 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 investor's page of the Genuine Parts Company 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 on the investor page 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 the call. Now, I'll turn it over to Paul for his remarks.

Thank you, Sid, and good morning. Welcome to our third quarter 2022 earnings conference call. Before diving into the details of the quarter, we want to say that our hearts go out to our teammates, suppliers, customers, and all those affected by the devastating impact of Hurricane Ian in late September. GPC is committed to providing care and support through our GPC Relief Fund and our partners at the American Red Cross. So now turning to the quarter, we are pleased with the continued strength of our results for 2022, and we are proud of the great work by all of our 53,000 GPC teammates who are at the core of our success. Our team delivered record results with double-digit sales and earnings growth, driven by the execution of effective strategies and continued resilience of our automotive and industrial businesses. Let's review several of our Q3 highlights. Total sales of 5.7 billion, up 18%, and adjusted earnings per share of $2.23, up 19% from last year. Record quarterly sales for the automotive and industrial segments, And our sixth consecutive quarter of double-digit sales growth. Operating margin expansion in both segments and for GPC overall. Record quarterly earnings and our ninth consecutive quarter of double-digit earnings growth. The ongoing integration of KDG, which continues to create significant value. And finally, continued strong cash flow generation and the further strengthening of our balance sheet. Our teams are executing on key strategic initiatives to deliver market share gains and drive ongoing momentum in our top and bottom line results. We remain agile and navigating a dynamic operating environment created by inflation and economic conditions, the geopolitical landscape, and supply chain challenges. We continue to benefit from the competitive advantages of our size and scale, And we remain focused on advancing our technology to optimize inventory availability, enhance network productivity, and maximize the effectiveness of our pricing strategies. We are making significant progress in our operations through our efforts in all these areas, as evident in the expansion of operating margins again in the third quarter. Our automotive and industrial businesses continue to take advantage of several industry tailwinds. In automotive, the increase in year-to-date miles driven, an aging car park, limited new car inventory, and elevated used car prices are all supportive of healthy demand in the aftermarket. In industrial, the manufacturing economy remains expansionary, with PMI holding at greater than 50, while industrial production just at its ninth straight quarter of growth. up 2.9% year-over-year. Our teams continue to operate well in a challenging environment, and as we wind down the year, we remain focused on driving our strategic initiatives across all of our global operations. This past quarter, we spent considerable time in the field visiting stores and branches, meeting with many of our strategic suppliers and customers, And we came away encouraged by the general outlook for continued growth in the automotive aftermarket and industrial space. In addition, during the quarter, our global leadership team met to review our near-term initiatives and collaborate on our long-term strategic roadmap. Our teams are well aligned, and we are confident in our strategic plans to deliver long-term sales and earnings growth and margin expansion. Our strong cash flow generation and exceptional balance sheet position GPC with the financial strength and flexibility to pursue strategic growth opportunities via investments in both organic and acquisitive growth, while also returning capital to shareholders through the dividend and share repurchases. So before I pass the call over to Will, we'd like to highlight our 2022 sustainability report. which we published earlier this month. The new report advances GPC's long-term sustainability strategy and expands our reporting and disclosure to reflect the extent of our global operations. We do this through a focus on three key areas, including improving diversity, equity, and inclusion, reducing carbon emissions, and enhancing ESG governance. Two highlights from the report include the completion of our 2022 employee engagement survey, where we had significant participation across our global teams and received an 80% global engagement score. And secondly, the calculation and disclosure of our scope one and two carbon emissions and plans for greenhouse gas reduction programs across our global operations. We believe that our 2022 sustainability report illustrates GPC's strong ESG strategy and a way forward that underscores our commitment to keeping the world moving. We encourage you to visit the sustainability page on our website for more information on our progress in this important area. So again, we thank each of our GPC teammates for taking great care of our customers and delivering on another great quarter of record results. So now I'll turn the call over to Will.