Genuine Parts Company

Good day, ladies and gentlemen. Welcome to the Genuine Parts Company first quarter 2023 earnings conference call. All participants will be in a 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 your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. At this time, I would like to turn the conference over to Sid Jones, Senior Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today for the Genuine Parts Company First Quarter 2023 Earnings Conference Call. With me today are Paul Donahue, our Chairman and Chief Executive Officer, Will Stangle, our President and Chief Operating Officer, and Bert Napier, Executive Vice President and Chief Financial Officer. In addition to this morning's press release, a supplemental slide presentation can be found on the investor's page of the Genuine Parts Company website. Note, we will not be playing these slides through the webcast. 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. 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 filings, 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 first quarter 2023 earnings conference call. We were pleased with the continued strength and momentum in our businesses and to report results that exceeded our expectations for the quarter. Before I share my comments on the first quarter, I want to share a few thoughts from our 2023 Investor Day, which we hosted just this past month. We used this event to convey our confidence in the bright future of Genuine Parts Company and update everyone on our strategy and the many opportunities we see for long-term profitable growth. During the course of the day, we highlighted our rich history, ongoing transformation and strategic priorities, which we showcased through several key initiatives in an interactive expo. Our panel discussion with our global business unit leaders allowed us to share specific business and market opportunities and provide insights to the collaboration among our leaders and synergies across the businesses. Finally, we provided three-year financial targets, including a compelling outlook for double-digit EPS CAGR, and a double-digit EBITDA and segment profit margin by 2025. It was a great day for the GPC leadership team and hopefully an informative and productive day for all of our attendees and everyone in the financial community more broadly. If you missed it, we invite you to view the full presentation on our investor relations website. So now let's turn to the first quarter. We are proud of the outstanding work by our global GPC teammates. With sales and earnings coming in ahead of our expectations, our first quarter performance was a clear example of how our strategic transformation to a global automotive and industrial company is a competitive advantage that distinguishes GPC in the marketplace. We benefited from our business mix and the geographic diversity of our operations with continued strong performances in our international automotive businesses and in the industrial segment. A few highlights in the quarter include record quarterly sales of $5.8 billion, up 9% from the prior year, segment margin of 9.1%, up 50 basis points from 2022, earnings per share of $2.14, up 15% from adjusted EPS last year, and our 11th consecutive quarter of double-digit adjusted earnings growth. And finally, we strengthened our balance sheet while generating solid cash flow to support our growth initiatives and capital allocation. The global GPC team is focused on driving accelerated sales and earnings growth, continued margin expansion, and strong cash flow through dynamic economic conditions. Across our businesses, our teammates are aligned and executing on our strategic plans to deliver outstanding customer service and continued market share gains. In industrial, demand trends held strong throughout the first quarter, with new and existing customer activity and reshoring trends each presenting growth opportunities. We believe our continued momentum in industrial is due to the diversity of our product and service offerings and end markets, which all performed well again this quarter. Our acquisition of KDG and enhanced capabilities and industrial solutions, including automation, fluid power, and conveyance, are proving to be competitive differentiators, and we remain bullish on this business in the near term. Our global automotive business continues to benefit from the geographic diversity of our markets, which helped offset the headwinds of a warmer winter and volatile weather conditions in our U.S. automotive business in Q1. In addition, the automotive aftermarket is benefiting from trends such as the ongoing increase in miles driven, an aging and complex vehicle fleet, and rising interest rates and continued high prices for new and used vehicles. These are all key drivers to ongoing growth and demand, especially for the DIFM segment, which represents 80% of our global automotive sales. So after delivering back-to-back record years, we are pleased with the solid start to 2023, and we continue to expect another strong year of profitable growth. Looking ahead, we are confident that GPC is well-positioned with the right strategic plans, strong fundamentals, and rock-solid balance sheet to pursue accretive, organic, and acquisitive investment opportunities, while also returning capital to shareholders through dividend and share repurchases. So again, we thank each of our GPC teammates for taking great care of our customers around the world. So now I'll turn the call over to Will.