industrial deep dive
TRANSCRIPT
Industrial Deep Dive
September 15, 2021
Forward-Looking StatementsSome of the comments made during this webcast and information contained in our presentation constitute forward-looking statements that are subject to thesafe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in the future tense and all statements accompanied by words suchas “expect,” “likely,” “outlook,” “forecast,” “preliminary,” “would,” “could,” “should,”, “position”, “will,” “project,” “intend,” “plan,” “on track,” “anticipate,” “to come,”“may,” “possible,” “assume,” or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include theCompany’s view of business and economic trends for the remainder of the year, the Company’s ability to execute our strategic priorities and capitalize in light ofthese business and economic trends, and the updated full-year 2021 financial guidance for the Company. The Company cautions that all forward-lookingstatements 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 resultof various important factors. Such factors may include, among other things, the extent and duration of the disruption to our business operations caused by theglobal health crisis associated with the COVID-19 pandemic, including the effects on the financial health of our business partners and customers, on supplychains 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 thefinancial and capital markets; the Company’s ability to maintain compliance with its debt covenants; the Company's ability to successfully integrate acquiredbusinesses into the Company’s operations and to realize the anticipated synergies and benefits; the Company's ability to successfully implement its businessinitiatives in its two business segments; changes in demand for the Company's products; the ability to maintain favorable supplier arrangements andrelationships; disruptions in global supply chains and in our suppliers' operations, including as a result of the impact of COVID-19 on our suppliers and oursupply chain; changes in national and international legislation or government regulations or policies, including changes to import tariffs, environmental andsocial policy, infrastructure programs and privacy legislation, and their impact to the Company and its suppliers and customers; changes in general economicconditions, including unemployment, inflation (including the impact of tariffs) or deflation and the United Kingdom's exit from the European Union and theunpredictability of the impact following such exit; changes in tax laws, regulations, treaties and policies, including the interpretation and enforcement of any ofthe foregoing; volatile exchange rates; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; the Company's ability tosuccessfully 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 resultof 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 latest SEC filings. The statements speak only as of the date they are made, and theCompany undertakes no duty to update any forward-looking statements made during this presentation or in these materials except as required by law. Actualresults may vary materially and, as such, you are cautioned not to place undue reliance on these forward-looking statements.
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Randy BreauxPresident
Carol YanceyEVP & CFO
Will StengelPresident
Presenters
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Global Footprint2021 Revenue by Region (as of 6/30/21)
Key Statistics(as of 6/30/21)
Founded: 1928Headquarters: Atlanta, GACountries Served: 15
Locations: ~10,600• Warehouses ~900• Distribution Facilities ~190• Retail (Owned/Independent) ~9,500
Employees: ~52,000
74%North
America
15%Europe
11%Australasia
Genuine Parts Company Snapshot (NYSE: GPC)
Market Capitalization: ~$18B Leading Global Distributor of Automotive and Industrial Replacement Parts
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Our Transformational Journey
2013
• Four segments: Automotive, Industrial, Office Products, Electrical
• North American and Australasian operations
• Expanded distribution footprint
2017 - 2020
• Evolved to two segments: Automotive and Industrial
• Expanded operations in Europe, North America and Australasia
• Created global transformation office
• Strengthened omni-channel capabilities
• Enhanced shared services platform
• Increased capabilities in advanced data analytics
2021+
• Focus on profitable growth and execution of strategic initiatives
• Further expand North American, Australasian and European operations
• Focus on market-leading automotive and industrial businesses
• Drive efficient and productive cost structure
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U.S.A CanadaAsia/Pacific
U.S.A
US Automotive AAG GPC Asia Pacific UAP – NAPA Canada
Headquarters:Atlanta, GA
US:• 63 Distribution Centers
• 5,870 NAPA Auto Parts Stores
• 22 Traction Heavy Duty Parts Stores
Mexico:• 13 NAPA Mexico stores
Headquarters:London, England
France:• 17 Distribution Centers
• 1,089 Stores
UK:• 35 Distribution Centers
• 816 Stores
Germany:• 11 Distribution Centers
• 61 Stores
Poland:• 210 Stores
Netherlands & Belgium:• 7 Distribution Centers
• 212 Stores
Headquarters:Melbourne, Australia
Australasia:• 13 Distribution Centers
• 414 Auto Parts Storesand Branches in Aus
New Zealand:• 111 Auto Parts Stores
and Branches in NZ
Headquarters:Montreal, Quebec
Canada:• 14 Distribution Centers
• 693 NAPA and Heavy Vehicle Stores
• 24 Import Parts Facilities
$230B+ Global Market
United States$125
Europe$83
Canada$9
Australasia$7
Mexico$6
Business Across the GlobeAutomotive – 66%
8% Market Share+2-3% Industry Growth
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U.S.A Canada Asia/PacificU.S.A
Business Across the GlobeIndustrial – 34%
Motion Motion Asia Pacific
Headquarters:Birmingham, AL
U.S., Canada & Mexico:
• 25 Distribution Centers
• 593 Branches
• 53 Service Center
Headquarters:Sydney, Australia
Australia, New Zealand, Indonesia & Singapore:
• 8 Distribution Centers
• 143 Branches
$200B+ Global Market
North America$190
Australasia$10
3% Market Share+2-3% Industry Growth
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Advancing longer-term strategic roadmap and excited for numerous opportunities
Unique culture, based on core values and purpose, serves as important common foundation
Leadership positions in attractive, fragmented markets; leading global brands and long-standing relationships based on customer service and expertise
Current Priorities – investing in our core business, including talent, sales force effectiveness, digital, supply chain and emerging vehicle technologies
Key value drivers – profitable growth, operating leverage, cash conversion and disciplined capital allocation
Strategic Areas of Focus
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YTD 2021 Highlights
Sales
$9.2Bup 16.8%
Gross Margin
+20%15th Consecutive
YOY Increase
Adj. Total Expenses
+14%Improved 70 BpsAs a % of Sales
Adj. EPS
$3.24Up 53%
Ample Liquidity
$2.5BAt June 30
Adj. Net Profit Margin
+54%Improved 160 Bps
Capital Structure
1.6xTotal Debt to Adj
EBITDA
Strong Cash Flow
$1B+Cash from Operations
2021E
ImprovedWorking Capital
$1.2BAt June 30
Financial Strength to
Drive Growth
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16%
38%15%
31%
YTD 2021 Capital Deployment Current Priorities
Dividend
Reinvestment
M&A
Share Repurchases
1 Includes proceeds from divestitures.
~$600M1
Disciplined Capital Allocation
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2021 Strong Outlook and Strategic Growth Plans
FREE CASH FLOW
$900M to $1.1B
TOTAL REVENUE
10% to 12%AUTOMOTIVE: 11% to 13%
INDUSTRIAL: 6% to 8%
CASH FROM OPERATIONS
$1.2B to $1.4B
ADJ EPS
$6.20 to $6.35+18% to +20%
Guidance provided July 22, 2021
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$500,000
$30 Million
$100 Million
$1.0 Billion
$2.3 Billion
$3.5 Billion
$5.7 Billion
19761980
19902000
20102020
1946
Revenue History
33Distribution Centers
53Service Centers
736Branches
Access to
10M+Parts
Select Suppliers
Strategic suppliers represent 50% of our purchases
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Product Segments
Mechanical Industrial & Safety Bearings Material Handling
Hydraulics Electrical & Automation Pneumatics Linear
Seals & Accessories Hydraulic Hose Industrial Hose Process Pumps
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Diverse Customers
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Key Industries
Equipment& Machinery Food & Beverage Iron & Steel Pulp & Paper
Automotive Chemical &Allied Products
Aggregate & Cement Fabricated Metal
Lumber & Wood Equipment Rental& Leasing
Rubber & PlasticProducts Oil & Gas Extraction
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Corporate Accounts
Energy Services Team
Cost Savings Initiatives
Repair & Warranty Management
Product/Industry Technical Expertise
Inventory
Analytical Reporting
On-site Solutions
CorporateAccounts
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Value Proposition
REDUCE PURCHASE &
OWNERSHIP COST
ASSET MANAGEMENT
SAVINGS
OPERATIONAL & PRODUCTIVITY IMPROVEMENTS
COMPREHENSIVESINGLE SOURCE
KNOWLEDGE, EXPERTISE &
INNOVATIVE SOLUTIONS
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Comprehensive Single-Source Provider
Heavy Volume
Right Parts
Unplanned Purchased
Service Solutions
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Field Products Specialists
Expertise ProductGroupsOfferings Benefits
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Repair and Service Group
Mechanical Fluid PowerElectrical Hose
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Market Overview
~3%Market ShareSignificant growth
opportunity
Addressable Market
~$200B$190B in North America
$10B in AsiaPacExpansion
via new and expanded product offering and new technologies
Preventive, Predictive Maintenance Repair
and Operations
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Industrial Drivers
Factors thatInfluence the Business
IndustrialProduction & PMI GDP Inflation
Rates
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Fragmented Competitive Landscape
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Strategic Growth Initiatives
Omnichannel Industrial Services & Solutions
Acquisition Strategy
EnhancedPricing
Strategy
NetworkOptimization
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Omnichannel
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Small | Medium Customers
Digital Marketing
Large Customers
Branch CSR
Outside Sales + MiPRO
Inside Sales Call Center
Omnichannel Sales Process
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Industrial Services & Solutions
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Acquisition Strategy
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Acquisition Strategy & Focus
HOSE & CONVEYANCEFLUID POWER PROCESS PUMPMECHANICAL AUTOMATION
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Enhanced Pricing & Category Management
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Price Structure
Implemented a VALUE basedpricing methodology
• Competitors• Time Based Pricing• Supply & Demand• Customer Profiles• External Factors in the Market• Total Cost to Serve• Willingness to Pay or “Elasticity”
Taking multiple dynamicsinto consideration:
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Network Optimization
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KEY TAKEAWAYS• We operate in a very large and fragmented
global market with significant growth opportunities
• Motion has the right resources, strategy and management team to further strengthen our position as a leading industrial distributor
• We are well-positioned to deliver market share gains and sustained profitable growth
• The Industrial business is accretive to the overall value of Genuine Parts Company
Change is certain and the best way to predict the future is to create it!
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