Genuine Parts Co. (GPC) reported first-quarter sales of $4.6 billion, a 3.7% decrease from first-quarter 2019.
Net income for the first quarter was $136.5 million, down from $160.3 million in first-quarter 2019. Diluted earnings per share were 94 cents.
GPC estimates first-quarter sales took a 3% hit from the COVID-19 pandemic, and diluted earnings per share took a 21-cent hit.
“Our hearts go out to the millions affected by the ongoing COVID-19 pandemic, and we thank those health care providers, first responders and other workers on the front lines of our fight against this outbreak,” GPC Chairman and CEO Paul Donahue said. “Their commitment to the care and protection of our citizens and communities is admirable and greatly appreciated.
“We also owe a debt of gratitude to our associates across the GPC family. Our team members have stepped up with a powerful display of commitment to GPC and our mission. Working together, we have rallied through the crisis with preparedness plans to help our employees stay healthy and well, and our operations remain safe, open and positioned to service our customers’ critical needs during these unprecedented times.”
Sales for GPC’s Automotive Parts Group, which includes NAPA Auto Parts, were $2.58 billion, down from $2.62 billion in first-quarter 2019.
Impact of COVID-19
Prior to the COVID-19 pandemic, GPC was optimistic about its prospects for 2020, “with $100 million in cost-savings initiatives well underway and plans in place for both top- and bottom-line growth,” the company explained. When states began issuing stay-at-home guidance in mid-March, however, GPC experienced “a sharp decline in demand,” and the trend continued for the rest of the quarter, which ended March 31, and throughout April.
Daily sales excluding divestitures were trending at greater than 4% growth in the first half of March, according to GPC. In the second half of March, daily sales were down approximately 16%.
In April, total daily sales excluding divestitures were down an estimated 25%, with the Automotive Group down approximately 30%, Industrial down 10% and Business Products down 20%, according to the company.
As of May 6, most of GPC’s facilities are operational, the company noted. The only exception is France, which remains in temporary lockdown due to preemptive government mandates. In New Zealand, which also was in full lockdown throughout most of March and April, the government has initiated the process of easing its restrictions and GPC’s operations “are gradually returning to work.”
GPC said it has taken a number of measures to protect employees and maintain business continuity during the pandemic, including:
- Enhanced safety protocols for employees and facilities
- Diligent and more frequent communications with employees, suppliers and customers
- Enhanced customer-service capabilities to drive sales, including online, curbside pick-up, ship-to-home and touchless delivery offerings
- Realignment of capital allocation priorities to effectively preserve cash
- More favorable debt covenants, effective May 1
- Evaluating alternative forms of liquidity, including utilization of asset-based lending
- Implementation of accelerated and substantial cost-savings initiatives
- Generous giving in support of health care providers and first responders in our communities
“These are unusual and difficult times, but we are very proud of how our team has responded and confident that we will pull through this crisis and emerge well-positioned for the future,” Donahue said. “This is a testament to the strong GPC culture and deeply embedded values throughout the organization, gained from our 93-year history.”
Like many companies, GPC recently withdrew its full-year 2020 financial guidance.
“Due to the economic uncertainty as a result of the rapidly evolving COVID-19 pandemic and the limited visibility on the impacts to our businesses, we cannot reasonably estimate the company’s full-year financial and operating results at this time,” the company said in a news release. “Therefore, we will not be providing annual guidance updates until macroeconomic conditions improve.”