Genuine Parts (GPC) 22 Apr 212021 Q1 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the Genuine Parts Company First Quarter 2021 Earnings Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Sid Jones, Senior Vice President of Investor Relations. Please go ahead, sir.

you First us Call. Quarter thank Genuine for and Company Parts XXXX morning, for today joining the Good Earnings Conference me President; Donahue, Officer; Paul Chief Financial Executive today and and With Executive Chief Vice our President Will Carol and Chairman our Officer. Yancey, our Stengel, are

financial posted a include may be to generally our the a accounting these referred Company which Genuine this results as differ As in of include businesses. the this due the principles. Investor which today's certain advised forward-looking from may the obligation any in Today's statements call statements factors of during can morning, section that could Relations call of SEC involve measures, its conference forward-looking assumes presentation statements company reminder, Please this and Parts may press the results website. this to materially call today's The Investors be discussion non-GAAP also actual morning's our filings, webcast no issued in be during update made forward-looking reconciliation to company press regarding latest any provided website. company's release. company's reported accepted and slide measures release is call. several earnings important found The under described also is including on A

Paul remarks. to his for over it turn I'll Now

appreciate call. and good and joining safe We conference Sid, morning. today Thanks, you earnings and first Welcome our you're XXXX us to well. staying hope quarter

as we with value. our XX,XXX-plus mental operational solid strong our success. of trends, through Through GPC physical team our sales start execution We customer priority on are The and GPC and employees automotive our with the industrial to enhancing ongoing and XXXX focused delivering increasing improving businesses. financial the are teammates core operated top in and and in the strong thoughtfully, quarter, well-being the of results pleased remain recovery the efficiencies

the from financial results. And a the quarter quarter Total up which expansion. decrease do of last cost quarter drove $X.X billion, year. our first year-over-year results quarter XX% through of from positive, margin from the actions our a to in field an to These in now our X% also year. X% is expense increase continue basis XXX expenses job the consecutive of were teams margins implemented last managing and our points improved up great XXth gross representing operating operating the and in margin, last sales first of was ongoing Turning the for sales significantly X.X% of profit Gross reductions carryover and XXXX. quarter a fourth year,

income up $X.XX, drove diluted Our strong XX%. earnings of performance operating per million net and share $XXX of

We flow. solid also continued fortify balance and liquidity sheet, cash ample to ensuring our

and teams, and of results, XXXX. our proud We are our intend are encouraged to this we we build on by throughout momentum

sales add focus The comps favorable including in in U.S., financial and would the increase our driven much first by quarter. in region, were to by on in all segments. XX% Asia global now sales XX% up and Sales automotive sales in from and in were initiatives the operations. and we a Europe, capitalized operating a Total XXXX, sales U.S. inventory key with XX% America, price Comp improved move level from each improved positive in QX Canada. were a We increase improved QX were North X% our availability, for reasonable in growth on Asia the our was factor across X%, much fourth stimulus the improving basis in sales of points, operations, of our industrial represented X% of to from Automotive inflation despite through In as driven was Pac, and from XX% of XXX a XX% sales as drivers first recovery, we up inflation revenues our comps of attributable in the Europe global in continue business the ongoing comps expect with team quarter, and environment billion, sales. decrease XX%. By quarter, region. profit X% to comps automotive XXXX were $X Europe economic Turning lockdowns our sales that were strengthening and quarter in XXXX. while throughout weather strong all Pac. X% XX% segment was not conditions results a total margin the

accounts In gains. to NAPA share growth brand effective the the in to prove continue availability enhance ongoing profitable and inventory market and key grow addition, initiatives launch of driving

quarter, team in the the Benelux the our U.K. out the sales teams outperformed For would and sales recovery, excellent also our France improved We with double-digit region call much comps. in with strong The performance expense a in in operating by we combined through for strong a so terrific Asia year growth in improvement start European experienced In point the to basis sales operations. our Pac, second XXXX. half automotive of with our XXX a mid-teens the margin, produced the remained controls, line region.

over in retail sales For sales volume strong Repco in with XX% our of stores plus-XX% outperform, posting held and both and associated as March the lockdowns to the the pandemic. increase sales, the XX% multiple Retail through which through quarter. our a commercial region quarter, operated continue represent total

commercial double-digit Our accelerate continue sales the sales as growth quarter. to posting in well,

the highs strength reached at We sales, pre-COVID Xx which benefit online in levels. from record continue to

North by group it at helping a point NAPA and the region. the and XXX quarter. and since comp Comp X% and we our up through first of operated and for were quarterly up, been level regional in top operating a variety which Canada, on Québec. building up was in received, improvement were in the this the profit margin of margin Finally, margins. solid of were remain since Sales well our high both on posted the its This lockdowns, In point up resulting growing XXX volumes America, basis points. quarter lines, the we in the comp comps both was basis impacted bottom of Ontario and record U.S. In this sales commercial XXX a the post perform in month commercial sales segments. basis very business our retail profit in increase quarter and name X%, which our has strongest first sales driven to in pre-pandemic, team of XXXX, on the focused presence larger continues positive brand U.S., March. Summing growth markets produced NAPA

solid group, counts By Midwest region, increase counts our produced growth, out is we and although that groups over both were posted In months. the region the add quarter. several past would on growth were which that addition, the and marking we strong would and lockdowns as notable in XX U.S. This commercial in West quarter. traffic quarters. in the been has sales this COVID-XX equipment Atlantic, our such the this brakes traffic ticket in retail transactions, and of positive Likewise, both most call our tools categories and product by strongest the also affected Northeast first batteries,

encouraged in indicator for which the especially positive is to commercial rebound business, are our business. our a brakes We see generally

investments would sales investments ongoing in which in to continues drive store well and quarter from outperform and call retail side, as omnichannel year. specialists the and sales, to BXC retail the promotions. also were in we which with out the up prior as refreshes online double-digit via record reached our On increase We continue growth, strong targeted XXX% levels the

continued generate sales, garage independent strong growth. our other customers, commercial For to wholesale category of

professional to year-over-year, our Auto the and for number growth sales the And look quarter. NAPA but Sales new this encouraged number government of in which sales group NAPA. of further the segment. pleased to were and serving. by We in been customers, time were attracting in has improved major account Care sequentially customers We effective investments to from in have improved Street improvement we accounts we sales first fleet with on the been also fourth Clearly, new several for positive salespeople the our quarters. posted see increasing the to are down

growth are our we As we opportunities segment. for we the automotive for see excited look ahead, global

on We XX age fleet in growing We fundamentals further for industry. we the aftermarket a miles value sell increase focused vehicle driven, to customer availability, ultimately, favorable our an enhancing you vehicles chain, further our increased in more include our all expect assure such plans These initiative and improvement capabilities. years, can and to X inventory our as supply deliver cars. omnichannel and parts remain in for strengthening more investing

expand global competitive bolt-on to additional and footprint new our store we enhance addition, our to stores with further expect greenfield acquisitions, positioning. In changeovers

QX and team was were increase of group in Motion sales continued record in from over recovery with now for posting sales month you for down for the Industrial were and discuss last a consecutive volumes. can months point Group. a improved third tremendous business. Parts our So the and is turning breakout X% in the X%, average trends. emergence Comp The economy, accomplishment several last key decrease another ongoing March $X.X and was let's the daily sales improving improvement X% line which indicators American in a North year. with see the GPC sales This a industrial Total pandemic. from achieving X in the our sales this billion, flat with quarter reflecting global the

from For of perspective, December points PMI was XX.X% increase in March, an X.X XX.

quarter, first significant third production XXXX. increased quarter the the following in of industrial in consecutive second the downturn X.X% addition, expansion the quarter of In by

Diving well positive environment, and with nonfactor are suppliers. more activity our year. far. more operating at along another as our expect rates XX X% customers, saying can project pricing strengthening drive point which start That inflation as price initiatives translating higher our at The said, year produced of to cost, Importantly, sales improvement our X.X% see X% X.X% seeing these orders. control basis run remains that releasing capital to margin we in QX we are versus margin would profit to our inflation segment indicators by and a growth activity into from we an last numbers with deeper sales, thus with

product industries and us. machinery, wood for among and industry all improving lumber were For the virtually quarter, encouraged groups experienced We the by equipment sectors, categories recovery key third. aggregate sales and and in we especially and trend the all cement,

in our generating customers. sales we the XXXX. to quarter inside our to from from In sales to the sales of new digital continue is relates A addition, driver Motion omnichannel center, our which first digital key benefit of Xx capabilities, incremental growth with up build-out

total potential While sales, of relatively excited percentage still the by a sales growth. we future small are for

solution We also to automation. growing our areas remain and services sales conveyance our repair, such as opportunities expand on in and businesses equipment and focused expertise

To business. and several our sales areas, industrial have remain overall category services in continue and pricing further consideration We enhance strategy growth, profitable key management our these our solutions ensure in build to made we scale capabilities for bolt-on and M&A acquisitions to a the strategies.

our In growth delivering addition, our our plan improve while business, and back service. optimize out this We comments. Motion are chain to a exceptional see excited into remain moving customer about to supply bullish we to and Closing continue industrial our we network team further productivity mode.

by our I'll conclude now update So initiatives. remarks providing ESG on a brief my

As environment, personal outlined our to focused and for our growth and training our GPC comprehensive in the on in enhance in ensure report, emotional, provide program communities responsibility embraces health well-being GPC programs to physical of our teammates. our sustainability we development QX, we our the corporate financial our operate. innovate expanded In associates which and ways and that

our make to and continue of to corporate Additionally, progress in inclusion. commitment the advancement we diversity

actively teammates while initiatives. representative support bias is to our We and D&I serve, mitigate model communities are our partnerships we training talent behaviors unconscious the strengthening that of inclusive recruiting that

both communities be we XXXX. we live. and that good corporate to we citizens focused been and Finally, continues where causes make remain Since a in work back legacy our to have that XXXX, on giving mission difference, and

to Will Will? So for over remarks. now, I'll his turn it

you, everyone. Good morning, Paul. Thank

I First, suppliers to GPC also partnership. global congratulate the loyalty I'd our to this for team performance thank their want like their and the our quarter. on for customers

global remain to compared to part team and Areas continues strong product solid be The our but environment attention and the in as and labor we has availability. include us a delivered As inflation, doing uncertainty for of global cautious business XXXX, mentioned, improved momentum. quarter first of performance each COVID-XX, logistics Paul day. had

second during have the I'll the half team strategic GPC needs based initiatives foundation that our is also now share on some perspective additional on expectations. will challenging customer progress. sustained to require of The comparisons of in and the and to momentum and experience focused deliver the energized Despite is the more We uncertainty, performance. year. year-over-year exceed understanding priorities working their our their

customer to global that integrate easy priorities The These with, create faster and illustrate terms and efforts terms, to to data realign teams, to better also strategic independent have simplest be to improve but do a of opportunities. a and To need a This to our growth. listening and and operations. profitable accelerate reduce teams not are customer and reliable operational multiyear existing reinforces only action simplify like initiatives and We enable best-in-class customers efficiency required will corresponding our the are analyzing experience feedback deliver team customer as we and helpful. integrate. opportunities business streamline In our a executing highlight costs. productivity few initiatives executions, processes, plans guiding in strength deliver I'd simplify us and experience, serves our investments. to and principle our operating

back-office simplify and GPC indirect disparate a functions, few noncustomer-facing offshore as sourcing examples. legacy streamline functional processes to we're activities coverage, systems, example, integrate For optimize IT and and footprint centralized support facilities working

and we in we're the integrate, core business positioning simplify our As investing simultaneously for future. and

investments cash vehicle technologies. talent, include: structure to digital, chain strong investments. our pillars make quarter capital few Our highlights these to emerging core across sales progress of include Key during key talent. allocation of and effectiveness, A needed solid the force the pillars the provide and one, continue flexibility supply our flow, capital disciplined

of exciting The segments, efforts serve digital needs serve. deliberate force the across of globe organization traditional communities category capabilities effectiveness. to segment, high-potential that representative Two, continue our each action talent, foundational talent is and our include sales recruit is into diverse want our to infuse the take reflect of share initiatives to and strategies play We different recognize the new future. DPC few. to an Examples leadership that customer and Talent an management, the be teammates mix we leadership sales unique in choice both always be associated vehicle values employer element Data effectiveness. a roles name and to selling field sales to understand for a analytics role include of and and and emerging investment priority omnichannel segment a the technology force as a will increasing to of area strive we strategies. digital, of our

sales skills As enhanced to intensity an reporting digital example, the automotive U.S. visits, with teammates tools and its virtual new team product tools sales with customer track communicate revamped and training. to and field

compensation with XXXX, Three, automotive addition, in to growth. U.S. programs incentives In digital. the adjusted team better profitable align

priority As I we as and foundational mentioned, digital growth. customer a is experience deliver profitable best-in-class a accelerate

the delivered Our businesses excellent performance via digital in quarter. channels

global see We pricing as search invest Four, our represents continue strong still digital total catalog, our Digital a about ordering, digital teams to to portion we experience continue year foundational increases executing. of ease and Related, in critical vision excited small other are and compelling we're channels. elements, the prior including elements relatively sales, our such versus across digital chain. and customer supply analytics. of

success the improvement. enhanced the productivity, the automation in this right strategies enjoyed Our with recent technology We're and workforce available delivery inventory, executing product right tools facility, continuously XXX% market automotive Other is are investments a logistics labor facility we focused achieve to initiatives team and that ensure solid tracking examples example to be supply right goal. industrial the in One would delivered business. U.S. the the productivity time. have select chain at U.S. management

portfolio, with vehicle footprint, supplier trends. market of a with we to We to the partnerships A automotive it team electric planning vehicle including strategic category product our alignment and strategic present existing brands, repair relationships XX,XXX leveraging address position One talent executing Through customer EV to relationships include: developing aspire process, global dedicated that center our to technologies. select strategies and XXX% leading we global approach. highlights few our diverse relates groups global and to vehicle strategy We Lastly, the technologies leverage, advisory EV developed with new established our strategies, existing and a participants. emerging lead multidimensional opportunities and believe management councils partners, GPC unique global emerging as SKUs, scaled industries. for supplier have

term deliver and future critical on an and focus action build on that the initiatives we're vision. acknowledge exciting we taking out near While act to medium performance,

strategy. bolt-on service existing acquisitions customers, acquisitions product growth geographies, further our of strategic GPC markets new Lastly, to capabilities part priority and are and We new and our key penetrate a acquire acquire acquire talent. utilize

We also selectively capabilities believe new we consider business acquisition our position well us and as test models.

our pipeline footprint unique markets. market-leading We our choice. scale, remains acquisition Our global fragmentation brands, of given and actionable acquirer the be position culture us and active an to of believe

This as savings execute to teams will visibility hope global we around for One and Similar cost tools We not cadence initiatives. only our monthly drive our In the disciplined of on utilized GPC share selective approach best developed today's the strategy. this helps approach and our to practices sense important helps global a reinforce teamwork. performance, part to in the but remain globe team. and also as plan, create focus XXXX of status I summary, remarks

will review environment to control to evolve, now focused as and execute through will remain agile on financial and We the to I'll can remain year Thank beyond. the we performance you, details. we Carol and as what the continues global it of turn balance we the

Thank Will. you,

year quarter. we from our last to quarter year. point an billion with from was review XXXX. basis were decrease financial the year in We X% a compared outlook X.X% GPC first update improvement then margin sales the XX for improved up and Gross of and key quarter, information, the fourth first a our will will last begin in XX.X%, in Total the provide XX.X% $X.X full on

level reflect of was mentioned incentives well. We operations. to mix with strategies, a higher as and neutral benefited to sales, there impact the positive of price continues and gross line Paul pricing and and true and also number progress impact a to margin quarter gross that gross we minimal our in for would including sourcing shift add steady of from the margin. first margin sales were initiatives, margin as year the Our gross inflation supplier global improving in quarter our last earlier, this And is in of

drive strategic will sourcing initiatives. As gains initiatives category our to execute year, global strategic analytics, mix additional on move also we product margin and the shift, and to gross via through pricing advantages tools positive we management continue

the other This from in or and year, expenses is reflects last first sales SG&A. year's XX.X% points adjusted basis last up this year. up from $X.X which improvement billion administrative selling, year XX.X% Our an were X.X% XXX from X.X% quarter, down to nearly of last

tremendous So our and in XXXX control on progress measures generated ongoing growth. savings of impact stronger cost as the to also favorable well as improved sales primarily due leverage our cost and

these our progress by which in our as freight we're in was in rising increases slightly supports Our strategic spend, areas offset and managing; covered earlier. Will technology costs which initiatives, planned expenses, closely

from to expenses. Our billion total year's or expenses first adjusted last $X.X in up year and quarter, were X.X% nonoperating operating the last compared up X.X%

expenses favorable basis margin improved from XX.X% $XX sales points. total All in XXX Total compared quarter to quarter related profit approximately the to XXX a profit point In in improved points segment basis quarter to XXXX, plan retirement line. comparison increase, include million, sale to our our on reported last the XXX to segment the strong year, of in, of the was X.X% has the sales, and a First was X% increase. that down our real XX% on expenses XXXX. other X.X% $XXX by basis profit margin segment first and XX.X% estate up the for nonoperating gains benefit income million are of valuation adjustments

we're margin solid since the in our of and positive a XXXX, strongest our momentum building first businesses. So reflection profit improvement quarter

from million interest million favorable line due gains of expense XXXX, in adjustment was down in estate million $XX debt XXXX plan rates favorable last in year. and and retirement total $XX relative primarily interest due net to decrease discussed $XX Our million expense from the in real to the corporate to the quarter, $XX The down earlier. was more

well improved in and line to XX.X%. primarily from first exercise tax of was mentioned tax options last reported the year Our retirement relates with real the the rate for rate estate stock favorable quarter plan prior adjusted previously gains as XX.X%, the year the as adjustments. improvement This rate impact and of

continuing prior per earnings to from $XXX income share diluted earnings or net in per with diluted for operations of compares quarter an the $X.XX. first adjusted $X.XX an share Our increase. per $X.XX was share million XX% year diluted of This

results quarter So now let's turn to by our first segment.

billion, profit and XXX last year. $XXX to automotive margin first the recovery point our with strong for the in driven at from initiatives. X.X% our a the year. up was XX% basis was compared of for $X of expand and was automotive revenue XX% businesses were have million margins each quarter. X.X% Our pleased by Segment prior execution quarter the increase We automotive The continued the operating margin to the their third in profit quarter business the margin in growth first up consecutive of

of addition, to first XXXX, points. basis In our quarter also XXX we're the quarter that encouraged up compares margin first favorably

and broad operations, look progress a ahead. quarters continued recovery in across for our So the we

in economy. Our consecutive strengthening were third $X.X flat year, and the quarter, sales improved the consistent for quarter, sequentially with the is industrial last with which industrial billion

margin the year and basis up third XX Australasian last ago, XXXX. and $XXX quarter to consecutive million up improved margin from from compared the margin North expansion our basis a Our X.X% both year. quarter XX% points was of industrial by profit reflects The first profit was in also and businesses, points segment industrial of X.X% XX for of to American up is

stronger expect quarter results with industrial, which sales continue to remainder another of we year. of through growth projected So operating strong the the for

sheet. balance So to now our turn comments let's the

a in liquidity last is is the sheet financial a operate At growth our from support and XXXX. strong strength XX% $XXX the total of accounts down function which to strategy. sold continue year, and ample XX, receivables primarily receivable in to with We balance March million

year. our the payable XXX% inventory XXX% ratio from the up increased AP was inventory XX%. to And improved Our last year, in prior from and to accounts X%

and continue We pleased position, improvement. in overall progress we further have we capital opportunities our improving working believe with to for our are

Our billion billion the March agreement provides throughout XX% March from at the and from XXXX We significantly XXXX. XX, revolving issuance for that last million expanded or $X.X total is our a down debt new and credit credit favorable $XX course December debt XX, of of new and debt improved down capacity rates. $X with position public more

these our With structure, X.Xx total EBITDA to to X.Xx changes has last to our debt year. positive debt from adjusted improved

first we billion in Additionally, the liquidity, March line quarter $X.X at in available with billion with December closed which XX XX. is $X.X up from and year last

the we increase million. in to operations to be also year. billion expect flow $XXX flow, in $XX quarter, million continue We strong $XXX improvement million capital, continue $X from $XXX and and cash working first cash to of up year, in to cash in $X.X a in cash generate last the the from to net income generating to the start the the million range, in from billion is strong including operations With which quarter first free

priorities invested cash the capital in XXXX. in expenditures include the M&A, from quarter, and repurchases. We an key first expenditures, Our for increase through capital $XX million our businesses $XX the million dividend in share reinvestment in

additional and plans to for efficiencies forward, investments Looking improve in drive we and businesses our have productivity. growth

year. of million to expect expenditures continue for $XXX We approximately the capital total

from an heard earlier, growth our acquisitions remain strategic important component long-term you of strategy. As Will

to and additional months to segments the ahead. we make the our to consecutive and our the of industrial quarters complement $X.XX cash automotive dividend. in expect In cash share in $XXX shareholders. We dividend of dividend continue public names, first represents every dividend XXXX, in our per strong we a The bolt-on to of increase acquisitions quarter, company strategic paid and cultivate XXth global has to and year a a our paid million XXXX both since pipeline targeted annual shareholders going

have actively since a share repurchase program XXXX. participated in We

were repurchase the company we While repurchases shares, ahead. and up first the XX.X will share quarter, authorized quarters the months in is in to there repurchases and to no million resume additional currently

for outlook XXXX. to Turning our

considered our the plans updating initiatives, current full XXXX. performance, economic year potential release are including and in strategic previously inflation outlook. on provided guidance, past updated foreign We at trends, and several guidance the February earnings for business growth our In our we factors, global our arriving recent currency fluctuations, XX,

continued addition, potential such uncertainties disruptions impact on our In results. as market consider with to we the and due COVID-XX its

factors our the of plus-X% total from these With XXXX previous for be range sales plus-X% we an to guidance plus-X%. increase of expect to in plus-X%, to mind, in

growth of exclude these total we increase plus-X% sales total guiding business, of plus-X% growth to a plus-X% to rates plus-X%. segment automotive increase to to future usual, benefit As from unannounced the and plus-X%; an an any the plus-X% plus-X% the segment, to from are for plus-X% By acquisitions. sales increase for industrial

our of represents second Thank Paul. quarter to increase on from look go diluted now year. range on exceed we the results back our XX% financial over the performance to you, On which per and our I'll This meet $X.XX these the initiatives to previous forward through earnings earnings or targeted reporting a to focused guidance an as enter side, We $X.XX. our and we share it turn we to of are raising XXXX. guidance $X.XX $X.XX, for from is up to XX% to

Carol. you, Thank

Looking global is economy the recovery the GPC and the we ongoing industrial. and ahead, team the in excited see growth for auto for prospects both

Our us to focused and plans strategic pursue and sheet growth. executing profitable drive flow value. flexibility cash growth remain strong our to on capture shareholder strong provides we the opportunities, financial balance Generate

the ahead. result, that a strong we deliver we quarters can in financial results are As optimistic

each GPC best. continued for to being dedication their we So of thank our to in the commitment and support, teammates want closing,

to turn operator with So thank it you Parts back for questions. And your the for that, interest in we'll Genuine your Company.

JPMorgan. with from question [Operator is our Christopher Horvers Instructions]. And first

comp X Can less you day. talk about, I think well, I guess have a basis, you on

a segment? So the each reported how would headwind? follow-up, you a size then are up about that does Motion a X-year -- comp of And in performance a talked about day that that you selling including in basis? you And And think performance? unique for there as record per as it what comps, just March, it reflect Was I basis. was March on look do something X sort like plus that on

-- X comp right. Yes, did in that you're we in the did day quarter, our are Chris. We provided. reflect numbers have that sales and less On not

X.X have So we it the good really of the each be about points for would of thing that. our equally. is rest segments The won't year,

We day. the in for or have numbers. But with if X adjusted our will year not that close comp it, the will, of less shown full any you we

to in industrial on thanks to waiting honestly. for Motion, We've our like question your been for March. business. question Chris, always We your relative about And regarding breakout We talk month a and Motion. it, had

at you industrial indicators going into the they've all If all been PMI to look from right. the up production,

was roaring back get it with they knocked got seen as and year. a bit business the March. in -- a this through going trend, down And lot that's our on just the now, the expectation, came got little when a balance positive before matter to a they of out knew they but trend we've Motion, we in are honestly, It's of it south, carry storm. sidelined February of really with our they time. So Motion in the

But some modest going does then, of you check? margin on inflation, the talk that that takes keep see DIY time commercial and given initiatives out? and mix quarter and two think about Carol, in gross the XX.X% margin, basis, some you could can Or a on versus still Do and that Got more forward? gross over year is expansion the laid divestiture up so it. forth. And puts first in you the

divestitures the I fully of we Chris, impact all you, and discontinued. anniversaried tell would Yes.

full XXXX. been about margin at continue gross and our It margin for are you myself given in So to call, did that mean, of improvement is what our the I gross And core impact. and actually function initiatives. number -- true modeling Will is heard a year February model of initiatives. the we have we talk

have So we had pricing and progress some tools strategic great analytics. in

Our category sourcing. mix management, shifts some had as product global well. We've

has job just team industrial Our tremendous done quarter-after-quarter increases. of a

on kind the teams, we really for a really sourcing tenders impact out well. global global And of are had working Our rebates quarter. neutral

year, improve believe that up will continue to margin full So our for we full do year. and will the gross be

quick one. last Okay. Then one

much -- the you've haven't you know I mean, balance Looking ever to I sheet. cash -- if but don't I'd I sitting don't sheet, that had at have look -- balance the that's on back,

So there? repurchase? be more bolt-ons. typically, how are Are potential around about you you of kind target $XXX million something aggressive bigger the to thinking $XX share Or you to million thinking

thing Chris, right our to much Yes. expect us a to I question. having cash balance the a look do of prudent you're XXXX, in conserving normal of We as ourselves at of But we capital spot is did got And think that recall a was return great It now. and none allocation. on, great bit in on little prudently cash timing more position. sort sheet.

So you Will will see our M&A pipelines, about. talked as

You will will acquisitions see the that come bolt-on in. type

to see in buying share again, some with from were million. had debt the CapEx where You're And shares our going $XXX getting of up our buyback, to and our we precluded somewhat we found agreements ourselves.

honestly, be away. We buying, expect in there to right

certainly that. will do repurchase. our do we more, And opportunity we'll share normal We do if to the have

you'll as see we and ahead. allocation, use more move normal us capital to putting that So cash

question Greg And Melich is with our Evercore ISI. next from

had labor if to operating a basis part questions. be? the wanted reductions. be sort what to sustainable the about I could And sustainable XXX could of point and the in productivity. understand I margin what with sort of improvement start two we just heard think business cost of I wanted that

That great in using center. technology for Yes. It's four was a case distribution inside a asking study the a of great it. walls question. Thanks

the we As technology. about work doing people the think have more getting number with we to of relative productive

technology And cetera. That move et and we modules, that's in continue sustainable. improve completely as and to lift will building, the is forward. vertical think investment it So that

point comment would XX I sort X.X% operating implying a And operating margin. of I to the X% on improvement. just outlook We're margin long-term Greg, is margin in our about basis improvement operating And honestly, is mean, the again, add this over to year that XX basis a in our that's combination XXXX a probably results, and XXXX as of point XX well. improvement SG&A. and gross margin from coming

on a lot think in great. inflation, really input in it costs That's Right. you mentioned of like. structural I a the sounds there's obviously, bit there. but That's effectively, pivot quarter, a rise And first wasn't out material part, it to

numbers what what So expect also, the you inflation seeing guidance your like you what the that line? I'd just And would in inflation in COGS are assuming? or you top are to in know

Yes.

QX really for sales right, had we our and no modest on pretty You're gross inflation margin. impact or

to But more we as X% on we and improvement if We're a pass the yet, we'll come to margin guidance a honestly, will, hasn't probably to on into initiatives, side. X% to and half-weighted. move side it us that we'll look we we that's X% X% at not do sales. going in to to that and think hit But able tailwind through. be our Quite be deliver gross second that, continue our ahead. modeled As have looking to ahead, our being a forward industrial believe you if look able the automotive we on honestly, quite with on

it. Got

So you not end that's presumably the just gave? in but those back would half, the by the upper what at think, that it's be of you ranges it guidance

in more modeled That's correct. back half, back the normalized we our you well. the it's as And also have side know cost of growth And not into sort half.

So as seeing it's on we'll update quarterly expect we're move but the inflation, you on coming. what we do we ahead

Greg, add from world seeing in of remarks. else, it's watching everybody ranging the it we're alluded in selective I inflation parts inflation mean, and might I to parts But just I prepared the geographies. in the of like Will. and different cost different on in SG&A business, the side. wage

global logistics got You've inflation.

inflation. You've got commodity

that cost day. offset productive and that that every to of definitely we're being on around work inflation, watching that's working but good actively we're something doing So some

from Our is next with Kate question Goldman McShane Sachs.

know contributors improvement business. there I was ask I wondered to some the in comp. of I fleet if about the could just

drag. was it a However,

South just you the the the point. able And rest where at a East. more out more would didn't to I you this seems of performance it If that see that. would were place country in you quantify have that thought than open call regional maybe been given And strength,

your comments just on wanted that. get So to

thanks for Yes. your Kate, question.

I In call, we last in come which that back our breakdown, in improvement. referenced fleet terms think QX, did the of we did an see

year. that positive positive Our and the is expectation the through in will remain turn of fleet balance QX

As turn positive, in the major is close was those seeing both you both center retail growth and by we mid business off-the-charts What accounts AutoCare segments, single-digit our business categories. break to really our various encouraged were down NAPA strong.

see turning across division. improvements called regions. -- it encouraged a as out I heavy-duty regionality, our to also our So fleet to in Kate, that I positive northern mix, yes, includes think the we saw business government municipalities and as are call board And would Atlantic I far our really out especially in QX.

led Our in Atlantic the QX way for the us. And really division Virginia. Carolinas, to down Atlantic comes

close that So is to the south.

as just Our regions as our saw northern but fine, strong region. we not just as southeast performed our in was western well as what

that Is at And to was were from a seen up to way more question, quarters? there successful of last mentioned you that you just thanks accounts, follow-up commercial or I sales quantify you've your compare what Okay. a, the a wondering had couple signing to new in it effort.

business the have X what That Well, seen if that smaller garages X, the you quarter. the was our literally X% of it's those we it coming know our term we're in some up changes not getting enhancements kind seeing time. the to out as describe -- street, XXXX. again, and business. significant out touch of look And wholesale, and made at our we bays. growth Kate, down we -- and reflected point. customers, We other that's doubled and -- force We And in have sales up in some we're

as bullish back, and we're the would expected in going category it 'XX. really DIFM forward to bounce pleased we So see

question next with our Ciccarelli Capital from Markets. is RBC Scot And

Scot importantly, like regional would to Or attribute quarter was seemed Ciccarelli. cetera, I or given commercial business question, affected by the et guys a in better it or the more mobility? are weather improved because it harsh commentary, winter, like Kate's more follow-up we and your that on you customers, maybe your guess seeing that saw had? patterns as you, consumer

Yes.

and business. is the coming we we're X all about it is I where efforts our last winter see -- ago, it back and tend good sales in anywhere driven, as you we think this on, the was year. think bounce above, an to years how back I our not normalized still know, miles team a that The from And touched we with many force that changes while it's the going in levels these made a near that of Will year. the were has weather, to NAPA our making then more It impact talk market. Certainly, did bit on Scot. calls, in we

our really combination of I strategy. sales a So think it's

the at street-level has availability inventory improved. Our

many still And is, still of It's hitting quarter really is is I factors would now, Scot, positive COVID-related at this it's know, not had of most trended I So combination kind positive you the in it's thing despite lockdowns of what encouraged to. being And parts lockdown. one a would point -- world. by, quarter. once. Scot, right that business I'm in really in as the really think yet Canada our full we in

Our from supply service it our not levels be. is where our would traditionally and suppliers

of put headwinds upside quarter few these even I there's we the proud had, when So look, quite more behind we're a we us. would you, think but I tell of

I maybe And we here. Yes. my That's into guess gross bit I broad question is, little a know dug G&A. helpful. kind then s more of it super margin,

a Like reductions. and back had combination of in? some reductions have there kind you back need cost Are guys You cut that a layered of to for both temporary time. of cost permanent be period

certain the that into got recovering, to Now we is some layer P&L. back the business expenses

and -- had We great it's question. Yes. a

those comes plan we do XXXX temporary permanent cost again, we expenses the the structure permanently permanent. in. of those with savings, cost put But some that in volume And As there I a mean, lower is level that come converted our capitalize back, to of and on back place. we did variable

But from our done a And February, in year. out and So we improvement we margin Team's $XX remain SG&A. came in in in QX, operating improved we savings. we've sort and is contemplated our we've contemplated flattish -- in as about had of go payroll. job the now a that again, seen throughout does the we SG&A with those carryover was when had think a million quarter that on benefit the outlook, tremendous I

as some which example. initiatives just productivity, might that add SG&A reinvest kind is our as I Will. it's of philosophical portion growth of another into do we I Scot, and point, an intent mean, work, productivity is talent, to

the reinvesting not in productivity we're So philosophically. focused driving business solely without on

our next Bret question Jordan from And is with Jefferies.

you When they're behavior strength waiting Or this buying a in is change you delivery shipment? either online the seeing are and about or talked expecting still for in buying a a where consumer store? and digital, pickup in digitally

both. it's think I

use out of coming which in of in say, a COVID, in -- meet use having things whole to I digital different do means differ that the that foundation different the of been But skills to there think being and frequency, every And it, the you change the I dramatic it Meaning across is way those would digital has easy to of the with. needs customers. they customer business concept the segment. dimension. as

continue mix of and to those So done good work needs, I in we're everything, to a going setting invest it's different really around foundation say up would we've of it. meeting the and

percentage the still what versus out like a Could you maybe is talk shipped? about door actually going digital of box being in

not I me. in front that I'm sure number of have

circle back with you. me Let

Motion behind and first pretty been some I auto Or question us? batteries much issues Are there filters, quarter. the or stock supply have is availability issues, and -- a then you think in and seeing And Okay. on any that it's whether both impacting? With

talked it's behind out I were know us, not. it last we No, wish batteries. quarter specifically you and I Bret. I called and

battery had Filters, lot it categories well. gotten business, But mentioned, a quarter seeing whole our where as be our you that's in-stock better, there's terms and of could other in pockets struggling. we're great While we some product in in still a better levels. we're

to challenges labor mentioned business. for back materials, of chain, what up earlier. raw be our supply suppliers upside against normal -- with increased I our more just So look, comes some up are know issues. global the I going levels, with When our know that's that the I that's to

charts great. Okay, I in about versus I this NAPA just then guess, you issue. was off the And of retail What U.S. talked X housekeeping commercial, retail. percentage quarter? the guess

in -- Bret. percentage of In increase, terms well, our terms of

business the... than retail up was in XX% greater Our

gets the how Just the sort sales, as a of percentage pie carved of up?

see stores, to it Bret, know, accelerate. Percent great -- of in It's look, the look, we're of going business total, DIFM it's side, -- but layouts still put still in stores. of die that improving to our improving XX-plus hell retail is folks hours, our our we as and store on continuing into live to DIY our effort a And lot stores, the we you a our percent.

a put it the through these it, effort we've lot talked on about calls of behind So and we've a years. lot

segment continuing to So it's perform see really that well. great to really

Our next question is from Seth Wedbush. Basham with

can can we We at back moving. come here. the Maybe to keep end Seth

me? Can you hear

now. you got We

your Paul, this market you is quarter that can think doing you how my quantify in core question I is around business the fleet share. don't quarters? to U.S. NAPA know ex if relative recent

with out waiting XXXX. in it the We're happen our that really up Well, been We've look, seen, it we're and quarter. to pleased the see bounce performance remains business pleased to right? certainly this as against quarter. and So our for back one stacks first pleased to commercial be

the What business I business pleased that was solid The our we're fleet what IBS I solid. beginning see, was touched referenced to believe Seth, already retail that we do performance. back. pleased on business, bounce So Bret, what that with to we're and as is see really a to

So team proud I doing of for really well, NAPA quarter the quite the and think we're I'm put up. they

business. the sales your particularly so the well, March versus distribution those your stimulus around in distributions you I as you for look stimulus a And January, probably in check DIY sales balance presume pronounced XXXX? even business was that you. a at trends as But more for there Got do-it-for-me saw some and bounce in check around of

one the quarter, month guess off alluded and comment little I is March even it, pretty I started was February was trends, and a the strongest Yes. to was Paul would the January and strong, between DIY. softer. the our really it say in commercial

you think as happened. it it I laid out So

with next Brian question Sponheimer our is Gabelli And Asset from Management.

next-generation hello, and with I ways it in but this be for to stations want also say electric vehicles, or include well? quick. potentially really for charging would the investment investing be the support as fleet I'll otherwise, also just to help

Yes. does. It

is prudent developing move as We we and the on main for to topic. the intensely the the And to we're work though, of think just to it's think all doing we it's think work forward. engine, be business serve this understanding of our choices that around just I doing on reemphasize I today, be are ice going as part to important and us we focused a focus note, that strategies facts the lot evolves.

move looking strategy as open we're and forward. we everything So at refining the and

the welcome at combustion EVs, do the Union first with you eye presence And of leading back. And we're doubled good to focused in it's pointed -- future. Brian, we will add. out, hear see in just point, -- before team U.S. be from have believe Will business with But you in again. would the we having today towards -- the internal Europe, majority an hand off, our see still, here We will, our and And certainly because likely Europe, down most engine. European on the effort it, leading European our as that we rightfully I time, tipping if the shift, we'll it the on

is Imbro question from with Stephens, next Daniel Our Inc.

the wanted follow-up on I on start Carol, guidance. to a

full about I'm by if raised I want -- you correct year to think XXX wrong. I bps. please say me

obviously FX any XQ. to which include tailwind nice didn't guidance a last the think tailwinds, I were

And is each you then any organic how results? on digging So segment have guidance FX? can out much parse maybe growth you based the guidance maybe it, changes first your raise for made of the to underlying quarter into just

question. Yes, Okay. great

guidance. really So our about talking

reflects recovery So really full and for quarter. accelerated year first our the in earnings the stronger sales the

FX. items QX will, the those full year. not, quarter. into of assume some what numbers So the unusual favorable we you be rest did in did considered other the if year in the consider for We baked we of the But occurred would

really not more model currency will, approach, in. the So sort if and a have you of that we taken conservative, on cautious

guidance. about is that sales And the then same-store contemplated. again, So you asked

store So you thing same bps in for for segment, at total the on if did look comp raising XXX the -- at each sales. and we

plus industrial same-store the for to sales. automotive plus X% X% plus on on So and to plus X% X%

talk And love industrial, Paul, Got I to up it. about That's maybe it. know then on you following helpful.

I think last was said quarter, up January you X%.

weather Or full February you at think the else I just results? X%. to the industrial said meaningfully. that quarter there February as I get all Is down guys quarter -- mean, March just was anything To driven? down we happened in that was look was up first

move, branches for really, to off. a going pretty really -- to for picture were the start team. January, that There's our balance takes of you you, I true and it's low March to start to, business the of single-digit very continue gates we've at it look a were business earlier, way had the when probably We plants combine the Yes. that's we first to Feb record a out got was together, and again, I we're off if shut the as in Daniel. else times that Motion. the us start projects been And hit increase. is good CapEx XXX -- look good, to month will with many that much of When And at year. maybe not to think is point good we down. when we And through Motion tell you better I February, April. this a But mentioned a mentioned, as reopen, quarter. hard. through cycle expectation to turns, And March were over And

David our question Research. Bellinger be with Wolfe And will last from

have turn follow-up about question started seems that. to to in are that at this corner It talk my that you line the on follow-up quarters? out for the demand on to XXXX side. to you March. extend the sight even into supply potential several though growth Just constraints as expectation of next just Yes, on last industrial And the these customer into segment point? allowing Can over has

couple And into they're been if these of projects, the I was a Well, we that's first and lead with know, industrial they're times ago, actually full moving really visiting back as for CapEx our generally positive is in. field factories that's are team projects. we've of now, as happening are, out visit they there's Motion feedback line right weeks you the customers our business. many with get we the time of in out We all And production, universal rolling humming. of very, sight, very these But many -- long customers.

'XX. into have with and that's So it's our Motion that on a expectation look as just verified, David, further production numbers And PMI industrial all at further we'll we And going believe is continue kind to really that look forward growth solid we in we to when to the going of year. and continue continue support the we're numbers numbers the XXXX. should produce

encouraging. just And very then inventory availability the prepared That's improved quarter. on remarks, in noted your business, is this Parts again Auto

sales So can more in of subsequent to lift the us you're detail way and improvement, there? there some give that terms you seeing? ongoing any availability parts or behind initiatives to quantify the Is that either

us, the time. right sure, got priority a we've the and that great question, be the remarks, as to market product making focus continues in in at Yes. for obviously it I It's prepared right a right said

So it's initiative. absolutely ongoing an

improvements and watching the supply in We studying are chain. global

encouraged We are getting that it's better.

to all to product. efforts we that the make sure watching really right of are we the think about, so by got we improve as that And category,

So it's focused to have getting on to better, it. but we're stay going

Europe to XX%. the inroads strides, up our that we're place we I QX. I this potentially us that, one but in and us would real -- here the team great would at we Europe. market I plenty add the much tell believe talked our enabled think had quarter, European pluses and our of Europe great we right And that morning, in on inventory, of we haven't at across making was to had right about time, one you of business I outside of grew in had as great what this it, said, product, also had a David, But for really the quarter which overall grow Will

part with make the pleased progress that of continue really to So the world. we in

remarks. for the call reached now turn end the of closing have the management We to I'll over session. question-and-answer

We'd all our and earnings day. we thank you Parts the you. a participation QX to to to look interest support on Thank like forward appreciate have your your and today. Thanks, for and results, company. of QX in call of great Genuine reporting you out We

your disconnect for lines Have you Thank time. may you a and this conference, today's your concludes day. great participation. this And at