Genuine Parts Company (NYSE:GPC) Q1 2024 Earnings Call Transcript

Will Stengel: Yes, Seth, it’s a national program. So it’s having an effect in all parts of the U.S. Automotive business. The way to think about it is, this is our first pillar around sales effectiveness. And the concept is making sure that you’ve got your selling resources focused on the right customers. And so in particular, as we talked about the Auto Care segment, making sure that we got the right sales coverage for our Auto Care customers and then making sure that people in the stores are appropriately resourced and focused on making sure that we’re getting parts out-of-the stores efficiently. So it’s just — it’s a standard play in distribution to make sure that we’re optimizing selling and then you complement all that with inside sales resources for folks and make sure you got real nice sales coverage across the entire customer-base. So it’s a broad program, very common and excited about what it’s going to do for the business?

Seth Basham: Got it. That’s helpful. And then just a little bit more color around the changes in sales incentives. Are there changes for the independents that could be pulling forward any sales in the last couple of months?

Paul Donahue: We haven’t made any meaningful changes to sales incentives for our sellers. We’re obviously doing category management work each and every day. That’s a cousin of strategic marketing. So thinking about promotion activity. And there’s nothing new or different there in the first quarter unlike any other previous year. So we wouldn’t expect a pull-forward.

Seth Basham: Thanks, Paul, and good luck.

Paul Donahue: Thanks, Seth.

Operator: The next question comes from Aaron Reed with Northcoast Research. Please go ahead.

Aaron Reed: Yes, thanks for taking my call. I just want to touch on real quick. Inflation seems to be slowing. It sounds like you had it down 1%. Can you give a little more insight around what does wage inflation look like? Are you seeing that fall as well too or kind of where are you in that process?

Bert Nappier: Yes, Aaron, it’s Bert. Look, I mean, I think when we think about the period from a year-ago with wages and some of the competition around labor, the environment certainly has abated and gotten much softer year-over-year. We’re seeing in terms of how we think about labor more in-line with historical averages in terms of increases, some of the things we were having to do to invest a little bit more a year-ago have abated and we’re not seeing those. So I would say year-over-year much more normalized environment and we’ve got that reflected in our outlook for the year. Some of that headwind of investment that we made last year, we saw impact the quarter, as I mentioned in my prepared remarks. And some of those things where we were investing in our team members with a little higher wage increase and healthcare increases that we didn’t pass on last year, well, we’re seeing that pass by.

And so I would just say that when we look at labor moving forward, a less intense and competitive landscape, easier ability to recruit and gain talent in a more normalized environment for wage increases.

Aaron Reed: Okay. Great. And then just one follow-up question. Something I’ve been actually looking at closely as well too is your own brand expansion across Europe. I was wondering if you could just give us an update on that and really how that’s progressing?

Paul Donahue: Yes, happy to, Aaron. The — look, the launch of the NAPA brand which occurred about four years ago, we started in the U.K., we anticipated it would be well received in the UK markets. It exceeded our expectations and actually accelerated our strategy to expand the brand across Europe. And I would tell you, Aaron, we have and continue to be very bullish on the reception the NAPA brand has received across Europe. We rolled — we’re in the process of rolling out in Spain now as we — as we speak. And we expect that this year we’ll cross the $500 million mark in outbound sales of the NAPA brand and we’ve done that in five years. So it’s gone amazingly well.

Aaron Reed: Great. Thank you very much.

Paul Donahue: You’re welcome.

Operator: Ladies and gentlemen, we have time for one more question. Your next question comes from Carolina Jolly with Gabelli. Please go ahead.

Carolina Jolly: Great. Thanks for taking my question. I know you talked about the automotive cadence. I was wondering if you could touch anything on maybe industrial and anything you can talk about in terms of cadence there and any end-markets that might have done well in the quarter?

Paul Donahue: Yes, Carolina, thanks for the question. Happy to talk about that. The — from the end-markets perspective, given some of the noise that I described with the weather and the March Good Friday, I’m not sure I would over-index or extrapolate some of the comments that I’ll share with you. If you remember last call, we shared a little bit more detail about our 14 end-markets that we track and we saw kind of sequential improvement versus the prior quarter in two of those. We saw a little bit of step back in the sequential improvement. So we actually had three or four go the other way this quarter. Again, I wouldn’t read too much into that. The short strokes are it’s a mixed story out there. I commented a little bit about some of the areas of strength and weakness in terms of the types of categories.