Genuine Parts Company (NYSE:GPC) Q4 2022 Earnings Call Transcript

Paul Donahue: Yes. So thanks for the question, Joe. And look, it’s a reality, and there’s a number of reports that we’ve all reviewed of late commenting on the number of CEOs that are considering and have begun considering bringing manufacturing back here, not only the U.S., but across North America. And certainly, Mexico would be a part of that where we have a strong presence with the Motion business. So look, it’s a positive. It’s more long — it’s certainly more long range. It’s not going to — certainly not going to happen overnight. But again, I think as these companies do return to North America, automation is going to play a significant role given some of the labor challenges and labor shortages. So automation in these operations is going to be significant, and again, we are extremely well positioned as it relates to our automation and robotics offerings.

Joe Enderlin: That’s helpful. Thank you. As a follow-up, you noted you realized there were $30 million of synergies from the KDG acquisition with more expected in ’23 and ’24. Just to clarify, were these mainly revenue or cost synergies? And then what are the primary drivers here? And then do you maybe think there might be any upside to the $50 million goal?

Will Stengel: Yes. The synergies are in both buckets. So we have net sales synergies as well as cost synergies. So they interplay together. We do think there’s some upside as we move forward. The business has really nice momentum. We committed to $50 million when we originally announced the transaction by year three. We’re in a position to deliver $50 million by the end of year two. So with $30 million realized through year 1, an incremental $20 million in year 2. And I’m confident that the team will execute well and deliver on that commitment and potentially more.

Joe Enderlin: That’s all for me. Thank you.

Operator: Ladies and gentlemen, we have time for one more question and that question is from Seth Basham from Wedbush. Please go ahead.

Seth Basham: Thanks a lot for squeezing me in. Nice quarter. I have a couple of questions about the core U.S. NAPA business. First, regarding the fourth quarter results, you mentioned strength finished the quarter. I presume weather helped. I’m wondering if you can quantify how much weather was a help, and how you’re thinking about weather for the first quarter and 2023.

Will Stengel: Yes, Seth, I would — its Will. I would say that weather might have helped slightly, but not material to close the year. As we look forward, it’s currently 80 degrees here in Atlanta. There’s a couple of feet of snow in different parts of the country. It’s hard to predict. I would tell you, January feels like — certainly, in our North American market, it’s been a mild winter that had some implications for some of our product categories, but I’m confident the team is going to work through that. We can’t control it. So we’re going to focus on what we can control and make sure that we’re taking care of our customers and our teammates safely.

Seth Basham: Fair enough. And then as you’re thinking about the U.S. NAPA sales growth in comps in 2023, is that within the same 4% to 6% range that you’re expecting for the global business?