GENUINE PARTS CO
For the period ended Sep 30, 2024. Filed Oct 22, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 22, 2024
GPC$122.80-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-23.
0000040987-24-000178
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-22.
0000040987-24-000210
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 66 previous paragraphs and 75 current paragraphs.
28 unchanged; 25 reworded; 22 added; 11 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Our third quarter net sales were $6.0 billion, up 2.5% year-over-year, and net income was $227 million, down 35.5%. Acquired businesses contributed 3.2% of net sales growth, of which 1.5% was from acquired stores in our U.S. Automotive business, including Motor Parts Equipment Corporation ("MPEC") and Walker Automotive Supply, Inc. ("Walker"). An extra selling day contributed to an additional 1.1% of net sales growth. These benefits were partially offset by essentially flat comparable sales in Automotive and declines in Industrial comparable sales of 2.4%, primarily driven by ongoing weak market conditions across our geographies. We also estimate the disruption from hurricanes and the CrowdStrike technology outage in the U.S negatively impacted comparable sales in both segments by a total of 0.7%. Our gross margin improved 0.6% primarily due to the benefits of acquired stores in our U.S. Automotive business. Net income declined 35.5% primarily due to fixed cost deleveraging from declines in comparable sales and increased costs related to: personnel, rent, acquisitions, technology investments, depreciation, restructuring, and interest expense.
Current report
Automotive sales for the three months ended September 30, 2024 were $3.8 billion, an increase of 4.8% from 2023. The increase reflects a 4.4% benefit from acquisitions which was primarily driven by acquired stores in our U.S. Automotive business, including MPEC and Walker. We also experienced a 0.2% increase in comparable sales and a 0.2% favorable impact of foreign currency and other. We faced the effects of persistent soft demand in our U.S. businesses, inclusive of sales disruption from Hurricanes Beryl and Helene and the CrowdStrike outage, and adverse economic conditions in our European automotive businesses.
Current report
Automotive sales for the nine months ended September 30, 2024 were $11.1 billion, an increase of 2.9% from 2023. The increase reflects a 3.4% benefit from acquisitions, partially offset by a 0.1% decrease in comparable sales and a 0.4% unfavorable impact of foreign currency and other. Year-over-year comparable sales also were impacted by persistent soft demand in the U.S., the hurricanes and CrowdStrike outage, and adverse economic conditions in Europe.
Current report
Gross profit for the three months ended September 30, 2024 increased $89 million, or 4.2%, compared to the same period of the previous year, and gross margin increased 0.6% to 36.8%. The improvements are primarily driven by acquired stores in our U.S. Automotive business.
Current report
Selling, Administrative and Other Expenses
Current report
SG&A expenses represent 28.8% of sales for the three months ended September 30, 2024, an increase of 2.2% from the prior year. For the nine months ended September 30, 2024, SG&A expenses represent 27.9% of sales, an increase of 1.4% from the prior year. We estimate operating cost inflation, including personnel costs and rent, caused approximately 40% and 70% of the increase for the three and nine month periods, respectively. Increased operating costs from owning more U.S. automotive stores contributed approximately 25% of the increase in each period. We also incurred acquisition and integration costs and costs related to increased investments in technology, among other things.
Current report
Restructuring and Other Costs
Current report
Depreciation and Amortization
Current report
Depreciation and amortization expenses increased $22 million related to ongoing investments in technology and supply chain initiatives.
Current report
Interest Expense
Current report
Interest expense for the three months ended September 30, 2024 increased $12 million, or 75.8%, compared to the same period of the previous year, due to increased borrowing to fund acquisitions, including the senior notes issued in August 2024.
Current report
For the three months ended September 30, 2024, Industrial segment profit decreased 8.5% compared to the same period in 2023 and Industrial segment profit margin was 11.9%, down 1.0% from the prior year. These declines primarily relate to persistent segment operating cost pressures from inflation, particularly personnel costs and rent. For the nine months ended September 30, 2024, Industrial segment profit decreased 2.6% compared to the same period last year and Industrial segment profit margin decreased to 12.2% compared to 12.3% in the same period in the previous year, based on similar inflationary segment operating cost pressures.
Current report
Net Income, Diluted Earnings Per Share and Adjusted EBITDA
Current report
Corporate Expense and other Segment Reconciling items
Current report
This section explains the material reconciling items displayed in the Segment Footnote in the Notes to Condensed Consolidated Financial Statements, that are not discussed above including corporate expense and other unallocated costs.
Current report
Corporate expense reflects costs related to headquarter's broad based support to our business units and other costs that are managed centrally and not allocated to business segments. These include personnel and other costs for company-wide functions such as executive leadership, human resources, technology, cybersecurity, legal, corporate finance, internal audit, and risk management, as well as product liability costs and A/R Sales Agreement fees. Our operational objective is to maintain Corporate expenses within a range of 1.5% to 2.0% of net sales. Corporate expense amounted to $114 million and $90 million in the third quarter of 2024 and 2023, respectively. For the nine months ended September 30, 2024 corporate expense amounted to $284 million, or 1.6% of net sales, in 2024, compared to $258 million, or 1.5% of net sales, in 2023.
Current report
Corporate expenses increased in both periods primarily due to the effects of persistent inflation on personnel costs and ongoing investments in technology.
Current report
Other unallocated costs represent restructuring and other costs and acquisition and integration related costs and other. These increased year-over-year due to the global restructuring initiative that was approved in February 2024 and significantly increased acquisition activity in 2024.
Current report
(1) Amounts are the same as adjustments included within the adjusted net income table above.
Current report
(1) Amounts are the same as adjustments included within the adjusted net income table above.
Current report
On April 29, 2024, our Board of Directors approved the termination of the frozen U.S. qualified defined benefit plan (pension plan), effective September 30, 2024. We intend to transfer the management and delivery of continuing benefits associated with the pension plan to a third-party insurance company. Upon settlement, we expect to recognize a non-cash, pre-tax pension settlement charge in 2025 equal to the actuarial losses accumulated in AOCI, which totaled approximately $620 million ($450 million, net of tax) as of September 30, 2024.
Current report
On August 7, 2024, we issued $750 million of unsecured 4.95% Senior Notes due 2029. Interest is payable on February 15 and August 15 of each year, beginning February 15, 2025. We intend to utilize the proceeds of this offering to repay the Series J Private Placement Notes and have utilized a portion of the proceeds to repay indebtedness under our commercial paper program that was outstanding as of June 30, 2024. Any remaining amounts will be utilized for general corporate purposes.
Removed paragraphs (11)
Previous report
Our second quarter year-over-year net sales growth of 0.8% was driven by growth in Automotive, partially offset by a modest decline at Industrial. The macroeconomic environment remained challenging, with lagging industrial production driving soft demand and difficult trading conditions in Industrial. Performance in our U.S. and European automotive businesses also reflected moderating demand and a softer pricing environment from lower inflation. Despite this, Automotive sales continued to benefit from the prior year European acquisitions and current quarter acquisitions in the U.S. On April 30, we completed the acquisition of MPEC, our largest independent owner of NAPA Auto Parts stores in the U.S., operating 181 locations.
Previous report
Second quarter gross margin improved 50 basis points year-over-year, however net income declined $49 million primarily due to restructuring costs, investments in technology, and increased personnel costs resulting from acquisitions and inflation.
Previous report
Automotive sales for the three months ended June 30, 2024 were $3.7 billion, an increase of 2.0% from 2023. The increase consisted of a 3.1% benefit from acquisitions which was primarily driven by our European acquisitions and the MPEC acquisition, partially offset by a 0.6% decrease in comparable sales and a 0.5% unfavorable impact of foreign currency and other. The slight decrease in comparable sales reflects softened demand in our U.S. and European businesses and the negative impact of moderating inflation.
Previous report
Automotive sales for the six months ended June 30, 2024 were $7.3 billion, an increase of 2.0% from 2023. The increase consisted of a 3.0% benefit from acquisitions, partially offset by a 0.2% decrease in comparable sales and a 0.8% unfavorable impact of foreign currency and other.
Previous report
Gross profit for the three months ended June 30, 2024 increased $46 million, or 2.1%, compared to last year, and gross margin increased 50 basis points to 36.6% compared to the same period of the previous year. Gross profit for the six months ended June 30, 2024 increased $107 million, or 2.6% compared to the same period in the prior year. Gross margin increased 70 basis points to 36.2% compared to that same period of the previous year.
Previous report
Operating Expenses
Previous report
SG&A expenses represent 27.6% and 27.4% of sales for the three and six months ended June 30, 2024, respectively, compared to 26.7% and 26.5% in the prior year. We experienced increased personnel and rent costs primarily related to acquisitions, annual merit wage increases and inflation.
Previous report
For the three months ended June 30, 2024, Industrial segment profit decreased 2.3% compared to the same period in 2023 and Industrial segment profit margin was 12.4%, down 10 basis points from the prior year. For the six months ended June 30, 2024, Industrial segment profit increased 0.4% compared to the same period last year and Industrial segment profit margin increased to 12.3% compared to 12.1% in the same period in the previous year. The decrease in segment profit for the three months ended June 30, 2024 resulted from deleveraging expenses driven by lower sales. The improvements in the six months ended June 30, 2024 occurred, despite a year-over-year sales decline of 1.6%, primarily due to expense management and ongoing execution of our supply chain initiatives and strategic category management.
Previous report
Net Income
Previous report
(2) Represents GAAP net income as a percentage of GAAP net sales.
Previous report
(3) Represents total segment profit as a percentage of GAAP net sales.
Reworded paragraphs (25)
Previous wording
The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying notes contained herein and with the audited Consolidated Financial Statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results for the year ended December 31, 2024.
Current wording
The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying notes contained herein and with the audited Consolidated Financial Statements, accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results for the year ended December 31, 2024.
Previous wording
We caution you that all forward-looking statements 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 result of various important factors. Such factors may include, among other things, changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation, financial institution disruptions and geopolitical conflicts such as the conflict between Russia and Ukraine, the conflict in the Gaza strip and other unrest in the Middle East; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; public health emergencies, including the effects on the financial health of our business partners and customers, on supply chains 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 the financial and capital markets; our ability to maintain compliance with our debt covenants; our ability to successfully integrate acquired businesses into our operations and to realize the anticipated synergies and benefits; our ability to successfully implement our business initiatives in our two business segments; slowing demand for our products; the ability to maintain favorable supplier arrangements and relationships; changes in national and international legislation or government regulations or policies, including changes to import tariffs, environmental and social policy, infrastructure programs and privacy legislation, and their impact to us, our suppliers and customers; changes in tax policies; volatile exchange rates; our ability to successfully 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 result of the work from home environment; the uncertainties and costs of litigation; disruptions caused by a failure or breach of our information systems, as well as other risks and uncertainties discussed in our 2023 Annual Report on Form 10-K and from time to time in our subsequent filings with the SEC.
Current wording
We caution you that all forward-looking statements 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 result of various important factors. Such factors may include, among other things, changes in general economic conditions, including unemployment, inflation (including the impact of tariffs) or deflation, financial institution disruptions and geopolitical conflicts such as the conflict between Russia and Ukraine, the conflict in the Gaza strip and other unrest in the Middle East; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; natural disasters or adverse weather conditions, such as recent severe hurricanes; public health emergencies, including the effects on the financial health of our business partners and customers, on supply chains 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 the financial and capital markets; our ability to maintain compliance with our debt covenants; our ability to successfully integrate acquired businesses into our operations and to realize the anticipated synergies and benefits; our ability to successfully implement our business initiatives in our two business segments; slowing demand for our products; the ability to maintain favorable supplier arrangements and relationships; changes in national and international legislation or government regulations or policies, including changes to import tariffs, environmental and social policy, infrastructure programs and privacy legislation, and their impact to us, our suppliers and customers; changes in tax policies; volatile exchange rates; our ability to successfully 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; the uncertainties and costs of litigation; disruptions caused by a failure or breach of our information systems, as well as other risks and uncertainties discussed in our 2023 Annual Report on Form 10-K and from time to time in our subsequent filings with the SEC.
Previous wording
Our Automotive Parts Group ("Automotive") operates in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand, and accounted for approximately 62% of total revenues for the six months ended June 30, 2024. Our Industrial Parts Group ("Industrial") operates in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore, and accounted for approximately 38% of our total revenues for the six months ended June 30, 2024.
Current wording
Our Automotive Parts Group ("Automotive") operates in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand, and accounted for approximately 63% of total revenues for the nine months ended September 30, 2024. Our Industrial Parts Group ("Industrial") operates in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore, and accounted for approximately 37% of our total revenues for the nine months ended September 30, 2024.
Previous wording
Our results of operations are summarized below for the three and six months ending June 30, 2024 and 2023.
Current wording
Our results of operations are summarized below for the three and nine months ended September 30, 2024 and 2023.
Previous wording
For the six months ended June 30, 2024 our net sales increased slightly compared to 2023. We experienced a 2.1% benefit from acquisitions, partially offset by a 0.9% decrease in comparable sales and a net unfavorable impact of foreign currency and other of 0.6%.
Current wording
For the three months ended September 30, 2024 our net sales increased 2.5% compared to 2023. We experienced a 3.2% benefit from acquisitions and favorable impact of foreign currency and other of 0.1%, partially offset by a 0.8% decrease in comparable sales.
Previous wording
For the three months ended June 30, 2024 our net sales increased slightly compared to 2023. We experienced a 2.2% benefit from acquisitions, partially offset by a 0.9% decrease in comparable sales and a net unfavorable impact of foreign currency and other of 0.5%.
Current wording
For the nine months ended September 30, 2024 our net sales increased 1.2% compared to 2023. We experienced a 2.4% benefit from acquisitions, partially offset by a 0.9% decrease in comparable sales and a net unfavorable impact of foreign currency and other of 0.3%.
Previous wording
The decrease in comparable sales is primarily driven by a sales decline in our industrial business due to the impact of weaker macro-economic conditions on our customers in 2024 as discussed below.
Current wording
The decreases in comparable sales for the three and nine months ended September 30, 2024 are primarily driven by a sales decline in Industrial due to the impact of weaker macro-economic conditions on certain customers as discussed further below. Third quarter comparable sales across both segments were disrupted by Hurricanes Beryl and Helene and the CrowdStrike outage, with an estimated total negative impact of 0.7%.
Previous wording
Net sales for the three months ended June 30, 2024 were $2.2 billion, a decrease of 1.1% compared to 2023. The decrease reflects a 1.6% decrease in comparable sales and a 0.2% unfavorable impact of foreign currency, slightly offset by a 0.7% benefit from acquisitions.
Current wording
Net sales for the three months ended September 30, 2024 were $2.2 billion, a decrease of 1.2% compared to 2023. The decrease reflects a 2.4% decrease in comparable sales and a 0.1% unfavorable impact of foreign currency, slightly offset by a 1.3% benefit from acquisitions.
Previous wording
Net sales for six months ended June 30, 2024 were $4.4 billion, a decrease of 1.6% compared to 2023. The decrease reflects a 2.1% decrease in comparable sales and a 0.1% unfavorable impact of foreign currency, slightly offset by a 0.6% benefit from acquisitions.
Current wording
Net sales for the nine months ended September 30, 2024 were $6.6 billion, a decrease of 1.5% compared to 2023. The decrease reflects a 2.2% decrease in comparable sales and a 0.1% unfavorable impact of foreign currency, slightly offset by a 0.8% benefit from acquisitions.
Previous wording
The decrease in comparable sales reflects moderation in demand in certain customer sectors and continued softness in industrial production. We continue to experience an adverse macro-economic environment when compared to 2023, which caused slowing global industrial demand.
Current wording
The decrease in comparable sales for the three and nine months ended September 30, 2024 reflects continued softness in industrial production and the ongoing moderation in demand in several customer sectors. In particular, we believe certain customers that are sensitive to the interest rate environment and political uncertainty are delaying capital expenditures. We continue to experience an adverse macro-economic environment when compared to 2023, which caused slowing global industrial demand. In addition, sales disruption from Hurricanes Beryl and Helene and the CrowdStrike outage had anegative impact on third quarter net sales.
Previous wording
These increases reflect the positive contributions of our strategic category management and sourcing initiatives. We continue to invest in enhancing technology to generate better pricing data and analytics, which allows us to shift pricing dynamics across each market we serve.
Current wording
Gross profit for the nine months ended September 30, 2024 increased $196 million, or 3.1% compared to the same period in the prior year, and gross margin improved 0.7% to 36.4%. Approximately 50% of these improvements are due to acquired businesses. The remainder of the improvements primarily reflect the positive contributions of our strategic category management and sourcing initiatives. We continue to invest in enhancing technology to generate better pricing data and analytics which allows us to shift pricing dynamics across each market we serve.
Previous wording
In addition, we incurred $37 million of costs related to the global restructuring initiative and $25 million primarily related to the acquisition and integration of MPEC, which closed on April 30, 2024. Refer to the Restructuring Footnote in the Notes to Condensed Consolidated Financial Statements for more information on our global restructuring initiative.
Current wording
For the three and nine months ended September 30, 2024, we incurred $41 million and $161 million, respectively, of costs related to the global restructuring initiative that was approved in February 2024. We recognized approximately $25 million of benefits related to this global restructuring initiative for the nine months ended September 30, 2024. Refer to the Restructuring Footnote in the Notes to Condensed Consolidated Financial Statements for more information on our global restructuring initiative.
Previous wording
For the three months ended June 30, 2024, Automotive segment profit decreased 4.7% compared to the same period in 2023, and Automotive segment profit margin decreased to 8.4% compared to 9.0% in the same period last year. For six months ended June 30, 2024, Automotive segment profit decreased 1.2% compared to the same period in 2023, and Automotive segment profit margin decreased to 8.0% compared to 8.3% for the same period last year. These decreases are primarily due to increased freight costs as well as personnel costs resulting from acquisitions and inflation.
Current wording
For the three months ended September 30, 2024, Automotive segment profit decreased 18.6% compared to the same period in 2023, and Automotive segment profit margin decreased to 6.9% compared to 8.9% in the same period last year. We estimate that 40% of these declines relates to persistent segment operating cost pressures from ongoing inflation, particularly personnel costs and rent. The remainder primarily reflects the effects of rising freight costs, technology investments and changes in sales mix. Partially offsetting the declines was a 20 basis point segment profit margin benefit related to acquisitions, particularly acquired stores in U.S. Automotive such as MPEC and Walker. For the nine months ended September 30, 2024, Automotive segment profit decreased 7.3% compared to the same period in 2023, and Automotive segment profit margin decreased to 7.6% compared to 8.5% for the same period last year, based on similar inflationary and other segment operating cost pressures and sales mix changes.
Previous wording
Our effective income tax rate for the three and six month periods ended June 30, 2024 was 23.5% compared to 24.1% and 24.5% for the same periods in 2023, respectively. The rate decrease is primarily due to expanded investment benefits and earnings mix shift across our global businesses.
Current wording
Our effective income tax rate for the three and nine months ended September 30, 2024 was 23.9% and 23.6%, respectively, as compared to 24.5% for the same periods in 2023. The rate decrease is primarily due to expanded investment and domestic credit benefits.
Previous wording
For the three months ended June 30, 2024, net income was $296 million, a decrease of 14.2% compared to net income of $344 million for the same three month period of the prior year. On a per share diluted basis, net income was $2.11, a decrease of 13.5% compared to $2.44 in 2023. These decreases are primarily due to $37 million of costs related to the global restructuring initiative and $25 million primarily related to the acquisition of MPEC. Adjusted net income for the three months ended June 30, 2024 was $342 million, a decrease of 0.9% compared to net income of $344 million for the same period of 2023. On a per share diluted basis, adjusted net income was $2.44, remaining flat compared to diluted earnings per share of $2.44 last year. Second quarter 2024 adjusted EBITDA was $569 million, an increase of 1.4% from $561 million in 2023.
Current wording
For the three months ended September 30, 2024, net income was $227 million, a decrease of 35.5% compared to net income of $351 million for the same three month period of the prior year. On a per share diluted basis, net income was $1.62, a decrease of 34.9% compared to $2.49 in 2023. These decreases are primarily due to $41 million of costs related to the global restructuring initiative, $4 million of acquisition and integration costs, persistent cost pressures from personnel costs and rent inflation, increased costs and depreciation from ongoing technology investments and increased interest costs from borrowings to fund acquisitions. For the nine months ended September 30, 2024, net income was $771 million, a decrease of 22.9% compared to net income of $1.0 billion for the same nine month period of the prior year. On a per share diluted basis, net income was $5.51, a decrease of 22.2% compared to $7.08 in 2023. These decreases are primarily due to $161 million of costs related to the global restructuring initiative, $29 million of acquisition and integration costs, persistent cost pressures from personnel costs and rent inflation, increased costs and depreciation from ongoing technology investments and increased interest costs from borrowings to fund acquisitions.
Previous wording
For the six months ended June 30, 2024, net income was $544 million, a decrease of 16.0% compared to net income of $648 million for the same three month period of the prior year. On a per share diluted basis, net income was $3.89, a decrease of 15.1% compared to $4.58 in 2023. These decreases are primarily due to $120 million of costs related to the global restructuring initiative and $25 million primarily related to the acquisition of MPEC. Adjusted net income for the six months ended June 30, 2024 was $652 million an increase of 0.6% compared to net income of $648 million in 2023. On a per share diluted basis, adjusted net income was $4.66, an increase of 1.7% compared to diluted earnings per share of $4.58 last year. Second quarter 2024 adjusted EBITDA was $1.09 billion, an increase of 1.5% from EBITDA of $1.07 billion from 2023.
Current wording
Adjusted net income for the three months ended September 30, 2024, which excludes the effects of restructuring and other costs and acquisition and integration costs, was $263 million, a decrease of 25.1% compared to net income of $351 million for the same period of 2023. On a per share diluted basis, adjusted net income was $1.88, a decrease compared to diluted earnings per share of $2.49 last year. Third quarter 2024 adjusted EBITDA was $477 million, a decrease of 15.6% from $565 million in 2023. Adjusted net income, which excludes the effects of restructuring and other costs and acquisition and integration costs, for the nine months ended September 30, 2024 was $915 million, a decrease of 8.4% compared to net income of $1.0 billion in 2023. On a per share diluted basis, adjusted net income was $6.55, a decrease of 7.5% compared to diluted earnings per share of $7.08 last year. Third quarter 2024 adjusted EBITDA was $1.6 billion, a decrease of 4.4% from EBITDA of $1.6 billion from 2023. The decreases in these adjusted measures reflect the negative effects of lost expense leverage on comparable sales declines combined with increased costs, as discussed more fully in the commentary above.
Previous wording
Adjusted net income, adjusted diluted EPS, adjusted EBITDA, total segment profit, total segment margin, and adjusted EBITDA for each segment are non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
Current wording
Adjusted net income, adjusted diluted EPS, adjusted EBITDA, and adjusted EBITDA for each segment and Corporate are non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
Previous wording
The following tables set forth reconciliations of net income and diluted EPS to adjusted net income and adjusted diluted EPS, respectively, to account for the impact of adjustments. We also include reconciliations from net income to adjusted EBITDA, net income to total segment profit and total segment margin and segment profit to segment EBITDA and adjusted EBITDA for each segment. We believe that the presentation of adjusted net income, adjusted diluted EPS, total segment profit and adjusted EBITDA, which are not calculated in accordance with GAAP, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of our core operations. We consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating performance by removing items management believes are not representative of our operations and may distort our longer-term operating trends. In the case of adjusted EBITDA by segment, we believe this additional metric is useful to investors as it provides further insight into the performance of our segments. We believe the non-GAAP metrics included herein also enhance the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not associated with our core operations. For example, for the three and six months ended June 30, 2024, adjusted net income, adjusted EBITDA and adjusted diluted earnings per share exclude costs relating to our global restructuring initiative and acquisition of Motor Parts and Equipment Corporation. We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.
Current wording
The following tables set forth reconciliations of net income and diluted EPS to adjusted net income and adjusted diluted EPS, respectively, to account for the impact of adjustments. We also include reconciliations from net income to adjusted EBITDA, segment profit to segment EBITDA and adjusted EBITDA for each segment and Corporate. We believe that the presentation of adjusted net income, adjusted diluted EPS, and adjusted EBITDA, which are not calculated in accordance with GAAP, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of our core operations. We consider these metrics useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating performance by removing items management believes are not representative of our operations and may distort our longer-term operating trends. In the case of adjusted EBITDA by segment and Corporate, we believe this additional metric is useful to investors as it provides further insight into the performance of our segments and Corporate. We believe the non-GAAP metrics included herein also enhance the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not associated with our core operations. For example, for the three and nine months ended September 30, 2024, adjusted net income, adjusted EBITDA and adjusted diluted earnings per share exclude costs relating to our global restructuring initiative and acquisitions of MPEC and Walker. We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.
Previous wording
(2) Amount primarily reflects integration costs related to the completion of the acquisition of MPEC in April 2024, including professional services costs, personnel costs, and lease and other exit costs.
Current wording
(2) Amount primarily reflects integration costs related to the completion of the acquisitions of MPEC in April 2024 and Walker in July 2024, including professional services costs, personnel costs, and lease and other exit costs.
Previous wording
(3) We determine the tax effect of non-GAAP adjustments by considering the tax laws and statutory income tax rates applicable in the tax jurisdictions of the underlying non-GAAP adjustments, including any related valuation allowances. For the three and six months ended June 30, 2024, we applied the statutory income tax rates to the taxable portion of all of our adjustments, which resulted in a tax impact of $16 million and $37 million.
Current wording
(3) We determine the tax effect of non-GAAP adjustments by considering the tax laws and statutory income tax rates applicable in the tax jurisdictions of the underlying non-GAAP adjustments, including any related valuation allowances. For the three and nine months ended September 30, 2024, we applied the statutory income tax rates to the taxable portion of all of our adjustments, which resulted in a tax impact of $9 million and $46 million.
Previous wording
Our cash balance was $555 million as of June 30, 2024, a decrease of $547 million from December 31, 2023. For the six months ended June 30, 2024, we had net cash provided by operating activities of $612 million, net cash used in investing activities of $762 million and net cash used in financing activities of $382 million.
Current wording
Our cash balance was $1.1 billion as of September 30, 2024, a decrease of $24 million from December 31, 2023. For the nine months ended September 30, 2024, we had net cash provided by operating activities of $1.1 billion, net cash used in investing activities of $1.2 billion and net cash used in financing activities of $125 million.
Previous wording
The cash provided by operating activities increased as compared to prior year primarily driven by changes in working capital. We had $762 million in net cash used for investing activities, consisting of capital expenditures and acquisitions and other investing activities of $839 million, partially offset by proceeds from the sale of property, plant and equipment and the divestiture of businesses. The financing activities consisted primarily of $272 million for dividends paid to our shareholders and $75 million of stock repurchases.
Current wording
The cash provided by operating activities increased as compared to prior year primarily driven by changes in working capital. We had $1.2 billion in net cash used for investing activities, consisting of capital expenditures and acquisitions and other investing activities of $1.3 billion, partially offset by proceeds from the sale of property, plant and equipment and the divestiture of businesses. The financing activities consisted primarily of $411 million for dividends paid to our shareholders and $112 million of stock repurchases.
Previous wording
Accounts receivable increased $303 million, or 13.6%, from December 31, 2023. Inventory increased $427 million, or 9.1%. Accounts receivable and inventory were both impacted by second quarter increases in revenues and related product demand. Inventory also increased $200 million as a result of the MPEC acquisition. Accounts payable increased $432 million, or 7.9% from December 31, 2023, in line with the increase in inventory. Total debt of $3.9 billion at June 30, 2024 decreased $26 million, or 0.7%, from December 31, 2023.
Current wording
Accounts receivable increased $157 million, or 7.1%, from December 31, 2023. Inventory increased $850 million, or 18.2%. Accounts receivable and inventory were both impacted by third quarter increases in revenues and related product demand. Inventory also increased approximately $520 million as a result of acquiring an approximate 150 net new stores, including stores acquired in the acquisitions of MPEC and Walker. Accounts payable increased approximately $600 million, or 10.9% from December 31, 2023, in line with the increase in inventory. Total debt of $4.6 billion at September 30, 2024 decreased $712 million, or 18.2%, from December 31, 2023.
Previous wording
We ended the quarter with $2.0 billion of total liquidity. Total liquidity comprises of $555 million of cash and cash equivalents and $1.4 billion of our $1.5 billion revolving credit facility available after the effect of $100 million of commercial paper outstanding as of June 30, 2024. From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk. We currently believe that the existing lines of credit, commercial paper program, and cash generated from operations will be sufficient to fund anticipated operations for the foreseeable future.
Current wording
We ended the quarter with $2.6 billion of total liquidity. Total liquidity comprises of $1.1 billion of cash and cash equivalents and $1.5 billion available on our revolving credit facility. From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk. We currently believe that the existing lines of credit, commercial paper program, and cash generated from operations will be sufficient to fund anticipated operations for the foreseeable future.
Previous wording
We expect to be able to continue to borrow funds at reasonable rates over the long term. At June 30, 2024, our total average cost of debt was 3.25%, and we remain in compliance with all covenants connected with our borrowings. In addition, we repaid the 155 million Australian dollar principal amount of our Series A Senior Unsecured Note, due June 30, 2024.
Current wording
We expect to be able to continue to borrow funds at reasonable rates over the long term. At September 30, 2024, our total average cost of debt was 3.49%, and we remain in compliance with all covenants connected with our borrowings.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The increases in these adjusted measures reflect the positive effects of executing our strategic category management and other initiatives, as discussed more fully in the commentary above.
Previous report — wording carried elsewhere
The table below represents a reconciliation from GAAP net income to total segment profit: