GPC Raises Outlook for Motion as Q2 Sales Jump Nearly 20%

Motion Sdf

Genuine Parts Company reported its 2021 second quarter fiscal results on Thursday, showing strong recovery at its industrial parts subsidiary, Motion (formerly Motion Industries).

Motion saw Q2 sales of $1.59 billion — 33.2 percent of GPC's total — up 19.6 percent year-over-year and up from $1.51 billion in Q1. It was a major acceleration in year-over-year sales compared to Q1, when sales were down 0.1 percent. The 19.6 percent gain was powered by a 16.4 percent increase in comparable sales, a 2.4 percent positive impact from foreign currency and a 0.7 percent bump from acquisitions.

Motion's Q2 profit of $150 million jumped 38.1 percent year-over-year and 20 percent from Q1, with profit margin of 9.5 percent up 130 basis points year-over-year.

In its Q2 investor presentation for its Industrial segment, GPC noted strong growth outlook for plant automation and robotics solutions and said the company is projecting positive comparable sales over the balance of 2021, as sales trends improved among virtually all industrial product categories and industries served. GPC added that it is continuing the expansion of the value-add business for Industrial, with a focus on Automation, Conveyance and Repairs.

GPC is forecasting full year 2021 Industrial sales growth of 6 to 8 percent, raising its previous outlook of 4 to 6 percent issued in its Q1 report.

GPC's shared the same strategic initiatives for its Industrial Group that it stated in its Q1 presentation:

  • Omni-channel buildout to accelerate e-commerce growth
  • Expand industrial services and solutions capabilities
  • Considering strategic M&A to further boost products/services offering
  • Strategically enhanced pricing and product category management
  • Network optimization and automation to further improve productivity

GPC's Automotive unit — which does business as NAPA Auto Parts — saw even more substantial growth in Q2. Automotive sales of $3.20 billion (66.8 percent of GPC's total) jumped 28.0 percent year-over-year and improved 6.7 percent from Q1. Comparable sales jumped 21.1 percent, while foreign currency contributed 5.1 percent to the gain and acquisitions added 1.9 percent. Automotive segment profit of $291 million was up 32.8 percent year-over-year and up from $236 million in Q1, while profit margin of 9.1 percent increased 30 basis points year-over-year.

GPC is forecasting full year 2021 Automotive sales growth of 11 to 13 percent, up substantially from its previous outlook of 5 to 7 percent.

Overall, GPC's total Q2 sales of $4.78 billion increased 25.1 percent year-over-year, accelerating considerably from the 9.1 percent gain seen in Q1, when sales totaled $4.46 billion. The year-over-year increase was powered by a 19.5 increase in comparable sales, a 4.1 percent impact from foreign currency and a 1.5 percent bump from acquisitions. Q2 operating profit of $253 million was up 33 percent year-over-year and up 16.1 percent from Q1. Q2 net profit of $196 million was a complete reversal from a $564 million loss a year earlier, and was down from $218 million in Q1.

Looking forward, GPC raised its full-year 2021 sales growth outlook to 10 to 12 percent, up from 5 to 7 percent in its Q1 report.

“Our 25 percent total sales growth reflects the benefits of a strengthening global economy and positive sales environment in both our Automotive and Industrial businesses," said Paul Donahue, GPC chairman and CEO. "Automotive posted our strongest growth, with record sales and double-digit sales comps in each region of our operations. Industrial sales were also strong, highlighted by an accelerated recovery and its fourth consecutive quarter of improving sales trends."

More in Earnings