UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20222023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number: 1-5690
  __________________________________________ 
GENUINE PARTS COMPANY
(Exact name of registrant as specified in its charter)
   __________________________________________ 
GA58-0254510
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2999 WILDWOOD PARKWAY, 30339
ATLANTA,GA
(Address of principal executive offices) (Zip Code)
678-934-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of each exchange on which registered
Common Stock, $1.00 par value per shareGPCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
There were 141,161,349140,196,631 shares of common stock outstanding as of October 17, 2022.16, 2023.



Table of Contents
Page
   
  
  

1

Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$629,198 $714,701 
Trade accounts receivable, less allowance for doubtful accounts (2022 – $47,262; 2021 – $44,425)2,215,032 1,797,955 
Merchandise inventories, net4,300,709 3,889,919 
Prepaid expenses and other current assets1,678,259 1,353,847 
Total current assets8,823,198 7,756,422 
Goodwill2,460,911 1,915,307 
Other intangible assets, less accumulated amortization1,748,274 1,406,401 
Property, plant and equipment, less accumulated depreciation (2022 – $1,369,770; 2021 – $1,339,706)1,241,567 1,234,399 
Operating lease assets1,073,858 1,053,689 
Other assets1,029,272 985,884 
Total assets$16,377,080 $14,352,102 
Liabilities and equity
Current liabilities:
Trade accounts payable$5,531,253 $4,804,939 
Current portion of debt1,629 — 
Dividends payable126,434 115,876 
Other current liabilities1,835,803 1,660,768 
Total current liabilities7,495,119 6,581,583 
Long-term debt3,231,668 2,409,363 
Operating lease liabilities809,495 789,175 
Pension and other post–retirement benefit liabilities262,820 265,134 
Deferred tax liabilities398,797 280,778 
Other long-term liabilities500,989 522,779 
Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; none issued— — 
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2022 – 140,962,009 shares; 2021 – 142,180,683 shares140,962 142,181 
Additional paid-in capital132,240 119,975 
Accumulated other comprehensive loss(1,074,316)(857,739)
Retained earnings4,465,565 4,086,325 
Total parent equity3,664,451 3,490,742 
Noncontrolling interests in subsidiaries13,741 12,548 
Total equity3,678,192 3,503,290 
Total liabilities and equity$16,377,080 $14,352,102 
(in thousands, except share and per share data)September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$654,637 $653,463 
Trade accounts receivable, less allowance for doubtful accounts (2023 – $61,499; 2022 – $53,872)2,394,787 2,188,868 
Merchandise inventories, net4,482,773 4,441,649 
Prepaid expenses and other current assets1,497,677 1,532,759 
Total current assets9,029,874 8,816,739 
Goodwill2,637,150 2,588,113 
Other intangible assets, less accumulated amortization1,754,977 1,812,510 
Property, plant and equipment, less accumulated depreciation (2023 – $1,532,480; 2022 – $1,435,677)1,513,822 1,326,014 
Operating lease assets1,197,244 1,104,678 
Other assets888,831 847,325 
Total assets$17,021,898 $16,495,379 
Liabilities and equity
Current liabilities:
Trade accounts payable$5,486,379 $5,456,550 
Current portion of debt354,017 252,029 
Dividends payable133,254 126,191 
Other current liabilities1,826,709 1,851,340 
Total current liabilities7,800,359 7,686,110 
Long-term debt2,963,448 3,076,794 
Operating lease liabilities919,470 836,019 
Pension and other post–retirement benefit liabilities198,180 197,879 
Deferred tax liabilities411,350 391,163 
Other long-term liabilities527,816 502,967 
Equity:
Preferred stock, par value – $1 per share; authorized – 10,000,000 shares; none issued— — 
Common stock, par value – $1 per share; authorized – 450,000,000 shares; issued and outstanding – 2023 – 140,234,786 shares; 2022 – 140,941,649 shares140,235 140,941 
Additional paid-in capital163,602 140,324 
Accumulated other comprehensive loss(1,087,262)(1,032,542)
Retained earnings4,969,538 4,541,640 
Total parent equity4,186,113 3,790,363 
Noncontrolling interests in subsidiaries15,162 14,084 
Total equity4,201,275 3,804,447 
Total liabilities and equity$17,021,898 $16,495,379 
See accompanying notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
2

Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)(in thousands, except per share data)2022202120222021(in thousands, except per share data)2023202220232022
Net salesNet sales$5,675,274 $4,818,849 $16,572,323 $14,067,301 Net sales$5,824,602 $5,675,274 $17,504,726 $16,572,323 
Cost of goods soldCost of goods sold3,695,607 3,108,082 10,805,910 9,126,614 Cost of goods sold3,715,361 3,695,607 11,247,341 10,805,910 
Gross profitGross profit1,979,667 1,710,767 5,766,413 4,940,687 Gross profit2,109,241 1,979,667 6,257,385 5,766,413 
Operating expenses:Operating expenses:Operating expenses:
Selling, administrative and other expensesSelling, administrative and other expenses1,458,418 1,338,768 4,226,412 3,883,241 Selling, administrative and other expenses1,551,799 1,458,418 4,644,696 4,226,412 
Depreciation and amortizationDepreciation and amortization86,563 72,121 259,822 218,377 Depreciation and amortization83,860 86,563 261,948 259,822 
Provision for doubtful accountsProvision for doubtful accounts6,146 4,284 13,539 14,230 Provision for doubtful accounts8,417 6,146 22,378 13,539 
Total operating expensesTotal operating expenses1,551,127 1,415,173 4,499,773 4,115,848 Total operating expenses1,644,076 1,551,127 4,929,022 4,499,773 
Non-operating expense (income):Non-operating expense (income):Non-operating expense (income):
Interest expense, netInterest expense, net18,220 14,167 58,318 47,853 Interest expense, net15,827 18,220 49,146 58,318 
OtherOther(7,616)(17,547)(26,897)(77,454)Other(15,722)(7,616)(44,338)(26,897)
Total non-operating expense (income)Total non-operating expense (income)10,604 (3,380)31,421 (29,601)Total non-operating expense (income)105 10,604 4,808 31,421 
Income before income taxesIncome before income taxes417,936 298,974 1,235,219 854,440 Income before income taxes465,060 417,936 1,323,555 1,235,219 
Income taxesIncome taxes105,578 70,389 304,494 211,649 Income taxes113,862 105,578 323,906 304,494 
Net incomeNet income$312,358 $228,585 $930,725 $642,791 Net income$351,198 $312,358 $999,649 $930,725 
Dividends declared per common shareDividends declared per common share$0.8950 $0.8150 $2.6850 $2.4450 Dividends declared per common share$0.950 $0.895 $2.850 $2.685 
Basic earnings per shareBasic earnings per share$2.21 $1.60 $6.57 $4.47 Basic earnings per share$2.50 $2.21 $7.11 $6.57 
Diluted earnings per shareDiluted earnings per share$2.20 $1.59 $6.53 $4.44 Diluted earnings per share$2.49 $2.20 $7.08 $6.53 
Weighted average common shares outstanding141,336 142,871 141,609 143,826 
Dilutive effect of stock options and non-vested restricted stock awards773 718 819 796 
Weighted average common shares outstanding – assuming dilution142,109 143,589 142,428 144,622 
See accompanying notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
3

Table of Contents

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Net income$312,358 $228,585 $930,725 $642,791 
Other comprehensive loss, net of income taxes:
Foreign currency translation adjustments, net of income taxes in 2022 — $33,843 and $73,892; 2021 — $11,328 and $25,494, respectively(131,811)(82,574)(248,757)(75,738)
Cash flow hedge adjustments, net of income taxes in 2022 — $1,384 and $4,151 ; 2021 — $1,384 and $4,151, respectively3,741 3,741 11,223 11,223 
Pension and postretirement benefit adjustments, net of income taxes in 2022 — $2,576 and $7,736; 2021 — $3,425 and $10,280, respectively6,982 9,301 20,957 27,931 
Other comprehensive loss, net of income taxes(121,088)(69,532)(216,577)(36,584)
Comprehensive income$191,270 $159,053 $714,148 $606,207 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Net income$351,198 $312,358 $999,649 $930,725 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments(77,314)(131,811)(63,027)(248,757)
Cash flow hedge adjustments, net of income taxes in 2023 — $0 and $951; 2022 — $1,384 and $4,151, respectively— 3,741 2,572 11,223 
Pension and postretirement benefit adjustments, net of income taxes in 2023 — $703 and $2,108; 2022 — $2,576 and $7,736, respectively1,909 6,982 5,735 20,957 
Other comprehensive income (loss), net of income taxes(75,405)(121,088)(54,720)(216,577)
Comprehensive income$275,793 $191,270 $944,929 $714,148 
See accompanying notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
4

Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Three Months Ended September 30, 2022Three Months Ended September 30, 2023
(in thousands, except share and per share data)(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
July 1, 2022141,280,841 $141,281 $123,388 $(953,228)$4,329,115 $3,640,556 $13,007 $3,653,563 
July 1, 2023July 1, 2023140,467,550 $140,468 $153,748 $(1,011,857)$4,788,852 $4,071,211 $14,583 $4,085,794 
Net incomeNet income— — — — 312,358 312,358 — 312,358 Net income— — — — 351,198 351,198 — 351,198 
Other comprehensive loss, net of taxOther comprehensive loss, net of tax— — — (121,088)— (121,088)— (121,088)Other comprehensive loss, net of tax— — — (75,405)— (75,405)— (75,405)
Cash dividend declared, $0.895 per share— — — — (126,434)(126,434)— (126,434)
Share-based awards exercised, including tax benefit of $73114,619 15 (1,039)— — (1,024)— (1,024)
Cash dividend declared, $0.9500 per shareCash dividend declared, $0.9500 per share— — — — (133,254)(133,254)— (133,254)
Shares issued from employee incentive plansShares issued from employee incentive plans5,991 (541)— — (535)— (535)
Share-based compensationShare-based compensation— — 9,891 — — 9,891 — 9,891 Share-based compensation— — 10,395 — — 10,395 — 10,395 
Purchase of stockPurchase of stock(333,451)(334)— — (49,474)(49,808)— (49,808)Purchase of stock(238,755)(239)— — (37,258)(37,497)— (37,497)
Noncontrolling interest activitiesNoncontrolling interest activities— — — — — — 734 734 Noncontrolling interest activities— — — — — — 579 579 
September 30, 2022140,962,009 $140,962 $132,240 $(1,074,316)$4,465,565 $3,664,451 $13,741 $3,678,192 
September 30, 2023September 30, 2023140,234,786 $140,235 $163,602 $(1,087,262)$4,969,538 $4,186,113 $15,162 $4,201,275 

Nine Months Ended September 30, 2022
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2022142,180,683$142,181 $119,975 $(857,739)$4,086,325 $3,490,742 $12,548 $3,503,290 
Net income— — — — 930,725 930,725 — 930,725 
Other comprehensive loss, net of tax— — — (216,577)— (216,577)— (216,577)
Cash dividend declared, $2.685 per share— — — — (380,041)(380,041)— (380,041)
Share-based awards exercised, including tax benefit of $3,86863,877 64 (15,508)— — (15,444)— (15,444)
Share-based compensation— — 27,773 — — 27,773 — 27,773 
Purchase of stock(1,282,551)(1,283)— — (171,444)(172,727)— (172,727)
Noncontrolling interest activities— — — — — — 1,193 1,193 
September 30, 2022140,962,009 $140,962 $132,240 $(1,074,316)$4,465,565 $3,664,451 $13,741 $3,678,192 

Nine Months Ended September 30, 2023
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2023140,941,649 $140,941 $140,324 $(1,032,542)$4,541,640 $3,790,363 $14,084 $3,804,447 
Net income— — — — 999,649 999,649 — 999,649 
Other comprehensive loss, net of tax— — — (54,720)— (54,720)— (54,720)
Cash dividend declared, $2.8500 per share— — — — (400,483)(400,483)— (400,483)
Shares issued from employee incentive plans372,471 373 (24,062)— — (23,689)— (23,689)
Share-based compensation— — 47,340 — — 47,340 — 47,340 
Purchase of stock(1,079,334)(1,079)— — (171,268)(172,347)— (172,347)
Noncontrolling interest activities— — — — — — 1,078 1,078 
September 30, 2023140,234,786 $140,235 $163,602 $(1,087,262)$4,969,538 $4,186,113 $15,162 $4,201,275 
5

Table of Contents
Three Months Ended September 30, 2021Three Months Ended September 30, 2022
(in thousands, except share and per share data)(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
July 1, 2021143,301,673 $143,302 $111,972 $(1,003,554)$3,982,159 $3,233,879 $11,266 $3,245,145 
July 1, 2022July 1, 2022141,280,841$141,281 $123,388 $(953,228)$4,329,115 $3,640,556 $13,007 $3,653,563 
Net incomeNet income— — — — 228,585 228,585 — 228,585 Net income— — — — 312,358 312,358 — 312,358 
Other comprehensive loss, net of taxOther comprehensive loss, net of tax— — — (69,532)— (69,532)— (69,532)Other comprehensive loss, net of tax— — — (121,088)— (121,088)— (121,088)
Cash dividend declared, $0.815 per share— — — — (116,486)(116,486)— (116,486)
Share-based awards exercised, including tax benefit of $402,256 (69)— — (68)— (68)
Cash dividend declared, $0.8950 per shareCash dividend declared, $0.8950 per share— — — — (126,434)(126,434)— (126,434)
Shares issued from employee incentive plansShares issued from employee incentive plans14,619 15 (1,039)— — (1,024)— (1,024)
Share-based compensationShare-based compensation— — 6,320 — — 6,320 — 6,320 Share-based compensation— — 9,891 — — 9,891 — 9,891 
Purchase of stockPurchase of stock(800,436)(800)— — (98,721)(99,521)— (99,521)Purchase of stock(333,451)(334)— — (49,474)(49,808)— (49,808)
Noncontrolling interest activitiesNoncontrolling interest activities— — — — — — 2,115 2,115 Noncontrolling interest activities— — — — — — 734 734 
September 30, 2021142,503,493 $142,503 $118,223 $(1,073,086)$3,995,537 $3,183,177 $13,381 $3,196,558 
September 30, 2022September 30, 2022140,962,009 $140,962 $132,240 $(1,074,316)$4,465,565 $3,664,451 $13,741 $3,678,192 

Nine Months Ended September 30, 2021
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2021144,354,335$144,354 $117,165 $(1,036,502)$3,979,779 $3,204,796 $13,207 $3,218,003 
Net income— — — — 642,791 642,791 — 642,791 
Other comprehensive loss, net of tax— — — (36,584)— (36,584)— (36,584)
Cash dividend declared, $2.445 per share— — — — (351,606)(351,606)— (351,606)
Share-based awards exercised, including tax benefit of $6,667385,419 385 (19,783)— — (19,398)— (19,398)
Share-based compensation— — 20,841 — — 20,841 — 20,841 
Purchase of stock(2,236,261)(2,236)— — (281,650)(283,886)— (283,886)
Cumulative effect from adoption of ASU 2019-12 (1)— — — — 6,223 6,223 — 6,223 
Noncontrolling interest activities— — — — — — 174 174 
September 30, 2021142,503,493 $142,503 $118,223 $(1,073,086)$3,995,537 $3,183,177 $13,381 $3,196,558 

(1)We adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, during the first quarter of 2021.
Nine Months Ended September 30, 2022
(in thousands, except share and per share data)Common Stock SharesCommon Stock AmountAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Parent EquityNon-controlling Interests in SubsidiariesTotal Equity
January 1, 2022142,180,683$142,181 $119,975 $(857,739)$4,086,325 $3,490,742 $12,548 $3,503,290 
Net income— — — — 930,725 930,725 — 930,725 
Other comprehensive loss, net of tax— — — (216,577)— (216,577)— (216,577)
Cash dividend declared, $2.6850 per share— — — — (380,041)(380,041)— (380,041)
Shares issued from employee incentive plans63,877 64 (15,508)— — (15,444)— (15,444)
Share-based compensation— — 27,773 — — 27,773 — 27,773 
Purchase of stock(1,282,551)(1,283)— — (171,444)(172,727)— (172,727)
Noncontrolling interest activities— — — — — — 1,193 1,193 
September 30, 2022140,962,009 $140,962 $132,240 $(1,074,316)$4,465,565 $3,664,451 $13,741 $3,678,192 
See accompanying notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.

6

Table of Contents
GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30, Nine Months Ended September 30,
(in thousands)(in thousands)20222021(in thousands)20232022
Operating activities:Operating activities:Operating activities:
Net incomeNet income$930,725 $642,791 Net income$999,649 $930,725 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization259,822 218,377 Depreciation and amortization261,948 259,822 
Loss on software disposal— 61,063 
Share-based compensationShare-based compensation27,773 20,841 Share-based compensation47,340 27,773 
Excess tax benefits from share-based compensationExcess tax benefits from share-based compensation(6,770)(3,868)
Gain on sale of real estateGain on sale of real estate(102,803)— Gain on sale of real estate— (102,803)
Intangible asset impairment17,461 — 
Excess tax benefits from share-based compensation(3,868)(6,667)
Changes in operating assets and liabilitiesChanges in operating assets and liabilities115,481 71,791 Changes in operating assets and liabilities(219,721)132,942 
Net cash provided by operating activitiesNet cash provided by operating activities1,244,591 1,008,196 Net cash provided by operating activities1,082,446 1,244,591 
Investing activities:Investing activities:Investing activities:
Purchases of property, plant and equipmentPurchases of property, plant and equipment(243,998)(138,206)Purchases of property, plant and equipment(349,858)(243,998)
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment141,228 24,184 Proceeds from sale of property, plant and equipment7,339 141,228 
Proceeds from divestitures of businesses32,620 16,687 
Acquisitions of businesses and other investing activities(1,586,812)(142,567)
Proceeds from sale of investmentsProceeds from sale of investments80,482 — 
Acquisitions and other investing activitiesAcquisitions and other investing activities(211,392)(1,554,192)
Net cash used in investing activitiesNet cash used in investing activities(1,656,962)(239,902)Net cash used in investing activities(473,429)(1,656,962)
Financing activities:Financing activities:Financing activities:
Proceeds from debtProceeds from debt4,547,511 242,332 Proceeds from debt2,543,882 4,547,511 
Payments on debtPayments on debt(3,586,954)(403,126)Payments on debt(2,544,619)(3,586,954)
Share-based awards exercised(15,444)(19,398)
Shares issued from employee incentive plansShares issued from employee incentive plans(23,689)(15,444)
Dividends paidDividends paid(369,483)(349,293)Dividends paid(393,420)(369,483)
Purchases of stockPurchases of stock(172,727)(283,886)Purchases of stock(172,347)(172,727)
Other financing activitiesOther financing activities(16,869)(5,353)Other financing activities(8,826)(16,869)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities386,034 (818,724)Net cash provided by (used in) financing activities(599,019)386,034 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents(59,166)(20,639)Effect of exchange rate changes on cash and cash equivalents(8,824)(59,166)
Net decrease in cash and cash equivalents(85,503)(71,069)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents1,174 (85,503)
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period714,701 990,166 Cash and cash equivalents at beginning of period653,463 714,701 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$629,198 $919,097 Cash and cash equivalents at end of period$654,637 $629,198 
See accompanying notesNotes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
7

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General1.General
Basis of Presentation
The accompanying unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes required by accounting principles generally accepted in the U.S. (“U.S. GAAP”) for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notesNotes to the consolidated financial statementsConsolidated Financial Statements included in the Annual Report on Form 10-K of Genuine Parts Company (the “Company,” “we,” “our,” “us,” or “its”) for the year ended December 31, 2021.2022. Accordingly, the unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements and related disclosures herein should be read in conjunction with our 20212022 Annual Report on Form 10-K. Significant accounting policies and other items disclosed in our Annual Report have been omitted from this report because they have not changed.
The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements.Condensed Consolidated Financial Statements. Specifically, we make estimates and assumptions in our unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements for inventory adjustments, the accrual of bad debts, credit losses on guaranteed loans, customer sales returns, and volume incentives earned, among others. Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation. Reserves for bad debts, credit losses on guaranteed loans and customer sales returns are estimated and accrued on an interim basis based on a consideration of historical experience, current conditions, and reasonable and supportable forecasts. Volume incentives are estimated based upon cumulative and projected purchasing levels.
In the opinion of management, all adjustments necessary for a fair presentation of our financial results for the interim periods have been made. These adjustments are of a normal recurring nature. We have reclassified certain prior period amounts to conform to the current period presentation. The results of operations for the three and nine months ended September 30, 20222023 are not necessarily indicative of results for the year ended December 31, 2022.2023. We have evaluated subsequent events through the date the unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements covered by this quarterly report were issued.
Recent Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”). We consider the applicability and impact of all ASUs and any not listed below were assessed and determined to not be applicable or are expected to have determined that any recently adopted accounting pronouncements did not have a materialan immaterial impact on our condensed consolidated financial statements.Condensed Consolidated Financial Statements.
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs. Programs. This standard requires disclosure of the key terms of outstanding supply chain finance programs and a rollforward of the related amounts due to vendors participating in these programs. The new standard does not affect the recognition, measurement or financial statement presentation of any amounts due. The guidance iswas effective in the first quarter of 2023, except for the rollforward, which isbecomes effective in the first quarter of 2024. Early adoption is permitted. We are evaluatingFor additional information, please refer to the adoption of this new guidance.supply chain finance programs section herein.
DebtPrepaid Expenses and Other Current Assets
1.750%The following table provides a detail of prepaid expenses and 2.750% Senior Notes Offeringother current assets reported within the Condensed Consolidated Balance Sheets as of:
On January 6, 2022, we issued $500 million of unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022.
We utilized the proceeds from these offerings to repay borrowings under our Revolving Credit Facility, which were incurred to finance a significant portion of the Kaman Distribution Group ("KDG") acquisition.
(in thousands)September 30, 2023December 31, 2022
Prepaid expenses$117,310 $113,522 
Consideration receivable from vendors825,347 847,341 
Other current assets555,020 571,896 
Total prepaid expenses and other current assets$1,497,677 $1,532,759 
8

Table of Contents
Derivatives and Hedging
We are exposed to various risks arising from business operations and market conditions, including fluctuations in interest rates and certain foreign currencies. When deemed appropriate, weWe use derivative and non-derivative instruments as risk management tools to mitigate the potential impact of interest rate and foreign exchange rate risks. The objective of using these tools is to reduce fluctuations in our earnings and cash flows associated with changes in these rates. Derivative instruments are recognized in the condensed consolidated balance sheetsCondensed Consolidated Balance Sheets at fair value and are designated as Level 2 in the fair value hierarchy. They are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.
The following table summarizes the classification and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):
September 30, 2022December 31, 2021September 30, 2023December 31, 2022
InstrumentInstrumentBalance Sheet ClassificationNotionalBalanceNotionalBalanceInstrumentBalance Sheet LocationNotionalBalanceNotionalBalance
Net investment hedges:Net investment hedges:Net investment hedges:
Forward contractsForward contractsPrepaid expenses and other current assets$1,513,750$261,813$925,810$73,819Forward contractsPrepaid expenses and other current assets$606,950$57,968$606,950$46,670
Forward contractForward contractOther current liabilities$$$235,180$2,935Forward contractOther current liabilities$106,800$206$106,800$3,064
Foreign currency debtForeign currency debtLong-term debt700,000$686,980700,000$792,820Foreign currency debtLong-term debt700,000$740,180700,000$749,280
The tables below present gains and losses related to designated net investment hedges:
Gain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded ComponentsGain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Three months ended September 30,
Three Months Ended September 30,Three Months Ended September 30,
Net investment hedges:Net investment hedges:
Forward contractsForward contracts$81,454 $20,958 $7,965 $6,574 Forward contracts$19,217 $81,454 $3,158 $7,965 
Foreign currency debtForeign currency debt43,890 21,000 — — Foreign currency debt20,300 43,890 — — 
TotalTotal$125,344 $41,958 $7,965 $6,574 Total$39,517 $125,344 $3,158 $7,965 
Gain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded ComponentsGain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Nine months ended September 30,
Nine Months Ended September 30,Nine Months Ended September 30,
Net investment hedges:Net investment hedges:
Forward contractsForward contracts$167,834 $45,143 $23,095 $19,722 Forward contracts$4,681 $167,834 $9,475 $23,095 
Foreign currency debtForeign currency debt105,840 49,280 — — Foreign currency debt9,100 105,840 — — 
TotalTotal$273,674 $94,423 $23,095 $19,722 Total$13,781 $273,674 $9,475 $23,095 
Fair Value of Financial Instruments
As of September 30, 20222023 the fair value of our senior unsecured notes was approximately $2.8$2.9 billion, which are designated as Level 2 in the fair value hierarchy. Our valuation technique is based primarily on prices and other relevant information generated by observable transactions involving identical or comparable assets or liabilities.
Guarantees
We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”). While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants. At September 30, 2022,2023, we were in compliance with all such covenants.
9

Table of Contents
As of September 30, 2022,2023, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $908$991 million. These loans generally mature over periods from one to six years. We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating
9

Table of Contents
agencies of the independents and affiliates that participate in the guarantee programs. In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees. We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts. To date, we have not had significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material. As of September 30, 2022,2023, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.
As of September 30, 2022,2023, we have recognized certain assets and liabilities amounting to $74$63 million each for the guarantees related to the independents’ and affiliates’ borrowings. These assets and liabilities are included in other assets and other long-term liabilities in the condensed consolidated balance sheets.Condensed Consolidated Balance Sheets. The liabilities relate to our noncontingent obligation to stand ready to perform under the guarantee programs and they are distinct from our current expected credit loss reserve.
Supply Chain Finance Programs
Several global financial institutions offer voluntary supply chain finance (“SCF”) programs which enable our suppliers (generally those that grant extended terms), at their sole discretion, to sell their receivables from us to these financial institutions on a non-recourse basis at a rate that takes advantage of our credit rating and may be beneficial to them. We and our suppliers agree on commercial terms for the goods and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. Our current payment terms with the majority of our suppliers range from 30 to 360 days. The suppliers sell goods or services, as applicable, to us and they issue the associated invoices to us based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. In turn, we direct payment to the financial institutions, rather than the suppliers, for the invoices sold to the financial institutions. No guarantees are provided by us or any of our subsidiaries on third-party performance under the SCF program; however, we guarantee the payment by our subsidiaries to the financial institutions participating in the SCF program for the applicable invoices. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable in our Condensed Consolidated Balance Sheets.
All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our consolidated statement of cash flows. As of September 30, 2023 and December 31, 2022, the outstanding payment obligations to the financial institutions are $2.9 billion and $3.1 billion, respectively. The amount settled through the SCF program was $3.1 billion and $2.7 billion for the nine months ended September 30, 2023 and 2022 respectively.
Earnings Per Share
We maintain various long-term incentive plans, which provide forcalculate basic earnings per share by dividing net income by the grantingweighted average number of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents and other share-based awards.common shares outstanding. Certain outstanding options are not included in the diluted earnings per share calculation
10

Table of Contents
because their inclusion would have been anti-dilutive. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material.
The following table summarizes anti-dilutivebasic and diluted shares outstanding:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Anti-dilutive shares outstanding3601,142158
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
Net income$351,198 $312,358 $999,649 $930,725 
Weighted average common shares outstanding140,335 141,336 140,569 141,609 
Dilutive effect of stock options and non-vested restricted stock awards599 773 716 819 
Weighted average common shares outstanding – assuming dilution140,934 142,109 141,285 142,428 
Basic earnings per share$2.50 $2.21 $7.11 $6.57 
Diluted earnings per share$2.49 $2.20 $7.08 $6.53 
2. Segment Information
The following table presents a summary of our reportable segment financial information:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Net sales:Net sales:Net sales:
AutomotiveAutomotive$3,490,462 $3,204,534 $10,233,577 $9,353,998 Automotive$3,626,943 $3,490,462 $10,787,769 $10,233,577 
IndustrialIndustrial2,184,812 1,614,315 6,338,746 4,713,303 Industrial2,197,659 2,184,812 6,716,957 6,338,746 
Total net salesTotal net sales$5,675,274 $4,818,849 $16,572,323 $14,067,301 Total net sales$5,824,602 $5,675,274 $17,504,726 $16,572,323 
Segment profit:Segment profit:Segment profit:
AutomotiveAutomotive$309,349 $281,150 $896,475 $807,586 Automotive$322,004 $309,349 $915,771 $896,475 
IndustrialIndustrial242,505 165,754 656,330 441,459 Industrial282,807 242,505 828,166 656,330 
Total segment profitTotal segment profit551,854 446,904 1,552,805 1,249,045 Total segment profit604,811 551,854 1,743,937 1,552,805 
Interest expense, netInterest expense, net(18,220)(14,167)(58,318)(47,853)Interest expense, net(15,827)(18,220)(49,146)(58,318)
Intangible asset amortizationIntangible asset amortization(39,416)(25,311)(118,740)(78,239)Intangible asset amortization(33,667)(39,416)(113,414)(118,740)
Corporate expenseCorporate expense(72,820)(47,389)(187,883)(130,029)Corporate expense(90,257)(72,820)(257,822)(187,883)
Other unallocated (expenses) income (1)(3,462)(61,063)47,355 (138,484)
Other unallocated (loss) income, net (1)Other unallocated (loss) income, net (1)— (3,462)— 47,355 
Income before income taxesIncome before income taxes$417,936 $298,974 $1,235,219 $854,440 Income before income taxes$465,060 $417,936 $1,323,555 $1,235,219 
(1)     The following table presents a summary of the other unallocated income, and expenses:net:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Other unallocated income, net:
Gain on sale of real estate (2)$— $— $— $102,803 
Gain on insurance proceeds (3)— — — 1,507 
Transaction and other costs (4)— (3,462)— (56,955)
Total other unallocated (loss) income, net$— $(3,462)$— $47,355 
1011

Table of Contents
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Other unallocated (expenses) income:
Gain on sale of real estate (2)$— $— $102,803 $— 
Gain on insurance proceeds (3)— — 1,507 — 
Product liability damages award (4)— — — (77,421)
Loss on software disposal (5)— (61,063)— (61,063)
Transaction and other costs (6)(3,462)— (56,955)— 
Total other unallocated (expenses) income$(3,462)$(61,063)$47,355 $(138,484)
(2)    Amount reflects a gain on the sale of real estate that had been leased to S.P. Richards.
(3)    Amount reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.
(4)    Amount reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.
(5)    Amount reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies.
(6)    Amount primarily reflects costs associated with the January 3, 2022 acquisition of Kaman Distribution Group.
Beginning in 2023, certain functions, including cybersecurity and integrationthe management of KDG.our product liability litigation, were transferred to corporate to be streamlined and centrally managed. These costs also include atotaled $15 million and $44 million for the three and nine months ended September 30, 2022, of which $9 million and $27 million were allocated to Automotive and $6 million and $17 million impairment charge driven by a decisionwere allocated to retire certain legacy trade names, classified as other intangible assets, priorIndustrial based on several factors, including sales volumes and headcount. Beginning in 2023, these costs, which totaled $30 million and $49 million for the three and nine months ended September 30, 2023, are no longer allocated to our segments when measuring their operating performance. We have not restated the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy. Refer to the acquisition footnote for more information regarding the acquisition.2022 comparative segment financial information.
Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
North America:North America:North America:
AutomotiveAutomotive$2,333,390 $2,100,250 $6,766,271 $6,039,617 Automotive$2,315,733 $2,333,390 $6,865,819 $6,766,271 
IndustrialIndustrial2,064,569 1,493,618 5,996,299 4,362,792 Industrial2,066,284 2,064,569 6,325,746 5,996,299 
Total North AmericaTotal North America$4,397,959 $3,593,868 $12,762,570 $10,402,409 Total North America$4,382,017 $4,397,959 $13,191,565 $12,762,570 
Australasia:Australasia:Australasia:
AutomotiveAutomotive$404,708 $374,167 $1,182,557 $1,130,744 Automotive$411,422 $404,708 $1,226,037 $1,182,557 
IndustrialIndustrial120,243 120,697 342,447 350,511 Industrial131,375 120,243 391,211 342,447 
Total AustralasiaTotal Australasia$524,951 $494,864 $1,525,004 $1,481,255 Total Australasia$542,797 $524,951 $1,617,248 $1,525,004 
Europe – AutomotiveEurope – Automotive$752,364 $730,117 $2,284,749 $2,183,637 Europe – Automotive$899,788 $752,364 $2,695,913 $2,284,749 
Total net salesTotal net sales$5,675,274 $4,818,849 $16,572,323 $14,067,301 Total net sales$5,824,602 $5,675,274 $17,504,726 $16,572,323 
3. Accounts Receivable Sales Agreement
Under our accounts receivable sales agreement (the "A/R Sales Agreement"), we continuously sell designated pools of receivables as they are originated by us and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”). The A/R Sales Agreement has a three yearthree-year term, which we intend to renew.
We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutioninstitutions by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institutioninstitutions so that the total principal amount outstanding of receivables sold is approximately $1$1.0 billion at any point in time (which is the maximum amount allowed under the agreement as amended on January 3, 2022).
11

Table of Contents
The total principal amount outstanding of receivables sold is approximately $1.0 billion and $800 million as of both September 30, 20222023 and December 31, 2021, respectively.2022. The amount of receivables pledged as collateral as of September 30, 20222023 and December 31, 20212022 is approximately $1.1$1.3 billion and $973 million,$1.1 billion, respectively.
The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:for the:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Receivables sold to the financial institution and derecognizedReceivables sold to the financial institution and derecognized$2,281,934 $1,884,023 $6,760,652 $5,700,895 Receivables sold to the financial institution and derecognized$2,206,769 $2,281,934 $6,511,568 $6,760,652 
Cash collected on sold receivablesCash collected on sold receivables$2,281,926 $1,884,028 $6,560,655 $5,700,896 Cash collected on sold receivables$2,206,755 $2,281,926 $6,511,559 $6,560,655 
12

Table of Contents
Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by operating activities in the condensed consolidated statementsCondensed Consolidated Statements of cash flows.Cash Flows. The SPE incurs fees due to the unaffiliated financial institutioninstitutions related to the accounts receivable sales transactions. Those fees, which are immaterial,totaled $15 million and $8 million for the three months ended and $44 million and $14 million for the nine months ended September 30, 2023 and 2022, respectively, are recorded within other non-operating expense (income) in the condensed consolidated statementsCondensed Consolidated Statements of income.Income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institutioninstitutions any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of September 30, 20222023 and December 31, 20212022 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.
4. Employee Benefit Plans
Net periodic benefit income from our pension plans included the following components for our pension benefits:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Service costService cost$2,532 $3,043 $7,734 $9,185 Service cost$1,504 $2,532 $4,501 $7,734 
Interest costInterest cost18,804 17,915 56,520 53,783 Interest cost26,141 18,804 78,394 56,520 
Expected return on plan assetsExpected return on plan assets(37,569)(38,755)(112,887)(116,345)Expected return on plan assets(41,270)(37,569)(123,773)(112,887)
Amortization of prior service costAmortization of prior service cost172 172 516 516 Amortization of prior service cost173 172 519 516 
Amortization of actuarial lossAmortization of actuarial loss9,264 12,465 27,818 37,430 Amortization of actuarial loss2,340 9,264 7,021 27,818 
Net periodic benefit incomeNet periodic benefit income$(6,797)$(5,160)$(20,299)$(15,431)Net periodic benefit income$(11,112)$(6,797)$(33,338)$(20,299)
Service cost is recorded in selling, administrative and other expenses in the condensed consolidated statementsCondensed Consolidated Statements of incomeIncome while all other components are recorded within other non-operating expense (income). Pension benefits also include amounts related to supplemental retirement plans.
5. Acquisitions
We acquired several businesses including KDG, for approximately $232 million and $1.6 billion, net of cash acquired, during the nine months ended September 30, 2022. For the nine months ended September 30, 2021, acquisitions totaled $143 million, net of cash acquired.
2023 and 2022, respectively. During the nine months ended September 30, 2022,2023, we recognized approximately $408$290 million and $818$38 million of revenue, net of store closures, related to our current year Automotive and Industrial acquisitions, respectively. The resultsWe recorded approximately $172 million of operations forgoodwill and other intangible assets associated with these acquisitions. Other intangible assets acquired businesses are included in our condensed consolidated statements of income beginning on their respective acquisition dates.
$77 million consisted of customer relationships with a weighted average amortization lives of 20 years. For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates. Excluding KDG,The results of operations for the nine months ended September 30, 2022 and September 30, 2021, we recorded approximately $200 million and $97 millionacquired businesses are included in our Condensed Consolidated Statements of goodwill and other intangible assets associated with acquisitions. Other intangible assets acquired consisted primarily of customer relationships with a weighted average amortization lives of 20 years.
12

Table of Contents
Income beginning on their respective acquisition dates.
KDG Acquisition
On January 3, 2022, we, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash.cash, net of cash acquired of approximately $30 million. KDG, which is headquartered in Bloomfield, Connecticut, is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to MROmaintenance, repair, and OEMoperation and original equipment manufacturer customers. KDG has approximately 1,700 employees with approximately 220 locations across the United States and Puerto Rico. As of January 3, 2022, KDG had estimated annual revenues of approximately $1 billion.
The net cash consideration transferred of approximately $1.3 billion is net of the estimated cash acquired of approximately $30 million.
The KDG acquisition was financed using a combination of borrowings under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement and $109 million of cash.
The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition date as well as adjustments made to the acquisition accounting during the nine months ended September 30, 2022 (referred to as the "measurement period adjustments"). The measurement period adjustments primarily resulted from revisions to the valuation of certain tangible and intangible assets. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets. We are in the process of analyzing the estimated values of all assets acquired and liabilities assumed as of the acquisition date, including, among other things, obtaining valuations of certain tangible and intangible assets, as well as the fair value of certain contracts and the determination of certain tax balances. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations, tax accounting and leases.
As of January 3, 2022
(in thousands)Initial BalanceMeasurement Period AdjustmentsAs Adjusted
Trade accounts receivable$156,000 $— $156,000 
Merchandise inventories166,000 (1,000)165,000 
Prepaid expenses and other current assets39,000 (2,000)37,000 
Property, plant and equipment26,000 (2,000)24,000 
Operating lease assets49,000 (5,000)44,000 
Other assets1,000 — 1,000 
Other intangible assets574,000 (6,000)568,000 
Goodwill592,000 4,000 596,000 
Total assets acquired1,603,000 (12,000)1,591,000 
Trade accounts payable85,000 — 85,000 
Other current liabilities32,000 — 32,000 
Operating lease liabilities17,000 (1,000)16,000 
Deferred tax liabilities121,000 (10,000)111,000 
Other long-term liabilities39,000 (4,000)35,000 
Total liabilities assumed294,000 (15,000)279,000 
Net assets acquired$1,309,000 $3,000 $1,312,000 
The other intangible assets acquired included $527 million of customer relationship intangibles and a $41 million favorable trade name licensing agreement, with amortization lives of 17 and 1.5 years, respectively. The other intangible assets have a total weighted amortization life of 16 years.
The goodwill was assigned to the Industrial segment and is attributable primarily to expected synergies and the assembled workforce. Approximately $261 million of the estimated goodwill recognized as part of the KDG acquisition is expected to be tax deductible.
For the nine months ended September 30, 2022, approximately $5 million of inventory amortization step-up cost related to this acquisition was included in cost of goods sold. Further, $49 million of transaction and other one-time
13

Table of Contents
costs, inclusive of the impairment charge described below, were included in selling, administrative, and other expenses in the condensed consolidated statements of income.
In June 2022, we incurred a $17 million non-cash impairment charge related to our decision to retire certain legacy Industrial trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of the KDG integration and rebranding strategy. We evaluate other intangible assets for potential impairment indicators annually or more frequently if circumstances change.
6. Accumulated Other Comprehensive Loss
The following tables present the changes in AOCL by component for the nine months ended September 30:
Changes in Accumulated Other
Comprehensive Loss by Component
Changes in Accumulated Other
Comprehensive Loss by Component
(in thousands)(in thousands)Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal(in thousands)Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2022$(463,227)$(15,042)$(379,470)$(857,739)
Other comprehensive loss before reclassifications— — (248,757)(248,757)
Beginning balance, January 1, 2023Beginning balance, January 1, 2023$(506,610)$(2,572)$(523,360)$(1,032,542)
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications— 2,765 (63,027)(60,262)
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss20,957 11,223 — 32,180 Amounts reclassified from accumulated other comprehensive loss5,735 (193)— 5,542 
Other comprehensive income (loss), net of income taxesOther comprehensive income (loss), net of income taxes20,957 11,223 (248,757)(216,577)Other comprehensive income (loss), net of income taxes5,735 2,572 (63,027)(54,720)
Ending balance, September 30, 2022$(442,270)$(3,819)$(628,227)$(1,074,316)
Ending balance, September 30, 2023Ending balance, September 30, 2023$(500,875)$— $(586,387)$(1,087,262)
 Changes in Accumulated Other
Comprehensive Loss by Component
(in thousands)Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2021$(692,868)$(30,007)$(313,627)$(1,036,502)
Other comprehensive income before reclassifications— — (75,738)(75,738)
Amounts reclassified from accumulated other comprehensive loss27,931 11,223 — 39,154 
Other comprehensive income, net of income taxes27,931 11,223 (75,738)(36,584)
Ending balance, September 30, 2021$(664,937)$(18,784)$(389,365)$(1,073,086)

 Changes in Accumulated Other
Comprehensive Loss by Component
(in thousands)Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2022$(463,227)$(15,042)$(379,470)$(857,739)
Other comprehensive loss before reclassifications— — (248,757)(248,757)
Amounts reclassified from accumulated other comprehensive loss20,957 11,223 — 32,180 
Other comprehensive income (loss), net of income taxes20,957 11,223 (248,757)(216,577)
Ending balance, September 30, 2022$(442,270)$(3,819)$(628,227)$(1,074,316)
The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the employee benefit plans footnote.Employee Benefit Plans Footnote. Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.
7. Commitments and Contingencies
Legal Matters
From timeWe are subject to time, we are involved in various claimslegal proceedings, many involving routine litigation incidental to the businesses, including approximately 2,309 pending product liability lawsuits resulting from our national distribution of automotive parts and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolutionsupplies. Many of these actions will haveinvolve claims of personal injury allegedly resulting from the use of automotive parts we distributed. The amount accrued for pending and future claims was $225 million as of September 30, 2023, which represented our best estimate of the liability within our calculated range of $199 million to $283 million, discounted using a material adverse effect ondiscount rate of 4.59%. The amount accrued for pending and future claims was $220 million as of December 31, 2022, which represented our financial position, resultsbest estimate of operations, liquiditythe liability within our calculated range of $190 million to $270 million, discounted using a discount rate of 3.83%. Our undiscounted product liability was $297 million and capital resources.$285 million as of September 30, 2023 and December 31, 2022, respectively. There have been no significant developments to the information presented in our 20212022 Annual Report on Form 10-K with respect to litigation or commitments and contingencies.
Environmental Liabilities
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed an applied threshold not to exceed $1 million. Applying this threshold, there are no environmental matters to disclose for this period.
14

Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements and accompanying notes contained herein and with the audited consolidated financial statements,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, 2021.2022. The results of operations for the three and nine months ended September 30, 20222023 are not necessarily indicative of results for the year ended December 31, 2022.2023.
Forward-Looking Statements
Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission (“SEC”), release to the public, or make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in the future tense and all statements accompanied by words such as “expect,” “likely,” “outlook,” “forecast,” “preliminary,” “would,” “could,” “should,” “position,” “will,” “project,” “intend,” “plan,” “on track,” “anticipate,” “to come,” “may,” “possible,” “assume,” or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include our view of business and economic trends for the remainder of the year and our expectations regarding our ability to capitalize on these business and economic trends and to execute our strategic
priorities. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.
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;Ukraine and the conflict in the Gaza strip; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; the extent and duration of the disruption to our business operations caused by the globalpublic health crisis associated with the COVID-19 pandemic,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 20212022 Annual Report on Form 10-K and Item 1A, Risk Factors, in our report on Form 10-Q for the quarter ended March 31, 2022 (all of which may be amplified by the COVID-19 pandemic and geopolitical conflicts, such as the current conflict between Russia and Ukraine) and from time to time in our subsequent filings with the SEC.
Forward-looking statements speak only as of the date they are made, and we undertake no duty to update any forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K and other reports filed with the SEC.
15

Table of Contents
Overview
Genuine Parts Company is a service organization engaged in the global distribution of automotive and industrial replacement parts. We have a long tradition of growth dating back to 1928, the year we were founded in Atlanta, Georgia. We conduct business in North America, Europe and Australasia from a network of more than 10,30010,000 locations.
At Genuine Parts Company, our mission is to be a world-class service organization and the employer of choice, supplier of choice, valued customer of choice and investment of choice - we keep the world moving! This is our purpose and the foundation of how we do business. Additionally, we strive to be a respected business community member and a good corporate citizen. Our strategic financial objectives are intended to align with our mission and drive value for all our stakeholders. Our strategic financial objectives include: (1) top line revenue growth in excess of market growth; (2) improved operating margin; (3) strong balance sheet and cash flows; and (4) effective capital allocation.
Our Automotive Parts Group operated("Automotive") operates in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand, as of September 30, 2022, and accounted for 62% of total revenues for the three and nine months ended September 30, 2022.2023. Our Industrial Parts Group operated("Industrial") operates in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore. The Industrial Parts GroupSingapore, and accounted for 38% of our total revenues for the three and nine months ended September 30, 2022.2023.
15

Table of Contents
Key Business Metrics - Comparable SalesPerformance Indicators
We consider comparable sales, which refers to period-over-period comparisonsa variety of our net sales excluding the impact of acquisitions, foreign currencyperformance and other, to be a key business metric. Management uses comparable sales to evaluate the results of operations and we believe that this key indicator provides additional perspective and insights when analyzing the operating performance offinancial measures in assessing our business, from periodand the key performance indicators used to periodmeasure our results are Comparable Sales, Gross Profit and trendsGross Margin, Selling, Administrative and Other Expenses ("SG&A"), Segment Profit and Segment Margin, as well as Net Income and EBITDA along with their adjusted measures. For more information regarding our key performance indicators please reference the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its historical operating results. While this metric is widely used by industry stakeholders, our calculation ofAnnual Report on Form 10-K for the metric may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate this metric in the same manner. This metric should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this report.year ended December 31, 2022.
Results of Operations
OverviewOur results for the third quarter of 2023 reflect a 2.6% increase in sales driven by our international automotive businesses and continued growth in our Industrial segment. Our year-over-year sales growth was negatively impacted by one less selling day in the U.S., the moderating benefit of inflation on the pricing environment in our global automotive segment and declines in sales in our U.S. Automotive business. The combination of continued revenue growth and gross margin expansion led to earnings growth of 12.4% and further expansion of total segment margin.
For the nine months ended September 30, 2023, our revenue grew 5.6%, helping drive earnings growth of 7.4%, which reflects the ongoing benefits of our diverse business mix and geographic footprint. Our Automotive Parts Group and Industrial Parts Group both reported strong sales and segment profit growth duringresults for the three and nine months ended September 30, 2022 when compared toinclude costs of $47 million resulting from a gain on the same prior year period. June 2022 sale of real estate and KDG acquisition costs incurred throughout 2022.
Our Industrial Parts Group also benefited from the January 2022 acquisitionresults of KDG. We expect this strategic and highly synergistic acquisition to significantly enhance our scale and to strengthen our market leading position in industrial solutions. Additionally both businesses continued to be highly effective in managing the impacts of inflationary pressures, a dynamic geopolitical landscape and ongoing supply chain challenges, all of which we expect to continue throughout the remainder of the year.
Sales
Salesoperations are summarized below for the three months ended September 30, 2022 were $5.7 billion, a 17.8% increase2023 and 2022.
 Three Months Ended September 30,
20232022
(in thousands)$% of Sales$% of Sales$ Change% Change
Net sales$5,824,602 100.0 %$5,675,274 100.0 %$149,328 2.6 %
Cost of goods sold3,715,361 63.8 %3,695,607 65.1 %19,754 0.5 %
Gross profit2,109,241 36.2 %1,979,667 34.9 %129,574 6.5 %
Operating expenses:
Selling, administrative and other expenses1,551,799 26.6 %1,458,418 25.7 %93,381 6.4 %
Depreciation and amortization83,860 1.4 %86,563 1.5 %(2,703)(3.1)%
Provision for doubtful accounts8,417 0.1 %6,146 0.1 %2,271 37.0 %
Total operating expenses1,644,076 28.2 %1,551,127 27.3 %92,949 6.0 %
Non-operating expense (income):
Interest expense, net15,827 0.3 %18,220 0.3 %(2,393)(13.1)%
Other(15,722)(0.3)%(7,616)(0.1)%(8,106)106.4 %
Total non-operating expense (income)105 — %10,604 0.2 %(10,499)(99.0)%
Income before income taxes465,060 8.0 %417,936 7.4 %47,124 11.3 %
Income taxes113,862 2.0 %105,578 1.9 %8,284 7.8 %
Net income$351,198 6.0 %$312,358 5.5 %$38,840 12.4 %
16

Table of Contents
Three Months Ended September 30,
(in thousands, except per share data)20232022$ Change% Change
Diluted EPS$2.49$2.20$0.29 13.2 %
Total adjusted EBITDA$564,747$526,181$38,566 7.3 %
Automotive segment profit$322,004$309,349$12,655 4.1 %
Industrial segment profit$282,807$242,505$40,302 16.6 %
Total segment profit$604,811$551,854$52,957 9.6 %
Automotive segment margin8.9 %8.9 %
Industrial segment margin12.9 %11.1 %
Total segment margin10.4 %9.7 %
Our results of operations are summarized below for the nine months ended September 30, 2023 and 2022.
 Nine Months Ended September 30,
20232022
(in thousands)$% of Sales$% of Sales$ Change% Change
Net sales$17,504,726 100.0 %$16,572,323 100.0 %$932,403 5.6 %
Cost of goods sold11,247,341 64.3 %10,805,910 65.2 %441,431 4.1 %
Gross profit6,257,385 35.7 %5,766,413 34.8 %490,972 8.5 %
Operating expenses:
Selling, administrative and other expenses4,644,696 26.5 %4,226,412 25.5 %418,284 9.9 %
Depreciation and amortization261,948 1.5 %259,822 1.6 %2,126 0.8 %
Provision for doubtful accounts22,378 0.1 %13,539 0.1 %8,839 65.3 %
Total operating expenses4,929,022 28.2 %4,499,773 27.2 %429,249 9.5 %
Non-operating expense (income):
Interest expense, net49,146 0.3 %58,318 0.4 %(9,172)(15.7)%
Other(44,338)(0.3)%(26,897)(0.2)%(17,441)64.8 %
Total non-operating expense (income)4,808 — %31,421 0.2 %(26,613)(84.7)%
Income before income taxes1,323,555 7.6 %1,235,219 7.5 %88,336 7.2 %
Income taxes323,906 1.9 %304,494 1.8 %19,412 6.4 %
Net income$999,649 5.7 %$930,725 5.6 %$68,924 7.4 %
Nine Months Ended September 30,
(in thousands, except per share data)20232022$ Change% Change
Diluted EPS$7.08$6.53$0.55 8.4 %
Total adjusted EBITDA$1,634,649$1,506,004$128,645 8.5 %
Automotive segment profit$915,771$896,475$19,296 2.2 %
Industrial segment profit$828,166$656,330$171,836 26.2 %
Total segment profit$1,743,937$1,552,805$191,132 12.3 %
Automotive segment margin8.5 %8.8 %
Industrial segment margin12.3 %10.4 %
Total segment margin10.0 %9.4 %

17

Table of Contents
Net Sales
Our net sales for the three months ended September 30, 2023 increased 2.6% compared to $4.8 billion for the same period of the prior year. The increase in sales is attributable to a 12.7%0.5% increase in comparable sales, a 1.7% benefit from acquisitions and 0.4% favorable impact of foreign currency and other.
Our net sales for the nine months ended September 30, 2023 increased 5.6% compared to the same period of the prior year. The increase in sales is attributable to a 4.6% increase in comparable sales and a 9.1%2.0% benefit from acquisitions, slightlypartially offset by a net unfavorable impact of foreign currency and other of 4.0%1.0%. Sales
Our comparable sales growth was driven by Industrial and our international automotive businesses for the three and nine months ended September 30, 2023. Both segments also experienced the ongoing benefits of strategic pricing initiatives and acquisitions completed in prior periods. For the three months ended September 30, 2023, sales growth was negatively impacted by one less sales day compared to the same prior year period and declines in our U.S. Automotive sales.
Automotive
Net sales for Automotive were $3.6 billion for the third quarter of 2023, an increase of 3.9%, compared to the same period in the prior year. The increase for the third quarter of 2023 consisted of a 2.4% benefit from acquisitions, 0.9% favorable impact of foreign currency and other and 0.6% increase in comparable sales. Comparable sales was impacted by one less sales day and lower sales in our U.S. Automotive business. While our sales growth was impacted by the prior year benefit from price increases to offset higher product costs and other inflationary pressures, we continued to benefit from the positive effects of our strategic sales initiatives in our European and Australasia businesses. The benefit from acquisitions includes our recent acquisition of Recambios y Accesorios Gaudí, S.L. ("Gaudi") in Spain, and the favorable impact from foreign currency primarily reflects the appreciation of the Euro against the U.S. dollar during the period.
Net sales for Automotive were $10.8 billion for the nine months ended September 30, 2022 were $16.6 billion, a 17.8%2023, an increase of 5.4%, compared to $14.1 billion for the same period ofin the prior year. The increase in sales is due tofor the nine months ended September 30, 2023 consisted of a 12.1%3.7% increase in comparable sales and a 8.7%2.8% benefit from acquisitions, slightly offset by a 3.0% net1.1% unfavorable impact of foreign currency and other. The increase in comparable sales reflectsis due to higher sales in our international businesses. The benefit from acquisitions includes the benefitseffects of price increases to offset higher product costsour entry into new markets in Spain and other inflationary pressuresPortugal. The unfavorable impact of foreign currency primarily results from the weakening of the Australian and to a lesser extent, continued increase in consumer activity whenCanadian dollars compared to the three and nine months ended September 30, 2021. We continue to execute our strategic pricing and otherU.S. dollar throughout the period.
Industrial
Net sales initiatives to mitigate product and other inflationary cost pressures.
Sales for the Automotive Parts Group increased 8.9% and 9.4% for the three and nine months ended September 30, 2022, respectively, compared to the same periods in the prior year. This group's revenueIndustrial were $2.2 billion, an increase of 0.6% for the three months ended September 30, 2022 consisted of an approximate 9.2%2023 compared to the same period in 2022. The increase reflects a 0.3% increase in comparable sales driven by price increases to offset higher product costs and other inflationary pressures and strong demand. The overall sales increase also included a 5.3%0.6% benefit from acquisitions, partiallyslightly offset by a 5.6% net0.3% unfavorable impact of foreign currency and other. This group's revenuecompared to the same period in 2022.
Net sales for Industrial were $6.7 billion, an increase of 6.0% for the nine months ended September 30, 20222023 compared to the same period in 2022. The increase reflects a 6.0% increase in comparable sales and a 0.6% from acquisitions, slightly offset by a 0.6% unfavorable impact of foreign currency compared to the same period in 2022.
For the three months ended September 30, 2023, our results reflect anticipated softer economic activity and industry demand. For the nine months ended September 30, 2023, our growth in comparable sales reflects the positive impact of our ongoing sales and pricing initiatives and continued growth in many of the industry segments we serve. We attribute part of our sales growth to the diversification of our products and service offerings, and ongoing benefits from the KDG acquisition.
Gross Profit and Gross Margin
Gross profit for the three months ended September 30, 2023, increased $130 million, or approximately 6.5%, compared to the same period in the prior year. Gross margin increased 130 basis points to 36.2% for the three months ended September 30, 2023. Gross profit for the nine months ended September 30, 2023 increased $491 million or 8.5% compared to the same period in prior year. Gross margin increased 90 basis points to 35.7% for the nine months ended September 30, 2023.
Gross profit increases for the quarter and for the year-to-date periods were primarily driven by the increases in net sales and expanded gross margins. Gross margin improvements for the periods primarily reflect the positive contributions of our strategic pricing and sourcing initiatives.
1618

Table of Contents
consistedOperating Expenses
SG&A expenses represent 26.6% of an approximate 9.3% increase in comparable sales and 4.4% benefit from acquisitions, partially offset by a 4.3% net unfavorable impact from foreign currency and other compared to the same period in 2021.
Sales for the Industrial Parts Group increased 35.3% and 34.5% for the three andmonths ended September 30, 2023, an increase of 90 basis points from 25.7% in the third quarter of 2022. SG&A expenses represent 26.5% for the nine months ended September 30, 2022, respectively, compared to2023, an increase of 100 basis points from 25.5% for the same periodsperiod in 2021. The increases for both periods reflect benefits2022. SG&A expenses as a percentage of approximately 17% and primarily from the acquisition of KDG and increases of 19.6% and 17.9% in comparable sales for the three and nine months ended September 30, 2022 respectively. Our Industrial Parts Group continuesinclude costs of $3 million and income of $47 million, respectively, which primarily related to the net benefit fromof a gain on the ongoing executionJune 2022 sale of real estate and KDG acquisition costs incurred throughout 2022. The increases in both periods are primarily driven by planned increases in personnel costs due to wage inflation and global investments in information technology to support our pricing, supply chain and otherongoing strategic initiatives, and the continued resilience and expansion in the industrial economy, which is evident in indicators such as the Purchasing Managers Index and Industrial Production Index.
Costtiming of Goods Sold and Operating Expenses
Cost of goods sold includes the total cost of merchandise sold, including freight expenses associated with moving merchandise from our suppliers to our distribution centers, retail stores and branches, as well as supplier volume incentives and inventory adjustments.
Cost of goods soldadditional product liability expense for the three months ended September 30, 2022 was $3.7 billion, an 18.9% increase from $3.1 billion for2023 due to increases in our estimated product liability claim exposure.
Segment Profit
Beginning in 2023, certain functions, including cybersecurity and the same period in 2021. As a percentagemanagement of net sales, cost of goods sold was 65.1% for the three months ended September 30, 2022 comparedour product liability litigation, were transferred to 64.5% for the same period in 2021. As a result, gross margin declinedcorporate to 34.9% from 35.5% for the same period in 2021. For the nine months ended September 30, 2022, cost of goods sold was $10.8 billion, an 18.4% increase from $9.1 billion for the same nine month period in 2021. As a percentage of net sales, cost of goods sold was 65.2% for the nine months ended September 30, 2022 compared to 64.9% for the same period in 2021. As a result, gross margin declined to 34.8% from 35.1% in the same period in 2021.
The decreases in gross marginbe streamlined and centrally managed. These costs totaled $15 million and $44 million for the three and nine months ended September 30, 2022, was driven primarily byof which $9 million and $27 million were allocated to Automotive and $6 million and $17 million were allocated to Industrial based on several factors, including sales volumes and headcount. Beginning in 2023, these costs, which totaled $30 million and $49 million for the impact of supplier incentives asthree and nine months ended September 30, 2023, are no longer allocated to our segments when measuring their operating performance. We have not restated the 2022 comparative segment profit financial information.
Automotive
Automotive segment profit for the three months ended September 30, 2023 increased 4.1% compared to the same period in 2021, unfavorable foreign exchange,2022. Automotive segment margin remained at 8.9% for the three months ended September 30, 2023. For the nine months ended September 30, 2023, Automotive segment profit increased 2.2% compared to the same period in the prior year, and a business mix shiftAutomotive segment margin decreased 30 basis points to 8.5% for the same period in 2022. Automotive segment margin was negatively impacted by the loss of expense leverage primarily caused by slowing demand and the impact of lower sales in the U.S., combined with planned investments in wages and information technology. Our results in the U.S. also reflect operational execution challenges and further tightening of market conditions.
Industrial
Industrial segment profit increased 16.6% and 26.2% for the three and nine months ended September 30, 2023 compared to the same periods in 2022. For the three and nine months ended September 30, 2023, Industrial segment margin increased 180 basis points and 190 basis points to 12.9% and 12.3%, respectively, when compared to the same periods in the previous year. The improved Industrial segment margin is primarily due to the increasedcontinued sales fromgrowth and our Industrial Parts Group. This decline was partially offset by the ongoing favorable impact offocus on leveraging expenses and executing supply chain initiatives as well as other strategic initiatives in areas such as category management and pricing initiatives in our business.pricing.
Income Taxes
Our operating expenses are substantially comprisedeffective income tax rate for the three and nine months ended September 30, 2023 was 24.5%, compared to 25.3% and 24.7% for the same periods in 2022. The rate decrease is primarily due to statute-related adjustments and domestic tax credit benefits.
Net Income
For the three months ended September 30, 2023, net income was $351 million, an increase of compensation and benefit-related costs12.4% compared to net income of $312 million for personnel. Other major expense categories include facility occupancy coststhe same three month period in the prior year. On a per share diluted basis, net income was $2.49, an increase of 13.2% compared to $2.20 for headquarters, distribution centers and retail store/branch operations, transportation and delivery costs, technology and digital costs, accounting, legal and professional services, insurance costs, and travel and advertising.
Total operating expenses increased 9.6% to $1.6 billionthe same period in 2022. Our results for the three months ended September 30, 2022 include costs of $3 million, which primarily related to KDG acquisition costs. Excluding these amounts, on an adjusted basis, net income increased 10.7% compared to $1.4 billion$317 million for the same threeperiod in the prior year. On an adjusted per share diluted basis, net income increased 11.7% compared to $2.23 for the same period in 2022.
For the nine months ended September 30, 2023, net income was $1.0 billion, an increase of 7.4% compared to net income of $931 million for the same nine month period in 2021. Asthe prior year. On a percentageper share diluted basis, net income was $7.08, an increase of net sales, operating expenses decreased to 27.3%8.4% compared to 29.4%$6.53 for the same period in 2022. Our results for the nine months ended September 30, 2022 include income of $47 million, which primarily related to the net benefit of a gain on sale of real estate and KDG acquisition costs. Excluding these amounts, on an adjusted basis, net income increased 11.6% compared to $896 million for the same period in the prior year. On an adjusted per share diluted basis, net income increased 12.6% compared to $6.29 for the same period in 2022.
19

Table of Contents
For the three months ended September 30, 2023, adjusted EBITDA was $565 million, an increase of 7.3% from $526 million for the same three month period in the prior year. For the nine months ended September 30, 2022, these expenses totaled $4.52023, adjusted EBITDA was $1.6 billion, compared to $4.1an increase of 8.5% from $1.5 billion for the same period in 2021, and as a percentage of net sales, operating expenses decreased to 27.2% compared to 29.3% for the same nine month period in 2021. For the nine months ended September 30, 2022 operating expenses included $57 million of transaction and other costs associated with the KDG acquisition, inclusive of a non-cash impairment charge of $17 millionprior year.
The growth in these metrics in all periods presented reflects improved segment margin, primarily in our Industrial segment, driven by higher revenue, particularly in our international business. We also benefited from the retirement of certain legacy trade names that will no longer be used as result of the on-going KDG integration. The increase in total operating expenses for the nine month period was partially offset by a one-time benefit of $103 million from a gain on the sale of real estate that had been leased to S.P. Richards. The overall decrease in operating expenses as a percentage of net sales for the period is primarily related to improved leverage on stronger sales and cost control initiatives.
Segment Profit
The Automotive Parts Group's segment profit increased 10.0% in the three months ended September 30, 2022 compared to the same period of 2021, and its segment profit margin improved to 8.9% compared to 8.8% for the same period of the previous year. For the nine months ended September 30, 2022, segment profit increased 11.0% compared to the same period of the prior year, and segment profit margin increased to 8.8% compared to 8.6% for the same period in 2021. These improvements in segment profit and segment profit margin, despite inflationary headwinds, reflect strong operating results in all geographical regions, driven primarily by strong sales demand and thecontinued execution of our strategic growth and operating initiatives around supply chain, pricing and technology.
The Industrial Parts Group's segment profit increased 46.3% and 48.7%other initiatives, as discussed more fully in the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021, primarily driven by the acquisition of KDG. For the three months and nine months ended September 30, 2022, this group's segment profit margin increased to 11.1% and 10.4%, respectively, compared to 10.3% and 9.4%, respectively, for the same periods of the previous year. These improved segment profit margins are primarily due to the benefit of strong sales growth and strategic initiatives in areas such as supply chain, category management and pricing.
17

Table of Contents
Income Taxes
Our effective income tax rate for the three months ended September 30, 2022 was 25.3% compared to 23.5% for the same three month period in 2021. The rate increase is primarily due to geographic income mix shifts with a higher percentage in international.

The effective income tax rate for the nine months ended September 30, 2022 was 24.7% compared to 24.8%, for the same period in 2021. The rate decrease is primarily due to a prior year United Kingdom rate change that required deferred tax asset and liability remeasurement increasing the 2021 comparative rate, which was partially offset by geographic income mix shifts.commentary above.
Net IncomeNon-GAAP Financial Measures
For the three months ended September 30, 2022, net income was $312 million, an increase of 36.6% compared to net income of $229 million for the same three month period of the prior year. On a per share diluted basis, net income was $2.20, an increase of 38.4% compared to $1.59 for the same three month period of 2021. For the nine months ended September 30, 2022, net income was $931 million, an increase of 44.8% compared to net income of $643 million for the same nine month period in 2021. On a per share diluted basis, net income was $6.53, an increase of 47.1% compared to $4.44 for the same nine month period of the prior year.
For the three months ended September 30, 2022, net income on an adjusted basis was $317 million, an increase of 17.3% compared to adjusted net income of $270 million for the same three month period of the prior year. On a per share basis, net income on an adjusted diluted basis was $2.23 for the three months ended September 30, 2022, an increase of 18.6% compared to $1.88 for the same three month period of 2021. For the nine months ended September 30, 2022, net income on an adjusted basis was $896 million, an increase of 21.0% compared to adjusted net income of $741 million for the same nine month period of the prior year. On a per share basis, net income on an adjusted diluted basis was $6.29 for the nine months ended September 30, 2022, an increase of 22.9% compared to $5.12 for the same nine month period of 2021. Adjusted net income, adjusted diluted EPS, adjusted EBITDA, total segment profit, total segment margin, and adjusted diluted earnings per shareEBITDA for each segment are both non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
The growth in net income and adjusted net income in all periods presented reflects strong operating results in both of our segments, driven primarily by strong sales demand, the benefits of key acquisitions (including KDG), and the execution of our strategic growth initiatives, despite inflationary and other macroeconomic headwinds.
The following table setstables set forth a reconciliationreconciliations of net income and diluted net income per common shareEPS to adjusted net income and adjusted diluted EPS, respectively, as well as net income per common shareto adjusted EBITDA, in each case, to account for the impact of these adjustments. We also include a reconciliation from net income to total segment profit and total segment margin, as well as a reconciliation from segment profit to adjusted EBITDA for each segment. We believe that the presentation of adjusted net income and adjusted diluted net income per common share,these non-GAAP measures, when considered together with the corresponding GAAP financial measures and therelated 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 continuing 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 these measures are useful andthe 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. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures as superior to, in isolation from, or as a substitute for, GAAP financial information.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
GAAP net income$351,198 $312,358 $999,649 $930,725 
Adjustments:
Gain on sale of real estate (1)— — — (102,803)
Gain on insurance proceeds (2)— — — (1,507)
Transaction and other costs (3)— 3,462 — 56,955 
Total adjustments— 3,462 — (47,355)
Tax impact of adjustments (4)— 1,464 — 12,651 
Adjusted net income$351,198 $317,284 $999,649 $896,021 
18
20

Table of Contents
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
GAAP net income$312,358 $228,585 $930,725 $642,791 
Adjustments:
Gain on sale of real estate (1)— — (102,803)— 
Gain on insurance proceeds (2)— — (1,507)— 
Product liability damages award (3)— — — 77,421 
Loss on software disposal (4)— 61,063 — 61,063 
Transaction and other costs (5)3,462 — 56,955 — 
Total adjustments3,462 61,063 (47,355)138,484 
Tax impact of adjustments1,464 (19,167)12,651 (40,489)
Adjusted net income$317,284 $270,481 $896,021 $740,786 
The table below representrepresents amounts per common share assuming dilution:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)(in thousands, except per share data)2022202120222021(in thousands, except per share data)2023202220232022
GAAP net income$2.20 $1.59 $6.53 $4.44 
GAAP diluted earnings per shareGAAP diluted earnings per share$2.49 $2.20 $7.08 $6.53 
Adjustments:Adjustments:Adjustments:
Gain on sale of real estate (1)Gain on sale of real estate (1)— — (0.72)— Gain on sale of real estate (1)— — — (0.72)
Gain on insurance proceeds (2)Gain on insurance proceeds (2)— — (0.01)— Gain on insurance proceeds (2)— — — (0.01)
Product liability damages award (3)— — — 0.54 
Loss on software disposal (4)— 0.42 — 0.42 
Transaction and other costs (5)0.02 — 0.40 — 
Transaction and other costs (3)Transaction and other costs (3)— 0.02 — 0.40 
Total adjustmentsTotal adjustments0.02 0.42 (0.33)0.96 Total adjustments— 0.02 — (0.33)
Tax impact of adjustments0.01 (0.13)0.09 (0.28)
Adjusted diluted net income per common share$2.23 $1.88 $6.29 $5.12 
Tax impact of adjustments (4)Tax impact of adjustments (4)— 0.01 — 0.09 
Adjusted diluted earnings per shareAdjusted diluted earnings per share$2.49 $2.23 $7.08 $6.29 
Weighted average common shares outstanding – assuming dilutionWeighted average common shares outstanding – assuming dilution142,109 143,589 142,428 144,622 Weighted average common shares outstanding – assuming dilution140,934 142,109 141,285 142,428 
The table below clarifies where the adjusted items are presented in the condensed consolidated statements of income.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Line item:
Cost of goods sold$— $— $5,000 $— 
Selling, administrative and other expenses3,462 61,063 (50,848)138,484 
Non-operating expense (income): Other— — (1,507)— 
Total adjustments$3,462 $61,063 $(47,355)$138,484 
(1)    Adjustment reflects a gain on the sale of real estate that had been leased to S.P. Richards.Richards.
(2)    Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.
(3)    Adjustment reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.
19

Table of Contents
(4)    Adjustment reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies.
(5)    Adjustment primarily reflects costs associated with the January 3, 2022 acquisition of Kaman Distribution Group.
(4)     We determine the tax effect of non-GAAP adjustments by considering the tax laws and integrationstatutory income tax rates applicable in the tax jurisdictions of KDG. These costs also include a $17 million impairment charge driven by a decision to retire certain legacy trade names, classified as other intangible assets, priorthe underlying non-GAAP adjustments, including any related valuation allowances. For the three and nine months ended September 30, 2022, we applied the statutory income tax rates to the endtaxable portion of their estimated useful livesall of our adjustments, which resulted in a tax impact of $1.5 million and $12.7 million respectively. A portion of our transaction costs included in our non-GAAP adjustments for the three and nine months ended September 30, 2022 were not deductible for income tax purposes; therefore, no statutory income tax rate was applied to such costs.
The table below represents a reconciliation from GAAP net income to adjusted EBITDA:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
GAAP net income$351,198 $312,358 $999,649 $930,725 
Depreciation and amortization83,860 86,563 261,948 259,822 
Interest expense, net15,827 18,220 49,146 58,318 
Income taxes113,862 105,578 323,906 304,494 
EBITDA564,747 522,719 1,634,649 1,553,359 
Total adjustments (1)— 3,462 — (47,355)
Adjusted EBITDA$564,747 $526,181 $1,634,649 $1,506,004 
(1)    Amounts are the same as partadjustments included within the adjusted net income table above.
21

Table of executing our KDG integrationContents
The table below clarifies where the adjusted items are presented in the Condensed Consolidated Statements of Income:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Line item:
Cost of goods sold$— $— $— $5,000 
Selling, administrative and other expenses— 3,462 — (50,848)
Non-operating income: Other— — — (1,507)
Total adjustments$— $3,462 $— $(47,355)
The table below represents a reconciliation from GAAP net income to total segment profit:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
GAAP net income$351,198$312,358$999,649$930,725
Income taxes113,862105,578323,906304,494
Income before income taxes465,060417,9361,323,5551,235,219
Interest expense, net15,82718,22049,14658,318
Corporate expense90,25772,820257,822187,883
Intangible asset amortization33,66739,416113,414118,740
Other unallocated (loss) income, net (1)3,462(47,355)
Total segment profit$604,811$551,854$1,743,937$1,552,805
GAAP net sales$5,824,602$5,675,274$17,504,726$16,572,323
GAAP net income margin (2)6.0 %5.5 %5.7 %5.6 %
Total segment profit margin (3)10.4 %9.7 %10.0 %9.4 %
(1)    Amounts are the same as adjustments included within the adjusted net income table above.
(2)     Represents GAAP net income as a percentage of GAAP net sales.
(3)    Represents total segment profit as a percentage of GAAP net sales.


22

Table of Contents
The table below represents a reconciliation from segment profit to segment EBITDA and rebranding strategy. Referadjusted EBITDA:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Automotive:
Segment profit$322,004 $309,349 $915,771 $896,475 
Depreciation40,673 36,335 119,683 109,028 
Other costs (2)— 8,927 — 26,780 
Automotive segment adjusted EBITDA362,677 354,611 1,035,454 1,032,283 
Industrial:
Segment profit282,807 242,505 828,166 656,330 
Depreciation7,644 7,340 21,774 21,865 
Other costs (2)— 5,587 — 16,761 
Industrial segment adjusted EBITDA290,451 255,432 849,940 694,956 
Corporate:
Corporate expense(90,257)(72,820)(257,822)(187,883)
Depreciation1,876 3,472 7,077 10,189 
Other costs (2)— (14,514)— (43,541)
Other unallocated (loss) income, net (1)— (3,462)— 47,355 
Corporate EBITDA(88,381)(87,324)(250,745)(173,880)
Total adjustments (1)— 3,462 — (47,355)
Corporate adjusted EBITDA(88,381)(83,862)(250,745)(221,235)
Adjusted EBITDA$564,747 $526,181 $1,634,649 $1,506,004 
(1)    Amounts are the same as adjustments included within the adjusted net income table above.
(2)    These represent costs for certain functions, including cybersecurity and product liability litigation that were transferred to Corporate beginning in 2023 to be streamlined and centrally managed. We presented the acquisition footnote for more information regarding the acquisition.2022 comparative period to reflect how management manages these costs in 2023 and going forward.
Financial Condition
Our cash balance of $629was $655 million atas of September 30, 2022 decreased $862023, an increase of $1.2 million from December 31, 2021.2022. For the nine months ended September 30, 2022,2023, we had net cash provided by operating activities of $1.2$1.1 billion, net cash used in investing activities of $1.7 billion$473 million and net cash provided byused in financing activities of $386$599 million.
The cash provided by operating activities wasdecreased $162 million compared to the prior year period. The decrease is driven by higher net income for the nine months ended September 30, 2022 and the effective management of our working capital, including a $200 million benefit related toin the prior year from increasing the facility limit of our A/R Sales Agreement. We had $473 million in net cash used $1.7 billion cash for investing activities, primarily in connection with the acquisition of KDG, in addition to $244 million for capital expenditures.expenditures and acquisitions, and other investing activities of $561 million, partially offset by $80 million related to cash proceeds from the sale of our remaining investment in S.P. Richards and other investments. The financing activities consisted primarily of $1 billion of net proceeds from debt primarily from the Senior Notes offering (as discussed below). This was partially offset by $369$393 million for dividends paid to our shareholders and $173$172 million of sharestock repurchases.
Each Total debt of our working capital line items were impacted by the acquisition of KDG (refer to our acquisitions footnote in the notes to condensed consolidated financial statements for further information). Accounts receivable increased $417$3.3 billion at September 30, 2023 decreased $11 million, or 23.2%0.3%, from December 31, 2021. Inventory increased $411 million, or 10.6%, from December 31, 2021. In addition to the KDG acquisition, accounts receivable and inventory were both impacted by increases in revenues and related product demand. Accounts payable increased $726 million, or 15.1% from December 31, 2021. Apart from KDG, this was due largely to increased purchases to meet demand, inflationary pressures, and extended payment terms with certain suppliers. Total debt of $3.2 billion at September 30, 2022 increased $824 million, or 34.2%, from December 31, 2021 driven primarily by the Senior Notes offering (as discussed below).
We continue to negotiate extended payment dates with our suppliers. Our current payment terms with the majority of our suppliers range from 30 to 360 days. Several global financial institutions offer voluntary supply chain finance (“SCF”) programs which enable our suppliers, at their sole discretion, to sell their receivables from us to these financial institutions on a non-recourse basis at a rate that takes advantage of our credit rating and may be beneficial to them. The SCF program is primarily available to suppliers of goods and services included in cost of goods sold in our condensed consolidated statements of income. Our suppliers and us agree on commercial terms for the goods and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. The suppliers sell goods or services, as applicable, to us and they issue the associated invoices to us based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. In turn, we direct payment to the financial institutions, rather than the suppliers, for the invoices sold to the financial institutions. No guarantees are provided by us or any of our subsidiaries on third-party performance under the SCF program; however, we guarantee the payment by our subsidiaries to the financial institutions participating in the SCF program for the applicable invoices. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable in our condensed consolidated balance sheets. All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our condensed consolidated statements of cash flows. As of September 30, 2022 and December 31, 2021, the outstanding payment obligations to the financial institutions are $3.1 billion and $2.7 billion, respectively. The amount settled through the SCF program was $2.7 billion and $2.3 billion for the nine months ended September 30, 2022 and September 30, 2021, respectively.2022.
Liquidity and Capital Resources
We ended the quarter with $2.1$2.2 billion of total liquidity (comprising $1.5 billion availability on the revolving credit facility and $629655 million of cash and cash equivalents). 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 and cash generated from operations will be sufficient to fund our ongoing operating activities and our anticipated operationscash commitments for the foreseeable future.investing and financing activities, such as capital expenditures and potential acquisitions, future debt obligations, and dividends.
2023

Table of Contents
We have a healthystrong cash position and thesolid financial strength to pursue futurestrategic growth opportunities through disciplined, strategic capital deployment. Our key priorities include reinvestingthe reinvestment in our businesses through capital expenditures, mergers and acquisitions, the dividend and share repurchases. TheseWe have plans for additional investments are designedin our businesses to drive growth, improve efficiencies and productivity, and enhancedrive shareholder value.
On January 3, 2022, we amended our A/R Sales AgreementWe expect to increasebe able to continue to borrow funds at reasonable rates over the facility limit by an additional $200 million bringing the total to $1 billion. The terms of the A/R Sales Agreement limit the balance of receivables sold to approximately $1 billion at any point in time. Refer to the A/R Sales Agreement footnote in the notes to condensed consolidated financial statements for more information.
On January 6, 2022, we issued $500 million of unsecured 1.750% Senior Notes due 2025. Simultaneously, we issued $500 million of unsecured 2.750% Senior Notes due 2032. For both offerings, interest is payable semi-annually on February 1 and August 1 of each year, beginning August 1, 2022. We utilized the proceeds from these offerings to repay the borrowings under the Revolving Credit Facility which were incurred to finance a significant portion of the KDG Acquisition.
long term. At September 30, 2022,2023, our total average cost of debt was 2.34%2.33%, and we remain in compliance with all covenants connected with our borrowings.
On March 14, 2023, we entered into a second amendment to our syndicated facility agreement dated October 30, 2020 to replace the benchmark rate, the 1-month London Inter Bank Offered Rate, with the 1-month Secured Overnight Financing Rate for borrowings denominated in U.S. Dollar.
Any failure to comply with our debt covenants or restrictions could result in a default under our financing arrangements or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could create cross defaults under other debt arrangements and have a material adverse effect on our business, financial condition, results of operations and cash flows.
On February 14, 2022,21, 2023, we announced a 10%6% increase in the regular quarterly cash dividend for 2022.2023. Our Board of Directors increased the cash dividend payable to an annual rate of $3.58$3.80 per share compared with the previousprior year dividend of $3.26$3.58 per share. We have paid a cash dividend every year since going public in 1948, and 20222023 marks the 66th67th consecutive year of increased dividends paid to shareholders.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II of our 20212022 Annual Report on Form 10-K. Our exposure to market risk has not changed materially since December 31, 2021.2022.
Item 4. Controls and Procedures
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by us in the reports that we file or furnishesfurnish under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
On January 3, 2022, we completed the KDG acquisition. We are in the process of integrating KDG into our system of internal control over financial reporting.
Excluding the KDG acquisition, thereThere have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the SEC that occurred during our last quarter ended September 30, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2124

Table of Contents
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to our legal proceedings may be found in the Commitments and Contingencies footnoteFootnote in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I, which is incorporated herein by reference.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 20212022 Annual Report on Form 10-K, and our quarterly report on Form 10-Q for the quarter ended March 31, 2022, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about the purchases of shares of our common stock during the three months ended September 30, 2022:2023:
ISSUER PURCHASES OF EQUITY SECURITIES
PeriodTotal Number of Shares Purchased (1)Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
July 1, 2022 through July 31, 2022145,453$139.71145,45310,770,664
August 1, 2022 through August 31, 2022158,642$155.69129,55810,641,106
September 1, 2022 through September 30, 202265,277$159.2458,44010,582,666
Totals369,372$150.02333,45110,582,666
PeriodTotal Number of Shares Purchased (1)Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
July 1, 2023 through July 31, 202386,951$162.7486,9519,365,468
August 1, 2023 through August 31, 2023120,355$155.12104,7469,260,722
September 1, 2023 through September 30, 202348,709$150.2847,0589,213,664
Totals256,015$156.79238,7559,213,664
(1)Includes shares surrendered by employees to satisfy tax withholding obligations in connection with the vesting of shares of restricted stock, the exercise of stock optionsshare appreciation rights and/or tax withholding obligations.
(2)On August 21, 2017, the Board of Directors announced that it had authorized the repurchase of 15 million shares. The authorization for the repurchase continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Board of Directors. Approximately 10.69.2 million shares authorized remain available to be repurchased. There were no other repurchase plans announced as of September 30, 2022.2023.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended September 30, 2023, none of the Company’s directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
2225

Table of Contents
Item 6. Exhibits
(a) The following exhibits are filed or furnished as part of this report:
Exhibit 3.1
Exhibit 3.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32
Exhibit 101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
Exhibit 101.SCHXBRL Taxonomy Extension Schema Document
Exhibit 101.CALXBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEFXBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LABXBRL Taxonomy Extension Labels Linkbase Document
Exhibit 101.PREXBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104The cover page from this Quarterly Report on Form 10-Q for the period ended September 30, 20222023 formatted in Inline XBRL

2326

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Genuine Parts Company
(Registrant)
Date: October 20, 202219, 2023/s/ Bert Nappier
Bert Nappier
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and
Accounting Officer)

2427