Donahue stated, “We entered the third quarter focused on driving profitable growth and productivity initiatives for our streamlined automotive and industrial portfolio. Our progress for the quarter reflects the resiliency in our businesses and the benefits of these initiatives. Our financial performance was highlighted by strengthening sales trends, continued gross margin expansion, significant cost savings, operating margin expansion in each of our businesses, a stronger balance sheet, enhanced liquidity and substantial cash flows. We were pleased to report a strong financial performance for the quarter.”

Third Quarter 2020 Segment Highlights

Automotive Parts Group

Sales for the Automotive Group were $3.0 billion in the third quarter, up 6.0% from 2019 and representing 68% of total company revenues. The increase consisted of an approximate 2.2% increase in comparable sales, a 2.2% net impact of favorable foreign currency and other and a 1.6% benefit from acquisitions. Segment profit of $266 million was up 19.6%, with profit margin at 9.0%, up 100 basis points from 2019.

Industrial Parts Group

Sales for the Industrial Parts Group were $1.4 billion, down 18.6%, or down 8.7% excluding the EIS divestiture, and representing 32% of total company revenues. The decrease in sales and sales excluding divestitures includes an approximate 9.2% decrease in comparable sales, slightly offset by a 0.4% benefit from acquisitions and a favorable foreign currency impact. Segment profit of $126 million was down 8.7%, with profit margin up at 8.9%, up 100 basis points from 2019.

Nine Months 2020 Results

Sales from continuing operations for the nine months ended Sept. 30, 2020, were $12.3 billion, a 7.2% decrease compared to $13.2 billion for the same period in 2019. Excluding divestitures, net sales from continuing operations were down 2.8% for the nine months. The net loss from continuing operations for the nine months was $8.2 million, or a loss of $0.06 per diluted share. Excluding items which impact comparability with prior periods, as noted above, the company’s adjusted net income from continuing operations was $544.1 million, or $3.76 per diluted share.

Balance Sheet, Cash Flow and Capital Allocation

The company generated operating cash flow from continuing operations of $1.4 billion during the first nine months of 2020, a significant increase from the prior year, driven primarily by entering into an agreement to sell accounts receivable which provided $500 million of operating cash flows and the effective management of our working capital. Free cash flow was $1.3 billion for the first nine months of 2020, also up significantly. 

The company returned $435 million to shareholders during the nine months ended Sept. 30, 2020, including $339 million in the form of quarterly dividends and $96 million in share repurchases. As previously announced, the company decided to suspend its share repurchase program and limit its M&A activities to smaller, bolt-on acquisitions until there is greater visibility into the macro environment. 

The company ended the quarter with $2.8 billion of total liquidity (comprising $1.9 billion availability on the revolving credit facility and $0.9 billion of cash and cash equivalents). The company reduced debt by $300 million during the quarter and is in compliance with all its debt covenants.

Donahue concluded, “As we move forward through the balance of 2020, our teams will execute on a number of strategic initiatives to build on the positive momentum of the third quarter. Our plans focus on maximizing the value of our automotive and industrial business segments and positioning GPC for sustained long-term growth and improved profitability. We look forward to reporting on our progress in the quarters ahead.”