Item 1. Financial Statements

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)						June 30, 2024						December 31, 2023
Assets
Current assets:
Cash and cash equivalents						$	555,277					$	1,102,007
Trade accounts receivable, less allowance for doubtful accounts (2024 – $59,179; 2023 – $56,608)						2,526,060						2,223,431
Merchandise inventories, net						5,103,644						4,676,686
Prepaid expenses and other current assets						1,611,717						1,603,728
Total current assets						9,796,698						9,605,852
Goodwill						2,858,668						2,734,681
Other intangible assets, less accumulated amortization						1,818,954						1,792,913
Property, plant and equipment, less accumulated depreciation (2024 – $1,695,974; 2023 – $1,592,658)						1,787,822						1,616,785
Operating lease assets						1,604,559						1,268,742
Other assets						1,002,692						949,481
Total assets						$	18,869,393					$	17,968,454
Liabilities and equity
Current liabilities:
Trade accounts payable						$	5,931,993					$	5,499,536
Current portion of debt						853,236						355,298
Dividends payable						139,375						132,635
Other current liabilities						1,841,809						1,839,640
Total current liabilities						8,766,413						7,827,109
Long-term debt						3,027,491						3,550,930
Operating lease liabilities						1,318,307						979,938
Pension and other post–retirement benefit liabilities						222,378						219,644
Deferred tax liabilities						473,125						437,674
Other long-term liabilities						505,556						536,174
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 – 2024 – 139,346,018 shares; 2023 – 139,567,071 shares						139,346						139,567
Additional paid-in capital						180,527						173,025
Accumulated other comprehensive loss						(1,035,739)						(976,872)
Retained earnings						5,256,514						5,065,327
Total parent equity						4,540,648						4,401,047
Noncontrolling interests in subsidiaries						15,475						15,938
Total equity						4,556,123						4,416,985
Total liabilities and equity						$	18,869,393					$	17,968,454

See accompanying Notes to Condensed Consolidated Financial Statements.

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

						Three Months Ended June 30,												Six Months Ended June 30,
(in thousands, except per share data)						2024						2023						2024						2023
Net sales						$	5,962,567					$	5,915,006					$	11,746,198					$	11,680,124
Cost of goods sold						3,782,264						3,780,263						7,491,240						7,531,980
Gross profit						2,180,303						2,134,743						4,254,958						4,148,144
Operating expenses:
Selling, administrative and other expenses						1,647,456						1,581,653						3,222,383						3,092,897
Depreciation and amortization						99,202						90,873						189,812						178,088
Provision for doubtful accounts						5,678						8,322						11,889						13,961
Restructuring and other costs						29,760						—						112,802						—
Total operating expenses						1,782,096						1,680,848						3,536,886						3,284,946
Non-operating (income) expense:
Interest expense, net						21,921						16,455						39,611						33,319
Other						(9,915)						(16,649)						(32,921)						(28,616)
Total non-operating (income) expense						12,006						(194)						6,690						4,703
Income before income taxes						386,201						454,089						711,382						858,495
Income taxes						90,657						109,595						166,944						210,044
Net income						$	295,544					$	344,494					$	544,438					$	648,451
Dividends declared per common share						$	1.00					$	0.95					$	2.00					$	1.90
Basic earnings per share						$	2.12					$	2.45					$	3.91					$	4.61
Diluted earnings per share						$	2.11					$	2.44					$	3.89					$	4.58

See accompanying Notes to Condensed Consolidated Financial Statements.

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

						Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)						2024						2023						2024						2023
Net income						$	295,544					$	344,494					$	544,438					$	648,451
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments						15,278						(9,540)						(64,642)						14,287
Cash flow hedge, net of income taxes in 2023 — $951 and $951 respectively						—						2,572						—						2,572
Pension and postretirement benefit adjustments, net of income taxes in 2024 — $1,063 and $2,126; 2023 — $702 and $1,405 respectively						2,887						1,912						5,775						3,826
Other comprehensive income (loss), net of income taxes						18,165						(5,056)						(58,867)						20,685
Comprehensive income						$	313,709					$	339,438					$	485,571					$	669,136

See accompanying Notes to Condensed Consolidated Financial Statements.

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

						Three Months Ended June 30, 2024
(in thousands, except share and per share data)						Common Stock Shares						Common Stock Amount						Additional Paid-In Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Parent Equity						Non-controlling Interests in Subsidiaries						Total Equity
April 1, 2024						139,335,342						$	139,335					$	179,349					$	(1,053,904)					$	5,137,597					$	4,402,377					$	14,799					$	4,417,176
Net income						—						—						—						—						295,544						295,544						—						295,544
Other comprehensive income, net of tax						—						—						—						18,165						—						18,165						—						18,165
Cash dividend declared, $1.0000 per share						—						—						—						—						(139,376)						(139,376)						—						(139,376)
Shares issued from employee incentive plans						259,702						259						(16,828)						—						—						(16,569)						—						(16,569)
Share-based compensation						—						—						18,006						—						—						18,006						—						18,006
Purchase of stock						(249,026)						(248)						—						—						(37,251)						(37,499)						—						(37,499)
Noncontrolling interest activities						—						—						—						—						—						—						676						676
June 30, 2024						139,346,018						$	139,346					$	180,527					$	(1,035,739)					$	5,256,514					$	4,540,648					$	15,475					$	4,556,123

						Six Months Ended June 30, 2024
(in thousands, except share and per share data)						Common Stock Shares						Common Stock Amount						Additional Paid-In Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Parent Equity						Non-controlling Interests in Subsidiaries						Total Equity
January 1, 2024						139,567,071						$	139,567					$	173,025					$	(976,872)					$	5,065,327					$	4,401,047					$	15,938					$	4,416,985
Net income						—						—						—						—						544,438						544,438						—						544,438
Other comprehensive loss, net of tax						—						—						—						(58,867)						—						(58,867)						—						(58,867)
Cash dividend declared, $2.0000 per share						—						—						—						—						(278,761)						(278,761)						—						(278,761)
Shares issued from employee incentive plans						288,513						288						(19,068)						—						—						(18,780)						—						(18,780)
Share-based compensation						—						—						26,570						—						—						26,570						—						26,570
Purchase of stock						(509,566)						(509)						—						—						(74,490)						(74,999)						—						(74,999)
Noncontrolling interest activities						—						—						—						—						—						—						(463)						(463)
June 30, 2024						139,346,018						$	139,346					$	180,527					$	(1,035,739)					$	5,256,514					$	4,540,648					$	15,475					$	4,556,123

						Three Months Ended June 30, 2023
(in thousands, except share and per share data)						Common Stock Shares						Common Stock Amount						Additional Paid-In Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Parent Equity						Non-controlling Interests in Subsidiaries						Total Equity
April 1, 2023						140,545,475						$	140,545					$	147,690					$	(1,006,801)					$	4,644,770					$	3,926,204					$	13,432					$	3,939,636
Net income						—						—						—						—						344,494						344,494						—						344,494
Other comprehensive loss, net of tax						—						—						—						(5,056)						—						(5,056)						—						(5,056)
Cash dividend declared, $0.9500 per share						—						—						—						—						(133,492)						(133,492)						—						(133,492)
Shares issued from employee incentive plans						351,648						351						(22,241)						—						—						(21,890)						—						(21,890)
Share-based compensation						—						—						28,299						—						—						28,299						—						28,299
Purchase of stock						(429,573)						(428)						—						—						(66,920)						(67,348)						—						(67,348)
Noncontrolling interest activities						—						—						—						—						—						—						1,151						1,151
June 30, 2023						140,467,550						$	140,468					$	153,748					$	(1,011,857)					$	4,788,852					$	4,071,211					$	14,583					$	4,085,794

						Six Months Ended June 30, 2023
(in thousands, except share and per share data)						Common Stock Shares						Common Stock Amount						Additional Paid-In Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Parent Equity						Non-controlling Interests in Subsidiaries						Total Equity
January 1, 2023						140,941,649						$	140,941					$	140,324					$	(1,032,542)					$	4,541,640					$	3,790,363					$	14,084					$	3,804,447
Net income						—						—						—						—						648,451						648,451						—						648,451
Other comprehensive income, net of tax						—						—						—						20,685						—						20,685						—						20,685
Cash dividend declared, $1.9000 per share						—						—						—						—						(267,229)						(267,229)						—						(267,229)
Shares issued from employee incentive plans						366,480						366						(23,521)						—						—						(23,155)						—						(23,155)
Share-based compensation						—						—						36,945						—						—						36,945						—						36,945
Purchase of stock						(840,579)						(839)						—						—						(134,010)						(134,849)						—						(134,849)
Noncontrolling interest activities						—						—						—						—						—						—						499						499
June 30, 2023						140,467,550						$	140,468					$	153,748					$	(1,011,857)					$	4,788,852					$	4,071,211					$	14,583					$	4,085,794

See accompanying Notes to Condensed Consolidated Financial Statements.

GENUINE PARTS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

						Six Months Ended June 30,
(in thousands)						2024						2023
Operating activities:
Net income						$	544,438					$	648,451
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						189,812						178,088
Share-based compensation						26,570						36,945
Excess tax benefits from share-based compensation						(8,233)						(6,431)
Other operating activities, including changes in operating assets and liabilities						(140,672)						(400,050)
Net cash provided by operating activities						611,915						457,003
Investing activities:
Purchases of property, plant and equipment						(259,245)						(205,336)
Proceeds from sale of property, plant and equipment						73,645						4,762
Proceeds from divestitures of businesses						3,715						—
Proceeds from sale of investments						—						80,482
Acquisitions and other investing activities						(580,141)						(106,028)
Net cash used in investing activities						(762,026)						(226,120)
Financing activities:
Proceeds from debt						539,722						1,668,757
Payments on debt						(544,355)						(1,602,138)
Shares issued from employee incentive plans						(18,780)						(23,155)
Dividends paid						(272,021)						(259,929)
Purchases of stock						(74,999)						(134,849)
Other financing activities						(11,893)						(6,436)
Net cash used in financing activities						(382,326)						(357,750)
Effect of exchange rate changes on cash and cash equivalents						(14,293)						3,509
Net decrease in cash and cash equivalents						(546,730)						(123,358)
Cash and cash equivalents at beginning of period						1,102,007						653,463
Cash and cash equivalents at end of period						$	555,277					$	530,105

See accompanying Notes to Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.General

Basis of Presentation

The accompanying unaudited Condensed 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 Notes to the Consolidated 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, 2023. Accordingly, the unaudited Condensed Consolidated Financial Statements and related disclosures herein should be read in conjunction with our 2023 Annual Report on Form 10-K.

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. Specifically, we make estimates and assumptions in our unaudited Condensed 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. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results for the year ended December 31, 2024. We have evaluated subsequent events through the date the unaudited Condensed 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 an immaterial impact on our Condensed Consolidated Financial Statements.

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard requires disclosures of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of other segment items by reportable segment, and all annual disclosures currently required by Topic 280 to be included in interim periods. The guidance is effective for our Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items, income before tax expense disaggregated between domestic and foreign, income tax expense disaggregated by federal, state and foreign, as well as further information on income taxes paid. The guidance is effective for our Annual Report on Form 10-K for the year ended December 31, 2025, with early adoption permitted. The guidance should be applied on a prospective basis, with retrospective application permitted. We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

Prepaid Expenses and Other Current Assets

The following table provides a detail of prepaid expenses and other current assets reported within the Condensed Consolidated Balance Sheets as of:

(in thousands)						June 30, 2024						December 31, 2023
Prepaid expenses						$	151,407					$	110,863
Consideration receivable from vendors						891,864						928,499
Other current assets						568,446						564,366
Total prepaid expenses and other current assets						$	1,611,717					$	1,603,728

Derivatives and Hedging

We are exposed to various risks arising from business operations and market conditions, including fluctuations in certain foreign currencies. We use derivative and non-derivative instruments as risk management tools to mitigate the potential impact of 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 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):

												June 30, 2024												December 31, 2023
Instrument						Balance Sheet Location						Notional						Balance						Notional						Balance
Net investment hedges:
Forward contracts						Prepaid expenses and other current assets						$	1,053,110					$	63,056					$	606,950					$	37,676
Forward contract						Other current liabilities						$	106,800					$	487					$	106,800					$	4,383
Foreign currency debt						Long-term debt						€	700,000					$	749,910					€	700,000					$	772,660

The tables below presents gains and losses related to designated net investment hedges:

						Gain (Loss) Recognized in AOCL before Reclassifications												Gain Recognized in Interest Expense for Excluded Components
(in thousands)						2024						2023						2024						2023
Three Months Ended June 30,
Net investment hedges:
Forward contracts						$	6,994					$	(9,212)					$	4,651					$	3,158
Foreign currency debt						5,670						2,940						—						—
Total						$	12,664					$	(6,272)					$	4,651					$	3,158

						Gain (Loss) Recognized in AOCL before Reclassifications												Gain Recognized in Interest Expense for Excluded Components
(in thousands)						2024						2023						2024						2023
Six Months Ended June 30,
Net investment hedges:
Forward contracts						$	20,256					$	(14,536)					$	9,020					$	6,317
Foreign currency debt						22,750						(11,200)						—						—
Total						$	43,006					$	(25,736)					$	9,020					$	6,317

Fair Value of Financial Instruments

As of June 30, 2024, the fair value of our senior unsecured notes was approximately $3.6 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. As of June 30, 2024, we were in compliance with all such covenants.

As of June 30, 2024, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $757 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 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 the 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 June 30, 2024, 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 June 30, 2024, we have recognized $52 million of certain assets and liabilities 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. 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 Condensed Consolidated Statement of Cash Flows. As of June 30, 2024 and December 31, 2023, the outstanding payment obligations to the financial institutions are $3.1 billion and $3.0 billion, respectively.

(in thousands)						June 30, 2024
Obligations outstanding at the beginning of the year						$	3,041,187
Invoices confirmed during the year						2,058,584
Confirmed invoices paid during the year						(1,967,840)
Confirmed obligations outstanding at the end of period						$	3,131,931

Earnings Per Share

We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding. Certain outstanding options are not included in the diluted earnings per share calculation

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 basic and diluted shares outstanding:

						Three Months Ended June 30,												Six Months Ended June 30,
(in thousands, except per share data)						2024						2023						2024						2023
Net income						$	295,544					$	344,494					$	544,438					$	648,451
Weighted average common shares outstanding						139,358						140,574						139,394						140,688
Dilutive effect of non-vested restricted stock awards						471						673						567						808
Weighted average common shares outstanding – assuming dilution						139,829						141,247						139,961						141,496
Basic earnings per share						$	2.12					$	2.45					$	3.91					$	4.61
Diluted earnings per share						$	2.11					$	2.44					$	3.89					$	4.58

2. Segment Information

The following table presents a summary of our reportable segment financial information:

						Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)						2024						2023						2024						2023
Net sales:
Automotive						$	3,726,991					$	3,654,999					$	7,301,011					$	7,160,826
Industrial						2,235,576						2,260,007						4,445,187						4,519,298
Total net sales						$	5,962,567					$	5,915,006					$	11,746,198					$	11,680,124
Segment profit:
Automotive						$	313,975					$	329,347					$	586,911					$	593,767
Industrial						276,841						283,372						547,680						545,359
Total segment profit						590,816						612,719						1,134,591						1,139,126
Interest expense, net						(21,921)						(16,455)						(39,611)						(33,319)
Intangible asset amortization						(34,685)						(40,625)						(68,785)						(79,747)
Corporate expense						(85,984)						(101,550)						(169,746)						(167,565)
Other unallocated costs (1)						(62,025)						—						(145,067)						—
Income before income taxes						$	386,201					$	454,089					$	711,382					$	858,495

(1) The following table presents a summary of the other unallocated costs:

						Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)						2024						2023						2024						2023
Other unallocated costs:
Restructuring and other costs (2)						$	(37,247)					$	—					$	(120,289)					$	—
Acquisition and integration related costs and other (3)						(24,778)						—						(24,778)						—
Total other unallocated costs						$	(62,025)					$	—					$	(145,067)					$	—

(2) Amount reflects costs related to the global restructuring initiative which includes a voluntary retirement offer in the U.S., inventory liquidation costs, and rationalization and optimization of certain distribution centers, stores and other facilities.

(3) Amount primarily reflects integration costs related to the completion of the acquisition of Motor Parts and Equipment Corporation ("MPEC") in April 2024, including professional services costs, personnel costs, and lease and other exit costs.

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 June 30,												Six Months Ended June 30,
(in thousands)						2024						2023						2024						2023
North America:
Automotive						$	2,352,254					$	2,344,701					$	4,549,144					$	4,550,086
Industrial						2,101,811						2,128,747						4,181,937						4,259,462
Total North America						$	4,454,065					$	4,473,448					$	8,731,081					$	8,809,548
Australasia:
Automotive						$	412,883					$	407,853					$	813,231					$	814,615
Industrial						133,765						131,260						263,250						259,836
Total Australasia						$	546,648					$	539,113					$	1,076,481					$	1,074,451
Europe – Automotive						$	961,854					$	902,445					$	1,938,636					$	1,796,125
Total net sales						$	5,962,567					$	5,915,006					$	11,746,198					$	11,680,124

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-year term expiring in January 2025, which we intend to renew.

We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutions 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 institutions so that the total principal amount outstanding of receivables sold is approximately $1.0 billion at any point in time (which is the maximum amount allowed under the agreement as amended on January 3, 2022).

The total principal amount outstanding of receivables sold is approximately $1.0 billion as of both June 30, 2024 and December 31, 2023. The amount of receivables pledged as collateral as of June 30, 2024 and December 31, 2023 is approximately $1.5 billion and $1.2 billion, respectively.

The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:

						Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)						2024						2023						2024						2023
Receivables sold to the financial institutions and derecognized						$	2,135,710					$	2,139,392					$	4,305,752					$	4,304,799
Cash collected on sold receivables						$	2,135,626					$	2,139,393					$	4,305,670					$	4,304,804

Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The SPE incurs fees due to the unaffiliated financial institutions related to the accounts receivable sales transactions. Those fees, which totaled $31 million and $29 million for the six months ended June 30, 2024 and 2023, respectively, are recorded within other non-operating (income) expense in the Condensed Consolidated Statements of Income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institutions 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 June 30, 2024 and December 31, 2023 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 June 30,												Six Months Ended June 30,
(in thousands)						2024						2023						2024						2023
Service cost						$	1,711					$	1,503					$	3,438					$	2,997
Interest cost						25,324						26,136						50,689						52,253
Expected return on plan assets						(44,339)						(41,263)						(88,743)						(82,503)
Amortization of prior service cost						281						173						562						346
Amortization of actuarial loss						3,567						2,340						7,134						4,681
Net periodic benefit income						$	(13,456)					$	(11,111)					$	(26,920)					$	(22,226)

Service cost is recorded in selling, administrative and other expenses in the Condensed Consolidated Statements of Income while all other components are recorded within other non-operating (income) expense. Pension benefits also include amounts related to supplemental retirement plans.

5. Acquisitions

We acquired several businesses for approximately $651 million, which includes certain non-cash consideration, and $116 million, net of cash acquired, during the six months ended June 30, 2024 and June 30, 2023, respectively. We recognized approximately $100 million and $5 million of revenue related to our current year Automotive and Industrial acquisitions, respectively. We recorded approximately $283 million of goodwill and other intangible assets associated with these acquisitions. Other intangible assets acquired of $120 million consisted of customer relationships with weighted average amortization lives of 19 years. For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of the respective acquisition date. The fair values of the assets acquired and liabilities assumed are preliminary. Additional adjustments, particularly to inventory and intangible assets, may be made to the acquisition accounting during the measurement period, which may be up to one year from the respective acquisition date. The results of operations for acquired businesses are included in our Condensed Consolidated Statements of Income beginning on their respective acquisition dates.

These acquisitions included MPEC, the largest independent owner of NAPA Auto Part stores in the U.S., which we acquired on April 30, 2024. We recognized approximately $100 million of goodwill and other intangible assets associated with MPEC. Approximate values of other assets acquired and liabilities assumed included inventory of $200 million, operating lease assets of $200 million and operating lease liabilities of $200 million.

6. Accumulated Other Comprehensive Loss

The following tables present the changes in AOCL by component for the six months ended June 30:

						Changes in Accumulated Other Comprehensive Loss by Component
(in thousands)						Pension and Other Post-Retirement Benefits						Cash Flow Hedges						Foreign Currency Translation						Total
Beginning balance, January 1, 2024						$	(517,941)					$	—					$	(458,931)					$	(976,872)
Other comprehensive income (loss) before reclassifications						—						—						(64,642)						(64,642)
Amounts reclassified from accumulated other comprehensive loss						5,775						—						—						5,775
Other comprehensive income (loss), net of income taxes						5,775						—						(64,642)						(58,867)
Ending balance, June 30, 2024						$	(512,166)					$	—					$	(523,573)					$	(1,035,739)

						Changes in Accumulated Other Comprehensive Loss by Component
(in thousands)						Pension and Other Post-Retirement Benefits						Cash Flow Hedges						Foreign Currency Translation						Total
Beginning balance, January 1, 2023						$	(506,610)					$	(2,572)					$	(523,360)					$	(1,032,542)
Other comprehensive income (loss) before reclassifications						—						2,765						14,287						17,052
Amounts reclassified from accumulated other comprehensive loss						3,826						(193)						—						3,633
Other comprehensive income (loss), net of income taxes						3,826						2,572						14,287						20,685
Ending balance, June 30, 2023						$	(502,784)					$	—					$	(509,073)					$	(1,011,857)

The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the 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

We are subject to various legal proceedings, many involving routine litigation incidental to the businesses, including approximately 2,516 pending product liability lawsuits resulting from our national distribution of automotive parts and supplies. Many of these involve 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 June 30, 2024, which represents our best estimate of the liability within our calculated range of $180 million to $255 million, discounted using a discount rate of 4.36%. The amount accrued for pending and future claims was $244 million as of December 31, 2023, which represents our best estimate of the liability within our calculated range of $196 million to $277 million, discounted using a discount rate of 3.88%. Our undiscounted product liability was $285 million and $308 million as of June 30, 2024 and December 31, 2023, respectively. There have been no significant developments to the information presented in our 2023 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.

8. Restructuring and other costs

In February 2024, we approved and initiated a global restructuring designed to better align our assets and further improve the efficiency of the business. This initiative includes an announced voluntary retirement offer in the U.S., along with a rationalization and optimization of certain distribution centers, stores and other facilities.

For the three and six months ended June 30, 2024, we incurred $37 million and $120 million, respectively, in costs related to our global restructuring initiative. We expect to incur total costs up to $200 million related to the global restructuring efforts in 2024 and to substantially complete the initiative by the end of 2025. We may incur additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of these initiatives. The global restructuring was approved and funded by our corporate office and therefore these costs are not allocated to our segments.

For the three months ended June 30, 2024, costs of $37 million include severance and other employee costs of $4 million, other restructuring costs of $26 million, and restructuring inventory liquidation costs of $7 million, which are reflected in cost of goods sold.

The table below summarizes the activity related to these costs for the six months ended June 30, 2024.

(in thousands)			Severance and other employee costs						Other restructuring costs (1)						Total (1)
Liability as of January 1, 2024			$	—					$	—					$	—
Restructuring and other costs			65,954						46,848						112,802
Cash payments			(41,277)						(32,872)						(74,149)
Non-cash charges			3,094						(12,844)						(9,750)
Translation			(90)						2						(88)
Liability as of June 30, 2024			$	27,681					$	1,134					$	28,815

(1) Amount reflects moving expenses, accelerated rent, professional fees, facility closure costs and asset impairment costs that are attributable to our restructuring. Amount excludes a $7 million noncash charge reflected in cost of goods sold for inventory liquidated rather than moved during facility consolidation in connection with the restructuring.