On April 30, 2024, Genuine Parts Company completed the acquisition of MPEC, the largest independent owner of NAPA Auto Parts stores in the U.S., operating 181 locations. This acquisition is expected to contribute to future Automotive sales growth.

The company approved and initiated a global restructuring designed to better align assets and improve efficiency. The company expects to incur total costs up to $200 million related to this initiative in 2024 and substantially complete it by the end of 2025.

The company continues to invest in enhancing technology to generate better pricing data and analytics. These investments are aimed at improving strategic category management and sourcing initiatives, which have contributed to gross margin expansion.

Despite a year-over-year sales decline of 1.6% in the Industrial segment for the six months ended June 30, 2024, segment profit increased by 0.4%. This improvement was primarily due to expense management and ongoing execution of supply chain initiatives and strategic category management.

The company is focused on integrating acquired businesses into its operations and realizing anticipated synergies and benefits. The MPEC acquisition is expected to contribute to future Automotive sales growth.

The effective income tax rate for the three and six month periods ended June 30, 2024, decreased compared to the same periods in 2023. The rate decrease is primarily due to expanded investment benefits and earnings mix shift across our global businesses.

The company cautions that actual results may differ materially from forward-looking statements due to various factors, including changes in general economic conditions, geopolitical conflicts, and public health emergencies.

The company notes that any failure to comply with debt covenants or restrictions could result in a default, which could have a material adverse effect on its business, financial condition, results of operations, and cash flows.

The company acknowledges that the uncertainties and costs of litigation, including product liability lawsuits, remain a risk factor that could affect its business, financial condition, and operating results.

Automotive sales continued to benefit from the prior year European acquisitions and current quarter acquisitions in the U.S. On April 30, we completed the acquisition of MPEC, our largest independent owner of NAPA Auto Parts stores in the U.S., operating 181 locations.

Performance in our U.S. and European automotive businesses also reflected moderating demand and a softer pricing environment from lower inflation.

The macroeconomic environment remained challenging, with lagging industrial production driving soft demand and difficult trading conditions in Industrial.

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.

Improvements in the six months ended June 30, 2024 occurred, despite a year-over-year sales decline of 1.6%, primarily due to expense management and ongoing execution of our supply chain initiatives and strategic category management.

SG&A expenses represent 27.6% and 27.4% of sales for the three and six months ended June 30, 2024, respectively, compared to 26.7% and 26.5% in the prior year. We experienced increased personnel and rent costs primarily related to acquisitions, annual merit wage increases and inflation.

We continue to invest in enhancing technology to generate better pricing data and analytics, which allows us to shift pricing dynamics across each market we serve.

On February 15, 2024, we announced a 5.3% increase in the regular quarterly cash dividend for 2024. Our Board of Directors increased the cash dividend payable to an annual rate of $4.00 per share compared with the prior year dividend of $3.80 per share. We have paid a cash dividend every year since going public in 1948, and 2024 marks the 68th consecutive year of increased dividends paid to shareholders.

The company continues to repurchase shares under its authorized program. Approximately 8.0 million shares remain available to be repurchased as of June 30, 2024.

We had $762 million in net cash used for investing activities, consisting of capital expenditures and acquisitions and other investing activities of $839 million, partially offset by proceeds from the sale of property, plant and equipment and the divestiture of businesses.

The macroeconomic environment remained challenging, with lagging industrial production driving soft demand and difficult trading conditions in Industrial.

Performance in our U.S. and European automotive businesses also reflected moderating demand and a softer pricing environment from lower inflation.