Genuine Parts Company — the parent of MRO parts and services provider Motion Industries — on Monday detailed the actions it has taken in response to the COVID-19 pandemic.
GPC is operational across all three of its business segments — automotive parts (primarily via Napa Auto Parts), industrial parts (primarily via Motion Industries) and business products (primarily via S.P. Richards). The company said its business segments experienced slowing sales trends over the last two weeks of March due to growing pandemic concerns and the expansion of efforts to slow the virus’ spread, such as shelter-in-place orders, and that it expects the sales environment to slow further entering Q2.
To manage its cost base, GPC it is expanding its 2019 cost savings plan (announced October 2019) to reduce expenses by $100 million in 2020. Additional cost savings steps included in that expansion include:
- Delayed merit increases
- Pay reductions for select personnel including senior management
- Work hour reductions for hourly personnel
- Voluntary and Involuntary unpaid leave programs
- Reduction of temp and contract labor
- Elimination of travel, entertainment and meetings
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Addressing liquidity, GPC said it had approximately $1.0 billion in cash and borrowing capacity as of March 31. The company is actively seeking multiple options for alternative forms of financing to enhance its credit capacity. GPC said it is conserving cash via the aforementioned additional cost-savings initiatives, reducing capital expenditures and mergers & acquisitions, suspending share repurchases and is working capital management.
“We continue to take aggressive and necessary measures to keep our workplaces safe while also searching for prudent and innovative ways to maintain our high standard of operation,” said Paul Donahue, GPC chairman and CEO. “Protecting our people and keeping our operations up and running remains critical. GPC plays an essential role in keeping major facets of our economy and infrastructure operating, and we will continue to challenge ourselves to meet the needs of our customers. We believe the steps we are taking to stabilize our business in these unprecedented times will position the Company for strong sales and earnings growth as we exit this global pandemic."
GPC said it has implemented the following enhanced safety protocols at all company facilities:
- Began steady flow of communications regarding COVID-19 updates, including health and safety protocol and procedures
- Implemented business continuity plans across our operations
- Instituted multiple levels of cleaning protocols in all facilities
- Increased frequency of disinfecting high-touch areas and high-traffic common areas
- Reinforced hand washing and infection control training
- Established safe distancing procedures and processes in all facilities
- Provided additional personal protective equipment and cleaning supplies
- Initiated actions to screen, limit or prohibit non-essential visitors to the properties
- Instilled processes to isolate staff who show any symptoms or have been exposed to the virus
- Commenced remote work strategy for administrative teams
- Prohibited all domestic and international non-essential travel for all employees
- Engaged with legal counsel for all jurisdictions where Genuine Parts operates to ensure compliance with local mandates
GPC will report its 2020 first quarter financial results on May 6 and said that while it can’t reasonably estimate the full impact of COVID-19, the company doesn’t expect to achieve its previously provided full-year guidance.
