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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, 2023
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 filer
Smaller 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 140,196,631 shares of common stock outstanding as of October 16, 2023.




1

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, 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, net 4,482,773 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 shares
140,235 140,941 
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 Notes to Condensed Consolidated Financial Statements.
2

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
Net sales$5,824,602 $5,675,274 $17,504,726 $16,572,323 
Cost of goods sold3,715,361 3,695,607 11,247,341 10,805,910 
Gross profit2,109,241 1,979,667 6,257,385 5,766,413 
Operating expenses:
Selling, administrative and other expenses1,551,799 1,458,418 4,644,696 4,226,412 
Depreciation and amortization83,860 86,563 261,948 259,822 
Provision for doubtful accounts8,417 6,146 22,378 13,539 
Total operating expenses1,644,076 1,551,127 4,929,022 4,499,773 
Non-operating expense (income):
Interest expense, net15,827 18,220 49,146 58,318 
Other(15,722)(7,616)(44,338)(26,897)
Total non-operating expense (income)105 10,604 4,808 31,421 
Income before income taxes465,060 417,936 1,323,555 1,235,219 
Income taxes113,862 105,578 323,906 304,494 
Net income$351,198 $312,358 $999,649 $930,725 
Dividends declared per common share$0.950 $0.895 $2.850 $2.685 
Basic earnings per share$2.50 $2.21 $7.11 $6.57 
Diluted earnings per share$2.49 $2.20 $7.08 $6.53 
See accompanying Notes to Condensed Consolidated Financial Statements.
3


GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
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, respectively
1,909 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 Notes to Condensed Consolidated Financial Statements.
4

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Three 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
July 1, 2023140,467,550 $140,468 $153,748 $(1,011,857)$4,788,852 $4,071,211 $14,583 $4,085,794 
Net income— — — — 351,198 351,198 — 351,198 
Other comprehensive loss, net of tax— — — (75,405)— (75,405)— (75,405)
Cash dividend declared, $0.9500 per share
— — — — (133,254)(133,254)— (133,254)
Shares issued from employee incentive plans5,991 6 (541)— — (535)— (535)
Share-based compensation— — 10,395 — — 10,395 — 10,395 
Purchase of stock(238,755)(239)— — (37,258)(37,497)— (37,497)
Noncontrolling interest activities— — — — — — 579 579 
September 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, 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

Three 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
July 1, 2022141,280,841$141,281 $123,388 $(953,228)$4,329,115 $3,640,556 $13,007 $3,653,563 
Net income— — — — 312,358 312,358 — 312,358 
Other comprehensive loss, net of tax— — — (121,088)— (121,088)— (121,088)
Cash dividend declared, $0.8950 per share
— — — — (126,434)(126,434)— (126,434)
Shares issued from employee incentive plans14,619 15 (1,039)— — (1,024)— (1,024)
Share-based compensation— — 9,891 — — 9,891 — 9,891 
Purchase of stock(333,451)(334)— — (49,474)(49,808)— (49,808)
Noncontrolling interest activities— — — — — — 734 734 
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, 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 Notes to Condensed Consolidated Financial Statements.

6

GENUINE PARTS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Nine Months Ended September 30,
(in thousands)20232022
Operating activities:
Net income$999,649 $930,725 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization261,948 259,822 
Share-based compensation47,340 27,773 
Excess tax benefits from share-based compensation(6,770)(3,868)
Gain on sale of real estate  (102,803)
Changes in operating assets and liabilities(219,721)132,942 
Net cash provided by operating activities1,082,446 1,244,591 
Investing activities:
Purchases of property, plant and equipment(349,858)(243,998)
Proceeds from sale of property, plant and equipment7,339 141,228 
Proceeds from sale of investments80,482  
Acquisitions and other investing activities(211,392)(1,554,192)
Net cash used in investing activities(473,429)(1,656,962)
Financing activities:
Proceeds from debt2,543,882 4,547,511 
Payments on debt(2,544,619)(3,586,954)
Shares issued from employee incentive plans(23,689)(15,444)
Dividends paid(393,420)(369,483)
Purchases of stock(172,347)(172,727)
Other financing activities(8,826)(16,869)
Net cash provided by (used in) financing activities(599,019)386,034 
Effect of exchange rate changes on cash and cash equivalents(8,824)(59,166)
Net increase (decrease) in cash and cash equivalents1,174 (85,503)
Cash and cash equivalents at beginning of period653,463 714,701 
Cash and cash equivalents at end of period$654,637 $629,198 
See accompanying Notes to Condensed Consolidated Financial Statements.
7

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, 2022. Accordingly, the unaudited Condensed Consolidated Financial Statements and related disclosures herein should be read in conjunction with our 2022 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. 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, 2023 are not necessarily indicative of results for the year ended December 31, 2023. 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.
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance 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 was effective in the first quarter of 2023, except for the rollforward, which becomes effective in the first quarter of 2024. For additional information, please refer to the supply chain finance programs section herein.
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)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 
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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):
September 30, 2023December 31, 2022
InstrumentBalance Sheet LocationNotionalBalanceNotionalBalance
Net investment hedges:
Forward contractsPrepaid expenses and other current assets$606,950$57,968$606,950$46,670
Forward contractOther current liabilities$106,800$206$106,800$3,064
Foreign currency debt Long-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 Components
(in thousands)2023202220232022
Three Months Ended September 30,
Net investment hedges:
Forward contracts$19,217 $81,454 $3,158 $7,965 
Foreign currency debt 20,300 43,890   
Total$39,517 $125,344 $3,158 $7,965 
Gain Recognized in AOCL before ReclassificationsGain Recognized in Interest Expense for Excluded Components
(in thousands)2023202220232022
Nine Months Ended September 30,
Net investment hedges:
Forward contracts$4,681 $167,834 $9,475 $23,095 
Foreign currency debt 9,100 105,840   
Total$13,781 $273,674 $9,475 $23,095 
Fair Value of Financial Instruments
As of September 30, 2023 the fair value of our senior unsecured notes was approximately $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, 2023, we were in compliance with all such covenants.
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As of September 30, 2023, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $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 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, 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, 2023, we have recognized certain assets and liabilities amounting to $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. 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 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
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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 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,
(in thousands)2023202220232022
Net sales:
Automotive$3,626,943 $3,490,462 $10,787,769 $10,233,577 
Industrial2,197,659 2,184,812 6,716,957 6,338,746 
Total net sales$5,824,602 $5,675,274 $17,504,726 $16,572,323 
Segment profit:
Automotive$322,004 $309,349 $915,771 $896,475 
Industrial282,807 242,505 828,166 656,330 
Total segment profit604,811 551,854 1,743,937 1,552,805 
Interest expense, net(15,827)(18,220)(49,146)(58,318)
Intangible asset amortization(33,667)(39,416)(113,414)(118,740)
Corporate expense(90,257)(72,820)(257,822)(187,883)
Other unallocated (loss) income, net (1) (3,462) 47,355 
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, 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 
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(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 primarily reflects costs associated with the January 3, 2022 acquisition of Kaman Distribution Group.
Beginning in 2023, certain functions, including cybersecurity and the management of our product liability litigation, were transferred to corporate to be streamlined and centrally managed. These costs totaled $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 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 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 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,
(in thousands)2023202220232022
North America:
Automotive$2,315,733 $2,333,390 $6,865,819 $6,766,271 
Industrial2,066,284 2,064,569 6,325,746 5,996,299 
Total North America $4,382,017 $4,397,959 $13,191,565 $12,762,570 
Australasia:
Automotive$411,422 $404,708 $1,226,037 $1,182,557 
Industrial131,375 120,243 391,211 342,447 
Total Australasia$542,797 $524,951 $1,617,248 $1,525,004 
Europe – Automotive$899,788 $752,364 $2,695,913 $2,284,749 
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-year term, 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 September 30, 2023 and December 31, 2022. The amount of receivables pledged as collateral as of September 30, 2023 and December 31, 2022 is approximately $1.3 billion and $1.1 billion, respectively.
The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement for the:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2023202220232022
Receivables sold to the financial institution and derecognized$2,206,769 $2,281,934 $6,511,568 $6,760,652 
Cash collected on sold receivables$2,206,755 $2,281,926 $6,511,559 $6,560,655 
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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 $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 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 September 30, 2023 and December 31, 2022 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,
(in thousands)2023202220232022
Service cost$1,504 $2,532 $4,501 $7,734 
Interest cost26,141 18,804 78,394 56,520 
Expected return on plan assets(41,270)(37,569)(123,773)(112,887)
Amortization of prior service cost173 172 519 516 
Amortization of actuarial loss2,340 9,264 7,021 27,818 
Net periodic benefit income$(11,112)$(6,797)$(33,338)$(20,299)
Service cost is recorded in selling, administrative and other expenses in the Condensed Consolidated Statements of Income 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 for approximately $232 million and $1.6 billion, net of cash acquired, during the nine months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023, we recognized approximately $290 million and $38 million of revenue, net of store closures, related to our current year Automotive and Industrial acquisitions, respectively. We recorded approximately $172 million of goodwill and other intangible assets associated with these acquisitions. Other intangible assets acquired of $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. The results of operations for acquired businesses are included in our Condensed Consolidated Statements of 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, net of cash acquired of approximately $30 million. KDG, which is headquartered in Bloomfield, Connecticut, is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to maintenance, repair, and operation and original equipment manufacturer customers.
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6. Accumulated Other Comprehensive Loss
The following tables present the changes in AOCL by component for the nine months ended September 30:
 Changes in Accumulated Other
Comprehensive Loss by Component
(in thousands)Pension and Other Post-Retirement BenefitsCash Flow HedgesForeign Currency TranslationTotal
Beginning balance, January 1, 2023$(506,610)$(2,572)$(523,360)$(1,032,542)
Other comprehensive income (loss) before reclassifications 2,765 (63,027)(60,262)
Amounts reclassified from accumulated other comprehensive loss5,735 (193) 5,542 
Other comprehensive income (loss), net of income taxes5,735 2,572 (63,027)(54,720)
Ending balance, September 30, 2023$(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, 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. 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 2,309 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 September 30, 2023, which represented our best estimate of the liability within our calculated range of $199 million to $283 million, discounted using a discount rate of 4.59%. The amount accrued for pending and future claims was $220 million as of December 31, 2022, which represented our best estimate of the 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 $285 million as of September 30, 2023 and December 31, 2022, respectively. There have been no significant developments to the information presented in our 2022 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.
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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 Statements and accompanying notes contained herein and with the audited 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, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of results for the year ended December 31, 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 and the conflict in the Gaza strip; volatility in oil prices; significant cost increases, such as rising fuel and freight expenses; public health 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 2022 Annual Report on Form 10-K 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.
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 10,000 locations.
Our Automotive Parts Group ("Automotive") operates in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand, and accounted for 62% of total revenues for the nine months ended September 30, 2023. Our Industrial Parts Group ("Industrial") operates in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore, and accounted for 38% of our total revenues for the nine months ended September 30, 2023.
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Key Performance Indicators
We consider a variety of performance and financial measures in assessing our business, and the key performance indicators used to measure our results are Comparable Sales, Gross Profit and Gross 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 our Annual Report on Form 10-K for the year ended December 31, 2022.
Results of Operations
Our 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 results for the nine months ended September 30, 2022 include costs of $47 million resulting from a gain on the June 2022 sale of real estate and KDG acquisition costs incurred throughout 2022.
Our results of operations are summarized below for the three months ended September 30, 2023 and 2022.
 Three Months Ended September 30,
20232022
(in thousands)$% 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

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

Net Sales
Our net sales for the three months ended September 30, 2023 increased 2.6% compared to the same period of the prior year. The increase in sales is attributable to a 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 2.0% benefit from acquisitions, partially offset by a net unfavorable impact of foreign currency and other of 1.0%.
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, 2023, an increase of 5.4%, compared to the same period in the prior year. The increase for the nine months ended September 30, 2023 consisted of a 3.7% increase in comparable sales and a 2.8% benefit from acquisitions, offset by a 1.1% unfavorable impact of foreign currency and other. The increase in comparable sales is due to higher sales in our international businesses. The benefit from acquisitions includes the effects of our entry into new markets in Spain and Portugal. The unfavorable impact of foreign currency primarily results from the weakening of the Australian and Canadian dollars compared to the U.S. dollar throughout the period.
Industrial
Net sales for Industrial were $2.2 billion, an increase of 0.6% for the three months ended September 30, 2023 compared to the same period in 2022. The increase reflects a 0.3% increase in comparable sales and a 0.6% benefit from acquisitions, slightly offset by a 0.3% unfavorable impact of foreign currency compared 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, 2023 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.
18

Operating Expenses
SG&A expenses represent 26.6% of sales for the three months 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, 2023, an increase of 100 basis points from 25.5% for the same period in 2022. SG&A expenses as a percentage of sales for the three and nine months ended September 30, 2022 include costs of $3 million and income of $47 million, respectively, which primarily related to the net benefit of a gain on the June 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 ongoing strategic initiatives, and the timing of additional product liability expense for the three months ended September 30, 2023 due to increases in our estimated product liability claim exposure.
Segment Profit
Beginning in 2023, certain functions, including cybersecurity and the management of our product liability litigation, were transferred to corporate to be streamlined and centrally managed. These costs totaled $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 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 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 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 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 Automotive 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 continued sales growth and our focus on leveraging expenses and executing supply chain initiatives as well as other strategic initiatives in areas such as category management and pricing.
Income Taxes
Our effective 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 12.4% compared to net income of $312 million for the 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 the 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 $317 million for the same period 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 the prior year. On a per share diluted basis, net income was $7.08, an increase of 8.4% compared to $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

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, 2023, adjusted EBITDA was $1.6 billion, an increase of 8.5% from $1.5 billion for the same nine month period in the prior 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 continued execution of our strategic pricing and other initiatives, as discussed more fully in the commentary above.
Non-GAAP Financial Measures
Adjusted net income, adjusted diluted EPS, adjusted EBITDA, total segment profit, total segment margin, and adjusted EBITDA for each segment are non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
The following tables set forth reconciliations of net income and diluted EPS to adjusted net income and adjusted diluted EPS, respectively, as well as net income to adjusted EBITDA, in each case, to account for the impact of 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 these non-GAAP measures, when considered together with the corresponding GAAP financial measures and related reconciliations, 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 the 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 investors should, consider such non-GAAP financial measures 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 
20

The table below represents amounts per common share assuming dilution:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
GAAP diluted earnings per share$2.49 $2.20 $7.08 $6.53 
Adjustments:
Gain on sale of real estate (1) — — — (0.72)
Gain on insurance proceeds (2)— — — (0.01)
Transaction and other costs (3)— 0.02 — 0.40 
Total adjustments— 0.02 — (0.33)
Tax impact of adjustments (4)— 0.01 — 0.09 
Adjusted diluted earnings per share$2.49 $2.23 $7.08 $6.29 
Weighted average common shares outstanding – assuming dilution140,934 142,109 141,285 142,428 
(1)    Adjustment reflects a gain on the sale of real estate that had been leased to S.P. Richards.
(2)    Adjustment reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.
(3)    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 statutory income tax rates applicable in the tax jurisdictions of the 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 taxable portion of all 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 $