What changed in this filing

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Item 1. Business

2022-02-17 compared with 2021-02-19 · 133 added, 117 removed, 62 unchanged (80% of the section changed)

Genuine Parts Company, a Georgia corporation incorporated on May 7, 1928, is a leading service organization engaged in the distribution of automotive and industrial replacement parts, each described in more detail below.

In 2020, business was conducted from more than 10,000 locations throughout North America, Europe, Australia and New Zealand ("Australasia") via an offering of best in class operating and distribution efficiencies, industry leading coverage of consumable/replacement parts, outstanding just-in-time service and enhanced technology solutions.

As used in this report, the “Company” refers to Genuine Parts Company and its subsidiaries, except as otherwise indicated by the context;

Genuine Parts Company, “GPC”, a Georgia corporation incorporated on May 7, 1928, is a leading service organization engaged in the distribution of automotive and industrial replacement parts, each described in more detail below.

In 2021, business was conducted from more than 10,300 locations throughout North America, Europe, Australia and New Zealand ("Australasia") through an offering of best in class operating and distribution efficiencies, industry leading coverage of consumable/replacement parts, outstanding just-in-time service and enhanced technology solutions.

As used in this report, the “Company” refers to GPC and its subsidiaries, except as otherwise indicated by the context;

and the terms “automotive parts” and “industrial parts” refer to replacement parts in each respective category.

For financial information regarding segments as well as our geographic areas of operation, refer to the segment data footnote in the Notes to Consolidated Financial Statements.

The Company’s website can be found at www.genpt.com.

The Company makes available, free of charge through its website, access to the Company’s Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other reports, and any amendments to these documents, as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”).

Additionally, our corporate governance guidelines, codes of conduct and ethics, and charters of the Audit Committee and the Compensation, Nominating and Governance Committee of our Board of Directors, as well as information regarding our procedure for shareholders and other interested parties to communicate with our Board of Directors, are available on our website.

The Company makes available, free of charge through its website, access to the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, any amendments to these documents, and other reports.

These documents and reports are available under the Investor Relations section of the Company’s website as soon as reasonably practicable after such material is filed with or furnished to the Securities and Exchange Commission (“SEC”).

Additionally, our corporate governance guidelines, codes of conduct and ethics, charters of the Audit Committee and the Compensation, Nominating and Governance Committee of our Board of Directors, and information regarding our procedure for shareholders and other interested parties to communicate with our Board of Directors, are available also on our website.

In Part III of this Form 10-K, we incorporate certain information by reference to our proxy statement for our 2022 annual meeting of shareholders.

We expect to file that proxy statement with the SEC on or about March 2, 2021, and we will make it available online at the same time at http://www.proxydocs.com/gpc.

We expect to file the proxy statement with the SEC on or about March 1, 2022, and it will be available online at the same time at http://www.proxydocs.com/gpc.

Please refer to the proxy statement for the information incorporated by reference into Part III of this Form 10-K when it is available.

BUSINESS PRODUCTS GROUP

We previously reported the results of our Business Products Group as a segment.

The Business Products Group was engaged in the wholesale distribution of a broad line of office and other business-related products through a diverse customer base of resellers for use in businesses, schools, offices, and other institutions.

Business products fall into the general categories of office furniture, technology products, general office, school supplies, cleaning, janitorial and break room supplies, safety and security items, healthcare products and disposable food service products.

As further described in the acquisitions, divestitures and discontinued operations footnote in the Notes to Consolidated Financial Statements, effective June 30, 2020, the Company completed the divestiture of its Business Products Group by selling Supply Source Enterprises, Inc.

("SSE") and S.P.

Richards Company ("SPR") in separate transactions.

The results of operations, financial position and cash flows for the Business Products Group are reported as discontinued operations for all periods presented.

The Company maintains an immaterial investment in SPR, which is included within other assets on the consolidated balance sheet.

As a result of the reclassification of the Business Products Group business to discontinued operations, we now have two segments:

the Automotive Parts Group and the Industrial Parts Group.

Our description and discussion within this "Item 1.

Business" reflect the continuing operations, unless otherwise noted.

Our segments are further detailed in the segment data footnote in the Notes to Consolidated Financial Statements.

OUR PURPOSE & STRATEGY

As a global service organization engaged in the distribution of automotive and industrial replacement parts...we keep the world moving!

This is our purpose and foundation for how we do business.

At GPC, our mission is to be a world-class service organization and the employer of choice, supplier of choice, valued customer of choice and investment of choice.

Additionally, we strive to be a respected business community member and a good corporate citizen.

In order to execute this mission, the Company aligns its resources with strategic areas of focus for its streamlined operations.

Specifically, the Company focuses on its market-leading automotive and industrial businesses in North America, Europe and Australasia to deliver profitable growth, operational efficiencies and strong cash flow.

We have strategic initiatives designed to build on our current competitive advantages.

We believe our primary competitive advantages are our:

(1) global presence and brand strength;

(2) best-in-class operating and distribution efficiencies;

and (3) enhanced technology solutions.

Our strategic financial objectives are intended to complement our mission and drive value for all our stakeholders.

These financial objectives include:

(1) top line revenue growth in excess of market growth;

(2) improved operating margin;

(3) a strong balance sheet and cash flows;

and (4) effective capital allocation.

Our strategy is designed to position the Company for long-term growth and enhance shareholder value.

AUTOMOTIVE PARTS GROUP

The Automotive Parts Group distributes automotive parts and accessory items in North America, Europe and Australasia.

The Automotive Parts Group offers complete inventory, cataloging, marketing, training and other programs to the automotive aftermarket in each of these regions to distinguish itself from the competition.

To complement its competitiveness in the automotive aftermarket, this Group includes select investments in digital/e-commerce businesses across our operations.

During 2020, the Company’s Automotive Parts Group included National Automotive Parts Association ("NAPA") automotive parts distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”) owned and operated in the United States ("U.S.") by the Company and its U.S.

Automotive Group;

NAPA and Traction automotive parts distribution centers and auto parts stores in the U.S.

and Canada owned and operated by the Company and NAPA Canada/UAP Inc.

(“NAPA Canada/UAP”), a wholly-owned subsidiary of the Company;

auto parts stores and distribution centers in the U.S.

operated by corporations in which the Company owned either a noncontrolling or controlling interest;

auto parts stores in Canada operated by corporations in which NAPA Canada/UAP owns a 50% interest;

Repco and other automotive parts distribution centers, branches and auto parts stores in Australasia owned and operated by GPC Asia Pacific, a wholly-owned subsidiary of the Company;

automotive parts distribution centers and auto parts stores in Europe, owned and operated by Alliance Automotive Group (“AAG”), a wholly-owned subsidiary of the Company.

The Company’s automotive parts distribution centers distribute replacement parts (other than body parts) for substantially all motor vehicle makes and models in service in the U.S., including imported vehicles, hybrid and electric vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles and farm vehicles.

In addition, the Company distributes replacement parts for small engines, farm equipment, marine equipment and heavy duty equipment.

The Company’s inventories also include accessory items for such vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals who perform their own maintenance and parts installation.

The Company's automotive parts network was expanded in 2020 via the acquisition of various store groups and automotive operations in North America, Europe and Australasia.

The Automotive Parts Group is the largest global automotive parts network, distributing automotive parts, accessories and service items in North America, Europe and Australasia.

The Automotive Parts Group offers complete inventory, cataloging, marketing, training and other programs to the automotive aftermarket in each of these regions which distinguish this business from the competition.

To complement its competitiveness in the automotive aftermarket, the Automotive Parts Group includes investments in select digital/e-commerce businesses across our operations.

In North America, the Automotive Parts Group sells parts primarily under the National Automotive Parts Association ("NAPA") brand name through distribution centers and automotive parts stores (“auto parts stores” or “NAPA AUTO PARTS stores”).

In Europe, Alliance Automotive Group (“AAG”), a wholly-owned subsidiary of the

Company, is a leading distributor of vehicle parts, tools and workshop equipment with its primary operations in seven European countries.

AAG is rolling out the NAPA brand of products and currently serves its customers under a variety of banners, including Groupauto, Precisium Group, Pièces Auto, UAN, Alliance Automotive Group Germany and PartsPoint.

In Australasia, the Automotive Parts Group serves the market primarily under the Repco and NAPA brand names.

The Company’s automotive parts network was expanded in 2021 with the acquisitions of various store groups and automotive operations in North America, Europe and Australasia.

The Company’s global automotive network sells to customers in both commercial do-it-for-me (“DIFM”) and retail do-it-yourself (“DIY”) segments of the market and covers substantially all global motor vehicle models.

DIFM customers include local, regional and national repair centers, auto dealers, service stations and both private and public sector accounts.

DIY customers are primarily served over-the-counter at our global stores or digitally.

DIFM and DIY customers account for approximately 80% and 20% of the Automotive Parts Group’s total sales, respectively.

Distribution System .

In 2020, the Company's U.S.

Automotive Group operated 52 domestic NAPA automotive parts distribution centers located in 37 states and approximately 1,190 domestic company-owned NAPA AUTO PARTS stores located in 46 states.

Automotive Group is supported by several operations that are integral to the NAPA supply chain.

In addition, this Group operates two TW Distribution heavy duty parts distribution centers which serve 22 company-owned Traction Heavy Duty parts stores located in eight states.

At December 31, 2020, the Company had either a noncontrolling, controlling (less than 100% owned) or other interest in seven corporations, which operated approximately 268 auto parts stores in 12 states.

The Company’s domestic automotive operations have access to approximately 565,000 different parts and related supply items.

The following table details the breakdown of our automotive distribution network including our distribution centers, company-owned and independently-owned automotive parts stores by geographic region as of December 31, 2021.

North America Europe Australasia Total

Distribution centers 77 72 13 162

Company-owned stores 1,535 675 517 2,727

Independently-owned stores 5,119 1,648 — 6,767

Total locations 6,731 2,395 530 9,656

The mix of company-owned stores versus independently-owned stores in a given market varies based on several factors including our overall market strategy, the ability to access desirable local retail space, the complexity, profitability and expected ultimate size of the market and our ability to provide operational support within a geographic region.

In our Australasian operations, the Company goes to market with a company-owned store model.

Independently-owned stores purchase inventory from company-operated distribution centers.

These independently-owned stores are responsible for operating and managing their business, including operating costs and capital expenditures.

The Company does not receive a royalty or franchise fee from independently-owned stores.

The Company’s 162 automotive parts distribution centers serve both company-owned and independently-owned stores located throughout the geographic regions in which we operate.

Both types of automotive parts stores, in turn, sell to a wide variety of customers in the automotive aftermarket.

The Company’s automotive operations have access to more than 650,000 different parts and related supply items.

These items are purchased from hundreds of different suppliers, with approximately 47% of 2021 automotive parts inventories purchased from 10 major suppliers.

Since 1931, the Company's domestic operations have had return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.

The Company’s domestic distribution centers serve the company-owned NAPA AUTO PARTS stores and approximately 4,700 independently-owned NAPA AUTO PARTS stores located throughout the U.S.

NAPA AUTO PARTS stores, in turn, sell to a wide variety of customers in the automotive aftermarket.

Collectively, sales to these independent automotive parts stores account for approximately 60% of the Company’s total U.S.

Automotive sales and 22% of the Company’s total sales.

NAPA Canada/UAP, founded in 1926, is a leader in the distribution and marketing of replacement parts and accessories for automobiles and trucks and is also a significant supplier to the mining and forestry industries in Canada.

NAPA Canada/UAP operates a network of eight NAPA automotive parts distribution centers, four heavy duty parts distribution centers, one fabrication/remanufacturing facility and one Altrom distribution center supplying 573 NAPA stores, 122 Traction wholesalers and 24 Altrom branches.

The NAPA stores and Traction wholesalers in Canada include 198 company-owned stores, 13 joint ventures and 21 progressive owners in which NAPA Canada/UAP owns a 50% interest and 463 independently owned stores.

NAPA and Traction operations supply bannered installers and independent installers in all provinces of Canada, as well as networks of service stations and repair shops operating under the banners of national accounts.

NAPA Canada/UAP is a licensee of the NAPA ® name in Canada.

In Australia and New Zealand, GPC Asia Pacific, originally established in 1922, is a leading distributor of automotive replacement parts and accessories.

GPC Asia Pacific operates 12 distribution centers, 406 auto parts stores under the Repco banner, 112 auto parts stores under NAPA, Ashdown Ingram and other banners, and 18 locations associated with AMX/McLeod.

AAG, founded in 1989, is a leading European distributor of vehicle parts, tools, and workshop equipment with its primary operations in six countries in Europe.

In France, AAG operates 17 distribution centers and serves 1,083 stores, of which 253 are company-owned, under the banners GROUPAUTO France, Precisium Group, Partner's, and GEF Auto.

In the United Kingdom ("U.K."), AAG operates 34 distribution centers and serves 818 stores, of which 220 are company-owned, under the banners GROUPAUTO UK & Ireland and UAN.

In Germany, AAG operates 11 distribution centers and 59 company-owned stores under the banner Alliance Automotive Group Germany.

In Poland, AAG serves 210 affiliated outlets under the banner GROUPAUTO Polska.

In the Netherlands and Belgium, AAG operates under the banner Alliance Automotive Group Benelux through a network of one national distribution center, 6 regional warehouses and 215 stores, of which 153 are company owned.

The Company’s automotive distribution network provides access to hundreds of thousands of different parts and related supply items.

Each item is cataloged and numbered for identification and accessibility.

Significant inventories are carried to provide for fast and frequent deliveries to customers.

The majority of orders are filled and shipped the same day they are received.

The Company’s automotive distribution network provides access to hundreds of thousands of different replacement parts (other than body parts) for substantially all motor vehicle makes and models, including hybrid and electric vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles and farm vehicles.

Each part is cataloged and numbered for identification and accessibility.

Significant inventories are carried to provide for fast and frequent deliveries to customers whose orders are often filled and shipped the same day they are received.

The Company does not manufacture any of the products it distributes.

The majority of products are distributed in North America under the NAPA ® name, a mark licensed to the Company by NAPA, which is important to the sales and marketing of these products.

Traction sales also include products distributed under the HD Plus name, a proprietary line of automotive parts for the heavy duty truck market.

The majority of products distributed in North America are under the NAPA name, a mark licensed to the Company by NAPA, which is important to the sales and marketing of these products.

In Australasia and Europe, products are distributed under several brand names, including many of the national brands, as well as the NAPA name.

In addition, the Company distributes replacement parts for small engines, farm equipment, marine equipment and heavy duty equipment.

The Company’s inventories also include accessory items for vehicles and equipment, and supply items used by a wide variety of customers in the automotive aftermarket, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, and individuals who perform their own maintenance and parts installation.

Traction, the Company's heavy duty parts business in North America sells products distributed under the HD Plus name, a proprietary line of automotive parts for heavy duty truck market.

Service to NAPA AUTO PARTS Stores .

The Company believes that the quality and the range of services provided to its North American automotive parts customers constitute a significant advantage for its automotive parts distribution system.

Such services include fast and frequent delivery, parts cataloging (including the use of electronic NAPA AUTO PARTS catalogs) and stock adjustment through a continuing parts classification system which, as initiated by the Company from time to time, allows independent retailers (“jobbers”) to return certain merchandise on a scheduled basis.

Such services include fast and frequent delivery, parts cataloging (including the use of electronic NAPA AUTO PARTS catalogs) and stock adjustments through a continuing parts classification system which, as initiated by the Company, allows independently-owned stores to return certain merchandise on a scheduled basis.

The Company offers its NAPA AUTO PARTS store customers various management aids, marketing aids and service on topics such as inventory control, cost analysis, accounting procedures, group insurance and retirement benefit plans, as well as marketing conferences and seminars, sales and advertising manuals and training programs.

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This system, which undergoes continuous analytical review, is an integral part of the Company’s inventory control procedures and comprises an important feature of the inventory management services that the Company makes available to its NAPA AUTO PARTS store customers.

The Company's North American operations have return privileges with most of its suppliers, which have protected the Company from inventory obsolescence.

Over the last 25 years, losses to the Company from obsolescence have been insignificant and the Company attributes this to the successful operation of its classification system, which involves product return privileges with most of its suppliers.

The Company is the sole member of the National Automotive Parts Association, LLC a voluntary association formed in 1925 to promote the distribution of automotive parts for its members.

NAPA, which neither buys nor sells automotive parts, functions as a trade association whose sole member in 2020 owned and operated 52 distribution centers located throughout the U.S.

NAPA develops marketing concepts and programs that may be used by its members which, at December 31, 2020, includes only the Company.

It is not involved in the chain of distribution.

NAPA, which neither buys nor sells automotive parts, functions as a trade association that develops marketing concepts and programs for its sole member.

Among the automotive products purchased by the Company from various manufacturers for distribution are certain lines designated, cataloged, advertised and promoted as “NAPA” lines.

Generally, the Company is not required to purchase any specific quantity of parts so designated and it may, and does, purchase competitive lines from the same as well as other supply sources.

Generally, the Company is not required to purchase any specific quantity of parts so designated and it may purchase competitive lines from the same as well as other supply sources.

The Company uses the federally registered trademark NAPA ® as part of the trade name of its distribution centers and parts stores.

The Company funds NAPA’s national advertising program, which is designed to increase public recognition of the NAPA name and to promote NAPA product lines.

The Company is a party, together with the former members of NAPA, to a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954.

The Company is a party to, together with the former members of NAPA, a consent decree entered by the Federal District Court in Detroit, Michigan, on May 4, 1954.

The consent decree enjoins certain practices under the federal antitrust laws, including the use of exclusive agreements with manufacturers of automotive parts, allocation or division of territories among the Company and former NAPA members, fixing of prices or terms of sale for such parts among such members, and agreements to adhere to any uniform policy in selecting parts customers or determining the number and location of, or arrangements with, auto parts customers.

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The automotive parts distribution business is highly competitive.

The Company competes with automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those that they build themselves), automobile dealers, warehouse clubs and large automotive parts retail chains.

In addition, the Company competes with the distributing outlets of parts manufacturers, oil companies, mass merchandisers (including national retail chains), and with other parts distributors and retailers, including online retailers.

The Company competes with other large automotive parts retail chains, automobile manufacturers (some of which sell replacement parts for vehicles built by other manufacturers as well as those that they build themselves), automobile dealers, and warehouse clubs.

In addition, the Company competes with the distributing outlets of parts manufacturers, mass merchandisers (including national retail chains) and other parts distributors and retailers, including online retailers.

The Automotive Parts Group competes primarily on product offering, service, brand recognition and price.

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(“Motion”), a wholly-owned subsidiary of the Company headquartered in Birmingham, Alabama, operates in North America.

Motion Asia Pacific, which was rebranded from the Inenco Group ("Inenco"), also a wholly-owned subsidiary of the Company headquartered in Sydney, Australia, operates across Australasia.

Motion distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission products, industrial automation and robotics, hose, hydraulic and pneumatic components, industrial and safety supplies and material handling products to MRO (maintenance, repair and operation) and OEM (original equipment manufacturer) customers throughout the U.S., Canada and Mexico.

In Canada, industrial parts are distributed by Motion Industries (Canada), Inc.

(“Motion Canada”).

The Mexican market is served by Motion Mexico S de RL de CV (“Motion Mexico”).

In 2020, Motion served approximately 170,000 customers in all types of industries located throughout North America, including the equipment and machinery, food and beverage, forest products, primary metals, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries;

as well as strategically targeted specialty industries such

as power generation, alternative energy, government, transportation, ports, and others.

Motion services all manufacturing and processing industries with access to a database of 10.4 million parts.

Additionally, Motion provides U.S.

government agencies access to approximately 20,500 products and replacement parts through a Government Services Administration (“GSA”) schedule.

Motion Asia Pacific, also a wholly-owned subsidiary of the Company headquartered in Sydney, Australia, operates across Australasia.

Motion distributes industrial replacement parts and related supplies such as bearings, mechanical and electrical power transmission products, industrial automation and robotics, hose, hydraulic and pneumatic components, industrial and safety supplies and material handling products to maintenance, repair and operation (“MRO”) and original equipment manufacturer (“OEM”) customers throughout the U.S., Canada and Mexico.

In 2021, Motion served more than 170,000 OEM and MRO customers in all types of industries located throughout North America and Australasia, including equipment and machinery, food and beverage, forest products, primary metals, pulp and paper, mining, automotive, oil and gas, petrochemical and pharmaceutical industries;

well as strategically targeted specialty industries such as power generation, alternative energy, government, transportation, ports and others.

Motion services all manufacturing and processing industries with access to a database of over 12 million parts.

The Industrial Parts Group provides customers with supply chain efficiencies achieved through the Company’s on-site solutions offering.

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Motion also provides a wide range of services and repairs such as:

gearbox and fluid power assembly and repair, process pump assembly and repair, hydraulic drive shaft repair, electrical panel assembly and repair, hose and gasket manufacture and assembly, as well as many other value-added services.

A highly developed supply chain with vendor partnerships and connectivity are enhanced by Motion’s leading e-business capabilities, such as MiSupplierConnect, which provides integration between the Company’s information technology network and suppliers’ systems, creating numerous benefits for both the supplier and customer.

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Distribution System .

In North America, the Industrial Parts Group stocks and distributes more than 155,000 different items purchased from more than 750 different suppliers.

The following table details the breakdown of industrial parts distribution centers, branches and service centers by geographic region as of December 31, 2021:

North America Australasia Total

Distribution centers 15 9 24

Branches 463 149 612

Service centers 55 1 56

Total locations 533 159 692

The Company’s 24 industrial parts distribution centers serve the branches and services centers located throughout the geographic regions in which we operate.

The branches and service centers, in turn, sell to MRO and OEM customers in all types of industries across North America and Australasia.

In North America, the Industrial Parts Group stocks or distributes more than 12 million different items purchased from more than 45,000 different suppliers.

Its service centers provide hydraulic, hose and mechanical repairs for customers.

Approximately 50% of total industrial product purchases in 2020 were made from 11 major suppliers.

Sales are generated from the Industrial Parts Group’s facilities located in 49 states, Puerto Rico and nine provinces in Canada and Mexico.

Approximately 50% of total industrial product purchases in 2021 were made from our top 50 strategic suppliers.

Sales are generated from the Industrial Parts Group’s facilities located in 49 U.S.

states, Puerto Rico and nine provinces in Canada and Mexico.

In Australasia, the Industrial Parts Group operated a network of distribution centers and branches across Australia, New Zealand, Indonesia and Singapore as of December 31, 2021.

Additionally, the Company’s industrial parts network was expanded in 2022 with the acquisition of Kaman Distribution Group ("KDG").

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 MRO and OEM customers.

KDG has approximately 220 locations across the United States and Puerto Rico.

Most branches have warehouse facilities that stock significant amounts of inventory representative of the products used by customers in the respective market areas served.

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Motion also offers systems and automation products that support sophisticated motion control and process automation for full systems integration of plant equipment.

The nature of Motion's business demands the maintenance of adequate inventories and the ability to promptly meet demanding delivery requirements.

The nature of Motion's business demands the maintenance of adequate inventories and the ability to promptly meet critical delivery requirements.

Virtually all of the products distributed are installed by the customer or used in plant and facility maintenance activities.

Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of receipt of order.

Most orders are filled immediately from existing stock and deliveries are normally made within 24 hours of order receipt.

The majority of all sales are on open account.

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Risk Factors — We face substantial competition in the industries in which we do business.”

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

The Company is committed to the development of sustainable and efficient operations and business practices that enhance and protect our people, our communities and our planet.

Our goal is to generate above-market returns while aligning our business practices to support the interests of our stakeholders as we strive to be the employer of choice, the supplier of choice, a valued customer of choice and the investment of choice.

Additionally, we strive to be a respected business community member and a good corporate citizen.

Our process of defining sustainability priorities focuses on the simultaneous improvement of the environmental, social and financial position of the Company, and our strong leadership and governance practices that strive to integrate sustainability into the Company’s business strategy and corporate culture.

The Compensation, Nominating, and Governance Committee of the Board of Directors oversees our sustainability initiatives which aims to deliver long-term value for our shareholders and all our stakeholders.

We seek to promote a diverse, equitable and inclusive workplace and to ensure the health, safety and well-being of all employees.

In response to the COVID-19 pandemic, we prioritized the health and safety of our employees while also contributing to the needs of the community through mask donations and many other initiatives.

The Company emphasizes giving back and uplifting the communities in which we operate through partnerships and volunteer efforts.

Refer to the “Human Capital Management” section below for further information on our human capital management initiatives.

The Company is committed to reducing its environmental footprint and positively impacting the planet through the implementation of sustainable initiatives throughout our value chain.

We have expanded the use of LED lighting retrofits and smart HVAC systems in our facilities and have continued to implement and monitor fleet management practices and policies to minimize our energy usage and carbon emissions.

Our recycling efforts divert thousands of tons of waste from landfills annually.

The Company is continuously incorporating environmental stewardship in its practices and discovering opportunities to develop more efficient operations.

Additional information regarding our sustainability efforts and future initiatives can be found in our 2021 Sustainability Report and the Sustainability section of our website at www.genpt.com.

HUMAN CAPITAL MANAGEMENT

The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent.

To support these objectives, the Company’s human resources programs are designed to CONNECT prospective and current talent to opportunities at the Company, ENGAGE current employees through an inclusive and diverse culture with an emphasis internally and throughout the community, and help employees to GROW for future opportunities within the organization.

To support these objectives, our human resources programs are designed to connect prospective and current talent to opportunities at the Company, engage current employees through an inclusive and diverse culture, and develop employees to grow for future opportunities within the organization.

Employee Retention and Professional Development

As of December 31, 2021, the Company employed approximately 52,000 people worldwide and operated within 15 countries.

We take pride in our employees and are committed to helping our employees improve their physical, emotional and financial well-being.

Our well-being programs include an online platform that offers an interactive way to accomplish personal and financial goals and a rewards platform for completing Company sponsored competitions and well-being activities.

The Company periodically conducts a global Engagement Survey ("the Engagement Survey") as a means of measuring employee engagement and satisfaction, as well as a tool for improving our human capital strategies.

Our management reviews the results and based on the responses we have built action plans to focus on areas of improvement.

We are pleased to report

that the 2020 Engagement Survey results were overall favorable and have shown that our employees are proud to work for the Company.

The results of the 2020 Engagement Survey and future surveys help us to continuously improve our human capital strategies and find ways to foster engagement and growth for our employees.

In addition, to empower employees to continually enhance their skills and reach their maximum potential, we provide a range of development programs, resources, and opportunities to help them be successful.

We take pride in our employees and are committed to helping them improve their physical, emotional, financial and social well-being.

Our well-being programs include an online platform that offers an interactive way to accomplish personal and financial goals and a rewards platform to reward employees for completing Company sponsored competitions and well-being activities.

The Company periodically conducts a global engagement survey as a means of measuring employee engagement and satisfaction, as well as a tool for improving our human capital management strategies.

Our leadership team reviews the survey results and based on the responses, action plans are developed to focus on areas of opportunity.

We are pleased to report that our most recent engagement survey results were favorable overall and have shown that our employees are proud to work for the Company.

The results of the engagement surveys we do help us to continuously improve our human capital strategies and find ways to foster engagement and growth for our employees.

In addition, to empower employees to continually enhance their skills and reach their maximum potential, we provide a range of development programs, resources, and opportunities.

Many are facilitated locally by each business with core leadership development at the Corporate level.

One of our more significant programs is focused on high potential employees from all businesses globally.

This program is a combination of in-person and virtual coursework and training with the intent to become fully immersed in the operations of our business and developing strategies and improvements cross-functionally.

The Company also offers various internship and rotational programs.

Our internship and rotational programs allow employees to see different operations of our business while also building strong relationships throughout the Company.

Additionally, we offer various on-demand and live training courses to help our employees achieve their professional and personal goals.

We believe these programs demonstrate the Company’s ongoing commitment of developing our future leaders.

Diversity and Inclusion

Our culture is strengthened by our core values, which includes a steadfast commitment to diversity and inclusion.

As part of our investment in our people, we make diversity and inclusion a priority.

Our goal is to create a culture where we value, respect, and provide fair treatment and equal opportunities for all employees.

In addition, the Company has created a Diversity and Inclusion Committee, led by senior leadership and representatives from each business unit to ensure accountabilities exist to advance new initiatives and causes directed at leveling the playing field for all concerned.

Our commitment includes supporting organizations that advance the interests of impacted individuals as well as supporting our communities in need.

In the year ended December 31, 2020, our senior leaders also participated in training and discussions around the creation of an inclusive workplace.

Employees at all levels across the organization are also participating in trainings to gain a better understanding of unconscious bias and its impact on the business.

One of our more significant programs is focused on high potential employees from all global businesses units.

This program is a combination of in-person and virtual

coursework and training with the intent that participants become fully immersed in the operations of our business and develop strategies and improvements cross-functionally.

The Company also offers various internship and rotational programs that allow employees to see different operations of our business while also building strong relationships throughout the Company.

Other development opportunities include on-demand and live training courses to help our employees achieve their professional and personal goals.

We believe these programs demonstrate the Company’s ongoing commitment of developing our future leaders as well the addition of resources that specifically focus on the creation and implementation of development programs globally.

Diversity, Equity and Inclusion

Our culture is strengthened by our core values, which includes a steadfast commitment to diversity, equity and inclusion.

As part of our investment in our people, we make diversity, equity and inclusion a top priority.

Our goal is to create an inclusive and welcoming culture where we value, respect, and provide equal opportunities for all employees.

In furtherance of these goals, we created a Diversity, Equity, and Inclusion Council, led by senior leadership and representatives from each business unit to ensure accountabilities exist to advance new initiatives.

Some initiatives include, providing scholarships with an emphasis for students who attend Historically Black Colleges and Universities (HBCU's) and collaboration with organizations that support woman such as Women in Technology and Woman in Auto Care.

Our commitment also includes supporting organizations that advance the interests of disadvantaged individuals and communities in need.

As part of our commitment, we are now a member of the Georgia Minority Supplier Diversity Council (GMSDC) and the Georgia Hispanic Chamber of Commerce (GHCC).

Additionally, we have increased our support for the United Way's African American Partnership and Young Professional Leaders programs.

Our efforts are also directed internally where we encourage the exchange of ideas, actively listen to employee dialogue, provide appropriate training, and ensure that the interests of all our employees are supported and advanced.

Overall, the Company seeks to create an environment where there is a sense of belonging and all voices are valued.

Employees will soon be supported through four (4) initial Business Resource Groups (BRG's)-African American;

and Women, which will be established during the first quarter of the year.

For further engagement, many of our employees can participate in the McKinsey Connected Leaders Academy.

In addition, employees at all levels across the organization participated in training to gain a better understanding of unconscious bias and its impact on the business.

Overall, the Company seeks to create an environment where there is a sense of belonging and all voices are heard and valued.

Please refer to the Company's 2021 Sustainability Report and Human Rights Policy, which can be found on the Company's investor relations website, for further information on human capital management.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business