My previous investment thought on Genuine Parts Company (NYSE: GPC ) was a hold rating because I was not able to gain confidence in how the near term will play out, especially with automotiveI focus on long-term investments while incorporating short-term shorts to uncover alpha opportunities. My investment approach revolves around bottom-up analysis, delving into the fundamental strengths and weaknesses of individual companies. My investment duration is the medium to long-term. Ultimately, I aim to identify ...

I am an avid investor with a major focus on small cap companies with experience in investing in US, Canadian, and European markets. My investment philosophy to generating great returns on the stock market revolves around identifying mispriced securities by understanding the drivers behind a company's financials, and ultimately, most often revealed by a DCF model valuation. This methodology doesn't limit an investor into rigid traditional value, dividend, or growth investing, but rather accounts for all of a ...

Core Insights - Genuine Parts Company (GPC) shares increased approximately 2% following the release of third-quarter results, which showed revenue surpassing analyst expectations, although earnings slightly fell short [1] Financial Performance - The company reported adjusted earnings of $1.98 per share, slightly below the consensus estimate of $2.01 [1] - Total revenue reached $6.26 billion, exceeding expectations of $6.12 billion and reflecting a 4.9% increase compared to the same quarter last year [1] Segment Performance - Sales in the Automotive Parts Group rose 5% to $4.0 billion, driven by a 1.6% increase in comparable sales, a 2.3% contribution from acquisitions, and a 1.1% positive impact from foreign currency [2] - The Industrial Parts Group experienced a 4.6% growth, reaching $2.3 billion [2] Future Outlook - For the full year 2025, the company raised its total sales growth forecast to 3–4% from the previous range of 1–3%, while narrowing its adjusted EPS outlook to $7.50–$7.75 from $7.50–$8.00 [2] Strategic Focus - Management emphasized a commitment to disciplined cost management and strategic expansion in key markets [3]

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[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity as of September 30, 2025, and December 31, 2024 | Metric | Sep 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total Assets | $20,694,868 | $19,282,705 | $1,412,163 | 7.3% | | Total Current Assets | $10,666,957 | $9,852,584 | $814,373 | 8.3% | | Trade accounts receivable, net | $2,639,775 | $2,182,856 | $456,919 | 20.9% | | Merchandise inventories, net | $5,873,796 | $5,514,427 | $359,369 | 6.5% | | Total Liabilities | $15,889,741 | $14,930,554 | $959,187 | 6.4% | | Short-term borrowings | $910,752 | $41,705 | $869,047 | 2083.8% | | Total Equity | $4,805,127 | $4,351,851 | $453,276 | 10.4% | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details the company's revenues, expenses, and net income for the three and nine months ended September 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | % Change (YoY) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | % Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Net sales | $6,260,232 | $5,970,198 | 4.9% | $18,290,726 | $17,716,396 | 3.2% | | Gross profit | $2,341,402 | $2,198,441 | 6.5% | $6,839,474 | $6,453,399 | 6.0% | | Total operating expenses | $2,007,109 | $1,876,578 | 7.0% | $5,840,398 | $5,413,464 | 7.9% | | Interest expense, net | $40,342 | $27,818 | 45.0% | $117,769 | $67,429 | 74.7% | | Income before income taxes | $291,693 | $297,593 | (2.0)% | $881,887 | $1,008,975 | (12.6)% | | Net income | $226,171 | $226,582 | (0.2)% | $675,443 | $771,020 | (12.4)% | | Basic earnings per share | $1.63 | $1.63 | 0.0% | $4.86 | $5.53 | (12.2)% | | Diluted earnings per share | $1.62 | $1.62 | 0.0% | $4.85 | $5.51 | (12.0)% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income components | Metric (in thousands) | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $226,171 | $226,582 | $675,443 | $771,020 | | Foreign currency translation adjustments, net | $(14,804) | $90,001 | $171,353 | $25,359 | | Pension and postretirement benefit adjustments, net | $3,681 | $2,886 | $11,048 | $8,661 | | Other comprehensive income (loss), net | $(11,123) | $92,887 | $182,401 | $34,020 | | Comprehensive income | $215,048 | $319,469 | $857,844 | $805,040 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section outlines changes in the company's equity, including parent equity and noncontrolling interests, for the period | Metric (in thousands) | Sep 30, 2025 | Jan 1, 2025 | | :-------------------------------- | :----------- | :---------- | | Total Parent Equity | $4,786,631 | $4,337,407 | | Noncontrolling interests | $18,496 | $14,444 | | Total Equity | $4,805,127 | $4,351,851 | - **Key Changes (Nine Months Ended Sep 30, 2025 vs. Jan 1, 2025):** - Net income contributed **$675.44 million**[17](index=17&type=chunk) - Other comprehensive income, net of tax, added **$182.40 million**[17](index=17&type=chunk) - Cash dividends declared totaled **$(429.49) million**[17](index=17&type=chunk) - Shares issued from employee incentive plans resulted in a **$(16.32) million** impact[17](index=17&type=chunk) - Share-based compensation added **$37.18 million**[17](index=17&type=chunk) - Noncontrolling interest activities increased by **$4.05 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash movements from operating, investing, and financing activities for the nine months ended September 30, 2025 and 2024 | Metric (in thousands) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | % Change (YoY) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :------------- | | Net cash provided by operating activities | $510,689 | $1,096,225 | (53.4)% | | Net cash used in investing activities | $(487,951) | $(1,245,192) | (60.8)% | | Net cash provided by (used in) financing activities | $(93,717) | $124,828 | (175.1)% | | Net decrease in cash and cash equivalents | $(48,632) | $(23,889) | 103.6% | | Cash and cash equivalents at end of period | $431,359 | $1,078,118 | (59.9)% | - **Operating Activities Changes (9M 2025 vs 9M 2024):** - Net income decreased from **$771.02 million** to **$675.44 million**[21](index=21&type=chunk) - Other operating activities, including changes in operating assets and liabilities, shifted from a net inflow of **$378 thousand** to a net outflow of **$(574.09) million**[21](index=21&type=chunk) - **Financing Activities Changes (9M 2025 vs 9M 2024):** - Payments on debt increased from **$(124.34) million** to **$(567.37) million**[21](index=21&type=chunk) - Net proceeds of commercial paper were **$886.18 million** in 2025, compared to **$0** in 2024[21](index=21&type=chunk) - Purchases of stock decreased from **$(112.50) million** to **$0**[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. General](index=9&type=section&id=Note%201.%20General) This note outlines the basis of presentation, management estimates, recent accounting pronouncements, and details on prepaid expenses, derivatives, guarantees, supply chain finance, and EPS - Unaudited interim financial statements are prepared in accordance with Form 10-Q, relying on management estimates for inventory, bad debts, credit losses, sales returns, and volume incentives[23](index=23&type=chunk)[24](index=24&type=chunk) - **Recent Accounting Pronouncements:** - ASU 2023-09 (Income Taxes): Effective for 2025 Annual Report, requires specific categories in rate reconciliation and disaggregated income tax expense[28](index=28&type=chunk)[29](index=29&type=chunk) - ASU 2024-03 (Expense Disaggregation): Effective for fiscal years beginning after Dec 15, 2026, requires disclosure of inventory purchases, employee compensation, depreciation, and amortization[28](index=28&type=chunk)[29](index=29&type=chunk) - ASU 2025-05 (Credit Losses): Effective for 2025 Annual Report, provides a practical expedient for credit loss measurement on accounts receivable[31](index=31&type=chunk)[32](index=32&type=chunk) - ASU 2025-06 (Internal-Use Software): Effective Q1 2028, revises capitalization guidance for internal-use software costs and requires disclosure as part of property, plant, and equipment[31](index=31&type=chunk)[32](index=32&type=chunk) | Category | Sep 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Prepaid expenses | $140,136 | $118,401 | | Consideration receivable from vendors | $1,086,099 | $972,842 | | Other current assets | $495,792 | $584,067 | | Total | $1,722,027 | $1,675,310 | - The company uses derivative and non-derivative instruments as risk management tools to mitigate foreign exchange rate risks, recognized at fair value (Level 2)[34](index=34&type=chunk) - Guarantees approximately **$559 million** in borrowings for independent automotive parts stores, with a non-material current expected credit loss reserve[39](index=39&type=chunk) - Outstanding payment obligations to financial institutions under supply chain finance programs were **$3.1 billion** as of September 30, 2025, down from **$3.4 billion** at December 31, 2024[42](index=42&type=chunk) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended Sep 30 | $1.62 | $1.62 | | Nine Months Ended Sep 30 | $4.85 | $5.51 | [Note 2. Segment Information](index=13&type=section&id=Note%202.%20Segment%20Information) This note provides detailed financial information for the Automotive and Industrial segments, highlighting net sales and EBITDA growth for the three and nine months ended September 30, 2025 | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | % Change | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Net sales | $3,989,788 | $3,799,789 | 5.0% | $11,566,957 | $11,100,800 | 4.2% | | Gross profit | $1,654,382 | $1,537,263 | 7.6% | $4,799,478 | $4,457,256 | 7.7% | | EBITDA | $334,704 | $316,142 | 5.9% | $958,203 | $998,687 | (4.1)% | | Gross margin | 41.5% | 40.5% | 1.0 pp | 41.5% | 40.2% | 1.3 pp | | EBITDA margin | 8.4% | 8.3% | 0.1 pp | 8.3% | 9.0% | (0.7) pp | | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | % Change | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Net sales | $2,270,444 | $2,170,409 | 4.6% | $6,723,769 | $6,615,596 | 1.6% | | Gross profit | $686,993 | $660,699 | 4.0% | $2,039,909 | $2,003,072 | 1.8% | | EBITDA | $285,015 | $267,287 | 6.6% | $851,864 | $831,234 | 2.5% | | Gross margin | 30.3% | 30.4% | (0.1) pp | 30.3% | 30.3% | 0.0 pp | | EBITDA margin | 12.6% | 12.3% | 0.3 pp | 12.7% | 12.6% | 0.1 pp | | Segment | As of Sep 30, 2025 (in thousands) | As of Sep 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Automotive | $11,791,393 | $10,668,061 | | Industrial | $3,801,627 | $3,882,297 | | Corporate | $118,599 | $758,648 | | Goodwill and other intangible assets | $4,983,249 | $4,950,172 | | Total assets | $20,694,868 | $20,259,178 | | Region | 3 Months Ended Sep 30, 2025 (in thousands) | 3 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2025 (in thousands) | 9 Months Ended Sep 30, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | North America | $4,616,329 | $4,417,222 | $13,521,797 | $13,148,303 | | Australasia | $623,343 | $592,946 | $1,762,394 | $1,669,427 | | Europe – Automotive | $1,020,560 | $960,030 | $3,006,535 | $2,898,666 | | Total net sales | $6,260,232 | $5,970,198 | $18,290,726 | $17,716,396 | [Note 3. Accounts Receivable Sales Agreement](index=16&type=section&id=Note%203.%20Accounts%20Receivable%20Sales%20Agreement) This note details the Accounts Receivable Sales Agreement, including outstanding receivables of approximately **$1.0 billion** and fees incurred by the special purpose entity - Total principal amount outstanding of receivables sold is approximately **$1.0 billion** as of September 30, 2025 and December 31, 2024[55](index=55&type=chunk) - Fees incurred by the SPE totaled **$39 million** for the nine months ended September 30, 2025, compared to **$47 million** for the same period in 2024[55](index=55&type=chunk) [Note 4. Debt](index=17&type=section&id=Note%204.%20Debt) This note outlines the company's debt structure, including its expanded revolving credit facility and commercial paper program, with **$892 million** outstanding, and compliance with covenants - Unsecured Revolving Credit Facility expanded to **$2.0 billion** (from **$1.5 billion**) and maturity extended to March 20, 2030. No outstanding borrowings as of September 30, 2025[56](index=56&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - Commercial Paper Program expanded to **$2.0 billion** (from **$1.5 billion**). **$892 million** outstanding as of September 30, 2025, with a weighted average interest rate of **4.47%**[57](index=57&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - Commercial paper borrowings were used to repay **$500 million** of 1.75% Unsecured Senior Notes due February 1, 2025[59](index=59&type=chunk)[148](index=148&type=chunk) - The company was in compliance with all financial covenants, including maximum debt to EBITDA ratio, as of September 30, 2025[60](index=60&type=chunk)[150](index=150&type=chunk) [Note 5. Employee Benefit Plans](index=17&type=section&id=Note%205.%20Employee%20Benefit%20Plans) This note details the company's pension plans, including a shift to a net periodic benefit loss and the planned termination of the U.S. qualified defined benefit pension plan, with an expected **$650 million to $750 million** charge | Metric | 3 Months Ended Sep 30, 2025 (in thousands) | 3 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2025 (in thousands) | 9 Months Ended Sep 30, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Service cost | $1,590 | $1,718 | $4,691 | $5,156 | | Interest cost | $22,951 | $25,335 | $68,711 | $76,024 | | Expected return on plan assets | $(29,245) | $(44,352) | $(87,550) | $(133,095) | | Amortization of prior service cost | $285 | $281 | $855 | $843 | | Amortization of actuarial loss | $4,618 | $3,564 | $13,859 | $10,698 | | Net periodic loss (income) | $199 | $(13,454) | $566 | $(40,374) | - Board approved termination of the frozen U.S. qualified defined benefit pension plan, effective September 30, 2024. Final settlement expected by December 31, 2025[62](index=62&type=chunk)[63](index=63&type=chunk)[145](index=145&type=chunk) - Anticipates a one-time pre-tax pension settlement charge of **$650 million to $750 million** in Q4 2025[145](index=145&type=chunk) [Note 6. Acquisitions](index=18&type=section&id=Note%206.%20Acquisitions) This note details the company's acquisition activities, including **$295 million** in spending, **$156 million** in acquired goodwill, and **$137 million** in revenue contributions for the period - Acquisition spending was **$295 million** for the nine months ended September 30, 2025, compared to **$1.1 billion** in the prior year[64](index=64&type=chunk) - For the nine months ended September 30, 2025, approximately **$156 million** in goodwill and other intangible assets were acquired, including **$73 million** in customer relationships with 20-year amortization lives[65](index=65&type=chunk) - Revenue from current year Automotive acquisitions was **$89 million** and from Industrial acquisitions was **$48 million** for the nine months ended September 30, 2025[65](index=65&type=chunk) - In the nine months ended September 30, 2024, the company acquired two of the largest independent owners of NAPA Auto Parts Stores in the U.S., Motor Parts & Equipment Corporation and Walker Automotive Supply, Inc., recognizing approximately **$100 million** of goodwill and other intangible assets[66](index=66&type=chunk) [Note 7. Accumulated Other Comprehensive Loss](index=18&type=section&id=Note%207.%20Accumulated%20Other%20Comprehensive%20Loss) This note details changes in Accumulated Other Comprehensive Loss (AOCL), which decreased to **$(1.079) billion**, driven by foreign currency translation and pension adjustments | Component | Jan 1, 2025 (in thousands) | Sep 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------------- | :------------------------ | :-------------------- | | Pension and Other Post Retirement Benefits | $(581,000) | $(569,952) | $11,048 | | Foreign Currency Translation | $(680,743) | $(509,390) | $171,353 | | Total AOCL | $(1,261,743) | $(1,079,342) | $182,401 | - **Key Drivers of Change (9M 2025):** - Other comprehensive income (loss) before reclassifications: **$171.35 million** (primarily foreign currency translation)[68](index=68&type=chunk) - Amounts reclassified from AOCL: **$11.05 million** (pension and other post-retirement benefits)[68](index=68&type=chunk) [Note 8. Commitments and Contingencies](index=19&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note addresses legal matters, primarily **3,000** asbestos-related product liability claims, with an accrued liability of **$222 million** and an insurance receivable of **$39 million** - The company is subject to various legal claims and lawsuits, with liabilities based on the best available information, and expects no material adverse effect on its business, results of operations, or financial condition[70](index=70&type=chunk) - **Asbestos-Related Product Liability:** - **3,000** pending lawsuits as of September 30, 2025[74](index=74&type=chunk)[75](index=75&type=chunk) - Accrued liability: **$222 million** (discounted at 4.16%) as of September 30, 2025, within a calculated range of **$207 million to $296 million**[74](index=74&type=chunk)[75](index=75&type=chunk) - Undiscounted liability: **$300 million** as of September 30, 2025[74](index=74&type=chunk)[75](index=75&type=chunk) - Insurance receivable: **$39 million** as of September 30, 2025[74](index=74&type=chunk)[75](index=75&type=chunk) - No environmental matters requiring disclosure under SEC Regulation S-K Item 103[76](index=76&type=chunk) [Note 9. Restructuring and Other Costs](index=20&type=section&id=Note%209.%20Restructuring%20and%20Other%20Costs) This note details the global restructuring initiative, including incurred costs and total expected costs for asset alignment and efficiency - Global restructuring initiative approved and initiated in February 2024, designed to better align assets and improve business efficiency[77](index=77&type=chunk) | Period | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Nine Months Ended Sep 30 | $167,317 | $153,825 | - Total expected costs for the global restructuring initiative are between **$400 million and $430 million** for 2024 and 2025, with substantial completion expected by the end of 2025[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, condition, and results of operations, highlighting sales growth, net income drivers, and strategic factors - **Q3 2025 Performance Highlights:** - Net sales increased **4.9%** to **$6.3 billion**[90](index=90&type=chunk)[91](index=91&type=chunk) - Gross profit margin expanded approximately **60 basis points**[90](index=90&type=chunk)[91](index=91&type=chunk) - Net income remained **flat** with the prior year period[90](index=90&type=chunk)[91](index=91&type=chunk) - Restructuring and other costs totaled **$67 million** (up from **$41 million** in prior year)[90](index=90&type=chunk)[91](index=91&type=chunk) - Global restructuring program yielded **$36 million** in benefits[90](index=90&type=chunk)[91](index=91&type=chunk) - **9M 2025 Performance Highlights:** - Net sales increased **3.2%** to **$18.29 billion**[96](index=96&type=chunk) - Net income decreased **12.4%** to **$675.44 million**[96](index=96&type=chunk) - Net income was primarily impacted by higher depreciation and interest expense from planned investments, lower pension income due to a change in investing strategy, higher SG&A expenses (salaries, healthcare, rent), and increased restructuring costs[92](index=92&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - Tariffs did not have a **material impact** on financial results for the three or nine months ended September 30, 2025[93](index=93&type=chunk) [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) This section outlines the nature of forward-looking statements and the various risks and uncertainties that could cause actual results to differ - All statements in the future tense or using words such as "expect," "likely," "outlook," "forecast," or similar expressions are considered forward-looking statements[83](index=83&type=chunk) - Actual results may differ materially due to various risks and uncertainties, including changes in general economic conditions (unemployment, inflation, geopolitical conflicts), volatility in oil prices, significant cost increases, public health emergencies, debt covenant compliance, ability to integrate acquired businesses, slowing demand, supplier arrangements, collection of receivables, regulatory changes, tax policies, exchange rates, labor market, competitive pressures, and information system disruptions[84](index=84&type=chunk) - The company undertakes no duty to update any forward-looking statements except as required by law[85](index=85&type=chunk) [Overview](index=22&type=section&id=Overview) This section provides a general overview of Genuine Parts Company, its global operations, and its business segments - Genuine Parts Company (GPC) is a global service organization founded in Atlanta, Georgia, in 1928, known for customer service, profitable growth, distribution capabilities, and strong cash flow[87](index=87&type=chunk) - As of September 30, 2025, the company conducted business in North America, Europe, and Australasia from more than **10,700** locations[88](index=88&type=chunk) - **Revenue Mix (Nine Months Ended Sep 30, 2025):** - Automotive business: **64%** of total revenues[88](index=88&type=chunk) - Industrial business: **36%** of total revenues[88](index=88&type=chunk) [Key Performance Indicators](index=22&type=section&id=Key%20Performance%20Indicators) This section identifies the key performance indicators used by management to measure and evaluate the company's financial results - Key performance indicators used to measure results include Comparable Sales, Gross Profit and Gross Margin, Selling, Administrative and Other Expenses ("SG&A"), Segment EBITDA and Segment EBITDA Margin, and Net Income and EBITDA along with their adjusted measures[89](index=89&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net sales, gross profit, expenses, and net income, for the reporting periods [Net Sales](index=24&type=section&id=Net%20Sales) This section analyzes net sales growth for the three and nine months ended September 30, 2025, attributing changes to comparable sales, acquisitions, and foreign currency - **Net Sales Growth (3 Months Ended Sep 30, 2025):** - Total increase: **4.9%**[99](index=99&type=chunk) - Comparable sales: **+2.3%**[99](index=99&type=chunk) - Acquisitions: **+1.8%**[99](index=99&type=chunk) - Favorable foreign currency and other: **+0.8%**[99](index=99&type=chunk) - **Net Sales Growth (9 Months Ended Sep 30, 2025):** - Total increase: **3.2%**[99](index=99&type=chunk) - Acquisitions: **+2.5%**[99](index=99&type=chunk) - Comparable sales: **+0.6%**[99](index=99&type=chunk) - Favorable foreign currency and other: **+0.1%**[99](index=99&type=chunk) - Automotive net sales for the three months ended September 30, 2025, were **$4.0 billion**, an increase of **5.0%** YoY, driven by acquisitions (**2.3%**), comparable sales (**1.6%**), and foreign currency (**1.1%**)[101](index=101&type=chunk) - Industrial net sales for the three months ended September 30, 2025, were **$2.3 billion**, an increase of **4.6%** YoY, reflecting a **3.7%** increase in comparable sales and **1.1%** benefit from acquisitions, partially offset by a **0.2%** unfavorable impact of foreign currency[104](index=104&type=chunk) [Gross Profit and Gross Margin](index=25&type=section&id=Gross%20Profit%20and%20Gross%20Margin) This section analyzes the increase in gross profit and expansion of gross margin, driven by strategic pricing and sourcing initiatives - **Gross Profit Increase:** - 3 months ended Sep 30, 2025: **$143 million** (**+6.5%**)[106](index=106&type=chunk) - 9 months ended Sep 30, 2025: **$386 million** (**+6.0%**)[106](index=106&type=chunk) - **Gross Margin Expansion:** - 3 months ended Sep 30, 2025: **+60 basis points** to **37.4%**[106](index=106&type=chunk) - 9 months ended Sep 30, 2025: **+100 basis points** to **37.4%**[106](index=106&type=chunk) - Increases primarily reflect the benefit of successful execution of ongoing strategic pricing and sourcing initiatives and acquisitions completed in the prior year[106](index=106&type=chunk) [Selling, Administrative and Other ("SG&A") Expenses](index=25&type=section&id=Selling%2C%20Administrative%20and%20Other%20%28%22SG%26A%22%29%20Expenses) This section analyzes the increase in SG&A expenses, driven by acquisitions, personnel costs, and rent, and its impact on sales percentage - **SG&A Expense Increase:** - 3 months ended Sep 30, 2025: **$84 million** (**+4.8%**), comprising **2.4%** from acquisitions and **2.4%** from other cost increases[107](index=107&type=chunk) - 9 months ended Sep 30, 2025: **$342 million** (**+6.9%**), comprising **4.0%** from acquisitions and **2.9%** from other cost increases[107](index=107&type=chunk) - Continued to experience higher SG&A expenses primarily due to higher salaries and wages, rising healthcare costs, and increased rent from lease renewals in a higher interest rate environment[108](index=108&type=chunk) - **SG&A as a percentage of sales:** - 3 months ended Sep 30, 2025: Remained **flat at 28.8%**[109](index=109&type=chunk) - 9 months ended Sep 30, 2025: Increased **100 basis points** to **28.9%** of sales[109](index=109&type=chunk) - Global restructuring initiatives had an estimated **$96 million** benefit to SG&A for the nine months ended September 30, 2025[108](index=108&type=chunk) [Restructuring and Other Costs](index=25&type=section&id=Restructuring%20and%20Other%20Costs) This section details the increase in restructuring and other costs, primarily due to facility closures and severance from the global restructuring plan - Incurred **$67 million** and **$167 million** of restructuring and other costs during the three months and nine months ended September 30, 2025, respectively[110](index=110&type=chunk) - Costs increased by **$26 million** compared to the prior period, reflecting costs associated with facility closures and additional severance costs[110](index=110&type=chunk) - These costs are part of the global restructuring plan approved and initiated in February 2024, which remains on track to better align assets and improve business efficiency[110](index=110&type=chunk) [Depreciation and Amortization](index=26&type=section&id=Depreciation%20and%20Amortization) This section analyzes the increase in depreciation and amortization expenses, driven by planned investments in technology and supply chain initiatives - Depreciation and amortization expenses increased **$21 million** for the three months and **$70 million** for the nine months ended September 30, 2025[111](index=111&type=chunk) - The increase is related to planned investments in technology and supply chain initiatives[111](index=111&type=chunk) [Non-Operating Expenses and Income](index=26&type=section&id=Non-Operating%20Expenses%20and%20Income) This section analyzes the increase in net non-operating expenses, primarily due to higher interest expense and decreased pension income - Net non-operating expenses for the three months ended September 30, 2025, were **$43 million**, an **$18 million** increase from the prior year period[113](index=113&type=chunk) - For the nine months ended September 30, 2025, net non-operating expenses were **$117 million**, an **$86 million** increase from the prior year period[114](index=114&type=chunk) - The increase was primarily due to a **$13 million** (3 months) and **$50 million** (9 months) increase in net interest expense from increased borrowings, and a **$13 million** (3 months) and **$40 million** (9 months) decrease in pension income due to the planned U.S. pension plan termination[113](index=113&type=chunk)[114](index=114&type=chunk) [Income Taxes](index=26&type=section&id=Income%20Taxes) This section analyzes the decrease in the effective income tax rate, influenced by restructuring costs, investments, and tax position adjustments - **Effective Income Tax Rates:** - 3 months ended Sep 30, 2025: **22.5%** (down from **23.9%** in 2024)[115](index=115&type=chunk) - 9 months ended Sep 30, 2025: **23.4%** (down from **23.6%** in 2024)[115](index=115&type=chunk) - The rate decrease is primarily due to comparative restructuring costs and expanded investments, partially offset by routine tax position adjustments[115](index=115&type=chunk) - The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, did not have a **material impact** on income tax expense and is not expected to materially impact the 2025 annual effective tax rate[116](index=116&type=chunk) [Net Income and Adjusted Net Income](index=26&type=section&id=Net%20Income%20and%20Adjusted%20Net%20Income) This section analyzes net income and adjusted net income, attributing changes to investments, pension income, personnel costs, and gross margin | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | | 3 Months Ended Sep 30 | $226,171 | $226,582 | (0.2)% | | 9 Months Ended Sep 30 | $675,443 | $771,020 | (12.4)% | | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | | 3 Months Ended Sep 30 | $275,595 | $263,013 | 4.8% | | 9 Months Ended Sep 30 | $810,455 | $915,472 | (11.5)% | | Period | 2025 | 2024 | % Change | | :-------------------------- | :--- | :--- | :------- | | 3 Months Ended Sep 30 | $1.62 | $1.62 | 0.0% | | 9 Months Ended Sep 30 | $4.85 | $5.51 | (12.0)% | | Period | 2025 | 2024 | % Change | | :-------------------------- | :--- | :--- | :------- | | 3 Months Ended Sep 30 | $1.98 | $1.88 | 5.3% | | 9 Months Ended Sep 30 | $5.82 | $6.55 | (11.1)% | - Flat/declining net income was due to planned investments (higher depreciation and interest costs), lower pension income, increased personnel and healthcare costs, and increased rent expenses, partially offset by gross margin improvement[119](index=119&type=chunk)[120](index=120&type=chunk) [Segment EBITDA](index=26&type=section&id=Segment%20EBITDA) This section analyzes EBITDA performance and margins for the Automotive and Industrial segments, highlighting growth drivers and cost pressures | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | EBITDA Margin 2025 | EBITDA Margin 2024 | | :-------------------------- | :------------------ | :------------------ | :------- | :----------------- | :----------------- | | 3 Months Ended Sep 30 | $334,704 | $316,142 | 5.9% | 8.4% | 8.3% | | 9 Months Ended Sep 30 | $958,203 | $998,687 | (4.1)% | 8.3% | 9.0% | | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | EBITDA Margin 2025 | EBITDA Margin 2024 | | :-------------------------- | :------------------ | :------------------ | :------- | :----------------- | :----------------- | | 3 Months Ended Sep 30 | $285,015 | $267,287 | 6.6% | 12.6% | 12.3% | | 9 Months Ended Sep 30 | $851,864 | $831,234 | 2.5% | 12.7% | 12.6% | - Automotive EBITDA increase (3M) driven by acquisitions, comparable sales growth in North America, Australasia, and Canada, and favorable foreign currency effects in Europe, along with improved gross margin[121](index=121&type=chunk)[122](index=122&type=chunk) - Automotive EBITDA decrease (9M) driven by persistent inflationary cost pressures from salaries and wages, healthcare expenses, rent, and freight[123](index=123&type=chunk) - Industrial EBITDA increase (3M & 9M) reflects solid sales growth and operating discipline despite a challenging macroeconomic environment, offsetting inflation in costs[124](index=124&type=chunk)[125](index=125&type=chunk) [Corporate EBITDA and Other Segment Reconciling items](index=27&type=section&id=Corporate%20EBITDA%20and%20Other%20Segment%20Reconciling%20items) This section analyzes Corporate EBITDA loss and its percentage of net sales, driven by operational streamlining and technology investments | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | % of Net Sales 2025 | % of Net Sales 2024 | | :-------------------------- | :------------------ | :------------------ | :------- | :------------------ | :------------------ | | 3 Months Ended Sep 30 | $(93,374) | $(106,686) | (12.5)% | (1.5)% | (1.8)% | | 9 Months Ended Sep 30 | $(263,131) | $(267,306) | (1.6)% | (1.4)% | (1.5)% | - The operational objective is to maintain Corporate EBITDA within a range of **1.5% to 2.0%** of net sales[128](index=128&type=chunk) - The company continues to consolidate certain back-office functions at Corporate to streamline operations and drive improvements, alongside ongoing investments in technology[127](index=127&type=chunk)[128](index=128&type=chunk) [EBITDA and Adjusted EBITDA](index=27&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) This section analyzes EBITDA and Adjusted EBITDA, highlighting drivers for increases in the three-month period and decreases in the nine-month period | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | | 3 Months Ended Sep 30 | $459,510 | $431,447 | 6.5% | | 9 Months Ended Sep 30 | $1,365,584 | $1,372,252 | (0.5)% | | Period | 2025 (in thousands) | 2024 (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :------- | | 3 Months Ended Sep 30 | $526,345 | $476,743 | 10.4% | | 9 Months Ended Sep 30 | $1,546,936 | $1,562,615 | (1.0)% | - The increases in EBITDA and adjusted EBITDA for the three months ended September 30, 2025, were driven by core sales growth, gross margin improvement (strategic pricing, sourcing initiatives, and prior-year acquisitions)[131](index=131&type=chunk) - The decreases in EBITDA and adjusted EBITDA for the nine months ended September 30, 2025, were primarily driven by lower pension income and the effects of rising costs (personnel, healthcare, rent), as well as one less sales day[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures like adjusted net income and EBITDA to reflect core operations and enhance comparability - Non-GAAP financial measures (adjusted net income, adjusted diluted EPS, adjusted EBITDA) provide meaningful supplemental information indicative of core operations[134](index=134&type=chunk) - These measures exclude items like costs related to the global restructuring initiative and acquisition/integration of independent automotive stores, which management believes are not representative of ongoing operating performance[134](index=134&type=chunk) - Reconciliations from GAAP net income and diluted EPS to adjusted measures are provided to ensure transparency[133](index=133&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) [Financial Condition](index=29&type=section&id=Financial%20Condition) This section assesses the company's financial position, including cash, working capital, and debt levels, as of September 30, 2025 - Cash and cash equivalents decreased by **$49 million** to **$431 million** as of September 30, 2025, from December 31, 2024[139](index=139&type=chunk) - Net cash provided by operating activities for the nine months ended September 30, 2025, was **$511 million**, a decrease mainly due to lower net income, accelerated tax payments, higher interest payments, and working capital changes[140](index=140&type=chunk) - Net cash used in investing activities for the nine months was **$488 million**, primarily for capital expenditures and acquisitions[140](index=140&type=chunk) - Net cash used in financing activities for the nine months was **$94 million**, comprising **$543 million** for debt repayment and **$421 million** for dividends, partially offset by **$886 million** in net proceeds from the commercial paper program[140](index=140&type=chunk) - Accounts receivable increased **$457 million** (**+20.9%**) and inventory increased **$359 million** (**+6.5%**) from December 31, 2024, driven by increased revenues and product demand[141](index=141&type=chunk) - Total debt increased **$474 million** (**+11.1%**) to **$4.8 billion** at September 30, 2025, from December 31, 2024[141](index=141&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet short-term and long-term obligations, including available cash, credit facilities, and capital deployment priorities - The company maintains strong liquidity with **$431 million** of cash and cash equivalents and **$2 billion** in undrawn capacity on its Revolving Credit Agreement[142](index=142&type=chunk) - Existing lines of credit, commercial paper program, and cash generated from operations are expected to be sufficient to fund anticipated operations for the foreseeable future[142](index=142&type=chunk) - A key supplier to the global automotive segment filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in September 2025, representing approximately **3%** of global automotive SKUs and sales. The company is assessing financial exposure and ensuring supply chain continuity[143](index=143&type=chunk)[144](index=144&type=chunk) - A one-time pre-tax pension settlement charge in the range of **$650 million to $750 million** is expected in the fourth quarter of 2025 due to the planned termination of the U.S. qualified defined benefit pension plan[145](index=145&type=chunk) - The Board of Directors approved a **3%** increase in the regular quarterly cash dividend for 2025, to an annual rate of **$4.12** per share, marking the **69th consecutive year** of increased dividends[146](index=146&type=chunk) - Key capital deployment priorities include reinvestment in businesses through capital expenditures, mergers and acquisitions, the dividend, and share repurchases[149](index=149&type=chunk) - As of September 30, 2025, the total average cost of debt was **3.93%**, and the company remains in compliance with all covenants connected with its borrowings[150](index=150&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company refers to its 2024 Annual Report on Form 10-K for detailed quantitative and qualitative disclosures about market risk, stating that its exposure to market risk has not materially changed since December 31, 2024 - For quantitative and qualitative disclosures about market risk, refer to Item 7A of Part II of the 2024 Annual Report on Form 10-K[152](index=152&type=chunk) - The company's exposure to market risk has not changed **materially** since December 31, 2024[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2025, ensuring timely and accurate reporting of required information, with no material changes in internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=30&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of September 30, 2025 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective** as of September 30, 2025[153](index=153&type=chunk)[154](index=154&type=chunk) - These controls provide **reasonable assurance** that information required to be disclosed is recorded, processed, summarized, and reported within specified time periods[153](index=153&type=chunk) [Changes in Internal Control over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section states that no material changes in internal control over financial reporting occurred during the quarter - No changes in internal control over financial reporting were identified during the quarter ended September 30, 2025, that have **materially affected**, or are reasonably likely to materially affect, internal control over financial reporting[155](index=155&type=chunk) [PART II – OTHER INFORMATION](index=32&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from the Commitments and Contingencies Footnote in the Notes to Condensed Consolidated Financial Statements (Item 1 of Part I) - Information with respect to legal proceedings is incorporated by reference from the Commitments and Contingencies Footnote in the Notes to Condensed Consolidated Financial Statements (Item 1 of Part I)[156](index=156&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section reiterates previously reported risk factors and highlights a new specific risk: the potential material impact on operations, revenue, and supply chain due to bankruptcy or credit failures of significant customers or vendors - Refers to previously reported risk factors in the 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025[157](index=157&type=chunk) - A new highlighted risk is that results of operations, revenue, and supply chain could be **materially affected** by the bankruptcy, insolvency, or other credit failures of a significant customer or vendor[158](index=158&type=chunk) - In September 2025, a key vendor for the Automotive segment filed for Chapter 11 bankruptcy, posing risks of supply chain disruptions, inability to source replacement goods at comparable costs, increased operating expenses, and negative impacts on receivables or future sales[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended September 30, 2025, the company repurchased **27,281** shares of common stock at an average price of **$136.23** per share, with approximately **7.5 million** shares remaining available for repurchase | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------------- | :----------------------------- | :--------------------------- | | July 1, 2025 through July 31, 2025 | 3,941 | $133.12 | | August 1, 2025 through August 31, 2025 | 9,734 | $131.06 | | September 1, 2025 through September 30, 2025 | 13,606 | $140.82 | | Totals | 27,281 | $136.23 | - Shares purchased consist of shares surrendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted stock and the exercise of share appreciation rights[161](index=161&type=chunk) - Approximately **7.5 million** shares remain available to be repurchased under a **15 million** share authorization announced on August 21, 2017[162](index=162&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section discloses that two officers adopted Rule 10b5-1 trading plans in September 2025, allowing for the sale of a portion of shares subject to future vesting of equity awards, net of taxes [Rule 10b5-1 Trading Plans](index=33&type=section&id=Rule%2010b5-1%20Trading%20Plans) This section details the adoption of Rule 10b5-1 trading plans by two officers for the sale of future vested equity awards - Christopher T. Galla (Sr. VP, General Counsel) and James F. Howe (President, Motion) adopted Rule 10b5-1 trading plans in September 2025[164](index=164&type=chunk) - These trading arrangements allow for the sale of a portion of shares subject to future vesting of equity awards, including performance-based restricted stock, net of shares withheld for taxes[165](index=165&type=chunk) - The volume and timing of sales are determined, in part, based on pricing triggers outlined in the trading arrangement, and the exact number of shares sold depends on vesting outcomes and tax withholdings[165](index=165&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the 10-Q report, including corporate governance documents, various agreements, certifications from the CEO and CFO, and XBRL financial data documents - Exhibits include Amended and Restated Articles of Incorporation, By-Laws, Cooperation Agreement, Form of Award Certificate, Form of Severance Agreement, Certifications pursuant to SEC Rule 13a-14(a) signed by the CEO and CFO, Certification Pursuant to 18 U.S.C. Section 1350, and various XBRL Taxonomy Extension Documents[166](index=166&type=chunk) [Signatures](index=35&type=section&id=Signatures) The report was signed on behalf of Genuine Parts Company by Bert Nappier, Executive Vice President and Chief Financial Officer, on October 21, 2025 - The report was signed by Bert Nappier, Executive Vice President and Chief Financial Officer, on behalf of Genuine Parts Company[170](index=170&type=chunk) - Date of signature: **October 21, 2025**[170](index=170&type=chunk)

Key Takeaways Genuine Parts' Q3 EPS of $1.98 missed estimates but rose from last year's $1.88.Q3 sales climbed 5% to $6.26B, fueled by comps growth, acquisitions and forex gains.Genuine Parts lifted 2025 sales guidance to 3-4%, with stronger Automotive momentum.Genuine Parts Company (GPC) reported third-quarter 2025 adjusted earnings of $1.98 per share, which missed the Zacks Consensus Estimate of $2.02. The bottom line, however, increased from the year-ago quarter’s earnings of $1.88 per share. The company ...

Genuine Parts Company (NYSE:GPC) Q3 2025 Earnings Call October 21, 2025 08:30 AM ET Company ParticipantsTim Walsh - VP of Investor RelationsBert Nappier - EVP and CFOWill Stengel - President and CEOChristian Carlino - Equity Research AssociateConference Call ParticipantsMichael Lasser - Equity Research AnalystBret Jordan - AnalystChris Dankert - Senior Equity AnalystMark Jordan - Equity AnalystGreg Melich - AnalystScot Ciccarelli - Senior Equity Research AnalystOperatorWelcome to the Genuine Parts Company t ...

Genuine Parts Company (NYSE:GPC) Q3 2025 Earnings Call October 21, 2025 08:30 AM ET Company ParticipantsTim Walsh - VP of Investor RelationsBert Nappier - EVP and CFOWill Stengel - President and CEOChristian Carlino - Equity Research AssociateConference Call ParticipantsMichael Lasser - Equity Research AnalystBret Jordan - AnalystChris Dankert - Senior Equity AnalystMark Jordan - Equity AnalystGreg Melich - AnalystScot Ciccarelli - Senior Equity Research AnalystOperatorWelcome to the Genuine Parts Company t ...

Genuine Parts Company (NYSE:GPC) Q3 2025 Earnings Call October 21, 2025 08:30 AM ET Speaker1Welcome to the Genuine Parts Company third quarter 2025 earnings conference call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. At this time, I would like to turn the conference over to Tim Walsh, Vice ...

Genuine Parts Company (NYSE:GPC) Q3 2025 Earnings Call October 21, 2025 08:30 AM ET Speaker0Welcome to the Genuine Parts Company Third Quarter twenty twenty five Earnings Conference Call. Today's call is being recorded. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. A At this time, I would like to turn the conference over to Tim Walsh, Vice President of Investor Relations.Please go ahead, sir.Speaker1Thank you, and good morning, ...