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]

Group 1 - The article does not provide any relevant content regarding the company or industry [1]

[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)

Core Insights - Genuine Parts Company (GPC) reported third-quarter 2025 adjusted earnings of $1.98 per share, missing the Zacks Consensus Estimate of $2.02, but showing an increase from $1.88 per share in the same quarter last year [1][10] - The company achieved net sales of $6.26 billion, exceeding the Zacks Consensus Estimate of $6.13 billion, and reflecting a 5% year-over-year growth driven by comparable sales, acquisitions, and favorable forex impacts [2][10] Segmental Performance - The Automotive segment's net sales reached $4 billion, a 5% increase year over year, surpassing the estimate of $3.87 billion, with comparable sales growing 1.6% and EBITDA increasing 5.9% to $335 million, resulting in an EBITDA margin of 8.4% [3] - The Industrial Parts segment reported net sales of $2.3 billion, up 4.6% year over year, exceeding the estimate of $2.24 billion, with comparable sales rising 3.7% and EBITDA growing 6.6% to $285 million, achieving a margin of 12.6% [4] Financial Performance - As of September 30, 2025, the company had cash and cash equivalents of $431 million, down from $480 million at the end of 2024, with long-term debt standing at $3.75 billion [5] 2025 Guidance - Genuine Parts raised its overall sales growth expectation for 2025 to 3-4% from the previous 1-3%, with automotive sales anticipated to grow 4-5% compared to the earlier forecast of 1.5-3.5%, and industrial sales growth expectations increased to 2-3% from 1-3% [6] - The company now projects adjusted earnings per share between $7.50 and $7.75, maintaining the operating cash flow guidance of $1.1-$1.3 billion and free cash flow projection of $700-$900 million [7] Zacks Rank & Other Key Picks - Genuine Parts currently holds a Zacks Rank 2 (Buy), with other notable stocks in the automotive sector including BRP Inc., Mobileye Global Inc., and Autoliv Inc., with BRP and Mobileye holding a Zacks Rank 1 (Strong Buy) [8]

Financial Data and Key Metrics Changes - Total GPC sales for Q3 2025 were $6.3 billion, reflecting a 5% increase year-over-year, with adjusted EBITDA up 10% and adjusted diluted earnings per share at $1.98, a 5% increase from the previous year [4][5][22] - Gross margin expanded by 60 basis points to 37.4%, driven by strategic pricing and sourcing initiatives [4][24] - SG&A as a percentage of sales remained flat at 28.8%, with absolute dollar growth of $88 million year-over-year [25][26] Business Line Data and Key Metrics Changes - Global industrial sales reached $2.3 billion, up 5% year-over-year, with comparable sales growth of approximately 4% [7][10] - The automotive segment saw a 5% increase in sales, with comparable sales growth of about 2% [10][11] - Core MRO and maintenance business, accounting for 80% of Motion sales, grew mid-single digits, while capital-intensive projects saw slight growth [9][10] Market Data and Key Metrics Changes - Growth was observed in seven out of fourteen end markets, with notable strength in iron and steel, food products, and fabricated metals [8] - European market conditions remained soft, with total sales flat in local currency and comparable sales down approximately 2% [16] - The Asia-Pacific region experienced double-digit growth, with total sales up approximately 10% and comparable sales growth of about 5% [17] Company Strategy and Development Direction - The company is focused on operational and strategic reviews to enhance differentiation in a changing landscape, with updates expected in 2026 [18][19] - Strategic acquisitions, such as the planned acquisition of Benson Auto Parts in Canada, are aimed at expanding market presence and product offerings [15][16] - The company is adapting to inflationary pressures and tariff challenges while maintaining a disciplined approach to cost management [6][22] Management's Comments on Operating Environment and Future Outlook - Management noted that end markets remain muted, particularly in Europe, with challenges including tariffs, trade uncertainties, and cautious consumer behavior [6][22] - The company is optimistic about the potential for growth in industrial opportunities, particularly with onshoring trends [8] - Guidance for 2025 was updated to reflect total GPC sales growth expectations of 3%-4%, with adjusted diluted EPS projected between $7.50 and $7.75 [29][30] Other Important Information - The company experienced a low single-digit benefit from tariffs in Q3, with a slight net benefit expected in Q4 [23][45] - Cash generated from operations for the first nine months of 2025 was approximately $510 million, with free cash flow of $160 million [26][28] - The company plans to incur restructuring expenses between $180 million and $210 million, with expected benefits of $110 million to $135 million [32][33] Q&A Session Summary Question: What accounts for the expected moderation in gross margins for Q4? - Management indicated that the moderation is primarily due to the lapping of acquisition benefits and ongoing cost pressures from tariffs [36] Question: What are the benefits of having the businesses together? - Management highlighted that the integration has led to enhanced sales effectiveness, technology investments, and supply chain efficiencies [37][38] Question: What is the same SKU inflation in U.S. NAPA? - Management noted that the inflation impact is around 2.5% for U.S. automotive and slightly stronger for Motion, with expectations for continued stability [44][45] Question: Are independent owners losing market share? - Management stated that independent owners are managing inventory levels effectively and are not losing market share, with strong partnerships in place [67][72] Question: How should the fourth quarter outlook inform expectations for 2026? - Management refrained from providing specific guidance for 2026 but indicated that improvements in SG&A and gross margins are expected to continue [90]

Financial Data and Key Metrics Changes - Total GPC sales for Q3 2025 were $6.3 billion, reflecting a 5% increase year-over-year, with adjusted EBITDA up 10% [4][5] - Adjusted diluted earnings per share were $1.98, a 5% increase from the same period last year [5][22] - Gross margin expanded by 60 basis points to 37.4% compared to the previous year [4][24] Business Segment Performance - Global industrial sales reached $2.3 billion, up approximately 5% year-over-year, with comparable sales growth of about 4% [7][10] - The automotive segment saw sales increase by approximately 5%, with comparable sales growth of about 2% [10][11] - Motion's core MRO and maintenance business, accounting for 80% of Motion sales, was up mid-single digits during the quarter [9] Market Performance - Growth was observed in seven out of fourteen end markets, with notable strength in iron and steel, food products, and fabricated metals [8] - European market conditions remained soft, with total sales flat in local currency and comparable sales down approximately 2% [16] - The Asia-Pacific region experienced double-digit growth in local currency, driven by both organic initiatives and acquisitions [17] Company Strategy and Industry Competition - The company is focused on strategic pricing, sourcing initiatives, and acquisitions to enhance gross margins [4][24] - An operational and strategic review is ongoing, with updates expected in 2026, aimed at differentiating in an evolving landscape [18][19] - The company is actively managing the tariff environment and leveraging supplier partnerships to mitigate cost impacts [6][23] Management's Comments on Operating Environment and Future Outlook - Management noted that end markets remain muted, particularly in Europe, with challenges including tariffs, trade uncertainties, and elevated interest rates [6][22] - The company is narrowing its guidance for 2025, expecting diluted earnings per share in the range of $6.55 - $6.80, and adjusted diluted EPS of $7.50 - $7.75 [29][30] - Management expressed confidence in the fundamentals of the business and the potential for growth despite current market conditions [20][34] Other Important Information - The company has invested approximately $350 million in CapEx for supply chain modernization and IT improvements [28] - A definitive agreement has been signed to acquire Benson Auto Parts, enhancing the company's footprint in Canada [15][16] - The company expects to generate cash from operations in the range of $1.1 billion - $1.3 billion and free cash flow of $700 million - $900 million [33] Q&A Session Summary Question: What accounts for the expected moderation in gross margins for Q4? - Management indicated that the moderation is primarily due to the lapping of acquisition benefits and ongoing cost pressures from tariffs [36] Question: What are the benefits of having the businesses together? - Management highlighted meaningful benefits from operating as one entity, including improved sales effectiveness and technology investments [37][38] Question: What is the same SKU inflation in U.S. NAPA? - Management noted that the benefit to U.S. automotive is around 2.5%, with expectations for slight net benefits in Q4 [44] Question: Are independent owners losing market share? - Management stated that independent owners are managing inventory levels effectively and are not losing market share [67] Question: How should the fourth quarter outlook inform expectations for 2026? - Management refrained from providing specific guidance for 2026 but indicated that improvements in SG&A and gross margins are expected to continue [90]

Financial Data and Key Metrics Changes - Total sales for Genuine Parts Company (GPC) in Q3 2025 were $6.3 billion, reflecting a 5% increase year-over-year, with adjusted EBITDA up 10% [5][6][21] - Adjusted diluted earnings per share (EPS) reached $1.98, a 5% increase from the same period last year [6][21] - Gross margin expanded by 60 basis points to 37.4%, driven by strategic pricing and sourcing initiatives [5][24] Business Segment Data and Key Metrics Changes - Global industrial sales were $2.3 billion, up approximately 5% year-over-year, with comparable sales growth of about 4% [7][11] - The automotive segment saw sales increase by approximately 5%, with comparable sales growth of about 2% [11][12] - Motion's core MRO and maintenance business, accounting for 80% of Motion sales, was up mid-single digits during the quarter [10] Market Data and Key Metrics Changes - Growth was observed in seven out of fourteen end markets, up from five in the previous quarter, with notable strength in iron and steel, food products, and fabricated metals [9] - European market conditions remained soft, with total sales flat in local currency and comparable sales down approximately 2% [16] - The Asia-Pacific region experienced double-digit growth in local currency, with total sales increasing approximately 10% [17] Company Strategy and Development Direction - The company is focused on operational and strategic reviews to enhance differentiation in a changing landscape, with updates expected in 2026 [18][19] - GPC is actively managing the business to offset inflationary pressures and is committed to strategic acquisitions, such as the planned acquisition of Benson Auto Parts in Canada [15][27] - The company aims to leverage its size and scale to enhance procurement and operational efficiencies [48] Management's Comments on Operating Environment and Future Outlook - Management noted that end markets remain muted, particularly in Europe, but expressed confidence in the company's resilience and adaptability [6][19] - The outlook for 2025 was updated, expecting diluted EPS in the range of $6.55 to $6.80, with adjusted diluted EPS between $7.50 and $7.75 [28][30] - The company anticipates continued earnings growth in Q4, despite a more cautious market environment [34] Other Important Information - The company generated approximately $510 million in cash from operations and $160 million of free cash flow in the first nine months of 2025 [26] - GPC has returned $421 million to shareholders through dividends year-to-date [28] - The company expects to incur restructuring expenses in the range of $180 million to $210 million for 2025 [32] Q&A Session Summary Question: What accounts for the expected moderation in gross margins for Q4? - Management indicated that the moderation is primarily due to the lapping of acquisition benefits and ongoing cost pressures [36][37] Question: What are the benefits of having the businesses together? - Management highlighted meaningful benefits from integration, including improved sales effectiveness and technology investments [38][39] Question: What was the same SKU inflation in U.S. NAPA? - Management noted that the inflation impact is around 2.5% for U.S. automotive and slightly higher for Motion, with expectations for continued low single-digit benefits [43][44] Question: How is the company managing inventory levels with independent owners? - Management emphasized ongoing support for independent owners to optimize inventory and cash flow management [57][68] Question: What is the outlook for inflation and its impact on pricing? - Management expects inflation to remain in the 2% to 3% range, with a balanced approach to passing along price increases [72][75] Question: How should the fourth quarter outlook inform expectations for 2026? - Management refrained from providing specific guidance for 2026 but indicated that strong momentum and cost management efforts would continue to support growth [85][86]

Financial Data and Key Metrics Changes - Total GPC sales for Q3 2025 were $6.3 billion, an increase of approximately 5% compared to the same period last year, with adjusted diluted earnings per share of $1.98, up 5% year over year [5][28][34] - Adjusted EBITDA increased by 10% year over year, with EBITDA margins improving in both Automotive and Industrial segments [5][31] - Gross margin was 37.4%, reflecting a 60 basis point increase from the previous year, driven by strategic pricing and sourcing initiatives [29][34] Business Line Data and Key Metrics Changes - Global Industrial sales were $2.3 billion, up approximately 5% year over year, with comparable sales growth of about 4% [9][12] - The Automotive segment saw sales increase by approximately 5%, with comparable sales growth of about 2% [12][34] - Motion's core MRO and maintenance business, accounting for 80% of Motion sales, was up mid-single digits during the quarter [11] Market Data and Key Metrics Changes - In the U.S., total automotive sales increased approximately 4%, with comparable sales up about 2% [13][18] - Canadian automotive sales rose approximately 3% in local currency, with comparable sales increasing by about 2% [18] - European sales were flat in local currency, with comparable sales down approximately 2% [20] Company Strategy and Development Direction - The company is focused on operational discipline and strategic investments to enhance customer service and manage inflationary pressures [24][33] - There is an ongoing operational and strategic review to assess business structure and differentiate in an evolving landscape, with updates expected in 2026 [23][34] - The company is optimistic about the long-term fundamentals of its markets and is positioned to build on its momentum [25][39] Management's Comments on Operating Environment and Future Outlook - Management noted that end markets remain muted, particularly in Europe, but they are adapting to dynamic environments and remain resilient [6][24] - The company expects diluted earnings per share for 2025 to be in the range of $6.55 to $6.80, with total sales growth projected at 3% to 4% [34][36] - Management highlighted the importance of monitoring the fluid tariff environment and customer sentiment as they navigate market conditions [39] Other Important Information - The company has signed a definitive agreement to acquire Benson Auto Parts in Canada, which is expected to close in Q4 2025 [19] - The company has returned $421 million to shareholders through dividends in the first nine months of 2025 [33] Q&A Session Summary Question: What accounts for gross margins being up less in the fourth quarter? - Management indicated that the moderation in gross margin expansion is primarily due to the lapping of acquisition benefits and ongoing sourcing and pricing efforts [43][44] Question: What are the benefits of having the businesses together? - Management emphasized the meaningful benefits of operating as one team, including improved sales effectiveness and technology investments [45][46] Question: What is the same SKU inflation in US NAPA? - Management noted that the full run rate of inflation is expected to stabilize, with a low single-digit benefit to sales growth from tariffs [53][54] Question: Have independents been losing market share? - Management stated that independent owners are managing inventory levels effectively and are not losing market share [78][80] Question: How should the fourth quarter outlook inform 2026 expectations? - Management suggested that while they expect solid performance in Q4, they are cautious about market conditions and will continue to monitor the environment closely [99][104]

Core Insights - Genuine Parts Company (GPC) reported quarterly earnings of $1.98 per share, missing the Zacks Consensus Estimate of $2.02 per share, but showing an increase from $1.88 per share a year ago, resulting in an earnings surprise of -1.98% [1] - The company achieved revenues of $6.26 billion for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 2.03% and up from $5.97 billion year-over-year [2] - Genuine Parts has surpassed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates four times in the same period [2] Earnings Outlook - The future performance of Genuine Parts' stock will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on the recently released numbers [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.79 on revenues of $5.91 billion, while for the current fiscal year, the estimate is $7.65 on revenues of $24.08 billion [7] Industry Context - The Automotive - Retail and Wholesale - Parts industry, to which Genuine Parts belongs, is currently ranked in the bottom 25% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Performance - Global sales increased by 4.9% to $6.3 billion[11] - Adjusted diluted EPS increased by 5.3% to $1.98[11] - Adjusted EBITDA increased by 10.4% to $526 million[11] - Gross margin improved by 60 bps to 37.4%[11] Segment Performance - Industrial global sales increased by 4.6% to $2.3 billion, with comparable sales up 3.7%[13] - Automotive global sales increased by 5.0% to $4.0 billion, with global comparable sales up 1.6%[17] - North America industrial sales increased by 5.2%[13] - Australasia automotive sales increased by 10.4%[18] Capital Allocation and Outlook - Year-to-date capital deployment includes 37% in strategic investments, 19% in M&A, 44% in share repurchases and dividends totaling $953 million[27] - The company anticipates $400 million to $450 million in capital expenditures for FY2025[32] - The company anticipates $300 million to $350 million in M&A capital outlay for FY2025[32] - Updated 2025 outlook projects total sales growth of 3% to 4% and adjusted diluted EPS of $7.50 to $7.75[34]