Genuine Parts Company (GPC) FY 2025 Conference September 04, 2025 10:20 AM ET Company ParticipantsKate McShane - Managing DirectorWilliam Stengel - President, CEO & DirectorHerbert Nappier - EVP & CFOKate McShaneHi, everybody. It's my pleasure to introduce Genuine Parts Company. Today, we have with us Will Stengel, President and Chief Executive Officer and we have Bert Napier, who's been Executive Vice President and Chief Financial Officer since May 2022. Thank you so much for joining us today.William Steng ...

Financial Data and Key Metrics Changes - Total GPC sales for Q2 2025 were $6.2 billion, an increase of 3.4% compared to the same period last year [5][31] - Gross margin expanded by 110 basis points to 37.7%, driven by strategic pricing and sourcing initiatives [5][32] - Adjusted EPS for the quarter was $2.10, down 14% year-over-year, reflecting lower pension income and higher depreciation and interest expenses [30][31] - Adjusted SG&A as a percentage of sales increased to 28.7%, up 150 basis points year-over-year [33] Business Segment Data and Key Metrics Changes - Global Industrial segment sales were $2.3 billion, a 1% increase year-over-year, with comparable sales essentially flat [11] - Global Automotive segment sales increased by 5%, with EBITDA of $338 million, representing an 8.6% margin, down 110 basis points from the previous year [14][15] - E-commerce sales at Motion accounted for 40% of sales, up over 10% from the start of 2024 [13] Market Data and Key Metrics Changes - Industrial activity metrics like industrial production and PMI were trending positively at the start of the year but fell below 50 during the second quarter [12] - In the U.S., total sales for the automotive segment were up 4%, with comparable sales essentially flat [18] - Canada saw total sales increase approximately 5% in local currency, while Europe experienced flat sales with comparable sales down 1% [23][24] Company Strategy and Development Direction - The company is focused on executing strategic initiatives and cost actions to navigate ongoing market challenges, including tariffs and inflation [6][10] - A global cross-functional command center has been established to manage tariff impacts and support customers [8] - The company aims to enhance operations and drive long-term value through disciplined investments and strategic acquisitions [28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for market improvement in the second half of 2025, despite ongoing challenges [10] - The impact of tariffs is expected to be more pronounced in the latter half of the year, affecting revenue and customer demand [39][41] - Management highlighted the importance of agility and discipline in operations to adapt to the dynamic environment [48] Other Important Information - The company announced a leadership transition in the North America automotive business, with Randy Bro retiring and Alain Moss promoted to President, North America Automotive [16][17] - The company acquired 32 stores from independent owners in the U.S. during the second quarter, strengthening its market presence [22] Q&A Session Summary Question: What are the fill rates in independent NAPA stores? - Management noted improvements in independent owner inventory positions, with sales out aligning well with company-owned stores [51] Question: How is pricing around tariff increases being managed? - Management confirmed that pricing dynamics are balanced with supplier cost increases, though not resulting in a net benefit to gross margin [52][54] Question: What are the expectations for same SKU inflation in the U.S.? - Management indicated that inflation assumptions are consistent across segments, with a focus on the NAPA business [60][62] Question: How does the company view the cadence of price tailwinds into the second half? - Management expects an acceleration of price impacts in the third quarter, with a leveling off in the fourth quarter [56] Question: What is the outlook for the motion business? - Management expressed confidence in positive trends for the motion business, despite moderated growth expectations [72][75]