Q3 2025 Genuine Parts Co Earnings Call

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 operator at this time I would like to turn the conference over to Tim Walsh, Vice President of Investor Relations. Please go ahead Sir.

Speaker #1: Good day, ladies and gentlemen. Welcome 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.

Speaker #1: 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.

Thank you and good morning, everyone welcome to genuine parts company third quarter 2025 earnings call.

Speaker #1: At this time, I would like to turn the conference over to Tim Walsh, Vice President of Investor Relations. Please go ahead, sir.

Joining us on the call today are will Stengel, President and Chief Executive Officer, and Bert Nappier Executive Vice President and Chief Financial Officer.

In addition to this morning's press release, a supplemental slide presentation can be found on the investors page of the genuine parts company website.

Speaker #3: Thank you, and good morning, everyone. Welcome to Genuine Parts Company's third quarter 2025 earnings call. Joining us on the call today are Will Fingel, President and Chief Executive Officer, and Bert Napier, Executive Vice President and Chief Financial Officer.

Today's call is being webcast and a replay will also be made available on the company's website after the call.

Following our prepared remarks, the call will be opened for questions. The responses to which will reflect management views as of today October 21 2025.

Speaker #3: In addition to this morning's press release, a supplemental slide presentation can be found on the investors' page of the Genuine Parts Company website. Today's call is being webcast, and a replay will also be made available on the company's website after the call.

If we're unable to get to your questions. Please contact our Investor Relations Department.

Please be advised this call may include certain non-GAAP financial measures, which may be referred to during today's discussion of our results as reported under generally accepted accounting principles.

Speaker #3: Following our prepared remarks, the call will be open for questions. The responses to which will reflect manager's views as of today, October 21st, 2025.

A reconciliation of these measures is provided in the earnings press release.

Speaker #3: If we're unable to get to your questions, please contact our Investor Relations department. Please be advised this call may include certain non-GAAP financial measures, which may be referred to during today's discussion of our results, as reported under generally accepted accounting principles.

Today's call May also involve forward looking statements regarding the company and its businesses as defined in the private Securities Litigation Reform Act of 1095.

The company's actual results could differ materially from any forward looking statements due to several important factors described in the Companys latest SEC filings, including this morning's press release.

Speaker #3: A reconciliation of these measures is provided in the earnings press release. Today's call may also involve forward-looking statements, regarding the company and its businesses, as defined in the Private Security Litigation Reform Act of 1995.

The company assumes no obligation to update any forward looking statements made during this call.

Speaker #3: The company's actual results could differ materially from any forward-looking statements due to several important factors described in the company's latest SEC filings, including this morning's press release.

With that I'll turn it over to will.

Thank you Tim Good morning, everyone and thank you for joining our third quarter 2025 earnings call.

As always I want to start by thanking our over 63000 global GPC teammates are people, who are at the heart of everything we do and our team's dedication and commitment to serving our customers is the core of our success.

Speaker #3: The company assumes no obligation to update any forward-looking statements made during this call. With that, I'll turn it over to Will.

Speaker #4: Thank you, Tim. Good morning, everyone, and thank you for joining our third quarter 2025 earnings call. As always, I want to start by thanking our over 63,000 global GPC teammates.

Turning to our results for the third quarter. A few highlights include total GPC sales were $6 3 billion, an increase of approximately 5% versus the same period in the prior year with sequential improvement in comparable sales growth at both U S automotive and motion.

Speaker #4: Our people are at the heart of everything we do, and our team's dedication and commitment to serving our customers is the core of our success.

Speaker #4: Turning to our results for the third quarter, a few highlights include total GPC sales, which were $6.3 billion, an increase of approximately 5% versus the same period in the prior year, with sequential improvement in comparable sales growth at both US Automotive and Motion.

Gross margin expansion of 60 basis points versus the same period last year, reflecting the ongoing benefits from our strategic pricing sourcing initiatives and acquisitions.

Adjusted EBITDA up 10% year over year with improvement in EBITDA margins in both our automotive and industrial segments for the quarter.

Speaker #4: Gross margin expansion of 60 basis points versus the same period last year, reflecting the ongoing benefits from our strategic pricing, sourcing initiatives, and acquisitions.

And adjusted diluted earnings per share of $1 98.

An increase of 5% from the same period last year.

Speaker #4: Adjusted EBITDA up 10% year over year. With improvement in EBITDA margins in both our automotive and industrial segments for the quarter. An adjusted diluted earnings per share of $1.98 and increase of 5% from the same period last year.

Our third quarter results were in line with our expectations and reflects the ongoing execution of our growth and productivity initiatives.

Our end markets remained muted most notably in Europe.

We're working around the world to earn business with existing and new customers.

Speaker #4: Our third-quarter results were in line with our expectations and reflect the ongoing execution of our growth and productivity initiatives. Our end markets remain muted, most notably in Europe, but we're working around the world to earn business with existing and new customers.

Globally customers remain cautious and looking for the best value as they make purchasing decisions.

Tariffs trade uncertainties elevated interest rates, a cautious consumer and muted industrial spending are familiar challenges.

Speaker #4: Globally, customers remain cautious and looking for the best value as they make purchasing decisions. Tariffs, trade uncertainties, elevated interest rates, a cautious consumer, and muted industrial spending are familiar challenges.

But the teams have adapted to working in dynamic environments and remain resilient and determined.

We have also been proactively managing the business to offset an inflationary cost environment and we'll stay disciplined.

As it relates to tariffs, we continue to leverage our strategic supplier partnerships and collaborative GPC global approach.

Speaker #4: But the teams have adapted to working in dynamic environments and remain resilient and determined. We have also been proactively managing the business to offset an inflationary cost environment and will stay disciplined.

As we expected the sales benefit from inflation was slightly more pronounced in the third quarter relative to the second quarter.

Speaker #4: As it relates to tariffs, we continue to leverage our strategic supplier partnerships and collaborative GPC global approach. As we expected, the sales benefit from inflation was slightly more pronounced in the third quarter relative to the second quarter.

In 2025, we have performed in line with our expectations for the last three quarters and are narrowing and updating our guidance range for the remainder of the year.

Bert will share additional color on the impact of tariffs and financial considerations as we push to close the year.

Speaker #4: In 2025, we've performed in line with our expectations for the last three quarters, and our narrowing and updating our guidance range for the remainder of the year.

We will remain agile and focused on what we can control.

Turning to our results by business segment.

During the third quarter total sales for global industrial were $2 3 billion, an increase of approximately 5% versus the same period in the prior year with comparable sales up approximately 4%.

Speaker #4: Bert will share additional color on the impact of tariffs and financial considerations as we push to close the year. We'll remain agile and focused on what we can control.

Speaker #4: Turning to our results by business segment, during the third quarter, total sales for global industrial were 2.3 billion, an increase of approximately 5% versus the same period in the prior year, with comparable sales up approximately 4%.

Sales inflation during the third quarter was approximately 3%.

We're encouraged by the sequential improvement in the third quarter sales performance and believe we are performing in excess of the market growth.

During the quarter industrial activities metrics like industrial production and PMI remains soft since the trade and tariff uncertainties started in March we.

Speaker #4: Sales inflation during the third quarter was approximately 3%. We're encouraged by the sequential improvement in the third quarter sales performance and believe we're performing in excess of the market growth.

We've seen PMI below 50 for the last seven months, although theres been some sequential improvement with the most recent reading slightly below 50.

Speaker #4: During the quarter, industrial activity metrics like industrial production and PMI remained soft since the trade and tariff uncertainties started in March. We've seen PMI below 50 for the last seven months, although there's been some sequential improvement, with the most recent reading slightly below 50.

Despite the market conditions, we're bullish on the outlook for motion is their size and scale competitive positioning and customer value proposition our differentiators.

We see emerging industrial opportunities develop like onshoring as trade policy shift and our motion team is taking advantage of those opportunities as they present themselves.

Speaker #4: Despite the market conditions, we're bullish on the outlook for Motion as their size and scale, competitive positioning, and customer value proposition are differentiators. We see emerging industrial opportunities develop like onshoring as trade policies shift, and our Motion team's taking advantage of those opportunities as they present themselves.

Looking at the performance across our end markets. We saw growth in seven of our 14 end markets, which is up from 5% in the second quarter with.

With strength in iron and steel food products and fabricated metals.

We're also pleased with the traction with our data center initiatives, which continues to build momentum.

Speaker #4: Looking at the performance across our end markets, we saw growth in seven of our 14 end markets, which is up from five in the second quarter.

This growth was partially offset by softer demand in pulp and paper lumber and wood and oil and gas.

Speaker #4: With strength in iron and steel, food products, and fabricated metals. We're also pleased with the traction with our data center initiative, which continues to build momentum.

Our core MRO and maintenance business, which accounts for approximately 80% of motion sales.

Was up mid single digits during the quarter.

Speaker #4: This growth was partially offset by softer demand in pulp and paper, lumber and wood, and oil and gas. Our core MRO and maintenance business, which has accounted for approximately 80% of Motion's sales, was up mid-single digits during the quarter.

With shared strength in both our small and medium sized and corporate account businesses.

In 2025, our corporate account customer renewal rate is 98% and we've won over 30, new contract relationships year to date.

Speaker #4: With shared strength in both our small- and medium-sized and corporate account businesses, in 2025, our corporate account customer renewal rate is 98%, and we've won over 30 new contract relationships year to date.

The remaining 20% of motion sales, which originates from more capital intensive projects was up slightly during the quarter as customers continued to selectively pursue larger projects.

However, customer sentiment continues to improve and our large dollar order backlog has increased sequentially throughout the year now up approximately 20% versus the start of the year.

Speaker #4: The remaining 20% of Motion's sales, which originates from more capital-intensive projects, was up slightly during the quarter as customers continue to selectively pursue larger projects.

Switching to industrial profit during the third quarter segment, EBITDA was approximately $285 million and 12, 6% of sales representing a 30 basis point increase from the same period last year.

Speaker #4: However, EBITDA in the third quarter was Switching 335 million, which was 8.4% of sales, representing a 10 basis point increase from the same period last year.

Speaker #4: customer sentiment continues to improve, and our large dollar order backlog has increased sequentially throughout the year. Now up approximately 20% versus the start of the year.

The motion team continues to operate with discipline.

We both manage a sluggish demand environment and offset pressure from inflation in costs.

Motions organization and cost structure is set up for the eventual rebound in industrial demand and we would expect to see good operating leverage once the market and flex.

Turning to the global automotive segment sales in the third quarter increased approximately 5% with comparable sales growth up approximately 2%.

During the quarter, the automotive segment saw inflation in pricing of approximately 2%.

Global automotive segment EBITDA in the third quarter was $335 million, which was eight 4% of sales representing a 10 basis point increase from the same period last year.

The improvement year over year reflects stronger topline growth as well as benefits from restructuring and cost actions to offset ongoing inflationary cost pressures from wages healthcare rent and freight.

Speaker #4: The improvement year over year reflects stronger top-line growth, as well as benefits from restructuring and cost actions, to offset ongoing inflationary cost pressures from wages, healthcare, rent, and freight.

Now, let's turn to our automotive business performance by geography.

Starting in the U S total sales for the third quarter were up approximately 4%.

With comparable sales up approximately 2% we saw quarterly sequential improvement in sales growth from both our company owned and independently owned stores with comps for our company owned stores up approximately 4%.

Speaker #4: Now, let's turn to our automotive business performance by geography. Starting in the US, total sales for the third quarter were up approximately 4%, with comparable sales up approximately 2%.

An independent purchases up approximately 1%.

Speaker #4: We saw quarterly sequential improvement in sales growth from both our company-owned and independently owned stores, with comps for our company-owned stores up approximately 4%, and independent purchases up approximately 1%.

Our focus on operating better company owned stores as a key priority and advancing very well.

As an additional and important data point when we look at the comparable sales performance of Napa to end customer, which.

Speaker #4: Our focus on operating better company-owned stores is a key priority and is advancing very well. As an additional and important data point, when we look at the comparable sales performance of NAPA to the end customer, which includes our company-owned store sales as well as the sales out from the independent-owned stores to the end customer, the total NAPA system delivered end customer sales growth of approximately 3%.

Which includes our company owned store sales as well as the sales out from the independent owned stores to the end customer.

The total Napa system delivered and customer sales growth of approximately 3%.

This metric also sequentially improved from the second quarter, which was approximately 1%.

We're also pleased with the sequential improvement in the buying behavior of our independent owners.

But we will remain diligent to ensure we're partnering with owners in a challenging market.

Speaker #4: This metric also sequentially improved from the second quarter, which was approximately 1%. We're also pleased with the sequential improvement in the buying behavior of our independent owners.

We do this with defined initiatives that help our owners manage their operations and be more successful.

We believe the work we're doing to better partner with our independence is having a positive impact and this effort will remain a high priority for the team going forward.

Speaker #4: But we'll remain diligent to ensure we're partnering with owners in a challenging market. We do this with defined initiatives that help our owners manage their operations and be more successful.

By customer type comparable sales to our commercial customers were up low to mid single digits.

Speaker #4: We believe the work we're doing to better partner with our independents is having a positive impact, and this effort will remain a high priority for the team going forward.

While sales to our retail customers decreased low single digits.

We saw sequential improvement with auto care and major accounts, which were both up mid to high single digits.

Speaker #4: By customer type, comparable sales to our commercial customers were up low to mid-single digits, while sales to our retail customers decreased low single digits.

Our priority is to earn more share of wallet with our auto care and major account customers and the team is building solid momentum.

Speaker #4: We saw sequential improvement with auto care and major accounts, which were both up mid to high single digits. A priority is to earn more share of wallet with our auto care and major account customers.

Looking at our product categories, we've seen sequential improvement in both our non discretionary repair and maintenance and service categories, which were both up mid single digits in the third quarter.

Speaker #4: And the team is building solid momentum. Looking at our product categories, we've seen sequential improvement in both our non-discretionary repair and maintenance and service categories.

In these categories, which account for approximately 85% of our U S. Automotive business, we continue to see break fixed demand fundamentals, despite higher prices driven by tariffs.

Speaker #4: Which were both up mid-single digits in the third quarter. In these categories, which account for approximately 85% of our U.S. automotive business, we continue to see break/fix demand fundamentals, despite higher prices driven by tariffs.

Discretionary categories were again flat driven by specific category initiatives in our tool and equipment offering.

Customers are using discretion and looking for value, however, deferred maintenance will ultimately need to be addressed.

Speaker #4: Discretionary categories were again flat, driven by specific category initiatives in our tool and equipment offering. Customers are using discretion in looking for value; however, deferred maintenance will ultimately need to be addressed.

Additionally, we continue to strengthen our relative footprint in strategic priority markets.

Wiring over 85 locations from independent owners and competitors in the U S year to date.

Turning to Canada total sales increased approximately 3% in local currency versus the same period last year with comparable sales increasing approximately 2%.

Speaker #4: Additionally, we continue to strengthen our relative footprint in strategic priority markets, acquiring over 85 locations from independent owners and competitors in the U.S. year to date.

Both our automotive and heavy duty businesses are performing well with heavy duty outperforming in the quarter.

Speaker #4: Turning to Canada, total sales increased approximately 3% in local currency, versus the same period last year. With comparable sales increasing approximately 2%. Both our automotive and heavy-duty businesses are performing well, with heavy-duty outperforming in the quarter.

The economic conditions in Canada have weakened through the course of the year, but our team continues to outperform the market.

We're pleased to share we signed a definitive agreement to acquire Benson auto parts, one of the largest independent aftermarket players in Canada operating approximately 85 stores in Ontario, and Quebec.

Speaker #4: The economic conditions in Canada have weakened through the course of the year, but our team continues to outperform the market. We're pleased to share we've signed a definitive agreement to acquire Benson Auto Parts, one of the largest independent aftermarket players in Canada, operating approximately 85 stores in Ontario and Quebec.

This is an attractive strategic transaction that adds talent store footprint and priority markets and a diversified product offering to better serve our customers in Canada.

We expect the transaction to close in the fourth quarter and is subject to customary closing conditions.

Speaker #4: This is an attractive strategic transaction that adds talent, store footprint in priority markets, and a diversified product offering to better serve our customers in Canada.

In Europe total sales were flat in local currency with comparable sales down approximately 2% consistent with what we saw in the second quarter.

Speaker #4: We expect the transaction to close in the fourth quarter and it is subject to customary closing conditions. In Europe, total sales were flat in local currency, with comparable sales down approximately 2%, consistent with what we saw in the second quarter.

These results were below our expectations.

The team continues to navigate a soft market that has moderated further in the second half versus our expectation.

The team is managing inflationary cost pressures with a fluid political landscape.

Speaker #4: These results were below our expectations, the team continues to navigate a soft market that has moderated further in the second half versus our expectation.

Despite this we believe we are performing in line with the market with strength driven by the Napa brand and key account customer growth offset by generally cautious spending and deferred maintenance.

Speaker #4: The team is managing inflationary cost pressures with a fluid political landscape. Despite this, we believe we're performing in line with the market, with strength driven by the NAPA brand and key account customer growth offset by generally cautious spending and deferred maintenance.

Rounding out automotive our team in Asia Pacific continues to post solid results and win market share.

Our team delivered another quarter of double digit growth in local currency driven by both organic initiatives and contributions from acquisitions.

Speaker #4: Rounding out automotive, our team in Asia Pacific continues to post solid results, and win market share. Our team delivered another quarter of double-digit growth in local currency, driven by both organic initiatives and contributions from acquisitions.

Total sales increased approximately 10% with comparable sales growth of approximately 5%.

Both trade and retail businesses put up strong numbers during the quarter with retail continuing our strong run of standout performance.

Speaker #4: Total sales increased approximately 10%, with comparable sales growth of approximately 5%. Both trade and retail businesses put up strong numbers during the quarter, with retail continuing a strong run of standout performance.

Retail sales were up again high single digits in the quarter and showing strength relative to the competition and all other local retail segments.

Our in flight initiatives are working well and the local team is energized to build on the strong momentum.

Speaker #4: Retail sales were up again, high single digits in the quarter, and showing strength relative to the competition in all other local retail segments. Our inflight initiatives are working well, and the local team is energized to build on the strong momentum.

It's also appropriate to formally comment on the recent press coverage associated with first brands.

Genuine parts company has a commercial relationship with first brands predominantly across our global automotive business.

Our relationship represents approximately 3% of global automotive sales.

Speaker #4: It's also appropriate to formally comment on the recent press coverage associated with First Brands. Genuine Parts Company has a commercial relationship with First Brands, predominantly across our global automotive business.

We're coordinated as a global GPC team and engaged in ongoing discussions with first brands to partner as they navigate their situations.

Speaker #4: Our relationship represents approximately 3% of global automotive sales. We're coordinated as a global GPC team and are engaged in ongoing discussions with First Brands to partner as they navigate their situation.

Service levels product availability and brand quality currently remains strong and alternate sources of product are expected to be available if needed.

There was no negative impact to our third quarter performance.

Speaker #4: Service levels, product availability, and brand quality currently remain strong, and alternate sources of product are expected to be available if needed. There was no negative impact to our third quarter performance.

Before I close I want to briefly touch on our operational and strategic review announced in September as part of our board evolution and in flight strategic planning process.

We continue to make good progress on the internal work and are on track to provide an update in 2026 at an investor day as we previously disclosed.

Speaker #4: Before I close, I want to briefly touch on our operational and strategic review announced in September, as part of our board evolution and inflight strategic planning process.

We're turning over all stones, and asking hard questions as we analyze how to differentiate in an evolving landscape.

Speaker #4: We continue to make good progress on the internal work, and are on track to provide an update in 2026 at an investor day as we previously disclosed.

This involves an assessment of both our operational plans and our business structure.

Speaker #4: We're turning over all stones and asking hard questions, as we analyze how to differentiate in an evolving landscape. This involves an assessment of both our operational plans and our business structure.

We're excited about the value creation potential of genuine parts company and looking forward to providing an update next year.

In closing as we look at our performance year to date, our results have been in line with our expectations, despite less favorable market conditions versus our expectations to start the year.

Speaker #4: We're excited about the value creation potential of Genuine Parts Company, and looking forward to providing an update next year. In closing, as we look at our performance year to date, our results have been in line with our expectations, despite less favorable market conditions versus our expectations to start the year.

We're focused on what we can control and working to finish 2025 strong.

Our operating discipline and actions to proactively manage the business in an inflationary environment had been appropriate and our strategic initiatives and investments are making a positive difference in our ability to better serve customers.

Speaker #4: We're focused on what we can control, and working to finish 2025 strong. Our operating discipline and actions to proactively manage the business in an inflationary environment, have been appropriate, and our strategic initiatives and investments are making a positive difference in our ability to better serve customers.

The near and long term fundamentals of our markets are attractive and we are well positioned to build on our momentum.

Thank you to our shareholders customers owners and supplier partners for your continued trust and support.

I want to reaffirm my sincere gratitude to our GPC teammates for their tireless effort and commitment to serving our customers.

Speaker #4: The near and long-term fundamentals of our markets are attractive, and we're well-positioned to build on our momentum. Thank you to our shareholders, customers, owners, and supplier partners for your continued trust and support.

I'll now turn the call over to Bert.

Thanks will and thanks to everyone for joining the call our third quarter results reflect continued discipline and strong execution, while navigating weak market conditions, particularly in Europe, the tariff environment and a cautious customer.

Speaker #4: I want to reaffirm my sincere gratitude to our GPC teammates, for your tireless effort and commitment to serving our customers. I'll now turn the call over to Bert.

Speaker #5: Thanks, Will, and thanks to everyone for joining the call. Our third-quarter results reflect continued discipline and strong execution while navigating weak market conditions, particularly in Europe, the tariff environment, and a cautious customer.

Against this backdrop, our third quarter performance was highlighted by mid single digit sales growth.

<unk> digit adjusted EBITDA growth twice the rate of our sales growth.

EBITDA margin expansion in both segments and a return to earnings growth.

Speaker #5: Against this backdrop, our third quarter performance was highlighted by mid-single-digit sales growth, double-digit adjusted EBITDA growth, twice the rate of our sales growth, EBITDA margin expansion in both segments, and a return to earnings growth.

In July we shared that we expected third quarter earnings to increase 5% to 10% and we finished the quarter with adjusted EPS of $1 98.

Five 3% to prior year due to stronger top line growth and our restructuring and cost actions, which are offsetting known headwinds from lower pension income and higher depreciation and interest expense.

Speaker #5: In July, we shared that we expected third-quarter earnings to increase 5% to 10%. We finished the quarter with adjusted EPS of $1.98, up 5.3% from the prior year, due to stronger top-line growth and our restructuring and cost actions, which are offsetting known headwinds from lower pension income and higher depreciation and interest expense.

Those headwinds cumulatively totaled a 25 negative impact to earnings per share.

As it relates to tariffs our teams are continuing to manage the tariff environment, leveraging our capabilities and expertise through a dynamic landscape for.

Speaker #5: Those headwinds cumulatively totaled a 25 cent negative impact to earnings per share. As it relates to tariffs, our teams are continuing to manage the tariff environment, leveraging our capabilities and expertise through a dynamic landscape.

For the third quarter, we experienced a low single digit benefit to sales growth from tariffs and a low single digit increase to cost of goods sold in line with our expectations.

The net impact of the tariffs on the quarter with a slight benefit to our results.

Speaker #5: For the third quarter, we experienced a low single-digit benefit to sales growth from tariffs, and a low single-digit increase to cost of goods sold, in line with our expectations.

Turning to our detailed results my comments this morning around our third quarter performance and outlook will focus primarily on adjusted results, which exclude the nonrecurring costs related to our global restructuring program.

Speaker #5: The net impact of the tariffs on the quarter was a slight benefit to our results. Turning to our detailed results, my comments this morning around our third quarter performance and outlook will focus primarily on adjusted results.

During the third quarter these costs totaled $67 million of pre tax adjustments or $49 million after tax.

Speaker #5: Which With that, let's margin was 37.4%, an increase of 60 basis points from last year. The improvement in our gross margin was primarily driven by the ongoing execution of our strategic sourcing and pricing initiatives.

With that let's get into the quarterly results.

Speaker #5: exclude the non-recurring costs related to our global restructuring program. During the third quarter, these costs totaled $67 million of pre-tax adjustments, or $49 million after tax.

Total GPC sales increased four 9% in the third quarter, which included a 230 basis point improvement in comparable sales a benefit from acquisitions of 180 basis points and a foreign currency tailwind of 70 basis points.

We delivered sequential improvement in comparable sales growth at both U S auto and industrial.

With industrial comparable sales growing approximately 4% year over year, despite PMI remaining and contractionary territory throughout the quarter.

For the quarter, our gross margin was 37, 4% an increase of 60 basis points from last year.

The improvement in our gross margin was primarily driven by the ongoing execution of our strategic sourcing and pricing initiatives as.

As expected the benefit to gross margin expansion from acquisitions in the quarter was more muted as we have now cycled the one year anniversary of both the amtech and Walker transactions.

Turning to our costs, our SG&A as a percentage of sales for the third quarter was 28, 8% flat versus the prior year and demonstrates continued improvement in the rate of deleverage across the business through the course of 2025.

Speaker #5: As expected, the benefit to gross margin expansion from acquisitions in the quarter was more muted, as we have now cycled the one-year anniversary of both the MPEC and Walker transactions.

Speaker #5: Turning to our costs, our SG&A as a percentage of sales for the third quarter was 28.8%, flat versus the prior year. And demonstrates continued improvement in the rate of deleverage across the business through the course of 2025.

On an adjusted basis SG&A grew year over year in absolute dollars by $88 million driven by a few key factors first approximately $40 million in SG&A growth from acquisitions. However, our acquisitions continue to have a positive impact to net operating profit margin.

Speaker #5: On an adjusted basis, SG&A grew year over year an absolute dollars by 88 million, driven by a few key factors. First, approximately 40 million in SG&A growth from acquisitions.

Second approximately $45 million or two 7% growth in core SG&A.

The growth of our core SG&A continues to be primarily due to inflation driven increases in salaries and wages and rent.

Speaker #5: However, our acquisitions continue to have a positive impact to net operating profit margin. Second, approximately 45 million, or 2.7% growth in core SG&A. The growth of our core SG&A continues to be primarily due to inflation-driven increases in salaries and wages and rent.

The growth of our core SG&A was mitigated by a $36 million benefit in the quarter related to our restructuring and cost initiatives as they work to mitigate cost inflation.

For the quarter total adjusted EBITDA margin was eight 4%.

Speaker #5: The growth of our core SG&A was mitigated by a $36 million benefit in the quarter, related to our restructuring and cost initiatives, as they work to mitigate cost inflation.

40 basis points year over year.

Both our automotive and industrial segments expanded EBITDA margins for the quarter as sales growth gross margin expansion and the benefits of our restructuring program more than offset court SG&A inflation.

Speaker #5: For the quarter, total adjusted EBITDA margin was 8.4%. Up 40 basis points year over year. Both our automotive and industrial segments expanded EBITDA margins for the quarter, as sales growth, gross margin expansion, and the benefits of our restructuring program more than offset core SG&A inflation.

Turning to our cash flows for the first nine months of 2025, we generated approximately $510 million in cash from operations and $160 million of free cash flow.

Our year to date operating cash flow in 2025 has been impacted by a few key factors.

Speaker #5: Turning to our cash flows, for the first nine months of 2025, we generated approximately $510 million in cash from operations, and $160 million of free cash flow.

Lower year over year earnings of approximately $100 million.

Accelerated tax payments of $90 million.

And higher interest payments of $50 million.

Speaker #5: Our year-to-date operating cash flow in 2025 has been impacted by a few key factors. Lower year-over-year earnings of approximately $100 million, accelerated tax payments of $90 million, and higher interest payments of $50 million.

The remaining year over year decrease is driven by working capital changes associated with the commercial activity that was occurring in the first half of 2024 and connection with inventory investments made at Napa.

This activity and the associated build of accounts payable and receipt of supplier incentives did not repeat in 2025, creating a tough year over year comparison.

Speaker #5: The remaining year-over-year decrease is driven by working capital changes associated with the commercial activity that was occurring in the first half of 2024, in connection with inventory investments made at NAPA.

This headwind was concentrated in the first half of the year and our cash generation accelerated in the third quarter.

Speaker #5: This activity, and the associated build of accounts payable and receipt of supplier incentives, did not repeat in 2025. Creating a tough year-over-year comparison. This headwind was concentrated in the first half of the year, and our cash generation accelerated in the third quarter.

And 2025, we have invested approximately $350 million in Capex as we continue to invest to modernize our supply chain and create a better customer experience with our investments in it.

Our investments in supply chain modernization with our new Dcs and our international businesses alongside enhancements to our search and catalog capabilities are driving enhanced productivity and returns.

Speaker #5: In 2025, we have invested approximately $350 million in CapEx. As we continue to invest to modernize our supply chain, and create a better customer experience with our investments in IT.

We have also invested $182 million year to date in the form of strategic acquisitions and we are excited about the continued expansion of our market leading business in Canada with events and acquisition.

Speaker #5: Our investments in supply chain modernization with our new distribution centers and our international businesses, alongside enhancements to our search and catalog capabilities, are driving enhanced productivity and returns.

We continue to make good progress on our long term strategic investments to profitably grow our business with discipline and a strong focus on returns from these investments and.

Speaker #5: We have also invested $182 million year to date in the form of strategic acquisitions, and we are excited about the continued expansion of our market-leading business in Canada, with the Benson acquisition.

And finally through the first nine months of 2025, we have returned $421 million to our shareholders through our dividend.

Speaker #5: We continue to make good progress on our long-term strategic investments to properly grow our business, with discipline and a strong focus on returns from these investments.

Now turning to our outlook as we detailed in our press release. This morning, we are updating our outlook for 2025.

Speaker #5: And finally, through the first nine months of 2025, we've returned $421 million to our shareholders through our dividend. Now, turning to our outlook, as we detailed in our press release this morning, we are updating our outlook for 2025.

For the full year, we expect diluted earnings per share, which includes the expenses related to our restructuring efforts.

To be in the range of $6 55.

To $6 80.

And our adjusted diluted earnings per share to be in the range of $7 50.

Speaker #5: For the full year, we expect diluted earnings per share, which includes the expenses related to our restructuring efforts, to be in the range of $6.55, to $6.80.

The $7 75.

Narrowing our outlook from our previous range of $7 50 to.

To $8.

Speaker #5: And our adjusted diluted earnings per share, to be in the range of $7.50, to $7.75 cents. Narrowing our outlook from our previous range of $7.50 to $8.

While we delivered third quarter results that were in line with our expectations market conditions through the third quarter did not improve.

The narrowing of our guidance range is based on our expectation that current market conditions persist for the remainder of 2025 and.

Speaker #5: While we delivered third quarter results that were in line with our expectations, market conditions through the third quarter did not improve. The narrowing of our guidance range is based on our expectations that current market conditions persist for the remainder of 2025, and remain relatively consistent with what we experienced in the third quarter.

And remained relatively consistent with what we experienced in the third quarter.

With respect to the full year our outlook for 2025 includes the expected year over year headwinds from a loss of pension income as well as higher depreciation and interest expense.

Collectively these headwinds produced approximately $1 of EPS headwind in 2025, when compared to 2024.

Speaker #5: With respect to the full year, our outlook for 2025 includes the expected year-over-year headwinds from a loss of pension income, as well as higher depreciation and interest expense.

Our outlook also assumes foreign currency rates at current levels.

In addition, as we've previously communicated our outlook for GAAP diluted earnings per share currently excludes the charge. We now expect to record in the fourth quarter with the termination of our U S pension plan.

Speaker #5: Collectively, these headwinds produce approximately $1 of EPS headwind in 2025, when compared to 2024. Our outlook also assumes foreign currency rates at current levels.

The one time noncash charge that would be recognized that settlement will be equal to the accumulated actuarial losses recorded on our balance sheet, which we currently estimate to be in a range of $650 million to $750 million.

Speaker #5: In addition, as we've previously communicated, our outlook for gap-diluted earnings per share currently excludes the charge we now expect to record in the fourth quarter, with the termination of our US pension plan.

Speaker #5: The one-time, non-cash charge that would be recognized at settlement will be equal to the accumulated actuarial losses recorded on our balance sheet, which we currently estimate to be in a range of $650 million to $750 million. There are multiple variables that impact the charge, which will be finalized on or before December 31, 2025.

There are multiple variables that impact the charge, which will be finalized on or before December 31 2025.

As a reminder, our U S pension plan is overfunded and terminating the plan has been a long term derisking strategy to further strengthen our balance sheet.

We will share the final details when we report our fourth quarter earnings in February.

Speaker #5: As a reminder, our U.S. pension plan is overfunded, and terminating the plan has been a long-term de-risking strategy to further strengthen our balance sheet.

Let me share a few additional considerations to frame our outlook.

Our updated revenue guidance assumes total GPC sales growth in the range of 3% to 4% for 2025 up from our previous outlook of 1% to 3%.

Speaker #5: We will share the final details when we report our fourth-quarter earnings in February. Let me share a few additional considerations to frame our outlook.

We are raising our outlook given our year to date results and recent momentum.

Speaker #5: Our updated revenue guidance assumes total GPC sales growth, in the range of 3% to 4% for 2025. Up from our previous outlook of 1% to 3%.

By business segment, we are now guiding to the following total sales growth of approximately 4% to 5% for the automotive segment and total sales growth of approximately 2% to 3% for the industrial segment.

Speaker #5: We are raising our outlook given our year-to-date results and recent momentum. By business segment, we are now guiding to the following: total sales growth of approximately 4% to 5% for the automotive segment, and total sales growth of approximately 2% to 3% for the industrial segment.

These updates reflect our expectations for continued solid revenue growth in the fourth quarter.

In addition in the fourth quarter, we expect to continue to expand gross margin. However, the rate of our margin expansion will moderate as expected as we've moved past the anniversary of our acquisition in the U S Napa business.

Speaker #5: These updates reflect our expectations for continued solid revenue growth in the fourth quarter. In addition, in the fourth quarter, we expect to continue to expand gross margin.

We expect SG&A leverage in the fourth quarter building on the improvement we've experienced sequentially through 2025, driven by our ongoing cost and restructuring actions.

Speaker #5: However, the rate of our margin expansion will moderate, as expected, as we've moved past the anniversary of our acquisitions in the US NAPA business.

For 2025, we expect to incur restructuring expenses in the range of 180 million to $210 million and.

Speaker #5: We expect SG&A leverage in the fourth quarter, building on the improvement we've experienced sequentially through 2025, driven by our ongoing cost and restructuring actions.

And an expected benefit of $110 million to $135 million when fully annualized in 2026, we expect our 2024 and 2025 restructuring efforts and cost actions to deliver over $200 million of cost savings.

Speaker #5: For 2025, we expect to incur restructuring expenses in the range of $180 million to $210 million, and an expected benefit of $110 to $135 million.

We remain on track to deliver our targeted benefits.

Speaker #5: When fully annualized in 2026, we expect our 2024 and 2025 restructuring efforts and cost actions to deliver over $200 million in cost savings. We remain on track to deliver our targeted benefits.

Our outlook also includes the expected interest expense of approximately $160 million in 2025.

Collectively these factors lead to our expectations for continued earnings growth in the fourth quarter.

Speaker #5: Our outlook also includes expected interest expense of approximately $160 million in 2025. Collectively, these factors lead to our expectations for continued earnings growth in the fourth quarter.

As we progressed through the quarter, we will continue to watch the fluid tariff environment customer sentiment industrial demand activity and overall market conditions, particularly in Europe.

Lastly, we expect to generate cash from operations in a range of $1 1 billion to $1 3 billion and free cash flow of $700 million to $900 million.

Speaker #5: As we progress through the quarter, we will continue to watch the fluid tariff environment, customer sentiment, industrial demand activity, and overall market conditions, particularly in Europe.

With the narrowing of our outlook range around earnings we would anticipate being at the lower end of these ranges.

Speaker #5: Lastly, we expect to generate cash from operations in a range of $1.1 billion to $1.3 billion, and free cash flow of $700 million to $900 million.

In closing the external environment remains dynamic marked by a fluid tariff landscape.

And cost inflation stagnant market conditions, and a cautious customer.

Speaker #5: With the narrowing of our outlook range around earnings, we would anticipate being at the lower end of these ranges. In closing, the external environment remains dynamic, marked by a fluid tariff landscape, heightened cost inflation, stagnant market conditions, and a cautious customer.

As we look to finish 2025 strong our focus remains on operating with agility and discipline, while consistently delivering excellent service to our customers around the world.

We remain confident in the supportive underlying fundamentals of our businesses and the strategic investments supporting our long term growth.

Speaker #5: As we look to finish 2025 strong, our focus remains on operating with agility and discipline, while consistently delivering excellent service to our customers around the world.

Thank you and we will now turn it back to the operator for your questions.

Thank you ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.

Speaker #5: We remain confident in the supportive underlying fundamentals of our businesses, and the strategic investments supporting our long-term growth. Thank you, and we will now turn it back to the operator for your questions.

Can we do I have a question. Please press star followed by the numbers.

Speaker #1: Thank you, and ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press a star, followed by the number one on your telephone keypad.

Thank you please limit yourself to one question and one follow up.

With that our first question comes from the line of Greg Melick with Evercore. Please go ahead.

Speaker #1: If you are using a speakerphone, please raise your handset before pressing the keys. To withdraw your question, please press a star, followed by the number two.

Hi, Thanks.

I wanted to start on the where you added burden on the fundamentals on the business in the fourth quarter Guide.

Speaker #1: We ask that you please limit yourself to one question and one follow-up. With that, our first question comes from the line of Greg Mellick with Evercore, please go ahead.

Besides the cycling of the business acquisitions.

Is there anything else accounting for gross margins being up less than the fourth quarter timing on tariff pass through.

Speaker #6: Hi, thanks. I wanted to start on where you ended, Bert, on the fundamentals and the business in the fourth quarter guide. Besides the cycling of the business acquisitions, what would, if anything else, account for gross margins being up less in the fourth quarter?

Rebates or anything along those lines.

Hey, good morning, Greg I would say no. There is no other uniqueness to the gross margin expansion in the fourth quarter and the guide it's really about just the continued great work, we're doing on sourcing and pricing and as you mentioned the lapping of the acquisition benefit.

Speaker #6: Timing on, you know, tariff pass-through, vendor rebates, anything along those lines?

Speaker #7: Hi, good morning, Greg. I would say no, there's no other, uniqueness to the gross margin expansion. In the fourth quarter, in the guide, it's really about just the continued great work we're doing on sourcing and pricing, and as you mentioned, the lapping of the acquisition benefit.

As we've gotten past the anniversary of the Big U S auto acquisitions last year.

Got it thanks, and then I guess more strategically on the review.

Given that this is the first time, we've had a call since the board evolution, we will just like to.

Speaker #7: As we've gotten past the anniversary of the big US auto acquisitions last year.

As youre looking at it.

Do you think are the real benefits of having the businesses together today and do you think that would change is there any reason to have them together as you think about the longer term future.

Speaker #6: Got it, thanks. And then, I guess, more strategically on the review, given that this is the first time you've had a call since the board evolution, Will, I'd just like to, as you're looking at it, you know, what do you think are the real benefits of having the businesses together today, and do you think that would change?

Yes, Greg Thanks for the question.

We've we've enjoyed very meaningful benefits over the last three to four years associated with being together is as I've talked about before as we studied all of the investments that we've put into the business and the strategies around our initiatives. They are very very consistent.

Speaker #6: Is there any reason to have them together, as you think about the longer-term future?

Speaker #7: Yeah, Greg, thanks for the question. We've enjoyed very meaningful benefits over the last three to four years, associated with being together as I've talked about before.

And so as you think about the benefits of the work that's happened in the last three to four years, it's really been an acceleration in some of the pieces that is better than the individual pieces. So whether it's sales effectiveness technology investments supply chain, we've really benefited.

Speaker #7: As we studied all of the investments that we put into the business and the strategies around our initiatives, they are very, very consistent. And so, as you think about the benefits of the work that's happened in the last three to four years, it's really been an acceleration in the sum of the pieces that is better than the individual pieces.

I'm working as one team and as I've said in my prepared remarks, we've had the opportunity as we do every year as part of our strategic planning process.

Speaker #7: So whether it's sales effectiveness, technology investments, supply chain, we've really benefited from working as one team. And as I said in my prepared remarks, you know, we've had the opportunity, as we do every year as part of our strategic planning process, to evaluate all those initiatives, pressure test what's working, where we want to improve, what we want to do more of.

To evaluate all of those initiatives pressure test, what's working where we want to improve what we want to do more of.

And how we think about the future and so this is a very natural and.

A process that we go through every year and so we've done that with great rigor I had my entire executive team plus another level out at an off site.

Speaker #7: And how we think about the future. And so this is a very natural process that we go through every year. And so we've done that with great rigor.

Later earlier this summer.

And we've done really good work to ask tough questions challenge each other.

Speaker #7: I had my entire executive team plus another level out at an offsite later earlier this summer. And we've done really good work to ask tough questions, challenge each other, think about capital allocation.

Think about capital allocation, so it's a very healthy fulsome process.

And again as I said in my prepared remarks, we will give everybody an update next year. After we finish the work.

So gentlemen, thanks and good luck.

Thanks, Greg.

Speaker #7: So it's a very healthy, fulsome process. And again, as I said in my prepared remarks, we'll give everybody an update next year after we finish the work.

And your next question comes from the line of Chris <unk> with Jpmorgan. Please go ahead.

Hi, Good morning, it's Christian Carlino on for Craig.

Speaker #6: Good job, and thanks, and good luck.

Okay.

Speaker #7: Thanks, Greg.

Okay.

Can you talk about what was same SKU inflation in U S. Napa and how are you thinking about incremental pricing come through over the next couple of quarters for both U S Napa and motion.

Speaker #1: And your next question comes from the line of Chris Horvitz with JP Morgan. Please go ahead.

Speaker #8: Hi, good morning. It's Christian Carlino, on for Chris. Can you talk about what was SAMSQ inflation in US NAPA and how are you thinking about incremental pricing coming through over the next couple of quarters for both US NAPA and Motion?

What at what point will the one region <unk> show up in sales and what level of inflation you can see that approaching.

Yes, Chris and good morning look I think as we think about the full run rate of inflation.

We're probably there as we look at how we exit the third quarter. We saw all of the tariff impacts start to build in the early part of the third quarter.

Speaker #8: You know, at what point will the full run rate of tariffs show up in sales, and in what level of inflation do you see that approaching?

Speaker #7: Yeah, Christian, good morning. Look, I think, as we think about the full run rate of inflation, we're probably there. As we look at how we exit the third quarter, we saw all of the tariff impacts start to build.

Mature.

Here at the end of the quarter and really honestly with the stabilization of that.

Part of why we adjusted the revenue guide upward I would say that the benefit to U S. Automotive is two five ish range.

Speaker #7: In the early part of the third quarter, and kind of mature here at the end of the quarter, and really, honestly, with the stabilization of that, it's part of why we adjusted the revenue guide upward.

Maybe a little stronger on the motion side.

And we'd expect it as we as we said in our prepared remarks to live in that kind of range for the rest of the year low.

Speaker #7: I'd say that the benefit to US automotive is two and a half-ish range. Maybe a little stronger on the Motion side. And we'd expect it, as we said in our prepared remarks, to live in that kind of range for the rest of the year.

Low single digit on the top line low single digit on cost of goods sold impact.

A net benefit to the third quarter, and we expect a slight net benefit to the fourth quarter.

But as we look ahead I think we will exit assuming everything else stays stable.

Speaker #7: Low single-digit on the top line, low single-digit on cost of goods sold impact, it had a net benefit to the third quarter, and we expect a slight net benefit to the fourth quarter.

The other dynamics around the fluid environment with China don't change too much we would expect to exit the year that way.

I think what would be a good thing for everyone is that we start 2026 with a lot of clarity around this issue.

Speaker #7: But as we look ahead, I think we'll exit, assuming everything else stays stable and the other dynamics around the fluid environment with China don't change too much. We'd expect to exit the year that way.

And that can start to build back some confidence with our customers.

Got it that's really helpful.

Speaker #7: And I think what would be a good thing for everyone is that we start 2026 with a lot of clarity around this issue. And that can start to build back some confidence with our customers.

As you think about the right structure for GPC, how would you characterize any dis synergies into two businesses operated separately ultra.

Both from a purchasing standpoint, as <unk> shared corporate costs and any others.

Speaker #8: Got it, that's really helpful. And as you think about the right structure for GPC, how would you characterize any disynergies, if the two businesses operated separately?

With the details.

Yes, Chris and it's probably a little hypothetical to think about the split of the company and dis synergies and things like that I'll build on <unk> point.

Speaker #8: You know, both from a purchasing standpoint, as well as shared corporate costs, and then the other explicit details you would put around that. Thanks.

We have done a nice job in the last several years of leaning into.

<unk> GPC and we don't really think about it through the prism of allocating corporate to different segments or breaking things up at this moment.

Speaker #7: Yeah, Christian, it's probably a little hypothetical to think about the split of the company and disynergies, and things like that. I'll build on Will's point.

Speaker #7: We have done a nice job in the last several years of leaning into one GPC. And we don't really think about it through the prism of allocating corporate to different segments, or breaking things up at this moment.

As will said when we think about where we are benefited.

Procurement is a place where we've been able to leverage capability.

<unk> direct procurement and indirect procurement and that's just being smart quite frankly, we have a big business, we have a powerful portfolio of spend and we can come out and be smart about how we do that and worked really closely with our suppliers and our customers on that front to find the right balance. The other thing I would tell you is that.

Speaker #7: As Will said, when we think about where we've benefited, procurement is a place where we've been able to leverage capability in both direct procurement and indirect procurement.

Speaker #7: And that's just being smart, quite frankly. We have a big business, we have a powerful portfolio, of spend, and we can come out and be smart about how we do that, and work really closely with our suppliers and our customers on that front to find the right balance.

With with <unk> coming in a few years ago, we've really made meaningful strides in the investment in technology I'll start with our Poland Tech Center, which is celebrating their three year anniversary. The work we're doing in Krakow to benefit the entirety of the business is pretty spectacular.

Speaker #7: The other thing I would tell you is that, you know, with Naveen coming in a few years ago, we've really made meaningful strides in the investment in technology.

Doing it at a high high rate of quality.

Speaker #7: I'll start with our Poland Tech Center, which is celebrating their three-year anniversary. The work we're doing in Krakow, to benefit the entirety of the business, is pretty spectacular.

And with great productivity and these are initiatives that benefit everyone.

So we're doing it one time, rather than perhaps historical ways of doing it multiple times.

Speaker #7: We're doing it at a high, high rate of quality, and with great productivity. And these are initiatives that benefit everyone. So we're doing it one time, rather than perhaps historical ways of doing it multiple times.

And when you think about how that translates theres a benefit to the entire business of doing it that way and that cascades into every dimension of our investment profile. When we think about the automation of the DC, we're leveraging capabilities globally and thinking about how to do that smart in using our learnings and expertise to follow the best technology.

Speaker #7: And when you think about how that translates, there's a benefit to the entire business of doing it that way. And that cascades into every dimension of our investment profile.

The moment and now as we've turned our attention to the transformation work, we're doing in the U S. Automotive business, we're seeing that cascade through with the two new Dcs. We're building this year in Napa.

Speaker #7: When we think about the automation of a DC, we're leveraging capabilities globally, and thinking about how to do that smart and using our learnings and expertise to follow the best technology of the moment.

Got it thank you very much and good luck.

Speaker #7: And now, as we've turned our attention to the transformation and work we're doing in the US automotive business, we're seeing that cascade through with the two new DCs we're building this year in NAPA.

Thanks.

And your next question comes from the line of Jordan with Jefferies. Please go ahead.

Hey, good morning, guys.

Hey, Brett.

Speaker #8: Got it, thank you very much. Best of luck.

When you think about the factoring programs and obviously the first brands.

Speaker #7: Thanks.

Speaker #1: And your next question comes from the line of Jordan with Jeffries. Please go ahead.

Issue have you seen any either increased risk spread pricing from the banks or any.

Speaker #9: Hey, good morning, guys.

Speaker #7: Hey, Brett.

Speaker #9: Hey, when you think about the factoring programs and obviously the first brands, have you seen any increased risk spread pricing from the banks or any less willingness to participate in the payables models?

Less willingness to participate on the payables models.

No.

Ill say no and then I'll give you a little bit more color on it.

Look we see the first brand situation with respect with respect to supply chain financing really isolated to first brands.

Programs have been around for some time and they've been through periods of disruption broader disruption like Covid and have remained strong. So our current view is that.

Speaker #9: No, I'll say it no, and then I'll give you a little bit more color on it. Look, we see the first brand situation with respect to supply chain financing, really isolated to first brands.

The programs are continuing to function normally across all of our other supplier partners our.

Speaker #9: The programs have been around for some time, and they've been through periods of disruption. Broader disruption, like COVID, and have remained strong. So our current view is that the programs are continuing to function normally across all of our other supplier partners.

Our program is designed well our size and scale makes us attractive partner for our suppliers.

And we've got a great group of banking partners that.

That help us work with the suppliers five big platforms.

Speaker #9: Our program is designed well. Our size and scale makes us an attractive partner for our suppliers. And we've got a great group of banking partners that help us work with the suppliers: five big platforms, and our utilization while down year to date really on the back of lower inventory replenishment, we don't see anything unusual.

And our utilization while down year to date really on the back of lower inventory replenishment. We don't see anything unusual first brands has been suspended in our programs.

Which you would expect I can't speak to the other is more broadly, but that's true for us globally.

But we feel good about the program overall and wouldn't call any question into the health of it more broadly for the automotive aftermarket in the industry.

Speaker #9: First brands has been suspended in our programs, which you would expect. I can't speak to the others more broadly, but that's true for us globally.

Ed I would just I would just I would just add another couple of thoughts which is.

Speaker #9: But we feel good about the program overall. And wouldn't call any question into the health of it more broadly for the automotive aftermarket in the industry.

We are coordinated as a global team.

We're operating with a high level of coordination around the world as I said in my prepared remarks, the commercial relationship with first brands continues to be solid fill rates are high.

Speaker #9: Brett, I would just add another couple of thoughts, which is, you know, we are coordinated as a global team. We're operating with a high level of coordination around the world.

And we're in active discussions.

We're cautiously optimistic that we're going to continue to build.

Speaker #9: As I said in my prepared remarks, the commercial relationship with first brands continues to be solid, fill rates are high, and we're an active discussions.

Our path to a resolution on this one.

Great. Thank you and then I think you commented that your sell out from independents and your company comp was up plus three ish, so maybe a little bit less inventory at the independents and.

Speaker #9: So we're cautiously optimistic that we're going to continue to build path to resolution on this one. Great, thank you. And then I think you commented that your sell-out from independents and your company comp was a plus three-ish.

And you mentioned that you were sort of helping them.

Along the path of better in stocks could you give us maybe a bit more color as to how you are helping the independents and sort of what level of inventory, where you see them app versus where you target them being.

Speaker #9: So maybe a little bit less inventory at the independents. And you mentioned that you were sort of helping them along the path of better in stocks.

Yes, Brian we're constantly working with the owners I think you summarized the facts appropriately which is we're really pleased with.

Speaker #9: Could you give us maybe a bit more color as to how you're helping the independents and sort of what level of inventory you see them at versus where you'd target them being?

What we are seeing selling out into the market. We've talked a lot about over the last couple of years. The work that we've been doing with independent owners and our own stores for that matter to make sure that we've got the right inventory in the right place at the right time.

Speaker #9: Yeah, Brett, we're constantly working with the owners. I think you've summarized the facts appropriately, which is we're really pleased with what we're seeing selling out into the market.

Theyre pretty individualized discussions with owners so it depends on the needs of the independent owner, whether it's <unk>.

Speaker #9: We've talked a lot about over the last couple of years, the work that we've been doing with independent owners and our own stores for that matter, to make sure that we've got the right inventory in the right place at the right time.

Helping them thinking about pricing, helping them thinking about cash flow management, helping.

Helping thinking helping them think about product assortment. So.

Speaker #9: They're pretty individualized discussions with owners, so it depends on the needs of the independent owner, whether it's helping them thinking about pricing, helping them thinking about cash flow management, helping them think about product assortment.

That's super granular by local market by size and scale of owner. So those are the discussions that we're having owner by owner and we're really pleased with the types of discussions that we're having and the momentum that we built through the course of the year.

Speaker #9: So that's super granular by local market, by size and scale of owners. So those are the discussions that we're having. Owner by owner, and we're really pleased with the types of discussions that we're having and the momentum that we've built through the course of the year.

Should we expect that sell in to accelerate in the fourth quarter, just given the fact that they would seem to be they have sold more in the third quarter than they took.

Brett I wouldn't assume that theyre going to accelerate in the fourth quarter.

Speaker #9: Should we expect that sell-in to accelerate in the fourth quarter, given the fact that they would seem to have sold more in the third quarter than they took?

We had an unexpected expectation that they would start to accelerate a little maybe a little stronger than they did in the third quarter. We're pleased with the improvement.

Speaker #9: Brett, I wouldn't assume that they're going to accelerate in the fourth quarter. We had an expectation that they would start to accelerate a little, maybe a little stronger than they did in the third quarter.

But in the fourth quarter, we've kind of assumed that its going to be pretty pretty level on with Q3 with respect to their behavior.

Things that could be helpful that would give us some upside one of the biggest things impacting the independent owner or the elevated interest rates and so if we saw more relief there that would be a factor that could lead us to a bit of an acceleration there.

Speaker #9: We're pleased with the improvement. But in the fourth quarter, we've kind of assumed that it's going to be pretty level with Q3, with respect to their behavior.

Speaker #9: Things that could be helpful that would give us some upside. You know, one of the biggest things impacting the independent owner are the elevated interest rates.

Really are as will mentioned, it's really individualized and they really are managing their own cash flows and being tight on their working capital and as such they turn to.

Speaker #9: And so if we saw more relief there, that would be a factor that could lead us to a bit of an acceleration. They really are, as Will mentioned, it's really individualized, and they really are managing their own cash flows and being tight on their working capital.

Make these replenishment decisions through that prism.

So I think that may be a way, we get a little bit more clarity and help on the independent owner as we drive through the rest of the year.

Speaker #9: And as such, they tend to make these replenishment decisions through that prism. And so I think that may be a way we get a little bit more clarity and help on the independent owner as we drive through the rest of the year.

Great. Thank you.

<unk>.

And your next question comes from the line of Scot Ciccarelli with <unk> Securities. Please go ahead.

Good morning, guys.

Morning.

So with the independents continuing to work down their inventory levels and just given what we know the physical dynamics of the industry.

Speaker #9: Great, thank you. Thanks, Brett.

Speaker #1: And your next question comes from the line of Scott Cicarelli with Tourist Securities. Please go ahead.

Do we think that the independents had been losing market share and like is there a way to potentially quantify that.

Speaker #8: Good morning, guys.

Speaker #9: Morning, Scott.

Speaker #8: So with the independents continuing to work down their inventory levels, and just given what we know the typical dynamics of the industry are, do we think that the independents have been losing market share?

Yes, Scott I wouldn't say, they're working down their inventories.

There they are.

Been mindful like we all have about managing inventory balances and so that doesn't necessarily mean to say.

Speaker #8: And like is there a way to potentially quantify that?

Speaker #9: Yes, Scott, I

Don't have enough to compete.

Speaker #7: wouldn't say they're working down their inventories. I think they're they've been mindful, like we all have, about managing inventory balances. And so that doesn't necessarily mean they don't have enough to compete.

And so no I am not prepared to say that the independent owners are losing share in the market I think all of the initiatives that we've been doing across company owned stores and independent owned stores are having their intended effect, we've been very consistent about the body of work.

Speaker #7: And so, no, I'm not prepared to say that the independent owners are losing share in the market. I think all of the initiatives that we've been doing across company-owned stores and independent-owned stores are having their intended effect.

In that regard, whether it's assortment planning and making sure you got the inventory operational excellence and so I would describe the partnership with the independent owners as good as it's been in some time, so we need to keep our head down and continue to support them in a choppy market, but I feel good about the work that we're doing with the owners and how they're competing.

Speaker #7: We've been very consistent about the body of work. In that regard, whether it's assortment planning or making sure you've got the inventory operational excellence, I would describe the partnership with the independent owners as good as it's been in some time.

In the market.

Okay, and then I will take a little different angle on this one and then maybe it's a bit of a follow up to <unk> question as well is there a point in your estimation, where the independents have to start building back up their inventory levels from where they are currently.

Speaker #7: So we need to keep our head down and continue to support them in a choppy market, but I feel good about the work that we're doing with the owners and how they're competing in the market.

Speaker #8: Okay, maybe I'll take a little different angle on this one then. Maybe it's a bit of a follow-up to Brett's question as well. Is there a point in your estimation where the independents have to start building back up their inventory levels from where they are currently?

I would say it depends but on the margin, yes could we have them buying more inventory. The answer is yes, I think I would just add Scott that it's always.

Inventory availability is a daily focus and I think we can always continue to get better whether we're talking about independent owned stores or.

Speaker #7: I would say it depends, but on the margin, yes, could we have them buying more inventory? The answer is yes.

The company owned stores, obviously, we have more control over the company owned stores and the growth.

And the performance of the company owned stores.

4% improvement year over year is a reflection of their hard work, we're doing in the business and we're doing that same hard work with the independent owners.

And you saw that with sequential improvement in their performance in the quarter as well. So look I mean, I think we can always be better and I wouldn't isolate being better on inventory availability to the independent owners in isolation as will said partnership with them has never been better.

And the opportunities that lie ahead, our strong I think if you want to kind of anchor one thing on where they could be replenishing faster.

While they are being cautious right now it's back to my comment a few minutes ago on interest rates and anything we can do to help them on interest rates outside of all of the things we're already doing.

The GPC perspective would be helpful for them and Scott, maybe just to summarize it with a simple sentence I mean, our inventory positions, whether it's company owned stores are with independent owners is not a reason for underperformance our inventory levels have never been healthier in the aggregate. So we're in a great spot.

Bob we're competing effectively.

And we're going to continue to keep our head down.

Okay got it thanks guys.

And your next question comes from the line of Michael Lasser with UBS. Please go ahead.

Good morning. Thank you so much for taking my question. You mentioned you expect the run rate for inflation to remain in this range.

Call it 2% to 3% others in the industry have suggested that inflationary impact could peak.

As soon as the first quarter of next year and that could be within the mid to high single digit impact range. So what is different about GPC that its not experiencing as much inflation.

And presumably it's not because you are not passing along the price increases. So we shouldnt expect price gap to widen or anything of that nature.

Yes, I'll, let Michael I would just say that as we think about this tariff dynamic. The most important thing that we focus on is to work with our suppliers to make sure that we're minimizing any disruption to our customers and that means a very tight balancing of cost increases and price increases and we're doing that in a <unk>.

Presumably it's not because you are not passing along the price increases so we shouldnt expect price gap to widen or anything of that nature.

Yes, I'll, let Michael I would just say that as we think about this tariff dynamic. The most important thing that we focus on is to work with our suppliers to make sure that we're minimizing any disruption to our customers and that means a very tight balancing of cost increases and price increases and we're doing that.

Very thoughtful way.

And considering what we think the market can accept I think the experience to date to date would tell you that the market has accepted the price increases across the board and I think our philosophy is no different than.

In a very thoughtful way.

Considering what we think the market can accept I think the experience to date to date would tell you that the market has accepted the price increases across the board and I think our philosophy is no different than.

The rest of the players in the marketplace, whether youre talking about the industrial side of our business or the automotive side of our business.

We're working to pass along what we can we benefit from it being a break fix model on both sides.

The rest of the players in the marketplace, whether youre talking about the industrial side of our business are the automotive side of our business. We're working to pass along what we can we benefit from it being a break fix model on both sides.

And we think that what's happening is rational.

I think we're thinking about it through all of those dimensions.

Certainly seeing a benefit a net small benefit of the outcome of that in the quarter and we'll see that again in the fourth quarter.

And so I don't think theres anything thats fundamentally different as we approach it to anyone else or the number slightly different of course, I think everybody has different dynamics in terms of their exposure to China their size and scale I think smaller players probably are feeling more of a price increase because they don't have the size and scale that we do.

And we think that what's happening is rational.

So I think we're thinking about it through all of those dimensions, we're certainly seeing a benefit a net small benefit of the outcome of that in the quarter and we will see that again in the fourth quarter.

And so I don't think Theres anything thats fundamentally different as we approach it to anyone else are the numbers slightly different of course, I think everybody has different dynamics in terms of their exposure.

And I think when we think about that it gives us some degrees of flexibility to work really closely with our customers. So we've seen a low single digit benefit on the topline.

To China their size and scale I think smaller players probably are feeling more of a price increase because they don't have the size and scale that we do and I think when we think about that it gives us some degrees of flexibility to work really closely with our customers. So we've seen a low single digit benefit on the top line.

Through the third quarter, we expect that again in the fourth quarter low single digit increase to cost of goods sold here in the third quarter, we expect that for the fourth quarter.

And again, it's a dynamic area. So we'll continue to watch it closely but I think we've got it balanced and dialed in in the right way.

Through the third quarter, we expect that again in the fourth quarter low single digit increase the cost of goods sold here in the third quarter, we expect that for the fourth quarter.

Okay.

My follow up question is on the fourth quarter outlook and how that should inform how we as external observers should.

And again, it's a dynamic area. So we will continue to watch it closely but I think we've got it balanced and dialed in in the right way.

Start thinking about 2020.

Okay.

Yes.

You raised the top end of your.

My follow up question is on the fourth quarter outlook and how that should inform how we as external observers should.

Sales outlook, yet lowered the midpoint of your.

Earnings outlook, presumably.

Start to think about 2020.

You wanted to be around where the consensus was for the for the fourth quarter. So should we.

Six you raised the top end of your.

Sales outlook, yet lowered the midpoint of your.

How should we read the profitability outlook in the fourth quarter and B, how should that inform how we think about genuine parts.

Earnings outlook, presumably.

You wanted to be around where the consensus was for the for the fourth quarter. So should we how should we read the profitability outlook in the fourth quarter and B, how should that inform how we think about genuine parts.

Margin structure next year, assuming that the company can maintain this pace of sales growth should you experience a similar amount of margin expansion on leverage on your SG&A that you're embedding in the fourth quarter. Because you do have a one time lap that you're benefiting from in the fourth quarter. Thank you.

Margin structure next year, assuming that the company can maintain this pace of sales growth should you experience a similar amount of margin expansion or leverage on your SG&A that you're embedding in the fourth quarter. Because you do have a one time lap that youre benefiting from in the fourth quarter. Thank you.

It was a very long question, Michael I might've discharge Baird.

And to be long winded, Bart I'm going to charge you extra next time for the length of that question I cannot afford it all this information.

Hey, look I mean, I'm going to start with a very straightforward comment about the fourth quarter, we expect to have a really solid fourth quarter.

It was a very long question, Michael I might have to chart Baird I tend to be long winded Bert I'm going to charge you extra next time for the linked to that question.

And now I'll walk you through a little bit of my perspectives on the guide we did narrow the range.

All this information.

Hey, look I mean, I'm going to start with a very straightforward comment about the fourth quarter, we expect to have a really solid fourth quarter.

I want to go back to how we started the year on our outlook, which was that we expected a more muted first half and a recovery building and accelerating through Q3 and Q4.

And now I'll walk you through a little bit of my perspectives on the guide.

In full transparency as I said in my prepared remarks, we didn't see that happened in the third quarter.

We did narrow the range.

I wanted to go back to how we started the year on our outlook, which was that we expected a more muted first half and a recovery building and accelerating through Q3 and Q4.

And so we don't see the improvement in market conditions.

For the remainder of 2025, despite our third quarter performance, which was in line with our own expectations. So it's that more muted recovery that we had expected for the full year that led to the narrowing of our range.

In full transparency as I said in my prepared remarks, we didn't see that happened in the third quarter.

And so we don't see the improvement in market conditions.

And that more robust trading environment.

For the remainder of 2025, despite our third quarter performance, which was in line with our own expectations. So it's that more muted recovery that we had expected for the full year that led to the narrowing of our range.

And stronger underlying demand that we might have expected was really the path to the upside of our previous EPS range.

So with one quarter left in three quarters already in the books. We felt it was important to give everyone. Some color on how we see the fourth quarter playing out.

And that more robust trading environment.

Stronger underlying demand that we might have expected was really the path to the upside of our previous EPS range and so with one quarter left in three quarters already in the books. We felt it was important to give everyone. Some color on how we see the fourth quarter playing out.

With respect to trends on revenue and EPS.

And while I don't give you guys quarterly guidance when we think about the revenue for the fourth quarter, we're going to build on this momentum we've had here in the third quarter.

Sequential improvement in Napa, we think solid growth that motion.

With respect to trends on revenue and EPS.

And the tariff landscape that while it's been fluid hasnt been stabilized to some respect and Thats why we have included and talked about some of the benefits that we've assumed for the rest of the year on the tariff front with respect to revenue.

While I don't give you guys quarterly guidance when we think about the revenue for the fourth quarter, we're going to build on this momentum we've had here in the third quarter.

Sequential improvement in NAFTA, we think solid growth at motion.

And the tariff landscape that while it's been fluid has been stabilized to some respect and Thats why we have included and talked about some of the benefits that we've assumed for the rest of the year on the tariff front.

The watch point on the top line as the European market conditions, which will continue to watch closely.

And so thats really kind of how we're thinking about the revenue when we think about gross margin expansion to Greg's earlier question. It will moderate in the fourth quarter from the third quarter, we're lapping the benefit of those acquisitions.

With respect to revenue.

I think the watch point on the top line as the European market conditions, which will continue to watch closely.

And the reality is we are experiencing some higher cost of goods sold from the tariffs, which I mentioned earlier.

So thats really kind of how we're thinking about the revenue when we think about gross margin expansion to Greg's earlier question. It will moderate in the fourth quarter from the third quarter, we're lapping the benefit of those acquisitions.

And so we'll be working through that through the fourth quarter as well on SG&A.

While we are still feeling cost inflation, we've done some great work on our cost structure over the last two years and we're going to continue to lean into that and we have an expectation for some leverage in the fourth quarter from all the hard work. We've done when you take the net some of that we will see earnings growth in the fourth quarter as we balanced the solid revenue growth I just.

And the reality is we're experiencing some higher cost of goods sold from the tariffs, which I mentioned earlier.

And so we'll be working through that through the fourth quarter as well on SG&A.

While we are still feeling cost inflation, we've done some great work on our cost structure over the last two years and we're going to continue to lean into that and we have an expectation for some leverage in the fourth quarter from all the hard work. We've done when you take the net some of that we will see earnings growth in the fourth quarter as we balanced the solid revenue growth.

Talked about moderated gross margin some SG&A leverage and all of that momentum we've had here in the third quarter, but we did give you a little bit more interest expense in Q4, and Thats just based on the trending out of the year so with that.

Just talked about moderated gross margin some SG&A leverage and all of that momentum we've had here in the third quarter, but we did give you a little bit more interest expense in Q4, and Thats just based on the trending out of the year. So with that then.

The net sum of it all puts us in the EPS range that we shared with you today.

Really kind of think about where that that upside was coming from it was on the expectation.

Earlier in the year of a more robust trading environment.

Net sum of it all puts us in the EPS range that we shared with you today.

And just to clarify how should the fourth quarter implied expectation inform how we should think about 2026.

If I really kind of think about where that upside was coming from it was on the expectation.

Well look I don't want to get out in front of my skis on giving you guidance on 2026.

Earlier in the year of a more robust trading environment.

Will mentioned, we had a lot of work we're doing here. This is also our business planning process season for 2026.

And just to clarify how should the fourth quarter implied expectation inform how we should think about 2026.

I think the great work, we've done on SG&A will continue to show through as we look into next year.

Look I don't want to get out in front of my skis on giving you guidance on 2026 as will mentioned we had a lot of work. We're doing here. This is also our business planning process season for 2026.

Obviously I think we'll continue to have gross margin expansion as we look ahead, because we're doing such great work in that space and we have opportunities across the board across the business.

I think the great work, we've done on SG&A, we will continue to show through as we look into next year.

Look I don't want to get into market conditions, our top line forecast for 2026.

Obviously I think we'll continue to have gross margin expansion as we look ahead, because we're doing such great work in that space and we have opportunities across the board across the business.

As I think about how 2026 could set up I think we're in a bit of a similar dynamic to a year ago, everyone was waiting on the outcome of an election, we got election resolution and clarity and we started the year 2025 with I think a bit more optimistic outlook you saw that just as an example, with PMI starting the year above.

Look I don't want to get into market conditions, our top line forecast for 2026.

As I think about how 2026 could set up I think we're in a bit of a similar dynamic to a year ago, everyone was waiting on the outcome of an election, we got election resolution and clarity and we started the year 2025 with I think a bit more optimistic outlook you saw that just as an example, with PMI starting to Airbus.

<unk> I.

I think as we find ourselves at the end of 2025, we sit in a similar place there's a lot of folks sitting on the sidelines not around an election, but more around what's going to happen with interest rates and how do we get some kind of could clear rules of engagement on tariffs. If we got that in the fourth quarter. I think you could see a trading environment in 2026 that would be a little bit more.

<unk>.

I think as we find ourselves at the end of 2025, we sit in a similar place there's a lot of folks sitting on the sidelines not around an election, but more around what's going to happen with interest rates and how do we get some kind of good clear rules of engagement on tariffs. If we got that in the fourth quarter. I think you could see a trading environment in 2026 that would be a little bit more.

Robust, obviously Europe would continue to be a watch point, so it will be thinking about that.

So those are the broad strokes that were thinking about as we move through our business planning process and set up for 2026. The other watch point I would give you is cost inflation and SG&A.

Our robust obviously Europe would continue to be a watch point, so it will be thinking about that.

It's been persistent.

So those are the broad strokes that were thinking about as we move through our business planning process and set up for 2026. The other watch point I would give you is cost inflation and SG&A.

We'll want to take a really hard look at that so that's about the <unk>.

Hi, its level of cover color and detail I can give you Michael on 2026 without getting too specific and getting out in front of.

The good work, we need to do here in the fourth quarter to give you an informed guide on the full year 2006, but I would just say this.

It's been persistent.

We'll want to take a really hard look at that so that's about the <unk>.

Hi, its level of cover color and detail I can give you Michael on 2026 without getting too specific and getting out in front of the.

A lot of good momentum in the business.

We delivered a solid third quarter.

The good work, we need to do here in the fourth quarter to give you an informed guide on the full year 'twenty six but I would just say this I mean, we've got a lot of good momentum in the business.

We've shown earnings growth.

For the first time in a while and we're going to continue to be focused on that as a leadership team.

Understood. Thank you so much and good luck.

We delivered a solid third quarter.

Thank you. Your next question comes from the line of Keith Mcshane with Goldman Sachs. Please go ahead.

And we've shown earnings growth for.

For the first time in a while and we're going to continue to be focused on that as a leadership team.

Hey, Good morning. This is mark Jordan on for Kate Mcshane. Thank you for taking my questions.

Understood. Thank you so much and good luck.

You touched on a little bit there, but maybe can you talk about what youre seeing for inflationary cost increases in terms of salaries wages.

Thank you. Your next question comes from the line of Keith Machine with Goldman Sachs. Please go ahead.

In rent and what the magnitude of the pressures there and maybe what the company is doing to try and offset those headwinds.

Hey, Good morning. This is mark Jordan on for Kate Mcshane. Thank you for taking my questions.

You touched on a little bit there, but maybe can you talk about what youre seeing for inflationary cost increases in terms of salaries wages and.

Yes look I think the magnitude of the kind of increase in inflation lives in that three ish percent range in the aggregate.

Rent and what the magnitude of the pressures there and maybe what the companies join to try and offset those headwinds.

I would say the inflation in rent is probably a little higher right now than it is in wages wage.

Yes look I think that the magnitude of the kind of increase in inflation lives in that three ish percent range in the aggregate.

Wages, probably lives in the three to five rent probably.

Lives a little higher than that just because most of the lease renewals were feeling right now are being renewed for the first time outside of the Covid.

I would say the inflation in rent is probably a little higher right now than it is in wages.

Wages, probably lives in the three to five rent probably.

Period in which obviously leasing rates and rent renewals were depressed and so there is a bit higher pressure. There I think in terms of what we're doing it's everything we've talked about and you see that here in the third quarter, we've taken as a leadership team a tremendous amount of actions across the business in 2024.

Lives a little higher than that just because most of the lease renewals that we're feeling right now are being renewed for the first time outside of the Covid.

Period in which obviously leasing rates and rent renewals were depressed and so there is a bit higher pressure. There I think in terms of what we're doing it's everything we've talked about and you see that here in the third quarter, we've taken as a leadership team a tremendous amount of actions across the business in 2024.

<unk> doubled down in 2025.

Because with the cost inflation and SG&A being persistent that means we have to work smarter and that means we have to invest in productivity and operational efficiencies to offset that headwind and we've done that.

<unk> doubled down in 2025.

Because with the cost inflation and SG&A being persistent that means we have to work smarter and that means we have to invest in productivity and operational efficiencies to offset that headwind and we've done that.

<unk> seen that here in Q3 with a flat SG&A as a percentage of revenue year over year, which is a massive improvement from Q1 and Q2 and so we're proud of that work is largely offsetting that headwind.

<unk> seen that here in Q3 with a flat SG&A as a percentage of revenue year over year, which is a massive improvement from Q1 and Q2 and so we're proud of that work is largely offsetting that headwind.

And you see that with an overall core SG&A growth of two 7% against the top line of 5%, which I think is.

Allowing us to get some leverage on EBITDA in the business. So we're going to continue the hard work, we've got to keep our head down we got to keep grinding and I think that work that we've done is the reason why youre going to see a bit of SG&A leverage in the fourth quarter.

And you see that with an overall core SG&A growth of two 7% against the topline of 5%, which I think.

Allowing us to get some leverage on EBITDA in the business. So we're going to continue the hard work, we've got to keep our head down we got to keep grinding and I think that work that we've done is the reason why youre going to see a bit of SG&A leverage in the fourth quarter.

As we work to continue to offset some of these other headwinds in the business.

Perfect. Thank you very much and then just changing the subject real quick to the U S Napa business.

Retail of course smaller questionary sales, but are you seeing any signs of changing customer behavior there.

As we work to continue to offset some of these other headwinds in the business.

We haven't seen any changing customer behavior, I would say that part of the business continues to be pressured.

Perfect. Thank you very much and then just changing the subject real quick to the U S. Napa business retail of course, a smaller portion of your sales, but are you seeing any signs of changing customer behavior there.

It's more discretionary in nature and as you noted, it's not a big part of our business.

We haven't seen any changing customer behavior, I would say that part of the business continues to be pressured.

It sequentially improved, but it's still pressured so no no material changes in behavior or.

Trading down or the like but continued to be pressured.

It's more discretionary in nature and as.

As you noted, it's not a big part of our business.

Thank you very much.

Thanks.

It sequentially improved, but it's still pressured so no no material changes in behavior or Trey.

And your next question comes from the line of Chris Dankert.

Michael Please go ahead.

Trading down or the like but continued to be pressured.

Hey, good morning, guys. Thanks for taking the question here.

Thank you very much.

I guess I wanted to talk about the supply chain investments, specifically thinking about the Nashville, DC investment there more efficient picking and shipping anything you can share with us in terms of kind of quantifying the improved customer service levels or maybe the subsequent sales growth in region following that investment.

Thanks.

And your next question comes from the line of Chris Dankert.

<unk> markets. Please go ahead.

Hey, good morning, guys. Thanks for taking the question here.

I guess I wanted to talk about the supply chain investments in Napa, specifically thinking about the Nashville, DC investment there more efficient picking and shipping anything you can share with us in terms of kind of quantifying the improved customer service levels or maybe the subsequent sales growth in region following that investment.

Yes, Chris happy to.

I would I wouldn't isolate it just to a Nashville example, we've seen.

We've seen benefits from our supply chain investments when we make building improvements and it's everything that you described it's kind of the productivity of the building itself.

Yes, Chris happy to.

I would I wouldn't isolate it just to a Nashville example, we've seen.

It's the service level to the customer as a result, it's a function and drives better growth in the local market.

We've seen benefits from our supply chain investments when we make building improvements and it's everything that you described it as kind of the productivity of the building itself.

Can think of.

One building in Canada that we've made recent investments in they've got double digit growth in the market post investment.

It's the service level to the customer as a result, it's a function and drives better growth in the local market.

And so that's kind of the marker that we set you want to see significantly better growth better coverage better inventory flows better safety better productivity. So Nashville is one of many examples where.

Can think of.

One building in Canada that we have made recent investments in they've got double digit growth in the market post investment.

And so that's kind of the marker that we set you want to see significantly better growth better coverage better inventory flows better safety better productivity. So Nashville is one of many examples where.

We've seen really nice success as a result of our investments in the supply chain.

Got you. Thanks for the color there and then I guess, maybe to kind of shift over to the motion business.

Definitely encouraging to hear about the backlog growth I guess anything you can see I mean I assume the majority of that is OEM centric just given the nature of those businesses anything you'd share in terms of how you are expecting.

We've seen really nice success as a result of our investments in the supply chain.

Got you. Thanks for the color there and then I guess, maybe you can kind of shift over to the motion business.

Trend it sounds like Youre expecting some level of acceleration.

Definitely encouraging to hear about the backlog growth I guess anything you can see I mean I assume the majority of that is OEM centric just given the nature of those businesses anything you'd share in terms of how you are expecting.

Any color would be would be helpful. Yes.

Yes, I think we're cautiously optimistic we obviously have been cautiously optimistic about this part of the business for some period of time.

Trend it sounds like Youre expecting some level of acceleration there just any color would be would be helpful. Yes.

And so wherever hopeful that we're closer to the bottom than not.

Yes, I think we're cautiously optimistic we obviously have been cautiously optimistic about this part of the business for some period of time.

As I've said in the prepared remarks, the large orders booked.

Book of business is sequentially improving as you noted that's largely OEM based business I think Burke made an interesting inappropriate comment about.

And so wherever hopeful that we're closer to the bottom than not.

As I've said in the prepared remarks, the large orders book.

Coming into the end of the year and feeling better about the world and turning the calendar and feeling like.

Book of business is sequentially improving as you noted that's largely OEM based business I think Burke made an interesting inappropriate comment about.

26 has more clarity, whether it's rates or the industrial complex or the like.

Coming into the end of the year and feeling better about the world and turning the calendar and feeling like.

The conversations with customers as I said last quarter, they're generally constructive, but they're cautious and so there is work out there to be done and we're just slowly working through the bottom part of this phase in the market and feel good about where we're headed into the fourth quarter into 2026.

26 has more clarity, whether it's rates or the industrial complex or the like so the conversations with customers as I said last quarter, they're generally constructive, but they're cautious and so there is work out there to be done and we're just slowly working through the bottom part.

Thanks, So much and best of luck closing out the year here.

Thanks, Chris.

Of this phase in the market and feel good about where we're headed into the fourth quarter into 2026.

And we have no further questions at this time I would like to turn it back to will Stengel for closing remarks.

Thanks again, everybody for your interest in genuine parts company, we look forward to giving everybody an update on our February call have a great day and thanks again.

Yeah.

Thanks, So much and best of luck closing out the year here.

Thanks, Chris.

And we have no further questions at this time I would like to turn it back to will Stengel for closing remarks.

Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you for joining you may now disconnect.

Thanks again, everybody for your interest in genuine parts company, we look forward to giving everybody an update on our February call have a great day and thanks again.

Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you for joining you may now disconnect.

Okay.

Okay.