GENUINE PARTS CO

Genuine Parts Company operates in the automotive aftermarket and industrial parts distribution industries. The automotive aftermarket industry growth is driven by increases in miles driven, a growing and aging vehicle fleet, rising complexity in vehicle technology, and expanding opportunities in electric and hybrid vehicles. The industrial distribution industry growth is supported by increased manufacturing activity across diverse end markets, shifts in global supply chains, rising demand for automation and robotics, and an aging technical workforce. The company serves customers from more than 10,800 ¹ locations, primarily in North America, Europe, and Australasia (primarily Australia and New Zealand). In 2025, revenues were distributed approximately 74% in North America, 16% in Europe and 10% in Australasia.

The company's competitive advantages include strong brands, a global footprint with leading positions in key markets, robust supply chain and distribution capabilities, and advanced technology solutions. Key competitors in North America Automotive include AutoZone, Inc., O'Reilly Auto Parts, Inc., Advance Auto Parts, Inc., and LKQ Corporation. Internationally, competitors include LKQ Corporation, which has a strong presence in Europe, and Bapcor in Australasia. In industrial distribution, the main competitor is Applied Industrial Technologies, Inc., but the company also competes against Fastenal Company and W.W. Grainger, Inc. The company's competitive advantages are based on broad product availability, quality service, strong brand recognition, and competitive pricing.

The company generates revenue by distributing automotive replacement parts, accessories, tools, equipment, and related solutions, as well as industrial replacement parts and value-added solutions to maintenance, repair and operation (MRO) customers and original equipment manufacturer (OEM) customers. The company serves two primary customer types in its Automotive segments: Do-It-For-Me (DIFM) commercial customers including independent and national repair centers, dealerships, service stations, and public and private fleets, and Do-It-Yourself (DIY) retail customers who shop through company-owned and independently-owned stores as well as digital platforms. DIFM and DIY customers represent approximately 80% and 20% ², respectively, of sales in the aggregate across the two Automotive segments. The Global Automotive network serves over one million ³ commercial customer locations. The Industrial segment supports over 180,000 ⁴ customers across approximately 900,000 ⁵ locations.

The North America Automotive segment operates in the United States and Canada through NAPA Auto Parts subsidiaries and UAP Inc., and represents approximately 39% ⁶ of total GPC net sales. The segment serves customers through 6,864 ⁷ locations across the U.S. and Canada, with a mix of approximately 35% company-owned and 65% independently-owned stores. The segment's heavy vehicle business operates under banners such as Traction, TruckPro, TW, and Cadel. In Canada, specialty stores operate under the NAPA/CMAX brand, as well as the Altrom and Auto-Camping banners. The repair center network includes over 20,000 ⁸ locations across North America through programs like the independent NAPA Auto Care program. The U.S. Automotive business offers over one million ⁹ parts sourced from hundreds of suppliers, with approximately 55% ¹⁰ of the 2025 U.S. Automotive inventory purchased from 10 major suppliers.

The International Automotive segment operates in Europe and Australasia and represents approximately 24% ¹¹ of total net sales. The segment operates through Alliance Automotive Group (AAG) in Europe and GPC Asia Pacific in Australasia. In Europe, the segment serves thousands of repair shops and collision centers through over 2,500 ¹² outlets supported by national and regional distribution centers. The segment operates under numerous well-established local banners across Europe, including GROUPAUTO, Precisium, Pièces Auto in France; Coler, Henig, Knoll, Voigt in Germany; UAN, CAAR and NAPA Auto Parts in the U.K. and Ireland; PartsPoint, Alliance Automotive Trading and Precisium in Belgium and Netherlands; and Lausan, Soulima, Gaudi and Colón in Spain and Portugal. The Australasia business operates the largest automotive aftermarket business in the region through company-owned stores under the Repco and NAPA Auto Parts brands. The Industrial segment represents 37% ¹³ of total GPC net sales and operates across North America and Australasia through Motion Industries, Inc. and Motion Asia Pacific. The Industrial segment serves a total addressable market estimated to be over $150 billion ¹⁴. National account customers collectively represent approximately 45% ¹⁵ of annual sales. Motion has access to more than 10 million ¹⁶ replacement parts sourced from nearly 40,000 ¹⁷ different suppliers, with approximately 45% ¹⁸ of purchases coming from the top 50 strategic suppliers. The Industrial segment operates 755 ¹⁹ locations, including distribution centers, branches and service centers.

On February 17, 2026, following a comprehensive strategic and operational review by the Board of Directors and management team, the company announced its intention to separate into two independent, publicly traded companies: one comprising the Automotive Parts Group (Global Automotive) and the other comprising the Industrial Parts Group (Global Industrial). The transaction is intended to qualify as a tax-free transaction for U.S. federal income tax purposes for the company's shareholders. The separation is targeted for completion in the first quarter of 2027 ²⁰, subject to certain customary conditions. In 2025, the company completed over 50 ²¹ strategic acquisitions resulting in over 250 ²² additional locations globally. The company made a strategic acquisition of Benson Auto Parts, expanding its store footprint in key Canadian markets. In 2025, the company announced a 3% ²³ increase in its regular quarterly cash dividend. The company has paid a cash dividend every year since going public in 1948, and 2025 marks the 69th ²⁴ consecutive year of increased dividends paid to shareholders. On December 19, 2025, the company settled all future obligations under the U.S. pension plan through the transfer of the remaining benefit obligations to a third-party insurance company under a group annuity contract, recognizing a one-time, non-cash, pre-tax pension settlement charge of $741,967 ²⁵ ($541 million ²⁶, net of tax).

In 2025, net sales were $24,300,141 ²⁷, an increase of 3.5% ²⁸ compared to $23,486,569 ²⁹ in 2024. Net income totaled $65,945 ³⁰, down 92.7% ³¹ compared to $904,076 ³² in the prior year. Diluted EPS was $0.47 ³³ in 2025, down $6.00 ³⁴ compared to $6.47 ³⁵ in 2024. Adjusted diluted EPS was $7.37 ³⁶, down $0.79 ³⁷ compared to $8.16 ³⁸ in 2024. Gross margin improved 50 ³⁹ basis points to 36.8% ⁴⁰ from 36.3% ⁴¹ in 2024. Adjusted EBITDA was $2,005,602 ⁴² in 2025 which was flat compared to $1,996,502 ⁴³ in 2024. Net cash provided by operating activities was $890,762 ⁴⁴, a decrease of $360,489 ⁴⁵, or 28.8% ⁴⁶, from 2024.

The company expects revenue and earnings growth in 2026 despite continued weak market conditions. The company expects gross margin expansion and will maintain emphasis on cost control, productivity and disciplined capital allocation.

The company's growth vectors include the proposed separation of Global Automotive and Global Industrial into two independent, publicly traded companies, which management believes will sharpen customer and market alignment, increase clarity and speed, simplify operations, and enable disciplined, business-specific investments that will unlock stronger valuation and long-term stakeholder value. The company also continues to pursue strategic bolt-on acquisitions that expand capabilities and footprint. In 2025, the company completed over 50 ⁴⁷ strategic acquisitions resulting in over 250 ⁴⁸ additional locations globally, with the majority in the North America Automotive business through the acquisition of independent NAPA stores in the U.S.

The company continues to invest in technology and supply chain to enhance the customer experience and improve efficiencies in the business. The company is leaning into modernizing its supply chain and technology through digital innovation and data-driven strategies to enhance its competitive edge. By optimizing supply chains and leveraging technology, the company is empowering teams with cutting-edge tools to continue the focus on delivering exceptional customer service and driving sustainable growth.

The company expects gross margin expansion in 2026 and will maintain emphasis on cost control and productivity. In 2025, the company recognized approximately $175 million ⁴⁹ in cost savings related to its global restructuring initiative, which was designed to better align assets and cost structure to the current economic environment. The company incurred $253,961 ⁵⁰ of restructuring and other costs related to the initiative in 2025.

The company will continue to focus on disciplined capital allocation, increasing its dividend, pursuing strategic bolt-on acquisitions that expand capabilities and footprint, and continuing to invest in technology and supply chain. In 2025, the company deployed $318,291 ⁵¹ for acquisitions, $469,838 ⁵² for capital expenditures, and $563,842 ⁵³ for dividends. The company announced a 3% ⁵⁴ increase in its regular quarterly cash dividend in 2025.

The company faces headwinds from continued weak market conditions, persistent cost inflation, changes in tariffs and global trade regulations, and costs associated with investments in technology and supply chain capabilities. In 2025, tariffs drove higher prices to customers and cost inflation that impacted gross margin and SG&A expenses. The company continues to be affected by softer consumer demand, as macro-economic headwinds such as high interest rates and persistent cost inflation continued to impact customers, particularly in Europe. Economic activity in the U.S. manufacturing sector, measured by PMI, remained contractionary through the end of 2025 which continued to pressure Industrial net sales.

The company faces constraints from ongoing cost and interest rate pressures. The company's results in 2025 reflect continued headwinds in global market conditions, persistent cost inflation, changes in tariffs and global trade regulations and costs associated with investments in technology and supply chain capabilities to drive growth.

The company's business will be adversely affected if demand for its products slows, with primary factors for the Automotive segments including the number of miles vehicles are driven annually, the number of vehicles in the car parc, the addition of electric vehicles and hybrid vehicles, and the economy generally which in declining conditions may cause consumers to defer vehicle maintenance. For the Industrial segment, primary factors include the level of industrial production and manufacturing capacity utilization and the economy in general. Supply chain delays or interruptions could harm the business, including dependence on supplier relationships and the modernization of the supply chain, which requires substantial capital investment. In September 2025, one of the key vendors for the North America Automotive segment filed for Chapter 11 bankruptcy, resulting in a $150,500 ⁵⁵ charge for expected credit losses. The company faces substantial competition in highly competitive markets, and increased competition among distributors of automotive and industrial parts, including increased availability among digital and e-commerce providers, could cause a material adverse effect. The proposed separation of the Automotive and Industrial businesses may not be completed on the terms or timeline currently contemplated, and costs and expenses related to the proposed separation are expected to be significant. Changes in legislation or government regulations or policies, particularly those relating to international trade and taxation, could have a significant impact, and in the first half of 2025, the United States imposed increased tariffs on foreign imports, including an additional 20% tariff on all product imports from China and an additional 25% tariff on all product imports from Mexico and Canada.

Management's message emphasizes a significant step in the company's commitment to its purpose by announcing the intent to separate Global Automotive and Global Industrial into two independent, industry-leading publicly traded companies. Management believes creating two focused, independent companies sharpens customer and market alignment, increases clarity and speed, simplifies operations and enables disciplined, business-specific investments that will also give investors clear line of sight into each business, unlocking stronger valuation and long-term stakeholder value. In 2026, management expects revenue and earnings growth despite continued weak market conditions, expects gross margin expansion, and will maintain emphasis on cost control, productivity and disciplined capital allocation, which will position the company to perform effectively even amid ongoing cost and interest rate pressures. Management will continue to focus on disciplined capital allocation, increasing the dividend, pursuing strategic bolt-on acquisitions that expand capabilities and footprint, and continuing to invest in technology and supply chain to enhance the customer experience and improve efficiencies in the business.