Good morning, everybody. Welcome to our conversation with the team from Genuine Parts Company. It is great to see you, and we are so excited to have the team with us today, including Will Stengel, who's the company's President and Chief Operating Officer. Bert Nappier, who is second or third year as being the Chief Executive Officer. CFO. Yeah. And Tim Walsh, who needs no introduction, but heads the IR team at Genuine Parts. Genuine Parts is super interesting because it has been a steady business for a hundred and how many years? Almost 100 years. Oh, my gosh! With, you know, a very consistent dividend yield and, two really interesting business segments that we're gonna talk about, about today. Where we wanna start is on, at its heart, Genuine Parts is a distribution business, serving customers both in the industrial segments as well as, the automotive aftermarket, really domestically and around the world. And you wouldn't tell--you couldn't tell by looking at them, but these are a couple of, you know, really shrewd operators who do a great job. They seem like they're down-home fellas, but they are quite sharp. So, with that being said, can you walk us through the size and coverage of your distribution network as it stands today, and how has it grown over the last five years? Yeah. Well, first and foremost, Michael, thanks for having us. Yeah. It's been a few years since GPC was at the conference, and we appreciate your hard work for- Yeah covering the stock. We are excited to have you back. Glad, glad to be here. Yeah. So, yeah, look, as Michael alluded to, Genuine Parts Company, founded in 1928. It is a B2B distribution business. We operate in 17 countries with roughly 70,000 employees around the world. Seventy to eighty percent of our business is North America, 20% or so in Europe, and the balance in Asia Pacific. If you look at our distribution network around the world, we have roughly 11,000 locations globally. And if you break those down by our global automotive segment, this is really the largest global network of not just parts, but also care at the repair shop in these local markets.170 distribution centers globally, roughly 10,000 stores, some of which are company-owned, the balance are independently owned. We have, as I said, this very differentiated and powerful network of repair centers, where the technicians are actually working on cars in bannered Genuine Parts Company, NAPA, et cetera, brands. On the industrial side, roughly 30 distribution centers. The predominance of our industrial business is in North America. Slightly different business model, so we've got a branch-based and a DC-based business on the industrial side, and then we've got a variety of different value-add service centers around the world. So if you look at that network in the aggregate, we own the last mile with our customers. As I said, it's a B2B business, and we think that scale advantage, especially in our fragmented markets, is a real competitive advantage as we invest further into supply chain technology, et cetera. And we've been on a very robust investment program over the last 3-4 years, simplified the business, and redeployed that capital into predominantly technology and supply chain. So examples of distribution facilities in the U.K. in France, in New Zealand, we've got some in the States, and we're evolving the way in which we serve our customers, with the sole focus on making sure that we're taking care of that customer at the local level. You think about the needs of these customers, they need the part, in the right place at the right time, in order for them to be successful in their jobs, and that's how we've designed our network. Speaking of which, Will, the two of the defining characteristics of both your, your business segments are the need to have relationships, very relationship-driven business, as well as parts availability. So with your, you know, both Motion and NAPA or the automotive business have been really tremendous at maintaining these relationships with the customers. Do you believe you have the right distribution capabilities to serve the increasing parts complexity of both the industrial segment and the automotive segment, where it stands today? And what do you need to do over the next five years to meet what is ever gonna be a more complex world, with, you know, changes that are taking place across both segments? Yeah, look, I think as a distribution business, your network's always evolving, and I would think about that two different ways. The first is, the existing network that you have needs to forever get more productive, and so investments into your buildings, investments- Mm into your processes, into your talent. And then you're always evolving with the customer demand, and so maybe the push pins on the map, evolve over time as well. We're doing both of those bodies of work pretty actively on a day-to-day basis. As you said, the core of the advantage is the long-standing relationships. Motion, 75-year-old business, NAPA, a 100-year-old business, our business in Australia, a 100-year-old business. And so when you compete on service and consistently taking care of that customer, it's a very, it's a very powerful service proposition, and we think we're, excellent around the world at that. Yeah. On the other hand, where do you see opportunities for efficiencies that would provide some expense savings over time? Yeah, I think inside the walls of your buildings is where you really do get your most leverage near term. You know, we always talk about near, medium, long term as it relates to supply chain investments. The near term is better processes, labor management, all the things that you would think of to make sure that that widget is getting out of the DC and to the customer most efficiently. And so that's a big area of focus for us as we think about productivity. Got you. I wanna pivot to the auto business, which represents a significant portion of both the sales and profit for Genuine Parts. It's been an interesting few years, you know, for the economy, but certainly for the auto aftermarket, both domestically and globally. How are you thinking about just the rate of growth for this sector for the next several years? Yeah. Look, it certainly has been an interesting couple of years. If you look back through the 100 years of history that NAPA has in the automotive aftermarket, it's an incredibly consistent growth profile. So you're talking 2-3 points of very consistent. I'm not sure I'd describe it as cyclical, but it's certainly through the cycle. Cyclically resistant. There you go. And so that's what we would expect as we move forward. We've guided this year to something a little bit less than that, as we continue to evolve out of all things supply chain, pandemic, crisis, inflation comes down a little bit. But both of these businesses are break fix businesses. Certainly the automotive aftermarket, where your objective is to help Mrs. Jones get her car back on the road, and those cars break regardless of what's happening in the economy. So we love the fundamentals of the growth attributes of the market. There's been a lot of inflation in our economy. Aftermarket has a lot of pricing power, given the nondiscretionary nature of what you guys are selling. How are you thinking about the outlook for inflation this year, and how does that contrast to what it's been historically? Yeah, I'll take that one. And look, I think we've been through a two-year period here in which we've seen a lot of dynamic movement and inflation. We go through 2022, with inflation rising through the course of the year, providing a tremendous amount of benefit to the entire... all the players in the aftermarket- Yeah benefited from that tailwind. As we saw in 2023, and as we expected, it would tick down. You know, monetary policy would affect, eventually have its effect, and it did. And we saw that tick down through the course of 2023, and so you saw the declines come. And as we exited 2023, I think we finally found our way back to what folks would say is, is more normal levels. When we looked at 2024 and, and looked ahead to our guidance for the year, we're counting for something like 1%, maybe something a little less than that, for the automotive side. For the industrial side of our business, it's been pretty steady. We don't have a lot of inflationary impacts in the motion business and the industrial business because one, most of our supply is sourced in North America, so some of the true shocks to inflation and cost that came from freight and labor and wages we didn't experience there. And our wage rates in that business are a little higher, so we're a little protected for some of the competition for labor there as well. So a little bit of two tails within our own business, but we certainly have seen the effect in the automotive segment, not only just in the U.S. but in Europe as well, and we're seeing those bleed out, and I think a year in which it's gonna look more normal, and that's our expectation moving forward. Bert, you just to put it in perspective, about 1 basis point or 100 basis points- Yeah, about a point. Yeah. That's pretty consistent with where it's been historically. And just for those folks who are a little less familiar with the auto aftermarket, you know, the industry gets a point of growth from the pricing, and then transactions grow modestly to drive what should be a steady overall growth rate. That's right. Is that the right way to think about it? Yeah. Got you. And the NAPA business is also a bit unique in that there's a mix of company-owned stores versus independent franchise locations. Can you just to level set, can you give some history on how that has come to be? It's part of the foundation and origin of the story. And then what is the vision moving forward for the right mix between those two different modes? Yeah, look, I mean, NAPA will be 100 years old next year. An amazing business. You guys look great for that. You're too kind. You're too kind. I'm losing a lot of hair. Right. I didn't get the makeup room like you did, Michael. That's where I was. Look, a 100-year-old business next year, one that's known for... So how did it evolve? It's known for the things that are most important to the aftermarket: inventory, availability, quality, expertise. I mean, there's a reason it's called NAPA Know-How. Yeah. So, a great business that grew over a 100-year period, and it grew up as an association, as an association of independent owners that worked together for a common good and a common success. And a lot of that is back to your point earlier about relationships, and so what's important about the business model is the relationship at the local level and serving that customer, having the right part at the right time, at the right place. And that has stuck with the business over time and allowed it to grow, and has actually driven strongholds and competitive advantages in places that the model, because it's capital light in rural markets, works really well. It's probably in a more rural market, maybe we don't want our own capital in the ground. But we have an amazing business partner with one of our independent owners, who has those local relationships in these smaller communities where they go to school together, they go to church together, they bank at the same local community bank. That's the fabric of a lot of our success over time, and will continue to be. So while we've made an announcement about a pivot in strategy, both models still work, and we think both models continue to be very successful for us, and we have opportunities in both. More immediately, though, we see an ability to lean into having more company-owned stores and an evolution there, as we look ahead. So, what is having more company-owned stores provide you with? Presumably, it's a little bit of more influence. With that being said, how does it change the complexity of the P&L, both from a comp and a margin perspective? Yeah, look, so early innings, just, you know, just made this announcement on earnings call in February, so don't know that we're ready to say exactly how- These guys would like a weekly update. Oh, I know they would. Just like they would like a weekly update on the weather, too. That's right. I know. Look, I think, we're not ready to call the ball on how it's gonna evolve the P&L. We're just, just getting into this. We saw this trend accelerate in the second half of 2023, and, it's one in which we believe, to kind of your point there, we like what it does for us in terms of control. We like controlling the-- our own destiny in some of these more key markets, and that means the full transaction. So we're going to be able to have better control over, the pricing, the inventory depth in the store, the assortment, all the things we think are important to winning. And so that will turn that control back over to us in those markets. So strategically, we love that lean, and we're gonna continue to lean into this trend. Where it will evolve in terms of... right now, it's a 75-25 mix. Hard to tell. We're gonna use 2024 to kind of bring us some learnings. I do expect it to accelerate in 2024. But instead of maybe giving you specific targets around the P&L, maybe I'll just give you some color on what it means to the business economically. These transactions for us are largely asset deals, many at net book value, and it's an M&A transaction at its core, and so it has synergies in it, and many of these are value creation immediately. But just like any M&A transaction, it'll take us some time to burn into the full synergies of absorbing the business and their P&L and all of those things and getting it right-sized for a larger operation. When we look at many of these, some of the key quick wins are around SG&A. Many have a back office that we don't necessarily need. We have our own back office capabilities. Some have small distribution capabilities as well, maybe a mini warehouse or a series of warehouses that we also wouldn't need. And then, while our NAPA independent owners are strong partners, I would say on average, about 90% of what they sell is NAPA branded, and so there's an ability for us to go in and take that additional 10% or so and stock the shelves with fully NAPA products. So we'll see a little commercial uplift. We're gonna get some SG&A benefit. We'll get a little bit of supply chain benefit right out of the gate, and then we'll burn into those full synergies over time. But, we really like this pivot. We're excited about it and what it means for the business. We'll keep everybody updated on where we think that mix ultimately lands. You see this as a multiyear strategy? Sure ... rather than just a 24 strategy? Sure. Look, I mean, the dynamic of the situation is one in which these will come to us as they come to us. Many of them come to us because of demographics- Mm-hmm ... so, lack of succession, where, you know, multi-generational owned business, but the next generation, you know, just isn't fit to run a parts store or doesn't want to run a whatever the case may be. And that's a great time for us to come in. If you're a multi-generational owner, you're running great stores. We don't want them to leave the NAPA family, and so we'll let the game come to us. But we've, like I said, we've seen an acceleration of that in the second half of last year, and I think that will continue, and so we'll take them as they come. My advice to them is don't come into sell-side research as they're trying to figure out what they want to do. There has been some new leadership in the auto business. You know, can you give us a sense of what Randy's priorities are, where, you know, where it goes from here? There's been some changes in the vendor relationships or agreements. How should we, as outside observers, measure the... and keep accountable for, you know, this new leadership in the business? Yeah, listen, I think, while he's new to the NAPA business- Right Randy is a proven executive at Genuine Parts Company. Randy Bro led our Motion business in the president capacity for the last five years. We've had incredible success with that business under his leadership. His success has been driven by putting a great team around him, setting a vision for the business, and then executing really well, and I think that's a, a core capability that any good business would want their leader to have, and that's what we've put him into NAPA to do. As I said, we've got great opportunities in the NAPA business. His priorities are making sure that we're focused on the right things, making sure that we've got the right inventory in the right markets, making sure that our sales folks are out there selling aggressively, making sure that our store operations are running at a very high level, and our supply chain's efficient. And so that's a play that he's had a lot of experience with over his career, and it's highly applicable to what any good distribution is focused on. So we're excited about Randy. 2023 was a tough year. We're really bullish about what we're working on. As you said, you know, there's a lot of change happening, and we're really confident that- the future is super bright for the NAPA business in the U.S. The market's focus has been on market share changes and execution. I think there is some encouraging or hope that with this leadership change, those two factors or questions will be addressed. How do you see this playing out? It takes time. When a new leader comes in- Mm You can't snap your fingers and get in there right away and make change. You have to have an influence over the culture and various things. So how do you see this playing out from an execution and a market share standpoint? Yeah, look, we're... As I said, 2023 is behind us. Mm. 2024, we've shared our perspective of what we think the full year total GPC, and then each one of our segments will do in 2024, and, and that's certainly an improvement relative to last year. But it's a journey, and I'm really encouraged by, again, the body of work that's happening. There's a lot of change. We think that level of urgency and change is appropriate, and we've got a ton of confidence in the team that we've put on the field- Yeah to make it happen. NAPA is also interesting in that you partner closely with some of your customers. There'll be NAPA AutoCare centers, so there will be a brand, NAPA, when someone takes their car to get some work done. It sounds like you're seeing some, you know, acceleration or increases in the number of branded AutoCare centers. Can you give us a sense of what's driving that? Yeah, look, I think part of the mandate when you get a new leader in working with the team to figure out what's really important, and I think there's no confusion on the importance and the differentiation that our AutoCare network offers us in the market. And so, we're super focused on making sure that we're servicing that customer segment with a high level of excellence. And making sure that the incentives, both for our own sales professionals as well as the AutoCare itself, to buy as much and grow as much as we would expect them to as we move forward. So it's blocking and tackling, but an area I think that we're gonna make sure that we're- Mm gonna win in those AutoCares, and we owe it to those AutoCare customers to do that. One of the aims of our conference has been to get a read on what's going on with the consumer. You have an interesting vantage point 'cause you serve the bulk of your auto business is on the do-it-for-me side, which tends to be a bit more affluent of the consumer. Affluent is probably not the word. Middle, you know, mainstream consumer. Mm-hmm. Your DIY business, which is a minority of your AutoCare of your auto segment business, it may lean a little bit lower income. What are you seeing from a demographic perspective? You know, has there been some trade-down in the business? Any observations from that standpoint? Yeah, look, I think through the year we've talked about increasing cautiousness from the consumer. As you note, we're a B2B business. 80% of our customer base is a technician or a professional. We do have pockets of quote, unquote, "retail consumer business." It's a mixed, mixed picture out there, but I do think that as we've gone through 2023, the higher interest rate environment and maybe some uncertainty about, you know, where the next 12 months are going, has given people some cautiousness in terms of, you know, their purchasing behavior. Having said that, our business is lovely in the sense that it's a break-fix business, so there's only so long you can defer, you know, changing your tires or fixing your brake rotors before you've got to make that purchase. So we might be in a moment of softness here, but at some point, all that activity will recover, so. Not only a lovely business, but it's run by some lovely people. So, is that a characterization that you would say last year, which is, you know, folks were feeling a little bit more pressured, and as a result, they were deferring some of their maintenance? And, you know, it—you can only defer maintenance for so long. And in your experience, you know, what would you expect those deferred maintenance cycles to... How long do those tend to last? Yeah, look, I think, I think you characterized it well. 2024, if you look at how we've guided the year, it is a bit of a recovery to something more normal. Mm-hmm. So, no specific algorithm on when that converts, but certainly in the next 12 months, we would expect, that activity to continue to get more normal again. Yeah, Michael, I would just say, if you think about 2023, where we saw a bit more robust first half and a little, you know, more moderated second half, I think 2024 looks the inverse of that. Got you. Whether the first half gonna be a bit more moderated. I think we've got a lot of things happening at the macro level that are still... You know, folks are watching. And the second half, that could be better, but that's anybody's guess. I mean- Yeah ... everybody's guessing around interest rate cuts, and we have an election here in the U.S. that will be meaningful. And so there are a lot of factors I think we'll all have to watch. But if you look at the core of our guide for the year and our expectations on how the business will perform, a little bit more muted first half, a little bit more robust second half, and that's across both of our segments. Sure. And we don't have to guess if someone's air conditioning breaks, they're gonna have to fix it at some point. Especially if you're in Atlanta in the summertime, you're gonna want it. Exactly. Genuine Parts has had a lot of success in Europe, which I think, at the outset of the company's journey to that market, there was some skepticism, 'cause maybe there was a lack of understanding of how that market operated. It's a little different than the United States, where we have a lot of do-it-yourselfers here. Folks in Europe- Mm ... may not be as inclined or interested in doing work themselves.... So, A, can you give us a sense for what has driven Genuine Parts' success in Europe? And, you know, what is in place to help sustain that momentum? Yeah, I appreciate you bringing that up. We love talking about our European business. It has been a great success story, and enjoyed a lot of momentum in the last three or four years. This is the third year in a row of double-digit growth for that business. It's a humble brag. Humble brag. That's a great testament to the leadership that we have over in Europe. Frank and his team, as we would expect, he's got a great team. We're in nine countries over there. They've been very thoughtful and disciplined in terms of how they've picked their geographies. The beautiful thing about our European platform is it's got all of the core characteristics of what we think creates a successful distribution business, which is we've got scale in fragmented markets, we've got a great service proposition and a great team, with opportunities to aggregate and roll up both not just inorganically but also organically to grow and win in that market. A $50 billion market, we've got less than 8% share, 5%-8% share. That's an exciting runway for growth. Part of what gets us most excited about our opportunity in Europe is actually the rollout of the NAPA brand. Mm-hmm. That is a real differentiator relative to the local markets, when you think about what NAPA brings to our European platform versus others. So that business, in the last three years, has basically gone from zero to $400 million to $500 million in revenue. The reason that's so meaningful is it really is the first foray into having a quote, unquote, "private label brand" in Europe, which has historically been a Tier One market, where you're working predominantly with the OEs. So attractive economics, differentiator with the customers that allows them to think about their line logic and their price point sensitivity, and within that logic, we've got a NAPA solution. So we've been really pleased with the success there, and the future is bright for the NAPA brand. We entered Spain, as a new market in the last year and a half or so. That's the fifth largest car park in Europe, and in the span of a couple years, we're now the distant number one leader in the Spanish market for all the reasons I just described. Mm-hmm. Bringing NAPA into the market, we did a couple acquisitions, and see an opportunity to grow that business. So, a lot of good stuff happening over in Europe. And despite all of the press and things that you read about, recessions, et cetera, that business has found a way to navigate through it and deliver performance in an exceptional way. Europe's beautiful in the summer. If any investor wants to do a store tour of some of these Spanish locations, they offer stands. I'm gonna put you on the spot here. With that being said, some of your competitors are moving southward. Mm-hmm to Latin America, Mexico. How have you chosen this path to move westward versus or eastward versus southward, and you do have a presence in Canada. You know, why does Europe make more sense? Well, I think I just described, it's a big market. Yeah. We can bring our capabilities there in a differentiated way. You know, we've got very little share in massive markets. As we always like to say, we've got a lot of food on our plate already that we can eat off of for a long time. And so, we're very focused on making sure that we're winning profitable share in places that we are for now. And, never say never, but, certainly comfortable with our growth opportunities in our current geographies. And similarly, there's been great success in Asia and Australia. What has been the opportunity there? The business in Australia is a little different. And how do you see the growth proceeding in these markets as well? Bert was just there. You wanna take this one? Bert, give us... You know, feel free to show us some pictures. Yeah. Well, yeah, I don't know about that. But, look, we did just spend two weeks overseas. Tim and I spent time in Tokyo, Singapore, and with our team in Australia. We just really have two fantastic businesses. That's a microcosm of GPC and our APAC business, with an automotive presence and an industrial business. Market share-wise, Australia auto, we're about 20%, so market leader, with a, as Will mentioned earlier, 100-year-old brand. The Repco brand in Australia sets us apart, alongside a similar story with the introduction of NAPA. So two really strong brands in the market. And the success, I think, of the team there on both sides of the house, has to do with just a maniacal focus on the customer. And we really know exactly what we're trying to do. We're an auto parts retailer. The business is a little different there, 100% company-owned stores versus the model we talked about here in the US. So we have full control of the commercial side of the house and how we attack the market. And look, you know, we're not trying to be all things to all people in these retail locations. We're not selling flip-flops and air fryers. We're selling auto parts, and we're focused on both the retail and the commercial side of the house, as we look at the business. On the industrial side, again, highly fragmented. It's very similar to the North American landscape. Highly fragmented landscape and an industrial business that is performing quite well. That business, the totality of the APAC business, has been a part of the GPC family for about a decade, and in that period, three times. You know, grown revenues three times, grown EBITDA four times. Highly successful, very good leadership team. And so we enjoy that presence, and we enjoy what they do down there because they actually embody this one GPC concept, where these two businesses sit in a market, where they really pursue things across both lines of business, and we're seeing Rob and the team have a lot of great success thinking about how we attack the market as one GPC, particularly with the containment of those businesses in such a tight geography. So love that business and love its performance. A lot to be proud of. I wanna pivot to the industrial segment, but before we do, you are expecting 20-40 basis points of gross margin expansion in the auto business this year. How does that break down from a geographic perspective, and what would be the principal driver of that expectation? Well, look, I mean, I think the way to think about it, and this gets a little bit to your earlier question about the outlook for the U.S. automotive business. I think the way to think about that, while we don't break it down by specific geography, the 20-40 basis points, we can't get there without a really healthy recovery at U.S. Automotive. And that's because, as you all know, that's the, the majority of the business. A little over half of that business for global automotive for us is U.S. Automotive. So the outlook is for U.S. Automotive to rebound and continued contributions from great businesses in Canada, in Europe, and in Asia. When we think about the levers that we have in terms of growing gross margin this coming year, a lot of what we've done in the past, I'd say two years, has been on the investment we made, that we announced and talked about in Investor Day, in pricing and in the analytics and platforms that make us smarter around pricing. This may be moving up in price, where we can take some opportunity. It may be adjusting price to be more competitive, where we see that opportunity as well. And so as we look ahead, while pricing will still be a lever, we see the coming year being a little bit more weighted towards sourcing as our key driver of gross margin opportunity. When we think about it, we think about the fact that, we have more and more opportunities to go to market as one GPC and drive better deals, stronger deals, better terms and conditions, better pricing, and we see that as the lever within gross margin as we look ahead. Pulling it up, you know, we have other opportunities in the business. As we look at how we're continuing to drive not only gross margin expansion, but bottom-line margin expansion. We'll make some investments in SG&A this year, in IT, which are important for our business, but at the same time, as we announced in February, we've got a global restructuring underway that we think is important, to continue to nip and tuck the business, continuously improve it, to put us on the right footing as we look ahead, particularly as we know there's some cost of business, doing business, that's just gonna stay a little higher. Yeah. When you have that, you have to take other offsets. So our global restructuring is giving us an opportunity to be even more efficient and more streamlined, not only in how we think about the SG&A, but also across supply chain. I wanna dig into that. Do you feel like globally, the cost of doing business is a little higher, or is that more of a U.S. phenomenon? No, I think we're all facing... Look, I mean, interest rates are up everywhere, and so everybody's facing a higher interest rate environment, and that changes your cost of doing business inherently, particularly when you think about the cost of capital. The other side of that is we're all feeling wage pressure. Globally. Globally. I mean, Europe is a great example. To your point earlier, you know, not a lot of Europeans work on their own car. Yeah. But the other thing about the European landscape is, there's a lot more statutory-driven increase in wage that responds to environment. Yeah. The environment for folks is just a little higher cost, and so the statutorily driven wage increases impact everyone, and we're not immune to that. So I don't think that the cost of doing business is germane to the U.S. I do think we're seeing the cost of doing business impact everyone globally, and we can give you examples of that in our APAC markets as well. So, we thought it was important to have a global restructuring and have that pivot, and all of our businesses are participating and leaning in because we see it as a good opportunity to do what every business should do, continuously improve, continuously streamline, and pivot and adjust to the landscape, so that you're putting yourself on the right footing, looking ahead. I want to pivot to the industrial business. Yeah. It's been a really good news story for quite some time. How do you break it down between underlying growth in the industrial segments that GPC's Motion business serves versus share gains? Because you've been executing at a very high level. Yeah, well, listen, the industrial business is a powerhouse. It really is. It's got a great market position. Their market position was even further extended with the acquisition of Kaman Distribution Group. That was the number 3 competitor in the market. You add one and three, and so, we like to describe it as kind of working on our distancing of our number one position. The share gains, I think, have been evident. Admittedly, as we suspected, the first half of 2023 would be different than the second half of 2023. Randy's phrase is: "It seems like it's been lower for longer with some of the end market indices." We're cautiously optimistic as we come through 2024, that that will start to pivot, and we've seen some green shoots that are encouraging. But it's a great operating team. It's a diverse business. We've got roughly 14-15 different end markets across the business that create some diversification benefit. We've got great product diversification in terms of, you know, actual widgets plus value-add solutions, which is an increasingly exciting part of the business that we're investing in. And so it's just a very nice, well-positioned, and highly competitive group of people that are executing at a high level. So we're excited about it. ... And let's dig into that just a little bit. Two things: where do you see the end markets that represent the nicest growth opportunities? It's hard to get the picture out of my mind of going to your analyst meeting and seeing the automation and the displays that you set up, thanks to Tim Walsh. And then you mentioned some green shoots. What are those green shoots? Yeah. We certainly the automation is a big- If you think about the mega trends that sit underneath- Mm Our industrial business, the nearshoring activity, you know, we've got a great presence in Mexico. Currently, we're in Canada and obviously in the U.S. and so we're customer-specific examples are real, and we're seeing that, automation's a big mega theme, you know, making these factories, regardless of where they are, more productive and efficient, and so we've got a great offering there. We've seen some encouraging signs, recently in our traditional automotive, that has recovered slightly from, where it was last year, and there are puts and takes across the board, but, net, net, we're cautiously optimistic that, that, 2024 will be a more normal growth year for Motion relative to even, what it was in 2023. 2023, to your comp, roughly 20%, I think. So, to your stack, 20%. So, they've done a nice job, even in a sluggish market, to- Mm to grow that business. You mentioned reshoring. Is it that along with, you know, some of the infrastructure spending that's happening that are, you know, underlying some of this growth, and that presumably will persist for years? We're really excited about the long-term potential of the business. Yeah. It's got a leadership position and very attractive mega, mega trend themes to support it for many years to come. Yeah. If I'm not mistaken, the profitability of the Motion business is as good as it's been. Presumably, some of that's been due to the acquisition of KDG. What's the opportunity for more? I mean- Well, look- This is a tough crowd. I know, Michael. I know. Look, there's a long runway, as Will said. Motion's been through a period of exceptional margin expansion, 200 basis points in 2023, from 10.5% to 12.5%. We gave long-term targets for Motion for 2025 to get to 12%, so we're sort of already there. We've guided this year for another 10-20 basis points of improvement in Motion. We'll take this year as we go through a little bit of an uneven growth period to kind of reevaluate where we think the long-term new long-term target for Motion goes, since we're already at our long-term target. But, you know, how did they get to where they've been? I think it's on the back of a KDG integration that was just truly exceptional. I've been doing this for a long time, and I've seen a lot of M&A. Might be the best one I've ever seen. Ruthless execution, great leadership, great discipline, complementary businesses that came together with different capabilities that were attractive to our customers, complementary book of business as well. And that has resulted in a $50 million synergy target that turned into $70 million, and an integration that was supposed to be done in 3 years, that was done in 2. So how did Motion get some exceptional margin expansion in 2023? Integration went better and finished earlier, alongside of continued investment in gross margin and price and, and being able to grow gross margin because of the pricing investments we're making, and then just great discipline in terms of SG&A. So I think those levers, particularly on further gross margin expansion and further leveraging of SG&A, continue to be key levers for us as we look and guided to 10-20 basis points of improvement for margin for this year for Motion, but as we look even further, and we'll come back to everybody as we rethink the longer term over time. But the runway for Motion is quite strong. Given this, this success that you speak of with M&A and how that it's not just unique to the motion business, but KDG, it's been a heritage of the organization for a long time, what do you see on the current M&A landscape? And one of your competitors in North American auto business has some assets up for sale. You know, how do you see the environment for potential additions in this environment? Look, I mean, we have a robust pipeline. We always do of M&A activity, and we probably have, at any moment in time, 200 companies in our pipeline of things we're looking at, some actionable, some not. So the environment remains robust, not only for automotive and the assets that are in the market that you're talking about, but also on the industrial side. When we think about M&A, and it's been a great hallmark of success, we have a great playbook, we have great discipline. For us, when we think about it, it really comes down to three things: We think about the cultural fit, we think about the strategic fit, and we think about the financial fit. Culturally, we want to be aligned with the target on the same principles, focusing on our customers, taking care of our team members, and focusing on profitable growth, and if one of those isn't tilted in the right way, that might mean that that's not the right thing for us. Strategically, you know, we don't shop without a list. We make sure that our business units are focused on very strategic, targeted growth. So use Europe as an example, looking at additional bolt-ons in Europe, looking at additional geographies, particularly with an example like growing into Spain and Portugal over the last two years. So that strategic roadmap is important for us. And then finally, financially. It has to make sense financially in terms of the returns, the value creation, the accretion, all of those things. I would say in terms of what does the current environment look like, it's been a little stagnant on the industrial side over the last 18-24 months. We haven't seen as many opportunities, maybe as we saw in the year in which we did the KDG acquisition. I think that has a lot to do with expectations on the seller side. Valuations still seem a little high to us, and again, we're super disciplined, so we'll wait to see how that maybe in the second half, that starts to turn a little bit. On the automotive side, most of the capital we deployed in 2023 was on the automotive side, and we did a nice job there. The blended rate of EBITDA acquired was about 9%, a little north of that, which was accretive to our global automotive segment margin. So we're doing a good job where we're investing. It's going to continue to be a lever for us. We're always gonna kick the tires on the assets in the market, but they're gonna have to come back to you know, hunting in those three priorities that we have. And the great thing for us is we have a tremendously strong balance sheet, and we have the opportunity and the ability to be flexible and move on opportunities as they come into view, and they make sense for us. You mentioned seller pricing expectations are high on the industrial side. Would you say that's true on the automotive side as well? You know, a lot of what we see on the automotive side, I think, hunts in more reasonable zones. Got you. You know, and we wouldn't have pulled the trigger if we didn't think that, particularly with another acquisition in Spain last summer. We think most of that hunts in a place that we feel pretty comfortable with. You'd be remiss not to mention that you've been effective stewards of capital, given that when something doesn't make sense in the portfolio, like the office supply segment or others, you've taken action there, too. So you- We have, you know, we feel great about our strategy, which is to have great leadership businesses in big markets where we have an advantage and an opportunity to grow. And that share characteristics around initiatives and, you know, customer dynamics that allow us to win, and we feel really good about the two businesses that we have. Got you. Well, that is a great place to conclude our conversation. Please join me in thanking the team from GPC for a wonderful discussion. Thanks, Michael. Thanks, Michael. Thanks for having us. I'm so sorry, Tom.