Good afternoon. It's my pleasure to introduce Genuine Parts for this afternoon's session. Today, we have with us Will Stengel, President and Chief Executive Officer of Genuine Parts, who's been in the role since April 2024. And we also have Bert Nappier, Executive Vice President and Chief Financial Officer, who's been in the role since May 2022. Thanks so much for joining us today. Thanks for having us. Thanks. Will, just given that it's been about a hundred days since you began the role, wondering if you could talk about some of what you've been doing? Yeah. Yeah, listen, first and foremost, it's, it's a great honor to have the opportunity to lead the Genuine Parts Company organization. We have a lot to be grateful for, the strong leadership. A hundred-year-old company, roughly, and, I'm the sixth CEO in a hundred years. Thanks to Paul Donahue, Tom Gallagher, and all that came before us. We've got a great organization with a really special culture, which is certainly where I've been spending a lot of my time in the first 100+ days, focused on talent and culture, making sure that we've got the right team in place, to make sure that we've got the right capabilities in place, and that's a mix of both new capabilities that we're bringing to the organization, but also, nurturing this very special culture that we have. I'll give you a data point: 80% of our global workforce would characterize themselves as engaged per our engagement data. So for 17 countries, 70,000 employees, I think that's playing from a great place of strength. We continue to be very focused on investing in the business and making sure that we bring a lot of discipline and rigor to that exercise, working closely with Bert, obviously, on all things capital allocation. But we have really exciting opportunities around the world to invest back in the business and deliver returns and create value, in particular around our technology platforms, where the team has never worked more closely than they are today, building platforms ones that are creating benefits around the world, both on our industrial and automotive side of the business. So excited about that. Excited about our industrial business. Over the years, we've made sure that part of the business has received the right amount of support and attention, and obviously, the performance of the business in the last five years speaks for itself. Increased operating margins by four or five hundred basis points. They've got a great leadership position, so making sure that position, that business, is positioned to continue to succeed. Also spending a lot of time thinking about and executing against a refined strategy in our NAPA U.S. business. Mm-hmm. Thinking about owning more of our company stores and mixing up that percentage as a percent of total, relative to history. So there's a lot to really like, and, the team's doing a wonderful job. It's a tough market, as, I'm sure we're gonna talk about, but we... I've never been more excited about the work that's happening and feel great about the team that we've got on field and the opportunities in front of us. Great. Thank you for that. We wondered if we could, you know, start with U.S. Automotive and, we have plenty of questions, too, about Industrial, so I will get to that as well. But, just given the health of the consumer, especially at the lower income level of consumer, we wondered, despite automotive being more defensive, if you are seeing any strains in that lower income consumer, either through demand deferral, trade down, or just softer discretionary spend? Yeah, I think we've seen, like a lot of industries, we've seen the impact of higher rates across our customers and the end consumer. We think about it as the impact on small business, which is how we would characterize our independent owners, so they're navigating this interest rate environment. Obviously, the end consumer is navigating it as well, and so that has shown up in terms of a moderation in the actual demand. The good news is our business is a break/fix business, and there's only so long you can defer an issue with either your factory floor on the industrial side or your car, and so while it might be deferred, it's in essence a timing issue. Mm-hmm. And we're well positioned to exploit a recovered market when that comes. Just within the regional and national account business, which is large, large for you, I know there's been some pressure, especially around the deferral of tires, which is impacting tire installers. You guys don't sell tires, but- Right. ... there has been this ripple effect. Do you believe undercar and demand for around the tire parts could benefit from pent-up demand, given what you've seen? I don't know if I'd call it pent-up demand, but it is deferred opportunities. Mm-hmm. As I said, eventually that sale has to happen, and in our major account business, which is probably a little bit more end consumer centric, just given the way that those customers' networks work, we have seen some softness there, which is just one of the data points that reinforces this idea that the end consumer is feeling pain in a different way, in the last, call it two or three quarters than they were 12 or 24 months ago. Mm-hmm. And from an execution standpoint, I know there's a lot of work that's been done, in store and distribution center operations, with a focus on improving customer service metrics, such as inventory availability and on time, on-time deliveries, kind of table stakes- Yeah ... for your business. Can you talk about these efforts? What innings are you in terms of improving the operations, and what progress have you seen so far? Yeah, I think it's really important philosophically at the company, this idea of focusing on the things that we can control, regardless of what's happening in the market, is something that we talk a lot about internally. We talk about performing in excess of the market performance, and so whatever that means, you're always aspiring to execute a body of work that's gonna position you to outperform, and as you said, whether we're talking industrial or automotive, there's a certain amount of basic execution that, really makes a difference to the customer. We talk about having the right inventory in the right place, in the right quantities, that's super important. We've had a lot of emphasis on that over the last 12-24 months and made great progress. That's no longer something that we spend a lot of time talking about with the teams as a reason as to why we can't deliver on our customers' expectations. So great progress there. That's a never-ending game in this business, so you're always fine-tuning your dials to make sure that you've got the right assortment. And so if you're in inning seven, you're probably always in inning seven of nine- Mm-hmm ... because you're constantly working to be perfect. The second big area of focus is what we call store operations, store excellence. Now that you have the inventory, getting that inventory from wherever it is on the distribution node to the end customer is obviously important, and really proud of the work that we've done there. That's also a never-ending journey because you're always working to create a new standard of excellence. But the idea is, now that the part's in the local market, how do you get it efficiently and economically to the end customer at pace? And we've got all sorts of new dashboards and intensity around that at the local level and seeing great traction with our field sales organization and our store ops organization. And then the last piece I would say is sales force effectiveness. It's, it's a generic term, also something that's a never-ending journey, but making sure that you're covering the market appropriately and thoughtfully with your selling assets, whether it's outside sales, inside sales, et cetera. And another big body of work there, ongoing, and I'd say we're in inning four or five there with exciting opportunities. Maybe I'd, backing up a little bit, if we could maybe talk to why the supply chain got to the state that it was, in which you needed to maybe address some changes there. Was it more of a function of what we lived through post-pandemic, or were there other issues that you came across? No, I think it was an overall dynamic that many companies were working through. It's a global supply chain. It's a highly complex SKU assortment, and the supply chain itself is complex, even once you get to North America. Mm-hmm. So I think the disruption in the global supply chain created new awareness for where we had opportunities to get better. Associated with that, same on inventory. So, not just getting product from point A to point B, but making sure that we were partnering with the right folks to get us inventory and overcome some of the challenges that everyone were facing. And I think we've done that well. And as I said, it's not something we spend a lot of time talking about now, but I think the experience has made us better and tighter. With regards to the sales force and the improvements and training you're doing there, what are some of the key tenets that you're focusing on? How does the sales force maybe look today versus a year ago? Yeah. I think it starts with being very clear on where your customer is and who your customer is. And that sounds simple, but, there are a lot of choices and parts of the aftermarket, in the automotive segment that you can focus on. And, Randy Breaux and the team at NAPA in the U.S. have done a really nice job to be very clear on making sure that we're winning with our core repair shops and our fleets. Remember, the NAPA business is 80% do it for me, 20% retail, so we're not really a retailer. Our stores, in essence, are nodes on our distribution network, getting to our ultimate customer, who is the repair technician that's helping Mr. or Mrs. Jones get that car off the lift and back on the road. And so focus on who the customer is, making sure that you've got the right amount of customers in your book of business if you're a salesperson, holding you to account for the quota that you said you were gonna deliver. So I would just call it more discipline and data around the selling efforts, and less about a structural change in how we're attacking the market. If we could move on to pricing and just your current view on the pricing environment. Are there any concerns that just the softer industry-wide demand could result in pricing or promotional pressures? It's a historically very rational industry- Yeah ... but again, it's everything's been unprecedented, so I feel like you have to think about it. Right. How are you thinking about pricing? Bert, you wanna take this? Yeah, no, look, I think we benefit from having great competitors and competitors, including us, that understand the industry and have understood it for a long time, have the expertise to think through how that all works. And so I would say, even with all the shifts in either demand, consumer sentiment, different actions by different competitors, which happen every day, I'd say the environment remains rational, very balanced. Look, we all run our own playbooks, and you know, you hear about different kinds of things happening. Those happen every single day. And so one of the great things that we've done in terms of investment in GPC, both on the industrial and on the automotive side, but also at NAPA, is to build technology and capability that allows us to be more nimble in the marketplace and be more competitive. That may mean, in a specific geography with a specific product, we wanna move the price up a little bit 'cause there's an opportunity there, or we wanna be more competitive and move it down. I think that's the beauty of the investment we've made over the last few quarters, and particularly maybe over the last couple of years, of having that capability, which I think gives us more flexibility in the marketplace, both with the independent owners and recommending what they can do in the market, but also how do we win with our company stores. I might just add, Kate, that one of the attributes of this industry, as I said, it's a break-fix business model, and so the basics of having the part and getting that part to your customer consistently with excellence is the order qualifier. Mm-hmm. The quality of the product is an order qualifier, and then, you know, within a reasonableness and competitiveness, the price becomes a discussion. But if we can focus on the first three, and do that, better than our competition, I think that's where we're spending a lot of time. To Bert's point, we've built all the tools to be very agile and sophisticated, to make sure that we're doing the right pricing work, but, it's as important or more important for us to just execute at a field level each and every day. Just while we're on the subject of price, if we were to see a new round of tariffs on imports, you know, again, very defensive industry you're in, so I would imagine costs would be passed through in the form of higher prices. But could you maybe talk through what we saw the last round of tariffs and what you're thinking about potentially for this next round? Yeah, look, I mean, I think in the last round, that was one in which the price was passed through. It does take a while for those kinds of things to move through the supply chain, so it's not an automatic, overnight impact. It's not a flip a switch, and it happens tomorrow. So I think it depends on what and who and where those things come into play. And I would expect the market will follow what happened in 2017- Mm-hmm ... when the Trump tariffs came in, and you saw that work its way, probably over six to 12 months, through the supply chain. And in many cases, those got passed on to the end customer. And that's probably the general prevailing expectation, should that be the case moving forward. Look, you know, the devil's in the details, and it's always gonna be not universally true for all things, but there'll be places where I think that'll be the prevailing thesis, is that it would be passed through. I would just say, the kind of experience at GPC and any company for that matter, over the last three to four years, I mean, you build muscle and capabilities as the world around you evolves. I'm super proud of the team that, you know, whether it's the pandemic or supply chain challenges, we've found a way to navigate it, and I have no doubt that we will adjust to whatever the market presents to us later this year and beyond. You mentioned, Will, in your introduction to the role or the last hundred days of the role, the strategy of purchasing stores from independents. And I do think that this is a newer development within the GPC strategy. So in the Q2, I think you announced that you had acquired 2 40+ stores. Can you talk about the opportunity that exists, that enables the company to purchase stores from independents? What's the motivation of the independents to sell? How accretive is a typical acquisition, and how do you determine which independents are you gonna approach? Yeah, I'll take a quick pass at it, and then Bert jump in. You know, first and foremost, it's important to appreciate the independent owners play a really important role in the current NAPA strategy, as well as the future strategy. The brilliance of the NAPA story was the independent owners basically created the aftermarket in the U.S. It was an asset-light business model, it was highly entrepreneurial, and as a result, it created this wonderful leading position in Do It For Me. I think as the years have progressed, and we evolve and think differently about how to compete, how to control our own destiny, it's prompted us to tweak it, refine it, not transform it or overhaul it. And what that means is, we think it's important to own a little bit more of our local market position by owning the stores, as opposed to partnering with an independent owner. And so, Bert, you can maybe talk a little bit about how the pipeline gets built. Sure ... and the math of it all, and- Yeah - and why we like it. Yeah, and it's an important pivot, one that we're really excited about. I think it's gonna be a really nice balance between, as Will said, continuing to have independent owners, particularly in the strongholds of the business, rural markets, places where, quite frankly, our investors and as a CFO, we don't want to put our own capital in the ground, but they're great businesses. They've been with the NAPA family for a long time. That'll continue. The opportunity that's presented itself is, I think, more strategic markets, urban markets, where we wanna be more on the front foot, and so the way the pipeline builds is, quite frankly, we start commercially. Where are those markets that are important to us, to be on the front foot and control our own destiny, and those, think urban, I think is the way- Mm-hmm ... to think about that. And from there, it becomes a normal M&A transaction. You have to have a willing seller, Mm ... and a willing, buyer, and we are obviously a willing buyer. But we're building that pipeline through focusing on those markets and, and reaching out to owners. And in some cases, owners reach out to us. Mm. Maybe they've been with the family for a long time. They're third generation. They don't have a fourth generation to pass the business down to, so it creates another natural moment. So it's a two-way dialogue, and as we then go through the math side of it, it's a very compelling transaction for us. So in terms of control, we own the commercial transaction from end to end now, and so we have the ability to set the depth and breadth and assortment in the store. That conversation right now is one in which we have an influence position with independent owners, but not the ability to dictate.... Many of our own independent owners buy all of their products from NAPA, but some of them are in that kind of 90% range, and so we have the ability to stock up to 100%. So that commercial transaction of setting the pricing, the assortment, the inventory depth, all the things where you, you kind of win, is attractive. From there, we stop sharing the margin, so that's you had heard us talk about in the Q2 call, that we had some benefit and gross margin from just the MPEC acquisition of having an enhancement to the gross margin profile when you think about that. And so you think through the prism of M&A, you've got the top line, you've got gross margin, and now we're gonna go after SG&A. And when we think about SG&A, many of these are small businesses that have their own supply chains, light supply chains, maybe an off-campus warehouse where they're keeping extra stock. We'll have the ability to take that out. Any back office capabilities, we probably don't necessarily need. If it's AP, AR clerks, payroll clerks, those kinds of things, we can put that into our own back office. And so there's nice opportunities to capture SG&A cost reductions. And then finally, from a liquidity and a balance sheet perspective, we can put our terms on that business and benefit from a working capital perspective. And in many cases, we'll see the ability to improve our own leverage and liquidity. We quite often guarantee the debt of some of these independent owners in our growth financing capital programs, and while I don't issue the loan itself, I guarantee the loan- Mm-hmm. And that counts against me, and so I'll have the ability to release some of that as well when we think about that. So attractive opportunity, one that we're super excited about leaning into and moving forward with both models and winning in the marketplace. I would just tell you, Kate, too, it will take us some time. If you think about our 6,000 stores in the U.S., NAPA stores, roughly 2,000 company-owned, 4,000 independent-owned. In our 4,000, there's roughly 2,000 owners. And our largest owner that we acquired, MPEC, 180 stores or thereabout, they were twice the size of the next largest. And so the tail is long, and, that's a good and a bad thing. It allows us to be very surgical by market, but it's not gonna be a linear evolution. And the other thing I would say is, the work that we're doing, outside of M&A and owning more stores applies to helping all of our independent owners in the same way that we help ourselves with company-owned stores. So whether that's inventory, pricing strategies, creating incentives to grow the business in a better, smarter way. So it's not a binary one or one or nothing, it's a, it's a pretty broad body of work that we're collectively doing at NAPA as an ecosystem to compete more effectively. I know you said you have to have a willing seller, of course, but is there a goal necessarily or a sweet spot of where you'd like to get to? Yeah, I think- As we go through this? I think so. Like, I think as we look ahead and look, I'll throw out a target that, you know, it'll take, as Will said, some time to get there. I think directionally, fifty-fifty is probably the right place, as we look in the long term. We've just acquired the largest, you know, independent owner here in the past three months. It will take time to move through the pipeline to get there. Three years ago, we were at 20%, 80%, so 80% independently owned. Just with the work over the last few years and through the acquisition in May, we're now at 70-30. So it's gonna take us some time. When you think about the largest independent owner at a hundred and eighty-ish stores, the next largest is half that. Yeah. And the next largest after that is half that, and then you start to move down through the Pareto pretty quickly into the one, two, three, four stores. And so it'll take us some time to get to something like a fifty-fifty, but I think if folks wanna think about where we could go, that's probably a pretty good proxy directionally. The last question I'll ask. I know you talked about just the P&L implications of when you take over the business, but for the overall enterprise, what are the implications of margins from this initiative? Yeah, look, I mean, we're in the early innings, so we'll give that a little time. I mean, they are accretive. Yep. So we are getting good gross margin expansion, as we talked about. We are bringing in the SG&A headwind, which we also talked about in our call, Q2 earnings call. That will take some time to get to that SG&A, just because you think about it through an M&A prism, it is post-merger integration. It starts out being accretive, and I think it'll grow into being even more accretive over time as we capture cost synergies. Okay, thank you. We can move on to industrial now. I wanted to talk through what you mentioned on your last quarterly call. You did revise your outlook for the industrial segment for the second half of the year, so we wanted to talk to you about how the second half is comparing to the first half, and is there any concern that a softer manufacturing environment could last for longer than you're currently expecting? Yeah, look, I mean, when we started the year, we saw twenty twenty-four in a prism of, you know, a more moderated first half and perhaps a more robust second half, and I think as we looked at the adjustment to earnings outlook that we made with the Q2 earnings release, we had to rethink how that was gonna play out. It's been lower for longer when you think about the industrial environment. We had expected originally, when we started the year, to see starting in the Q3 with a more robust environment, and a lot of that was based on what we thought about when interest rates would be adjusted. I don't have a model in which I forecast based on this many basis points of interest rate reduction means this much top line. It was more philosophical to say that a lower interest rate environment on the industrial side would be more conducive to activity, and we still believe that philosophy. It's just a matter of when that's gonna happen, and I think when we reset our guidance, starting with the Q2 call, we thought that pushed out, and so it was gonna start in the Q3. I think it's moved out to the latter part of the year. When you think about the catalysts for what will happen in the industrial space, I do think interest rates, clarity, you know, what's going to happen with the next announcement? Is it a cut? How much? Are there going to be more this calendar year? That's going to be an important inflection point for us to rethink how things will look. The second part, and this is the best data you can probably ever get. I mean, we follow industrial production, we follow PMI, all of those things on industrial, but we talk to our customers, and that's really important. And our customers have raised the election as another kind of gating factor in terms of just uncertainty. So when we think about the election, it's not so much who wins, it's about the outcomes, and the outcomes being centered around the question you asked me earlier about tariffs, but also income taxes. for corporates. And our customers are really thinking through, like, "Okay, do I expand my business? Do I add another production line? If I'm going to add another production line, that calculus has to think through a prism of higher interest rates, because maybe I'm borrowing to do that. But also, when I make that investment, what are the future outcomes going to be on my own business as a customer? Are there going to be new tariffs that may impact... I do need more production, I need less production, but then income taxes as well. So, I think as we move through the second half, we're gonna get a lot more clarity on clearing out uncertainty- Mm-hmm. With interest rates and with the election, and it won't be, it won't be a switch either there. It's going to take some time for all of that to build back into how we think about the timing of the industrial environment getting a bit better, so that's our prevailing thesis on outlook. Yeah. Is to continue to wait and see, and watch, and stay close to our customers and what they're doing, and being able to respond. The great thing about the Motion business is that they have the size and scale, they have the inventory. We have 600 branches, and so with our branch capabilities, we meet our customers with inventory where they need it, when they want it, and we supplement that with our new fulfillment strategy, which is just an enhancement to the ability to service customers. I would just add, too, the medium-term opportunity that's really exciting is the nearshoring. And so Bert talked about the discussions that you have with customers. So remember, the customer here is the engineer and the procurement professional that is keeping the factory running each and every day, and they're buying products from our Motion business. And so, you know, when you start having a discussion with the level above those floor workers to say: How are you thinking about your growth plans? The nearshoring discussions are pretty active. We've got a great business in Mexico. We've seen really good strength there, and there's no question that that's a strategy that's at the forefront of a lot of these industrial manufacturers' minds. It's just a function of when and how, and it's in a business that I think has got a lot of very exciting long-term tailwinds behind it. From a margin standpoint, we continue to be really amazed by the strength of the industrial segment margins. As we look forward, you know, how do you think about the potential for further margin expansion? Obviously, you know, any kind of reinvigoration of the top line is going to help, but beyond that, where do you think expansion can come from? Look, I mean, we're calling for 10-20 basis points of margin expansion for industrial this year, with a pretty, you know, sluggish top line, so continuing to perform very well, even though it's a low-growth environment. The levers for Motion to continue to push that starts with size and scale, and being able to take share on the top line and grow the business as, particularly as the economy recovers, but they still have great opportunities in that business in terms of gross margin. Through category management, we're doing great work in pricing and sourcing, continuing to protect that gross margin and rate, and increase it, but then also on SG&A, it's a very well-run business. It has great leverage, and I think we'll see even better leverage once we get into a little bit more productive backdrop for some of the works we've been doing through this period of softness. So staying focused, being urgent, continuing to invest in what we do, and capability, even though the market's been a little soft, so that on the other side, I think you'll see even more margin expansion. There's a lot of runway there. We're not ready to reset a new target for the Motion business, but we're excited about the long-term opportunities there. I think one of the things that's a great opportunity is in these moments of market cycles, and you've seen it over the last 20 or 30 years, is the scaled large players generally have a moment in time to extend an advantage, and that's largely driven by the fragmentation of the market. It's largely driven by the ability to weather the storm with capital, continue to invest in the business. And so, that's an underlying theme for our global company, which is, look, these are the moments through which you stay disciplined on doing the right body of work, investing in the company, taking care of your people, and taking care of your customers, and I think that will pay you back in spades, and certainly what we're super focused on. In the last couple of minutes here, we've been asking five questions of each company that's presented at the conference. We've touched on some of them already, but the expectations for the health of the consumer in the second half versus the first half, do you expect things to be the same, better, or worse? Look, I think, back to my point about some of these moments, expectation right now is, I would say, consumer stays kind of where we've seen it coming out of the Q2. I think there's opportunities for perhaps improvement- Mm-hmm. If we get clarity around interest rates, if we get some clarity around election, and then what are the policies moving forward? That could be helpful in the second half to making the consumer feel better, particularly when you think about, like, our independent owners in the NAPA business in the U.S., but also when you think about the customer on the industrial side as well. On the topic of margins, looking out to next year, what cost pressures are you anticipating, whether it be materials, labor? We talked about tariffs, but ex that, just do you expect costs to be the same, better, or worse than 2025? Look, you need a bit of a crystal ball to look into twenty twenty-five at this point, particularly with some of the things that will change here in the next few months. But I, I'm hopeful that some of the things we've felt and that we've talked about this year with wage inflation, so we've had the headwind from investment in wages, we've had some pressure from freight, we've had pressure in rent, expense renewals. I'm hopeful that those things start to abate. Just like we saw the inflationary benefits cool down in the top line, that we see the inflationary pressure cool down, in some of our SG&A categories as we look ahead. Look, when we think about our business, you know, we're making investments, and we've talked about those. And so in twenty twenty-five, and even more specifically here as we look at the Q3, we've got pressure from depreciation, and we've got pressure from interest expense. And those are the right pressures 'cause we're making the right investments in the business. But as I said on the Q2 call, we expect our earnings to be down in the Q3, and some of those pressures come from about $0.20 of headwind from depreciation and interest expense in Q3. Mm-hmm. Those will be things that we'll manage around in 2025 as well. I would just say, look, I'm proud of the team. We announced a pretty thorough global restructuring, if you wanna call it that, but in the Q1 of this year, and I'm proud that we did. We saw a tougher market, and we took pretty quick action, and I think that's just a good example of the teams operating well and being mindful of what you don't wanna do, is cut into muscle and impair yourself as you come through the cycle. That's the tough part of these jobs, is how do you continue to stay the course and feel good about, and hold people to account for doing the right work at pace, regardless of what's happening with the cycle so... Our third question we can skip, 'cause it's not completely applicable, but, the fourth question we wanted to ask was about points of distribution, if you expect to have more or less points of distribution in the U.S. next year? Our footprint is largely stable, honestly. We don't need to open incremental new facilities. I think we need to tuck in and create local relative density and make our existing facilities operate better and more efficient, but we don't have a big capital need to add nodes to the network. In many instances, we actually can consolidate nodes into a more efficient facility and optimize the network that way, while also improving service to customers, which is a big part of the strategy as well. And then the last question is on promotions, which I'll skip as well. So with that, with that, we're complete with our questions. Thank you so much. Thanks for having us, Kate. Yes. Great to be here. Thanks, everyone. Appreciate it. Good to see you.