Good day, ladies and gentlemen. Welcome to the Genuine Parts Company First Quarter 2025 Earnings Conference Call. At this time, all lines are in listen-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 the operator. This call is being recorded on Tuesday, April 22nd, 2025. At this time, I would like to turn the conference over to Tim Walsh, Senior Director, Investor Relations. Please go ahead, sir. Thank you, and good morning, everyone. Welcome to Genuine Parts Company's First Quarter 2025 Earnings all. 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. 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 open for questions, the responses to which will reflect management's views as of today, April 22nd, 2025. 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. 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 Securities Litigation Reform Act of 1995. 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. The company assumes no obligation to update any forward-looking statements made during this call. With that, let me turn the call over to Will. Good morning, everyone, and thank you for joining us for our first quarter 2025 earnings call. Before we get into the details of our results, I always want to start by thanking our over 63,000 GPC teammates around the globe. Your dedication and commitment to serving our customers remain the core of our success, and I'm so proud of the team's continued focus and hard work. We had a solid quarter in line with our expectations, but we're obviously working in a dynamic external environment. Tariffs, trade, and geopolitics are impacting the operating landscape for all companies. These factors, combined with inflation and interest rates, are adding to an already cautious demand backdrop. Despite this, we remain focused on what we can control, providing excellent customer service and executing on our strategic initiatives to make the business smarter, faster, and better. The teams have navigated multiple market environments over the past five years, and we've used those moments to drive positive change across our company and advance our strategic priorities. We're committed to this approach as we navigate the current environment and are confident that we have the relevant playbooks to remain agile. I experienced our focus on serving our customers firsthand last week at the NAPA National Ownership Workshop event, where we celebrated NAPA's 100-year anniversary. The event highlighted NAPA's status as a global leader and pioneer of the automotive aftermarket industry. Joined by thousands of our repair shop customers, independent owners, and field teammates, we reflected on this significant milestone and reinforced our commitment to delivering outstanding customer service together for the next 100 years. Not only was this event an opportunity to celebrate our history, it was also a chance to detail the in-flight work that's shaping our future. Our working sessions showcased details around talent and culture, sales effectiveness, operational excellence, and technology initiatives, all designed to enhance our customer experience. As an example, we highlighted the recent rollout of our modernized e-commerce platform, NAPA ProLink, built specifically for our commercial customers. Developed in partnership with Google, this platform features proprietary search capabilities that are faster and more reliable. The platform offers improved functionality with 10% more product coverage and leverages a more comprehensive and accurate catalog. In 2025, NAPA B2B e-sales are growing mid-single digits and capturing new business. The customer feedback on the modernized platform is overwhelmingly positive, and we're excited about the benefits this will deliver to the NAPA business and our customers as we move forward. Now, turning to our business results, I'll walk you through highlights of our first quarter performance, which were in line with our expectations. Following my remarks, Bert will provide some additional color on our financial results and touch on our 2025 outlook, which we're maintaining today despite the evolving trade policies. A few highlights from the first quarter include total GPC sales of $5.9 billion, up 1.4% versus the same period in the prior year. Our sales growth was primarily driven by acquisitions and improving sales in our industrial business, which was partially offset by one less selling day, impacting sales growth in the quarter by 110 basis points. Gross margin expansion of 120 basis points versus the same period last year, reflecting the benefits from acquisitions and our strategic pricing and sourcing initiatives, and solid progress with our productivity initiatives to manage and optimize expenses. Turning to our results by business segment, during the first quarter, total sales for global industrial were $2.2 billion, approximately flat versus the same period in the prior year, with comparable sales decreasing less than 1%. The one less selling day negatively impacted global industrial sales by 150 basis points. While we continue to navigate sluggish market conditions, we saw sequential improvement from the fourth quarter, driven by increased customer activity and Motion's defined sales initiatives. From a cadence perspective, average daily sales were positive in all three months of the first quarter. Looking at the performance across our 14 end markets, we saw growth in pulp and paper, aggregate and cement, and DC and logistics, while iron and steel, automotive, and oil and gas remained pressured. During the quarter, nine of our 14 end markets saw sequential improvement from the fourth quarter. Our performance by customer type saw continued outperformance with our national account customers. We also saw sequential improvement in our local MRO accounts and value-added services compared to 2024. Sales from value-added services like automation solutions and fluid power were flat to slightly down, which represents a notable improvement relative to last year. Switching to industrial profit, during the first quarter, segment EBITDA was approximately $279 million and 12.7% of sales, representing a 10 basis point increase from the same period last year. Overall, the Motion team continues to make progress on its profitable growth, category management, and supply chain productivity initiatives. The team is managing the business with discipline to deliver profitability despite a persistent soft market environment. While industrial activity metrics like PMI and industrial production have been depressed for the longest period in over three decades, we were encouraged to see PMI start the year with some momentum, with two consecutive months above 50 before slipping back to 49 in March. Motion's size and scale, diverse end markets, and strong customer value proposition position us well in a highly fragmented industry and across all market environments. Turning to global automotive segment, sales in the first quarter increased 2.5%, with comparable sales decreasing 0.8% in line with our expectations. The first quarter included one less selling day compared to last year, which negatively impacted sales and comparable sales growth by an estimated 90 basis points. Global automotive segment EBITDA in the first quarter was $285 million, which was 7.8% of sales, representing a 110 basis point decrease from the same period last year. Our first quarter results for the global automotive segment reflect ongoing pressure from softer organic sales in the U.S. and Europe and the one less selling day. Now, let's turn to our automotive business performance by geography. Starting in the U.S., total sales for the first quarter were up approximately 4%, while comparable sales declined approximately 3%. During the quarter, the one less selling day negatively impacted sales and comparable sales growth by approximately 160 basis points. Looking at average daily sales across the business, sales in the quarter were positive in all three months, with March being the strongest. Comparable sales for our company-owned stores were up low -single -digits, while independent purchases were down low -single -digits. By customer type, total sales to our commercial customers were up low -single -digits, with all four customer segments being positive in the quarter, while sales to our retail customers decreased mid-single -digits. Our performance by category is consistent with the prior two quarters, with non-discretionary repair categories up low -single -digits and maintenance and service categories flat in the first quarter. The pressure remains in our discretionary categories, which represent approximately 15% of sales, and were down mid-single -digits. Additionally, we acquired 44 stores from independent owners and competitors, further strengthening our footprint in our priority markets. The integration of our recent acquisitions, including MPEC and Walker, acquired in mid-2024, are progressing well and remain on plan. Both acquisitions are positively contributing to NAPA's EBITDA margin. Turning to Canada, total sales increased approximately 5% in local currency versus the same period last year, with comparable sales increasing approximately 4%. These results are a testament to the exceptional work of our Canadian team, who delivered strong results despite a softer macroeconomic environment. In Europe, total sales increased approximately 3% in local currency, with comparable sales essentially flat. The team in Europe continues its expansion of the NAPA brand and its wins with key accounts. Underlying market demand remains soft across our geographies, driven by macro challenges. Despite these headwinds, our ongoing strategic initiatives, including upgrades to our supply chain infrastructure, are expected to improve productivity efficiencies and support future profitable growth in our geographies. Rounding out automotive, our team in Asia-Pacific delivered another quarter of double-digit growth in local currency, driven by both organic initiatives and contributions from recent acquisitions. Total sales increased approximately 12%, with comparable sales growth of approximately 3%. Continued strength from our retail business is notable in the market. This sustained performance underscores the strength of our team in the region and their ability to execute effectively in the market. As we look ahead to the second quarter and the rest of the year, we remain focused on what we can control. We believe our diversified global geographies and business mix creates differentiation as we leverage our global relationships to navigate the market. Our scale creates an advantage relative to many other small players in our industries. We've got a battle-tested team in place with required expertise to navigate uncertain markets. We've invested in the business over the recent past to provide tools to help us analyze the business with more granularity. We have a long-standing history of financial strength characterized by attractive cash generation. Importantly, we also have a team culture defined by an action bias, agility, and a passion for serving customers in every market environment. I want to conclude by thanking our shareholders, customers, and suppliers for their trust and continued support. Most of all, thanks again to our GPC teammates for your dedication and hard work. I'll now turn the call over to Bert. Thanks, Will, and thanks to everyone for joining the call. Our first quarter performance was in line with our expectations despite a dynamic external backdrop, which is a reflection of the resiliency and agility of our teams as we continue to navigate through challenging conditions. Our discussion today of our first quarter performance and our outlook will focus primarily on adjusted results, which exclude the non-recurring costs related to our global restructuring program and costs related to the acquisition of MPEC and Walker. During the first quarter, these costs totaled $69 million of pre-tax adjustments or $49 million after tax. As expected, earnings were down in the first quarter as our profitability was negatively impacted by one less selling day, lower pension income, higher depreciation and interest expense, and foreign currency headwinds, which cumulatively totaled a $0.48 negative impact. As we shared in February, we expected these factors to drive first quarter earnings down by 20%-30%, and we finished the quarter with adjusted EPS of $1.75, down 21% to prior year. While certain new tariffs took effect during the quarter, the financial impact to GPC for Q1 was immaterial. Let's turn to the details of the quarter, starting with sales. Total GPC sales increased 1.4% in the first quarter, which included a benefit from acquisitions of 300 basis points. These items were partially offset by foreign currency headwinds and an 80 basis point decrease in comparable sales as our businesses continue to operate in soft market conditions. Both total sales and comp sales were negatively impacted by 110 basis points from one less selling day. Our gross margin was 37.1% in the first quarter, an increase of 120 basis points from last year, relatively in line with our expectations. The improvement in our gross margin was driven by acquisitions, along with some favorability in vendor rebates. Recall that we will begin to cycle these acquisitions through 2025, and as a result, would expect the rate of gross margin expansion in subsequent quarters in 2025 to be below what we reported in the first quarter. Our adjusted SG&A as a percentage of sales for the first quarter was 28.9%, up 170 basis points year -over -year, sequentially improving from the fourth quarter. On an as-adjusted basis, our SG&A grew in absolute dollars by $120 million year -over -year, including approximately $80 million from acquired businesses. The SG&A impact of acquired businesses will diminish over time as we anniversary the acquisitions and continue to realize the anticipated synergies from the integration of these businesses. Our core SG&A grew $40 million, or 2.5% in the quarter, as we curbed the rate of growth of core SG&A significantly on a sequential basis from the fourth quarter of 2024, when we experienced core SG&A growth of approximately 4%. We continue to do the hard work to improve our cost structure, aligning to market realities, and ultimately getting to our expectation for leverage in SG&A. Within our core SG&A, we experienced an increase of approximately $45 million related to salaries and merit adjustments and rent expense due to lease renewals occurring in a higher-rate environment. Over the past year, we've taken extensive actions to adjust our cost structure, and our efforts remain in flight and on track. In the first quarter, we incurred restructuring costs of $55 million and realized approximately $27 million of cost savings for a benefit of $0.14 per share. For the quarter, total adjusted EBITDA margin was 8.1%, down 80 basis points year -over -year. The decrease was driven by the impact of one less selling day and the leverage from lower organic sales growth and cost inflation, partially offset by benefits from our acquisitions and restructuring efforts. Turning to our cash flows, for the quarter, cash from operations was down $41 million, and free cash flow was down approximately $160 million. While we continue to benefit from favorable terms within payables, our investments in inventory, including our MPEC and Walker acquisitions, created timing headwinds in working capital in the first quarter, which is typically our lowest cash generation quarter of the year. During the first quarter, we invested approximately $120 million back into the business in the form of capital expenditures as we continued our investment in our supply chain and IT systems. In addition, we invested approximately $75 million in the form of strategic acquisitions. Finally, during the quarter, we returned approximately $135 million to our shareholders through our dividends. Now, turning to our outlook. As we detailed in our press release this morning, we are reaffirming our outlook for 2025. For the full year, we continue to expect diluted earnings per share, which includes the expenses related to our restructuring efforts, to be in a range of $6.95-$7.45, and adjusted diluted earnings per share to be in the range of $7.75-$8.25. As further detailed in our earnings release, our outlook excludes the previously announced one-time non-cash charge we expect to record when our U.S. pension plan termination settles, expected for late 2025 or early 2026. On slide 11 of our earnings presentation, we've included an illustration of the key business drivers impacting our 2025 outlook. Recall that our outlook includes an expected headwind from a loss of pension income, higher depreciation and interest expense, as well as a headwind from foreign exchange conversion. Collectively, these headwinds produce approximately $1 of EPS headwind in 2025 when compared to 2024. Our current outlook assumes foreign currency rates at current levels. While we have reaffirmed our outlook for the full year, the fluid external backdrop makes visibility into the rest of the year, particularly in the second half, more complex. We believe we can meet our expectations for the year. However, it is important to share the assumptions embedded in our outlook, given the lack of clarity in the current external landscape. First, consistent with February, our outlook does not include any impact from tariffs in 2025. The potential implications of the U.S. administration's shifting policies on tariffs are unclear, and the tariffs could impact us across multiple prisms. As we evaluate the implications of the tariffs on our business, we will be considering the following factors: impacts to our revenue, including the pace and timing of potential same-skew price adjustments, overall market conditions and fluctuations in underlying demand for parts and services, increases in product costs as we engage with our supplier partners, adjustments to our supply chains, including operational impacts with inventory availability and suitable substitutes, as well as higher freight costs associated with movement of goods, inflationary cost increases in SG&A, as the tariffs have the potential to drive higher salaries, wages, and rent, and volatility in interest rates and foreign currency rates, which could have negative impacts. Given the shifting environment, the recent 90-day pause to delay the effective date of the announced tariffs for many countries, and the complexity of applying the tariffs I just outlined, we believe it is prudent to exclude any impact of potential tariffs from our outlook as we await greater clarity from the U.S. administration on the path forward. While we don't guide to the quarter, I would like to provide some additional color regarding expectations for the second quarter, where we believe we have the most visibility into our forecast, given the recent delay in the effective date for the proposed tariffs on many countries. Our trends in April have held consistent with March, and while market conditions remain soft, we've seen no appreciable downturn over the past two weeks, despite the tariff environment. With first quarter earnings falling in line with our expectations, we continue to expect first-half earnings to be down 15%-20% and second-half earnings to be up 15%-20%, consistent with the view we shared with you in February. For the second quarter, we expect adjusted earnings to be down 15%-20% from the prior year, primarily driven by lower pension income, higher depreciation and interest expense, and the negative impact of foreign currency. As we look more broadly beyond the tariffs, recall that our outlook for 2025 is based on softer market conditions improving as we move throughout the year, with a pace and timing of the recovery in both of our segments leading to a more robust second-half growth environment. However, many companies have limited information at this point as to what the full year will bring, and we are modeling multiple scenarios, many of which are incomplete given the lack of data. Despite the lack of clarity, for context, we can see at least two downside scenarios, which I'd like to share with you. The first scenario would be that the next 90 days brings clarity around the tariff environment, but the current uncertainty produces a more prolonged softness and lack of recovery in trading conditions beyond our current expectations, extending into the early stages of the second half of the year. In this case, we would expect to conclude 2025 in the lower end of our guidance range. In the second downside scenario, the tariff environment could persist for an extended period beyond the next 90 days and well into the balance of 2025. In this case, our assumptions around a second-half recovery may not materialize, which would make our current guidance difficult to achieve. Given the incomplete nature of the second downside scenario, we are not able to reforecast the year, but we will pivot based on the backdrop and provide additional updates as needed. With that, our current guidance assumes total sales growth in the range of 2%-4% for 2025. Our outlook assumes that market growth will be roughly flat and that the benefit from inflation will be approximately 1%. It also assumes a benefit from M&A carryover and about a point of growth from our strategic initiatives. These benefits are partially offset by the one less selling day in the first quarter and about a point of headwind from foreign exchange. For gross margin, we continue to expect 40 basis points -60 basis points of full-year gross margin expansion, driven by our continuous focus on our strategic sourcing and pricing initiatives, as well as a benefit from the independent store acquisitions in U.S. automotive. Our outlook assumes that SG&A will deleverage between 20 basis points and 40 basis points. Our SG&A outlook is driven by continued cost inflation pressures and the impact of incremental SG&A from acquisitions in the U.S. automotive business. These impacts are partially offset by the expected benefits from our global restructuring activities. For 2025, we expect to incur restructuring expenses in the range of $150 million-$180 million associated with these activities, with an expected benefit of $100 million-$125 million. When fully annualized in 2026, we expect our 2024 and 2025 restructuring efforts and cost actions will deliver approximately $200 million of cost savings. By business segment, we are guiding to the following: 2%-4% total sales growth for the automotive segment, with comparable sales growth in the flat to up 2% range. We expect the automotive segment EBITDA margin to be flat to up 10 basis points from last year. For the industrial segment, we expect total sales growth of 2%-4%, with comparable sales growth in the 1%-3% range. We expect global industrial segment EBITDA margin to expand by approximately 20 basis points-40 basis points year -over -year. Turning to a few other items of interest, we expect to generate cash from operations in a range of $1.2 billion-$1.4 billion and free cash flow of $800 million-$1 billion. The strength of our balance sheet continues to give us the confidence in our ability to execute in the face of the ongoing uncertainty of the external landscape. As detailed in our earnings release, our outlook for CapEx and M&A remain in line with the expectations we shared with you in February. In closing, the external environment has become increasingly complex, with the tariff landscape driving heightened uncertainty across many prisms. As we look ahead to the remainder of the year, we remain confident in the underlying fundamentals of our businesses and the strategic investments we are making to improve our position for the long term. Our near-term focus remains on operating with agility and discipline while we continue to serve 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. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the hands before pressing any keys. One moment, please, for your first question. Your first question comes from Bret Jordan with Jefferies. Your line is now open. Hey, good morning, guys. Morning, Bret. Could you talk a little bit about what you saw for inflation in the first quarter, both Motion and the automotive business? Obviously, we're not going to address the tariff potential. Yeah, sure. Look, for inflation, it really came in line with what we thought, about just a little bit less than a point across both businesses. On the top line, getting a little bit of benefit, but not a ton, really right in line with our expectations. I would tell you on the inflation side, we're really still feeling it more on SG&A. A little bit upside down when you compare the point or so on the top line to somewhere in the 2% range on SG&A costs, really in salaries and wages, and a little bit in rent as well. Now, that's declining, which is nice. We are seeing the monetary policy across the world have its intended effect of pulling it back and landing in a place that's a little bit more normalized than we've seen in the last two years. Something that's still a little bit stubborn in the cost side of the P&L and something we're still working on pretty hard, particularly when you think about our global restructuring. Okay. A question on your automotive, it's the day, you were comping up a bit, but you described the market as soft. Are you seeing share gain over there? Is this leverage of the private label program? I guess, how do you see your performance relative to the underlying market there? Yeah, Bret. We're really pleased with the performance over in Europe. We're seeing really nice outsized growth in our NAPA branded products over there. Our share is, in our estimation, kind of in line with the market, just slightly better. We're doing a lot of work around the cost structure over there as well, under the prism of harmonizing and optimizing all of the different geographies in Europe, working together to get benefits. There is a lot to like over there. That NAPA branded product, especially in a tough market, has been a differentiator. It's about 15% of our revenue with a big runway. Obviously, it's a margin good guy for us. We're going to continue to push on that as an important strategic initiative as we move forward. Great. Appreciate it. Thank you. Thanks, Bret. Your next question comes from Gregory Mellick with Evercore. Your line is now open. Hi, thanks. Good morning, guys. I wanted to follow up on just level set us on where we are with North American Auto. You bought in more independents. I know you have a strategy to get to, I guess, half. Just sort of where are we on that? Anything on initiatives to reaccelerate the share there and turn the comps for the overall business? Yeah, Greg, I'll take that one. As we said in the script, we continued our momentum with adding to our store count, about 40-45 stores through the quarter. Last year, obviously, was a big effort with the acquisition of MPEC and Walker, which added materially to our footprint. We're going to continue to pursue that strategy. It's important to note that the independent owner model will always be an important part of who we are. The owners, as I saw firsthand in my time in Las Vegas, they're a really important, powerful player in these local rural markets with a great service proposition. We are going to continue to lean into that and make sure that they are positioned for success. As we look forward to 2025, our acquisition of new stores will slow and moderate. Obviously, 2024 was an unusually high amount of stores that we acquired. We are turning our attention to really running great stores, which goes to your second point. I am pleased with the progress. We have talked a lot over the last couple of years about the areas of emphasis as it relates to winning and earning share by delivering great service. It starts with store operations, sales excellence. We are doing some things out in the field to make sure that our sales organization is aligned and focused on taking care of customers, and our store operations professionals are working on making sure that the parts are getting out of the stores quickly and efficiently. We're doing inventory work. We're doing all the right work, and we're making slow and steady progress. Pleased with the progress, but never satisfied. Got it. I'd love to pivot and follow up on tariffs a little bit. Not specifically understand on the not changing the guidance for it, but you gave us a couple of scenarios that could make things worse. Is there a scenario that could make things better, particularly given the nature of the product and the potential to pass through pricing? Yeah, Greg, that's an interesting question. We've had a lot of conversations in the last few weeks around what are the downsides. We have had a few conversations on the upside. Look, I think when you think about how this could be better, or maybe we'll just say how could things return to what feels a little bit more normal. That is why I think we kept our guide where we saw it. The guidance range is wide enough to give us some latitude to see an upside case. That would be, I think, in the sense that things get resolved here in short order. This current period of dislocation and disruption does not blunt what we would see as a more robust second half. In that environment, with a little bit of price that is probably not baked into what we are thinking, you could see some upsides. I would just tell you that for right now, we are kind of sitting here in a wait-and-see mode. We had a good first quarter in terms of our expectations. They were in line with what we thought. We have had a decent start to April. That gives us a view that with so many moving pieces and no new information, and I think we're all in the same camp of trying to understand what's happening, we have a lot of data points that would just point us to, let's stay in the wait-and-see and hold it. Hopefully, we can get past this 90-day period with a lot of good outcomes. In that case, I think everyone, not just GPC, but everyone will feel better about the rest of the year. Greg, I would just add a couple of other thoughts. One is these industries are rational markets, and we've had history prove to us that in inflationary periods, we're able to pass through price as we're delivering a service proposition to our customers. To the extent that that is steady, measured, and under control consistently through the forward coming quarters, that's a good guide. The other thing I would tell you is we've seen sequential improvement in the industrial business over the last couple of quarters, as we had hoped as we came out of this contraction cycle that's been the longest in history. As we saw in the first quarter, we saw sequential improvement as we moved through January, February, March, and optimistic that, cautiously optimistic that in an upside scenario, we continue on that trajectory and it turns into the second half recovery that we had planned at the beginning of the year. Lots of moving pieces, lots to consider. As I think we said pretty clearly in our scripts, we're going to be very agile and make sure that we're reacting accordingly to seize the moment. That's great. Congrats and good luck. Thanks. Thanks. Your next question comes from Christopher Horvers with JP Morgan. Your line is now open. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Hi, good morning. It's Christian Carlino on for Chris. Excluding some of the calendar noise, you saw a real step up in comps for Motion. Could you talk a bit more about what drove that and what you're hearing from those customers? Are they pausing that 20% of demand that is bigger capital projects given the uncertainty, or are they accelerating projects they had already started? To what degree do you think you maybe saw any pull forward of demand given the tariffs that might have benefited the first quarter? Thanks. Christian, thanks for the question. I'll take it. We were very encouraged as we started the year at Motion. The performance was in line or slightly better than what we had planned internally. We were encouraged by seeing the activity with customers on some of these capital-related projects, which was an area of softness as we've gone through the last couple of years. That is a really positive indicator. We continue to see good strength with our corporate account business, our smaller local MRO business strengthened through the quarter. I think you put all those pieces together, and it's a function of the industrial economy feeling like we were getting to a 2025 where rates were going lower. You had election certainty in the fall of 2024, and people were energized to do work. There's been a lot of destocking happening in the industrial complex over the last couple of years. Eventually, our customers need to make sure that they've got the right parts and solutions to move forward with a healthy economy. As I said in my previous answer, we're hoping that the upside scenario is that continues to progress as we move through 2025, and Motion's really well positioned to take advantage of it as it turns. Got it. That's really helpful. On the U.S. NAPA business, are you seeing a difference in trends in markets where one of your competitors are closing stores versus the balance of the country? On the independents, is that slower trends there due to simply the markets that the independents tend to be in, more rural markets growing more slowly, or are the independent owners destocking just given the rate backdrop and the degree of uncertainty? We've heard about them buying lower for maybe some time now. Maybe could you give us a sense of what the cumulative impact like channel inventory levels and what that looks like given you can only destock for so long without impacting share? Yeah. Let me try and tackle that one. On the first one, in terms of the kind of micro market dynamics for markets where there's competitive changes, it depends. We have seen some strength. Each market has its own dynamics. We consider all of the local dynamics as we evaluate what's happening. I would tell you that our Midwest, Mid-Atlantic region showed strength, outside strength relative to the balance of the country, largely driven by the great work that's happening with our recent acquisitions. The West, where we had the most customer disruption, we saw good strength, but not anything outsized. I think we're attacking the right opportunities and being thoughtful about the business that we're taking on to make sure that we can take care of our customers. As it relates to the independent owners relative to company-owned stores, I would tell you, and I saw this firsthand during my time last week with all the owners, we saw sequential improvement with the owners through the fourth quarter of last year. That kind of got choppy to start the year, driven by lots of different things, weather, etc., new backdrop. We saw really nice strength coming into the end of the quarter in March with continued strength into the first part of April. Company-owned stores are performing a little bit better. That's probably a function of the continued dynamic environment that the owners are working in. I'm really proud of the work that the teams are doing to work with the owners to make sure that they're well positioned to capture the market. Lots of noise in the quarter, but feel good about the fundamentals as we move forward. Got it. Thank you very much. Best of luck. Thanks, Christian. Your next question comes from Michael Lasser with UBS Securities. Your line is now open. Good morning. Thank you so much for taking my question. Understanding that there's a lot of uncertainty in the tariff situation. If you put aside both the potential top-line impact as well as your mitigation efforts, can you simply size the cost impact to your cost of goods if the current tariff regime were to remain in place for the rest of the year? This way, the market and shareholders can come up with their own assumptions about the other factors, and at least those impacts could be priced into the model. Thank you. Michael, that's a good question and a tough one. I think we tried to give you guys some downside scenarios at the broadest context, but get to the more specific of your question. I think maybe a little bit of context is the actual application of a tariff to a single good. We have been studying this quite closely over the last few weeks as this landscape has evolved. To give you some color on that, we looked at one SKU the other day that has the potential to have nine different tariff permutations applied against it. That is just one particular SKU coming in from one country of origin that would have nine possible cost adders as you move through the clearance process. The net result of that particular application of that tariff is about 30%, which I think is consistent with what a lot of folks are looking at in the wind of the blended tariff rate is somewhere in the mid-20s to high -30s and at highs from the 1900s. If that were your only data point, then that hopefully is a little bit of color. Now, that is an unmitigated strategy of just letting the tide wash over us and letting that be the case. Obviously, we would be doing things to mitigate that and doing mitigation strategies against it. It also would not consider any other elements of the P&L for which there might be other changes. It also would not consider, as you said, you are looking at gross margin or cost of goods sold in isolation, pricing actions we may take or may have the ability to take. That is really why we have viewed trying to quantify the most draconian scenario as an incomplete homework assignment at this point. We are all calling balls and strikes on what is happening. When you really think about this and the impact on GPC, and that is why I outlined it in my prepared remarks, we are going to be looking at same SKU price inflation, price adjustments. We will be looking at cost of goods sold. We will be looking at demand impacts. There could be fluctuations in demand as well. Operating costs could be in the form of higher salaries and wages. We could have more freight costs as we think about the movement of goods. The other thing that does not get really considered in this is all of us, not just GPC, all of us have in-flight capital projects for which the capital input costs of a DC that is currently being constructed is going to have a different profile. The complexity of the landscape is quite high, and the degree of forecasting difficulty is also quite high. Hopefully, that gives you a bit of color on just the application of one particular tariff on one particular good. We would have to do that on tens of thousands of SKUs. That is the work we are looking at. That is why we seek more clarity over the next 90 days. I think everyone is seeking more clarity. As we get more of that, I will be able to give you guys a more precise view. Michael, I would just add, I would just add just as a reminder for everybody, about 70% of Genuine Parts Company's purchases globally are either in the U.S. or Europe. We articulated about 14% from China, which if you do all of the math, our NAPA business is really the outsized exposure with China, Mexico, Canada, 20%-15%-5% respectively. We think the diversification of the business is an advantage. Having said that, the diversification adds to the complexity because we have trade partners around the world. While they might not be tariff impacted, it just adds to the complexity of how all of our geographies interact with their manufacturing base. Thank you, Will and Bert. That's very helpful. Now, just to clarify, would it be appropriate for us to apply an average of 30% to 14% of your cost of goods, or would that 30% be applied more broadly because while only a portion of the goods that you're selling, for example, in the United States are going to be brought in from across the border, there will be some indirect impact to those goods from raw materials or other non-finished goods that could play into this tariff situation? Yeah, Michael, I don't think you can, I don't think you can use it as a rule of thumb to just apply 30% to the 14%. It's way more complex than that. That's why I tried to give you a little color just on one SKU. We would have to do that on tens of thousands of SKUs based on country of origin. The one I was thinking of and the one I was quoting to you, the country of origin was China. That is not our only exposure point. I do not think I can give you a rule of thumb that is that simple. I wish I could because actually, if I could, I might be able to give you a more precise view on forecasting on some of the downside scenarios we shared this morning. I think we just have to try to really think about this as a wait-and-see mentality. We have given you some color around what we think downsides could be. We had a nice question earlier on what the upsides could be. Look, the bottom line here is what will the resiliency of the underlying demand for two businesses that are break-fix be in a tariff world? How long will the tariff world continue to persist? The landscape shifted on us in the last 90 days with us talking about China, Mexico, and Canada in February. Now we're talking about China at a much more elevated level, and we're talking about the rest of the world. We'll just give you some color on the rest of the world. Look, we're going to continue to be transparent. We're going to continue to give you the right color to be able to understand how you can model this business. We're trying to model the business as well through multiple scenarios, as I'm sure you can appreciate. Like many, I think we're in a wait-and-see mode and relying on our teams. We have a lot of confidence in our teams to go execute in this environment, given our past practice in this space and some of the lessons learned from COVID. Understood. Your analogy about unfinished homework was very appropriate given my moniker in high school was unfinished homework. I totally get it. Thank you very much for that, Bert. With that being said, my last question is, what are you hearing from your independents on how they're navigating through this environment? Is there any evidence that they are trying to buy as much inventory as possible at the current time in order to get ahead of what could be some cost increases down the road? If and when the tariffs do start to show up in the form of higher prices, how do you expect them to react on the independent side? Thank you. Michael, I think it depends. It depends on the owner, and it depends on the owner's situation. I had a mixed series of discussions with owners over the last week about how they were thinking about the tariff world. I would say we have not seen a pull-forward rush to put in product associated in the aggregate across the ownership group associated with tariffs. We are always working with our owners to make sure that they're appropriately inventoried. We're helping them with the analytics to understand parts and products that they should have relative to the market. I would say we haven't seen anything materially different in that strategy over the recent 90 days. How will they operate in a tariff world? I think it depends. I think all small businesses are trying to navigate the environment. Big corporations that are publicly traded are trying to navigate the environment. I think we owe it to our owners to work with them like we've worked with them for many decades to make sure that they're successful and navigate the market as an important partner to us to take care of our customers. Understood. Thank you very much and good luck. Thanks, Michael. Your next question comes from Chris Dankert with Loop Capital. Your line is now open. Hey, morning, guys. Thanks for taking the questions. Fully appreciate the uncertainty. I guess just to beat a dead horse on pricing and tariffs, I understand there's the pause. There's the major tariffs that we're all kind of sitting, waiting about. We have seen tariffs go into effect. We have seen price increase announcements from multiple vendors to deal with the earlier March tariffs. If we just look at that smaller subset that is in effect today that have already announced actual price increases, not some kind of contingent plan, is there any way to size what that impact is from a sequential 1 Q to 2 Q basis here? If we're waiting, what's the risk to gross margin from waiting because those increases have been announced? Yeah, Chris, it's a good question. I would give you a couple of thoughts. One is, in every year at this time of year, we have ongoing discussions with our suppliers about how prices are going up or down into the market. Usually, they're going up. That's the ordinary course process. You get a letter or have a discussion with a vendor. It starts a 90-day discussion back and forth about the logic and the facts behind the rationale why prices are going up. That kind of gets put into the market, so to speak. That process happened like it does every single year. Those discussions flow in different weeks and different months as the discussions get resolved. We have seen that activity happen. We have also seen an elevated number of those discussions just based on the world in which we are operating in. Over the next 90 days or so, there will be resulting actions that are taken as a result of those discussions. To your point, has there been activity already put into the market? The answer is yes. Is it driven specifically by a tariff world? Unclear. We're not waiting to see what happens in the world to manage the business, make sure that we're doing the right thing for gross margin rate, gross profit dollars, and same SKU inflation. We're actively working on it. I think to your point, there's more news to unfold as we go, but we're not watching the clock, waiting to see what's happening before we're going to manage the business. Chris, I'd just add to Will's point that it did have an impact in the first quarter. We stated on our prepared remarks that it was immaterial. Not only are things happening and we've had an impact, the impact was largely immaterial in the first quarter. We factored the current set of circumstances into our updated outlook, which we've reaffirmed. I would tell you that the only thing that we're waiting on, when I say wait and see, is what we do with the full picture of the tariffs as they move beyond what we've already experienced. I just want to be very clear about that. We're not sitting on our back foot on the current environment. We're sitting and waiting and seeing around reforecasting a year as a few more data points unfold over the next 90 days. Understood. Thanks for the clarity there, guys. I guess similar question, but more in terms of inventory positioning for Genuine Parts Company here, I guess. I assume we're trying to bring some stuff across the border more quickly. What does that mean maybe for use of cash versus cash generation in the second quarter? I know you do not normally talk about cash generation on that smaller basis, but maybe given the circumstances, it is worth any kind of color we can get there. Look, I would just tell you that I think we had a decline in cash flow in the first quarter. The headwind that we faced was investment in inventory. I think the simple way to say it is that the first quarter reflected an inventory use of cash. Some of that is related to the acquisition of MPEC and Walker coming into the calculation on a year-over-year basis. The other is investments we have made in inventory to make sure that we are in the right place and on the right front foot as markets rebound. If we move past this period of uncertainty, and particularly on the industrial side, our customers need inventory. We're well-positioned, and Motion is very well-positioned to be effective in that environment. As Will's already shared, we've done a lot of great work with our independent owners to ensure they're well-stocked and positioned as we move into the spring. We've also had a product launch at NAPA with a new Carlyle tool program. I would tell you that our use of cash in the first quarter really had a lot to do with inventory. We got some offsetting benefit on the payable side and a little bit of a timing fluctuation from a typically seasonally slower sales period. I wouldn't tell you that that has impacted the second quarter to any big degree. I don't think there's another big use of cash coming in the second quarter related to inventory. I think we've done a lot of that work already. I would just add that we reiterated and reaffirmed our full year outlook for cash flow, both for operating cash flow and free cash flow. We feel good about the cash generation of the business over the course of the year. I think we've done some nice work to be in a great place as we move through the rest of the three quarters of 2025. Very helpful. Thanks so much and best of luck, guys. Thank you. Your last question comes from Carolina Jolly with Gabelli. Your line is now open. Great. Thanks for taking my questions. Just too, sorry to ask another tariff question, but if you could remind us how much of your automotive business is outside of the U.S. and if you would find that relatively, I guess, immune to the kind of tariff volatility that we're talking about today. The non-U.S., Carolina, I think you cut out a couple of times, but I think your question was how much of our automotive business is outside of the U.S. Is that right? Yes. Yes. Yeah. The APAC automotive business is about 10%. Europe's about 15%. When you think about the base of revenue, then that's what the portion is that's outside of the United States. I would also tell you, when we think about those two regions, those trading partners for the APAC business, if they're trading with China, the current U.S. administration impact on that trading lane is not a direct impact. Could there be other indirect impacts? Sure. We do not see the APAC business directly impacted by the tariff situation. The same goes for Europe. Europe's trading partners for us are also some China-based. That trading lane also does not really have an impact from the direct announcement of tariffs in the U.S. I think anything that might come there is indirect. I would just tell you that those businesses are well-positioned to continue to be successful. The Asia-Pacific business had an excellent quarter. We have talked about the European business already this morning. They continue to do well as well. The diversification of the supplier base is a strength. Not only do we benefit from size and scale globally, but we benefit from size and scale in both of those regions. I would not tell you there is an outsized exposure point when we think about our offshore businesses in the automotive space. Okay. Perfect. Thanks for the clarification. Just another question specific to your U.S. auto business. Are you able to kind of differentiate what's kind of market-driven and what was driven by some of the initiatives you've taken over the last year? Yeah. Carolina, we do look at it that way. I mean, the market has been kind of flattish to down slightly, in our opinion. We usually target a point or so of share gains, and we've been tracking around that plus or minus for the last few quarters. Obviously working to get that number higher, but that's our calculus. Great. Thank you again. Thanks. Ladies and gentlemen, there are no further questions at this time. I will now turn the call over to Will Stengel for closing remarks. Thanks again, everybody, for your interest in Genuine Parts Company. We look forward to giving everybody a good update on our call in July. Have a great day. Thanks again. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.