Executive Summary

Q2 2025 delivered modest top-line growth with revenue up 3.4% to $6.16B and adjusted EPS of $2.10; both slightly above S&P Global consensus, while GAAP EPS declined YoY on inflationary cost pressures, higher depreciation and interest, and lower pension income .
Management revised full-year 2025 guidance lower: total sales growth to 1%-3% (from 2%-4%) and adjusted EPS to $7.50-$8.00 (from $7.75-$8.25), citing tariff uncertainty and moderated demand assumptions, partially offset by restructuring savings .
Segment picture mixed: Automotive sales +5.0% with EBITDA margin down 110 bps to 8.6%; Industrial sales +0.7% with EBITDA margin up 10 bps to 12.8% .
Tariffs are a key narrative driver; management expects low-single-digit price benefits and low-single-digit COGS increases in 2H, with a global “command center” actively managing SKU-level impacts and customer tools (e.g., digital tariff calculator) .
Capital allocation steady; Board declared a regular quarterly dividend of $1.03 payable Oct 2, 2025; cash from operations in H1 was $169M and free cash flow was -$79.7M due to lower earnings, accelerated tax payments, and working capital changes .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded 110 bps YoY to 37.7% on sourcing and pricing initiatives and acquisition benefits; CFO: “Our gross margin was 37.7%… an increase of 110 basis points from last year” .
Industrial segment returned to growth (+0.7% sales) with EBITDA margin expansion (+10 bps to 12.8%), aided by pricing/sourcing and cost discipline; e-commerce at Motion now ~40% of sales, up >10% vs start of 2024, driven by GenAI-enabled enhancements .
APAC automotive delivered double-digit growth (+~13% sales, ~5% comps), with retail up high single digits and continued share gains; Canada posted ~5% sales growth with ~4% comps on targeted DC and micro-market investments .

What Went Wrong

Automotive EBITDA margin compressed 110 bps to 8.6% on inflation in salaries/wages, rent, and freight across geographies; U.S. retail down mid-single digits and Europe flat with down comps amid muted macro and inflationary pressures .
Earnings pressure from lower pension income and higher depreciation and interest totaled ~$0.29 negative EPS in the quarter; adjusted EPS down 14% YoY to $2.10 .
Cash conversion weaker: H1 2025 operating cash flow $169M (vs $612M prior-year H1) and free cash flow -$79.7M, reflecting lower earnings, accelerated tax payments, and working capital normalization versus a tough prior-year comp .

Financial Results

Consolidated Actuals vs Prior Periods and S&P Global Consensus

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$5.77	$5.87	$6.16
Revenue Consensus ($USD Billions)*	$5.71	$5.83	$6.11
GAAP Diluted EPS ($)	$0.96	$1.40	$1.83
Adjusted Diluted EPS ($)	$1.61	$1.75	$2.10
Primary EPS Consensus Mean ($)*	$1.55	$1.68	$2.07
EBITDA ($USD Millions)	$416.97	$473.53	$546.96
EBITDA Consensus Mean ($USD Millions)*	$427.36	$453.88	$532.99
Gross Profit ($USD Billions)	$2.07	$2.17	$2.32
Gross Margin (%)	36.9% (adjusted)	~37.0% (computed)	37.7%

Notes: Values marked with * are retrieved from S&P Global; adjusted vs consensus comparisons use S&P “Primary EPS” normalization.

Segment Performance

Metric	Q4 2024	Q1 2025	Q2 2025
Automotive Sales ($USD Billions)	$3.70	$3.66	$3.91
Automotive Segment EBITDA ($USD Millions)	$285	$286	$338
Automotive Segment EBITDA Margin (%)	7.8%	7.8%	8.6%
Industrial Sales ($USD Billions)	$2.10	$2.20	$2.25
Industrial Segment EBITDA ($USD Millions)	$271	$279	$288
Industrial Segment EBITDA Margin (%)	12.9%	12.7%	12.8%

KPIs and Mix

KPI	Q4 2024	Q1 2025	Q2 2025
Total Net Sales – Comparable Sales (%)	-0.5%	-0.8%	+0.2%
Total Net Sales – Acquisitions (%)	+3.2%	+3.0%	+2.6%
Total Net Sales – FX (%)	-0.1%	-1.5%	+0.4%
H1 Operating Cash Flow ($USD Millions)	—	—	$169
H1 Free Cash Flow ($USD Millions)	—	—	-$79.7

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales Growth	FY 2025	2% to 4%	1% to 3%	Lowered
Automotive Sales Growth	FY 2025	2% to 4%	1.5% to 3.5%	Lowered
Industrial Sales Growth	FY 2025	2% to 4%	1% to 3%	Lowered
GAAP Diluted EPS	FY 2025	$6.95 to $7.45	$6.55 to $7.05	Lowered
Adjusted Diluted EPS	FY 2025	$7.75 to $8.25	$7.50 to $8.00	Lowered
Effective Tax Rate	FY 2025	~24%	~24%	Maintained
Operating Cash Flow	FY 2025	$1.2B to $1.4B	$1.1B to $1.3B	Lowered
Free Cash Flow	FY 2025	$800M to $1,000M	$700M to $900M	Lowered
Segment EBITDA Margins	FY 2025	—	Auto: flat to slightly down; Industrial: +20–40 bps YoY	Provided detail
Dividends	Ongoing	$1.03 quarterly (in place)	$1.03 quarterly declared Aug 12, 2025	Maintained

Drivers: Management incorporated impacts of enacted U.S. tariffs (low-single-digit price and COGS assumptions), moderated demand expectations (PMI <50), and incremental restructuring actions; pension plan settlement remains excluded from adjusted EPS .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/Macro	Q1: “solid start… despite the tariffs and trade dynamics” ; Q4: outlook set before tariff specifics, highlight restructuring	Low-single-digit price benefit and low-single-digit COGS increase; command center; digital tariff calculator for customers	Elevated focus; execution framework in place
Restructuring/Cost Actions	Q4: new global restructuring; 2025 costs $150–$180M, savings $100–$125M, >$200M annualized in 2026	Q2: restructuring costs $45M; ~~$33M savings (~~$0.18/share) in quarter; 2025 restructuring now $180–$210M, >$200M annualized savings in 2026	Expanded actions; savings runway
Digital/AI Initiatives	—	Motion e-commerce ~40% of sales; growth >10% vs start 2024 leveraging GenAI	Accelerating adoption
Supply Chain & Pricing	—	SKU-level pricing pass-through broadly balanced with supplier costs; improved independent owners’ inventory positions	Stabilizing execution
Regional Trends	Q4: Auto +6.1%; Industrial -1.2%	U.S. auto comps ~flat; Canada +~5% with ~4% comps; Europe flat with down comps; APAC +~13% sales, ~5% comps	APAC strong; Europe muted
Pension Plan Settlement	Q4: settlement expected late 2025/early 2026; excluded from adjusted EPS	Still excluded from 2025 adjusted EPS; GAAP EPS guide does not include timing-specific impact	Unchanged stance

Management Commentary

CEO: “Our results for the quarter were in line with our expectations… as we proactively manage through an evolving external environment” .
CFO: “Adjusted EPS of $2.10, down 14%… profitability negatively impacted by lower pension income and higher depreciation and interest expense, which cumulatively totaled a $0.29 negative EPS impact” .
On tariffs: “We have a global cross-functional command center… showcasing a proprietary digital tariff calculator… helping customers understand exposure” .
Outlook drivers: “Revised expectations reflect moderated growth… and our estimate of the impacts of the current tariff environment… revenue includes a low single-digit pricing benefit and COGS includes a low single-digit cost increase” .
Segments: “Industrial segment EBITDA margin… +10 bps YoY… Automotive segment EBITDA margin… down 110 bps” .

Q&A Highlights

Independent NAPA stores: Inventory positions and sell-out improved; sell-out correlates with company-owned stores (up low-single digits) .
Pricing pass-through: Broadly balanced between supplier cost increases and market pricing; cadence of price tailwinds expected to accelerate in Q3 and normalize in Q4 .
Automotive margins: Current compression driven by inflation in SG&A; management aims to “bend the curve” via restructuring; expects improving profitability in 2H .
Motion cadence: Positive trends to start Q3; acceleration expected in Q3 and Q4 vs easing comps; tariff clarity would help demand confidence .
Guidance rationale: Segment and geography differences (e.g., no tariff offset in Europe/APAC); net effect is lower top-line guide despite price tailwinds .
Europe/NAPA brand: NAPA-branded product offers value and helps offset macro headwinds with sequential improvement across most countries .

Estimates Context

Q2 actuals vs S&P Global consensus: Revenue $6.16B vs $6.11B* (beat ~0.8%); adjusted EPS $2.10 vs $2.07* (beat ~1.5%); EBITDA $547.0M vs $533.0M* (beat ~2.6%) .
Trend vs prior quarters: Q1 revenue $5.87B vs $5.83B* (beat), adjusted EPS $1.75 vs $1.68* (beat); Q4 revenue $5.77B vs $5.71B* (beat), adjusted EPS $1.61 vs $1.55* (beat) .
FY 2025 consensus adjusted EPS ~$7.63* vs company guidance $7.50-$8.00; consensus may drift lower on tariff/demand risks and expanded restructuring costs, with upside if price pass-through and savings accelerate .

Note: Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Modest beats on revenue, adjusted EPS, and EBITDA, but YoY earnings compression and margin headwinds indicate ongoing cost inflation and non-operating drags; focus near term on SG&A leverage trajectory and restructuring savings capture .
Guidance cut reflects tariff uncertainty and moderated demand; monitor tariff breadth/magnitude, signs of demand destruction, and inflation in costs as outlined by CFO—these are key catalysts for estimate revisions and stock moves .
Segment divergence persists: Industrial showing stabilization and margin resilience; Automotive margin recovery depends on cost actions and pricing discipline—watch Q3 cadence and APAC/Canada outperformance vs Europe .
Cash conversion was soft in H1; full-year FCF guide lowered—track working capital normalization and restructuring cash outlays to gauge FY cash generation .
Strategic levers (GenAI-enabled digital, sourcing/pricing, acquisitions integration) underpin gross margin gains—sustainability of these levers is central to 2H profitability recovery .
Dividend maintained ($1.03/qtr); defensive attributes of break/fix markets and rational pricing backdrop provide a floor, but macro/tariff path will dictate multiple and near-term sentiment .
Watch Q3: management expects adjusted earnings +5%-10% YoY; execution against price pass-through, SG&A leverage, and restructuring savings will be the near-term scorecard .

GENUINE PARTS CO (GPC)·Q2 2025 Earnings Summary