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GENUINE PARTS CO (GPC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered steady top-line growth with gross margin expansion and segment EBITDA improvements; revenue was $6.26B (+4.9% YoY), adjusted EPS was $1.98 (+5% YoY) while GAAP EPS held at $1.62 .
  • Versus S&P Global consensus, GPC posted a revenue beat and a slight adjusted EPS miss: Revenue $6.26B vs $6.12B consensus (beat); Adjusted EPS $1.98 vs $1.99 consensus (slight miss) *.
  • Full‑year 2025 guidance was tightened and raised for sales (3–4% from 1–3%) and narrowed for adjusted EPS ($7.50–$7.75 from $7.50–$8.00), with segment sales growth raised for Automotive (4–5%) and Industrial (2–3%) .
  • Management cited tariff pass-through benefits, strategic sourcing/pricing, and restructuring savings offsetting inflation, lower pension income, and higher depreciation/interest; watchpoints are Europe demand, tariff fluidity, and independent owner inventory behavior .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded 60 bps YoY to 37.4% on strategic pricing/sourcing, with adjusted EBITDA margin up 40 bps to 8.4% and segment EBITDA margin gains in both Automotive (+10 bps to 8.4%) and Industrial (+30 bps to 12.6%) .
  • Management execution amid macro/tariffs: “Our third quarter results were in line with our expectations and demonstrate the ongoing execution of our strategic initiatives” — CEO Will Stengel .
  • Revenue momentum and guidance raise: Total sales growth guidance lifted to 3–4%; Automotive to 4–5%; Industrial to 2–3% as Q3 comps improved in U.S. Auto and Motion, with tariffs providing a net slight benefit .

What Went Wrong

  • GAAP earnings constrained by headwinds: lower pension income, higher depreciation and interest expense drove ~25% cumulative EPS headwind; GAAP EPS flat YoY at $1.62 .
  • Europe remained soft with comps down ~2% in local currency and cautious customer sentiment; retail in U.S. NAPA remained pressured despite sequential improvement .
  • Operating cash flow down YoY (YTD $511M) due to lower earnings, accelerated tax, higher interest, and working capital headwinds vs 2024 first-half dynamics; YTD free cash flow $160M .

Financial Results

Consolidated Revenue and EPS (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$5,866,069,000 $6,164,425,000 $6,260,232,000
GAAP Diluted EPS ($)$1.40 $1.83 $1.62
Adjusted Diluted EPS ($)$1.75 $2.10 $1.98
Revenue Consensus Mean ($USD)$5,828,032,230*$6,113,690,950*$6,124,598,550*
Primary EPS Consensus Mean ($)$1.67996*$2.06672*$1.99012*
Primary EPS - # of Estimates11*11*11*
Revenue - # of Estimates11*11*11*

*Values retrieved from S&P Global.

Q3 2025 vs Prior Year and Prior Quarter (select margins)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD)$5,970,198,000 $6,164,425,000 $6,260,232,000
Gross Margin %——37.4%
Adjusted EBITDA Margin %——8.4%
GAAP Diluted EPS ($)$1.62 $1.83 $1.62
Adjusted Diluted EPS ($)$1.88 $2.10 $1.98

Narrative highlights:

  • Revenue +4.9% YoY (Q3), sequentially higher vs Q2; gross margin +60 bps YoY; adjusted EPS +5% YoY .
  • Adjusted EPS was slightly below consensus by ~$0.01; Revenue beat consensus by ~$0.14B *.

Segment Breakdown (Q3 2025)

SegmentSales ($USD)YoY %Segment EBITDA ($USD)EBITDA Margin %YoY bps change
Automotive$3,989,788,000 +5.0% $334,704,000 8.4% +10 bps
Industrial$2,270,444,000 +4.6% $285,015,000 12.6% +30 bps

KPIs and Drivers

KPIQ3 2025Notes
Comparable Sales (Total)+2.3% Acquisitions +1.8%, FX +0.7%, Other +0.1%
Comparable Sales (Automotive)+1.6% Acquisitions +2.3%, FX +1.0%, Other +0.1%
Comparable Sales (Industrial)+3.7% Acquisitions +1.1%, FX −0.2%
YTD Operating Cash Flow ($USD)$510,689,000 Headwinds from earnings, taxes, interest, and working capital
YTD Free Cash Flow ($USD)$160,246,000 Capex $350M; acquisitions $182M
Cash & Equivalents ($USD, 9/30/25)$431,359,000 Liquidity includes $1.1B undrawn revolver

Guidance Changes

MetricPeriodPrevious Guidance (7/22/25)Current Guidance (10/21/25)Change
Total Sales GrowthFY 20251% to 3% 3% to 4% Raised
Automotive Sales GrowthFY 20251.5% to 3.5% 4% to 5% Raised
Industrial Sales GrowthFY 20251% to 3% 2% to 3% Raised
GAAP Diluted EPS ($)FY 2025$6.55 to $7.05 $6.55 to $6.80 Narrowed lower
Adjusted Diluted EPS ($)FY 2025$7.50 to $8.00 $7.50 to $7.75 Narrowed lower
Effective Tax RateFY 2025~24% ~24% Maintained
Net Cash from Ops ($)FY 2025$1.1B to $1.3B $1.1B to $1.3B Maintained
Free Cash Flow ($)FY 2025$700M to $900M $700M to $900M Maintained
DividendsNext Pay Date—$1.03 per share payable Jan 5, 2026 Maintained distribution cadence

Note: GAAP EPS guidance excludes a one‑time non‑cash charge from U.S. pension plan termination expected at settlement; adjusted EPS excludes this charge .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Tariffs/MacroQ1: Outlook excluded new tariffs; cautious macro; reaffirmed guidance . Q2: Outlook revised to include tariff impact; moderated improvement expected .Tariffs provided low single-digit sales benefit and low single-digit COGS increase; net slight benefit; fluid environment .Neutral to Slight Positive (pricing pass-through working).
Pricing/SourcingQ1/Q2: Strategic initiatives continued .Gross margin +60 bps YoY from strategic sourcing/pricing .Positive margin trajectory.
Industrial Demand/PMIQ1: Soft comps; Industrial −0.4% sales . Q2: Industrial +0.7% sales; comps −0.1% .PMI below 50 for seven months; comps +~4%; backlog up ~20% YTD .Stabilizing, cautiously improving.
U.S. NAPA / IndependentsQ2: Automotive comps +0.4% .U.S. sales +~4%; comps +~2%; company-owned comps +~4%; independents +~1%; end-customer NAPA +~3% .Sequential improvement; interest rates remain a headwind .
EuropeQ1/Q2: Soft demand .Local currency flat; comps −~2%; below expectations; inflationary pressure .Persistent headwind.
Technology/AI & Supply ChainQ1/Q2: Ongoing investments .Poland Tech Center; search/catalog enhancements; new DCs driving local growth (e.g., double-digit post-investment at one site) .Execution driving productivity and service.
Data Centers—Industrial “data center initiative” gaining momentum .Emerging opportunity.
Board/Strategic Review—Board refresh; operational/strategic review with Investor Day planned for 2026 (Elliott cooperation) .Governance change; potential value unlock narrative.

Management Commentary

  • CEO: “Our third quarter results were in line with our expectations and demonstrate the ongoing execution of our strategic initiatives… We continue to proactively manage costs in an inflationary environment” — Will Stengel .
  • CFO: “Adjusted EPS of $1.98, up 5.3%… headwinds from lower pension income and higher depreciation and interest expense… net slight benefit from tariffs” — Bert Nappier .
  • CFO on 2025 guidance: “We are updating our 2025 outlook… expect current market conditions to persist… expect continued earnings growth in the fourth quarter” .
  • CEO on strategic review: “We’re turning over all stones… excited about the value creation potential… update in 2026 at an Investor Day” .

Q&A Highlights

  • Tariffs and pricing: Management expects low single-digit sales benefit and COGS increase; net slight benefit in Q3 and Q4; run rate inflation stabilizing at ~2–3% top-line impact; pass-through balanced to minimize customer disruption .
  • Gross margin cadence: Q4 gross margin expansion to moderate due to lapping acquisition benefits and tariff-related COGS; sourcing/pricing continue to support margins .
  • Independents inventory and sell-in/out: End-customer sales +~3%; independents cautious due to rates; no clear market share loss; replenishment decisions tied to working capital constraints .
  • Industrial momentum and backlog: Seven of 14 end markets grew (iron/steel, food products, fabricated metals); backlog up ~20% YTD; cautiously optimistic on OEM project activity .
  • Supply chain investments: New DCs and building upgrades improving productivity, service levels, and local market growth (example: double-digit growth post-investment) .

Estimates Context

  • Q3 2025 actuals vs S&P Global consensus: Revenue $6.26B vs $6.12B consensus — bold beat; Adjusted EPS $1.98 vs $1.99 consensus — slight miss *.
  • Q2 2025: Revenue $6.16B vs $6.11B consensus — beat; Adjusted EPS $2.10 vs $2.07 consensus — beat *.
  • Q1 2025: Revenue $5.87B vs $5.83B consensus — beat; Adjusted EPS $1.75 vs $1.68 consensus — beat *.
  • Implications: Street likely lowers FY adjusted EPS midpoint modestly (company narrowed to $7.50–$7.75), while raising/maintaining sales growth on tariff pass-through and improved comps; watch for margin expectations to reflect Q4 moderation and persistent SG&A inflation .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality of execution: Margin expansion and segment EBITDA improvements demonstrate pricing/sourcing discipline and restructuring benefits; supports medium-term margin confidence despite macro noise .
  • Narrative catalysts: Raised sales guidance and tightened EPS range; potential strategic actions following board refresh/Elliott cooperation could unlock value through operational or portfolio decisions (Investor Day 2026) .
  • Near-term trading setup: Expect steady Q4 revenue with moderated gross margin expansion and some SG&A leverage; Europe softness and rate-sensitive independents are watchpoints; tariffs likely a slight net tailwind if stable .
  • Cash generation trajectory: Q3 saw acceleration vs 1H; FY free cash flow guide maintained ($700M–$900M) — monitor working capital normalization and capex pacing .
  • Segment mix: Industrial (Motion) showing resilient comps and backlog build; Automotive gaining momentum in U.S. and APAC, with Europe lagging — positioning favors North America/APAC exposure .
  • Risks: Tariff policy changes, European demand weakness, persistent SG&A inflation (rent/wages), pension termination accounting charge (GAAP-only) .
  • Dividend continuity: Quarterly dividend maintained at $1.03/share, reinforcing capital return commitment into 2026 .