U.S. Auto Business Performance
Q: Why is U.S. auto business losing market share?
A: Management acknowledges share loss in the U.S. auto business in 2023 and is confident in turning it around with new leadership, improved supply chain, technology investments, and field operations. They believe their best days are ahead and are encouraged by early 2024 progress. "

Automotive Margin Outlook
Q: How are you thinking about automotive margins after 2023?
A: They are guiding to 20–40 basis points of margin improvement in the Automotive segment for 2024, building on continued strength in Europe and Australasia. They are implementing restructuring activities to streamline the business and improve efficiency in the U.S., expecting positive benefits. "

Restructuring Impact
Q: How will the $100–$200 million restructuring affect results?
A: The restructuring is global, mainly reducing SG&A costs, particularly people costs. About two-thirds of the benefits will come from personnel reductions, primarily through a voluntary retirement program in the U.S. Benefits will build through the year, impacting U.S. results, and costs are predominantly cash. " "

Company-Owned Store Expansion
Q: What's the strategy for expanding company-owned NAPA stores?
A: They are strategically increasing company-owned stores in the U.S., prioritizing markets for acquisition due to higher costs and interest rates affecting independents. This simplifies the network and improves operational consistency. The acquisitions are small, treated as M&A, and expected to be immediately accretive by capturing margins previously shared with independents. "

2024 Outlook and Guidance
Q: How do you view the business trend into 2024?
A: They anticipate a moderated first half and a stronger second half in 2024. Q1 is expected to be the weakest earnings quarter, facing interest rate headwinds and tough comparisons. However, January results are encouraging, with improvement over December, and they remain confident in their full-year guidance. "

Industrial Segment Margin Outlook
Q: Are Industrial margins sustainable after recent growth?
A: They guided to 10–20 basis points of margin expansion in 2024 for the Industrial segment, after achieving 12.5% margins in 2023 with a 200 basis points improvement. They anticipate a recalibration toward historical growth due to a tighter economic environment and lapping prior benefits but see a long runway with focus on gross margin and operational discipline. "

Global Automotive Segment Growth
Q: What are expectations for automotive market growth in 2024?
A: They expect global automotive comp sales growth of 2%–4%, with market growth across geographies between flat to 2% up. Inflation is expected to contribute about 1 point, and acquisitions another 1 point to sales growth in 2024. "

Sell-in vs. Sell-through in 2024
Q: Will sell-in to independents align with sell-through in 2024?
A: They anticipate 2024 will return to normal, with sell-in and sell-through being equivalent as independents have completed destocking, reducing pressure on comps. "

Competitive Dynamics and Customer Focus
Q: How are you addressing competition and smaller customers?
A: Recognizing strong competitors, they are restructuring their sales force and adopting strategies from their industrial team to focus on smaller customers. They aim to recapture this business with programs, incentives, and dedicated teams, and are encouraged by early 2024 progress. "

Store Ownership and Business Mix
Q: What's the current mix of company-owned vs. independent stores?
A: In the U.S., about 25%–30% of NAPA stores are company-owned, with over 2,000 independent owners operating approximately 6,000 stores. The business mix includes major accounts (high teens to 20%), NAPA AutoCare (20%), small shops (20%), and government and fleet customers comprising the remainder. "