Genuine Parts Company (GPC) UBS Global Consumer and Retail Conference summary

Strategic separation and business focus

• Announced a split into two standalone public companies after a robust strategic review in early 2025, aiming to maximize shareholder value and unlock operational and financial agility.

• Separation enables each business to pursue tailored growth strategies: industrial focusing on organic and M&A growth, automotive on technology and supply chain investments.

• Both businesses already operate largely independently, minimizing separation complexity and costs, which are described as manageable and well below $400–500 million.

• Leadership and talent strategies are being developed to preserve culture and ensure strong governance for both entities.

• Capital structures will be tailored to each business, with both targeting investment-grade ratings and capital allocation aligned to strategic needs.

Operational updates and market outlook

• Industrial (Motion) business is seeing positive trends in manufacturing and backlog, with customers adapting to uncertainty and deferred maintenance driving demand.

• Motion’s diversified verticals and disciplined execution have enabled outperformance even in weak markets, with investments focused on technology, supply chain, and sales coverage.

• Automotive (NAPA) business has shown sequential improvement in company-owned stores, with ongoing efforts to support and improve independent operators.

• Gas prices and geopolitical events are monitored, but only significant, sustained changes are expected to materially impact demand or costs.

• Tariff changes are not expected to create windfalls or major pricing shifts, as most imports are handled by suppliers; pricing remains rational and stable.

Financial performance and investment priorities

• Guided for 40–60 basis points of gross margin improvement in 2026, driven by strategic sourcing and advanced pricing technology.

• Fourth quarter 2025 saw cost headwinds, especially in healthcare and SG&A, but these are not expected to repeat; business stability is supported by strong Q1 2026 performance.

• EBITDA growth is expected throughout 2026, with transformation and restructuring benefits accelerating in the second half.

• Industry-wide cost pressures, especially in healthcare, are being managed through pricing, productivity, and restructuring, with AI seen as a key lever for future efficiency.

• Investment in technology and AI is a priority, with proprietary tools like ChatGPC deployed to optimize inventory, sales, and customer interactions, and governance in place to ensure cost discipline.