GPC · Q1 2026 Earnings

Cautious

Genuine Parts Company

Reported April 21, 2026

30-second summary

Genuine Parts delivered Q1 FY2026 revenue of $6.27B (+6.8% YoY) and adjusted EPS of $1.77, with International Automotive accelerating to +13.2% growth — well above the 3–6% full-year segment guide. Management reaffirmed every line of FY2026 guidance unchanged despite the International beat, signaling expected deceleration through the balance of the year. North America Automotive EBITDA margin printed 6.6%, up 110bps from the damaged 5.5% Q4 FY2025 base but still the most pressured operational line; Q1 FCF was negative $34M against a reaffirmed $550–700M FY range.

Headline numbers

EPS

Q1 FY2026

$1.77

Revenue

Q1 FY2026

$6.26B

+6.8% YoY

Gross margin

Q1 FY2026

37.4%

Free cash flow

Q1 FY2026

$-0.03B

Operating margin

Q1 FY2026

3.9%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$6.26B	+6.8%	$6.01B	+4.3%
EPS	$1.77	—	$1.55	+14.2%
Gross margin	37.4%	—	35.0%	+235bps
Operating margin	3.9%	—	—	—
Free cash flow	$-0.03B	—	$0.42B	-108.1%

Guidance

Company reaffirms all full-year FY2026 guidance across EPS, revenue growth, and cash flow metrics; no quantitative changes issued despite Q1 International Automotive growth of 13.2% significantly exceeding the 3-6% full-year guidance range.

Guidance is issued for both next quarter and the full year. Both may appear below.

Reaffirmed unchanged this quarter: Diluted earnings per share ($6.10 to $6.60), Adjusted diluted earnings per share ($7.50 to $8.00), Total sales growth (3% to 5.5%), North America Automotive sales growth (3% to 5%), International Automotive sales growth (3% to 6%), Industrial sales growth (3% to 6%), Effective tax rate (Approx. 24%), Net cash provided by operating activities ($1.0 billion to $1.2 billion), Free cash flow ($550 million to $700 million)

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
North America Automotive	$2.363B	+4.3%
International Automotive	$1.586B	+13.2%
Industrial	$2.316B	+5.2%

Platform metrics

Q1 FY2026

Segment	Q1 FY2026
Comparable Sales Growth	2.4%
Operating Cash Flow	$63.9 million
Acquisition Contribution to Sales Growth	1.3%
Total Liquidity	$1.3 billion

Profitability

Q1 FY2026

Segment	Q1 FY2026
North America Automotive EBITDA Margin	6.6%
International Automotive EBITDA Margin	9.1%
Industrial EBITDA Margin	13.6%
Adjusted SG&A as % of Sales	29.4%

Management tone

Narrative arc: Q2 FY2025 — "downside scenario played out" → Q3 FY2025 — "current conditions persist" → Q4 FY2025 — "separation as the answer" → Q1 FY2026 — "execution while transitioning."

Three quarters ago Europe was a deteriorating headwind that management was steadily removing from forward assumptions; this quarter European geographies showed sequential improvement across the board, with International Automotive growth more than doubling its own full-year guide range. The shift is concrete: Will told Jefferies' Brett Jordan there was sequential improvement in all European geographies versus Q4 FY2025, with Germany and Iberia singled out. The signal is that Q4 FY2025's removal of Europe from the FY2026 upside case was conservative — yet management is not yet willing to bank the win by raising guidance.

The separation language has tightened from "planned" in Q4 FY2025 to operational specificity in Q1 FY2026. The press release qualitative statements now name "Global Automotive and Global Industrial" as "two independent, publicly traded companies" with a Q1 FY2027 completion target — language that signals advanced internal preparation. The Jefferies Q&A pushed this further: the two spincos will have explicitly different capital allocation policies, with automotive prioritizing shareholder returns then bolt-on M&A, and industrial more M&A-oriented. Both will maintain investment-grade ratings. The strategic question that took 18 months to answer ("does this conglomerate structure work?") is now resolved; the new question is execution risk on the separation itself. Bert quantified incremental run-rate dis-synergy and standalone costs at $100–150M total, split into two ~$50–75M buckets — dis-synergies (evenly split between auto and industrial) and standalone costs (vast majority at industrial).

The independent NAPA channel data point softened more than Q4 FY2025's framing implied. Independent same-store purchases were +1% in Q1 FY2026 against company-owned comps of +5.5%. The +1% vs +5.5% spread means the channel-mix drag on consolidated NA margin remains active.

A new caution entered around Iran/geopolitical risk. Bert Napier quantified Q2 FY2026 EBITDA downside risk at $10–20M from the conflict, framed around oil price volatility (six days of double-digit moves in 45 days), with Middle East sourcing exposure under 0.5% and freight ~3% of revenue. This is the first time geopolitical conflict has been numerically scoped on a GPC call; the willingness to put a dollar range on it suggests management's planning horizon has compressed to "the next 100 days."

Q&A highlights

Greg Millick · Evercore ISI

Asked about pricing trajectory given Iran conflict impact on freight costs. Specifically questioned whether pricing would remain at 3% or decelerate, and how management expected to pass through increased freight costs across the business.

Bert Napier explained that pricing is expected to stay in line with full-year guidance of 2% (split between tariff and inflation), with the duration of the conflict being the biggest variable. Highlighted $10-20M EBITDA downside risk in Q2 from conflict, with headwinds in COGS and operating expenses offset partially by pricing benefits but muted by demand impact. Emphasized the dynamic nature of the environment and refinement of forecasts to the next 100 days.

Expected pricing for full year: 2% (split between tariff and inflation)Q2 EBITDA downside risk from conflict: $10-20 millionOil price volatility: six days of double-digit moves in last 45 days, some nearly 20%Freight represents approximately 3% of revenue

Brett Jordan · Jefferies

Asked for regional detail on European performance, competitive landscape, and strength/weakness by market. Also inquired about dividend policy for the two standalone spincos post-separation.

Will Stengel noted sequential improvement across all European geographies versus Q4. Highlighted strong execution in Germany and Iberia. Regarding dividends, management indicated that capital allocation strategies for the two businesses will differ and follow their respective growth strategies. Stated automotive will focus on shareholder returns first with some CapEx and bolt-on M&A, while industrial will have more M&A focus. Committed to maintaining investment-grade ratings for both.

Sequential improvement in all European geographies from Q4 2025Germany business performing well relative to competitionIberia accelerating NAPA brand offeringAutomotive spinco capital allocation: shareholder returns first, then CapEx and bolt-on M&A

Christopher Horvath · J.P. Morgan

Detailed questions on Section 232 steel tariff impact on pricing, and whether management expected to pass through freight cost inflation (both inventory-capitalized and periodic domestic freight).

Bert Napier explained that on Section 232 tariffs, no material increases have been seen yet, and any increases would be managed through standard pricing mechanisms. On freight, capitalized inventory freight would be part of pricing strategy, while periodic domestic freight out costs are being absorbed in near term but considered for longer-term pricing. Management characterized the tariff environment as normalized. Addressed tight gross margin Q1 comparison (120 bps expansion year ago) and reaffirmed full-year guidance of 40-60 bps gross margin expansion.

No material Section 232 increases observed to dateTariff environment described as 'normalized'Q1 gross margin: 37.3%, up 20 bps YoYFull-year gross margin guidance: 40-60 bps expansion

Scott Ciccarelli · Truist

Asked for profitability detail on company-owned stores versus independent business, and long-term profitability potential. Also asked about independent owner sentiment regarding inventory and cost pressures.

Will Stengel declined to disclose specific company-owned versus independent profitability metrics but indicated compelling 'entitlement' analysis from 2025 strategic review showing material improvement opportunity. Referenced best-in-class examples already at entitlement level and committed to detailing at upcoming investor day. On independents: noted very positive tone from 20 largest owners during recent visit, sequential improvement in sales, good alignment on priorities, and creative inventory support programs being developed.

2025 strategic review identified compelling profitability entitlement opportunity in automotiveBest-in-class store examples already operating at entitlement levelIndependent same-store purchases up approximately 1% in Q1Company-owned comparable sales up 5.5% in Q1

Michael Lasser · UBS

Asked whether supporting independent owners through extended capital/terms creates trade-off against free cash flow generation for standalone automotive business, and how this impacts FCF outlook.

Bert Napier stated that supporting independents does not impact medium or long-term cash flow generation. Explained that GPC has used its strong balance sheet for many years to support independents through capital programs, loans, and payment terms. Indicated this is already in the run-rate and will continue post-separation. Management signaled new ways of optimizing independent owner support are being developed but won't change long-term cash generation outlook.

Supporting independents through GPC balance sheet is long-standing practice already in run-rateNo material impact to medium/long-term cash flow from current or future independent owner support programsNew approaches to optimizing independent owner support being developedBoth spincos to maintain investment-grade ratings

Answers to last quarter's watch list

Separation timeline, separation costs, and dis-synergy quantification — Press release confirms separation "remains on track for completion in the first quarter of 2027" and names "Global Automotive and Global Industrial" as the two standalone entities. Bert quantified incremental run-rate dis-synergy and standalone costs at $100–150M, with one-time separation costs (legal, banking, professional fees) excluded and corporate cost allocation still to come. Status: Partially resolved; one-time costs still pending.

North America Automotive EBITDA margin trajectory off the 5.5% Q4 FY2025 base — Recovered to 6.6% in Q1 FY2026, +110bps sequentially but only +10bps YoY. The healthcare and core SG&A pressure that drove the Q4 FY2025 trough has partially unwound; absolute level remains a concern.

Continue monitoring

FY2026 adjusted EPS landing within $7.50–$8.00 vs. the back-loaded H1 setup — Q1 FY2026 adjusted EPS of $1.77 represents ~23% of the midpoint ($7.75), broadly tracking but providing no margin of safety. With FY adjusted EPS guidance reaffirmed and Q2 FY2026 carrying a $10–20M EBITDA downside risk from the Iran situation, the back-loaded math still requires H2 strength.

Continue monitoring

Free cash flow against the new $550–700M FY2026 range — Q1 FY2026 FCF printed negative $34M against a reaffirmed $550–700M FY range, implying Q2–Q4 FY2026 must generate $585–735M. Status: Continue monitoring with caution.

European underlying market growth and whether it stabilizes — Resolved positively. International Automotive grew +13.2% in Q1 FY2026, management explicitly cited sequential improvement across all European geographies, and Germany and Iberia were singled out as strong.

Resolved positively

Independent NAPA owner sales trajectory and whether the channel inflects — Independent same-store purchases were +1% in Q1 FY2026, against company-owned +5.5%. Positive inflection from the Q4 FY2025 underperformance trajectory but still a wide gap. Status: Continue monitoring; gap to company-owned remains active.

What to watch into next quarter

Whether International Automotive growth holds above the 3–6% FY guide upper end — Q1 FY2026 printed +13.2%; the FY guide reaffirmation implies management expects deceleration. A Q2 FY2026 print sustained above 8% would force a mid-year guide raise; a sub-5% print would validate the conservative reaffirmation

Q2 FY2026 EBITDA absolute impact from the Iran situation vs. the $10–20M downside Bert quantified — first numerically-scoped geopolitical risk; if the actual hit exceeds $20M it would call into question the unchanged FY EPS range

North America Automotive EBITDA margin sequential progression off the 6.6% Q1 FY2026 base — needs to step up materially through the year to restore the segment's structural earning power; a stall at 6.6–7.0% would deepen the concern about U.S. unit economics ahead of the separation

Gross margin expansion pace — Q1 FY2026 delivered +20bps YoY against a +120bps prior-year compare with no tariff impact; the compare eases through the year but H2 needs to step up to hit the full-year framework

H1 cumulative FCF — Q2 FY2026 must generate meaningful FCF to put FY $550–700M within reach without an aggressive Q4 FY2026 working capital release

Independent same-store purchases gap to company-owned (+1% vs +5.5% in Q1 FY2026) — closure of the gap, not just stabilization, is what unlocks NA margin recovery

Sources

GPC Q1 FY2026 Press Release (SEC filing) — https://www.sec.gov/Archives/edgar/data/40987/000004098726000015/gpc-earnq12026.htm
GPC Q1 FY2026 earnings call Q&A (analyst exchanges referenced in extraction)

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