GPC · Q4 2025 Earnings

Cautious

Genuine Parts Company

Reported February 17, 2026

30-second summary

Genuine Parts closed 2025 with Q4 revenue of $6.01B (+4.1% YoY) and adjusted EPS of $1.55, while booking a $4.39 GAAP loss driven by a $742M pension settlement charge and a $150M First Brands receivable write-down. The headline is strategic, not operational: management announced a planned tax-free separation of automotive and industrial — the answer to last quarter's "business structure" hint — alongside FY26 adjusted EPS guidance of $7.50–$8.00 (+1.8% at the low end, +8.5% growth at the high end, +5% at the midpoint per management). FY25 closed below the prior $7.50–$7.75 adjusted range at $7.37, and the FY26 guide explicitly excludes any rebound in Europe or independent NAPA owners.

Headline numbers

EPS

Q4 FY2025

$1.55

Revenue

Q4 FY2025

$6.01B

+4.1% YoY

Gross margin

Q4 FY2025

35.0%

Free cash flow

Q4 FY2025

$0.42B

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$6.01B	+4.1%	$6.30B	-4.6%
EPS	$1.55	—	$1.98	-21.7%
Gross margin	35.0%	—	37.4%	-240bps
Free cash flow	$0.42B	—	—	—

Guidance

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

New guidance

Metric	Period	Guide	YoY
Diluted EPS (GAAP)	FY2026	$6.10 to $6.60	—
Adjusted Diluted EPS	FY2026	$7.50 to $8.00	—
Total Sales Growth	FY2026	3% to 5.5%	—
North America Automotive Sales Growth	FY2026	3% to 5%	—
International Automotive Sales Growth	FY2026	3% to 6%	—
Industrial Sales Growth	FY2026	3% to 6%	—
Effective Tax Rate	FY2026	Approx. 24%	—
Net Cash from Operations	FY2026	$1.0 billion to $1.2 billion	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted Diluted EPS	FY2025	$7.50 to $7.75	$7.50 to $8.00	+$0.25 on high end	Raised
Total Sales Growth	FY2025	3% to 4%	3% to 5.5%	+1.5pts on high end	Raised
Automotive Sales Growth	FY2025	4% to 5%	3% to 5%	-1% on low end / flat high end	Raised
Industrial Sales Growth	FY2025	2% to 3%	3% to 6%	+1 to +3pts	Raised
Net Cash from Operations	FY2025	$1.1 billion to $1.3 billion	$1.0 billion to $1.2 billion	-$0.1B on both ends	Lowered

Segment performance

Q4 FY2025

Segment	Q4 FY2025	YoY
North America Automotive	$2.326B	+2.4%
International Automotive	$1.485B	+6.4%
Industrial	$2.198B	+4.6%

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Comparable Sales Growth	1.7%
Acquisition Contribution	1.5%
Total Liquidity	$1.5B

Profitability

Q4 FY2025

Segment	Q4 FY2025
North America Automotive EBITDA Margin	5.5%
International Automotive EBITDA Margin	8.7%
Industrial EBITDA Margin	13.4%
Adjusted Gross Profit Margin	37.6%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Dividend Increase	3.2%

Management tone

Narrative arc: Q2 — "downside scenario played out" → Q3 — "current conditions persist" → Q4 — "separation as the answer."

The strategic structure question that management batted away in Q2 and softened on in Q3 has now resolved into a definitive answer: separation. The Q3 Evercore exchange ("We're turning over all stones... this involves an assessment of... our business structure") was a tell. The Q4 announcement of a planned tax-free separation of automotive and industrial reframes everything — the post-separation Global Automotive will be a $16B revenue / $1.3B EBITDA business with CapEx-heavy reinvestment, and Motion will be capital-light bolt-on M&A. The Jefferies exchange formalized this: management explicitly said the two businesses have "different priorities" — language that would have been unthinkable as recently as Q2 when integration benefits were the defense.

Three quarters ago Europe was a stabilizing growth platform; two quarters ago it "moderated below expectations"; last quarter it was "below our expectations" for a second consecutive time; this quarter it deteriorated sequentially September → October → November, and management has now removed any Europe recovery from the FY26 outlook. Bert's direct words on the call: "Europe remains a watch point, and we do not expect an improvement in market conditions in Europe through the first quarter from those that we experienced as we closed out the year." The forecasting credibility on Europe has eroded so steadily that management has now chosen to model the headwind as persistent rather than transitory.

The framing on independent NAPA owners shifted similarly. Q3 explained away the underperformance as interest-rate driven and "as good as it's been in some time"; Q4 quantified it as a $0.10 EPS drag in the quarter and explicitly excluded independent-owner recovery from FY26. The UBS Q&A made this concrete: management said no material improvement is expected in independent business performance in the early part of 2026. That is the second pillar — alongside Europe — being removed from the upside case.

Two non-recurring items the press release confirms but does not soften: a $742M non-cash pension settlement charge from the December U.S. pension plan termination, and a $150M loss provision on First Brands Group receivables following the supplier's bankruptcy (First Brands was flagged at ~3% of global automotive sales in the Q3 watch list). Both are below-the-line for adjusted EPS but show up in the -$4.39 GAAP print and represent quantified versions of risks Tapebrief was already monitoring.

The hedging language is more explicit than usual. The press release's full-year 2026 outlook leads with the qualifier "while one month doesn't make a trend, we're also encouraged" — language that simultaneously preserves optionality and undermines any bullish read of early January. Management used the phrase "we are encouraged by the initial positive indicators to start 2026, but will remain prudent on our views on the full-year outlook" — a sentence whose second clause is louder than its first.

Recurring themes management leaned on this quarter:

Separation strategy as path to unlock value and increase strategic clarityPersistent cost inflation (wages, healthcare, rent, freight) offsetting gross margin gainsEurope market deterioration below expectations requiring aggressive restructuringTariff normalization providing modest 2% pricing benefit in 2026 outlookTransformation programs delivering $175M in cost savings (exceeding $110-135M target)Independent owner pressure and discretionary category weakness in U.S. automotive

Risks management surfaced:

Further market condition deterioration in Europe through Q1 2026Downside variability in sales to independent owners in U.S. NAPA businessPersistent cost inflation in salaries, wages, and U.S. healthcare (high single-digit rates)Separation execution risks and dis-synergy costs (stated as 'manageable' but unquantified)Industrial PMI below 50 for 10 months of 2025; customer discretionary spending constraints

Q&A highlights

Scott Ciccarelli · Tourist

What is driving the 14% EBITDA decline in North American auto business and 5.5% margin, which is lower than anticipated? Can you break down earnings contribution from company-owned stores versus independents?

Management attributed margin pressure to wage inflation, U.S. healthcare costs (up $32M vs. expectations, growing at high single digits), rent and freight pressure, and disproportionate IT investments in SG&A. They deferred detailed company-owned vs. independent earnings breakdown to an upcoming investor day for Global Automotive, but noted stores are 65-35 split while sales are closer to 50-50. Highlighted improvements in company-owned store payroll percentage in Q4.

U.S. healthcare costs up $32 million, $20 million more than full-year expectationsCore cost growth 1.7% in quarter (excluding acquisitions and FX)Company-owned stores achieved best-ever payroll percentage in Q4Store split: 65-35 (company vs. independent), sales split closer to 50-50

Michael Lassen · UBS

Why did North American auto lose market share in Q4, particularly in the independent business? Will the 2026 acceleration guidance depend on improvement in the independent business?

Management highlighted strong company-owned Napa stores (4% comp sales) but acknowledged independent owners underperformed Q4 expectations after showing momentum in Q3. They attributed underperformance to cost inflation and elevated interest rates. For 2026, management noted no material improvement expected in early part of year for independents, being prudent given Q4 exit levels, though they will continue working to position independents for strength.

Napa company-owned stores: 4% comp sales in Q4Independent owners did not meet Q4 expectations despite Q3 momentumNo material improvement expected in independent business performance in early 2026Management taking prudent, cautious approach on market share trajectory

Brett Jordan · Jefferies

Do the two separated businesses have different capital allocation needs? Does Motion require less catch-up investment given recent M&A activity?

Management stated the businesses have different priorities but similar overall investment needs. Motion is capital-light with smart prior investments positioned for bolt-on M&A. Global Automotive has compelling CapEx opportunities for medium-term margin expansion despite $3B invested over five years. Global Automotive will be a $16B revenue/$1.3B EBITDA business with CapEx tilting slightly more toward CapEx vs. M&A, though management declined to prejudge final capital allocation policies.

Global Automotive: $16 billion revenue, $1.3 billion EBITDA at midpoint guidance$3 billion capital invested in Global Automotive over prior five yearsMotion positioned for bolt-on and strategic acquisitionsGlobal Automotive may have higher CapEx relative to M&A vs. Motion

Greg Mellick · Evercore

What inflation expectations are embedded in 2026 guidance for industrial and auto segments? How is management thinking about dividend policy post-separation given 70-year dividend growth history?

Management expects 2% inflation (including tariffs) for full year 2026 across both businesses, with approximately 1 point coming from tariffs. Pricing benefits will compress in H2 as comparisons lap H1 benefits. Tariff discussions with suppliers have normalized. On dividend, no change to GPC policy for 2026 with 3.2% announced increase in line with prior year. Detailed capital allocation and dividend policies for separated entities to be discussed at future investor day.

2% expected inflation for full year 2026 (includes tariffs)~1 percentage point of the 2% comes from tariffsPricing benefits expected to compress in H2 20262026 dividend increase: 3.2%, in line with prior year

Chris Dinkert · Loop Capital Markets

What is the mix of the $100-125M restructuring benefit between automotive and industrial? How will benefits flow through P&L?

Management indicated restructuring benefits are split fairly evenly between both businesses. Benefits flow through both gross margin and SG&A productivity. Increasingly weighted toward transformation activities (supply chain, sales effectiveness, technology) rather than pure cost-cutting. Specific areas include Napa supply chain, sales effectiveness with independent owners, Motion commercial pricing capabilities, and enterprise technology.

$100-125 million total restructuring benefit for yearBenefit split fairly evenly between automotive and industrialBenefits flow through both gross margin and SG&AIncreasing shift from restructuring to transformation initiatives

Answers to last quarter's watch list

Whether the FY adjusted EPS midpoint of $7.625 actually lands — Missed. FY25 closed at $7.37, $0.13 below the low end of the prior $7.50–$7.75 range. Second consecutive guide that landed lower than the narrowed range.

Resolved negatively

Automotive segment EBITDA margin trajectory off the 8.6% Q2 base — Resolved negatively in the NA breakout. North America Automotive Q4 EBITDA margin came in at 5.5% (-110bps YoY). International Automotive at 8.7% (-100bps YoY) also compressed. The structural cost-vs-pricing gap Ciccarelli flagged in Q2 has clearly widened in U.S. operations.

Resolved negatively

Europe comparable sales — Deteriorated further. Management disclosed European underlying market conditions worsened sequentially from September to October and again in November, leaving underlying market growth down mid-single digits. Management has now removed Europe recovery from FY26 assumptions entirely.

Resolved negatively

Strategic review update timing and scope — Resolved positively in the sense that the question was answered definitively: GPC announced a planned tax-free separation of automotive and industrial. Whether it ultimately unlocks value is a forward question, but the strategic review is no longer open.

Resolved positively

First Brands exposure (~3% of global automotive sales) — Resolved negatively at the receivables level. GPC recorded a $150M loss provision in Q4 for amounts due from First Brands Group following the supplier's bankruptcy, and executed contingency plans with alternative suppliers. The 3% sales exposure has not been separately quantified as a revenue impact in the press release.

Resolved negatively

Gross margin in Q4 against the 37.4% Q3 print — Q4 GAAP gross margin printed at 35.0% (-90bps YoY), depressed by $160M of non-recurring charges including the First Brands write-down. Adjusted Q4 gross margin was 37.6% (+70bps YoY), and FY25 adjusted gross margin was 37.5% (+90bps YoY) — gross margin expansion for the third consecutive year. Status: Resolved positively on an adjusted basis.

What to watch into next quarter

Separation timeline, separation costs, and dis-synergy quantification — management characterized dis-synergies as "manageable" but unquantified; watch the upcoming investor day for the dollar figure and any change to the targeted Q1 2027 close date

North America Automotive EBITDA margin trajectory off the 5.5% Q4 base — this is now the most damaged operational line in the company; watch whether Q1 holds 5.5% or whether the U.S. healthcare cost overrun continues to compound

FY26 adjusted EPS landing within $7.50–$8.00 vs. the back-loaded H1 setup — pricing benefits compress in H2 per the Evercore exchange, so any H1 EPS shortfall would make the high end of the range mechanically harder

Free cash flow against the new $550–700M FY26 range — FY25 came in at $421M against a $700–900M guide; another miss against the lowered range would force a structural conversion reset

European underlying market growth and whether it stabilizes off the November lows — management has set the bar at "no improvement through Q1"; any further deterioration would force a mid-year guide cut

Independent NAPA owner sales trajectory and whether the channel inflects — FY26 guidance assumes no improvement; a return to Q3-style momentum would be upside not currently modelled

Company-owned vs. independent profitability disclosure at investor day — Ciccarelli's question was deferred; the eventual split will define how investors value the Global Automotive spin-off

Sources

GPC Q4 2025 Press Release (SEC filing) — https://www.sec.gov/Archives/edgar/data/40987/000119312526053013/d44894dex991.htm
GPC Q4 2025 Earnings Call Transcript — prepared remarks and Q&A, February 17, 2026

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