Genuine Parts Company

10/20/2026 | Press release | Distributed by Public on 10/20/2026 09:03

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying notes contained herein and with the audited Consolidated Financial Statements, accompanying notes, related information and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of results for the year ended December 31, 2026.
Forward-Looking Statements
Some statements in this report, as well as in other materials we file with the Securities and Exchange Commission ("SEC"), release to the public, or make available on our website, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in the future tense and all statements accompanied by words such as "expect," "likely," "outlook," "forecast," "preliminary," "would," "could," "should," "position," "will," "project," "intend," "plan," "on track," "anticipate," "to come," "may," "possible," "assume," or similar expressions are intended to identify such forward-looking statements. These forward-looking statements include our view of business and economic trends for the remainder of the year and our expectations regarding our ability to capitalize on these business and economic trends and our ability to successfully execute our strategic priorities, including our anticipated separation of Global Automotive and Global Industrial into two independent, publicly traded companies. Senior officers may also make verbal statements to analysts, investors, the media and others that are forward-looking.
We caution you that all forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors. Such factors may include, among other things, changes in general economic conditions, including persistent inflation (including the direct and indirect impact of tariffs and retaliatory tariffs) or deflation, geopolitical uncertainty and unrest (including from the conflict involving the United States and Iran) and declining consumer confidence; our ability to successfully implement the separation of Global Automotive and Global Industrial and achieve the anticipated benefits of such transaction; volatility in oil prices; significant costs, such as elevated fuel and freight expenses; our ability to maintain compliance with our debt covenants; our ability to successfully integrate acquired businesses into our operations and to realize the anticipated synergies and benefits; our ability to successfully implement our business initiatives in our three business segments; slowing demand for our products; the ability to maintain favorable supplier arrangements and relationships; changes in national and international legislation or government regulations or policies, including changes to global trade regulations, environmental and social policy, infrastructure programs and privacy legislation and related uncertainties, and their impact to us, our suppliers and customers; changes in tax policies; volatile exchange rates; our ability to successfully attract and retain employees in the current labor market; uncertain credit markets and other macroeconomic conditions; competitive product, service and pricing pressures; failure or weakness in our disclosure controls and procedures and internal controls over financial reporting; the uncertainties and costs of litigation; public health emergencies, including the effects on the financial health of our business partners and customers, on supply chains and our suppliers, on vehicle miles driven as well as other metrics that affect our business, and on access to capital and liquidity provided by the financial and capital markets; disruptions caused by a failure or breach of our information systems; the success of our global restructuring efforts and the annualized cost savings arising therefrom, as well as other risks and uncertainties discussed in our 2025 Annual Report on Form 10-K and from time to time in our subsequent filings with the SEC.
Forward-looking statements speak only as of the date they are made, and we undertake no duty to update any forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent Forms 10-K, 10-Q, 8-K and other reports filed with the SEC.
Overview
Genuine Parts Company ("GPC") is a leading global service provider of automotive and industrial replacement parts and value-added solutions. We have a long history of growth and innovation dating back to our founding in Atlanta, Georgia, in 1928. Over nearly a century, we've built a reputation for delivering excellent customer service, profitable growth and strong cash flow generation.
For the nine months ended September 30, 2026, we conducted business in North America, Europe and Australasia from more than 10,800 locations. Our Automotive businesses operated in the U.S., Canada, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand and accounted for 63% of total revenues for the nine months ended September 30, 2026. Our Industrial business
operated in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore and accounted for 37% of total revenues during this period.
We are focused on being the preferred employer, supplier, and partner while delivering value to our shareholders. This focus drives our strategic financial objectives which are growing revenue in excess of the market, improving operating margins, maintaining a healthy balance sheet, generating strong cash flows, and allocating capital effectively. As we look to the future, we are leaning into modernizing our supply chain and technology through digital innovation, and data-driven strategies to enhance our competitive edge. By optimizing supply chains and leveraging technology, we are empowering our teams with cutting-edge tools to continue our focus on delivering exceptional customer service and driving sustainable growth. At the heart of it all is our commitment to excellence, supported by a culture of continuous improvement and a legacy of strong leadership that has guided us for nearly a century.
Proposed Separation of Automotive and Industrial Businesses
On February 17, 2026, we announced our intention to separate the Company into two independent, publicly traded companies: one comprising our Automotive Parts Group ("Global Automotive") and the other comprising our Industrial Parts Group ("Global Industrial"). The separation is targeted for completion in the first quarter of 2027, subject to certain customary and regulatory conditions.
Key Performance Indicators
We consider a variety of performance and financial measures in assessing our business, and the key performance indicators used to measure our results are Comparable Sales, Gross Profit and Gross Margin, Selling, Administrative and Other Expenses ("SG&A"), Segment EBITDA and Segment EBITDA Margin, and Net Income and EBITDA along with their adjusted measures. For more information regarding our key performance indicators please reference the Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Trends Affecting our Business
We are navigating through several external factors that create uncertainty and volatility in our operating results. These factors, and any changes to these factors, among others, could have a material adverse impact on customer behavior and our future operating results. For additional discussion regarding these external factors and other risks, refer to Risk Factors in Item 1A of Part I within our Annual Report on Form 10-K for the year ended December 31, 2025.
Middle East Geopolitical Developments
We are closely monitoring geopolitical tensions in the Middle East, including the ongoing conflict involving the United States and Iran, and related regional instability. The conflict has and could continue to lead to significant disruption of fuel and energy supplies and increases in global fuel prices, heightened inflationary pressures, disruptions in global supply chains and adverse impacts on customer spending patterns. While we have no operations in the Middle East, we did experience an increase in fuel and related supply chain costs attributable to the conflict, including higher freight costs, primarily in our International Automotive segment. We continue to evaluate and take actions to mitigate any impacts on our business, results of operations and financial condition. The ongoing effects of the conflict remain uncertain.
Tariffs and Other Trade Policy Matters
We continue to monitor the global trade environment, including tariffs on merchandise inventories sourced directly or indirectly from several countries, such as China, Canada, and Mexico, and their impact on our operations. During the nine months ended September 30, 2026, tariffs continued to drive higher product costs and customer pricing, impacting our gross margin and SG&A expenses. We continue to manage these challenges through strategic pricing and sourcing initiatives, leveraging global supplier relationships and technology tools.
On February 20, 2026, the U.S. Supreme Court issued a decision invalidating certain tariffs imposed under the International Emergency Economic Powers Act. The financial impact of this ruling remains subject to ongoing administrative processes, including the extent and timing of refunds from U.S. Customs and Border Protection ("CBP"). Our exposure as the importer of record represents less than 0.5% of our total purchases. Subsequent to the ruling, we submitted refund claims related to these tariffs. The claims submitted and refunds received through September 30, 2026 were not material to our condensed consolidated financial statements. While we continue to take steps to manage tariff-related cost pressures, these actions may not fully offset increased costs in future periods.
Results of Operations
Our third quarter performance continued to reflect solid sales across our business segments and benefits from our global restructuring initiatives, despite a challenging operating environment. Net sales increased 4.2%, with comparable sales growth across all segments, along with contributions from acquisitions and foreign currency. During the third quarter, we incurred restructuring and other costs and costs associated with our planned separation, which contributed to a 0.8% decline in net income. Excluding these items, adjusted net income increased 3.8%, driven by higher gross profit from increased sales, pricing and sourcing initiatives, and benefits from our global restructuring program.
Our results of operations are summarized below for the three and nine months ended September 30, 2026 and 2025.
Three Months Ended September 30,
2026 2025
(in thousands) $ % of Sales $ % of Sales $ Change % Change
Net sales $ 6,521,308 100.0 % $ 6,260,232 100.0 % $ 261,076 4.2 %
Cost of goods sold 4,037,033 61.9 % 3,918,830 62.6 % 118,203 3.0 %
Gross profit 2,484,275 38.1 % 2,341,402 37.4 % 142,873 6.1 %
Operating expense:
Selling, administrative and other expenses 1,944,518 29.8 % 1,805,928 28.8 % 138,590 7.7 %
Depreciation and amortization 137,490 2.1 % 127,475 2.0 % 10,015 7.9 %
Provision for doubtful accounts 9,238 0.1 % 6,871 0.1 % 2,367 34.4 %
Restructuring and other costs 64,545 1.0 % 66,835 1.1 % (2,290) (3.4) %
Total operating expense 2,155,791 33.1 % 2,007,109 32.1 % 148,682 7.4 %
Non-operating (income) expense:
Interest expense, net 45,970 0.7 % 40,342 0.6 % 5,628 14.0 %
Other 3,866 0.1 % 2,258 - % 1,608 71.2 %
Total non-operating expense 49,836 0.8 % 42,600 0.7 % 7,236 17.0 %
Income before income taxes 278,648 4.3 % 291,693 4.7 % (13,045) (4.5) %
Income taxes 54,201 0.8 % 65,522 1.0 % (11,321) (17.3) %
Net income $ 224,447 3.4 % $ 226,171 3.6 % $ (1,724) (0.8) %
Three Months Ended September 30,
(in thousands, except per share data) 2026 2025 $ Change % Change
Diluted EPS $ 1.62 $ 1.62 $ - - %
Adjusted diluted EPS $ 2.07 $ 1.98 $ 0.09 4.5 %
North America Automotive segment EBITDA $ 193,860 $ 199,626 $ (5,766) (2.9) %
International Automotive segment EBITDA $ 141,394 $ 135,078 $ 6,316 4.7 %
Industrial segment EBITDA $ 316,927 $ 285,015 $ 31,912 11.2 %
Corporate EBITDA $ (103,521) $ (93,374) $ (10,147) 10.9 %
Total adjusted EBITDA $ 548,660 $ 526,345 $ 22,315 4.2 %
North America Automotive segment EBITDA margin 7.6 % 8.0 %
International Automotive segment EBITDA margin 9.0 % 9.0 %
Industrial segment EBITDA margin 13.2 % 12.6 %
Corporate EBITDA margin (1.6) % (1.5) %
Total adjusted EBITDA margin 8.4 % 8.4 %
Nine Months Ended September 30,
2026 2025
(in thousands) $ % of Sales $ % of Sales $ Change % Change
Net sales $ 19,323,199 100.0 % $ 18,290,726 100.0 % $ 1,032,473 5.6 %
Cost of goods sold 12,029,253 62.3 % 11,451,252 62.6 % 578,001 5.0 %
Gross profit 7,293,946 37.7 % 6,839,474 37.4 % 454,472 6.6 %
Operating expense:
Selling, administrative and other expenses 5,718,856 29.6 % 5,286,802 28.9 % 432,054 8.2 %
Depreciation and amortization 403,234 2.1 % 365,928 2.0 % 37,306 10.2 %
Provision for doubtful accounts 27,339 0.1 % 20,351 0.1 % 6,988 34.3 %
Restructuring and other costs 193,426 1.0 % 167,317 0.9 % 26,109 15.6 %
Total operating expense 6,342,855 32.8 % 5,840,398 31.9 % 502,457 8.6 %
Non-operating (income) expense:
Interest expense, net 135,723 0.7 % 117,769 0.6 % 17,954 15.2 %
Other (2,503) - % (580) - % (1,923) 331.6 %
Total non-operating expense 133,220 0.7 % 117,189 0.6 % 16,031 13.7 %
Income before income taxes 817,871 4.2 % 881,887 4.8 % (64,016) (7.3) %
Income taxes 177,331 0.9 % 206,444 1.1 % (29,113) (14.1) %
Net income $ 640,540 3.3 % $ 675,443 3.7 % $ (34,903) (5.2) %
Nine Months Ended September 30,
(in thousands, except per share data) 2026 2025 $ Change % Change
Diluted EPS $ 4.64 $ 4.85 $ (0.21) (4.3) %
Adjusted diluted EPS $ 5.99 $ 5.82 $ 0.17 2.9 %
North America Automotive segment EBITDA $ 558,393 $ 543,121 $ 15,272 2.8 %
International Automotive segment EBITDA $ 436,230 $ 415,082 $ 21,148 5.1 %
Industrial segment EBITDA $ 947,494 $ 851,865 $ 95,629 11.2 %
Corporate EBITDA $ (330,859) $ (263,131) $ (67,728) 25.7 %
Total adjusted EBITDA $ 1,611,258 $ 1,546,937 $ 64,321 4.2 %
North America Automotive segment EBITDA margin 7.5 % 7.5 %
International Automotive segment EBITDA margin 9.2 % 9.5 %
Industrial segment EBITDA margin 13.3 % 12.7 %
Corporate EBITDA margin (1.7) % (1.4) %
Total adjusted EBITDA margin 8.3 % 8.5 %
Net Sales
For the three months ended September 30, 2026, net sales increased 4.2% compared to 2025. The increase was driven by a 2.9% increase in comparable sales, a 0.9% benefit from acquisitions, and a 0.5% benefit from favorable impact of foreign currency and other.
For the nine months ended September 30, 2026, net sales increased 5.6% compared to 2025. We experienced a 2.9% increase in comparable sales, a 1.7% benefit from favorable impact of foreign currency and other, and a 1.1% benefit from acquisitions.
Our comparable sales growth in both periods reflected pricing benefits and gains from our strategic initiatives. We estimate that comparable sales for both periods benefited from approximately 2.5% of price inflation, including tariff related impacts.
North America Automotive
Net sales for the three months ended September 30, 2026, for North America Automotive were $2.5 billion, an increase of 2.2% from 2025. The increase is primarily attributable to a 1.7% increase in comparable sales and a 1.1% increase from acquisitions, offset by a 0.6% unfavorable impact of foreign currency and other.
Net sales for the nine months ended September 30, 2026, for North America Automotive were $7.4 billion, an increase of $247 million, or 3.4%, from 2025. The increase is primarily attributable to a 2.2% increase in comparable sales and a 1.3% increase from acquisitions. Impacts from foreign currency and other were relatively flat.
Our sales growth within North America Automotive reflected favorable execution in company-owned operations and strong contributions from our stores that were acquired over the last twelve months, which enhanced our ability to reach and serve our customers.
International Automotive
Net sales for the three months ended September 30, 2026 for International Automotive were $1.6 billion, an increase of 4.5% from 2025. The increase is attributable to a 1.7% increase from acquisitions, 1.7% favorable foreign exchange impact, and a 1.1% increase in comparable sales.
Net sales for the nine months ended September 30, 2026 for International Automotive were $4.7 billion, an increase of 8.5% from 2025. The increase is attributable to a 5.5% favorable foreign exchange impact, a 2.1% increase from acquisitions and a 0.9% increase in comparable sales.
Industrial
Net sales for the three months ended September 30, 2026 for Industrial were $2.4 billion, an increase of 6.1% compared to 2025. The increase in sales primarily reflects a 5.5% increase in comparable sales and a 0.5% favorable impact from foreign exchange.
Net sales for the nine months ended September 30, 2026 for Industrial were $7.1 billion, an increase of 6.1% compared to 2025. The increase in sales primarily reflects a 5.1% increase in comparable sales and a 0.8% favorable impact from foreign exchange.
During the third quarter of 2026, economic activity in the U.S. manufacturing sector, measured by PMI, continued its run of expansion, with eight of the first nine months of 2026 reflecting expansion; supporting sales demand in our Industrial segment.
Gross Profit and Gross Margin
Gross profit increased $143 million, or 6.1%, with gross margin increasing approximately 70 basis points to 38.1% during the three months ended September 30, 2026, compared to the same prior year period. Gross profit increased $454 million, or 6.6%, with gross margin increasing approximately 30 basis points to 37.7% during the nine months ended September 30, 2026, compared to the same prior year period. The increases in gross profit are primarily driven by increased sales, and our margin expansion reflects our ongoing pricing and sourcing initiatives, partially offset by the impact of tariffs and Middle East conflict-driven inflation in product costs.
Selling, Administrative and Other Expenses
SG&A expenses increased $139 million, or 7.7%, during the three months ended September 30, 2026 compared to the same prior year period, and, as a percentage of sales, increased 100 basis points.
SG&A expenses increased $432 million, or 8.2%, during the nine months ended September 30, 2026 compared to the same prior year period, and, as a percentage of sales, increased 70 basis points.
SG&A expenses increased in both periods primarily due to higher salaries and wages, freight, healthcare, rent, and IT costs, as well as additional operating expenses associated with recent acquisitions. In addition, SG&A expenses increased due to foreign currency exchange impacts of approximately $10 million and $110 million for the three and nine months ended September 30, 2026, respectively. We also incurred costs of $21 million and $55 million related to the planned separation of our Global Automotive and Global Industrial businesses for the three and nine months ended September 30, 2026, respectively.
As a percentage of net sales, SG&A increased approximately 100 basis points for the three month period and approximately 70 basis points for the nine-month period primarily due to inflationary pressures on freight, healthcare, rent, ongoing planned investments in technology, and separation costs. Separation costs contributed 30 basis points of the SG&A increase as a percentage of net sales for the three and nine months ended September 30, 2026.
In response to ongoing inflationary cost pressures, during the nine months ended September 30, 2026, we continued our targeted cost-control initiatives, including reductions in discretionary travel and the strategic deferral of select technology and other projects.
Restructuring and Other Costs
As part of our global restructuring plan, which was approved and initiated in February 2024, we incurred $65 million and $193 million associated with facility closures and additional severance costs during the three and nine months ended September 30, 2026, respectively. For additional details, refer to the Restructuring and Other Costs Footnote in the Notes to Condensed Consolidated Financial Statements.
Depreciation and Amortization
Depreciation and amortization expenses increased $10 million and $37 million for the three and nine months ended September 30, 2026, respectively, related to planned investments in technology and supply chain initiatives.
Non-Operating Expenses and Income
We incurred $50 million in net non-operating expense during the third quarter of 2026, a $7 million change from $43 million in net non-operating expense in the prior year period. We incurred $133 million in net non-operating expense during the nine months ended September 30, 2026, a $16 million change from $117 million in net non-operating expense in the prior year period. This category primarily includes net interest expense, investment income, foreign currency gains and losses, and fees associated with our Accounts Receivable Sales Agreement ("A/R Sales Agreement").
Income Taxes
Our effective income tax rates were 19.5% and 22.5% for three months ended September 30, 2026 and 2025, respectively. Our effective income tax rates were 21.7% and 23.4% for nine months ended September 30, 2026 and
2025, respectively. The rate decreases in both periods were primarily driven by renewable energy investments tax credits, tax benefits associated with foreign tax credits, as well as the impact of the mix of foreign and domestic income.
Net Income, Adjusted Net Income and Segment EBITDA
Net income was $224 million for the three months ended September 30, 2026, a decrease of 0.8% compared to $226 million during the third quarter of 2025. Diluted earnings per share ("EPS") was $1.62 for the third quarter of 2026, unchanged compared to $1.62 during the prior year period.
Net income was $641 million for the nine months ended September 30, 2026, a decrease of 5.2% compared to $675 million during the same prior year period. Diluted earnings per share ("EPS") was $4.64 for the nine months ended September 30, 2026, down 4.3% compared to $4.85 during the same prior year period.
The year over year declines in net income are primarily due to certain nonrecurring costs related to the planned separation of our Global Automotive and Global Industrial businesses, increased restructuring and other costs, and higher costs associated with the conflict in the Middle East. These were partially offset by gross profit increases from sales growth and pricing and sourcing initiatives, and benefits from our global restructuring program and cost actions, which are discussed above in more detail.
Adjusted net income was $286 million for the three months ended September 30, 2026, an increase of 3.8% compared to the same prior year period. On a per share basis, adjusted net income was $2.07, an increase of 4.5% compared to $1.98 in the same prior year period. Adjusted net income was $827 million for the nine months ended September 30, 2026, an increase of 2.0% compared to the same prior year period. On a per share basis, adjusted net income was $5.99, an increase of 2.9% compared to $5.82 in the same prior year period. Adjusted net income increased in both periods primarily due to gross profit increases from sales growth, our pricing and sourcing initiatives, and benefits from our global restructuring program and cost actions, which are discussed above in more detail.
North America Automotive
North America Automotive EBITDA decreased $6 million, or 2.9% for the three months ended September 30, 2026, driven by the following factors. North America Automotive segment sales grew $56 million, or 2.2%, primarily driven by a 1.7% increase in comparable sales and a 1.1% benefit from acquisitions. Gross profit increased $20 million, or 2.1%, primarily driven by higher sales and benefits from our pricing and sourcing initiatives. Operating expenses increased $26 million due to continued inflationary pressures in freight, healthcare, wages and rent expenses. These cost pressures were partially offset by the continued benefits of our global restructuring and disciplined cost control initiatives.
North America Automotive EBITDA increased $15 million, or 2.8% for the nine months ended September 30, 2026 driven by the following factors. North America Automotive segment sales grew $247 million, or 3.4%, driven by a 2.2% increase in comparable sales and a 1.3% benefit from acquisitions. Gross profit increased $92 million or 3.3%, primarily due to higher sales and benefits from our pricing and sourcing initiatives. Operating expenses increased $77 million due to continued inflationary pressures in freight, healthcare, wages and rent expenses. These cost pressures were partially offset by the continued benefits of our global restructuring and disciplined cost control initiatives.
For the three months ended September 30, 2026, EBITDA margin decreased 40 basis points to 7.6% from 8.0% compared to the prior year period. Our margin compression was largely driven by continued inflationary pressures and incremental expenses associated with acquired businesses, coupled with slight contraction in gross margin, primarily due to the impact of businesses acquired after the third quarter of 2025 that operate at slightly lower gross margins. For the nine months ended September 30, 2026, EBITDA margin was flat at 7.5% compared to the prior year period.
International Automotive
International Automotive EBITDA increased $6 million, or 4.7% for the three months ended September 30, 2026 driven by the following factors. International Automotive segment sales grew $67 million, or 4.5%, driven by a 1.7% benefit from favorable foreign currency exchange and a 1.7% contribution from acquisitions, and a 1.1% increase in comparable sales. Gross profit increased $52 million, or 7.6%, primarily impacted by higher sales and the positive impact on our pricing and sourcing initiatives. Operating expenses increased $46 million due to continued inflationary pressures impacting personnel costs, rent and freight. These cost pressures were partially offset by the continued benefits of our global restructuring and disciplined cost control initiatives.
International Automotive EBITDA increased $21 million, or 5.1% for the nine months ended September 30, 2026 driven by the following factors. International Automotive segment sales grew $373 million, or 8.5%, driven by a 5.5% benefit from favorable foreign currency exchange, a 2.1% contribution from acquisitions, and a 0.9% increase in comparable sales. Gross profit increased $187 million, or 9.3%, in-line with the increase in sales. Operating expenses increased $165 million driven primarily by inflationary pressures impacting personnel costs, rent and freight. These cost pressures were partially offset by the continued benefits of our global restructuring and disciplined cost control initiatives.
For the three months ended September 30, 2026, EBITDA margin was flat at 9.0% compared to the prior year period. Our gross margin increased 130 basis points, primarily driven by higher sales and benefits from our pricing and sourcing initiatives. These gains were offset by higher fuel and freight costs associated with the conflict in the Middle East, which resulted in reduced expense leverage during the period.
For the nine months ended September 30, 2026, EBITDA margin decreased 30 basis points to 9.2% from 9.5% compared to the prior year period. The decline primarily reflects higher fuel and freight costs associated with the conflict in the Middle East, which resulted in reduced expense leverage during both periods. Our higher sales and benefits from our pricing and sourcing initiatives drove an increase of 40 basis points in gross margin that partially offset the increase in operating expenses.
Industrial
Industrial EBITDA increased $32 million, or 11.2%, for the three months ended September 30, 2026 driven by the following factors. Industrial segment sales increased by $138 million or 6.1%, for the three months ended September 30, 2026, primarily driven by a 5.5% increase in comparable sales and a 0.5% positive impact from foreign currency. Gross profit increased $71 million, or 10.4%, primarily driven by higher sales and benefits from our pricing and sourcing initiatives.
Industrial EBITDA increased $96 million, or 11.2%, for the nine months ended September 30, 2026 driven by the following factors. Industrial segment sales increased by $413 million, or 6.1%, for the nine months ended September 30, 2026, primarily driven by a 5.1% increase in comparable sales and a 0.8% positive impact from foreign currency. Gross profit increased $182 million, or 8.9%, primarily driven by higher sales and benefits from our pricing and sourcing initiatives.
For the three months ended September 30, 2026, EBITDA margin improved 60 basis points to 13.2% from 12.6% compared to the prior year period. For the nine months ended September 30, 2026, EBITDA margin improved 60 basis points to 13.3% from 12.7% compared to the prior year period. Our margin expansion in both periods was driven by the benefits our strategic pricing and sourcing initiatives which drove gross margin expansion of 120 and 80 basis points for the three and nine month periods, respectively, and the continued benefits of our global restructuring and disciplined cost control initiatives.
Corporate EBITDA and Other Segment Reconciling items
Corporate EBITDA primarily reflects costs related to our corporate headquarters' broad support to our business units and other costs that are managed centrally and not allocated to business segments. These include personnel and other costs for company-wide functions such as executive leadership, human resources, technology, cybersecurity, legal, corporate finance, internal audit, and risk management, as well as asbestos-related product liability costs and A/R Sales Agreement fees. Our operational objective is to maintain Corporate EBITDA within a range of 1.5% to 2.0% of net sales.
Corporate EBITDA amounted to losses of $104 million, or 1.6% of net sales, and $331 million, or 1.7% of net sales, for the three months ended September 30, 2026 and nine months ended September 30, 2026, respectively, compared to losses of $93 million, or 1.5% of net sales, and $263 million, or 1.4% of net sales, in the prior year periods. The increased losses were primarily driven by inflationary pressures impacting personnel costs and health insurance.
Other unallocated costs for both periods represent restructuring and other costs, separation costs, and acquisition and integration related costs and other. For the nine months ended September 30, 2026, we incurred $193 million of restructuring and other costs and $55 million of separation costs.
EBITDA
EBITDA was $462 million for the third quarter of 2026, an increase of 0.6% from $460 million during the same prior year period. Adjusted EBITDA was $549 million in the third quarter of 2026, an increase of 4.2% from $526 million during the same prior year period. The increase in adjusted EBITDA was primarily driven by improved segment operating performance and continued execution of strategic pricing, sourcing, and cost control initiatives.
EBITDA was $1.4 billion for the nine months ended September 30, 2026, a decrease of 0.6% from $1.4 billion during the same prior year period. Adjusted EBITDA was $1.6 billion for the nine months ended September 30, 2026, an increase of 4.2% from $1.5 billion during the same prior year period. The increase in adjusted EBITDA reflects higher segment EBITDA across North America Automotive, International Automotive and Industrial, supported by comparable sales growth, acquisition contributions, strategic pricing actions and benefits from our global restructuring and cost initiatives.
Adjusted net income, adjusted diluted EPS, EBITDA and adjusted EBITDA are non-GAAP measures (see table below for reconciliations to the most directly comparable GAAP measures).
Non-GAAP Financial Measures
The following tables set forth reconciliations of net income and diluted EPS to adjusted net income and adjusted diluted EPS, respectively, to account for the impact of adjustments. We also include a reconciliation from net income to adjusted EBITDA. We believe that the presentation of adjusted net income, adjusted diluted EPS, and adjusted EBITDA, which are not calculated in accordance with GAAP, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of our core operations. We consider these metrics useful to investors because they provide greater transparency into management's view and assessment of our ongoing operating performance by removing items management believes are not representative of our operations and may distort our longer-term operating trends. For example, for the three and nine months ended September 30, 2026, certain of the non-GAAP metrics contained herein exclude costs relating to our global restructuring initiative, our planned separation and our acquisition and integration of acquired independent automotive stores, which are one-time events that do not recur in the ordinary course of business. We believe the non-GAAP metrics included herein also enhance the comparability of our results from period to period and with our competitors, as well as to show ongoing results from operations distinct from items that are infrequent or not associated with our core operations. We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
GAAP net income $ 224,447 $ 226,171 $ 640,540 $ 675,443
Adjustments:
Restructuring and other costs (1) 64,545 66,835 193,426 167,317
Separation costs (2) 21,204 - 54,912 -
Acquisition and integration related costs and other (3) 803 - 6,092 14,035
Total adjustments 86,552 66,835 254,430 181,352
Tax impact of adjustments (4) (25,053) (17,411) (68,239) (46,340)
Adjusted net income $ 285,946 $ 275,595 $ 826,731 $ 810,455
The table below represents amounts per common share assuming dilution:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2026 2025 2026 2025
GAAP diluted earnings per share $ 1.62 $ 1.62 $ 4.64 $ 4.85
Adjustments:
Restructuring and other costs (1) 0.47 0.48 1.40 1.20
Separation costs (2) 0.15 - 0.40 -
Acquisition and integration related costs and other (3) 0.01 - 0.04 0.10
Total adjustments 0.63 0.48 1.84 1.30
Tax impact of adjustments (4) (0.18) (0.12) (0.49) (0.33)
Adjusted diluted earnings per share $ 2.07 $ 1.98 $ 5.99 $ 5.82
Weighted average common shares outstanding - assuming dilution 138,331 139,406 138,104 139,257
(1)Amount reflects costs related to our global restructuring initiative which includes employee severance and other termination benefits, and the rationalization and optimization of certain distribution centers, stores and other facilities.
(2)Amount primarily reflects legal and professional services and executive incentive plan costs related to the planned separation of our Global Automotive and Global Industrial businesses that was announced on February 17, 2026 and is targeted for completion in the first quarter of 2027.
(3)Amount primarily reflects lease and other exit costs related to the integration of acquired independent automotive stores.
(4)We determine the tax effect of non-GAAP adjustments by considering the tax laws and statutory income tax rates applicable in the tax jurisdictions of the underlying non-GAAP adjustments, including any related valuation allowances. For the three and nine months ended September 30, 2026, we applied the statutory income tax rates to the taxable portion of all of our adjustments, which resulted in a tax impact of $25 million and $68 million, respectively.
The table below represents a reconciliation from GAAP net income to adjusted EBITDA:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
GAAP net income $ 224,447 $ 226,171 $ 640,540 $ 675,443
Depreciation and amortization 137,490 127,475 403,234 365,928
Interest expense, net 45,970 40,342 135,723 117,769
Income taxes 54,201 65,522 177,331 206,444
EBITDA 462,108 459,510 1,356,828 1,365,584
Total adjustments (1) 86,552 66,835 254,430 181,352
Adjusted EBITDA $ 548,660 $ 526,345 $ 1,611,258 $ 1,546,936
(1)Amounts are the same as adjustments included within the adjusted net income table above.
The table below clarifies where the adjusted items are presented in the Condensed Consolidated Statements of Income:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2026 2025 2026 2025
Line item:
Cost of goods sold $ 803 $ - $ 6,092 $ -
Selling, administrative and other expenses 21,204 - 54,912 14,035
Restructuring and other costs 64,545 66,835 193,426 167,317
Total adjustments $ 86,552 $ 66,835 $ 254,430 $ 181,352
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our financial position and cash flow performance have provided us with the capacity to invest in acquisitions, capital expenditures and technology to support our global growth strategy, as well as return value to our shareholders through dividends. Our sources of capital consist primarily of cash flows from operations, supplemented as necessary by issuing commercial paper, private and public issuances of debt and bank borrowings.
On February 17, 2026, we announced a 3.2% increase to our regular quarterly cash dividend. We have paid a cash dividend every year since going public in 1948, and 2026 marks the 70th consecutive year of increased dividends paid to shareholders.
Currently, we believe that our existing lines of credit, term loan A facilities, commercial paper program, and cash generated from operations will be sufficient to fund our operations for the foreseeable future, including working capital requirements, strategic acquisitions, dividends, share repurchases, capital expenditures, scheduled debt and interest payments, and income tax obligations.
Cash Flow Activity
For the nine months ended September 30, 2026, net cash provided by operating activities was $817 million. The increase in net cash provided by operating activities as compared to the prior year period is primarily driven by an improvement in working capital, partly offset by payments related to tax planning initiatives. We also had a $250 million benefit to operating cash flow from our A/R Sales Agreement. Changes in working capital can cause cash from operations to vary significantly period over period depending on factors such as the timing of customer payments, inventory purchases, vendor payments, tax payments, and fluctuations in foreign exchange rates.
During the nine months ended September 30, 2026, we continued to invest in our business through strategic acquisitions and capital expenditures to broaden our product and service offerings, improve our business operations and expand our global footprint. For the nine months ended September 30, 2026, we deployed $434 million for dividends, $314 million for capital expenditures, and $69 million for acquisitions. In addition, we had net proceeds of debt of approximately $338 million, which includes $45 million under our commercial paper program to support these investments.
A summary of our condensed consolidated statements of cash flows is as follows:
Nine Months Ended September 30,
(In thousands) 2026 2025 $ Change % Change
Operating activities $ 816,647 $ 510,689 $ 305,958 59.9 %
Investing activities $ (361,076) $ (487,951) $ 126,875 26.0 %
Financing activities $ (139,033) $ (93,717) $ (45,316) (48.4) %
Liquidity and Capital Resources
Our liquidity is supported by cash generated from operating activities and available borrowings.
On April 28, 2026, we amended our existing Syndicated Facility Agreement to establish a Term Loan A Facility in an aggregate principal amount of $500 million and a Delayed Draw Term Loan Facility in an aggregate principal
amount of $500 million, each maturing on October 28, 2027. As of September 30, 2026 both facilities were fully drawn.
As of September 30, 2026, total liquidity was $2.4 billion, consisting of $0.8 billion in cash, and $1.6 billion of available capacity under our $2.0 billion Unsecured Revolving Credit Facility, which reflects $389 million outstanding under our commercial paper program. From time to time, we may enter into other credit facilities or financing arrangements to provide additional liquidity and to manage against foreign currency risk.
At September 30, 2026, we had $5.1 billion of total debt outstanding. Approximately $1.2 billion of this debt includes unsecured Senior Notes which contain covenants related to a maximum debt to EBITDA ratio and certain limitations on additional borrowings.
Additionally, we have an A/R Sales Agreement to sell short-term receivables from certain customer trade accounts to unaffiliated financial institutions on a revolving basis. On January 2, 2026, we amended our A/R Sales Agreement to increase the facility capacity from $1 billion to $1.25 billion and extended the agreement's maturity through January 8, 2027. We also facilitate a voluntary supply chain finance program to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. Refer to the Accounts Receivable Sales Agreement Footnote and the Supply Chain Finance Programs section within our General Footnote in the Notes to Condensed Consolidated Financial Statements for more information.
We expect to be able to continue to borrow funds at reasonable rates over the long term. At September 30, 2026, our total average cost of debt was 4.09%, and we remain in compliance with all covenants connected with our borrowings. Any failure to comply with our debt covenants or restrictions could result in a default under our financing arrangements or could require us to obtain waivers from our lenders for failure to comply with these restrictions. The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could create cross defaults under other debt arrangements and have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Genuine Parts Company published this content on October 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 20, 2026 at 15:04 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]