Good day, everyone. Welcome to the Genuine Parts Company Third Quarter 2020 Earnings Conference Call. Today's call is being recorded. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. I would now like to turn the conference over to Sid Jones, Senior Vice President of Investor Relations. Please proceed, sir.

Good morning, and thank you for joining us today for the Genuine Parts Company Third Quarter 2020 Conference Call. With me today are Paul Donahue, our Chairman and Chief Executive Officer; and Carol Yancey, our EVP and Chief Financial Officer. As a reminder, today's conference call and webcast include a slide presentation that can be found on the Genuine Parts Company Investor Relations website. Before we begin this morning, please be advised that this call may include certain non-GAAP financial measures which may be referred to during today's discussion of our results as reported under Generally Accepted Accounting Principles. A reconciliation of these measures is provided in the earnings press release issued this morning, which is also posted in the Investors section of our website. Today's call may also involve forward-looking statements regarding the Company and its businesses. The Company's actual results could differ materially from any forward-looking statements due to several important factors described in the Company's latest SEC filings, including this morning’s press release. The Company assumes no obligation to update any forward-looking statements made during this call. Finally, please note that we've accounted for the Business Products segment, S.P. Richards, as discontinued operations for all periods presented. Now, I'll turn the call over to Paul for his remarks.

Thank you, Sid, and good morning, everyone. Welcome to our third quarter 2020 earnings conference call. We appreciate you joining us today and hope you are staying safe and well. During the quarter, we remained focused on our top priorities, which include ensuring the continued health and safety of our employees, customers, suppliers, and communities in which we operate; execution of our strategic initiatives and cost actions for our global Automotive and Industrial segments to deliver customer value, operational efficiencies and strong financial results; management of our working capital to drive strong free cash flow and pay down debt to further strengthen our financial position and enhance liquidity; effective capital deployment, including strategic reinvestments in the business, paying a consistent dividend to our shareholders and the repayment of debt as appropriate; and finally, we also advanced our ESG initiatives with the release of our 2020 Corporate Sustainability Report. Carol and I look forward to covering our progress in each of these areas today, and then taking your questions. Our teams continued to execute with agility through the third quarter, aggressively managing each of our operations through the challenges of COVID-19. We are proud of their hard work and commitment to operational excellence, which has required effective measures to maintain a safe work environment, while also providing first-class customer service. Through the quarter, we engaged with our teams at every level and resumed field visits to connect with our employees, customers and suppliers. We can tell you firsthand that through the adaptability and successful execution of our passionate and talented associates, we are fully operational and prepared with comprehensive readiness plans, should a second wave begin to materially affect our businesses. So, a big thank you to our 50,000-plus team members across our global footprint. Upon the divestiture of our Business Products group in June, we entered the third quarter focused on driving profitable growth and productivity initiatives for our streamlined portfolio of our Automotive and Industrial business segment. As you may recall, exiting non-core operations is one of several key steps in the transformation of the Company. In addition, we are also investing in higher return businesses to further expand and strengthen our core. Moving on to our financial results. We achieved a strong financial performance in the third quarter that reflects the resiliency of our businesses and the benefits of our strategic growth initiatives and cost actions taken across our operations. Total sales for the third quarter were $4.4 billion, up 1% excluding the impact of divestitures. This was a significant improvement from the 10% sales decline in the second quarter, due to the impact of COVID-19. Total operating margin was 9%, a 100 basis-point improvement from last year, achieved through solid progress in both gross margin and SG&A, driving margin expansion in each of our Automotive and Industrial businesses. Adjusted net income was $237 million and adjusted earnings per share was $1.63, up 17%. Our cost savings plan, announced in October of 2019, has generated significant savings across the organization in 2020. Through the first nine months, we have already achieved our $100 million cost savings target for the full year. In addition, cost actions in response to COVID-19 further boosted our operating results. Looking ahead, we remain focused on finding additional cost savings to further improve our cost structure and long-term profitability. Let me mention one example of the many initiatives to improve our operational efficiencies and customer service. We were excited to open our newest U.S. automotive distribution center in Nashville, Tennessee just last month. Nashville is a 325,000 square-foot distribution center, equipped with systems and efficiencies to enable high productivity and the service of over 300-plus NAPA stores. By bringing this facility online, we'll be able to close or consolidate smaller, less productive DCs in the NAPA network. The opening of Nashville and consolidation of these operations has gone smoothly, despite the impact of COVID-19. We would like to thank our operations team for the great work on this important project. We will continue to make additional supply chain investments in the years to come. We also improved our working capital, enhanced our liquidity, while generating another quarter of substantial cash flows. Turning to our business segments. Automotive represented 68% of total sales in the third quarter and Industrial was 32% of total sales. By geography, 76% of revenues are attributable to North America, with 14% to Europe and 10% to Australasia. Total sales for the global Automotive Group were $3 billion, a 6% increase from last year, and improved sequentially from the 10% decrease in the second quarter. Comp sales also turned positive, up 2.2%, compared to a 12.6% decrease in Q2. A solid automotive recovery on the top line with a consistent growth pattern in each month through the quarter helped us deliver a 100 basis-point improvement in operating margin. In North America, our U.S. automotive sales were down approximately 1%, which is significantly improved from the 12% decrease in the second quarter. Comp sales were down 2.8% and much improved from the 13.8% decrease in Q2. In addition, we were encouraged by an impressive 60 basis-point increase in operating margin for U.S. automotive. In Canada, sales for the third quarter were up 2.6%, and improved from a 13% decrease in Q2. Comp sales increased by 0.5% and operating margin was up a strong 200 basis points. So, a solid quarter for our Canadian team. Also in North America, sales to our retail customers continued to outperform, up low-double-digits for the third quarter. While retail sales peaked in July, this customer segment remained solid through the quarter as the persistence of COVID continued to drive outsized DIY growth, although we believe this surge in demand is gradually moderating. We continue to strengthen our retail positioning through our ongoing initiatives, such as store refreshes, NAPA rewards program, targeted promotions and enhanced merchandising and inventory. In addition, our growing omni-channel capabilities, including the recent addition of 35,000 new SKUs and direct-to-customer shipping from select suppliers continue to drive exceptional value for the retail customer. This has led to online retail sales that doubled our 2019 volume, and we expect continued strong omni-channel growth at NAPA in the fourth quarter and beyond. Moving on to our DIFM business. Sales to commercial accounts were down low-single-digits in the third quarter, which is much improved from last quarter and an encouraging indicator that consumers are becoming more mobile and getting back out on the road. As miles driven continued their slow recovery, sales trends across each of our customer channels strengthened relative to Q2, with our independent unaffiliated professional repair accounts leading the way and posting positive sales growth. Looking forward, we expect this customer segment as well as our fleet and government accounts, national accounts and NAPA auto care centers to strengthen further in the months ahead. Among these customers, our fleet and government segment remained the most pressured, as many of these operations are running at less than capacity due to slower business conditions and/or budgetary constraints. This is especially true for our customers in the energy and airline industries, which have been significantly impacted by the pandemic. To counter these and other commercial headwinds, our teams are executing on a number of recovery plans designed to optimize NAPA's customer value proposition, sell more parts and gain market share. These plans focus on maximizing the effectiveness of our new sales structure, improvements to key programs such as NAPA auto care, enhanced systems and digital capabilities, as well as strategic pricing initiatives and improved inventory availability. While our team has made significant progress in the quarter, we expect our focus in these areas and favorable fundamentals to drive meaningful results in the period ahead. Those favorable fundamentals include the growing number of vehicles in the 6 to 12-year aftermarket sweet spot, and the recent spike in new car sales, low gas prices and continued improvement in miles driven. In Europe, aftermarket sales trends had a strong rebound in the third quarter, and our team did a tremendous job of capitalizing on that. Total sales were up an impressive 16%, which is improved from a 3% sales decrease in the second quarter. And comp sales were up a strong 12%, compared to last quarter's mid-teen decline. Importantly, this quarter's sales growth, combined with our ongoing cost savings initiatives, drove a 140 basis-point margin improvement, marking a significant step forward for this group. In breaking down our overall European performance, we are very pleased that operations in each country recovered with positive sales comp, driven by the broad surge in demand for deferred maintenance and repairs. In addition, the powerful NAPA brand has proven to be an effective growth driver. We have introduced the NAPA brand in the UK and France, and plan to roll it out in Germany this month. We posted our strongest European sales in the UK this past quarter, and NAPA branded products have grown to represent a low-double-digit percentage of total sales in less than one year. As a reminder, we identified the opportunity for private brands in Europe at the time of our initial discussions to acquire AAG back in 2017. We are encouraged by the quick acceptance of the NAPA brand and excited for its growth potential. Likewise, our focus on driving growth with key existing and new accounts, including the larger national account customers also contributed to our recovery. So, again, just a fantastic job by the team in Europe on both the top and bottom lines. Turning now to our automotive operations in Australia and New Zealand. This team reported another quarter of exceptional results, with total sales increasing 16% and comp sales up strong at plus 15%. This follows a 4% total sales increase and a 2% core sales increase in the second quarter. Our strong sales for the quarter reflect a robust sales environment for both, the commercial and retail customer segments in the Australasian region, and our team is well-positioned with a 60% commercial and 40% DIY sales mix. We're encouraged by the current sales climate, despite ongoing headwinds due to COVID-related restrictions in select key markets, such as Melbourne, and the state of Victoria. To drive this growth, our team in Australasia is executing on several growth initiatives. These include the continued rollout of the NAPA brand, and new NAPA store openings, digital enhancements across the B2C and B2B platform, strategic pricing and targeted marketing. These and other initiatives as well as the ongoing cost actions across our operations generated a strong 180 basis-point improvement and operating margin for the quarter. So, in summary, we are pleased with the recovery in the aftermarket, and our automotive performance across North America, Europe and Australasia. So, now, let's turn to our results for the global Industrial Parts Group. Total sales for this group were $1.4 billion, down 8.7%, excluding the EIS divestiture. Comp sales were down 9.2%, a significant improvement from the comp sales decline of 16.7% in the second quarter. These sales results as well as our ongoing focus to drive meaningful cost savings and optimizing our distribution network drove an 80 basis-point improvement in net operating margin for the quarter. In North America, our total sales were down 9.7% as compared to a 16.7% decrease in Q2. We saw strengthening trends in industrial indicators over the last several months, and an improving sales cadence in each month of the quarter. Specifically, the ISM PMI, industrial production, and capacity utilization have all pointed to increasing industrial activity since we last reported, and we expect these trends to continue in the months ahead. We would also add that as customers reopen their plants, we will capitalize on more onsite sales opportunities. We are also beginning to see an increase in CapEx orders among many of our customers, many of which were deferred due to crisis. So, we see a number of positive signs for the industry ahead. Throughout the pandemic, our team has been executing on our growth strategy to further bolster Motion's leading competitive position in the MRO industry. We are focused on initiatives to expand our industrial services and solutions capabilities, enhance our pricing and category management strategy, and optimize the effectiveness of our Motion Industries website, which we re-launched just last quarter. Each of these initiatives has added value for the Company and our customers. For the quarter, our automation solutions group was our strongest operation, posting high-single-digit growth. We are building out this operation to further support the growing megatrend of plant automation and robotics at our customers. In contrast, the southwest region of the U.S. was our weakest due to the significant impact of COVID on the oil and gas sector in that area of the country. We were also pleased to complete three strategic bolt-on acquisitions in North America during the quarter. Two of these businesses specialize in motion control and automation products and services, including engineering and application expertise and aluminum extrusion, which complement our growing MI automation solutions group. Our third acquisition expands our hydraulics business at Motion Canada. Combined, these operations further expand our presence in strategic geographies and overall products and service offerings, and are expected to contribute approximately $35 million to $40 million in annual revenues. So, to summarize our North American industrial performance, we were encouraged by the gradual improvement and sales trends throughout the quarter. Our team also operated well and was very-disciplined in applying their cost control measures, which we believe bodes well for continued progress in the months ahead, as the industrial economy strengthens further. Turning to Australasia, July 1 marked the anniversary of our MI Asia Pac acquisition, and this team delivered a low single-digit sales increase for the quarter. While we continue to benefit from the strength of the local mining industry, we are also executing on our new branding strategy and other growth initiatives to drive sales and gain market share. In addition, the MI Asia Pac team is operating well and making excellent progress on key cost reduction and working capital initiatives. Another focus area for GPC has been the advancement of our ESG initiatives. To account for our progress in this important area, we issued our first sustainability report back in 2018 and followed that up with a summary update in 2019. On September 30th, we were pleased to issue our 2020 Sustainability Report. This year's report substantially expands our disclosure across the ESG spectrum, such as human capital and diversity and inclusion, among others. In developing our disclosure, we engaged with our top shareholders to ensure our pathway to ESG best practices, aligned with the expectations of these key stakeholders. We invite you to visit our GPC website to view this report and learn more about our company-wide commitment to ESG. As we move forward through the balance of 2020 and into 2021, our teams will execute on a number of strategic initiatives to build on the positive momentum of the third quarter. These plans and initiatives are grounded in a strategic growth framework, focused on maximizing the value of our Automotive and Industrial business segments and positioning GPC for sustained long-term growth and improved profitability. Key elements of the framework include capturing more wallet share with existing customers and acquiring new customers; introducing new products and services while innovating our omni-channel strategy and expanding digital offerings; building a global branding strategy to further leverage our powerful NAPA and MI brands, which we have initiated via the rollout of the NAPA brand into Europe and Australasia; and the rebranding of our Inenco Industrial Business to MI Asia Pac; expanding our global geographic footprint, including acquiring strategic bolt-on businesses. And finally, our strategic framework includes ongoing transformation initiatives to achieve operational excellence as exemplified by our cost actions and other initiatives. So, now, I'll turn it over to Carol for a deeper review of our financials.

Thank you, Paul. As a reminder, our comments this morning will focus on adjusted results from continuing operations, which exclude transaction, restructuring and other costs and income. Total GPC sales were $4.4 billion in the third quarter, down 3.4% from 2019 or up 1%, excluding divestitures, which is much improved from the 10% decline in the second quarter. We're also pleased to report our 12th consecutive increase in quarterly gross margin, which improved to 35% compared to 33.4% in the third quarter last year. The 160 basis-point improvement primarily reflects the benefit of sales mix shift to higher gross margin operations, positive product mix, especially in industrial. The broad improvement was driven by our focus on strategic category management initiatives in areas such as pricing and global sourcing. The divestiture of EIS last September 30th was also accretive to gross margin performance. These items were partially offset by a decrease in supplier incentives due to lower purchasing volumes. The pricing environment has remained stable thus far in 2020 with limited supplier price increases and very little inflation in our third quarter sales. Based on the current pricing environment, we expect only minor price inflation through the balance of the year. Our selling, administrative and other expenses were $1.1 billion in the third quarter, down 1.7% from last year and representing 26.1% of sales compared to 25.6% last year on an adjusted basis. The decrease in operating expenses reflects the favorable impact of both our permanent and COVID-related cost actions implemented thus far in 2020, as previously mentioned by Paul. In accordance with our $100 million cost savings plan announced late in 2019, we're pleased to report that we have successfully achieved the $100 million annual target well ahead of schedule. With more than $40 million in savings recognized in the third quarter, our permanent expense reductions totaled over $110 million for the nine months. In addition, our teams have continued to execute on a number of additional savings initiatives in response to COVID-19. These initiatives contributed approximately $60 million in incremental savings in the third quarter. So, combined, we generated approximately $100 million in cost savings during the third quarter, driven by strategic reductions and payroll and facility costs, as well as more temporary savings from furloughs, reduced travel and entertainment, freight changes and other initiatives in response to COVID. Looking ahead to the fourth quarter, we will continue to execute on our cost actions, and we currently expect to achieve $130 million to $140 million in permanent cost savings for 2020, which will carry over into 2021. We also expect to generate further savings related to COVID-19 but have less clarity here, as these cost savings will moderate as the economic recovery continues and sales volumes increase. Despite the continued uncertainty, we enter the fourth quarter focused on driving growth and aggressively managing our expenses to maximize profitability. Our total operating and non-operating expenses were an adjusted $1.2 billion for the third quarter, reflecting a decrease of 1.5% from last year and comprising 27.9% of sales. Our total segment profit in the third quarter was $392 million, up 9% on a 3% sales decrease. Excluding divestitures, total segment profit increased 13% on a 1% sales increase, and our segment profit margin was 9.0%, a strong increase of 100 basis points. Our tax rate for the third quarter was 23.4% on an adjusted basis, down from 24.9% in the prior year period, due primarily to the benefit of statute related adjustments. Our net income from continuing operations in the third quarter was $233 million with an earnings per share of $1.61. Our adjusted net income was $237 million or $1.63 per share, which compares to $204 million and $1.39 per share in 2019 or a 17% increase. So, now, let's discuss our third quarter results by segment. Our Automotive revenue for the third quarter was $3 billion, up 6% from the prior year and sequentially improved from the 10% sales decline last quarter. Our segment profit at $266 million was up 20% with a profit margin of 9.0%, compared to 8.0% in the third quarter of 2019. The 100 basis-point increase in margin was driven by improved operating results across each of our automotive businesses, which was a great job by our teams and a testament to their continued focus on meaningful cost reductions across our operations. Our Industrial sales were $1.4 billion in the quarter, an 18.6% decrease from a year ago. Excluding the EIS divestiture, Industrial sales were down approximately 9%, which is a significant improvement from the second quarter. Our segment profit of $126 million was down 8% from a year ago or up slightly excluding EIS, and the profit margin was up 80 basis points to 8.9%. The improved margin for Industrial reflects gains in both our North American and Australasian industrial businesses, which was driven by the combination of gross margin expansion and cost savings. We expect to see continued progress in the quarters ahead as the sales environment further recovers. While these sales trends and operating results are encouraging and reflect the recovery from the lows of the second quarter, we continue to operate in an environment of significant uncertainty and cannot reasonably forecast the full impact of COVID-19 in the coming months. As a result, we believe it's prudent to not reestablish formal financial guidance at this time. So, now, let's turn to our comments on the balance sheet. Our accounts receivable of $2.0 billion were down 22% from the prior year, due primarily to the change in sales and the benefit of an agreement to sell $500 million of receivables to a financial institution earlier this year. We remain pleased with the quality of our receivables and confident about our collection trends, although we continue to closely monitor receivables in light of the current business conditions. Inventory at September 30th was $3.4 billion, up 2% from September of last year, or essentially flat excluding the impact of foreign currency. This is a function of lower purchasing volumes and our continued focus on effective inventory management. Accounts payable of $4.0 billion is up 1% from last year and a reflection of the change in inventory and the impact of lower purchasing volumes. At the end of our quarter, the AP-to-inventory ratio was 118%, which has improved from 112% at June 30th. Our total debt at $2.9 billion is down 15% from $3.4 billion last year and down 10% from the second quarter. During the third quarter, we further strengthened our liquidity position and we entered October with approximately $2.8 billion in available liquidity, which has improved from our $2.6 billion liquidity at June 30th and $1.1 billion in liquidity at March 31st. For the first nine months of 2020, we generated $1.4 billion in cash from operations, which is up significantly from 2019. This led to strong free cash flows of over $1.3 billion. As a reminder, we modified our near-term capital deployment strategy back in early April to preserve our cash through the duration of COVID-19. However, we remain committed to several key priorities for cash to serve to maximize shareholder value. These priorities are evident in our improved debt leverage of 2.2 times our total debt to adjusted EBITDA, which compares to 2.5 times at the end of the second quarter, and the $4.3 billion in capital deployed across our four key areas in the last three years. These include reinvestments in our businesses via capital expenditures, M&A growth net of divestitures, share repurchases, and the dividend. For 2020, we reduced our initial $300 million in planned capital expenditures to approximately $150 million to $200 million, and we have suspended plans for share purchases through December 31st. While we've also pulled back on acquisition activity, we've made several strategic bolt-on acquisitions this quarter, as Paul mentioned earlier, and we continue to plan for additional M&A that aligns with our growth strategies for the Automotive and Industrial businesses. And finally, we continue to support the dividend which has increased for 64 consecutive years. So, that's our financial update for the third quarter. We've made significant progress in several key areas. We want to thank our teams for their great work and many accomplishments under these tough circumstances. I'll now turn it back over to Paul.

Thank you, Carol. Through the continued focus on our top priorities, outlined at the beginning of this call, we were pleased to report a strong financial performance for the quarter. Our results highlight our progress in several key areas, including strengthening sales trends, continued gross margin expansion, transformative cost actions and significant cost savings, operating margin expansion in each of our businesses, and a stronger balance sheet, enhanced liquidity and substantial cash flows. We are excited for the future at GPC, and we look forward to reporting on our progress in the quarters ahead. We thank you for your interest in GPC. And with that, we'll turn it back to the operator for your questions.

Thank you. Our first question comes from Bret Jordan with Jefferies. Please proceed with your questions.

When you think about the cadence of the quarter, I guess NAPA U.S. specifically but also maybe Europe as well, as we came out of the COVID lockdown, could you talk about sort of how businesses either picked up with mobility improving or maybe even softened as stimulus money was spent? And then, I guess, within Europe, talk specifically about the strength you've seen there. Obviously, not as much consumer stimulus in that economy yet seeming to outperform, could you maybe give us some color as to is that share gain that's driving your significant comp or is it just the underlying lift in service demand?

Thank you, Bret. Let's begin with the overall performance of the company. Throughout the quarter, we maintained a steady trajectory, moving into positive territory. We experienced stability in July and August, with a positive shift occurring in September. In terms of the automotive sector, we observed consistent mid-single-digit growth across July, August, and September. In Europe, we showed particularly strong results in August, achieving double-digit growth across all months of the quarter. I’m incredibly proud of our team in Europe, especially considering the challenges we faced in Q2 when much of France and parts of the UK were in lockdown. The increase we saw in Q3 is robust and is reflected across all markets and customer segments. This includes both small independent shops as well as significant gains with major national accounts. While I believe we may be gaining market share in Europe, we will need to monitor that over time. Additionally, we are excited about the launch of our NAPA private label, which significantly contributed to sales growth in the UK this quarter, with increases in ten different product categories. We plan to roll this out in France next, followed by Germany and the Netherlands.

You might talk about the margin lift from private label.

Yes. The margin on the private label, Bret, as you know, for our private label, we do generally have a more favorable margin when you look at the all-in and consider the terms that we get and the global tenders that we're doing. But generally, we do have a little bit lower price in Europe on that private label. So, it would be neutral in total to Europe on their gross margin. But, the fact is, we're more dollars and we're expanding our market share. And again, when we look at global tenders, there is a GPC benefit, if you will, when you think about global extended terms and putting more volume through our global suppliers.

And Bret, as I called out in my prepared comments, when we first started talking to the AAG team a few years back, we saw a real opportunity to introduce private brand into our European markets, and it's played out honestly exactly as we had hoped and thought of would. And I'll tell you what I'm most encouraged by is the acceptance and I guess the recognition of the NAPA brand in Europe.

And I guess, a quick follow-up. Could you talk about any regional performance highlights in the U.S.? And then, Carol you talked about inflation moderating. Do you see anything going on in pricing? And I guess maybe more on the DIY side, I think, there were some comments coming out of zone that they and Walmart have become a bit more competitive. Do you see any pricing changes in the market in general?

Yes. Pricing has been really rational, and specific to automotive, we cannot say we've seen much in the way of changes whether it's do-it-for-me or DIY, we've had very minimal price increases through the third quarter, 0.1% in automotive, and we really don't expect much at the end of the year. But again, no supplier price increases and a pretty rational pricing environment.

Bret, regarding your question about regional performance, I assume you're referring to the U.S. As we observed in the previous quarter, our strongest markets remain the Midwest and the mountain regions. Both have been performing well for us, delivering positive numbers in Q3. However, we have noticed some challenges in the Northeast, which experienced a mid-single-digit decline this quarter. It's important to note that in Q2, our business in the Northeast was down 19%. We've improved from a 19% decrease to about 4% in Q3. The Mid Atlantic region shows a similar trend, moving from a high-double-digit decline in Q2 to a mid-single-digit decrease in Q3. While these markets are still under pressure, we are encouraged by the strong sequential improvement from quarter to quarter.

Okay. And it sounded like Europe, UK might be the strongest market with France number two.

That is correct. Absolutely.

Our next question comes from the line of Scot Ciccarelli with RBC Capital Markets. Please proceed with your question.

Hi. Good morning. This is Beth Reed filling in for Scot. I wanted to ask if you could help us understand the recovery pace in the auto sector. I believe that in July, the trends were around 6%. Could you clarify whether that figure refers to sales or comparable sales? I think it was sales, but just wanted to confirm. Also, at that time, how were U.S. comparable sales performing? Lastly, regarding the U.S. market, did you notice improvements month over month? Any additional insights on those metrics would be appreciated.

Yes. So, we’ll double team this one, Beth. But, the first response, I think, you asked, and I’m trying to recount your questions. I think, the first one was around, was the 6% that was mentioned back in Q2, was that comp or total. That was total, not comp. Okay? So, did that answer that question?

Yes.

Okay. As we review our automotive business for the quarter, it remained steady throughout, showing mid-single-digit performance, and the U.S. automotive segment exhibited a similar consistency across the quarter.

Okay. So, the U.S. auto comparisons were down low to mid low-single-digit for each one?

Correct.

Okay, got it. And then, just one on the Industrial side…

Hey Beth, I would just add to that. That improved in the month of September.

Got it. Thank you. That's helpful.

In July, the performance was relatively stable. In August and September, the results were not as strong as in July. However, when looking at the overall figures, that's what we have.

Got it. Okay. On the Industrial side, just with the negative trends continuing, and as you guys mentioned, some of the industries are starting to improve. How should we think about trends in that segment as we look over the next few quarters?

Yes. To provide some background on Motion, we have experienced cyclical periods in the industrial business before, and we typically follow the industrial indicators with a delay. This trend is consistent with what we've observed in recent quarters. What encourages us, Beth, is that we noted sequential improvement throughout the quarter, with September being the strongest month in Q3. We believe that as the economy improves, the gap between our performance and the industrial indicators will close. The key takeaway is that we expect demand to improve in the coming months. We are seeing very strong results from our wood and lumber segments, as well as pulp and paper, much of which is linked to the robust building industry. Therefore, we are confident that Motion will recover and be in a favorable position in the upcoming quarters.

Alright. Thank you so much.

You're welcome.

Our next question comes from the line of Chris Horvers with JP Morgan. Please proceed with your question.

Thanks. Good morning, everybody.

Hey, Chris.

I just wanted to follow up on a couple of questions there. First on the Motion side. You talked about September being the strongest month, obviously down 9% comps for the quarter. I guess, how close are you to getting to positive there? And then, could you also size up maybe the exposure to weaker industries, like energy and travel?

Yes. Well, the energy comment, Chris, that's definitely a headwind for us. If you look at our Southwest part of the United States was certainly our weakest market in the country, and that is largely driven by oil and gas. So, that's a definite headwind for us going forward. And in terms of looking out, Chris, look, it's challenging. I mean, there's a lot of uncertainty in the markets. There's no doubt. Our expectation is our Motion business will turn positive in '21. But, I would also tell you, our expectation is that we're going to continue to show sequential improvement. Just as we did from Q2 to Q3, we think Q4 will be an improvement over Q3, and then again, certainly positive in '21.

So, would that mean that like Motion in September was more down, like mid to high single-digit versus high single-digit decline in September?

That is correct.

Got it. That makes sense. To clarify on the U.S. cadence specifically, it seems like DIY slowed down while do-it-for-me improved. Overall, it seemed roughly neutral over the three months. Is that accurate? You also mentioned that September showed improvement, so I was trying to piece all of that together.

Yes. My reference to September, Chris, was regarding August. September was a better month compared to August, which showed some softness. September did see an improvement. Carol noted that we were relatively stable in July, followed by a slight dip in September. However, this change was minimal, just a few basis points month to month. I apologize; I forgot the second part of your question, Chris.

So, the second part was really like, it seems like the situation is mixed with DIY slowing down. One of your competitors mentioned a drop off in August and into September regarding DIY. So, I guess, is that what contributed to keeping the relative trend flat over the quarter? And then, any comment on how close we are to being positive in September in commercial for do-it-for-me?

Our DIY business saw significant growth, especially in July, where we experienced an increase of nearly 20%. However, this growth has moderated a bit throughout Q3. It's important to note that the kind of increases we've experienced in DIY aren't expected to continue across the industry. We have certainly benefited from the stimulus funding that impacted the market. Meanwhile, our DIFM business remained steady during the quarter, maintaining a low-single-digit growth range. Additionally, the low-single-digit numbers we are seeing now are actually an improvement compared to the high-single-digit declines we faced in May and June.

Aren't you welcome.

Our next question comes from the line of Greg Melich with Evercore ISI. Please proceed with your question.

Hi. Thanks. I have a couple of questions. One, I'd love to follow up. Thanks for all the color around U.S. automotive. Could you just level set us now on the mix of that business between independents, the NAPA auto care group, major accounts and fleet just given how disparate the performance has been this year?

Looking at the business, as you mentioned, Greg, our most challenging segment has been fleet and government. It's important to note that this segment includes our oil and gas and energy businesses, as well as large contracts with municipalities, school bus contracts, and contracts with airlines for ground equipment. This mix has made fleet and government quite challenging, but we believe it will rebound strongly. Our major account and auto care businesses also saw slight declines this quarter. However, we are encouraged by the growth in our all other wholesale business, which includes independent unaffiliated garages. That sector held up well, and we are optimistic about building on that in Q4 and beyond.

If we examine the business, are independents and garages now about half or 30% of the business, while fleet and government may be down to 20%? Would that be a reasonable estimate?

Certainly. When we analyze our segments, the fleet portion accounts for roughly 20% to 25%. Meanwhile, the unaffiliated independent garage segment comprises about 40% to 45% of the total. I apologize, Greg, but could you please repeat your question regarding our independent owners?

Yes. I just want to know, just generally speaking, how the independents are doing. So, what percentage of the mix are they now as opposed to company owned stores? And how are they doing? I mean, how many of them got PPP loans? Are they sort of fully back and up to running the way that you want to versus what they were doing in the second quarter?

Yes, it's a great question, Greg, and I'm glad you asked that. Independent owners make up roughly 60% of our business. I'm pleased to share that we've been meeting with some of our larger independent owners this week, and they're doing well. In terms of PPP money, the vast majority, probably close to 90%, received those funds. From a cash standpoint, our independents are doing just fine.

Great. And then, if I can, so one more question there. You brought up an interesting addition of 35,000 SKUs. That would be direct from vendor. Could you just help us frame what that could mean to sales and sort of expanding the business in a more capital effective way? And I also thought I heard you mention some pricing or re-merchandising actions to help gain some share back. But I was…

Let's discuss the 35,000 SKUs I mentioned. Consider this as part of the endless aisle concept, leveraging our fantastic suppliers and the full range of their catalog offerings. For instance, with our partner Dorman, who has been with us for many years and has a wide catalog, we haven't listed all their SKUs before, but we're now planning to make them available online. While it's too early to quantify the impact since we've just launched this, it's a clear example. Another case is the WeatherTech line, a well-known consumer brand. We are enthusiastic about the potential of the endless aisle for the NAPA business, and we aim to keep expanding this opportunity in the future.

I heard that pricing was reasonable, but I also thought there were some specific actions in certain segments.

Yes. So, we were talking about rational pricing and really no supplier price increases in automotive. The actions taking both in our Automotive and our Industrial business are really buy side, sell side type pricing, global sourcing type internal gross margin initiatives. Really again, there are no drastic changes in the pricing environment. We've just gotten much more strategic as it relates to both, retail and commercial pricing in our gross margin efforts.

So, these are, just so I understand, more strategic, meaning that you're lowering prices to the customer or end up getting more merch margin based on how you're mixing it?

No. I mean, Greg, we've had 12 consecutive quarters of gross margin improvement in an environment with lower sales volumes and no inflation and tariffs. And again, we've got pricing, data analytics. We've got investments we've made. Again, we are getting improved gross margin with these initiatives and remaining very competitive. So, the idea is to grow our sales and grow the business. And again, I'm really pleased to see the opportunities and the results that we've gotten in the gross margin area.

That's great. Thanks a lot both of you. Good luck.

Thank you.

Thank you.

Our last person for questions comes from the line of Matt McClintock with Raymond James. Please proceed with your questions.

Hey, everyone. This is Mitch Ingles, filling in for Matt. Thanks for taking my questions. So, most of my questions have already been answered. I just had a quick follow-up on your major accounts group in Automotive. Are these accounts mostly back online today and purchasing at lower volumes? It sounds like the recovery for Europe for these types of accounts has been relatively solid. Do you expect a similar trend for these accounts in the U.S. in coming months? Any color on the recent trends here would be helpful.

Yes, we do anticipate that business will recover in tandem with an increase in miles driven. One point that hasn't been addressed this morning, despite the noticeable rise in traffic, is that miles driven in recent months is still down by nearly 10%. As this figure starts to improve, we expect both our major account and commercial business to recover as well. Additionally, we are pleased with our major account performance in the UK and the strength we observed in our European business during Q3. We believe this positive trend will continue into 2021.

Great. Thanks for the color. And best of luck.

Yes. Thank you.

There are no further questions in the queue. I'd like to turn the call back to management for closing remarks.

We'd like to thank all of you for your participation in today's call, and we look forward to reporting our year-end results in February. Thank you very much for your support of Genuine Parts Company. Have a great day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.