Good morning, ladies and gentlemen. Welcome to the Genuine Parts Company Fourth Quarter 2024 Earnings Conference Call. This call is being recorded on Tuesday, February 18, 2025. At this time, I would like to turn the conference over to Tim Walsh, Senior Director, Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. Welcome to Genuine Parts Company's fourth quarter 2024 earnings call. Joining us on the call today are Will Stengel, President and Chief Executive Officer; and Bert Nappier, Executive Vice President and Chief Financial Officer. In addition to this morning's press release, a supplemental slide presentation can be found on the Investors page of the Genuine Parts Company website. Today's call is being webcast, and a replay will also be made available on the company's website after the call. Following our prepared remarks, the call will be open for questions. The responses to which will reflect management's views as of today, February 18, 2025. If we're unable to get to your questions, please contact our Investor Relations department. Please be advised 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. Today's call may also involve forward-looking statements regarding the company and its businesses as defined in the Private Securities Litigation Reform Act of 1995. 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. Now I'll turn the call over to Will.

Thank you, Tim, and good morning. Welcome to our fourth quarter and full year 2024 earnings call. Before we get into the details of our results, I want to take a moment to express my gratitude to our over 63,000 GPC teammates around the world. Your hard work, dedication, and unwavering commitment to serving our customers are the foundation of our success. Our people are at the heart of everything we do, and we have a culture of service, performance, integrity, and teamwork. In 2024, we made meaningful strides in strengthening our teams by making focused investments in talent across the globe at all levels. These people investments are helping build a stronger organization. As evidence of the strength of our culture, we're proud to share that in our most recent Global Engagement Survey, a record 81% of our teammates reported being highly engaged with our company, up three points from the survey a couple of years ago. Reflecting on 2024, our end markets did not perform at the levels we planned at the start of the year, but I'm proud the team stayed focused on what we could control as we advanced our strategic initiatives to improve the business and effectively manage our operations against the backdrop of challenging macroeconomic conditions. Our strategic investments continue to enhance the customer experience, improve productivity, and drive profitable growth as we leverage our global scale and teamwork to prioritize opportunities that make GPC smarter, faster, and better. Technology and data underpin our investment priorities with an emphasis on talent, sales, and supply chain. We're confident that our investments and actions continue to strengthen the business and create long-term value. We complement our core investments with disciplined bolt-on acquisitions. In 2024, we acquired over 100 companies that added talent, geographic coverage, new capabilities, and value to GPC. I'd like to take a few moments to highlight some of our key accomplishments from 2024, and Bert will share more details on the fourth quarter and our 2025 outlook in a few moments. A few financial highlights for 2024 include total GPC sales were $23.5 billion, an increase of approximately $400 million or 1.7% compared to 2023. Included in our sales growth was a benefit of 260 basis points from strategic acquisitions, which offset weak market conditions, particularly in our industrial segment. Adjusted gross margin increased 70 basis points, driven by acquisitions and our strategic pricing and sourcing initiatives. We generated strong cash flows with $1.3 billion of operating cash flow, and we executed a global restructuring to proactively offset softer market conditions, which led to $45 million in cost savings in 2024 with more to be realized in 2025. In addition to our investment in the business, we returned over $700 million or nearly 60% of our operating cash flow to our shareholders in the form of dividends and share repurchases. As a sign of confidence in the long-term outlook for GPC this morning, our Board approved a 3% increase to our dividend, marking the 69th consecutive year we've increased the GPC dividend. Turning to our results by business segment. In 2024, total sales for Global Industrial were $8.7 billion, a decrease of 1.4% compared to last year with comparable sales down 2% as weak market conditions resulted in reduced customer demand for the full year. Within Motion's business in 2024, our core MRO and maintenance business, which accounts for approximately 80% of Motion's sales, was essentially flat with the prior year. Our corporate account customers, which account for approximately 45% of Motion sales, saw low single-digit growth. Looking at our diverse collection of industries served, we saw growth across four of our 14 end markets, with strength in pulp and paper, mining, and distribution centers and logistics. This growth was offset by softer demand in markets like equipment and machinery, automotive, and metals. The remaining 20% of Motion sales originates from more capital-intensive projects, including our value-added service offering. This business was down mid- to high single digits for the year. While we've seen customers delay certain capital-intensive projects given the environment, we remain bullish on the long-term opportunities in this portion of the business as customer spending rebounds. For the full year, Global Industrial segment EBITDA was $1.1 billion, which was 12.6% of sales, a decrease of 20 basis points versus the prior year. While profitability continues to be impacted by sales deleverage and inflationary cost pressures, we're confident that our strategic initiatives and cost actions will drive margin expansion as market conditions improve. Despite the tough market in 2024, Motion North America improved gross margin and delivered an EBITDA margin of approximately 13%, down only approximately 10 basis points versus the prior year. Over the last five years, Motion has expanded its profit margin by over 300 basis points. While the industry faces temporary headwinds, we're energized about how Motion is positioned in the market and the opportunities available to us. We operate in a large and highly fragmented market and despite being the number one player in the industry, we still hold less than 10% market share, which reinforces the significant runway we have for continued profitable growth. During 2024, we executed a disciplined succession plan at Motion by promoting James Howe as President. James has a 35-year track record in the industry and started in the business as a Motion field sales representative. The Motion senior leadership team has 200 years of experience at Motion and 270 cumulative years of experience in the industry. Most importantly, we go to market with an unmatched team of local, highly technical account and product specialists that know our customers' operations and the equipment they utilize as they create tailored solutions to keep their businesses running smoothly. Recall, in many instances, our Motion associates are physically located in customers' facilities. Motion leads the industry with its scaled technical capabilities, value-added solutions, and local support offering, complemented by our national network of both branches and distribution centers, as well as unparalleled investment in inventory. We believe Motion offers the best value proposition regardless of customer size, type or location. In 2024, we further expanded our depth of inventory by over 60,000 SKUs while simultaneously improving inventory efficiency. Our network enables the right inventory, strategically located in the right markets to ensure we're at our customers' facility promptly to get them back up and running. In addition to the traditional MRO and maintenance solutions, Motion also serves its customers with a robust value-add service offering, where we help our customers improve their operations, drive productivity and create value. This includes designing and delivering solutions such as fluid power systems, electrical and automation systems, and conveyor systems to solve specific customer applications. Additionally, Motion offers its customers predictive and preventative maintenance solutions to help minimize the risk of an unexpected part failure. We've installed thousands of sensors into our customers' facilities that give them critical insights into the cycle times and the health of their operations. These solutions are designed to improve throughput and productivity, helping our customers optimize their operations. Motion extends its competitive advantage with its repair and service offering, including our new state-of-the-art facility in Houston. This team works hand-in-hand with customers to diagnose the root cause of machinery problems, perform repairs, and train their teams on proper installation and maintenance of equipment. Key end markets where we provide these services include mining, steel, cement, and paper mills. In 2024, we realigned our value-add solutions team with our core distribution leadership to ensure a seamless and coordinated customer experience. This differentiated approach improves our ability to deliver our full Motion offering to each customer. While industrial market conditions remain challenged, we're confident in Motion's ability to navigate the near-term headwinds and continue to drive value for our customers. Our leadership position, unmatched technical expertise, and broad portfolio of scaled solutions position us well to capitalize on growth opportunities as industrial activity recovers. This, coupled with opportunities with advancing trends around nearshoring, has us excited about what's ahead for Motion. We're cautiously optimistic to see three months of sequential improvement in PMI with January at 50.9%. However, we believe it's prudent to be cautious with our enthusiasm until additional evidence of a sustained market recovery is clear. Turning to the Global Automotive segment. Total sales in 2024 were $14.8 billion, an increase of approximately 4% compared to last year. Automotive sales growth was comprised of a benefit of 370 basis points from acquisitions, largely in the U.S., and flat comparable sales growth. The moderation in the sales benefit from inflation continued to be a factor in our year-over-year comparisons. As expected, Global Automotive sales inflation remained below 1% throughout 2024. For the full year, Global Automotive segment EBITDA was $1.3 billion, which was 8.7% of sales, a decrease of 70 basis points versus 2023. Our results for Global Automotive reflect ongoing pressures from a soft market environment and cost pressures, particularly in Europe and the U.S. Now let's turn to our automotive business performance by geography. Starting in the U.S., total sales were up approximately 3% in 2024 with roughly flat comparable sales growth. During the year, sales out to our commercial customers were flat while sales out to do-it-yourself customers were down low single digits. Within commercial, we saw low single-digit growth in our NAPA AutoCare and other wholesale customer segments, while fleet and government was flat. Major account sales were down low single digits, but showed sequential improvement through the back half of the year. Looking at our comparable store sales, both sales out from company-owned stores and comparable sales into independent stores performed relatively in line with each other, approximately flat for the year. Turning to our product category performance for the year. We continue to see relative strength from our nondiscretionary repair categories, which accounts for approximately 50% of NAPA's business, up low single digits in 2024. We general maintenance and service categories like braking, filters and chemicals, which represent about approximately 35% of our business, were also up low single digits versus the prior year. And lastly, we continue to see softer demand in discretionary categories, which represent approximately 15% of the business, down mid-single digits from last year. While 2024 market growth proved to be softer than expected, we were encouraged by the progress we've made to improve NAPA's capabilities, service, and position in the market. Our back-to-basics mindset has driven material improvement in our internal metrics around inventory stocking levels, customer service, and on-time delivery. As an example, we're making notable progress improving the operations inside our current distribution centers; our internal metric for service levels from our distribution centers to stores improved almost 800 basis points in 2024, and our safety metrics improved by approximately 20%. And we did all of this while investing in inventory and flowing more product through our facilities to ensure we have the right part in the right place at the right time. While much of the focus at NAPA in 2024 was ensuring we are executing the key aspects of the customer experience at a high level, we continue to make investments in the business to position us for long-term success. We're investing in the supply chain at NAPA and completed the expansion of our Indianapolis distribution center, increasing capacity to support growing customer demand and improve delivery speed across key markets. This facility includes a significant technology and automation upgrade, which will drive cost efficiencies and inventory productivity. In addition, in 2025, we're leveraging our global scale to launch a professional hand and service tool and equipment offering that will allow us to further capitalize on a large and growing industry opportunity. Our acquisition of MPEC and Walker are on track relative to operational plans and financial targets. In total, we've integrated approximately 55% of the stores into NAPA technology platforms, which enables consistent control of local operations. In 2024, the transactions delivered sales, gross margin, and operating profit margin benefit as expected. We've been pleased with the progress to date, and we'll continue to execute our post-close integration strategies. While the broader consumer continues to feel pressure from macro headwinds like high interest rates and persistent cost inflation, the automotive aftermarket industry fundamentals remain supportive of long-term growth, including increasing miles driven and aging car parc and high new and used vehicle pricing. In addition, we view commercial customers as the growth engine of the industry as the complexity of vehicles continues to increase. With this backdrop, NAPA operates from a position of strength with 80% of our business concentrated in commercial, supported by our network of more than 6,000 store locations and approaching 20,000 AutoCare centers. In 2025, NAPA will celebrate 100 years of history, a truly remarkable accomplishment. We're thrilled to celebrate this milestone, but we're even more excited for what the next 100 years is going to bring. As we look at our results outside the U.S., in Europe, throughout 2024, we navigated a weak economic backdrop, which resulted in a lack of market growth for the aftermarket. In 2024, total sales were up 6% in local currency, with flat comparable sales growth. These results reflect ongoing execution of our initiatives, including key account wins, expanding the NAPA brand and strategic bolt-on acquisitions. In 2024, we grew NAPA branded sales 16% versus 2023 to €500 million, a remarkable accomplishment since its launch five years ago and a testament to the power of the NAPA brand. The rollout of NAPA across Europe has been a competitive differentiator, especially in a challenging market and has far exceeded our expectations. NAPA branded sales now represent approximately 15% of our sales in Europe and we can see a path of this penetration climbing to over 20% over the next four to five years. In our other international geographies, Asia Pacific and Canada, we continue to enjoy leading market positions despite challenging market conditions. In Asia Pacific, sales in 2024 increased 6% in local currency with comparable sales growth up approximately 4%. Our Asia Pacific team continues to execute at a high level delivering their fifth consecutive year of double-digit profit growth. Their ability to drive market share gains, deliver strong operating leverage, and strategically and consistently invest for the future has been instrumental in their success. In Canada, total sales in 2024 increased approximately 1% in local currency, with comparable sales growth down approximately 2%. Our Canadian team continues to execute well despite a softer macroeconomic backdrop and a more cautious consumer. As I mentioned, our accomplishments and results around the world are bolstered by investment in technology and complemented by strategic acquisitions. Acquisitions have been a hallmark of GPC, and 2024 was no different. During the year, we made progress on our initiative to own more of our NAPA stores here in the U.S., completing the acquisition of more than 500 stores, mostly from our independent owners. Our store footprint in the U.S. is now approximately 35% company-owned, with the balance being our independently owned stores. Over time, we see a path to bring our network closer to a 50-50 mix. With our independent owners always continuing to play a critical role in our network, particularly in smaller and more rural markets. In addition, Motion acquired four bolt-on acquisitions in 2024 to build upon its technical and value-added solutions capabilities, and we've remained active to start 2025. Going forward, we believe M&A will continue to play an important part of our growth profile in both our automotive and industrial business. We play in two large and fragmented markets and enjoy the flexibility of a strong balance sheet. Beyond M&A, our global investments in technology are advancing well. This year, we're focused on improving catalog and search capabilities using Google Cloud, enabling us to deliver a more seamless experience, particularly for our commercial customers. As examples, within our automotive catalog, we've made material enhancements that help our commercial customers find what they need, leading to lower order cancellations and returns. And we're now leveraging machine learning and automation to help our catalog continuously improve itself without the need for manual data entry. Within search, we used Google Cloud to build an automotive specific search experience, focused on our commercial customers. Our search results are now four times faster, two times more accurate, all at half the cost. There are numerous other examples of progress within recent technology investments where we've leveraged our global scale to make us smarter, faster, better. For example, the recent completion of our global HR rollout with Workday to create a standardized company-wide platform that simplified 40 disparate HR platforms to one. In addition, we've ramped up our capabilities at our Poland tech center, now comprised of nearly 300 engineers that lead global technology initiatives across pricing, inventory, catalog, search, and cybersecurity. Not only has the tech center added capabilities and speed but also resulted in material cost savings. Less visible, but critically important, we've made material progress to simplify our core tech infrastructure as we've improved stability, performance, and scalability. Looking ahead into 2025, we have opportunities to build on our momentum and drive organic growth by enhancing our customer value proposition, expanding market share, and improving profitability through cost discipline. While we expect soft market conditions to persist into the first half of 2025, we anticipate gradual improvement as the year progresses. A key aspect of our outlook is the improvement in market conditions for both industrial and a rebound in the European landscape. Bert will walk you through the details of our assumptions in a few minutes. Our continued investments in strategic initiatives reflect our commitment to driving growth and improving efficiency. We're confident these actions will support sustainable growth and long-term value creation. While committed to our long-term strategic investments, we're also balancing the current environment with prudent and urgent cost actions. Our global restructuring efforts announced last year have progressed ahead of plan, delivering cost savings at the high end of expectations. Today, we announced that we're targeting an additional $100 million to $125 million of savings in 2025. These efforts continue our focus to simplify our operations and improve productivity. Collectively, our actions across 2024 and 2025 will position us for approximately $200 million in annualized cost savings beginning in 2026. In summary, while our full-year financial results were impacted by challenging market conditions, we're encouraged by the operational progress we've made across our business. GPC's legacy of operational excellence, exceptional customer service, and financial discipline continue to guide us. Our market-leading automotive and industrial businesses are well positioned to capitalize on growth opportunities, driven by supportive long-term industry fundamentals while leveraging our size, global scale, and expertise as a competitive advantage. We remain focused on creating value through a balanced capital allocation strategy, including reinvesting in our business, pursuing disciplined and accretive M&A, and returning capital to shareholders through our long-standing dividend. In closing, I want to thank our GPC teammates for their continued hard work and dedication to serving our customers and to our shareholders for their continued trust and support. We look forward to building on our momentum in 2025 and well beyond. And now I'll turn the call over to Bert.

Thanks, Will, and thanks to everyone for joining the call. My remarks this morning will focus on two key areas: our fourth quarter performance, which was at the high end of our expectations and our outlook for 2025. Our fourth quarter results reflect revenue growth from the benefits of acquired businesses, which more than offset the negative impact of weak market conditions. As expected, despite the revenue growth and gross margin expansion we realized, earnings were down in the fourth quarter due to headwinds from planned investments in the business and cost inflation, although further cost actions and better results from our global restructuring allowed us to finish 2024 modestly ahead of our expectations when we began the quarter. Our discussion will focus primarily on adjusted results, which exclude the nonrecurring costs related to our global restructuring program, costs related to the acquisition of MPEC and Walker, and a charge to write down inventory related to a global rebranding and relaunch of a key product category. During the fourth quarter, these costs totaled $125 million of pretax adjustments, or $91 million after tax, with $62 million attributable to the inventory write-down. Starting with sales, total GPC sales increased 3.3% in the fourth quarter, including a benefit from acquisitions of 320 basis points and the benefit of an additional selling day in the U.S. totaling 110 basis points. These items were partially offset by slightly negative comparable sales growth as weak market conditions and lower customer demand, particularly in industrial and Europe, impacted our sales performance. Looking at the quarterly sales by business unit. Starting with our Global Industrial segment, sales in the fourth quarter decreased approximately 1% compared to the prior year, with comparable sales down 2%. During the quarter, we had one extra selling day compared to the fourth quarter of last year, which positively impacted sales growth by approximately 150 basis points. Average daily sales were down low single digits in October and November, and down mid-single digits in December. As expected, our December results were impacted by the timing of the holiday and extended customer idling during the last two weeks of the year given the weaker demand environment. As we look at Global Automotive, total sales in the fourth quarter increased approximately 6% compared to the prior year with comparable sales up slightly. In addition to the benefits from acquired businesses, during the fourth quarter, we had one extra selling day in the U.S., which positively impacted Global Automotive sales growth by approximately 90 basis points. By geography, starting in the U.S., total sales were up approximately 7% in the fourth quarter, aided by acquisitions with comparable sales flat. The extra day versus prior year positively impacted sales growth by approximately 170 basis points. Our average daily sales cadence through the quarter was positive in all three months. And within our do-it-yourself and do-it-for-me customer segments, the trends in the fourth quarter were generally consistent with the full year commentary that Will shared. In our international markets, sales in Europe during the fourth quarter increased 3% in local currency with comparable sales down 1% as a result of weak macroeconomic conditions. In Asia Pacific, sales in the fourth quarter increased 14% in local currency, with comparable sales up approximately 6%. Both commercial and retail segments delivered solid growth with notable strength in retail. And finally, in Canada, total sales in the fourth quarter increased 1% in local currency, with comparable sales down approximately 1%, driven by challenging economic conditions. As we turn back to our consolidated results with respect to gross margin, after adjusting for the $62 million charge to write down inventory related to our global product rebranding, our adjusted gross margin was 36.9% in the fourth quarter, an increase of 50 basis points from last year. As expected, the improvement in gross margin was driven by acquisitions, primarily at U.S. automotive. Our adjusted SG&A as a percentage of sales for the fourth quarter was 29.4%, up 210 basis points year-over-year and in line with our expectations. This deleverage can be attributed to the following factors. First, approximately 80 basis points from cost inflation, primarily in salaries and wages as well as rent and freight expense. Second, approximately 60 basis points from acquired businesses, which represents the isolated impact of the SG&A of these acquisitions. When taken together with the improved gross margin, the net operating profit benefit from acquisitions to GPC is positive. Further, as we capture the synergies we expect from these acquisitions, the SG&A impact will abate over time. Third, we experienced approximately 60 basis points of deleverage related to a reserve adjustment for product liability claims. This deleverage was partially offset by approximately 35 basis points related to our global restructuring efforts. Notably, the 60 basis point impact from the adjustment to our product liability reserve masked the sequential improvement in the deleverage in SG&A. As our cost actions and discipline in spending are having the intended effect of curbing the rate of increase. For the quarter, total adjusted EBITDA margin was 7.5% and down 180 basis points year-over-year. The decrease was primarily driven by the continued lower sales growth environment and higher cost inflation in wages, rent, and freight, partially offset by margin expansion driven by our acquisitions and a benefit from our restructuring efforts. Total adjusted EBITDA margin for 2024 was 8.5%, down 80 basis points from 2023. Our fourth quarter adjusted net income, which excludes nonrecurring expenses of $91 million after tax or $0.65 per diluted share, was $224 million or $1.61 per diluted share. Our full-year adjusted net income was $1.1 billion or $8.16 per diluted share. In 2024, we took actions to better align our costs with the current environment and made significant progress on our global restructuring. We incurred restructuring costs of $220 million, and through our team's hard work, we realized approximately $45 million of cost savings in 2024 or a benefit of $0.24 per share. Turning to our cash flows. For the year, we generated $1.3 billion in cash from operations and $684 million in free cash flow. In 2024, we invested approximately $570 million back into the business in the form of capital expenditures as we continued investment in our supply chain and IT systems. In addition, we invested $1.1 billion in the form of strategic acquisitions, including the acquisition of our two largest NAPA independent owners, MPEC and Walker. Now let's turn to our outlook for 2025. We expect diluted earnings per share, which includes the expenses related to our restructuring efforts, to be in the range of $6.95 to $7.45. And our adjusted diluted earnings per share to be in the range of $7.75 to $8.25. Our 2025 outlook does not assume any changes in tariffs from the new administration and assumes current FX rates. Our outlook for 2025 has been developed based on current weak market conditions and lower customer demand levels as well as our expectations around the pace and timing of an improvement in market conditions. While the industries where we compete continue to enjoy supportive fundamentals, the near-term market conditions remain muted as our customers navigate cost inflation, high interest rates, a dynamic foreign currency market, and the emerging potential for impacts from tariffs. In addition, as further detailed in our earnings release, our 2025 outlook excludes the previously announced one-time non-cash charge we expect to record when our U.S. pension plan termination settles, expected for late 2025 or early 2026, which we intend to treat as a non-GAAP adjustment. We've excluded the impact of this charge from our 2025 guidance given the uncertainty of when the plan termination will settle, which is dependent upon several regulatory steps and approvals. We will provide additional updates regarding the expected timing of completing the pension plan termination as we move through 2025. On slide 12 of our earnings presentation, we've included an illustration of the key business drivers impacting our 2025 outlook. Let me take a moment and walk through the details of these components which collectively produce approximately $1 of EPS headwind in 2025 when compared to 2024. First, as I just mentioned, we have begun the process to transition our U.S. pension plan to a third-party insurance company, which we expect to complete in late 2025 or early 2026. In 2024, we recognized approximately $67 million of income from our U.S. pension plan. In connection with the transition, the plan's assets have been reallocated and as such, our pension income in 2025 will be significantly lower with an impact of an estimated $0.28 per share when compared to 2024. Second, through the fourth quarter, we have seen notable moves in the foreign currency markets, which have put downward pressure on the euro, Canadian dollar, and Australian dollar. The strengthening of the U.S. dollar on a relative basis against these currencies is expected to have a negative impact of $0.15 per share year-over-year. Finally, our planned investments in the business will result in higher depreciation and interest expense. On a year-over-year basis, we expect these two items will negatively impact 2025 earnings per share by approximately $0.60. While we do not provide quarterly guidance, I do want to share our views on the earnings cadence for 2025 and our expectations for the first half. Our sales outlook for 2025 is predicated on a steady improvement through the course of the year, with weak market growth continuing into the first half of 2025 before improving in the second half. The pace and timing of the recovery of activity in both segments is a key element of our outlook. Given our views on the sales backdrop for 2025 within the EPS guidance range we provided for the year, we expect earnings to be down in the first and second quarters, rebounding with earnings growth in the third and fourth quarters, with results improving sequentially across each quarter. Based on our current expectations, we would expect first half earnings to be down 15% to 20% and second half earnings to be up 15% to 20%. For the first quarter, we expect earnings to be down in the range of 20% to 30% from prior year, driven by several factors: one less selling day, lower pension income, higher depreciation and interest expense, the negative impact of a stronger U.S. dollar, and a weaker industrial market when compared to the first quarter of 2024. For the second quarter, we expect earnings to be down and pressured by the negative impact of depreciation, foreign currency, and interest as well as lower pension income. As we look to the specific elements of our outlook, we expect total sales growth to be in the range of 2% to 4%. Our outlook assumes that market growth will be roughly flat and that the benefit from inflation will be approximately 1%. It also assumes the benefit from M&A carryover and about one point of growth from our strategic initiatives. These benefits are partially offset by the one less day in the first quarter and about one point of headwind from foreign exchange. For gross margin, we expect 40 to 60 basis points of full-year gross margin expansion, driven by our continuous focus on our strategic sourcing and pricing initiatives as well as a benefit from the independent store acquisitions in U.S. automotive. Our outlook assumes that SG&A will deleverage between 20 and 40 basis points. Our SG&A outlook is driven by continued cost inflation pressures and the impact of incremental SG&A from acquisitions in the U.S. automotive business. These impacts are partially offset by the expected benefits from our global restructuring activities. For 2025, we are expanding upon our restructuring initiatives and taking further cost actions. We expect to incur additional restructuring expenses in 2025 in the range of $150 million to $180 million associated with these activities, with an expected benefit of $100 million to $125 million. When fully annualized in 2026, we expect our 2024 and 2025 restructuring efforts and cost actions to deliver approximately $200 million in cost savings. By business segment, we are guiding to the following: 2% to 4% total sales growth for the automotive segment with comparable sales growth in the flat to up 2% range. The expectation for automotive segment EBITDA margin is to be flat to up 10 basis points from last year. For the industrial segment, we expect total sales growth of 2% to 4% with comparable sales growth in the 1% to 3% range. We expect Global Industrial segment EBITDA margin to expand by approximately 20 to 40 basis points year-over-year. Turning to a few other items of interest. We expect to generate cash flow from operations in a range of $1.2 billion to $1.4 billion and free cash flow of $800 million to $1 billion. For CapEx, we expect approximately $400 million to $450 million or approximately 2% of revenue in 2025 at the high end of the range, moderated from 2024 as we drive further rigor and prioritization into capital allocation in light of the market conditions. As we look at M&A, our global pipeline remains robust and we will continue to remain disciplined in pursuing opportunities that create value. We expect our M&A capital deployment to moderate as well in 2025 to a range of $300 million to $350 million as our investment in U.S. automotive returns to a more normalized level of activity. As we start 2025, we continue to operate in challenging market conditions and are taking actions, including advancing our global restructuring activities to improve the profitability of the business. We believe the backdrop of lower sales growth is market-driven, not specific to our business, and we stand well positioned once the cycle turns more favorable. We remain confident in the underlying fundamentals of our business, and we'll continue to invest in the business with a long-term focus. Thank you, and we will now turn it back to the operator for your questions.

Thank you. Your first question comes from Scot Ciccarelli with Truist. Your line is now open.

Guys, thanks. You guys have made a lot of investments. Imagine changes on the auto side, but North American comp growth has slowed further, and it is lagging a bunch of the other industry leaders. Can you help us reconcile operational improvements, for some of this underperformance, and when would you expect to see your operational improvements start to show through on relative sales or market share?

Great. Some of these are quick wins, while others will take longer to realize. Overall, we feel positive about the work we're doing. We are actively collaborating with our independent owners to keep them energized and motivated to compete and sell alongside us. We are making significant progress with our company-owned stores and have confidence in our team. In summary, we take pride in the work we're doing and are pleased with our progress, but we remain unsatisfied and look forward to continuing our advancement.

Okay. I'm sorry, I might have missed the very beginning of that. Can you just help reconcile kind of the underperformance versus some of the others? Obviously you've made a lot of improvements internally. I think the operator might have lost us for a second.

Yes, Scot, I think what I described is, we're proud of the progress that we're making. We're putting the right work into the business. We're seeing strength in parts of our commercial business as a result of our targeted work. And as we described, we're realizing some of the softness in some of the discretionary business. But pleased with the non-discretionary and doing the right work to advance us moving forward. So each and every month we're getting better, and we're excited about the progress as we look forward.

Got it. I'll take the rest offline. Thanks, guys.

Your next question comes from Christopher Horvers with JPMorgan. Your line is now open.

Thanks. Good morning, guys. My first question is, can you give us some guidance on how you think about the progression of the comps over the year? You gave good discussion around the earnings forecast, but how are you expecting the ramping comps in Motion in the U.S. NAPA business in particular? And related to that and Scot's question, the U.S. business didn't really get any benefit from what turned out to be a pretty good winter in the month of December. So can you talk about what happened there as well?

Hi Chris, it's Bert. I'll give you a little bit more color on the cadence of 2025. I think at the highest level, just think about our sales outlook in terms of, we exited the year with pretty weak conditions across the board. And as I think we've talked about, really one of the first times in GPC history, where all five of our business units are feeling the downward cycle in the same way. We're going to start the year in that position. So we have expectations that this weak environment will persist through the first half. We don't really get into giving individual sales guidance, by business unit. But I will say that we're looking for the second half to be better and to improve, and we're looking for sequential improvement across the year. As I kind of outlined in my prepared remarks, with the cadence of earnings and with that backdrop, obviously, we would have the expectation that sales and comp sales would progress through the course of the year to support that improvement in earnings. So I think we'll be looking to the second half. There are a lot of moving pieces out there right now in which I think the market is reacting to some pretty muted conditions. Whether it's high interest rates, inflation, foreign currency, the emerging potential for tariff impacts, which we obviously did not include in our guide. There's some things to be very optimistic about, but cautiously optimistic and being prudent about sequential improvement in PMI and IP, which we've seen over the last three months. So that would be a benefit for Motion that has a lag to it; about a two to three months' lag. And so if those things continue, then that would put us right in the middle of the year in which we might see some improvement. And that would come alongside hopefully, some improvement in the customer side of the house, on the automotive business. But look, there's still things to watch. We're watching that industrial business, and we're watching Europe to a certain degree as well.

Thanks. I guess on the two questions, one follow-up on the weather benefit in U.S. NAPA, but were you surprised not to see any improvement there? And second, on the Motion side of the business, obviously the elections behind us, you saw the PMI pick up, but tariffs have gotten full front and center in the news. What are you hearing from your customers? Do you think the tariff is something that could remain an overhang until it fully goes away, such that that pushes out that Motion recovery in the PMI recovery?

Hi Chris, I'll take the weather point and just say, look, don't forget the fourth quarter started with some pretty significant disruption from the hurricanes. So as we started October, we were still feeling the impact in both segments of the hurricane that persisted really through the month of October, and perhaps into the first week of November, where we got back on our feet. You top and tail that with some better weather in December from an automotive perspective in terms of winter weather and driving sales. And I would say that weather, which is why we really didn't call it out for the quarter, was a push. When you take those two factors together. And I'll let Will give you some color on the tariff question, around industrial. Yes look, I think it's a wait and see, Chris. Honestly, I would say that the tone of the discussions are biased, more positive as we've started the year, but I think everybody is cautious and staying agile. Obviously, as we think about the implications for Motion associated with a stronger North American manufacturing base, that's a huge tailwind. If you think about our tariff exposure at Genuine Parts Company. I would tell you that it's definitely a fluid situation, but we've been prepared for this moment. Our merchandising teams around the world have done really good work to make sure that we've got a diversified global supply chain. And in fact, even in the course of the fourth quarter, we analyzed the country of origin across 800,000 SKUs, to make sure that we were exceptionally precise about how to manage the business. And if you look at the key takeaways from that analysis, for GPC overall as a global company, our tariff exposure as a percent of purchases is about 7% in China, and less than 5% in Mexico and Canada. Motion has almost 90% to 95% of its exposure in the U.S. The area of the business that has exposure to China, Mexico, Canada as a percentage of total GPC is NAPA, where roughly 20% of purchases are from China, 15% are from Mexico, and less than 5% in Canada. So we've got a good handle on the facts. The discussions with the vendors right now, I would describe similarly to the way that I describe customers, which is everybody's trying to make sense of which way the wind's blowing. And the good news is the team's prepared to react accordingly, as we did a couple of years ago, where we operate in rational markets that are structured where we have the ability to deliver service to the customer, but also pass through price.

Thank you.

Your next question comes from Greg Melich with Evercore ISI. Your line is now open.

Hi. Thanks. I wanted to double click on two things. One, is that sales progression you talked about. Obviously we exited last year week. It sounds like we started this year below the sales growth range that you're expecting for the year. Is that fair to say that it's below maybe, perhaps positive, but below the 2% to 4% range?

Yes, Greg, that's fair. I mean, we're looking at 2% to 4% for the full year, with some fat cap weighting to that as I described in my prepared remarks, particularly when you think about the shape of the earnings. So we would start in a little lower position and end in a little higher position. And that'll get you to the math of the 2% to 4%.

Got it. And then maybe Will double click on tariffs. Remind us your business proposition around tariffs. And if you look to protect gross margin dollars, or protect gross margin rate, depending on how tariffs play out by country and product line?

Yes, Greg, I would say it depends. Honestly, we talk a lot about category management, and managing the assortment and the category at a pretty granular level. So there might be situations where you're thinking about gross margin dollars, or profit dollars, and there might be situations where you're talking gross profit rate. So it's a balancing act. Obviously, gross margin rate is important to the financial expression of our business. And so all else equal, that's something that we consider.

Got it. And if I could, I just want to make sure on interest expense, a housekeeping item still $150 million this year. Does that include basically the lack of the pension income since that being divested?

No, Greg, not in the interest expense number we gave you. Pension income is a headwind, as I described in our prepared remarks. It's down from the year-over-year $0.28 estimated headwind for the year. But that's not a part of the interest expense book that in…

That's totally separate from that. And that'll show up as soon as it's actually divested, or before that?

Yes, it's actually before that. We had to reallocate and rebalance the portfolio of assets in connection with the transfer, which is why we have the headwind. The actual settlement is subject to numerous regulatory and approval steps, which is why the timing we expect to be in the fourth quarter could slip into the first quarter of next year. We wanted to be clear about when that timing might occur, because we go through that regulatory process. But to prepare the plan assets for the transition, we rebalance the portfolio much less equity weighted. And so in that respect, the income will be down significantly year-over-year. And you can think about that $0.20, $0.28, sorry. Pretty radically across the year.

Perfect. Thank you and good luck.

Yes. Thanks, Greg.

Your next question comes from Michael Lasser with UBS. Your line is now open.

Good morning. Thank you so much for taking my question. One of the key debates on the Genuine Parts investment case is this idea of market share, and why has the company's North American business, not only in the automotive business but also seemingly on the industrial side, been losing market share? Is it service, is it availability, or some other factors? So A, could you give us some more detail on how the investments are going to close some of these factors that may be driving underperformance? And B, is the expectation that you will see a progression over the course of the year predicated on an acceleration in market share, or the industry accelerating? Thank you very much. And I have a follow-up.

Michael, let me take that one and make a few points. First of all, you referenced North America automotive. And for us, our Canadian operations continue to perform very well and in line with the market. So that's a great business up there. It's got a leadership position and continues to extend its lead. I would respectfully disagree with your observation about Motion North America not competing effectively or losing market share. Our closest competitor has a slightly different mix of business. Regardless of that, I think if you look at our performance relative to anybody in the market is as good or better, and we're excited to continue to prove that quarter-after-quarter throughout '25 and well beyond. On the U.S. automotive side of our business, I think we've been pretty clear about the areas where we're investing to take care of our customers and win market share. It starts with inventory. It starts with supply chain. It starts with talent. It starts with sales intensity running great stores. As we have a different operating model, 35% of our stores are company-owned, which is up 10 percentage points versus not that long ago. So we're evolving our mix. We can control those operations and compete effectively in the market. We partner with the balance of our stores with our independent owners. And as everybody knows, it's been a challenging couple of years in a higher interest rate environment. We partner with those independent owners as small businesses to make sure they've got the right inventory, make sure they have the right resources, and make sure that they're attacking the market effectively. And so, whether you look at our MPEC and Walker acquisition to change the mix, whether you look at some of the investments we're putting in supply chain technology, we're doing all the right work, and there's no team more motivated than our NAPA U.S. team to compete effectively and win market share. Overlay with what we hope will be an improving fundamental market backdrop as we move through 2025. So to answer the last part of your question, it's both earning our fair share by taking care of our customers, and then enjoying the fundamentals that we hope improve as we move forward through 2025.

Thank you very much for that. My follow-up question is, if the industry doesn't accelerate to the degree that you're expecting, or some of the market share trends become more challenging, how should we model or think about the sensitivity of the earnings for GPC to the top line? Are there other elements of the P&L that you could manage in the event that sales falls short through the course of the year? Thank you.

Thanks, Michael. Look, I mean, I think one of the things that we've been very thoughtful about is the expansion of our cost actions and restructuring in light of what we see as soft conditions starting the year. We've given a good estimate of what we think we'll do this year on the expansion of restructuring, and additional cost actions. And we're doing that because we believe it's prudent to balance the long-term and the short-term right now. We do have an ability to lean further into those should we need to. Some of the things we're being very mindful of right now, as we think about restructuring and cost actions, is continuing to protect customer-facing roles, protect customer service, and protect the customer experience. And so, we've got an ability to lean in a little bit further if we want, particularly if we see things not changing. One of our key learnings from 2024 has been around this sense of urgency and moving faster. And so, we're going to be much tighter on watching how things develop. Being transparent with all of you on how we see things developing. And if we need to accelerate more restructuring, we will. We do feel like we've found a sweet spot for 2025 as we bring in the rollover of 2024 actions, which give us a little bit more incremental benefit in '25, and then the new actions really split between things you would expect us to do on restructuring, a little heavier lift now though, some more facility actions and leaning into streamlining our back office. We're also doing that with some cost actions where we're simplifying our operations and giving us the ability to be a little bit more nimble. So it's all about smarter, better, faster. And to the extent we need to, we can expand those activities and react to the market accordingly.

Thank you very much and good luck.

Thanks, Michael.

Thanks, Mike.

Your next question comes from Kate McShane with Goldman Sachs. Your line is now open.

Hi, good morning. Thanks for taking our question. Just with regards to the automotive comments about same-store sales. What is driving EBITDA margins flat to up? Is it the cost savings? And our second question is, is there a target in cadence of buying back independent's in 2025? And what kind of lift have you seen in same-store sales comp, as you've taken those businesses over?

Kate, I'll take the margin question, and then I'll let Will give you some color on the independent owners. But when we think about flat to up 10 basis points on automotive for the guide for the year, we kind of think about that through the prism of several things. One, we are going to see continued expansion in gross margin. So that will be a lift for sure. I think it sales backdrop will be a bit better. Giving us a little bit better ability to navigate the entirety of the P&L and make some better choices with that respect. And then also, these cost actions and restructuring will see those benefit both segments. So it's not just unique to automotive, both sides of the house are being disciplined and tightening the belt. And so when we take all that collectively, a better sales environment, gross margin expansion, a normalized level of inflation in SG&A, we think we're returning to in 2025, and the cost actions, we believe that's the right backdrop to expand margin on the automotive side. And I'll let Will give you a little bit of color, on the independent owner and cadence there.

Yes, Kate, it's a good question. So just as a reminder, the MPEC and Walker those two transactions in 2024 were, at the time, our largest two independent owner groups. If you look at the Pareto of our independent owners at this moment in time, of which there's roughly 2,000, our largest owner is somewhere in the 50 to 60 store range. We have a handful of folks in the 30 to 40 range. And then the vast majority of our owners operate five or fewer stores. And so, as we look forward from an M&A standpoint in U.S. automotive, there will be less of a material impact to our financial statements associated with that activity. What we've seen in the performance post close is what we would have expected to see, which is it gives us an opportunity to influence sales in the local market. It gives us the opportunity to harmonize and optimize cost and everything in between. So it's the right operational strategy. It's the right financial strategy; it's hard work. It takes time. You noticed in my comments, where 55% of stores are integrated. You have to put the systems into the independent owner stores, so that we can operate them effectively. And those activities are not technically in our comp sales growth yet given the recent nature of the acquisitions.

Thank you.

Your next question comes from Seth Basham with Wedbush Securities. Your line is now open.

Thanks a lot and good morning. Will, in response to Michael Lasser's question, you noted the challenges for independent NAPA customers. But in your prepared remarks, you noted that the company-owned stores and independent stores aren't relatively in line. Can you just give us a little bit more color on whether or not you think that the company-owned stores are facing any additional challenges that might be leading to less strong performance than peers?

No, Seth, I don't think there's anything uniquely different about our company-owned stores that disadvantage us relative to the market. Again, as I said, we've been very focused on executing the basics and working with our independent owners to that regard, meaning having the right inventory, having the right talent in the stores, having the right operational processes. And if you look at our company-owned stores, we're highly energized, because we've got a great number of stores that operate very effectively. And the opportunity set available to us is to quartile up the performance of the bottom quartile of our stores. So it's a very tangible body of work. There's nothing wrong with our company-owned stores. We've got some independent owners that have excellent stores in many instances, better stores than us. And so, we're constantly learning from each other, and we can see the opportunities in front of us and each and every day we've got to go to work and make sure that we're running great field operations and taking care of our customers, and that's what we're focused on.

Got it. And then my follow-up question is with one large competitor exiting the West Coast, do you see any opportunity to gain market share out there?

We do, Seth. Any time I think you have changes in the competitive landscape, it presents opportunities. The thing that we can focus on, as I've said a few times today, is making sure that we're running a good business to capture those opportunities. So the fundamental execution is really important to seize the moments. We do have a big national account business. We are a national scaled partner. And so that presents opportunities to us. We obviously have a dedicated network of AutoCare facilities and repair shops, which creates opportunities for us, and we also have independent owners. And so, if you look at all the opportunities that are available, when we execute well locally in the markets, we're excited about what it could be.

Great. Thank you.

And our last question comes from Bret Jordan with Jefferies. Your line is now open.

Hi, good morning, guys.

Hi, Bret.

In the prepared remarks, you talked about internal metrics that you were working on the distribution centers that had picked up 800 basis points. Could you talk about what were those and on what basis were you having fill rate issues that you were dealing with? Or I guess, sort of what's happening at the distribution center level?

Yes, the distribution centers are performing as well as they ever have been, as we've talked about over the last couple of years. We've made changes to the way in which we've organized our operations teams and made it more of a centralized function that's enabled us to put more consistent processes into the network. And I think what you're seeing in the recent quarters is the result of really, really good, disciplined hard work from our supply chain and operations teams around the country. We've got a great leader in that part of our business, and we have opportunities to continue to get better. So we're excited.

That 800 basis point increase is not off of a low base. It sort of seems like a dramatic step up, and it was in the prepared remarks. So I was wondering if there was something that needed fixing?

It really wasn't. It wasn't, Bret. I think, quite frankly, some of these metrics that we put into a more standardized way are new to the buildings. Not every building was using the same metrics. And so, one of the nice things about having consistent processes is you can level up everybody across the network. So nothing really to read into the improvement.

Okay. Great. And then I think also in the prepared remarks, you talked about a tool offering. Is there any more color we could get on that? Is that a new category for '25?

It's not a new category. It's a super important category. So if you look at the tools and equipment industry, we estimate it to be a 10+ billion market opportunity. We played in that market space forever. And as we looked at and listened to the feedback from our customers, we took that input to reimagine a more effective assortment strategy. And so, we've got a brand today. We're making it better. It's targeting particularly the professional repair shop - so as the commercial leader, it's important to have this offering. It's about an 8% category T&E for us as part of our NAPA business. And this specific offering is a much smaller portion of that, but we think it's critically important to take care of that professional repair technician.

We're simplifying and streamlining the assortment from think of it as a good, better, best to a more focused two-tier brand strategy.

Okay. Thank you.

Thanks, Bret.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.