Genuine Parts (NYSE:GPC) reported third-quarter 2026 sales growth of 4% and adjusted earnings per share growth of about 5%, as strength in its Industrial business helped offset softer automotive demand tied to higher fuel costs and cautious consumer conditions.
Total sales rose to $6.5 billion, up more than $250 million from a year earlier. Adjusted diluted earnings per share were $2.07. Gross margin expanded 70 basis points to 38.1%, supported by pricing and sourcing initiatives, while adjusted EBITDA margin was flat at 8.4% as higher operating costs offset those gains.
Management also said its planned separation into independent Automotive and Industrial public companies remains on track for completion in the first quarter of 2027. The company plans to provide further details on each business at Investor Days in New York City on Dec. 8 and Dec. 9.
Industrial segment leads growth
Industrial sales totaled $2.4 billion, rising 6% year over year, with comparable sales up 5.5%. Price inflation contributed roughly 2% to the segment’s sales growth. Segment EBITDA increased about 11% to $317 million, while EBITDA margin rose 60 basis points to 13.2%.
Chairman and CEO Will Stengel said Motion’s core break-fix maintenance, repair and operations business, which represents about 80% of segment sales, grew approximately 5% during the quarter. The remaining, more capital-intensive portion of sales increased nearly 10%.
The company cited nine consecutive Purchasing Managers’ Index readings above 50, deferred maintenance activity and delayed customer investments beginning to move forward. Stengel also said investment in data centers and artificial-intelligence infrastructure was positively affecting the wider manufacturing economy.
Genuine Parts recorded growth in 12 of the 14 industrial end markets it tracks, including high-single-digit growth in equipment and machinery. Food products, iron and steel, automotive, fabricated metals, distribution and logistics, oil and gas extraction, and equipment rental and leasing also grew. Lumber and wood, along with rubber and plastics, experienced softer demand.
Chief Financial and Operating Officer Bert Nappier said Industrial demand remained solid entering October, though the company is taking a prudent view of the fourth quarter because of holiday-related production schedules among customers.
Automotive results reflect commercial resilience and retail pressure
North America Automotive sales increased about 2%, with comparable sales also up about 2%. Segment EBITDA was $194 million, or 7.6% of sales, down 40 basis points from the prior-year period.
In the U.S., total sales rose roughly 1.5% and comparable sales increased about 2%. Pricing contributed approximately 2.5% to sales growth. Company-owned store comparable sales rose about 3.5%, including approximately 5% growth in commercial sales. Independent same-store purchases were slightly higher than a year earlier.
Across the NAPA system, including sales from company-owned and independent locations to end customers, comparable sales grew about 3%. Commercial customer sales increased about 4%, while retail customer sales fell approximately 3%.
Stengel attributed the retail pressure to higher fuel prices, persistent inflation and a recent interest-rate increase. Management said the effects of the conflict in Iran have weighed on consumer sentiment and automotive demand across geographies, particularly on the retail side.
Nappier said North America Automotive’s margin decline reflected higher freight, fuel and rent costs, which totaled $15 million year over year, as well as a merit increase for NAPA’s U.S. hourly workforce. He said that absent inflation-driven costs, the segment would have posted a 20-basis-point margin improvement.
In Canada, sales increased approximately 9% in local currency and comparable sales rose 1%. The Benson acquisition was performing ahead of plan financially and operationally, according to Stengel.
International Automotive sales rose 4.5%, with comparable sales up about 1%. Segment EBITDA increased about 5% to $141 million, while its 9.0% EBITDA margin was unchanged. European local-currency sales rose around 4%, with comparable sales up 1%, including improved recent performance in the United Kingdom. Asia-Pacific local-currency sales increased about 2%, with comparable sales up about 1%; its two-wheel motorcycle business generated double-digit local-currency sales growth.
Inflation and Iran-related costs shape outlook
Nappier said the company estimated the Iran conflict reduced third-quarter EBITDA by $16 million, or $0.09 per share, primarily through higher freight and fuel costs. Fuel and diesel prices were up 30% and 50%, respectively, from the prior year, management said.
Healthcare costs increased about 15% during the quarter, while freight expense rose 12%. Adjusted selling, general and administrative expense as a percentage of sales increased 70 basis points to 29.5%.
The company incurred about $200 million of restructuring costs year to date and realized $105 million in savings, including approximately $36 million in the third quarter. Third-quarter reported results also included $87 million in pretax costs related to restructuring and the planned separation, including $21 million of separation-related costs, primarily third-party advisory fees.
For the full year, Genuine Parts narrowed its adjusted EPS outlook to $7.50 to $7.75, representing 3.5% growth at the midpoint compared with 2025. It expects reported diluted EPS of $5.60 to $5.85. Nappier said the company expects to finish the year toward the lower end of its adjusted guidance range.
The company now expects Iran-related incremental costs of $30 million to $40 million in the second half, compared with its earlier forecast of $20 million to $30 million. Nappier said the company expects about 2.5% price inflation through the remainder of 2026 but was not prepared to provide a 2027 inflation forecast.
Separation preparations continue
The company said Court Carruthers will become chief executive officer of GPC following the separation, with Nappier serving as chief financial and operating officer. Stengel is set to become chairman and chief executive officer of Motion.
Carruthers, who had spent six weeks in the role at the time of the call, emphasized customer service, field execution, independent-owner partnerships and supply-chain modernization. He said GPC would take a market-by-market approach to its company-owned and independent store mix.
Management highlighted a new automated NAPA distribution center in eastern Pennsylvania that opened on time and on budget during the third quarter. Carruthers said the facility is intended to expand product availability while creating productivity and real-estate consolidation opportunities. A second U.S. NAPA distribution center is expected to begin operations by year-end.
Year to date, Genuine Parts generated $817 million in operating cash flow and approximately $500 million in free cash flow. It invested approximately $315 million in capital expenditures and returned about $434 million to shareholders through dividends.
About Genuine Parts (NYSE:GPC)
Genuine Parts Company (NYSE:GPC) is a distributor of automotive and industrial replacement parts. Its Automotive Parts Group supplies components and accessories for cars, trucks and other vehicles, serving professional repair shops, commercial customers and do-it-yourself consumers through distribution networks, stores and digital channels.
The company’s Industrial Parts Group distributes products used to maintain and repair manufacturing, commercial and other industrial equipment. Its offerings include bearings, power-transmission components, motion-control products, industrial supplies and related maintenance, repair and operations products.
