GPC Q3 Sales Rise 4.2% as Industrial Strength Offsets Automotive Pressure

GPC reported higher third-quarter sales and adjusted earnings as strong Industrial results and gross-margin improvement offset weaker profitability in North America Automotive. The company narrowed its 2026 adjusted diluted EPS outlook to $7.50 to $7.75 from $7.50 to $8.00, while leaving its sales, adjusted EBITDA and cash-flow forecasts unchanged.

For the quarter ended September 30, 2026, sales rose 4.2% year over year to $6.52 billion. Gross margin increased 70 basis points to 38.1%, while adjusted EBITDA advanced 4.2% to $548.7 million. Adjusted EBITDA margin was unchanged at 8.4%.

Adjusted net income increased to $285.9 million from $275.6 million, and adjusted diluted EPS rose 4.5% to $2.07 from $1.98. On a GAAP basis, net income was $224.4 million, compared with $226.2 million a year earlier, while diluted EPS was unchanged at $1.62.

The gap between GAAP and adjusted results included $64.5 million of restructuring and other costs, $21.2 million of expenses related to the planned separation of the company’s automotive and industrial operations, and $803,000 of acquisition and integration-related costs and other items.

Adjusted selling, administrative and other expenses represented 29.5% of sales, up from 28.8% in the prior-year quarter, partly offsetting the benefit from the stronger gross margin.

Industrial business leads profit growth

Industrial sales increased 6.1% to $2.41 billion, with comparable sales up 5.5%. Segment EBITDA climbed 11.2% to $316.9 million, and the EBITDA margin expanded 60 basis points to 13.2%.

The business recorded growth in 12 of its 14 end markets, with sequential improvement in eight. Maintenance, repair and operations sales grew about 5%, supported by large corporate accounts, while the value-added solutions business expanded nearly 10% and improved sequentially from the second quarter.

North American Industrial sales rose 6.1% in local currency, while Australasia sales declined 0.8%.

Automotive sales rise as North American margins contract

North America Automotive sales increased 2.2% to $2.54 billion, with comparable sales up 1.7%. Segment EBITDA declined 2.9% to $193.9 million, and the EBITDA margin fell 40 basis points to 7.6%. Gross margin was broadly stable at 39.1%, but operating expenses rose to 31.5% of sales from 31.1%.

In the U.S., company-owned stores generated comparable sales growth of about 3.5%, including approximately 5% growth in commercial sales. GPC said the Benson acquisition continued to support performance, with financial and operational results tracking ahead of plan. Total sales increased 1.4% in the U.S. and 8.9% in Canada on a local-currency basis.

International Automotive sales rose 4.5% to $1.57 billion, while comparable sales increased 1.1%. Segment EBITDA gained 4.7% to $141.4 million, with the EBITDA margin unchanged at 9.0%. Europe’s comparable sales improved sequentially from the second quarter, with the most notable improvement in the UK, while Australasia delivered what the company described as a solid quarter despite a challenging operating environment.

2026 EPS outlook narrowed

GPC now expects 2026 GAAP diluted EPS of $5.60 to $5.85, down from its previous range of $5.90 to $6.40. Its adjusted diluted EPS forecast was narrowed to $7.50 to $7.75 from $7.50 to $8.00, implying adjusted EPS growth of 2% to 5%.

The company maintained its expectations for total sales growth of 3% to 5.5%, comparable sales growth of 2% to 4%, and adjusted EBITDA of $2.0 billion to $2.2 billion. It also continues to forecast adjusted gross-margin improvement of 40 to 60 basis points.

Operating cash flow is expected to total $1.0 billion to $1.2 billion in 2026, with free cash flow of $550 million to $700 million. Capital expenditures are projected at $450 million to $500 million.

For the first nine months of 2026, operating cash flow was $816.6 million and free cash flow was $502.2 million. The company paid $434 million in dividends and invested $314 million in capital expenditures during the period. Its 2026 cash dividend is $4.25 per share, up 3.2% from 2025.

Separation remains targeted for early 2027

GPC said the planned separation of its Global Automotive and Global Industrial businesses remains on track for completion in the first quarter of 2027. Leadership teams have been announced, and investor days are scheduled for December 8 and 9 in New York City.

The outlook incorporates current business trends, growth plans, strategic initiatives, the global economic outlook, trade conditions and geopolitical conflicts. Risks identified by the company include persistent inflation, tariffs, weaker consumer confidence, slowing product demand, volatile exchange rates, higher fuel and freight costs, supplier disruption, competitive pricing pressure and challenges in executing the separation and global restructuring initiatives.