Genuine Parts NYSE: GPC executives outlined leadership plans, operating priorities and separation preparations as the company moves toward creating standalone automotive and industrial businesses.
Chairman and Chief Executive Officer Will Stengel said the leadership selections were designed around aligning talent with business strategy, maintaining continuity and ensuring Motion can operate as a public company immediately following the separation.
Stengel is set to become chairman and CEO of Motion, the industrial business, while Bert Nappier, currently executive vice president, chief financial officer and chief operating officer, will take on expanded responsibilities on the automotive side. The company also named Court as CEO-elect of GPC's automotive business. Stengel said Court brings automotive experience, distribution expertise, board familiarity and experience in supply chain, technology, global sourcing and e-commerce.
Motion Focused on Organic Growth and Bolt-On Deals
Stengel said Motion's strategy is already established and will not undergo a major change because of the separation. He highlighted opportunities to expand wallet share with existing customers, improve margins through pricing and sourcing, and pursue acquisitions.
“The special sauce of Motion is just the way in which it interacts with its customers,” Stengel said, describing the company as deeply embedded in customers’ operations.
Motion expects bolt-on acquisitions to be its primary M&A focus initially, given the fragmentation of its markets. Stengel said the company has demonstrated it can complete larger transactions, citing the KDG acquisition, but stressed that management will remain disciplined in deploying M&A capital.
Data-center infrastructure is not currently a material part of Motion’s business, according to Stengel. However, he said the company sees a medium-term opportunity through offerings such as hose fittings and specialty solutions, supported by relationships with hyperscale customers and suppliers.
Stengel also welcomed Howard Yu as Motion’s CFO. Yu previously led a spin-off from Danaher and brings public-company, capital-markets and capital-allocation experience, Stengel said.
Automotive Priorities Include U.S. Supply Chain Modernization
Nappier said the automotive business is preparing for day-one readiness while maintaining momentum in its current operations. Its priorities include supply-chain modernization, sales excellence and continued improvements at company-owned stores.
The company has two new U.S. distribution centers coming online this year and has approved three more. One returns-oriented distribution center opened in August, while a core distribution center is expected to open later in the fall. Nappier said the company expects to redesign its North American network over time, potentially reducing the current footprint of about 60 distribution centers while increasing efficiency and technology use.
Genuine Parts has also built a robotics lab outside Atlanta where vendors can test technologies, including robotics and shelf-moving systems. Nappier said the company expects to fund its U.S. supply-chain investment within its existing capital-expenditure envelope by reallocating spending previously directed to international projects.
On sales, Nappier said the company is focused on gaining wallet share, improving field execution and supporting its independent owners. Independent owners account for about 60% of the company’s North American automotive footprint.
Stengel said the company is in “inning one” of applying the tools used in company-owned stores to its independent-owner network. He pointed to company-owned store performance that improved from a negative 0.5% comparable-sales result two years ago to mid-single-digit comparable growth at the start of the year. Nappier added that the top quartile of independent owners posted 5% growth in the second quarter.
Separation Work Remains on Track
Nappier said the separation program is divided into three areas: operational separation work, regulatory and audit requirements, and capital-markets preparation. A dedicated project-management team is handling contract and systems separation, as well as process redesign, while the operating teams continue to serve customers and execute the day-to-day business.
The standalone audit for Motion and the company’s Form 10 filing are in progress, and Nappier said SEC-related work is on track. He said the company does not currently see anything that would move the expected first-quarter timing, although the SEC review process remains outside the company’s control.
Automotive and Motion investor days are scheduled for Dec. 8 and Dec. 9, respectively, in New York.
Management is targeting investment-grade credit ratings for both companies. Nappier said Motion is expected to emphasize organic growth and M&A, followed by capital expenditures and shareholder returns. Automotive is expected to prioritize capital spending, particularly for its U.S. supply chain, while continuing to pursue bolt-on acquisitions in Europe and potentially the U.S.
The company has not yet announced specific dividend policies for the separate businesses. Nappier said management is reviewing capital allocation with “no sacred cows” and plans to provide more detail at the December investor days.
Demand, Pricing and Margin Commentary
Stengel said the company has seen sequential improvement in its automotive business through the first half and no material change from the demand trends it previously disclosed. He noted that approximately 80% of the automotive business is business-to-business, limiting its exposure to retail do-it-yourself demand trends.
Management expects pricing to remain a low-single-digit benefit for both businesses for the balance of the year. While commodity-related price pressures could create some additional lift, Stengel said the company intends to remain methodical in passing through increases to customers.
Nappier declined to provide 2027 guidance but said both businesses have opportunities for operating-profit and margin expansion through gross-margin initiatives, cost management, sales capabilities and improved inventory availability. He also said the company is taking a measured approach to artificial intelligence, focusing initially on data governance and applications that could improve inventory management, operating efficiency and sales-force productivity.
About Genuine Parts (NYSE:GPC)
Genuine Parts Company NYSE: GPC is a global distributor of automotive and industrial replacement parts. Founded in 1928 and headquartered in Atlanta, Georgia, the company serves professional customers, businesses and consumers through a broad network of distribution centers, stores and service locations.
Through its automotive parts operations, including the NAPA brand in North America and other regional businesses, Genuine Parts distributes replacement parts, accessories, tools and equipment for cars, trucks and other vehicles.
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