What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-22 · 341 added, 230 removed, 935 unchanged (38% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Genuine Parts Company and Subsidiaries

To the Shareholders and the Board of Directors of Genuine Parts Company

Opinion on the Financial Statements

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Loss Contingencies Related to Product Liabilities

Description of the Matter As disclosed in Notes 1 and 16 to the consolidated financial statements, the Company is subject to pending product liability lawsuits resulting from its national distribution of automotive parts and supplies.

The Company accrues for loss contingencies related to product liabilities if it is probable that the Company will incur a loss and the loss can be reasonably estimated.

The amount accrued for product liabilities as of December 31, 2023 was $244 million.

Auditing the Company’s loss contingencies related to product liabilities was complex due to the significant measurement uncertainty associated with the estimate, management’s application of significant judgment and the use of valuation techniques.

In addition, the loss contingencies related to product liabilities are sensitive to significant management assumptions, including the number, type, and severity of claims incurred and estimated to be incurred in future periods.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant controls over the Company’s process for estimating loss contingencies related to product liabilities.

Asbestos-Related Product Liability

Description of the Matter As disclosed in Notes 1 and 16 to the consolidated financial statements, the Company is subject to pending asbestos-related product liability lawsuits resulting from its distribution and sale of asbestos-containing brake and friction products.

The Company accrues for asbestos-related product liabilities if it is probable that the Company has incurred a loss and the amount of the loss can be reasonably estimated.

The amount accrued for the asbestos-related product liability as of December 31, 2024 was $256 million.

Auditing the Company’s asbestos-related product liability required complex judgments due to the significant measurement uncertainty associated with the estimate and the use of valuation techniques.

In addition, the asbestos-related product liability is sensitive to significant management assumptions, including the number of future claims and costs of resolving claims.

For example, we tested controls over management's review of the significant assumptions described above and the reconciliation of claims data to that used by the Company’s actuarial specialist.

To test the estimated loss contingencies related to product liabilities, our audit procedures included, among others, assessing the methodology used, testing the significant assumptions, including testing the completeness and accuracy of the underlying data, and comparing significant assumptions to historical claims as well as external data.

We evaluated the legal letters obtained from internal and external legal counsel, held discussions with legal counsel, and performed a search for new or contrary evidence affecting the estimate.

We involved our actuarial specialists to assist in our evaluation of the methodology and assumptions used by management and to independently develop a range of estimated product liabilities using the Company’s historical data as well as other information available for similar cases.

We compared the Company's estimated loss contingencies related to product liabilities to the range developed by our actuarial specialists.

To test the estimated asbestos-related product liability, our audit procedures included, among others, assessing the methodology used, testing the significant assumptions, including testing the completeness and accuracy of the underlying data, and comparing significant assumptions to historical claims as well as external data.

We evaluated the legal letters obtained from internal and external legal counsel and held discussions with legal counsel.

We involved our actuarial specialists to assist in our evaluation of the methodology and assumptions used by management and to independently develop a range of the estimated asbestos-related product liability.

We compared the Company's estimated asbestos-related product liability to the range developed by our actuarial specialists.

We also assessed the adequacy of the Company’s disclosures, included in Notes 1 and 16 to the consolidated financial statements, in relation to this matter.

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Provision for doubtful accounts 30,001 25,947 19,791

Restructuring and other costs 213,520 — —

Total operating expenses 7,294,399 6,543,619 6,125,905

Non-operating expenses (income):

Non-operating (income) expense:

Interest expense, net 96,827 64,469 73,887

Other ( 43,579 ) ( 59,764 ) ( 32,290 )

Total non-operating expenses (income) 4,705 41,597 ( 37,426 )

Total non-operating expenses 53,248 4,705 41,597

Income before income taxes 1,175,968 1,742,348 1,572,602

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Net income $ 904,076 $ 1,316,524 $ 1,182,701

Other comprehensive income (loss), net of income taxes:

Other comprehensive (loss) income, net of income taxes:

Foreign currency translation adjustments ( 221,812 ) 64,429 ( 143,890 )

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( 63,059 ) ( 11,331 ) ( 43,383 )

Other comprehensive income (loss), net of tax 55,670 ( 174,803 ) 178,763

Other comprehensive (loss) income, net of tax ( 284,871 ) 55,670 ( 174,803 )

Comprehensive income $ 619,205 $ 1,372,194 $ 1,007,898

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Purchase of stock ( 1,572,219 ) ( 1,572 ) — — ( 221,154 ) ( 222,726 ) — ( 222,726 )

Cumulative effect from adoption of ASU No.

2019-12 — — — — 6,223 6,223 — 6,223

Noncontrolling interest activities — — — — — — 1,536 1,536

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Share-based compensation 40,693 57,226 38,058

Gain on sale of real estate — ( 102,803 ) —

Gains on sales of real estate ( 43,049 ) — ( 102,803 )

Other operating activities 47,473 ( 41,626 ) 18,377

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Trade accounts payable 512,347 2,038 676,406

Other assets and liabilities ( 254,036 ) ( 71,016 ) ( 200,411 )

Operating lease right-of-use asset 634,448 344,580 370,476

Other current and noncurrent assets ( 122,864 ) ( 168,742 ) ( 19,948 )

Operating lease current and noncurrent liabilities ( 662,641 ) ( 355,335 ) ( 372,733 )

Other current and noncurrent liabilities 42,876 ( 74,539 ) ( 48,811 )

Net cash provided by operating activities 1,251,251 1,435,610 1,466,971

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Proceeds from sale of property, plant and equipment 122,432 25,099 145,007

Acquisitions of businesses ( 1,080,238 ) ( 306,881 ) ( 1,690,208 )

Proceeds from divestitures of businesses 1,631 10,754 33,604

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Proceeds from settlement of net investment hedge 15,990 — 158,441

Acquisitions and other investing activities ( 309,452 ) ( 1,681,660 ) ( 284,315 )

Other investing activities — ( 2,571 ) 8,548

Net cash used in investing activities ( 1,507,524 ) ( 705,792 ) ( 1,684,240 )

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Effect of exchange rate changes on cash and cash equivalents ( 31,807 ) 10,887 ( 49,070 )

Net increase (decrease) in cash and cash equivalents 448,544 ( 61,238 ) ( 275,465 )

Net (decrease) increase in cash and cash equivalents ( 622,016 ) 448,544 ( 61,238 )

Cash and cash equivalents at beginning of year 1,102,007 653,463 714,701

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Genuine Parts Company is a distributor of automotive replacement parts and industrial parts and materials.

We serve a diverse customer base through a network of more than 10,700 locations throughout North America, Europe, and Australasia and, therefore, have limited exposure from credit losses to any particular customer, region, or industry segment.

We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral.

We have evaluated subsequent events through the date the financial statements were issued.

We serve a diverse customer base through a network of more than 10,700 locations throughout North America, Europe, and Australasia.

Principles of Consolidation

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Intercompany accounts and transactions have been eliminated in consolidation.

Certain prior year amounts are reclassified to conform to the current year presentation.

These reclassifications had no impact on our previously reported total assets, total liabilities, results of operations, comprehensive income or net cash flows from operating, financing or investing activities.

We have evaluated subsequent events through the date the financial statements were issued.

Use of Estimates

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Revenue Recognition

We primarily recognize revenue at the point the customer obtains control of the products or services and at an amount that reflects the consideration expected to be received for those products or services.

We recognize revenue at the point the customer obtains control of the products or services and at an amount that reflects the consideration expected to be received for those products or services.

Revenue is recognized net of allowances for returns, variable consideration and any taxes collected from customers that will be remitted to governmental authorities.

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Arrangements with customers that include payment terms extending beyond one year are not significant.

Liabilities for customer incentives, discounts, or rebates are included in other current liabilities in the consolidated balance sheets.

Liabilities for customer incentives, discounts, sales returns or rebates are included in other current liabilities in the consolidated balance sheets.

Product Distribution Revenues

We generate revenue primarily by distributing products through wholesale and retail channels.

We generate revenue primarily by distributing products through wholesale and, to a lesser extent, retail channels.

For wholesale customers, revenue is recognized when title and control of the goods has passed to the wholesale customer.

Retail revenue is recognized at the point of sale when the goods are transferred to customers and consideration is received.

Shipping and handling activities are performed prior to the customer obtaining control of the products.

Certain shipping and handling activities may be performed prior to the customer obtaining control of the products.

Costs associated with shipping and handling to our customers are considered costs to fulfill a contract and are included in selling, administrative and other expenses in the period they are incurred.

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We estimate variable consideration based on historical experience to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to a customer.

We recognize estimated variable consideration as an adjustment to the transaction price when control of the related product or service is transferred.

We recognize estimated variable consideration as an adjustment to the transaction price

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when control of the related product or service is transferred.

The realization of variable consideration occurs within a short period of time from product delivery;

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While we have a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which we operate could result in higher than expected defaults and, therefore, the need to revise estimates for bad debts.

We have limited exposure from credit losses to any particular customer, region, or industry segment.

We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral.

For the years ended December 31, 2024, 2023, and 2022, we recorded provisions for doubtful accounts of approximately $ 30 million, $ 26 million, and $ 20 million, respectively.

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Merchandise Inventories, Including Consideration Received From Vendors

Merchandise inventories are valued at the lower of cost or net realizable value.

Merchandise inventories are valued at the lower of cost or either market value or net realizable value, as applicable.

Cost is determined by the last-in, first-out ("LIFO") method for a majority of U.S.

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and certain other inventories.

If the FIFO method had been used in place of LIFO, cost would have been approximately $ 880 million and $ 835 million higher than reported at December 31, 2023 and 2022, respectively.

If the FIFO method had been used in place of LIFO, the carrying cost of inventory in the consolidated balance sheets would have been approximately $ 896 million and $ 880 million higher than reported at December 31, 2024 and 2023, respectively.

Reductions in certain industrial parts inventories resulted in liquidations of LIFO inventory layers, which reduced cost of goods sold by immaterial amounts in 2024 and 2023.

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Prepaid expenses and other current assets consist primarily of consideration receivable from vendors, prepaid expenses, income taxes and other miscellaneous receivables.

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The following table provides a reconciliation of prepaid expenses and other current assets reported within the consolidated balance sheets at December 31:

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A component is a reporting unit if the component constitutes a business for which discrete financial information and operating results are available and management regularly reviews that information.

However, we may aggregate two or more components of an operating segment into a single reporting unit if the components have similar economic characteristics.

However, we aggregate two or more components of an operating segment into a single reporting unit if the components have similar economic characteristics and the other aggregation requirements are met.

To review goodwill at a reporting unit for impairment, we generally elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

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If we elect not to perform a qualitative assessment or conclude from our assessment of qualitative factors that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we must perform a quantitative test to evaluate goodwill impairment.

To perform a quantitative test, we calculate the fair value of the reporting unit and compare that amount to the reporting unit's carrying value.

To perform a quantitative test, we estimate the fair value of the reporting unit and compare that amount to the reporting unit's carrying value.

We typically calculate the fair value by using a combination of a market approach and an income approach that is based on a discounted cash flow model.

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Impairment losses, if any, are measured based upon the difference between the carrying amount and the fair value of the assets.

There were no impairment losses in 2023.

In 2022 and 2021, we recognized losses related to impairments and disposals of $ 17 million and $ 61 million, respectively.

Refer to the Goodwill and Other Intangible Assets Footnote and the Property, Plant and Equipment Footnote for more information on the losses that occurred in 2022 and 2021, respectively.

There were no significant impairment losses in 2024 or 2023.

In 2022, we recognized losses related to impairments and disposals of $ 17 million.

Refer to the Goodwill and Other Intangible Assets Footnote for more information on the losses that occurred in 2022.

Other assets consist primarily of cash surrender value of life insurance policies, equity method and other investments, guarantee fees receivable, and deferred compensation benefits.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.

Depreciation and amortization are primarily determined on a straight-line basis over the following estimated useful lives of each asset:

Property, plant and equipment are carried at cost less accumulated depreciation.

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We capitalize software costs and classify them within property, plant, and equipment, with the associated depreciation reflected as depreciation expense.

These software costs include the costs of developing or obtaining internal-use software, such as external direct costs of materials and services, payroll and benefits costs, interest costs, and costs to develop or obtain software that allows for access or conversion of historical data by new systems.

We capitalize costs when the preliminary project stage is complete, management has authorized and committed to funding the software project, it is probable that the software project will be completed, and it is probable that the software will be used to perform the intended function.

Cost capitalization ceases when the software project is substantially complete and ready for its intended use.

Costs that are associated with the preliminary stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred.

Depreciation is primarily determined on a straight-line basis over the following estimated useful lives of each asset:

buildings, 10 to 40 years;

machinery and equipment, 5 to 15 years;

software, 3 to 5 years;

furniture and fixtures, 5 to 15 years;

capitalized software, generally 3 to 5 years, but up to 20 years for strategic investments in enterprise resource planning and other core systems with low obsolescence risk;

and the shorter of lease term or useful life for leasehold improvements.

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A reserve for claims incurred but not reported is developed by analyzing historical claims data provided by our claims administrators.

These reserves are

included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.

These reserves are included in accrued expenses in the accompanying consolidated balance sheets as the expenses are expected to be paid within one year.

Long-term insurance liabilities consist primarily of reserves for our workers’ compensation program.

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If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.

Legal and Product Liabilities

We accrue for potential losses related to legal disputes, litigation, product liabilities, and regulatory matters when it is probable (the future event or events are likely to occur) that we will incur a loss and the amount of the loss can be reasonably estimated.

The product liability amount reflects our reasonable estimate of losses based upon currently known facts.

To calculate the liability, we estimate potential losses relating to pending claims and also estimates the likelihood of additional, similar claims being filed against us in the future.

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Legal and Asbestos Liabilities

We accrue for potential losses related to legal disputes, litigation, asbestos liability, and regulatory matters when it is probable (the future event or events are likely to occur) that we have incurred a loss and the amount of the loss can be reasonably estimated.

The asbestos-related product liability amount reflects our reasonable estimate of losses based upon currently known facts.

To calculate the liability, we estimate potential losses relating to pending claims and also estimate the likelihood of additional, similar claims being filed against us in the future.

To estimate potential losses on claims that could be filed in the future, we consider claims pending against us, claim filing rates, the number of codefendants and the extent to which they share in settlements, and the amount of loss by claim type.

The estimated losses for pending and potential future claims are calculated on a discounted basis using risk-free interest rates derived from market data about monetary assets with maturities comparable to those of the projected product liabilities.

We use an actuarial specialist to assist with measuring our product liabilities.

We use an actuarial specialist to assist with measuring our asbestos liability.

Fair Value Measurements

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These involve fair value measurements on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy.

The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable, trade accounts payable, and borrowings under the line of credit approximate their respective fair values based on the short-term nature of these instruments.

The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments.

Fair value measurement using unobservable inputs is inherently uncertain, and the use of different methodologies or assumptions to determine the fair value instruments could result in a different fair value measurement at the reporting date.

There have been no changes in the methodologies used since December 31, 2022.

There have been no changes in the methodologies used during the periods presented.

Derivatives and Hedging

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When a designated instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively.

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Shipping and Handling Costs

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Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes.

In addition, valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be

In addition, valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.

In making this determination, we consider all available positive and negative evidence including projected future taxable income, future reversals of existing temporary differences, recent financial operations and tax planning strategies.

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Diluted earnings per share $ 6.47 $ 9.33 $ 8.31

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Recent Accounting Pronouncements

Changes to U.S.

GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standard Updates (“ASUs”) to the FASB Accounting Standards Codification (“ASC”).

We consider the applicability and impact of all ASUs and any not listed below were assessed and determined to be not applicable or are expected to have a minimal impact on our consolidated financial statements.

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This standard removes certain exceptions for performing intraperiod tax allocations, requires recognition of deferred taxes for investments, and requires calculating income taxes in interim periods.

The guidance also simplifies the accounting for franchise taxes, transactions that result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods.

We adopted ASU 2019-12 as of January 1, 2021, and recognized a cumulative-effect adjustment to increase opening retained earnings by $ 6 million.

Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

This standard requires disclosure of the key terms of outstanding supply chain finance programs and a rollforward of the related amounts due to vendors participating in these programs.

The new standard does not affect the recognition, measurement or financial statement presentation of any amounts due.

The guidance was effective in the first quarter of 2023, except for the rollforward, which is effective for our Quarterly Report on Form 10-Q for the period ended March 31, 2024.

We adopted ASU 2022-04, including the early adoption of the rollforward, during the year ended December 31, 2023.

For additional information, refer to the Supply Chain Finance Programs Footnote.

GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”) to the FASB Accounting Standards Codification (“ASC”).

We consider the applicability and impact of all ASUs and any not listed below were assessed and determined to not be applicable or are expected to have an immaterial impact on our Consolidated Financial Statements.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This standard requires disclosure in the notes to financial statements, at each interim and annual reporting period, of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption.

Also required is a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated.

This guidance is effective for all public entities for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and early adoption is permitted.

This guidance should be applied either prospectively to financial statements issued after the effective date of this update or retrospectively to all prior periods presented in the financial statements.

We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

Segment Reporting (Topic 280):

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Improvements to Reportable Segment Disclosures.

This standard requires disclosures of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of other segment items by reportable segment, and all annual disclosures

currently required by Topic 280 to be included in interim periods.

The guidance is effective for our Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted.

We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

This standard also requires disclosure of the title and position of the CODM.

We adopted this standard effective December 31, 2024.

Income Taxes (Topic 740):

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The standard requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items, income before tax expense disaggregated between domestic and foreign, income tax expense disaggregated by federal, state and foreign, as well as further information on income taxes paid.

The guidance is effective for our Annual Report on Form 10-K for the year ended December 31, 2025, with early adoption permitted.

The guidance is effective for the year ended December 31, 2025, with early adoption permitted.

The guidance should be applied on a prospective basis, with retrospective application permitted.

We are currently evaluating the impact of adopting this standard on our financial statements and disclosures.

Segment Information

Our reportable segments consist of the Automotive Parts Group ("Automotive") and Industrial Parts Group ("Industrial").

Within the reportable segments, certain of our operating segments are aggregated since they have similar economic characteristics, products and services, type and class of customers, and distribution methods.

Our Automotive segment distributes replacement parts (other than body parts) for substantially all makes and models of automobiles, trucks, and other vehicles.

Our Automotive segment distributes replacement parts (other than collision parts) for substantially all makes and models of automobiles, trucks, and other vehicles.

Our Industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, including hydraulic and pneumatic products, material handling components and related parts and supplies.

Inter-segment sales are not significant.

Segment profit for each industry segment is calculated as net sales less costs of goods sold, operating expenses, and certain non-operating expenses attributable to the segment (e.g., foreign currency), excluding general corporate expenses, net interest expense, intangible asset amortization, and other unallocated amounts that are primarily driven by corporate initiatives.

Approximately $ 415 million, $ 577 million and $ 472 million of income before income taxes were generated in jurisdictions outside the U.S.

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Corporate assets are principally cash and cash equivalents and headquarters’ facilities and equipment.

The following table presents a summary of our reportable segment financial information:

During the fourth quarter of 2024, we changed our segment profit measure to segment earnings before interest, taxes, depreciation and amortization ("EBITDA").

We believe that Segment EBITDA and Segment EBITDA margin are useful measures because they allow management, analysts, investors, and other interested parties to evaluate the profitability of our business operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest) and tax strategies (income taxes).

In addition, EBITDA is a metric included in certain long term incentive compensation plans.

Our President and Chief Executive Officer is our Chief Operating Decision Maker ("CODM") and uses segment EBITDA to assess segment operating performance and allocate resources among our segments.

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The significant segment expenses regularly provided to the CODM are total cost of sales and total other operating expenses.

Total other operating expenses represent all other costs of operating our segments, such as personnel, freight and delivery, facility, technology, marketing costs, as well as items such as foreign currency.

Automotive Segment

The following table presents a summary of our reportable automotive segment financial information:

(in thousands) 2024 2023 2022

Automotive $ 14,246,783 $ 13,666,634 $ 12,544,131

Industrial 8,843,827 8,429,339 6,326,379

Total net sales $ 23,090,610 $ 22,095,973 $ 18,870,510

Segment profit:

Net sales $ 14,769,133 $ 14,246,783 $ 13,666,634

Cost of goods sold 8,831,702 8,584,065 8,299,239

Gross profit 5,937,431 5,662,718 5,367,395

Operating expenses 4,653,900 4,323,584 3,993,194

EBITDA $ 1,283,531 $ 1,339,134 $ 1,374,201

Gross margin (1) 40.2 % 39.7 % 39.3 %

Operating expenses as a percentage of net sales 31.5 % 30.3 % 29.2 %

EBITDA margin (2) 8.7 % 9.4 % 10.1 %

Industrial Segment

The following table presents a summary of our reportable industrial segment financial information:

(in thousands) 2024 2023 2022

Net sales $ 8,717,436 $ 8,843,827 $ 8,429,339

Cost of goods sold 6,062,301 6,210,043 6,041,655

Gross profit 2,655,135 2,633,784 2,387,684

Operating expenses 1,552,947 1,500,863 1,449,030

EBITDA $ 1,102,188 $ 1,132,921 $ 938,654

Gross margin (1) 30.5 % 29.8 % 28.3 %

Operating expenses as a percentage of net sales 17.8 % 17.0 % 17.2 %

EBITDA margin (2) 12.6 % 12.8 % 11.1 %

(1) Gross margin is gross profit as a percentage of net sales.

(2) EBITDA margin is EBITDA as a percentage of net sales.

Additional Information

The following table presents a reconciliation from EBITDA to net income:

(in thousands) 2024 2023 2022

Segment EBITDA

Automotive $ 1,283,531 $ 1,339,134 $ 1,374,201

Industrial 1,102,188 1,132,921 938,654

Total segment profit $ 2,277,716 $ 2,078,310 $ 1,668,659

Corporate EBITDA (1) ( 389,217 ) ( 314,709 ) ( 313,526 )

Interest expense, net ( 96,827 ) ( 64,469 ) ( 73,887 )

Corporate expense ( 323,721 ) ( 269,364 ) ( 174,842 )

Intangible asset amortization ( 147,178 ) ( 157,437 ) ( 103,273 )

Depreciation and amortization ( 407,978 ) ( 350,529 ) ( 347,819 )

Other unallocated costs ( 315,729 ) — ( 5,021 )

Income before income taxes 1,175,968 1,742,348 1,572,602

Income taxes 271,892 425,824 389,901

Net Income $ 904,076 $ 1,316,524 $ 1,182,701

(1) Corporate EBITDA consists of costs related to our corporate headquarter’s broad support to our business units and other costs that are managed centrally and not allocated to business segments.

These include personnel and other costs for company-wide functions such as executive leadership, human resources, technology,

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cybersecurity, legal, corporate finance, internal audit, and risk management, as well as asbestos-related product liability costs and A/R Sales Agreement fees.

The following table presents a summary of the other unallocated costs:

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Product liability adjustment (4) — — ( 28,730 )

Product liability damages award (4) — — ( 77,421 )

Loss on software disposal (5) — — ( 61,063 )

Gain on equity investment (6) — — 10,229

Restructuring and other costs (5) ( 221,007 ) — —

Acquisition and integration related costs and other (6) ( 33,126 ) — —

Inventory rebranding strategic initiative (7) ( 61,596 ) — —

Transaction and other costs (8) — — ( 80,601 )

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(3) Amount reflects insurance recoveries in excess of losses incurred on inventory, property, plant and equipment and other fire-related costs.

(3) Amount to remeasure product liability for a revised estimate of the number of claims to be incurred in future periods, among other assumptions.

(4) Amount reflects damages reinstated by the Washington Supreme Court order on July 8, 2021 in connection with a 2017 automotive product liability claim.

(5) Amount reflects a loss on an internally developed software project that was disposed of due to a change in management strategy related to advances in alternative technologies.

(6) Adjustment relates to gains recognized upon remeasurement of certain equity investments to fair value upon acquiring the remaining equity of those entities.

(7) Amount for 2022 primarily includes costs of $ 67 million associated with the January 3, 2022 acquisition and integration of KDG which includes a $ 17 million impairment charge.

(4) Adjustment to remeasure product liability for a revised estimate of the number of claims to be incurred in future periods, among other assumptions.

(5) Amount reflects costs related to our global restructuring initiative which includes a voluntary retirement offer in the U.S., inventory liquidation costs, and rationalization and optimization of certain distribution centers, stores and other facilities.

The inventory liquidation costs, recognized in cost of goods sold, total $ 7 million and arise from facility closures.

Refer to the Restructuring and Other Costs footnote in our Notes to Consolidated Financial Statements for more information.

(6) Amount primarily reflects ongoing acquisition and integration costs related to the acquisitions of MPEC in April 2024 and Walker in July 2024, including professional services costs, personnel costs, and lease and other exit costs.

Refer to the Acquisitions footnote in our Notes to Consolidated Financial Statements for more information.

(7) Adjustment reflects a charge to write down certain existing inventory associated with a new global rebranding and relaunch of a key tool and equipment offering.

The existing inventory that will be liquidated is comprised of otherwise saleable inventory, and the liquidation does not arise from our normal, recurring operational activities.

(8) Amount for 2022 primarily includes costs of $ 67 million associated with the January 3, 2022 acquisition and integration of Kaman Distribution Group ("KDG") which includes a $ 17 million impairment charge.

The impairment charge was driven by a decision to retire certain legacy trade names, classified as other intangible assets, prior to the end of their estimated useful lives as part of executing our KDG integration and rebranding strategy.

Separately, this adjustment includes an $ 11 million loss related to an investment.

Amount for 2021 includes transaction and other costs related to acquisitions.

The following table presents a summary of our reportable segment total assets:

5 unchanged sentences

Total assets $ 19,282,705 $ 17,968,454

Table of C o ntents

The following table presents a summary of select financial information by reportable segment:

36 unchanged sentences

Total net sales $ 23,486,569 $ 23,090,610 $ 22,095,973

Table of C o ntents

Goodwill and Other Intangible Assets

4 unchanged sentences

Amortization — — — ( 147,178 )

Impairments — — — ( 17,461 )

Foreign currency translation 26,068 623 26,691 28,929

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Based on these assessments, we did not recognize any goodwill impairments during 2024 or 2023.

Accumulated impairment losses for the Automotive segment were $ 506,721 as of December 31, 2024 and 2023.

We have not incurred any accumulated impairment losses for the Industrial segment.

If there are sustained declines in macroeconomic or business conditions in future periods affecting the projected earnings and cash flows at our reporting units, among other things, there can be no assurance that goodwill at one or more reporting units may not be impaired.

5 unchanged sentences

Customer relationships $ 2,350,241 $ ( 778,707 ) $ 1,571,534 $ 2,252,553 $ ( 695,934 ) $ 1,556,619

Trademarks 349,022 ( 113,123 ) 235,899 342,136 ( 85,188 ) 256,948

Non-competition agreements 5,619 ( 5,224 ) 395 5,575 ( 5,073 ) 502

Other intangibles 369,744 ( 142,246 ) 227,497 354,641 ( 118,347 ) 236,294

$ 2,719,985 $ ( 920,953 ) $ 1,799,031 $ 2,607,194 $ ( 814,281 ) $ 1,792,913

Table of C o ntents

The valuation of identifiable intangible assets utilizes significant unobservable inputs and, therefore, represents a Level 3 fair value measurement.

The estimated fair value of the identifiable intangible assets is generally determined using an income approach.

Amortization expense for other intangible assets totaled $ 143 million, $ 147 million, and $ 157 million for the years ended December 31, 2024, 2023, and 2022, respectively.

7 unchanged sentences

Machinery, equipment and other 1,675,312 1,195,950

Furniture and fixtures 649,352 633,557

Construction in progress 278,791 382,730

Property, plant and equipment, at cost 3,722,545 3,209,443

1 unchanged sentence

Property, plant and equipment, net $ 1,950,760 $ 1,616,785

We capitalize interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on our borrowings.

Total interest costs capitalized for the years ended December 31, 2024 and 2023 were $ 10.9 million and $ 7.9 million, respectively.

Accounts Receivable Sales Agreement

We have an A/R Sales Agreement to sell short-term receivables from certain customer trade accounts to the unaffiliated financial institutions on a revolving basis.

The A/R Sales Agreement has a 3 year term, which we intend to renew.

The A/R Sales Agreement has a 1 year term.

As part of the A/R Sales Agreement, we routinely sell designated pools of receivables as they are originated by it and certain U.S.

10 unchanged sentences

Total principal amount outstanding of receivables sold is approximately $ 1.0 billion and $ 1.0 billion as of December 31, 2024 and December 31, 2023, respectively.

Table of C o ntents

The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of period end:

4 unchanged sentences

The SPE incurs fees due to the unaffiliated financial institutions related to the accounts receivable sales transactions.

Those fees, which totaled $ 60 million, $ 27 million, and $ 11 million in 2023, 2022, and 2021,

respectively, are recorded within other non-operating expense (income) in the consolidated statements of income.

Those fees, which totaled $ 61 million, $ 60 million, and $ 27 million in 2024, 2023, and 2022, respectively, are recorded within other non-operating expense (income) in the consolidated statements of income.

The SPE has a recourse obligation to repurchase from the unaffiliated financial institutions any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns.

1 unchanged sentence

The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.

The weighted average interest rate on our outstanding borrowings was approximately 3.16 % and 2.33 % at December 31, 2023 and 2022, respectively.

Certain borrowings require us to comply with a financial covenant with respect to a maximum debt to EBITDA ratio.

At December 31, 2023, we were in compliance with all such covenants.

Due to the workers’ compensation and insurance reserve requirements in certain states, we also had unused letters of credit of approximately $ 71 million outstanding at December 31, 2023 and 2022.

On November 1, 2023, we issued $ 425 million of unsecured 6.50 % Senior Notes due 2028.

Simultaneously, we issued $ 375 million of unsecured 6.88 % Senior Notes due 2033.

For both offerings, interest is payable semi-annually on November 1 and May 1 of each year, beginning May 1, 2024.

We utilized the proceeds from these offerings to repay the Series F Private Placement Notes and outstanding indebtedness under the Unsecured Revolving Credit Facility and for other general corporate purposes.

On November 29, 2023, we established a commercial paper program that allows us to issue unsecured commercial paper notes up to $ 1.5 billion outstanding.

The maturities of the commercial paper notes vary but may not exceed 364 days from the date of issuance.

The commercial paper notes are sold under customary terms in the commercial paper market and will rank pari passu with unsecured and unsubordinated indebtedness.

The notes are issued at par less a discount representing an interest factor or, if interest bearing, at par.

The net proceeds of issuances of the commercial paper notes are expected to be used for general corporate purposes.

As of December 31, 2023, we had no borrowings outstanding under our commercial paper program.

The following table summarizes our debt as of December 31, 2023 and December 31, 2022:

Table of C o ntents

The following table summarizes our debt outstanding as of December 31, 2024 and December 31, 2023:

(in thousands) December 31, 2024 December 31, 2023

Unsecured Revolving Credit Facility, $ 1,500,000 , LIBOR plus 1.13 % variable, due September 30, 2026

December 2, 2013, Series F Senior Unsecured Notes, $ 250,000 , 3.24 % fixed, due December 2, 2023

June 30, 2019, Series A Senior Unsecured Notes, A$ 155,000 , 3.10 % fixed, due June 30, 2024

1 unchanged sentence

October 30, 2017, Series J Senior Unsecured Notes, € 225,000 , 1.40 % fixed, due October 30, 2024

248,355 240,840

January 6, 2022, Senior Unsecured Notes, $ 500,000 , 1.75 % fixed, due February 1, 2025

9 unchanged sentences

November 1, 2023 Senior Unsecured Notes, $ 425,000 , 6.50 % fixed, due November 1, 2028

425,000 425,000

May 31, 2019, Series A Senior Unsecured Notes, € 50,000 , 1.55 % fixed, due May 31, 2029

52,030 55,190

August 7, 2024, Senior Unsecured Notes, $ 750,000 , 4.95 % fixed, due August 15, 2029

October 30, 2017, Series L Senior Unsecured Notes, € 125,000 , 2.02 % fixed, due October 30, 2029

9 unchanged sentences

November 1, 2023 Senior Unsecured Notes, $ 375,000 , 6.88 % fixed, due November 1, 2033

375,000 375,000

May 31, 2019, Series C Senior Unsecured Notes, € 100,000 , 1.95 % fixed, due May 31, 2034

9 unchanged sentences

Thereafter 1,687,180

Table of C o ntents

Unsecured Revolving Credit Facility

On October 30, 2020, we entered into a $ 1.5 billion Syndicated Facility Agreement (as amended, the "Unsecured Revolving Credit Facility").

The Unsecured Revolving Credit Facility is scheduled to mature on September 30, 2026.

We had no outstanding borrowings under the Unsecured Revolving Credit Facility as of December 31, 2024 or December 31, 2023.

Commercial Paper Program

On November 29, 2023, we established a commercial paper program that allows us to issue unsecured commercial paper notes up to $ 1.5 billion outstanding.

The maturities of the commercial paper notes vary but may not exceed 364 days from the date of issuance.

The commercial paper notes are sold under customary terms in the commercial paper market and will rank pari passu with unsecured and unsubordinated indebtedness.

The notes are issued at par less a discount representing an interest factor or, if interest bearing, at par.

The net proceeds of issuances of the commercial paper notes are expected to be used for general corporate purposes.

We had no outstanding borrowings under our commercial paper program as of December 31, 2024 or December 31, 2023.

In the Consolidated Statement of Cash Flows, we present commercial paper activity with original maturities of three-months or less on a net basis given their short-term nature.

Notes and Other Borrowings

On August 7, 2024, we issued $ 750 million of unsecured 4.950 % Senior Notes due 2029.

Interest is payable on February 15 and August 15 of each year, beginning February 15, 2025.

On November 1, 2023, we issued $ 425 million of unsecured 6.500 % Senior Notes due 2028.

Simultaneously, we issued $ 375 million of unsecured 6.875 % Senior Notes due 2033.

For both offerings, interest is payable semi-annually on November 1 and May 1 of each year, beginning on May 1, 2024.

Certain borrowings require us to comply with a financial covenant with respect to a maximum debt to EBITDA ratio.

At December 31, 2024, we were in compliance with all such covenants.

Supply Chain Finance Programs

15 unchanged sentences

Confirmed obligations outstanding at the end of the year $ 3,331,385 $ 3,020,465

Table of C o ntents

Derivatives and Hedging

1 unchanged sentence

We have designated certain derivative instruments and a portion of our foreign currency denominated debt, a non-derivative financial instrument, as hedges of the foreign currency exchange rate exposure of our Euro-denominated net investment in a European subsidiary.

We also designated certain derivative instruments as hedges of our CAD-denominated net investment in a Canadian subsidiary.

We apply the spot method to assess the hedge effectiveness of the derivative instruments and this assessment for each instrument excludes the initial value related to the difference at contract inception between the foreign exchange spot rate and the forward rate (i.e., the forward points).

The initial value of this excluded component is recognized as a reduction to interest expense in a systematic and rational manner over the term of the derivative instrument.

All other changes in value for the net investment hedges are included in AOCL within foreign currency translation and would only be reclassified to earnings if the European subsidiary were liquidated, or otherwise disposed.

All other changes in value for the net investment hedges are included in AOCL within foreign currency translation and would only be reclassified to earnings if the European or Canadian subsidiary were liquidated, or otherwise disposed.

Upon settlement, the cash paid or received generally is reflected in investing activities in the statement of cash flows.

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The exercise of lease renewal options is at our discretion.

We evaluate renewal options at lease inception and on an ongoing basis, and include renewal options that we are reasonably certain to exercise in the expected lease terms when classifying leases and measuring lease liabilities.

We evaluate renewal options at lease inception and on an ongoing basis, and we include renewal options that we are reasonably certain to exercise in the expected lease terms when classifying leases and measuring lease liabilities.

We elected a policy of not recording leases on the consolidated balance sheets when the leases have a term of 12 months or less and we are not reasonably certain to elect an option to purchase the leased asset.

Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.

Table of C o ntents

The table below presents the locations of the operating lease assets and liabilities on the consolidated balance sheets:

19 unchanged sentences

Total operating lease liabilities $ 1,801,667

Future minimum lease payments include $ 52 million related to options to extend lease terms that are reasonably certain of being exercised.

Future minimum lease payments exclude $ 77 million related to operating leases that have not yet commenced.

These leases are expected to commence in 2024 with lease terms of 3 to 15 years.

The table below presents operating lease costs and supplemental cash flow information related to leases:

Future minimum lease payments include $ 53 million related to options to extend lease terms that we are reasonably certain to exercise.

Future minimum lease payments exclude $ 9 million related to an operating lease that has not yet commenced.

This lease is expected to commence in 2025 with a lease term of 15 years.

The table below presents operating lease costs and supplemental cash flow information related to leases for the year ended December 31:

(in thousands) 2024 2023 2022

5 unchanged sentences

Cash paid for amounts included in the measurement of operating lease liabilities is included in operating activities in the consolidated statements of cash flows.

Table of C o ntents

Employee Benefit Plans

4 unchanged sentences

No further benefits were provided after this date for additional credited service or earnings, and all participants became fully vested as of December 31, 2013.

On April 29, 2024, our Board of Directors approved the termination of the frozen U.S.

qualified defined benefit plan (pension plan), effective September 30, 2024.

We intend to transfer the management and delivery of continuing benefits associated with the pension plan to a third-party insurance company.

The pension plan settlement process involves several regulatory steps and approvals.

Subject to completion of these steps and approvals, settlement is expected between late 2025 and early 2026.

As part of the plan settlement process, pension plan participants not currently receiving payments will have the opportunity to select a single lump sum payment or an annuity from the insurance company that will pay and administer future benefit payments.

Upon settlement, we expect to recognize a non-cash, pre-tax pension settlement charge in late 2025 or early 2026 equal to the actuarial losses accumulated in AOCI, which totaled approximately $ 735 million ($ 540 million, net of tax) as of December 31, 2024.

The actual amount of the settlement charges will depend on the valuation of the pension obligation at the settlement date, which is dependent upon interest rates, the lump sum election rate, the cost to purchase annuities, U.S.

pension plan asset returns, and other factors.

Once settled, we will be fully relieved of all obligations under the U.S.

pension plan.

The Canadian plan is contributory, and benefits are based on career average compensation.

6 unchanged sentences

Several assumptions are used to determine the benefit obligations, plan assets, and net periodic income.

The discount rate for the U.S.

pension plan is calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments.

The bond matching approach reflects the process that would be used to settle the pension obligations.

Prior to December 31, 2024, the discount rate for the U.S.

pension plan was calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments.

As a result of the decision to terminate the U.S.

pension plan, as of December 31, 2024, the benefit obligation for the U.S.

pension plan was determined based on the amount expected to be required to settle the obligations.

Assumptions utilized included the portion of the obligations expected to be settled through elections of lump sum payments or annuities and the cost to purchase annuities, what are subject to change upon actual plan settlement.

The discount rate for non U.S.

plans are set by using Willis Towers Watson's RATE:Link model.

For each plan, this approach reflects yields available on high quality corporate bonds that would generate the cash flow necessary to pay the plan's benefits when due.

plans and the U.S.

pension plan prior to December 31, 2024, this approach reflects yields available on high quality corporate bonds that would generate the cash flow necessary to pay the plan's benefits when due.

The expected return on plan assets is based on a calculated market-related value of plan assets, where gains and losses on plan assets are amortized over a five year period and accumulate in other comprehensive income.

2 unchanged sentences

These assumptions are updated at each annual measurement date.

Table of C o ntents

Changes in benefit obligations for the years ended December 31, 2024 and 2023 were:

5 unchanged sentences

Plan participants’ contributions 1,547 1,765

Actuarial loss (gain) 76,072 ( 546,266 )

Actuarial loss 51,940 76,072

Foreign currency exchange rate changes ( 19,128 ) 5,580

1 unchanged sentence

Plan amendments — 2,464

Settlements — ( 276 )

Acquired plans — 1,039

Benefit obligation at end of year $ 1,981,552 $ 1,981,783

The benefit obligations for our U.S.

pension plans included in the above were $ 1.7 billion and $ 1.7 billion at December 31, 2023 and 2022, respectively.

pension plans included in the above were $ 1.7 billion at both December 31, 2024 and 2023.

The total accumulated benefit obligation for our defined benefit pension plans in the U.S., Canada, and Europe was approximately $ 2.0 billion and $ 2.0 billion at December 31, 2024 and 2023, respectively.

pension plan, there was a net actuarial liability loss of $ 50 million and an asset gain of $ 47 million.

The liability loss was comprised primarily from a decrease in the discount rate.

supplemental retirement plan, there was a net actuarial liability loss of $ 20 million.

The liability loss is the result of a $ 5 million loss associated with a decrease in the discount rate, an $ 11.2 million demographic loss related to new entrants, and an $ 8.5 million loss associated with higher than expected incentive payouts.These losses were offset by updates that were made to other assumptions, including termination rates, retirement rates, percent married, spouse age difference, and benefit payment form elected based on the results of an experience study performed during 2023.

The net impact of these updates is a gain of $ 4.8 million.

pension plan, there was a net actuarial liability loss of $ 61 million and an asset loss of $ 61 million.

The liability loss was comprised primarily from the cost associated with measuring the plan on a termination basis and the valuation of expected lump sum payments to be made in 2025 prior to the settlement of the plan.

supplemental retirement plan, there was a net actuarial liability gain of $ 6 million.

The liability gain is the result of a $ 8 million gain associated with an increase in the discount rate, a $ 2 million gain related to updates to the salary growth and bonus payout assumptions, and an offsetting $ 4 million demographic loss for participant experience.

The assumptions used to measure the pension benefit obligations for the plans at December 31, 2024 and 2023, were:

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Benefits paid ( 142,721 ) ( 137,742 )

Settlements — ( 276 )

Fair value of plan assets at end of year $ 2,223,879 $ 2,233,079

The fair values of plan assets for our U.S.

pension plans included in the above were $ 2.0 billion and $ 1.9 billion at December 31, 2023 and 2022, respectively.

pension plans included in the above were $ 2.0 billion at both December 31, 2024 and 2023.

For the years ended December 31, 2024 and 2023, the aggregate projected benefit obligation and aggregate fair value of plan assets for plans with projected benefit obligations in excess of plan assets were as follows:

2 unchanged sentences

Aggregate fair value of plan assets $ — $ —

Table of C o ntents

For the years ended December 31, 2024 and 2023, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows:

12 unchanged sentences

and Canada establish investment policies and strategies and regularly monitor the performance of the funds.

plan, our largest pension plan, is well-funded, with a funded status of 128 % at December 31, 2024.

The plans in Europe are unfunded and, therefore, there are no plan assets.

The pension plan strategy implemented by our management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S.

and Canada as well as fiduciary standards.

The long-term primary investment objectives for the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return.

Our investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark ( 38 % U.S.

Large-cap stocks, 4 % U.S.

Mid-cap stocks, 5 % U.S.

Small-cap stocks, 10 % International stocks, 3 % Emerging Market stocks and 40 % Barclays U.S.

Gov/Credit Index).

Beginning in 2024, the U.S.

pension plan strategy implemented by our management is to minimize funded status volatility through the plan termination process.

Our investment strategy with respect to U.S.

pension plan assets is to fully hedge plan obligations on a termination basis.

In connection with the planned U.S.

pension plan termination process, we acquired certain guaranteed annuity contracts from an insurance company using existing plan assets to fund on-going obligations under the U.S.

pension plan prior to our planned termination.

The Canadian pension plan strategy implemented by our management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in Canada as well as fiduciary standards.

The long-term primary investment objectives for the Canadian pension plan is to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return.

The Company's Investment Strategy with respect to Canadian pension plan assets is to generate a return in excess of the passive portfolio benchmark ( 50 % Equity, 40 % Fixed Income, 10 % Other).

The fair values of the plan assets as of December 31, 2024 and 2023, by asset category, are shown in the tables below.

10 unchanged sentences

Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year.

The guaranteed annuity contract was valued based on the transaction price adjusted for changes in interest rates and actual benefit payments.

Table of C o ntents

(in thousands) Total Assets Measured at NAV Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs

9 unchanged sentences

Corporate bonds 66,321 — — 66,321 —

Asset-backed and mortgage-backed securities 10,396 — — 10,396 —

Convertible Securities 1,720 — — 1,720 —

Other-international 45,059 — — 45,059 —

Municipal bonds 14,295 — — 14,295 —

Options and Futures ( 104 ) — — ( 105 ) 1

Mutual funds-fixed income 201,247 — 201,247 — —

Short Term Collective Trust 345,064 — — 345,064 —

Investment Contracts, at Contract Value 1,241,434 — — — 1,241,434

Total $ 2,223,879 $ — $ 519,008 $ 463,437 $ 1,241,434

Table of C o ntents

(in thousands) Total Assets Measured at NAV Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs

31 unchanged sentences

$ 780,704 $ 706,838

Table of C o ntents

The following table reflects the total benefits expected to be paid from the pension plans’ or our assets.

23 unchanged sentences

(in thousands) 2024 2023 2022

Current year actuarial loss (gain) $ 23,289 $ 97,412 $ ( 264,547 )

Current year actuarial loss $ 101,991 $ 23,289 $ 97,412

Recognition of actuarial loss ( 14,281 ) ( 9,361 ) ( 37,065 )

3 unchanged sentences

Total recognized in other comprehensive income loss $ 86,583 $ 15,700 $ 59,724

Total recognized in net periodic benefit income and other comprehensive income (loss) $ ( 28,750 ) $ 32,614 $ ( 334,492 )

Total recognized in net periodic benefit income and other comprehensive loss (income) $ 32,648 $ ( 28,750 ) $ 32,614

The assumptions used in measuring the net periodic benefit income for the plans follow:

7 unchanged sentences

Total plan expense was approximately $ 75 million in 2024, $ 77 million in 2023, and $ 69 million in 2022.

Table of C o ntents

For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of their respective acquisition dates.

The results of operations for acquired businesses are included in our consolidated statements of income beginning on their respective acquisition dates.

We acquired several businesses for approximately $ 322 million, net of cash acquired, during the year ended December 31, 2023.

Approximately $ 300 million was related to our Automotive segment and $ 22 million was related to Industrial.

During the year we recognized approximately $ 389 million and $ 48 million of sales, net of store closures, related to our 2023 Automotive and Industrial acquisitions, respectively.

We recognized approximately $ 219 million of goodwill and other intangible assets associated with these acquisitions.

Other intangible assets acquired of $ 99 million consisted of customer relationships with a weighted average amortization life of 20 years.

We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting during the year ended December 31, 2023.

We acquired several businesses for approximately $ 1.6 billion, net of cash acquired, during the year ended December 31, 2022.

Approximately $ 1.3 billion was related to our Industrial segment, primarily the acquisition of KDG discussed further below, and $ 300 million was related to Automotive.

We recognized approximately $ 562 million of sales, net of store closures, and $ 239 million of goodwill and other intangible assets related to our Automotive acquisitions during the year ended December 31, 2022.

The other intangible assets acquired consisted of customer relationships of $ 76 million, trademarks of $ 9 million, and other intangibles of $ 4 million with weighted average amortization lives of 18 , 15 , and 3 years, respectively.

On January 3, 2022, the company, through its wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $ 1.3 billion in cash, net of cash acquired of approximately $ 30 million.

KDG contributed approximately 5 % of net sales included in our consolidated statement of income from January 3, 2022 to December 31, 2022.

The KDG acquisition was financed using a combination of borrowing under the existing unsecured revolving credit facility, proceeds of $ 200 million from the selling of additional receivables under our amended A/R Sales Agreement, and $ 109 million of cash.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date for the KDG acquisition as well as adjustments made when finalizing the acquisition accounting during the year ended December 31, 2022 (referred to as the "measurement period adjustments").

The measurement period adjustments primarily resulted from revisions to the valuation of inventory and intangible assets, deferred taxes, and long-term liabilities.

As of January 3, 2022

(in thousands) Initial Balance Measurement Period Adjustments As Adjusted

We acquired various businesses for approximately $ 1.2 billion, which includes certain non-cash consideration and is net of cash acquired, during the year ended December 31, 2024.

We recognized approximately $ 500 million and $ 30 million of revenue for the year ended December 31, 2024 for our Automotive and Industrial acquisitions, respectively.

The following table summarizes the aggregate estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for these businesses during the year ended December 31, 2024.

The fair values of the assets acquired and liabilities assumed are preliminary and may be subject to additional adjustments, particularly to inventory and intangible assets during the measurement period, which may be up to one year from the respective acquisition dates.

(in thousands) As of Acquisition Dates

Trade accounts receivable $ 100,000

1 unchanged sentence

Prepaid expenses and other current assets 10,000

Other intangible assets 210,000

Property, plant and equipment 100,000

1 unchanged sentence

Other assets 10,000

Other intangible assets 574,000 ( 6,000 ) 568,000

Goodwill 592,000 9,000 601,000

Total assets acquired 1,603,000 ( 19,000 ) 1,584,000

Trade accounts payable 85,000 — 85,000

Other current liabilities 32,000 — 32,000

Total identifiable assets acquired 1,300,000

Current liabilities ( 120,000 )

Operating lease liabilities ( 240,000 )

2 unchanged sentences

Total liabilities assumed ( 410,000 )

Net identifiable assets acquired 890,000

Goodwill 280,000

Net assets acquired $ 1,170,000

The other intangible assets acquired included $ 527 million of customer relationship intangibles and a $ 41 million favorable trade name licensing agreement, with amortization lives of 17 and 1.5 years, respectively.

The other intangible assets have a total weighted amortization life of 16 years.

We used the multi-period excess earnings method under the income approach to measure KDG's customer relationships, which is sensitive to certain assumptions including discount rates and certain assumptions that form the basis for the forecasted results (e.g., future revenue growth rates and EBITDA margins).

These assumptions are forward-looking in nature and are dependent on the future performance of the acquired business and could be affected by future economic and market conditions.

The goodwill was assigned to the Industrial segment and is attributable primarily to expected synergies and the assembled workforce.

Approximately $ 261 million of the goodwill recognized as part of the acquisition was tax deductible.

Other intangible assets acquired, totaling approximately $ 210 million , consisted primarily of customer relationships and trade names with weighted average amortization lives of 18 years .

The estimated goodwill recognized as part of the acquisitions is generally not tax deductible.

Goodwill of $ 250 million and $ 30 million has been assigned to the Automotive and Industrial segments, respectively.

This goodwill is attributable primarily to the expected synergies and assembled work forces of the acquired businesses.

The businesses acquired included two of the largest independent owners of NAPA Auto Parts Stores in the U.S., Motor Parts & Equipment Corporation ("MPEC") in April 2024 and Walker Automotive Group in July 2024.

We recognized approximately $ 100 million of goodwill and other intangible assets associated with the MPEC and

Table of C o ntents

Walker acquisitions.

Approximate values of other assets acquired and liabilities assumed included inventory of $ 290 million , operating lease assets of $ 240 million and operating lease liabilities of $ 250 million .

We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting during the year ended December 31, 2024.

We acquired several businesses for approximately $ 322 million, net of cash acquired, during the year ended December 31, 2023.

Approximately $ 300 million was related to our Automotive segment and $ 22 million was related to Industrial.

During the year we recognized approximately $ 389 million and $ 48 million of sales, net of store closures, related to our 2023 Automotive and Industrial acquisitions, respectively.

We recognized approximately $ 219 million of goodwill and other intangible assets associated with these acquisitions.

Other intangible assets acquired of $ 99 million consisted of customer relationships with a weighted average amortization life of 20 years.

We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting during the year ended December 31, 2023.

We acquired several businesses for approximately $ 1.6 billion, net of cash acquired, during the year ended December 31, 2022.

Approximately $ 1.3 billion was related to our Industrial segment, primarily the acquisition of KDG and $ 300 million was related to Automotive.

On January 3, 2022, the company, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $ 1.3 billion in cash, net of cash acquired of approximately $ 30 million.

KDG contributed approximately 5 % of net sales included in our consolidated statement of income from January 3, 2022 to December 31, 2022.

For the twelve months ended December 31, 2022, approximately $ 5 million of inventory amortization step-up cost related to this acquisition was included in cost of goods sold.

Further, $ 62 million of transaction and other one-time costs, inclusive of an impairment charge, were included in selling, administrative, and other expenses in the consolidated statements of income.

Refer to the Goodwill and Other Intangible Assets Footnote for more information on the impairment charge.

If the KDG acquisition had occurred on January 1, 2021 and if its results of operations had been included in our consolidated results since that date, our unaudited pro forma consolidated statements of income would have reflected net sales of approximately $ 22.1 billion and $ 19.9 billion and net income on a per share diluted basis of $ 8.47 and $ 6.02 for the years ended December 31, 2022 and 2021, respectively .

The pro forma information is not necessarily indicative of the results of operations that we would have reported had the transaction actually occurred at the beginning of this period, nor is it necessarily indicative of future results.

The adjustments to the pro forma amounts include, but are not limited to, applying our accounting policies, amortization related to fair value adjustments to intangible assets, one-time acquisition accounting adjustments, interest expense on acquisition related debt and debt not assumed, and any associated tax effects.

The pro forma results do not include any cost savings or other synergies that may result from the acquisition.

Earnings related to KDG included in our consolidated statement of income from January 3, 2022 to December 31, 2022 are impracticable to provide due to KDG’s ongoing integration into Motion, which commenced shortly after the acquisition date.

We acquired several businesses for approximately $ 282 million, net of cash acquired, during the year ended December 31, 2021.

During the year ended December 31, 2021, we recognized approximately $ 220 million and $ 25 million of sales, net of store closures, related to our 2021 Automotive and Industrial acquisitions, respectively.

We recognized approximately $ 160 million of goodwill and other intangible assets associated with the 2021 acquisitions.

Other intangible assets acquired consisted of customer relationships with a weighted average amortization life of 20 years.

We did not recognize any significant measurement period adjustments related to finalizing acquisition accounting for the year ended December 31, 2021.

Share-Based Compensation

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Nonvested at end of year 881 $ 152.71 1.6 $ 102,853

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A summary of our stock appreciation rights activity and related information is as follows:

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The following tables present the changes in AOCL by component:

Changes in Accumulated Other

Comprehensive Loss by Component

Changes in Accumulated Other Comprehensive Loss

by Component, Net of Income Taxes

(in thousands) Pension and Other Post-Retirement Benefits Cash Flow Hedges Foreign Currency Translation Total

Beginning balance, January 1, 2022 $ ( 463,227 ) $ ( 15,042 ) $ ( 379,470 ) $ ( 857,739 )

Other comprehensive (loss) income before reclassifications ( 18,965 ) 2,765 64,429 48,229

Other comprehensive income (loss) before reclassifications ( 71,258 ) — ( 143,890 ) ( 215,148 )

Amounts reclassified from accumulated other comprehensive loss 27,875 12,470 — 40,345

Net current period other comprehensive (loss) income ( 11,331 ) 2,572 64,429 55,670

Ending balance, December 31, 2022 ( 506,610 ) ( 2,572 ) ( 523,360 ) ( 1,032,542 )

Changes in Accumulated Other

Comprehensive Loss by Component

(in thousands) Pension and Other Post-Retirement Benefits Cash Flow Hedges Foreign Currency Translation Total

Beginning balance, January 1, 2022 $ ( 463,227 ) $ ( 15,042 ) $ ( 379,470 ) $ ( 857,739 )

Other comprehensive loss before reclassifications ( 71,258 ) — ( 143,890 ) ( 215,148 )

Other comprehensive income (loss) before reclassifications ( 18,965 ) 2,765 64,429 48,229

Amounts reclassified from accumulated other comprehensive loss 7,634 ( 193 ) — 7,441

Net current period other comprehensive (loss) income ( 43,383 ) 12,470 ( 143,890 ) ( 174,803 )

Ending balance, December 31, 2023 ( 517,941 ) — ( 458,931 ) ( 976,872 )

Other comprehensive income (loss) before reclassifications ( 74,604 ) — ( 221,812 ) ( 296,416 )

Amounts reclassified from accumulated other comprehensive loss 11,545 — — 11,545

Ending balance, December 31, 2024 $ ( 581,000 ) $ — $ ( 680,743 ) $ ( 1,261,743 )

The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote.

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Generally, tax effects in AOCL are established at the currently enacted tax rate and reclassified to net income in the same period that the related pre-tax AOCL reclassifications are recognized.

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Significant components of our deferred tax assets and liabilities are as follows:

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$ 271,892 $ 425,824 $ 389,901

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The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:

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Taxation of foreign operations, net (2) 3,201 4,666 3,347

Foreign rate change - deferred tax remeasurement — — 17,032

Valuation allowance 412 2,911 ( 7,153 )

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statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.

(3) Includes investment benefits and associated unrecognized tax benefits.

We account for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.

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This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.

In 2023, certain countries have enacted legislation and implemented policies resulting from the Organization for Economic Co-operation and Development’s (“OECD”) Anti-Base Erosion and Profit Shifting project under Pillar Two, which establishes a global 15% per-country minimum tax.

The rules are applicable for fiscal years starting on or

after December 31, 2023.

We estimate an immaterial impact to the tax provision related to the Pillar Two legislation in 2024 and will continue to monitor implementation in the countries in which we operate.

We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”).

We guarantee the borrowings of certain independently controlled automotive parts stores and businesses

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(“independents”) and certain other affiliates in which we have a noncontrolling equity ownership interest (“affiliates”).

Presently, the independents are generally consolidated by unaffiliated enterprises that have controlling financial interests through ownership of a majority voting interest in the independents.

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Separately, we concluded that the affiliates are not variable interest entities.

During the year ended December 31, 2024, we acquired all of the remaining affiliates, which are consolidated in our financial statements.

Our maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal to the total borrowings subject to our guarantees.

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At December 31, 2024, we were in compliance with all such covenants.

At December 31, 2023, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $ 954 million.

At December 31, 2024, the total borrowings of the independents subject to guarantee by us were approximately $ 575 million, a decrease from $ 954 million at December 31, 2023.

These loans generally mature over periods from one to six years .

We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents and affiliates that participate in the guarantee programs.

In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents or affiliates (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees.

We regularly monitor the performance of these loans and the ongoing operating results, financial condition and ratings from credit rating agencies of the independents that participate in the guarantee programs.

In the event that we are required to make payments in connection with these guarantees, we would obtain and liquidate certain collateral pledged by the independents (e.g., accounts receivable and inventory) to recover all or a substantial portion of the amounts paid under the guarantees.

We recognize a liability equal to current expected credit losses over the lives of the loans in the guaranteed loan portfolio, based on a consideration of historical experience, current conditions, the nature and expected value of any collateral, and reasonable and supportable forecasts.

To date, we have had no significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material.

To date, we have had no significant losses in connection with guarantees of independents’ borrowings and the current expected credit loss reserve is not material.

As of December 31, 2024, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.

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Legal Matters

We are subject to various legal proceedings, many involving routine litigation incidental to the businesses, including approximately 2,451 pending product liability lawsuits resulting from our national distribution of automotive parts and supplies.

Many of these involve claims of personal injury allegedly resulting from the use of automotive parts we distributed.

We are subject to various claims and lawsuits, principally in the United States, and regulatory proceedings worldwide.

The liabilities recognized on these claims and other matters are based on the best available information and assumptions that we believe are reasonable.

While litigation of any type contains an element of uncertainty, we believe that our insurance coverage and our defense, and ultimate resolution of pending and reasonably anticipated claims will not have a material adverse effect on our business, results of operations or financial condition.

Asbestos-Related Product Liability and Insurance Receivable

We maintain a liability for probable and estimable claims and settlements associated with our distribution and sales of asbestos-containing brake and friction products sold primarily before 1991.

These claims and settlements are unrelated to our ongoing operations, revenue generating activities, and business strategy.

We regularly conduct a comprehensive legal review of our asbestos liability.

We review recent and historical claims data, including, (i) the number of pending claims filed, (ii) the nature and mix of those claims (e.g., disease type, plaintiff type, geography), (iii) the costs to resolve pending claims, and (iv) trends in filing rates and in costs to resolve claims (collectively, the “Claims Data”).

We also consider the known latency periods for common asbestos diseases when projecting future filing trends and claims.

We provide the Claims Data to a third-party actuarial specialist with expertise in determining the impact of Claim Data on future filing trends and costs.

The actuarial specialist assists us in estimating the costs to resolve pending and future claims.

We use this analysis to develop our estimate of probable liability on a discounted basis, using risk-free interest rates derived from market data about monetary assets with maturities comparable to those of the projected liability.

Developments may occur that could affect our estimate of asbestos-related product liability and actual results may differ under different assumptions or conditions.

These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the estimate, including the number of future claims, the nature and

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mix of those claims, and the average cost of resolving claims (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other codefendants and insurers.

Complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state.

Our estimate has been impacted by adverse inflation trends, a backlog of claims building up from court closures during the COVID-19 pandemic, and an evolving legal and product liability environment.

As a result of our comprehensive legal review, we increased the liability by $ 57 million in 2024.

We have 2,768 pending asbestos lawsuits as of December 31, 2024.

The amount accrued for pending and future claims was $ 256 million as of December 31, 2024, which represented our best estimate of the liability within our calculated range of $ 219 million to $ 313 million, discounted using a discount rate of 4.58 %.

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Our undiscounted product liability was $ 336 million and $ 308 million as of December 31, 2024 and December 31, 2023, respectively.

The amounts recognized are based on the best available information and assumptions that we believe are reasonable.

While litigation of any type contains an element of uncertainty, we believe that our insurance coverage and our defense, and ultimate resolution of pending and reasonably anticipated claims will continue to occur within the ordinary course of our business and that resolution of these claims will not have a material adverse effect on our business, results of operations or financial condition.

On April 17, 2017, a jury awarded damages against the company of $ 82 million in a litigated automotive product liability dispute.

Through post-trial motions and offsets from previous settlements, the initial verdict was reduced to $ 77 million.

We believed the verdict was not supported by the facts or the law and was contrary to our role in the automotive parts industry.

We challenged the verdict through an appeal to a higher court.

On February 19, 2020, the

Washington Court of Appeals issued an order entirely reversing the jury's finding on damages and ordering a new trial on damages.

The plaintiffs subsequently appealed this order to the Washington Supreme Court.

On July 7, 2020, the Washington Supreme Court indicated that it would consider a further appeal on this matter, and oral arguments occurred on November 10, 2020.

On July 8, 2021, the Washington Supreme Court overturned the order of the Washington Court of Appeals and reinstated the trial court's damage award of $ 77 million against the company.

We recorded an adjustment to increase selling, administrative and other expenses by approximately $ 77 million, inclusive of statutory interest and insurance coverage, in the consolidated statements of income for the year ended December 31, 2021.

The damage award and statutory interest was fully paid as of December 31, 2021.

We hold insurance policies that cover some asbestos settlements and defense costs.

Annually, we conduct an insurance exhaustion study to model expected recoveries for pending and future claims, and we adjust the insurance receivable balance to reflect the present value of these recoveries.

Our receivable for estimated insurance recoveries related to pending and future claims was $ 44 million and $ 46 million as of December 31, 2024 and December 31, 2023, respectively.

Environmental Liabilities

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Applying this threshold, there are no environmental matters to disclose for this period.

Subsequent Events

In February 2024, we approved and announced a global restructuring designed to better align our assets and further improve the efficiency of the business.

Restructuring and Other Costs

In February 2024, we approved and initiated a global restructuring initiative designed to better align our assets and further improve the efficiency of the business.

This initiative includes an announced voluntary retirement offer in the U.S., along with a rationalization and optimization of certain distribution centers, stores and other facilities.

We expect to incur costs of between $ 100 million and $ 200 million related to the restructuring efforts in 2024.

The initiative was approved and funded by our corporate office and therefore these costs are not allocated to our segments.

We expect to substantially complete the initiative by the end of 2025.

For the year ended 2024, we incurred total costs of $ 221 million related to our global restructuring initiative.

The table below summarizes the activity related to these costs for the year ended December 31, 2024.

(in thousands) Year Ended December 31, 2024

Cost of goods sold $ 7,487

Restructuring and other costs 213,520

Total costs $ 221,007

In light of evolving business and market conditions, we are expanding our restructuring initiatives and now expect to incur an additional $ 150 to $ 180 million of costs in 2025 as we complete this initiative.

In total, we expect to incur costs of between $ 370 million and $ 400 million related to our global restructuring initiative in 2024 and 2025.

The estimated charges that we expect to incur are subject to a number of assumptions, and actual amounts may differ materially from such estimates.

We may also incur additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of these initiatives.

(in thousands) Severance and other employee costs Other restructuring costs (1)

Liability as of January 1, 2024 $ — $ — $ —

Restructuring and other costs 90,851 122,669 213,520

Cash payments ( 69,739 ) ( 100,433 ) ( 170,172 )

Non-cash charges 3,198 ( 21,311 ) ( 18,113 )

Translation ( 480 ) 1 ( 479 )

Liability as of December 31, 2024 $ 23,830 $ 926 $ 24,756

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(1) Amount reflects professional fees, accelerated rent, facility closure costs, moving expenses and asset impairment costs that are attributable to our restructuring.

Amount excludes a $ 7 million non-cash charge reflected in cost of goods sold for inventory liquidated rather than moved during facility consolidation in connection with the restructuring.

Subsequent Events

A/R Sales Agreement

On January 3, 2025, GPC amended its A/R Sales Agreement to renew the $ 1 billion facility for one year .

The benchmark rate, Bloomberg Short-term Bank Yield Index, was replaced with the Secured Overnight Financing Rate .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data