What changed in this filing

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Item 1. Financial Statements

2025-04-22 compared with 2024-10-22 · 215 added, 192 removed, 282 unchanged (59% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) September 30, 2024 December 31, 2023

(in thousands, except share and per share data) March 31, 2025 December 31, 2024

Current assets:

17 unchanged sentences

Trade accounts payable $ 6,011,293 $ 5,923,684

Current portion of debt 810,982 355,298

Short-term borrowings 813,936 41,705

Current portion of long-term debt — 500,000

Dividends payable 142,951 134,355

23 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except per share data) 2025 2024

8 unchanged sentences

Total operating expenses 1,885,739 1,754,790

Non-operating (income) expense:

Non-operating expenses (income):

Interest expense, net 37,216 17,690

Other ( 908 ) ( 23,006 )

Total non-operating (income) expense 24,270 105 30,960 4,808

Total non-operating expenses (income) 36,308 ( 5,316 )

Income before income taxes 251,637 325,181

1 unchanged sentence

Net income $ 194,392 $ 248,894

Dividends declared per common share $ 1.00 $ 0.95 $ 3.00 $ 2.85

Basic earnings per share $ 1.40 $ 1.79

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

2 unchanged sentences

Foreign currency translation adjustments 49,329 ( 79,920 )

Cash flow hedge, net of income taxes in 2023 — $ 0 and $ 951 respectively

Pension and postretirement benefit adjustments, net of income taxes in 2024 — $ 1,062 and $ 3,188 ;

2023 — $ 703 and $ 2,108 respectively

Pension and postretirement benefit adjustments, net of income taxes in 2025 — $ 1,327 ;

2024 — $ 1,063

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended September 30, 2024

(in thousands, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non-controlling Interests in Subsidiaries Total Equity

July 1, 2024 139,346,018 $ 139,346 $ 180,527 $ ( 1,035,739 ) $ 5,256,514 $ 4,540,648 $ 15,475 $ 4,556,123

Net income — — — — 226,582 226,582 — 226,582

Other comprehensive income, net of tax — — — 92,887 — 92,887 — 92,887

Cash dividend declared, $ 1.00 per share

— — — — ( 139,111 ) ( 139,111 ) — ( 139,111 )

Shares issued from employee incentive plans 1,693 2 2,254 — — 2,256 — 2,256

Share-based compensation — — 10,710 — — 10,710 — 10,710

Purchase of stock ( 269,646 ) ( 270 ) — — ( 37,230 ) ( 37,500 ) — ( 37,500 )

Noncontrolling interest activities — — — — — — ( 1,793 ) ( 1,793 )

September 30, 2024 139,078,065 $ 139,078 $ 193,491 $ ( 942,852 ) $ 5,306,755 $ 4,696,472 $ 13,682 $ 4,710,154

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

1 unchanged sentence

Net income — — — — 194,392 194,392 — 194,392

Other comprehensive income, net of tax — — — 34,020 — 34,020 — 34,020

Cash dividend declared, $ 3.00 per share

— — — — ( 417,872 ) ( 417,872 ) — ( 417,872 )

Shares issued from employee incentive plans 290,206 290 ( 16,814 ) — — ( 16,524 ) — ( 16,524 )

Share-based compensation — — 37,280 — — 37,280 — 37,280

Purchase of stock ( 779,212 ) ( 779 ) — — ( 111,720 ) ( 112,499 ) — ( 112,499 )

Noncontrolling interest activities — — — — — — ( 2,256 ) ( 2,256 )

September 30, 2024 139,078,065 $ 139,078 $ 193,491 $ ( 942,852 ) $ 5,306,755 $ 4,696,472 $ 13,682 $ 4,710,154

Three Months Ended September 30, 2023

July 1, 2023 140,467,550 $ 140,468 $ 153,748 $ ( 1,011,857 ) $ 4,788,852 $ 4,071,211 $ 14,583 $ 4,085,794

Net income — — — — 351,198 351,198 — 351,198

Other comprehensive loss, net of tax — — — 53,013 — 53,013 — 53,013

5 unchanged sentences

Noncontrolling interest activities — — — — — — 186 186

September 30, 2023 140,234,786 $ 140,235 $ 163,602 $ ( 1,087,262 ) $ 4,969,538 $ 4,186,113 $ 15,162 $ 4,201,275

Nine Months Ended September 30, 2023

March 31, 2025 138,788,979 $ 138,789 $ 204,595 $ ( 1,208,730 ) $ 5,315,279 $ 4,449,933 $ 14,630 $ 4,464,563

Three Months Ended March 31, 2024

1 unchanged sentence

Net income — — — — 248,894 248,894 — 248,894

Other comprehensive loss, net of tax — — — ( 54,720 ) — ( 54,720 ) — ( 54,720 )

Other comprehensive income, net of tax — — — ( 77,032 ) — ( 77,032 ) — ( 77,032 )

Cash dividend declared, $ 1.0000 per share

4 unchanged sentences

Noncontrolling interest activities — — — — — — ( 1,139 ) ( 1,139 )

September 30, 2023 140,234,786 $ 140,235 $ 163,602 $ ( 1,087,262 ) $ 4,969,538 $ 4,186,113 $ 15,162 $ 4,201,275

March 31, 2024 139,335,342 $ 139,335 $ 179,349 $ ( 1,053,904 ) $ 5,137,597 $ 4,402,377 $ 14,799 $ 4,417,176

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

1 unchanged sentence

Net income $ 194,392 $ 248,894

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 115,435 90,610

2 unchanged sentences

Other operating activities, including changes in operating assets and liabilities ( 359,046 ) ( 26,301 )

Net cash provided by operating activities 1,096,225 1,082,446

Net cash (used in) provided by operating activities ( 40,827 ) 318,306

Investing activities:

3 unchanged sentences

Proceeds from divestitures of businesses — 3,381

Proceeds from sale of investments — 80,482

Other investing activities 23,335 80

3 unchanged sentences

Payments on debt ( 522,352 ) ( 660 )

Net proceeds of commercial paper 772,108 —

Shares issued from employee incentive plans ( 502 ) ( 2,211 )

4 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 7,359 ( 17,058 )

Net (decrease) increase in cash and cash equivalents ( 23,889 ) 1,174

Net decrease in cash and cash equivalents ( 59,544 ) ( 52,419 )

Cash and cash equivalents at beginning of period 479,991 1,102,007

8 unchanged sentences

The preparation of interim financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited Condensed Consolidated Financial Statements.

Specifically, we make estimates and assumptions in our unaudited Condensed Consolidated Financial Statements for inventory adjustments, the accrual of bad debts, credit losses on guaranteed loans, customer sales returns, and volume incentives earned, among others.

Inventory adjustments (including adjustments for a majority of inventories that are valued under the last-in, first-out (“LIFO”) method) are accrued on an interim basis and adjusted in the fourth quarter based on the annual book to physical inventory adjustment and LIFO valuation.

1 unchanged sentence

Volume incentives are estimated based upon cumulative and projected purchasing levels.

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.

In the opinion of management, all adjustments necessary for a fair presentation of our financial results for the interim periods have been made.

These adjustments are of a normal recurring nature.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results for the year ended December 31, 2024.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of results for the year ended December 31, 2025.

We have evaluated subsequent events through the date the unaudited Condensed Consolidated Financial Statements covered by this quarterly report were issued.

3 unchanged sentences

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 Condensed Consolidated Financial Statements.

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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.

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

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.

Income Taxes (Topic 740):

3 unchanged sentences

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.

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.

Prepaid Expenses and Other Current Assets

The following table provides a detail of prepaid expenses and other current assets reported within the Condensed Consolidated Balance Sheets as of:

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Prepaid expenses $ 173,925 $ 118,401

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The following table summarizes the classification and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Instrument Balance Sheet Location Notional Balance Notional Balance

1 unchanged sentence

Forward contracts Prepaid expenses and other current assets $ 838,046 $ 26,735 $ 1,867,966 $ 85,834

Forward contracts Other current liabilities $ 1,020,460 $ 24,928 $ 106,800 $ 4,383

Forward contract Other current liabilities $ 574,300 $ 1,557 $ — $ —

Foreign currency debt Long-term debt € 475,000 $ 514,473 € 475,000 $ 494,285

2 unchanged sentences

(in thousands) 2025 2024 2025 2024

Three Months Ended September 30,

Net investment hedges:

Forward contracts $ ( 52,429 ) $ 19,217 $ 4,731 $ 3,158

Foreign currency debt ( 31,570 ) 20,300 — —

Total $ ( 83,999 ) $ 39,517 $ 4,731 $ 3,158

Gain (Loss) Recognized in AOCL before Reclassifications Gain Recognized in Interest Expense for Excluded Components

(in thousands) 2024 2023 2024 2023

Nine Months Ended September 30,

Three Months Ended March 31,

Net investment hedges:

3 unchanged sentences

Fair Value of Financial Instruments

As of September 30, 2024, the fair value of our senior unsecured notes was approximately $ 4.5 billion, which are designated as Level 2 in the fair value hierarchy.

As of March 31, 2025, the fair value of our senior unsecured notes was approximately $ 3.7 billion, which are designated as Level 2 in the fair value hierarchy.

Our valuation technique is based primarily on prices and other relevant information generated by observable transactions involving identical or comparable assets or liabilities.

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”).

While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants.

As of September 30, 2024, we were in compliance with all such covenants.

As of September 30, 2024, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $ 626 million.

This number decreased from $ 954 million as of December 31, 2023 due to acquisitions of our independent stores, including Motor Parts and Equipment Corporation ("MPEC") in April 2024 and Walker Automotive Supply, Inc.

("Walker") in July 2024.

We guarantee the borrowings of certain independently controlled automotive parts stores and businesses (“independents”).

While such borrowings of the independents are outstanding, we are required to maintain compliance with certain covenants.

As of March 31, 2025, we were in compliance with all such covenants.

As of March 31, 2025, the total borrowings of the independents subject to guarantee by us were approximately $ 574 million.

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 recognize a liability equal to the 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 not had significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material.

As of September 30, 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.

As of September 30, 2024, we have recognized $ 45 million of certain assets and liabilities for the guarantees related to the independents’ and affiliates’ borrowings.

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 not had significant losses in connection with guarantees of independents’ borrowings and the current expected credit loss reserve is not material.

As of March 31, 2025, 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.

As of March 31, 2025, we have recognized $ 40 million of certain assets and liabilities for the guarantees related to the independents’ borrowings.

These assets and liabilities are included in other assets and other long-term liabilities in the Condensed Consolidated Balance Sheets.

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All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our Condensed Consolidated Statement of Cash Flows.

As of September 30, 2024 and December 31, 2023, the outstanding payment obligations to the financial institutions are $ 3.3 billion and $ 3.0 billion, respectively.

(in thousands) September 30, 2024

Obligations outstanding at the beginning of the year $ 3,054,586

As of March 31, 2025 and December 31, 2024, the outstanding payment obligations to the financial institutions were $ 3.3 billion and $ 3.3 billion, respectively.

The amount settled through the SCF program was $ 1.1 billion and $ 1.0 billion for the three months ended March 31, 2025 and March 31, 2024, respectively.

(in thousands) March 31, 2025

Obligations outstanding at the beginning of the period $ 3,341,333

Invoices confirmed during the year 1,033,405

Confirmed invoices paid during the year ( 1,102,527 )

Confirmed obligations outstanding at the end of period $ 3,282,358

Confirmed obligations outstanding at the end of the period $ 3,272,211

Earnings Per Share

We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding.

Certain outstanding options are not included in the diluted earnings per share calculation because their inclusion would have been anti-dilutive.

Certain outstanding options are not included in the diluted earnings per share calculation

because their inclusion would have been anti-dilutive.

Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material.

The following table summarizes basic and diluted shares outstanding:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except per share data) 2025 2024

1 unchanged sentence

Weighted average common shares outstanding 138,783 139,429

Dilutive effect of non-vested restricted stock awards 406 599 500 716

Dilutive effect of stock options and non-vested restricted stock awards 417 667

Weighted average common shares outstanding – assuming dilution 139,200 140,096

2 unchanged sentences

Segment Information

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

Three Months Ended September 30, Nine Months Ended September 30,

Automotive Segment

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

Three Months Ended March 31,

(in thousands) 2025 2024

Automotive $ 3,799,789 $ 3,626,943 $ 11,100,800 $ 10,787,769

Industrial 2,170,409 2,197,659 6,615,596 6,716,957

Total net sales $ 5,970,198 $ 5,824,602 $ 17,716,396 $ 17,504,726

Segment profit:

Net sales $ 3,664,888 $ 3,574,020

Cost of goods sold 2,156,824 2,161,716

Gross profit 1,508,064 1,412,304

Operating expenses 1,222,557 1,092,628

EBITDA $ 285,507 $ 319,676

Gross margin (1) 41.1 % 39.5 %

Operating expenses as a percentage of net sales 33.4 % 30.6 %

EBITDA margin (2) 7.8 % 8.9 %

Industrial Segment

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

Three Months Ended March 31,

(in thousands) 2025 2024

Net sales $ 2,201,181 $ 2,209,611

Cost of goods sold 1,535,594 1,547,300

Gross profit 665,587 662,311

Operating expenses 386,876 383,324

EBITDA $ 278,711 $ 278,987

Gross margin (1) 30.2 % 30.0 %

Operating expenses as a percentage of net sales 17.6 % 17.3 %

EBITDA margin (2) 12.7 % 12.6 %

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

(2) EBITDA margin is earnings before interest, taxes, depreciation and amortization ("EBITDA") as a percentage of net sales.

Additional Information

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

Three Months Ended March 31,

(in thousands) 2025 2024

Segment EBITDA

Automotive $ 285,507 $ 319,676

Industrial 278,711 278,987

Corporate EBITDA (1) ( 91,125 ) ( 82,140 )

Interest expense, net ( 37,216 ) ( 17,690 )

Intangible asset amortization ( 36,292 ) ( 33,667 ) ( 105,077 ) ( 113,414 )

Corporate expense (1) ( 113,949 ) ( 90,257 ) ( 283,695 ) ( 257,822 )

Depreciation and amortization ( 115,435 ) ( 90,610 )

Other unallocated costs (2) ( 68,805 ) ( 83,042 )

Income before income taxes 251,637 325,181

(1) Amount reflects costs related to headquarter's broad based 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,

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

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

Three Months Ended September 30, Nine Months Ended September 30,

Income taxes ( 57,245 ) ( 76,287 )

Net Income $ 194,392 $ 248,894

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

(2) T he following table presents a summary of the other unallocated costs:

Three Months Ended March 31,

(in thousands) 2025 2024

3 unchanged sentences

Total other unallocated costs $ ( 68,805 ) $ ( 83,042 )

(2) 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.

Refer to the Restructuring Footnote in the Notes to Condensed Consolidated Financial Statements for more information.

(3) 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 the Notes to Condensed Consolidated Financial Statements for more information.

(3) Please refer to the Restructuring and Other Costs Footnote in the Notes to Condensed Consolidated Financial Statements for more information.

(4) Adjustment primarily reflects lease and other exit costs related to the ongoing integration of acquired independent automotive stores.

The following table presents a summary of our reportable segment total assets, as well as Corporate and other unallocated reconciling items:

Three Months Ended March 31,

(in thousands) 2025 2024

Automotive $ 10,929,903 $ 9,968,524

Industrial 3,133,547 3,226,428

Corporate (5) 927,640 632,360

Goodwill and other intangible assets 4,826,115 4,509,200

Total assets $ 19,817,205 $ 18,336,512

(5) Corporate is a reconciling category that includes our corporate offices, substantially all financing activities and any other items that are not allocated to the business segments.

The following table presents a summary of select financial information by reportable segment, as well as Corporate and other unallocated reconciling items:

Three Months Ended March 31,

(in thousands) 2025 2024

Depreciation and amortization:

Automotive $ 60,103 $ 46,739

Industrial 9,664 8,149

Corporate 8,797 1,622

Intangible asset amortization 36,871 34,100

Total depreciation and amortization $ 115,435 $ 90,610

Capital expenditures:

Automotive $ 65,134 $ 65,732

Industrial 15,166 12,413

Corporate 39,540 37,545

Total capital expenditures $ 119,840 $ 115,690

United States $ 3,853,778 $ 3,783,929

Europe 972,865 976,782

Canada 463,474 472,803

Australasia 552,354 529,833

Mexico 23,598 20,284

Total net sales $ 5,866,069 $ 5,783,631

Long-lived assets:

United States $ 1,182,474 $ 976,888

Europe 388,071 348,720

Canada 190,168 151,624

Australasia 225,278 187,831

Mexico 816 857

Total long-lived assets $ 1,986,807 $ 1,665,920

Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors.

The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

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subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”).

The A/R Sales Agreement has a three-year term expiring in January 2025, which we intend to renew.

The A/R Sales Agreement has a one year term expiring in January 2026.

We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutions by providing collection services.

As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institutions so that the total principal amount outstanding of receivables sold is approximately $ 1.0 billion at any point in time (which is the maximum amount currently allowed under the A/R Sales Agreement).

The total principal amount outstanding of receivables sold is approximately $ 1.0 billion as of both September 30, 2024 and December 31, 2023.

The amount of receivables pledged as collateral as of September 30, 2024 and December 31, 2023 is approximately $ 1.4 billion and $ 1.2 billion, respectively.

The total principal amount outstanding of receivables sold is approximately $ 1.0 billion and $ 1.0 billion as of March 31, 2025 and December 31, 2024, respectively.

The amount of receivables pledged as collateral as of March 31, 2025 and December 31, 2024 is approximately $ 1.5 billion and $ 1.3 billion, respectively.

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

1 unchanged sentence

Cash collected on sold receivables $ 2,103,255 $ 2,170,044

Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.

Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by (used in) operating activities in the Condensed Consolidated Statements of Cash Flows.

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

Those fees, which totaled $ 47 million and $ 44 million for the nine months ended September 30, 2024 and 2023, respectively, are recorded within other non-operating (income) expense in the Condensed Consolidated Statements of Income.

Those fees, which totaled $ 13 million and $ 15 million for the three months ended March 31, 2025 and 2024, respectively, are recorded within other non-operating expense (income) in the Condensed 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.

The reserve recognized for this recourse obligation as of September 30, 2024 and December 31, 2023 is not material.

The reserve recognized for this recourse obligation as of March 31, 2025 and December 31, 2024 is not material.

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.

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 September 30, 2024 or December 31, 2023.

Due to the workers’ compensation and insurance reserve requirements in certain states, we also had unused letters of credit of approximately $ 71 million outstanding as of September 30, 2024.

On March 20, 2025, we amended the Unsecured Revolving Credit Facility to expand the borrowing capacity from $ 1.5 billion to $ 2.0 billion and extend the maturity date to March 20, 2030.

We had no outstanding borrowings under the Unsecured Revolving Credit Facility as of March 31, 2025 or December 31, 2024.

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 may not exceed 364 days from the date of issuance.

The Unsecured Revolving Credit Facility is used as a liquidity backstop for the repayment of commercial paper outstanding under the program.

We had no borrowings outstanding under our commercial paper program as of September 30, 2024 or December 31, 2023.

In the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2024, we have presented commercial paper activity with original maturities of three-months or less on a net basis given their short-term nature.

In the Statements of Cash Flows for the six months ended June 30, 2024, such amounts were presented on a gross basis in “Proceeds from debt” and “Payments on debt” line items.

This change in presentation does not impact previously reported net cash used in financing activities.

We had no net commercial paper activity for the nine months ended September 30, 2024 and no activity in the prior year period.

On August 7, 2024, we issued $ 750 million of unsecured 4.95 % Senior Notes due 2029.

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

We intend to utilize the proceeds of this offering to repay the Series J Private Placement Notes and have utilized a portion of the proceeds to repay indebtedness under our commercial paper program that was outstanding as of June 30, 2024.

Any remaining amounts will be utilized for general corporate purposes.

The weighted average interest rate on our outstanding borrowings was approximately 3.49 % as of September 30, 2024.

We amended our commercial paper program on March 27, 2025 to expand the maximum borrowing capacity from $ 1.5 billion to $ 2.0 billion.

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 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 have been used to repay certain of our unsecured senior notes (as described below) and have been and are expected to continue to be used for general corporate purposes.

We had $ 775 million outstanding under our commercial paper program as of March 31, 2025, presented in Short-term borrowings on the Condensed Consolidated Balance Sheet, and no outstanding borrowings as of December 31, 2024.

The weighted average interest rate of our commercial paper outstanding as of March 31, 2025 was 4.63 %.

In the Condensed 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

In addition to funding other working capital requirements, we used commercial paper borrowings to repay the $ 500 million principal amount of our 1.75 % Unsecured Senior Note due February 1, 2025.

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

We were in compliance with all such covenants as of September 30, 2024.

See Note 6 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for further information regarding the Company's indebtedness.

At March 31, 2025, we were in compliance with all such covenants.

Employee Benefit Plans

Net periodic benefit income from our pension plans included the following components for our pension benefits:

Three Months Ended September 30, Nine Months Ended September 30,

Net periodic benefit income from our pension plans included the following components for the three months ended March 31:

Pension Benefits

(in thousands) 2025 2024

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Amortization of actuarial loss 4,622 3,567

Net periodic benefit income $ ( 13,454 ) $ ( 11,112 ) $ ( 40,374 ) $ ( 33,338 )

Service cost is recorded in selling, administrative and other expenses in the Condensed Consolidated Statements of Income while all other components are recorded within other non-operating (income) expense.

Net periodic loss (income) $ 178 $ ( 13,464 )

Pension benefits also include amounts related to supplemental retirement plans.

Planned Pension Plan Termination

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 2025 equal to the actuarial losses accumulated in AOCI, which totaled approximately $ 620 million ($ 450 million, net of tax) as of September 30, 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, U.S.

pension plan asset returns, the lump sum election rate, and other factors.

Once settled, we will be fully relieved of all obligations under the pension plan.

We acquired various businesses for approximately $ 1.1 billion and $ 230 million, which includes certain non-cash consideration and is net of cash acquired, during the nine months ended September 30, 2024 and September 30, 2023, respectively.

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

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.

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

To support this transition, during 2024 we adjusted our investment strategy to fully hedge plan obligations, including the purchase of annuity contracts using existing plan assets to fund ongoing obligations prior to termination.

As a result of these changes, income from our expected return on plan assets is significantly reduced in 2025, with the investment strategy focused on minimizing funded status volatility during the termination process.

The final settlement process, including transferring the management of benefits to an insurance company, is expected to be completed by late 2025 or early 2026, pending regulatory approvals.

We acquired several businesses for approximately $ 152 million and $ 132 million, which includes certain non-cash consideration and is net of cash acquired, during the three months ended March 31, 2025 and March 31, 2024, respectively.

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.

We recorded approximately $ 94 million of goodwill and other intangible assets associated with these acquisitions, primarily related to a U.S.

acquisition in our industrial segment.

Other intangible assets acquired of $ 47 million consisted of customer relationships with weighted average amortization lives of 20 years.

The results of operations for acquired businesses are included in our Condensed Consolidated Statements of Income beginning on their respective acquisition dates.

We recognized approximately $ 300 million and $ 20 million of revenue for the nine months ended September 30, 2024 for our Automotive and Industrial acquisitions, respectively.

2024 Acquisitions

The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for the aggregate of these businesses during the nine months ended September 30, 2024:

(in thousands) As of Acquisition Dates

Trade accounts receivable $ 130,000

Merchandise inventories 520,000

Prepaid expenses and other current assets 10,000

Other intangible assets 200,000

Property, plant and equipment 90,000

Operating lease assets 210,000

Other assets 10,000

Total identifiable assets acquired 1,170,000

Current liabilities ( 90,000 )

Operating lease liabilities ( 210,000 )

Deferred tax liabilities ( 30,000 )

Other long-term liabilities ( 10,000 )

Total liabilities assumed ( 340,000 )

Net identifiable assets acquired 830,000

Goodwill 270,000

Net assets acquired $ 1,100,000

Other intangible assets acquired, totaling approximately $ 200 million, consisted primarily of customer relationships and trade names with weighted average amortization lives of 19 years.

The provisional fair value of the identifiable intangible assets are subject to adjustment pending final valuation.

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

Goodwill of $ 240 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., MPEC in April 2024 and Walker in July 2024.

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

Approximate values of other assets acquired and liabilities assumed included inventory of $ 300 million, operating lease assets of $ 200 million and operating lease liabilities of $ 200 million .

During the three months ended March 31, 2025, we recognized approximately $ 8 million and $ 13 million of revenue related to our current year Automotive and Industrial acquisitions, respectively.

Accumulated Other Comprehensive Loss

The following tables present the changes in AOCL by component for the nine months ended September 30:

The following tables present the changes in AOCL by component for the three months ended March 31:

Changes in Accumulated Other

Comprehensive Loss by Component,

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

Net of Income Taxes

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

Beginning balance, January 1, 2025 $ ( 581,000 ) $ ( 680,743 ) $ ( 1,261,743 )

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Other comprehensive income (loss), net of income taxes 3,684 49,329 53,013

Ending balance, September 30, 2024 $ ( 509,280 ) $ — $ ( 433,572 ) $ ( 942,852 )

Ending balance, March 31, 2025 $ ( 577,316 ) $ ( 631,414 ) $ ( 1,208,730 )

Changes in Accumulated Other

Comprehensive Loss by Component,

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

Net of Income Taxes

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

Beginning balance, January 1, 2024 $ ( 517,941 ) $ ( 458,931 ) $ ( 976,872 )

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Other comprehensive income (loss), net of income taxes 2,888 ( 79,920 ) ( 77,032 )

Ending balance, September 30, 2023 $ ( 500,875 ) $ — $ ( 586,387 ) $ ( 1,087,262 )

Ending balance, March 31, 2024 $ ( 515,053 ) $ ( 538,851 ) $ ( 1,053,904 )

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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Legal Matters

We are subject to various legal proceedings, many involving routine litigation incidental to the businesses, including approximately 2,617 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.

The amount accrued for pending and future claims was $ 235 million as of September 30, 2024, which represented our best estimate of the liability within our calculated range of $ 181 million to $ 257 million, discounted using a discount rate of 3.81 %.

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 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.

We have 2,814 pending asbestos lawsuits as of March 31, 2025.

The amount accrued for pending and future claims was $ 252 million as of March 31, 2025, which represented our best estimate of the liability within our calculated range of $ 218 million to $ 311 million, discounted using a discount rate of 4.23 %.

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 %.

Our undiscounted product liability was $ 292 million and $ 308 million as of September 30, 2024 and December 31, 2023, respectively.

Our undiscounted product liability was $ 329 million and $ 336 million as of March 31, 2025 and December 31, 2024, respectively.

There have been no significant developments to the information presented in our 2024 Annual Report on Form 10-K with respect to litigation or commitments and contingencies.

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 $ 42 million and $ 44 million as of March 31, 2025 and December 31, 2024, respectively.

Environmental Liabilities

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Restructuring and Other Costs

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

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.

For the three and nine months ended September 30, 2024, we incurred $ 41 million and $ 161 million, respectively, in costs related to our global restructuring initiative.

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

In the first quarter 2025, we incurred $ 55 million in restructuring and other costs compared to $ 83 million in the prior year period.

We expect to incur total costs up to $ 180 million related to the global restructuring efforts in 2025 and to substantially complete the initiative by the end of 2025.

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

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

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

For the three months ended September 30, 2024, costs of $ 41 million include severance and other employee costs of $ 11 million, and other restructuring costs of $ 30 million.

The table below summarizes the activity related to these costs for the nine months ended September 30, 2024.

The tables below summarize the activity related to the restructuring costs discussed above.

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

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Translation 517 41 558

Liability as of September 30, 2024

$ 25,024 $ 1,336 $ 26,360

(1) Amount reflects moving expenses, accelerated rent, professional fees, facility closure costs 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.

Liability as of March 31, 2025 $ 29,208 $ 792 $ 30,000

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

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

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

Restructuring and other costs 61,624 21,418 83,042

Cash payments ( 7,036 ) ( 13,018 ) ( 20,054 )

Non-cash charges 1,339 ( 8,255 ) ( 6,916 )

Translation ( 25 ) — ( 25 )

Liability as of March 31, 2024 $ 55,902 $ 145 $ 56,047

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

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-Q

Item 1. Financial Statements