Good morning, my name is Holly and I'll be your conference operator today. At this time, I would like to welcome everyone to the Genuine Parts Company First Quarter 2014 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). I would like to turn the call over to Sid Jones, Vice President, Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining us today for the Genuine Parts Company first quarter 2014 conference call to discuss our earnings results and outlook for full year. Before we begin this morning, please be advised that this call may involve forward-looking statements regarding the company and its businesses. The company's actual results could differ materially from any forward-looking statements due to several important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during this call. We'll begin this morning with comments from Tom Gallagher, our Chairman and CEO. Tom?

Thank you, Sid, and I would like to add my welcome to each of you on the call today and say that we appreciate you taking the time to be with us this morning. Paul Donahue, our President, and Carol Yancey, our Executive Vice President and Chief Financial Officer, are both on the call as well and each of us has a prepared remarks and once completed we'll look forward to answering any specific questions that you may have. Earlier this morning, we released our first quarter 2014 results and hopefully you've had an opportunity to review them, but for those who may not have seen the numbers as yet, a quick recap shows sales for the quarter were $3.625 billion which was up 13%. Net income was $157.5 million, which was up 9%, and earnings per share were $1.02 this year compared to $0.93 in the first quarter last year, and the EPS increase was 10%. We are pleased with our overall results in the first quarter and we feel that the GPC team is off to a solid start to 2014. The combined 13.3% sales increase was our strongest performance in a few quarters and certainly acquisitions helped boost the overall results, but we were pleased as well with our performance of the underlying businesses especially in light of the number weather related closures that we experienced across each of the businesses during the quarter and we are also pleased that our increase in sales on a per day basis improves sequentially in each of the businesses as we worked away through the quarter which is encouraging. In looking at the sales results by segment, our Electrical and Automotive operations had very strong quarters with Electrical being up 30% and Automotive up 23%. Industrial was plus 4% and…

Thank you, Tom. Good morning, everyone and welcome to our conference call. I'm pleased to join you today and to have an opportunity to provide an update on the first quarter performance of our automotive business. As was mentioned in our previous conference calls, we now include in our automotive recap the results from GPC Asia-Pacific, which was consolidated into our results on April 1, 2013. As Tom mentioned in his opening remarks, our automotive business grew top line revenues by 23% in the first quarter. To further explain our growth, the numbers breakout as follows. Acquisitions, primarily GPC Asia-Pac, contributed 17% of the 23%, our core business grew 7%, and currency had a negative impact of 1 plus percent. I would like to take this opportunity to walk you through our North American numbers and provide an overview of our first quarter performance. As we reflect on this past quarter's results, it would be apparent the numbers are very similar to our fourth quarter performance. A combination of colder weather, solid industry fundamentals and a shift in the Easter holiday but most importantly improved execution in the field enabled us to report another good quarter. All of these factors played a part in our team generating a 7% top line increase. When evaluating our quarterly performance, we are encouraged to see that all regions of the U.S. are positively contributing to our sales growth. As was the case in the fourth quarter, the top performers in the first quarter were once again those that were most impacted by the colder winter temperatures. Our division stretching from the plains across the Great Lakes to the Northeast continued to lead the way for the company. In addition these colder temperatures provide a positive momentum for a number of our key product…

Thank you, Paul. We will get started with the review of our first quarter income statement and the segment information, and then we will review a few key balance sheet items. Tom will come back up and wrap it up, and then we will open the call up to your questions. Total revenues were $3.6 billion for the first quarter, an increase of 13% from last year, consisting of a 10% contribution from acquisitions, 4% underlying growth, and this was offset by 1% headwind from currency. Gross profit for the first quarter was 29.9% of sales, up 110 basis points from the 28.8% last year. Primarily, the increase reflects the favorable impact of higher gross margin in our alteration business which owns 100% of its stores. Excluding the impact of GPC Asia-Pacific which we will annualize in the second quarter, our underlying gross margin was down slightly from last year's first quarter, and this was due mainly to customer and product mix shift across all of our businesses. We will continue to seek opportunities for margin expansion. And for the year, we would expect gross margin to be in the 30% range. As an additional point of interest, we are seeing some slight inflation in our non-automotive businesses today and not seeing that in the automotive sector, and we do not expect this change much over the balance of the year. Our pricing year-to-date through the first quarter is flat for automotive, 0.8% for industrial, 0.7% for office product and 0.8% for electrical. Turning to our SG&A, our total expenses were $841 million in the first quarter, representing 23.2% of sales. Our SG&A expenses as a percent of sales were up 130 basis points for the quarter. And much like the change in gross margin this primarily reflects the impact…

Thank you, Carolyn and Paul for your updates. So that will wrap up our prepared comments and, in summary, we would say that we feel that we came to the quarter in pretty good shape and about where we had planned to be. As we look out over the reminder of the year, we continue to feel positive about our prospects in all four of our business segments. In automotive, we anniversaried the GPC Asia-Pacific acquisition as of the 1, April, which will moderate our overall automotive group growth rates over the reminder of the year. But we continue to feel good about the underlying fundamentals and the automotive aftermarket as Paul just covered and we feel good as well with results that we are seeing from our various initiatives. The one unknown for us right now is the strength of the headwind that we will encounter over the reminder of the year due to currency exchange. As mentioned earlier, it was over 1% in the first quarter. With all of that said however, we feel that we should raise the bottom end of our full year automotive guidance plus 5% to plus 6% and for now leave the top end to plus 7%. As mentioned during our comments, we're a bit encouraged by some of the signs that we are seeing in both the industrial and electrical markets and we would reaffirm the previously provided full year revenue guidance of 5% to 7% for industrial and 25% to 30% for electrical. And in office products now having the bit of clarity around the Office Depot business we need to raise the guidance from the previously provided plus 1 to plus 3 to plus 3 to plus 4. Putting all this together will give us a full year increase of 68% which is up from our previously provided 5% to 7%. On the earnings side, our prior expectation was to be in the range of $4.47 to $4.57 and at this point we would say that a range of $4.49 to $4.59 is probably more appropriate. Now although we don't provide quarterly guidance, as a point of information there will be a bit of choppiness on the quarterly basis due to some of the one-time purchase accounting adjustments related to the GPC Asia-Pacific acquisition in Quarters 2 and 3 last year. And as you are updating a model Sid will be available to talk with you on this. But we are comfortable with the current annual guidance of $4.49 to $4.59 that we just provided and we will look forward to refining this a bit further as the year progresses. With that said, we would like to address your questions and we'll turn the call back over to Holly. Holly?

Thank you. (Operator Instructions) And your first question will come from the line of Scott Ciccarelli with RBC.

Paul went through I guess again as I get older here, but Paul went through a couple of the different growth rates on the auto side. Can you just re-summarize those quickly, and number one. Number two, you guys had some nice improvement on the payment terms, and the accounts payable to inventory. Is that coming from across the different segment or is that more a leverage toward auto where obviously some of your competitors have very capable APied inventory ratios? Thanks.

I would say that on the accounts payable that's primarily coming from auto and that would be the majority of what we have seen recently and what we expect to see, but I would also say all of our businesses have initiatives focused on it and it's something that all of our businesses are looking towards doing and have some improvement there. But I would say the majority of the increase is certainly coming from automotive.

Got you. Thank you.

And Scott, specifically what were you looking for me to repeat on the automotive numbers.

Well, I guess I think you had said both commercial and wholesale were up to 8% or is that --

That's correct, yeah. Commercial and wholesale were up 8%. Our same store sales were up 8% and our retail business was up 9%.

I got it. Okay. And then so we were looking 7% because of the currency?

Yes.

Where that's all organic?

Yeah.

I got it. Okay. Yep, that cleared up. All right. Thanks guys.

You are welcome.

Scott, one of the thing I would just add is one of the things that we really find pleasing about the quarter in the automotive business is the consistency of the performance across all of the segments. I think our team did a terrific job of touching all the bases in this quarter.

Got you. Thanks, Tom.

Thank you.

And your next question will come from the line of Greg Melich, ISI Group.

Hi, thanks. Paul you mentioned March has had a nice improvement over the weather disruption in January and February. Could you help us give an idea of the magnitude and whether there was need to shift but impacted that and how April is looking to look more like March or more like the whole first quarter?

I'll take that, Greg, and I will comment on all of the businesses. Automotive showed consistency throughout the quarter; we saw some pickup in March. And then if we look at the other three businesses, one of the things that was a bit encouraging is that in each of those businesses we actually saw sequential improvement as the quarter progressed. And those businesses were prone to be hurt by the impact of weather, but March was a good month for us in all four other businesses.

And did April look more like March or like the first quarter?

April looks more inline with March.

Great. And then, second, could you give us some update on how the Australian business is doing organically? And if -- got lost a little bit in that seven number of it, anything in terms of traffic and comp trends there?

As you know, we do not break out that business separately. I think we would just believe that we continue to be very pleased with the job that that team is doing and we think that has got a very bright future.

And your next question will come from the line of Matthew Fassler with Goldman Sachs.

My primary questions relates to auto supply and related two parter. The first just relates to how much of the wholesale business associated with a Depot Max deal that you did not previously -- did you think you will capture and I am particularly asking with regard to geographic coverage and do you feel like you have the coverage to get all of their markets? And the second question is related to that. As you think about the price that you may have paid to get that business, is there any margin pressure you would expect on the legacy business as result of whatever it is you took in that bid? Thank you so much.

And I will try to answer that. In terms of how much of the business will we capture we've been named first call as you know. So that gives us the opportunity to fulfill all of their needs across the entire enterprise. And how much will we get, we are pretty optimistic that we are going to get a very high percentage of it. We do have the geographic coverage to support it. We have got the ability to handle all of that business and our intentions are to handle all of that business.

Great.

And then, in terms of any pressures on the legacy business, we would not anticipate that. I think it may be important to point out that I don't believe that this was first and foremost a price decision on the part of Office Depot. I think price certainly was an element. But I think it is important to remember that we have had the Office Depot business for 20 years, and part of the reason I suspect that we might have got the nod is that we have done I think a pretty commendable job of handling that business from day one. So I think price is always a factor but the value add and the level of service and the level of support that you can provide is an important element as well, and I think we faired reasonably well in that over the past 20 years.

And then a very brief follow-up. We can handle this after the call, if you like. But to the extent that you spoke about purchase accounting dynamics for the second and third quarter last year, would there be any adjustments to the current year's numbers or is it just simply a function of understanding the charges that you might have incurred a year ago?

We are not anticipating any purchase accounting adjustments to speak out for 2014. It was just a reminder, that we did have the large one time adjustment in the second quarter and then we had a smaller adjustment in Q3. So it's just a reminder about the choppiness due to the prior year numbers.

And your next question will come from the line of Aaron (inaudible) with Wolfe Research.

Hi. This is actually Chris (inaudible) on for Aaron. Hoping to get your thoughts on -- I was hoping to get your thoughts on increased vehicle complexity. The trend appears to be solely hurting DIY and favor DIFM. But wondering if the increase complexity tick with high grade (inaudible) and even the aluminum F-150, if there comes a point where like the smaller bay and the three bay garage as they are no longer able to handle the work, and how should we think that this relates to NAPA?

Well I would try to take it. Paul may have something to add. I would say one, you are right that the vehicles are going to become more complex and they are going to require a higher level of training and sophistication to do the repair work in the years ahead. On the NAPA side, we have been anticipating this for several years now and we have got training programs for all of our commercial customers that if followed will enable them to do these repairs going forward. The other thing to keep in mind is that the aftermarket is a very, very large industry and you have got 251 million vehicles on the road today. And this new technology that comes in, it comes in on a gradual or evolutionary basis, not a revolutionary basis. So there is a multiyear opportunity for us to be prepared not only from the technical training point of view, but also from the supply chain point of view to handle demands of the vehicle in the future. So we actually see it is an opportunity. To your point, I do think that those on the repair side that for whatever reason are going to avail themselves of the training or aren't a position to buy some of the new diagnostic equipment and tools that will be needed they are going to be threatened. But at the same time, we think that good customers like our major account customers, our NAPA AutoCare customers, this is an opportunity for them to perhaps gather up some share as we evolve through the transition we are going to be going through.

:

And your next question will come from the line of Chris Horvers, JPMorgan.

So I wanted to try to parse out a little bit more on some of the March, April commentary. We talked about an Easter shift. Is it possible to look at what average daily volume growth was like in the DIY in the commercial side of the order parts business, to try to figure out what the underlying trend is?

It is a hard number to come up with, but it will be -- we would suggest it would be less than 0.5%.

I got you. In terms of the impact. I understand. In that DIY number was just I mean through the roof, is there any reason to think that first the Easter shift had more of an impact of that side of the business? And can you dig into some of the category performance in DIY where that acceleration was made. As I think, then DIY would say well wiper, it's cold, it's smelly as batteries, as wipers and that really surge of demand in DIY should have already past, that actually seems like it showed up later. So can you just talk about the category that show the acceleration and how you think about the performance in DIY and commercial, both took you and then as you get into the balance of the year?

Yeah. Chris, this is Paul. Just to -- let me take the retail piece first. And I think I would start by telling you that, overall our team is performing at a higher level, executing at a higher level. We have done a lot of work in our stores. We reset our stores, re-merchandized and extended hours, better signage, better associate care on the floor for our customers and dedicated care on the floor. So I think all of that has a positive impact on our retail business. And we really saw that trend throughout the past year. You couple that with the harsh winter weather and that harsh winter weather that really drove we think some real emergency type repairs. An emergency type repairs, you got stuff breaking down right, so you got batteries that need to be replaced, wipers that need to be replaced, wipers that need to be bought, chemicals that need to be bought. We saw positive growth in every one of those categories throughout the quarter. So I would say really it's a combination. I think, one, our execution is better and then I think the harsh winter weather grow folks into our stores to get some emergency repairs done quickly.

You would think in, I mean, Tom's comment that April looks more like March in auto, you would think that people aren’t repairing, changing their batteries out, because it's warmer and the cars were starting. So I guess it's the demand starting to spread to more of the repair and maintenance categories that aren't more emergency in nature?

I think that's a fair assumption. And my comment about April was not just for automotive. That was also for other businesses as well.

Understood. And then that's a good segue. So on the industrial business it did, it seem like the organic growth came in the little lighter than you were originally anticipating. So did actually the weather end up having more of an impact on that business in the middle part of the quarter that you expected is what you have seen in March and April, more in line with how you originally thinking about the year.

Well we did have an improved quarter organic growth wise. We did have an improved quarter around for the addition of some acquisition volume as well, but we did see some improvement organically and we also had the impact negative impact of the currency exchange in the quarter which was just over 1% in the industrial business. To the second part of your question. Our non-automotive business are hurt by the kind of whether that we experienced in the first quarter, because its business closures and we don't experience increased demand because of cold temperatures. We do get the benefit of increased demand on automotive offset by whatever number stores and customer locations that are closed, but it was a headwind in the quarter the weather was and that's behind us now. So we have got a degree of optimism for the reminder of the year.

Okay. And then just the final one on the margins. At what point an organic growth in the non-automotive businesses do you start to see vendor allowances picking the year to year and then similarly getting leverage on the SG&A side? Thanks.

I will try to that and Carol can help, but I would say that we need approaching mid-single digit growth in those businesses. One of the offsets potentially to any volume instead a program is a fact that our team is doing a better job ever increasing better job on our inventory management. So I think Carol covered the inventory numbers overall but we are doing a better job and each of the business is on a continuing basis. So we run the businesses, we don't use the balance sheet to prop up the income statement. So if we can generate mid-single digit growth in any of these businesses and at the same time through better visibility and better technology hold inventories even that's what we are going to do; we are not going to push the inventories in order to try to qualify for any additional rebase that might be earned.

And I think just one of the things on the volume incentives, there was not really an impact on the quarter. Our volume incentives were basically flat compared to the prior quarter and we're modeling flat this year for 2014. So I think there are some other things that should come into play with our gross margin initiatives that we should get the improvement from those areas rather than just the sheer volume incentive.

Your next question will come from the line of John Ruvolo, Bank of America.

First question would be to you, Carol. If we think about the auto business if we think about the year-over-year incremental margins, they have been in the low kind of 8% range over the past few quarters. I guess the question is this a reasonable one way to think about or other additional levers now that can be pulled given an Exebel would be fully integrated and so forth?

Well traditionally, and we try not to base everything on this first quarter. So first quarter tend to be a low margin business especially on the automotive side, and we do have a better seasonality certainly with Asia-Pacific and what our first quarter is their winter, if you will, but we have the seasonality so on a full year basis we would point you more to looking at the full year margin numbers and so that's what we would expect to be on a full year. And we also looking for a 10 to 20 basis point improvement on a full year basis.

Okay. That's helpful. And maybe more of just a strategic question here thinking about the office products business and you guys currently have eight proprietary brands there which it would appear that there would be at least some degree of costs that's associated but supporting those trend. Is there any business rational potentially should consolidating the brand and going to the market with maybe a more consolidated portfolio, if you will?

I don't think that's part of our thought process currently. I think what we are comfortable with the way we are managing the product portfolio today.

And your next question comes from the line of Brian Sponheimer with Gabelli & Company. Brian Sponheimer - Gabelli & Company: A couple of questions here. With auto being at 8%, how much do you think a piece of that came from market share gain and how much do you think may have come from what will be the advance General Parts conglomerate when that's all integrated?

Yeah, Brian, this is Paul. A couple of things. One, it's kind of difficult to tell at this point but I would tell you that as far as your question on the Advance CARQUEST acquisition though. It's pretty early we are encouraged by the things that we are seeing happening in the fields but it's very early. And I can tell you that for the first quarter there was really no material impact on our numbers in the first quarter as a result of those two businesses coming together. Brian Sponheimer - Gabelli & Company: Okay. And just Motion Dynamics staying fairly stable so far.

Absolutely, you are talking about in the marketplace, Brian? Brian Sponheimer - Gabelli & Company: Yeah.

Yeah, so for everybody is -- it seems to be pretty rational out there. We are certainly as Carol pointed out in her comments we are not getting any help from price increases, but it's rational. Brian Sponheimer - Gabelli & Company: As this year progresses and let's say things begin to get any better do you foresee a mix shift back towards the best and better products, Paul, or is that just something that you think it's going to be a major part of the marketplace going forward?

Well it's hard to tell. Brian, we do have a good, better, best offering of products for sure on the marketplace. We promote all three, we push all three, we have seen bit more of a flight to value on recent years and I don't know that that's going to change to any effect going forward in '14. Brian Sponheimer - Gabelli & Company: All right. Thank you. On just one of your comments you said you guys made -- pay down some debt as the year goes on. Given how cheap your borrowing or why would that be the best use of cash as you guys look at how to allocate capital?

Right now, what we were saying is we are at 900 right now and we may; it's really going to depend on what opportunities may present themselves between now and the end of the year and certainly that could come in the form of the acquisitions or share repurchases. And honestly, we have to look at how our cash is going to be and our cash flow coming in. So it's really a balancing we made the level similar to last year. We were saying we may take it down a bit from the $900 million that it is first quarter. But we haven't rule out anything, because it's really we are going to look at it as things present themselves between now and the end of the year.

And your next question will come from the line of Seth Basham, Wedbush Securities.

Good morning. So I have a couple questions. First, if you could give us a better sense of what underlying gross margins were year-over-year for the auto business when you strip out a specific business?

We do not break out the gross margins specifically to the segments. But what we would say is, that you took out the impact of Asia-Pacific for those quarter, our core gross margins were down about 10 basis points and that was really reflected in all of our businesses. And we said that was more of a customer and product mix and it is really representative of all of our businesses. And we would hope -- we have got some things in place and we hope to see that come back a bit between now and the end of the year. And we are kind of targeting at around 30% or just little bit better than that by the end of the year.

Okay. So full year gross margin guidance hasn't changed versus the prior guidance, right?

No, it hasn't.

Okay, great. And then, in terms of the auto business again, the gap between some of our strongest markets that you referenced, the weather affected markets in the north and north-east versus the least strong market, did that gap changed in this quarter relative to the last quarter?

Well, it get somewhat, Seth, and primarily, because some of our divisions and groups down in the south were impacted by the weather in the negative fashion, right. So we had some customer closure and store closures which certainly the folks of north deal with the weather a lot better than we did down here in the south.

And does that imply that the northern markets actually accelerated in terms of trend in the fourth quarter or the first quarter versus the fourth?

Well the north divisions continue to as they were in the fourth quarter, Seth, continue to be strong operators for us absolutely, your assessment is correct.

Okay, great. And then, can you remind us last year what your same store sales was, the U.S. NAPA Business, adjusted for any selling day differences?

Hold on.

Just give us a second.

Yeah.

Hold that up.

For the first quarter?

Yeah.

5%.

No, no.

That is not.

First quarter 2013, our same store sales were just up modestly, basically flat.

It has…

On a same day basis?

On a same day basis.

Yeah.

Okay. And then lastly, it relates to be office business, the incremental $100 million of sales you guys expect from the OEP win, should we expect that to come at similar margins to the segment average?

No there will be, it will be a little bit lower than the overall average.

The next question will come from the line of Keith Hughes, SunTrust.

My question has been answered. Thank you.

Thanks Keith.

And your next question will come from the line of Bret Jordan, BB&T Capital Markets. Bret Jordan - BB&T Capital Markets: A quick question I guess is as you look at the accounts payable to inventory and you are pushing towards 80% and I imagine mostly that is on the back of the automotive side, where do you see that number getting to? Do you think you can get the motion and electrical suppliers to sort of drink the cool aid on extended terms or because most of it come from auto they might be hard to get it up from here?

I don't think we plateau. So I think you will see a bit of improvement from here. As far as the first part of the question, this concept is not spread throughout the other businesses. So it's going to be more difficult and more time consuming to accomplish what we would like to accomplish in those businesses but I think we still have a little bit of headway yet in terms of bringing it up. Bret Jordan - BB&T Capital Markets: Would we think that your auto AP inventories in the 90s if your aggregate AP was in 79.

We haven't worked that number. Bret Jordan - BB&T Capital Markets: Okay. And then I get the question go back to market share unlocked you say has changed in the first quarter but as you picked up distributors from the CARQUEST transaction.

We have had some positive results there, it's little early in the process, but there have been some movements, yes. Bret Jordan - BB&T Capital Markets: Talk about how many or (inaudible) where you to drive that or

No, we wouldn't want to do that. Bret Jordan - BB&T Capital Markets: Okay. And then one last question. I will give you one last one. As you talk about the strong categories I think you said the friction you were getting better into the second quarter. Is chassis or any other categories staying strong out of what with the venture of real seasonal demand spike as people do post winter repairs? I understand with batteries are hitting a much of amount of peak in Q1 but are there other peaks in the business that are driving Q2?

Yeah, Bret, you are right, we saw certainly Q1 was big growth and batteries as we saw in Q4. Our chassis has a good first quarter as well. We are expecting that business to continue strong into Q2, you look at some of the potholes up in the northern part of the country I think there is going to be an opportunity for chassis for sure. As we look at our core categories breaks and filters, for example, with people now as the weather warrants up people get the cars into the base that's the business that we are expecting to see a nice ramp up here in Q2 and Q3.

And your final question is a follow-up question from the line of Greg Melich with ISI Group. Mike Montani – ISI Group: Yes, hey, guys. This is Mike Montani on for Greg. Just wanted to follow-up on the full year guidance. It seems like the revenues were increased by about $140 million, but then EPS by only about $0.02, which seems to imply about $5 million of net EBIT. Is there something that I am missing there, it seems like interest is up a little bit and may be other amortization line items as well to offset? Could you just help me to understand the flow through there?

We will have to get back you on that, Mike.

We did not do in terms of the actual revenue and the EBIT. One thing we did do is raise the bottom end of the automotive guidance, so we brought that up in five to six. But I think there were some other changes, some other headwinds in there. And honestly, currency is playing in there a bit too. So did not necessarily come about the way you did.

And at this time, there are no further questions. I'll turn this conference call back over to management for closing remarks.

Well, we appreciate you attending our call today and we appreciate all the questions. And if we can be of further assistance, let us know. Otherwise, we look forward to reporting out after of second quarter numbers. Thank you for your support.