Good day, ladies and gentlemen. Welcome to the Genuine Parts Company Third Quarter 2022 Earnings Conference Call. Today’s call will be recorded. [Operator Instructions] At this time, I would like to turn the conference over to Sid Jones, Senior Vice President, Investor Relations. Please go ahead, sir.

Good morning and thank you for joining us today for the Genuine Parts Company third quarter 2022 earnings conference call. With me today are Paul Donahue, our Chairman and Chief Executive Officer; Will Stengel, our President; and Bert Nappier, Executive Vice President and Chief Financial Officer. As a reminder, today’s conference call and webcast includes slide presentation that can be found on the Investors page of the Genuine Parts Company website. Please be advised this call may include certain non-GAAP financial measures, which maybe referred to during today’s discussion of our results as reported under Generally Accepted Accounting Principles. A reconciliation of these measures is provided in the earnings press release issued this morning, which is also posted on the Investor page of our website. Today’s call may also 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, including this morning’s press release. The company assumes no obligation to update any forward-looking statements made during the call. Now I will turn it over to Paul for his remarks.

Thank you, Sid and good morning. Welcome to our third quarter 2022 earnings conference call. Before diving into the details of the quarter, we want to say that our hearts go out to our teammates, suppliers, customers and all those affected by the devastating impact of Hurricane Ian in late September. GPC is committed to providing care and support through our GPC Relief Fund and our partners at the American Red Cross. So now turning to the quarter. We are pleased with the continued strength of our results for 2022 and we are proud of the great work by all of our 53,000 GPC teammates who are at the core of our success. Our team delivered record results with double-digit sales and earnings growth driven by the execution of effective strategies and continued resilience of our automotive and industrial businesses. Let’s review several of our Q3 highlights. Total sales of $5.7 billion, up 18% and adjusted earnings per share of $2.23, up 19% from last year. Record quarterly sales for the automotive and industrial segments and our sixth consecutive quarter of double-digit sales growth. Operating margin expansion in both segments and for GPC overall, record quarterly earnings and our ninth consecutive quarter of double-digit earnings growth. The ongoing integration of KDG, which continues to create significant value. And finally, continued strong cash flow generation and the further strengthening of our balance sheet. Our teams are executing on key strategic initiatives to deliver market share gains and drive ongoing momentum in our top and bottom line results. We remain agile in navigating a dynamic operating environment created by inflation and economic conditions, the geopolitical landscape and supply chain challenges. We continue to benefit from the competitive advantages of our size and scale and we remain focused on advancing our technology to…

Thank you, Paul. Good morning, everyone. I also would like to thank the global GPC teams as well as our supplier partners for their ongoing commitment to serving our customers. We appreciate the collective focus and hard work to deliver great results around the world. During the third quarter, we continued to deliver strong results across both our automotive and industrial businesses. Our results were driven by solid team execution and disciplined focus on strategic initiatives, which are aligned around our five foundational priorities, talent and culture, sales effectiveness, technology, supply chain and emerging technology. Turning to the performance by segment, total sales for Global Automotive were $3.5 billion in the third quarter, an increase of approximately $285 million or 8.9% versus the same period last year. Our sales performance was relatively consistent in all 3 months of the quarter, and on a comparable basis, sales growth for the quarter increased 9.2%. Our global teams delivered mid single-digit to mid-teens comp growth across each of our operations. And as Paul mentioned, the automotive segment continues to be driven by solid industry fundamentals and strong team execution. Global Automotive segment profit was $309 million, and segment operating margin was 8.9%, an increase of 10 basis points versus the same period last year. This performance reflects strong sales growth and operating expense leverage. During the third quarter, our automotive business experienced high single-digit levels of inflation, relatively consistent with the levels we saw in the second quarter. The pricing environment remains rational, and we’re pleased with the ongoing positive impact of our strategic category management initiatives. We expect sales inflation in the fourth quarter to be largely consistent with the third quarter. Now let’s turn to an overview of our automotive businesses by geography. In the U.S., automotive sales grew approximately 11%…

Thank you Will and thanks to everyone for joining us today. As Paul and Will have shared, we are very pleased with our third quarter results. As I review the key highlights for the third quarter, our comments this morning focused primarily on our adjusted quarterly results, which excludes the non-recurring costs related to the integration of KDG. Total GPC sales were $5.7 billion in the third quarter, up $856 million or 17.8% from last year. Our increase in total sales reflects a 12.7% increase in comparable sales, including mid-single-digit levels of inflation, and a 9.1% contribution from acquisitions. These items were partially offset by a 4% unfavorable impact of foreign currency, in line with our assumptions. Hurricane Ian did not have a material impact on our third quarter financial results. Our gross margin was 34.9%, a 60 basis point decrease compared to the third quarter last year. Gross margin was negatively impacted by three key factors: first, moderating supplier incentives, which pressured gross margin by approximately 80 basis points. Second, foreign currency, which impacted gross margin by approximately 30 basis points. And finally, a shift in the mix of our sales based on the strength of our industrial segment, which impacted gross margin by approximately 35 basis points. These headwinds were partially offset by the positive impact of our data-driven pricing and sourcing programs where our teams continue to leverage our growing global scale. These actions and our expertise drove an 85 basis point favorable impact to gross margin in the third quarter. We currently expect our full year gross margin to be in line with our third quarter and 9-month rate. Our total operating and non-operating expenses excluding non-recurring items, were approximately $1.6 billion, up 15% from 2021 and at 27.5% of sales compared to 28% of sales…

[Operator Instructions] The first question comes from Greg Melich with Evercore ISI. Please proceed with your question.

Thanks. Congrats, guys. Some good numbers. I guess my first question is on the gross margin performance. Could you just give us a little more insight as to by segment in both the quarter given that you’ve got increase in costs, you said it’s passing through price remains rational, but it is starting to fall. So just if you could sort of walk us through each segment as to what’s driving that.

Sure, Greg. It’s Bert. Thanks for joining. Thanks for the question. I’ll start just with the reiteration, we were down 60 basis points to 34.9 on a consolidated basis. The quarter benefited from an 85 basis point improvement in the underlying execution of our day-to-day strategic pricing and sourcing programs. That really reflects the outstanding execution from the team across the environment. I don’t really want to break it down into each segment. I mean we’re all performing well on the underlying core of the business. We’re pleased with the actions on both segments. And the teams are really doing an exceptional job, as you can imagine, in a very, very dynamic environment. That’s hard to see, unfortunately, here in the quarter. As I mentioned in my prepared comments, we had three key factors. I’ll reiterate those year-over-year moderation in supplier incentives, that’s 80 bps; currency, which you’re aware at the end of the quarter there we had a lot of movement in currency rates, 30 basis points. And then the industrial performance and the acquisition of KDG, a 35 basis point drag there. That’s a lower gross margin business relative to automotive. But at the same time, we trade that off for a higher margin business. And as you heard Will mentioned in his prepared remarks, an 11.1% margin for industrial for the quarter, which is a record. Just a little more color on the supplier rebates. Those moderated from a year ago when heightened supply chain challenges. We’re constraining things as we’re all aware. The positive is that we now have more inventory. We have a more available base of inventory for our customers, which is a good thing. Another reminder, a year ago, that was a 116 basis point benefit to margin from that issue. So look, as I mentioned, for the full year, we think the gross margin rate for the full year will be in line with the third quarter. But despite all that, we see expansion of margin here in the fourth quarter – or I’m sorry, here in the third quarter by 40 basis points to 9.7% margin. That’s the third consecutive quarter of overall margin expansion, and we expect that for the fourth quarter as well. When you look at the fourth quarter looking ahead, I think as you look at that number and guiding to the Q3 levels, we really see the two variables there from where we prior – from our prior guidance being gross margin performance at Motion continuing to outperform our earlier expectations and currency.

Got it. I guess my follow-up would be on that fourth quarter. If I sort of back into it, it seems like there is a pretty meaningful deceleration in organic growth with the new guidance. I think it’s maybe 500 or 600 bps in auto and maybe double that in industrial. Is there – is that actually happening in October? Or is that just conservatism?

Let me take that kind of up one level and give you some color on guidance overall. First, I want to thank our teams. We’ve had a great third quarter, first 9 months. I think the business continues to be very balanced and resilient, but like everyone, forecasting in this environment has its challenges. We took a number of factors into account in our guidance raise. Firstly, our performance year-to-date and the industry fundamentals and momentum we see. But obviously, we have to balance that against the macro including, we think, with inflation and pressuring cost. We can’t ignore any of these tightening conditions and undoubtedly, those will impact businesses and consumers at some point. The macro data has been pretty choppy, as you’re aware, but we’re very comfortable and confident in our overall guide with the new guidance range of $8.05 to $8.15. That’s going to have EPS up year-over-year, 16% to 18% on the back of a really, really strong year a year ago. We’re being prudent, I think it’s probably the right way to phrase it. Eyes wide open on things to watch. We’ve got inflation, geopolitical tension, supply chain constraints, effect, fuel and energy prices, all moving around on us. But at the same time, there is probably, Greg, a little modesty here. We outperformed in the fourth quarter a year ago, and we’ve outperformed so far this year, and we’re not necessarily a management team that will continue to count on the same level of outperformance. When I look at the fourth quarter, I’d kind of call your attention to a few things for the fourth quarter guide and the full year. We’ve got incremental foreign currency, as I mentioned, $0.03 headwind in the fourth quarter relative to when we gave you guidance before. The gross margin rate compression that we just discussed and also, we have 1 fewer working day in the fourth quarter. So that’s something to be aware of. But look, my dad used to say be baseball ready and that needs to be ready for whatever comes. I think we’re doing that. We’re going to look for additional growth opportunities and efficiency and discipline. And I’m going to let Will give you a little bit more color on the segment side on the sales.

Yes, Greg, maybe just to answer your question, I mean, we’re encouraged by the trends that we’re seeing through October across the global business. So if that’s any indicator, we’re not seeing a slowdown. We’re proud of the teams for continuing to build on that momentum into the fourth quarter. Just maybe some other thoughts. As you think about kind of what’s implied in the Q4, I’d just remind you, Q4 ‘21 for auto had a big comp, high teens. So the guide for auto on a 2 year is kind of close to that 20%. And that holds true for U.S. auto and kind of each of the pieces of global automotive. So still really solid performance. And as I said, encouraged by what we’re seeing through October.

That’s helpful and good luck.

Thank you, Greg.

Thank you, Greg.

Our next question comes from Christopher Horvers. Please go ahead with your question.

Thanks and good afternoon. Maybe to follow-up on that a little bit. One of your industrial distributor peers talked about some, I guess, softer tone in certain customer segments when they reported recently. As you were out in the field recently, is there – are you sensing any of that caution? And do you think it’s maybe just like the tack that you’re taking, like eventually something could happen and we’re being cautious or do you think there is something – some real change going on in some of your businesses on the industrial side?

Yes, Chris, thanks. This is Paul. I would tell you, and we have spent a good bit of time in the field late. I traveled with the Motion team I don’t know, a few weeks back. And we spent a good bit of time with that group this week. The overall sentiment from our Motion team, Chris, remains really strong, optimistic. They are seeing increases across just about every customer segment in every product segment. So I’m aware of the other industrial group, you mentioned that reported earlier this week. But I have to tell you, we’re not seeing it on our side, Chris. And I would just remind you, we’re still seeing expansion in PMI, which we generally track pretty closely with through the years anyway. And industrial production came out earlier this week in industrial production, again, post a good result in September. So I would tell you, overall, our Motion team continues to perform at an incredibly high level. And as Will said, early numbers in October point to that continuing well into Q4.

Chris, maybe just some other perspective to add to Paul’s comments, sales cadence was consistent for the industrial team through the quarter, as Paul said, the vast majority, if not all the product categories were growing north of 20% plus, which were high single digits 2 plus 20%. All of our end markets, we’re seeing super strong growth. We track 15 different industries. All are performing very well. We called out a few in the script, equipment machinery, food products, iron steel, automotive, mining, oil and gas. And I’d tell you, geographically, we’re seeing strength pretty broad-based, including Canada and Mexico as well as our service business, fluid power automation conveyance. So are the customers just like everybody trying to predict what happens in 2023, certainly, those discussions happen when we were out in the field. But the backlogs are strong, and the recent trends have been strong. So we feel bullish about certainly closing the year and then coming into next year with some momentum.

Thank you for that. Will, I think at a recent conference, you mentioned the ability to take segment margins to the double-digit range. Can you talk a little bit more about that – do you see that – is that more of a blended of NAPA and Motion or could you see that potential for the NAPA segment to also reach double digit and what do you think the big drivers are to get there?

Hi, Chris, it’s Bert. I’ll take that one. Look, I think as the new CFO coming in and taking a look at this business, I’m sitting here looking around and we’re asking ourselves questions about what’s the full potential of the two businesses together. So I know you would appreciate that exercise as the new guy. We’re not ready to give you a target on that. I want to do some homework here over the next several months as we sharpen our pencil around that. But we’re doing that work. I think the historical perspective here has been this business can be a 7% and then an 8% and then we’re marching our way up the chain there. You’ve seen a margin at 9.7% this quarter consolidated which is another improvement in the third consecutive one – this third consecutive quarter in a row of improvement there. As I look ahead with a fresh set of eyes coming in, I see a tremendous amount of opportunity for things that are within our own control, not necessarily reliant on external. Some of those are underway. Some of those would be sourcing and category management initiatives, which are in early innings, pricing initiatives, which are in early innings. The business demonstrated a great ability through the pandemic to transform continue to be more efficient and lower cost structure, that’s going to continue. And I think there is a tailwind there. We have got two really great businesses with great size and scale. And when you have that kind of power behind you, I think you do have an ability to continue to grow and improve margins. We will have some modernization of our supply chain and DCs that continue. Will talked about that a little bit in his prepared remarks around the Florida facility for Motion. So, there are just a tremendous amount of opportunities. And we owe you to come back and give you some full longer term targets there, but hopefully, that gives you a little perspective as the new CFO.

That’s great. Thanks Bert.

Our next question comes from Christopher Horvers with JPMorgan. Please go ahead.

Chris, you are coming back for another one? I think we just had, Chris.

I can ask more questions. I got a lot more.

I will talk to you later Chris.

Our next question comes from Kate McShane with Goldman Sachs.

Hi. Thanks for taking our questions. You had mentioned, I think in your automotive comments that you saw growth in all categories, and we just wanted to confirm that if it includes discretionary categories and what you are seeing relative to the more defensive categories? And then just with regards to transaction versus ticket if you saw any meaningful change this quarter versus last quarter in automotive?

Thanks Kate. Thanks for the question. Let me take a pass at that and Bert and Paul will jump in. Maybe just starting at the top, for U.S. auto, consistent growth through the quarter, we have recognized and celebrated a variety of different sales records through the quarter, so super proud of the teams for that. As we mentioned, both DIFM and do-it-yourself, we are strong and positive through the quarter, which is always good to see. If you look at the subsets of the business, the mid-single digit performance from our major accounts in our AutoCare, we had low-double digit to low teens in our fleet and government business. And we had, as we said, mid-single digit retail performance on tough comp. No change in trends from ticket and transactions. We talked about that, I think last quarter, transactions down, ticket up, but that was as we expected, our categories of strength, batteries, filters, brakes, commodities and chemicals. And then we saw really broad-based strength across the geographies, with particular outperformance in our mountain region, which is Texas through Montana and Alaska for our business and then down the eastern part of the United States, including the Northeast Atlantic region and Southeast. So, we saw some strength in our accessories category, which is the retail category for us, a smaller piece of the business, but I think that’s somewhat discretionary in nature, and we saw a nice strength there. So, really strong broad-based performance through the quarter around the business on the U.S. auto side.

And Kate, I would just add to Will’s comments that a driver of that business is certainly fuel prices. We are seeing fuel prices coming down a bit, which is always a good thing for our auto business. We certainly expect to see miles driven ticking back. People are taking to the roads. And they are a little – still a little bit reticent to get on mass transit and airplanes. So, all those factors, I believe will continue to bode well for our auto business going into next year.

Thank you. And if I could just ask one follow-up question, I think you mentioned you expect the same inflation, same-SKU inflation in Q4 as what you saw in Q3. And I know you are not talking about 2023 today, but do you have any high-level views about when you could expect to see some moderating of the inflation and how that might impact traffic versus – or transaction versus ticket next year?

Hi Kate, it’s Bert. I will take that one. Look, I mean I will kind of point this out, and I will reiterate it. Our expectation, let’s talk about the fourth quarter because that’s a bit of a setup for 2023. Our expectation at this point for inflation for Q4 is that it stays consistent with the Q3 level. And I think in our view that means it’s stabilizing on some level to moderating. However, as many of you know, the inflow of moderating or stabilizing levels of inflation takes some time to flow through supply chain. I think that will lag into 2023. Obviously, we have a tremendous amount of monetary policy action afoot, and that will take some time to have an effect into 2023, but we would anticipate that it would. As we turn the corner into the next year, I think we will see continued pressure on labor costs and on product costs at this point. Again, I mean we are looking several months ahead here. So, that’s a little bit of our initial view. When we think about it from our perspective, it’s a tough and dynamic environment, and our teams are really focused on this and it requires intense focus. Our strategy remains unchanged in that regard as we look ahead. We are going to continue to pass along inflation impacts to protect our gross margin rate. I think we have done a nice job of managing that in a very dynamic environment, and we are going to continue to focus on those category management and pricing actions. So hopefully, that gives you a little color. We are talking about something several months away, but that’s our initial view on that front.

Thank you.

Thanks Kate.

Our next question comes from Bret Jordan with Jefferies. Please go ahead with your question.

Hey. Good morning guys.

Good morning.

On the European automotive, could you talk a bit more about the private label strategy there? What you are seeing as far as consumer acceptance of the NAPA brand and maybe what percentage is in the mix now and how the margin delta sets up versus the legacy product that you were selling?

So, Bret, I will take a stab at this one, and let the other guys jump in. I was with our European team all last week over in Spain and pleased to report that the NAPA brand rollout continues to expand across Europe, not only in the new markets, we will be launching in Spain and Portugal later this year, early next year, but also expanding the number of product categories that we are currently positioning under the NAPA brand. The acceptance, I have to tell you, Bret, has been beyond expectation. All that said, it’s still about 10%, give or take, of our total business. So, it’s meaningful. But look, we are still – we still have a long way to go, and before NAPA becomes a real dominant piece of our overall business over there. So, very pleased with where we find ourselves. And look, there is a lot of discussion around Europe, a lot of concern around Europe. But I can tell you, Bret, you saw the numbers, you heard Will talk about the numbers in Q3, another really, really strong quarter, up 20% plus local currency. And pleased to tell you that despite all the noise through the first couple of weeks of October, business in fourth quarter looks good as well. So, we continue to be very bullish about our European business.

You just answered my second question, but just – to go back to the first half of the first – on the October trend in Europe. But how does the margin shake up in Europe on the private label mix, obviously, a different supply chain?

Yes. Bret, it’s neutral. Generally speaking, on average it’s neutral. So, either a good guy or a bad guy. And I would just add to Paul’s comments, I figured you asked a follow-up. But as he said, we are continuing to see really good strength broadly in each one of our countries, Germany, mid-teens growth, Benelux, low-double digits, mid single-digit growth in the UK and the French market. So, as Paul said, NAPA is a big part of each one of those country strategies and initiatives and they have got nice traction delivering super nice results. So, good to see.

If it’s margin neutral is the long-term goal to get a better cost of goods there to get margin out of it. I mean what’s the point of the initiative, if it’s not more profitable?

That’s the strategy over time, obviously, getting the brand into the market, putting it into the line logic and penetrating the market as kind of step one and then over time as it develops the following, we will revisit that.

Great. Thank you.

Thank you, Bret.

Our next question comes from Elizabeth Suzuki with Bank of America. Please go ahead.

Great. Thank you. Just a question on the automotive side. And Paul, you had mentioned that new vehicle supply and elevated used car prices have been tailwinds, but you started to see used car pricing rolling over and new vehicle supply could begin to improve. So, I mean how much of a headwind do you think that could be as you plan your business for the next few years?

Yes. I appreciate you pointing that out, Liz. We are seeing used car prices coming down a bit. I honestly don’t see that being a huge impact on our business overall. We look at – look, the key drivers for our business have always been and will continue to be, I believe the average age of the vehicle on the road, which is at a new record again in this year over 12 years. Miles driven is always going to be a key element for us. And we are seeing an uptick in miles driven as fuel prices moderate just a bit. And I think you are going to see that as folks do begin to return to the workplace and are again, a bit hesitant to get on mass transit. I think we will continue to see that drive forward. So, look, in terms of new car sales, Liz, it’s a little bit of a double-edged sword. We need those new car sales because 5 years from now, those are going to be our customers as they come to the aftermarket. So, if new car sales tick up a bit, that’s not going to have a big impact on our business in the short-term. In the long-term, it’s a good thing for us. And if we go back to the 17 million vehicle new car vehicles produced each year sold each year, that’s not a bad thing for us at all because that’s our future customers. So, I think any way you slice it, the – our business – our U.S. automotive business and our global automotive business is in a good place and the fundamentals are very sound.

Great. Yes, that makes sense. And just a quick follow-up on the auto side. Will had mentioned you are pleased with the market share growth in the majority of categories, what are the categories where you aren’t pleased with your market share? And what do you view as the biggest opportunities?

Look, I am looking down our list, but I am not sure I can call out one where we are not pleased. I mean we are seeing really broad-based strength across all the product categories. So, I can’t call out one where we are disappointed. Obviously, if there are some inventory opportunities, those would be – that will be the commentary where we would want to do better, but I am not sure that’s a function of the demand drivers or kind of our strategy. So, sorry for not being more helpful, but I think that’s the honest truth.

Okay. Alright. Thanks very much.

Okay. Thanks. Thanks Liz.

Our next question comes from Scot Ciccarelli with Truist Securities. Please go ahead.

Good morning guys.

Good morning Scot.

How are doing? So, the industrial business is obviously very strong. And we know that historically, it’s followed some of the broader macro factors and index changes typically with about a six-month to nine-month lag or so. And Paul, I think you already pointed out how PMI is still positive, but obviously, it’s moderated quite a bit. So, I guess the question is, how should we kind of net out today’s strong growth versus at least what appears to be a pretty significant moderation in that, let’s call it, broader macro trend?

So Scot, thanks for the question. And you are right to point out that the moderation in PMI. But again, anything over 50, if we are growing and we continue to grow. That said, the motion footprint Scot, is different today than we were historically. So, we have expanded our footprint into segments like conveyance, conveyors and all things around that product category, which as we have seen the distribution center model, expand across the U.S. We have seen great expansion in that product category, automation and robotics is a growing double digit – strong-double digit category for us, and we believe we have huge upside in that area. So, if you look at the motion of today, Scot, it’s different than it was 3 years to 5 years ago when we were primarily a power transmission and industrial supplies-type business. And that has been intentional from our team. And I think will shelter us going forward and will give us a leg up as we go forward if we do see continued softening because Scot, you are not alone. We continue to have people and analysts and investors question the industrial business and do we believe that we will continue to see the great growth that we have seen out of that business in the last couple of years. And certainly, while we have shown 20% comp growth in Q3, we are not going to stay at 20%. We are realistic enough to know that, but we also do believe that that’s a business that we can continue to grow 6% to 8% year-after-year-after-year regardless of what PMI and industrial production numbers might call out.

Okay. Thanks a lot guys.

Thank you.

Our next question comes from Carolina Jolly with Gabelli. Please go ahead.

Hi everyone. Thanks for taking my question.

No problem. Good morning.

Good morning. So, just a quick question around cash flow, working capital. Your AP to inventory ratio is probably around 130% now. That’s definitely higher compared to 2019. Has that been a structural shift since you extended terms in Europe, or do you think we will see that kind of revert to your historic…?

No, I don’t think it has anything necessarily to do with Europe. When you look at the landscape – this is Bert, by the way, I don’t think it has anything to do with the European landscape. Look, the business has changed fundamentally over the last year. We have a large acquisition of KDG in the Motion business. But when we look at our working capital metrics, we are very pleased with where we are. We have had a six-day reduction in our cash conversion cycle during the course of the year. So, we are pleased with that. Managing payables well. DSO is down, managing inventory very well as well. And so I don’t think there is anything that I would call out as a structural shift. It’s something that we stay very focused on a day-to-day basis, given the unlock of cash as we are smarter about how we do that. Look, as we look ahead, I mean nobody is perfect. We do have opportunities to optimize on the inventory side, and we will continue to do that. And we have got great teams here that are focused on that as well. So, I wouldn’t place any overreliance or over-indexing on any one factor. Bottom line is we have had very strong cash flow through the course of the year. We will have a great result for the rest of the year in terms of free cash flow and for the full year. And that takes us back to our long-standing ability to continue to be very disciplined and thoughtful on capital allocation and reinvest in the business, which we will continue to do because we see great opportunities there. And at the same time, return capital back to shareholders, which as you all know, we have a long-standing history of doing so.

Great. Thanks. So, it doesn’t sound like this is a temporary benefit you are seeing right now, but it’s corporate initiatives that have been working.

No. I wouldn’t point to a temporary benefit. I think we are very consistently – I know some of this predates me, but consistently showing improvement across cash conversion and our working capital elements.

Great. Thanks. And then just a quick second one. Your DIY business seems to have been doing very well performing potentially just given what have been said in the second quarter call. Can you talk about why you think that is? Is it the digital factor that you talked about in the beginning of the call or just any commentary there?

Yes, Carolina, it’s Will. I think you nailed it. We are super proud. We have made a lot of progress on all things, technology and digital for our retail business all around the globe, but in particular, U.S. automotive and in Canada and investments in the catalog, investments in search, investments in kind of product data quality have been making a real difference. So, more work to do, but proud of the progress the teams are making.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. End of Q&A:

Yes. Thanks Dave. Just to all of our folks out there today, we appreciate your questions and everyone joining the call. Look, we are very pleased with another record quarter at Genuine Parts Company. We could not be more proud of the great work done by all of our GPC teammates around the world. We continue to be excited that with the momentum that our business is generating. And I would just conclude by saying the future continues to be very, very bright for Genuine Parts Company. So, you all have a great day, and we look forward to chatting again in February. Thank you.

The call has now concluded. Thank you for attending today’s presentation. You may now disconnect.