Hi, everybody. It's my pleasure to introduce Genuine Parts Company. Today, we have with us Will Stengel, President and Chief Executive Officer, and we have Bert Nappier, who's been Executive Vice President and Chief Financial Officer since May 2022. Thank you so much for joining us today.
Thanks for having us.
Nice to have you here.
It's great to be here.
Before we get into our discussion, you did put out a press release this morning announcing board refreshment and a cooperative relationship with Elliott Management as one of your largest investors. Wanted to maybe start the conversation with that.
Yeah, we did issue a press release this morning. There were really three elements of the release, and in no particular order, maybe I'll give a little bit of context. So first and foremost, the board refreshment activity.
Mm-hmm.
Actually, if you studied Genuine Parts Company over the last three or four years, we've been very intentional about evolving our board. About three years ago, we had a very detailed succession planning skills matrix exercise that the board engaged on, and we had four directors becoming retirement eligible in April of this year, so while we had some news today, it's really been a long-standing effort of the board to add capabilities and evolve as our directors retired, so we're announcing today, John Holder and Robin Loudermilk are retiring. They've been great stewards of the company, great contributors to the business, 15 years of service each, and so we thank them for their contributions to the business.
We're also announcing Matt Carey and Court Carruthers, who are great professionals, that if you think about our skills matrix exercise that we did three or four years ago, they fit really nicely into that. Court brings a great perspective on all things industrial distribution, amongst other things. Matt Carey, a world-class CIO from Home Depot, Walmart, eBay, been in transformational things, technology, so he brings a great perspective, and most importantly, they're great culture fits in the board. So, from a board refreshment perspective, that was our news. We also announced our contemplation and plan to have an Investor Day.
Mm-hmm
In 2026. Also, if you kinda take a step back and think about that news, it makes a bunch of sense. About three years ago, March of 2023, we did our first ever Investor Day at Genuine Parts Company, and we laid out a three-year vision. And so logically, as we come into 2026, it'll be a great opportunity for us to share our perspective of the business. I would tell you, there's a lot of ongoing ordinary course activity as it relates to operating reviews, strategic reviews. This year, we actually changed our internal processes. We do annual planning every year, strategic planning every year, and pulled forward a big body of work to early in the year associated with thinking about really, how good can this business be?
So what is the entitlement for each one of our businesses around the world, and what does it mean from an investment capital standpoint? What does it mean from a return on investment? And then also, how do all those pieces fit together strategically as a, from a business mix perspective? So that work has been ongoing. We're deep in it. We would expect to be continuing to do that work as we proceed through the balance of the year and then share our findings and our perspectives next year at an Investor Day. And then lastly, of course, we've got news associated with Elliott. Elliott's been a great partner over the last four to six months. We've been in constant discussion, and we're very much aligned. I think they appreciate the in-flight work.
I think they appreciate the traction and the progress that we've made as a business over the last two to three years. I think they support the investments that we're putting into the business, but they have the same questions that we do, which is: How good can this business be? And I think we both are fully aligned, that we think it can be, even better than it is today, and there's a lot of value to unlock. So we're doing that work. It's been cooperative, it's been constructive, highly professional, and we really appreciate their support.
Great. We'll get to, I think, some of the bigger longer-term picture questions in a little bit, but one topic that we keep getting asked quite a bit about when it comes to your business, but most of the companies that we cover, is tariffs. And so we thought we could start there. Auto parts retail traditionally has very strong pricing power.
Yeah.
And I think for a while, the thought was, well, you know, tariffs will come, and you guys will just pass it through. But it does seem like there may be, industry-wide, is a little bit more tentativeness about how much you can pass through, whether it be because of how much inflation there's been, just how much inflation there could be. How are you viewing the elasticity response to anything that might happen with prices?
Yeah, I think it's a great question. It's a common question, which is: How do you make sense of all things tariffs? Maybe some of the facts for the business. So about $15 billion in purchases globally for Genuine Parts Company. A simple way to think about it is if you think about our tariff-exposed purchases from China, as an example, so U.S., China, that's about 7% of total $15 billion. So in the aggregate for total company, obviously something that is important for us to figure out, but not a material issue for us. That's just China. Obviously, the world has evolved, so other than China, there are tariff considerations, and that's where I think a lot of the complexity has come.
I do think we're in a different moment than perhaps two or three years ago, where we had a lot of ability with same-SKU inflation, with a rebounding customer coming out of pandemic.
Mm-hmm.
And I think the global economy is just in a different place. And so part of the calculus is, first of all, understanding the ever-changing facts associated with tariff: yes, no, and how much? And then also, how do we make sure that we do right by our customers? We operate in a rational pricing industry on both sides of our business. And to your point, we operate in a break/fix business, where it's all about the service and the solution that you deliver to your customer, and then you get into a discussion around price. So I think those two elements maybe make us a little bit different, but it's complicated.
Mm-hmm.
And we've commented on our earnings call. We have a global command center set up, and they're meeting three or four times a week. And literally, it's, you know, "Does this tariff still apply? Which SKUs does it apply to? Who's calling the vendor?" So, it's created a significant administrative effort, and I couldn't be prouder of the team. I mean, this is one of those situations where the global scale of Genuine Parts Company really matters. These long-standing relationships with suppliers. I was with, some suppliers at an off-site, and, you know, we spent a lot of time talking about how the world was gonna unfold, and at the end of the day, it comes down to being able to communicate effectively with strategic partners.
Mm-hmm.
Because they're as confused as anybody, including us. So I think it's effective communication, having the right team on the field with the right hustle, the tools in place to navigate it, and then never losing sight of making sure that, you know, we're taking care of our customers and delivering great service so that, you know, we can help them be successful.
You do operate in kind of a slower turn, inventory, business. Have you started to see some of those costs start to flow through? Have you had to take some price, and ultimately, you know, how much price do you think you'll have to pass through?
Yeah, look, I think on that, on that point, we talked about this in our earnings release. The pricing that we've felt so far, that we shared in, in the call, and continues to be the case, lives in that low single-digit range.
Mm-hmm.
And so when we think about Will's point about how are we being fair and really making sure we take care of customer, we've mirrored that on the top line. So we're talking about a low single digit in the aggregate for all of GPC cost increase, and then we're assuming a low single-digit price increase for the balance of 2025. So I think they're both pretty evenly balanced. As Will said, the dynamic remains shifting and uncertain, and we keep having different movements and different patterns, whether it's steel derivative tariff or, you know, the Trump administration challenge to the ruling, and now there's a potential Supreme Court review. Those give the command center more data to work with almost every single day. So where can it go from here?
You know, look, I mean, I think if you look at the fourth quarter of 2022, when the same-SKU inflation in the aftermarket was pushing on double digits, that's the last time elasticity was tested at that level, and that right now seems to be the high watermark. But as Will pointed out, that was with a different consumer.
Right.
Who had a lot more stimulus money, coming out of the pandemic. Can we go that high this time? I don't know. I think we'll have to wait to see what the landscape brings. From a GPC perspective, we're gonna continue to stay focused on the customer and making sure we do the right thing by them. And, you know, if we're getting an increase, we're trying to manage it and make sure that we get a little bit of price, too, and look to the rest of the year, as we've said, that this could be a slight net benefit for us as we think about the totality of the tariff equation.
Maybe we can move on to the U.S. Automotive business. You know, could you talk maybe about some of the trends that you're seeing? What's driving the stronger commercial business, what's maybe pressuring the retail business, and how you think about demand overall?
Yeah, I, I would start with just a recognition of the U.S. Automotive team. I mean, there is a lot of really, really good work happening at U.S. Automotive. It's been a multi-year effort, and you know, we're starting to see some of the early signs of those efforts paying us back. One, in particular, is associated with our kind of independent owner and store-company-owned store operations. I think on the independent owner, to your point earlier, about just how is small business and the consumer feeling, it's a tough market out there.
Mm.
I mean, if it's a tough market for a global organization, it's a really tough market for a small business owner. And so, we continue to make really nice progress with working with them to help them be successful, whether it's inventory, whether it's running better stores, whether it's acquiring new stores, whether it's pricing strategies. So, we've been very intentional working with that stakeholder group at U.S. Automotive, to help them navigate this really tough market, and that will be a journey that we continue to stay on. The independent owners is a really important part of our U.S. Automotive, go-to-market strategy. Great relationships, they're great operators, they bring, very real kind of competitive intensity to local rural markets, so we're gonna continue to lean in to make sure that those folks are successful.
On the company-owned store side, we've done a lot of work there, up to and including, as an example, realigning our teams, our executive leadership teams, so that we have dedicated focus on running better stores. and we're starting to see really nice progress there. So, as it relates to just kind of U.S. Automotive, I think the environment's choppy.
Mm.
The market's sluggish, and it's all about delivering great service to customers that ultimately wins relative to others.
Within your commercial business, I think the Auto Care and major accounts customer segments have been stronger in recent quarters. I know again, there's been a lot of work being done. Could you maybe talk about some of the bigger drivers of strength there?
Yeah. So the NAPA strength is obviously Do It For Me, so about 80% of the business is Do It For Me. Major accounts and our Auto Care Repair technicians are kind of the core areas of focus there, and I think that strength is a function, as I just said, of very intentional actions around making sure that we've got the right service levels for those customers, making sure that we're able to be an easy partner for major accounts around the country. And those sound like simple thoughts, but there's a lot of work required to mobilize the field around those two channels, and as I said, we're seeing some nice success, and we'll continue to stay focused on it.
And another area of success or at least improvement has been in the discretionary part of your business.
Mm.
I think it's been a long time that we've heard really any kind of green shoots in discretionary and auto part retail in general, but last quarter, discretionary was flat for you guys, and you attributed some of it to the changes you're making in tools and equipment. Could you talk a little bit more about that?
Yeah, it's a great, it's a great data point. It kind of is consistent with this idea of self-help. So, that discretionary part of the market has been choppy at best over the last couple of years. And for us and for our business, we made a strategic choice to really lean into this tools and equipment, hand tools and service tools in particular, specifically for our core customer, which is the repair technician. And so we've done a lot of work over the last couple of years to roll out this new product to attack a pretty big market where we've got a leadership position, but see a lot of white space.
Mm-hmm.
And so that's been a driver of kind of helping yourself in a market that's not helping you, as it relates to this discretionary category. I'm not sure I'm ready to say that discretionary is back.
Mm-hmm.
But I am proud to say that the work that we're doing to offset a choppy market is having the positive effect.
And I would just add, Kate, that on that point, you know, there is a big opportunity with that core customer.
Mm.
The mechanic over their lifetime will spend a hundred thousand dollars of investment in tools for their trade. The other thing about our Carlyle Tools rollout is that it's a global rollout, and so all of our Automotive businesses around the globe benefit from this particular offering versus it being a NAPA-specific operational offering in the U.S. It's a nice opportunity for us to leverage size and scale in the global automotive footprint and take advantage of that and roll it out globally.
The other work that you've been doing, you have mentioned, when you were speaking about the independents, that for traditional small business, the environment has been tough, and now it's been about a year since you acquired two of the largest independent platforms. I know the rest of the independent owner base is much more fragmented, so how should we think about the pace of the independent acquisitions going forward, and is there a longer-term mix the company is targeting?
Yeah, look, I'll, I'll start with the longer-term mix, and we've been saying this for some time. We're thinking about a high watermark of 50/50. When Will and I got here a few years ago, it was more 25/75, and we've made some material movement in that over the last few years, getting to a 35/65 mix at this point. The 50/50 is the high watermark, though it's not meant to be that we're just marching to that number. The pivot that we've made is really about commercial strategy. It's not really through the prism of, there's a line of independents waiting to be acquired, and we're just moving through the line. We really thought about.
And we do this a lot, and you guys have seen in all the transformation we've done over the last few years, asking ourselves tough questions and then taking very positive steps to move the business forward, and this is another one. And this is how we thought about 2023 and some of the challenges that we experienced in the business, and it was asking the really hard question of a hundred-year-old business: Does this model really continue to work? And the answer to that is yes, categorically yes. Our independent owners are great business folks. They're great partners to NAPA, and they will continue to be. But in certain markets in the U.S., we feel like it's in our best interest, and we're better advantaged and positioned to be in full commercial control of the transaction.
The way we think about this transition is market by market, not so much person by person.
Mm-hmm.
And, as we go to be stronger in those markets, if we ended up at 42 and not 50, but we satisfied our commercial objectives, then that would be the endpoint. And so, rolling out and pivoting to this new strategy, as we did last year, it just became really nice that the first two things that happened in the conversation was that our two largest independent owners had a desire to make some transitions.
Mm-hmm.
And that obviously created a big capital allocation last year relative to how the go-forward works. From here, the independent owner that's available for us to acquire, and remember, it's got to be a willing buyer and a willing seller, and it's got to meet our commercial criteria, is much smaller. And so that's why you've seen the pace of capital allocation in 2025 pull back.
We've targeted about three hundred million in M&A for the year. That's more of a bolt-on mentality versus taking advantage of a big strategic opportunity. And so we'll see that pace, I think, stay here in 2025, and it should stay from a NAPA perspective with respect to the acquisition of independent owners in a pretty steady state moving forward, just given the relative size of what's left to acquire. The Walker and MPEC acquisitions have gone really, really well. We're on track. The integrations have gone well. We have dedicated teams focused on the integration of the two businesses. They have different needs, so they have different integration playbooks.
But most importantly, it gave us one hundred and eighty stores in the MPEC acquisition, 85 stores in the Walker acquisition, great strongholds across the Midwest and the Eastern part of the U.S., and great footprint of stores with great opportunities for both market penetration and continued financial performance. So we're excited about what we're doing on that front, and excited about where those opportunities lead us in the continued transformation of the NAPA business as we look ahead.
If we can move over to European automotive. The European business has been under a little bit of pressure, although we had our European equity strategist sitting with us yesterday, and she sounds a little bit more bullish on what Europe could look like in the next year or so. Could you maybe talk about some of the headwinds you're facing there? What countries have been experiencing this pressure? And again, it seems more macro-related than anything else. So how are you trying to offset these headwinds?
Yeah, our European business is doing a really nice job. It's the same theme, which is we're controlling what we can control and making the business better. It is a tough market. I think it's just the underlying market, a lot of the same thematics from the U.S., you know, uncertain geopolitical, et cetera. So I think the backdrop is challenged.
Mm-hmm.
I'm hopeful that it continues to improve. I think the business is winning relative to the market and others, and a large portion of that is driven by this very unique positioning we have associated with the NAPA brand o ver in Europe, which really was the first of its kind as the proprietary brand choice for the European market, which was historically a Tier 1 market. And so in challenging times, to have a value choice relative to others, I think is a differentiator.
So we're leaning into that. It's about 15% of revenue. Today, you know, as part of our strategic planning, we're gonna challenge the team to understand how big that can be. It's obviously attractive margin mix, lever for us over in Europe. And we're really focused on the same themes around the world, which is making sure supply chain service is excellent. We've made some big investments in France, in the U.K., in Spain, in Germany. The European team has been the beneficiary of some capital that we fully expect to start to ramp up and deliver returns as we move forward. They're doing a really nice job. It's a tough market. We're in roughly less than 10 countries.
Mm-hmm.
France, Germany, U.K., are kind of our big three. We entered the Spanish market a few years ago and have done really good work there to dramatically change the profitability of the business, and we're now the largest player in Spain and Portugal. Really good body of work and just navigating a tough market.
Yeah. And you know, the dynamic of the European customer adopting a private brand, you mentioned it was a nice value.
Yeah.
Option for them. But why do you think it took so much time for a private brand to work, and what do you think is unique about NAPA?
I think it takes really strong leadership from our leader over there in Europe.
Mm-hmm
To manage all the different geographies and get people aligned and get situated with vendors. I mean, it's a big program.
Mm-hmm.
You know, five years ago, it was zero. This year, we'll do over EUR 500 million.
Mm-hmm
Of revenue from branded products. So it took a little bit of time to get it right, and then you're seeing really nice adoption. And each country has their own cadence and opportunity to accelerate.
Mm-hmm.
And so it's filling in, you know, the filter program that's not fully rolled out in Germany, but it's in the U.K. So the playbook's there now, and now we're just gonna lean into it.
Kate, I would just add to that, like, the headwind to start was the fact that the European landscape really has a mentality of leaning into the OEM.
Right.
I think this is where we were so uniquely positioned because we have the NAPA brand and what it stands for, that it allowed us, and we might have been the only one, to be able to penetrate that market the way we have, behind everything Will talked about with the leadership of the team. To take that private label, and the NAPA brand that stands for a hundred years, a hundred years this May, of quality and expertise.
Mm-hmm.
And the way that the brand was built in the U.S., and then take that to Europe, I think that gave us a unique advantage, vis-à-vis anything else that might have happened, and allowed us to take a bit of a risk. When you had a mentality from a European consumer perspective that is, "I'm very loyal to the OEM," and introduce this, and then have the success we've had, I think it just speaks to a combination of different factors that really leans back into all the transformation work we've been doing over the last few years.
Just one thing I'm curious about, and then we can move on to industrial. I know there's been a lot of success in introducing good, better, best when it comes to private label.
Mm-hmm.
Is that something that you're doing in Europe as well? Or that's to come.
I mean, in essence, the NAPA brand is the good, better.
Mm-hmm. Mm-hmm.
The best would be the Tier 1 OE.
Yep.
And then the NAPA is across-the-line logic, probably fills in from there, depending on the product category.
Moving on to industrial, we wanted to first ask about the MRO maintenance part of the industrial business, the majority of your sales at 80%, and you've been very stable, you know, in that business. Can you talk about your offering there, the value that Motion provides, and maybe some feedback about what you are hearing from customers in this more tentative, choppy environment?
Yeah. So just as a reminder for everybody, the customer of Motion is the factory floor repair, maintenance, procurement expert who's trying to keep that factory up and running. And so if you go back to where we started, I mean, this is a break-fix business model, where, you know, the cost of having the bottling plant line number one down is a lot more meaningful than, you know, the $50 widget that we've got available to him immediately to fix the problem, and the expertise to understand that it takes the $50 widget. So, it's a great business model.
You know, we're hearing the same on whether it's capital planning decisions on the factory floor or, "Hey, I've got a budget of $100, and, you know, maybe I don't spend all of the budget of this month because I'm waiting to see." I mean, those are just kind of the natural discussions that you would expect people to have with us in these times. Having said that, you know, I was recently in the field with some Motion customers, and the most compelling data point I can share with you is our Motion employee, of which there's 30 Motion associates in the plant.
Mm-hmm.
Working every day.
Mm-hmm.
Our Motion employee led the tour of the plant with two of our customer's employees there for the executive team that was coming through. So while we're having those back-and-forth discussions about, you know, geez, it seems like a choppy market, I mean, those are happening literally every minute because we're in with these customers, we understand the factories better than they do or as well as they do, and we're the, the solution partner in a time of need. And so while the market obviously has been disappointing, PMI came out sequentially improved, but below 50, I think this is just a timing thing.
Mm-hmm.
If you actually studied the data in the recovery cycles above 50 for PMI, it creates a very attractive two or three-year run where you're in expansion period, and this Motion business is just absolutely poised to perform really, really well. They're doing a great job already, but with a little market help, brighter days ahead for sure.
Great. I wanted to be sure to ask a couple questions around the balance sheet. The company ended Q2 with a leverage of around 2.5x, which is at the higher end of your 2x- 2.5x range. How comfortable are you with that current leverage? And should we expect to see a focus on deleveraging in the near term?
We're comfortable because we like the range of 2x-2.5x .
Mm-hmm.
We're floating in a little higher end of the range right now, and that's really why you saw us, as we started this year, talk about, pulling back on share repurchases. So we've made some choices a round capital allocation to pull back there and focus on taking some debt off the balance sheet as we move through the year, and so that remains our focus for 2025. We'd like to end the year with a net reduction in debt, which will help on the leverage side. And look, we've got earnings growth expected in the second half of 2025, which obviously helps to some extent, too, so I love the ability that we have to turn dials to meet the needs of the business.
The balance sheet gives us that flexibility. We can pivot to pursue an M&A opportunity if needed, and in this particular moment, we think the best thing for us to do is continue to support the dividend, do the CapEx we've talked about, the bolt-on M&A we've talked about, and in this particular 2025 season of focus, to take some debt down.
We are asking five questions of every company that sits with us on stage. So, we wanted to go through those quickly. We've touched on some of them already, but your expectations for the environment in the second half of 2025 versus the first half of 2025, do you expect things to be the same, better, or worse?
I think when we, earlier this year, we had expected kind of a more material ramp second half. Our latest earnings call, we moderated that just based on the world around us. So relative to, original expectations, it's moderated, but I would say that we're cautiously hopeful.
Mm-hmm.
Is my favorite phrase.
Mm-hmm.
It gets sequentially better in the second half, and you know, some of the conversations with customers, and people want to do the work.
Yeah
They just want clarity. And, I'm encouraged that we'll have more clarity second half than we did first half.
You know, fully acknowledging you haven't given guidance for 2026, do you have a view on the health of the consumer into 2026 versus maybe what we saw in 2025?
Cautiously hopeful.
I'll add a little bit to that. And I'll build on the point around clarity. I think everybody would like to have some clarity.
Mm-hmm.
And clarity doesn't mean that tariffs go away or this or that. It just means that we finally get ourselves into a position where everybody understands the rules of the road. And look, the setup was really nice going into 2025. You got to the end of 2024, we had an election. It cleared out some of the uncertainty. Everybody knew who the president was going to be, and general policy, and all of that. And I'll just use our Motion industrial business as an example. As we started 2025, PMI climbed above 50. It sat there in February, and then a whole new set of facts came forward in March and April with tariffs and the actions on trade, and then that pulled the sentiment back down.
If we could go through this season, through the second half of 2025, and in particular here, September through the end of the year, and we had some clarity on interest rates, we get cuts, we don't. We're not guessing and assuming what might happen this month or December or any period in between, and the same thing with tariffs. So if we assume that we get some clarity around China, no more delays, we know the framework. We get past whatever legal challenges are going to be or not be over the next month, all of that starts to lock into place. I think you could see a case that sets up just like we set up for 2025 coming out of 2024.
We get that cleared out, and maybe things from a sentiment and a consumer perspective start to change, and we see that momentum kicker we've been looking for. And that's a really kind of nice setup for GPC, given all the work we've done and the investment we've made in the business and the transformation actions we've taken and the costs we've taken out of the business. If we could get a little bit better backdrop, I think the 2026 profile would look different.
I was gonna make the same point, which is, you know, these have been moments over the last five years where the best thing you can do as a business is help yourself.
Mm-hmm.
And run at pace, invest thoughtfully for the medium and long term, and make the business better. And when the market comes, it will come, and we, because of the hard work that we've done in the interim, will be a beneficiary from, you know, market growth. So, that's what we're gonna focus on, and, you know, I think this team at Genuine Parts Company over the recent past has developed a lot of capability and muscles around navigating ambiguous macro environments, and, I'm really proud of the work that we're doing, and I know that 2026 will be a good year for us.
A couple of other questions we had. Inventory, what are your expectations for inventory growth into the second half?
Look, I mean, it's the most important thing for our business, the investment inventory that we make, because it's inventory availability both for the automotive and the industrial side. It's that break-fix that happens, and when the call comes, you have to have the part. We've made significant investment in inventory over the last 18 months, getting NAPA really strong and on its front foot, and being even more solidly footed on the Motion side, while at the same time being smart.
Mm-hmm.
So we're using data and analytics and AI to tell us how to change business rules around replenishment. So we're getting deeper in the fast-moving and taking data to allow us to maybe slow down a replenishment on something we now know is not gonna sell again for thirteen months. And maybe in the old world with GPC, we would have had buy it or sell it, buy it the next day. And so I think that is a capability we've built that's allowing us to be much smarter and stay right on top of the inventory point because it's the thing that drives the sales in the business.
What is your expectation for some of the non-tariff margin drivers, like freight, wages, and materials into 2026? Do you see them being the same, better, or worse?
Yeah, look, I don't wanna give 2026 guidance just yet, but on freight, wages, and rent, those are our big three expenses outside of anything else we might have to consider from a cost of goods sold perspective. Look, it's a little early to tell. I think some of the comments I made just a minute ago could help moderate some of the increases we've seen in those. So if we got some of that resolved here in the back half of 2025, we could come down off of the kind of 3%-3.5% range that some of those have been sitting in for us and what we've experienced in 2025, but we'll just have to wait and see. But it's our key focus for sure. What's gonna happen on wages?
What are we feeling on freight, and what are we feeling on rent? Rent's a little tougher one because all of us are going through a cycle of renewals that are happening post-COVID, when we were probably more advantaged than the landlord, and now that dynamic's flipping around a little bit.
Yeah.
And it's understood and planned for, but they're also feeling a different cost profile in the post-COVID environment. Wages and freight tend to be a function of the market.
Yeah.
And so if we look at the market, we can sort of see the markers for where those might end up and the expectation on that side.
And then our last question is just about the competitive landscape and consolidation. Do you think market share consolidation in your industry will speed up, slow down, or be the same in 2026?
I think it'll speed up, honestly. You know, our philosophy is, in tough markets, large serial acquirers usually benefit. I think in, on all of our businesses, we're kind of an acquirer of choice, and so, we're obviously here to do M&A, thoughtful, smart M&A. Interest rates down, and I think that's conducive as well. We're gonna stay really disciplined on it, but I think it creates a really nice opportunity for us.
Okay. Thank you for joining us.
Thanks, Kate.
Appreciate it.