Welcome to the 2026 Annual Shareholder Meeting of Genuine Parts Company. I'm Will Stengel, Chair Elect and CEO of Genuine Parts Company, and I'm joined today by Bert Nappier, our EVP and Chief Financial Officer, Chris Galla, our SVP, General Counsel and Corporate Secretary, and Timothy Walsh, our Vice President of Investor Relations. We appreciate you joining us today, and I'll now call the annual shareholder meeting to order. I'll be serving as the chairman of the meeting, and Chris will be serving as the secretary. I will now turn the meeting over to Chris to cover the agenda for today, as well as some procedural instructions regarding the question and answer portion of our meeting.
Good morning. I'd also like to welcome you and thank you for joining us for our 2026 annual meeting. Please note that this meeting is being recorded. The agenda that will govern the order of business for the meeting should appear on your webcast screen, along with three links. Two to the meeting materials and one to the rules of conduct for the meeting. The rules of conduct will also govern the question and answer session. This morning, we will first hear from Will, who will share a brief update on the state of the business, highlight the directors standing for election, and provide a recap of the previously announced intent to separate our automotive and industrial businesses into two publicly traded companies.
We will then proceed to the formal portion of the meeting where we will review the three proposals presented in our 2026 proxy, along with the vote counts for each. We will then adjourn the meeting and transition to the question and answer portion of our time together. If you are a shareholder and wish to ask a question, you could submit your question at any time on the virtual meeting website. We will address questions as stated in the rules of conduct and as time permits during the session. The polls for voting and questions and answers are open and will close after the presentation of the three proposals in our 2026 proxy statement. If you voted prior to the meeting, there is no need to vote again unless you wish to revoke your prior vote.
I would like to advise you that certain statements in today's meeting constitute forward-looking statements that are based on our current market, competitive and regulatory expectations and are subject to risks and uncertainties that could cause actual results to vary materially. Please see our latest Form 10- K and other SEC filings for a discussion of the risks that our businesses face. In today's presentation, we use certain non-GAAP financial measures and refer you to the non-GAAP reconciliations available on the investor page of our website. Now, let me turn the meeting back over to Will. Will?
Thank you, Chris. Here you can see a snapshot of Genuine Parts Company as we operate today. Founded in 1928 , GPC has been in business for 98 years. We are a global service provider of automotive and industrial replacement parts and value-added solutions. We serve 100,000 of customers through a network of more than 10,800 locations across 17 different countries. We are the leading global distributor in a diversified end market with 74% of our business in North America, 16% in Europe, and the remaining 10% in Australasia. Back in February, we announced our intent to separate our automotive and industrial businesses into two publicly traded companies. Each business is global in nature and a leader in their respective industries. I'll touch on the separation more in a moment.
Before turning to our 2025 financial performance, I wanna recognize our 65,000 teammates across the globe. Their commitment to serving our customers and executing our priorities each day allowed us to make meaningful progress across our key strategic initiatives. As we reflect on 2025, the operating environment remained dynamic, shaped by evolving trade policy, tariffs, interest rates, and a cautious consumer. Throughout it all, our mindset remained controlling what we can control and committing to strategic investment that positions the business to win near and long term. As we proactively manage through an inflationary cost environment, strengthen our operations, and deliver consistent service to our customers. That focus enabled us to grow revenue by winning new business and expanding gross margin for the third consecutive year. Now, I'll take you through some of the 2025 financials.
Total GPC sales were 24.3 Billion, a 3.5% Increase from 2024 . Adjusted gross margin increased 90 basis points, driven by pricing, sourcing, and acquisitions. Total adjusted EBITDA of $2 billion or 8.3% of sales. And our adjusted diluted earnings per share was $7.37 . We made significant progress on our global restructuring efforts, realizing approximately $175 million of cost savings or a benefit of $95 per share. And we generated $891 million in cash from operations. Our disciplined approach to capital allocation remained a defining characteristic of GPC in 2025 . Anchored in our framework to reinvest in the business, maintain a strong balance sheet, and uphold our long-standing commitment of returning capital to shareholders.
As we outlined on our 2023 Investor Day, we made the intentional decision to step up reinvestment in the business. Since that time, we have effectively doubled our historical level of capital expenditures. In 2025 alone, we invested more than $450 million, primarily in supply chain and technology. These investments are deliberate and focused, designed not only to enhance operating productivity and modernize our capabilities, but importantly, to improve the customer experience. We're balancing near-term priorities with the investments required to strengthen our automotive and industrial businesses over the medium and long term. This disciplined approach allows us to navigate the current macro environment while continuing to advance our strategic initiatives. Our capital allocation priorities also include the continued return of capital to our shareholders through an increasing dividend.
In 2025, we returned over $560 million to shareholders in the form of dividends. For 2026, GPC is paying an annualized dividend of $4.25 per share, representing a 3.2% increase from 2025 and marking the 70th consecutive year we have increased the dividend. Strong corporate governance is a foundation to our long-term value creation. That begins with an effective board of directors. I'd now like to briefly comment on our board of directors, including the nominees standing for election at this year's annual meeting. The board has continued its multi-year refreshment program, thoughtfully evolving its composition to align with our strategic priorities. Over the past year, we strategically added industry and operational expertise through the appointment of two outstanding independent directors, Matt Carey and Court Carruthers.
As part of this refreshment process, Robin Loudermilk and John Holder retired in late 2025 after many years of dedicated service to the company. We thank them for their meaningful contributions to GPC. As previously announced, Paul Donahue will conclude his service on the board following this annual meeting, bringing to a close more than two decades of dedicated service to GPC. Throughout his tenure, Paul has provided valuable insight and perspective, and on behalf of the board and the entire organization, we sincerely thank him for his many contributions to the company. Today's nominees collectively represent a broad range of backgrounds, skills, and experiences. Our board reflects diversity across industry expertise, operational leadership, finance and governance, as well as diversity in race, ethnicity, gender, age, and nationality. We believe this breadth of perspective enhances the board's effectiveness in guiding strategy and supporting sustainable long-term value creation.
We began 2026 with a significant strategic update for Genuine Parts Company, announcing our intent to separate into two independent, publicly traded companies. Our automotive businesses will continue to be the largest global automotive aftermarket replacement parts and solutions provider in the world, and our global industrial businesses will create a standalone, best-in-class industrial solutions platform. For nearly a century, Genuine Parts Company has built a proud legacy of leadership and driving change across its industries, consistently focused on serving our customers and strengthening the business as markets evolve. However, the pace of change and agility required for all businesses continues to accelerate. Artificial intelligence is the most recent example. What has worked in the past for companies likely won't work in the future.
With that in mind, over the past decade, we've established leading global footprints in attractive geographies, simplified our business mix, and accelerated strategic investments to further advance and differentiate our business. More recently, despite dynamic and unprecedented market conditions, we have executed a broad-based supply chain and technology transformation while continuing to invest in talent and capabilities across the organization. We have complemented these efforts with significant acquisition activity to add scale and enhance local service in our priority markets. Through a coordinated global team approach, we've evolved the business and increased the company's intrinsic value. This work has created a strong foundation on which we can continue to evolve, win versus our competition, and pursue options to unlock shareholder value. As shared last September, in 2025, we conducted a comprehensive strategic and operational review to determine how best to unlock our full potential and maximize shareholder value.
In partnership with our advisors, we evaluated our business structure, operational and strategic growth opportunities, and capital allocation priorities. Following this review, we concluded that separating our global automotive and global industrial businesses is the best path forward for our company and stakeholders. We have two scaled market-leading businesses with compelling but distinct growth strategies, and a separation will allow each to pursue those opportunities most effectively. We believe creating two public companies positions both for long-term growth. The separation will enhance focus and agility, enable tailored strategies and investment priorities. Strengthen financial flexibility, and provide investors with clearer differentiated value propositions. Global Automotive, with its globally recognized NAPA brand, will operate as a pure-play automotive aftermarket parts and solutions provider. As a standalone company, it will be better positioned to capitalize on shared customer needs and favorable market trends, particularly within the growing commercial customer.
Its geographic diversity provides a balanced global platform with clear market share opportunities in a $200 billion addressable market that is nondiscretionary by nature. Our Global Automotive business is executing a transformation program designed to deliver above-market growth and margin expansion while optimizing working capital and increasing return on invested capital. Significant progress has already been made in each geography with investments deployed and capability building. As a standalone company, Global Automotive is targeting to maintain an investment-grade credit rating and will have a balanced capital allocation program to support the strategic vision, including organic investment, accretive bolt-on acquisitions, and returns to shareholders. Turning to Global Industrial, Motion is a leading diversified industrial distributor serving more than 180,000 customers across a wide range of end markets.
At approximately twice the size of its nearest competitor, Motion offers the largest portfolio of mission-critical maintenance, repair, and operations parts and value-added solutions to keep facilities operating efficiently. It differentiates through deep technical expertise and a unique omni-channel sales model built on long-standing supplier and customer relationships. Motion competes in a highly fragmented $150 billion global market with defined commercial and operational initiatives to extend its industry-leading position. Motion will build on its best-in-class financial performance by delivering profitable sales growth, operating leverage that translates into improving double-digit EBITDA margins, strong free cash flow generation, and attractive returns on invested capital. Targeting an investment-grade rating and supported by strong cash flow and a dedicated balance sheet, Motion will continue to pursue strategic and bolt-on acquisitions to strengthen priority products, markets, and solutions capabilities. The automotive and industrial businesses already operate independently.
There are no shared customer-facing roles. There are limited shared facilities. There's an ongoing body of work to finalize all the separation details. There are a select number of IT, sourcing, and back-office support functions that we will manage and transition. We believe the initial estimates of incremental costs associated with the separation are manageable. We estimate them to be in the range of $100 million-$150 million. The separation is planned to be tax-free to GPC shareholders. We will provide further updates on leadership and governance, standalone financial profiles and long-range targets, capital structure, capital allocation strategies, and other separation matters as we move through our process. We're working at pace and targeting to complete the separation in the first quarter of 2027, subject to customary approval processes.
We plan to host investor days for each business in the second half of 2026, and we look forward to sharing more about the exciting vision for these two companies as we advance. In closing, this is an exciting time for GPC as we are proactively pursuing a strategy to unlock value and position each business and geography for long-term success. Today, we have two leading distribution platforms in attractive industries with defined plans to capture exciting opportunities. The clarity the transaction provides will accelerate our ability to deliver performance and extend our leadership positions in our industries for years to come. Thank you for your support of and interest in GPC. I would like to turn the meeting over to our secretary to conduct the formal part of our shareholder meeting. Chris?
Thank you, Will. We will now begin the formal portion of our shareholder meeting. The board of directors has appointed representatives of Broadridge to tabulate the votes cast at our annual meeting, and American Election Services LLC will act as the independent inspector of elections. A list of shareholders as of the record date is available for inspection by shareholders using the registered shareholder list link found on the webcast page. The notice of the meeting and proxy materials were mailed beginning February 27th, 2026 to all shareholders of record as of February 18th, 2026. As a result, this meeting is being held pursuant to proper notice. We have received votes representing approximately 87% of the roughly 122 million shares of the company stock that are eligible to vote.
This means we have a quorum present, and the meeting is duly constituted and will proceed. Today, we have three management proposals for you to consider. They were all discussed in the proxy statement. The first proposal is the election of directors. The following 11 people have been properly nominated by the board. Mr. Matthew Carey, Mr. Court Carruthers, Mr. Richard Cox, Mr. Russell Hardin, Ms. Donna Hyland, Mr. Jean-Jacques Lafont, Ms. Juliette Pryor, Mr. Darren Rebelez, Ms. Laurie Schupmann, Mr. William Stengel, and Mr. Charles Stevens. The board recommends a vote for the election of each director nominee. The second proposal is an advisory vote to approve executive compensation as disclosed in the company's 2026 proxy statement. The board recommends a vote for this proposal. The third proposal is a ratification of the selection of the company's independent auditor, Ernst & Young LLP, for fiscal year 2026.
The board recommends a vote for this proposal. I have received a preliminary voting tabulation from American Election Services, and based on that tabulation, I am pleased to report that all 11 director nominees on the ballot have been elected with over an average of 98% of the votes cast. Each will serve until the next annual shareholder meeting and until their successors are elected and qualified. Proposal two, the advisory vote on executive compensation, has been approved by more than 95% of the votes cast. Proposal three, the ratification of the company's auditor, Ernst & Young LLP, has been approved by approximately 96% of the votes cast.
Thank you, Chris. We have now completed the formal portion of the meeting, and the 2026 annual shareholder meeting is now adjourned. We thank you for your participation in our virtual shareholder meeting. I would now like to turn the meeting back to Chris to begin the question-and-answer portion of our time together.
Thank you, Will. Welcome to the question-and-answer portion of the meeting. I will now call on Timothy Walsh, Vice President, Investor Relations, to see if there are any questions in the queue.
Thank you, Chris. There are no shareholder questions at this time. I'll turn it back to Will for final remarks.
We would like to thank you for your participation in today's shareholder meeting and for your continued commitment to an investment in Genuine Parts Company.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.