AddedRisk Factors
With respect to our North America Automotive and International Automotive segments, the primary factors are:
The 10-K against last year's
151 changes: 50 added, 44 removed, 57 reworded
10-K 0000040987-26-000003 (2026-02-20) vs 10-K 0000040987-25-000026 (2025-02-21)
The redline
The paragraph that changed most in each section
Marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 214 words changed in this paragraph; it is 30% similar to last year's version.
Our business is global, so and changes to existing international trade agreements, blocking of foreign trade, increased protectionism, or imposition of tariffs on foreign goods could could, among other things, weaken consumer confidence, negatively impact employment rates in industries on which we are dependent, result in decreased revenues and/or increases higher cost of goods sold and lower gross profit and margins, cause supply chain delays or disruptions or diminishing returns on capital investments, including with respect to our ongoing distribution center optimization initiative, and deter customers in pricing, either our Industrial segment from pursuing facilities and automation projects, all of which could have an adverse impact on our business, results of operations, financial condition and cash flows in future periods. For instance, the United States imposed Section 232 tariffs on many imported products of steel and aluminum in March 2018 and expanded the tariffs to additional derivative products of steel and aluminum effective February 8, 2020. The United States imposed Section 301 tariffs on most imported products from China starting in July 2018. Although the United States and China reached a Phase One trade deal in January 2020, there was no Phase Two trade deal implemented and most of the tariffs imposed remain in place. Uncertainty persists in the trade relationship between the two countries that impacts the global trade landscape, and as of February 2025, new tariffs were enacted that significantly increase tariffs on foreign imports into the United States. The effects of these changes, including responsive actions from foreign governments, could also have significant impacts on our financial results.
Source: Item 1A, 10-K 0000040987-26-000003 vs Item 1A, 10-K 0000040987-25-000026
MD&A 190 words changed in this paragraph; it is 34% similar to last year's version.
SG&A expenses increased $476 $508 million, or 7.7%, 7.6%, from 2023. Approximately 50% 2024. The growth in SG&A expenses was largely attributable to elevated operating expenses linked to acquisitions of the approximately $225 million and a $103 million increase in our asbestos-related product liability due to adverse trends in claim counts and costs. The remaining increase was driven by personnel expense inflationary wage pressures, rising healthcare costs and 10% by higher rent expense, reflecting inflationary pressures on annual wage increases and lease renewals and higher operating costs expense due to acquisitions, primarily from the addition of more U.S. automotive stores. Additionally, 10% of the increase was attributable lease renewals. We also continue to our make investments in technology as we continue to enhance our supply chain and digital capabilities to as we improve the customer experience, increase automation in distribution centers, and modernize payment platforms. The remainder of the increase was attributable to other SG&A categories, as we incurred higher operating costs from acquired businesses, and we continued to invest in our supply chain to optimize product assortment and positioning, which helps reduce distribution costs. Partially offsetting these increases was approximately $175 million of cost savings associated with our global restructuring program, which was designed to better align our assets and cost structure to the increase were $43 million in real estate sale gains, primarily from sale-leaseback transactions to enhance our financial operational flexibility on properties we continue to use in our ongoing operations. current economic environment.
Source: Item 7, 10-K 0000040987-26-000003 vs Item 7, 10-K 0000040987-25-000026
Accounting Policies 83 words changed in this paragraph; it is 41% similar to last year's version.
We formally document relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges to specific forecasted transactions or variability of cash flow to be paid. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivative and non-derivative instruments that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. When a designated instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively.
Source: Item 8, Note 1 – Summary of Significant Accounting Policies, 10-K 0000040987-26-000003 vs Item 8, Note 1 – Summary of Significant Accounting Policies, 10-K 0000040987-25-000026
Legal Proceedings 44 words changed in this paragraph; it is 86% similar to last year's version.
As a result of our comprehensive legal review, including our evaluation of recent claim activity trends and our updated actuarial analysis, we increased the liability by $57 $107 million in 2024. 2025. This change in estimate resulted from new information related to our estimated number of future claims, the estimated cost of resolving claims, as well as the impacts of discount rate changes. We have 2,768 3,274 pending asbestos lawsuits as of December 31, 2024. 2025. The amount accrued for pending and future claims was $317 million as of December 31, 2025, which represented our best estimate of the liability within our calculated range of $258 million to $397 million, discounted using a discount rate of 4.18%. The amount accrued for pending and future claims was $256 million as of December 31, 2024, which represented our best estimate of the liability within our calculated range of $219 million to $313 million, discounted using a discount rate of 4.58%. The amount accrued for pending Our undiscounted product liability was $398 million and future claims was $244 $336 million as of December 31, 2023, which represented our best estimate of the liability within our calculated range of $196 million to $277 million, discounted using a discount rate of 3.88%. Our undiscounted product liability was $336 million and $308 million as of December 31, 2024 2025 and December 31, 2023, 2024, respectively.
Source: Item 3, via Note 16 – Commitments and Contingencies, 10-K 0000040987-26-000003 vs Item 3, via Note 16 – Commitments and Contingencies, 10-K 0000040987-25-000026
Every change, by type
Sentences and paragraphs added, removed or reworded
Sentences and paragraphs of GPC's Risk Factors and MD&A, 10-K 2026-02-20 against 10-K 2025-02-21. Each links to the text at sec.gov.
AddedRisk Factors
Our results of operations, revenue, and supply chain could be materially affected as a result of a bankruptcy, insolvency or other credit failures of a significant customer or vendor.
AddedRisk Factors
Our operations depend on relationships with various customers and vendors, and we may be exposed to risks if any customer or vendor declares bankruptcy, becomes insolvent, or otherwise fails to meet its financial or contractual obligations. For example, in September 2025, one of the key vendors for our North America Automotive segment filed for Chapter 11 bankruptcy. In the event a key customer or vendor files for bankruptcy or ceases operations, we may face significant disruptions including, but not limited to, delays in our supply chain, inability to source replacement goods at comparable costs, increased operating expenses, and such events may negatively impact our ability to collect outstanding receivables or ability to generate future sales and cash flow. Credit and financial difficulties of our customers and vendors may also lead to a reduction in sales, price reductions, increased returns of our products, and could adversely affect our brand, revenue, operating results, and financial condition.
AddedRisk Factors
commerce solutions our retail and business customers desire, differentiate ourselves from our competitors' e-commerce solutions or adapt to new or enhanced e-commerce tools, we may lose existing customers and fail to attract new ones. Our business, financial condition, results of operations and cash flows may be materially and adversely affected as a result.
AddedRisk Factors
The proposed separation of our Automotive and Industrial businesses may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the separation, if completed, will achieve the intended financial, strategic and operational benefits.
AddedRisk Factors
On February 17, 2026, following a comprehensive strategic and operational review by our Board of Directors and management team, we announced our intention to separate the Company into two independent, publicly traded companies: Global Automotive and Global Industrial. The proposed separation is intended to be tax-free for U.S. federal income tax purposes for the Company’s shareholders and is expected to be completed in the first quarter of 2027. Completion of the proposed separation is subject to, among other things, the final approval of our Board of Directors, receipt of requisite regulatory clearances and compliance with applicable SEC requirements.
AddedRisk Factors
The proposed separation is complex in nature, and unanticipated changes or developments could delay or prevent the completion of the separation or cause the separation to occur on terms or conditions that are different or less favorable than expected. Whether or not we complete the separation, we may face significant challenges in connection with the transaction, including, without limitation:
AddedRisk Factors
•our ability to maintain operational, commercial, data and information technology, intellectual property, human resources, finance, legal, sales, and marketing continuity where necessary between the two companies;
Show the other 16
AddedRisk Factors
•the risk that, if the Internal Revenue Service determines that certain steps of the proposed separation do not qualify for tax-free treatment for U.S. federal income tax purposes, the Company and its shareholders could incur significant tax liabilities;
AddedRisk Factors
•costs and expenses related to the proposed separation are expected to be significant, including costs related to commercial and operational dis-synergies, restructuring and other transaction expenses, expenses related to establishing stand-alone operational, commercial, personnel, and digital and technology infrastructure and accounting, tax, legal, and other professional services expenses, any of which may be higher than initially expected;
AddedRisk Factors
•retaining existing business and operational relationships, including with customers, suppliers, employees, and other counterparties;
AddedRisk Factors
•failing to successfully promote retention, as well as motivate and maintain efficient and effective labor and employee relations;
AddedMD&A
In the fourth quarter of 2025, we disaggregated our automotive aftermarket business into two reportable segments. There were no changes to our Industrial segment. We believe this expanded segmentation will provide our investors with additional information to better understand our performance. Concurrent with the change in reportable segments, we revised our prior period financial information to be consistent with the current period presentation. There was no impact on consolidated net sales, total operating expenses, net income or diluted EPS as a result of these changes. Refer to the Segment Data Footnote in the Notes to Consolidated Financial Statements for additional information.
AddedMD&A
Our results in 2025 reflect continued headwinds in global market conditions, persistent cost inflation, changes in tariffs and global trade regulations and costs associated with investments in our technology and supply chain capabilities to drive growth.
AddedMD&A
Net income totaled $66 million, down 92.7% compared to the prior year period. Our results include discrete charges for our pension settlement of $742 million, credit losses from the bankruptcy of First Brands Group of $151 million, and asbestos-related product liability remeasurement of $103 million. Our lower net income was also driven by lower pension income and higher SG&A expenses from inflationary pressures on salaries, healthcare costs, freight, and rent, as well as planned investments in technology to modernize our systems and digital platforms. These technology investments, along with enhancements to our supply chain capabilities, also contributed to higher depreciation and interest from additional borrowings year over year. These costs were partially offset by increased cost savings of approximately $175 million associated with our global restructuring program, which was designed to better align our assets and cost structure to the current economic environment.
AddedMD&A
We continue to monitor the global trade environment, including the tariffs on merchandise inventories sourced directly or indirectly from several countries, such as China, Canada, and Mexico and their impact on our operations. During 2025, tariffs drove higher prices to our customers and cost inflation that impacted our gross margin and SG&A expenses. We managed these challenges through strategic pricing and sourcing initiatives, leveraging global
AddedMD&A
supplier relationships and technology tools. While the ongoing economic volatility continues to add uncertainty to our operating environment, we expect our balanced portfolio and global diversification will help mitigate potential disruptions. See Part I, Item 1A. Risk Factors for further discussion regarding tariff-related risks.
AddedMD&A
In 2025, we completed over 50 strategic acquisitions resulting in over 250 additional locations globally. The majority of our completed transactions were in our North America Automotive business, primarily through the acquisition of independent NAPA stores in the U.S. In addition, we made a strategic acquisition of Benson Auto Parts, expanding our store footprint in our key Canadian markets and providing a diversified product offering to better serve our customers in Ontario and Quebec.
AddedMD&A
Depreciation and amortization increased $130 million in 2025 compared to 2024, as a result of the ongoing enhancements to our technology platforms, such as proprietary digital tools that improve customer experience and operational transparency, as well as supply chain initiatives designed to increase efficiency and service levels. These targeted investments are critical components of our strategy to strengthen our competitive position, support customer needs amid evolving market conditions, and drive long-term value creation. Additionally, approximately $40 million of the increase is attributable to a nonrecurring adjustment related to asset retirement obligations.
AddedMD&A
The $855 million increase primarily reflects a $742 million pension charge related to the settlement of our U.S. qualified defined benefit plan. Additionally, increased investments led to higher borrowings, contributing to a $67 million increase in net interest expense in 2025. At the same time, a shift to a more conservative investment
AddedMD&A
strategy in the months leading up to the settlement of our U.S. pension plan resulted in a $47 million decrease in other non-operating income.
AddedMD&A
The effective tax rate for year ended December 31, 2025 considers the enactment of One Big Beautiful Bill Act ("OBBBA") on July 4, 2025, which did not have a material impact to income tax expense.
AddedMD&A
The year over year declines in these metrics are primarily due to lower pension income and the settlement of our U.S. qualified defined benefit plan, discrete charges resulting from First Brand's bankruptcy, adverse asbestos claims trends, higher expenses from ongoing investments, persistent cost inflation and higher interest expense. This was partially offset by gross margin expansion and benefits from our global restructuring program and cost actions. Each of these items is explained more fully above.
AddedMD&A
North America Automotive EBITDA decreased $43 million, or 6.1%, from 2024, and EBITDA margin decreased 70 basis points to 7.1% from 7.8% in 2024, driven by the following factors.