Ladies and gentlemen, thank you for standing by. And welcome to the Genuine Parts Company Third Quarter 2015 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Sid Jones, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining us today for the Genuine Parts' third quarter 2015 conference call to discuss our earnings results and outlook for the full year. Before we begin this morning, please be advised that this call may involve forward-looking statements regarding the company and its businesses. The company's actual results could differ materially from any forward-looking statements due to several important factors described in the company's latest SEC filings. The company assumes no obligation to update any forward-looking statements made during the call. We will begin this morning with comments from Tom Gallagher, our Chairman and CEO. Tom?

Thank you, Sid. And I would like to add my welcome to each of you on the call today and to say that we appreciate you taking the time to be with us this morning. Paul Donahue, our President; and Carol Yancey, our Executive Vice President and Chief Financial Officer are both on the call as well, and each of us has a few prepared remarks and once completed, we will look forward to answering any specific questions that you may have. Earlier this morning, we released our third quarter 2015 results and hopefully you've had an opportunity to review them. But for those who may not have seen the numbers as yet, a quick recap shows sales for the quarter were $3.922 billion, which was down 2%. Net income was $188.1 which was down 1%, and earnings per share were $1.24 this year compared to $1.24 in the third quarter last year, putting us even in EPS for the quarter. As has been in the case for year along, currency exchange has been a significant headwind for us both on the revenue and earnings results and the impact accelerated in the third quarter. Importantly, the local currency results for our international businesses remain solid but when converted to U.S. dollars we lost 4% on the revenue line and 5% per share in EPS in the quarter. Or stated in another way without currency impact our sales were up 2% and EPS was up 4%. In addition to the currency headwind, we continue to experience a slowdown in specific segments of the economy which impacted several of our businesses but most significantly in industrial and electrical. We will comment on this factor a bit more as we review the individual businesses and as we customarily do I will cover the…

Thank you, Tom. Good morning and welcome to our third quarter conference call. I’m pleased to be with you here today and have the opportunity to revive you an update on our third quarter performance of our automotive business. For the quarter ending September 30, our global automotive sales were down 2% year-over- year. This performance consists of approximately 4% in core automotive growth, which is consistent with the second quarter and improved from the 3% underlying growth we reported in the first quarter. However, this was offset by a currency headwind of approximately 6% in the third quarter, which is up from a 4% currency impact in the first and second quarters. Previously, our expectation was the currency to hold at/or around 4%. Our U.S. team posted a 4% sales increase in the third quarter which is improved from the 3% growth we reported for the first and second quarters. Our international businesses which include Canada, Mexico, Australia and New Zealand reported another quarter of mid-single digit growth and local currency. We are encouraged by the positive trends we are experiencing in our U.S. results and the steady growth across our international markets. We expect that these trends continue in the periods ahead. In the U.S. we are pleased with the progress and we are seeing in our field operations across the country. While result vary by geographical reason, our teams are executing on our key initiatives and again we are pleased with the progress The Atlantic, North East, Central and Southern Region showed the strongest growth in the quarter. Likewise, our sales in the mid-western region of the country rebounded nicely in the quarter. This pay group reported solid growth following flat sales in the second quarter, which was directly related to the wet weather patterns experienced in…

Thank you, Paul and good morning. We'll begin with a review of our income statement and segment information and then we'll review some key balance sheet and other financial items. Our total revenues for the quarter were $3.9 billion, consisting of underlying sales growth of 1.4%, seven tenths of 1% contribution from acquisitions. These items were offset by a strong currency pressures of 3.7%, which was somewhat stronger than we had anticipated. For the nine months through September, our total revenues of $11.6 billion, a 1% increase, consists of 2.4% core growth and 1.2% from acquisitions, offset by a 3% currency headwind. Our gross profit for the third quarter was 29.8%, up slightly from the 29.7% gross margin last year. For the nine months, our gross margin of 29.8% compares to the 29.9% reported last year. The progress we made in the third quarter is encouraging and primarily reflects the improvement in our automotive margins, although the office and electrical businesses also increased. The improvement in these businesses was partially offset by the continued pressure we're experiencing in our industrial business, which is due to the sluggish sales environment and lower inventory purchases, which ultimately negatively impacts supplier incentives earned. Executing on our gross margin initiatives is a key priority for our management team and we're committed to an enhanced gross margin for the long-term. We would also add that our gross margin initiatives are critical in offsetting the low inflationary environment that has persisted across our businesses for several years now, especially in automotive. Cumulative supplier price changes through September are negative three tenths of 1% for automotive, positive seven tenths of 1% for industrial, positive six tenths of 1% for office products, and a negative 1.5% for electrical. Turning to our SG&A, our total expenses were $869 million…

Thank you, Carol, and thanks to you and Paul for the comprehensive updates. So that will conclude our prepared remarks and clearly it was another challenging quarter for us. However, underneath the headline numbers, there were a number of positives as well. Few examples, the 4% constant currency increase in automotive and 5% company store same-store sales growth shows steady progress as does our mid single digit local currency increases in Australasia, Canada and Mexico. Also in Automotive, the continued strong results coming from the NAPA Auto Care and major account initiatives are two primary and commercial programs and the solid 8% increase in our retail business show good progress on both the commercial and retail sides of the business. The completion of two key acquisitions in the quarter, one in office products and one in industrial and we expect to announce a few others of similar size before yearend and all this will give us a bit of a sales lift going into 2016. Gross margin improved 12 basis points in the quarter and SG&A decreased six basis points enabling us to show operating margin improvement in three of our four businesses and an overall GPC operating margin improvement of 40 basis points. On the balance sheet, good work was done in the areas of accounts receivable, inventory and accounts payable, enabling us to show a nice reduction in working capital as well as a nice increase in cash generation and there are ongoing progress being made by GPC team in a number of key areas as well, which will all serve as well in the quarters ahead. However, the one area that continues to give a significant challenge is revenue growth across all of our businesses. Currency is having an effect on each of the businesses to one…

[Operator Instructions] Your first question comes from the line of Elizabeth Suzuki with Bank of America Merrill Lynch.

Good morning, guys. Can you parse out the foreign exchange impact between Australia and Canada, et cetera? And do you think the headwinds should start to ease in maybe not the next quarter, but starting 2016?

I'll try to answer that Elizabeth. We can't give you the specifics right now on the impact by country, but I can’t tell you that currency exchange quarter-end-over-quarter-end we were down about 20% in Mexican Pesos, about 18% in both Canadian and Australian Dollars. If that helps, we will be happy to follow up with you.

Okay, thanks. In the industrial segment, are there cost-cutting measures or price cuts that you can execute to try to offset the demand headwinds? Are you noticing any market share shifts among your competitors at all?

We are adjusting our cost structure as we go forward. What normally happens is when we get in the periods like this and we have seen prior periods similar to this. Revenue declines a bit more quickly than we can get to cost structure down, but eventually, we will catch up with it. And then at least based upon prior experiences what we have seen is that, when revenue does start to come back, the earnings come back fairly quickly and at a bit stronger pace because of the good work that the team does on the cost side of the business. As far as share shifts, we don't see anything right now that would indicate to us that we are losing business. I had mentioned in my comments that good work is going on in landing new agreements with specific customers, which might suggest that we are at least holding our own, perhaps picking up a little bit, but as being overshadowed by the declines we are seeing in certain categories right now.

Okay. Thank you.

Thank you.

Your next question comes from the line of Mark Becks with JPMorgan.

Hi, thanks. On the sales guidance, I just wanted to sharpen the pencil on automotive and industrial. So it looks like it's implying kind of 5% to 9% declines in industrial and then in automotive, it seems like 4Q is like 2% to 6%. So I was just hoping you can - obviously, with 4Q being a little bit of a smaller quarter, it gives a wide range, so I'm hoping you can drill that down a little bit.

You're going to have to help me on that. I get a little confused when you referenced second quarter.

Yes, so if we use the guidance for down 2% to 3% in industrial, it seems to imply a down 5% to 9% decline in industrial. So I want to see if that seems appropriate. And then similarly with automotive, if we should be thinking about kind of 2% to 6% sales growth in that category for the fourth quarter.

I think on the industrial, you are probably a ted high. What you saw as Tom mentioned, the later part of the quarter got worse in the industrial segment. So we are guiding for a little bit worse in Q4 so it’s probably more at the lower end of the range that you talked about. And then I think as you look out for what automotive would be Q4, I think you are in line with what we are using. Part of that is the currency. If currency won’t be quite as strong of an impact in Q4, it's going to be more back to where it was like Q2.

All right, that's helpful. And then within industrial more specifically, if I look at your 4% sales decline, it looks like it was a little bit more severe than some of the competitors out there. I was just curious who you see the major competitors being, whether it be an Interline or perhaps maybe a Grainger or Fastenal who looked like their top line was a little bit stronger?

Yes. We would not say that they are direct competitors. The best comparison I think would be with Applied Industrial Technologies with Kaman and with DXP. They would be the ones that we would encounter most frequently and would have the cost with the clearest overlap in product offering. If we look at Interline or if you like at Grainger or Fastenal, we really don’t overlap with them as much on the product categories that we sell.

Understood. And then just last question, you operated a distribution business essentially with four distinct segments. I know some of the facilities are shared warehouses, but I was just hoping you can kind of tease out what benefits you derive from operating the multiple segments and then the potential synergies you gain, whether it be from fleet or transportation or shared services from the various segments? Thank you.

You mentioned three of the areas where we do get some leverage, certainly on transportation both inbound and two to three outbound. We certainly get it in the area of shared services without question. We don't share facilities to a large degree today. Each business runs independent facilities. That’s something that we think potentially we could do as we go forward. We are looking at it now between the couple of the businesses. But we share technology enhancements and capabilities. We generally pilot something new in one of the business, prove the concept and then start to roll it into other businesses. There are several things that we do across all of the businesses once we prove that the concept gives us a kind of returns that we are looking for.

And Mark I just want to be clear on automotive guidance that we talked about. What we were talking about is probably flat up slightly for Q4 that’s what implies, but the FX would be about 4%. So that is kind of what you are talking about.

Okay. So with kind of the 4% core automotive growth rate, it seems like that's a good number to think about for fourth quarter as well.

Yes, it is. And last year Q4 our automotive comp was at 6%. So that’s a good number.

Okay, great. Best of luck.

Your next question comes from the line of Greg Melich with Evercore ISI.

Hi, thanks. Tom, I think in your final comments, you mentioned that revenue decelerated across the business through the quarter. Could you help, I guess give a little bit more color then into October and specifically in auto what you saw. Does that mean that auto had a really strong beginning of the quarter and now it's just at that lower level that you just inferred or what do you think is going on there?

We saw the quarter was softer. The underlying business as Paul mentioned was pretty good. But we did see deceleration in our U.S. based business, as well as in the international businesses. The delta is not as significant in automotive as it is in industrial - and to a degree in office products. The only business that we did not see deceleration across the quarter was in our electrical business. The other three all declined. If we look at the early results in October, it’s pretty much in line with what we saw in the back half of the quarter is softer than what it had been. We think right now based upon what we can gather from talking with our customer base and with our supplier base is we think end market demands have pulled back a bit from what we had seen earlier in the quarter and certainly through first half.

If I could follow up on the gross margin, what drove the expansion there, again, especially in auto? Was it the stronger dollar helping, price optimization, vendor leverage? What are you seeing there?

Actually Greg, it’s all those things. We were pleased - this has been our second quarter, our gross margin improved with automotive and some of the things that we put in place earlier in the year and certainly you talked about it with our foreign operations. We had to put some things in place on both the buy side and the sell side to combat the currency issues. Those are working quite nicely for us in Q2 and Q3. And then really on the U.S. business too, their gross profit is up as well and that’s really just strong focus on both the buy side and the sell side. It’s just really all across the board. So we’ve been pleased to see their improvements. I'd tell you going into Q4, the only headwind is going to be coming with industrial and just a further softening in their top line. So if we can maintain where we were at be flat or slightly up, through the rest of the year, but we’ve got a little bit of headwind with industrial.

That’s great. Thanks a lot.

Your next question comes from the line of Matthew Fassler with Goldman Sachs.

Thanks a lot and good morning to you. The first question I want to ask is about the cadence of cost control. The Company responded quite well to the revenue slowdown in the quarter, both in SG&A and in working capital. And the deceleration in SG&A growth or I guess the move to a decline was a real step change from where you had been. The guidance that you gave as best I can tell suggests a trend in SG&A much closer to the year-to-date number than what you saw in the third quarter. So can you talk about what enabled you to cut costs so substantially in Q3 and why you don't expect that same pace of expense reduction to persist into Q4?

What we talk about is, look we were extremely pleased with the progress in Q3 and I'd tell you from an SG&A standpoint, again our team suggesting our cost structure to where we saw the topline to be and it’s in a lot of different areas on SG&A and we’ve seen improvement that’s come in automotive really all year with SG&A. It’s really hard with industrial and their lack of top line for them to have. And they are going to have continued pressure on their SG&A line. When you look at the full year, I’d really point you to look at our operating margins through the nine months where each of our businesses except industrial have improvements through the nine months and where we are at 10 basis points operating margins, that’s really probably more of what we expect to be for the full year. We had sequential better sales in Q3, especially in automotive. So we leverage better on the SG&A. Q4, you just have a lower sales volumes, their seasonality. You won't get as much SG&A leverage. And then we are guiding on the corporate expense. You see a change there for the end of the year. We had some favorable onetime items in corporate expense at the end of the year and we called those out last year and there was a swing of almost – there will be a swing of almost $10 million in that retirement plan adjustment. So some of those things are factoring into our full year guidance to get us more to the year-to-date number you’re looking at.

Okay. Secondly, and very briefly, I know you announced a couple of new acquisitions. Is it possible just to sum up I guess the annualized revenue that you acquired and just how we think about that factoring into the full-year guidance? I suspect that the numbers are going to be reasonably small contributors, but anything we need to factor in as we build up our organic versus acquisition model for Q4?

Well, we have contemplated those acquisitions in our guidance. The one that Paul mentioned, the Covs acquisition doesn't close to December 1. So there is a very small amount that would go in there. But if you look at the ones we've already exposed on, you’re talking about something around 140 million on an annual basis and that excludes the Covs deal but hasn't closed yet.

And these are acquisitions -- the $140 million are for acquisitions you announced today?

They are the ones going back to January 1.

Okay, got it.

We have had about 7. But those are in our 2015 guidance already.

So the new news we would have to add to our models is kind of immaterial for the rest of the year?

That's correct.

And then finally interesting commentary on office products and I guess wondering for your insights on the independents sort of bearing the brunt of the slowdown. When do you typically see that in a cycle? I know that there can be some volatility by channel, so I don't want to make too much of it, but you did call it out. So curious for your read from the field on what that typically means. A – Tom Gallagher: Well, the independence this is two consecutive quarters at the independent side of the business that has been down and we see further consolidation happening in that customer segment currently. We see more of that continuing honestly as we work away through year end but our expectation would be that the independent side of the business would be positive for us in 2016, probably have another quarter or two were to be negative ahead of us yet.

It sounds like you have visibility, Tom, to some consolidation by actual deals that have happened that are changing the landscape a bit and then those run their course. A – Tom Gallagher: Well there are some of that, that’s right, that’s right. And we have visibility to some that we think are going to happen.

Fair enough. Got it. Okay, thank you so much, guys. A – Tom Gallagher: Thank you.

Your next question comes from the line of Seth Basham with Wedbush Securities.

Good morning and thank you for taking my question. My first question is on the industrial side looking at the margin performance there, which was very good all things considered. Can you help us understand a little bit more on the gross margin side versus SG&A side where you saw more pressure and how you expect that to play out in the fourth quarter?

So on the industrial side and their growth margin is actually down and then their SG&A is not improved either. That’s the one area that I mentioned that - look the size the top line, it's also the volume incentive, so their volume incentives are down similar to their sales decrease in the quarter and we would expect those to be down for the full year as well. So they are just not getting the same level and so that’s going to be, I think both pressure on gross margin and SG&A. So where their margins down 10 basis points through the nine months given where we have guided to for the full year we could see a little more pressure on that operating margin for the rest of the year.

Got it. So only a little bit more than 10 basis points. Does that mean 2030 or even more severe than that?

Well, we’d hope that will not be more severe than that. Look we are really hopeful that - right now we just don’t know but hopefully it’s something what you described.

Got it, okay. Moving on, on the auto side, looking at the core business on the wholesale side in the U.S., this is the second quarter in a row that you've talked about ticket counts being negative, not dramatically so, but any more color there why that's happening, Paul?

Yes, and I think you and I talked about that last quarter. Look there is a couple of things happening here, one certainly vehicles, vehicle quality is a heck of lot of better today and I think we’re seeing some of that impact on the number of cars coming into the bays. But what you do see when they do come in that the repair is at a higher price which were seeing and we’re pleased to see as our average ticket value continues to - continues to go up in the right direction. So, it's something that we’re watching a bit Seth you are correct it is two consecutive quarters and we’re going to continue to monitor it but we would expect that to bounce back in 2016.

Got it. Is there one segment of your wholesale business that is showing more weakness? Is it the up and down the street garage customer?

No, not really, Seth. I mean if you - the numbers that we shared with you, our auto care business continues to be strong and that's, that’s all different sizes of shops. Our major account business continues to be solid, so there is no one area jumping out.

It maybe reflective but what’s happening with the car counts in the bays and I think there is some inconsistency across the board in the industry with car counts I think some are experiencing increased car counts and others are flat to may be down just slightly.

Understood. Okay, thank you very much and good luck.

Your next question comes from the line of Tony Cristello with BB&T Capital Management.

Thanks, good morning. Tom, can you sort of maybe categorize a little bit how this slowdown feels versus other slowdowns you've experienced? The severity doesn't seem like it's as bad in any way, but the beginning stages here I guess give pause and I think you even alluded to watching some things to maybe give you an indication how this may play out.

It’s an interesting question Tony. On the one hand we looked at a set of data points that would indicate that things are going along, okay. On the other hand you look at a different set and they suggest to you that it’s in consistent what the first set of data might indicate. Right now it feels like we’re in a grind-it-out mode in several of our businesses and there seems to be quite a bit of caution on the part of a number of our customers primarily in the non-automotive businesses in terms of CapEx and investing for future growth. And I think people are being very careful about how they’re spending their money right now on investing for the future. So, right now from at least from my perspective we still have a couple of quarters I think to work our way through this and I think it’s going to be a gradual path forward not anything that’s going to be a hockey stick type recovery. I think it’s going to be slow for another quarter or two and then hopefully we’ll start to see the evidence of that. And if you look at the disconnect, on the industrial side the disconnect between industrial production and capacity utilization, they seem to be going in different directions right now and historically they tend to move in line with one another. So again, just they’re conflicting sources of information currently.

Okay. And was there something in particular on the office side as well, which seems to be holding up better that gives you a little bit of a pause in a different manner than what you've seen in industrial?

On the office products side, we thought like the team together a pretty darn good quarter having anniversaried the two significant impacts. Being up 3% in the current environment I think is reflective of some good work being done by the office products team. The thing that gives us a little bit of pause though is, we actually thought we might be just a slightly better as we went into the quarter, we thought it might be a little bit stronger than the way it turned out and we saw some deceleration as the quarter progressed as I mentioned and that’s continued on into the first half of October. So we don’t have the sense right now as to what the real cause but what we do know and talking with our primary vendors is that this is not unique to S.P. Richards or Genuine Parts, they're seeing this across most of their customer base and it just seems to be a temporary slowdown that hopefully we will reverse itself as we work our way through the quarter.

Okay, that's great color. Maybe if I can ask one more, on the automotive side, you are having very good success in terms of the DIY and gaining some traction with various initiatives. Maybe if you could just add a little color to that in terms of is it simply you're a much higher percentage commercial business and so adding that emphasis on DIY is easy to gain that share? Is there something you are doing perhaps differently than what your traditional DIY-focused retailers would? Or is it a situation where even your affiliates are seeing an increased appetite for that type of product and maybe they are gaining some share from what seems to be a competitive marketplace with some disruption over the last couple of years?

Yes, Tony this is Paul, I would tell you that and we’ve talked about it a bit in previous calls. We have put a renewed focus on our DIY business. We've addressed many of the fundamentals expanding our store hours, additional training for our folks, we’ve added some personnel in the stores, and we’ve also are testing out a new retail store format Tony that we've began to roll-out in 2015. And it’s very early yet, but we’re pleased with the results and we'll be reviewing that the balance of this year and make a decision as we go into 2016. Generally what takes place, you mentioned our affiliates are independent owners, they will many times let us pioneer some new ideas and certainly new approaches. I think they will get on board when they see the kind of success that we're driving in the retail side. Many of our independent owners do a heck of a job today on the retail side of the business anyway. So it's early yet, Tony, but I would tell you we're pleased with the results that we are seeing.

Okay. Now that's great. I appreciate the time. Thank you.

Thank you.

You're welcome. Thank you.

Your next question comes from the line of Carolina Jolly with Gabelli & Company.

Thanks, good morning. So looking at your results, you've got some challenged end-market promotions. Has this distress made any potential acquisition targets, maybe something similar to Lake Erie, more willing to discuss a potential sale?

Well, as you know, it takes a willing seller and a willing buyer. We are a willing buyer. We just have to find more willing sellers that are willing to sell at prices that we think are favorable to the shareholders of Genuine Parts Company. I mentioned in my comments that we have a couple more that we think we'll announce prior to year end, none of which will have any material influence on Q4. But will help us as we go into the first quarter of next year. So there are a number of conversations that are going on. A couple are further along and we feel confident that we'll get a few closed by year end and hopefully we can generate some additional interest from some others.

Okay. Great. Thanks.

Thank you.

Your next question comes from the line of Bret Jordan of Jefferies.

Morning. A good question. I guess as we talk about Mexico, and it was about a year ago that you began to go to Mexico with the NAPA brand as opposed to Auto Todo. Could you give us any color on how the traction is building there as you are rebranding?

You bet, Bret. It was - you've got a good memory, it was just about exactly one year ago that we launched our initiative in Mexico and bringing the NAPA brand down to Mexico. We - where we are currently, we're on track, we're on target. We expect to end the year with 20 to 25 NAPA stores in the region. I would also tell you that probably since we last talked, we're in the process of recruiting a couple of strong entrepreneurial independent owners who are opening stores down in the region as well. So - so far we're on track.

Okay, and then one other regional question. You mentioned some of the energy states were a little softer than the average in performance in the quarter. How about the West ex the energy states? If you go all the way out to the coast, how was the regional performance there?

Yes. So the west - and I did mention our team out West, but they are holding their own, Bret. They were right at the overall growth number for the commercial business and our overall business. So West is holding up okay. We're seeing, as I mentioned solid growth up and down the East Coast, all the way down into the southern and Florida groups, most of our softness or where our softness is, it's almost directly tied to some of those oil and gas markets.

Okay. And then one last question, as you were talking about M&A, is there any thought about increasing the Company-owned store base within NAPA, either just buying in independents as they retire or doing something more structural there? I mean, obviously, as you are getting a retail operation, you get maybe a better return on the average store. Is there a thought about upping the Company-owned store count?

I think you'll see that happen as time goes on, Bret. Our basic philosophy is we'll own the stores in and around the major metropolitan areas and we'll have good independent owners in the outlying areas. And I don't think that will change materially going forward. But as a percentage of our total automotive volume going out a few years, you'll probably see the corporate stores represent a little bit higher percentage of the total volume than the independent stores do today.

All right. Great, thank you.

All right, Bret.

Your next question – your final question comes from the line of Scot Ciccarelli with RBC Capital Markets.

Hey, guys. Thanks for letting me in under the wire here. Couple of things, first of all, I guess, obviously, we did see at least a slight deceleration in auto despite what seemed to be pretty favorable weather for most of the quarter. So for the sake of focusing on an admittedly short-term issue, I guess the question is probably for Paul. Do you have concerns that we could start to see a little bit of incremental softening if the mild weather we've seen for most of the fall here continue deeper into the quarter?

Scot, you hit it. Our - we did see slight deceleration as the quarter progressed. We had a really strong both June and July saw a little bit of a downtick, slight downtick in August and September. It's early yet, but we're certainly optimistic that the quarter will come in as we projected. But I think as Tom mentioned in his comments, in the overall environment that we're in, we are in a - we are definitely in a grind it out kind of mode right now as we go into the fourth quarter.

So would you attribute the little bit of deceleration that we saw in auto to weather or was it something else, just so it's kind of clear for everyone?

No, I don't think it's tied to weather, Scot. Actually the weather throughout the summer and even into September we had I think a warmer than normal summer, which resulted in some good numbers for us and categories like air conditioning was strong, batteries were solid in the quarter. So no, I don't think it attributable to weather at all.

Well, you've mentioned before that you guys are exposed to more industrial related to stuff in NAPA than maybe some of your competitors are. Is that where you are seeing it, some of the items that you've mentioned before on that front?

No, as I mentioned in a previous question, where we are seeing softness, it is directly in some of the more dominant oil and gas markets, Southwest for sure, some of the mountain areas, which includes some of the fracking country up in the Dakotas and Montana. We do - do a lot of business in the fleet, Scot. We do a lot of heavy duty business. We do a lot of heavy duty filter business and we are seeing some fairly significant declines in those categories in those markets.

Okay, I knew you mentioned the geography. I was just trying to clarify on the product. That's helpful. And then previously, I think, as Carol mentioned, you guys are comfortable with the receivables. Can you help us understand how much exposure you have to some of these troubled end markets? You've referenced mining, oil, gas, etc. and is there a point where you start to consider changes to terms to some of these customers as you try and protect against potential losses, just given the strain on some of their own balance sheets?

Actually, we very closely monitor accounts receivable and certainly what you are speaking about in the industrial area, right now, we're not taking steps, additional steps to modify anything. But I can tell you its just a constant focus on our receivables. We feel like we're in pretty good shape. We actually already have an outlook and an estimate for what our full year bad debt expense will be and we don't have anything that we're concerned about. I think our customers and the terms that we have, we have a pretty close insight as to what's going on. So I wouldn't see anything there.

Got you. Okay. Thanks a lot, guys.

All right.

I've got just one last point. Keep in mind that I think across the enterprise our team has done a very good job in accounts receivable management. Carol pointed out earlier that we are down 1% in receivables year-over-year, which I think is a pretty good job.

Thanks, Tom. I appreciate that.

We'd like to thank everybody for participating in this quarter's conference call. And if you have any further questions, let us know. But we appreciate your interest in and support of the company and we look forward to talking to you again after our fourth quarter earnings in February. Thank you.

This concludes today's conference call. You may now disconnect.