Good day ladies and gentlemen. Welcome to the Genuine Parts Company First Quarter 2016 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] At this time I'd like to turn the conference over to Sid Jones, Vice President, Investor Relations. Please go ahead sir.

Good morning, and thank you for joining us today for the Genuine Parts Company first quarter 2016 conference call to discuss our earnings results and he outlook for the full year. Before we begin, 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 this 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 has a few prepared comments and once completed, we'll look forward to addressing any specific questions that you may have. Earlier this morning, we released our first quarter 2016 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 $3.718 billion, which was down one half of 1%. Net income was $158 million, which was down 1.9% and earnings per share were $1.05 this year, which was even with the $1.05 reported in the first quarter of last year. Once again this quarter, currency exchange was a headwind to all of our results. The impact of the strength of the US dollar versus the Canadian, Australian, New Zealand and Mexican currencies was 1.6% on the revenue line and $0.01 per share in earnings per share. Stated another way in constant currency sales were up 1.1% and EPS was up 1%. While a bit better than the reported results, we still find ourselves revenue challenged primarily in our non-Automotive businesses and this is clearly pointed out if we look at the results by segment without currency impact. In constant currency our Automotive business was up 4.4%, industrial was down 1.7%, Office Products was down 2.5% and Electrical was down 3.4%. So the difference between our Automotive operations and our remaining three segments is quite pronounced and Paul will cover the…

Thank you, Tom. Good morning and welcome to our first quarter conference call. I'm pleased to be with you today and to have the opportunity to provide you an update on the first quarter performance of our Automotive business. For the quarter ending March 31, our global Automotive sales were up 2% year-over-year. This performance consists of approximately 4.5% in total Automotive growth which includes an approximately 1% benefit from acquisitions. However, this was offset by a currency headwind of approximately 2.5% in the first quarter. Our U.S. team posted a 4% sales increase in the first quarter, an improved performance from the 2% growth we reported in the fourth quarter and the 3% growth we experienced for the full year of 2015. Turning to our international business, which include Canada, Mexico, Australia and New Zealand, this group once again reported another quarter of mid single digit growth in their local currency. Despite challenging local economies, especially in Australia and Canada, we remain encouraged by the consistent mid single digit growth we are experiencing across all of these international markets. In the U.S., our results varied widely by geographical region and product category. Geographically our business in the Florida, Atlantic and Western regions of the country all out performed in the quarter. On the other hand the Central, the Eastern, Midwestern regions of the country all under performed. We would attribute the warmer than average temperatures experienced across the Northern states in February and March is having a negative impact on our business in that region of the country. And as we look at our winter related goods, we saw a similar trend in sales. After experiencing double digit growth in January, our battery business was flat in both February and March. Again we believe warmer than normal weather patterns…

Thank you, Paul, and good morning. We appreciate you being on the call with us this morning and we will get started with looking at our first quarter income statement and segment information and then we will review a few key balance sheet and other financial items. Our total revenues of $3.7 billion for the first quarter were down a 0.5% or up 1% excluding the impact of FX. Our gross profit for the first quarter was 29.7%, compared to 29.8% last year. The slight change in gross profit margin primarily reflects the continued pressure of lower supplier incentives earned in our Industrial business. Excluding this factor, we’re pleased with the positive impact of our gross margin initiatives across all of our businesses. On SG&A, the impact of SG&A in the quarter was flat and we had some impact from our cost saving initiatives and just the loss of leverage. So, our efforts to enhance gross margin are especially important in our low inflationary environment. I want to mention what our cumulative supplier price changes are for 2015. We’re down six-tenths of 1% in Automotive. We’re up two-tenths of 1% in Industrial. We’re up one-tenth of 1% in Office and we’re down 1.25% in Electrical. The talking about SG&A, again, I’m sorry about that, our SG&A was $850 million or 23.07% of sales, which is in line with first quarter of last year. So, our cost control measures continued to positively impact our results and they are driving our progress towards greater operational efficiencies. For the first quarter, however, the benefits of our overall cost savings were somewhat offset by the deleveraging of our expenses in our non-Automotive businesses. As we look ahead, our teams remain committed to controlling our expenses and enhancing our productivity and streamlining our operations. We…

Thank you Carol and thanks to you and Paul for your comprehensive updates. So that’s an overview of the financial and operating performance for the first quarter. And in looking back, our feeling is that our teams did a reasonably good job of operating with the Automotive group turning in the best performance. A lack of revenue growth in the non-automotive businesses did not enable us to gain any operating average unfortunately. Turning to the balance sheet we feel that folks did a pretty good job overall and we look for another strong year in cash generation and asset management. The one area that we continue to be challenged in is sales growth and across all of our businesses, organic growth initiatives and strategic bolt on type acquisitions are getting a lot of attention. And on the acquisition front based upon what we see right now, we think that we’ll have a bit more to talk about in the second and third quarters. Now as far as the reminder of the year is concerned, we feel that previously provided guidance remains appropriate at this time. You may recall that we guided for Automotive revenues to be up 2% to 3% for the full-year against the current 1.8% increase. We said Industrial would be up 1% to 2% compared to 2.5% decrease for the first quarter. Office Products down 1 to up 2 compared to 2.8% decrease in the quarter and Electrical will be up 1 to 2 compared to the 3.4% decrease in Q1. So for the total company we feel that 1% to 2% increase is appropriate compared to the half of 1% decrease through the first quarter. And then on the earnings side, we feel that an expectation of $4.70 to $4.80 per share remains appropriate and this should be up 2% to 4% over the prior year. At this point we would like to address your questions and we will turn the call back to Catherine.

[Operator Instructions] Our first question will come from Seth Basham with Wedbush Securities.

Thanks a lot and good morning.

Good morning, Seth.

Good morning.

My first question is just on the guidance Tom, could you tell us what your expectations are for FX impact this year and any additional revenue you’re assuming in your guidance from acquisitions?

Well, the FX is pretty difficult quite honestly, Seth as you know, we think back to January of this year currency exchange was an even heavier factor, we were down mid to upper double digits in the exchange rates between the Canadian, Mexican and Australian rates. We did see some moderation, some strengthening of the dollar in February and March, but at this point for the quarter it was still double-digit impact and we really don’t have a clear look at what we think is going to happen as we go forward. I think perhaps this thing to say would be that, for the whole company we’ve guided to being up 1 to 2 and perhaps for the whole company FX is going to be a headwind of 1.5% to 2% at this point. As far as the acquisitions, the only ones that we have included in our guidance are the ones that have been completed. So, Paul covered a couple of them. Carol covered a few more. They are the only ones we have included and our practice is not to include anything until we actually close on it. And at that point, we’ll incorporate it into our future guidance if that answers your question.

That’s helpful. Just to confirm relative to your guidance you provided initially for 2016 in February, you assumed at that point in time 3% or 4% sales growth for entire company ex FX and now you are now looking for 1% to 2%?

Well, no, we’re looking at 1% to 2% including FX and then 1.5% to 2% headwind from FX, so on a constant currency basis, you would have to add that 1.5% to 2% back in.

Got it. Okay. Helpful. All right, and then my other questions on the auto business, looking at U.S. comps, it seems like they slowed down to your stack basis. Also it seems like your Major Accounts business growth slowed a little bit. I understand I think weather is a drag. Any other factors you can point to that might be impacting your business relative to the industry?

Seth, this is Paul. No, it just - I touched on many of the factors. Seth, we hate to play the weather card, because at the end of the day we still need to execute on our initiatives. Look, I think our team is doing a pretty good job. But when you look at the delta between our big divisions up in the northern states versus some of our business in the southern states, it certainly had an impact. Our NAPA AutoCare business continues to be solid, very solid. Our Major Account business is good. It’s not growing at the double digit rate perhaps that we saw a couple of years ago, but it’s still growing at a good pace overall. So now, I think, Seth, there is just a bit of sluggishness out there right now, but we’ve got some great initiatives. We just need to continue to execute and I have no doubt that business will bounce back quickly.

Got it.

Seth, I’d add to that. If you look at across the spectrum of our larger accounts, the major accounts and the AutoCare customers, those in the northern tier, as Paul pointed out, are having a more difficult time than those in the southern tier. But also those that are more heavily oriented toward tires, are a bit more challenged than those that are more heavily oriented towards the service side. So we will see all that reverse at some point, but we just don’t know when.

Got it. Since you brought up weather as an important point here, if you think about warmer winter weather and the impact on parts stress, would you expect heading into the summer season there to be fewer part failures and more limited parts sales as a result of that?

It depends upon how warm and how hot it gets in the summer. That’s going to put the second round of stress and that’s a key determinant. So if we have a hot summer, I think we will see some of the summer related products, heating and cooling as an example, I think we’ll see some pick up there, if we have a modest summer, we won’t get that increased demand.

Got it. Thanks a lot and good luck.

Thank you, Seth.

Thank you. Our next question will come from Chris Bottiglieri with Wolfe Research.

Hi, thank you for taking my call. My first question is, can you talk about your plan for enhanced store openings and you’re trying to pick it up for the company-owned store group. This is primarily in the U.S. So, is it going to be focused abroad and then ultimately how many stores do you think you could have in the US?

Yeah, Chris, this is Paul. So, our store expansion program includes all of our markets, so Australia, New Zealand, where we will continue to grow via acquisition as well as organic growth and we believe we have opportunities to continue to grow in both Australia and New Zealand markets. In Canada same thing as well as Mexico, in Mexico, as you may recall, we’ve rolled out our NAPA Mexico initiative, which we have 20 plus stores in Mexico today branded under the NAPA brand both company-owned and independently-owned. We believe and we’re not going to put a targeted number out there, Chris, but we believe we’ve got significant opportunities to continue to grow our store footprint in Mexico. And then in the US, again, same type of initiatives both acquisition, bolt-on type acquisitions as we announced already do this year, but in addition, organic new distribution as well across the U.S. and we think again there is many open markets across the U.S., so we can continue to expand the NAPA brand.

Got you, then I have one quick follow-up. As I understand it historically more [Indiscernible] facilitator of independents when I look to exit the business, you sell from one independent to the other. Is there any change in philosophy if the company acquires some of these independents or how do you see that playing out?

Chris, this is Tom. Our attitude is exactly what it has been and that is if it’s an independently-owned store in an outline market, if there is another independent owner that’s ready to step in and make that acquisition, we’ll help them do that. If there isn’t someone ready to step in, but the current owner has a desire to get out and we’ll buy the store and we’ll run it for a period of time until we find a good independent owner. If it’s in a metro market, we’ll buy the store and we’ll operate it for the long term as a company-owned store. So the attitude is essentially the same.

Okay. Really helpful. Thank you for the comments.

Thank you.

Thank you. We will now go to Matthew Fassler with Goldman Sachs.

Hi. This is Chandni Luthra on behalf of Matt Fassler. Tom, I have a quick question on your Industrials business. So, I just want to understand about the performance in the Industrial segment. It appears that you guys outperformed versus how we saw your peers report in the last week or so. Could you perhaps throw some light in terms of what drove that performance and what was the cadence, because a lot of your peers talked about a very sharp decline in the second half of March. I just want to understand if you guys also saw a dip in March and you know how the quarter trended? Thank you.

Well, I’ll take the latter part of the question first. We did see March being the weaker of the three months in the quarter, but still better than what we had been running. In terms of what’s happening within our Industrial business, I think our teams have been working hard on some of their share of wallet and market share initiatives, as well as on the acquisitions we did and had the benefit of the two acquisitions that closed late in the quarter that Carol mentioned. But additionally our folks are finding additional opportunities with existing customers and they are also opening up some new customers. So as I mentioned earlier in my comments, we can look at about half of the business and see that it’s performing pretty well and then we look at roughly the other half and we see that we’re still challenged. So hopefully we’re starting to see a little bit of a turn and maybe the quarters ahead will be a little bit more reflective of what we’ve seen in Q1 and then also early in the month of April.

Got it. Thanks for the color. And quickly on the Office segment, so you guys had your business decline by about 3%. I just want to understand how should we think about go forward given that you’ve maintained your guidance and in terms of what gives you confidence to kind of catch up with that guide given that cycling of the ODP, OMX [ph] businesses having some impact to you?

Well, in terms of maintaining the guidance, we did say that. We guided to down one to up one for the full year, having finished the first quarter down 3%, we would say may be closer to the mid to lower end of the range for the full year. I did comment in my prepared remarks that we think we have an opportunity to close on a pretty good size acquisition for the Office Products group yet in Q2. It will be late in Q2. That’s not in our guidance at this point. But assuming that we are able to complete that, we’ll give you an update on that as we make our comments at the end of the second quarter.

Great. Thank you so much.

Thank you.

Thank you. We will continue on to Tony Cristello with BB&T Capital Markets.

Thank you. Good morning

Good morning.

My first question, I wanted to just touch on the import parts side of the business and better understand where you are in terms of parts coverage there. It’s obviously growing at - I think you said, Paul, high single digit rate and I wanted to understand is that growth just because you are offering more and more parts. Are you seeing more and more demand from existing or you growing both with the new customer as well.

Yeah so Tony, great question on our import parts business. So we - look, we have been in the import parts business for some time and we go to market under the Altrom brand we sell here in the U.S. direct through our NAPA network. And where we see continued growth is both existing customer expansion, but also capturing new customers. So our NAPA Auto Care centers are major accounts are servicing more and more import part vehicles therefore they need access to those parts and fortunately they are coming through us. When we look at the continued expansion of that segment we are excited of our core business, the Altrom business going through our NAPA network, but also with our recent acquisition of Olympus and what that group brings us and I think I talked about a bit in our last call is, we got a great team at Olympus they bring us years and years of import experience that is the value to us and this is the category that we think we can certainly continue to grow at the a greater rate than our overall business.

And do you see the same lift of benefits as your companies stores as you all do or see at your independence when you put in new initiatives or focus on being able to sell through on imports or something, I’m just trying to piece together sort of the success across your whole business versus company-owned versus independent.

Yeah so Tony, we’ve made a commitment in our company owned stores that we are going to be stocking in import parts and it is a classic parts business in general. If you have the part, you have good people and you’re priced competitively, generally you are going to get the business and what we are finding as we upgrade our inventories across our NAPA company-owned store network business is growing as we upgrade those inventories. On the independent side Tony, it’s been an initiative that we worked on for a number of years as our independent owners. Some have gotten into the business, do a terrific job, others have been a little slower to adapt to stocking in import parts. They may - certainly some of our independent owners are out in more rural markets were they may not be quite at much demand for import parts, but our initiative in growing that businesses both via our company-owned stores and via our independent owners as well.

Tony I might just add on, you may recall that our general approach to any new initiative is that we will test it, pilot it in the company store group will approve the concept and then at that point we will go to be independent owners. We want to make sure that what we are recommending to them work so after we approving the concept we will tell them what we did, how we did it, what it cost, what is the returns are and then our good progressive owners will step up and they will embrace the initiative and we go on from there.

That’s great color. I appreciate that and if I can ask just one more question, I think you mentioned CapEx acceleration and several projects that may be hitting in the second half of the year. Can you provide any were information, is that an IT type spend or there any strong store refreshers or something that we should consider?

Yeah, it’s both facility refreshes and also an IT project. So mentioning on facilities we have got in each of our segments and both here in the U.S., Canada and Mexico and Australia folks have DC refreshers. So a lot of it is in the area of productivity improvement and so it could be not necessarily a full relocation, but a refresh within the facility. So those are multi-months projects that we know we have started and there’ll be slated for third quarter and fourth quarter and then IT as well we got again, most of our IT projects are going to be in productivity areas were health management, inventory optimization and we have several sights planned for the second half of the year. So those are all in the work, so we expect that to pick up over the balance of the year.

Okay, thank you very much for your time.

Thank you.

Thank you. And Mark Becks with JP Morgan have our next question.

Hi thanks for sharing the monthly detail in Auto. Understanding that there is a slowdown as far as the end of the quarter I just wanted to clarify what was the impact from the Easter shift and the labor - leap day shift and then does that help or hurt back half of the quarter.

Well, Mark this is Paul, we think certainly it was not a help, we estimate and it is hard to put an exact number to it, but we estimates Easter holiday moving from April end of month of March cost us minimum half a point on our top line.

And then any impact from the leap day?

For sure, the extra day, again estimating between a point of quarter to point half.

Ranging between 0.5% and 1% for the quarter at net.

Understood and then Paul you elevated to widening performance gap in the northern stores versus southern stores. Historically some of your peers is focusing gaps anywhere in the range of 500 to call it a 1000 basis points, is there any way you can kind of frame up the difference between say the north-east market which is more the kind of weather sensitive market versus like the South or the West.

Yeah, I will put it this way Mark, when we look at across northern states and not just the north east because we really felt the impact in the Midwest, when we talk about the Central, Mark, that’s Ohio, Pennsylvania but all the way into the north-east as well. That group and those are some of our larger operations that group grew low single digit, when we compare those to some of our southern division, so I mentioned Florida, I would throw the Southern group in there as well, the Atlantic which should be the Carolina South and then even West that group grew mid to high single digits across, so it was more of a significant delta that helps seen in some time.

Okay, that’s very helpful and then last question for me Tom and Carol you mentioned you’re open to more larger transformational type of acquisitions and historically [indiscernible] you’ve opted for more than smaller bolt-on type acquisition. So just trying to get an idea of historically why that has been the route you have gone by that it is just there is more opportunities of that nature in the marketplace or culture or anything else there.

Mark, I will take a stab at that. You have hit on one key point and that is generally speaking there are many more opportunities in that $25 million to $250 million range. Secondly, our philosophy has been that any acquisition we do needs to be accretive and hit the minimum threshold within three years and it seems that we can get to some of the back office synergies more quickly and more easily in the 25 to 150 range than something well above that. And then the third thing is that, we got a general approach that we want to make multiple acquisitions across each of our businesses and spread the investments spread, the risk so to speak, but also to leverage the strong management teams that we have across our businesses. Now with all of that said if we were to find - I think you used the word transformational, if we would find something larger, we would be more than happy to look at it, but it has to meet the same general level of expectation within three years and we look for 15% ROIC no later than the third year, but if we found something large that met that threshold then we would absolutely have interest in doing it. The good point is that we have the balance sheet that will enable us to do whatever and it was set that kind of logic that led us to GPC Asia Pacific, the largest acquisition we have done and one that has turned out to be pretty darn good thanks for the shareholders at Genuine Parts.

Okay. So if you have more to talk about in 2Q and 3Q just it seems like it safe to assume that these will be more of those kind of bolt-on that you are talking about.

We just have to wait and see.

Okay, thanks.

All right thank you.

Thank you. We’ll go on to Elizabeth Suzuki with Bank of America Merrill Lynch.

Hey guys just a quick question for Paul, looking at the auto business in Texas and other oil related markets you guys mentioned that the broader region underperformed, but do you have data on those markets specifically in terms of their performance year over year in the quarter.

Yeah, so Elizabeth if I look at our businesses down in the Southwest part of the country and that group was under some stress all last year and if I look at Q1 that group was up low single digits, so certainly on the lower end of our performance amongst our many divisions.

Okay, great thank you.

Welcome.

Thank you.

Thank you. Our next question comes from Scot Ciccarelli with RBC Capital Markets.

Good morning guys.

Hi Scot.

I apologize in advance for kind of stick on this weather things here, but couple of questions. What other categories outside of batteries would you attribute kind of whether gyration is the first question? And then second relate to that I guess winter of 2011 - 2012 is probably the closest comparable that we have to this year’s warm winter weather. So I’m not sure if you have that data in handy or not, but can you remind us of your sales cadence in these types of categories in 2012, how they kind of trended from February to March and into the spring - later spring and summer months.

So, Scot I will take the first part first and then I’ll let Carol handle the historical data, if she has it. But yes outside of batteries and certainly the entire electrical category Scott, when we look at starters, alternators and including batteries that entire category, which is the big category for us only, grew low single digits in the quarter. Heating and cooling, certainly heating is another area that was impacted, we saw slower than kind of our fleet average growth. And then all of our chemicals in commodities type products were another area that we saw slower than our typical growth or in our overall growth for the first quarter, so all of those categories really can be impacted one way or the other by the weather.

It goes even further Scot, if you think about up in your neck of the woods when you got that extreme cold weather, it tends to cause additional puddles up North and through the Central and Midwest parts of the country as well, which in fact potentially can impact some of your chassis product in the ensuing quarter or two so. It is pretty pervasive in terms of what it can do and I should say that we are pretty pleased with our chassis business right now, our chaste team is doing a really good job for us and we are getting some pretty good growth currently from that organization.

Got you.

And Scot as far as the weather patterns back in 2011 and 2012 I mean I will have you afterwards, but we are not going to comment or do we have that product line specific cadence in those winter months on how that reacted, but we’re happy to discuss that further.

I guess the question is just in general, so obviously you’re not going to break all that out by category, but you kind of went from February to March, you already talked about some sluggishness in some of these categories and Paul just referenced them, did they continue to worsen as you go to the latest spring in summer months or did it kind of will get to a level and just kind of stay there and I just trying to figure out.

I would take a stab at that first, Scot. This is Tom and I would say that we’ve somewhat stabilized in those categories at this point, but we wish we were stabilized at a slightly higher rate.

Got it. Okay thanks a lot guys.

Thank you.

Thanks Scot.

Thank you. And Bret Jordan with Jefferies has our next question.

Hi, good morning guys

Good morning Bret.

Good morning.

On global project accusation could a give us a little color on what you’re seeing in heavy-duty and maybe how that’s comping relative to passenger vehicle parts and maybe sort of give us a feeling for after this deal how big that is going to be relative to your parts distribution .

Yeah, so Bret, that’s a business, we don’t talk about a lot, but across North America so US and Canada and in Canada we have got very mature robust business on the heavy duty side it is in our standalone side in excess of $600 million in annual business. It’s a good business, it’s a growing business and there is roughly 8 million heavy duty trucks on the road here in the US and it’s the category that we think we can continue to grow. The acquisition of Global which is Atlanta again much like Olympus acquisition that we did on the import side, brings us a great team, a knowledgeable team experienced team in the category, we believe we’ve got well [indiscernible] synergies and again just bring in another experienced group into our business and we will complement our heavy-duty business here in the Southeast quite nicely.

Bret just to add on to that, by our estimation we would have 5% to 6% of the total available market for the heavy-duty industry and if we can grow that to 10%, we’re talking upwards of $0.5 billion to $600 million more in revenue, so that’s part of the strategy.

How was this business is been comping is that comping ahead of your company average in auto.

No, it is actually been - the fleet business it is actually been little bit less than our total Automotive business, but the good news is it’s come back a bit. I think Paul mentioned that we were up 2% in Q1 in our fleet business. So we’re pleased with the fact that it has started to revert back to what is a more normal business.

Okay and then one last question on comp, when you look at the NAPA core comp, how do you feel that rate was relative to the industry in Q1. Do you think you’re a share gainer or just performing in line?

Hard to say Bret, being the first guys out, I’m guessing we’re going to be where the market is. We certainly don’t believe we are losing any market share across the country and our teams are executing on the initiatives we put out there for them so. We think we will be in line, hard to say though; we will have to wait and see.

Okay and then one last question in Mexico are you going to convert the auto total stores to NAPA brand or do they standalone?

Yeah, great question Bret, that’s something that we are looking at. I was actually down there with the team last week, we have not made a final decision one way or the other, as you may know we have eight auto total stores down in the marketplace and we’re evaluating that right now, but that absolutely could happen in the future and I would also comment Bret because I know you follow it quite closely, our overall business and sales in Mexico continue to grow each quarter, we are building out our team, we are building out our brand, we just added that talented executive to that group down there and we are still bullish with our opportunities down in that market.

Okay, great thank you.

Welcome.

Thank you, Bret.

Greg Melich with Evercore ISI. Your line is open.

Hi, thanks. I just want to follow-up on the Easter shift question, make sure I got the math right there and the second one on the margins. If we assume it was 50 or 75 perhaps, should we be thinking that our run rate would simply move that amount of sales in the second quarter from first and Tom when you describe stabilizing trend which number are we stabilizing I guess, is it adjusting for the shift or not or for leap day. And I have a follow-up on margin.

My understanding of the question on the trends was more product oriented and that’s where I think we have stabilized in particular product categories. In terms of the impact of Easter we should see the benefit of that in April, we should pick up a little bit more in April that we gave back in March.

So [indiscernible] it would be fair to assume that it should be a little better in April so far than we saw in the first quarter.

Well, we will see how it all shapes out and will give you an update on it in our second quarter conference call.

Okay, so I’ll switch to margins then. I think it was Carol, in your comments you talked about how the industrial was the main pressure on the overall gross margin rate, a lot of the other improvement across the business was still there, but Industrial hurt. So I guess my question is what level of sales do we need to get out of industrial so that we actually start to deleverage it on the gross margin side, thanks.

Yes, so you are correct when we look at gross margin the other three segments are find the pressure on gross margin was through Industrial and so lot of our initiatives are in place and I just mentioned Industrial has done a really good job, therefore gross profit was up in Q4 and was also up in Q1. So they’ve done a lot of things on the buy side and sell side to help get that up. So when the volume does come back and it probably needs to be more in the very low single digit range for us to get some of that OEM and center of that, that’s going to really go straight to the margin, but the good thing is their SG&A improvements and their core gross profits, those things are already in place. And when we do get just a little bit of volume back and the top-line growth then we’ll see that on their operating margin.

That’s great. Thanks, good luck.

Thank you.

Thank you, Greg.

Thank you. Our final question comes from Brian Sponheimer with Gabelli.

Last and least I get it.

Hi, Brian.

Hi, Carol. My compliments on the continued working capital improvements and I guess, if you just take APM inventory [ph], it’s $280 year-over-year. Is that coming exclusively from NAPA or is that something that’s really a kind of a holistic entire business approach to working capital.

So all of our businesses have initiatives in the working capital and specifically focused in the payables area, so we’ve - what I would say just the - more the majority of the dollars are coming from Automotive, we do have improvement coming from the others and I can tell you their teams, it’s backed into our pay plans as part of everybody’s performance, it’s part of what everybody’s pushing down is working capital initiatives and we are seeing some improvements in the non-automotive as well. So the ideas that we have just continued improvements each quarter, but again it’s more coming from Automotive, but we’re getting some from the others too.

I understood and then Paul, just one question. You mentioned brakes being up low double digits in the quarter and some improvement on chassis, how much of that is more miles driven and is there any part of that just better supply from some of your larger on and important suppliers within those product offerings.

Yeah, Brian, so I answer that two ways, on the brakes business we’ve - our brakes business has been solid now for a number of quarters in a row and that’s across all the brakes, [indiscernible], and Friction, and Caliper’s have all been out pacing our overall growth and I think it’s just a great job by our team out in the field grabbing some market share and we got a great partner on that side. If you recall Brian, a year ago on the chassis side we were having some significant service issues and please to report those are now behind us and we’re seeing that business return back to more normal growth rates, but we were down quite a bit early last year as a result of some of the service problems. So again that’s the business we had to do quite well throughout the first half of the year.

Alright, terrific. Well, thank you very much.

Thank you, Brian.

Thank you.

Thank you. And I’d like to turn the conference back over to management for any additional or closing remarks.

We thank you for participating on today's first quarter call, and we appreciate your support of Genuine Parts Company, and we look forward to updating you in July on our second quarter result. Thank you.

Thank you. And again ladies and gentlemen that does conclude today's conference. Thank you all again for your participation.