Good day, ladies and gentlemen. Welcome to the Genuine Parts Company Second Quarter 2023 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to Sid Jones, Senior Vice President of Investor Relations. Please go ahead, sir.

Good morning, and thank you for joining us today for the Genuine Parts Company Second Quarter 2023 Earnings Conference Call. With me today to share their remarks are Paul Donahue, our Chairman and Chief Executive Officer; Will Stengel, our President and Chief Operating Officer; and Bert Nappier, Executive Vice President and Chief Financial Officer; Tim Walsh, our Senior Director, Investor Relations, has also joined us. In addition to this morning's press release, a supplemental slide presentation can be found on the Investors page of the Genuine Parts Company website. Please be advised this call may include certain non-GAAP financial measures, which may be referred to during today's discussion of our results as reported under generally accepted accounting principles. A reconciliation of these measures is provided in the earnings press release. Today's call may also 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, including this morning's press release. The company assumes no obligation to update any forward-looking statements made during this call. Now I'll turn the call over to Paul for his remarks.

Thank you, Sid, and good morning. Welcome to our second quarter 2023 earnings conference call. We are pleased to report another solid quarter with record sales and double-digit adjusted earnings growth. Our second quarter once again highlights the value and benefit of our global automotive and industrial businesses and the mix and geographic diversity of our company which we believe are competitive advantages that differentiate GPC in the marketplace. A few highlights from our second quarter results include: Total sales of $5.9 billion, an increase of 5.6% from the prior year. Total company segment margin of 10.4% and an increase of 60 basis points from the same quarter last year. Earnings per share of $2.44, an increase of 10.9% from adjusted earnings per share last year, and our 12th consecutive quarter of double-digit adjusted earnings growth. And finally, we continue to maintain a strong balance sheet while generating solid cash flow to support our growth initiatives and capital allocation priorities. Our global team remains focused on the strategic initiatives we highlighted at our Investor Day in March. And we believe our One GPC approach is contributing to our strong financial performance. We compete in 2 very large and fragmented markets and see significant opportunities to grow our business, expand our margin profile and generate strong cash flow to support our strategic investments while delivering returns to our shareholders. As we continue to navigate a dynamic macro environment, we believe our focused execution, investments in our business and strong industry fundamentals, position GPC for long-term success. Looking at our Industrial segment, demand trends held solid through the second quarter, even as the rate of sales growth tempered a bit relative to the first quarter as we expected. Motion's growth rate on a 2-year basis continues to be exceptional. And while certain…

Thank you, Paul. Good morning, everyone. I'd also like to thank the global GPC team as well as our supplier partners for their ongoing commitment to serving our customers. We appreciate all the hard work to take care of our customers every day with solutions that help keep the world moving. We do this with focus on our foundational priorities, including talent and culture, sales effectiveness, technology, supply chain and emerging technology, all complemented by a disciplined M&A strategy. We work together as One GPC team to create customer success and shareholder value. On behalf of the entire GPC team, we would like to congratulate Kevin Herron on his well-deserved retirement after an amazing 34-year career at the company. Kevin earned success in all of his roles over the years, including the last 5 years as President of the U.S. Automotive business. He embodies our GPC values and he's been an inspirational leader and mentor to many around the world. We're deeply grateful for his significant contributions to Genuine Parts Company and wish him the very best in his retirement. With Kevin's retirement, we also want to congratulate Randy Breaux on his promotion to Group President, GPC North America effective July 1st. In the new role, Randy will oversee both the automotive and industrial businesses across North America, while assuming day-to-day responsibility as President of the U.S. Automotive Group. Randy is a proven leader with a track record of performance. His relevant expertise across distribution industries, familiarity with GPC teammates and stakeholders and success at Motion make him the ideal candidate for the role. This transition represents the depth of our leadership team and our talent strategies as we continue to leverage the power of One GPC. Now turning to our 2 business segments. Total sales for Global Industrial were…

Thank you, Will, and thanks to everyone for joining us today. Our teams continue to operate at a high level and perform through this dynamic environment. And I'm pleased to walk you through the highlights of our second quarter performance. Before I get started on the details of our results, I would like to note that we had no nonrecurring items in the second quarter and 6 months of 2023. Our comparisons to the prior year, however, excludes certain nonrecurring items in 2022, primarily related to the sale of S.P. Richards Real Estate and the integration of KDG which represented a net $59 million benefit or $0.42 per diluted share. GPC revenues increased 5.6% or $313 million to $5.9 billion in the second quarter of 2023. This reflects a 4.9% improvement in comparable sales, including low single-digit to mid-single-digit levels in inflation and a 1.8% contribution from acquisitions. These items were partially offset by a 0.9% unfavorable impact of foreign currency. The value and advantage of our balanced portfolio and global diversification was highlighted again as we delivered another quarterly sales record. Our gross margin was 36.1%, a 110 basis point improvement from the second quarter last year, driven by the ongoing favorable impact of our pricing and sourcing initiatives. We believe the execution of key strategic initiatives around gross margin will continue to drive strong results. And for the full year, we now expect our gross margin rate to improve 30 to 50 basis points from 2022, an increase from our prior estimate of 20 to 40 basis points of improvement year-over-year. Our total operating and nonoperating expenses in the second quarter were $1.7 billion, up 9% from adjusted expenses in 2022 and at 28.4% of sales. This compares to total adjusted expenses of 27.6% of sales in the…

Thank you, Bert. Before we get into Q&A, we'd like to take a moment to acknowledge Sid Jones, who has announced his decision to retire from Genuine Parts Company after 33 years of service to the company. Sid has been leading our Investor Relations team since 2003 and today marks his 83rd quarterly earnings call at GPC in that role. We thank Sid his many contributions over the years and wish him and his family the very best in his retirement. Tim Walsh has been working closely with Sid and the team for over a year and will be named Head of Investor Relations on August 1st. We look forward to having Tim in his new role and now he will do an exceptional job for us. So with that, we are now ready for your questions.

[Operator Instructions]. Our first question comes from Liz Suzuki of Bank of America.

Sid, you're going to be greatly missed. So we'll miss you a lot. Just a question on the U.S. automotive comp is plus 1%. You noted that globally, both DIY and -- for me were positive with DIFM outpacing DIY. Was that the case in the U.S. as well? You may have mentioned it and I missed it, I'm just not sure if you gave that detail for the U.S. in terms of DIY versus DIFM.

We did Liz, DIFM outperformed retail in the U.S. Automotive group for the quarter.

Okay. Great. No, that's very helpful. And then just a question on the Industrial business. The margins have been really healthy there. I mean should we think about that 2Q operating margin is a decent run rate going forward? And is there any seasonality we should keep in mind that may have changed one way or another after the KDG acquisition?

Liz, it's Bert. I don't think you have on part to Q2 as the proxy for industrial for the full year. As you -- as we've commented, we see that industrial growth rate moderating here in the second half. Having said that, we still will get margin expansion for the full year on the Industrial segment. But we're thrilled with where the business performed in Q2 that 12.5% rate is a proxy for we can go long term as we shared at Investor Day, but we still have a lot of work to do to continue to grow that business and would use -- not use that as a proxy, but look to still see expansion of margin for the full year.

The next question comes from Chris Horvers of JPMorgan.

Chris Horvers from JPMorgan. Sid we will miss you very much, and congratulations on your retirement and all the best in your future endeavors. My first question is just following up on the U.S. -- the U.S. NAPA comp, I think you implied in April that you're maybe running about a 4 and you imply that June was down. So was June down sort of low to mid. And can you talk about what you're seeing that you're encouraged by in July and how you're thinking about U.S. NAPA comps in the back half?

Yes, Chris, happy to walk you through, and I'll maybe just kind of walk through some of the comments that we had in the prepared remarks. But so for U.S. automotive, April and May, as you noted were the stronger months in the quarter, low single-digit growth. The first half of June, in fact, was a solid start to the month, and we saw a tapering towards the end of the month that left June to be flattish, which puts together the 2 and then the 1 comp for the quarter, U.S. Automotive. We have seen an improvement to start the month in July. Obviously, we've had some extreme heat that is going to have a positive impact and -- while it's probably early to call the whole month, we're encouraged by the positive momentum plan to build on that through the quarter. As Liz just asked, we saw outperformance and do-it-for-me versus retail, both growing in positive directions. And we continue to be bullish about our fleet and government segment, which we mentioned in the prepared remarks, that grew nicely in the quarter. Good strength in filters, batteries and fluids, which are important categories for us. So we're excited about some of the things we're doing from a merchandising standpoint in those categories. And I think it wasn't a total surprise to us given the weather patterns in the second quarter that some of our heating and cooling categories didn't perform the way we expected them to, just given. It wasn't an overly warm second quarter in the aggregate for the U.S. market. But we're excited about what we're working on in the business. Obviously, we think we've got more potential than we showed in the quarter. We're excited about Randy's leadership now in place here for the first couple of weeks. He's been out in the field working with the teams. I think there's a lot of energy and positive momentum there. Gross margin, as Bert talked about, continues to be a great piece of execution, both on the pricing and sourcing side of the house. Also very proud of the team and their quick adjustments to all things cost. So they're operating with a lot of intensity and focus. And importantly, we're investing in the business for the long term. So making sure that we're balancing near-term actions with long-term potential. So in the aggregate, a lot to be proud about the team. We're going to continue the grind and push through the second half of the year, but proud of what we're working on.

And Chris, I would just tag on to that, that the fundamentals of the industry are still solid -- miles driven, going in the right direction as gas prices moderate a bit. New car sales being still a bit soft compared to historic numbers. And we're seeing the same across our international business as well. So as we reported our team in Europe had a phenomenal quarter, strong double-digit growth. Many of the fundamentals there, the same here across North America, rock solid. And our team in Asia Pac, Australia, New Zealand also had another really strong quarter. So fundamentals of automotive are still rock solid. And we certainly see improvement as we move forward through the back half of the year.

Sounds great. And then a follow-up question on the gross margin. I mean 36.1% is quite impressive. If you look back historically, the second quarter is a reasonable proxy for the year on gross margin. I know 1Q was a lot lower. But perhaps, was there anything unsustainable in the gross margin performance in the second quarter? And do you think over time, this is a level that is around 36% is sort of the destination? Or is it an area that perhaps you could even grow from?

Chris, it's Bert. Look, I think we had a great quarter here. In the past couple of quarters, I've given you the offsets for gross margin. We had a clean number this time around. We had no offsets from some of the things we've talked about in the past, whether it's inflation or mix. So we're just thrilled with the work that the team is doing and so important in this environment when we've got all the different economic pressures out there. So we've got a great focus on sourcing and getting the right inventory in the right place at the right time. We also have great work happening on pricing across all of the business. And so that 110 basis point improvement for the quarter up to 36.1%, I think is a reflection of really, really hard work. We're going to continue to stay focused on gross margin expansion through those 2 prisms, through pricing and sourcing. I'm not going to call the bulges yet on where that number can ultimately end up. As I said in my prepared remarks, we're more bullish on where it can be for this year. We had originally been planning for 20 to 40 basis points of improvement, and we've got that to 30 to 50 basis points. Within that, again, benefit from the execution of our strategic initiatives. We do have a little bit of a benefit modeled in for ocean freight, which we see turning positive for us here in the second half. So those are the 2 things I'd call out with really no foreseen at this point impact from either FX or inflation or mix.

The next question comes from Scot Ciccarelli of Truist.

I have a follow-up on Christopher's question. So the slowdown you've experienced in U.S. auto, do you think there's any share shifts occurring given some of the strong results we've seen from a few of your competitors or would you really just point to weather as the headwind in 2Q?

Yes, Scot, we don't think there's any share shifts. We always study the analytics. We use third-party independent information. We look at it by category and feel good about where we are. We act on that data every week and every month. We review it as a team and feel good about where we are. So no, we don't think that there's share loss happening here. We have specific strategies by category that we're executing against. And so the story can be quite different at a category level, but that's part of the science and art of all things, category management. So really proud of what the teams are working on. And as I said, we use independent data to keep ourselves honest to make sure that we're winning in the marketplace.

Okay. So maybe some of the delta could be due to geographic differences potentially?

When you say geographic, you mean U.S. geography differences?

Well, no. I mean, within the U.S., like your results, like if we had positive results from both DIY and commercial. And obviously, you had a 1% comp, like neither was up very strongly, right? So on -- specifically on the commercial side, like could we potentially attribute -- or did you potentially see like significant geographic differentiation in your business, stronger in the South, weaker in the West, what have you?

We really don't see a material difference across our regions. We've got 5 regions. The growth rates are not materially different. There's always region specific customers and dynamics. But as I said in my prepared remarks, we saw a recovery in the Northeast and West, which we planned and expected based on their slow start driven by weather, we saw that come to bear. And for the second quarter, though, by themselves, there's not a material difference by region.

Got it. And then just a quick housekeeping item. The $80 million or so that you guys highlighted for cost actions and the stock comp true-up. Were they the main drivers in the spike of corporate expense? And should we expect that line item to moderate in the back half?

Scot, it's Bert. I'll take that one. Look, we did have an increase in the corporate expense as a result of the 2 items you noted, one on the stock comp true-up and the other on the cost actions. The other thing contributing to corporate, and this is a little obscured in the 10-Q, but if you take a chance to read through the 10-Q, you get some good color on that either from the first quarter or the one that will be filed later today. We transferred some functions at the beginning of this year into the corporate environment that we felt were better suited to be run on a more consolidated basis, one of them being cyber security and our work around cybersecurity globally. We did a little bit of that related to some of the finance functions and also our management of our product liability cases and litigation. When we did that, we actually got a benefit so far this year in terms of being ahead of where those items were being spent last year. But it did create a transfer left pocket, right pocket, which makes the corporate number look a little bit bigger. We're still guiding for the year of corporate expense in the $300 million to $325 million range. Longer term, we target for that to be about 1% of revenue. It's up this year because of those transfers and we'll look up for the full year. But like I said, we're already seeing the benefit of the move of centralization by streamlining those functions and seeing them operate at a lower cost rates than they had in the past.

Okay. But some of the margin expansion that we've seen at the segment level is because of that cost transfer, just to be clear.

Yes, it's pretty small there, Scot. I mean we're talking about costs totaling year-to-date, $29 million in the aggregate. So it's a pretty small move. It stands out at corporate a little bit bigger because of the size and scale of the corporate expense line. But it's very negligible at the segment level.

The next question comes from Bret Jordan of Jefferies.

Congrats to Sid and Randy. Randy now that you run them both, I guess, where do you see the biggest opportunity industrial or auto in the U.S. in the next, say, 2, 3 years?

Bret, the good news is Randy is not on the call with us, but that's a tough question for him to answer. He loves both these businesses now. He's been out in the field and has a ton of energy and excited about the opportunities in front of us. So...

I was going to ask you what you like better, but I figure out you too.

He wouldn't have answered that question? He like them both.

Which one is your favorite kids, you know, Bret?

That's easy. Question on price, I guess. We were talking about sort of low mid-single-digit benefit from inflation in Q2. How do you see the second half cadence? The bar gets higher, I guess, year-over-year, but maybe you've got some incremental price passing along some of the rate inflation from your suppliers. How do we think about the organic price comp second half?

Yes. Bret. I'll take that one, it's Bert. On inflation, I'll kind of start at a high level. As we expected, we saw inflation moderate again in Q2, and I think really falling in line with our original thinking as we started the year, monetary policy in the U.S. and around the world, I think it's having its desired effect. You can see that in the U.S. CPI data. Just to reiterate, for the quarter -- second quarter inflation with low single digits all up for GPC, mid-single digits in auto, and low single digits for industrial. That industrial number has stayed pretty consistently in that low single-digit range for the year. Auto ticked down from high single digit to mid-single digit. And then on the whole, GPC has ticked down from mid-single digit to low single digits. So really falling right in line with what we thought when we started out the year. We're seeing some inflationary pressure on operating expenses, particularly in wages, and that was in my prepared remarks. That's sitting in the mid-single-digit range right now. It's probably the most pronounced impact in the business, but we're managing it. We're doing all the right things and taking some actions to try to offset that. And I think that's not a GPC-specific comment, it's a comment that all businesses are facing with wage pressure and inflation and wages. As we look ahead, we think inflation will continue to moderate throughout 2023. And I think policy will continue to have its desired effect. Auto will tick down from high single digits to start the year to low single digits to close out the year. And industrial is going to bounce along that low single digits for the full year. We'll see GPC close out in the aggregate from a mid-single digit to a low single-digit. So it's not a one-size-fits-all for our business segments, but hopefully, that gives you a little color on how we're thinking about the rest of the year. And that's all factored into our guidance and our update to the guidance for the year.

Okay. And then one follow-up on another pricing question. I guess one of your auto peers reported pretty rough Q1 and talked about price competition in the market. I guess could you comment about what you see, I guess, from pure pricing, any cadence of change in pricing in year-to-date '23?

Yes. I'll take a shot at that, Bret. And then maybe Will can tag on what perhaps more specific thought. Look, first and foremost, I'd say we're not going to speak to specific strategies of our competitors. We got a lot of respect for our peers and they're doing what they've got to do for their business. What I would tell you, the competitive landscape, the dynamics are still rational. We play in huge markets, as outlined by Will. We've got lots of different competitors across all those markets, both big and small. What we really spend our time thinking about, Bret, and you won't -- this is not new news. It's about inventory availability. Ensuring we've got the right people in the right markets, ensuring we've got our store footprint -- the right store footprint to cover all of our strategic markets and allowing us to continue to grow profitably. We're in a break-fix model and helping our customers really solve their problems quickly with the right part in the right market at the right price. It's all part of our value prop. That hasn't changed, Bret. And honestly, I don't see that changing anytime soon. Do we think about price? Sure, we do. But right now, our customers are really more focused on ensuring they can be productive in their shops. That they're taking care of their customers. And we think we're a pretty good partner not only here in North America, but around the world to solve those challenges for them. So Will, I don't know if there's anything else from a pricing environment that you would want to comment on?

Well, I would just say, operationally, what the teams are working on is incredibly helpful in this environment as it has been for the last couple of years, hence, the investment and focus on it. And more importantly, the teams globally are learning from each other. And so I think in one of our previous calls, we've talked about all the great work that's happening in U.S. automotive. We're sharing that work over in Europe. And so these are some of the benefits of working together as a team and sharing all the learnings from an environment that's very similar around the world and gross margin performance in the total company. I think, is a good data point to suggest that we're having some success. So it's an important part of distribution business and it's especially important part of navigating this environment, and we're going to continue to get better at it and invest in it so that we can make the right decisions for our customers.

The next question comes from Greg Melich of Evercore ISI.

I wanted to -- one question on the U.S. auto business and then follow-up on industrial guidance. I just want to understand a little bit better with that inflation number, I think we're still seeing mid-single digits. Would it be fair to say a 1 comp would translate into negative 4 units. And then could you give us a little more color on the non-fleet and government business, how the independent dealers did and how NAPA AutoCare did?

Yes, Greg. So I don't -- it's not as simple as minus 4% because we got to do it for me in retail. So you've got a distinction on transactions there. So do it for me, positive transaction and price, do it yourself as expected, transactions down tick it up. So in the aggregate, that's a little bit more noisy than just the minus 4%. On the other parts of the business, the AutoCare business continues to perform well. Obviously, our value prop with that segment is incredibly important and it's a challenging time. So partnering with them to make sure that they're being productive and navigating the environment. So that was a part of the business that performed to our expectations. Major accounts is a very customer-specific book of business. So there are some pockets of strength in that book of business as well as some areas of opportunity. I would reinforce our philosophy here that it's really important that we think about partners and growing our business through the medium term in a profitable way. And so I think we're going to bring a lot of discipline and rigor to thinking about the trade-offs between profitable share and not in our major account business. So in the aggregate, a bit of a mixed story, but positive in total.

Did the company stores do materially different than the jobbers?

We didn't see a material difference in the performance. It was pretty close to each other. And...

Yes, okay. Just maybe DIY, do-it-for-me mix a little bit, but no difference in that cut. The -- I guess the follow-up is on industrial. I just want to make sure I got that right. I mean, with obviously the big numbers continue to come through it. But the margin, the 12.5% margin, I just want to make sure I'm not -- do we assume that industrial margins will actually be down in the back half or that was -- they'll still be up for the year? Was that -- interpret that wrong, Bert?

Yes. Actually, you did interpret it wrong. But let me back it up and maybe pull it up and give a little color on guidance in general, and I'll work my way back down to segment margins. As you can expect, we're pleased with the first half performance on an overall basis, allowed us to raise our outlook again for the year this time by $0.20 to the $9.15 to $9.30. And in doing that, we see some upside in industrial profitability versus our previous expectations, the international automotive business, which is about 50% of the segment revenue for global automotive, we see some upside. And then obviously, we've taken up our gross margin performance expectations. That guidance delivers EPS growth with a midpoint of 10.6%, and that's putting us in a position to expect our third consecutive year of double-digit earnings growth, which in this environment, is, we think, pretty impressive. On a growth basis, top line, we had exceptional '21 and '22. We still see strong growth but moderated growth to mid-single digits overall for this year. And that really, as we look at a pretty choppy macro environment and difficult to interpret we're keeping an eye on some of these things that are out there, whether it's inflation, monetary policy, interest rates, the political landscape globally and foreign currency. So we're keeping a close eye on all of that. We balance that against confidence in our own business. Paul talked about strong industry fundamentals. We've got some great cash flows that allow us to invest in our business. And taking that all together, while it's a little bit more cautious, we do have a lot of confidence in GPC. A few details just to remember, again, gross margin, we've ticked up to 30 to 50 basis point increase expectation versus our original 20 to 40 basis points. On segment margins, we're looking for those to be up for the full year, 20 to 40 basis points. That's expansion again. We do think industrial will be up for the year. So just to clarify, Industrial will be up for the year, but not using the 12.5% for Q2 of the proxy. Industrial segment margin will outpace automotive, but we believe automotive will be in a position to recover here in the second half, as Will outlined. The only point I would call out on just a headwind is SG&A. We will see deleverage as we expected for the year 30 to 40 basis points, which is consistent with our original expectations. So all that together allowed us to take our guidance up for the year slightly better on international auto, industrial profit conversion and better gross margin expectations.

Got it. Thanks for piecing that together. And I guess I will say said, thanks for everything, and I didn't realize 83 quarters you must have started in college. So...

All right, I lead them up too easy.

The next question comes from Daniel Imbro of Stephen Bank.

Sid, I'll add my congratulations to the group. Well deserved -- working together. Well, I want to start on the U.S. auto side, maybe taking a step back from the quarter, just more strategically, obviously, with the promotion of Randy to the new responsibility, can you talk about what's the strategy is there, maybe bringing Motion and auto under singular leadership rather than kind of running separately. Is that a reflection of running the businesses closer together? Is that just a personnel decision? Can you talk to me about how you view that? And you mentioned some early positive internal response. Can you share any more color on what that's been.

Yes. Thanks for the question. Look, I think, as I said in my prepared remarks, Randy is a proven leader. He is well understood by our organization and brings a lot of relevant expertise to the NAPA business. As we've talked about often, at the end of the day, these are distribution businesses. And while -- they obviously have a different customer and product catalog. The value creation initiatives are all the same. And so Randy's progress and momentum and building a great team there at Motion that is incredibly deep, I think, it's all relevant and has spoken for itself in terms of the performance. And so I think it's more about how do we quickly build on the momentum of the business. And I think Randy brings is a great opportunity to do that. So I don't think it's operationally, meaning that we're putting the 2 business. In fact, I know it's not. We're not putting the businesses together, but I think it's just going to allow us to be a little bit more efficient and at pace to work together as kind of a One GPC team, which is a philosophy that we've been talking about as an organization. And I think an advantage that we have, given the similarities of all the initiatives that we're doing around the world to go at pace and drive impact faster than perhaps if we were not together as a company.

Daniel, I would just add to Will's comments, Randy has done a phenomenal job at Motion as you've seen in the numbers, and we expect that to continue because we've got a great leadership team at Motion. And as you know, every business, it's much bigger than one person. I would say the same by U.S. automotive, Daniel. And I'm glad you asked the question because it gives me the opportunity to recognize that team. Kevin did a great job over the last few years of really bringing in a lot of new talent into the leadership group at U.S. Automotive. That team, I have 100% confidence, it is going to continue to drive improvements in U.S. automotive. And I have no doubt Randy will continue on with the good work that Kevin did by leading that team. So we're excited by the moves and look forward to the impact that Randy is going to have across both businesses.

And then follow up on the automotive guidance, not to get too into it, but trying to reconcile the 4% to 6% comp guide and the 4% to 6% total revenue guide on the automotive side. I think FX rates just as we sit today are at least a few points better than what you initially guided. So trying to reconcile how that wouldn't be more of a tailwind. Are you hedging out some of that translational benefit in the back half? Or is the right interpretation, it will be more FX benefit? And maybe lighter organic growth just within that same guidance range. Just trying to square away how FX rates can change the guide, kind of gets maintained.

Yes, sure. Look, on the top line, I think we've been consistent pretty much throughout the year with our initial outlook on the top line guide. And we've just basically done what we said we would do on both with the 4% to 6%. As we look at the rest of the year through de-comping and trying to get a little bit more color on global automotive I would say that the international automotive will continue to outpace the U.S. We'll expect it to be on the higher end of our comp range. We'll expect the U.S. to be on the lower end. So the international is a bit on the higher end, you probably get a little bit of improvement from FX to your point, but that's kind of how we're thinking about those things. And look, in the U.S. automotive business, as Will has highlighted, there's more potential there. But we are being a little bit conservative on how we think about the rest of the year and how that business recovers and continues to improve over the second half. On industrial, I'd be remiss if I didn't talk about the industrial side. They've had a fantastic first half. But as we expect in the second half, moderates a bit to low single digits in the second half versus high single digits in the first half, which gives you the 4% to 6% for industrial. But even with that low single-digit. As I've said a couple of times, we will see some nice margin expansion for the full year in the Industrial segment. So hopefully, that reconciles that and squares the circle for you.

Just one follow-up on the comp guide. You just mentioned you called the back half conservative on the outlook. But in the U.S., you're calling for an acceleration. Inflation is moderating. So clearly, you're implying traffic is going to further accelerate to get the total comp up. I guess, what are the specific buckets? Or what are you looking at in the business that gives you guys the confidence that the traffic will be ultimately accelerating from here through the back half of the year to get that acceleration towards the low end of the 4% to 6% comp guide in the U.S.

Yes. I'm not sure I would have interpreted that way. I'll just reiterate kind of what we're thinking. As we look at the 4% to 6% for the back half for automotive. We've had consistent growth throughout the year on the 4% to 6% range. We expect that for the next 2 quarters, full year automotive at 4% to 6%. International on the higher end and U.S. automotive on the lower end of that range, and I think we'll just leave it there.

We have time for one last question, and that question will come from Seth Basham of Wedbush.

Congrats to Sid as well, we'll miss you buddy. My question, not to beat a dead horse is back on the U.S. auto business and the cadence of comps through the quarter. Perhaps we were mistaken, Will. But I thought on the last quarterly conference call, you said that April to date had accelerated from the 3% level in the first quarter. That implies a pretty material deceleration through the balance of the quarter, he said zero-ish, flattish in June. Where were we in April and May?

I think the comment that we made in the first call was true. In April, we did accelerate from the March performance. And as you articulated, and as I think we said, April and May were close to each other in this quarter and then June was the deceleration, and we called it flattish. So call it low single digit, low single digit, flattish for the quarter.

All right. Fair enough. And then secondly, just following up on your comments regarding the major accounts segment. Seems like that's the segment where there's the most price competition, you're being more disciplined with how you approach some customers there. Can you give us any more color? Are you walking away from some business that you don't see as being profitable enough at this point in time?

I'm not sure I'd go that far. I would say, first and foremost, this part of the business is always discussing price, obviously, because they're big scale accounts. So I wouldn't say that those types of discussions are more intense today than they were before. I think we're just bringing a fresh perspective to making sure that our value prop is being appreciated. And we're also doing work with smaller regional "major accounts" that we can really drive a lot of value with given all the capabilities that we bring to them. So I think it's just a stepped-up level of focus and strategic discipline about taking care of our customers.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Yes. Thank you. And I just want to reiterate, we are super proud of our team, the way they continue to operate and in a challenging environment around the world. I'd also like to thank all of you for joining us today, and thanks for your combined and continued interest in Genuine Parts Company. We'll look forward to hosting another call in the third quarter and report on our results. So we'll have another call on October 19th. In the meantime, stay cool and enjoy the rest of your summer. Thank you.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.