Advance Auto Parts (AAP) 22 Aug 242024 Q2 Earnings call transcript

Welcome to the Advance Auto Parts Second Quarter 2024 Earnings Conference Call.

Before we begin, Lavesh Hemnani, Vice President, Investor Relations, will make a brief statement concerning forward-looking statements that will be discussed on this call.

Good morning, and thank you for joining us today to discuss our second quarter 2024 results. I'm joined today by Shane O'Kelly, President and Chief Executive Officer; and Ryan Grimsland, Executive Vice President and Chief Financial Officer.

Following management's prepared remarks, we will take questions.

be management's please contain today begin, statements. forward-looking we advised remarks that will Before than historical Worldpac our statements statements, other anticipated expectations statements All of and future not review plans, the to, for operational the including, of fact limited statements and regarding our strategic sale initiatives, projections, business. but forward-looking are by statements. Actual differ from materially forward-looking results those our could projected or implied

in actual our forward-looking subsequent statements SEC. release Form under and results cause to about could found recent differ information factors Additional forward-looking filings risk that statements earnings and most the in be can factors made our with and XX-K

let Now the Shane to O’'Kelly. over Shane? me turn call

Thank several start our exhibited you, would by I my months. good members hard like everyone. over the work by team Lavesh, past to appreciation and morning, expressing for the

focus team Despite comparable During sequentially. continue consumers uncertain feel remained environment second our sales the headwinds, Pro strategic with driving quarter, X.X% by business. priorities. We the growth a the our improved our serving macroeconomic weak pressured demand second of DIY positive led ended as navigated maintained quarter but progress on the on an climate. customers our weight of and to frontline team

step a substantial. market the drive the sustainable long-term creation macro environment a retailers remains to Our our share but from time, for value comp performance industry. growth relative challenging, team and of is work. solid is take the The in lowering us second quarter is Turnarounds right we're Moreover, baseline putting expectations and recapture ahead are lower starting and the direction. in opportunity to position Advance

here. substantially M&A a successful transaction know Worldpac with difficult other we sheet. do hand, the we On balance our a a from managed to through need process strengthens what We quarter navigated and complex successfully that

reigniting determined later X,XXX our all merely price, and projection. growth are a this on to call, optimizing made are As others on productivity, our smaller are the hear you some slope path by margins. team our forward, by top-down chain some The decisions around also of not focused will of looking dictated be and and related improving in investments supply will by

team, a Worldpac of our an member. When are balance last an and be substantial it I solidifying can team mind yield the early we business. had initiated just that strategic As keep exciting review Selling time even and Advance inning improvements Parts and sheet upside. Advance incremental wins, in operational joined September, we is a Auto to

and to have selling against stage return We executing been to Advance. for with these is actions the auto new parts. fundamentals decisive Progress for our business in the simplify actions future a setting

about path ahead Let's progress the the the business. company. review of review Number Worldpac and that talk one, and for the Canadian strategic

the We our on are completed sharpens blended have focus which process, box. to this pleased

Second, more while front front reducing Pro our and, in the competitive, line become investing sales energizing These the our line. in teams. to costs investments are particular,

the and our proceeds we and strong action are cash the to sale to XX in core billion better model. company. in unlocks box business of years. Reaching improves focus of of Through is improving in which our which independents. our in we margin last Third, milestone sheet, would here interest, business and changes to streamlining availability position to for the both sell help we process end use have agreement X,XXX on dedication regarding into Worldpac by of to and consolidating one for outstanding over our everyone Worldpac making talent us an Worldpac. hires, of first We all decisive the to service The agreement the to model Advance, Carlyle the by promotions the our well-established will service in improving to customers vision for gap our And model is productivity customers, a for The of sheet to external from our on us the path further to definitive sell fifth, our major and balance and operating And thank with for roles. Fourth, augmented industry. Starting supply parts our is their team the and invest to commitment success. our the than Pro forward, are the assets, I the DIY cost transaction parts we behalf footprint our a blended the which like industry. outcome. before and that generated pleased it's expected Worldpac servicing a our key organizational our fuels the Today, proven retail Group. sale internal plan close company. the position our more balance year narrow the vision putting our operations Worldpac entered business. chain with enabling members with to strengthen announced auto net the The $X.X That's

With now the Canadian an Pac on review World our update I provide also to want assets. complete,

quarter, to deep our knowledge market business. was Canadian the the that traveled and and I long-tenured Canada second brings team expertise During the impressed to by

delivered Our our that well business strong U.S. aligns performance. model operations team with consistently and has

maintained business. patience to our decision to where our during team I team for forward As operations. with thank customers, to the our unwavering review on the to we Canadian their a result, and like would grow they serving an look the working I focus this have made retain Canadian

Moving action, to our reducing and reinvesting costs our front decisive in line. second

parts team. up our commercial in our managers We they These and for and costs our account are stepping have investments Pros Pro business been reduced have of savings as commercial reinvested efforts. frontline portion a those meaningful particularly our

to compared down sales decline and street Pros up quarter. QX, During in year-over-year positive comp a turned the first the with

more to putting become greater customer also and on to that, year-over-year, are all grew focused our we and the accounts we and field segments. Along time them non-sales are accountability. Pro Pro we on and emphasis across committed strategic growing igniting tasks, share reducing Our remain serving culture with are spent

As improve to our take part from identify our this, continually members seeking we gaps to swift frontline business. of actions are feedback team and

track on we Lastly, of million by savings indirect procurement next year. to $XX remain deliver

decisive action added Chief welcomed individuals quarter. to Officer, Starnes organizational we've functions. Merchandising the third our And Bruce now is changes. additional second critical new Our in in talented related We merchandising

We have hired inventory for e-commerce. leading new SVP merchandising visual And and a pricing. we've added assortment, and management. a new added of SVP new VP a merchandising, We've operations

July, to our costs. year, marketing three, pricing examples relevancy to one, brake work excellence fundamental our our e-commerce our now do ensure initial and customers. have respect SKUs we to leaders of the improve retail to have and frequent backroom bring availability; merchandising our ahead We on stronger program. The all this line earlier our began coordinating number implementation value full can true year for that by in great to X team's of track new to is effort recent now An merchandising and system. more than business. Early to system. a depth, Bruce's report capabilities Number conducting are being organization forward This have I and that our to months management These together assortments recent include: of functions we realigned X with and also enhancing operations, our actively goal. collaboration. this for bundle into and product number are reviews. the of marketing offers XXX,XXX it We efforts augmented two, launch front-end these more reviews example inventory actions deeper deliver right is coming XXX of breadth and We new in our things and assessing the line managed look completed

of with fourth completion We to System DCs different XX or operating track a is DCs WMS. replenishment be single Our XX of Warehouse the Management the WMS previous expected with will At on remain end. or bearing as structure and our expect XX This serve supply will DCs The while the action, to DCs of feature with either converted of operating capacities large chain our Thompson recent DC chain. conversion completion, compares DC hubs. to remaining supply systems. our Georgia consolidation closed nodes be by our on year's implementation market final nationwide completed our to

of market in Speaking hubs operation. as mid-August, XX of we have hubs, market

these smaller The is creating hub supported or XX,XXX has potential the existing make greenfielding radius hub a new of to a SKUs upfitting by are market locations. stores DCs, to each average on of market same-day We an hubs and converting new basis. to stores available Advance

determining market our We hub hubs We the right least hub to schedule critical that efficient apply routes still now effectively on open insights XXXX are frequencies. We to hubs with us XXXX. open expect XX by replenishment and expect at will model this and believe learnings market operational end updated along XX inventory stores. of service for and develop to gaining managing by the enable

Lastly, action our is our last decisive assets. all the of improving productivity

review, continue the few our margins overall close efforts margin to years. strategic supported sustainable industry. our sales gap This and is goals positive long-term drive the as improved are frontline include generate our to by improve to the the our we business that mid-single-digit blocks asset next market-based is We pricing, And help future inventory consider believe These in core opportunity reposition blocks we believe As sales. advanced can productivity productivity. our by we operational our will energized we and following supported availability. building comp amplifying it's to we performance relative Note generating success. team competitive biggest our building

at team path stores gross capabilities open markets least real new store footprint stores margin. contributes we well to markets And now to located on combined building where stronger can sales to block are is entire can open productivity improving estate where scaling in as This year of with our we The block to strength. The currently building store footprint. is put assessing as next our us is team, XXX we second gap. also the per Our rationalize stores. a closing identify new

created margins, costs, As and DC mentioned, and tenants transportation is gross to harmonizing are supply primary excellence from are unlocking better throughput, chain. Value first and activities. other X optimizing there they improving many here merchandising

post block SG&A our with building Our labs our structure. is operating Worldpac realigning

and a now business details we auto fundamentals against single Advance, in in will as our time, selling the business. with outlook future. share are a to manage To for for operating more to as parts. November. call a on executing we at focus of leverage emphasis clear conclude, expenses are We at revitalized of that areas remaining next the leaders we invest operating for to create look We that business putting our is our same pack required core earnings post-World continue plan we poised our our processes on to But vision greater of the success the

hand Ryan? Ryan over me the let call to results. Now financial our discuss to

by start customer to Shane, our members you, like to thanking Thank good would morning, delivering everyone. I commitment service. excellent their dedicated and team also for

Before execute adjustments billion will the results result diving $XXX some These This our transaction revised and for billion does and The reported after on in our at balance plan. These to to price of not business. our into proceeds end our the and $X.X related enterprise billion and last I costs QX the additional EBITDA margins approximately certain transaction approximately months, in greater to will EBITDA. to of approximately items, contributed intercompany related provide the atypical financial Worldpac provide $XX invest fees. some overhead account and strengthen $X.X transaction. Based of and business strategic financials, over XX flexibility details proceeds will sheet enterprise of approximately to year, million the Worldpac our for taxes the revenue supporting account million QX, outlook $X.X Worldpac EBITDA. for additional net

the Shane determine overall asset we asset As expense efforts productivity for are to improve base to most business. mentioned, structure and amplifying the our appropriate

will investment We our structure are accelerate transaction cost expansion help believe and a of enterprise corporate evaluating our support earnings further productivity, balanced growth. to function combined frontline margin strategic with business and effectively structure clarity The to a for that sales We provide needs also plan proceeds deliver to teams. simplification will growth. deploy by enterprise prioritize

remain we position us will and progress, years. next the initial are in taking believe our margins mid-single-digit our approach obscured the to we actions generate few have in confident headwinds near-term well While that

were in DIY pro billion negative increased Moving year. to of store Comparable a comps range. led to by sales our second quarter positive last $X.X results. Net low the comp. sales single-digit X.X%, flat

the the reduction locations, with driven was sales largely fewer by compared offset independent QX, improvements sales largely in performance. Carquest Although comparable net which positive

growth and quarter, of among to terms the trends with our In from second improved the moved through actions drive benefit strategic cadence of weather-related as sales started soft, off for hot the we Pros. the and tailwind the quarter

In chemicals in see engine addition management. to HVAC to the strong category, and we and performance results continue in fluids positive

more channels Looking at our closely.

comparable QX and offset professional of DIY saw transactions. was with of also Gross in sales strategic net transactions pricing net positive ticket sales business, gross our a of basis, a took billion was annualized quarter, Last in Our of profit comparable than investments was product investment costs. pricing and XX.X% our to by or decline $XX margin compared an with higher fix On positive, year-over-year business prior more year. basis. by the although an our ticket actions $X.X impacted million initial we XX.X% on in competitive

second investment note over our reposition Rather, industry. opportunities more competitively improve and these to advance expanded we changes these perception in a to pricing in assortment, as are additional adjustments not million. in resulting more dynamics. broadly would that challenging across market the quarter, to I necessary cumulative view price and we the actions During identified XXXX the our of $XXX changes response the

Our customer recover. SG&A demand begins awareness with field to these position us believe billion. team $X of has these pricing should was Initial as has put visits. positive. in been a And feedback competitive that stronger been changes changes driving regular we

outflow our associated for with our the professional to and training the business, of points year costs team, and share weaknesses half other implementation of payables fees prior earnings an basis strategic with XX.X% first and with previously per X.X% last compared was $X.XX wage remediation our was by As expenses SG&A the outflow expenses material of same of in timing year. by in of flow investments related the the with year. operational compared $X.X year, sales, quarter. higher an driven at XX.X%, million plan. Operating the cash million increase net compared The quarter margin about of payroll XXX compared strategic of last free prior of of a with deleveraged associated disclosed with with percentage in review an the Diluted in in our came Year-to-date SG&A was in year. frontline driven last associated $XXX the $X.XX

Moving guidance. on XXXX our update to year an full

updated including sale. We completion of outlook full pending the the year the Worldpac, have for enterprise, our

reported as be operations. will Worldpac close, Following discontinued

including range of business in to billion We will from store quarter sales update our the to $XX.XX now third November. We our outlook box sales for advanced expect year results blended $XX.XX for with range flat. full in billion X% comparable to the negative

for guidance Our the considers our the year-to-date and balance of year. expectations revised performance

both consumer-related the DIY to diminishing expect macro discretionary year pressure and consumer, exiting overarching by off to maintenance on headwinds We driven respect the relating lower started deferrals, quarter-to-date businesses term. With QX. comparisons short spending impact Pro and our tougher trends, the tailwinds prior in have to weather-related our weaker trajectory

have We for this the into factored full our year. guidance

for and normalize, provides confident speculate against. Operating driven The won't to is on outlook higher expected car timing, the backdrop year X.X%. revised margin aging margin we nature combination While the return margin industry gross supportive are maintenance. park by execute as we for growth conditions lower to of the will now This is largely between a auto by driven be of X.X% and to income being to us deleverage. SG&A full a the nondiscretionary

earlier, we pricing took will during second indicated actions quarter, As impact margin. gross the additional which

weaker our seeing of over some yield results demand unit net initially price are the we anticipated said, slower rate time, given improving is than to velocity, we the to green we increase improvement in While positive That shoots volume. expect landscape. investments

to to degree, minimum is expect investments generate SG&A to now demand $X.XX, expected expect we current EPS a we part our make are we environment continuing address to Diluted to to and million to of for as from are SG&A, necessary be cash year-over-year $XXX slightly Regarding expenses $X to but a up the of adjusting flat full still meaningful turnaround. range year of free flow. the

to through to for stores Our wrap on we unchanged undertake we reiterate expect that the call in of IT, like hand range November. With to to be assets box, the a guidance still stronger now this Advance is into margin I $XXX and million our supply I infrastructure. To capital as and to up, $XXX for that, million will Shane. projects firmly we to believe chain would expenditures blended the that to have in productivity we'll better expect review and our more visibility trajectory back pathway the growth the earnings has share enhance

Ryan. team you, to In serving want all once Thank closing, thank commitment customers. to I again for our their of our members

In and purpose. and people call have I clearer by the am and be company's now it's even the company's Worldpac, macro ability proven for questions. arriving been selling historically to have to our for open wake has the advance, let's excited in recover I an by industry more Operator? the pressure. the resilient been quickly demonstrated periods vision, after that, excited excited of Since with Our up potential. With of

[Operator from Instructions] Melich And Greg from our first question today Evercore comes ISI.

follow really Worldpac guidance Ryan. sure have Or I'd guess want year? up full guidance, it? it you I on the I exclude includes just make because to love still year does it this the to

Yes, guide. it the Worldpac in includes

transaction, as we the we'll ops earnings call. it the go for that soon QX QX, As provide will into a RemainCo close this guide and at

it. Got

year? sure should that for EBITDA the So next complete And that exclusivity you you is agreement million most the so sell it. break? clean agreement EBITDA thinking still there -- free sale, of Worldpac through for where would And sort year, got when with we're -- I the on any a the Or of product buyer guess -- advanced of thinking to that of just is include a the get have the cash follow a to the $XXX flow, minimum from on it stores? distribution be -- we about make Worldpac the base this

an have them. agreement No, we with do

That's to through stores. catalog piece sell Worldpac critical a continue offering our Pros. product will for our of our We

As you OEM products Worldpac that certain Advance provides know, Greg, European sold. type has offer to

of not wanted It's retain business, continues. relationship part but huge we to that capability. So our a the

World source So to Advance. and we pack, as then to can we customer sell products the them would

it's I do helpful. more product could give of on you're then That's And incremental investment. to markets really And what million. that guess an in last, or terms detail Is you looking it. pricing us figure? Got annualized there? $XX lines the an extra

to that Yes, number. for fully et that's cetera, And account doesn't a -- annualized see the that that is that. lift, an would loaded we necessarily offset

We and get some help to that -- to offset to expect out lift see the it's offset to that annualized, But million spread. and is cost trajectory unit $XXX investment. broad

across Our went initial probably spread, we Pro of as to priced This but at room, tilted Pro QX, but more but in initially and get price out also balances competitively -- end investments categories had full front the of within was the broad maybe area, towards some seasonal it's SKU when some DIY the included also touch more we kind spread categories, priced our we right more across listing. broad Pro categories. try

So some color there.

I market that found were we as the note is first positioned, how looked were we leading think we're is, down. we to historically unnecessarily sell. not we thing at the the This market, above

market the provide personal whack pulled and customer on circumstances. feedback on of a who this these Shane, screen critical And customer out a radiators. I'll so anecdote. I And the moving are up saw obviously, is guys said, and you to in pro

than we were is needed higher. enough, back and radiated to $XX of at pricing what where go and sort sure our materially we higher be. And we so look We're

so made we radiator start in we and see the And units. pickup then adjustment, to

be forward. part know market, as Ryan broadly, customers it's market-based to but as terms pricing, this our story of importantly, now in for the and and growth going said, look we've to we'll done of that's us being just at So

question Simeon Morgan comes next from The Gutman Stanley. from

still bringing growing, versus priority the much out health to question. versus this the growth. also normal investing is corner more improving want in it be undertone growth investing for the to balance? wanted I that of triaging start strategic a don't ask around business, want Shane, back I asking industry the business, as left and how There's growth. of but fixing keeps I understand we're priority the core a for sort you to looking sort we're of but to

Thanks, Yes. Simeon.

We one get of luxury have to other. focusing on the do versus both. just the We don't

today's the escalation. or I in think benefits you business inevitably rental look whatever see cost of if it or at you'll is, environment,

So positive to we want be a company. comping

Starnes look our bringing street at to you merchandising in likes our leaders experience where now doing the excellence that to sales team Pro and of the inside in on with efforts also CPPs he and outstanding past terms our up PLR cadre his capabilities got and CAMs, and with that's what a with Bruce us costing. so from of of and investments we're And we've help merchandising process, of brings availability, in members and down rejuvenating pricing, with focus his

regards of So set mechanics, getting how to relates us. do. cost those and things comp we a table want to we're are is it critical positive the some for We've as on the of many but competitive in underpinnings the to

I the process epitomizes sale Worldpac that. think

of Worldpac our singularly focused box. business inside as we're the different with a company, blended on now distraction that, that creates the So

And comp. a efficient a we make but positive for that focus need to look growth operationally be that to delivering so supply to that us perspective look on for chain, also more

-- be $X -- million of million is don't of the . if that post Or stays Worldpac and $XX run it to I $XX a just know Advance? of looks -- $XX I looks this away? will adjustment mention there the just some And Can like it part million EBITDA. that you'll like of that but run -- don't with was comment, it does follow-up. rate goes you EPS mean then that Worldpac rate is not sub

Yes.

page parts Ryan? that's But and your accurate. is retailer. why is I underlying excitement box a But is performance, there focus, exactly terms as turning this of that terms the blended core little creating a in a where I hypothesis as wanting it auto in business bit. So we're company, the Ryan will that's unpack of think think

the we to It's million RemainCo won't we did is parent are guidance until the at but at held intercompany reason held that that costs the Simeon, of $XX QX, the enterprise. the added the EBITDA. net was some we that additional provide and a Yes, is specific The EBITDA give company.

were of to should the the that in but closer to additive million. look call, full if you $XXX on with to at the So picture $XXX as close that million deal RemainCo. QX But think as we'll Worldpac, come a of we earnings

next question Bret from The comes Jefferies. from Jordan

capital Worldpac working guess carry of much Worldpac? working situation, I the that reduction? to what's how is And discrete inventory you the as outlook as capital far

it's so billion QX, inventory. Worldpac. of about is looks little Bret, for is The -- billion that ballpark coverage $X there. us million it's going will they're but mix we $X share with but should no Yes, [indiscernible] about when ratio RemainCo you inventory us -- when obviously lower. inventory more We'll of roughly they're as like coverage what in of in the mix ballpark sorry, billion the of a that bit longer $X $X Their give consolidated, a a it to us, little down in bit up ratio

debt And Okay. you or the high sheet look you reduction, post penalties? a guess, down about pay those the of prepayment and in balance Or couple what's guess, X%. got proceeds, close? the debt the tranches then Can you've I talked like can I

down, look bolstering to debt in at We'll a at that need look we cash, balance specifics at, business sheet. going forward. the to what business, more share need pay we'll later we what when what take and we're we now, look Right for that definitely going at we close the date. around need invest to We'll definitely the Yes.

So attack higher that, would think would we share we'll more. if tranches. bit attack interest do you probably little those a that we But

[indiscernible] ahead, the Go Bret? Yes. I'll sorry, remarks. touch on And prepared

it said in still was I use of proceeds? repurchased the

I over, a of reasonable that. period think, Yes. on time

cash initiatives be good a important first our and growth is for we've making period Excess priority is forward, sure us. to sheet a sheet balance shareholders The and then balance going returning reasonable got over invest time, shareholders. for the of absolutely cash going to to in

remarks, a teams. the have And as multiple didn't unified the estate house, the X heard We we you on areas: investment created had prepared one, team. of side in real stores, we

and And so investing store new a running we've That's team, [indiscernible]. capability. that got that a been opening we've a leader muscle strong in very creating

want win at XXX where to opening markets stores year, we're we stores. as to put back where about a think to those we to a have a way So get and looking right to

of then existing stores X some POS areas bit have systems. stores And want on to a legacy of system we that one system. the got we've on all freshening. We get need residual There's refresh POS POS still a our of other that front, X IT a

and investment goes from IT hub DC tracking chain hubs. on system, an in particular even terms of it there's the through a also of DCs pick mods getting So then inventory to But doing DC this market there. a in rolling customer. and conveyor the systems, out there's We're investment existing And as to there. But the the in supply side, think terms inside about we're a just of the consolidation.

investment So there's there. some

the fruitful our we effectiveness, help of areas where can [indiscernible]. increasing a there's sales of of terms journey, improving our So on the us proceeds number in that some will both we're put

Ciccarelli The from question Truist. Scot next from comes

your maybe only your outline margin? you Can I EBIT reduction or sizable so, a over it's to percent pretty know bridge I a mean, -- but XXX points in reduction. basis

ago? investment, a better of much price changed how from how maybe strategic couple of how what much to of months kind the from just much change, sales idea give a from is So from investments,

absolutely. Yes,

it. volume. the rate. in expected. that drivers piece and the the with of coming So pretty that And big is X is we then SG&A what much of the margin Those investments price is other large the portion line in of are really

While demand, continue we're and our have. pulling we supply those initiatives back to sure investments we're we on key also growth SG&A in relative that chain making

in are drivers we going to going place about volume the on So the and SG&A be biggest line The expected to same rate. is the the come guide. in top margin

X%, and that on Scot, the definitely less year-over-year. a manifests of it mortgage, where rents know what spend outsized relevant down, defaults their the have up think are rate we trading small sit, and less, spend or for high or cohorts observation company spend is that you a the terms diminishing changes made and on you at consumer, our $XX,XXX as even $XX,XXX or that's where less. there. we And seeing headwind their impacts, Based deferring Yes. and in guys making either are good we're or or card itself are stats getting spending people And in are squeezed the even they the households with about seeing credit

to that that's downtick what that sensitive something line. terms we're to that that, turnaround, on of so when you're sensitive we're is impact a hits And bottom in particularly our in and us,

And then follow-up supposed just that how $XXX figure, much guess a on -- I helpful. of we're that is to Worldpac. D&A? of million using much Very quick $XXX How

We D&A. don't specifically give on

of Can we sales? percent look a at

EBITDA. sales is saying Well, the $XXX million think of Worldpac closer EBITDA, we're of that was that's to you about, X.Xx would

much XX% enterprise D&A? I assume sales, understand. depreciation sales, is about and if XX% total can it's we of Worldpac that How was actual -- the amortization of like

QX. not time. business at this do We're giving different or ops We'll out Yes. to that parts this in relative specific guidance the of

comes next Michael from The UBS. question from Lasser

have are the others? becomes range, long-term the competitiveness as going in lockstep it the just should in the to with XX% high market a doesn't put resource competitors operating to think when margin advance it's and if market at a competitive much of teens, remain invest more disadvantage have How about its mid-single-digit that the to it low does if core

question. great Michael,

can at terms But XX.X margin, million our at mid-single they've And be operating next large the if years is So aggregate, a and auto think the of look -- this and that huge of say the you have would we of that market. vehicles It's digits, permanent folks a this we in our there's we years. that that horizon. they ocean growing. that few still don't an swath XXX going touch That's market that said But they don't aged not as aspiration share higher take company. parts, of certainly been to I in about where yes, touch.

standing or And to with think toe ever us without for them. taking room So grow I toe there's dollar that's important. a to

be leading sort in We many X,XXX in terms are to there look you at bones locations. we our And the the player. have we markets where just market, terms with where Secondly, in are if retail ability of X,XXX we independents. out work are, of of

hadn't need it's and where think is to go function though perhaps out compete be better them, a focus with operating I there. stores we model been were at structurally, not past, we're go fundamentals. to we tuning clearing as our This our that those have So And and as focused. and be markets the to in in of actually

and this, call our I'm this go. optimistic we are really we turnaround, the as tough would that doing as And mid-single about can where players to phase, go the which there. in from we're talked company I So point there improve other still through we we'll which we'll in continue get very out is that phase, move to about digits, that and now, through those

making it sounds there of your is other sales [indiscernible] on or distribution to your are considering points margins they that or get see either dependent? in new have are you about to a do basis connected your Why as that, gross grow a the associates, to is, especially to investing you price, ability question being margin more these basis a where is the margin evidence that those follow-up others in basis distribution frontline investments you SKU-by-SKU industry? that assets are areas significantly, mid-single-digit store-by-store mostly X,XXX below not like either are these are outperforming My to in opportunities

It's another question. good

opportunities on margin operating it having XX chain. relates side. different there's And in supply to about the talked DCs We opportunities We as the about just certainly think systems. think both. have I

consolidated incremental one a store a an POS we of that have market and it's being about talked the in we of good systems, sales, on and to And and go XX to district dollar friction operating get locations. you DC the without causes. even trained members So plenty that and that tech money. different. That's system node on your entirely and Imagine the out store you and substantial takes that being are to manager different another with go hubs, team example. We one

of our gain an do. in there's members terms what team So efficiency

them, operating right the right improvements. products, terms of got by in will We're PLRs, the the component. in quantities. brand, We're and position. that's look we XXX So brand conducting certainly the sure mix a the right of we've versus way, ordering making both for private and huge national frequencies of cost right

a side litany So of just of the things without help there sales. terms that in margin us

right? jobs think a hidden lot that we've There's things turnover, and about substantially reduce number us key you investments, those reduced helps in on if that, frontline But about, difference. of a a makes costs turnover, of you that that our with turnover talked

like because customers. terms as at, I we get pricing. right, on of In we on people, to I hey, more tell it's it needed we comes Advance, to customers and that And sales be you're have your frequently the where helps -- as us pricing, out it earlier, frustrating to your market's the to with like say, then touched through brand, of I like very I to we're able investment line distribution, you, but yes, -- relates

to we where action. was is, moving an the market really thought a was important So

comes question Horvers JPMorgan. from Next from Chris

previously. It's you how to Advance for speak on wasn't known systems you're Chris. for investments, its these Christian Could price Carlino approaching

and market and engine this the it a under single-digit categories. like management to So WDs price and high will SKU-based premium car peers

national So are peers? below pricing you the

for just before. I market. example goal No, above. at and warranted. systems looked we're We've looking sales We been specifically actually be the not exception side, to lot ability national category well -- CPIs mentioned what look peers. not we've look and so our pricing creating below you the We've tiers where and do mentioned put we've be emphasis to the were. where at the that's where -- at a able be outside on We're radiator to our members our team to of we on like pricing also market

looked that's We've market we've leave the is And I lower. but the We've not capabilities. think adjustments, made the So we've built broadly it to and benchmarked markets. an important component.

supply That's then mid-single-digit costs material could get think to it And about that Got deleverage weakness chain helpful. for what back it. you higher million and quantify backing recruiting. been said out Got $XX hasn't margins, to back extent you financing but on impact you're the I the in the from you of might getting executive material, grosses when to the charges it. you've

the what's of So remainder get the Worldpac advisers should you back? that

Yes.

specific ready items not details on give we're those to So there.

QX rate. a more call, in to think path the we will lay OI our specifically I mid-single-digit earnings how out

there OI gap increase. down our sales details we there. that cost our we're X where as going supply and we're are buckets this productivity, we that key that So on, year. it's have the how there understand where see margin, are rate it's that from. The Those and and chain coming more year lay we and might X investments. thing, out that that's might investments it's first opportunity, where that's think really investments back get focused areas are we'll we and to our our when We'll laying big come path opportunity or about making that It's drive Obviously, you the our cost. to you're recur and with it's can not we number so next

Sigman Seth from Barclays. comes question from next The

deferring? over quarter. the through you quarter. talk Is wanted it just the started seeing? off us Is it And trends for bit months. just a rest you're you weaker that the that to slowdown out think of last like third Trends about several playing how sounds it second from improved the DIY? that dissect coming more slowdown year? that Can consumer Any perspective It in weather? on Is I do the that Pro? about Is the that more? a

absolutely. Yes,

see typical the is and they're the side. typically overhanging down we're discretionary, spoke So some kind seeing. on Pro QX. want seeing you driven up we that started earlier, did quarter the the some just this see positive that's in really year. We of when continue off that low on our the We're nice was would to but by that's it's to rest maintenance in street our income DIY seeing quarter recently, see trends we're trends Pro, consumers of outperform macro as the to we're half and back the see, across to those the just we the and consumer of categories, We And did and to seeing and the we pressure business, DIY pressure part, putting large Pro continue through the decelerate kind really think, and expecting both Shane higher more slowdown of than medium the but that the you of probably through ended we're guide consumers pressured these And it movement consumer. initiative. pressured

that lot just And some issues perspective to on core like, address. and I Can what you're Okay. I Worldpac, Worldpac least then time? back follow-up the you If very question. but more about that just what Got think give like it. has us looked obviously excluding talked you for over ideally, looked growth this perspective quarter, on confirms at the it my guys productivity sales out have trying a

We're not going to give specifics right now.

We're positive Pro we box. We that positive the will blended -- QX performance. the seeing just in I'll in you the are give seeing but QX, earnings, in

that initiative, that's that's of more blended and and the that when where what about street positive lot -- up box, really so be in we seeing we units our in the we QX Pro we're what like the transaction, And and in blended in talk see seeing on about advanced talk we comp there. down a the rolling specific call, we're out. different some we're we're the momentum But initiatives won't but the box the

comes Citigroup. from Steven question Zaccone from next The

price I up investments. the to on follow wanted

that spoke time the doing X% time were So of investments you you that about count. the us, to you the SKU at accounted last for said price

that SKU on comment the with customers? level that that take catch another of count million, to some Pro today? $XXX there you won't does this given need to confidence your slower of So And been just these gives investments, then to what translate what price have you

and the a Steven. sure places, right Pro seasonal broad-based. are to this percentage the share especially We Yes, categories. but like investing necessarily wanted all we They areas. Don't in definitely want broad-based it's with at more across to more that are in make much point,

always we're incremental and competitively to continue make reiterate, the far remain want lead here. going we look We're trying As market just not to to to I that priced. Again, priced. as investments, we're sure are competitively trying to

to chance say have better So we yes product. we to customer the when have a the

the portion might the perspective, large much... investments. investments from be there So But of our were some pretty additional

And customers the get when you and that the our down large to as and line. and pricing feedback up we've is we in regularly initiative our with got pros, a talked street underway know, we've

welcome we're call, with opportunity first to a retain call that Now marginal and a where in business. pricing, we're that the customers provides second third the the get or line that's where news, to for being business, we continue

auto things that's business so them think many of parts always is there has in all. the being the one about out are good I there that nobody parts

product even inevitably, So get they with have a some that who's have they there's requisite call. competitor, -- We'll don't entrenched customer or with that the an don't availability. for entrenched the

up we business. the get Now got that the lined we've that's price

getting where look business. we customers, why the obviously We'll objection and So terms we it. get think we But at be in to or are where customers we of the be. need tuning price isn't feedback from we aren't

that and And follow that time. industry, that, And up on us to earlier comment service that we piece those help also speed. maybe parts factors when know call price decision get Okay. That's to one to There's list? factor is from customer understand just turnarounds the stack you're this the right? move up other all take the how then made get following trying you up Can you delivery helpful. availability, of just business, to among the you

Yes.

got we've well. of our in do locations, So products, where people, our terms we great

company investments. what seeing put those excited our by we're from focus stores. the And this we're so We're to on as shoots a turning the the represents. page early And

to said, my the So it that wage first potentially of talk else. to from team leaving members member for was a and raise able I "Hey, hearing somewhere for the company front That sell investing a the $X.XX. go for fast difference of team opportunity versus being talk We're food I part makes staying the for our around GM line. members. about in team who one to

availability. our So guys seeing impacts. We're seeing energy it that, we're terms seeing invokes better retention PLR We're are our you terms in of out of succeed. in seeing want going. our team they're the of it and in terms you members. saying, to of seeing that us We're vendor product by Vendors We we're say, to are where reaching and excited "Hey, partnerships. it

So the vendors are behind us.

we're of a So of traction. doing, are making level we're starting sort at the of each improvements bit what of to get little

want things Now places to want have to that we we go. do still we in

So supply chain, gets got the we've got to as do the In finish to consolidation, more market him expect hubs. Bruce to merchandising, with things. traction we out that roll team, we

in upside excitement. the These the we getting our from do there's want progress we're So but the on internally, getting things track. areas indicating there's are and we're to back and that own that importantly, doing, all people we're we're are our where team from customers

The from comes next from Brian question Nagel Oppenheimer.

So to my on but these question, I touch if you repeated, want price just I also being first investments. apologize

situation, the those So do the case-by-case I as you reaction But is, several and to see that it's times, you're items? I you've not you've the said a the prices, a have on you're -- question undertaking as these but know lower. competitive leading sector, and now adjusted recognizing, adjustments question you're

haven't competitive make we race to to position the really adjustments been of a to on of them the seen and that the kind place, just as ballpark it we're price But Yes. We've that able and price. Brian, move move monitor keep here. down not because of we haven't we that bottom in down to the seen getting driving competitors competitive within be It's lower. bring that. them

it. Got

you'll other second forward, Worldpac, not a recognizing that least at near ex point. smaller with you Okay. Worldpac, less company. I'm RemainCo you're scale Are you a for potential specifically buyer? And there opportunities about foregoing referring what leverage is Then regard are the at think question, full my again, the this of details giving that you'll But the Or there are of be as going RemainCo? to to term? other -- sale be implications

which saying, a in to opposite, great see "Hey, it's We are mind Worldpac company. -- actually I the separate that is getting don't keep And don't going. was -- see you're vendors any see that I substantially our Advance

So procurement it's not the entities as though was consolidated. X that the between

vendors are getting you're accountability. the you're guys some getting discipline, are you saying, So some focused,

be I about a growing, want great part serious You're of that. we that's think And to message.

still marginally So what we will parts. smaller, be huge inside auto player a we're of

of there, and an distributors out support in got stores many mind moms to again. the keep We're still so opening smaller the pops internally. vendors. industry. that significant there player building going absolutely We've We're So in the start we're excitement are and

forward. today and of making as this to company setting keep trajectory So -- then that decision the this for watershed is view in moment Canada a Worldpac, I the selling putting terms we're about

next Basham is Seth question Wedbush. from from The

My not on will first consider year? much this for of the you is transitory that just How would recur to guidance the guidance year. EPS next be question onetime items

of QX Yes, lay that's not real in Those significant is a adjustment smaller we'll pricing investments more out of and smaller but margin what volume year-over-year are a the drivers probably the EPS, And call, top of it's to our on those portion, the impact not overall guidance. and mainly that product some guide giving on specifics portion. our the items. that forward by on that line. means The of of pricing the going then the the driven but related a and one, but investments real it's costs, portion margin

to of Right. to How much ratio? is debt leverage? And post that my where want second to take pay down leverage Worldpac, you do get question will sale you

at we X.X. it evaluating But about grade when long what we investment ratio and a be at looks this I term, want a want -- term, to transaction, to be of a want that from we we when at mean, like. be close we look remain Long we'll ultimately, to obviously, standpoint, that's RemainCo X.Xx.

continue to standpoint. from look at what a that balance we'll sheet means So

turnaround. think of I'll you this And a that, just about Yes. say context in the

up in billion internal to So $X We've $X.X our we million of pick here. close got terms generation.

or about or infusion balance shareholders, company it's it's debt So whether to journey. fuel potential uses, different cash step. investments key think And exciting the have with is sheet the now to a as that strengthening the we

at what business again, the activities create -- just the to turnaround, I Worldpac look for the right, everybody with simplify on on to you focus going if I you think want call, emphasize associated the creating singular and focus, do. selling you company is key a

You have the by the journey that have it. strong if said that the everybody all better. way, a understands. And strategy doing undertake luxury then help a sheet to And then of about you you balance

Final Paribas. question we have Chris Bottiglieri time for today, comes from from BNP

ask something Just of wanted wanted about store plan. to kind the seems just [indiscernible] plans. the That opening incremental. to opening I store like

kind you're how to cost my then cash would and Worldpac, Is and is it you first I million like spend store. it of box $XXX store come think million contingent breakeven growth? can So [indiscernible]. the or return be year set about to margins do would $X going ex this Free it open on I flow Worldpac But of growth? for think store just to to to proceeds the probably improving think the going $X to sales be funding -- guess. funding is a from line you about the going and time Trying of million

question. Good

So of both. little it's a

pick having where find stores go in is important you a year, part open where of how opened But So what creating makes growth. opening difference. open every you we the actually and is right? all you as And we robust of capability terms an store we forward,

of you the than market where already you're you in tends guy open some a you're open where last the market share in and if to an quicker you known If that have takeoff store regional the in be market. area much

the terms to of bolster processes. you leasing the how to in make programs, that about fitting, happen. you And real So grand that or go by of your stocking you're terms needed whether think team one got that's you're to whether opening about you're kidding was occurred. site we And and your of way, in that estate things our building selection,

we've And that muscles opening been practice. some be of have have to put All that been. stores they rejuvenated needed those to and

right? how important okay, "Hey, figure now is a you it, to they it. So and year of the team one stores we say, go and back go accelerate get that to out you right? opening an XXX the you do part do how sequentially So and we say, you come stores and go can things can That's do open many of

identifying they've what doing. the they're So go that's can that. markets And where been now we do

it? some offered do to how think pay for those you So I like. look you as what costs numbers

the proceeds. some of comes from So it

think right? going. I way to absolutely, get great That's engine the a

And I would at has think come aside. from that our traditional CapEx there. Ryan be to So put us Some $XXX budget there $XXX we million, set right? money will

And it to from amplify creating to activities. the the and a from you or then further some you maybe that comes turnaround these higher even benefit some store get if of of wanted can openings, new number something we're that of growth then

like kind particularly of That to How you a is closing about How do Do balance lose opportunity? scale do question. in a And like have money? the good the way -- given that's a of my versus percent from do the of you sense. what are a makes closures? need How frame segue you with stores store there scale at you think next your of [indiscernible] the to market least lot kind in closures? balance store of stores a

Yes.

of the sort it's reverse So process.

management place, participation share, want GM makes way, to sales say, first. or the at the right regional and the things do is don't outside sales markets a what's look performs by we isn't often where a or maybe have is be where markets is at terms We huge in performance. look we look how have a always And performance "Hey, the at our we in the we store look this right, look at where first So difference or coming. CPP's of because those unprofitable function or the thing stores of it individual at or we market don't productivity where below the

economically, leadership store you change. say, at it's and stores, it's function we can look of where them can where be. we it don't not a individual to a here's making "Hey, But could think a stack want We we

It therefore, doing the easy it. location is the of how be based to close how market we're we'll on physical lot. generally. -- out terms park could in could the and it in of so what conditions It of be store get the And

important I do. what we'll And so it. that's think And that's an part of

a where to a in And a if benefit. can market store that that's you are money it's go that close actually cash a flow flow drag, cash opening then stores

Okay.

everybody at your appreciate in industry. everybody, parts to with I blended quarter the next thank behalf we're think I that you, call for third Advance, Thank we in of move time. this the our chapter we're our know Advance box, look you. And one the one describing in today. get as forward and of independents when forward excited questions. we growing We journey, on more to auto

concludes today's you much This your Thank call. attendance. very for

You disconnect may now your lines.