O'Reilly Automotive (ORLY) 25 Apr 192019 Q1 Earnings call transcript

Hello, and welcome to the O'Reilly Automotive, Inc.

First Quarter 2019 Earnings Conference Call. My name is Michelle, and I will be your operator for today's conference. [Operator Instructions].

As a reminder, this conference call is being recorded. the the turn McFall. now will call Tom over I Mr. sir. McFall, begin, you may

morning, Thank us. you, everyone, thank Michelle. Good and you for joining

conference XXXX. period. After our discuss prepared comments, our second call, a XXXX our and today's question-and-answer host quarter of and the outlook first year full we'll results for During quarter we'll

safe today covered this And the we statements. begin to provisions by, we protection forward-looking we harbor I'd Before the remind everyone XXXX. statements the to be forward-looking contain like morning, that and claim Reform our contained comments Securities Private for intend Act under, in of Litigation

company's filings. You could, results the from materially is forward-looking by will, member. year a to on assumes statements anticipate, company's could forward-looking Johnson, serious be statements may, December and would any several important report annual due very to expect, XX, CEO no the as call. Form The XXXX, consider, for in should, us today family estimate, recent XX-K with involving or ended can factors actual identify believe, latest intend described project, differ words, these plan, to to a such health any words. Co-President, statements and close this made The our issue obligation Greg during company unable update forward-looking due SEC other similar

Chairman this CEO, will Former Henslee. Greg At Executive be and to absence. turn time, I'll For Vice today's the our Greg call, in Johnson's call Henslee, Greg participating over

this Jeff our and Tom Officer. O'Reilly our Participating our Chief the quarter McFall, call. David Officer morning, I'm like Team both professional begin Good on are our Co-President; Chairman, Auto valued to also everyone, thanking extremely unwavering Shaw, me commitment Parts with by and our to Tom. their what long-term customers. is our This and O'Reilly present. first Operating service drives Executive and Financial our and the dedication day I'd customers. providing Thanks, welcome the O'Reilly, Chief call conference taking do job to consistently our customers of DIY we levels is care success, excellent for each of proud today that to to call expert morning

in we year. timing first of this was cause past especially the our during can the quarter our patterns past, of volatility solid business. should for headwind demand weather in DIY weather also discussed most are XXXX, As This is saw our periods a we positive business but we throughout quarter harsh support the the winter the quarter, true extended that for throughout encountered significant and which rain as

in comparable reduction contributed dollars delay the tax a volatility refunds Additionally, and of basis. on sales quarter the a refund during total to the

points as would I a first Finally, is comp as basis to everyone XXXX, Sunday additional of had of an approximately compared impact XX our quarter day sales included store lowest our remind week. volume that the Sunday negative which of

our comparable we X.X% quarter. of store quarter guidance of at range to impact our result, a saw the bottom the As first of was end short-term headwinds the due during the sales increase

increase as of professional customer dollars and and on operating sales in of a the strength in of XX.X%. managing our the X.X% industry. to basis, and in the remain during confident of put of our As profit we business Considering health very DIY operating aftermarket we compared growth, volatility business underlying to automotive first day-by-day, the for rate of XXXX results the review the a our effort team in I'm and margin the proud resulting trends quarter, our and both region-by-region sales profitable expenses quarter the an driving our

the combination cover profit, we in lower tax of which substantially solid This sales along rate expected, and operating growth also we benefited performance in will our operating comments. ongoing than the program share buyback a were In from Tom earnings of profitable drove per -- ability addition his quarter in XX.X% with per $X.XX prepared to to model to exceeded drive which our share, increase $X.XX our and business and first consistently our of end execute results. per guidance solid team's share top share reflects an range of

sales headwind to additional quarter with recent and Now color consistent first on results. positive to first DIY Sunday impact store I'd business sales of ticket professional our the was DIY most business exceed continuing our increase comparable first in like DIY counts. contributors the our during weather The DIY. the even being was evident the to with growth to our with The sales professional comp sales professional the comparable additional volatility of the in our provide typical in composition quarter of our continued drive of sides some trends, with store outpaced results in The store both and quarter. quarter

a same in complexity business our expectations with line will impact inflation repairs to prices mix. the for was SKU demand store business consistent as pinch rising full contributor the the the However, this year of impact The on strong be favorable we by on approximately across business quarter, sides believe these a was Average economy. trends average was to and increasing vehicle of the the still the driven first of otherwise side ticket of both overall with customers feel comparable X%. and ticket sales from recent even the

on sales our to of comparable store growth. the cadence Moving

Greg start Call As our mentioned Johnson were in XXXX February, to pleased XXXX. our during with Analyst we Year-End

of the polar February This in comparable by the in winter weather softness offset our we unfavorable from vortex the tax met year a compared somewhat of to due standpoint harsh timing However, of half the refunds was markets. in many weather last back markets. generally to from most and

strong of strong headwind. point in with to continued March was March, report we the that And easily strongest as Sunday and pleased even has good in this business finished quarter I'm However, quarter month to the extra trend was our April. the this

approximately results, we in first already confident are cold, down batteries and Given X%, core the dollars in our line. that brakes, in timing of demand drive it's trends to impact harsh moving underlying our and in wipers the in with refund estimate difficult lighting and the our but performance key quarter maintenance delay business fundamentals fully forward. refunds as I've to On drive basis, repair and as performance by good strong category performance discussed such categories, along such weather with driven the matched categories a tax

we opportunity customer in As the our market the to outlook second and of business we of ahead share continue industry our the beginning gain best providing since our guidance by at the remained has to industry model year. executing strength remainder service to and XXXX, look quarter on our the the our of provided and unchanged

same we X% result, to store to are a and sales second guidance year our establishing As comparable full at rate. reiterating the guidance quarter X% X% X% of our

our quarter, the expected, full XX.X% was of our top margin end basis was the XXXX year built guidance. gross a into point and, XX as first our towards For margin improvement of over margin expectations quarter

general I but have see we expect to that moving forward. his pricing During cost in in the impact quarter, acquisition discuss tariff will our rational acquisition mix pleased increases incremental continue and cost sales that to and comments, inflationary our part prices, we tariffs in and more LIFO a in we've pricing be hard benefited in continued a the to improvements cost, market industry been to been of passed in environment. details along of rational from favorable Tom add will

of year XX.X% full our of leaving sales gross range are continue of to be at sales. guided expect guidance to and We previously our operating to profit XX.X% margin XX.X% unchanged our to full also XX.X% year within

For full earnings per share, $XX.XX quarter we're second reiterating guidance to EPS our year guidance of establishing to $XX.XX. $X.XX at are our and $X.XX

guidance our from impact not fourth Our full does include quarter includes included in additional repurchases. of the this shares which repurchased call year but call differ not any we share impact significantly the through does

on and excellent over demand long-term customers to ability for to I'm company's solid XXXX, Before Team I'll their to call confident this we Jeff, in demand Jeff? to industry providing work dedication by commitment a Jeff I of are our and our thank to turn the in every continued the continued in team's I call to the service again turn both to would start like hard Shaw. Due customers, our our our success. now capitalize to and off to over day. O'Reilly drivers our

Thanks, to remarks and like hard my for members to team and today our good thanking and morning, providing begin everyone. their service. dedication I'd comments by Greg, customer echoing work Greg's top-notch

expenses sales drive to the dedicated Our of managing growth. team significant customers remaining care by taking our volatility during closely while weathered profitable the quarter to

at relating for XX full store like of SG&A for our to SG&A but as a spend results quarter. deleverage discussing of Now our our deferred a the XX.X%, XXXX. a a On quarter the of minutes basis I'd and headwind a which benefit in is was an end our our Within top the for guidance with grew basis other X%, with compensation points is from to basis, SG&A line SG&A per income. percent quarter. sales in points offsetting the expectations year of average corresponding few XX

omni-channel and low face to continue customer pressures a service wages costs other goals environment. and inflationary our We unemployment, aggressively pursue and to variable from

actively and We for with the our growth focus growth spend continue a individual to a X.X% in is all every store, opportunity model of SG&A relationships building long-term of executing key to manage We to full excellent O'Reilly and the profitability our or provide SG&A strong in to confident corporate of expenses control per held expense ensure drive customers, our helps through continue each year diligently our Our we scrutinize X%. store service. spend and we department. managers of business culture, component DC our dollar to expect remain to customer focus accountable is our their with of on profitable

expansion crucial our our it's spend parts of market provide of back projects on like additional equally parts us some our they business to an taught economic anything, continue invest on on and have the executing to in our car If lead need their model dual livelihood to get I'd DIY who distribution to customers and update to It's all experience next that professional to customers ongoing industry the Next, I'd exciting we depend the to like in to news. the our and DC get us center -- innovate must availability. share or road. critical decades

work the customer than hard-to-find get XXX competitors. parts on hub is our our outstanding in store stores do hands XX our provide to ability dependent to customers' teams and Our in center distribution our faster service

of for these the in set fourth an targeted XXXX. open larger Cleveland Memphis. breadth will metropolitan under us allowing while track, is feet, quarter facility of As a that a of the hard-to-find an also level Mississippi, even we parts an service to provide and area complete accommodating of back DC X in time, call, the Arkansas XXX of significant new our way new existing and Twinsburg, of in we have addition XXXX, of operations half for just South just projects the upgrade consolidate south country square we our Nashville pleased super DC provide and CapEx to into plan to increasing DC to Nashville with starting capacity at new capacity to markets. project this the Knoxville Ohio stores. announced, plan work build XXXX Little facility location the and expansion higher XXXX, to a in the we're with the DC included Tennessee. in us to the and the approximately a broader the infill which to hub. flexibility previously The is our in market similar Memphis Horn Lebanon, of DC this DC This open will the also to hub with Nashville new growth Lake, first are the larger region that convert DC consolidate our to projects additional and our SKU relocation plan on of the and half the service DC Rock, DCs discussed the DC store. in XXX,XXX Nashville to existing Both our for in new will On new announce convert to and and purchase surrounding provide initial plan capacity, We strategy in additional to store us a be super DC, last our we'll The an Cleveland for of in allow

a facilities. X undertaking, at plan this these first I'm a managing projects our distribution confident And DC operations team one build, time open of is experienced to it major extremely isn't significant and the Now teams. but each ability in of successfully for

to track year. like we provide to continue Finally, quarter, XXX call stores, new brief turning Tom, and stores a our the before for on update year. net be at the remainder the new store open opened for plans of to In the over our XX during the the expansion we net first I'd on to least and quarter

We XX we as different across openings our stores our store states the continue to growth continue identify country, of to in market the to store spread great opportunities new quarter all with across areas. during open

work Auto will of We merging into stores, also the Bennett stores. the end XX existing locations, remaining Bennett with we of total begun of a net acquired converting O'Reilly of O'Reilly XXXX. new XX acquisition XX The successfully have the which the at stores Supply stores the

to great continuing addition, the grow second end market the we We of The the share team forward a Florida. has in Bennett our look will complete conversion stores to been and quarter. Bennett the of by

Before our distribution customer for their solid to highly on each providing every for never like to industry-leading a we business their thank dedication I and I'd to O'Reilly today, and year results We're customers' store driving deliver XXXX, to in team thank off an our teams in to to our Team up to best the have XXXX, in place and focused company's once remain again finish outstanding competition confident but right I'm continued and the in want success. satisfied we're commitment continued by start industry. our service I our outhustling win day.

call Now over I'll turn Tom. the to

to to for our continued which the like Team first quarter. solid O'Reilly all their also of our drove commitment would in I customers, performance Jeff. Thanks, thank

our Now full quarterly our for at and we'll look a the results take guidance closer update year.

For the non-store million of non-comp, stores, a million $X $X sales a a decrease store $XXX store stores. million, sales $XX in in Bennett closed $XX increase sales, in from the acquired which contribution increased quarter, comprised million non-comp increase includes million sales, from comp decrease and and the

XXXX, billion. be billion $XX to continue For total $XX.X we revenues to expect to our

As wholesale this was and the purchased Greg tariff-driven pricing. a and acquisition well. and corresponding On to quarter gross was the price retail that price recent increases expect sell-through previously margins benefited quarter year-over-year basis to as to and first margin be benefit of XX in second acquisition prior for mentioned, up points on-hand mix inventory year-over-year to increases, as our gross the benefit we'd we saw from gross a margin costs, quarter basis,

see the to of have the to acquisition excuse As XXXX. expect we LIFO quarter a aggregate to a don't of result not charge for and me, during costs, a we inflation-driven -- the did expect pressure remainder we don't charge have a

XX.X% Our XX.X% benefit of to of a compares first by of pretax tax comprised base and rate for reduced rate rate share-based XXXX reduced of XX.X% income, rate was compensation. of which quarter from X.X% X% of first was income share-based effective of benefit This compensation. the of pretax comprised XX.X% quarter tax was a by base

approximately a expect an of continue XXXX, we For benefit base a by effective the compensation. XX.X% for XX.X% to rate tax of share-based of year reduced of comprised full X.X% rate of

compensation expect quarter year to While first quarter, from the share-based of expectations year, these the full out over tax unchanged. we from to the exceeded quarter leaving even will and our expectations benefit course variations fluctuate the for and are rate our we

which quarter, to tax with the open tax base consistent expect be to our of third certain may exception of the tolling the due lower relatively We rate be periods.

our quarter full flow on XXXX. quarter for free $XXX million card a net the higher and our the flow with by and driven Free quarter components we investment. by year the of cash to that for increased was first guidance part in versus reduction and our the Now expectations first the move income for the cash balances, drove offset in credit of pretax CapEx higher reduction $XXX in and receivable XXXX million inventory results

end store up was year, in down full the billion quarter and which are last beginning range slightly was Inventory cash time guidance $X.X X.X% year the flow from the from free the at $X year. For per our we this the maintaining of a billion. of to $XXX,XXX, of

of opening grow the Cleveland result of store putting pressure DC growth acquisition per the to this as the expect to inventory increases to percentage. the the cost continue on X.X% a in We and of year quarter range X% fourth

ratio end XXXX first with ended finish AP-to-inventory we where at was quarter and XXX%, the Our we the line of to expect in where XXXX.

distribution Finally, Bennett technology quarter by CapEx Jeff driven capital as were well store million ongoing was accelerate as investments. expenditures same new of period investments from growth convert the first in $XXX in which the stores, to and prepared his XXXX for million, discussed up drive $XX projects new our comments

come We $XXX continue million the in million to to for and year. CapEx between $XXX forecast

Moving debt. of debt-to-EBITDA adjusted the We XXXX. in ratio quarter ratio end with of finished first on our X.XXx, the at to an line with

are approach We appropriate. X.Xx, when and will stated our of leverage below target we that number

by is We to continue to of purchase and X.X our at We cash share average million. shares average we buyback first the view our total the remain cash supported for price price investment shareholders. flows for during business, an expected returning quarter, execute effective of $XXX very our of a share available our means we of repurchase discounted $XXX.XX program continue as million program. repurchased And confident the future an

their and open to questions, our your Michelle, time, at like this call happy And the questions. your to comments. the line, answer the team thank our we'll and our up return prepared This I'd concludes I I'd to dedication company operator, to ask for our Before like to to be to O'Reilly customers.

[Operator Instructions].

queue JPMorgan. from the [ph] in with question first Christopher The comes

best quarter? probably the You XXX headwind best you about about by mentioned cadence little point -- March bit a month. that little basis a more the there's of for by was far talk -- the Can despite bit

relative January up February how of those was to two? did negative? sort And size So

Well, the the receive March February that business as the to tax tax to a hit. March those refunds in we bit Chris, a And business. solid -- tax of But in quarter. saw plan refunds, to April. solid. refunds as February. and in, the March, But And who'd in wasn't this said, shortfall spring also those was issue of compared was and coming It's hit in primary negative. think was a relative our continued we refunds our size we've strongest February customers of in January to the was quarter. little said, and trend had started pickup clearly, best-performing I a pretty we experience comparison driver and we point

Understood. deferral Do was sort you quarter? quarters? second first of between think the any to and the is washout there it within all Or going

there and I DIY February. Oh, to on the April had also -- delayed that it's row, customers, rain in pouring some forward they think weather of just out probably a for refunds in People tax don't result cars was we chance being pushed forward. that have into get push if the several down as so outside and a a days work their just

want something relative I mention to weather. else And to

of drive those the in polar rubber business. good weather weather, hot creates damage the clear the causes close, that. unless months incredibly for chassis pot holes roads. weather of bust all and because bust things does some our vortex in are weather and and and that good demand. weather couple cold causes like I relative and the business on home just parts up read They to that is the I've February. up to some want hard, the cold cold the As business with parts reports to freeze-thaw freeze-thaw itself experienced is roads our the soft. of DIY failure They last along events, is not some in people that and our make accompanied that snow over by the steering of in some weather those When and But parts to it's extremes, and for days of markets, rain we the stay snow schools And and of

mention want just to clarity. I just So that for

with think have to that do you And this that you about in roads, as think Did sort corrupted speak, weather second winter? weather snow are extreme so was variation? would you that this assess And question, that from then Understood. -- how that expecting in -- same you on -- accompanied quarter? that snow of you lift

I auto it that's Yes. conducive business. results, that spring/summer parts think we I winter the a winter the move would as Not good that again, would that in say we into was had months. to not and good -- for those immediate be business but

thinking others? you're And sorry, better a just any winter particular about regions that had versus

you have regional? Jeff, do any

probably that throughout regions the The The is parts The based kind is seen the of on with -- about of experienced weather. national was the markets from center news, of regional winter that -- slows what part Greg just normalized and to, the than they northern up you performance and And down were northeastern expect. alluded would eastern benefited which weather flooding of historic be heavy was or the there parts on in diluted spring in has more country it throughout -- makeup anybody. more rains, we as quarter. there southern the a the the display the really the early that country. the everybody mean, The parts as I country

with one from in next Oppenheimer. queue Brian comes The the Nagel

tracking number for affected the Is question. in performance between at to there follow give But here in Chris' like the just can weather weather that non-weather maybe of impact some better ex type up of to QX these discussed was core the us affected you variance you've of type weather? past, and ex factor the help business what first, on in -- So understand quarters markets.

Yes.

markets Just our between is best-performing the asking? our you're and worst-performing that difference markets, what

Yes.

numbers got Tom? on You any it,

there that headwind market. our all our and of beneficial was some in we you, weather in weather tell of markets some all What is would Brian,

our variance point. when the the we much Obviously, you the call expect performance softer the out country. I that driver it's revenue little disclosing and we where anticipated was We're appropriate that at sales to overriding we as relatively throughout for not the full about, changed how temperatures versus cool year. think than year or midpoint, at be as expectation Jeff expectation this comp for probably part are in that center normalize haven't our of comp wouldn't and and rain look received close to total talked we the

and fair. a term nature. as second fair. acquisition, That's Yes. comments, stores the spent In quarter longer Then about That's your the bit I in prepared maybe ask opened question in of the to as I time want in guess, the well you number of integration talking you both the Florida.

So as we look clip? the at -- there that it, are you of how the a remain do you there the number How of, a think do store process potentially think relatively potential as about sort make new are stores least out view to smaller of or targets you to whether for at take Do And acquisitions? open there you of strategic decision does right continue at say, purchase. open that the thought that -- now because chains decent productivity as place?

talk to want you Tom, it? about

in about sellers, going into enter would new expect. new there's up to was which what our chains we out we're to stores. markets, CSK, when we we a our But we is talk pleased enter that talked goes been new the find right do performance those it performance whether there calculation parts X,XXX selling new my who's of the non-comp market, want When market the number it's comments, about the philosophy a and in Bennett opportunity our store stores. store to So be out how putting with store parts are we that prepared has store out an Obviously, team to sales, performance. has with X and I we're throws very and if for been continue the the new see and business with where stores, of always

is our always find have opportunistic in we're But a lead. where they're our acquisitions. looking to to that's do what we win-win exit, to be able first So

huge relationships we're better. stores, growing do count teams to opportunity also much store but the When large that continue a and a those make in very to in the at to those not X team that we new in store Bennett number our really of market those acquisitions. solid market leverage and look We an add X really the but stores stores and a

the the with queue Ciccarelli And RBC Scot question Capital from next in comes Markets.

I know expecting basis you of year, two about about the part that. to XXX points but questions guys for talked inflation related

what all, two, if year-over-year XQ? don't year-end of or how Like on kind number impact And against a measure was I had then cetera? is that you know figure, you of that. said the that et do guys is First that?

Tom?

It's we basis a year detailed a and sold we two. this do last what would is slightly tell for versus you on last year. above And SKU-by-SKU this calculation year volume outflowed year the versus that was prices

increases. seeing people in line, SKU inflation inflation SG&A saw seeing it, saw those tariffs. call we're cost price tax amount, flow our but and the through the without what we much really the So that quarter in with SG&A that's about on on price started inflationary about and in of as of talked increases pressured last care retail we're fourth we're in through year especially this cost really of we health the to as we'd and our payroll primarily as top But increases on about passed from we interest year really costs talked in standpoint, talked and we the quarter general our SG&A unless and growth be similar our same industry we fourth in and reinvested we in about talked last inflation year's is as reduced expect

continue we see expect SKU-on-SKU X% level. about to So a to inflation calculated at detailed

based on change, Tom? the that political away front, what's tariffs on did happening view the does if on And go your

reduce that bigger expect would we of price I one of is think are to our only in some you aggregate portion what's inflation see wage driving tell I'd prices. inflation. to But opportunities tariffs driver increases. a

extent the on that in being how in that market the prices in through. that see will be or that won't go-forward marketplace. the a we that's through, fast basis that tariffs business they day-by-day that tariffs planning we sure make So place come tariffs to we're to that, are are how manage reductions determined Obviously, the to basis the additional and competitive existing happens, on stay business place from we'll our of

the the And queue Simeon with in question next Morgan comes Gutman from Stanley.

DIFM how [indiscernible] DIY consistent is in it's few for quarter Josh Was the between Simeon. quarters? your past This with the been over on the growth and gap

more, as tell about also some we which impact a of you, it talk bit is and seen in weather our our on the are and returns, from the customers precipitation, primarily which, obviously, shops inside professional which volatility given the lower-end unexpected was when consumer. bigger have impacts not We weather, a delay you little DIY tax headwinds our is

sense. quick just follow-up. makes then And That a

Aside of quarter, if it, into coming sort old, that change call the vehicles the your sort tax any stores? in of can this really from weather the XX-year-old of seeing you number to the and push side, maybe are XX-, you for XX-,

What would the you the we tell United in States slowly. vehicle moves population that is very

about amount. seen have in same haven't We scrap a rates dramatic and sales maintained the reported change the

cycles go road mileages. safely And see haven't get big a seen able change. we the and better vehicles and age continue they're more routine on the as older through at to driven higher maintenance we the be to So of manufactured

we as tell the change that's very pretty it's see consistent. population slowly happens and time, over we vehicle So you

Seth And the Sigman Crédit Suisse. from question comes next with

guys is of And as perspective? basically What same would follow doing you're SKU seeing then the what doing on It a you wanted up inflation. sounds well? are you elasticity? inflation from as others like Are to tracking I there signs expect. the any competitive

Yes.

both business. So about continue that of When on a DIY we we on our we you the to would we competitive adjust side that tell making sure our and and really be do product very prices are market of the professional the on appropriately. work prices in competitive of elasticity products, it And lot itself. the talk depends

product. example, inelastic content changes lead and lead For have the of prices quarterly the very to batteries, prices batteries a a it's in but change high in leads

your doesn't If replace you need and out go start, work, doesn't your to them. people battery car and

extend can see drive our those maintenance example, they changes oil for miles between On that side that, up, prices go to routine the of people extent that items, flip the you oil changes. oil

maintenance really failure a standpoint. depends it a So and on

March How more in may business any been. macro few That's about on helpful. And you've the somewhat the just improvement for backdrop that think quarters. do your specifically business, over the DIY -- you today? then been Okay. have that how saw customer you color the last on And cautious strong March DIY

Tom, do you want to that? take

weather So partially we out easing from there. returns in getting March from and saw partially a benefit tax

low-end to customers We exposed And more price continue extent view our to that to that. somewhat they're goes to fuel up, as the exposed a little DIY increases.

as it great and see to grow our business to us great continue market for a a opportunity We share.

question next from comes McClintock the Matt And with Barclays.

thinking Just I was level. higher

not you're overlooked about you're that sometimes talked You et just the investments DCs the that cetera, hub, seems in marketplace discussed continued And you're and improve a and mega the to others bit that that some new that's super opening you of nothing discussion it's in a investments their part doing occurring. while going making it of like do. maybe down little availability. and to are your part availability And lot about sitting just competitors new hub, there's

you maybe done wondering things So build some and the over last position that marketing-leading give upon to continue just couple increase part to of can if us you've in overview your I of was availability? years of the an

do Jeff, take that? want to you

the A DC legacy they we we as to mentioned, couple XXXX. guys number availability And of Midwest a well. were in the putting of we've with huge that new And the market the needed our starts and SKUs distribution DCs Sure, the the acquisition the can SKUs just support they the I'll and Knoxville from heard and acquisition it in way. you those Little that centers. start in. DC maybe to capacity from you Rock of hold footprint provide for that. through market chime CarPro distribution have here necessary in the And didn't call is benefit X the DCs, that Obviously, that centers on number stores that just talk with that got us out hold it back and to under to

we expansion reasoning beyond mean, would Memphis that's the on competitors many, well it to support traditional the get a many, is greenfield the They as an And never lot competitors. there the every DC be with DC. in for that, Lebanon the solid to -- takes of new So based and control and And the I Akron that's talked DC growth. these the about. it normally Obviously, across super do do-it-for-me phenomenal regional we markets to and bulk as that freestanding next of level out a in -- head-to-head SKUs many hub market the the level the just markets, really would be two-step that where support hubs that of country that then have we've of these go don't market. amount got the those have the want hubs competition in stores by day. to sure semi-metro DCs business the There's super number still job driven the of make the we new

in for markets position years. our reacting many evaluating an continually many, we're accordingly. standpoint and that inventory from We've So done

in I what And the going commented and hubs. would the Little that DC DC we is add super Rock Tennessee to that are become to

stores those DCs locations. relatively have are We small. The in

So is availability level and for to step communicate from those away that a trying to important parts what aren't of have going markets continue we high are to at. we're we'll us

add, of something parts And at how more O'Reilly. is this become available look it's old of of the make being about is more now each is realized business, to we public a the competitors that larger reason publicly is have more availability a is that of to we discussion XX want talking this an into I it's more here key and we the and successful were business do-it-for-me If back Greg, years forum topic the to XX our that discussion. the the store, discussion gotten or just in side Matt, that become in traded

has tools on market stores Spoke So DC alone in worked a hub we hub supported improve that not availability them, we and they're by SKU we basis. to call as same-day the better hubs happened, and stand through have in our stores, have deployment stores -- just that or where you a --

So available within customer of part competitors, hour regardless needs is the a an having our a the our us X business, of it's on or success when having it it. big or one in the of or part shelf whether

queue the Wolfe Research. And the comes next in Chris Bottiglieri from question with

one then long term one. and term near One

So QX still was inflation, pretty driven tariffs, that in year? calculate by X% wages entirely last considerably given last isn't [indiscernible] methodologies inflation 'XX any were wages, year? think there Because like up it, the I given to inflation

of and X%. the in of little talked five SKU talked same it We first We we've quarter first extensively A was was commodity-driven bit the it year a the was that saw than and in the about XXXX past about some less inflation. saw years inflation, lot that.

East Historically, question. additional at than Analyst Got targeted Twinsburgh, XX-K, the suggested as more a Mississippi. bit X,XXX whatnot. DC you. store any longer-term you if Coast like with you open In but XXX you've you're Bigger, of capacity that, or Days, seems had business your your adding capacitating on especially potential you've Yes, the networks do your in now that's XX/XX, stores helpful. you're the that DC of to more support DCs

at really X,XXX guess, potential? I thought your the all like you store question just So have is

here by model parts years, the number is road, continue addition Knoxville. continue the we is to increase. of Little each the we'd Rock and offset more What to would of to see SKUs you of some there's are expect, closure also being -- vehicles the more say more additions the that as What specific model on

to need what at stores we X,XXX we'd of store for probably diversity. we opportunities per you stores, is that cover are that can to more that continue footage tell the the expecting we all we have SKU But to and to add square So look north this point.

regional we able continue our the those replacing will be to of some would stores that in expect number consolidating would stores that the to we U.S. be stores. competitors smaller with our by of have additionally, increasing And

The of from Suzuki America. next question queue Elizabeth in the comes from Bank

I online-only that between in retailers? would you large lead industry share of competitors was share in because movement ask about your smaller to few categorize chains, of perfect a Actually, auto and the some wanted or the some the the of I to to consolidations. take of question further last dealerships in mom-and-pop the operations, how years -- ability my mean, trends

off, us this I and expand best Well, I'll looking immediacy have makes perspective the the Tom to do I say large market. that some there's sense and Jeff positioned it to where business, provide we're start that comments. chains, may of and would need from advantage is are But acquisition then obviously, to when our the what have parts to in any by of parts all so. And think and of

advantage. So I an clearly, that's think

are can you Tom, that and an the online dominate transition of not? online that or a DIY is to there from any I think more want cases positioned networks purchases, that if have for we you of add online side availability transactions. to which I distribution provide pick-up-in-store the we're -- to to simply And if in that to we perspective, be over time many on the know because going don't have

No.

good. Sounds

what contained large could not And for chains potential up still think be the acquisition? in Great. potentially percentage you of point the market at that is this do

of XX,XXX the that When been you parts it's over outlets. years, relatively consistent XX,XXX to stores auto XX at are number last selling at look the

point. continue chains, So less XX% we little top but when overall market, we're at the of look you a the consolidate to than this market the at

the Michael And question the in comes from queue with Lasser UBS. next

the of are on on is X% Michael quarter, second Can April confidence filling This quarter? color has Atul right? if that easier to getting the second over you I the versus target what you comparison Maheshwari and provide for actually balance in Is X% comp [ph], the is giving June. quarter? Lasser. some compare an the And to think compares for May tougher

there June. quarter. ability of in the to disclose comp advantage is compared weeks course, comps, course, down, gas we've is compare on April a Yes. our easier [Indiscernible] monthly throughout that confidence industry, confidence trend past us our of and the well the the miles quarter. give comparison of several the the We our an simply is to standpoint of price our from but in then, condition been is driven for as April May don't and

each obviously, guidance that for to the at the and add sales a would look when is What April compare. we is easiest and quarter looking I our daily at we're year, for plan

our X% are expectations versus well expectations do we at guide daily X% continue highest the the our to for So for to quarter. and our second

reported, who Understood. a versus narrowed that this quarter. competitor look somewhat your my spread follow-up, And as recently at does the result appear it if we

So maybe this spread do or you share quarter can Or think past? you as of the much you're mix be in just explained factors not calendar by narrowing were the gaining the such other as variance? as recent

I the that we're our we some report. you that tell periods still competitors is think I don't in would same of report gaining What share.

internally think we story. our a little sales I our And degree, bit different period. their that, comparing to at some paints a to look business So of

and then I competitors think of to also And have you the much we your store also job have who makeup look calculated what competitors forth. some or and sales comparisons those of have. their look at you who with business and substantial our -- and comp our have store to sales the comp of a amount stack easier have so to are how at

this share our gaining all time, and plays how that with still out that yearly over market comps So we're feel does. confident and see -- I we'll we'll

next in from comes the queue Jordan question Jefferies. with Bret The

better than is of market that's independent pace? that relatively guys they doing seem On over base the just XX% gaining question, share. Does that seem are it I you guess couple like an you at got store network were, losing share be a of and competitors that to share accelerating

these it's look buying companies competitors grow and business on have the primary as bought, have of of successful I their business, which pressure there's we've and shops. of we as ability that don't of do-it-for-me of if not primary I independently side markets accelerating our be guys independent bought the pace. we to the into the know improved owned of some the that some definitely some we that as some most companies on know is the some an their talked at about

think that have of under continued as to strategy. those improve are many yes, have So and go-to-market the of us I pressure larger that grow them

from consumer it's really of it you is for anyway? guess, Great. impact. evidence a any And that tax DIY. pushed And and sort I refunds? the the question service tax socio-economic could Do then higher DIFM see obviously -- Or business pay the on back that impactful to

was side. noticeable more DIY It on the

socio-economic said cars customer is as on I typically not do-it-for-me Many their that. the things as necessity DIY own out as the and standpoint, a think to customer. the just you work economic who choose from of same like which of under that pressure to opposed hobbyists

we than see pressure we the on side more do yes, do-it-for-me. So DIY on the

And sir, the Securities. Wedbush next question with Seth comes in queue from the Basham

on that up question. following Just

impact spending to you back February, customer of all on DIY conclusion the come you about in the do If how the for delayed you think tax that do refunds don't March? that delayed in

for or exceed factor, been is based been us have day. beat March in we this March we you and to plan of that And Well, we're I back What year. continued to on to daily that for this and factor. just that a is been we confident point. that every have comp don't could can and results sales to at know the trend be drivers think of what that sales tell the the feel it's remainder we'll what's strong for do started we'd But a this reasonably our at what simply come we the has to which I look have, happened plan has kind the strong hard in exactly quarter, trying to April that of well, how store April. plan are. on And our the we look just say, to could We the daily compare able our conclusion. We that finished had point we

cetera? the And Can done you you've things different pick-up times, site it. up-to-home topic, give stores, Got on a et an update us omni-channel improve as follow-up, average progress. in [indiscernible] to experience,

take do Tom, to want you that?

customers to to we're availability What for they continue standpoint. time that a to continue to area an you delivery the and and choose tell passing got from be look we key website improve We SKU pick-up-in-store. is on. enhance reach about specific we're that Those way talking the the want is able a in our to would customers are as on the we we to focuses initiatives to of out us. We've engagement with business knowledge us interact way continue from the That's the focus working X/X up on.

we part can it need? we want When up it those people focus to So are we find Can So What to the the part? do the on. in have out, do have I part? well, get items do continue we don't have store? I pick that it? I If the --

in Stephens queue from with comes The next Daniel question the Inc. Imbro

that about on question, your like last more omni-channel, that the investing are channel. into on of it also peers definitely talking up seem Following some does heavily

online competition. the changed either all chains you the online-only to investments? How getting aggressive competitors? Has can guys' So about you more talk the are legacy online-only that just from big there responding at competitor or

Well, part in, customers brick-and-mortar what in. in have the plays a when or getting is be. price legacy online a would price buy competitors, need advice -- the This obviously, their you plays thing is they that offer cases, than thing some immediacy typically, to the lower of

cases. solve the we're in is their business people simply Just cars with really many problems in, helping the that

the gather solve part to today install our research to takes, And might we and use it information make evening are And many provide factors. those be. case is can opportunity, as understand their is not or bought before and reason from in help important whatever other how have the may of are the information that much And see don't brick-and-mortar to competitors as with or biggest to so next there customers being competitors, this. able investing they many in about customers, part day the they so we the so as real and that purchase. they get to perspective investing problems the tools be very what which the their sources products are people the Our we're people their be money these drive from that are day buying, parts be we stores relationships U.S. significant and this them we online pure many may if robust. with if The our availability want a in threat car, that simply phones our car we all the from that have reason as same

a we're and competitors' So efforts information to -- in business to online are it of comes efforts pure to content exposing simply we comes need brick-and-mortar competitors' be little feel like although protected a when it repair and our to our their that our cars. when bit and best availability the they exposure, our the

should through understand as remainder we think could get how comparisons and easier, XXXX? difficult, gross cadence look but on at gross thought extremely prepared inventory the quarter. mentioned your second the margin that through would I But bought Got And it. more continue Tom, you from tailwinds you headwinds margin I selling the the of back helpful. half That's we transportation comments, get of we the the into about previously think as in then, outlook, move

to to be basis. work quarter daily our in and saw quarters third our year our growth moderate range continue quarter the dollars as making to on for expect year-over-year, to in first of annual the we of that that hard on our a expect would optimizing be at we the We more margin in quarter. Based and gross guidance. than sure the and we're But second to the year-over-year fourth come then we'd higher in the second then to moderating sell-through, and first midpoint

question from Wells The next queue comes Fargo. Fadem the Zack with in

acquisition? QX moderate On spending guide drivers to how you much much we the X%? you of we to as would how of the level as up cost side talk or could move half? maybe as the usual business per store expect that in the for given then Bennett the the And should categorize through quarter, And into investment and the the versus year, X.X% X% SG&A back this

portion When yes, our total tax we're on of technology talk we reinvest for and we items about into our growth first right at payroll. decided the year primarily we spend level, to savings SG&A large look store last plan. service-related quarter, the When

first SKU charge, is we quarter the in that first and we quarter was offer growth haven't an highest in had as we but that rates, obviously be a that inflationary about those. moderating -- our That's for fourth. SG&A the in of that on relatively And the to we're increase. dependent see in in pressures SG&A for and here you there unemployment and a in we per-store driver talked is with a the second inflation. the continuing benefit What wage all would tell that was to seen some So biggest same large and would annualized third inflation, the happens what relation adjustment that benefits we the of in

it. categories Any Got national about are for then can Pro helpful. That's brands? your national versus environment, And bigger picture, DIY the just any of there? your where or and price brands the shifting competitive to your there dynamics are either talk we label customers? thoughts Just brands given importance customers rising

we of being difference. product brand case there's product national Well, many viewed as brands the a extremely What established has that have we private national as where do is or simply box the label And might where a been the not. benefits that important, is a brands multiple branded the some or are has we've better products in always national especially in brands brands. private-label product which

were those to at over and had brands the that O'Reilly by that existed brands brands. previously are national as independently we and a brands as those opportunity acquire exclusively national owned time represent have Some supplier brands

give is a simply business. want profitable our best and that us products run that to best strategy stores our to provide So the best the to customers the carry in service we our opportunity

we brand by a that a sometimes -- shelves them to for carry as customers and product it's what if represents a brand a labels the that's and and product sometimes that represent a a looking be. that's to advantage trade sometimes it's give up us, private lower-end better would entry-level be in that cost not product brand national to our might our better a national private-label a brand our And option would an significant brand owned will private-label and they're

you. Thank

allotted the back We over for turn time will for Mr. remarks. have now call closing questions. Henslee our Greg to reached I

and delivering our We forward like Michelle. by you another look I'd And O'Reilly just work very the team want to today thank hard the Thank call for for call to quarter. their conclude thanking us reporting second joining July. We Thanks, everyone today. solid quarter results on much. entire to continued in our

participating. today's you conclude Thank for gentlemen, this you. Ladies Thank does teleconference. and

disconnect. may You now