O'Reilly Automotive (ORLY) 29 Apr 212021 Q1 Earnings call transcript

Thank you for standing by, and welcome to the O'Reilly Automotive First Quarter 2021 Earnings Call. [Operator Instructions]. Thank you.

Now I'd like to hand the conference over to Tom McFall. Mr. ahead. go please McFall,

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

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

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

can made forward-looking latest obligation such company's company's XXXX, expect, XX, The company other these could, the for due XX-K factors report update to important this Form introduce to statements intend You ended would, identify Johnson. estimate, believe, words. any any this statements assumes similar annual actual by to the filings. several results Greg plan, December words will, year in project, or as statements described time, I'd recent forward-looking during could consider, The no call. differ like SEC anticipate, should, from At and may, on forward-looking materially

conference are our to call Jeff Good also and David O'Reilly Officer. Tom. everyone, today like O'Reilly, record-breaking another Team Chairman; quarter. Vice and McFall, first on call Co-President; Executive Chief the present begin on Tom Operating on and our call. Chairman, thanking Financial O'Reilly by our with Chief our Shaw, Participating our welcome morning, Parts Henslee, Auto to Greg Executive outstanding I'd quarter me Thanks, this are call. the the morning Officer and

to last incredible first first comparisons, of say to year highlighted earnings basis the impressive most the the on of and trends the plus our the an to just able increase one real again outstanding we once The a performance results and our rise pleased adhering these the in to deliver per been business the team operating team. safety history has our occasion put, responded periods the were record-breaking based XX% hard protocols. was challenging pandemic are of company, in our diluted increase profoundly while While of quarter especially in were do grateful team, amazing to for comparable doesn't XXX and store each strong has am a onset excellent Simply justice point of to an increase sales, margin share. XX.X% results customer expectations strict provide a work in O'Reilly Team of quarter of and I our the member by in and for sacrifice fashion and since service,

as in quarter the our of release for as now weather comps experienced robust yesterday, environment from for a well we've several we press As quarters broad-based quarter. favorable benefited a continuation of most our the trend sales highlighted first

accelerate expectations. that hit, of As recent a in some with grow very middle the are through similar a weather the but professional in offsetting cut above off the comp comp quarter pressure stimulus customers winter February business our many into not performance From we our in February weather. inclement we easily This our stimulus. held roads government to the January, as our of finished Southern strong their the quarter accustomed on this vehicles temporarily our the played that to was service, our highest headwind out with government payments risking type bring of March the first still and underlying of stack most result of U.S. beneficial followed soft the round results trends, driven comparable sales month our with growth spring point additional comparisons, stimulus and trend, benefit. impacted store of a of first these by store comparable factors, -- our year significantly sales perspective, XX.X% from months our meaningfully. prior weather strong aided In of exceeded our mid-March, we're quarter. at and of ourselves very sales saw continued by growth X.X X-year timing total, which pleased cadence markets XX.X% the In strongly against weather expectations. favorable quarter of for

quarter, businesses for you contributor, our As ticket robust average the to as by areas bigger contributed our well composition ticket also similar -- sales the driven in business. count our continued to are and expect, quarters, results would Both all the we've saw we comp pleased comps our DIY as in in in the of sales with we quarter comps. of strength being results strong as recent ticket DIY business with what our first professional experienced strongly increases

Additionally, performance pressure business, on limited in we on from invest sales From and both benefit also our batteries. the ability a professional sides of across approximately average February standpoint, ticket we category broad-based, extremely a in business larger our willingness to categories to X.X% inclement projects. was well, Average of out-front our of comps On trends acceleration and vehicles with see SKU the also their continue growth continued inflation, a with indicated that ticket. in robust ticket customers our in healthy categories, and in same brief despite and strong performed count business discussed. just DIY strong I side of weather an saw work

weather industry winters categories the categories through the in well we categories. under move first last we on car car development from demand mild in part inflicts under weather-related next demand X quarters. it vehicles the as as is positive support tear hard also winter a the associated our as harsh wear quarter, and and During should year and after benefited X The in this strong

guidance remainder to to like year. for and I'd the our comparable sales full our Now discuss outlook store the the of update year

have X% from our is expectations X% This the comparable based our to in our practice, in X% results announced subsequent can store our previous are down guidance quarter where the first our we we of and is flat. the normal increasing increase we continued strength such are business extreme sales in into to end trends full range range we exception yesterday, any on performance an a reporting robust historically of our a not revisions we over see to quarter-to-date our release the of because of As volatility time April. quarter factored to guidance earnings to our of year This short frame.

it However, by the the outperformance round extremely has update. of of strong March, into in feel aided our momentum to reflect at continued the we continued this saw we guidance end April, appropriate annual and latest stimulus, sales

remain of most improving underlying fundamentals to forward the rest in before the positive quarter, rounds larger consumer our the trends lower in business, we the how demand of in jobs pandemic, of can't to benefit were miles pace their an XXXX, will in uncertain return but regarding Even and we maintaining remain stimulus as vehicles. as our on the confident As to improvements started and and on these in first economy confident increased nature invest impact in of the of strong driven the decreased the exit driven recent will we of look norms. we the the miles given end at factors the on from professional of historical side the environment demand see also of U.S. employment, We we take to been capitalizing by arrangements repairing DIY encouraged We've we be even certain willing industry. the of consumers work-from-home we remain

the XXXX weather rest demand and of stimulus a the as potential government cautious extremely our we strong through -- However, move still to some outlook we significant favorable potentially been the forward soft in and due tailwinds has remain the from demand quarter-to-date backdrop in first the as of pulled quarter. that forward and variability result fading anticipate

especially the quarters. we As in significant the extremely third outlook and business, a side the on expected the in of the most for of -- year with prior the for the reminder, DIY comparisons pressure that second remainder faced year, difficult

for a to impossible of the team we is in gains significant play remainder industry our predict to our the build within continue expect industry-leading business success or strong driver fully it year model strength the to out of our of XXXX. how and to will the economy, share we While that know control, and remains broader out completely our leverage

Moving on gross margin. to

our quarter, margin. good gross of XXXX margin XX.X% improvement and sales above quarter distribution benefited The of of business the leverage XX strong first well the the from was as expectations gross as For increase built a outperformance costs from our a basis guidance DIY was range volume. point higher-margin on the our into

of full to year we to of XX.X% XXXX, margin in range For gross be expect our continue to XX.X%. the the

remain more see gross any inflation. pricing include industry we that in muted from Our we expected, inflationary extent guidance for to To a rational. pressures continues our will margin anticipate the benefit than expectation

over the first to performance. earnings Team outstanding first XX% again rate of per share XXXX on our $X.XX I want compared of growth For of And quarter, XX% to in compounded of increase congratulate represents the X-year a the quarter and quarter first over XXXX. $X.XX O'Reilly this of an

XXXX. growth guidance XXXX guidance, detail Jeff year-to-date compounded For guidance midpoint the and we an full rate an which operating profit year increase by will our XXXX, revised moment. driven in our more now represents increase are in $XX.XX raising XX% to $X.XX sales flow-through, and of strong previous X-year results versus compared from of excellent our X% the to of a annual to The discuss of a $XX.XX,

call guidance includes share repurchases. include repurchased of any the this shares but impact through additional Our not EPS does

but the base has for and, key distribution our want shortages well. with over including We've improvement Jeff, our have inventory I strength been underperformed our and shipping strong a strong suppliers the delays. chain, discussing have our Before our performance the supply call supplier I supply pressured or a overall, turn has our year performance, pandemic our as build our spend volumes. few has the of raw to material impacts, our in room been relationships of with strength really with up of availability a shined sales The elevated chain. who pleased factor been This very experienced to held strong supply the But a do due status base, position our small we've past we definitely made chain minutes of sales of been inventory supply we've company. network and number chain out historical through strategic and competitive to for investments industry-leading our long has competitive to the supplier majority and advantage

faced and dedicated shipments. have of also levels our outbound pressures our inbound as record have distribution been We processing centers in DC teams

We and and Just current the remain as very on maintaining continued our levels like express take to inventory our growing our the facilities. extremely our comments, my competitive to team normal have been stress for gratitude pressures their to I capacity customers working and volume support sales, to our the of of To care in finish selfless created the and facing even availability committed current strong view teams of our hard term. and to customers. stores, we're again DC operating extremely in our advantage have company our short to dedication want my

first call Jeff? over to performance our and testament is and of truly hard now incredible Our team. Jeff a the Shaw. work the commitment was I'll quarter to turn

first Thanks, I in comments remarkable Greg, to and Greg's by morning, Team good start O'Reilly quarter. thanking for the and echoing want the today everyone. results

been That Our team they overcome the business. responded demands as the committed encounter they customers to dedication whatever team display time extreme challenges has selflessly and to over steadfastly protocols course has past our running pandemic. to and that in safety the able our certainly of during in our the year has certainly on proved are

to on dedicated, our first in degree professional of Our team which customer industry-leading just indication excellent availability another rely service, us parts the are a seasoned, quarter parts people. customers of results and for knowledgeable the

quarter as to But hard level first for and to produce it's was our results think of I results. our strong fully record-setting XXXX performance. were, truly Our long appreciate these team the work of actually as impossible a required even hours

our stores, global electricity our stores of customers. to the conditions, going their And store of to from us in their needs and critical water teams parts went severe pipes are the the above our middle faced of access Many winter years, match the challenges weather, disasters for proven for stores the treacherous weather customers. distribution meet broken nothing needed, road is markets but of to our pandemic. commitment be just faced team, they ensuring the open. severe response to has extreme another extreme response as a enabling mile new Challenges teams such extra in their weather or natural that and to relentless team's picture our to impacts quarter effort pause the who beyond over in conditions it conditions, to Our resilience whether our our our of the by keep countless

strong Now I'd and first in spend reviewing performance some quarter time for outlook to the updated leverage SG&A our operating and like the extremely XXXX. profit

an points basis quarter, increase astounding in operating XX%. of dollar operating growth and of For profit the we generated first XXX margin

in the we frame to generated sales As levels to redeployed and we've discussed our growth quarter time into SG&A has second of rate sales profitability, outpace since back surge short a SG&A dollars historically continued to have more our as even last adjust gains the the of sales environment. those year, in high of stores

and basis X%, trends in which of of as yet quarter strong sales store The Day at Our improvement short this in demand that well first incredible store meet trend. other store SG&A us levels hours The sales higher-than-normal XXXX, of of SG&A our by the as XX.X% driven per company. points. which the and benefits is increase well far above generated, the perfect for quarter increase XXX and almost growth, leverage all an variable of historical operating per by compensation incentive we payroll to resulting store is comparable SG&A expenses saw XXXX Leap was case in associated was adjusted additional an

to matches expect our SG&A expectation walked image as for to this service match answer to well few environment to cost SG&A level allocating Based on leverage range revised on Greg of per structure we the that from now, leverage long-term our provide the X.X%. to an this on our As the right increase be based said of through through target we've customer stores the original profit range manage our actively and estimate that as guidance. increase strong date we XX the results members. basis of now in isn't to our business, and last and the we're operating our now and We expense sufficient is continue of the year This from so points comp of in for far we earlier. know ensure sales previous appearance guidance quarters will our sales training resources full robust through our approximately store excellent between the development up XXXX team XX.X% XX.X%, that call, plan

by day growth able with of external X, industry-leading support stock Memphis DC began Memphis. we On is plan, the to successfully sales our challenging a our made extremely over Horn that expansion onset more teams pleased strong orders larger-than-expected year announce DC build, and well front, the to opened we design new were in the this stores And delays Mississippi, an pandemic. the newest month, the caused I'm shipping in in markets. Lake, to our surrounding This took which by and to just inventory south set. of even facility But

several in with this for foot the stores, additional up of capacity the we weeks, country. Over the XXX,XXX-square store support to over facility ramp growth XXX next will middle fully

remain to to set network DC our top-notch inventory the committed Our strong bar availability, and develop growth for continue inventory in enhancing and distribution our availability to the support industry. teams we'll

could XX Finally, the progress dependent net on across for successfully local before In be opened on locations, XXXX. and their my new thank the new store XXX is we net provide to pleased municipal to spread line great of to over update for XX new market during comments, new I'd our and expansion want openings outstanding but to for I with in conclude our once store open first our some states. turning To agencies. approvals design team's quarter, call in stores see to still to a XXX Tom, permitting like O'Reilly the delays conditions stores This store quarter. And with total we plan continue first quarter. Team the ability again brief in performance

Now call to I'll Tom. turn the over

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

our a and updates results closer at quarterly take look guidance additional XXXX. to Now our for we'll

increased For store comp from $XX million million noncomp a a decrease in the Leap closed quarter, noncomp $XX $XXX increase increase $XX permanently stores. Day nonstore XXXX increase in and million million, million of comprised sales $XXX a store sales, in sales, sales, decrease a million $X a from

in Greg the which margin XXXX, positive our year. prior quarter, gross details For on in our performance total our previously expect be and the we covered now the expectations impact, and $XX.X I $XX.X billion. for was quarter, LIFO first to want billion to first line but $X our revenues million between with provide

we which are first larger exclusions anticipating year from our gross XXXX, discussed a impact half full positive offset from when our As that of pressure margins margin we partially the will to set tariff guidance, expired. have in LIFO we POS the

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

energy first of last the XXXX lower tax the realized of rate tax in was the expectations. was credits with our result XXXX The in timing year. rate The first quarter line of of base renewable quarter

realize For energy XXXX, the benefits from tax we credits in to renewable expect quarter. fourth

Also, of tax can X.X% XX.X%, rate compensation in a share-based a These tax in variations compensation. to we of to expectations quarterly no XX%, of year of create by expect benefit base codes. our continue XXXX, assume fluctuations benefit significant tax comprised share-based effective existing the reduced for of for rates. For an full tax rate the changes

our operating revised in Free XXXX cash our income, a these of income and components net last that year. flow an was in tax decreased comparisons for on versus investments quarter first quarter renewable the million drove increased cash increase of increase first the Now projects to to payable for tax increase of and the expectations the driven associated XXXX, XXXX free projects with the million timing and $XXX results flow excuse cash accounts I'll -- an by move inventory, the $XXX XXXX. of result the energy as me, in and and benefits significant

net range per was end flow the the this year will time X% strong the store to Inventory the as first quarter billion beginning billion $X cash profit of cash quarter we down of sales now through on and of extremely quarter our that down our billion versus year, by our by saw the quarter. operating the inventory the from in driven of reduction in be in reverse the at $X.X and guidance taxes For we end year. $XXX,XXX, payable to last billion move volumes, free of strong was previous expect XXXX, of to from offset particularly the we expectation $X.X which based the flow the for $X.X performance, benefit X.X% first and at some the

XXXX. plan we our in just inventory and at As XXXX carry on store expectations this of hub full inventory for complete still normal to we product plan is X% when last in store network, and over per additions. add and grow to store for beyond additional And XXXX call, typical inventory over approximately from our quarter's our store, and we year outlined our $XXX above expect million to discussed per new

of trends we impacted see the immediate our However, further stores. supporting of to initiatives inventory remain at highs. will of And delays by be the historic if the needs more replenishment need additions these sales could some these incremental timing

and from for anticipate end and investments volumes by we our turns as at company We of AP-to-inventory Our high first the an high over which was year. strong inventory when XXX%, quarter complete AP-to-inventory and moderates. influenced the this extremely growth historic the heavily additional our was will ratio the ratio our our all-time gradually sales sales inventory moderate last that

Capital XXX%. from which the finish quarter and was expectation activity. expenditures current ratio down for XXXX, Our approximately million stores timing the $XX million, of driven at of a the DC is $XX same development of expenditures first for to by XXXX were new period

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

We with ratio debt-to-EBITDA the of debt. quarter in finished significant reduction on growth of adjusted EBITDAR. end first an the driven X.XXx, to as XXXX quarter by Moving to of first with X.XXx the the ratio compared

we'll We approach continue leverage appropriate. be our to below target when number X.Xx, and of that

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

prepared open all I the concludes Before at to for answer up outstanding the This this team to your be questions, line, turn I'd questions. and the O'Reilly like happy your company's your ask our call I'd thank we'll again answer And to our their time, to Jack, operator to like to results. comments. to contributions

Evercore Instructions]. open. your is Melich [Operator Greg line with ISI,

and on love the do-it-for-me trends the business. between the side follow Tremendous quarter. to I'd DIY I up of the guess

were that period except gap you when them commercial between both said really that for I'm if said strong. impacted You the is wondering weather side. just the February gone

Yes. is Greg. Greg, this

quickly the was when business. more So both we side. DIFM positive to what and with saw we and sides government than results We're Similar on were very ticket our very both last pleased business the stimulus year business. introduced, DIY benefits typically the sides pleased traffic with favorably average side the of the of more in both we had, of

incentive what of I saw guess, really of that more last the that to saw to lesser in was January, last third year. over was quarter the quarters, the side we impacted benefit second DIY and degree, that March past or business in what in place, couple guess, the when the the a and, spread we similar With I saw we broadened in

it. Got

DIY, there, gap narrowing, but strong, there's as the that long So isn't right? stimulus both still as really that is

Right.

And it. I'm demand. follow-up Got on be Mayasa. standpoint from both gone, and an then has actual the I curious business the how integration just would just there guess

want you do take that to Jeff, one?

with the really team Yes. strong. pandemic mean last ability I get is calls. everything had performed Greg, last via impacted Mexico, the year work basically were. to we we to and well. year. somewhat were integration our business as obviously, pandemic the Probably had was as year. we've accomplished. down continue The it in good. strong, can Hopefully, They a we They integration. and going But but Mexico But down drastically good and back the the everything a they and really done get handle what Zoom little pandemic and team the impacted by not the really the with team and about year there work and eases later, is team we're bit strong. going back excited picked up finished And like they've

line your open. Jefferies, with Jordan Bret is

DIFM share a you Could of of the and gains your share the in the -- of maybe DIY the to results talk magnitude gains little about business? sort contribution versus bit the

the great gains are is a great for a that for quarter. quarter, contributor for the for we and it. I stimulus weather know contributor the It's also is that -- Yes. a know wish the and question, a had a quarter. But we It's contributor answer share I

streets, We're of share the was like up They're still hanging down a tell to without from we're a that tell our good sales from you stores X-steppers. they'll gain, from you, to and how we the quarter high to share and focused repeat way of don't you have So quantify all just of gain. share specifically box of customers. it's benefit we And how the to was smaller big from service on some doubt, improvement of some level -- And hard much the I'll are, seeing both sure customers. those gain. a feel on really share. taking making providing to from we're I talk that in differentiate if much the

weakest maybe and then And give the Okay. maybe a between performance. standout areas? spread just little what color the the maybe us And and gap on the strongest regions were the regional and

want do that one? you Jeff, Sure.

over be that's just X,XXX can the to always team With there sales day. we all honestly, our we're the performance that in May But know well. trend since expectations across year. XXXX better that of that exceeding with into last quarter, pleased across focused what every really markets of both Yes. on and we markets continued the our first first And our our are country, stores on going do in. out of all business there's there quarter pretty out really ops as sides And the

top-notch know to be best severe or prepared Now to through to softer markets important store us, our during a in it these there about teams we a that as of especially is maturity of was local West really, Southern continue events. just We and as Northeast how the up not there as events out open one would, sure our in how store everything comments the can't for our it the extreme and And they we occurs a disasters is the at -- service, enough our parts. experienced are you customer at these type when in as the our little there weather first this in to just markets. ramp proud occur. one And in -- offices. weather for we just our store that store our of close always these store and customers February the on just weather that weather we're we Southeast make and store, of support due they're always And and wildfires DC teams that customer be to for it's his need commitment the to are expect just experienced do I accustomed level, the or to. our just there, like winter Whether living catastrophic customers But based to do newer winter or time. really the strongly, they hurricane, power group of last flood stores. well just was say But Greg type mentioned that

with your Horvers Chris open. line JPMorgan, is

want I -- X commentary. the to Obviously, up a bit it's April follow halves. tale of So of on April last was year,

we're of place But the your But You parsing miles you've also you month big -- about of, out April X- to do-it-for-me? mid- seen in of, the impact have the, last on lapsed hit, when driven shorter DIY you in whether stimulus year. basis a or But what late and know and early. have you X-year talked can so raised as year in I stimulus talked a peers versus about talk it's last pickup a time. sort in -- you've drop sort or business, of about shelter period

Chris, is Tom. this

it's us and that for unusual and in we're guidance that. provide our include the updates to quarter to So include

very pleased business tell our not So throughout year, To individual and above But been driver. of going do. of our when so And Greg the to talked about, our side it's and because been as something we're in beyond you parse DIY with talked that this especially weeks the is included out strong that guide being that April, accelerated performance, I expectations. that we've the it stimulus -- the would on about hit expectation. business we've

And mix in versus comparison that I the Got quarter. an margin, probably mix first it. XQ, to year And front then last on I easier gross see the the the on XQ. know relative DIY was the LIFO I -- delta see

a to the chain. piece more It be other fourth you got the leverage seems seems relative supply this lot quarter quarter. The to like

higher what the quarter? changed end thoughts So was fourth incentives the supply perhaps workers might up in there. any would the paid trying to range what in be helpful. Or out parse And some you the where to change? on chain there Was you year for

Chris, don't know, as we costs a our you as talk of sales. distribution about percent actual

fourth Our the our this boxes to hard relation year, than the work we a first to in lot gross our leverage helped to to really more significant margin was quarter relation designed. of last quarter, year In comments through improvement. ever volume push of are continue though

happen. the that to that outstanding offset said, than But inefficiencies Greg would, see high, volume whenever through [indiscernible] we we by an how, So just job have volumes, more making done leverage these by our going teams, high of is. DCs are we're have as created normally the going

Right.

difference? So big the -- versus XX the is the is essential a XX

Our X. year's negative comments are the last X, versus

Ciccarelli Scot Markets, RBC line is Capital your open. with

Scot Ciccarelli.

on change reflective the kind upside your to experiencing you and is XQ you're Tom, April, really in and back April guidance the outlook, updated what obviously to your just start? any some So there is of so far due expectations? in referenced increase of just Or half increase in XQ the prior

and XXXX, quarter this Scot, would availability vaccine the government talked face in latter. call, and in unknowns on our year Yes. Greg. Early we subsidies the and the the driven and we and including that things. all is fourth It's those uncertainty all miles about weather

year. many back So the half. didn't on our we so we unknowns updated year guide is made of first We've adjustments for assumptions And performance through just half the make solely to April. that on of point date same the any the based this back there's in the that made part

comments could this stimulus half last other Obviously, with on it but if year, one follow your acceleration the coincided also in sales had you March. of Perfect. the in then, up the drop you year. big regarding And the benefit back saw Greg, I of

the If would outlier be the like still March you it quarter? X-year stack, the of a the on more start to look of a at, little back would let's were it, a Or half look upside? bit to rest significant call

question. I'll that Scot, this is Tom. answer

our were of soft last expectations March for year. April. our of Obviously, discussion because our end the for expectations. of versus Same thing raised performance of the beginning So performance the comp was

We a as that expectations, the expectation. through expectations our our of long level outperformed all quarter date versus we outperformed have call. we've higher this So of

Okay. Tom? But The X no commentary what on look might terms that of like, year? actual in line

Correct.

Oppenheimer, Brian line Nagel is with open. your

Great quarter. Congratulations.

a first I'd into one, to well. on apologize, deeper I are questions a my So little this know of focused number stimulus, want as but I dive

the a out your benefit to called you've stimulus clearly, sales lately. as So here

my number you one, say, events, had pandemic, to about how been you mean, the of think So through so I the there questions a I pull is driving, it a realizing know there's guess to how it? And -- would answer. is kind the of is are I demand -- Or stimulus in But forward difficult it's we've that sustainability nature? incremental this to of more aspect then do that?

few time, of part beyond questions, will into seems know a much time. trend and we into nor likely a over It Tom, will We It March Historically, benefit Great but this be significant long know there'll from long questions really the this quarter be second not a We and government don't additional want just that quarter. the that feel lot that's half? or just do we in But around those do continue. April. you stimulus. there'll lasted April take that how will following a how know what was Brian. unknowns like did stimulus. into be. on last if we weeks to of has that, know we don't stimulus that future trend that carried Unfortunately, less don't

Yes.

about our in So one remainder when of our March that through is prepared we're rush of -- some items business thinking -- that discuss in there big forward comments, quarter April. end the the through of pull was at did the the of this we

that's that assuming acceleration there for get their be guidance Within of you cleanup. For that while, quarter customers pull-forward, the you followed year. within first of can a the and do some of movement based timing we're industry who between business, was our of spring on second for the some this those inherent when that and and spring our know out

one that drive you sales. growth Got talked the to And someone regard maybe last that about year But and then customer, really -- so hobbyist sales pandemic the factor I the your others through in outsized more -- helped one with also it. was industry through my if this of could, aggressive to pandemic. follow-up, got

approach more seeing difficult how of are your that As comparisons, to we track? portion business you now these start

we -- more have an saw out. out I typically just that car anomaly, more wouldn't of than days, products, wish growth of care a Because lot it that called some last Brian, Yes. even I see performance called year. I'm we sorry, we waxes, washes,

was categories, you at you in categories. there sales than part performed stronger in When were what a when out they you products, very -- categories last were and did that lot batteries we the these, those some hard much car performance look to compare other But XXXX still year call, quarter, of year and of hobby called performance an last sell we sort it in Now first because was care well. anomaly. a of lot

our OE but lot of But in at those parts. that there's there -- and parts. categories, performed you consumer of average that parts day They doesn't out, out your well. categories matter when buy of all a a enthusiast As buys fact, categories look performance buy spike, unusual those performance an day replacement performance

this So but brakes, we year. continue, But have driver things significant probably to The we a which core that, trend seen year. well our have significant performed for that degree not categories, under saw what last lesser the more again, to that's comp. driver also very a than really like car, battery,

is open. your UBS, line with Lasser Michael

to your the comp of imply high to second to lot you mid-single digits uncertainty high year. the that mid- in early decline for would a Recognizing the X% in year, quarter, be all basis of it a end trying rate we know get for do growth rate and your in assume I is back out. compound very annual QX this forward? X% for below time. single-digit of up that couple a there Should to guidance you've lot you we that where embedded full guidance have for comp you're would case, the In that's compound your comp a the points if you'll what that assume running annual long in pulled growth frame that been of hundred on to sales there's being demand in question, half

going I'm question. Michael, Okay. try answer your to to

very were with You I'd the business a reverse, that and we everyone bit. done X April, weeks detail, toughest started year the then But were we in or second after as through the like come providing compares you stimulus June discussed breaking this is obviously year sure are year. I'm remind premise little May not not quarter June. And carried and the bit the quite of pandemic our We're and question on of quarterly and when a X the to last accurate. past. of onset May that that that in we've of your difficult the up what saw in is guidance in

for when you laid at the premise and the So is business we're thinking on monthly we at how beginning I'm performance full the X-year year. out look stacks basis uncertain the a that about

as you still our are if opposed dollars to the I pretty X-year on Michael, think percentages a Yes. at projections aggressive. the look basis,

this Would business? of going helpful. My short-term expenses market reinvest -- does in prepare very take you remarkable the and the some growth sales for better to labor it been strength and it tighter, the Inevitably, to is, the strength get it you wage going taking the of operating if run second is -- internal last labor over to That's the back long is months, increase. conversation reinvest Understood. what's question back in few using into some about this it business?

that payroll. side the in be, on professional good prepared that in more we business do hard, now, a question. going business keep staff foreseeable When to about the very is we're had it the to future. as don't add business, the like want to answer is requirements is I'll doesn't with Jeff good is really like down. as that. service to of we'd than not We've actually up up. when on add need it's Okay. talked to experience enough And expectations especially staff always comments, And Customer as long-term it view customer go the go mean, his what

long that to you sure and to focus, over it Our would turn we Jeff, that? and the appropriately want term. more we're to Jeff, has to I'll then people, make on for full-time like been planning add

to our we're of higher and a and right one now, But taken And we varies well provide always on long And service just a feel up they view nights of a and They're provides good hiring full-time sure it, and are that our tenured. And that really guess, business focused store. on Tom. a -- for making that. for -- on again, by -- big Well, we we've shore the more there years excellent levels those I I members. customer our a we're doing member experienced, skewed to been it's headway back making initiative mean, there. by store on pretty covered long-term We've definitely staffing improving our that's you weaknesses and store service. what's kind service trying really several more -- just team level time just business, grow of that our to weekends pretty we and more team really and for and is provide grow full-time our staff

with David Bellinger Wolfe your line Research, open. is

Great quarter.

inflation. So my on just first here question parts is

year indicated I quarter, And was X.X% X full point think called your alone. in you out think percentage you in forecast. embedded last I a increase QX

seeing the talk you you're go was And the So price some all? factor the full inflation magnitude year SKU how year? the high guidance about over raising of Can of that same at could balance sales in now? increases of a

our in and and within general the economy There have on in tough question. supply been industry that's pressures pressures. Wow, shipping a chains

expected the persist, soon extent We the of our saw to pricing, economists. quarter, first doesn't, We remain in industry that the expect expected year. to how will we that it those higher the inflation in pandemic we extent ease we bit out and lot had to in they a remain how the back are the although little here the ease going rational. rational we that. projected. also than of higher would we half hear To could we come and To word transitory determine than a see So from the

it. Got

there that. Okay. follow-up just on Difficulty]. Is something a potentially maybe And [Technical

hearing time a hard sorry, having we're your question. I'm

Sorry.

normally increases through, Just keep can Is price one. new in as there now? competitive anything to are be customers up those follow last about passed your to those that inflationary these backdrop reacquired a of Can lever that system? the used on and some different

sell, at we of pricing, majority the for vast they're based. look we things the need When

we we are We win to be in want service. competitive to on price, but really -- want

for the strategy the at we've look appropriate successful. But SKU-by-SKU, basis. continue a us market expect we pricing, we when long what's that to store-by-store follow a on made that pricing that's time So we manage used to

line Goldman Kate open. McShane Sachs, with is your

gross it to margins. I to but on the when question follow-up wanted comes just -- inflation

does So as more down gross the is demand that two when inflation year? guidance pipe, gross margin? quarter gas delay your resume DIFM And comes see that driven come that of here the would or goes how would back the does you up, be hopefully, come and for if into margin there there a in as play miles with

Okay.

see offset the -- to market gross help rising we to that of the what acquisition how in inflation, going to And on So a margin come depends rising if increases, what SG&A inventory additional we're that hand. is. those with will have, going that dollars in we price to when want go much Part have react hand we basis. prices a because attempt But expectation competitiveness prices of timely we're percentage. our they price is maintain

business professional are the was side we to gross volume on carries to the with And tough is the year of the going were continue those that and to grow. compares the for business, of DIY discounts. because buying side very going guidance On professional lower margin have our customers the professional a

on of faster. gross business. the growth the our expectation quarter, inherent that year, growth out So of DIY that stronger as And the in margin above was to would we part growing within our our for called side Greg was first due guide the have professional

Bank America, of is with your Liz open. line Suzuki

in behavior environment. that that pricing forward? on changes some going question what's in grab could as to words, faster-growing is market there competitive pressure in a Are I on in in segment the other seeing particular margin for share guess the pros channel now any promotional you a Just result recovers? gross

Yes. do to one? you Jeff, want that take

winning make with relationship. the that the top But rational. rational. of and deal maybe pretty all availability, is year. always on and you remains competitive regional mean react all, sure focus it We really that to pricing times stay certain pretty overall on in accordingly see say certain obviously in I'd board, and is marketplace across pricing certain the run service I players then of Sure. our price

Great. follow-up the on And just competitive a landscape.

last mean, for businesses PPP I a lot we year clearly loans, of also as expected auto maybe but M&A so environment environment. that we a received small much aftermarket, So kind might in from see of was support as very disruptive didn't the have

potential the for So how does targets acquisition look today? pipeline

well. or performed the -- a a may move players us out targets into, there say need There company. of just for looking for that our that strategic -- those brings competitive are that that acquisition or looking acquire. acquisition to exposure we're accordingly that on small I we we value that at already bigger conversations advantage opportunity based There's targets. We're are would lot an to market with looking to left the acquisition actually to we always We're pretty we're always Liz, some it a bargain having value that have and Yes. be industry not to. in targets, larger don't a acquisitions that chains markets are

bond available. XX focused that X, of maybe would have We is store when whatever a come those XX I we're the on open smaller mean, absolutely companies or X, the vintage what pipe. should really, acquisitions, XX, to comes X, may acquisitions. say XX, a the I down X, And chains, some So size stores, be just smaller

of to as We continue well. outside the opportunities U.S. also look acquisition for

are participant history the a for family-run a be ownership What are there's the that performers. performers industry. up that there I When in it's the pass change and going consolidate that is left come players still would not on that it to willing would And target add next or players to business, at the strong for they're out shows look we're to when that to sale those are generation. we tend to our a us, a

pipeline more at events chains individual different than acquisition determined macroeconomic circumstances. by that is So

is Zach Fadem open. with Wells Fargo, your line

older think longer-term DIY curious industry about But run could DIY right higher now be on the you the vehicles you the rate question I on versus considering moment a the whether have plenty long-term prepandemic. and the how structurally business. great one-off rising think population a road, of Obviously, of and having drivers.

to, Yes. That's It's good maintenance our that as that's DIY I also, repairs and the good portion a for time you most great used or for strong, cycles question, vehicles be a based more The of sales pretty couple of industry. been time, those Zach. lot car those can of reasons. in demand, have performed the of lot a a allude and is, and maintenance sales supply And car are the fact industry warranty. probably DIY that's out of should channel. the channel, new significant are of softer for a say, our on One

making two, of most those choose of the professional So their options: garage, probably independent of repairs. option they're not or do the back take is themselves. the consumer two factor A The to to because to period. would dealer, has warranty it repairs one Or out of cost our consumers go customers; which the

it It's past historically the vehicles be have the consumer that future? over to willingness Is to seen we've think than I the continue year do of does. a sure more repairs that going hard on we their hope I say. DIY is seen. going to and to into -- maintenance

hopefully, some younger. showing the the As my breaks, strength some where hopefully, traditions whether channel. suspension I've it's lot my or that But had changing used channel of oil the car dad in a or the channel, repairs, in when should our children easy DIY DIY said sticks in the of the stays in And past, maybe you change sales these oil I the benefit their how think industry here. and and that a and I change the the to car was aftermarket. traditions I there's involved with father either remember DIFM way,

ex on margin an That follow-up here. consistent makes same gross thinking for inflation, changes given fiscal latest fairly Tom, would suggested But outperformance you quarter, my us QX curious update be your and you on I'm SKU could sense. the through LIFO if last in And your basis 'XX. rate

transcript. look have the I'll Well, back to at

similar, than range. thought I better I our us had little we expect margin quarter, our we make to gross to a during all we our said think Obviously, the in. pretty not performance be want change -- that enough to first

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

reporting team thank We'd today our work Jack. forward to today, in record-setting joining and Thank thanking by our July. for you. call to hard second entire you, delivering Thank like O'Reilly in like call look your I'd results conclude quarter everyone a we to for continued the quarter. our

you for you, participating. ladies Thank concludes and Thank gentlemen. This today's conference.

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