O'Reilly Automotive (ORLY) 27 Apr 232023 Q1 Earnings call transcript

Greetings, and welcome to the O'Reilly Automotive Incorporated First Quarter 2023 Earnings Call. My name is Ali, and I will be your operator for today's call. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session. [Operator Instructions]

I will now turn the call over to Mr. Fletcher. Jeremy Mr. begin. may you Fletcher,

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

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

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

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

time, to I would Johnson. Greg this introduce At like

Vice our call are Chairman; quarter Brent Thanks, everyone Auto me first to are on Executive O'Reilly, Jeremy and Fletcher, present conference Chairman, and Executive Kirby; our also Officer. morning with the Henslee, call. and Financial the Jeremy. Parts this Greg Co-Presidents, Brad Participating and on O'Reilly the welcome morning Good Beckham our Chief call. our David

requires commitment excellent team our over across puts XXXX. our O'Reilly and and parts day. a our XX,XXX to the from strong the work begin Team unrelenting team I start like extremely to to results such strong professional hard call am Delivering grateful each on service Mexico. in of people today every for congratulating by U.S. customer consistent I'd an

and of robust to by strong and results outstanding growth quarter first highlighted team top continued both comparable on line were our on the the These results O'Reilly prior deliver of as year. sales in our our strength XX.X% top business. professional a demonstrated performance expectations sides increase in Our store DIY exceeded

Team people, invest and this business grow highly refine on year, enhance the our tools to in our execute our out charged initiatives further and O'Reilly our motivated share. of market gate aggressively to

have We very pleased our teams in been with generated momentum the XXXX. have

our sustained team growth into results remain the greatest ongoing remains O'Reilly clear capital focused delivered Team on sales assets. paying control for both quarter. us expense highly our through to these Our translate build commitment and our enabling competitive strong advantages gains quarterly our after members And returns and of on our and prudent is culture dividends quarter to shareholders. outstanding deployment,

quarter, prior our XX% $X.XX diluted per represents earnings over year. first the a share For the increase of

of our XX% EPS the quarter full shares increasing first are increase full to our our range We EPS of a range, expect guidance midpoint repurchased – year outperformance and $XX.XX to year XXXX. even, $XX.XX last to $XX At XXXX over now the our call. we revised since reflecting

Brad to view to demand clear company our industry a additional the I'd the and confidence top-line our quarter, Brent first reflection reiterate of for over detail in Before call industry. strong XXXX. balance like our as first and of to favorable I the turn the both for in We backdrop results quarter provide outlook our on our the

their economic elevated existing be will vehicles a compelling avoid vehicle further the for reinvest a order used on and pressures higher our proposition by and face to newer remain supported priced consumers consumers to also firm vehicle. existing of prices. payment to This new value continues in maintenance their that prioritize We continue vehicles belief in the of in taking repair to in

stabilization and remains consumer U.S. the growth supporting both fuel steady in growth rates, low wage miles health the in Encouragingly, driven. prices, resilient consumer and with unemployment

uphold overall for uniquely combine of industry. still up to outlook faster capitalize to to customer While strong and of backdrop to our for strategic provide in U.S. my again a a regard of on heightened service. we more want dynamics an maintain demand with than believe the grow I caution the comments, element our advantages we industry potential at To rate position thank automotive O'Reilly Even the importantly, excellent continuing company Team economy our the and market wrap pressures, we as for believe for aftermarket competitive the current fundamentals economic positive the a our to culture whole.

our our and the team to our the you makes commitment Your success members best fellow business. drives culture, and in our customers team

our our and to extend obtaining week as a business O'Reilly Lastly, public This as share to team public well markets us grow the family foresight our like benefits as to opportunities XXth our extending with the also I our to April allow marked company all the to to the past initial in public gratitude recognize ownership our in shareholders. had would of to members success. The offering capital XXXX. wisdom of company's anniversary through

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Brad to over Brad? call the turn now I'll Beckham.

to like I success you O'Reilly through Team customer thank everyone. morning, commitment to good begin excellent our sincere to service. providing their for and continued would a with also Greg, Thanks,

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to of start business, I'll sales take of what Now of through with time our the driver which and the I'd walk was some professional for business. details the on like performance outperformer of the above first our side our the the the and each expectation in quarter quarter saw results. we to side

basis comparisons, professional in XX% these throughout even Our a growth we direct quarter, The to of for the of steadily growth gains the sales are team's compounded were on quarter. exceeded result very comparable increasingly execution. our the outperformance be outstanding and professional very to trend pleased challenging and in strong business light continues see our

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Focusing drivers key sales professional on of results. our relationships robust these fundamentals and the building long-term are loyal

professional of expect growth opportunities the stronger our to to We also see XXXX, in win our DIY of to but on business be marketplace. our driver share in the side the exciting business continue

solid delivering results teams the positive comparable some pressure Turning with growth to quarter in with results sales February pleased our weather-related our driven of and our DIY by business. mixed for in We March. each January month were quarter generally store with the

see from weather as type from of severity the has The our seen both of and quarter volatility historically in timing impacts most the first spring the weather. weather-driven winter the of and onset business we

their the warm hold driveways on Our maintenance days will to and on of items DIY temporarily up and often customers the that advantage take take were repair, during of first winter. jobs perform spring tune in

definitely our across the much results. our business quarter volatility wet in pressured first of as of cool, country weather pace by DIY this The weather unseasonably the was impacted March

sprung our have have rebound pleased However, turned into we spring solid been finally and in we the the business. we April, calendar seen DIY into as with

continued improvement, start growth, sales quarter. a The to coupled robust professional strong the has resulted in second with DIY

said weather since what a about to we few XXXX, out spring. As expect, it's the more sales would pretty timing we of don't we exactly than times our with But talk much have like over on our given volatility control. results the far of years, in lines up the in so balance,

comps offset our in to provide ticket ticket Now on color headwind business pressure I counts the Strong a original ticket performed would some partially ticket because than average our March. counts on and, count professional performance. our outlook DIY ticket [indiscernible] to business and in to to by the DIY in count side of we the of Directionally, weather professional the wider like were quarter. our outperformance as our expected lesser,

line We similar for saw the same-SKU our growth in average mid-single-digit with by and ticket inflation levels expectations supported quarter. at

the increases same-SKU benefit as year-over-year passed increases of first incremental Our in significant opposed benefit quarter. from primarily the inflation result we price along cost was XXXX of to in

from compare result move to as year of in increases price to increases significant of price ticket most expect the expect this half same-SKU continue the levels benefit a to be this higher inflation against we the will this stemming benefit As and we dynamic, average and quarter from first first moderate year. throughout

my to To our outlook. and highlight sales would wrap guidance like on I up year comments sales, full

comparable to $XX.X to range are $XX.X year of maintaining our total and We X% of store guidance billion. sales guidance billion full sales X%

quarter full are above and After year incorporating we encouraged trending the are have far. first thus above seen by strength midpoint plan results, our we

the outpaced first of anticipated in plan our our though saw the expectations sales even already strength However, some we had in QX. original we quarter,

of we as year-over-year when laid as on stronger to our XXXX discussed half expect both we business. of be expectations our inflation last benefit a easier well on first ticket as sides result call, As we same-SKU the our comparisons comps count out

we noted, year. are optimistic first strong as Greg we thus in about Ultimately, the beginning weather ability overreacting we light drive as through forward. we And demand far results strong in the the see moving are are of pleased always year. we of we of with strong results, can industry dynamics and at positive believe sales especially While to move performance our are volatility about cautious the XXXX, our to quarter supportive

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Now our XX.X%, like I'd quarter sales first quarter. discuss SG&A a percentage from points of to in basis the deleverage was as the SG&A XXXX. XX of of a performance

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discussed in basis. on first our our quarter XXXX, event in-person was our and to first we year-over-year call comparison as headwind As SG&A conference since conference this February, a was such, a on

their However, XXXX, absolute product is in as to customers, shared culture the of investments best expanded serving our from in best of our of successes knowledge, our make parts the better energized be dominant and auto this and practices our each we supplier celebrated strategies XXXX. team we for our in spend markets one perpetuated team

through this of last in enhanced a our quarters year first comparison of $XX total time-off creates at As a quarter our noted out our fourth program XXXX, program end XXXX a rolled fourth have the million XXXX. will the of year-over-year team On comparable cost XXXX the roughly also XXXX the this headwind charge be on positive SG&A we but basis, which invested year. in fourth quarter a in for the in in that we to of full paid call, quarter three in resulted charge the

original our incremental In full expected per transition. part both For in quarter, the with which but our benefit was our coming driven impacts our given from rate related run year quarter, plan SG&A by and well above our is line spend performance. conference first increased SG&A in stronger-than-anticipated X.X%, the the team into sales the is sales expectations above total, in because member year-over-year of the the first our store quarter costs to plan leadership

technology image projects move continue XXXX, and we experience and team incremental appearance execute forward to in store As and upgrading infrastructure. fleet, refreshing and as deploying targeted our our plans in strengthening we member our benefits, investments at vehicle will well improving our as

are accelerate we'll in opportunities position and of strong drive customer growth our our to we track returns in And on investing levels continue generate profitable capitalize our we our deliver the and ability a items These continued have these gains, initiatives on from through see strength. are on to We teams to investments. and confidence on first service share long-term as quarter, planned.

For full original X.X% to expect the of to we a increase incremental guide as our per at X% support the year, of of SG&A robust our end approximately see first to spend in the store sales growth. quarter top result of X.X%

operating guidance XX.X% to XX.X% margin our at maintaining are of range we sales. Finally,

DIY team fortunate dedication of both continue focused and O'Reilly our teams comments, to thank to customer professional, my service again want conclude can our execution with you our am in our To with very our for their Team and customers, time our assure I I to spend relentless remain and on once fundamentals. members to success. stores

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over turn I'll Now call to Brent. the

like Brad. are the give focus thanks results to customer excellent I our would to my quarter. outstanding for on in performance and providing service. These testament O'Reilly efforts your Team to also Thanks, of culture a your first

some color investments. first margin through discuss store I Now gross quarter and our time our take will walk capital to position our and growth inventory provide on results,

Beginning margin. with gross

of margin basis of first with XX line our gross but quarter expectations. decrease an first point was in quarter the XX% from Our XXXX,

As quarters anticipated in call, we last first noted of we the our in comparison pressures year. two this

and those color now provide Our will what results saw. we in expectations, some quarter hit the first I on

the of the the higher rollout professional be quarter the comparison First, of middle XXXX. results were the gross in the which our impacted margin first began rate lapped the run quarter our the first margin of will initiative by half of first XXXX. year-over-year last year, for gross for We and in remainder pricing in of the quarter apples-to-apples fully

a impact Secondly, gross the time with the the in benefit our historic accounting forward. compare the which of and against first expectations we in final noted million XXXX, quarter will of headwind approximately have our that was in of LIFO as for line moving quarter roll-through these we quarter. we Both $XX were at headwinds not margin

in was In margin of anticipated to pro side from faster of that margin. carries from but expectations outperformance pressure of professional we business, our also also to as and continued our gross the first and pricing quarter business lower addition saw grow the LIFO, the which some resulting pressure gross planned a continues from mix a higher versus some

mix of resulting However, slightly product higher-than-planned professional of cost of our on the margin been business both expected, acquisition has than offsetting sales. better from benefits, some sides pressure positive from the

cost to cautious XXXX, of we the incremental for for year While reductions prospect so remain acquisition outlook this results costs. the including regarding pleased are our far we with remainder the

chain and inflationary and face to with see stable to expect broad pressures, in continue both partners potential environment supply takes directions. for cost anticipated relatively we a puts Our

selling Pricing If pass acquisition in in our are the increases has see in industry those we increases other costs, or confident remained to through future product in price. ability rational. cost we

at expect flat and last beginning margin to our gross to basis year quarter was quarter-to-quarter this for are on range. year year. per from finished to remainder margin up consistent that performance which the XX% of the the the XX.X% store and quarterly We of of year $XXX,XXX, compared XX.X% time within Inventory our full a guidance maintaining but gross the be

per working our X% XXXX are toward end inventory in the stores of distribution planned of at We deploy continue and to constantly distribution our store inventory our our centers by network. to across increase tiered the and position hub track optimal

merchandise work Our and benefits local in are inventory best supply to that results. strong the the strong in-stock possible years. line as reaping distribution they been top deploy assortment store inventory diligent chain as teams positions have And and management have our done is and several

end flat the inventory the quarter compared XXX% of returns are pleased from product generated the beginning we we and at ratio the Our AP that of in leader volumes first inventory to turns. with strong remain and to inventory was year, supported and continues to Net sales by ensuring remained be the the investment industry availability.

to new Turning progress store capital successfully on growth our we the first investments; quarter. and XX during stores opened

milestones highlight. few a are there to openings, like would these Within I that

off celebrated the of ceremony Gibson, our with our Oklahoma. with ribbon-cutting February XXrd in into entrance XXth we X,XXXth state. after kicked Maryland, First, opening a long we store Not marking the year Fort on our

Finally, we Rico distribution first center March. our stores and a in two in opened successfully Puerto

accomplishments to are these involved all truly We and teams thank would milestones. proud and of achieving the these of in like congratulate

Growth of is that sleeves does service a each their an industry-leading job of work, always O'Reilly O'Reilly and product hard customer Team outstanding rolling model up availability. store excellent and and is ensuring

dual and ability on our invest. that growth returns to capital premium the market is strategy on perpetuate drive the store team's our culture to our we Our execute reason continues

team year is fund in XXXX. XXX investments terms store toward growth have goal of for XXX ambitious new ahead capital to those We openings and marching initiatives Our of of our us plans. net ahead still an to

initiatives our capital expenditures for $XXX first to million $XXX $XXX of to Our were the on and guidance us capital are million. million. track for expenditure quarter our And still projects hit

summer. Mexico for remains this on our on an schedule Progress in distribution center opening Guadalajara,

to years new the as enhanced for service future excited the area as store in to levels facility Mexico growth us about of this across come. Guadalajara terms many metropolitan well are opportunity that for We will create

for is privilege Jeremy, service. again and the Team best excellent I enthusiasm I It automotive customer accomplishments thank to a real for quarter for to O'Reilly the in their over during once Before a to of part turn be want their aftermarket. team the call the

I turn call the Now will to Jeremy. over

Team work would also they for day. deliver and Thanks thank their the Brent. to hard excellent I O'Reilly professionalism as service customer like outstanding every

cover quarter of XXXX. on guidance results we some remainder first Now our additional and details the for will

XXXX sales quarter, XXXX a increase non-comp $XXX stores not and by yet increased comp the For store contribution million the have XX.X% sales, base. driven $XX and million in from a comparable entered in that

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

of like we gross and our LIFO performance of covered charge that to our recognized would margin. and do benefit impact from The everyone is comparisons, gross unique margin $XX our Brent not of have quarter not evaluation margin discrete a in I of comparison margin we best but resulting in as gross reported normal of guidance in measurement quarter discrete the LIFO the remainder view remind of for performance gross our the headwind first already, and the application GAAP first the first will LIFO the quarter as million XXXX XXXX to view XXXX. a

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

in expectations. effective line rate with first Our quarter tax was our

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

the certain tax be effective from to quarter tolling periods. compensation in quarterly in expected quarters the due of can tax rate Our Variations tax fluctuations our fourth tax three the benefit than to lower share-based rate. create is other

million in XXXX cash with move by quarter XXXX of that flow versus Free results. on prior our versus Now cash year. of and for we higher the free to $XXX expenditures the drove the driven for the capital will XXXX was million decrease first $XXX flow quarter the components

unchanged For range remains XXXX, expected $X.X free $X.X our cash at billion. billion of flow guidance a to

which the increase our of debt; up X.XX on XXXX an to end our we X.XX Moving compared to revolving is first credit debt-to-EBITDA of ratio with quarter borrowings ratio on times with facility. driven adjusted of times, finished by the

number of times over target be to prudently time. plan X.X our leverage to and below continue approach We that

execution repurchase the of million We first for total billion. price average continue share our of with share we $XXX.XX be And of a to X.X repurchased at during investment quarter, pleased the program. shares an $X.X

effective Act of release of repurchases the The at to we $XX.X sheet total in share for of $XXX yesterday, $XXX.XX Subsequent aggregate and is January beginning share X% We X, as share excise through assessed earnings. value tax part of on is and million million. a press repurchased for shares our and became in which quarter end share the net at excise investment of the repurchases. the that the first fair during of an directly repurchases was million X.X Reduction our tax balance retained incurred market XXXX, all implemented average price Inflation reflected quarter,

our that discounted as We repurchase cost cash and to flows the current of our buyback to returning is the capital of shareholders. confident continue we remain price future program expected view tax the inclusive very supported business, excess average an excise effective by our means of

As the by EPS repurchased of earlier but not additional a call guidance reminder, through does includes Greg any repurchases. shares include the share this impact outlined

to company. I thank up to before I our for and Finally, our their again commitment questions, would O'Reilly customers the entire like our to your open team call

to prepared we be our the to like to would time, will Ali, your concludes this I return answer comments. This operator ask happy line questions. At to and the

begin Ciccarelli Thank Please with will is you. Truist question Scot minute first ahead. XX from session. Our We question-and-answer a go coming [Operator Instructions] now Instructions] [Operator Securities.

a guys. It the looks information like Thanks in morning had pretty Good sales. acceleration for big all today. commercial you

that related you're do price markets certain positive of So a investments potentially to investments? price just share something to And make results guys you that increases? to function you. results should helping there potentially about improved continued sales prior drive the as thinking Thank seeing of question, tempt else then where Or that? in is we be additional

take Brad. there part the Hi. kind Good morning, of professional. This question I'll first Scot. on of Hey, your is the

our feel of about talked in And been have teams incredible last excited I looking just long we've just that speak year a the we're the and in-stock time. really lot and speaking what our of we're to that's that many store what as and And in – share side the top the can for a really of line, things especially house being supply part our and team our business, that Me the chain, that over gains of the business, rate our and our from our at large on we accomplishment – supply about. years. Brent operators side last touch percentage incredibly was such an we're in like professional chain service, side this sales Brent's our better proud store of high know point, the ship of you way high As found drove just a business. resolve a a

And on execution getting there the supply staffing so those calling continued our customers. properly customer chain, stores, yes, out on service

that that for we've for thing, we good lapped – now quarters pro just ago. that feel talked good all the was really talked tools initiative. we decision. started talk know, Just that about And our out we come a the the we are it, really time, of from feel year basically on But we've Scot, a pricing we've standpoint. that one-time as investment the toolbox a over really all of this lapped several a year you We we've side and made how as price year now professional that about excited

matrix we better of felt an and in the point larger – of than competitors. historical our really We had like we that felt independent us competitors, some two-step a really could move to opportunity our that have to competing been down we the overall close-end cheaper with somewhat retail by kind competitors like were

we around We've past here, and But feel kind plans have as what for we to no of it's It's we usual. round. So business thing. back good a the in really this second did. about lapped

Excellent. Thanks guys. a lot

Thanks, Scot.

Scot. Thanks,

Scot. Thanks,

Thank you.

Horvers from proceed. with JPMorgan. Please Our question next is coming Chris

Thanks. Good morning guys.

I the follow question, So on question. to wanted on up Scot's

with was do the you professional performance in quarter? So think And gander any first the market? DIY your the much on on market line first DIY you in outgrew side, how the

This Jeremy. Hi. real question. is the business. on Good I side DIY Chris. answer we a definitive the wish had morning, of Great

we're going over have that, to that we're more net have a wait just had we'll Some quarters, well share think gainer speaking, several – We some been about and to balance a it. executing on the talk business. opportunities fair see how any of others and And quarter broadly gaining. maybe We we of that our to on should we've to given teams of and there's we on be out be there's to our that our work need haven't fair marketplace. we that side addressed like get DIY to continue entitlement to share we there think think share the think

just a things quarter. feel we can a on the that perspective from what the is In business challenging. see but pay are saw was quarter attention rolled we like there we volatility could bit that it's first closely, DIY weekly quarter, given and the in more in of that first little those side our daily, watch Obviously, us solid good weather the for reports and pretty from the of spring, in,

that's think with the for picking business, the business team things but function and We – service. well. momentum and just providing that's how of that gained exceptionally our we've even in respects, where In absolutely talked that lot think business it on executing of that now has Brad to, we more are some share the the last the but sure, we great our model year already. professional great against our pointed are And teams a the of hard that it side, pricing, up that has fragmented more Brad running professional side to On got to been, a identify there. really

quick so And two follow-ups.

pricing? margin in of to stock? on better given do gross of capitalized see the sequentially get gross you're shouldn't that the the – in if are as getting coming First, on And the addition have back that margin, share that why did is are you that should year pro performance costs down, we that secondly, in inventory progresses? you back side And you when driving some so, any think stock some freight

kind just side, really service, really Chris. that we what ingredients, And felt level Hi, delivering have already the quarter service whether was availability it's right? Jeremy what we good third. our is three really first side on and tag Brent. on the said, were is execution and the it's this market, Yes. is what and professional of about teams of It's our the it's to really you Brad and go about and how think when business foremost, This in or to price saw And retail parts out and to we there.

that. product In XX about last terms better and months. over the progressively in-stock, of It's gotten we've availability talked

suppliers continue to use our of distribution footprint, our it there. and really part years, footprint. hub talked to us our But to obviously contribute – our in get a we've they've been competition and across really there and a quicker seen how be several the we've about model investment tier the And in which ability have we seen also position. with win is inventory get than placement helped a helps like has store aggressive been of finally We've we healthier, healthiest in inventory the them terms we big that DC big what

and how it's supplier execution availability network much our DCs. is of it deploy that as our inventory and So as about stores across we

some to consider. something transportation, inflationary come product, transportation it. That's freight we've to factor to we and cost, levels. even of terms acquisition down to international continued pre-COVID some some cost they'll – see In costs have on Domestic

raw have have cost lot a like pressure, We suppliers things cost that. of different pressure, material that labor

into of going you I remain bring So best and your the wrap our compete to do cautious that's model how in goods always there. can for that's question. But cost we of one the terms would effectively. it reasons we up everything We're to of

Thanks Have finish this guys. to great a spring.

Thanks, Chris.

Thanks, Chris.

Chris. Thanks,

you. Thanks

Our Melich next question with is from coming Evercore ISI. Greg

You may proceed.

on Thanks. a top sides. little I up line on bit wanted the follow to more both trends

like to in I sort getting want are mid-single-digit DIY, the came make So sure counts back April sounds positive, of mix? weather inflation still in it you're back and of terms just better. that's with ticket

relates stability standpoint. I from counts parse here into positive are want that. few as Yes, Greg, an that in too trend weeks to April it the closely wouldn't I ticket just to necessarily a ongoing say

ticket is Our little on on our would that balance, of reflect bit kind that net would see full year guidance. DIY of expectation pressure we the counts in a

see question that your business specific in the rebound we maybe for just April. so did us DIY And around

our Now in first for April, the interpret that we in we in out some of carried of outlook perspective. some week cautiously expectations there. and and kind for the and the us sure, of hit quarter spring feel really a of spring first from haven't up stage or stabilized that, at that, it nice that of year picked or changed But good DIY the over week balance there's this really that's

was – XX%. just SG&A, And it. on what, it grew, secondly, know then I guess, help Got I it –

on to that some that, else something the out is you What the store high the drove called unplanned. year Is things you costs? higher now there of planned full SG&A end? You it going have end? at per and wage for the think is at making Is that

the X sales did is exceed there Greg, X.X, quarter. was of to outlook, only of first which from beginning No, our as our expectations the Yes. a the in really, year range change

We addition the of there. pressures some have We're trucks some incremental that, things. for the incentive of that, especially more running types business. costs more hours, professional those And of then out side to on the associated with just in

above what but have be we midpoint what expected really little spend there, of and operating is reflective attribute and that. of is small it's change the per that would where have a just sales we guide most would profit running at the kept we store to would bit better that are So than plan

you DIY? And as then private volatility percentage more get of update you is on down an Any penetration? it. have signs trade label. in Do last Got just

Yes, Greg, grow. It's honestly can which I really really we're see speak slightly our to of We north that. to proud XX%, continue to brand penetration of. proprietary continue

traction better, with build And both customers, proprietary to DIY the with brands. continue our offerings across very competitive and We to lines gain good, through progression they professional. all best continue our

proud So of we're extremely that.

the that second could of ask think part your I again? you question,

Yes.

of building down a – trading you out and Are getting you sign traction. that? trade I any cash-constrained private know little finding and there of have that's more still consumers within So is the Just downs? gaining label, you're program

that. and strength have seen not the we gravitation of point. again, know we've a seen you honestly, And offering evidence not. or material this just something know down actually closely, probably the at it Yes vehicle. believe from think they have we any talking about of to that's seen the to quality not any when some that. consumers wanting slight we watch repair trade Greg. But their We've And the that's very I better are best, retailers

good great. luck. and Congrats, That's

Thanks, Greg. Appreciate it.

you. Thank

question is Jordan Our Jefferies. coming next Bret with from

You may proceed.

guys. morning good Hey,

Good morning Bret.

Bret. Good morning

quick the west. different about the give was and maybe weather the performance, you best and color some on the spread what nationally? versus you east us regional Obviously, saw between Could worst talk

Brad. Really, with market were Yes. fairly overall we Hey pleased is performed. how most this every consistent Bret,

Coast. others you side DIY on red, As the heard more in you've pressure can imagine, obviously from some on there's West the

But though a per based Some changed side doing, takes kind was that on the center the DIY weather puts there the in on of geography of bit to of country. weekends even honestly, especially the little rolled and upon part takes, the the puts specifically. what was and

it of a around So little bit. kind moved

know, northern even where bit overall, the a there surprisingly, our was March quite swings. There as had little huge well. And of just England. But in do pressure really just New performed that the pretty wasn't stores we Northeast don't really broad-based. pressure, for more you true most concentration we have the markets And or some

Northeast? in, needed distribution you a year, thoughts as Obviously, open that, is into be might And your that bit question about Mid-Atlantic and little to this that – the market. Maryland. great. talk in Okay, the infrastructure obviously, the entered as you've another XXX-plus stores maybe next far what's your to of fill come cadence Could maybe

Yes, question. This is Bret, Jeremy. great

few inroads that with XXXX later center acquisition and the there bought Boston. about VIP, the we distribution excited in are Northeast. in We our We then and of entered years we in Bond made have originally opened a the

those gap closing been that haven't of the markets kind to we we're So in already.

I both our those about teams the but to think been as also a as culture from inhere we've much as anything, able from acquisitions, platform the we've grow excited and markets. in been

So, for very us. attractive

how we individual any on pursue market. aggressively cautious are We

we able in benefits teams to strong that footprint to in One of grow is Northeast need that store that's And up successful helps we can we well. be continue footprint. our that really us identify across large the be with the that true to to have as the and our growth,

there to But properties see our get of teams. level been the growth to continue density. a to to to and aggressively we've acquire that build And working and need work we'll you'll up the

it's consistent think our I a with going to lot markets. be of

DC Hey of and really Bret, and this where we'll with our our markets to the opening to there. as And about needed our We're the the in support country me, the looking we've DC growth enhance growth of whole talked that the issues is DC down across to evaluate capacity we Greg. past one capacity obvious continue speak specifically, growth. as Northeast market a growth, looking DC in to Mexico those I support over question presence couple very also we've and to is growth in we are experienced markets. that hard the excuse and years, continue our those have mean, obviously, the to infrastructure. – unplanned DC And at just our

you. Thank great. Okay,

Thanks Bret.

Bret. Thanks

Thank you.

is next Fargo. coming Our Wells Fadem question from Zach with

proceed. may You

due positive, think normalized used in the we March? single-digit about believe big comp pressures morning. dynamics? And unit DIY as then you of talk DIY, think can decline? Or macro to typical low vehicle now inflect you you a left on last lapped level is year for weather extent good there Hey Could unit has units DIY the to the more DIY actually you the to the table any reason and back given industry what do picture to

for thanks questions. Good questions. Zack, the Hey,

think what net really the haven't impact is. We we quantified

was a bit recovery little in bag hone it we've different markets – was to March mentioned, April. us, on, some and fairly differently. performed in a seen it's for as for mixed Brad a And of us, window As here tight especially

DIY because of second us just think, work just we comparisons some the the As the of the the other side – that the remainder industry the we easier of as think quarter rest economic year. the pressures about in for maybe we've year, got year in the price specifically, first last the some that through of half on and of for gas balance look of the saw first I and

year on good DIY, for year. us, then especially some as last quarter the fourth strong we saw we And finish our really out to results end

impact that comparison us. of some So will

outlook. as feel engineering volatility on side for pressure our industry long-term we I of does But parts we industry probably on we and the secular mean on From What balance, all for the we say has a would kind that at the of we've just perceive the about see broader think like business. that us we're talked around through of close least back perspective, that saw forward? as continue that normalize moving to can and and to intervals pandemic. think of rest I from improved and the we'll years that impact manufacturing the impact cautious we're service the the that others have about, from the talked

wait we'll positive the the for our and continues to are terms strong bode others, we about very see to what vehicle what does But talked dynamics, think continue I on Brent be on well. obviously, But the DIY feel dynamics to we're, looks trajectory vehicle broader for in have for us, economy the that the overall and industry, like. puts of the takes the about That's Greg and like us positive good I business. to a how call, industry. For that and and

it. Got

going I say was This to is just real Zack, quick. Brad.

Hey Brad.

are you DIY macro as tremendous opportunity the teams know, always the taking focused what share. DIY a matter No side. our have We still on does on

have of lot We retail business. doing a of competitors a great lot

I the there is overall, outlook about though take to even ability is some of feel pressure on better prospects whole. our at because our the But share. And market so positive O'Reilly

through the color. what gains to in Perfect And hold to the against lap, you share attribute industry as particularly share year, then side, the the your the And outperformance pro expect you or the do and then price tougher better-than-expected investments compares? appreciate extent the to better-than-expected do gains? industry growth on

the Zach of get rearview rest sometimes We mirror great the how lot industry smarter in performs. to question. as all a the

I see of wait that's I contribute we'll think that. mean, We we to the out some that, talked is the to the of think about industry some there. I strong. data factors think,

a for that And very backdrop positive it's us. we believe for sure, so

opportunity We When more professional business. relationship are gains and even on you is execute execution, come. an gains frankly, with well the to meaningful. the those you customer, service important Loyalty hard very thing. have and fail When business it's we our an our how made. a meaningful. And pleased It's know that we've it's for

been us, been had sticky to So couple is of we've execution have that accomplish we've last to able of excellent because able really our the teams to as what very view years. we opportunity over the for deliver

the time for guys. Thanks

Thanks Zach.

Thanks Zach.

Thank you.

America. next Liz Suzuki question of from Our is with Bank coming

may proceed. You

without be that be helpful, by And grow any that Great. you that commercial, portfolio too. taken customers just versus and your channel about brand Can sensitive? Thank penetration been you squeezing me label you of losing you've more to give talk private could your of how so professional just retail any in. tend able to successfully the comment about for label private if approach you've then products would

put the a just with there. and seen And in suppliers that, we've designs and Liz, of this exponentially I'll across merchandise grown We're proud good of over again, is really team really, those proud clear, proprietary several maybe been too, quality to others jump best offerings the on better, can to products last the years. with able our building some of box, working we've brands Brent. be then line in. But tribute and good, start Yes. have strength just think, lot I lines. to those

quality really, well. reinforce very of national proud The because some seek brands want know well-known certainly brands that customers we're And want mix though proprietary a we to is is proud go-to-market have with and branding as national in-house those I our brands. very keep thing as we brands have other well as And of, in-house we we strategy both. to

and and proprietary foremost. seek that Customers for we've obviously for – bring a first lines. been value, really are they're And availability, our we to brand looking So, they're approach. to balanced looking able

about talk cases, I by In DIY promoters specifically. customers and huge by terms brands, believe in are though, our will professional tell don't our in many of proprietary and and we equally they really – professional quality adoption use value you, to than the and the of penetration can that well those them But we those better and because brands. speak can. DIY those across I And customers. both of see in Brad see professional specifically

is Greg. this Liz, Hey

and a ago. few brands few quality And the were products in to say us that the that Just I suppliers, multiple national us cost of shift to Proprietary those a is add products today it's brands would the box. the brands proprietary forget leverage of give to brands the control mitigate of that proprietary are ability that, help in better that of intentional. years growth don't proprietary calling risk, our brands we're

now continue for them take look brand own as additional spread we national So across brands opportunities names and to we proprietary categories. that to those

we're pleased the proprietary said performance on of sides brands, as our with both So very of business. Brent our

much. so you Thank Great.

you. Thank

Thank you.

Thank you.

Lasser from coming is with question next Our UBS. Michael

may You proceed.

that gains $XXX three, growth your growth commercial commercial first the would share share or in or Good so of that of came my question. $XX,XXX up share store. just quarter X,XXX to about we space for gains, comped got in one per If maybe solely doesn't incremental you've morning. market competitors a points assume Thanks lot of basis that half of given from year-over-year the larger your business million taking from which unreasonable seem translate

the that as increase might winning you be probably have and a that business able running sense is strong And that that lap coming from this in been past? in we win for will that's more, flow-through from share gains. deliveries think increase Hot seen And with should are Shot to who a that us you've those you as seeing associated also your you're as you because to not the you're is customer tails over? big coming give the chunky where So the SG&A

kind take probably stab. type, type, morning, so the customer Good really out Brad. It's from your customer specifically there, it's a front. on start but assumptions of and may just competitor I and I'll to Michael. Hi. about coming jump A question lot of I where

that footprint with D.C. New gap kind of national that know, York between and of account you have call book City, As we in up Washington big the about or business. through don't on to, a talked we still earlier strategic

the some a service providers lot third, outstanding We of call big that national second, providers. of fourth have and regional-type have customers, service we are with

our big from second but book regional it's not from – really question been lot customer from obviously we're able really, when a directly. business side, in on build some that of the and places just we There's we're national like your primarily is of It's to we've types, our independent way. coming But one we to small accounts look area garage. lot feel by a to first. proud and second moving that but move moves to third extremely one of the at And and right of the it's sustainable, call way the –

we rolling there, the started small to Shot delivery sure about you no our the ask When making the It's professional we to sure that an back efficiencies investment. year is store, the of to have investment in shops. our to vehicles we staffed, an our the had that counter is that I Hot fully committed obviously doubt, keep SG&A parts there's people making what back would say

talk lot efficient safe, and off getting we're about we sure the that we're well, know route in you that As we a way making deliveries. very rack car the the

all those and helping good these things. turning technicians those we're people bays So retain and

doubt, have you like investment standpoint. March; as little could Michael, in little an from a have no softer month all from So retail SG&A bit when a gets are back those things a imagine that scaled operators Sure, bit when our can have or of our the a payroll been long-term the not and could thing to the customer may rest mid- but levels. it it standpoint? the in service to year right for they may do comes

notch, our of like the was keep that the of off will levels those remainder back service year. so pedal And there a pay for that in top and feel March bit business to down part we is we the when kept pulled little

would I the that. the more about maybe thing and just what there side needed side, your do generally first that one think we through we in what SG&A the Michael, to – saw on flow sure, support we for specific to a But Brad question; to we little we that. add than back sales really quarter that we're and more when spent talked was on expected, bit and about

on about our year think last year. we talked just As executing broadly that investments through heavily we're call by more that's against we're that the making this flow really more impacted we the that this about

is our I support of about more conference been in with costs drive sales, the think year-over-year full leadership about. impact we've bigger year, which to the think incremental just is how combination what did the an our that than but we talking

in investments, SG&A that, So be don't couple because with the you you'll more happening part the investments, to peak those cycle gaining now. years, over O'Reilly because in of couple of Jeremy? on flow-through but can the investments able is next Is that this making share point O'Reilly is continues with sizable see investment era better last at where slowdown but to I over the the comp And year of as clarify why year guidance It's raise share, gain of era investments implies this sizable the some share. it a last an the quarters. assuming it's price

the as share going quarters? couple much see you not over to are gain So of next

we're the an that what some at. question, leverage as invest part absolutely we where we making we current the that, talked we will and see expect over move to investments we've that are in we not of That's And we future. would first on our forward the about some what that Michael, things these new part part in So of and don't the strong business lever of of the guidance beyond would fact the as we that on plain we'll SG&A have sales in of we XXXX SG&A say year. But [ph] that's growth and because important don't do. we long-term, provide continue

that have of things question, the first to whenever There longer-term opportunities we now us, opportunity reference that we our we the that we lot payoff in performance that to do we about in got a approach half have the the to season of year your And we've that We months But we'll a structural that. talked is continue of going that were the has left. we're make that. think to out. an plays year. to to and do we but some for sales see how see summer comparisons selling knowing easier first overreact the not we've few quarter, in Certainly, pleased first with try see we'll to year

luck. Best you so of Thank much.

Thanks Michael.

Michael. Thanks

Thank you.

We have from time for Simeon one coming Gutman question. Morgan with It's last Stanley.

proceed. may You

don't guess beat the result. existing? there's getting about the outperformance. Hey I talk my new any will for here, nice Can change question. accounts there. probably Thanks everyone you horse I think versus commercial dead much

fully with you the able it do with aspiration Can Are talk in my import – OE strategy about that or you growth now ask hear OE We wanted private ticket market product like to penetrate which to did I'll then happen is you a to about me follow-up talked And brands. ask have anything don't so distinctly with there, commercial? don't space. I to that just I bit your lines? any the about Import again. And you line in Direct?

not the the Yes. your over Hi, national a first or part. side. about may bit for of customer the just Simeon part anything kick Brad. I'll question. its little necessarily on ago segments, account I a materially Brent to minute it On strategic I latter talked changed take the

core existing to of customers with we're regional-type just new our business the service the a the We're earning some the day really customers. is like feel we're independent little We business, every providers. We're But seeing bit both. on move forward. of which the garage, – continue seeing seeing of

somewhere. and call mature markets fourth like that moving isn't about It's out we our talk enough third, on third customers second second were from all list We just the where time. a just first flat new to all there most the we brand of weren't in matter to to

the past, it see a So more share, been competitor we lot opportunity would in delivery total us with job. and just feel those take we versus more of combination, that have happening. to had so like We continuing a but that's may a vehicle split full getting be jobs job and delivering a

Brent. Simeon, this And Yes. is

be Import pleased doing brand. continue continue regarding and And our we to very the with it, of Import penetrate to to we performance continue that of your customers the second On continue question coverage offering Direct, half see Direct of there. we and

like very So compete we happy and there feel well.

branded some Direct Import type well. with And intending some boxes those products as we in are well in international some as cases in the categories are well-known as branded as of suppliers well, our

Thank luck. you. Good

Simeon. Thanks

Thanks Simeon.

Simeon. Thanks

Thank you.

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

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

conclude This you. today's Thank does call.

You a your have day. We may for and you participation. wonderful thank disconnect your lines,