O'Reilly Automotive (ORLY) 25 Jul 242024 Q2 Earnings call transcript

Welcome to the O'Reilly Automotive, Inc.

Second Quarter 2024 Earnings Call. My name is Holly, and I will be your operator for today's call. [Operator Instructions]

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

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

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

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

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

Auto during quarter. dedication call. I'd thanking North present also across hard-working customers the our their Thanks, parts this XX,XXX are like Officer. the Greg and to over today for Jeremy. begin Fletcher, Parts Financial Chief Kirby, of professional Chairman, Vice our Jeremy America Participating our are welcome our Good our on call. Hensley, second a Executive our Chairman; continued Brent call the morning, team conference my morning O'Reilly quarter me to David second O'Reilly, and everyone, on with President; Executive comments by and challenging to people

our we broader As call below industry. expectations quarter to our our as were headwinds demand faced our today, we'll second in results during discuss

the the growth midpoint in matches increased have EPS in generate growth. EPS revised represents we our We these $XX.XX now to efforts level of full within the to profit teams our This increase and of uphold customers on per job better are forecasted did year below to range top customer our and the finished high pressure comparable sides service with on comparable last we which store our our outperform our our prior come a quarter both updated night. Though of even However, At half share operational guidance and full expectations our result full XXXX. were on to for in several results to in our service of profit sales of to the sales quarter, on still line outlined their the fell year to year detail with of what negatively we performance to store EPS, year We our a direct provide providing impacted maintaining our that a sales second reflecting customers. expect The $XX.XX second doubling adjustments to our have top-notch as able our results continue in with metrics EPS short top of industry. of our to X% to results the also and outlook outlook. in sales expect team business. Despite were the and come the the our we a pleased range, first a X% release down press commitment is of of full quarter attention year. earnings our for to and top X.X% a years revised operating operating increase we robust

the continued in solid a the delivered XX% XXXX of light testament by in execution O'Reilly. comparison the macro generate to challenging growth strong growth to in Team especially we ability Our to EPS is environment, a

Now performance, by sales cadence quarter of with walking I'd in the of our our through like our dig details second quarter. to starting the further in sales results to in the

As off during results sluggish we faced April cool the last we from May, persisted throughout wet as into broad-based season. we weather believe our softness industry. discussed which with our headwinds call, in quarter spring our The started pressure on selling business reflected in the

strong for original trends As we saw weather-related improved guidance to the our basis expectations, entered categories. performance On hot we June June, relative our by driven quarter. performance week-to-week a represented in strongest

hot last sales saw June, of remained have solid July, as benefit to weather moderating trends in weather favorable with in far year. we July So in compare similar somewhat we

the Our sales professional mid-single-digit business, yet by our another we delivered where was second continued of driven quarter comps. in growth comparable store strength in quarter

positive values were of our While by both ticket of the business, growth average increases was in our sales to sides fueled growth professional contributors comps on in ticket robust counts. majority

our customer on industry-leading our second Our stack of came robust prior and to results XXXX, to in comps quarter service inventory in availability. attribute performance top the mid-teens comparisons X-year we professional and year

priority continue we both perspective, from on the batteries are what comparable shy ticket business results. business, we the share sales, keeping bullish appearance solid to sides our hot primary category of growth remains pronounced in for the typically more sales DIY oil highly These changes as just discretionary counts. like for on accessory categories comparable we strength a not and our in of by fragmented brakes, ability weather a our were road and in leverage of strong the well. The Average well percentage ongoing X%. partially our by business maintenance was experienced our offset store less in and the performance our on modest a remain categories. which and created quarter were professional vehicles than excited categories ticket to business spark softness plugs, of the sales We believe prospects in our reflects and our running results team's in values in the quarter from the by our and inflation which categories, we've professional including be professional to our on market. The From momentum quarter benefited of on drivers in X% are headwinds placing was same-SKU pressure down of comprise highlighted small store compound as HVAC customers performance their

for the these more products volatility where However, susceptible to to and demand quarter. is pressured sales contributed in in periods dynamic that shortfall are consumers our second

which and sales sides gains share are have average. to contributors tear We business been years. also past repair X the sluggishness car impacted and both certain wear in company our the some on categories, These below and part types hard key over parts saw of cumulative under by performed growth our professional of

drivers the repair confidence While ability long-term continue rates of environment. We the healthy current of to we our the broader demand quarter in in in consumer results pressure as average with their industry, view vehicles. our the market we first the in these this be our indicative are still maintenance Against strong well industry. believe backdrop for remain still second fundamental we to invest business relatively the and of cautious underpinning the customers mixed across employment wage the of half may of about but also and temporary performing of for XXXX, to results categories our the relative have in industry,

price as However, about macroeconomic their impact more characterized uncertainty level impacted the how of our could on they this believe broader type elevated and in seeing challenging be particularly the we're conditions. persists, cognizant the are short-term cumulative constrained that levels by some we year of in face economically demand conservatism periods industry election economic That adjustment of consumers also uncertainty spend potential of an consumers. are Historically, are half DIY the back year. the during of part of we this during said, if the managing

our the industry X%, the of first trends lowering the experiencing our are headwind. full will short-term fourth that to in expectations seen to we X% and guidance for our third have reflects half comparable updated XXXX, quarter. which year be second We quarter to outlook and this prove is the we results believe pressure and store sales our a both Given

core of North us coupled the multiple continually age for average in drive of remain solid. and car vehicle demand industry. confidence resilient similar that and in experience the quality the aftermarket Our company's our America a automotive our history very cycles with size rising The demand vehicles in of growth gives park drivers through the

We and growth expect population needs transportation to critical see the by underpinned continued in of total steady miles driven, nature daily vehicle owners. the growth of

value to prioritize affect vehicles. also our proposition never consumers the Ultimately, continued the model. for do We vehicle that older, maintenance believe we face repair cost business been mileage execute the continue of existing will an our how macroeconomic and and philosophy of in conditions not higher company's has higher funding we for that investment

our We an ownership throughout have mentality organization. instilled

market first of that are to outservicing offices philosophy simply sales when own none accept is environment, with an in you though local in gain there like tough X.X% of market, every I Even our market gained can competition. Our year-to-date a comparable still in share we run it centers pressures and guarantee outhustling XXXX and the stores, our store in as satisfied our distribution teams not believe share we half a external excuse increase. does by

to performance set markets company. high in day we committed one have to that Our remain achieve every the in it teams hungry matches putting a our work, every to win the are of and bar takes as

Team prepared company O'Reilly would our like your my As I comments, to thank for up commitment to fellow wrap and customers, again to your once team members. our I

Brent. turn over to the I'll call Now

like their excellent to Thanks, to to success join Team Brad. thanking in company's for service. would our continued steadfast O'Reilly I dedication and commitment their customer also Brad

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our our basis margin the basis XXXX of XX XX.X% was acquisition For business. approximately points of gross decrease second the by points Canadian the with driven from of down of XX quarter quarter, the

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some sales. planned quarter the costs fixed on cost gross second saw to our below also of in We margin deleverage from distribution pressure the

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we small, early the still still only our growth. innings While of footprint relatively in Mexico are and our is in

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Now turn call I the will Jeremy. over to

would also to thanks to continued I company's Team for add long-term Brent. Thanks, all their O'Reilly success. my to dedication like our of

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

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

between total billion. XXXX, to now be we and expect billion $XX.X For our revenues $XX.X

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

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

be We in tax quarters our to due expect the the periods other lower and rate to the X totaling quarterly certain fourth from can benefit fluctuations tax create rate. share-based of tax in than the quarter compensation variations

that will of flow XXXX, benefit move cash inventory this billion, lower to in Free growth and reduction on versus offset in XXXX. flow half the Now of a in cash we X XXXX drove with $X.X first line free components a was the with income year net for results. the months from by our

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

of Our of driven ratio at inventory XXXX. a above was XXX% AP our the year. second slightly first the half of end This the quarter XXX%, down inventory percentage the finished of at investments by as from the in timing expectations,

of see of at continue AP expect year We in moderation in ratio and half to the expect inventory finish XXXX percentage to our to a back to the XXX%. approximately

driven by program. debt. ratio under the X.XXx, paper adjusted commercial of ratio a an as our debt-to-EBITDA XXXX borrowings end our reduction to with in decrease with quarter to on second finished of compared X.XXx Moving of the We

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

$X.X our execution be release shares program. price average capital cash of we second program price $X,XXX shareholders. an our repurchase We means total press of And repurchase with expected price pleased investment is a through and of excess effective of very share million at $X,XXX we quarter, the XXX,XXX buyback We the of our continue shares at remain of investment to an yesterday, continue a we $XXX view million. Year-to-date business, repurchased by returning billion. our for of X.X future during confident that our total flows to for as share the repurchased an supported average the average to discounted

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

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[Operator Instructions] from from first Truist. Ciccarelli question Scot Your is

Scot Ciccarelli. quickies. Two

about talked may those missed it, provide then more you margins said how Canada your guide. or thought But you but I softness your it expect You margin you cetera? And you consider color full et to low that? help be than and reconcile maintaining discretionary expected. Can year you digits, mid-single you're mix dilutive sales on what were more discretionary down that misunderstood secondly, digits, in gross high originally just to double gross have digits, Can negative single I goods. percent of

first This help the I'll on able Yes, and question one. might part the the to is on in me Scot. of you guys be Jeremy. jump other

a cater typically have our but and I it's common. overall smaller was Those substantially think, comments, pretty categories, saw impact. we to overall overall, our are comments, were of because significantly that, versus the minor small accumulated chain. On you, when business. a pretty that I still, driver, enough the not be, of our even piece, chain. down than we're they mover part We of a prepared and big it's company more a of mentioned don't typically even it's overall when they the would we tell the of don't And of comp pressured rest a quantify But where really in though It's group. our rest individual don't discretionary portion they the --

little gross As in your question, we got their and roll would margin just second how we see familiar a with did operations more normally more perspective, what think our to that, range. But lined a out expect about amount than we be Canada's as numbers dilutive roll from we've -- seen. a obviously, bit in, we do about into had that we guidance built there'll decent of already

categories one becomes takes it in as think we out about the half puts and back are of the gross also what things that So comments, the as we of Brent margin some that his things looks of in leverage things over pressure. of like can year. Similarly, the time, level more view and prepared pointed think longer our we'll that a mix able manage our are as and cost out how items transitory typically create to our between don't to things like DC teams we our period see much

think about broadly just position be will that we've the our of into those year our or gives think with year, a able thought we be over for outlook all as the partner here half built we year far offset our how more perspective. And opportunities for back that outlook a in the and think to a we of kind while half the some in full we've suppliers amount benefit being And an think move that to our of how lot expected that margin in some continue about our stable we the as cost favored us contributor year, of back accumulate the for is year. that plan, that to we a of We in a kind into the about so relatively being short-term be quarter. seen gross items from of

The next from question Melich Evercore ISI. is from Greg

follow I up to trends. wanted on July the

fair? was have think be but good guys like it you June. sounds solid, might not been I remained as it Would as -- said it that

is Well, Greg, Brad. this

we at week mentioned, on coming June guidance I of like what by week best into when the earlier, as kind the the into internal rolled at trends we it kind our like plan as of July, think July. we from the of heading feel I in June aspect and the original the we mentioned to that we out look exit And want performer about back and of said was they solid balance year, just our rate quarter. beginning

July hard bit weeks go. tough making to as well a to started I bit, mix. mix balance how read. solid, feel to a little still Xth think -- the holiday it feel make category first when want we what that's way overall, is that little tell really guidance There's about good I far and sure when a lot a year -- of gone for quarters as a say a with a in few always that relative pieces And little a say of just of we Greg, so about really of has we or been feel quarter. guidance the it's couple remainder adjusted the business layered year, We're just in, we July how about. July the moving of -- excuse which that a me, good the from our to But the bit week, that we we in how

challenge. years in shift thing we keep always probably there, timing just that's saw year a the to quarter. we this The to in the and try in period comes when the that is year, X. on because in informed at a if in a X-, We're reluctant back when of and other of July impacts more Greg, a remember, benefits think weather some too and point, we our of hot a always trap different XXXX, the here you business seen think off we in we've saw the really these some the prior as kind or week far mind short too, second how through -- that's really And to -- work half X-year compared it so not over half many we of read challenging fluctuations, Brad's late a look across of hot broadly that about it way confident to to of come against weather, of the the just what's up of comparisons is year as in. To benefit draw it's conclusions outside weather all back you feel the what got. our just that We're

was these it. Are some you're there. you still That's great. on? follow-up But guess going a larger trade things? there there? what for of people Or you think undercar is ticket week. parts gaining undercar And is I deferring certain Got do then down going my some on share doing mentioned

Yes. part at maybe of we start lines, perspective years those share think a question. mild out. undercar, Great business look against specifically of in share. of that X category bit -- a to but Brad look on years, really data We you business, have is last last taken When and underhood, we're winter little this about at when we of at at both especially then the couple those and really sides hard you lot or our a from undercar categories. these unbelievable but a look compares up we we the look professional, We look we Greg, called X at going some again. the and

question I we're to think deferral. some directly, answer your seeing what is, is

Greg, may with on not both to still bit trade not I especially me the trade that deferral shops. in So sides repair we're those down items of want what little deferral and a What business, but service ticket of not think the about, down asked seeing, you design. the but help is some our line we're Brent there high is seeing still here,

higher-end that is look the it's at -- industry best which the news. and better, in requirements. build the been AGM the our to like in we're some categories. When driving where something we given progression on better better, we and the -- reported in migration that of There's and good to -- watched pressure closely of lines, into terms with best product some best across comments, continuum obviously some backdrop. point, Yes. as still look of good, And see our still of But are we've quarters, when interesting and that consumer think just feel part prior a getting on some is Brad's we different Greg, out Brad's of the that's of what's migration kind we things the of driving batteries, we've in actually of we I to consumer

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of of But customers you're about nuisance about wipers they middle, you to So minute bit more a or if a something we ago, migrate your we see to there. were did road. trade moving like think for We an it, little replace having your QX, but more wipers down continue categories think about your quality Where in streaking lower were range. it showed in down discretionary the going we People was some car. fairly car a are consistent but option see evidence better category units see that that's people to there. talked They dollars level. the box. and And on maybe a for in the if the more some to it's good really where value -- have did looking critical than in -- a little seen see bit that talked see we and Jeremy about

-- generally of we're but seeing. what kind So speaking, that's

And thing, the some make still our feel We question, share good pressure I when Greg, categories. we've we share back the just more gains And look our of at. root and on your seen that. cap about at look data to on the just undercar one we

That's there, have great. quarter. A lot Mark, great good of role and on the guys. color new a Congrats,

for next Michael from from is Your Lasser question today UBS.

gaining think or the quarters? you seen from perhaps round accelerate industry market through share as if especially or period Do in Merz. Mark in of necessary even another couples the is either of investment goes price here, a we've last protracted softness Congratulations, to of your expense maintain order

ago the work to in people, of the professional street a service to had other Yes. years chain part that many customer. cars and initiative. from off continue price a us of the our continue the inventory delivery and to the so for years that, has question and investments, We with always said a as better company, sales really Great our The of about do not we've independents. in like many pay. service necessary no. we on greatly. But up in we the make to answer pricing turning been the in to our you feel done, off X.X like that about managers And And good supply we our those feel as to share we've because terms It's have times, on teams paid We that's there the felt getting competitiveness rack we all our the answer good best-in-class pricing But relationship back to that the -- make things investments availability. fourth that down decision just really question, Michael. times, our the of done those the as keep is professional -- just that first that bays price much to then third our compared list is now Thank we, all always best-in-class almost made. last many gains. parts don't But the all said territory the much. so your that feel we've to short things strategic have the way make done work

don't The now our lot from like is on off. really compete. we Not different. simply what consumer. seeing that a paying some way are changed the investments way We I materially anything right feel seeing think the pressure we're has

the there, we're in don't tough we level. When part little are we're second And invest. of to question, any the see we investments, but We opportunities I billion we where take see year we of price to things bit unique like a competitors maybe seeing out an have this and tough your take times other ways. other continue -- share necessary terms investments with $XXX to just other almost next operating $XX-plus us company billion industry, see to in in

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And to of round don't I the necessary. there's so another in really initiative initiatives, going strategic price but feel continue to all invest like we're

you question fourth put catalyst growth what calendar do follow-up the My see the industry? year. and the is getting get just comparisons to Okay. accelerate is to of of some per the few persists gives just manage gains last SG&A year in growth our softness can that as period years. into calibrate the we O'Reilly the minimum What's through store this next the And if Is in quarter the with it back industry in next probably model. can across into of to the then so ease level

Jeremy then the of couple back help part, part. and Michael. first as the other me A for the Great. let catalyst far take I'll on as Well, out questions, I'll -- great

that teams or But share we based about nothing own some at I resting time look the not again, good want the some seeing It's says on gains, little data, I we're to the will and market quarter I don't build and gains. And what tell things of that. after think overall our front. laurels. continue a how to others And think last do. the such from think the continuing I how amount how X. take I others when we see destiny amazing obviously, obviously, our next share. When we had But is -- with that share great we've don't and these the gains. years. like year. first same think better, to of controlling be to continue the matter also it's will OE still all that really service hard not we're better that we're share to category always still bit the our And job we're in continue doing data, we as take have constant upon done to terms just lap we think yet comp still I comp we seen give we -- in of share tell, the to we've at for dealers and independents look a a to to do Michael, feel year the report mean, our decelerated fact catalyst many hide fact I the hard report But on continue part, yes,

had on staffing the their in to our vehicles. do expense tough, and that. inventory stores, kind front, get we Michael, my that delivery years when macro XXXX. toughest O'Reilly back, we've think perspective certain biggest with I career always times of They of There's don't are our overreact job levels staffing toughest public as on overreact a like can to things When good to XX-year their our there going are the competitors things catalyst competitors, not had the own opportunities a they of that and years build into from some

our in things the catalyst putting ourselves of critic fully to drive and worst is believe actually have in is biggest to we our And going I terms to own looking internally, being the continued team mirror our it's so that execution place committed take share just in the gains.

budget to supported that's the a to in around bit If the go what or And that we've long-term like markets support it past of of obviously, leverage. areas in, dynamics a into to today. monthly the SG&A give business road. them conviction having many the of looks the cars been always guide we drive on our fine We the depends we're we around outlook and before. ability put just to spend the provide overall. this keep broader seen question for of through Brad have also we what Yes. at know about little and into what very we we said. time the because just lot to that cycles, it inflation periods an their like don't their that a is of where XXXX or a level Maybe, these us long-term don't Mike, where other point circumstances versus needs industry, in part our the economically conserve add can on The much to one consumer because constrained and think strength, we're on But It's core by that the a is broader option industry fundamentals challenging answer. right they

manages the very the touched do a that business operations in gets effectively and of to on I we've got so and bit his in the pace but and sacrifice more when what us to of dialing these that our in environments. a we is does Brent -- team the talked prepared a what for that business what's value the how about not service change important not really comments were the that cadence way think consumer in -- appropriately think do needs soft, proposition, it little address the type relationships, the that

term that investing our we're that productivity manage we spend our whatever balance feel that you're long So well support lower our might look in that we're inflation, be a to while business. going results. the always inflation the can to we're to And of well sure able environment, making higher that like whether for in confident

for The is next with Securities. Guggenheim Forbes Steven question from today

store in around by any given wanted the wanted increase was the commentary so given for think And that expected in years or of back openings into the I opening to here, then openings related initiatives, the it's the forth. of out follow to reason being the of any of case could up number half implied sort your impacted to number on Mexico? growth especially year. if of us curious your -- I I distribution about this ask

Canada. on really good U.S. our the Steven. changed jump a But few say about store Thanks, the feel in. things growth Brent or on We the in let nothing has store front pace I'll and no, -- front openings. still store nor new No. Mexico Yes. of the

the year the gone about First really back good half. feel of half has well. Still

internationally terms out still feel up we going domestically openings end really and we're right feel number us how the good nothing down speed us We there slow to in year. or to have and of the like necessarily. So store about

said everything with we brand that that growth. then support there got We've talked Brad continue distribution about the Yes. The on. active that one store in in only Steven, invest working would just as thing we're infrastructure relocation we've to two out well projects I to add, and to there Mid-Atlantic DC of our new is existing X the

So the -- we're pipeline we're seeing to continuing going is that the now. to continue pace at same in future foreseeable

the versus Michael's does full-time sort to of shifted Michael's there question, And of but quick way that to over part-time appear years. done moderate it fixed maybe pressure expenses. us period of of be right, on then variable employee right about maybe how has follow-up entering a up, cost that potentially what be sort growth mix versus has it more just think would another the could right, structure may the of question, asking a help few some asked a sort of business, we And frame as way. the different We past

about we And so of cost way any the cost think fixed structure of structure the frame business. to variable how versus of sort

right in do over service going talked overcompensate last We're lot would of -- seasoned effectively about at We're sales with care in we one. few of our service create We of over our offset can team us, we're allows gives business. course -- that's those won't locations going -- our something chain just not and high of an know by large our movements that the talk industry they of the It course all. The we soft, to productivity invested we high years full-time a we to. But we high flexibility in softness we the -- interesting because and about the of time bit sacrifice from that store becomes believe, don't in over dial a that. with of need different as opportunities lots our the not in turn question. through quarter. to level us levels in are We've still we times still of team several have by year. a amount running way in last talk about business, as a very and how just normal very little Yes. his as these as think, of flexibility and amount very manage this when mix to of manage like high not part-time in flexibility. Clearly, items, in types operate full-time how continues level the we've feel huge the solid our and invested how our schedules in not at And we're as to in and mix members of teams a we've a business. that thought compensate distributed a sales that that potential within overall headwinds perspective, customers. these operate business dial candidly, levels got and you quality talked might in our they periods But levels and right a those company, take still members our not the need Brent service, at executing a what on we about matter we've we of work about process teams that think Thanks, to the the those our benefits to to it overadjust is really our level leaders provide. to If playbook, managed we of that we have out customers. comments. right It's the shortfall the a we've a Steven, solid how are for the about staffing basis manage pointed -- model And higher

you to broader comfortable level. the a leadership there that structure. in great how But team dial are manage we've into got that feel place for limits to right So we sure, cost

Steven, a to as point work on maybe, is store said on at good full-time what mix the have And just we put leaders about as a really just Yes. our it always that and made just or Tarrant to maybe operations Jeremy retention our build that of feel lot done and even we drew that we increase huge and came as sand been we focus a kind COVID, higher in focus. It's well as the Jason O'Reilly. out of

you parts have You have It people counter. on professional the work. can't doesn't turnover just if

feel full not our good store turnover. progress. all we COVID, And and productivity, in made levels a so our service slowdown We customer progress. those the initiatives investments the the of done. good operations teams off like But work good an in to of about the work and of time, investments the We ongoing on feel stability come be business. paying we but feel to that made have about we've It's about store lot out Still really that work really only retention. it's thing continue really that And feel those to done.

is with question Horvers JPMorgan. next Your from Christopher

second the Because spring industry in a turn the here? you know benefit, maybe the So my June that quarter around weather bit. question first benefit and a growth question your or late net to think the headwind net was pretty in little is growth I Do a got had weather but a category you north. a

of trying disaggregate business, you experienced performance, saw weather? you about what influence being of second how do the DIY in as quarter? of And to then you related So you that, as on than side July's trend to about are business think better the you're seeing the the the the also underlying that solid

of the comes because the say little of extreme gives boost bit second it's Yes. and quarter the weather probably around piece positive a failures just because first of oftentimes, that I weather gets question round Chris, on in would -- on the hot net there. first the a you a it

balance over different times of attribute course takes you out puts on lot multiple been has evens the first a candidly, top of overall as of more how informed because the think of it lots probably been the stuff over the industry you'd through we've to we periods of that look we time, as where There's But that the periods. As choppy. itself and has weather. half said that's of year, been put

think see there, of it's the half of the And neutral year. for puts and been we'll back takes. likely lots have And of although sure, so we balance to the more

kind as of and have bit how out and is the less winter to summer our at those little But little end we of it get fourth softer the into obviously, further impacts, move that. question. you really of quarter bit you out until a frame you As the relates broader that's would compare a of that

DIY experienced you on second versus into then the And July what the in quarter?

reasons would really, don't want tell DIY much lot. about as July professional for the thought parse of the through a business, Brad the We and process too you has consistent the been we I that all year. Yes. between talked pretty the move composition to

those and lot are of weather solid a we talk benefited that So side. DIY We categories hot saw performance a that perspective. about professional on both from

And an margin gross earlier question. on then it. Got following up

that year. from -- -- I happen you're XQ product if So the of expecting sounds didn't, just guess, how benefit to like back lower it half in it costs did clarify, like to acquisition and the

Like, in the that like some benefit that there on there was waiting for the side turn? quarter year as anything inventory second is accounting unique progresses? So a that sort the to turns of

we've kind think got move labor aren't, about that one, continued more into that wage efficient, facing still things. are that pressure, product and as we to getting environment, can I Yes. of better. When some costs, we've Chris. raw normalized there got pressures, some that some more a acquisition We've those are out production materials, suppliers on start COVID past getting

say would would that a things tell all with acquisition environment. version through I some there navigating been what typical and the it's back are in takes of cost you, I to that normal So puts out

year think we you year of planned how about the than first when about half plan. probably the the to we of year, -- the even built Our the back planned think we more normal the half be as we how

we to out So to it that we now. the continue see play way anticipate

deflation but the not -- cost So normalization bunch I tell we're side. are where acquisition there you I there. a a tell and we're in seeing would you it's of not what we point there, a that's would on seeing

net Brent's quarter. We think there's of Chris, we back add unique And to benefit as from an perspective. accounting was point, incrementally a just to through second half that Yes. move year. we can in nothing the the the There

Got it.

the in back year? the similar pretty be of should margin gross year-on-year So half

mean, feel our I we back half that the for where what at implies year. comfortable of guide and Yes. obviously, with is the

from Your next question is Brian from Nagel Oppenheimer.

you You But understand X of in of was reflect that us the months second So moderation about moderating in Or in you're for primarily some the or year? expectations solidifying as half better? help weakness the Chris' half year? in quarter? shorter-term the strengthening with apologize, guidance, on June. second talked June well. I question, but the How the maybe business than much my does actually the And then the question, a first the the of follow-up prior just can question so stronger also

if based our to our our guidance Yes. half -- for the similar Brian. -- back both. about take out, first one No, upon just a perspective. will of you from questions, maybe be first. midpoint it that within half I'll second thanks We it reflects pretty the it implied just as works think

just the with, be. think along results of have formed it's outlook of so and for obviously, we the in remainder So what is far, how the we our the our we perceive those year not what been that but see flow-through to how business

of think cadence our of April have into his expectations and I what would the we little expectations would been. think well June it kind the just for entered situation In was sort in normalization about right heat significantly the that's more the quarter, longer-term year. we think better May have the in of more prepared softer were But it of towards a expectations of with we line way both the on about came the our the our performed as to quarter, the comments, for June, back we As bit where what said looked outperformed a not impact and as a quarter, Brent certainly cadence month-to-month.

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

we you, by continued dedication O'Reilly look today, to reporting joining entire work October. like quarter. thank in to and team our and second today thanking Thank you. call Holly. your Thank hard like our forward to in would I our for results to conclude the for call our We customers the would everyone quarter third

today's call. Thank you. conference conclude does This

and you lines this for disconnect phone may wonderful your You a time, at day. have participation. Thank your