O'Reilly Automotive (ORLY) 24 Oct 242024 Q3 Earnings call transcript

Good day, and welcome to the O'Reilly Automotive, Incorporated Third Quarter 2024 Earnings Call. My name is Ali, 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 Ali. 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 third 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

words You expect, as can identify project, or these statements should, consider, may, by plan, believe, forward-looking will, words. guidance, target such similar could, anticipate, intend, estimate, would,

several on no important annual update other described company's statements results latest XX-K XXXX, December The the Form company factors company's assumes obligation any materially The actual to could in report the differ SEC filings. and XX, made call. to due year for recent during ended this forward-looking from forward-looking any statements

this introduce I Brad Beckham. would At like to time,

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

call our for over our conditions. thanking to XX,XXX members by during like commitment incredible their America today to across team would North begin our I challenging dedicated customers

a results will in gains, I to continued discuss and store deliver in market detail teams positive share sales Our comparable more which moment.

quarter customers our weather teams, Helene since they created in tremendous September October, with Carolina, end resolve our at flooding our our Milton quarter after persevered communities. to substantial along last highlight and through team circumstances our first our for our North Hurricane shortly the showed following very like and in of some end in the trying call. as events major I'd

These distribution multiple the in direct store, recovery. and prepare the of events only support the path but who and storms storms, actively impact our navigate the also across network not teams for

built critical customers people in commitment customer ever relentless our of a excellent more our is service time Our and relationships on than to to business is and providing need.

and proud Our aftermath and communities our we facing stand of do these Team with thoughts the still to part the as I'm continue customers our significant very O'Reilly dedication communities continued prayers these to be individuals the in storms. of to challenges of ready rebuild. and

of sales yesterday, As X.X% our we and increased release and XXXX store stacked third comparable third increases on and noted our X.X% respectively. in quarter XXXX, press quarter top impressive in X.X%

quarter our growth sales high-performance in as been XXXX for were results expectations our of impressive multiyear the standards. sales As has our third below

quarter in to the solid a had We start July.

month of However, softened the at sales of September. end continue trends and these throughout and much the August

result, was with a cadence our each of performance team during our our sales the driving comp to month. As quarter third fairly growth positive consistent the relative expectations

the view a a softness in headwind of and as modest from with Helene. exception We the neutral challenging attribute week the I'll industry final backdrop a impact Hurricane September weather sales discuss to demand moment, saw we in in where the quarter the

another by the Overall, our where quarter sales be delivered growth our continues comparable to business, mid-single-digit our of store driven team professional strength in comps.

of growth is half professional counts. our driven the the year, growth by sales Consistent with in majority being the of ticket first

year. comps generate continuing on is team the mid-teens of prior to in Our top share gains these professional

of business also our consistency concrete team. to on capture is service, strong In of customer taken, evidence industry the not to ability relationships, built share availability we have and our only and the incremental incredible an defend execution but

a long opportunity create to We what we've and ahead see us momentum remains a sustained of in fragmented professional the road highly are able market. of been with business pleased in our

which store ticket and comps comparable values Our on approximately partially both to sides inflation were our were positive pressure the approximately to a Average to continued of by same DIY offset be professional X% included benefit down business ticket comps. X%. due from in negative of sales, count quarter SKU

basis, solid a remain and category On plugs. we within maintenance such filters by spark as encouraged categories performance oil,

trading consumers prioritizing continue We with vehicle. trading also of many best customers of spectrum customers as support the as level entry-level products in on and Both and investing reflect value strong products. of maintaining to the existing proposition an these for see those the spectrum, our a down better to up dynamics on value

to softness experiencing and our appearance are chemicals, as such categories The discretionary tools continues performance parts. in we be pronounced more accessories,

the in a are categories significant store noted our typically business portion drivers comprise of not of these past, comparable performance. we've As primary not did sales and

pressure when this back pull area That times. said, some is more create in turn, consumers an being during their can spend where volatility with that, cautious

repair We softness impacted by tear some on trend of and categories are wear a seeing across vehicles. also cumulative

firmly experienced remain combination offer professional the best distribution of industry. in our the confident that ability of market store categories as conditions We improve. teams the people robust and by repair service supported believe tiered network, within We these our to our in outperform parts availability

believe the as are capture our pressure the indicative pursuing we and business, now improve service demand, broader remain of and existing we relentless view incremental are experiencing results investment repair We will levels every value of industry current of the long-term the confident industry. across be in vehicles. While proposition in we supported fundamental by to maintenance in opportunity of headwinds drivers and the short-lived

have our within experiencing change in times is in any pressure are of many reflective confidence drivers the that core the automotive domain cycles aftermarket. these industry, not today the we we experienced Having

managing Parc view, daily conditions heavy transportation price still when caution grow upcoming continues healthy, is well-maintained to reasonably age pocket an in element believe levels, but and North election. their environment American Car uncertainty macroeconomic book is their vehicle a In an place average in The on consumers an surrounding to consumer of our the exhibiting needs. of we meet and reliance

Caution and of on pressured [ be by in consumers our necessity. vehicles DIY ] is out as consumers tend these more more perform demonstrated economically is impactful business to their

slightly insulated with are DIY Our the Even base most the continues sell, possible. we from of completely spending of not to represent a consumer nondiscretionary nature of to over XX% we is wherever our customer products limit business. who motivated

the consumers are at the vehicle higher our true is However, keep and resilient adjust to This customer adverse mileages eventually their prioritize as in avoid base of condition. replacement vehicle. order in keeping circumstances is and our especially vehicles road good industry will working very on economic in incentivized existing their cost to to

update the growth as persist year, out this return finish cautious Against and in full that short we expecting X% This are full comparable of term. we sales quarter increase how macro our to current more year. our historical tightening XXXX our we While remainder performance confident year X%. could a pressures the backdrop, to year the are rates the will are are industry we're and we and of next enter third store now reflects guidance viewing

our election. our lap reminder, and impacts the demand and Sunday quarter. in volatile benefit quarter consumer a weather this easiest have X as the in we the We as of season quarter during fourth variability the the year winter potential year given As quite November dynamics from as less be expect our well holiday do comparisons fourth a can of

performance consistent with our in expectations. and quarter far, our So guidance October with been updated our third sales trends has line

as one they company the It's our set our demonstrate aggressiveness and we bar do to field note and to of amount the outside no on inside me as of of absolutely hustle conditions thinks are that important demand update day. on teams at ourselves performance for No to a market and our change each our of the impact standards they basis. all the we has outlook high the daily impacted attitude every we by company nor our have go

of on and industry our bullish are more markets. the opportunity our professional DIY the but We importantly, very tremendous to grow company our of both future has share the

success to than providing ever service possible has XX more one will the best to playbook years, execute the are committed in that our markets. company our We continue and for of driven every for customer

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

turn over Brent. I'll call the to Now

like focus on begin and Thanks, customer by Brad. perpetuating Team would thanking also I O'Reilly to our service excellent to culture. for commitment their

availability. team's gains customers professionalism ability value product drive outstanding in excellent both Our share to a environment their the challenging as and place service on as demonstrates our well

quarter give expansion will our capital color SG&A margin. results some I investments. gross third progress well Starting on as margin gross our as on with Today, and and

Canadian the XXXX, the business and of approximately Our was XX.X%, third XX points quarter. quarter Dilution from in expectations. points quarter our with up on expected margin third as line our basis in of at from XX came gross basis

along We points XX continue acquisition of basis points profit approximately with the XXXX. to expect XX full from margin year for basis of dilution gross operating dilution

margin gross results DIY as business. our than in sales the pressures mix more was from business, significantly professional and experienced a higher-margin the we anticipated included Our felt of headwind slightly larger which DIY were

combination However, we improved and merchandise our were our through offerings, to base brands. acquisition of strong strong with including with costs proprietary able to margin label partnerships manage private both supplier offset performance product our achieved this a headwind

as incremental rational mix would still out finish we remains as industry. acquisition both XXXX. a cost stable are would characterize pressure and the our cost and dynamics We a cost coupled across that inflation improvements environment environment pricing anticipate with modest seeing These of

margin of in XX% Given XXXX, first maintaining of gross a the our to for our at solid performance year we full X XX.X%. range months the are outlook

SG&A. to on Moving

Our X.X% the average in SG&A quarter. per store third grew

basis With of representing the XX growth. operating again, results, of points Canada's that inclusion approximately

of headwinds Our at high level the drove we of SG&A third quarter and that our the for deleverage expectations on was sales the end higher a experienced. spend dollar

saw service Our steps continue match conditions our quarter. levels manage expenses we in customer in teams and sales appropriate to with took to balance excellent business the in dialing to incremental the to pressure third as field staffing effectively

by saw was due losses, Hurricane Helene deferred in pressure cost well flexibility that a compensation. our and in for to self-insurance retained we part headwind as for SG&A somewhat exposure as liability our vehicle from property driven However, limited

This per in prior Based for SG&A SG&A year-to-date lowest our results per the expectation store on average year. to XXXX the from between X%. to a expect quarter growth we includes comparison in range that to X.X% our at continue year full resulting the year, updated fully loaded outlook remainder of our the be year, more and grow guidance store will primarily fourth the of

service sales guided As level will we has drive the service of an customer been deliberate that SG&A by growth make The dramatic our make and are we our customer over spend levels do adjustments opportunities. SG&A our long-term we robust and spend and expectation negatively focus to in that XXXX, long have that our would to growth our overreact measured managed not high adjustments term. impact

are of previous our guidance performance Factoring a for The come we margin third the our now our reduction store in full and sales to and driven our the remainder updating within expect sales the guidance, performance XX.X% operating from quarter comparable year full our year year-to-date by and in expectations. of outlook is XX.X%. range to year, updated

capital Next, inventory, and the at our X% I from which was would of like store quarter finished per and results. time the XXXX. to this $XXX,XXX, provide both last expansion Inventory year an up on update end expenditures

pleased our remains strong. chain with and to be continue in-stock our position health of store supply We the

excluding store unchanged Vast-Auto We chain, the our XXXX within growth are inventory per of our impact acquired existing inventory. leaving X% in the target of

year been supplement best inventories, have of deploying availability the teams ensuring DC we our store, in the hub level inventory inventory all and offering to are our markets. throughout Our opportunistically that

bringing of XX during quarter, of third a stores to total total a store opened our the openings We year-to-date XXX.

in We growth stores we permitting. behind pushed final third our delays due construction plan to some slightly store new have had as back and are quarter

our we on and in market open new XXX to remain even conditions. XXX performance track our continues However, to new store XXXX, expectations, stores exceed tough in

of our XXX XXX pleased target net new announce to stores. to I store XXXX opening also am

company. our New attractive store of an be to use for growth continues capital

counter, and approach is around locations we store returns disciplined the The high our the of day new store success store team resulting on new greenfield the quality open to primary determining in Our the growth generating doors. behind factor. X centered

a great informed vehicle We to and work population by playbook local our characteristics, by executing hard concentrations. teams customer new to professional select support sites, market store rigorous

gate. the We industry-leading ensure has each availability of also our inventory location out right

executing a field out though, culture promote in have walls assembling from right Ultimately, leadership. all win the go and model. inside store success our success that our through about Perpetuating roles supporting with proven in leadership ensures the and the of to store is business, we sales and both teams within our the operating in regional engaged X team philosophy

on. Moving

And X months maintaining million for Our are in capital $X with XXXX is our line year which the were of $XXX expenditures $XXX guidance first billion. of expectations. range we to our million, full

initiatives Our projects continue growth excited in opportunities track are areas. as our of the all market to about ahead planned and and of we us

of I in as gratitude I to September, of of comments, we all again would open X for operations the see the on and a Stafford, like network distribution deep to quarter. It of center O'Reilly distribution distribution Atlanta the well network. To distribution Mid-Atlantic new thank customers. industry-leading our for our want DC involved opening to continued from once to in the of Springfield our work to express fourth will the successful which the growth in our successful teams my in extend progress congratulations opening the their new in our successful this our exciting to want expansion close is my as dedication to hard facilities continued relocation Team look DC these I in teams XXXX. our on Virginia, year forward new the Metro opening with

upon that us. ahead excited team and Our providing best the of recognizes is about our our opportunities I'm in dependent service customer success the industry,

I Jeremy. to the Now will call turn over

hard Thanks, would for O'Reilly Brent. quarter. thank like during Team I the also to their work

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

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

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

benefit base quarter a rate of of of of tax share-based income, compares timing recognition which quarter rate of XX.X%, base was XX%, tax X.X% pretax for driven benefits compensation. rate This third our in to for pretax third was was the by by Our by tax XX.X% reduced XXXX and a reduced compensation. The a share-based comprised of a income, reduction of benefit of credits. of XX.X% base X.X% rate certain of for size the effective rate comprised

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

periods. our due of lower quarterly share-based totaling We other fourth from X the quarter rate in create than Also, the tax increased diluted quarter be in variations EPS increase the expect compensation can benefit the the at tax for to X%. fluctuations X%, quarters to year-to-date certain tax with our rate. Diluted EPS

third We have sales revised our is The the to of to by reduction $X.XX our remainder the updated range of our our $XX.XX. EPS range outlook $XX.XX guidance a quarter and sales driven to year. for results range

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

cash in X taxes XXXX, income, flow months same of the from of the headwind paid Now Year-to-date, free was energy for drove credits. from free billion, that results. the will timing line the and payment we offsetting in period for with $X.X in components on XXXX move with expected growth the tax cash to resulting our renewable partially flow cash first

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

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

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

senior quarter compared an $XXX with ratio as driven decrease growth. debt-to-EBITDA We August. X.XXx issued XXXX EBITDA debt. our of finished to on of XX-year third with million We by notes end of adjusted the in ratio Moving to of successfully X.XXx, a

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

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

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

customer concludes drive work answer like the I hard success. This be At ask to to future operator, will this our to will and to we questions. and would line, our comments. happy your continue return time, Your the commitment to Ali, excellent service to prepared

Jordan first coming question Our Jefferies. Instructions] from [Operator with is Bret

chain. A supply question on

With supply the do one X York the those Northeast? Virginia needed space DC you get touch allow into chain is expansion Northeast additional some New in opening, Or market? sort there of white got to and you before mid-Atlantic metro obviously, in that that you've Devens, to Mass,

Yes. DC. is I'll and Brent. for about guys Bret, This start the we're super can thanks. Yes, in. question. these join Mid-Atlantic that excited Thanks

corridor As to of lot we've store you continue just up. of to that Mid-Atlantic there opportunities have opens a that a the know, up

way for probably Stafford when between will, the super But one started point, there. excited And it's that so point, capability having on us another we up likely that to to in some would be To that pave going at we Devens, fill distance that feel be location. about like think to really get and the corridor. your they'll a open in

pretty jump on depending part in about said of it, could have up think just real X/X But may I still I it the an country, population the the of draw quick. we way you where Yes. think the Northeast you in Bret, such the lines, opportunity this with come in is well. I U.S. Brad. Brent

excited. of the stretch it between Still I We're we're rings markets, store Philly, standpoint England. And of get competitive type into to see of kind those is Northern expand the lot have going Virginia, metros those that D.C. the New those we'll think work of opportunity to out very lot a site going ton Virginia, in Baltimore, So quick from right too from try extremely a we're retail not lot markets, would extremely and too concentrate of D.C. of from I Metro, you in far way when DCs. Those bands inside facility. that a opportunity, then out but a opportunity in opportunity, DIFM those X a tight in ourselves are that Stafford acquisition to

Okay. question they, volumes? sales Great. big creation of but positive offset end store And then impact, I picture sort or hurricanes that? a losses, to day, the you impact. and at closures for enough a the hurricane obviously, about Are a of mean, short-term negative is the net on from think demand sales

at with Good obviously to especially to bit devastating be Western like of we're teams. Well, market disruption South think be what question, put in North late, up It's say, terms the it, fourth neutral. end of our storms, there. takes. have will with our you of of some have overall. is quite that Yes. puts be would too bad Georgia Helene. not a think We being had pretty talking we what's seen little been with earlier, mentioned and I basis a I when look to couldn't to disruption. But what quarter were number I a fourth many had disappointed I we the points and here in on But Helene, say, those comp. in happy been little X.X% watch hit, think would first just to then specifically weather third in Bret, saw careful overall proud in of in even Florida there comp bit more we I And we a think in if it Helene -- with And in would but a net last fairly possibly quarter, XX make about But fortunate it's a XX bit quarter, week, us yet Carolina. then we maybe foremost, immaterial. It with the that wanted to careful and Bret. the and up I We're kind happened. We

is Stanley. Simeon question coming Morgan next from with Gutman Our

you headwinds I ask, comment and to be about want the should think sense. I short-lived, that made makes

year, little X If you got a industry, business weak, quarters at a look before your the industry the almost softer. got maybe

you a about are that there So but soon? us it What on there's do softening why tricky have and crystal there failure markets it's you restrengthening rates? Like does Or to? that help micro some -- a basis about I anything where had confidence Is have? like you flip can then about what you've point know timing? setup. a ball, think no any

the can Yes. here. Great I'll do I Simeon, question, and try best to

think obviously I pandemic So lot we back generally, there. And at we don't when times. success you in live to of saw want look a

times there while comp and we've just back good you lived think things year the our normal in in uncertainty. Once feel when lot, So side. But lot, in I just up we're though history more about predominantly the And our base we definitely obviously, with we've here repeats to of yet, obviously, that many again, continue of industry to because it O'Reilly, we not times step growth. professional but this past with lot comp. The heard XX and industry, said reason a this a been several fact year-to-date the that and year 'XX, changes to that both is X.X% the things are a has we've that election the inflation built on industry And earlier we're say how all out to get the an kind and in lived election do about that sides short-lived the in piling of this feel itself think the so my us consumer get a even and have we're of this get and like you've feel, is called business, on on this. we years when really happy not we guiding which that soon inflation this moderated. year, past confident we our and we going the to higher our

there, seeing thing say are any the anything want granular that, maybe, to point we And to would be in we I way pointing that add clear to only that. I no about specifically, that's this us Simeon, would question. at

in Given we are a X.X% where is the quarter, have at third we comp we're what at. that The confidence about. talked Brad

think, while put of to the that in from possible a of. importantly, want and advantage capitalize want periods out one to industry to best for seem the has first to the demonstrated a the a slowness first be things start improve be the come our to be our situation it's ones ourselves where like manage we to I position of do over always think until you we ability that in that. We able identified have time do always focus the And consistency course how doesn't to of participating conditions be as the just it a persisted through I company, take these as perspective. though, to to teams in we're is and been best

to well be forward said Brad over this the to that, term move an positioned industry we're coupled so going about gives perspective from seen long we've what I point. us confidence what with think from that And

significant, component you years the market And expectation? a lands? then Two Just as looks a quick you're year, spread ago, that approach then to takes? market narrowed sense. you share. Makes where own share industry you next Is figure and do a comp it's what your blew are question put first, out. a normal on When it puts share. like little. the do how And It -- you O'Reilly This you . year, forecast taking always was still how a into year? it follow-up,

when next guidance between year. X on now amount question, next quarter we'll spend fair of Excellent a and time our we Simeon, provide and that for

think from entitlement our grow For sure, is our that momentum our because that advantage perspective to is have, of a the availability we expectation market. that is, team created the and it the is, distribution we've than faster we it

you next much what So been consistent of with that for of sure, expectations our work history. a for we for our component an that as that quarter, where include we've finalize have XXXX, expectation should really into are that

Our Michael with UBS. coming Lasser is from next question

This where misgauged the has times. just had been couple O'Reilly and year of in to down has the a a market uncharacteristically demand guide has

if at of and normal your trends you still a don't months, out say, few -- starting improve, it's Now second the generate we're that outset year, another the year through in away margin next to if have question perspective right XXXX. If how about level comp you to the is from your deleverage with of to you're going to we think a next to be what without weather going would you see go only per or O'Reilly the season X% X% how part industry see a another a be comp months few X% low order sustained some let's trends it's normal the algorithm from in on year coming to the X% SG&A year higher to sluggish grow the comp range. And side? Put store still be indeed, expense year? is next can next does way, will is sluggish having think the O'Reilly expansion remain

question. the for is Jeremy. thanks Michael, Yes, This

history. uncharacteristic, think, in we're our this I for us, like that think year I you're is having accurate for the year saying

years industries not We've -- years Although like this, had unprecedented. has completely our it's had though like this.

is and exactly our I our got guidance how is think some don't same. have the for moves exactly It for business us, having crystal have. the read the out of a it. timing sequence near-term try best focus of performs And have predict XXXX. that ball to have when into, we've to you and to insight don't we establish evaluate of frankly, that what don't we all We a but one we'll

and how perspective, that still I do a some we of challenge because concrete pretty time now form to think from a are. from it's hypothetical we those opinions a kind relevant have what between So situation answer period

that how what cost applies how our what think on components think what about guide might see expense what same those things. we think our structure overall of the year to XXXX to inflation I be be benefit are is SKU we and going we in next same levels will we and in answer comprised, read think

We back our we think, I step to our profitability next questions still strong year returns how business. talk, to forward and pull I the structurally operate feel to take business. that to guidance in productive try setting of we're think are our provide believe positioned maybe like doing on and process and for to how that business well the from in near-term can gains for be we investing so just share we

And of so for underlying together around our you'll as similar the XXXX, expectations time. those success we had conviction our a that long results see think for put I business we've

you all would today XX% Okay. My follow-up to -- disruptive be on of prepare coming work some coming to doing are prospect question China countries. And how XX% degree goods the in other is and tariffs much couple tariff next from goods the coming months? tariff for in from of how of

just through pass kind entire and really, of of will fantastic can costs price. to proprietary start selling in. kind supply teams tariffs us. be those when is our in any components. What since the brand and our had the COVID, of was continuing Yes. back wasn't in were those XXXX, that Brent. Great from a merchandise XXXX, XXXX Most teams, like continue of sourcing That a nonevent increased able was I since it reference alternate industry, teams, teams, we through our chain have we Michael, can add tell you, to guys then some before. Honestly, I on terms leverage to scenario we so And origin, look job sources, strength to the have would point countries and supply done multiple recent suppliers. at of this question. we in portfolio of COVID these of source that

that come I feel do a we don't tell has But the in the and of China the may specifically dependencies our costs we team to does. that some where are our China, to not goods. really with we anything those from part dependent that ability So I of pass several along to you would that we than still industry last confident on become work reduce say done over there have less proud of dependency. But play, cost does into where they years still were,

they'll Michael, Yes, talked point, to be, add teams, Brent a place will put is about, playbook Brent's and reiterate, talked supply we to only somewhat that would field along Brent our it in be that our place merchandise us will against back the our they our can in be playing pass solid that has the do everybody the chain a thing team and I things the and years compete level what and there. And they those all feel competitors about. else strategy for team, good to to I really and out

we that we'll comes. good if feel So to able that it be handle

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

different a taking but ways, different of couple a asked angle here. been has This

data. And over prices, beyond, the started course be when any there? your historically curious look look back you to thoughts tend up drivers in gas it and to you on lower catch or thoughts the be to unlock pinpoint Just the Any to if can see starting weather. maintenance today as pent-up demand, or year, which what we're of that dynamic QX as specifically the materialize deferred you

is kick last think ago. discretionary back though But seeing pressure Zack. Thanks, there, that long Yes. I'll X me off couple we in off, other a I here. to if some you and a even quarter were clean or let back quarters, first This time the then the guys going up for think kind of Brad. of

maintenance are look We our our from of pleased more with maintenance. part it We actually business categories. mentioned the type biggest You failure, jobs. at nondiscretionary very is repair

Some oil, our fairly plugs, of of and things with my spark oil We're like kind like really delayed. things been that called can out filters, has stuff that, a repair good. be failure I little bit that oil still pleased maintenance. comments, prepared changes, in categories. Maintenance

a deferral. We lot haven't seen of

so could to we QX more be somewhat saw than that. that model and little a pieces. Really, there discretionary we we what year-to-date more what vehicles even other bit of parts moving down. would deferral of more saw Now it see, trade pronounced we are continue have there be have could but some in in and offsetting been lot later There's then a

to lot that we're QX. up did best. and QX, that We some offset us customers there heard to in extent saw did still to actual good some trade in about We in best. talk a trading You've from some better moving see see better better while we down to from

say let I'd that's and may of kind Brent. what So

Yes.

a that say, Brad thing question. continued -- kind the has The trend of I other I an hang on, have great described as to perpetuate the to has just been continued of continued theme year. And would more has everything impact. mean to it's throughout Zack, it's

you're only the in results what that's in but our frame. and think QX, not QX results comparable across time the of industry seeing I

are best the age So the to inventory market we the then serve every their we availability comment every in we Jeremy continues you the vehicles. we're those everything to great and just and best as positioned and But come best categories, to business in is vehicles. And maintain have earn people continues we earlier, failure thing have people service as doing about going repair, made be go categories their the Parc that industry maintenance, in out serve will to know to Car back. maintain to market it it the can

about good are. where feel we So we

when begin back reverse is just tough in look and trend know. and the years a when it at a and following the And think following you XXXXs but the -- historically when see customer you're did ball, time XXXX, all look will back, see crystal we did has year, bounce we trend the frames, to the to I the at we year, about industry, look back this those as returns. the nobody the talking tough that you you in

that, for is well, to happen going going to and it. So this we're scenario ready we're be as that in confident

outlook to margin relative operating guess appreciate easing I then QX year-over-year the QX. I and in your imply QX And some would it. thoughts Got there. the declines saw we

just any drivers, Canada. offset it performance, thoughts on lower investments gross mentioned first any really by And or strong so all, dynamic the per on of had margin going But then colors forward? SG&A this part in you've slowing be You otherwise? margin, your store, on

year does start the a that expectations that think you've I line think benefit bit and we benefit throughout leverage does the feel with even top Zack, a weekday you been consistent like in at the gross quarter have from easiest just the course the with the last outlined least, year. the somewhat little get well. of pieces It of perspective from a margin, it's Sunday. And is as comparisons through and a you

less come within really there this the in you line year. we in said of believe of continue of within We we've some our as necessarily fourth that, move full cadence of long. it's done that the investments were at least it up through the in XXXX, those run against more year. But the not Or to that ran significant been in what to we previous that quarter obviously, there's we've guide. From significantly perspective, and the as for would have all fairly starts comparisons will the before quarters an SG&A with like guidance XXXX, of solid will easier lapping year a and be investments. in, lot remember, in course place the overhang things year-over-year But that up just delta a we is change year a depreciation

is Christopher coming from with question next Our JPMorgan. Horvers

questions. follow-up of couple A

First and If benefit of others recall, mix what have the quoted I less last pretty on it's X a than Sunday. difference. because modest the

or you And talk there roll from then that about quarter? related does benefit comp? how can in So And the third it much was a perspective? is that into any total sales in comp to

Yes.

we quarter, too. range, say be Fourth the because the difference somewhere variable you and it, just sales. to bit basis point it's even that, a Sunday timing a benefit up pretty of was And usually, the, quarter third call can can in it, measure little So XX, how have a but impact would from on maybe total that when comp holiday XX we depending that's perspective.

in maybe taking side, Is I does right? that question, tariffs you what they in able inflation through? talked it. Is the of indirect XXXX, And XX%. that and total that go China And gives to to then it to down? And exposure was about And I right? the to had Got to you the prior that does the how don't I up pass on sort side, come if like like does be XX% consumer tariff far XX%. think and away, of around around think of the follow that it on direct think went you'll that it feel tariff up on here confidence terms

probably that. several to follow-up China think the can tune Yes, of couple on start. is We years I Brent. in exposure, Chris, thoughts good of significantly ago. points that there. This was has about the A been where XXX-plus it reduced, basis

point. as first we'll hard into will range So where to to would as as able have the reduce at, me it able to to exposure. And At a percentage pass point, have a percentages to about, knows be we in point to what like a XX%, that for is may that especially how to those the the think the I comment the with for future that talking to point. be. the high a what ability play I at set and haven't there a the through with bit XX% there's you're still move in before I industry, we that's we we and at XX%. the percentages make see have that out to percentage, that to done seen be work forward. If a said past earlier, forecast believe scenario your -- this But some we on tariff there help on that were excessive confident deal effectively that of have do the this where that at little we feel on And teams Who it's

add I how is only our of those through And would been needs. very pass that industry think the demand we disciplined resilient in I nature Chris, meets Yes, thing higher historically, there those has the critical price transportation of increases. levels because very the cost is

to on it failure you're to your going going a you're move vehicle, have to forward. and you if to so And need replace need

be to see to what find harmful from think consumer the that save we can. to has broader we what impact most ways money undetermined obviously see an could is just weakened what now not wherever I they inflation and just because adjust that have is sell a perspective. Would to we'll the it's consumer

than save the make down. And So where been when what try impact things those But and are second cause would them broader that's repairs. But defer -- that to way to very past, level the to has likely adverse we an to the consumer probably yet investments under pressure, be in we of consumer are of the kind inelasticity have think some that disciplined effects with more the our -- of money base we're see. to have industry a inventory have because that trade that still to we being they of because that historically pressure, sell. or in required, always not

Truist. with Our next from question Ciccarelli is coming Scot

stores So you did are expectations. new exceeding make that the comment

thinking of i.e., in costs, terms economics, productivity, store store seeing, new of payback, higher factor store that people update any the can should we Given about broadly environment cetera? are new cost in be et kind how construction provide you that

specifics stores. of of And I We Yes. store, question, that that perspective million $X appreciate oh, that's the approaching get kind usually we too that usually get the than -- I'm of model sorry, the own Chris. when don't we the on new cost Scot, No, other detailed now. --

I and improve in a heavily what stores in informed our feel historically, new us, of over continued count. for the has into And just to that, year think be an part, seen we own bit decision perspective, of some mix store course this of that our more little from to you've model economics the good.

little our we've that's had resilient been But even to And for a of few business. sure, continued X a from over point both year. then as of to well. years been perspective rising kind maturity bit years, tide more within X that's beneficiary that and productivity kind the the a Just be pleased last has challenged trend that of ramp just total mid-level the continued or we've at

Scot, is Yes. this Brad.

mean our stores XXXX Just on talk business. And those growth. the about to We're announce maybe to costs, years, productivity XXX in in of seen when the I continue to we talk invest XXX our inflation excited really a reiterate, I at construction appreciate we new best those but new our about we way continues it's more couple for last pleased yes, the numbers. even asking in you of about new ROI, costs. even on to be to to we've lot and be

so And site just our incredible teams are selection. doing with an job

though Our that. up our ramping even stores. put just of for up. a be inflation they've the construction we've equals rent lot continued regional efficient to with standpoint like to and things teams and And those look that's with more lot get together I to chain hub They've backed as headwinds an of continue had standpoint, we're to more happy couldn't for why seen returns, 'XX. XXX we're and all unbelievable to That's that why and ramping our continue XXX though we teams our inflation. teams field up supply DCs our a cost ways from factors, to even to scale. And continue build then

Our coming is with Citi. from next question Zaccone Steven

do of looking the think bounce DIY? after focus you back softness. in years out, to the different at You've out wanted plays plays the that a think mentioned do segments? on history by I DIFM you that potential recovery versus business. that How some you How see

Yes, is great Brad. Steven, this question.

off weren't feel necessarily with take I share the on we on the the frame to our kind way about of -- side. good kick either of though to up we're teams I question. our DIFM want we side pleased really that the even performance -- continue to business, So

way so on here being And midterm think able going short about the all over when stuff. own to getting are the in to back norms things work to those on overall the you the their people and to weigh market and complexity

on the obviously an going outsized both sides. It's We DIFM opportunity side. continue to be see to on

a that has speaking, the the -- going been most I bit I so business, more stay is little That impacted. it's fact think DIFM to business balanced And generally likely think, the with the said, DIY more resilient.

way. comes And a do. that. consumer come there be some could some reasonably could like so it And good to when catch-up that There could back, in back be things

And in also bit uncertain, still next the and more more it's speaking, of continue is stay has XX, to feel little to steady I But while so months. DIFM XX resilient. plenty like a get going DIY, think that opportunity I generally think more little a to I bit healthier it

traffic? I'm your the on more question that the you gotten clubs, Okay. about or Great. DIY Have at heard we've the channel of then warehouse overall them just mass some the think follow-up and in And all competitive. pricing just as the but you've past, side. you business maybe impact a getting about seen sure

sure. Yes,

last different some happen saw from the in recovery necessarily service So nothing that and pedal parts the of they competitors, would -- job those our A years. section, more of in of discretionary speak, some types they're a of saw lines. closed, kind things folks. mass stuff were lot that of or a hard is, those there's the some like dabble their and lot that the was that type of of kind do They and parts happening less at XXXX, good during pandemic, on where fronts. But as be the those that, tough we Steven. We overall we to closed proliferation of huge opportunity, things know, like some compete over no so less saw a through and for of really, going doubt have to them and that. But you people couple retail. were And SKU so

people pandemic we In-Store to to for at that we and give to what not see Buy scores we sand has we tell them, is and we look continuing when did very maybe professional data look customer lot But we during continue into didn't us look going most that, team versus and we mass very customers stuck so are to to neighborhood store we able and versus gain, out, box Online, we what trusted into have being big have Pick our if at of get in in retail, pats And members CSAT our worked get big parking Up of a sticky. Customers a us, to said what bit store continue back. that the our our head at go well curbside little advice. in talk we telling when the a

we They're confidence, confidence we that going the to to was very a but going sell lot that always So in to sticky. Those with but always of continue to continue have priced, smaller are service to be have our with box. ability folks sharply our of in model commodities. majority our our overcome

time allotted our questions. reached have for We

So I to back Mr. now over the remarks. Beckham for will Brad closing turn call

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

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

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