AAP - Earnings call transcript Q1 2018 | Advance Auto Parts, Inc.

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Operator

Welcome to the Advance Auto Parts First Quarter 2018 Conference Call.

Before we begin, Elisabeth Eisleben will make a brief statement concerning forward-looking statements that will be made on this call.

Elisabeth Eisleben

Good morning and thank you for joining us today to discuss our first quarter 2018 results. I am joined this morning by Tom Greco, our President and Chief Executive Officer; Jeff Shepherd, our Senior Vice President, Controller, Chief Accounting Officer and Interim Chief Financial Officer; Bob Cushing, our Executive Vice President of Professional; and Mike Broderick, our Executive Vice President, Merchandising and Store Operations Support.

Following their prepared remarks, we will turn our attention to answering your questions.

Securities advised not comments deemed of historical as by be statements may forward-looking XXXX. begin, Private defined are Commission’s that facts the we that Reform today our include statements Securities Before Litigation Exchange Act and and maybe

to we are Securities While due website, described on no company’s with differ the in Exchange update made. such may risks Commission forward-looking our of results from those the number actual in duty to and and and projected maintain materially statements, a uncertainties, which statements filings

comments Additionally, regarding The for by detail, Please earnings will and and and important the quarterly include reconciliation information of the accompanying our related to non-GAAP financial earnings of release call. additional and both financial today measures. be call the content press governed certain non-GAAP press today information refer measures forward-looking financial financial in today’s contained our referenced statements issued release statements. statements this our in

me turn Now, Tom the to let call over Greco.

Tom Greco

Elisabeth good morning Thanks, everyone. and

I our as focus our the as team Before we Carquest AAP entire than better and quarter well thank to would network execution serving improving for first their like on Independents of continued customers ever. our review results,

metrics. service, operational their work of performance was XXXX result the a As first of many proud and I diligent hard to customer am quarter that improved report one across of

were operating execution margin focus down sales first relentless cash a on decreased total the us X.X% in free enabled EPS expansion, improvement double-digit and quarter, to sequential growth sales, In team’s flow. Our in a X.X%. significant deliver improvement comp revenue and

to quarter, of first Through comp tale were our XX positive. quarter off weeks was The two start. cities. the a the We sales quarter-to-date of good first a got

delayed during the North in our the and spring final QX However, by our Northeast X markets. significantly Central of impacted were weeks sales

quarter. in the This colder the combined than we north of with came seen spring first the strong have winter has in start years during course, resulted Of much our a eventually a week second past in X our QX. to

and market saw sales, of compared remain and the our batteries, year in consistent temperatures adjusted in our industry failure-related normal in Our in AAP Shifting delivered level, April, prior improved and of with spring-related undercar. XX again we the the execution year, the and comments per improved the $XXX line with Consistent past in focus lighting above average with year QX. nicely the every winter and demand demand our and free was above outlook to cash prior Rounding a industry sales the input very income bullish million and remained perspective, line March sales year May top category improving are both an digits. flow and This quarter. like positive to appearance is points growth quarters, is unusually increase pleased this Worldpac QX. to back wiper the average to of particularly is increased and categories on we expect an the result our working XX% ride share large year the benefiting performance Canadian major $X.XX. increased At and metrics, financials, good month is adjusted an top sales. impact and was drivers of The of northern margin out for AAP. From mid-single share. the and on more basis translating in bounced on levels down this news of balance earnings operations capital start precipitation conditions control we resulting of earlier operating an growth our market. increase versus and the the perspective, we Meanwhile, continued From a cold several $XXX category accessories X.X% once to chemicals of quarter million, in performance

the evident plan. to the the which quarter, down on drive percentage of without despite in Turning gross line I initiatives roll extremely through am shift further with both dedicated XX,XXX of absolute existing proposition. continued Pro, terms impacting professional Jeff long-term a is and update dollars our to SG&A we now in margin within both to value removing adjusted in I XXXX. e-commerce customer unnecessary our QX, on key now were bottom Advance costs We will first and the disciplined professional, ordering to out well in new an as of Advance in increased Shepherd Starting SG&A our sales customers. details our elaborate platform. in and Pro. shortly. for control in as lower of of this our converting we financial sales were expansion performance will We the nearly a QX customers fashion professional customers team proud in costs professional This engine Advance versus a productivity. as of have able remain reduction highly enrolling costs. costs

the catalog to in Pro, is our ever, and and BXB Under also is result. more our February. Related enroll professional online momentum X-year Advance we we us. Advance cross-banner of both for increasing business Bob X- across Cushing’s on our stack as penetration metric leadership, visibility the completed implementation Pro, long-term a Advance in are seeing user-friendly customers an As important Pro than

to more opening to customers important team platform As completion enables of and one and time in and ordering. professional The to multiple delivery a breadth and this find also and order say on and enables industry-leading including members to parts. Carquest place parts of saves reduce both researching team us customers often, reminder, step the all Advance, rate, Worldpac members cross-banner AAP’s find one close both allows increase inventory, see catalogs inventory Cross-banner times. visibility versus to in-market yes

functionality adoption and across AAP cross-banner of early, still banners. growth is accelerated driving it’s increasing While all

our we improving on quarter, Finally, assortment progress during methodology. the first made

We availability from stores learnings chain positioning, inventory transformation and to supply assortment, broader are initiatives. applying

XXXX. We demand-driven transition expect end the the of by to complete to assortment

store-by-store confident further and will assortment serve of better the needs improve this customers. to We are our market-by-market

In focused in we terms stores making DIY, our progress. are customer and maniacally the experience on notable of improving

We We incremental UPT have million time of including the greet percentage despite of and room units elements progress, satisfaction, customer results customer per grow important DIY And sales. still in of upsell of several here. to increased recent basis driving in plenty UPT. the XX we have in growth is every transaction, an which $XX or points estimate improvement that to we

stores, growing strong double-digits. business take of is our our e-commerce place majority the While our sales DIY today in

and we customer enhance that investments members strengthen experience, habits committed and further evolve, of are As the value in-store to offer. that team customer presence service buying both the our expertise recognizing online

improving supply needs In meet we while of to to chain customers our of working enterprise. the focused within end-to-end as across baseline of terms number We to are strengthen execution first KPIs chain, from limited improvement remain on evolving with streamline the chain and supply efficiencies supply our a priority.

quarter, rate, During we progress rate. rate, store and in-stock close first the on fill made

these improvements in see to throughout XXXX. metrics of further expect each We

improvements safety and on focused time, in delivery to cost. also order are We

vehicles including the end our XX% safety the fact, across which metrics In frequency XXXX. all quarter, impact was rate, Telematics of in collision of since a CFR, on had first the installation measurable or key down

XX% the improving, recordable total With day-out and me our seeing in Additionally, injury in our longer which improvement an or rate, are quarter. TRI, to strategy. day-in update allow term supply we provide chain on decreased execution

in-market share; first, drive market-by second, the As our distribution a -arket and approach store of of reminder, to of third, base. strategy: there our are a three centers; asset and key repurposing elements optimization the

we future market-by-market. we to to shape our of based demand asset Here entirety the gain build the evaluate need over and share continue on time of the base plans

this terms by to we year. to close optimization, decision we center, made DC In Gallman, end distribution Mississippi the our completed of expect be the which of

customers We improve with ensure we members these stores facilities. will AAP both work and while transitioning team to availability other in-market to

we In QX. stores approach of rigorous in-market to more store asset much implemented terms a base, have closing our in and

in better than knowledgeable any past redirecting we lease had obligations. customers are terms Now, in when minimizing a market, people we given our in retaining we stores, other performing store and close the to parts dramatically professional of

targets we on our supply in to In It’s significantly and accretive fact, cash the and we over laser closed flow exceeding footprint XX we optimize changes focused be time. assets, established these redundant QX as expect remained the far chain are that important stores reduce accelerating note to we growth.

new such, we are start. are in gaps we In an branches growth As two Worldpac opened they and off opportunities. excellent filling where to QX, have we

In leadership to in team our store partnerships. refined we supply with strengthen cross-functional to terms chain, QX be operations our more of line in structure

the for and confident us implement leaders Creedon Mike drive expand as continue now announced I chain recently, our to improved will and North division. leaders across supply help enable chain Maria we Presidents, solutions these have Ayres and business the we industry-leading Just dedicated transformation. execute collaboration am the supply will experienced performance, to South Division

with have us and line customers, margins we we after to was have and compelling, both Interstate envisioned value with announced proceed In help growth, improve long-term better partnerships in serve priorities sales several the the importance but of not the financial by flow. talked and The Finally, circumstances discussions external to decided past of December. changed. suppliers in Batteries, with months increase about drive cash parties these partnership

interest of going continued with our of and and is and to partnership shareholders. model financial We year-to-date and Interstate made provides a still success. strengthening Separately, the is was forward lens Our strong an pre-existing battery Batteries wish business our battery them we are brand, decision a in supplier. best start through service off our exceptional believe the priorities quality we products leading the our

value We Visa we for partnerships for partners driver the Card look auto suppliers for its up in April, will partners. with teamed parts and Uber external impactful Consistent supplier with Uber parties. to as that for continue all exclusive with this program aftermarket Debit create

DIY over the money cars on make partnership time. at make and this will the our stores U.S. drive We depend has X who Rico saving traffic Uber Puerto money into driver expect million while same in easier and and their to partners this online. will drivers

potential excited Uber relationship program partners of driver the future. optimistic deeper are for by in with and We the a the

I our review results, want and to more Chief to including XX and I leading with for financial April in proven underpins a of at to detailed artificial President the core find of us technology to infrastructure leader needed AAP. IT every processes than technology joined I we business search before Vice virtually potential. Technology Sri We lengthy Executive the more priorities. technology take tools it learning vetting excited machine introduce the years integration new our numerous Donthi. a initiative fully reengineering our of support our more into a many developing take core to and Lastly, turn of agenda. over opportunity experience intelligence us of to functions be to our After Sri of global have Sri and in-flight realize and Officer, Technology, not candidates, help helm Jeff have could

We announced contributions significant Jack to our for few also recently to Oglesby Bill I Board of want their Directors. years. a Brouillard and XX personally thank for Advance over to changes

President, Shepherd, are of pleased helped CEO guidance experience Doug has recently execute and be our our Interim execute been him. the elected business to to working Controller, has pleased to for and week. His in years review Jeff Officer. To objectives With our was for turn operational impact Jeff’s Advance meeting board strategic want am I that, a Vice to acceleration to growth and annual to Pertz appointed over we through as We will last to Jeff I Chief and to and at asset tenure conclude, expertise leadership I proven by I we it team. over welcome throughout financial has as on personally companies also and years great XXXX. and Doug a to already valuable of announce thankful plan. Doug introduce has guide turnarounds with stockholders will and strengthen forward Officer be our continue Senior Jeff initiatives. with our am look Chief for our our continue to XX had transformation against performance. significant Accounting a nearly his X.X Financial our

Jeff Shepherd

related XXXX. with profit quarter, the the The which rate XX%. was XX.X% prior supply margin profit $X.X by higher our as costs, of improved Thanks, basis, impacts our points of which our the first margin primary in Tom year. compared a quarter, in and the In partially of as the costs the $XX basis reduced basis distribution increased material slightly chain compared of expected gross centers of transportation a gross the of of reduction quarter billion a to margins our improved related new begin XXXX. performance second compared good business supply and our costs results. I morning of will the in on of Biggest were nearly and as were chain SG&A the XX million operational billion. quarter drivers was first fuel to XX as first margin headwinds was cost On points. due year to prices prior to the to the gross Adjusted specific opened the related half driver $X.XX improvements first These everyone. quarter by to offset expansion well items, decrease

adjusted basis As SG&A improved from first down XX to XX.X% a percentage our XX.X%. of points net quarter sales,

lower costs quarter third-party management and costs repair partially during expense and were fee rent. maintenance and travel utilities, higher reductions our progress Continued the in by offset including

delivered operating in first of income the Turning million $XXX operating quarter. we to adjusted adjusted income,

Our basis IT primarily related X.X% adjusted and originally to February certain partially to The initiatives than be incurred marketing estimated in was higher stronger performance than quarter. and costs prior margin was the points of expected due to operating on were that call. of XX timing year stronger first margin we the our

quarter expect the the rollout design. We these costs the now higher in begin balance to the marketing in as of of stages campaign with second costs new currently ramp a final the estimated through of we year

XX%, reform income QX from the corporate As in to tax a XX.X%. down law XX% result reduces of the rate rate our changes tax was that tax federal

disciplined discussed Moving on as the investments, of we we every review capital our capital committed to remain XXXX. project to throughout

scheduled $XXX with This $XXX line the second year. guidance. spending this year third begin During projects our $XX in quarter, and to first the between our million was CapEx spend With million. and we in expect large quarter, several is million full to

flow cash to a remained as cash summary our our first to quarter $XX and key continue our million our free on year Managing our see several we well has first for which which as focused operating in $XXX quarter. are of with pleased compared laser addition, the was focus been In and cash increasing to improvements we a million flow capital the working flow, very as cash and negative prior a $XXX program policies now implemented us quarter. said, the In continued are team and for management as year. quarters the we members Tom proud CapEx both of valuable of success disciplined were by result in last of improvement million

successfully XXXX, We let’s execute our With and among questions. to are our open market it growth sales growing addressing throughout in confident up peers. competitive to our transformation while ability your gap Operator? share agenda that, closing

Operator

Stanley. our you. first Gutman question will from [Operator And come Morgan with Instructions] Simeon Thank

line Your open. is

Simeon Gutman

question on. question are some is you year they is Thanks. costs as they Good their about in first My better morning we step on than even spoke guys. second some and much My if the that I full just goes margins, ramp run-rate, guess savings, outsized Jeff, an costs improve, operating performed you productivity that comps guided. of are see third leverage? up though could there and and maybe still quarter, margin the amount your at

Tom Greco

good morning, will and Hey, let I off. will Simeon. finish Jeff I start

First making all, we productivity. are good the driving we about of in feel really progress

budgeting. rates, margin to strong saw we on big zero-based focus in and about discipline chain, costs, improved the we speaking that quarter, gross three have supply going As buckets to are been material continue SG&A, you those we in and on

back this growth. We long-term are investing of drive to our some

which tools Pro the then around to also the our in later Bob have assortment, our dynamic on year. rollout particularly coming can later speak which is learning our website, BXC on invested machine We of catalog, and technology Advance platforms,

in our the So, particular, the side, investments and people, marketing on organization. there, and investments e-commerce, invest we in building brand in our to continue frontline our

how play. productivity, agenda are there place we some are put productivity driving, that come the a have good about in to to is multiyear driving think really feel that we offsets on into productivity but So, that starting the are I really we and discipline we

your to can the So, part latter speak Jeff of question.

Jeff Shepherd

Yes. Simeon. really think on Tom Yes, hit Thanks, the well. productivity I

more Just had Sri in coming expect side, them IT sure And SG&A we you quarter, investments this be we We resulted off. with of some want are think if the quarter, was investments. make and and the projects compared reviewing in going point we you that a in bit the investments. we to program, on to those up basis in marketing, before of some in in [ph] quarter and to that invest on the to particularly late could we the in coming form marketing investment quarter improvement. look very I But planned deferral delays of then are kick little XX in the really of some said to that that prior we through that second going particular want he some these thorough just the just quarter, savings to see XX% at the first

Simeon Gutman

Got it, okay.

And the is weather through part than gauge is going are to second like curious and we was not trying if to ask have period winter cold demand but there just change what had we given still will forward? some, spring now going usual you just is to the but pretty will to it winter. it demand, of it how rate normally just steadier I the have looks number, period? pent-up the to start a guidance the brings year so is of going trying have make compare this and conversation of be question, – breakage full cold have arrival the this to seeing better have a make of that had to seen a I am if lot demand, seen this industry or are a of we is I really followup, quarter my part I my just starting a winter will we how no you is that going I of bigger go am

Tom Greco

as ago, Well, did reiterate you Simeon. month guidance know, our we about a

we guidance. to point. the reiterating yes, We feel way second good are quarter really So started the our about your

to big associated sales As that were and XX be on in weeks, ride X comp really prepared weeks, last would strong in the DIY first the business, of positive categories we mentioned have breaks, the we obviously expect were they remarks, they the on weeks through side, that the soft with extremely spring: start you appearance control, back on last professional in we chemicals come several side as big, our QX. really and the strong

So really believe, second be about feel started us way we we is the the going yes, tailwind the quarter. to for we and weather a year this good

Simeon Gutman

guys. thanks Okay, luck. Good

Operator

you. Thank

Our next from question with comes Jefferies. Bret Jordan

Your line is open.

Bret Jordan

good morning Hi, guys.

Tom Greco

morning. Good

Jeff Shepherd

Good morning.

Bret Jordan

you could at and look in you underlying to and breakout regional talk sort of regionally performance I When you saw how in gain QX? about the share of versus performance sort trends the market, your then guess relative loss maybe demand maybe

Tom Greco

Well, the that west saw the in even I we – the really Heartland in Carolinas of think was southwest, that X being you saw particularly Bret, the as country, some were last Carolinas Great where said is It kind of softness. northeast. Lakes part Sure. about where into markets softness through our central that regionally, strongest weeks, we corridor, middle

to relative performance obviously the a we a look We we quarter. on quarter, an want basis. of at compare others terms the – great. apples-to-apples XX-week We in you had us think had XX-week feel I last

in in our if there relative to XX over the the you a terms that, improvement performance you look XX, over it to fact performance. and you prior over relative look last look our you weeks has of If been significant XX, the if compare

first we actually performing did we not So, thing in performance best was period of We in I in our the year. side in this as DIY know been terms about QX can here. our feel QX. how DIY good measure quarter business. the share, very in gain share, share the since we you have I on relative share terms; gained In the overall of are of only the is

performance are gain However, have going focused better we than had historically we much and we a on share very forward. had

share above until So, we are are not we sales simply and or rate. are be at satisfied relative the market growth on going going we to market growth be and to relentless

Bret Jordan

then start maybe as Mississippi, distribution or are far ask as I shutting cross consolidation, the far idea And lookup can IT some infrastructure reducing you timing supply the Okay. around chain consolidation? distribution as will progress your usual you of are that ability making my catalog some DC, as question that you

Tom Greco

cross-banner that’s because speak will and here in exciting to I visibility a really Well Bob for let us. second,

see made enabling have on parts our people We a the enterprise. to across progress of lot

to going that We take that unnecessary the essentially to facility to look – announcement Gallman out are continue going right important bring obviously is to step opportunities and for we down direction. shut in costs to an the are

be as in We benefit of to on miles, benefit well of an integrating and reduce Bret customer-facing we speak you cross-banner. Bob, employee-facing are visibility the maybe able will cross-banner kinds our but business and our overall all as as could as a to can, stem we cost, is progress the particular many things, those parts

Bob Cushing

Tom. Yes,

this throughout we the our enterprise. the informed midway another Advance improvement, store-to-store more entire often is is our access of introduced seen number Pro. So, seen we of course on the we had visibility And have there then had to value actually the rate cross-banner, number strategy cross-banner customer of we XXXX, assortment through conversion and yes, at and phase is outcome what fully going deployed of customers quarter we order say are forward, latter a importantly this saying part to one it have store to we and increases this across

Bret Jordan

Thank you. great. Okay,

Operator

Thank you.

with comes Lasser question Michael next from UBS. Our

is open. line Your

Michael Lasser

Thanks questions. morning. for a taking my lot Good

your but making yet still your granted the So, negative still And comp. you you and of reporting with initiatives your a comp progress calendar, Tom, your in are behind you outlined there trailing are peers. a are is lot differences

we comp can such see do really that is external weather of factors the of like – to shy the at independent work observer doing some we that expect the growth? perform you your external to that all So point are what the going

Tom Greco

Michael. Good morning,

the answer good feel that we to this of short half year is think about to as momentum. the the version. the is We I get back

executing I think we better ever we are than have.

key operations. our metrics and what’s in Mike Maria very, store happening at operations look Our Creedon Ayres are leading we as successfully. positive the are store very very team

being terms our very we great and per about are of transaction, in about we progress are We surgical how how there execute talk seeing we units executing in the store.

X in We row in weeks transaction. are up a now units per

seen have We I been since here. haven’t that

were service weekend very the Our customers more strong. is on professional weekends. Two capturing business

each So, those by, week are that goes metrics improving.

performing So, industry. more as this half we I with into growth the the of do we be back the of overall line believe will year, rate in get much

Michael Lasser

a you is have have B, to not if Tom, plan scrub you strategy, there start do And over? to

Tom Greco

Well, have our infrastructure obviously around engineered we this our year original guide.

good on sales our engineered feel we midpoint structure cost is That and performance around going execution feel forward about are continue year about guide. better that very said, share guide we focus our the drive to to that. good and of sales market very our the going for and So, growth to we and

good into B we structure answer about. because around say engineered this have your of feel to kind a that very year company engineered the built that have I our original was for a cost into was guide that we So plan plan the we would question,

Michael Lasser

just some DIY imply you your the share why share, case? about you commercial on think lost have comments said previously clarify and of side, overall market did lost so you market made gained then me you would some the share let the thinking market And the you on that’s side obviously that try share

Tom Greco

first said Well, the all, in Michael. in was the periods the year, is period first of year, I what we gained four of there right,

did in in first side. the the DIY share So gain not quarter we

lost on improving So we and it where was. from significantly share DIY that’s to be clear,

side of the business. the So, that’s on DIY

under that we a our holistically looking On see. progress. our what professional all aggregated stacks We and and side, of we X-year and business of the across now we are are banners, professional Bob’s we look we leadership at like on making lot X business at

Michael Lasser

so you thank Okay, much.

Operator

you. Thank

MoffettNathanson. from Our Melich with next question Greg comes

line Your is open.

Mike Montani

Hey, Montani for Greg. guys. Mike on morning. Good It’s

could. ask to if wanted I Just

You the the there mentioned more then in a addition the distribution the that would of release be and end center year four press of to there closing comment phases layoffs that. Mississippi was in in before

to there for for it So, DC incremental serve that think be XXX slated just rationalization another could about question purposes? about terms I closure guess the in stores we does of DC it and each was reasonable full modeling as typically is DC think

Tom Greco

Well, really we reasons, executing competitive for how changes. terms sensitive and We Gallman the topics both are competitive of not really in good closure. internal obviously these are so and about about are feel talking the any additional we

stores the carefully. We are of transition our measuring very

I think treated well we extremely our people through change. that

stores customer and our that before obviously Gallman receiving before and we and we sure metrics as the measure in the offered the disrupt and in we measure we we have We DCs AAP don’t are possible them metrics alternative our employment transitioned where making outside after of so after.

executing well. are this And so far very, we plan very

future are the sensitive. So, plans

to on not So, it as other this how really there feel going going handle say is than about one that good specifics and comment I will we comes. am it to we

Mike Montani

Understood if competitive more on it from the just there. to of obviously is in ticket changing? size transaction or how down guys counts and two-parter, quarter improvement XX the I where dynamics that is just some on this improve overall give then And one and XX, it you or was color up Can a down to could update transaction follow-up the down comps counts. was is

Tom Greco

The is transaction. DIY side primarily

a transaction. on into dollars units translates per making transaction of said lot per we progress course earlier, and As that I are of

progress On both. the professional on side, we are actually making

DIY, transactions So have good which side, opportunity progress we working do we the are on on. an professional on

to and very marketing to ready We half of we we new are right now back a this in the have year feel that got bring that contemplating about. campaign market good

So, DIY the area. transactions, is big opportunity the

Mike Montani

as follow-up well Just like it lately, of have was you that done noteworthy rationalizations improvement there of terms as cash business. the last the in flow sounds there store was all retention on on

can rates, closures? kind doing closure with XX% So, for of more closing the main is terms work that are is the XX% to to like criteria store share there commentary with in EBITDA you the negative historically maybe any that XX% now retention and looking and was of were that you basically stores XX% the

Tom Greco

am lot process. a We to we different concentrated Yes. order it’s if to that it flow. go clear make lot a a is past that. it into cash and parts wasn’t It the that difficult model sure of like of that was criteria and stores a to it, for I put process our not because there way market of stores would company. be obviously of It in we detail rapidly. drive The the essentially We proud country. variables going in going good the cash have store, set rather go we we was And in closed close flow to in multiple gave decision used that of we up through to on share a that that make into a execute drive very didn’t very decide to when a

about lease how stores area, retain at retain talking every look how members, want week. clear whole landlords, stay to at And sure to obligation with measured course all we that going that four we and have to great retain sales, team team we going when sales the at are Advance. that DIY of to the stores, parts about the those the we are were the we rigorously professional country, renting here the that do very the are single we have the members. We Now, look that make we we we people to are the then where in of the Advance how our variables we want we facility are minimize

over because So, can we we the stores, Region around go as And that managing of targets for each are set outcome the receiving XX forward, that quarter. all dimensions are those Presidents in we the have, Vice it this. we targets said we districts are the The four all are resulting we and positive company in the set tell a that of exceeding you obviously those. I

country. We across them have dispersed the

really and got So, and progress are Presidents for it’s each will discipline having to so spoke very our and it. manageable how work there of we managing those are performance manage continue they the say to criteria this we to am about, drive with I they to Region the pleased against great I Vice

Mike Montani

color. Thanks a Helpful lot.

Operator

you. Thank

comes question next Our with from JPMorgan. Chris Horvers

is line Your open.

Chris Horvers

Thanks. Good morning.

you So or you first just it so quarter up and pushed said follow-up to that want quarter? EBIT year-over-year up second about have quarter reinvestment, into XX beat out to commentary and the is was XX% about gets basis the the third points of the by second – on

Tom Greco

in quarter. Primarily, investments investments first These looking plan going the delayed were these don’t be a again operating delayed, beyond to anticipated we and at quarter, we together we detailed we very we are second through going put the the you but process that making originally thoughtful think annual our are second when because it’s got quarter.

in we second this the expect quarter. So reinvestment

Chris Horvers

Understood.

said to in you or are here and the original operating – be you of margins a guide so on headwind operating see your of margins, expect the operating second that do as flat sort you about context decline XX basis XX expansion think that in margin implying think So, points could XQ? be up I quarter, that XQ could you in the

Tom Greco

Yes.

comment good these have and have second we are we first We there are feel that about not going month. February margins, which going communicated think investments we and quarter we again the guidance what the last line reaffirmed to in were really be in put the year operating just in on we quarter for out even specifically with deferrals to with but

Chris Horvers

Understood.

first the ahead you it quarters to the going just of on of points so by sounds we beat its like quarter, are three you So year reiterate early basis XX sort basically?

Tom Greco

Exactly.

You got it.

Chris Horvers

year? some perhaps And expectation on gross sort the do year in that year much. Thanks of and a we and then quarter like the headwind very the happened for what capitalized upcoming there the that last back margin in of inventory was last cost from get what’s

Tom Greco

The inventory that last and range down confident at that’s to we was with inventory was in flat and you Yes, for to sure. year, of the Sure. the because that’s year but year-on-year year-on-year look year. we largely really feel year, that kind really consistent, the really if capitalized the relatively because little inventory immaterial last our compared expect balance was build of in inventory year. this Remember, a on consistent neutral we down be reduction million at to we and this of will expect $XXX last basis point drive be about again bit

Chris Horvers

guys. of luck Best Awesome.

Tom Greco

Thank you.

Operator

you. Thank

with Suisse. question next Our Sigman Seth Credit from comes

is line open. Your

Seth Sigman

cut look on just question QX, for through the and positive, at of year-to-date sense first discussed you sort the positive Thanks that whether the of so if strong am weather if of performance start also the that all My us any most quarter noise? through on sense help comps you is all weather Hey, to top I year-to-date noise some the can question. or through we cut trends will wondering taking us of you line, the guys. comps give are

Tom Greco

comment second quarter. that, on we are obviously the do but Seth, will Yes, quarter, can’t the the second able to start our be you math to about I on excited

would back expect a All back nicely, spring-related the brakes, of come have control, – you categories to that in on chemicals. those appearance car, finish categories the bounce under soft first really ride after

big the weeks. we mean, day last saw second shift our I So literally when couple the was benefits very in of of really it weather quarter a and the did first

the feel to we performance about and about going excited So, the the great is year balance year-to-date how unfold. of

Seth Sigman

am are benefits you I you are upside the with it Thank the store just to to laid closings the that helpful. the That’s laid the store but they to all this not that you. out that better than out? for doing what like so than are bit in little and least guidance am stores that clarify already the have you close current wondering to the or into be different baked these continue extent sure would a that’s past, year, supply And I work better closings, at chain just performing on plan Okay, you then great. sounds that’s and perform

Tom Greco

in terms performance than mean, is I than Yes. of the originally we we are overall cash targeted. our performance, seeing flow better

and lot we ability it’s to good stuff, So as but the the build our harder cash I at and this the start flow to about drive a road muscle said, of feel stores down get we really as moment, time. performance not over improve

and is target built are a operating we exceeding good to plan our news. that was target, which there in original So,

Seth Sigman

Great. Thanks very much.

Operator

Thank you.

Our next question comes from Matt McClintock with Barclays.

Your open. line is

Matt McClintock

some that just Tom, gave like conceptual, more to around basis put sensitivities if do about you a see little get to yes. Hi, I an improvement in and everyone. comp much how an to basis can XX Good improvement it, points an impressive I’d we what numbers already morning, some single in talking better you some improvement, and pretty business could of basic can just those pretty bit talk because do some improvement you UPT math a on And starting there? of you are conceptualize like get you sales? for go when store Thanks. your impressive for context some to here, points

Tom Greco

the X.XX in is industry I Yes. range. on in we there the are line. look benchmark and what of and bottom Thanks, range. We table people are mean, food X.XX, the Matt. other UPT the X.X that Lots others at we know we in do obviously

are basis X are how we X.XX sorry, to X.XX XX, to in points – like XX up points X far We basis that growing? range. So,

early but been So it stages, it three are straight growing we we and have are declining for we years.

of get grow there are for work to us sales them doing greeting trying the problem people in attaching are store. is are customer embracing are when working standards. And trying They to come very customers solve much at job hard to trying it. help They – the on they they is they solve. room problem about So to solve what to we to they of and and up the what type the they on, to are industry really lot there our a talking are think are really UPT

we point and from point from it as we it’s of view, service So, helping about well. customers not our but other feel a really just are metrics in view, great of showing a financial out customer

Matt McClintock

we the more basis in from I driven store, you some that see more mean interact in maybe could if tens training experienced that and changing does acceleration X terms kind because on your in to with, so single point? be a have of of quarter points could that how people just the that far stages much process of seems early follow-up the into kind you So X this to points it and of basis that at meaningful just is of

Tom Greco

people this to and mean, members we ideas and goes I a essentially are we is team that week drive fielding some and our his weighing to team even us going some better widening really think lot we of seeing on, to Matt to accelerate. on I Broderick do that it, for in improved each have transaction. make are definitely by, ways of for are it of those Mike easier units our per here

why to I accelerate answer don’t see reason your wouldn’t moving any forward question. it So,

Matt McClintock

for Thanks color, lot the a Tom.

Operator

you. Thank

question Our from Goldman Matt comes next with Fassler Sachs.

open. line is Your

Matt Fassler

Thanks and morning. so good much

we ahead of numbers dollars and so update going are supply us for are those coming you these believe those to primarily I supply that investments they couple case would are are chain, seeing next in indicated talked i.e., be are the you any an to can over how significant about as those you changes given guided, implement you As transformation and give expect some quarter costs the that chain given where of in looking, far relating years?

Jeff Shepherd

Yes, sure.

are the and the If transformation you GPI are optimization. the dollars look supply at shifting you year, but to those year, really the are shift. just the footprint we integration what chain focused last really seeing quarter, in and with still consistent were is Last we pretty on

and very that the about you to are distribution centers, example, in in Gallman careful what addressed store to how effort these, implement to continued already So be we has and we doing that got who we in Tom over in think strategic going are our serves real the our for I footprints be were not surgical only XXX Gallman, work because see stores. is very going those but and

anything so customer. And interrupt the to serving the we got make sure store that these to we we or when do related don’t

going good this balance the in types invest be to initiatives have of continue to we we that to those So feel the XXX XXX where these and guidance going of of to area, year. are throughout we by given driven about the it’s really

Matt Fassler

those in typically facilities being dollars closing to done you And relate existing that’s into there or to designate as work or transformation? when is buckets they be clear, classified new facilities

Jeff Shepherd

Probably won’t put we exactly speaking, details initiatives. but transformational what these into broader into generally go are in there,

that operations expense, we if put example. category expenses initiatives. and to delineate just larger be would were a what with types is projects of So, routinely would but transformational this store business transformational it of huge We normal from unique we close into the to going trying an not are do

Matt Fassler

just you when to to opportunity? I year-on-year what those down able numbers of quick Got on point on you know then direct based capital benchmarking kind to $X year-on-year this have quarter. At to monetize where your starting of that your if start lengthen follow-up were of way by you competitors get most you kind been have terms peers plus working to it. of payables have theirs, flattish being And feel opportunity vis-à-vis some a comfortable billion ratio a in would bit that of think

Jeff Shepherd

ratio? the Are to specifically you speaking AP

Matt Fassler

exactly. Yes,

Jeff Shepherd

of Okay. couple so Yes, there. things

we are that the of are increase First didn’t then very that job a can we metric. of to and enterprise opportunity, those working supply get and with doing with the got sure and really process more we on no very, that the again, And side, financing going that going. we strategic some strategic One interrupting discipline are take a inventory we it’s and his inventory, taking terms. is lot because there done the And as inventory work patterns continue and Mike we our deploying saw I is But inventory. more some that’s market-based that’s in inventory much we going you a really make being process. about are time. we it am the we have to of is is have can being in way are the the in more fantastic going want much, have strategic good with that the place secret has And phases. we are down and are process spending There deploying is being how across some our into we existing inventory Broderick sure what we two purchasing, the fully team a are on terms our throughout It’s chain utilize vendors we on extending of are we working to all, we of are stores and sure confident still And important, better lot entire making to that time, we we without importantly we hand. do to how we the the have get is but want deploying it. a wherever where places we take to back

Matt Fassler

it. you much so Got guys. Thank

Tom Greco

Matt. Thanks,

Operator

Thank you.

with question is Ciccarelli Scot RBC Markets. Our from Capital next

line Your open. is

Scot Ciccarelli

Scot guys. Good Ciccarelli. morning,

Tom Greco

Hey, Scot.

Scot Ciccarelli

Hi, guys.

two So questions.

the you how in visibility us we inventory of or it whether through but other just of on of metrics kind impact improvements improved guess different just measuring all, are are were there of factors a you understand front? zero kind can obviously of impacted cross-banners, by expected lot is that’s help I the seeing UPT, that on being First

Tom Greco

mean I on if this that ways, orders a different we Scot think the concretely first when Advance Pro, capturing before, of weren’t a now we I get way someone A information. couple measuring from or customer but call we are

of we part A we for available a lookup So, now store. that, measure in measure when someone in called us couple that and is things, occurred. us know And different we lookup store, occurs that the asked that part A

as click the couple in of our available store is we available in in up store notches area, is broader a it in available it that system. beyond and area, obviously, the that it stores the is market in-stock So of a it think then right, rate of group

when metrics part, the And know call don’t we are there assortment, together driving, similar there those which to call close to close understand So But reasons of where want each those connect Worldpac customer. Broderick how we is what times fundamentally the of close connected we is dynamic those what maybe other rate, that, way number Bob years. a we but that and we we measure, are Cushing so Mike we and sale eventually the measure that’s quite approach is the have parts, are. to which it in so is to new the the which obviously notion, is has at is we assorting the still for this a part honestly reasons and demand for to which coming had to all going of

Scot Ciccarelli

Interesting.

for is Tom. million a then free up are basis. improving, guys plans so second with operating And about you question and Okay, now or $XXX flow your net are cash on year-over-year cash flow cash cash thanks what

debt kind So for right what’s on about of front? doing Thanks. I what are think you just the the still and way am cash wondering guys

Tom Greco

Yes.

Our changed. priorities really cash haven’t

supply we First is maintain and make very to sure want as us that we the important rating that’s we utilize foremost chain our investment to grade financing. fully

that keep we here kind as we using So cash about in the of front of mind think future. our

it First, how we our we process business make on the ROI we for best to disciplined a do single Every our and sure has priority. highest that. reinvest have first and the return implemented shareholders. That’s project want reviewed to in very is

investment again, the haven’t at, our as Second or is making have status any priority our that it’s announced sure stockholders here, ROI we but we buyback share grade And investing first back would well finance cash and investors. we high business but in is grade our looking as something projects. priority returning investment into to be

Scot Ciccarelli

it. Got

guys. Thanks alright. Okay,

Operator

Thank you.

Bottiglieri question is Chris next Wolfe from with Our Research.

line open. Your is

Chris Bottiglieri

It’s consolidations noticing closed AI Carquest standstill, a pleased you the Hi, but on with combining of approach the but AAP thank number of that that fact to before, kind but then your I conversions the you holistic a questions. store small taking guess looked bit little for pretty you closures. hit stores, seem to a

was guess cards reaccelerate now? anything you just growth, how are closures? do of two right how is positive you then you count my do think opportunity that again see you the not to factors? question in an given lastly So And balance being how these that store kind I ever Is happy like there or semi-related about do

Tom Greco

is terms level mean, performing of it that emanates our a closure on think around Chris. now right accelerating extent we we really how and the that in I well executing. executing getting the feel question, and really region individual a so good to confidence are I Good question store really how are against about closures

are the We retaining sales.

members. are retaining team We the

We of out onerous. are are getting that leased obligations

in are to We continue do very to that. position a good

overall growth be to goal presence to top Now, the is the line expand throughout market our drive here country. clear, and

are looking where at market So there we headed. the each individually and market is

Worldpac versus how So, growth much market you terms? to a opened terms next terms put into all that we of those growth. see the in through we are drive going couple to the of growth can where we what variables in take infrastructure relative our And to look much of happening country going going want are in in how as and for on to to professional said know an of in going mix then any in platform professional see the are decide go the opportunities you us online into calling see in couple DIY, given side in in continue we to we the What’s we are we to years fill ordering in first branches we of market. quarter,

less So, infrastructure, Worldpac, a Carquest, Advance, where it’s market our at our much the it’s Carquest footprint is we so way very it the Autopart about holistic in who driving International, an closing gains stores, not a optimizing look market Independents and share with had across each enterprise about approach just by great quarter.

of independent lot platforms. have with our to continuing are a We success

done We an independent corporate we well are cases There have growing sold is they that where base. an store with that. have and to Advance very

sales So, much more to and approach in it’s holistic so do our drive top a a efficient fashion. very line

Chris Bottiglieri

material sense. of not ultimately about density then store lot that a or makes it just That decision visibility maybe maybe And not is the affect cross-banner process? to think just

Tom Greco

we learning visibility. lot with are cross-banner Well, a

an we really the acceleration I people. that of do sales we so think and from seeing cross-banner the converted fact are have at week, early are our visibility. and Every we we like stages

it base. in is we chain It’s supply it’s informing end-to-end work. market our informing and our route So, informing any asset given how

people job we to kind done making be out lot a parts get there but can available, those customer. of letting to them delight So, how available still honest, the so was and our is be to the part, making to one, it go there figure that

taking. and have that’s we it approach the to we Now, efficiently do more are

Chris Bottiglieri

Got it, okay.

got some sales slippage, lower that in And previously. stores through since ramp you kind conversions be those tailwind you getting and Do which than sorry one of means now, those kind optimize like were help stores way you are – final getting lower they could are may volumes lower think like store volume time then like you some a new you have for stores don’t were question when like consolidating, the me? would all of you converted us right it think structurally volume which think that’s would are them, you those over up of you or related, kind algorithm they store as

Tom Greco

sure I understand to want I question. your Yes, make

referring conversion say to? are So, you when you specifically, what

Chris Bottiglieri

had the how was think have that like to you a so presuming you an to the them than that old So less legacy store is store, before AP slippage, how sales you be that would million, your AP those? store $X stores, productivity Carquest stores, some about converted lot you productive converted an

Tom Greco

Yes.

want gee, our approach pertains we how as footprint. is the I’d everything that Advance, not to of make think answer I it are approach to that the we is taking

equity In a parts of west. the brand in fact, lot in Carquest the country in the different of has particular

sales hey, come Advance the to are the blindly We to cash store profitability, of we the rigorously, to there those Advance are we the the looking the measure Carquest with that not sales, we want I with of in Those – with to performing the use variables it’s around are not flow the sorry, cash to proximity store could very Carquest go the when it. another word Carquest and of will kind kinds going an that put were we store but convert with stores stores to footprint store, then – competitive convert at the store isn’t with look performance conclusion where to store. the effort to of to say we just close the just to of well So, Advance. store, flow, a we an close,

looking of where equity. of got have stores at the very performed is lot sure are and a drive making many we We markets Carquest and we flow cash the there well of cases, company lot in

Chris Bottiglieri

it. Got

it. you thank help. Okay, the Appreciate for

Operator

Thank you.

Our Mike next Bank. question comes Deutsche from Baker with

is line Your open.

Mike Baker

been Thanks. It’s long call. a

So, I will be quick. real

point talked answer the Just expect back you Mike And with you half to clarify, that’s up are the I you question positive key it’s I to think start? expect back the guess So get the back Lasser’s key the comps or with we earlier, you industry the trying half, you back going if question half be be – be in positive positive, expect to. to in really we get the of half the comps comps like pleased line about tough comps. Thanks. in to to it wouldn’t is by was to the why comps really, comparison, over sounds in the I second but the quarter, are

Tom Greco

Well, hard are we of of sales first half driving all, line XXXX. achieve of above the are to we get we growth of in rate hard driving do our industry back – growth in or the and the to that

here footprint to to end first quarter, the about at terms a road performed those very the some rate of it potholes and for and in that’s tail for of lot quarter because like the given from the country we thing a us difficult the our not not winter There a keep in in categories we quarter us. encouraging of the lot of it. demand are a a and categories Mike, at that and key for this into the of we It’s good seeing part the years feel couple certainly comment having going In good the way driving and have are we going second is of north we started. the least benefits shifted of some second but performance are of specifically, the

Mike Baker

And quarter follow-ups back of follow-up, just down the commenting you comps how so second year? in again could And remind the on the Okay. second two in the that second paced one are in us on signaling not so last more clear, one, are you quarter the months just necessarily up you be to half, quarter? not really

Tom Greco

Right.

Mike Baker

remind the last year? us What comparisons month Okay. by

Tom Greco

Last cadence. year, a we had obviously different

year slower ended it start let time. was this, look carefully think with a towards X-year But I improving. we and you weeks, the up for is which to mean, very the way the that’s the a bit look little the end. And kind I say played stronger at but X-year a out, we it at me over it last improvement performance was is comp where and significant comp a long XX if previously of the

going second feel we keep we that the of we where keep share competing to in. like all the are market we are And driving are to watching, the categories good So, to we the sales in comp about side. going quarter. we against our The start are X-year

Mike Baker

you Okay, much. Thank very understood.

Operator

Thank you.

with Fargo. next Our Zach from question comes Fadem Wells

line open. is Your

Zach Fadem

Hey, me good in. morning. Thanks fitting for

based know they far for do this of are are that buying thus the how you I the learning delivery comment in the could improvements customers its about your sales and attribute you website on growth, pickup customers double-digit store? here, you but and to the prefer online on recent On or what do much days early e-commerce online,

Tom Greco

Sure.

First we of our all, are online than pace a on very had rapidly more now much doing. moving been we at rapid platform,

the that opposed releasing are in are as the multiple releases to we pace We at. quarter now

of mobile our releases, an digital first load and a the difference e-commerce our things which font some of some platform. on mobile some There quarter well both the had the our one lot example We made new time alone, sizes, changed is – as which on introduced big platform as website side. pricing. in tools. So our several just our as monitoring page improved We we desktop happening

have before. We to delivering center distribution do enabled start wasn’t that a home, able to which to ship to

in or The So, our a are our a to done through you reports to improve have platform. been do at conversion continue to metrics you see I other XX% of that’s online in come April. experience think look that has measure out is think work through continue the obviously, seen still we to have we There which whether are have are as rate. range I to in up desktop lot going – traffic growing, that in we really work

but rate would kind Our the like that at conversion measure see. of is not conversion rate We we very improving, rate to closely.

the and have pace rapid prospects our amount overall in upside there is at like still growth the that platform there moving and tremendous of we we a So, very view.

were our a of would lot if is of on room Jashnani for progress improvement say think the I there our call, on CMO, are but there. making Yogi a lot we he still there platform,

Zach Fadem

you helpful. That’s decision to anticipate offering, the change should given tweak mix the we promotion your color AutoCraft market you supply there and points how to the the is any and And there category? chain on Interstate as or plan second, anything and any what as were far here major to sticking for going existing in partnership disruption the is are

Tom Greco

and we on very mean, one. relationships of important are our our our to we the spent I a point really that the have a Mike have I suppliers. they amount better tremendous ever with suppliers been suppliers the want spot And that to Sure. since our than our strengthening external of here. reinforce with comments Advance. partners at Broderick Couple particularly time, have transformation are relationships this we think in I been I have

for And lens that a what’s customers. it put flow. a So, it I to to partner, about we at external the evaluate best the where want pretty is supplier our consumer Whenever way. and or good with we financial cash We expansion margin know I in know headed. want straightforward looks very feel course engage of mean, third-party we sales, a we through that.

I with decided the priorities, December. because financial those it last So was in IB since mean, partnership, fundamentally with to circumstances we proceed line changed announced not

a great to off culture. it year. forward. a strong company other start great that building wish down I lot So, great this They them business separately, am there success Dallas. battery at that going of Interstate to And is a We our are going a in leave with very is a say to than business

We are year. very pleased started the with how we

Going supplier. forward, we have strengthened our relationship with the pre-existing battery

we interruption demand So, any to forward. anticipate of don’t going kind

fact, there interest and feel in of best was about good and very AAP decision no it doubt is we our this the shareholders. In

Zach Fadem

Got Tom. I Thanks, time. it. appreciate the

Tom Greco

Thank you.

Operator

Thank you.

Basham comes from Wedbush. Seth question with next Our

Your line is open.

Seth Basham

morning. a good Thanks and lot

Tom Greco

morning. Good

Seth Basham

around costs related improvements, in material My them improvement quarter items, the year? do you persist balance those really question outlook to the through the and gross good centers margin this of expect

Tom Greco

improvements our some to did We headwinds see the with mean, it think budgeting. the material so. productivity I material as cost, relates we operations. handling, I DC Yes, continue zero-based with

closely, we to monitor we something as but we we and savings excited as Some year, think monitoring to potential and up are that we manifest be in continue about, we distribution are see the from headwinds itself and and that with going quarter the associated transportation are will into of to domestic cost some well going and centers so And the continue import are headwinds. to third pressures, knew we are very of that’s margin. Nashville that those both stood prices Houston we we inflationary seeing then about last the material gas the both seeing

Seth Basham

it. Got

and of will headwinds, relates improvement in should to to see it better. some I are you costs the we potential those little opening the manage to year As able transportation if be DCs later potentially your annualizing

gross results margin be we expect year, do for better how So, thinking it? the the of balance should you about

Tom Greco

we is looking of X.X% that. on one the provided. that really OI think the down to bottom, to February. adjusted that component This X.X% in confident whole, feel I good OI, range feel Again, we we the we provided looking just at But about really with

Seth Basham

is Fair then in And around dynamic just of received that provide team have any Mike quantification question my seeing you you are on, Broderick the the enough. stores assortment? follow-up that and are dynamic lift working can assortment

Tom Greco

way a assortment just call had we of clear, and we not it executing deep we using current methodology, probability to to are obviously could sell, looking to it actually are Well, yesterday today. do a in because dynamic pretty excited to but is are store our this we play actually review a we you that be still assortment at yet, opposed the change are we very rapid real how about out, this as time

make going demand. significantly This we to refine much assortment so to quickly a that changes market So are respond we changes a year just store. to twice in is pretty able our more in to today that

to that’s got taking out we are we a into the country, category have parts So, rolled it over out category by being that roll pilot of but and should to it is very rolling obviously and the and plan different soon something the to that that as exciting. but we us overall right are sure say often. get lift This allow more drive customer and out, time make we is yes it very

Seth Basham

Excellent. Thank and very luck. much you good

Tom Greco

Thank you.

Operator

you. Thank

Our comes with next McShane question Kate from Citi.

Your open. line is

Kate McShane

being my when you little the up macro mentioned more your driven. that impact dynamic on competitors as taking for miles you considering drivers like thank given are the Hi, questions. but does sound are prices a bit gas highlighted it know I and cautious as favorable, you

your about the if about think how – year? wondered thinking rest macro you about of you just about thinking I talk you how you me for are the So the when are could excuse comp

Tom Greco

sure we mean I Kate. very for Sure, watching that are closely.

it’s record And P&L. we felt to cause That cost terms driven fuel prices to are continue it’s more that going to Day consumers will the to on consumer bigger going place That everything that initiatives better price change and year, on basis, overall plan the offset to we the fuel. a of in current question. around that, be that come structure. this a to indicated our on unfolds. balance of there, question think that the Memorial picture going this to a this week. but closely year-to-date where and have and bigger we have slightly in but did clearly have for bigger Miles I going said plan didn’t in is will as behavior. the I that – are above less we from said, the year question productivity we enough impact of monitor what We that’s a is as have up is mean, you the

expect this week. We be miles driven to up nicely

So will see. we

Kate McShane

Thank you.

Operator

Thank you.

Brian Our Oppenheimer. Nagel next from with comes question

open. is line Your

Brian Nagel

Thanks call morning. taking I good going my is the for question. Hi, know longer.

I So, quick. will be

seems other stronger commentary follow-ups. how that sales your is online companies. there, seeing frankly – sales, online and two now, the on than commentary your to taken versus is skewed of online you driving the place tell this Just much from pickup of similar the with good quick degree is the quite much you store that at at is One anyway to as in have sales How type And margin there point look cannibalizing which are the numbers online sales to buy store? in otherwise? may incremental

Tom Greco

want Well, ship And pickup in that have all, strength opportunity home. first big buy store. in towards means on still got of we means biased means and we two things. a we it online, are to to It build that

opportunities, Brian. So, both of those represent

pickup online, the to for incented things their to used I that people. changed We were have proximity in company online, ship-to-home store, store, but our how incented in employees. sales inside our were some buy of for for the only incented enable notably incent terms and a pickup buy not the of of were we in They think in They most way store. have stores. they in incenting different we better

the bit of Advance can go If to home, I they way confusing advice. be We I platform store, flexible provider served. my can go I saying in communicating We want up our get customers I that to with created in want and it customers a our order my wow, online, pick people for can can customers. a So to of very to it at parts to the serve our be I of them a want store get some and the lot home. a

and who So, in now in they to parts. stores our people standing whole the are are embracing customers e-commerce come up platform pickup really as this it they driving are that we to talk

of continue big So, right have it’s lot there. overall to search half the opportunity. are We experience going and a description. order a of I think to the category phone. strengthen with now have we in a type when that that think that to customers space growth online And we I succeed we some off the purchases our our mean, an most see over they in start of their

us we to get we and continue count area best-in-class that be to feel So, in can better. on

Brian Nagel

– follow-up, May, qualitative already more then more pickup as questions the month quick the in again or have And just presumably at turns look you. a about during seen it you we normal? I sales thank from guess lot business, and have I whether of materialize, for real comments Right, But of But standpoint been for happening watchers type. you sense as to exactly there or sales dynamic as of? it now that despite this we categories it sector of some weather should begin look make lagging still can’t a some we think as is improving are at this waiting as your

Tom Greco

I think for so industry. have positive on that Everything front. done is we long-term on the the much work outlook

you miles four to it, obviously down then very ‘XX think starts goes that it go big sweet improve year like peak. out, variable, bit, sweet I is variables. variable the this, we vehicle to It next several again little spot the stand an XX single-digits driven the when that’s analyzed start is that’s last way that down ‘XX, look You was and up, high years. is for up that is minute is over the vehicles ago, it’s a something fall, It car to year in we repairs variables piece, in that important, about but because at the in this last the time vehicles just ‘XX, at up. really spoke guys a big a spot or going park look about important There going so

that’s So, favorable. very very, looking

in the big category. work for parts on longer and We have so we are done a implications lasting and don’t – some some honestly or if the change what see the outlook

and ‘XX. it’s ‘XX, in So get is belief this better is a our ‘XX and very to healthy going category

Brian Nagel

much. Thank Appreciate very it. you

Operator

you. Thank

from Inc. Stephens comes Bienvenu with question next Our Ben

open. is line Your

Ben Bienvenu

quarters number Thanks morning. for questions. stack taking but X-year clearly guys a it improvement that first that noise three of is the sell Good not the year, internally the in indicative are XQ, the just help thanks. core X-year perhaps than metrics what us are last of is from be the stack understand how core might for or business, and performance highlighting better in the of to Hi, pointing my business? in did but Tom, you kind

Tom Greco

was stack X-year think plus QX Ben, to Yes. just the over a I we got QX, XXXX an you at exceptionally look QX when in strong the it had comp. X

So, at QX That’s QX how have look those together. we to we plus it. at really look

not take before over that significant there three XX-week improvement many quarters first but quarters, you just that. if the is a period So,

like as then So, we started watch the that and stack. quarter second we every lots it’s of improvement the strong, we said there X-year week out

Ben Bienvenu

that meaningfully And When about benefits, material margins? like Mississippi? DC when the operating see sounds the chain influence margin down the Understood. optimization start do moving of then in do opportunities, pieces we addition more materialize in to see are with start thinking gross overall margin of and to you some it we and cost to supply

Tom Greco

Sure.

kind out base we was all, execution of long-term, we in short-term in really just in injury quarter. there liked is the in take the the associated whether with and in improving frequency opportunities really what transportation. safety opportunities chain are standout go have be time. in centers for short-term to which Ben, think chain obviously that’s savings I got happened The there cost the our transformation have of First got our that. real distribution supply first longer Safety good that we supply time. both labor frequency a starting is sign. The safe is around our direction, rate people obviously We disciplines term rate, are collision and to going right want a the to

and be flawlessly. that’s to have very, optimization. things store DC optimization be very the These disciplined to have time that the going very over creation weather value in-market they and significant that are about done are or well thoughtful and We opportunity executed

that you thoughtful over creation be DC that in very that a a do that’s we comes network think way that’s of and tremendous is to amount journey, but have our time. when going about So, a multiyear value to with optimizing there got

Ben Bienvenu

luck. Thanks. Best of

Operator

you. Thank

with from question Elizabeth next Bank America/Merrill Suzuki comes Lynch. of Our

open. is line Your

Elizabeth Suzuki

can your margins of this inflation an quick. and Great, ticket and just I on just give thanks. this give starting I you may to in are update benefit keep have very it, Can see update merchandise will addressed the you on Thanks. you but and average missed already inflation? whether you any

Mike Broderick

Mike is this morning. Good Broderick. Elizabeth,

and our as perspective low year-over-year and relevant to from so we price a it we continue are major the that basically market that very seeing manage we merchandising are this is We index much we stay seeing – competitors, inflation always natural always marketplace. that’s now from that single-digit what in has and pretty a it the speak

Elizabeth Suzuki

Alright. That’s have. I you. all Thank

Operator

I time. I And am Greco further showing back to you. at call no turn questions this Tom closing now would like to remarks. Thank for the

Tom Greco

also military to like Memorial like over for efforts addition our the of independent our the would all we customers thanking and members conclude to we members. AAP serve in in We you. family by approach team members our appreciation quarter. call as team to AAP our their would sincere partners And including their service, across Day, thank all the express better for for XXXX Well,

enjoy returning who excited female check embark attempt that we U.S. the on Ennis prouder team are with association of their website, to couldn’t your journey the relationship with the to weekend. us Caitlin’s support an to be of veterans and are holiday Caitlin about Building on wounded our the for military story out warriors be that are servicetosummit.org. in-service organization Kirstie as joining to particularly the Kirstie call Please and Our Sheehan today some runs they about and deep. to to Homes committed and and in providing We Thanks for join summit to our homes Denali. which is Heroes, first

Operator

Ladies does and for gentlemen, today’s thank conclude in you the participating conference. This program.

disconnect. Everyone have You may all great day. a

Advance Auto Parts (AAP) 22 May 182018 Q1 Earnings call transcript