Earnings call transcript Q3 2023

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Operator

Greetings. Welcome to AutoZone's 2023 Q3 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded.

Before we begin, the company would like to read some forward-looking statements.

Brian Campbell

of note to call of the Securities Reform please that forward-looking the begin, Litigation subject are safe Act we that includes today's statements Private Before XXXX. harbor provisions

results important of could and Forward-looking statements morning's differ release a Exchange to other on Commission the and filings performance. cause Report of refer most Annual XX-K to for press recent expectations. future risks company's Form from are that this Please with actual and guarantees uncertainties not and materially the discussion Securities

our Forward-looking statements measures. and call obligations such speak non-GAAP be only the press non-GAAP date in financial Today's reconciliation A as to release. the made, of GAAP will statements. certain can to no company include of also undertakes measures update found

Operator

turn to I Chairman, Sir, the Bill Rhodes, Executive over and begin. you may conference host, call President, your Chief Officer. will now

Bill Rhodes

thank and Chief Vice call. Investor morning, AutoZone's conference today us quarter and President, Executive Good President third Jackson, today for XXXX Brian Tax. Campbell, you Jamere Relations Officer; and Vice me for With Treasurer, joining are Financial and

I slides third today, available opportunity If Conference learn Investor the on click Quarterly the to Regarding website, Please results. on to along the quarter, press comments Earnings release Calls the had and you've read them. about release, press under www.autozone.com, not, complementing quarter's hope our with our an our are Relations link. see

the our our customers across to has thank As success. the with which to Service, company their consistent we Customer been commitment long-term, begin, would I providing WOW! AutoZoners for to our like secret

domestic X.X%, comp. growth which team our quarter, same For the third sales total of included sales X.X% store a delivered

our highest rates to of operating of later our the in operating were start growth the sales EPS the pleased over profit profit a as were north we've improved weather. XX.X%. results growth expectations were quarter and deliver Both below X% EPS and the While experienced growth our we improved growth of topline had year. We in at quarter, our

cool, wet many March As have customer reported, retailers impacted weather tough month, traffic. as was a

In addition, that had our it refund some accumulations March and as particularly in for matters. call our season, last during country, year, significantly on down February really business. were tax was unfavorable snow much We our which weather, the of mentioned also reflect. impact in results this Unfortunately,

our experienced We also, this external commercial, quarter after had and rapid disappointing share quarter. our growth and year impacted internal us. in some tremendous growth and and this market We were gains some growth growth extensive to lapping was last that factors headwinds

some challenged that rates of car had business been used sectors have had extremely this We interest and with prices. rising high

rapid of during our growth the unintentionally our years, de-emphasized and true we some over disciplines. last couple of Additionally, also tried

get highly As help mode, topline us exit must and I've said flawless the six we we as to months execution, well-known reignite pandemic growth. I which regarded our so, for or last back believe will

We growth. both retail have reaccelerate good and to businesses, to we with commercial sales our urgency initiatives determined in are in and our share move and flight

sales growth very implies, the difference store international particularly this and delivered our same Mexico, as our total sales Fortunately, growth growth between team, sales strong domestic in our quarter. for

Our offering job, which strong great experiences, to is Brazil teams and customer growth. sales leading do in Mexico differentiated continue to a

how some categories we in cadence share 'XX. is, inflation also performance inflation our versus review sales This retails morning, XX-week FY and and our business our impact store the trends, our we impacting of regional our over that will third cost We'll for drove think callouts. will same sales merchandise the DIY DIFM in quarter fact, quarter, remainder how

domestic basis, same net sales share were earnings comp. domestic income increasing two-year was On the X.X%; sales basis, million; up quarter, and delivered for $XXX per XX.X%. stacked store Moving XX.X% a $XX.XX, comp; and a to the on was a store a X.X% three-year our specifics same our we

Our comp with three we've what in quarters. the last in seen was line three-year stacked

were sales up retail was our X.X%, Domestic and X.X%. domestic commercial growth

We as generated QX million than trailing year. $XX delivered up billion last additional sales, continue year. over On we commercial XX.X% records, in $X.XX in sales quarterly annual in an basis, with to strong $X.XX a a billion commercial four-quarter sales, we in set last

sales We $XX,XXX. also record average per QX for another set at weekly store

earlier, slower the comp domestic On was country. the had sales the in recovering our As experienced of growth just bit May. I've true a This before March X% in regional but in quarter's a and under to in basis, greater March, a fell businesses. back early results. markets DIY negative Northeastern in an for outlier We mentioned commercial held February, and a X% than April the we Midwestern than X% and of rest both to

grew on Our West Coast with line our ticket in X% the business and year. quarter, markets. last the was retail in decreasing remaining X% from for Average commercial

we cost inflation slowing trends in decades, those some as freight inflation product we and are negotiating are seeing the our are reductions moderate have from subsided. product cost significant seen and After cost have or vendors, most both

saw Additionally, approximately to anywhere X%. inflation to while close not historical wage norms, we moderate

levels, staffing improved has be regulatory pressures. wage as market substantially there we environment envision versus the inflation pulling much this year, back While from and continues last time don't these to

and profitable forces, on market driving we've to in growth, our through continues had units focus particularly external to transactions. While be share manage

for growth enhancing our reducing with by to store and of the proposition the our to improvements consistent being leveraging easier priced pledge we Our deliver. make that sales the effectiveness us mega did initiatives force openings, and coverage, brand, unit and included this efficient, value Duralast right hub new do times, availability, with growth, enhanced business hub more strength in living satellite and just improved quarter delivery technology store past

past in a into becoming X.X% sales our growing commercial. DIY leader business moderated While industry DIY over this time we delivered quarter, share our our and and we comp. Digging on this focused the remain both quarter, deeper domestic

count X%. From our down X% was said, the previously the year our up transaction have we were gain both data to unit share and we continued quarter. ticket As growth available, trends and during last dollar versus

approximately with parts, X% difference a hard them. outperformed between floor sales Our

outperformance in relative the to both improving hard is categories attributable parts discretionary and Our floor categories categories slowing. sales

to floor sales was well. our items see so performing It encouraging

Specifically, very year. successfully well strong performance batteries, and exceeded and performed oil, categories lapped expectations last year. wiper have These categories our all

we continue our friction commercial both summer, We delivering below miles both performed Our for DIY do this category hard believe improvements, parts continue floor and while growth well businesses to our our as and driven expectations. initiatives expect sales results. strong will

especially We will fourth decrease cost strategies. experiencing quarter, continued In Let in both we me digit in of pricing believe as pricing numbers the goods. address mid-single inflation, QX, also line our lapping with inflation, year. as of inflation but slow clear, we economy it to To are do expect high onset we the believe going slows. inflation away, not is the last wage be

that industry pricing parts of are maintain as disciplined increased dollars. increased, to also Historically, we is we I maintenance. has historically meaningfully about elasticity, costs. routine reduced rates, following have decades, to costs because not low that by or industry has notable It expect this failure have of want inflation, been reflect the lower margin highlight for to our our continue. and driven products purchases price higher periods the has pricing pricing and margin increasing industry commensurately to Most that sell in industry

in the the share tremendous initiatives, our on execution, commercial about gains excited achieved retail growth and team's businesses years. few our focus our both have remain last we We and over

an stores, For be hub have opening on we and expect to and commercial customer quarter, hub additional our our our performance as mega fourth position, service. improve business, improving sales by led we execute in-stock

resilient, as is We environment also pointing maintaining remain believe their the will vehicles. difficult business to our continue customers DIY macro

our as about trends will, always, seeing we're and markets performance We and as emerge. be what color provide transparent on

two Jamere, call grow across continuing with in stores on to the combined I'd XXX Mexico to our and to handing reiterate markets. almost like our business Brazil, these Before plan

performance As they again previously had impressive key contributors profit quarter and these and come. growth noted, to decades to be this to continue for sales should businesses

offerings are We expand in footprint targeting refine have Mexico the aggressively we and years. store and to five of US Brazil. our in learnings the are to the Brazil, next many we particular, over leveraging In our significantly in

growth be to about excited continue We our prospects internationally.

to business the be we successful. we know, disciplined leading our charge, to well dedicated the manner growing AutoZoners in future a with our continue and are will into profitable and We

turn I'll the to Now, call over Jamere? Jamere Jackson.

Jamere Jackson

Thanks, Bill, morning, everyone. and good

results had quarter. our for third As solid we Bill mentioned,

elaborate quarter, This increase a XX.X% X.X% domestic a in on comp EPS. in morning, to X.X% let growth, we this and EBIT, a delivered specifics our for QX. the moments increase few a start me take To P&L in

under reflecting up quarter, billion, solid in our growth sales strength $X.X the of For our were continued total industry, initiatives. just execution X.X%,

starting with Let color on me the for our give business more little third commercial quarter. our growth initiatives, a

Sales two-year domestic part represented just to billion XX% X.X% up DIFM to our increased Our customers domestic were auto a domestic DIFM basis. over our on of sales $X.X and over just stack sales. XX%

sales up Our across weekly program with X.X%. per were accounts, local the both national base customer categories. stronger We being and the our experienced local $XX,XXX, two of growth

and set the growth is of we million. share chain in this weekly another in highest a rates believe for at want record strong despite quarter the our Our volume business results that we to grew commercial history I quarter. our for sales $XX.X the reiterate deceleration

regional, accounts. stores, business a our commercial leverages local We our DIY building in domestic infrastructure, our of XX% which have we're approximately national, program and with and

total XX programs. we quarter, net This programs, X,XXX finishing with opened new

As continues faster. lead 'XX, growing to growth we continue on our and commercial expected, focus business FY in to way the

our to performance intact, even I retail strong remains past in calls, our have and gain commercial is share future And businesses. mega noted positioning us we industry. the continue hub strategy for on strategy an as driving Our brighter and as in

new add QX. locations, progress. ones in have some color our with four now XX mega again, I'll We hub opened on Once

While significantly $XX,XXX, the I of per than the hubs sales sales to overall our XX than average QX. mentioned commercial roughly mega in the weekly and continued ago, the faster program averaged was commercial significantly commercial business balance grow footprint higher a moment

stores These access assets to tens our of only for surrounding but This fulfillment the is of commercial. giving the parts entire lifting are network DIY strategy working. and the not for AutoZone is and well individually, capability both additional thousands customers performing

XXX mega XXX We to to regular in XX new by FY will supplemented our remain 'XX, objective hubs hubs, hubs. open mega XX we committed reach to and

as and far you've say can of the commercial in that Many maintain as results. eye double our this despite see, quarter's grow digits the that we business me conviction term, should near heard

in addressable market significantly is $XXX underpenetrated five a with to are an We approaching billion. four share that

views still have we to have although do going this changed Nothing and get long forward, has on a in and work in our The investments our significant made hubs building improving and more and pay customer hubs, expanding technologies that to our coverage service have continue Duralast dividends we brand, what back our runway. can adding mega to accomplish assortment, performance. we to

delivered exited domestic Moving we our in dismal commercial QX. positive retail has on comp to continue business, share deliver domestic despite focused in execution been to the Like a retail March. we business, We our X.X% a growth and and QX. grow stronger we're and much quarter comp resilient

saw last as X% down Bill saw traffic X% We growth, mentioned, levels. a and we ticket from year's

weeks continued dollar to gain excluding traffic in with However, only business. relative the retail our of reflection were we line past the of when down was unit quarter, four strength and the across middle we X%. quarter, share This segment, of a the last quarter,

strengthen competitively behind business initiatives. our Our to continued DIY growth has

challenges the market significant on for the experiencing aging markets with growing customers. macro and a car used still basis, both and addition, our a new park, posing car In is

markets time be a these DIY. originally longer challenged which to should assumed, We for for expect we tailwind of remain period than a

dynamics, from consumer pressure spending inflation initiatives, and despite macro in overall park car tailwinds positive These a comp driven economy. discretionary growth the have

business DIY the XXXX. of for resilient a forecasting are remainder We

say I'll few international a regarding Now, words businesses. our

and with continue be the to Mexico in we're We Brazil. making pleased progress

overall new stores saw ending finish growth our Brazil, we we During with XX. constant currency a growth sales with in than both countries the two stores stores and basis, we business. On the continue six quarter, Mexico in opened in new higher accelerate rates XXX to in to at

and be schedules on positioning. US significant and and to We and to expansion over to our Mexico committed to both sales capacity markets to chain our the a stores store adding improve disciplined outside our With earnings XX% currently store future. contributors bullish just in commitment growth continued growth both competitive expect are in in the and opening total we remain in a of we're international countries way, supply base

of rest Now, a gross on let and spend me few margins. the minutes the P&L

up quarter, the XX basis For was $XX margin credit, which of our improvement. million basis including points, gross drove LIFO a points XX

more than mix. was quarter gross higher last margins, merchandise year's Excluding drag a business the margin the offset LIFO increase benefit, commercial driven over our which by from

LIFO as quarter's the driver this quarters, we to taken mentioned few With have continued the in and million. was have hyperinflation expect fourth trend months, Freight the several remaining benefit cost in $XX the costs to last for charges over the this LIFO over drive we we and freight and continue quarter. primary LIFO I And balance took the our gain, P&L. to abate a past similar

a gains after taken we we done historically. of LIFO charges have only take incurred, P&L P&L As reserve far we unrecorded that our the we to to the charges rebuild as and reminder, we've plan have reverse gains that have fully balance, the extent thus we expect taken to

operating to Moving expenses.

basis points year. year's up versus were last X.X% expenses Our versus last as levered SG&A QX, XX

growth as growth manage sales As we forward, we've being time. previously, expenses we to move to in continue and SG&A on we with are said over line will committed disciplined

the $XXX million, quarter for X.X% the moving of year's P&L. Now, the versus quarter. was to the up prior rest EBIT

credit, would billion a at the billion Interest end for the $XX last have ago, the QX-end outstanding the as from last been expense $X.X $X.X debt year X.X% XX% Excluding year. was our of million million, LIFO EBIT up QX versus over quarter was up at $XX.X year. quarter

$XXX planning the levels end increase Higher rates, in are at million last in are driving for curve, debt interest We and short of especially borrowing $XX the the the Interest million in higher fourth fourth year's the quarter quarter. expense. borrowing versus expense area

quarter was quarter, the last XX.X%. rate third XX.X%, For of rate tax below year's our

stock while year's exercised, last from points basis XXX basis options XXX benefited points. was benefit rate quarter's This

us the model fourth due approximately credits XX.X% at For exercises. assumption on stock option we suggest before investors quarter, any to

up $XXX EPS. third income million, last was quarter. Moving to year's net versus and for Net quarter income X.X% the

income Our the third $XX.XX, XX net drove for than year's ago. quarter. lower share count diluted earnings higher versus share was The quarter share count lower combination of of last year up million XX.X% per X% a to and

would have and credit, our growth LIFO EPS the income would our XX.X%. Excluding have been net increased X.X%

Now, let QX. flow for me cash talk about free our

in For just $X.X cash million billion ago. generated free ago. a $XXX we've flow the Year-to-date, third billion quarter, over we versus versus $XXX over year a year generated $X.X just million

remain strong cash flow amounts to returning we going incredibly to We expect an cash be generator forward, to our committed shareholders. of and meaningful

norms. leverage ratios balance sheet, remain and liquidity strong position our below Regarding our our historic remains very our

in-stock inventory primarily Our total our up last X.X% growth versus inflation, inventory QX per recoveries. store and was driven year, increased and by initiatives, X.X%,

$XXX,XXX versus Net was store inventory, as defined $XXX,XXX less inventories last accounts on payable and merchandise a per basis, quarter. a negative negative negative year last $XXX,XXX

a As payable, QX a gross of year's XXX.X%. XXX.X% of versus at inventory, accounts last quarter result, as percent finished the

We just Lastly, in on our stock the quarter-end, I'll share and spend repurchased and quarter remaining $XXX million allocation moment $XXX repurchase had program. AutoZone we of our capital under a authorization. buyback at million share under

of since allowed sheet, year to balance earnings, the total have the outstanding strong company's start shares us this cash back Our and fiscal the generated buy X% of free year. powerful

in cash our allocation business, enables amounts capital meaningful to approach to invest while committed of us remain returning to the that We shareholders. disciplined

QX leverage area. finished to and ratio remain we at X.X return committed to EBITDAR, times Our times the X.X

way. continue and To shareholders. by competitive wrap up, in share cash growth our robust and positioning to drive cash, We're in a shareholder and disciplined driving investing long-term we our improving market our earnings returning initiatives, to excess our growing value

to work. continues strategy Our

our our our As continue growth fiscal growing have of international the long-term DIY value. to we look in bullish our shareholder business, and prospects and industry, I forward resilient businesses. commercial to opportunity tremendous to business XXXX, the we're remainder a confidence and on drive behind

Bill. it And now, turn to back I'll

Bill Rhodes

Jamere. you, Thank

on on and results must customer be We of execution. deliver always track are culture the of we us. our XXXX. and solid to define service a quarter. continue But customer what the We to focused remain this superior delivered past are first team our proud Execution putting flawless

the year. we said opportunities own our the on be Jamere ago, in moment of As our on to particular, a for and, continue bullish industry remainder

invest returns return an continue highest. and will investing drive appropriate are our that We on we capital continue to the initiatives where in

be XXX will initiatives grow in for underway to quarter over our sales busy retail on have remain Americas. be and the We'll commercial businesses. that We'll stores also those upcoming both we us. opening focused very in This

As ultimately focused AutoZoners. challenge. and have gains. execution we previously, now, will on like on our be driving five doubling what that that industry measure to I three bullish down to us We future are are continue accept AutoZone our share particular, and in we mentioned investors and, on we and know from by look flows on cash years

up call Now we'd to the for questions. open like

Operator

Jordan this ahead, is go Instructions] Thank Bret from Jefferies. question coming you morning [Operator first Please from Bret. Our

Bret Jordan

Hi, guys. good morning

Bill Rhodes

Bret. Hi

Bret Jordan

Could growth? the those maybe some said you'd color about more give the I on bit Could deemphasized some there us disciplines maybe turnaround remarks. you disciplines think internal be? in and little impacted a that prepared you internal talk more factors what the time might you

Bill Rhodes

great Yes, deemphasize how be question, want you unintentionally Bret. this. would I yes, have make I and procedures - that's some to to for it's we careful be in and that surprising. place, processes I say a - very - the it Thank of not We

During particular, the a had very, differently. do business, very of And to also lot we rapidly. in were pandemic, the in commercial growing things we

just And to to point, that's away to the turn in have going process, very And months, today. it days those day. weeks. on or those. we procedures of we're a from in not back got around that around in to we place. not some But and And turn are we reemphasizing diligently going working going your It's

just And little kind the midst bit. that that some it's our turned have our like of things are what pandemic, the processes periodic disciplined we of on a force, just sales back we is? deploying focus But national very things - - we account in simple how our like that,

Bret Jordan

mild winter one into you seeing then And given Are fourth the was or of XXXX, question QX the Okay. outlook, sort negatively the maybe if early where the back call just with of past the like it a to quarter years out or in impact we that we of quarter go the March, 'XX a impacted summer. on weather any as just event go real really weather?

Bill Rhodes

in that's have Bret. you're too, question, different one-time that's it We've this we And in think seen I a is, did year right. exactly the December. past. The great winter

that winter. place a might we a be about it's bit to be had never some our don't bit magnitude order category little the lingering 'XX, it think we softer. what but we XXXX, where going That in in has a I can effects. softer. also talked So on little of been see be a brakes anywhere saw I of

Bret Jordan

Okay, Thank you. great.

Bill Rhodes

Thank you.

Operator

you. Thank

next Christopher Please Christopher, Your line ahead. from JPMorgan. your from Horvers question go is coming is life.

Christopher Horvers

morning good everybody. Thanks,

Bill Rhodes

Good morning.

Christopher Horvers

So Do-It-For-Me line, the questions couple expectation that in fourth you as talked Do-It-For-Me double-digit can talk double-digit that can that in saw pace you and the April low on and you far the quarter? performed get how you May, the top a rebound see Jamere, And rebound? as about DIY back in of low can in about the eye that to is your

Bill Rhodes

going don't second I'm It Chris, that you was if his let mind. Jamere answer to part statement.

I he's well. for too that, think ready am I as and

very similarly. I - businesses the think trended

I the also during year refund that time of not it think things the I one the season. hit that the was for us all-important The tax us pointed the weather was worst at just poor. weather of out,

this You were down year. seen little have bit all a tax refunds

was mild time. bigger was us, just pretty It of and awful. and implication wet that cold weather period to the was during the But

improved out both saw they so, prepared And like called some Jamere? the trend have I and we both in at down level, businesses remarks.

Jamere Jackson

Yes.

our underpenetrated; to over said a gains being in playbook gives and four roughly years. associated I opportunity three we're growing We're faster a, of share and the as quite double-digit playbook, has create us that to have it, and my I listen, remarks, we significant committed over to time. mean, we lot growth business. share with a a frankly, five past growth that We're grower executing saw still an So still runway

delivery Duralast pricing offerings, times, our So associated of things a of have assortments Mega-hubs, and that technology, legs the we've expanding things competitive like with parts improving all with the still our them. done, our improving lot leveraging quality those of our

share I growth Bill when we rate think what as believe grew about we talked to it deceleration. about So first, the in commercial that execution, despite relates

still other And 'XX in have as will secondly, that runway. we'll Bill growth. and that during we flight, initiatives believe a have execute lot And in FY we of believe those initiatives mentioned, QX we accelerate growth that

has move strategy. changed nothing's changed outlook we So in as forward. in our our Nothing

Bill Rhodes

grower changed this our We double-digit to commercial. a I we And need weren't don't in commitment. quarter. in anything think has be

Christopher Horvers

it. margin line, Got And question. on a two-part then the - gross so

you the costs of then maybe that prior come back consumer? only So And not down how you're vendors, thinking you're Is the are from back? as some passing freight understandably, going your cycles? input and about LIFO - to different to from along get that

ultimately, then increased get of and these we to Do-It-For-Me. sort But or you're hard the that given leverage working turn the and I growth inventory, vendors scale of know with

have see the LIFO expansion we shouldn't recapturing margin So beyond, headwinds? sight just of gross line

Bill Rhodes

Yes, the take it to about to part and Jamere LIFO. first I'll talk back turn

product As far not all, of seen at in as meaningful in we costs time. reductions - point this have first

recall, to it and pass freight of meaningful of even because We But knew did reductions would all have course our order costs an cost. attempt if the we freight on at seen was we to you some magnitude. somewhat reverse not in anomaly, customers,

we my we've wage So a reductions, will has been that than pricing those. strong experienced reduce are inflation one some costs And don't really double we in what as XX here. I beginning anticipate of to for our see years result product more as reason,

We for inflation, P&L. somehow have paid to in that the wage too, get

talk some product want you LIFO? reduction inflation. offset to wage about be that get used anticipate of costs, to we that I will some in will And those so, if Jamere,

Jamere Jackson

Yes.

driven was which natural had offset we were and basis So margin of the as mix points from by, remaining commercial. merchandising drag as points I tailwind. LIFO that basis margin XX said, was more that actions, mentioned, we up I than XX a The

continue back see those we costs see to the to those come freight abate, as through gains P&L. we'll So

us is all playbook the that we'll and terms what margin intensity And actually back in we've then we're get be run will, to as forward for normal past. state merchandise will of working margin the of Bill our business, accretive the on if of means to said, in that that the going actions running you things

So, that. pretty we supply don't cool wages feel as off stickiest But portion down. that said, chain. and the good in of wages, anticipate seen We've about Bill are the going we some inflation

So, there'll moving still we of be conversations, now everything have deflationary was in in some of cost some quite be with where good terms pandemic were the in pressures red to there. versus it's inflation. arrows when actually we But were frankly, position to a when the heart

we margin we some we there, move us as have should tailwind that think some opportunity and forward. So, give

Christopher Horvers

Have much. very Thanks rest spring. a of great

Jamere Jackson

too. you Yes,

Operator

Thank you.

question next is Stanley. from Morgan live. coming Simeon Simeon, Your from Gutman is go your ahead. line Please

Simeon Gutman

normalization. to rate ask morning, run It's like. I wanted of question. the through commercial follow-up good some the Kind what to everyone. prior looks a going Hi,

double-digit. You both comp, have assume that's said total sales? I not just

if rate. to take historic And two-x theory, at going that's we in what the least grows at industry run the be

how high So that? why are Or shouldn't that thinking so run at low the single, double I'll it is leave else that, about rate? why even it, yes, normalized call you be it, -

Bill Rhodes

X% share. market we did think I I think, said same-store than you First a Simeon, of in remarks. just all, maybe his Jamere got we've don't same-store less said

XX% have in the business. retail over We

competitors would of have have with us we to the industry lot frankly, a anticipate in a ahead commercial strengths some don't fragmented the that, meaningfully grow have. of market. We I very that

over time, market know X.X%. And of long the periods DIFM you running is X%,

We've - didn't XX% me, seems to we growing that, Frankly, some time. it makes XX% also we our to do of work were we do over some this reaccelerate growth, period this quarter. sense. double growth it but to like So got celebrating and

The our is, either. we're sitting and worked not here hands sitting that other Jamere thing on on

will our customers the We're not in - provide not commercial on And the the you service largest us test better with business commercial partner generation that to working to They're make customer next a as the But test and that initiatives growth committed even deploy the be and on. some quarter's We're we're off what for excited of being a we're committed we're go over in know, them. of commercial. rate yet. to player going in working to I'm long also we are, about run. things them. better

Simeon Gutman

are go follow-up the you industry anything population? And my thinking continued it it price street? I about of Yes. posture? we crunch of on engaging again, with another regard competitive about And Is like but anything it aging credit terms seems to in yourself visible and seeing in nice here talked not through vehicle is, then the know could wave with the

Bill Rhodes

Yes. environment different seen Yes, the commercial great Have pricing we The things in in question. yes. the sector than before? answer absolutely is

to to something did what to similar We to want well-advertised XX we of before all, markets and then and their posture. six the I want tested had remind back did up two we markets ago. years it work. going pricing And some markets. changed that was about I But it, other competitors we XX they of it our odd had first One knew when in rolled we everybody,

competitors. to with in had value versus do optimize nothing majority warehouse our our everything share distributors of to our And vast industry. posture pricing it It with the do versus hold who proposition close-end to the trying had this

pricing. pricing, on we've their a competitor - indications is than has competitor move that, lower As we see us seen that no

time. similar reduced seem that point we visibility but We gap did. have perfect this to at don't that what think to to I that's it, have they what in seeing we're

Jamere Jackson

And stool, we're marketplace. remind I'll dynamic leg of a the our be other always terms And in the And just pricing you, environment. the thing to going what in pretty was is is right of pricing you said a priced we've initiatives, if will.

for needed gross some go growing been there us. that on and market our indeed, to something, Bill our of playbook before, margin certainly a do to dollars. if mentioned was we that action So That's suggested would continue winning we share as journey, growing there to this

Simeon Gutman

both. you Thank

Bill Rhodes

Yes, thank you Simeon.

Operator

Zach, Your Fadem from next go Please line is from Fargo. coming question live. Wells Zach ahead. is your

Zach Fadem

perhaps there thank you factors Hi, a maintenance to transitory do impact as a from industry? view versus and And factors a as the and tax the quarter? extent headwinds morning, these trend size change consumer, and a good external about way perhaps this up internal the or you comp Is slowing QX beginning the in refunds on to weather versus think bigger deferred you. gradually moving the one-off parts around of some for of what all

Bill Rhodes

see piece-by-piece changed. or we happened in to Certainly, I go the I We'll weather in I to weather the results what industry. repeat from more the themselves. lot or and have don't of should clearly, necessarily across that get parse not it visibility as can't changed. our industry an using through summer anomaly know a summer-time, fall. the impacts anticipate not implications they're that March don't the

winter pronounced more when have generally more They spring, and weather the in volatile. is

there. the Again, that with we But the as going think months, get talking I to take take and about, the can again. processes playing for because and as the internal of outcomes long doing game. they're things a we're a little some start we're ramifications said us ago, come these going I those along but that we'll processes I said, they're to minute time,

Zach Fadem

on that that pivot look to would as slowing we single-digit then rate say to And was And what store, or planned now this sales here to step expect you. from sales? range. down then stepped Got fair extent more up you to per normalized forward, from we've is versus it it perhaps a recover? your SG&A as To a run back back X.X% returned it lower

Jamere Jackson

we've said were growth, I quarter sort line saw the been with very we've And what little top Well, that SG&A as line. SG&A bit on you grown lighter, growing were faster of this and deliver in that. in we've we the way disciplined think is historically a a I'll disciplined reiterate that need business. to to in do a we things going upon is invest SG&A that to we're to create able what for also But sales

our to productivity, our areas we're and improve investments our improve talked us. improve that have to about the experience in doing we're is the the example, One of IT, that the I've to that the that improve way past stores for our customers with speed, in business in making

so to a the little that, upon bit we need that And lean to extent invest in SG&A more we and deliver to in will.

very result, And the to that the is been but this we it at deliver SG&A has of do when about expense that to disciplined line. a need that, certain growth business initiatives. going to not managing our But manage we're very, do a we'll

Zach Fadem

appreciate the guys. Got time it,

Bill Rhodes

Yes, thank Zach. you,

Operator

Guggenheim line from go is Your live. Steven, Please ahead. from next Steven question coming Forbes is Securities. your

Steven Forbes

Good morning.

Bill Rhodes

morning. Good

Steven Forbes

on Mega-hub wanted I initiative. focus to the domestic

confirm I you limitations target? But just pipeline just 'XX year-to-date. looks new then, Mega-hubs first year-end would you real comment today? or that? to and potentially the bottlenecks can on XXXX versus ramp in can any 'XX I accelerated how think confirmation estate speak So just to or prevent that more said beyond you And seven on a want the any Mega-hub

Jamere Jackson

of frankly, of those. open Mega-hub the talked about initiatives We we've this issue. is matter Yes, is more, And talked open one a execution. a lot about and And execution quite like runways. like or of macro would Bill versus to Candidly, competitive we sooner. them our would to growth a having still

So plan we've for QX. quarter got big a

our development better when exit want pandemic And places things execution talk on need about teams one to that But point. site of company. the is I we mode certainly on them. our and working an we are need more open this we very is the identification where have execution, clearly processes from to inside streamlining all to to get And faster. store work this

Steven Forbes

you opportunities, maybe could curious footprint and in you compares the maybe the Mexico years? mentioned to both expand then but then to And expect grow also ROIC, company average on on sort if if curious on footprint just follow-up, so the talked coming And today? you us return you how about international, Brazil international location could profile of staying the just over the update you of the a how

Bill Rhodes

Sure.

period opened We pandemic. a of many as So stores didn't open in Mexico, time. very excluding long the XX a year in the pandemic, we've for

Our there of us openings. down owes a team those few

a rate of over in part on Mexico a our strategic at as defined little ongoing will we little growth a Brazil test count and a in hopefully, A bit made year Brazil plan. ago, our So store going grow faster we over basis forward.

from going hopefully, rapidly. And open grow some there. forward We're to stores we'll are now very fiscal year so, odd moving they XX and this

become infrastructure said organic are and negative. level will a it the we scale, organic ROIC part Brazil We've some scale, until overhead in bigger warehouse bigger is lose growth. money and delivery of because of our the infrastructure. - our - and as times of So, Brazil, sorry, continuing On of it get several to we to

XX line for the Mexico, to returns. further for as we the see Mexico. to in We spectrum, and more better and get line States. sight they is further front in the more a and we see than of most clearly we good exciting In us are see growth of are now. - performing It's in growth returns And market good been very a in a our sight United years part us of profitability,

soon. any see anytime So, we slowing don't down

Steven Forbes

Thank you.

Bill Rhodes

you. thank Yes,

Operator

Your Please next Securities. your line go question is is coming live. from ahead. Scot Scot, Ciccarelli Truist from

Scot Ciccarelli

It guys. but fixed imply days they've makes been morning also of weeks, on be in execution some sense Good while. would a can't these or it for issues that going that

rather I my So Thanks. this quarter? show starkly up function is why trend so guess a let's have growth trends? more I it change like question call would a of slowdown guess the line expected in, than step would I stack

Bill Rhodes

to that of And be processes. I all to those not think to question. say and fair a careful was want it's this due I

things element. an happening the I about other talked marketplace. that's there's, think are that weather. that We And in

two have you're on year been to So, going at things I right. on probably for Those that. want a don't all years. And to pin

It's in just it's it. putting processes along take - later. outcomes They're going place. to processes months It's not and going with weeks those that the change to back those come some

Jamere Jackson

see Yes. faster, And we to forward, the that our is goal have we're path double-digits. immediate I we don't the in back where one, And to industry to two, and grow particularly think while ambitious but what business commercial, very share, is we a we dynamics. said you're snap Number believe hearing very grow they're healthy, that look industry our an healthy at potentially. as grow should number business continuing set that, tone from our we here

give growth new do us that all we the initiatives we'll we to lot things be flight, that that confidence have in We go place, think have the that. a of all able in

standpoint, these on talked things not about everything So we're us drive we're things are pinning the issue execution. we things pinning and to or from our Bill's macro an help will own that some that on saying destiny performance we've everything point, move we control But are execution as better where - forward.

Bill Rhodes

X% makes with only thing long-term. harder, I'd add the the very work playing and going over With this at us us. That's we're we're the not we're a And Yes, looking fact it deter so further, long growth. in game. hungrier to disappointed

Scot Ciccarelli

hopefully, gap see That's may helpful. a weather did how And the of Thanks markets then sales just in quarter? impact a big sales in quickie, kind guys. gauge you better in the help us different of that of performance

Jamere Jackson

Midwest and quarter and quite But better we across - where we see next about weather regionally if we the that get Northeast the mean, so, those saw those slightly the We we a decent the results. frankly, clearly the I probably rebound and talked than mixed we markets over saw comments that, Yes. could about bit produce that where chain. or little underperformed we are some the are of saw rest result. areas lower two a performance here

Scot Ciccarelli

you. Thank

Bill Rhodes

you. Thank

Operator

question Please Lasser live. UBS. from from go next line is Michael, your coming ahead. Michael is Your

Michael Lasser

you thank taking for morning, my Good question. all

of So market business's in commercial What the time performance your ability peers. of commercial that tell there at of the meaningful business does your one of you commercial share? was structural about acceleration decelerated gain a same in your Rhodes, the businesses terms limitation to

Bill Rhodes

That for obviously, not competitiveness put the slowdown it Michael. other a just dissimilar a us. so embarked be as a was that, way don't the in they to ago I'll years clear. also Yes, I what an pivot over that has ago on interesting two they their and to point happened two - to you And crystal - with us in little not strategy discussion, lost customers I'll sets the happened pin is mentioned - in of what year necessarily worked. out strategy out. It's together. competitors versus things pointed And pricing it, marketplace. those I to coincide changed us their on

Jamere Jackson

again, or my that changed. than larger even do hasn't on we've we've And but is very they faster were again, From how win grew point, also said what grew as focus, shares And before, quarter impressive, I share, share Michael, over we we well. grown as and and vantage focus past the mean, results so. those grow our

Michael Lasser

to And statement, does to an your a mean that total growth in for in the in to even commercial see to follow-up double-digit Jamere, level? back customers order on improvement your your customer prior or business, increase per sales to that an count existing get get

Jamere Jackson

$XXX market. as talked we in or five a we've Well, clearly, about, what's approaching four a billion we're share

both them opportunity the down And and for with call grow share of is as we opportunity locals front in-house. to also new to up believe street our it's is business us. existing And that in we in us So customers. are and wallet affectionately our still national grow - that and with of

a we that place forward, amount things we commercial have confidence, our as in at worked. us tremendous gives business look So, the what going of put

as dividends our same new customers pay an that that we to And well, opportunity deeper going some are things are for to and us grow the those the but We and are in that clearly have flight so. that wallets existing in for think the know or very, at things next QX time. go launching we're we it's in promising today us customers over very year of

Michael Lasser

much. very Thanks

Bill Rhodes

you. Thank

Operator

ROTH is from is next Your MKM. Bellinger line David, live. from coming David Please ahead. go your question

David Bellinger

the morning. good for Thanks taking Hi, questions.

and move look you May at this So February, fluctuations. back to refund if weather of X% tax quarter, past in as April X% we and comp these in close some

investments a that and here rate run and make on growth the continue sales for to business? hold good is So from comp these sustainable in as about you to to underlying price think

Bill Rhodes

anomaly. you As give we called out guidance" March but we out know, David, "don't as and pointed the

in line that So generally your thinking. supposition with is

David Bellinger

sales the believe talked is follow-up about then floor some prepared I a said. you your on discretionary what and Got remarks, believe, improving, - just you it. categories, And

out there. So that other with some of odds the comments seems that retailer

to we if do behind of you more for those positive trade-down just is a spending So about see of how broader benefit think maybe of more a And read anything indications there categories, into categories? that, just specific those slowdown, types it? a

Bill Rhodes

Yes.

recall, except called think don't you at necessarily rebound in-stock. discretionary in were of back none categories times categories, If business, wipers, as gotten not seen we've it we've discretionary. and I a that we've out but oil into I floor are bit sales seen little the those our improved batteries, discretionary. They're a big

more we we have places levels sales the the seen floor in-stock recover where we've But that would the maintenance-oriented generally, some were are places didn't categories. have liked. Those

David Bellinger

Great, thank you.

Bill Rhodes

Yes, thank you.

Operator

coming Melich Your Greg next is Please question ahead. is go Evercore ISI. live. from from your Greg, line

Greg Melich

basket the question and My ticket? Thanks might might is it X% the we trade traffic be difference the company. mix down that first be average up at down say on Thanks. items inflation up X% six us fair of and ticket inflation. Was for if that or giving look for to or

Jamere Jackson

will. Yes, mid-single always in that have mix And that's up can kind range, there's, different things the print basket and that. of saw to We then a digit-ish you the in than ZIP if cause the ticket slightly code. inflation you right

Bill Rhodes

industry you in has also average that happening innovations growth vehicle. a on count pressure I'd in technological of are Greg, has trajectory on ticket, historically like a long this time, customer and because that to a the remind components that for

in So, drag business I've X%, X.X%, a we've transaction X% counts. been seen our since with ticket growth generally basically this on

considerably. between are closed today historically are gap is and we the where where So we

Greg Melich

we've I'm thing there And Is or of are particularly versus retailers. went thinking retailers, geographies. more and urban and just a difference from question de-densification you with lot some weather it. densely COVID rural? stores Got how one my that's shrink, performing over on the populated second impacting seen through then is, any

Bill Rhodes

big different We the be tough it's there shrink sales. versus in trajectory on a front. rural than environments. sales in I out difference story Clearly, would see think don't shrink any environment our significant urban a

shrink managing okay. is team Our

been, some have than they worse on that. and We have are little focused that what bit a trends we're

about are retailers of lot a know, you problem. talking a as real it's organized But retail and crime

are which store. are Fortunately more an a in there for lot necessarily of times AutoZone consumable on not us, focused available items,

Greg Melich

you of in anything store or And have to to chain employees certain areas, hours you protect either sort extreme? like to that haven't go

Bill Rhodes

sure guards put make not, certain do we the no do stores to control in we environment. that Absolutely

Greg Melich

luck. Right good thanks, and

Bill Rhodes

Yes, thank you.

Jamere Jackson

you. Thank

Operator

Thank you.

this is is ahead. Our Zaccone from Please line Citi. morning go final Steven live. question coming from Steven, your

Steven Zaccone

Great, year, what you to digits be squeezing flattish? look will good tailwind would in we about fourth as slight morning, a in. to ask thank you still expect me quarter, for If mid-single to in think quarter? we the everyone be or pricing. third to it, I wanted next be could on in And comps fact, it the it

Jamere Jackson

But there look here. you're We saw that several that stubbornly as expect the in fourth ones I QX. play you to year, things at think talked the looking to And in be as what next what time what where quarter code to environment in then are the the is we've high. to thinking as see wage that ought about about we to are the correlate still pricing most generally you in we same wages spend ZIP are

it, to ZIP in X% X%-ish call code. of the Let's kind

that to obviously, pricing. ought you And from sort think at see what I from And environment. takes, of you a there - translates are pricing to a see minimum, puts and

deflation, where the categories more some we're inflation. As Bill we to have mentioned, than But past. some some norms speaking, that be in generally will will historical the see some fading there we'll see

Steven Zaccone

I commercial, internal and Okay, hate about did just I commentary to your our it great, the thank as line these to of may line Anything you. is go a to to fair be given something quarters? factors, And clarify want to think commercial some the on you time us time take helpful but back to couple double-digit models? assess say would growth for can return we then

Bill Rhodes

that it. going into we'll the turn Yes, to that It's don't we've stick with months. we until know already to in eight? around This think going take get is four? Is Is not I weeks. I said. what

Steven Zaccone

Thank you.

Bill Rhodes

Yes, thank you very much.

Okay.

be want Before we is business a We alternatives our to believe customers for and we XXXX moment continue solid nothing to a working. model granted our take conclude for understand industry, the shopping have our as take we us. call, reiterate will year to must I with to

help not stress is that succeed, to have I We this and marathon that plans a should continue sprint. us exciting a to want but

to we the and As successful. basics to AutoZone are value, to confident focus continue we strive will continue on be optimize shareholder

great participating heroes and celebrate both we today's owe remember Thank past Americans for our Memorial Have should next debt these as of all call. present. a you we day. gratitude. in Monday, Day a tremendous Lastly, We countries,

Operator

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

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

AutoZone (AZO) 23 May 232023 Q3 Earnings call transcript