AZO - Earnings call 4 2023

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Operator

Greetings, and welcome to AutoZone's Fourth Quarter 2023 Fiscal Earnings Release Conference Call. [Operator Instructions] Please note, this conference is being recorded.

We will now play our safe harbor statement.

Unknown Executive

Before we begin, please note that today's call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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

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

Operator

It floor Rhodes, is host, floor now CEO, my to Bill pleasure yours. to the turn Mr. Sir, is over the Chairman President. and your

William Rhodes

me joining today Treasurer, our you morning, Daniele, XXXX Financial today CEO-elect; thank Jamere Good Jackson, With and and Relations for President, are us Vice and Brian Campbell, Chief Phil Fourth for AutoZone's Tax. Officer; Investor Call. Quarter Conference

to release the the Regarding an to are hope you've Relations calls quarter, website, had available opportunity along on release, on press results. them. press read our quarter's the click earnings slides our quarterly with the comments our link. Investor under see complementing conference today, about learned If fourth www.autozone.com and Please not,

to want we begin, for in contributions their incredible fiscal our As we XXXX solid thank AutoZoners performance. during our resulted that

increased $X.XXX a migrate we not some week. our a this Jamere, of felt sales XXXX average states, on happened, $XX,XXX levels. drove important As This are years growth also profit, in It's than growth Newbern pandemic built Phil, the especially growth point, in fiscal it above X-year year's a sales this closer resulted for performance We the and X.X% which do from week. would it these per XX.X%. was sales not our that they stage, for total the That growing share pre-pandemic pledge at while $XX,XXX this of domestic XX% efforts will. To our at growth, continued phenomenal hasn't the putting enterprise. we XX-year first from remarkable could of our to perspective, exceptional week That to and organization. in see per sales without XXXX, expect Tom old customers across when per store the put weekly store XXXX. Candidly, results year, remember earnings I achieved XXXX have adjusted for enormous entire in success operating to billion higher XX% XXrd where XXXX in is level to

morning. have We this updates for several you

sure our noticed press table I'm a in you've First, release. new

change? our domestic, Mexico we the presenting and investing are of sizable same-store company. basis. Why and Brazil, The growth results amount sales, our We which same-store also sales our is and a includes a answer for now We're business, part becoming actual an both larger is and constant currency both of international reporting in on and larger total international capital are those countries. international

in metrics, As we it important important total. it growth to assess we evaluate is think

at least visibility. know enhance are change, our quarters component you to for X providing each we we to As your with a individually as is is objective committed this

Next, growth our XXXX this of fiscal X.X%. last domestic of half quarter same-store our sales quarter and compared to about were X.X% X.X%

half commercial meaningfully with our unacceptably. year and Our as documented sales was of We in our us respectable performance fiscal and X.X% in in to generally domestic well in declined commercial last our performance retail with line quarter, was ended expectations. sales. second growth But the

in of mild the first commercial was in But this performance half both the retail during disappointing. weather. quarter very period, we Our and experienced

sales. escalated materially quarter the did so reach the we and As of has our second half temperature

in experienced a the of increased last for second particularly Specifically, strong X.X% in the comps up of half. trajectory first weeks quarter, flat, were weeks but over the X the the Commercial quarter, X ending retail X%. our similar

those of and material of We The basis we this the points markets regional gap winter XXX of Northeast the between well for rest -- versus lack over this the over and Midwestern and attribute Regarding XXX performance basis to total saw points winter comp commercial. country. the weather results, Last a difference highlighted winter was the did attribute at happen lack our region. we in that trends peak part what were in that we us, our not undercar snowfall latter This led categories. could to growth and of in improve to to quarter, last has that we not lower performance. things executing levels. Both enhance are

with improvements since then seeing. are are we changes execution and the many made in have pleased We

on aren't but yet, We we're path. there a good really

recently completed review our business. commercial also another of strategic We

We have will be some few testing that exciting have validated we our next the new enhancements over direction quarters. and

and you the unfavorable weeks understand encouraging are also openings are want old. you few weather made encouraged we're to we favorable improvements so in operate those will reaching history. a taking. that how strong many many to XX% technology can Ultimately, significant in long-term domestic we our our success, and or our information weeks but that performance, business share We penetration we the new is the determine commercial starting our use how more We more macro it operate opened environment. our by a they're is programs, commercial will time ultimately, our first in Even just and actions we and and actions perspectives for with

supporting other growth, in Global FY Finally, where includes several our on didn't and that key more goals our achieve 'XX, teams new our strategy commercial store later. operations elements. disappointingly we store

of stores, the and where Reconfiguring our is important assortments having given countries you Hubs. XXX soundbites It we continuing in finally, from have process enhanced in Continued and especially strong more slow performance we to more and sales to Mega-Hubs products parts of expect over with nearing make technology halfway results. in continued optimizing effective. I've to more chain the of our very success. achieved to reinforce the to the improvements particular, growth our to these challenging and supply quarter's hard while XXX Mega-hubs the our And many achieve Hubs and goal lean high-level next particularly our Mega-Hubs, point global AutoZoners turning handling knowledgeable, efficiently direct our ultimate the critical and are commercial. on the decade, for on import efficient processes are that

I'd to introduce give Now color on the like Phil Daniele to Phil? more quarter. in-depth

Philip Daniele

as sales, good start XX Thanks, Bill, my DIFM cadence merchandise overall conference in our that call. versus weeks our morning, our quarter, sales to earnings well regional DIY QX disparities. performance by over and I categories and everyone. drove be release participating honored the I'm same-store the trends, will of first any reviewing as

affecting also is our costs We and impact how our think gross in inflation will we business -- and retails 'XX. share our FY how will inflation

on improved last the execution, top and do year's same-store sales exceptionally move materially better our a want growth. success, reiterate as quarter, Bill what ago, deliver I forward. domestic this X.X% that were results which strong over our Our moment quarter execution said to of ultimately hallmark of X.X% we is a will

business $X.X domestic grew and we fourth commercial grew billion quarter record believe lower-than-anticipated, X.X%. we with sales. Despite Our share in another set

is commercial our from $X.X domestic generated billion, auto sales, identical year. full which year, to Domestic year. last X.X% we represented of last sales For nearly XX% up part the

Mega-Hub working driven material in key Hub have store of growth coverage, we the stores. Our availability, by growth commercial initiatives of to those satellite the be to in been continues the in and improvements aggressive types for years. last on sales addition number Improved several

business We strengthen easier continue to us high-quality on Duralast brand an make continue with with. to to and focus do to deliver the enhancements we intense products, technological

opened operating also efficiently beyond. sales the quarter, are positions QX, programs us we in for time more 'XX opening force We sales and commercial impact delivery but well with net which FY minimal of the late majority XXX enhanced new effectiveness. had them and In improvements on in

With these have now stores. moves, over our commercial in XX% we of domestic

and We in commercial continue We positive of year's also on performance proud opportunity growth top X.X% our this DIY. see of comp 'XX in X.X%. for last sales domestic a very quarter beyond. We're had to of tremendous comp FY

majority of year, comp 'XX. in solid, are on continue last conviction an outsized during the for recent delivered results FY the X.X% fiscal we These 'XX. and XX.X% considering DIY built X.X% continued saw fact DIY we about The Additionally, during vast we the share the year us the that pandemic gives FY performance into our comp pandemic. we sustainability and growth of top the the a to very retain

Now let's focus the sales on cadence.

to the X.X% X spans saw flat over which by XX through increased as last end sales first the Over ended. same-store August, of quarter, we weeks, the the our Bill were early the but trends as weeks, quarter the encouraged We weeks. over May were mentioned,

across particularly The our July, much country, mild that sales cooler summer remained June, weather, and sales and wetter associated momentum rebound very head We however, heat weather as became very helped the winter, where underperformed weather-sensitive heat in relatively and anticipate fall. in overcome it through May hot we the negatively and into the August. Regarding us Midwest give the expectation. will and trends partially which country part experienced By hot some the trends. impacted it in of positive our categories hard us across the Northeast we a

historically, parts extreme weather, reminder, accelerated failures maintenance. hot or drives cold either As a and

in Regarding up was our traffic while our growth, the retail, versus X.X%, traffic X%. was ticket quarter's ticket down

X% of lap where However, the was improved last the ticket positive quarter we as X%. quarter, year as the up the significantly ticket a over went up inflation quarterly XXXX only along average in seen we've the higher was weakest increase since transaction count and being Our fact, weeks turned X the FY ago

commercial to just to like as continue to hyperinflation our shown history Regarding trends, abate. deceleration we traffic commercial growth, marked and growth, begins retail, ticket recent ticket but has see compared a

year. ticket in roughly perspective, last growth year versus XX% QX For X% was our this

comps of under we customers counts lower to and pressure. In some consumer continue as expected, to increase us of have not but economic which line customers. data experiencing share we continue are to aspirations, encourage 'XX, in As The wallet grow the see in car trends, our share macro comes the change. our to continues that commercial trade with will the our order to are we gaining to intend despite our recently, share in we industry with down

During geographic did differently regions than perform quarter, there the were there that some as always are. others

lower. point Midwest compared Northeast the of Midwest a quarter, the difference This and material and Northeast performing we the the basis the with the country, between to XXX balance saw

below Headed the weather-sensitive impact and of with quarter sales. Midwest significant fiscal anticipating a into on this part weather will less we've a very year, have of the winter the hard not Northeast parts mild experienced in snowfall, the the new are average As seen we first that country.

our our quarter. the for Regarding business, our categories, floor in sales and outperformed hard essentially part part our hard flat merchandise was retail categories categories the business

Northeast. were said weather, winter I hard clearly particularly previously, milder weather-sensitive in the the As by Midwest the parts impacted and

pricing. and inflation address also me Let

decades, continue. Historically, periods disciplined entered margins. been the has to we a inflation as periods. single-digit is It and as historically believe industry quarter, have those the cost, migrating average X%. We will up has to increased back industry similar have that maintain to about costs pre-pandemic be our reduced reflect a not that that was to following very low our I ago. we inflation the of saw levels expect year industry inflation. lower inflation our commensurately This fourth roughly we is increased, quarter pricing one And believe and lapping to pricing ticket as inflation want for and of to high from reiterate higher for pricing industry result, we has notable also quarter first the

first the to improve. XXXX, and sales we commercial trends our to our of resilient For be DIY expect quarter

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

color our a to call some Jamere, on for new like highlight priorities year. to of the key the I'd handing fiscal few and Before business give

Mega-Hub chain initiatives expanded First, secondly, progress drive we on our we supply in and our focus transforming on flight with are chain. and improved availability: continue rollouts; supply that are One our to is making to good two Hub

on Our speed availability. customer drive and to leveraging more with to entire expanded network to closer strategy customer is the growth inventory the sales focused to carry

or With had XXX impressive grow Additionally, fiscal on these continue opened to grow businesses year, and performance XXXX. internationally continuing businesses. XX% stores in to base, of we Mexican last our and store should our Brazilian plan

in have Mexico are refine we offerings our Brazil. U.S. in We leveraging the to many of learnings and the

I'd the to call Now over Jackson. to like Jamere turn

Jamere Jackson

morning, everyone. Phil, and good Thanks,

in company quarter, currency As year, fourth Phil discussed, top an a increase had X.X% X.X% have fourth XX.X% on comp stacked total constant XX.X% both a in comp, quarter of increase and impressive international solid Bill basis, previously and last XX.X% a a EPS. growth, EBIT, we on a a sales a domestic

were year strong grew In XX.X%. entire the X.X% and as very our results total for fiscal addition, grew EPS sales

grow and a the to a this results AutoZoners in and me on distribution enable stores elaborate minutes morning, We centers continue continued our few to deliver business our let us P&L of meaningful start our earnings to our have in efforts great specifics the for in way. To in to our QX. take

just total $X.X under billion, up For the sales were quarter, X.X%.

sales of 'XX. the to $XX.X FY our For versus year. up strength I total were last year, our X.X% continue the marvel at in fiscal business billion,

up Our amazing or XXXX. $X.X sales XX% an nearly since billion are

Let me on give our starting a with initiatives, little domestic commercial sales growth more our color and business.

X.X% sales domestic fourth up our stack represented DIFM auto customers XX% and XX.X% to to total X-year quarter, of the basis. and increased $X.X on For our of part billion DIFM sales. our domestic sales our domestic company XX% Sales a

$XX,XXX, X.X%. were program per sales weekly average approximately Our down

sales by approximately new was that late programs. productivity quarter in per it's our program the openings to Now of point materially important impacted out XXX

the these our While are the opportunity depress share. our with business. encouraged grow of early efforts the in by their open programs to openings prospects we're to These point-in-time response these commercial market commercial metric, more our contribution and stores productivity part to tremendous growth openings to of

accounts. initiatives and approximately our grow we expected program business with Our XX% DIY share by domestic building have winning share in commercial as our our delivering regional our infrastructure, results customers. are of increasing national, new now business commercial we're leverages our acceleration stores existing the of and which with local We and wallet

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

prospects year, year. led way growth the the of our into feel and 'XX, outset commercial the since we FY about in said heading I've the good As new

our last years commercial up FY X 'XX, X.X% year billion, ago. For sales $X.X from were versus up and XX%

Mega-Hub support of Importantly, of we now in goal have us, To with becoming front we growth, have of our faster-growing we business. XX a runway commercial on opened lot new locations XX and deliver in our expect a stores to QX.

the average the per significantly balance than moment I averaged ago, commercial the weekly XX program program, While sales growing are per Mega-Hubs and faster sales a mentioned the was of $XX,XXX higher footprint. commercial much

our our commercial as QX. twice grew business overall business fact, In in fast Mega-Hub commercial as

our lift individually, These lift a of well stores. drive AutoZone deliver inside and as availability parts our As coverage meaningful surrounding both as SKUs sales are is capability continues XXX,XXX store and Mega-Hubs over for typically a and commercial thousands assets assortment and for serve The other tremendous and fulfillment the to to an the the carry as sales giving of source stores reminder, network. the expanded our box customers business. DIY to lifting performing well access additional parts expansion entire

objective an near XXX reach by the have XXX Hubs Mega-Hubs regular to We term. supplemented in

and are our customers build on strong our and AutoZoners excited, Our determined we're momentum. to

for On comp the domestic of side DIY business, retail X.X% our up was the our quarter.

this our For growth to through on cycle. business stack 'XX, X.X% comp managed grew to X.X% continues FY deliver DIY The basis. and be crop resilient a we've as remarkably positive X-year

slightly mentioned, growth. X% we and Bill As ticket saw traffic down

counts, we historical with slightly we and business changes parts. growth, the by to traffic durability forward, would trends the mid-single-digit low in declining offset by in line long-term new the move for ticket of to As technology see expect driven

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

a growth tailwind In to customers, business sales for business. park for resilient addition, forecasting initiatives in and new 'XX. ticket FY growing macro We're a our and have which a a a for These the comp. provide car positive car park market aging car dynamics, environment DIY market consistent is used continues experiencing challenging our driven tailwinds growth, and and

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

our so base forward. have to going of store prospects growth we XX% will we total our the forward, noted, of U.S., continue disclosure business, international. our on do and international have about we moving As the revenue With to and current more share changed outside you may contribution simply the

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

stores to ending with in and XXX. the finish During in Mexico stores opened quarter, XX XXX new stores XX new with we Brazil,

count sales fashion, we in and success our We our reported Our of after in a as grew a constant the remain XXXX, and revised forward. By in review this opening and markets, on stores on given market pace these to the a Mexico an attractive to store we've Brazil, basis markets XXX opening store strategy strategic XX.X% a potential, making currency going committed accelerate will as XX.X% and meaningful growth. basis. contributor robust many annually and these future anticipate ultimate disciplined and AutoZone's same-store

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

driven quarter. For the margin $XX credit up noncash quarter, million by our a XXX gross this points, XX.X%, basis was LIFO primarily

LIFO had charge. we $XX year, a last million QX For

Excluding XX yet our gross we charges will now be improvement abate and credits over margin. once LIFO both largely have continues million We're previously, a to had unrecorded rebuild begin these expect $XX not QX we out LIFO in in credits, I will we our $XX modeling in as million that point through 'XX. any we inflation back reversed LIFO point in million will from and years, through P&L, we the as credit turn And to we and said basis reverse our $XX reserve. to FY I've to more LIFO inventory. we to P&L, currently take

expenses. Moving to operating

year's SG&A deleveraged growth and dividends a IT pace points. pay invest Our as and continue percentage sales in has These versus our as as QX we growth customer expenses XX up in to were accelerated of in initiatives. X.X% in experience, SG&A will been The investments payroll basis an productivity. to last purposeful underpin speed accelerated

as to move SG&A and expenses time. growth will with line manage on growth disciplined being in are forward, We we committed over we sales

including million up under and EBIT XX% was EBIT up billion up same-store in positive of at prior line QX the $X.X this prior for our X.X% million improvements, debt 'XX first from end billion, benefit. expense year QX was end year. outstanding $X.X FY of P&L. the million, Higher just past a $XX $X.X sales quarter the year We're year, the driven increase. 'XX this by the the rates the gross the XX.X% $XX.X debt of billion, year-over-year year's ago quarter $X.X Moving our for versus at FY the strong borrowing the top growth quarter to was driving in for across also driven billion quarter range versus first rest interest versus levels versus curve last by are and quarter. for as $XXX.X margin the the growth. Interest planning LIFO was

For the last quarter, up of quarter year's XX.X%. our from and tax rate was XX.X% fourth

This quarter's basis exercised, XX rate while points year, benefited from options points. benefited last XX basis it stock

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

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

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

'XX, For was income was X.X% million, and $XXX.XX, up up earnings XX.X%. share FY net per $X.X

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

For and the free fourth cash $X.X quarter, in million cash flow. we of operating billion generated $XXX

we in generated cash. year, the free For $X.X billion

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

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

year, by a $XXX,XXX total driven on inventory last X.X% $XXX,XXX versus was store Our QX increased store payable period and same last per versus store new negative last last inventory, basis inventory accounts down $XXX,XXX year, negative defined as a growth. Net less year was quarter. negative over X.X% inventory while the per merchandise

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

We of just had And $X.X repurchase moment allocation spend capital stock quarter. us our the fiscal billion billion this earnings the share end, the buy in share on I'll a powerful shares has remaining quarter at free of and back of The Lastly, balance AutoZone cash repurchased X% $X program. we our strong and the to allowed buyback we over authorization. sheet year. year outstanding beginning since generated under

to EBITDA, approach stock meaningful since return in shareholders. We allocation in X.Xx while historical XXXX, that business existing back investing X.Xx finished our remain our bought disciplined assets and at invest to buyback the our then which and in have is the of will We us this capital to cash over XXX% below business. QX objective inception EBITDA. shares We outstanding enable amounts growing of of committed our to

committed remain 'XX. to our shareholder we expect we up, objective, However, the and cash initiatives, driving earnings To long-term to value in to FY excess our driving return robust shareholders. X.Xx investing wrap cash by to remain growth committed we leverage returning in and and our to target

improving We're way. our Our strategy our share market continues growing in a positioning competitive disciplined and to work.

by I'd DIY business confidence confidence financial our AutoZoners. One a degree our a week our As prospects we're growth point. 'XX, and a high have housekeeping continue we XXrd week business, look continuing we will in and added commercial on be last of a driven in ability business to domestic will in have remind for FY you that QX extra results. our international shareholders team our forward to to grow results. a in exceptional bullish strategy FY like This our of to is 'XX, and share. I that significant tremendous value to fast-growing our behind drive ongoing resilient to

the our week, extra to I'll encourage week, and full that accordingly. And XXXX. we the to you order of In XXXX X fiscal look and our of As now extra breakouts fiscal will August result, year turn years, financial a back XX, XXXX to end last quarters, Bill. had at our we both show Xth the now for which breakouts I P&L model it

William Rhodes

you, Jamere. Thank

operating our New Live AutoZone. I for As year, to to like sounds a the Year, a consistent we the for this know very fiscal Pledge. start a theme I'd moment like theme discuss take new

of back emphasize first can the and defined and customers' our is to we differentiates culture the was it and team board same asked challenges what enough. as we frequently over theme answer our the goes approach, vehicles. in AutoZone by year performance it CEO XXXX. I'm The so operating performance, point everyone's based used contributions It's our not never culture helping In comes ahead about solve It sets culture. goals. on the full over, responsibility, family, much believe my is in and goals more. recognizing succinctly. leadership strategy AutoZone our from the their optimizing standard I, fact, My others? with putting at great and The and values team mediocrity. of family personal calling It's yourself and performance the a pledge summarize team-based the exceptional a our

As we've accelerated our top line since the onset also of the pandemic, improved. materially our competitive positioning has

Our will efforts for XXXX be on focused execution.

lot in a we a remain have flight, will of Supply in and chain completed. FY them projects focus need to We get improvements key 'XX.

with growth. Mega-Hub and store and Hub will distribution stores, new We our international centers, continue additions of

As international higher much domestic comp. I'm strong for same-store a comps XX.X%, you constant morning, posted than noticed, currency has International few sales our basis our years now. This aggressive announcing on Mexico can a teams after to of in been development we for store plans the extensive plan. U.S., share and of much an we more are of ultimate Brazil, strategic the number locations have global our a excited review

and the years We many now. this X pace we've on as domestic XXX year XX aspire as plan from in to a international roughly total XXX openings for averaged stores last the X Americas. and stores Over openings store years, accelerating XXX new a open of

but will we modeling XXX are from 'XX, FY there. will the ramp XXX around by XXX we split 'XX openings the with U.S., internationally. being in store remain XXX FY So

The the and profitability is asking now? is be higher of change the pandemic. per store materially beginning why why our may You answer this of since strategy

to more even our continue trade find new We in markets. mature U.S. areas

so in will with are toe I most believe and is the ROIC, some we commercial continue a diligent one has growth economics on materially be XX%. Also, over metrics immature, a expansion just the is and to changed track we disciplined. putting Our per commercial Brazil Mexico new basis. in see our other hold this on the to we want and beginning markets in of stress international markets. We store point at our opportunities that along important

track of returns long cash We have a performance flow with strong generation. high record and

over We believe have changing strategy and that test no in in approach plans learn. and revolution, and evolution, believe we where on believe improvement, continuous we we in

strategy. capital We have on our been remain allocation and anchored

While months. a about in always commercial over us the better I availability The solid next as not the that place our XX for have start on know time customer talking growing on for in spend plan reflecting past. and will business. in our focus XXXX. This focus time growth. focus FY strategies 'XX. the share to We we We key for store is believe domestic #X the I will our be future, we growth We're year, on service lead enjoy parts excited of sales development

billion distinctly Average XX.X% Our not just to $XX,XXX domestically goal team under Commercial comps milestone. impressively, a now past ago. per X.X%, sales, store billion personally that this are on in billion impressive of a achieved racing of X-year $X equating long milestones million year. I most some remember weekly $XX.X the $XX DIY annually. basis. sales are sales billion. $X.X $X.X

profitability in is for getting our in bought highest And rest and our Mexico AutoZone $X.X multiple broke the and the XX% to in store substantial can't in aren't Brazil growth year's ever, stock, that's billion second without EBIT both Our team on path sure. teams breakeven profitability on poised We records $X.X grown challenges, and ALLDATA last back has for future. that's only to count by billion. significant X our laws, the remarkable. But behind we our years, we and

pandemic We to to requires care the as get of had to possible. on have flawless As customer, I've back to exit close we several taking said this occasions, and mode. execution as

staffed of every day. sure every We right have hour every is make to store

of opening Simply goals remain we announced meet and processes of execution yesterday, transition June the store CEO my to we experiences we honor most and leadership that but always that as President function the Chairman it most the have nearly one this away from been remain team need announced XX, next years leadership had privilege now, part evolution of leadership Our that our and put, and we part of to the XX time life. to of senior machine the plan we a would for rewarding roles, I've plan I correctly, have of has January. AutoZone's always been. On transition have lines. Executive step being announced and We, in team.

we've process As contemplating well-defined, and began nearly years very for Board, many, robust, transition been disciplined a X years ago. this many a

to fabulous Our and a was successor them. successor a with ensure that identify had goal team

the car I years. With nearly Officer, in that for our in and in of Chief be terrific years as fanatic, and think our XX will company hands. this Daniele industry Jamere business, goal. serving now a for the balance has Operating here Newbern, the in Jackson it. and team, with we've finance addition Phil executive company fantastic to leading our XX he's teams loves He development accomplished The leading hands talented and is Tom store been

organization organization with about all as others. Yesterday, I Chain. top senior knows at And been Merchandising, our exceptionally in me, While the the a we Board and XX-year organization. for core to very care culture, announced the leaders not Vice changes know about in and have promotion business or the and their it's and asked prioritizing continue to always Jamere, I will me most Ultimately, AutoZoners It's Executive most which its foreseeable the pledge, a we future. I'm excited having congratulate be Supply team all Marketing is well, it our of sport. case, and and that taking performer. values most better involved Bill, customers ultimately, caring Bill I passionate AutoZoners a know be best, sweet is say, Phil for that and Phil, our other this who the AutoZoner, to this Hackney, of Tom development it's about, this about the importantly, President,

end be congratulate years announced leaders and will and for that We partnership, friendship better retiring X terrific Pleas leave years. also year. long-term the than their leadership around ago. I calendar AutoZone, Saltiel, and they all many massively They organization for McGee, a the of thank these Charlie Al Grant founded

it's that's why AutoZone. XX-year at important about see team, -- the the about goals, always why the much to about me phenomenal is It it's in my me, and is it's our individuals, changes with culture performance. this it's tenure to leadership It's is. culture in So Frankly, not the has over the it culture. amazing how near changed air. a about so organization To

AutoZone, shared much always the products feel those do listen at culture. three begin be I We've play we to on embody of believe put we to and first, our performance, we and not Phil importantly, us their that closest both we the culture. matter, are want for People most winning transition, teams lessons from and extraordinary only more. to As Both learned both this this so execution wins. the customer customer details recognized decades of

it, -- So sound best ahead us. on it to and lie our cliche, continue like days may believe but AutoZone's we both a say, of

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

Operator

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

Bret Jordan

rational. there made called in-stocks? Are Or footprint not the that just out space? your You the that market share was said also but you line the commercial better the What in you regional markets in space then those really, with happening peers of pricing do quarter, in in your is gain fourth and to but is exposure said relatively aspirations, that it difference? some are softer think showing then

William Rhodes

It's as a encouraged the different elements, and we a about expect. with Bret, we're change and of at that there's this are direction to question, going are our Again, you heading. satisfied lot that. And commercial not we're growth terrific level would we

got a key year, when, Bret, very we year, aggressive not I think it, were categories part lot less great in-stock a in of with ago, in-stocks. comparison XX of sophisticated our bought and is lot competitors mentioned you some a of positions. frankly, Last merchandise last versus and months

that outsized for us. to that's in growth point challenge beginning last we're that a certainly get past to time. beginning we're significant lap And year, As

We also in so commercial, the mentioned have need. that in desperately winter categories. the Northeast we've where particularly had in just we've some we challenges and that didn't and particularly want undercar undercar categories suffered those And and we with Midwest

Bret Jordan

growth at When international. you a obviously, and picture segments a the longer-term the the but -- guess, look basis? demographic And Great. Sort how the DIFM DIY in and of Okay. I rates do and different on see you big Mexico? question, Brazil in underlying economy, vehicle

William Rhodes

question. there, just not Yes, XX Bret. for years been There's great now. in it's nearly Mexico a We've data great

down from things been But new about Auto growth to And we in to so Brazil, we the so sales. participate significantly know in We're on stores we learn of there much grow are data. years, you as categories we've massively I better see of front in just we don't Same business, great think data working if can still don't and the not we Care at There just in try we're get lot a continue And terrific information there. that as earlier Brazil. get we more in have is kind still to grow. Association, of underpenetrated, we now, have some continuing are left same-store to but don't we're categories what almost Mexico happened in where have we said, all. and us, are we that XX that

Bret Jordan

than better But fair think U.S.? older underlying car an that to a base growth drives

William Rhodes

also in think vehicles particularly them car. have I there's of sizes X-liter is that's older, the U.S. Brazil Mexico, cars, if a Brazil, and a like. liters that and I in of there's very X.X is basis a of in size of clearly, massively mean vehicles. lot a Many are you the Mexico the different car lot manufactured engine the Brazil big smaller. engine are and the in

about to losing we got lot So still the We a where see fix but couple believe to we Brazil, over we're in to that got but we there. are. years. money success, still excited of great a path learn We we're next

Operator

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

Simeon Gutman

may the if missed My question still double commercial? And getting I should there? retirees and the what's to about is, for we time promotees. the the so, it, frame the digits to how -- think have first goal Congratulations is

Philip Daniele

Absolutely, it's or range still in so. the goal. pretty Keep X.X% in share low still mind, we that have

to higher not Like sight do We we're with like a under to will double-digit performance we that to see forward. we're rate, be, from over feel frame. share, want think QX we're of improve us growth time gain our believe we this continue time. getting we to but and point at we're where for back still tremendous back the said, we and not to in happy we line opportunity share. there's So do quarter to exiting But the

Simeon Gutman

why business then now the been cumulative. commercial And question the follow-up, your comfortable quarters methodical take some some in you're how to of it's prescriptively but that in with the you're year again, And you've the you've we built do not on from is next get that the periods had focused the it maybe working and been way of it, get reaccelerates, call growth, it's on? traction my few of versus that business one timing the faster things

Philip Daniele

in execution Well, to levels saw QX arena more Like our never said, we not we like we work QX. We're commercial we've to finished we or the long-term execution on we we've finished. a Hubs, we Mega-Hubs. that where be. continue opened think expected we we as business through talked that Well, said, that, in up and I it been better, be the performance model. get continue yet. improve improve and Execution is frankly, strategy, but to And wasn't QX our more working

year. And to we this move we've we're mature. continue continue strengthen last continue technology couple assortments. of still. standing that technology years, That And side to the the will store continuing over enhancements leverage also not we're to as through made and will our those We next enhancements

Operator

with is Our next Seth question coming Sigman Barclays. from

Seth Sigman

my the talking that all response Is if related? And Is far? on then well availability? execution maybe more on wanted follow-up. add how you I'll any follow fixing that just can shortfalls we last I'll something the to context as elaborate you're point, the about add and that business. on commercial the that up so What are roles. it new a Just seen. sales congrats here? you've And more on I that and

Philip Daniele

execution, you of the level with we some the struggled pandemic, think challenges the I execution. as go did, back store everybody On struggled in-stock. pandemic and staffing, struggled with with We the and if we to of obviously

we a path. our saw part any broken, our it was lot Our culture, little stock. Nothing opportunities solid there's think we're this our frankly improve, in on customers, time. just stores execution that one day execution we're back get were and primary take we're work AutoZone, We executionally we'll continue improve, continuing like improvements and We to in there care to day. to that I still takes to operate of the that flawlessly. got keep to safe, flawless achieve and AutoZoners QX. to marks we'll every things, And wouldn't -- expect ticking big single objectives we we wasn't of that, at didn't that and the off in area done. of down continue to day It's out say execute the keep

Seth Sigman

Got it.

about perspective on you it just seen to inflation elasticity? a you've what relates us traffic the you then to bit another coincides as volume And are And follow general, fiscal historically And Can that little moderating. on quarter. made thinking up give through how more Okay. in That's about just helpful. year? improving I wanted point for earlier and with think then this inflation coming I

Jamere Jackson

Yes.

I'll quite inflation time been store relative make our hyperinflation comping to we've So is some for point industry the on now. first that trends

to are that Those moderated rates. faded is the sort dynamics And experiencing. of been so as we've inflation and normal sort of the

As that our to expect our range mid-single-digit it to will be moving forward, to we relates business in inflation tickets. impact low the

On you digits, DIY side, transaction of as single counts seen historically the we've decline kind we've said, low will. if

to And our business moving be historic so we closer operating expect to forward. in norms

X-speed from the some pressure, And low-end for the has doing incomes been consumer. the We been net In that DIY and on very consumers sort under to haven't seen side terms has have of where an a point this played while inflation been a have wobble that we of but business the higher that's well. our result the resilient. consumer it's been out is of very, how world a from think macro environment standpoint,

Operator

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

Elizabeth Lane

or last that your -- about of the return? plans. on capital just going about where be years. get Just of international, part big a can pretty a capital in long-term construction just where mean, best of and has is which maybe quite rural you're just growth cost I up store store But a areas, thinking you How of to are growth. question bit capital couple and deployed thinking that allocation, expansion gone the the best think cost like you seems areas in given the it

William Rhodes

a Yes, at XX%, think urban are a to a Liz. XX-year back good stores. environments higher, in believe get we've that shows that I strategic you're that Yes. great returns. whether to basically And ROIC we this And construction we're return on, June, we're are accelerate opening get significant of rates all get We we year. we're can when to when amounts it runway be costs XXX Thank running rural are go making decisions on going and new once we stores we're environments. long that countries, finish got in that for really and an three going you, announcement and decisions. And higher to made interest making back we back or the decision review

and X% between that remember, Now store be will growth. organic X.X%

going talking of the growing term. long for like lot not about growth. makes sense in a having it's So to think XX% we're that's something range that We

Jamere Jackson

this Liz, invest around meaningful growth add, tremendous point amounts doesn't leverage give also talking of allocation, shareholders. long-term back to amount Managing is allocation capital X.Xx that EBITDA about, is of our financial profile to in your capital our invest but that this target our gives framework. a to Yes. change cash in The firepower us assets to at only thing to Bill existing I'll

long-term So framework it we move our allocation doesn't capital as forward. change

Elizabeth Lane

then talked Brazil. And and you Great. about Mexico

like as you're the profile the operations look total in percentage we money a as impact the total? company margin those in for AutoZone's or international total? profit And some losing profile there. Now about grow of how should in What Brazil, think Mexico still on the stores just does

William Rhodes

a of certainly two tale it's Well, countries.

just very profitability the with pleased are We we in that disclosed Brazil, the in but say I'll haven't profile are and return money particularly Mexico. losing profile we in Mexico, specifics

Operator

coming is Chris question Horvers next Our from with JPMorgan.

Christopher Horvers

also to up I the on side. follow wanted commercial

about talked X last X% the weeks. in You

bump we forward, and clearly, got was a was comp? look clarify, as you to weather that hot So there. And August

for quarter? the versus guess, about of I So you you've X% think what that from talked seen, about what's you the X.X% to did right the improving actually the trend line

Philip Daniele

a in the Yes. X be was of to weeks last just The quarter. total X%, clear, those growth

side were improve to bigger So quarter example. could like said, And I'd Those -- it although commercial the It air se, impacts like ticket tell those June failures if get probably over got May it impact you going categories of the there. about the as from beginning total forecast line. I'll a quarter, you a nothing heat, be the And and and that's are improved is helps had over on comps months as particularly growth. you we're to that the DIY the think that time we see those business, frame. of per wet. more quarter, and it to well. hot, and material bumpy, you, And conditioning, jobs. big first for like performance the due it as the big of the that, straight weather part the categories cool

move will a hot us weather go the beginning the as So QX bit. weather will we'll that summer move we we we think into help through story of a then little QX, and The pattern through the normal of year. help as us and rest

Christopher Horvers

Got -- it. Got then And it. Okay.

Anything is guess, then [ a talked terms X% was store that P&L some more like in any on know LIFO tailwinds probably margin you high-level of you comps I comments gross else other I that per in so the ] don't SG&A about And or and you headwinds. other total, the persist Jamere, year-over-year do So comments, think to it turn some think early on the to guide, then me was so for 'XX, forth? about as about and X%. right?

Jamere Jackson

Yes.

minds are Number there DIY Bill and talked around FY and we're think building of resilient consistent you're sort So your dynamics some those need dynamics models. their a that Phil of forecasting 'XX, to of about as we business. your you part comments. a as as And think one, I about very handful of wrap prepared

with in the on, we to, The focused our we as the we're got momentum an quarter commercial Phil next we first fourth second improving very pleased believe I quarter, were Again, going is alluded profile growth business. where good exited into that year. dynamic and

LIFO back I expect is you million We've LIFO. third of largely get we got that to dynamic P&L. think the mentioned around through the $XX that

as So us way term standpoint, an all said your sales. through from line of working will with in modeling, most, your grow expect we profile SG&A if then to back this you're longer to that, not year. And you come can expense

how underpinning I focus. And IT that in some We an the some of about, just so are particularly from the mode, areas mentioned growth that we're are investment then the talking standpoint. and international of initiatives that's last I'd just is in one

frankly, where post international us, has We've seen the about And in our You've on excited our numbers morning. business very fire. been business. the growth this years got quite we're international profile two

about going share made and a So as forward. growth strides consistent as business LIFO, of we've good DIY resilient where you move excluding domestic from the is our think and business, standpoint, about we lion's we the forward. tremendous we feel prospects margin are, in gross margin, which got We we've think a still

Operator

is with Lasser from UBS. question Our next coming Michael

Henry Carr

a of this or Henry Michael returning maintenance And growth is behalf you in goal? how reaffirmed high on deferred low levels to the car hearing to sustainable any counts way factoring in weak single-digit occurrence and double-digit elevated commercial, is about When are This it? about industry. quantify We've Carr the Lasser. in there been of thinking into

William Rhodes

data Obviously, a the shops on as sales, are know, hearing the about get technician and like. in the chassis that. chance for we've braking that Frankly, and the with off have takes see a been a particularly a hearing what's things. don't terrific We car we're February, counts the to business. going when And systems you tire provides the in tire, same opportunity whole another systems you and people commercial all we're since for Yes. time, our customer on it down, are

have but great has the a exact on softer we it So environment. numbers, think don't history a are what we been

the we're of some that to economic think challenges seeing. that with I do has

this for level the of time. period long in operated commercial at business a haven't We

when You categories. like And is I business. what But belief DIFM again, don't experiencing me -- the think we going last? have lot suspect the tell do our the from we know sales will I DIY How to like. And is happen, in of we short-term certain a get DIY So in sorry, what DIY to we economic trade economic down about cycles that cycle pressures now. we're that's from to performance. look discussions long DIFM

sales not on performance. focus is the short-term Our

share Our profitably business going over make sales focus is on our are in the what are doing we to competitively? long business to better term. And grow our we how and

Henry Carr

just think a we of into came Are for I openings -- Mega-Hubs where little believe most XX I you quick Is not the if bit for quarter. Thank a XX fiscal 'XX. roll XX were in XXXX? targeting it? year another to to year full going these just there way about should at of be mistaken, I'm you. might And And that as fourth in follow-up. short

William Rhodes

performance Jamere's me review do to public? in want You

Jamere Jackson

getting say, was just I ready to to you pay he question. ask did that

So falls under obviously, development purview. my store

you important we're past where as short opened to fiscal we to see doing it's Mega-Hub. to the that liked as And Bill And said, business what And category, quarter. We important be outsized It's be. squarely start also you'll execute when into to committed would need development I and to XX. I'll fits a that not from 'XX. Mega-Hub that commercial pipeline store certainly, that standpoint, FY but talked to we very to the XXX We the business. last number got XX our that we see year. tell business, for move are into have we for closer growth target. of just so the us is for is our We getting need because things we're in of on, better Phil what But strong this that DIY about our number, accelerate

we're working forward. and better through get we'll way So move our as it, we

Operator

is Securities. question Seth Wedbush next from coming with Basham Our

Seth Basham

question is the on commercial also business. My

it much as expectations? any national expected? as not [ in and ]? Is regions there down up Just share security versus underperforming you're of of that accounts you more Are are terms our sort gaining the accounts where

Philip Daniele

shop good will repair. the for some those national two winter markets frankly, the like and versus kind or to a recently. around off tire softer. what business are going deal are there's or be I and aren't -- didn't the good for tire when One two mentioned, the call of and account account a buyer Bill is as that groups accounts, markets pull I the segments those We working has didn't caliper brakes frozen like -- street. maybe have to tire the that those changes been tire well Yes. have earlier, suspension growth happen summer that us. And the I we tires national within that get consistent, bigger opportunity within get they just broken, down repair car as mean think would with Bill expect. as account normally that between has the been and sold well the general as new mentioned rusted not wheel growth say you as versa generates something's a you market, been should UDS it's the great parts And the winter off The that the as used been have not you is a payer and the vice see car been from to car more performed for used us of haven't dealerships, the pretty

thing is, push as more repair maintenance becomes other the the cycle. Now there off, failures people in

those months. pushing So last deferred good But the for of is that have couple us. the over been off longer maintenance points term, pressure

Seth Basham

points, the Understand, would also you you're as the [ getting areas so assess ] expected? much not but being is where pressure you as share those

Philip Daniele

we're that share in categories. gaining not Yes. I know don't those

cycle the of and I some would over snow. we've categories some to winter more another you until years, to last believe everybody grown of we through think share those a pretty know return down cycle be in commensurately of going go those I categories. significant couple aren't normal of

So I cycle. bit think a categories they'll be to we depressed. get We'll pressure be winter little under of those another see normal until

William Rhodes

our add do said -- we I was of years. may, I'll And earlier, massively over we like we competitors. because was than part in-stock grew have if couple exponentially our certainly think WD better a I position share of that Seth,

we've they've share as gotten back think them of in back some that ceded I stock. to

Seth Basham

my exactly that's Yes, follow-up going be, is to Bill.

your quarter? to fiscal about Just couple is improvement take to first that hearing position cycle another thinking of start Or to the Is that quarters? it going that competitors. we when in-stock by

William Rhodes

now. I said, was beginning the not competitor Not think as every same. going category same, to we're But to was cycle you every time. it's take it some the

-- height months, for it'll but with we'll probably So X be we of probably it. more dealing the it past

Operator

today Our will be Ciccarelli Truist. with question from final coming Scot

Scot Ciccarelli

one, outside roll of further -- and to guess what here business growth execution has the specific accelerate then part the have that is, as challenge two kind kind 'XX? main we of making changes weather, been of on confused, I into related segment So the still I'm to into to what commercial part are help you

William Rhodes

Scot. Thanks, Yes.

one not make to think is thing, we that there's single I tried think answer clear. the I

the were for we differently to differently the every said to because the make we've operate Everybody day. quarters, decisions having As two operating we during were had last fly on pandemic.

that then. and come As same the the we anybody. we we has I put pandemic, cuts. T's time and turnover, in have to get we have sure X,XXX of to today. weren't experienced just is making out execution experience thing, lost improvements got we've we're -- stores of one of on. There are back on right major disciplines. be, our as parts Those dotting And that got on paper exceptionally our delivering those on the the we've organization. levels that to against as like the things we making few level crossing high that and I's of right a our writing sharp And in-stock not this hallmark and schedule. been are these and and These don't We've the up we we're the we're needed

Scot Ciccarelli

better changes specific term, better a lack Is for And and you're both? it blocking of then just making? tackling

William Rhodes

sole is commercial making, that, that's not doing. technology we're deployed that of we've mentioned the got biggest the thing we've but in that change business. I that a that think we're lot the Phil that

really and months, X we've that excited means. technology, we're last refined the Over about what it

technological delivering quarter year, do how this better, We the first two how time, have at are X we business, that coming excited the specifically or major right delivery all that time, that the do in make do we are we're how we're or X sure commercial on enhancements right and in about focused we the execute decreased that. parts

Scot Ciccarelli

Thank you.

William Rhodes

All you. right. All right. Thank

a for position, in we the Before model we our alternatives. we customers call, a is will want moment our but have reiterate, conclude strong believe understand granted we our take prospects the year, excited is We're our and for to to growth take nothing about industry business as I solid.

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

great basics and successful. Thank the confident optimize to future, today's Have AutoZone be participating we strive to day. for As on you in focus continue are very shareholder we will value continue a to call. for the

Operator

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

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

AutoZone (AZO) 19 Sep 232023 Q4 Earnings call transcript