Welcome to the Advance Auto Parts second quarter 2024 earnings conference call. Before we begin, Lavesh Hemnani, Vice President, Investor Relations, will make a brief statement concerning forward-looking statements that will be discussed on this call. Good morning, and thank you for joining us today to discuss our second quarter 2024 results. I'm joined today by Shane O'Kelly, President and Chief Executive Officer, and Ryan Grimsland, Executive Vice President and Chief Financial Officer. Following management's prepared remarks, we will take questions. Before we begin, please be advised that management's remarks today will contain forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements regarding our strategic and operational review, initiatives, plans, projections, expectations for the future, and the anticipated sale of our Worldpac business. Actual results could differ materially from those projected or implied by the forward-looking statements. Additional information about forward-looking statements and factors that could cause actual results to differ can be found under Forward-looking statements in our earnings release and risk factors in our most recent Form 10-K and subsequent filings made with the SEC. Now, let me turn the call over to Shane O'Kelly. Shane? Thank you, Lavesh, and good morning, everyone. I would like to start by expressing my appreciation for the hard work exhibited by our team members over the past several months. During the second quarter, our frontline team navigated a weak demand environment as consumers continue to feel the weight of an uncertain macroeconomic climate. Despite the headwinds, our team maintained focus on serving customers and driving progress on our strategic priorities. We ended the second quarter with positive comparable sales growth of 0.4%, led by our pro business. DIY remained pressured but improved sequentially. Our second quarter comp performance is a step in the right direction. Moreover, the opportunity ahead of us to drive sustainable growth, recapture market share, and position Advance for long-term value creation remains substantial. Turnarounds take time, but our team is solid and putting in the work. The macro environment is challenging, retailers are lowering expectations, and we're starting from a lower baseline relative to the industry. On the other hand, we successfully managed through a difficult quarter and navigated a complex M&A process with a successful Worldpac transaction that substantially strengthens our balance sheet. We know what we need to do from here. As you will hear later in this call, looking forward, some of our investments are around price, some are related to supply chain, and others on optimizing productivity. All are focused on reigniting growth and improving our margins. The slope of the path will also be determined by a thousand smaller decisions made by our team and not merely dictated by a top-down projection. As a team, we keep in mind that even incremental improvements can yield substantial upside. Selling Worldpac and solidifying our balance sheet are early inning wins, and it is an exciting time to be an Advance Auto Parts team member. When I joined Advance last September, we had just initiated a strategic and operational review of the business. We have been executing against decisive actions to simplify our business and return to the fundamentals of selling auto parts. Progress in these actions is setting the stage for a new future for Advance. Let's review that progress and talk about the path ahead for the company. Number one, the strategic review of Worldpac and the Canadian business. We are pleased to have completed this process, which sharpens our focus on the blended box. Second, reducing our costs to become more competitive while investing in the front line. These investments are energizing the front line and, in particular, our pro sales teams. Third, making organizational changes to position us for success. Through our internal promotions and our external hires, we are putting outstanding talent in key roles. Four, consolidating our supply chain, which unlocks better parts availability and service for our customers, which improves the cost position of the company. And fifth, improving the productivity of all of our assets, which will help narrow our operating margin gap to the industry. Starting with the first decisive action regarding Worldpac. Today, we announced that we have entered into a definitive agreement to sell the Worldpac business for $1.5 billion in cash to The Carlyle Group. The sale process generated strong interest, and we are pleased with the outcome. We plan to use the net proceeds to strengthen our balance sheet and invest in the core business. The transaction is expected to close before the end of the year, and on behalf of everyone at Advance, I would like to thank the more than 5,000 Worldpac team members for their dedication over the last 10 years. Reaching an agreement to sell Worldpac is a major milestone for the company, and our vision from here is to further our commitment to the blended box model, servicing both pro and DIY customers with our well-established retail footprint, augmented by our independence. That's our path forward, and it's a proven service model in the auto parts industry. The sale of Worldpac fuels our vision by improving our balance sheet, streamlining our operations, and enabling us to focus on one business model. With the Worldpac review now complete, I also want to provide an update on our Canadian assets. During the second quarter, I traveled to Canada and was impressed by the deep expertise and market knowledge that our long-tenured Canadian team brings to the business. Our business model aligns well with our U.S. operations, and that team has consistently delivered strong performance. As a result, we have made the decision to retain our Canadian operations. I would like to thank our Canadian team for their patience during the review, where they maintained an unwavering focus on serving our customers, and I look forward to working with this team to grow the business. Moving to our second decisive action, reducing costs and reinvesting in our frontline. We have reduced costs and reinvested a portion of those savings in our frontline team. These investments have been particularly meaningful for our commercial account managers and our commercial parts pros, as they are stepping up our pro business efforts. During Q2, comp sales to up and down the street pros turned positive year over year, compared with a decline in the first quarter. Our strategic pro accounts also grew year over year, and we remain committed to serving them and growing our share across all pro segments. Along with that, we are igniting the field culture to become more customer-focused and are reducing time spent on non-sales tasks, and we are putting greater emphasis on accountability. As part of this, we are continually seeking feedback from our frontline team members to identify gaps and take swift actions to improve our business. Lastly, we remain on track to deliver $50 million of indirect procurement savings by next year. Our third decisive action is related to organizational changes. We welcomed our new Chief Merchandising Officer, Bruce Starnes, in the second quarter, and now we've added talented individuals in additional critical merchandising functions. We have hired a new SVP leading assortment, digital merchandising, and inventory management. We've added a new SVP for merchandising, operations, and pricing, and we've added a new VP of e-commerce. We have also realigned our marketing and e-commerce functions to now report into Bruce's organization for stronger collaboration. These leaders are enhancing our capabilities with respect to fundamental retail operations, and I look forward to the value that true merchandising excellence can bring to our business. Early examples include, number one, conducting more frequent and deeper line reviews to ensure that we have the right product depth, breadth, and costs. This year, we are on track to do 130 line reviews. Number two, assessing front and backroom assortments to improve relevancy and availability and number three, coordinating marketing efforts to deliver great offers for our customers. An example of all three of these things coming together is our recent launch of our Brake Bundle Program. The merchandising team's work is being augmented by recent pricing actions and the implementation of our new inventory management system. We now have more than 300,000 actively managed SKUs in our new system. We began this effort earlier this year and completed it in July, a full six months ahead of our initial goal. Our fourth action, consolidation of our supply chain. At completion, our supply chain is expected to feature 14 large DCs operating on a single warehouse management system or WMS. This compares to our previous structure of 38 DCs of varying capacities operating with different systems. We remain on track with our WMS implementation with the recent completion of the Thomson, Georgia DC conversion, and expect our final DC to be completed by year's end. The 14 DCs will serve as nationwide replenishment nodes, while the remaining DCs will either be closed or converted to market hubs. Speaking of market hubs, as of mid-August, we have ten market hubs in operation. We are creating these hubs by converting smaller DCs, upfitting existing stores, or greenfielding new locations. The market hub is new to Advance, and each market hub has the potential to make an average of 80,000 SKUs available to a supported radius of stores on a same-day basis. We are gaining critical insights on managing hub inventory, along with determining efficient routes and replenishment frequencies. We now expect to open at least 17 market hubs by the end of 2024 and believe that this updated schedule will enable us to effectively apply learnings and develop the right operational model for our hub service stores. We still expect to open 60 market hubs by 2026. Lastly, our last decisive action is improving the productivity of all our assets. As we continue our strategic and operational review, we are amplifying our efforts to improve overall asset productivity. We believe we can reposition the core Advance business to generate mid-single-digit margins in the next few years. And as we consider our long-term margin goals, we believe the following building blocks will help drive our future success. These building blocks include generating sustainable positive comp sales. This is supported by competitive market-based pricing. It's supported by our energized frontline team and improved inventory availability. Note that sales productivity is our biggest opportunity to close our performance gap relative to the industry. ... Our second building block is store footprint. This also contributes to closing the sales productivity gap. And now, with our stronger combined real estate team, we are assessing our entire store footprint to identify markets where we can rationalize stores, as well as where we can open new stores. The team is currently scaling capabilities to put us on a path to open at least 100 new stores per year, located in markets of strength. The next building block is improving gross margin. As mentioned, there are two primary tenets to unlocking better gross margins, and they are merchandising excellence and supply chain. Value is created here from harmonizing first costs, improving DC throughput, optimizing transportation, and many other activities. Our last building block is realigning our SG&A with our post-Worldpac operating structure. We will continue to invest in the required areas of our business, but at the same time, we are putting greater emphasis with our leaders to manage expenses and create operating leverage for our future. To conclude, as we look to a post-Worldpac Advance, we are now executing against a clear vision of operating a single business that is poised for success as we revitalize core processes that focus on the fundamentals of selling auto parts. We plan to share more details on our outlook for the remaining business at our next earnings call in November. Now, let me hand the call over to Ryan to discuss our financial results. Ryan? Thank you, Shane, and good morning, everyone. I would also like to start by thanking our dedicated team members for their commitment to delivering excellent customer service. Before diving into Q2 results and our revised outlook for the year, I will provide some additional details related to the Worldpac transaction. Based on our reported financials, over the last 12 months, at the end of Q2, Worldpac contributed approximately $2.1 billion to the enterprise revenue and approximately $100 million to enterprise EBITDA. This EBITDA does not account for certain atypical items, intercompany margins, and some overhead costs related to supporting the Worldpac business. These adjustments account for approximately $30 million of additional EBITDA. The transaction price of $1.5 billion will result in net proceeds of approximately $1.2 billion after taxes and transaction fees. These proceeds will strengthen our balance sheet and provide greater financial flexibility to invest in our business and execute our strategic plan. As Shane mentioned, we are amplifying our efforts to improve overall asset productivity to determine the most appropriate asset base and expense structure for the business. We are also evaluating investment needs by business function to effectively deploy transaction proceeds to accelerate growth. The simplification of our enterprise structure will provide further clarity for our frontline and corporate support teams. We believe that a strategic plan to prioritize sales productivity, combined with a balanced enterprise cost structure, will help deliver margin expansion and earnings growth. While near-term headwinds have obscured our initial progress, we remain confident in our approach and believe that the actions we are taking will position us well to generate mid-single-digit margins in the next few years. Moving to our second quarter results, net sales of $2.7 billion were flat to last year. Comparable store sales increased 0.4%, led by a positive pro comp. DIY comped in the negative low double-digit range. Although improved compared with Q1, the reduction in net sales was largely driven by fewer independent Carquest locations, which largely offset the positive comparable sales performance. In terms of cadence for the second quarter, trends started off soft and improved as we moved through the quarter with the benefit of the tailwind from hot weather-related sales and our strategic actions to drive growth among the pros. In addition to the strong performance in HVAC category, we continue to see positive results in fluids and chemicals and engine management. Looking at our channels more closely, our professional business saw positive comparable ticket and transactions. In our DIY business, comparable ticket was also positive, although more than offset by declining transactions. Gross profit was $1.1 billion, or 41.5% of net sales, compared with 42.5% of net sales in Q2 of the prior year. On a year-over-year basis, gross margin was impacted by our strategic pricing investments and higher product costs. Last quarter, we took initial actions to fix our competitive pricing with an investment of $40 million on an annualized basis. During the second quarter, we identified additional opportunities and expanded our actions more broadly across the assortment, resulting in a cumulative investment of over $100 million. I would note that these 2024 pricing changes are not in response to the challenging market dynamics. Rather, we view these changes as necessary adjustments to reposition Advance more competitively and to improve our price perception in the industry. Our field team has been driving awareness of these changes with regular customer visits. Initial feedback has been positive, and we believe that these pricing changes should put us in a stronger competitive position as demand begins to recover. SG&A was $1 billion. As a percentage of net sales, SG&A was 38.9%, compared with 37.8% in the same quarter last year. The higher SG&A was driven by an increase in payroll expenses associated with wage investments and training for our frontline team, professional fees related to the strategic and operational review of our business, costs associated with the remediation of our previously disclosed material weaknesses, and other expenses associated with the implementation of our strategic plan. Operating margin of 2.7% deleveraged about 200 basis points compared with last year. Diluted earnings per share came in at $0.75, compared with $1.32 in the prior year quarter. Year-to-date, free cash flow was an outflow of $4.6 million, compared with an outflow of $312 million in the prior year, driven by the timing of payables in the first half of last year. Moving to an update on our full-year 2024 guidance. We have updated our full-year outlook for the enterprise, including Worldpac, pending the completion of the sale. Following close, Worldpac will be reported as discontinued operations. We will update our outlook for Advance Blended Box business with our third quarter results in November. We now expect sales for the full year to range from $11.15 billion-$11.25 billion, including comparable store sales in the range of -1% to flat. Our revised guidance considers our year-to-date performance and expectations for the balance of the year. We expect consumer-related headwinds related to maintenance deferrals, lower discretionary spending to impact our trajectory in the short term. With respect to quarter-to-date trends, both our pro and DIY businesses have started off weaker, driven by the overarching macro pressure on the consumer, tougher prior year comparisons, and diminishing weather-related tailwinds exiting Q2. We have factored this into our guidance for the full year. While we won't speculate on the timing, we are confident the industry will return to growth as conditions normalize, driven by the aging car park and largely nondiscretionary nature of auto maintenance. This provides a supportive backdrop for us to execute against. Operating income margin for the full year is now expected to be between 2.1%-2.5%. The revised margin outlook is being driven by a combination of lower gross margin and higher SG&A deleverage. As indicated earlier, we took additional pricing actions during the second quarter, which will impact gross margin. While we are seeing some green shoots in improving unit velocity, the rate of improvement is slower than we initially anticipated, given the weaker demand landscape. That said, over time, we expect our price investments to yield positive net results through increased volume. Regarding SG&A, we still expect expenses to be flat to slightly up year over year. To a meaningful degree, we are adjusting SG&A to address the current demand environment and are continuing to make necessary investments as part of our turnaround. Diluted EPS for the full year is now expected to range from $2- $2.50, and we expect to generate a minimum of $100 million of free cash flow. Our guidance for capital expenditures is unchanged and still expect to be in the $200 million-$250 million range as we undertake projects to enhance our IT, stores, and supply chain infrastructure. To wrap up, I would like to reiterate that we firmly believe that Advance has a pathway to stronger earnings growth. Through the productivity review of our assets, we'll have better visibility into the margin trajectory for the blended box, and we expect to share more on this in November. With that, I will now hand the call back to Shane. Thank you, Ryan. In closing, I want to thank all of our team members once again for their commitment to serving our customers. Our industry has historically proven to be resilient, and it's demonstrated an ability to recover quickly after periods of macro pressure. Since arriving at Advance, I have been excited by the people, and I've been excited by the company's purpose. In the wake of selling Worldpac and with our clearer vision, I am now even more excited for the company's potential. With that, let's open the call up for questions. Operator? Thank you. We will now begin today's Q&A session. So if you would like to ask a question, please press star followed by one on your telephone keypad to enter the queue. If you wish to withdraw, please press star followed by two. Participants are asked to limit themselves to one question and one follow-up each, so we may reach as many people as possible. And our first question today comes from Greg Melich from Evercore ISI. Greg, your line is open. Please go ahead. Thank you. I guess I'd love to follow up really on the guidance, Ryan. Just wanted to make sure the full year guidance still includes Worldpac because you have it this year, or does it exclude it? Yeah. Morning, Greg. Yeah, it includes Worldpac in the guide. As soon as we close that transaction, Q3, it'll go into disc ops, and we'll provide a guide for the RemainCo at the Q3 earnings call. Got it. And so, just to make sure that minimum of $100 million free cash flow, that would include the EBITDA, most of the EBITDA from Worldpac this year. So when we're thinking about- Yeah, that includes- a base for next year, we should be thinking. Got it. Yeah, correct. And then I guess a follow-up on the- Free cash, yeah. Okay, thank you. Go ahead, Greg. For the agreement on the sale, is there any sort of exclusivity of distribution that you have with the buyer, where, you know, you get to still... you sell Worldpac product through Advance stores, or is it a complete clean break? No, we do have an agreement with them. We will continue to sell Worldpac product through our stores. Got it. That's a critical piece of our catalog offering for our pros. As you know, Greg, Worldpac provides offer to certain European OEM-type products that Advance has sold, so that relationship continues. It's not a huge part of our business, but we wanted to retain the capability so we can source products through Worldpac, and then we would sell them to the customer as Advance. Got it. That's helpful. And then last, on the incremental pricing investment, I guess it's an extra $60 million. Is that an annualized figure? And could you give us more detail in terms of, you know, what product lines or markets you're really looking to do there? Yeah, that is. That's an annualized number. And that's the fully loaded. That doesn't necessarily account for a lift, et cetera, that we would see to offset that. We expect to see unit trajectory and lift offset that, and some cost out to help offset the $100 million investment. But that is annualized. It's broad spread. When we went in initially, at the end of Q1, we had some seasonal categories, probably tilted more towards DIY front room, but also touched some pro categories. This was more broad spread, but also included more pro categories, as we tried to get right priced and competitively priced within the pro area. But it's kind of broad spread across. It maybe balances out the price investments across our full SKU listing. So some color there. I think the first thing to note is we're not leading the market down. This is, as we looked at historically how we were positioned, we found that we were above the market, unnecessarily so. And so this is moving to the market, and obviously, customer feedback, critical in these circumstances. And I'll provide a personal anecdote. I saw a pro customer who pulled up on the screen and said, "Shane, you guys are out of whack on radiators." And so we go back, and we look at what our radiator pricing is, and sure enough, we're materially higher. We're sort of $50 higher than where we needed to be. And so we made the adjustment, and then we start to see pickup in radiator units. As Ryan said, we've done this broadly, but importantly, it's to just be at the market, and we'll look for customers to now know us as being market-based in terms of pricing, and that's part of our growth story going forward. That's great. Good luck, guys, and thanks for all the info. Thanks, Greg. The next question comes from Simeon Gutman, from Morgan Stanley. Simeon, your line is open. Please go ahead. Hey, good morning, everyone. Hey, Shane, I wanna start asking a more strategic question. There's this undertone of we're, you know, we're improving the core business, but we're also investing for growth. I wanted to ask, you know, how much a priority is growth? I understand you don't wanna be left out as the industry keeps growing, but the priority versus sort of triaging, fixing the business, bringing it back to sort of normal health versus looking around the corner and still investing for growth and that balance. Yeah. Thanks, Simeon. We have to do both. We don't get the luxury of, of just focusing on, on one versus the other. I think inevitably in today's business environment, if you look at the cost of benefits or rent or, or whatever it is, you'll see escalation. So, we want to be a positive comping company. And so that's where you look at the likes of what we're doing in our sales efforts and up and down the street pro and rejuvenating team members with investments and, and focus on our, our CPPs and CAMs. Also, to bringing in Bruce Starnes and his merchandising excellence capabilities that he brings from, from his past experience. We've got a cadre of outstanding leaders now inside of merchandising to help us with, with availability, with pricing, with our PLR process, in terms of costing. So those are some of the mechanics, but getting to a positive comp is critical for us. We've set the table in many regards as it relates to the underpinnings of how we're competitive on cost and things we wanna do. I think the Worldpac sale process epitomizes that. So with Worldpac as a different business, inside of our company, the distraction that creates, we're singularly focused now on the blended box. And so look for us operationally to make that more efficient, to focus on that supply chain, but also look for a growth perspective that we need to be delivering a positive comp. And then, a follow-up: Can you? I don't know if you'll comment, but it looks like the run rate of EPS post-Worldpac looks like it'll be sub $2, and there was this mention of the $30 million of some adjustment to run rate, Worldpac EBITDA. I don't. Does that mean that it's $30 million that stays with Advance, or is that $30 million just not part of... It just goes away? Yeah. So Ryan will unpack it a little bit, but I think your hypothesis that the underlying core business, you know, is wanting in terms of performance, I think, is accurate. But that's exactly why we're creating this focus, and that's where there's excitement in terms of turning the page as a company, as a blended box, auto parts retailer. Ryan? Yeah. So we won't give specific guidance to the RemainCo until the Q3, but we did provide the EBITDA. The reason we added the 30 was that is additional EBITDA that is held at the parent company. It's a net of some intercompany and costs that are held at the enterprise, so you should look at that as additive to the 100. That if, if we were to close the deal on Worldpac, think of that as closer to $130 million. Got it. But in Q3 earnings call, we'll come with a- Okay, thanks guys. ... a full picture of the RemainCo. Yep. Thanks, Simeo. The next question comes from Bret Jordan from Jefferies. Bret, your line is open. Please go ahead. Hey, good morning, guys. Morning, Bret. Worldpac working capital situation. Hey, good morning. How much of the inventory that you carry is discrete to Worldpac, and I guess what's the outlook as far as working capital reduction? Yeah, Brett. So it's roughly in the ballpark of $1 billion of inventory. Sorry, billion. About $1 billion of inventory for Worldpac. Their coverage ratio is a little bit lower. We'll obviously share more on what that RemainCo looks like as we Disc Ops them in Q3, but that should give you a ballpark there. The coverage ratio is gonna mix us down when they're in the consolidated. It'll mix us up a little bit when they're no longer with us, but it's about $1 billion of inventory. Okay. And then the proceeds, I guess you've talked about debt reduction, and you've got a couple of debt tranches in the high 5%. Can you pay those down, or are there any prepayment penalties? Or I guess, what's the balance sheet gonna look like post-close? Yeah, we'll definitely share more specifics around that at a later date. Right now, we're gonna take that cash look at when we close the business. We'll look at bolstering the balance sheet. We'll definitely look at what debt we need to pay down, what we need to invest in the business, and what we need for going forward. So we'll probably share a little bit more, but if we do attack debt, you would think that we would attack those higher interest tranches. Yeah, and I'll touch on doing the- Repurchase still in the- ... the prepared remarks. Go ahead. Sorry, Brett. I said, is repurchase still in the use of proceeds? Yeah, over a reasonable period of time on that, I think the first priority is gonna be, you know, the balance sheet and making sure we've got a good balance sheet for growth going forward, invest in our initiatives, and then absolutely, over a reasonable period of time, returning cash to shareholders, excess cash to shareholders is important for us. And on the investment side of the house, you know, three areas, stores, you're in the prepared remarks. We created a unified real estate team. We didn't have one, we had multiple teams, and so we've got a very strong leader running that team, and we've been in investing in creating a new store opening capability, that's a muscle that had atrophied. So we wanna get back to opening 100 stores a year, and we're looking at markets where we have a right to win as a way to think about where to put those stores. There's some refresh of existing stores that need a bit of a freshening. And then two other areas, on the IT front, we've got two POS systems. We still have a residual legacy POS system that we wanna get all of our stores on one POS system, so there's an IT investment there, and then on the supply chain side, we're rolling out the market hubs, we're doing the DC consolidation, but even inside of the existing DCs, think about this in terms of pick mods and conveyor systems, there's investment there, but also in terms of just getting inventory tracking through the system, in particular, as it goes from a DC to a hub to a customer, so there's some investment there, so there's a number of fruitful areas where we can put some of the proceeds that'll help us on the journey, both in terms of improving our effectiveness or increasing our sales or both. Great. Thank you. The next question comes from Scot Ciccarelli from Truist. Scot, your line is open. Please go ahead. Good morning, guys. Can you outline maybe a bridge to your reduction in your EBIT margin? I mean, I know it's, you know, only over 15 basis points or so, but it's a pretty sizable percent reduction. So maybe how much is from the sales change, how much from price investments, how much from strategic investments, just to give a better idea of kind of what changed from a couple of months ago? Yeah, absolutely. So the large portion of that is volume, and then the other piece of that is the price investments and the margin rate. Those are really the two big drivers of it. SG&A is coming in pretty much in line with what we expected. While we're pulling back on SG&A relative to demand, we're also making sure we continue our investments in supply chain and those key growth initiatives that we have. So SG&A is gonna come in about the same place we expected in the guide. The biggest drivers are gonna be the volume on the top line and margin rate. Yeah, and, and Scot, you made a good observation there. Based on where we sit, even small changes have outsized impacts. We are definitely seeing the headwind with the consumer, and it manifests itself in terms of either deferring the spend or trading down. And you guys know the stats, right? Credit card defaults are at a high 9%. People are getting squeezed on rents and mortgage. That's up year over year. And what we're seeing in the cohorts that are relevant for our company, and think about that as households making $50,000 or less, or even $75,000 or less, their spend is diminishing, or where they spend, they're spending less. And so we're sensitive to that downtick that hits us, and that's something that when you're in a turnaround, we're particularly sensitive to in terms of what that impact is on our bottom line. Very helpful. Then just quick follow-up on Worldpac. How much of that, I guess we're supposed to be using $130 million figure, how much of that is DNA? Yeah, we don't give specifically on D&A. Okay, just confirm, can we look at a% of sales? The sales of Worldpac was $2.1. EBITDA, we're saying, is closer to $130 than you would think about, but it's EBITDA. I understand. How much of that is the actual depreciation and amortization, though? Like, you know, can we assume that- As- You know, if Worldpac was 18% of total sales, enterprise sales, it's about 18% of DNA? Yeah. We're not giving out specific guidance relative to Disc Ops or different parts of the business at this time. We'll do that in Q3. Okay. Thanks, guys. The next question comes from Michael Lasser from UBS. Michael, your line is open. Please go ahead. Good morning. Thank you so much for taking my question. Shane, how should the market think about the long-term competitiveness of core Advance? If it's gonna have a mid-single-digit operating margin when its competitors are in the high teens, low 20% range, does that put it at a disadvantage if the market becomes more competitive and it just doesn't have as much resource to invest to remain in lockstep with the others? Hey, Michael, great question. So we said mid-single digits. Think about that as our next few years horizon. That's not gonna be our permanent aspiration in terms of where we can take this company. But I would say that this is a huge market. It's an ocean of auto parts, 287 million vehicles aged at 12.7 years. And if you look at the share of the folks that, you know, have that higher operating margin, yes, they certainly have been growing, but in aggregate, there's still a large swath of the market that they don't touch and that we don't touch. So there's room for us to grow without ever taking a dollar or standing toe-to-toe with them, and I think that's important. Secondly, in terms of just sort of bones, in terms of our ability to be out in the market, we have 4,700 retail locations. You know, we work with 1,100 independents, and if you look at where we are, there are many markets where we are the leading player. So structurally, it's not as though to go out and compete with them, we need to actually go have stores and be in markets. We're there. This is a function of tuning our operating model and clearing our focus to be better at those fundamentals. And I think in the past, you know, perhaps that hadn't been where we were as focused. So I'm really optimistic about where the company can go. And as we move through this very tough phase, which we're doing now, which is in the turnaround, and I would call, you know, those other players are still out there in that phase. As we go through this, we'll get to our point that we've talked about, that mid-single digits, and we'll continue to improve from there. Okay. My follow-up question is, as you are making these investments, either in frontline associates, distribution, or price, do you have evidence to see that in those areas where you are investing, either on a SKU by SKU basis or a store-by-store basis, that are being connected to these new distribution assets, that they are outperforming? And of that, it sounds like your ability to get to a mid-single-digit margin is mostly sales dependent. Why are there not other opportunities to grow your margin more significantly, especially considering your gross margin is about 1000 basis points below the others in the industry? Thank you. It's another good question. I think there's opportunities in both. We certainly have opportunities as it relates to the margin side, and just think about the supply chain. We talked about having 38 DCs on different operating systems, so even without an incremental dollar of sales, we get to the consolidated 14 DC node with the market hubs, and that takes out substantial monies. That's a good example. We talked about the tech being on different POS systems and the friction that causes. Imagine being a district manager, and you go to one store, and your team members are trained on one operating system, and you go to another store, and it's entirely different, and we have that in plenty of locations, so there's an efficiency gain in terms of what our team members do. So we certainly will look for operating improvements. PLR is, by the way, a huge component. We're conducting 130 of them, and that's both in terms of making sure we got the right products, the right mix of private brand versus national brand, the right cost position. We're ordering in the right frequencies and quantities. So a litany of things there that, that help us, in terms of, of just, the margin side without sales. ... But on those things that you talked about, you know, if you think about frontline investments, that helps us reduce turnover, right? There's a lot of hidden costs with turnover, and we've substantially reduced turnover in a number of our key jobs that makes a difference. In terms of the distribution, right, we, as that investment comes through, helps us with sales because we're able to say yes more frequently to customers. And then on pricing, touched on it earlier, we needed to be where the market's at. It's very frustrating to have customers tell you, "Hey, I like Advance, I like your brand, I like your people, but you're out of line as it relates to pricing." So moving to where the market is, we thought was really an important action. Understood. Thank you very much, and good luck. Thanks, Michael. The next question comes from Chris Horvath from JPMorgan. Chris, your line is open. Please go ahead. Hi, good morning, it's Christian Carlino on for Chris. Thanks for taking our question. Could you speak to how you're approaching these price investments? You know, Advance wasn't known for its systems previously, so is this, you know, market and SKU-based? And peers will price at, like, a high single-digit premium to the WDs on under car and engine management categories. So are you pricing below the national peers? No, we're not. So that's not our goal, to be below national peers. We're just looking to be at the market. We've looked at CPIs where we've been well above. I've mentioned the radiator example before. You know, we looked, you know, category and market, specifically at where we were. We've also, and you mentioned on the system side, we've actually put a lot of emphasis on what our pricing tiers look like and creating the ability for our outside sales team members to be able to do exception pricing where warranted. So we've built capabilities, we've benchmarked the markets, we've looked broadly, and we've made the adjustments, but it is not to lead the market lower, and I think that's an important component. Got it. Got it. That's helpful. And then on getting back to the mid-single-digit margins, I think you've said it, it hasn't been material, but to what extent could you quantify the impact to grosses from the higher supply chain financing costs that you might get back when you de-leverage? And you're backing out about $25 million of charges for the material weakness and executive recruiting, so what's the remainder of the Worldpac advisory fees that you should get back? Yeah, so we're not ready to give specific details on those items there. I think in Q3 earnings call, we will lay out more specifically how our path to a mid-single-digit OI rate. So we'll come back with more details there on how we, how we get there. Obviously, there are investments that we're making this year that might not recur, but we might have investments next year. We'll lay that out so you can understand our path to that number and where it's coming from. The key thing, when we think about our gap and our opportunity, it's really three buckets, and that's where we're laying down our investments. It's sales productivity, it's first cost margin, and it's our supply chain cost. Those are the three big areas that we are focused on, and that's where you're gonna see the opportunity as we drive that OI rate improvement. Got it. Thank you very much. Best of luck. The next question comes from Seth Sigman from Barclays. Seth, your line is open. Please go ahead. Great. Good morning, everyone. I wanted to just talk about trends over the last several months. Trends improved through the second quarter. Sounds like started off weaker in the third quarter. Can you just dissect that for us a bit more? Is that slowdown coming from the pro? Is that DIY? Is it weather? Is it the consumer deferring? Like, any more perspective on that slowdown that you're seeing, and how do you think about that playing out the rest of the year? Thanks. Yeah, absolutely. So the slowdown we're seeing is across both categories, DIY and pro, probably more on the DIY side. We're just seeing consumers pressured, and they're putting off discretionary some maintenance that you would typically want to see. But it's typical when you see these consumers pressured, and Shane spoke to it earlier, just the pressure on some low- to medium-income consumer. And that's kind of in our guide, as we're expecting those trends to kinda continue through the back half of this year. We did see nice positive movement through Q2. We ended the quarter higher than we started the quarter, and that really was driven by our pro initiative. And we're seeing the up and down the street pro continue to outperform the rest of the business. But we did see the trends decelerate recently, and we think, in large part, that's really the macro overhang and the consumer pressure that we're seeing. Okay, got it. And then just my follow-up question: if I back out Worldpac, you know, I think it confirms the core productivity sales issues that you guys have talked a lot about, and you're obviously trying to address. Can you just give us more perspective on what growth has looked like, excluding Worldpac, at the very least for this quarter, but ideally, you know, some perspective on what that's looked like over time? We're not gonna give specifics right now. We will in the Q3 earnings, but I'll give you just... We are seeing positive in Q2, the positive pro performance. We're seeing that in the blended box. And so when we talk about the up-and-down the street initiative, we talk about our pro comp and transaction, we're seeing a lot of that in the Advance blended box, and that's what we're really-- that's where we see some positive momentum there.... But we'll be more specific on the different units in the Q3 call, but we like what we're seeing as a blended box and the initiatives that we're rolling out. Okay. Thanks, guys. Thank you, sir. The next question comes from Steven Zaccone from Citigroup. Steven, your line is open. Please go ahead. Great. Good morning. Thanks very much for taking my question. I wanted to follow up on the price investments. So the last time you spoke to us, you said the price investments that you were doing at that time accounted for about 8% of the SKU count. So this $100 million, you know, what does that translate to, to SKU count, today? And then what gives you confidence that you won't need to take another level of price investments, just given the comment there that some of these have been slower to catch on with your pro customers? Yes, Steven, they are much more broad-based. Don't necessarily want to share, like, with a percentage at this point, but it's definitely more broad-based across all categories. We wanted to make sure that we are invested in the right places, especially in the pro and seasonal areas. As far as incremental investments, we're always going to continue to look and make sure that we are competitively priced. Again, want to reiterate, we're not trying to lead the market here. We're just trying to remain competitively priced, so we have a better chance to say yes to the customer when we have the product. So there might be some additional investments, but, from our perspective, the large portion of the investments, we're pretty much- Yeah. And we've talked to our customers regularly, and as you know, we've got a large initiative underway with Up and Down the Street pros, and we get the feedback that our pricing's in line. Now, for customers where we're their first call, that's welcome news, and we continue to retain that business. Where we're a second or third call, being in line with pricing provides the opportunity to get the marginal business. I think one of the things that's always good about being in the auto parts business is there are so many parts out there that nobody has them all. So inevitably, for even a customer who's entrenched with a competitor, there's some product that they don't have or they don't have with the requisite availability, we'll get that call. Now that we've got the price that's lined up, we get the business. So we think we're where we need to be. We'll obviously be tuning it, but where we look at customers and we get feedback from customers, price isn't the objection in terms of why we are or aren't getting the business. Okay, that's helpful. And then maybe to follow up on that, you know, you made the comment earlier that turnarounds take time, and from following this industry, you know, we all know price is just one piece of the factor in that decision to get the business, right? There's also service, parts availability, delivery speed. Can you help us understand how you stack up among those other factors when you're trying to get that customer just to move up the call list? Thanks very much. Yeah. So in terms of where we've got great people, our locations, our products, we do well. And so we're excited by what this represents. We're turning the page as a company to put the focus on our stores, and we're seeing the early shoots from those investments. So talk about investing in the front line. We're hearing it from our team members. I go talk to, I talked to a GM who said, "Hey, I was able to raise the wage for one of my team members for a buck fifty." That makes a difference for that team member staying around and being part of the company versus potentially leaving for the first opportunity to sell fast food somewhere else. So we're seeing better retention of our team members. We're seeing the energy that invokes. We're seeing it in terms of our product availability. We're seeing it in terms of our PLR impacts. We're seeing it in terms of vendor partnerships. Vendors are reaching out to us and they're saying: Hey, we're excited by where you guys are going. We want you to succeed. So the vendors are behind us. So at each sort of level of what we're doing, the improvements we're making are starting to get a little bit of traction. Now, we still have things that we want to do and places we want to go. So supply chain, we got to finish the consolidation, we got to roll out the market hubs. You know, in merchandising, as Bruce gets traction with that team, we expect him to do more things. So there's upside in all the areas we're doing, but there's progress that we're getting back from our own team and from our customers, where people are indicating we're on the track, these are the things that we want to do. And importantly, internally, we're getting excitement. Okay. Thanks for the detail. The next question comes from Brian Nagel from Oppenheimer. Brian, your line is open. Please go ahead. Hi, good morning. Thanks for taking my questions. So my first question, I apologize for being repetitive, but I also want to just touch on these price investments. So the question I have, and you're recognizing, as you've said now several times, you're not leading the, you know, the sector lower. But the question is, as you've adjusted prices, and I know it's a case-by-case situation, but do you see a competitive reaction to those adjustments that you're undertaking on these items? Yeah, Brian, we haven't seen competitors move on that, 'cause we're really just getting down to be competitive within the ballpark of them. But we haven't seen them move to bring it down lower. It's not kind of driving a race to the bottom here. We've been able to make the adjustments and keep them in place as we monitor that price and the competitive position of that price. ... Got it. Okay, then my second question, with regard to the sale of Worldpac, again, recognizing you're not giving full details at this point, but, you know, as you think about the RemainCo ex Worldpac, are there other potential implications for the RemainCo? And what I'm referring to specifically is that, you know, as you well, then going forward, you'll be a smaller company. Are you less of a scale buyer, or are there other leverage opportunities that you'll be foregoing, at least near term? You know, we don't, I don't, I don't see any. I actually see the opposite, which is, our vendors are saying, "Hey, it's great to see that you're getting Advance going." And keep in mind that, you know, Worldpac was substantially a separate company. So it's not as though that, you know, the procurement between the two entities was consolidated. So the vendors are saying, "You guys are focused, you're getting some discipline, you're getting some accountability, you're serious about growing. We wanna be part of that." And I think that's a great message. So, you know, while we'll be marginally smaller, we're still a huge player inside of auto parts. So keep in mind, that there are so many moms and pops and smaller distributors out there. We're still an absolutely significant player in the industry. We've got the support of the vendors. We're building excitement internally. We're gonna start opening stores again. So this is you know, I view today as a watershed moment for this company in terms of selling Worldpac, making the decision to keep Canada, and then setting about the trajectory that we're putting forward. Thanks, Shane. Appreciate all the color. Thanks, Brian. The next question is from Seth Basham, from Wedbush. Seth, your line is open. Please go ahead. Thanks a lot, and good morning. My first question is just on the guidance for this year. How much of the EPS guidance would you consider to be one-time transitory items that will not recur next year? Yeah, that's a smaller portion. Not giving specifics on that one, but it's a smaller portion of the overall guidance. The real guide adjustment is driven by margin, and margin related to our pricing investments and product costs, but mainly the pricing investments, and then the volume on the top line. Those are the real drivers of the EPS, the year-over-year impact of some of those items. And we'll probably lay out more of that, on what that means going forward in our Q3 call, but it's not a significant portion. Thanks. My second question is, post-sale of Worldpac, where do you want to take leverage? How much debt will you pay down to get to that leverage ratio? Long term, we wanna be at a 2.5. I mean, obviously, that's when we look at it from a RemainCo standpoint. When we close this transaction, we'll be evaluating what that looks like, but ultimately, we wanna remain investment grade long term, and we wanna be at a ratio of about 2.5. So, we'll continue to look at what that means from a balance sheet standpoint. Yeah, and I'll just say that, you think about this in the context of a turnaround. So, we pick up $1.5 billion here, got close to $5 billion in terms of our internal generation. So strengthening the balance sheet is a key step. And as we think about the different potential uses, whether it's with debt or company investments or shareholders, it's exciting to now have that cash infusion to fuel the journey. I think it's, again, I wanna emphasize for everybody on the call, selling Worldpac and creating a singular focus. If you just look at key activities associated with a turnaround, right? You simplify the business, you create focus on what the company's going to do, you have a strategy that everybody understands, and then you set about doing it. And then, by the way, if you have the luxury of a strong balance sheet to help undertake that journey, all the better. Thank you. Final question we have time for today comes from Chris Bottiglieri from BNP Paribas. Chris, your line is open. Please go ahead. Hey, guys. Thanks for squeezing me in. Just wanted to kind of partner- Hey, Chris ... with the store opening plan. That seems like something incremental. Hey, guys. Just wanted to ask about the store opening plan. So I think you're going to spend... Like, I think it would cost about $1 million-$2 million per box to open a store. You know, free cash flow this year is $100 million, ex Worldpac, probably break even, would be my guess. But how do you think about funding the store growth? Is it gonna come from the proceeds of Worldpac, or is it gonna be just contingent on improving margins and sales first, and then you can return to store growth? I'm trying to understand the timeline and the funding of it. Yeah. So good, good question. So it's a little of both. So we actually open stores every year, right? But as we go forward, having a robust store-opening capability is an important part of creating growth. And in terms of where you pick where you open and how you open, what we find is makes all the difference. If you open in a market where you're already known and you have some regional market share, the take-off of that store tends to be much quicker than if you open in an area where you're the last guy in the market. So one of the things that we needed was to bolster our real estate team to make that happen, and that's occurred. You got to think about that in terms of site selection, by the way, whether you're building or whether you're leasing, in terms of how you go about your stocking programs, your kitting and fitting, your grand opening processes. All of those muscles needed to be rejuvenated, and they have been. We've been opening some stores that have put that to practice. Now how do you go accelerate it, right? One of the things you do is you go to the team and you say, "Okay, go figure out how many stores we can open." They come back and say, "Hey, we can get to opening 100 stores a year and do that sequentially," right? That's an important part of it. That's what they've been doing, and now they're identifying the markets where we can go do that. So how do you pay for it? I think you've offered some numbers as to what those costs look like. So some of it comes from the proceeds. I think absolutely, right? That's a great way to get the engine going. Some would come from our traditional CapEx budget that we set aside, and I think Ryan's put us at 200-250, right? So there'll be money there. And then if you wanted to further amplify it, and maybe you can get to something, you know, even a higher number of new store openings, then that comes from some of the growth or the benefit that we're creating from some of these turnaround activities. Gotcha. That makes a lot of sense, and it's a good segue to my next question. How do you think about the store closures? Do you have, like, kind of a... Is there a way to frame what percentage of stores are for while losing money? How do you kind of balance the need to scale- Yeah ... particularly in a given market versus store closures? How do you- how do you balance, like, losing the scale from closing stores and what's the opportunity? Yeah. So, it's sort of the reverse process. So look at markets where we don't have regional market share. Look at markets or individual stores where our performance is unprofitable or below where we'd want it to be, or maybe where the sales productivity isn't coming. And by the way, the first thing we do is we look at and say, "Hey, is this a function of we don't have the right management in place," right? Because often, you, the GM makes a huge difference in terms of how a store performs, or have, you know, what's the outside sales participation or the CPP's performance. We always look at those things first. But yeah, you could look at individual stores. We can stack them, and we could say, "Hey, here's a store where economically, it's not where we want it to be. We don't think it's a function of making a leadership change, and so therefore, we'll close it." Could be the physical location of the store based on how easy it is to get in and out of the parking lot. It could be the market conditions in terms of what, how we're doing generally. And so that's what we'll do. And I think that's an important part of it. And, you know, if you close stores that are actually a cash flow drag, that's money that then can go to opening a store in a market where it's a cash flow benefit. Okay. Thank you. Yeah. Okay, I think we're at time. Thank you, everybody, for the call today. We appreciate your questions. Look forward to describing more when we get to the third quarter, and know that on behalf of everybody at Advance, we're excited as we move forward in this next chapter of our journey. One Blended Box, one Advance with our independents growing in the auto parts industry. Thank you.