Greetings. Welcome to AutoZone's 2023 Q3 earnings release conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. Before we begin, the company would like to read some forward-looking statements. 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. Please refer to this morning's press release and the company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission for a discussion of important risks and uncertainties that could cause actual results to differ materially from expectations. Forward-looking statements speak only as of the date made. The company undertakes no obligations to update such statements. Today's call will also include certain non-GAAP measures. The reconciliation of non-GAAP to GAAP financial measures can be found in our press release. I will now turn the conference call over to your host, Bill Rhodes, Chairman, President, and Chief Executive Officer. Sir, you may begin. Good morning, thank you for joining us today for AutoZone's 2023 Q3 conference call. With me today are Jamere Jackson, Executive Vice President and Chief Financial Officer, and Brian Campbell, Vice President, Treasurer, Investor Relations, and Tax. Regarding the Q3, I hope you've had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, are available on our website, www.autozone.com, under the Investor Relations link. Please click on Quarterly Earnings Conference Calls to see them. As we begin, I would like to thank our AutoZoners across the company for their commitment to providing our customers with wow customer service, which has been the secret to our long-term consistent success. For the Q3, our team delivered total sales growth of 5.8%, which included a 1.9% domestic same-store sales comp. While our top line results were below our expectations at the start of the quarter, our sales improved later in the quarter as we experienced improved weather. We were pleased to deliver operating profit growth north of 9% and EPS growth of 17.5%. Both our operating profit and EPS growth were the highest growth rates we've had in over a year. As many retailers have reported, March was a tough month as cool, wet weather impacted customer traffic. In addition, snow accumulations were down significantly in February and March for much of the country, which also had some impact on our business. We mentioned in our last call that weather, particularly during tax refund season, really matters. Unfortunately, it was unfavorable this year as our results reflect. We also, after rapid growth and extensive market share gains in commercial, experienced some headwinds this quarter and our growth was disappointing to us. We were lapping tremendous growth last year and had some internal and external factors that impacted our growth this quarter. We have had some sectors of this business that have been extremely challenged with rising interest rates and high used car prices. Additionally, during our rapid growth over the last couple of years, we also unintentionally de-emphasized some of our tried and true disciplines. As I've said for the last six months or so, as we exit pandemic mode, we must get back to our well-known and highly regarded flawless execution, which I believe will help us reignite top line growth. We have good initiatives in flight in both our retail and commercial businesses. We are determined to move with urgency to re-accelerate our sales and share growth. Fortunately, as this difference between our domestic same-store sales growth and our total sales growth implies, our international team, particularly in Mexico, delivered very strong sales growth for the quarter. Our teams in Mexico and Brazil continue to do a great job offering differentiated customer experiences, which is leading to strong sales growth. This morning, we will review our Q3 same-store sales, DIY versus DIFM trends, our sales cadence over the 12-week quarter, merchandise categories that drove our performance, and some regional call-outs. We'll also share how inflation is in fact impacting our cost and retails and how we think inflation will impact our business for the remainder of FY23. Moving to the specifics for the quarter, domestic same-store sales were up 1.9%. Our net income was $648 million, and our earnings per share was $34.12, increasing 17.5%. On a two-year basis, we delivered a 4.5% domestic same-store sales comp, and on a three-year basis, a 33.4% stacked comp. Our three-year stacked comp was in line with what we've seen the last three quarters. Domestic resale sales were up 2.2%, and our domestic commercial growth was 6.3%. We continued to set commercial quarterly records with $1.11 billion in sales as we generated an additional $66 million in sales than in Q3 last year. On a trailing four-quarter basis, we delivered $4.54 billion in annual commercial sales, up a strong 14.4% over last year. We also set another Q3 record for average weekly sales per store at $16,800. As I've mentioned earlier, March was a bit of an outlier in the quarter's domestic sales results. We had a greater than 3% comp in February, but fell to a negative 1% in March before recovering back to just under 4% in April and early May. On a regional basis, we experienced slower growth in the Northeastern and Midwestern markets than the rest of the country. This held true for both our DIY and commercial businesses. Our business on the West Coast was in line with our remaining markets. Average ticket grew 4% in retail and commercial for the quarter, decreasing 1% from last year. After the most significant product cost inflation we have seen in decades, we are seeing those trends moderate and are negotiating some cost reductions from our vendors as both product costs and freight inflation are slowing or have subsided. Additionally, while not anywhere close to historical norms, we saw wage inflation moderate to approximately 4%. While the staffing environment is substantially improved versus this time last year, we don't envision wage inflation pulling back much from these levels as there continues to be regulatory and market pressures. While we've had to manage through external forces, our focus continues to be on driving profitable market share growth, particularly in units and transactions. Our growth initiatives did just that this past quarter and included new store unit growth, improved satellite store availability, hub and Mega Hub openings, improvements in coverage, leveraging the strength of the Duralast brand, enhanced technology to make us easier to do business with and more efficient, reducing delivery times, enhancing our sales force effectiveness, and living consistent with our pledge by being priced right for the value proposition we deliver. While our sales moderated this past quarter, we remain focused on growing our share over time and becoming the industry leader in both DIY and commercial. Digging deeper into our domestic DIY business this quarter, we delivered a 0.6% comp. As previously said, our ticket growth was up 4% versus last year, and our transaction count trends were down 3%. From the data we have available, we continued to gain both dollar and unit share during the quarter. Our sales floor outperformed hard parts with approximately a 3% difference between them. Our relative outperformance in sales floor categories is attributable to both discretionary categories improving and the hard parts categories slowing. It was encouraging to see our sales floor items performing so well. Specifically, batteries, oil, and wiper categories performed well and successfully lapped very strong performance last year. These categories have exceeded our expectations all year. Our friction category for both DIY and commercial performed below our expectations. We believe both our sales floor and hard parts businesses will continue to do well this summer as we expect miles-driven improvements while our growth initiatives continue delivering strong results. Let me also address our pricing strategies. In Q3, we continued experiencing mid-single-digit pricing inflation in line with cost of goods. We believe both numbers will decrease in the Q4 as we are lapping the onset of high inflation last year. To be clear, we do not believe inflation is going away, especially wage inflation, but expect it to slow as the economy slows. I wanna highlight that our industry has been disciplined about pricing for decades, and we expect that to continue. Most of the parts and products we sell in this industry have low price elasticity because purchases are driven by failure or routine maintenance. Historically, as costs have increased, the industry has increased pricing commensurately to maintain margin rates, increasing margin dollars. It is also notable that following periods of higher inflation, our industry has historically not meaningfully reduced pricing to reflect lower costs. We remain excited about our growth initiatives, our team's focus on execution, and the tremendous share gains we have achieved in both our retail and commercial businesses over the last few years. For our Q4 we expect our sales performance to be led by our commercial business as we execute on opening additional hub and Mega Hub stores, have an improving in-stock position, and improve customer service. We also believe our DIY business will remain resilient as the difficult macro environment is pointing customers to continue maintaining their vehicles. We will, as always, be transparent about what we are seeing and provide color on our markets and performance as trends emerge. Before handing the call to Jamere, I'd like to reiterate our plan on continuing to grow our business in Mexico and Brazil. With almost 800 stores combined across these two markets, as previously noted, these businesses had impressive performance again this quarter. They should continue to be key contributors to sales and profit growth for decades to come. We are leveraging many of the learnings we have in the U.S. to refine our offerings in Mexico and Brazil. In Brazil, in particular, we are targeting to expand our store footprint significantly and aggressively over the next five years. We continue to be excited about our growth prospects internationally. We are dedicated to growing our business in a disciplined and profitable manner well into the future. We know with our AutoZoners leading the charge, we will continue to be successful. I'll turn the call over to Jamere Jackson. Jamere? Thanks, Bill. Good morning, everyone. As Bill mentioned, we had solid results for our Q3. This quarter, we delivered a 1.9% domestic comp growth, a 9.3% increase in EBIT, a 17.5% increase in EPS. To start this morning, let me take a few moments to elaborate on the specifics in our P&L for Q3. For the quarter, total sales were just under $4.1 billion, up 5.8%, reflecting continued strength in our industry and solid execution of our growth initiatives. Let me give a little more color on our growth initiatives, starting with our commercial business for the Q3. Our domestic DIFM sales increased 6.3% - just over $1.1 billion, and we're up just over 32% on a two-year stack basis. Sales to our domestic DIFM customers represented 31% of our domestic auto parts sales. Our weekly sales per program were $16,786, up 1.2%. We experienced growth across both our local customer base and national accounts, with locals being the stronger of the two categories. Our results for the quarter set another record for highest weekly sales volume in the history of the chain at $92 and a half million. I wanna reiterate that our commercial business is strong, and we believe we grew share despite a deceleration in our growth rates this quarter. We have a commercial program in approximately 88% of our domestic stores, which leverages our DIY infrastructure, and we're building our business with national, regional, and local accounts. This quarter, we opened 26 net new programs, finishing with 5,526 total programs. As expected, commercial growth continues to lead the way in FY23, and we continue to focus on growing our business faster. Our strategy remains intact as we continue to gain share in the industry. As I have noted on past calls, our Mega Hub strategy is driving strong performance and positioning us for an even brighter future in our commercial and retail businesses. Once again, I'll add some color on our progress. We now have 85 Mega Hub locations, with 4 new ones opened in Q3. While I mentioned a moment ago the commercial weekly sales per program average was roughly $16,800, the 85 Mega Hubs average significantly higher sales than the balance of the commercial footprint and continue to grow significantly faster than our overall commercial business in Q3. These assets are not only performing well individually, but the fulfillment capability for the surrounding AutoZone stores is giving our customers access to tens of thousands of additional parts and lifting the entire network for both DIY and commercial. This strategy is working. We will open 22-25 new Mega Hubs in FY23. We remain committed to our objective to reach 200 Mega Hubs, supplemented by 300 regular hubs. Many of you have heard me say that in the near term, our commercial business should grow double digits as far as the eye can see, and we maintain that conviction despite this quarter's results. We are significantly under-penetrated with a four or five share in an addressable market that is approaching $100 billion. The investments that we have made in our Duralast brand, expanding our coverage and assortment, adding more hubs and Mega Hubs, building technology, and improving our customer service continue to pay significant dividends and have a long runway. Nothing has changed in our views on what we can accomplish going forward, although we still have work to do to get back to this performance. Moving to our domestic retail business, we delivered a 0.6% comp in Q3. Like our domestic commercial business, retail has been resilient, and we continue to grow share and deliver positive comp growth despite a dismal March. We exited the quarter much stronger, and we're focused on execution in Q4. We saw a 4% ticket growth, as Bill mentioned, and we saw traffic down 3% from last year's levels. However, excluding the middle 4 weeks of the quarter, traffic was in line with last quarter when we were down only 2%. This past quarter, we continued to gain unit and dollar share across the retail segment, a reflection of the relative strength of our business. Our DIY business has continued to strengthen competitively behind our growth initiatives. In addition, on a macro basis, the market is still experiencing a growing and aging car park, with both the new and used car markets posing significant challenges for our customers. We expect these markets to remain challenged for a longer period of time than we originally assumed, which should be a tailwind for DIY. These dynamics, growth initiatives, and macro car park tailwinds have driven a positive comp despite consumer discretionary spending pressure from overall inflation in the economy. We are forecasting a resilient DIY business for the remainder of 2023. I'll say a few words regarding our international businesses. We continue to be pleased with the progress we're making in Mexico and Brazil. During the quarter, we opened six new stores in Mexico to finish with 713 stores and two new stores in Brazil, ending with 83. On a constant currency basis, we continued to accelerate our sales growth in both countries at higher growth rates than we saw in the overall business. We remain committed to our store opening schedules in both markets and expect both countries to be significant contributors to sales and earnings growth in the future. With just over 11% of our total store base currently outside the U.S. and a commitment to continued expansion in a disciplined way, we are bullish on international growth, and we're adding stores and supply chain capacity in Mexico to improve our competitive positioning. Let me spend a few minutes on the rest of the P&L and gross margins. For the quarter, our gross margin was up 56 basis points, including a $17 million LIFO credit, which drove 42 basis points of improvement. Excluding the LIFO benefit, our gross margin increase over last year's quarter was driven by higher merchandise margins, which more than offset a drag from the commercial business mix. With this quarter's LIFO gain, we have taken our remaining LIFO balance to $89 million. As I mentioned over the last few quarters, hyperinflation and freight costs was the primary driver for the charges we took in the P&L. Freight costs have continued to abate over the past several months. We expect this trend to continue and drive a similar LIFO benefit in the Q4. As a reminder, we plan to take P&L gains only to the extent of the charges we have taken thus far. After we have taken P&L gains that fully reverse the charges that we've incurred, we expect to rebuild our unrecorded LIFO re-reserve balance as we have done historically. Moving to operating expenses. Our expenses were up 5.5% versus last year's Q3 as SG&A levered 10 basis points versus last year. As we've said previously, we're committed to being disciplined on SG&A growth as we move forward, and we will continue to manage expenses in line with sales growth over time. Moving to the rest of the P&L. EBIT for the quarter was $858 million, up 9.3% versus the prior year's quarter. Excluding the $17 million LIFO credit, EBIT would have been up 7.1% over last year. Interest expense for the quarter was $74.3 million, up 77% from Q3 a year ago as our debt outstanding at the end of the quarter was $7.3 billion versus $6.1 billion at Q3 end last year. We are planning interest expense in the $105 million area for the Q4 versus $64 million in last year's Q4. Higher debt levels and higher borrowing rates, especially at the short end of the borrowing curve, are driving the increase in interest expense. For the quarter, our tax rate was 17.4% and below last year's Q3 rate of 20.3%. This quarter's rate benefited 595 basis points from stock options exercised, while last year's benefit was 284 basis points. For the Q4, we suggest investors model us at approximately 23.4% before any assumption on credits due to stock option exercises. Moving to net income and EPS. Net Income for the quarter was $648 million, up 9.3% versus last year's Q3. Our diluted share count of 19 million was 7% lower than last year's Q3. The combination of higher net income and lower share count drove earnings per share for the quarter to $34.12, up 17.5% versus a year ago. Excluding the LIFO credit, our net income would have increased 7.1% and our EPS growth would have been 15.2%. Let me talk about our free cash flow for Q3. For the Q3, we generated $554 million in free cash flow versus $682 million a year ago. Year-to-date, we've generated just over $1.4 billion versus just over $1.6 billion a year ago. We expect to be an incredibly strong cash flow generator going forward, and we remain committed to returning meaningful amounts of cash to our shareholders. Regarding our balance sheet, our liquidity position remains very strong and our leverage ratios remain below our historic norms. Our inventory per store was up 4.3% versus Q3 last year, and total inventory increased 7.4%, driven primarily by inflation, our growth initiatives, and in-stock recoveries. Net inventory, defined as merchandise inventories less accounts payable on a per-store basis, was -$215,000 versus -$216,000 last year and -$227,000 last quarter. As a result, accounts payable as a percent of gross inventory finished the quarter at 126.5% versus last year's Q3 of 127.9%. Lastly, I'll spend a moment on capital allocation and our share repurchase program. We repurchased $908 million of AutoZone stock in the quarter, at quarter end, we had just under $850 million remaining under our share buyback authorization. Our strong earnings, balance sheet, and powerful free cash generated this year have allowed us to buy back 6% of the company's total shares outstanding since the start of the fiscal year. We remain committed to our disciplined capital allocation approach that enables us to invest in the business while returning meaningful amounts of cash to shareholders. Our leverage ratio finished Q3 at 2.3x EBITDA, we remain committed to return to the 2.5x area. To wrap up, we continue to drive long-term shareholder value by investing in our growth initiatives, driving robust earnings and cash, and returning excess cash to our shareholders. We're growing our market share and improving our competitive positioning in a disciplined way. Our strategy continues to work. As we look forward to the remainder of our fiscal 2023, we're bullish on our growth prospects behind a resilient DIY business and growing commercial and international businesses. I continue to have tremendous confidence in our industry, our business, and the opportunity to drive long-term shareholder value. Now I'll turn it back to Bill. Thank you, Jamere. We are proud of the results our team delivered this past quarter. We remain on track to deliver a solid 2023. We must continue to be focused on superior customer service and flawless execution. Execution and our culture of always putting the customer first are what define us. As Jamere said a moment ago, we continue to be bullish on our industry and, in particular, on our own opportunities for the remainder of the year. We will continue to invest in initiatives that drive an appropriate return on capital. We continue investing where our returns are the highest. This upcoming quarter will be very busy for us. We'll be opening over 100 stores in the Americas. We'll also remain focused on those initiatives that we have underway to grow sales in both our retail and commercial businesses. As we have mentioned previously, we are doubling down on execution and are focused on driving share gains. We know that investors will ultimately measure us by what our future cash flows look like 3 to 5 years from now, and we accept that challenge. I continue to be bullish on our industry and, in particular, on AutoZone and AutoZoners. Now we'd like to open up the call for questions. Thank you. The floor is now open for questions. If you would like to join the queue to ask a question, please press star one. On your keypad. If you wish to remove yourself from queue, you may press star two. We do ask, if listening on speakerphone this morning, to please pick up your handset while asking your question to provide optimal sound quality. In the interest of time, we ask you please limit yourself to two questions. Please hold a moment while we poll for questions. Our first question this morning is coming from Bret Jordan from Jefferies. Please go ahead, Bret. Hey, good morning, guys. Good. Could you talk a little bit more about the internal factors that impacted growth? I think you said you'd de-emphasize some internal disciplines in the prepared remarks. Could you maybe give us some more color there and maybe what the turnaround time on those disciplines might be? Yeah, it's a great question, Bret. Thank you for it. Yeah, I wanna be very careful how I say this. We unintentionally de-emphasized some of the processes and procedures that we have in place, and that's not to be surprising. During the pandemic, we had to do a lot of things differently, also in the commercial business in particular, we were growing very, very rapidly. We just got away from some of the process procedures that we have in place. We're going back to those and re-emphasizing those. To your point, that's not gonna turn around in a day. It's gonna turn around in months, not days or weeks. We're working very diligently on it today. You know, it's some simple things like periodic, how are we deploying our sales force? What are our national account focuses? Just things like that we have very disciplined processes that just in the midst of the pandemic, we kinda turned our back on a little bit. Okay. A question on the Q4 outlook. Just given the call out of the weather impact in March. If we go back to past years like 2017 or maybe 2012, where a real mild winter negatively impacted the early summer, are you seeing any of that as we go into the Q4, or was it really just sort of a one quarter event with the weather? I think that's a great question too, Bret, and you're exactly right. We've seen it in the past. The one time that's different this year is we did have winter in December. In 2017, we never had a winter. I also talked about that our brakes category has been a little bit softer. That can be a place where we see some lingering effects. I don't think it's gonna be anywhere on the order of magnitude of what we saw in 2017, but it might be a little bit softer. Okay. Great. Thank you. Thank you. Thank you. Your next question is coming from Christopher Horvers from JP Morgan. Christopher, your line is live. Please go ahead. Thanks. Good morning, everybody. A couple questions on the top line. The rebound that you saw in April and May, can you talk about how DIY and Do-It-For-Me performed in that rebound? You know, Jamere, you talked about the low double digit as far as the eye can see. Is your expectation that you can get back to that low double digit pace in Do-It-For-Me in the Q4? Chris, I'm gonna let Jamere answer that second part, if you don't mind. Since it was his statement. I think he's ready for that too, and I am as well. I think the businesses trended very similarly. I think one of the things that I also pointed out, it was not just that the weather was poor. The weather hit us at the worst time of the year for us, during the all important tax refund season. You all have seen tax refunds were down a little bit this year. To us, the bigger implication was the weather was just pretty awful. It was cold and wet and mild during that period of time. We saw both businesses trend down, and they both have improved at some level, like I called out in the prepared remarks. Jamere? Yeah. Listen, as I said in my remarks, I mean, we're still committed to being a double-digit grower over time. We're under-penetrated. We have a roughly a 4% - 5% share, and that gives us an opportunity to create a faster growing business. We're executing our growth playbook. You know, that growth playbook, quite frankly, still has a lot of runway associated with it, and we saw significant share gains over the past 3 years. Things like improving the quality of our parts in our Duralast offerings, expanding our assortments with Mega Hubs, improving our delivery times, leveraging technology, the competitive pricing that we've done, all of those things still have a lot of legs associated with them. You know, when I think about what Bill talked about as it relates to execution, first, we believe that we grew share in commercial despite the growth rate deceleration. Secondly, we believe that those growth initiatives still have a lot of runway. We have other initiatives in flight, as Bill mentioned, that we'll execute in Q4 and during FY '24 that we believe will accelerate growth. Nothing's changed in our strategy. Nothing's changed in our outlook as we move forward. I don't think anything's changed in our commitment. We need to be a double-digit grower in commercial, you know, we weren't this quarter. Got it. On the gross margin line, a two-part question. As input and freight costs come down from your vendors, how are you thinking about maybe passing along some of that back to the consumer? And is that different from prior cycles? Understandably, you're only gonna get the LIFO back, but then ultimately, we get the turn of that inventory, and I know you're working hard to sort of leverage your increased scale with these vendors given the growth in Do-It-For-Me. Shouldn't we have line of sight gross margin expansion beyond just recapturing the LIFO headwinds? Yeah, I'll take the first part and turn it back to Jamere to talk about LIFO. First of all, we have not seen meaningful reductions in product costs at this point in time. We have seen meaningful reductions in freight costs. If you recall, we did not even attempt to pass on all the freight costs to our customers because we knew it was somewhat of an anomaly and would reverse course at some order of magnitude. As we are beginning to see some product costs reductions. I don't anticipate that we will re-reduce pricing as a result of those. For one really strong reason, our wage inflation has been more than double what we've experienced in my 28 years here. We have to somehow get paid for that wage inflation too in the P&L. If we get some reductions in product costs, I will anticipate that those will be used to offset some of that wage inflation. Jamere, you wanna talk about LIFO? Yeah. As I mentioned, you know, we were up 56 basis points, and 42 basis points of that was a LIFO tailwind. The remaining margin was driven by, as I said, merchandising margin actions, which more than offset the natural mix drag that we have from commercial. As we, you know, continue to see those freight costs abate, we'll see those gains come back through to the P&L. As Bill said, what that means for us going forward is all of the things that we're working on in terms of merchandise, margin actions will actually be, you know, accretive to the business, if you will. We'll get back to our normal state of running the margin intensity playbook that we've run in the past. We feel pretty good about that. We've seen some inflation cool off in the supply chain, but as Bill said, the stickiest portion of that are wages. Wages, we don't anticipate going down. There'll still be some cost pressures there, but it's good to actually be in a position to have some deflationary conversations now versus where we were when we were in the heart of the pandemic, when quite frankly, everything was moving with red arrows in terms of inflation. We think we have some opportunity there, that should give us some margin tailwind as we move forward. Thanks very much. Have a great rest of spring. Yep, you too. Thank you. Your next question is coming from Simeon Gutman from Morgan Stanley. Simeon, your line is live. Please go ahead. Hey, good morning, everyone. Kind of a follow-up to the prior question. I wanted to ask what the commercial run rate looks like. You know, it's going through some normalization. You both have said double digit. I assume that's comp, not just total sales. That's gonna be at least 2x what the industry grows at, in theory, if we take the historic run rate. You know, why is that, you know, call it high single even low double, why shouldn't that be the normalized run rate? You know, how else are you thinking about it? Yeah. I'll leave it at that. First of all, you said same store. I don't think we said same store. Maybe Jamere did in his remarks. I just think, Simeon, we've got, you know, less than a 5% market share. We have, you know, over 15% in the retail business. We have a very fragmented industry in commercial with some competitors that frankly don't have a lot of the strengths that we have. I would anticipate us to grow meaningfully ahead of the market. You know, and the market over long periods of time, you know, DIFM's running 4 and a half%. To me, growing double that seems like it makes sense. Frankly, we didn't do it this quarter. We've got some work to do to re-accelerate our growth. We also we're celebrating some 25% and 27% growths over this period of time. The other thing that Jamere worked on is we're not sitting here and sitting on our hands either. We're also working on what are the next generation of initiatives that we're gonna deploy to make us provide better customer service for our commercial customers and be a better partner with them. I'm excited about some of the things that we're working on that they're not even in test yet. As you know, we will go off and test them. We're committed not to a quarter's growth rate in commercial. We're committed to being the largest player in the commercial business over the long run. Yep. My follow-up is, are you seeing anything with regard to price in terms of competitive posture? Is anything visible on the street? Then thinking about it yourself, I know we talked about not engaging in it again, but it seems like the industry could go through another nice wave here with credit crunch and the continued aging of the vehicle population. Yeah, great question. Yes. Have we seen things in the pricing environment in the commercial sector different than before? The answer is absolutely yes. One of our competitors well advertised that they had changed their pricing posture. I wanna back up, and I wanna remind everybody, we did something similar about 2 years ago. When we did it, first of all, we had tested it in 6 markets and then 14 markets before we rolled it to the other 40 some odd markets. We knew what was gonna work, and it had nothing to do with our pricing posture versus our close-in competitors. It had everything to do with trying to optimize our value proposition versus the warehouse distributors who hold the vast majority of share in this industry. As we've seen, a competitor move their pricing, we see no indications that that competitor has, is lower than us on pricing. I think that they seem to have reduced that gap similar to what we did. We don't have perfect you know, visibility to it, but that's what we're seeing at this point in time. You know, the other thing I'll remind you just, you know, in terms of our initiatives, you know, pricing was a leg of the stool, if you will, and pricing's a pretty dynamic environment. You know, what we've always said is we're going to be, you know, priced right in the marketplace. If indeed there was some action there that suggested we needed to go do something, we would certainly do that to continue on this journey, as Bill mentioned before, of growing our market share and growing our gross margin dollars. That's been a winning playbook for us. Thank you both. Yep. Thank you, Simeon. Your next question is coming from Zachary Fadem from Wells Fargo. Zach, your line is live. Please go ahead. Hey, good morning, and thank you. Is there a way to size up the impact of internal factors versus external factors on the comp this quarter? As you think about all the moving parts around tax refunds and weather and perhaps some deferred maintenance from a gradually slowing consumer, to what extent do you view these Q3 headwinds as a one-off or transitory versus the beginning of perhaps a bigger change in trend for the industry? I don't necessarily know that the industry changed. We'll have to see as we get more visibility to what happened across the industry. Certainly, our results changed. I can't go through and parse it piece by piece. Clearly, the weather implications from March were an anomaly that should not repeat themselves. I don't anticipate in the summertime. There are usually not a lot of weather impacts in the summer or fall. They generally are more pronounced in winter and spring, when the weather's more volatile. I think some of these internal things that we're talking about, as I said a minute ago, they're gonna take us a little time, because we can start doing the processes again. The ramifications and the outcomes that come along with those processes, as I said, are gonna take months. We'll get there. Again, we're playing for the long game. Gotcha. On your SG&A per store, it stepped back down to that 2.5% range. To what extent was this planned versus a pivot from slowing sales? As we look forward, is it fair to say that we've now returned to a more normalized, you know, lower single-digit run rate from here, or would you expect it to step back up as sales perhaps recover? Well, I think what we've said historically is we've been very disciplined on SG&A growth, and we've grown SG&A sort of in line with the top line. You saw this quarter that, you know, as sales were a little bit lighter, we were able to deliver upon that. What I also reiterate is that, you know, we're gonna invest in SG&A in a disciplined way for the things that we need to do to create a faster-growing business. One of the areas that I've talked about in the past is the investments that we're making in IT, for example, to improve our speed, to improve our productivity, to improve the way that we're doing business in our stores and improve the experience that our customers have with us. To the extent that we need to lean in and invest a little bit more in SG&A to deliver upon that, we will. This is a business that has been very disciplined about managing the SG&A line. When we need to manage it, to deliver a certain result, we'll do that, but we're not gonna do that at the expense of our growth initiatives. Got it. Appreciate the time, guys. Yep. Thank you, Zach. Your next question is coming from Steven Forbes from Guggenheim Securities. Steven, your line is live. Please go ahead. Good morning. I wanted to focus on the domestic Mega Hub initiative. Can you first just confirm the year-end targets? I think you said 22 to 25 new Mega Hubs versus 7 year-to-date. Just want confirmation on that. Then can you speak to any bottlenecks or limitations that would potentially prevent a more accelerated ramp in 2024 and beyond? Or just any comment on how the Mega Hub real estate pipeline looks today. Yeah. You know, we've talked about our growth initiatives still having a lot of runways. Quite frankly, the Mega Hub is one of those. You know, candidly, Bill talked about execution. We would like to open more. We would like to open them sooner. This is a matter of execution versus a macro or competitive issue. We've got a big quarter planned for Q4. The teams are working on all the things that we need to work on, from site identification to streamlining our processes to get more open faster. This, you know, very clearly is an execution point. I own store development inside our company. You know, when we talk about places where we need to exit pandemic mode and have better execution, this is certainly one of them. Maybe just a follow-up, staying on the footprint opportunities, you talked about international, but curious, maybe if you could expand on how you sort of expect the footprint in both Brazil and Mexico to grow over the coming years? You also mentioned ROIC. Curious if you could just update us on how the return profile of the international location compares to the company average today? Sure. In Mexico, excluding the pandemic, we've opened 40 stores a year for a very long period of time. We didn't open as many in the pandemic. Our team down there owes us a few of those openings, so hopefully we will grow at a little bit faster rate on a store count basis in Mexico going forward. A little over 1 year ago, we defined our test in Brazil as over and made Brazil a part of our ongoing strategic growth plan. They are now moving forward very rapidly. We're gonna open 20 some odd stores this fiscal year and hopefully will grow from there. It'll become a bigger and bigger part of our, you know, organic growth. On Brazil, the ROIC is negative. We've said it several times. Until we get to scale, some level of scale, we are continuing to lose money in Brazil because of the overhead infrastructure and warehouse and delivery infrastructure. We clearly see a line of sight to profitability. We see a line of sight to good returns. In Mexico, our returns are better than they are in the United States. It's been a very good performing market for us for 25 years now. The most exciting part is. As we get further and further in the growth spectrum, we see more and more growth in front of us in Mexico. We don't see any slowing down anytime soon. Thank you. Oh, thank you. Your next question is coming from Scot Ciccarelli from Truist Securities. Scot, your line is live. Please go ahead. Good morning, guys. It makes sense that some of these execution issues can't be fixed in days or weeks, but it would also imply that they've been going on for a while. I guess my question is like, why would the slowdown show up so starkly this quarter? I guess I would've expected more of a trend line rather than a step function change in, let's call it, stack growth trends. Thanks. Hey, I think it's a fair question. I wanna be careful and not say that all of this was due to those processes. I think that that's an element. We talked about weather, there's other things that are happening in the marketplace. I don't wanna pin it all on that. You're right, those things have been going on for probably a year to two years. It's not putting those processes back in place that's gonna change it's the outcomes that come along with those processes weeks and months later. Yeah. I think what you're hearing from our tone here is that, you know, number 1, we believe that the industry is healthy, and there are very healthy industry dynamics. Number 2, we're continuing to grow share. We have set a very ambitious goal to grow our business faster, particularly in commercial, where we said our business should grow double digits. As we look at the path forward, while we don't see an immediate snapback to that potentially, we think all the growth initiatives that we have in place, all the new things that we have in flight, give us a lot of confidence that we'll be able to go do that. You know, these are, these are not things, to Bill's point, where we're saying we're pinning everything on some macro issue or pinning everything on execution, but we control our own destiny, and the things that we've talked about from an execution standpoint are things that will help us drive better performance as we move forward. The only thing I'd add further, we're playing the long game. Yeah, we're disappointed with the 6% growth. That's not gonna deter us. In fact, it makes us hungrier and work harder. We're looking at this over the very long term. That's helpful. Just a quickie, hopefully. How big of a sales gap in sales performance did you see in different markets that may help us better kinda gauge the impact of weather in the quarter? Thanks, guys. Yeah. I mean, we saw mixed results. We talked a little bit about in the comments about the Northeast and the Midwest, that, you know, clearly where we underperformed. Those are markets that quite frankly, if we, you know, get some, get some decent weather, here over the next quarter or so, we could see that rebound and produce a better result. You know, those are probably two areas regionally where we saw slightly lower performance than we saw across the rest of the chain. Thank you. Thank you. Your next question is coming from Michael Lasser from UBS. Michael, your line is live. Please go ahead. Good morning. Thanks for the opportunity to take my question. Bill Rhodes, your commercial business decelerated at the same time there was a meaningful acceleration in the performance of the commercial businesses of one of your peers. What does that tell you about structural limitations in terms of your commercial business's ability to gain market share? It's an interesting way to put it, Michael. Yes, I'll be crystal clear, that is not lost on us, what you just pointed out. I'll also point out that, as I mentioned in the pricing discussion, they embarked on a pivot in their strategy a little over a year ago. Not dissimilar to what happened to us two years ago was they changed their competitiveness versus other sets of customers or of competitors in the marketplace. Obviously, that strategy has worked, and it so happened to coincide with the slowdown for us. I don't necessarily pin those two things together. Okay. You know, from my vantage point, Michael, I mean, the, you know, again, as we've said before, they grew share. Those results were very impressive. We also grew share as well. Our focus again is on how do we grow faster and win even larger shares than what we've grown over the past quarter or so. That focus hasn't changed. In a follow-up on your prior statement, Jamere, in order to get back to the double-digit growth for your commercial business, does that mean you need to see an improvement in sales per existing customers or an increase in your total customer count to get to that level? We clearly, as we've talked about, we're a 4% or 5% share in what's approaching a $100 billion market. That opportunity for us is to grow our share of wallet with our existing customers. It's also to grow new business, both in national and with locals or up and down the street, as we affectionately call them in-house. We believe that opportunity is still in front of us. You know, as we look at our commercial business going forward, what gives us a tremendous amount of confidence, the things that we've put in place have worked. We know that we have some things that are in flight today that are very, very promising that we're launching in Q4 and over the next year or so. We think those things are gonna pay dividends for us as well. It's clearly an opportunity for us to go deeper into the wallets of our existing customers, and grow new customers at the same time. Thank you very much. Thank you. Your next question is coming from David Bellinger from Roth MKM. David, your line is live. Please go ahead. Hey, good morning. Thanks for taking the questions. If we look back at this quarter, 3% comp in February, close to 4% in April and May as you move past some of these weather and tax refund fluctuations. Is that a good sustainable run rate to think about for comp sales growth from here, and as you hold on to price and continue to make these underlying investments in the business? You know, as you know, David, we don't quote unquote, "give guidance," but we pointed out and called out March as the anomaly. Your supposition is generally in line with that thinking. Got it. Then, just a follow-up on your prepared remarks. You talked about the sales floor and some discretionary categories believe, improving, I believe, is what you said. That seems at odds with some of the other retailer comments out there. Is anything to read into that? Is there more of a trade down benefit behind it and, you know, maybe a positive for those type of categories if we see more indications of a, just a broader spending slowdown? Just how do you think about those specific categories? Yeah, if you recall, the categories that I called out were not necessarily discretionary. They're sales floor categories, but batteries, oil, and wipers, none of those are discretionary. I don't think we've seen a big rebound in our discretionary business, except we've seen it a little bit improved at times as we've gotten back into in-stock. Those are some places we didn't have the in-stock levels that we would have liked. Generally, the places where we've seen the sales floor recover were more maintenance-oriented categories. Great. Thank you. Yep, thank you. Your next question is coming from Greg Melich from Evercore ISI. Greg, your line is live. Please go ahead. Thanks. My first question is on inflation. I, thanks for giving us the ticket up 4% and traffic down 2% for the company. Was it fair to say that inflation might be up 6% and that the difference might be items in basket or trade down or mix if we look at average ticket? Yeah, that's the right zip code. We saw inflation up kind of in the mid-single digit-ish range, if you will. There's always things in the basket and mix that, you know, can cause you to have a slightly different ticket print than that. You know, Greg, I'd also like to remind you that historically, for a long time, this industry has a trajectory that has pressure on customer count and growth in average ticket because of the technological innovations that are happening in components on a vehicle. We've seen our ticket grow 3%, 3.5%, 4% basically since I've been in this business, with generally a drag on transaction counts. The gap between where we are today and where we are historically has closed considerably. Got it. Then my second question is, you went through weather and geographies. Is there any difference in how the more urban or densely populated stores are performing versus rural? I'm just thinking, you know, that's one thing we've seen from dedensification over COVID and with shrink particularly impacting some retailers, a lot of retailers. I think shrink would be a different story than sales. Okay. We don't see any big significant difference in our sales trajectory in rural versus urban environments. Clearly, it's a tough environment out there on the shrink front. Our team is managing shrink okay. We have some trends that are a little bit worse than what they have been, and we're focused on that. As you know, a lot of retailers are talking about organized retail crime, and it's a real problem. Fortunately for us, they're a lot of times focused on more consumable items, which are not necessarily available in an AutoZone store. Got it. In certain areas, you haven't, like, changed store hours to sort of either protect employees or anything? You haven't had to go to that extreme? Absolutely not. We do put guards in certain stores to make sure that we do control the environment. Great. Thanks, and good luck. Yep, thank you. Sure. Thank you. Our final question this morning is coming from Steven Zaccone from Citi. Steven, your line is live. Please go ahead. Great. Good morning, everyone. Thank you for squeezing me in. I wanted to ask on pricing. If we think about mid-single digits in the Q3, what will it be in the Q4? As we look to next year, would you still expect it to be a, you know, slight tailwind to comps, or could it in fact be flattish? We expect the Q4 to be generally in the same zip code as what we saw in the, in Q3. As we look to next year, there are several things that are at play here. The one that I think you ought to spend the most time thinking about, as you're looking to correlate that to what you see in pricing is what we've talked about in the wage environment, where, you know, wages are still stubbornly high. You know, let's call it in the 4%-5%-ish kind of zip code. I think that, you know, sort of translates to, at a minimum, what you see, you ought to see from a pricing environment. There are puts and takes, obviously, from pricing. As Bill mentioned, there will be some categories where we'll see some deflation, some that will see some inflation. Generally speaking, we're fading more to the historical norms than we have in the past. Okay, great. Thank you. I hate to go back to commercial, but I did wanna clarify something and just, you know, given your commentary about some of these internal factors, is it fair to think the timeline to return to double-digit commercial growth may take a couple quarters? You know, anything you can say on the timeline would be helpful for us as we assess our models. I think we'll stick with what we've already said. This is not gonna turn around in weeks. It's gonna take months. Is that 4? Is that 8? I don't know until we get into it. Thank you. Yep, thank you very much. Okay, before we conclude the call, I wanna take a moment to reiterate we believe 2023 will continue to be a solid year for our industry. Our business model is working. We must take nothing for granted as we understand our customers have alternatives to shopping with us. We have exciting plans that should help us continue to succeed. I wanna stress that this is a marathon and not a sprint. As we continue to focus on the basics and strive to optimize shareholder value, we are confident AutoZone will continue to be successful. Lastly, as we celebrate Memorial Day next Monday, we should all remember our country's heroes, both past and present. We owe these Americans a tremendous debt of gratitude. Thank you for participating in today's call. Have a great day. Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you once again for your participation.