Greetings! Welcome to the AutoZone's 2024 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. The company would like to announce the following forward-looking statement. 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, and the company undertakes no obligation to update such statements. Today's call will also include certain non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures can be found in our press release. It is now my pleasure to turn the floor over to Phil Daniele, Chief Executive Officer with AutoZone. Good morning, and thank you for joining us today for AutoZone's 2024 Third Quarter Conference Call. With me today are Jamere Jackson, Chief Financial Officer, and Brian Campbell, Vice President, Treasurer, Investor Relations, and Tax. Regarding the third quarter, I hope you had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with the slides complementing our comments today, are available on our website, www.autozone.com, under the Investor Relations link. Please click on the quarterly earnings conference calls to see them. As we begin the call, I wanna say thank you to our more than 120,000 AutoZoners across all of our businesses for delivering solid earnings results in the face of a difficult macro environment. With our continued focus on providing what we call WOW! Customer Service, our AutoZoners delivered our total sales increase of 3.5%, total company same-store sales up 1.9%, and on a constant currency basis, total company same-store sales of 0.9%. Also, our operating profit grew 4.9%, while our earnings per share grew 7.5%. In spite of our lower-than-planned sales, we managed our business well, and we were able to deliver bottom-line results that continue to build on the phenomenal results we've had over the last several years. Congratulations to our AutoZoners everywhere who helped us achieve this quarter's growth. Your dedication to delivering on our commitment of WOW! Customer Service is always inspiring. Before I begin my comments on our third quarter sales, as a reminder, the backdrop to this quarter and every third quarter of our fiscal year includes tax refund season. It is roughly a $300 billion influx of cash to our customers. It begins around Valentine's Day and generally lasts 4-6 weeks. These dollars matter to our customers and meaningfully impacts their shopping patterns in our stores. This year, refund dollars ended up slightly versus the previous year. However, February refund flows were lower than expected and negatively impacted the first 3 weeks of the quarter's domestic same-store sales. While the refund flows did catch up later, in the later weeks, we felt the delayed refunds were a drag on our sales results through February and early March, similar to what you may have heard from other retailers. Secondly, the weather was unfortunately cooler and wetter than we had expected and planned, especially in the Northeast and the Midwest markets. As a result, sales in these markets were noticeably below the remaining markets, with this pattern more pronounced over the last eight weeks of our twelve-week quarter. Again, extreme weather, either hot or cold, drives hard part failures and accelerates maintenance over time, thereby driving higher sales. So on balance, we believe this quarter's sales were impacted negatively by the late start of the tax refund season, while the last eight weeks were impacted by cooler than we had planned. Despite these headwinds, we also had many successes. We gained share in our retail business, and we believe we continue to gain share in commercial. We continue to be encouraged by our supply chain initiatives. The construction of our two new domestic DCs are on track for Q2 FY 2025 opening, as well as our continued forward deployment of inventory across both our Hubs and our Mega Hubs. We continue to see progress on our initiatives within our domestic commercial business that give us confidence about accelerated growth. While it is prudent for us to remain cautious on our outlook for the remainder of the year, we believe we believe sales will accelerate over time. We are excited about our commercial initiatives that are providing deeper parts coverage closer to the customer with faster delivery times, improving customer service and thereby driving sales. For the third quarter, our total company same-store sales were 0.9% on a constant currency basis. As we have mentioned, international has become a more important part of our growth story, and this quarter, we delivered another strong quarter, up over 9.3% on a constant currency basis. We continue to be very encouraged with both our short-term and long-term growth prospects we have internationally and we plan to accelerate new store openings and drive operational improvements in these markets over the next several years. Our domestic same-store sales were flat this quarter compared to up 0.3% last quarter, and up 1.9% in Q3 of last year. As I mentioned previously, we believe our sales were impacted in the first 4 weeks of the quarter by the delayed tax refund season, and the last 8 weeks by the mild, wet weather pattern across much of the U.S. Domestically, we ran a negative 0.7 comp across the first 4 weeks, and collectively, across the last 8 weeks, a +0.3% comp. Our commercial business grew 3.3% against last year's Q3 growth of 6.3%. Our commercial results were higher in the first 8 weeks and relatively consistent, but slightly lower the last 4 weeks. The last 4 weeks' comparison were the most difficult of the quarter. Weather impact was more pronounced in the last 8 weeks of the quarter, and it was during this time that the regional performance disparities became more apparent. The Northeast and the Midwest underperformed the remainder of the country by close to 200 basis points over the last 8 weeks of the quarter. Commercial transaction counts were up and were partially offset by slightly negative ticket growth, which was attributable to similarly negative inflation on a same SKU basis. We opened 20 net new commercial programs and now have commercial in 92% of our domestic stores. Domestic commercial sales represented 31% of our domestic auto parts sales for Q3. Despite the choppiness in our commercial sales results this quarter, we are planning for a stronger growth rate in Q4 behind continued execution of our growth initiatives and somewhat easier comparisons. Commercial sales growth continues to be driven by the key initiatives we've been working on over time: improved satellite store inventory availability, material improvements in Hub and Mega Hub coverage, the strength of the Duralast brand with an intense focus on high-quality parts and products, and technology enhancements that make us easier to do business with. We are encouraged by our recently launched initiatives focused on improving customer service with faster delivery times. As we roll these initiatives to the majority of the chain, we are anticipating faster growth and accelerated share gains. Regarding domestic DIY, we had a negative 1% comp this quarter versus last year's comp of 0.6%. DIY ran negative 2% across the first 4 weeks of the quarter, positive 0.1% the second 4-week segment, and negative 0.1% comp over the last 4 weeks. Regionally, the Northeast and the Midwest markets underperformed the remainder of the country by approximately 100 basis points over the last 8 weeks of the quarter, similar to our commercial business. Heading into the fourth quarter, we feel weather should be a little less volatile, and we are planning accordingly. Regarding our merchandise categories in the DIY business, our sales floor categories, in particular, discretionary categories, underperformed hard parts. We also saw several seasonal merchandise categories and weather-sensitive hard part categories being off our planned results due to the cooler-than-expected weather. Regarding this quarter's traffic versus ticket growth, our DIY traffic was down approximately 2%, while our ticket average was up only 1%. We expect our average ticket growth will return to more normalized levels in the 2%-4% range as we get further removed from the higher inflation from the last couple of years. We attribute, we attribute our previously mentioned DIY share gains to improved customer service levels in our stores and our in-stock nearing pre-pandemic levels, driven by most of our vendor partners returning to more normalized operations, meaning recovering from the pandemic sales surge and supply chain disruptions. As we look forward, we are continuing to focus on flawless execution and delivering WOW! Customer Service will drive our accelerated sales growth in our domestic business. Before handing the call to Jamere, I'd like to highlight and give some color on our international business. At 872 stores open internationally, or 12% of our store base, this business had yet again impressive performance last quarter and should continue to grow at a robust pace for the remainder of fiscal year 2024 and beyond. We are leveraging many of the learnings we have in the U.S. to refine our offerings in our international markets. Before Jamere discusses our financial results, I'd like to remind you of our key objectives for fiscal year 2024. We are focused on growing our domestic commercial business, and we believe our improved customer service levels will lead to continued sales growth. We are also focused on our supply chain with two initiatives that are in flight to drive improved availability: first is our expanded Hub and Mega Hub rollouts, and secondly, we are making good progress on adding capacity to our distribution network. We have two distribution centers that are nearing completion in the U.S., one in Chowchilla, California, and the other in New Kent, Virginia. We are also very close to completing the expansion of our Tepeji, Mexico, D.C., and last quarter, we broke ground on a larger facility that will house our relocated Monterrey, Mexico, D.C. Our strategy is focused on leveraging the entire network to carry more inventory closer to the customer, driving sales growth with improved speed, expanded parts availability, and improved efficiencies. These capacity expansions will underpin our future growth. ... Now I'd like to turn the call over to Jamere Jackson. Thanks, Phil, and good morning, everyone. As Phil has previously discussed, we had a solid third quarter, with 3.5% total company sales growth, flat domestic comp growth, a 9.3% international comp on a constant currency basis, a 4.9% increase in EBIT, and a 7.5% increase in EPS. We continue to deliver solid results, and the efforts of our AutoZoners in our stores and distribution centers continue to enable us to drive earnings growth in a meaningful way. 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 $4.2 billion, up 3.5%. Let me give a little more color on sales and our growth initiatives. Starting with our domestic commercial business, our domestic DIFM sales increased 3.3% to just under $1.2 billion, and we're up 9.6% on a two-year stack basis. Sales to our domestic DIFM customers represented 31% of our domestic auto parts sales. Our average weekly sales per program were $16,400, down 2.4% versus last year's $16,800. Now, as a reminder, we have added over 300 new programs over the last 12 months, and these new programs are diluting the overall sales per program. We are, however, extremely pleased that these programs are maturing significantly faster than our historical performance and position us well for the future. We now have our commercial program in approximately 92% 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 20 net new programs, finishing with 5,843 total programs. Our commercial acceleration initiatives continue to make progress as we grow share by winning new business and look to gain share of wallet with existing customers. Importantly, we have a lot of opportunity in front of us, and we will continue to aggressively pursue growth in the highly fragmented commercial market, which we believe is our single largest growth opportunity. To support our commercial growth, we now have 103 Mega Hubs locations, with 2 net new Mega Hubs open in Q3. Our Mega Hubs continue to average significantly higher sales than the balance of the commercial programs and grew more than 3 times the rate of our overall commercial business in Q3. Our Mega Hubs typically carry roughly 100,000 SKUs, drive tremendous sales lift inside the store box, and serve as an expanded fulfillment source for other stores. These assets are performing well individually, and 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. We will continue to aggressively open Mega Hubs for the foreseeable future, and we expect to open well north of 200 Mega Hubs at full build-out. These assets are key to our growth plans. On the domestic retail side of our business, our comp was down 1% for the quarter. As Phil mentioned, we saw traffic down approximately 2%, offset by approximately 1% ticket growth. Over time, we would expect to see slightly declining transaction counts offset by low- to mid-single-digit ticket growth, in line with the long-term historical trends for the business, driven by changes in technology and the durability of new parts. While DIY discretionary purchases were challenged in Q3, we continue to see a growing and aging car park, miles driven back to pre-pandemic levels, a challenging new and used car sales market, and a consumer that is likely to continue to invest in their existing vehicles. As such, we believe our DIY business will remain resilient. Now I'll say a few words regarding our international business. We continue to be pleased with the progress we're making internationally. Our same-store sales grew an impressive 18.1% on an actual basis and 9.3% on a constant currency basis. During the quarter, we opened 12 stores in Mexico to finish with 763 stores and 1 store in Brazil, ending with 109. We remain committed to international, and given our success, we're bullish on international being an attractive and meaningful contributor to AutoZone's future growth. Now let me spend a few moments on the rest of the P&L and gross margins. For the quarter, our gross margin was 53.5%, up 102 basis points, driven by a significant improvement in our core business gross margins and 15 basis points from a non-cash $24 million LIFO credit in this quarter versus a $17 million LIFO credit in Q3 of last year. Excluding LIFO from both years, we had a very strong 87 basis point improvement in gross margin. Our merchandising and supply chain teams have done an exceptional job of driving gross margin improvement this year. I will point out that we now have $19 million in cumulative LIFO charges yet to be reversed through our P&L, and we expect this credit balance to reverse over the next couple of quarters. We're currently modeling approximately $10 million in LIFO credits for Q4 based on the deflation experienced this past year. Now, this compares to $30 million LIFO credit we had in Q4 last year, which means we would have a $20 million net headwind from LIFO in gross profit. As I've said previously, once we credit back the $19 million through the P&L, we will not take any more credits, and we will begin to rebuild an unrecorded LIFO reserve. Moving to operating expenses, our expenses were up 6% versus last year's Q3, as SG&A, as a percentage of sales, delevered 76 basis points. On a same-store basis, SG&A grew 3.3% as we continue to invest in initiatives that drive speed, productivity, and improve customer service. We're committed to being disciplined on SG&A growth as we move forward, and we will manage expenses in line with sales growth over time. Moving to the rest of the P&L, EBIT for the quarter was $900 million, up 4.9% versus the prior year, driven by our positive same-store sales growth and gross margin improvements. Interest expense for the quarter was $104 million, up 41% from Q3 a year ago, as our debt outstanding at the end of the quarter was $9 billion versus $7.3 billion in Q3 last year. We are planning interest in the $148 million range for the fourth quarter versus $109 million last year. Higher debt levels and borrowing rates across the curve are driving this increase, along with the extra week that we will have in this year's fourth quarter. For the quarter, our tax rate was 18.1% and up from last year's third quarter of 17.4%. This quarter's rate benefited 479 basis points from stock options exercised, while last year it benefited 595 basis points. For the fourth quarter, we suggest investors model us at approximately 23.2% before any assumptions on credits due to stock option exercises. Moving to net income and EPS. Net income for the quarter was $652 million, up 0.6% versus last year. Our diluted share count of 17.8 million was 6.4% lower than last year's third quarter. The combination of slightly higher net income and lower share count drove earnings per share for the quarter to $36.69, up 7.5% for the quarter. Now let me talk about our free cash flow. For the third quarter, we generated $434 million in free cash flow. We had higher CapEx spending this quarter versus a year ago, and we expect to spend close to $1.1 billion in CapEx this fiscal year as we complete the addition of our distribution center capacity expansion ahead of schedule. I will also remind you that we generate a majority of our free cash flow in the back half of each of our fiscal years. We expect to continue being 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 ratio finished Q3 at 2.5 times EBITDAR. Our inventory was up 7.9%, driven by a combination of inventory per store growth to support our growth initiatives, improvements in in-stock levels, along with new store growth. Net inventory, defined as merchandise inventories less accounts payable on a per store basis, was -$168,000 versus -$215,000 last year, and -$164,000 last quarter. As a result, accounts payable, as a percent of inventory, finished the quarter at 119.7% versus last year's 126.5%. Lastly, I'll spend a moment on capital allocation and our share repurchase program. We repurchased $735 million of AutoZone stock in the quarter, and at quarter end, we had $1.4 billion remaining under our share buyback authorization. We have bought back over 100% of the then outstanding shares of stock since our buyback inception in 1998, while investing in our existing assets and growing our business. We remain committed to a leverage target of 2.5 times and a disciplined capital allocation approach that will enable us to invest in the business and return meaningful amounts of cash to shareholders. To wrap up, we remain committed to driving long-term shareholder value by investing in our growth initiatives, driving robust earnings and free cash flow, and returning excess cash to our shareholders. We're growing our market share, expanding our margins, and improving our competitive positioning in a disciplined way. As we look forward to Q4, we remain bullish on our initiatives to grow sales behind a steady DIY business, a fast-growing international business, and a domestic commercial business that remains under-penetrated. I continue to have tremendous confidence in our strategy and our ability to drive significant and ongoing value for our shareholders. With that, I'll turn it back to Phil. Thank you, Jamere. We are proud of the results our team delivered this last quarter. We remain on track to deliver a solid 2024, but we must continue to focus on superior customer service and flawless execution. Execution and our culture of always putting customer first are what defines us. We are well positioned to grow sales across our domestic and international store bases with both our retail and commercial customers. Our gross margins are solid, and our operating expense structure is appropriate for future growth. We are putting our capital investments where they matter most: our stores, distribution centers, and leveraging technology to build a superior customer service experience where we are able to say yes to our customer's need. Fiscal 2024's top priority has been enhanced execution. We are making good progress. Additionally, we have many strategic projects in varying stages of completion. We will continue opening new Mega Hub and Hubs, completing construction on our new distribution centers, and optimizing, optimizing our new direct import facility. We are also in the early stages of ramping up our domestic and international store growth. As discussed, our international teams posted same-store sales comps on a constant currency basis of plus 9.3%, continuing several years of strong growth. While I mention all these investments in FY 2024, AutoZone's biggest opportunity remains growing share in our domestic commercial business. We continue to believe we have a solid plan in place for growth for the foreseeable future. We know our focus on parts availability and WOW! Customer Service will lead to additional sales growth. We are excited about what we can accomplish, and our AutoZoners are committed to delivering the results. Now, I'd like to open up the call for questions. Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. ...For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We do ask to please limit yourselves to two questions. If you have any additional questions, you may reenter the queue by pressing star one. One moment please, while we poll for questions. Your first question for today is from Bret Jordan with Jefferies. Hey, good morning, guys. Good morning, Bret. Good morning, Bret. Could you talk a little bit about the cadence? You commented at the end of the quarter, and the commercial business ended a bit softer and obviously very early in Q4. But could you give us any color, sort of, how we've trended sequentially into the fourth? Yeah, the commercial business, like we said, has been choppy. You know, the last four weeks were the more difficult compares for the quarter. You know, as we've said several times, I hate being the weatherman, but this particular spring has been challenging for us from a, you know, a wet and cooler season. You know, typically, in the latter half of the quarter, we start seeing some improved performance around, you know, the hot weather categories like AC chemicals and AC hard parts and, battery sales, et cetera, and we just didn't get that through the last several weeks of the quarter. Okay. And then, I guess, on a calendar year basis, could you maybe give us some color where you see inflation, you know, in pricing for your mix as it compares, I guess, just, Yeah. On the inflation front, you know, that has definitely been challenging as we've come off several years of, you know, hyperinflation, if you will, at our average unit retail on both the DIY side and the commercial side, frankly. I suspect, you know, the average unit retail, same SKU inflation would get back to more normal growth levels as we move further and further away from the inflation that we had over the previous years. Now, those inflation numbers start to come back, you know, as we get in the later quarters of the calendar year, and I suspect they'll return to more normalized levels over time. Great. Thank you. Thank you, Bret. Your next question is from Chris Horvers with J.P. Morgan. Hi, good morning, it's Christian Carlino on for Chris. First question on gross margin. You know, supply chain crisis aside, you've grown the commercial business pretty considerably over the past couple of years. So could you just speak to, I guess, the degree of vendor rebates you've yet to receive and how long you should benefit from this catch-up period for all the growth that you've had since prior to the pandemic? Well, certainly, our gross margins, as it relates to, you know, our relationship with vendors, has an opportunity to improve. As Phil mentioned previously, we are coming off a period of significant hyperinflation, particularly in the areas like freight. You know, quite frankly, we saw snarls across the majority of the supply chain, and it impacted them from the standpoint of having higher labor costs, higher input costs in total. So we're starting to see that abate, and that's given us an opportunity to go and negotiate for some deflation as we move forward. We're still in early innings there, and I wouldn't say that all of the inflationary pressures have abated, but we're certainly in a much better position today than we were a year ago. Got it. That's, that's helpful. And then, now that you're starting to lap some of the earlier signs of maintenance deferral at, at some of the tire centers, are you starting to see trends improve with that cohort of customers? And, and just broadly, can you speak to the performance at, like, the national accounts, the tire centers, the buy here, pay here dealers, and then the up-and-down the street mechanics? I would say, if you kind of broke apart those segments that you just talked about, probably the most challenged group of customers are customers that are, you know, drive their repair revenue from tires. Tires have definitely been a pressure point. I think that downward trend on tires has probably flattened out a little bit, but I still think the tire segment, in particular, is under some pressure and has been for quite a while. You know, on your other segment of customers, the buy here, pay here lot and used car centers, those have been more challenged as well. If you think about, you know, there was tons of used cars that were sold over the last two years or so, and I think that's just been slower. Also, as the, you know, the consumer's under a little bit more economic pressure due to inflation, not just in our category, but across all of, all of retail and across life at the moment, I think there's more pressure on some of those bigger ticket items like tires. Tires is a pretty big purchase for a customer. Got it. That, that's really helpful. Thanks a lot. Thank you. Your next question for today is from Simeon Gutman with Morgan Stanley. Good morning, everyone. Good morning, Simeon. Morning. My first question's on Mega Hubs. Can you share some math on them? What? You mentioned 200 over time. Can you, can you tell us year-over-year how many should we see per year? And then, can you frame the one-year lift from them, please? Yeah, so, certainly from a Mega Hub standpoint, we're pretty excited about our future there. As we've announced, we've, you know, we'll likely have over 200 Mega Hubs at full build-out. Last year, we opened 20. We're likely gonna open less than that this year. And, you know, we've got work to do, but our pipeline is very strong, and our pipeline is robust as we look into FY 2025. So we're gonna go as fast as we possibly can. These are big boxes, big boxes, and, you know, difficult to, to find places. But we've done a, a really good job and worked really hard to fill up that pipeline, and you'll start to see that accelerate as we move into FY 2025 and, and beyond. Yeah, Hubs are. I'll just add on. Hubs are, these, these have been great stores for us. I think, you know, looking over history, we thought we'd have 30-40 of these things in various markets, and, you know, now we see line of sight to, like Jamere said, well north of 200 Mega Hubs. And, and the Hubs are still a, an important part of our strategy as well, which have slightly less SKU count, well, 30,000-40,000 less SKUs than a Mega Hub. But both of those store bases are, are great for us. They help significantly on the commercial side of the business, and they lift the DIY market as well. So they're great assets for us and perform better than our, than our normal stores. Then can I ask, I know you don't give forward guidance. In thinking about fiscal 2025, the first half and the second half, is it fair to think that there's not a hockey stick, but it will be second-half weighted? In other words, the top-line backdrop, you know, improves mildly, hopefully, from weather, but you are gonna lap some big gross margin gains, core, non-LIFO, while you'll need the top line to lever the expenses. So it looks like you could see some, you know, second-half weighting in next year. Curious if that's, you know, some thoughts on sequencing for next year. Yeah, like you said, we don't, we don't give guidance, but here's some, some things that I'll tell you that I'm excited about. One is, you know, weather has been challenging, and we—I think, you know, over summer. Summer's gonna heat up. You know, we should get some... The merchandise categories and mix and things of that nature will help our sales, as we move a little bit forward. And although slower than we'd like, our commercial initiatives are working, and we think those will continue to mature over time. You know, in a segment where we're under-penetrated in share, below 5% share on the commercial business, we think we have ample opportunity to continue to grow over time with improved service, improved hard part and expanded part availability, and better service and delivery based on the things we talked about, parts investments, Mega Hub investments, and Technology Investments that'll grow our sales. But it won't be. It's not gonna be a hockey stick that turns around in six weeks or something. It's gonna take time. Yep. Okay, thanks. Good luck in the fourth quarter. Thanks, Simeon. Your next question is from Greg Melich with Evercore ISI. Hi. Thanks, guys. I wanted to follow up on inflation because it sounds like it was still across the box, slightly positive in the quarter, and, but I, I think I heard in commercial that it was same SKU, slightly negative. So could you just give us a little more of the detail on that? Yeah, I think two things from an inflation standpoint. Number one, you know, the backdrop is we're coming off a period of you know, significantly more inflation last year. So as we look at this year and look at that impact on our ticket growth, our ticket growth is lower than it's been historically, and quite frankly, that's had an impact on the top-line growth. You've heard me say a number of times that while hyperinflation is difficult from a cost standpoint, from a top-line standpoint, inflation has been our friend, and we just don't have that tailwind you know, right now. We do expect inflation to normalize over time, but the high freight costs that we had and the significant inflation that we had in the industry is just not there right now. This industry has been very disciplined about passing that inflation through, but also in times where the inflation is not there. We've also been disciplined about the pace with which, you know, retails are raised. So, we feel pretty good with where we are, in total. We think inflation's gonna return, but right now it's, you know, it's running significantly lower than it was a year ago and lower than what we've seen historically. And, just to be clear, in the quarter, it was zero? Yeah, we saw, you know, ticket, ticket growth, you know, across the business be very muted, in the quarter. You know, we're seeing, you know, some inflation in certain categories, and other categories we're seeing, hardly any inflation. As we manage our way through that, we've just got to make sure that we're pricing dynamically the price for inflation where we see it, and in places where you don't see it, obviously, we're being disciplined, like this industry has been for a really long time. Got it. So still disciplined, and you expect it to normalize, but right now it's not. It's- Yeah. On the... It's pretty muted. It's pretty muted right now. Yep, fair enough. And then my follow-up was just to understand a little bit more about the consumer trends. I know you've, you've talked in the past that we really haven't seen trade down on the DIY side at all. I'm just curious if that started to show up as a way. I think you mentioned maybe fewer items in the basket. Could you just double-click on that a little bit? Yeah. Yeah, it's a great question. I think there's a couple of things going on with, you know, if you kind of think about average ticket. Some of it, frankly, is been mix of category, and I'll, I'll talk about it in a couple of different ways. One is, you know, highly discretionary items, are have been challenged for a while. Some of those have a great ticket. You know, there's probably slightly fewer pieces in the basket, but I think some of that has been driven by,... the, the environment and the, the weather. You know, big jobs like air conditioning, if you will, those have been definitely muted in the springtime. Those are big jobs that have big tickets, multiple parts in them. You know, when it rains, you're probably going to sell two wiper blades, and when it's nice, people decide to do a tune-up. You may have, you know, all kinds of filters that have significantly more parts transactions, pieces per transaction in them. So I think ticket average will improve. It's not going to be improved based on, you know, hyperinflation like we've had over the last couple of years, but I do believe it will improve as we move through the summertime and get a better mix of product as we move- Got it. past some of this more challenging weather scenario. Got it. That's super helpful. Good luck, guys, and thank God we didn't talk about 5-year comps. Thanks, Greg. Thank you. Talk to you. Your next question for today is from Scot Ciccarelli with Truist. Good morning, guys. Thanks for the time. Sure. Given the slowdown in sales that obviously we're talking about, is there anything else you guys think you can do to accelerate the sales trends? Or is it just a matter of executing the way you can, and you need the broader environment to improve? And then kind of part two of this is, if is there a point at some stage, where if sales stayed sluggish, does it potentially tempt you to go through another round of price investments? I know that wasn't the original intent, but you know, a long period of slower sales could, you know, potentially raise that temptation, I would think. Thanks. Yeah. Let me start with kind of your first, the first part of your question. Are there things that we can do to improve? The answer is yes. We're in the process now of doubling down on customer service and execution. And, you know, on the commercial side, you know, we're continuing. On both sides, we're continuing to invest in hard parts coverage and Hubs and Mega Hubs. Those drive sales. On the commercial side, we continue to invest in ways to service the customer better and faster, and we like those initiatives that we have. So I think those help to improve, you know, our sales execution, if you will. The second part of the question? The second part is on pricing. Yeah. You know, from a pricing standpoint, as I mentioned before, we've been very disciplined on pricing. You know, we executed around the pricing initiatives a couple of years ago. It helped us grow our shares and improve our units. We like where we're priced today, and, you know, we don't see the need to go move the needle on pricing as a way to go accelerate sales growth. I'll just remind you that, you know, the lion's share of the demand in this business is relatively inelastic. So this industry has been disciplined about pricing for decades, and, you know, we continue to see that being the case. To Phil's point, I mean, we're committed and doubling down on our growth initiatives. It's, you know, improving the quality of our parts. It's expanding the assortments with Mega Hubs. It's improving delivery times, leveraging technologies, being competitive on pricing. All those are the kinds of things that, you know, are driving our business as we move forward, and we're pretty excited about the future. Yeah. I agree. Yep, just trying to verify. All right. Yeah, our pricing strategy is on both DIY. We like where we are, and you know, we believe we have the right strategies on both sides of the business. We made those investments several years ago to rightsize those strategies. The industry's been very disciplined on pricing over a long period of time, and we don't see that changing. Understood. Thanks a lot, guys. Thank you. Your next question is from Kate McShane with Goldman Sachs. Good morning. Thanks for taking our question. I just wanted to clarify, I think you mentioned in the prepared comments, a mention of store growth, and I wondered if that was more of a domestic comment versus international comment. Should we see an acceleration of the store openings here? And we wondered if, just with the sheer amount of growth you've seen over the last few years, do you think some of the demand weakness that you're seeing is just due to the sheer volume of what your current store base is handling? Yeah, we've talked several quarters ago about our aspirations to expand and accelerate our store growth in the back half of the decade. You know, we, we historically have built about 150 stores, give or take a few domestically, and we think that we can significantly expand that number as we move forward. The drivers there obviously are the growth opportunities that we see in DIY, but also, you know, a significant growth opportunity in commercial. And as we look at that, along with the expanded trade areas in the U.S., there's an opportunity for us to expand our business domestically, and we're going to do that by accelerating our, our store growth as we move through the balance of the decade. Then internationally, we've been extremely pleased with what we've seen in Mexico, and we like the growth prospects that we've seen in Brazil. You've seen what we've posted in terms of same-store sales comp growth now for several quarters. There's an opportunity for us to go faster there as well. So that accelerated store growth is certainly a part of our future growth strategy, and it'll help us, you know, become a faster growing business as we move forward. And then your comment about the capacity of our stores, I mean, one of the things that we've done over time is we've continued to optimize the footprint of our satellite stores and then augment that with what we've done with Hubs and Mega Hubs to jam more parts in a local market closer to customers. It's an important part of the growth strategy, both on the DIY and the commercial side of the business. And we'll continue to do that as we move forward, which is one of the reasons why we talked about expanding the number of Mega Hubs that we have, and our Mega Hub count will be north of 200 at full build-out. We just wish they'd come faster. Those building new stores takes, you know, it's a long, it's a long tail from the time you sign a contract to the time we actually open the doors and start selling parts out of them. It just takes, takes longer than we'd like. Thank you. Your next question is from Seth Sigman with Barclays. Hey, good morning, everyone. A couple follow-ups from my side. So when I look at the gap between your DIY business and the commercial business, it just seems narrower than it's been in the past, certainly pre-pandemic. And that's been happening in the last couple of quarters. And, you know, you look at DIY down 1%, it's actually not that different than the range we've seen in the past, so it's really commercial at this lower run rate. And I know there's a lot of moving pieces here, but it's more of a macro question, right? Do you think that the commercial end customer is just slowing more? And maybe that's deferral, maybe that's trading down, I'm not sure. I guess that's really what we're trying to figure out, is that, is that commercial end customer, that maybe more middle-income consumer trading down a little bit more? Yeah, that's a, you know, tough to figure out exactly what's going on in commercial, when you, you know, you start talking about how is a customer migrating up or down the cost curve, if you will. You don't, we don't get near the segmentation on the commercial side that we do on the DIY side and the retail side of the business. But I, you know, is the customer trading down? I think if you look at some of the segments that we have that are more challenged, thinking tires, right? A tire purchase could be well north of $1,000 for a customer. That segment has been challenged, for sure. You know, some of the new car and used car dealer segments have been a little more challenged, partly because I think they're not selling as many units. So those two segments have been challenged. So if you think, are customers migrating down because of bigger jobs or, down the Good, Better, Best column, I think that's probably true, that a customer may, you know, if they may have normally taken a car to a OE dealer, do they then migrate to a, you know, a Firestone or something of that nature? And do they migrate to the DIY customer or do the job themselves? I think you could see that, but it's very hard to understand how customers move on the commercial side of the business. I think, you know, part of that, you know, as we think of the commercial market in general, it's why we've been focused on this notion that, you know, we're roughly a 5 share in what's approaching a $100 billion market. You know, despite the fact that, you know, big ticket is pressured across really all of retail, and certainly, you know, a big ticket purchase in auto parts is not immune to those dynamics. I mean, we still have an opportunity to grow significantly in commercial and an opportunity to grow significantly faster. So all the things that Phil talked about, you know, in terms of our initiatives, are the things that we're focused on. If we do those things and execute on them, then that gives us an opportunity to really accelerate our commercial growth as we move forward. And just on that last point around accelerating commercial, you mentioned a number of initiatives around service and delivery. Can you just help us better understand operationally, what is actually changing? Were you adding people? Were you adding routes? And just how to think about that. And it sounds like you've had some success early on in some of the markets where you have deployed some of these changes. Any sense on the lift that you're seeing there that gives you that confidence? Thanks. Yeah, I think we are seeing success. Again, still relatively small in our rollout, and that rollout is not very mature at the moment, but we're leveraging some technology, you know, leveraging the technology of the handhelds and other technology in our stores to be smarter about how we deliver and where we deliver a part from. We're ultimately able to get the part to the shop faster than we were previously, and we're leveraging all of the assets we have in a local market to get those parts to a customer faster, and we like the results that we're seeing. We believe they, you know, as we roll these out, our sales will improve in those markets, and ultimately we'll provide better customer service and gain new customers, as well as share of wallet with existing customers. Great. Thanks, guys. Thank you. Your next question for today is from Brian Nagel with Oppenheimer. Hi, good morning. Thanks for taking my questions. Brian, good morning. So the first question I have, I know we've already had a number of questions on commercial, but so I apologize for also asking about commercial, but just in the near term, you know, if I, if I heard the prepared comments correctly, you know, it sounded like you expected a bit of a, a bit of a strength in here into, you know, into the end of fiscal 2024, the fourth period. So, the question I have is, you know, what, as you look at the business, I think comparisons do get easier, but are there, are there specific, so to say, building blocks, which could help to strengthen the business here in the very near term? Yeah, I think you got two dynamics. One, as you mentioned before, is that the comparisons do get a little bit easier in the fourth quarter if you look at, you know, our year-over-year numbers. But the second one is just initiatives that Phil talked about. I mean, we're, you know, we've been really focused on jamming more parts in the local markets, and we've done a great job of doing that, and that's paying dividends for us. And then we've been focused on service and delivery speeds. And if, you know, if we can win the game in terms of parts availability with jamming those parts in a local market, and we can get them to the customer faster, those are things that are gonna drive our business as we move forward. So again, we're excited about, you know, where we are and excited about the opportunity to, you know, accelerate our growth as we move forward. There are, you know, always, you know, macro challenges that you have to fight your way through, and, you know, big ticket is pressure, but you combine the fact that, you know, we're under-penetrated, we've got a full slate of growth initiatives in place. Those are the things that get us excited about the future. Well, thanks, Jamere. Then, my follow-up, and it's also a follow-up. But, you know, just with respect to the consumer, I mean, you look, you operate in a unique part of retail, you know, a lot of your-- a lot of the spend that happens in your stores is not necessarily discretionary. But there's a lot of chatter out there right now across consumer about maybe some incremental pressures on the lower-income consumer. So, the question I have is, are you seeing that? You know, as you look at your business and the data that's available to you, are you seeing, you know, clearly or somewhat clearly, signs of incremental pressure on this core consumer that's affecting their, their shopping patterns? Yeah, I think, you know, big ticket, I think, has been a challenge for the consumer in all of retail, not just us. Like you said, big pieces of our business are break-fix, starter, alternator, battery, your car's down, you've got to fix it. And those tickets, while they're large, they're not, you know, it's not thousands of dollars. It's, you know, a starter and alternator could be a couple hundred bucks. Certainly puts pressure on the low-end consumer to, you have to have that money come out of pocket, and they're under pressure. But discretionary categories have been under pressure for, frankly, quite some time. They, they all exploded during the pandemic when there was a lot of money in the consumer's pocket, and they've certainly been more challenged over the last, you know, 18-24 months, and that continues. But maintenance items, you know, I think as customers get more cash strapped, they look at, "If I take care of my car, I know that it will perform better and save me money in the long run." So maintenance items have a tendency to start to trickle up over time. And then the failure items, if you're gonna get the car back on the road, you've got to purchase it. You know, we don't have a lot of good, better, best categories. We have some in brakes and a couple other categories, but that's not a big piece of our business. The vast majority of our sales are on application parts that have one choice, and the customer buys that part to get their car back on the road. We think that'll continue. Well, thanks, guys. I appreciate all the color. Thank you. Thanks. Your next question for today is from Michael Lasser with UBS. Hello, Michael. Good morning. Hey, Phil. Thank you so much for taking my question. Phil, how would you compare and contrast this year for the aftermarket to 2017, which was the last year of challenged trends within the industry? And in your mind, is it really just a function of more cooperative weather that will drive an acceleration for the industry from here, or do you think something else needs to happen in order for the backdrop to be more favorable? It's a great question. I was wondering when the tough weather questions from a winter perspective would come up, and that was kind of that 2016, 2017 range you're talking about. It's a great question, and it's frankly one we talk about internally all the time. You know, we've had a pretty soft winter weather pattern for the last two years. When I kind of look across the country, this winter pattern, we got some pretty good weather, you know, from a precipitation, snow, and temperatures in the Midwest. We got very soft weather patterns relative to driving, you know, break-fix part failures on the Eastern Seaboard. Wasn't a lot of snow in, you know, New York, Boston, Philadelphia, New, you know, D.C., and we didn't have a whole lot of cold temperatures in those markets. Those typically have meant, you know, undercar and brake categories perform very well when you have those types of seasonal patterns. We didn't get that this year, and frankly, didn't get it last year. It's a little undetermined what happens in a long period of time where you haven't had those weather patterns with categories in that half of the country. I think that is yet to be seen. We don't have the inflation that we had probably back in 2017, 2018, and frankly, over the last two years, to be a benefit. I do think we'll get a better mix of categories going into the summer selling season, than we've had in Q3. I don't know if I'm really answering your question. I think that's yet to be seen, and I think it'll prove out over the next, you know, four months or so. Okay. My follow-up question is on the underlying gross margin trend outside of the LIFO benefit. It sounds like the LIFO could be about a $20 million drag in 4Q. How much more room do you have to improve the underlying gross margin to offset that type of headwind that you're going to experience, especially as you move into next year, where comps could remain uncertain and the market is still expecting double-digit EPS growth? What I'll say is, you know, we've run the gross margin play with intensity, and our merchandising teams and our supply chain teams have done a fantastic job. You know, you saw last quarter, we had, you know, this past quarter, we had almost 90 basis points of margin improvement, you know, strictly from what we're doing on the merchandising side and what we're doing with supply chain. I wouldn't suggest that those numbers are gonna be as high as we move forward. We are, you know, coming out of a period where we had, ... some pretty significant inflation that we got some deflation. And as we mentioned a little bit earlier, we're not getting the ticket necessarily to help us from a gross margin standpoint. So that will be muted some, but you know, we believe that you know, we'll have the potential to offset most, if not all, of the pressure that you see from a LIFO standpoint. Thank you very much and good luck. Your final question for today is from Max Rakhlenko with TD Cowen. Great. Thanks a lot, guys. Good morning. Morning. So first, on the speed initiative, can you discuss the pace of the rollout and when we think, and when we should think that it'll be in majority or all of the markets that you have Mega Hubs in? We've been working on this for, you know, probably a year, year and a half, and we started seeing the results that we really liked earlier this year and started ramping it up. We're probably in the middle innings, if you will, of rolling that out to our stores. We've got in our networks we've got some more to go, and we'll continue to add incremental stores as we move through the process, but I would say we're in middle innings. We do believe that as we roll this out, again, we believe we get better customer service, faster time to shop, and we believe we'll, with that better customer service, we'll gain new customers and grow share of wallet. It won't be an immediate snap, but we like the efforts, and the growth that we're seeing in those markets. That's great. And then just as a follow-up, on the slower Mega Hub openings, is that more structural, as it's tougher to find boxes in the right areas, or is it about execution opportunities on your end? And then it does sound like that the opening should start to accelerate in the next few quarters. Is that right? The openings will definitely accelerate, and Phil's sort of smiling at me 'cause I own store development as part of my finance responsibilities, and so this is, well, one of my primary objectives for this year. They are big boxes and hard-to-find locations. We've been working through what we need to do from an execution standpoint. I will say it's, you know, anybody that's doing new store construction across the business know how challenging the market has been over the last couple of years or so. But we've worked our way through a lot of those challenges this fiscal year. We like the pipeline that we, that we built, and we expect to see that accelerate as we move into FY 2025. I think the good thing is we know exactly where we want these stores. You know, in every metro market or, you know, adding multiples to a given city or an individual market that may have, you know, a smaller number of stores. We know where we wanna be. We wanna make sure we get them at the right distance from our current locations, and, you know, they've got to have good routes, so they're easily accessible to the other markets. And then you gotta find the spot that is a great retail location and a great place to do, you know, to fulfill and get these expanded parts to our shops and our stores fast. And it's just, it takes time. We'd love to go faster because they're great boxes for us, and I know that they help us on both DIY and commercial. That's great. Appreciate all the color and best regards. Great. Thank you. Okay, so before we conclude the call, I'd like to take a moment to reiterate that we believe our industry is in a strong position, and our business model is solid. We are excited about our growth prospects for the remainder of the year, but we'll take nothing for granted as we understand our customers have alternatives to shopping with us. We have exciting plans that should help us succeed for the future, but 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 for the future, we are confident AutoZone will be successful. Lastly, as we celebrate Memorial Day next Monday, I ask that we all remember our country's heroes, both past and present. We owe these great Americans a tremendous debt of gratitude. Thank you again for participating in today's call. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.