AutoZone, Inc.

Good day, everyone, and welcome to AutoZone's 2026 Q1 Earnings Release Conference Call. At this time, all participants are placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. At this time, the company would like to provide its 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 discussion of important risks and uncertainties that could cause actual results to differ materially from expectations. Forward-looking statements speak only as 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.

Good morning, and thank you for joining us today for AutoZone's 2026 First Quarter Conference Call. With me today are Jameer Jackson, Chief Financial Officer, and Brian Campbell, Vice President, Treasurer, Investor Relations, and Tax. Regarding the first 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 slides complementing our comments today, are available on our website, at www.AutoZone.com under the investor relations link. Please click on quarterly earnings conference calls to see them. To start out this morning, I want to thank our more than 130,000 AutoZoners across the company for their commitment to delivering on our pledge to always put customers first. Our decision-making process starts with asking the question, what is right for the customer? We strive to deliver on our commitment of providing wow customer service, and it's our auto zoners across our stores and supply chain who deliver on this commitment every day, driving our results and our continued success. To start this morning, I'll address our sales results and talk about our new store openings for the quarter. I'll discuss both domestic and international results and break our sales results down between traffic and ticket growth comparisons to address what inflation has meant to both our ticket growth and our sales growth. I'll also address regional disparities where they exist. And finally, I'll address our outlook and how we expect the year to unfold. For the quarter, our total sales grew 8.2%, while earnings per share decreased 4.6%. Additionally, I want to point out that this year's gross margin, operating profit, and earnings per share were negatively impacted by a non-cash $98 million LIFO charge, which had a material impact on our margins and EPS. Excluding this LIFO charge, our EPS would have been up 8.9% versus last year's Q1. We also delivered a positive 4.7% total same-store sales on a constant currency basis with domestic same-store sales growth of 4.8%. Our domestic DIY same-store sales growth grew 1.5% while our domestic commercial sales grew up 14.5% versus last year's Q1 and up sequentially from 12.5% on a 16-week basis in the fourth quarter of last year. Our focus is on improving execution, expanding parts availability, and improving the speed of delivery. We are pleased with our results thus far. International same-store sales were up 3.7% on a constant currency basis. our unadjusted international comp was up 11.2%. This was the first quarter since Q3 24, where FX rates were favorable to our operating profit and EPS. Jameer will provide more color for you on our foreign currency impact on our financial results for both this past quarter and the upcoming second quarter later on this call. With over 7,700 stores across the three countries, our business is getting more global each day. We finished the quarter with 6,666 U.S. stores, 895 Mexico stores, and 147 Brazil stores. We opened 53 stores globally this past quarter versus 34 in last year's first quarter. This kind of first quarter growth is at near record for any first quarter store openings in our history and indicative of our commitment to accelerate our store growth We are very excited about the pace of these openings, and we know that this pace will drive future earnings growth globally. Next, let me address our sales results in a little more detail. Coming into the quarter, we were optimistic that our improved execution would drive sales growth for both retail and commercial. More specifically, we felt the momentum we gained over the last three quarters with our domestic commercial sales would continue this quarter. We are very pleased that our domestic commercial sales accelerated again this quarter to 14.5%. This marked an acceleration from our commercial sales growth on a two-year and a three-year basis. Additionally, the domestic retail comp performed well up 1.5%, but slowed slightly from last quarter's 2.2%. Finally, our international constant currency comp was up 3.7% for the quarter, and performed slightly better on a two-year basis than last quarter's result. We are encouraged by our continued improved sales results, and the way we finished the quarter gives us confidence in our sales outlook for the remainder of our fiscal year 2026. Next, I'll discuss the quarter's sales cadence. Regarding our 4.8% quarterly domestic sales Same-store sales, the cadence was 5.5% in our first four weeks, positive 3.5% in our second four weeks, and positive 5.5% over the last four-week period in the quarter. We attribute the weakness in the middle four-week segment to weather in the month of October that was not as favorable as last year in a select group of markets. Last year, we experienced much colder weather in a subset of markets, and this year that did not repeat. which resulted in fewer winter-related parts sales than normal. While it got colder in the last four-week segment, it was not until November when we began to get the usual cold winter weather. Also, in a subset of markets in the southeast where hurricanes occurred last year, our sales were weaker than last year. Hurricanes drive sales after the storms and during the cleanup period, and without those storms this year, our sales in some markets were lower. Let me make a few comments on our domestic DIY business. Regarding our plus 1.5% DIY comp for the quarter, we experienced a positive 2.1% in the first four-week segment, a flat DIY comp in the second segment, and a plus 2.3 comp during the third segment. Our merchandise categories performed as we would have expected, but less favorable weather comparisons in certain regions definitely impacted our results. More specifically, sales in the northern half of the country outperforms our markets in the southern half of the United States. With regard to inflation's impact on DIY sales, we saw like-for-like same-skew inflation up approximately 4.8% for the quarter, the same with our DIY average ticket that was up 4.8%. Based on our inflation expectations, we continue to expect our average ticket to grow sequentially through the third fiscal quarter which ends in May. During the fourth quarter, we'll begin to lap the increases in inflation we saw in this past year's fourth quarter. We also saw DIY traffic down 3.4% as traffic was down roughly 2x in the middle four-week segment versus the first four weeks and the last four weeks due to the weather comparisons and positive impacts from hurricanes in those same markets. We are encouraged by our most recent trends and we expect our DIY business to remain resilient in this environment. Next, I will touch on our domestic commercial business. As I mentioned, our commercial sales were up 14.5% for the quarter. The first four weeks grew 15.2%. The second four-week segment grew 13.8%, and the third four-week segment grew 14.6%. As with DIY, our commercial sales were impacted during the middle four-week segment due to the weather comparisons to last year. Our commercial results have been boosted by our improved inventory, satellite store investments and availability, significant improvements in our hub and mega hub coverage, and continued strength of our Duralast brand and execution on our initiatives to improve speed of delivery and customer service. These initiatives are delivering share gains and give us confidence as we move further into FY26. Year-over-year inflation on a like-for-like same skew basis for commercial business was up 6% and grew similarly to our average ticket growth of 6.1%. Lastly, we are very pleased with the growth in our commercial transactions with traffic up 5.9% on a same store basis as we continue to grow market share. Our future sales growth will be driven by share gains and an expectation that like-for-like retail skew inflation will continue as we move forward. As I said earlier, we opened a total of 39 net domestic stores and 14 stores in our international markets, and we remain committed to more aggressively opening satellite stores, hub, and mega hub stores. Hubs and mega hubs comps results continue to grow faster than the balance of the chain, and we are going to continue to aggressively deploy these assets. For FY26, we expect to continue to open stores in an accelerated pace, and Jameer will share more on our new store development progress in a moment. Overall, we are encouraged with our sales performance this quarter. We believe we are positioned well for growth in FY26, and we expect both DIY and commercial sales trends to remain solid. We will, as always, be transparent about what we are seeing and provide color on our markets and outlook as trends emerge. Now, let me take a moment to discuss our international business. Across Mexico and Brazil, we now have 1,044 international stores. As I mentioned, our same store sales grew 3.7% on a constant currency basis behind a softer macro environment in Mexico. While we are continuing to gain market share, the economy is experiencing slower growth. As the economy improves, we expect our sales to re-accelerate as we continue to invest in our new stores and distribution centers. Today, we have almost 14% of our total store base outside of the U.S., and we expect this number to grow as we accelerate our international store openings. In summary, we have continued to invest capital in opening new stores, driving traffic, and sales growth. While there will always be tailwinds and headwinds in any quarter's results, what has been consistent is our focus on delivering sustainable, long-term results. We continue to invest in improving product assortments in stores and online, and improving efficiency in our supply chain, which positions us well for future growth. We are investing both CapEx and operating expense to capitalize on these opportunities. This year, we are investing nearly $1.6 billion in CapEx to drive our strategic growth priorities, and we expect to invest a similar amount next year. The majority of our investments will be in accelerated store growth, including hubs and mega hubs that place more inventory closer to our customers. We are also investing in two new distribution centers, one in Mexico and one in Brazil, all while continuing to invest in technology to improve customer service and our auto zoner's ability to execute on our promise of wow customer service and delivering trustworthy advice. This is the right time to invest in our business as we believe industry demand will continue to remain strong and we have the ability to grow market share. Now I'll turn the call over to Jameer Jackson.