O'Reilly Automotive, Inc. is a specialty retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories, operating in the United States, Puerto Rico, Mexico, and Canada **[0000898173-24-000040_orly-20241023xex99d1.htm:2]** **[0000898173-24-000032_orly-20240724xex99d1.htm:3]**. The company serves both do-it-yourself (DIY) customers and professional service providers through a dual market strategy, with a significant portion of its revenue coming from the DIY channel **[ORLY_3405874_1]** **[0000898173-24-000009_orly-20231231x10k.htm:63]**. O'Reilly's product offerings include new and remanufactured automotive hard parts, maintenance items, accessories, auto body paint, automotive tools, and professional service provider equipment, categorized by quality and price into "good," "better," and "best" **[0000898173-24-000035_orly-20240630x10q.htm:20]** **[0000898173-24-000043_orly-20240930x10q.htm:21]** **[0000898173-24-000009_orly-20231231x10k.htm:38]**. The company also provides enhanced services such as battery diagnostics, recycling programs, and custom hydraulic hoses **[0000898173-24-000009_orly-20231231x10k.htm:38]** **[0000898173-24-000009_orly-20231231x10k.htm:3]**.

1. **Automotive Hard Parts** - Offers new and remanufactured parts essential for vehicle repair and maintenance, catering to both DIY customers and professional service providers.
2. **Maintenance Items** - Supplies products necessary for routine vehicle upkeep, including filters, fluids, and wipers, ensuring vehicle longevity and performance.
3. **Accessories** - Provides a range of automotive accessories, enhancing vehicle aesthetics and functionality, tailored to customer preferences.
4. **Auto Body Paint** - Supplies paint products for vehicle bodywork, supporting both cosmetic and repair needs with a variety of color options.
5. **Automotive Tools** - Offers a comprehensive selection of tools required for vehicle repair and maintenance, serving both amateur and professional mechanics.
6. **Professional Service Provider Equipment** - Supplies specialized equipment for professional automotive service providers, enhancing service efficiency and capability.
7. **Enhanced Services** - Includes battery diagnostics, recycling programs, and custom hydraulic hoses, offering additional value and convenience to customers.

e98f4a025d0cdffd1f77a6c78cce2e380c85d8f90da3ebaed8e6478eafbb1e24

2a00a145bb6fbc3b2a21d51076b10e964d3f1d1e66b03057ac57d3c42fc56737

69dc49d738b58cc5436c7a6d68692d86ae550e6056d886379dfc43701059fb07

| Metric (Unit: Years) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Average Age of Vehicle Population | 12.2 **[0000898173-23-000044_orly-20230630x10q.htm:20]** **[0000898173-23-000044_orly-20230630x10q.htm:20]** | 12.2 **[0000898173-23-000044_orly-20230630x10q.htm:20]** **[0000898173-23-000044_orly-20230630x10q.htm:20]** | 12.2 **[0000898173-23-000044_orly-20230630x10q.htm:20]** **[0000898173-23-000044_orly-20230630x10q.htm:20]** | 12.2 **[0000898173-23-000058_orly-20230930x10q.htm:21]** **[0000898173-23-000058_orly-20230930x10q.htm:21]** | 12.5 **[0000898173-24-000035_orly-20240630x10q.htm:21]** **[0000898173-24-000035_orly-20240630x10q.htm:21]** | 12.5 **[0000898173-24-000035_orly-20240630x10q.htm:21]** **[0000898173-24-000035_orly-20240630x10q.htm:21]** | 12.5 **[0000898173-24-000035_orly-20240630x10q.htm:21]** **[0000898173-24-000035_orly-20240630x10q.htm:21]** | 12.5 **[0000898173-24-000043_orly-20240930x10q.htm:22]** **[0000898173-24-000043_orly-20240930x10q.htm:22]** |

2935afc508b632b2cf5a676a28a5c36f81791209a49258b198e24bbb758fb992

- **O'Reilly Automotive's 2025 comparable store sales guidance has been lowered to 2% to 4%**, down from the typical 3% to 5%, due to ongoing **pressure on discretionary categories** and a **cautious consumer**, indicating potential for slower growth.  **[ORLY_3414690_13]**
- The company has a **significant sourcing exposure to China (approximately 25%)**, and potential **tariffs could impact costs and margins**. Management acknowledges uncertainty in dealing with these challenges and has not included any tariff impact in their guidance.  **[ORLY_3414690_12]**
- **Capital expenditures are expected to increase** due to a shift towards **owning more stores**, with owned stores costing **$3 million to $4 million** compared to **$400,000 to $600,000** for leased stores, which may pressure returns on capital.  **[ORLY_3414690_24]**

f2c0414fc437b51856774f42803bb6c65ea8663c4daef3f3597594cb94a6cac2

1. Given that your higher-margin DIY business, which accounts for slightly over **50% of your sales**  **[ORLY_3403745_2]** , is experiencing softness and facing increased competition from mass retailers and warehouse clubs becoming more competitive  **[ORLY_3403745_21]** , how do you plan to regain momentum and protect your market share in the DIY segment?

2. With the prospect of **tariffs ranging from 30% to 60% on goods from China and other countries**  **[ORLY_3403745_14]** , what specific strategies are you implementing to mitigate the potential impact on your cost of goods sold and overall margins?

3. Your **SG&A expenses grew 4.2%** in the third quarter, reaching the high end of your expectations due to factors like self-insurance costs from events such as **Hurricane Helene** and deferred compensation  **[ORLY_3403745_4]** ; how do you intend to control these expenses without compromising your commitment to excellent customer service?

4. You've **reduced your operating margin guidance to a range of 19.4% to 19.9%**, driven by third-quarter sales performance and updated full-year comparable store sales expectations  **[ORLY_3403745_4]** ; what concrete steps are you taking to improve sales and margins in the face of current macroeconomic pressures?

5. The delays in new store openings due to **construction and permitting issues** have put you slightly behind your growth plan  **[ORLY_3403745_5]** ; how are you addressing these obstacles to ensure timely expansion and maximize the returns on your capital investments?

ed513acc5a66acfe5093ba8950c0046b6737abcd1f90714ff651124beba96a09

8c688cc71432dda273d5f52b8d77de09600e3a83cf01702368d30e7518bb8e28

Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

2e34ef7d6e333f85eb0494c7d6e9e087d47290d4dbfd0396fe28154845ae6ad5

Total Revenue [USD, Thousands]

Cost of Goods Sold (COGS) [USD, Thousands]

Selling, General, and Administrative Expenses (SG&A) [USD, Thousands]

Research and Development (R&D) [USD, Thousands]

Depreciation and Amortization (D&A) [USD, Thousands]

Interest Expense [USD, Thousands]

Operating Income (EBIT) [USD, Thousands]

Net Income [USD, Thousands]

Earnings Per Share (EPS) - Basic [USD, Units]

Earnings Per Share (EPS) - Diluted [USD, Units]

3a05c148ddba3eead568d8a56a7d81b80fb71e688512519d1ad18d3a93f98fe9

O’Reilly’s 2025 comp guidance is down to 2–4% (vs. typical 3–5%) due to a cautious consumer and discretionary softness. Q4 comps were 4.4%. With ~25% sourcing from China, tariff risks loom. Still, $16B in sales in a $168B market signals ample growth runway.

78790cab17ff64179f514745573455136bbade63bd2a3d687a6dcdb5604a9322

Average Age of Vehicle Population

cbf9435335cbca49903bf6b2647beda4d576e4a68a87647ee8fa3f47daefc7d9

- DIY Customers

- Professional Customers

- Other Sales

Total Revenue

ea7ab6327e454ed26b4aa78f6abf0dd2e62feddee9b99ae558d1090b68df07c5

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Total Revenues:** $16.6 billion to $16.8 billion  **[ORLY_3403745_7]** .
  2. **Effective Tax Rate:** 21.8%  **[ORLY_3403745_7]** .
  3. **Diluted EPS:** $40.60 to $41.10  **[ORLY_3403745_7]** .
  4. **Free Cash Flow:** $1.8 billion to $2.1 billion  **[ORLY_3403745_7]** .
  5. **Accounts Payable as a Percentage of Inventory:** Approximately 127%  **[ORLY_3403745_7]** .
  6. **Operating Margin:** 19.4% to 19.9%  **[ORLY_3403745_4]** .
  7. **Gross Margin:** 51% to 51.5%  **[ORLY_3403745_4]** .
  8. **SG&A per Store Growth:** 3.5% to 4%  **[ORLY_3403745_4]** .
  9. **Comparable Store Sales:** 2% to 3%  **[ORLY_3403745_2]** .
  10. **Capital Expenditures:** $900 million to $1 billion  **[ORLY_3403745_5]** .
  11. **New Store Openings:** 190 to 200 new stores  **[ORLY_3403745_5]** .

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Comparable Store Sales Growth:** 2% to 4%  **[ORLY_3394399_3]** .
  2. **SG&A Per Store Growth:** 3.5% to 4%  **[ORLY_3394399_5]** .
  3. **Operating Margin:** 19.6% to 20.1%  **[ORLY_3394399_5]** .
  4. **Gross Margin:** 51% to 51.5%  **[ORLY_3394399_4]** .
  5. **Earnings Per Share (EPS):** $40.75 to $41.25  **[ORLY_3394399_1]** .
  6. **Total Revenues:** $16.6 billion to $16.9 billion  **[ORLY_3394399_7]** .
  7. **Effective Tax Rate:** 22.4%  **[ORLY_3394399_7]** .
  8. **Free Cash Flow:** $1.8 billion to $2.1 billion  **[ORLY_3394399_7]** .
  9. **AP to Inventory Ratio:** Approximately 127%  **[ORLY_3394399_7]** .
  10. **Store Openings:** 190 to 200 new stores  **[ORLY_3394399_6]** .

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Total Revenues:** $16.8 billion to $17.1 billion  **[ORLY_3380843_7]** .
  2. **Operating Margin:** 19.7% to 20.2%  **[ORLY_3380843_6]** .
  3. **Effective Tax Rate:** 22.4%  **[ORLY_3380843_7]** .
  4. **Free Cash Flow:** $1.8 billion to $2.1 billion  **[ORLY_3380843_7]** .
  5. **Comparable Store Sales Growth:** 3% to 5%  **[ORLY_3380843_3]** .
  6. **Diluted EPS:** $41.35 to $41.85  **[ORLY_3380843_4]** .
  7. **Gross Margin:** 51% to 51.5%  **[ORLY_3380843_5]** .
  8. **SG&A Growth:** 4.5% to 5%  **[ORLY_3380843_5]** .
  9. **Capital Expenditures:** $900 million to $1 billion  **[ORLY_3380843_6]** .
  10. **Net New Store Openings:** 190 to 200  **[ORLY_3380843_6]** .

### Q4 2023 Earnings Call
- **Issued Period:** Q4 2023
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Earnings Per Share (EPS):** $41.05 to $41.55  **[ORLY_3372557_5]** .
  2. **Total Revenues:** $16.8 billion to $17.1 billion  **[ORLY_3372557_9]** .
  3. **Comparable Store Sales Growth:** 3% to 5%  **[ORLY_3372557_2]** .
  4. **Gross Margin:** 51% to 51.5%  **[ORLY_3372557_6]** .
  5. **Operating Profit Margin:** 19.7% to 20.2%  **[ORLY_3372557_8]** .
  6. **Effective Tax Rate:** 22.6%  **[ORLY_3372557_9]** .
  7. **Free Cash Flow:** $1.8 billion to $2.1 billion  **[ORLY_3372557_9]** .
  8. **Capital Expenditures:** $900 million to $1 billion  **[ORLY_3372557_4]** .
  9. **Inventory Growth:** 4% per store, plus 1% from Vast-Auto  **[ORLY_3372557_7]** .
  10. **SG&A Growth:** 4.5% to 5%  **[ORLY_3372557_8]** .

95b594d962e3ed52442023f1559af321fbe5c9416c49a6bb80db1739cac27630

| Name             | Position                                                      | Start Date       | Short Bio                                                                                                                                                                                                 |
|------------------|---------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Brad Beckham     | Chief Executive Officer                                       | January 2024     | Brad Beckham has been with O'Reilly for **28 years**, starting as a Parts Specialist. He has held various roles, including Store Manager and Executive Vice President. He became CEO in **January 2024**  **[0000898173-24-000009_orly-20231231x10k.htm:16]** **[ORLY_3405874_1]** .                                |
| Brent G. Kirby    | President                                                     | January 2024     | Brent G. Kirby joined O'Reilly in **2018** as Senior Vice President of Omnichannel. He has served as Executive Vice President of Supply Chain and became President in **January 2024**  **[0000898173-24-000009_orly-20231231x10k.htm:16]** .                                                     |
| Jeremy Fletcher  | Executive Vice President and Chief Financial Officer          | May 9, 2022      | Jeremy Fletcher has been with O'Reilly for **18 years**, starting as Financial Reporting and Budgeting Manager. He became CFO on **May 9, 2022**  **[0000898173-24-000009_orly-20231231x10k.htm:17]** **[0000898173-23-000011_orly-20221231x10k.htm:17]** .                                                                                       |
| Scott R. Ross    | Executive Vice President and Chief Information Officer        | October 2023     | Scott R. Ross joined O'Reilly in **October 2023**. He has over 30 years of IT experience, previously serving as President of Saks Cloud Services at Hudson's Bay Company  **[0000898173-24-000009_orly-20231231x10k.htm:17]** .                                                                   |
| Doug Bragg       | Executive Vice President of Operations and Sales              | 2022             | Doug Bragg has been with O'Reilly for **33 years**, starting as a Distribution Center Team Member. He became Executive Vice President of Store Operations in **2022**  **[0000898173-24-000009_orly-20231231x10k.htm:17]** .                                                                      |
| Tamara F. Conn   | Senior Vice President of Legal and General Counsel            | July 2023        | Tamara F. Conn has been with O'Reilly for **15 years**, starting as Legal Counsel. She became Senior Vice President of Legal and General Counsel in **July 2023**  **[0000898173-24-000009_orly-20231231x10k.htm:17]** .                                                                          |
| Robert Dumas     | Senior Vice President of Eastern Store Operations and Sales   | 2016             | Robert Dumas has been with O'Reilly for **32 years**, starting as a Parts Specialist. He became Senior Vice President of Eastern Store Operations and Sales in **2016**  **[0000898173-24-000009_orly-20231231x10k.htm:17]** .                                                                    |
| Larry Gray       | Senior Vice President of Inventory Management                 | June 2023        | Larry Gray has been with O'Reilly for **32 years**, starting as a Distribution Center Team Member. He became Senior Vice President of Inventory Management in **June 2023**  **[0000898173-24-000009_orly-20231231x10k.htm:18]** .                                                                |
| Philip M. Hopper | Senior Vice President of Real Estate and Expansion            | 2022             | Philip M. Hopper has been with O'Reilly for **12 years**, starting as Real Estate Counsel. He became Senior Vice President of Real Estate and Expansion in **2022**  **[0000898173-24-000009_orly-20231231x10k.htm:18]** .                                                                         |
| Jeffery T. Loafman | Senior Vice President of Distribution Operations            | April 2023       | Jeffery T. Loafman joined O'Reilly in **April 2023**. He previously worked at Walmart, Inc. for over 20 years in various roles, including Vice President of International Distribution Operations  **[0000898173-24-000009_orly-20231231x10k.htm:18]** **[ORLY_3399604_3]** .                                        |
| Chris Mancini    | Senior Vice President of Central Store Operations and Sales   | 2022             | Chris Mancini has been with O'Reilly for **20 years**, starting as an Installer Service Specialist. He became Senior Vice President of Central Store Operations and Sales in **2022**  **[0000898173-24-000009_orly-20231231x10k.htm:18]** .                                                      |
| Mark J. Merz     | Senior Vice President of Finance                              | 2022             | Mark J. Merz has been with O'Reilly for **16 years**, starting as a Senior Accountant. He became Senior Vice President of Finance in **2022**  **[0000898173-24-000009_orly-20231231x10k.htm:18]** .                                                                                               |
| Shari Reaves     | Senior Vice President of Human Resources and Training         | February 2024    | Shari Reaves has been with O'Reilly for **30 years**, starting as an Employment Coordinator. She became Senior Vice President of Human Resources and Training in **February 2024**  **[0000898173-24-000009_orly-20231231x10k.htm:18]** .                                                         |
| Chuck Rogers     | Senior Vice President of Professional Sales and Store Operations Support | 2022 | Chuck Rogers has been with O'Reilly for **33 years**, starting as a Delivery Specialist. He became Senior Vice President of Professional Sales and Store Operations Support in **2022**  **[0000898173-24-000009_orly-20231231x10k.htm:19]** .                                                    |
| Jason Tarrant    | Senior Vice President of Western Store Operations and Sales   | 2018             | Jason Tarrant has been with O'Reilly for **23 years**, starting as a Parts Specialist in **2001**. He became Senior Vice President of Western Store Operations and Sales in **2018**  **[0000898173-24-000009_orly-20231231x10k.htm:19]** **[ORLY_3399604_15]** .                                                    |
| David Wilbanks   | Senior Vice President of Merchandise                          | 2016             | David Wilbanks has been with O'Reilly for **11 years**, starting as Vice President of Merchandise. He became Senior Vice President of Merchandise in **2016**  **[0000898173-24-000009_orly-20231231x10k.htm:19]** **[0000898173-23-000011_orly-20221231x10k.htm:20]** .                                                                            |

74b03466dfbc363ba8e160bd31d0eacacb0402d08035b15f26d562f4e38effff

| Program Details         | Program 1       | Program 2       |
|-------------------------|-----------------|-----------------|
| Approval Date           | May 23, 2023  **[0000898173-24-000043_orly-20240930x10q.htm:12]** | November 16, 2023  **[0000898173-24-000043_orly-20240930x10q.htm:12]** |
| End Date/Duration       | 3 years from approval  **[0000898173-24-000043_orly-20240930x10q.htm:12]**  | 3 years from approval  **[0000898173-24-000043_orly-20240930x10q.htm:12]**  |
| Total additional amount | $2.0 billion  **[0000898173-24-000043_orly-20240930x10q.htm:12]** | $2.0 billion  **[0000898173-24-000043_orly-20240930x10q.htm:12]** |
| Remaining authorization amount | $0  **[0000898173-24-000043_orly-20240930x10q.htm:13]**  | **$967.7 million**  **[0000898173-24-000043_orly-20240930x10q.htm:13]**  |
| Details                 | Program to return excess capital to shareholders  **[ORLY_3372557_10]** **[0000898173-24-000009_orly-20231231x10k.htm:68]**  | Program to return excess capital to shareholders  **[ORLY_3372557_10]** **[0000898173-24-000009_orly-20231231x10k.htm:68]**  |

5c127e5cebd76e81477da43931cfe1dbbbbbb8607c86277c3614eeed3cba2566

**Annual guidance for FY 2024:**
- **Total Revenues**: $16.6 billion to $16.8 billion  **[ORLY_3403745_7]**  (lowered from $16.6 billion to $16.9 billion  **[ORLY_3394399_7]** )  
- **Effective Tax Rate**: 21.8%  **[ORLY_3403745_7]**  (lowered from 22.4%  **[ORLY_3394399_7]** )  
- **Diluted EPS**: $40.60 to $41.10  **[ORLY_3403745_7]**  (lowered from $40.75 to $41.25  **[ORLY_3394399_1]** )  
- **Free Cash Flow**: $1.8 billion to $2.1 billion  **[ORLY_3403745_7]**  (no change from prior guidance  **[ORLY_3394399_7]** )  
- **Accounts Payable as a Percentage of Inventory**: 127%  **[ORLY_3403745_7]**  (no change from prior guidance  **[ORLY_3394399_7]** )  
- **Operating Margin**: 19.4% to 19.9%  **[ORLY_3403745_4]**  (lowered from 19.6% to 20.1%  **[ORLY_3394399_5]** )  
- **Gross Margin**: 51% to 51.5%  **[ORLY_3403745_4]**  (no change from prior guidance  **[ORLY_3394399_4]** )  
- **SG&A per Store Growth**: 3.5% to 4%  **[ORLY_3403745_4]**  (no change from prior guidance  **[ORLY_3394399_5]** )  
- **Comparable Store Sales**: 2% to 3%  **[ORLY_3403745_2]**  (lowered from 2% to 4%  **[ORLY_3394399_3]** )  
- **Capital Expenditures**: $900 million to $1 billion  **[ORLY_3403745_5]**  (no prior guidance)  
- **New Store Openings**: 190 to 200 new stores  **[ORLY_3403745_5]**  (no change from prior guidance  **[ORLY_3394399_6]** )  

1f57708cd94169de3f3f5760f6dd1305561cc2ecaa55cc2392fbb949cc47a455

Domestic Revenue

International Revenue

9bdb0a92b4b4c54d75a58a90bbc04abe99df803539ff4b5d5562d6d5ecb3322b

- **O'Reilly has diversified its global supply chain and increased its proprietary brands to over 50% of revenue**, positioning it well to manage tariff challenges and reduce dependency on hotspots.  **[ORLY_3414690_12]**
- **O'Reilly continues to see strong demand in maintenance categories like oil and filters**, indicating resilience in key categories despite competitive pressures from nontraditional retailers.  **[ORLY_3414690_18]**
- **O'Reilly operates in a $168 billion industry, and as a $16 billion to $17 billion company**, it has plenty of opportunity to grow and continue to take market share in both DIY and DIFM segments.  **[ORLY_3414690_13]**

8dda14efc6c54ec70638020dd2af6f2211dad32720770549c4236593e8d3c3ad

| Name              | Start Date | End Date | Reason for Change |
|-------------------|------------|----------|-------------------|
| Ernst & Young LLP | 1992  **[0000898173-24-000009_orly-20231231x10k.htm:57]**    | Present  | Current auditor   |

1856d333d152ca0158c6d24f1ce9186b3fe2646d0a74533da6df33982824129e

557a6730fd6e54f2e26de300029dda6dc86de173ea210ea4b25bf122e24238f9

- Total Revenue: $4,364.44M (+3.8% YoY)  **[0000898173-24-000043_orly-20240930x10q.htm:14]** **[0000898173-23-000058_orly-20230930x10q.htm:3]**   
- Professional Customers: $2,032.38M (**+6% YoY**)  **[0000898173-24-000043_orly-20240930x10q.htm:14]** **[0000898173-23-000058_orly-20230930x10q.htm:13]**   
- Other Sales: $116.42M (**+42% YoY**)  **[0000898173-24-000043_orly-20240930x10q.htm:14]** **[0000898173-23-000058_orly-20230930x10q.htm:13]**   
- Diluted EPS: $11.39 (**+6% YoY**)  **[0000898173-24-000043_orly-20240930x10q.htm:3]** **[0000898173-23-000058_orly-20230930x10q.htm:3]** **[0000898173-23-000058_orly-20230930x10q.htm:17]**   

301cbf4fd565d74ec35f9eb5110d1a760e0c6f05dc18b030ec2198f43c37b60e

Comparable store sales (percentage)

Number of stores in the U.S. and Puerto Rico (count)

Number of stores in Mexico (count)

Number of stores in Canada (count)

Consolidated fixed charge coverage ratio (ratio)

Consolidated leverage ratio (ratio)

c8ddd3eb116ee6cf33cd76bd1f389b169278a80bb1b711eb8fcdfcb982a6fc56

| Year  | Amount Due (in billions) | Debt Type         | Interest Rate (%) | % of Total Debt                                                                 |
|-------|---------------------------|-------------------|-------------------|---------------------------------------------------------------------------------|
| 2026  | 1.25 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 3.550 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 23.2% = (1.25 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                            |
| 2026  | 1.25 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 5.750 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 23.2% = (1.25 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                            |
| 2027  | 0.75 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 3.600 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 13.9% = (0.75 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                            |
| 2028  | 0.50 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 4.350 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 9.3% = (0.50 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                             |
| 2029  | 0.50 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 3.900 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 9.3% = (0.50 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                             |
| 2030  | 0.50 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 4.200 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 9.3% = (0.50 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                             |
| 2031  | 0.50 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 1.750 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 9.3% = (0.50 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                             |
| 2032  | 0.85 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 4.700 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 15.8% = (0.85 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                            |
| 2034  | 0.50 **[0000898173-24-000043_orly-20240930x10q.htm:10]**             | Senior Notes      | 5.000 **[0000898173-24-000043_orly-20240930x10q.htm:10]**     | 9.3% = (0.50 / 5.39) * 100 **[0000898173-24-000043_orly-20240930x10q.htm:10]**                                             |

537b61632a245a10187b5528b34742b9e7138faa3818f9bf4a194d815ffeaf24

02f2d3c8b03f76e953e652a4d92a6f7b7f7ea2426395a2f0f5f54b675c943ceb

1. **Performance Slowdown**  
   **Q:** Slowdown in March—will comps hit low end?  
   **A:** Management acknowledged a bit of slowdown in March, continuing into early April, but cautioned it's just three weeks and there's a lot of quarter left.  **[ORLY_3380843_14]**  They attributed choppiness partly to weather factors and delays in tax refunds but emphasized not overreacting to short-term fluctuations and maintaining focus on long-term fundamentals.  **[ORLY_3380843_14]** 

2. **Consumer Demand and Market Outlook**  
   **Q:** Is consumer pressure affecting demand?  
   **A:** They're not seeing clear indicators of sustained consumer pressure.  **[ORLY_3380843_19]**  Core categories like failure and maintenance are performing well, with no significant deferral of big-ticket repairs or oil changes  **[ORLY_3380843_10]** **[ORLY_3380843_19]** . However, there is some softness in discretionary categories like truck accessories, possibly due to weather or consumer spending shifts  **[ORLY_3380843_10]** **[ORLY_3380843_12]** .

3. **Competitive Performance**  
   **Q:** Is outperformance versus industry moderating?  
   **A:** Management doesn't see their outperformance versus the industry moderating.  **[ORLY_3380843_13]**  They focus on revenue growth versus the **$147 billion** total addressable market and believe share gains continue.  **[ORLY_3380843_13]** 

4. **Impact of Weather and Tax Refunds**  
   **Q:** Are sales impacted by weather and tax refunds?  
   **A:** Sales have been influenced by unfavorable weather and delayed tax refunds, causing choppiness in demand  **[ORLY_3380843_8]** **[ORLY_3380843_9]** **[ORLY_3380843_21]** . January was strong due to harsh winter weather, but cooler, wetter conditions affected DIY customers' ability to work on vehicles  **[ORLY_3380843_8]** **[ORLY_3380843_21]** . Some delayed sales may be recouped as weather improves.  **[ORLY_3380843_21]** 

5. **SG&A Per Store Growth**  
   **Q:** Why will SG&A per store growth moderate?  
   **A:** SG&A per store growth is expected to moderate as teams balance store payroll with demand and investment depreciation pressures ease through the year.  **[ORLY_3380843_11]**  Depreciation headwinds were in the **high teens** percentage growth in Q1 but should moderate.  **[ORLY_3380843_11]** 

6. **Inflation and Costs**  
   **Q:** What is the outlook for inflation and costs?  
   **A:** They anticipate around **1% inflation** for the year, consistent with Q1.  **[ORLY_3380843_15]**  They continue to diversify their supply chain and expand proprietary brands to control costs.  **[ORLY_3380843_15]** 

7. **Pricing and PPI Initiative**  
   **Q:** Are PPI products still growing, and new pricing opportunities?  
   **A:** The PPI pricing initiative continues to pay off, with ongoing growth in affected categories.  **[ORLY_3380843_20]**  They feel good about their pricing matrix and don't see a need for further adjustments.  **[ORLY_3380843_20]** 

8. **Traffic and Comp Trends**  
   **Q:** How did traffic contribute to comps?  
   **A:** Traffic was a positive contributor to comps in Q1.  **[ORLY_3380843_16]**  Even DIY traffic was positive, significantly boosted by January's strength.  **[ORLY_3380843_17]** 

9. **Mexico Expansion**  
   **Q:** What's the potential size of business in Mexico?  
   **A:** Management is excited about the Mexican market's potential.  **[ORLY_3380843_22]**  With over **63 stores** currently, they see a tremendous runway for growth but didn't specify targets.  **[ORLY_3380843_22]** 

5d9a826b2b7a703dfb349aa6939693bd4a9b35faeb1b00117b3078fa709fa91a

1. **Guidance Moderation**  
   **Q:** Does guidance reflect weakness in first half or also lower H2 expectations?  
   **A:** The moderation in guidance reflects **both** the softness in the first half and adjusted expectations for the second half.  **[ORLY_3394399_18]**  The back half is expected to be **similar to the first half** at the midpoint, based on current business outlook and performance.  **[ORLY_3394399_18]** 

2. **Gross Margin Outlook**  
   **Q:** How can you maintain gross margin guidance despite Canada being more dilutive?  
   **A:** Although Canada is expected to be a bit more **dilutive to gross margins** than initially expected, this was largely anticipated and built into the guidance range.  **[ORLY_3394399_9]**  Short-term pressures are viewed as **transitory**, and benefits from supplier partnerships are expected to contribute in the back half, allowing the **full-year gross margin outlook to remain stable**.  **[ORLY_3394399_9]** 

3. **July Trends**  
   **Q:** Are July trends softer than June's improvement?  
   **A:** **July trends remain solid**, though possibly not as strong as June, which was the **best performer** of the quarter.  **[ORLY_3394399_10]**  Factors like the timing of the July 4th holiday and challenging year-over-year comparisons due to prior hot weather make July a bit hard to read, but overall, the company feels **positive about the start of the quarter**.  **[ORLY_3394399_10]** 

4. **Expense Management**  
   **Q:** Can you manage SG&A growth amid potential industry softness?  
   **A:** The company balances operations to address business softness **without sacrificing service**.  **[ORLY_3394399_13]** **[ORLY_3394399_15]**  There's **flexibility to adjust staffing levels**, even with a higher full-time employee mix, and they are confident in managing productivity to support results while **investing for the long term**.  **[ORLY_3394399_13]** **[ORLY_3394399_15]** 

5. **Consumer Behavior**  
   **Q:** Are customers deferring large undercar repairs or trading down?  
   **A:** There is some **deferral of high-ticket undercar service items**, especially in repair shops, due to consumer pressure.  **[ORLY_3394399_11]** **[ORLY_3394399_12]**  However, the company is **not seeing significant trade-down**; customers continue to migrate to **best categories**, driven by higher-end products and proprietary brands.  **[ORLY_3394399_11]** **[ORLY_3394399_12]** 

6. **Price Investments**  
   **Q:** Is another round of price or expense investment needed to maintain share gains?  
   **A:** **No further price investments are necessary**.  **[ORLY_3394399_12]**  The strategic investments made in professional pricing have **paid off**, and the company doesn't see material changes requiring additional price adjustments to continue gaining market share.  **[ORLY_3394399_12]** 

7. **Catalysts for Growth**  
   **Q:** What will accelerate industry growth from here?  
   **A:** The company focuses on **controlling its own destiny** by improving execution and service.  **[ORLY_3394399_13]**  Tough times present **opportunities to gain share** as competitors may overreact, and they are committed to driving share gains through **internal efforts**.  **[ORLY_3394399_13]** 

8. **Weather Impact**  
   **Q:** Was weather a net benefit or headwind in Q2 growth?  
   **A:** Weather was likely a **net positive** in Q2 due to the onset of hot weather leading to initial failures.  **[ORLY_3394399_16]**  Over the first half, weather impacts have **evened out** with various fluctuations, but it's considered broadly **neutral overall**.  **[ORLY_3394399_16]** 

9. **Gross Margin from Acquisition Costs**  
   **Q:** Did Q2 benefit from lower product acquisition costs?  
   **A:** Yes, there was a **net benefit** in Q2 from product acquisition costs as the environment **normalizes post-COVID**.  **[ORLY_3394399_17]**  The company expects **incremental benefits** in the back half, although not significant deflation, as supplier pressures **stabilize**.  **[ORLY_3394399_17]** 

10. **Store Openings**  
    **Q:** Will store openings increase in future years?  
    **A:** **No change** is expected in the pace of store openings; the company feels **good about the current level** in the U.S., Mexico, and Canada.  **[ORLY_3394399_14]**  Continued investment in distribution infrastructure supports this **steady growth pipeline**.  **[ORLY_3394399_14]** 

58c790293db202d7ad5f2800da7f1eecf34d474585b2e742b1407f22b2cc383c

- **O'Reilly is gaining market share in the professional (DIFM) segment and expects continued growth, with the segment remaining resilient and offering significant opportunities.**  **[ORLY_3403745_20]**
- **Expansion into new markets, particularly in the densely populated Northeast, through new distribution centers like the Mid-Atlantic DC, is positioning O'Reilly for substantial growth in underpenetrated areas.**  **[ORLY_3403745_9]**
- **Robust and flexible supply chain strategies, including reduced dependency on China and the ability to manage tariffs and cost pressures, are safeguarding margins and demonstrating operational resilience.**  **[ORLY_3403745_14]**

47d6927e5ad6096b780a810929ef5738fd53f43b585ac7792efc955a39d316bf

- **Choppiness and inconsistency in sales trends** due to weather impacts and delayed tax refunds are making it difficult for O'Reilly to predict sustained growth.  **[ORLY_3380843_9]** ,  **[ORLY_3380843_21]** ,  **[ORLY_3380843_8]**
- **Softness in the DIY segment, particularly in discretionary categories**, suggests potential pressure on lower-end consumers and a decline in consumer spending.  **[ORLY_3380843_9]** ,  **[ORLY_3380843_21]** ,  **[ORLY_3380843_12]**
- **Potential moderation in market outperformance compared to competitors**, indicating that future market share gains may be more challenging for O'Reilly.  **[ORLY_3380843_13]**

a08694a2e715c8c7abc428aff2cf9c1b39e401a86825529149a8b57f35b7d086

- **Softness in the DIY segment, which represents slightly over 50% of O'Reilly's business, is impacting sales growth and remains uncertain.**  **[ORLY_3403745_2]**
- **Increased competition from mass retailers and warehouse clubs has led to loss of market share in certain product lines, affecting overall traffic and pricing.**  **[ORLY_3403745_21]**
- **O'Reilly has misgauged demand and reduced guidance, admitting uncertainty in future performance and potential challenges in sustaining margin expansion.**  **[ORLY_3403745_13]**

e08be31bf080372d9804603698e3744790a93587f1b2785e2e3835c4df56034e

1. **Growth Guidance and Market Share**  
   **Q:** Will you grow share at same rate as 2023?  
   **A:** Management expects to continue taking market share but acknowledges gains won't be as strong as in 2023. They comped at **7.9%** last year but are guiding to **3–5%** comp growth this year, assuming industry growth of **2–3%**.  **[ORLY_3372557_16]** 

2. **Operating Margin Outlook**  
   **Q:** Are operating margins at peak levels?  
   **A:** Management aims to drive operating profit dollar growth and believes they can continue improving margins through share gains. Operating profit percentage was **18.9%** in 2019 and **20.3%** in 2023.  **[ORLY_3372557_17]** 

3. **Sustainability of Growth Rates**  
   **Q:** How sustainable are commercial growth rates in 2024?  
   **A:** Management is cautious due to tough comparisons but confident in outcomping the market and gaining share, especially in the fragmented professional segment, with balanced growth from new and existing customers.  **[ORLY_3372557_11]** 

4. **Elevated SG&A and Investments**  
   **Q:** Will elevated SG&A investment continue in 2024?  
   **A:** Management sees continued investment opportunities, especially in technology to improve customer service and remove friction. They prioritize long-term growth over short-term SG&A reductions to capitalize on market volatility.  **[ORLY_3372557_12]** 

5. **Shift to Owned Retail and Buybacks**  
   **Q:** How does shift to owned retail affect share buybacks?  
   **A:** They plan to increase owned new stores from **40%** to **60%** this year, resulting in fewer dollars allocated to buybacks but aligning with their capital priorities. Owning stores provides compounding long-term returns.  **[ORLY_3372557_13]** 

6. **Competitive Landscape**  
   **Q:** Any changes in competitive situation?  
   **A:** Management sees no significant changes; independent competitors remain strong but no step change observed. They continue to see a rational pricing environment and feel confident in their proposition.  **[ORLY_3372557_14]** 

7. **Maintaining SG&A Spend**  
   **Q:** Why not maintain higher SG&A spending?  
   **A:** Management is disciplined on ROI for SG&A and CapEx. They feel good about their investments and will continue to lean in where they see opportunities, including a recent acquisition.  **[ORLY_3372557_18]** 

8. **First-Half Profit Pressure**  
   **Q:** Why is first-half operating profit pressured?  
   **A:** Prior year's investments and timing of depreciation increase SG&A in the first half. Timing of technology investments also affects the profit cadence.  **[ORLY_3372557_15]** 

9. **Weather Impact on Sales**  
   **Q:** Did weather affect recent sales?  
   **A:** Fourth quarter sales were impacted by unfavorable weather and holiday timing. December sales were negative but better than plan. January's harsh weather also affected results, but overall setup is normal.  **[ORLY_3372557_20]** **[ORLY_3372557_21]** 

10. **Inflation and Mix in Guidance**  
    **Q:** How does inflation factor into comp guidance?  
    **A:** They expect less than **1%** inflation in 2024. Average ticket will benefit from mix and professional growth; comp expectations also rely on ticket count growth.  **[ORLY_3372557_22]** 

21fbdf298a210c9862b397d2e092a2e3c2e4880f75c14d9a2718a0dcaf637470

- **O'Reilly Automotive expects continued growth driven by the professional side of their business**, with **comp expectations partially driven by ticket count growth** as the professional segment remains strong.  **[ORLY_3372557_22]**
- **The company is confident in their ability to continue gaining market share** due to their competitive advantages and energized teams, even though growth may not match the exceptional rate of 2023.  **[ORLY_3372557_16]**
- **Increasing the proportion of owned stores in new openings from around 40% to closer to 60%**, the company believes this strategy enhances long-term value creation for shareholders through improved per-store volumes and profitability.  **[ORLY_3372557_13]**

d8b3d84d56d06520a5672978f58b9a7c2dcb63fc6c71dff5a044b8ed69edd4ca

- **Management remains confident in the underlying demand drivers, such as vehicle miles driven and the aging vehicle fleet, which support mid- to long-term demand growth.**  **[ORLY_3380843_21]**
- **O'Reilly sees significant growth potential in Mexico, where the average vehicle age is over **16 years**, compared to **12.5 years** in the U.S., indicating a tremendous runway in a fragmented market.**  **[ORLY_3380843_22]**
- **Despite short-term volatility, the company continues to gain market share and sees no material change in its competitive position, reinforcing confidence in ongoing share gains.**  **[ORLY_3380843_13]**

8cd75980613b64b427c2c53910dc0d31f92d5806ca08a55dea278b9deeb86dcc

- **O'Reilly Auto Parts plans to open *190 to 200 new stores in 2024*, including growth in Mexico and Canada, and sees no slowdown in its store growth pace.**  **[ORLY_3394399_14]**
- **The company is investing significantly in distribution infrastructure to support growth, with *three active distribution center projects*, indicating confidence in long-term expansion.**  **[ORLY_3394399_14]**
- **They are gaining market share in undercar parts categories, and customers are migrating towards higher-quality, proprietary brands, which strengthens margins and competitive positioning.**  **[ORLY_3394399_11]**

ac7a250896e4e3512396809950a7acfc3197471706f34a710a92541c8ad9b863

- **Management expects market share gains in 2024 to be lower than in 2023**, acknowledging they "comped to 7.9% last year, and we're clearly not guiding to that range this year."  **[ORLY_3372557_16]**
- **Operating profit pressure is expected to be greater in the first half of 2024** due to higher SG&A expenses from prior investments and timing of technology investments.  **[ORLY_3372557_15]**
- **Increasing owned store investments will reduce cash available for share buybacks**, potentially affecting shareholder returns. "It's going to be less dollars that we would allocate to that [share buybacks]."  **[ORLY_3372557_13]**

406809aa73c257c7071d3b7c3627cc6d4d50b64c15dbfc7c216f14c7a74ba9f2

- O'Reilly Auto Parts lowered its full-year comparable store sales guidance to **2% to 4%**, reflecting both weaker-than-expected results in the first half and updated expectations for the second half due to softness in sales and consumer pressures.  **[ORLY_3394399_18]**
- Gross margins were below expectations, impacted by unfavorable product mix, higher distribution costs, and greater-than-anticipated dilution from the Canadian acquisition; discretionary categories were down significantly, and DIY sales were negative, indicating pressure on higher-margin business segments.  **[ORLY_3394399_9]**
- The company faces challenges in managing expenses due to the shift towards more full-time employees, which could limit flexibility in SG&A management if sales remain soft.  **[ORLY_3394399_15]**

c878208106b319f149d0b53ea0b0f003fd4a4930189541b38798f5d2da148bdc

1. **2025 Outlook and Comp Sales**  
   **Q:** If trends don't improve, will you maintain normal comp guidance for 2025?  
   **A:** Management acknowledged that while 2024 has been uncharacteristic, they will evaluate their best read when establishing guidance for 2025. They believe they are well-positioned to take share gains and provide strong returns, remaining confident in their ability to grow faster than the market.  **[ORLY_3403745_13]** 

2. **Business Recovery Expectations**  
   **Q:** Why do you think headwinds are short-lived, and when will business flip?  
   **A:** They expect conditions to improve post-election and with moderating inflation. Historical patterns suggest a return to normal industry growth. Though not seeing specific indicators yet, they are confident based on past experiences that the headwinds are temporary.  **[ORLY_3403745_11]** 

3. **Deferred Maintenance and Demand Recovery**  
   **Q:** When did deferred maintenance impact start, and what unlocks pent-up demand?  
   **A:** Deferred maintenance trends have persisted throughout the year, impacting sales more over time. Management expects customers to return, citing historical bounce-backs after tough years. Factors like lower gas prices or normalized weather could unlock pent-up demand.  **[ORLY_3403745_15]** 

4. **Tariff Impact and China Exposure**  
   **Q:** How disruptive would new tariffs be, and can you pass on costs?  
   **A:** They have reduced dependency on China by over **500 basis points**, decreasing exposure to around **25%**.  **[ORLY_3403745_18]**  They feel confident in passing through increased costs, as they did with previous tariffs of **20–25%**.  **[ORLY_3403745_14]** **[ORLY_3403745_18]**  However, tariffs as high as **60%** would be unprecedented, and the broader consumer impact is uncertain.  **[ORLY_3403745_14]** **[ORLY_3403745_18]** 

5. **Market Share and Growth Expectations**  
   **Q:** Do you factor market share gains into next year's comp expectations?  
   **A:** Yes, they believe it's their entitlement to grow faster than the market due to their advantages and momentum. They expect to continue taking share gains, and this will be reflected in their 2025 expectations.  **[ORLY_3403745_12]** 

6. **Operating Margin and Expenses**  
   **Q:** What's driving Q4 margin easing and SG&A expenses?  
   **A:** Easier comparisons from last year and the benefit of one extra Sunday (approximately **30–40 basis points** to comp sales) are aiding margins.  **[ORLY_3403745_17]**  Gross margin remains solid and in line with guidance. SG&A expenses are stabilizing as they lap prior investments, with no change in investment cadence.  **[ORLY_3403745_16]** 

7. **New Store Economics and Expansion**  
   **Q:** How are higher construction costs affecting new store economics?  
   **A:** Despite higher construction costs, with owned store costs approaching **$3 million**, productivity and returns remain strong.  **[ORLY_3403745_19]**  This supports their plan to open **200–210** new stores in 2025, feeling confident about returns even with higher costs.  **[ORLY_3403745_19]** 

8. **Competition from Mass Retailers**  
   **Q:** Has competition from mass retailers impacted DIY business?  
   **A:** While mass retailers sell some commodities, management believes their service model and customer loyalty keep customers sticky. They don't see any significant changes in 2024 and are confident in overcoming competition with their professional service and availability.  **[ORLY_3403745_21]** 

9. **DIFM vs. DIY Recovery**  
   **Q:** How will recovery differ between DIFM and DIY segments?  
   **A:** They expect the DIFM segment to remain more resilient and continue gaining share. While DIY has been more impacted, they anticipate a meaningful comeback as consumers return, possibly with catch-up demand.  **[ORLY_3403745_20]** 

10. **Hurricane Impact on Sales**  
    **Q:** Are hurricanes net positive or negative for sales volumes?  
    **A:** Hurricanes like Helene caused some disruption, impacting comps by **10–15 basis points** in the quarter.  **[ORLY_3403745_10]**  Overall, weather is considered net neutral, and the total impact in Q4 remains to be seen.  **[ORLY_3403745_10]** 

11. **Supply Chain Expansion**  
    **Q:** Does the new Virginia DC cover the Northeast market?  
    **A:** The new Mid-Atlantic distribution center opens opportunities in that corridor. However, there may be a need for another DC between Stafford and Devens in the future. They are excited to expand in key markets like Northern Virginia, D.C. Metro, Baltimore, and Philly.  **[ORLY_3403745_9]** 

1322bcf504c2ad88e3d6b38b290c68e1fb809222ec3e4fe2d094c9ca538bd6bf

c1f79451509b5870b9132e198a1d202d550a36178169de9b18057685f1892863

1. **Lower Comparable Sales Guidance**  
   **Q:** Why guide comp sales at 2%–4% vs. usual 3%–5%?  
   **A:** Management guided to a 2%–4% comp sales increase for 2025 due to a cautious consumer and choppiness in the business, especially in discretionary categories. Despite a strong Q4 comp of **4.4%**  **[ORLY_3414690_13]** , they are cautious given pressures on the lower-end DIY consumer.  **[ORLY_3414690_13]** 

2. **Sourcing Exposure and Tariffs**  
   **Q:** What's your sourcing exposure to China, Mexico, and Canada?  
   **A:** Approximately **25%–26%** of sourcing is from China, high teens percentage from Mexico, and low single digits from Canada.  **[ORLY_3414690_12]**  They are prepared to manage potential tariffs through supplier negotiations and have been diversifying their supply chain to reduce dependency on hotspots.  **[ORLY_3414690_12]** 

3. **Impact of Competitor Closures**  
   **Q:** Are you seeing gains from competitor store closures in the West?  
   **A:** It's early to gauge the impact of competitor closures on the West Coast. While there may be opportunities to win additional business, they are cautious to pursue only quality sales that align with their business model.  **[ORLY_3414690_17]** 

4. **Inflation and Pricing Trends**  
   **Q:** Why is inflation below general economy levels?  
   **A:** Same-SKU inflation was under **1%** in Q4.  **[ORLY_3414690_15]**  The industry doesn't adjust prices weekly, so inflation impacts occur more gradually. Currently, there's no indication of a sharp inflation spike in their products.  **[ORLY_3414690_22]** 

5. **Gross Margin Outlook**  
   **Q:** How did mix and complexity impact gross margins in Q4?  
   **A:** Gross margins were influenced by the inclusion of the Canadian business and product mix shifts due to seasonality.  **[ORLY_3414690_15]**  Some factors affecting margins were transitory, and management feels positive about cost management moving into 2025.  **[ORLY_3414690_16]** 

6. **Automation in Distribution Centers**  
   **Q:** Will new DCs include automation features?  
   **A:** Recent DC projects included goods-to-person automation to enhance efficiency, labor savings, and accuracy.  **[ORLY_3414690_19]**  They view this as an ongoing evolution and will continue to assess the need for such technologies in future DC projects.  **[ORLY_3414690_19]** 

7. **Owned vs. Leased Store Economics**  
   **Q:** What's the cost difference between owned and leased stores?  
   **A:** Owned stores cost **$3–$4 million** including construction and equipment, while leased stores cost **$400,000–$600,000**.  **[ORLY_3414690_24]**  Both models provide strong returns, and they see stores as an attractive investment over the long term.  **[ORLY_3414690_24]** 

8. **Fuel Prices Impact on Expenses**  
   **Q:** How do fuel prices affect operating expenses?  
   **A:** Fuel costs are not a significant mover in operating expenses unless there are substantial price changes. They manage fuel costs as part of their overall spend, and it doesn't typically impact the business meaningfully.  **[ORLY_3414690_20]** 

9. **Self-Insurance Cost Pressures**  
   **Q:** How are rising insurance costs impacting the industry?  
   **A:** The cost of resolving accidents is creating pressure, but it's an inherent part of operating their fleet.  **[ORLY_3414690_23]**  They will continue to manage these costs as a component of their operating expenses.  **[ORLY_3414690_23]** 

10. **Nontraditional Retail Competition**  
    **Q:** Is competition from nontraditional retailers affecting DIY market share?  
    **A:** They haven't seen significant impact from nontraditional competitors. Maintenance categories like oil and filters continue to perform strongly, and their focus on service and availability differentiates them from price-focused competitors.  **[ORLY_3414690_18]** 

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**Annual guidance for FY 2025:**  
- **Total Revenues**: $17.4 billion to $17.7 billion  **[ORLY_3414690_10]**  (raised from $16.6 billion to $16.8 billion  **[ORLY_3403745_7]** )  
- **Comparable Store Sales Growth**: 2% to 4%  **[ORLY_3414690_2]**  (no prior guidance)  
- **EPS**: $42.60 to $43.10  **[ORLY_3414690_10]**  (raised from $40.60 to $41.10  **[ORLY_3403745_7]** )  
- **Gross Margin**: 51.2% to 51.7%  **[ORLY_3414690_6]**  (raised from 51% to 51.5%  **[ORLY_3403745_4]** )  
- **Operating Margin**: 19.2% to 19.7%  **[ORLY_3414690_8]**  (lowered from 19.4% to 19.9%  **[ORLY_3403745_4]** )  
- **Effective Tax Rate**: 22.6%  **[ORLY_3414690_10]**  (raised from 21.8%  **[ORLY_3403745_7]** )  
- **Free Cash Flow**: $1.6 billion to $1.9 billion  **[ORLY_3414690_10]**  (lowered from $1.8 billion to $2.1 billion  **[ORLY_3403745_7]** )  
- **Capital Expenditures**: $1.2 billion to $1.3 billion  **[ORLY_3414690_4]**  (no prior guidance)  
- **New Store Openings**: 200 to 210  **[ORLY_3414690_4]**  (no prior guidance)  
- **Average SG&A Per Store Growth**: 2% to 2.5% or 2.5% to 3% excluding the Q4 2024 charge  **[ORLY_3414690_8]**  (lowered from 3.5% to 4%  **[ORLY_3403745_4]** )  
- **Accounts Payable-to-Inventory Ratio**: ~125%  **[ORLY_3414690_10]**  (lowered from 127%  **[ORLY_3403745_7]** )  
- **Same-SKU Inflation**: ~1%  **[ORLY_3414690_4]**  (no prior guidance)

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O'Reilly Automotive Inc (ORLY)

Financials