Good morning, and welcome to the AutoZone Conference Call. [Operator Instructions] Please be advised, today's call is being recorded. If you have any objections, please disconnect at this time. This conference call will discuss AutoZone's first quarter financial results. Bill Rhodes, the company's Chairman, President, and CEO, will be making a short presentation of the highlights of the quarter. This conference call will end promptly at 10 a.m. Central Time, 11 a.m. Eastern time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements.

Certain statements contained in this press release are forward-looking statements. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, positioned, strategy and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments, and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; availability of consumer transportation; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of our annual report on Form 10-K for the year ended August 27, 2011, and these risk factors should be read carefully.

Mr. Rhodes, you may now begin.

Good morning, and thank you for joining us today for AutoZone's Fiscal 2012 First Quarter Conference Call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer, Store Development and IT; and Brian Campbell, Vice President, Treasurer, Investor Relations, and Tax. Regarding the first quarter, I hope you've had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, is available on our website, www.autozoneinc.com. Please click on Quarterly Earnings Conference Calls to see them. We are pleased to announce our fiscal -- our financial results and update you on our progress regarding our operational activities for 2012. Regarding the numbers, our EPS for the first quarter increased by 24%, another strong financial quarter for us as our domestic same-store sales increased 4.6%. This marks the 12th consecutive quarter of EPS growth in excess of 20%, and the 21st consecutive quarter of double-digit EPS growth. Our sales and operating profit growth rates were in line with the last couple of quarters, continuing to be driven by our focus on maintaining our competitive position within the retail sales category, strong performance in our Commercial sales category and continuing to grow our Mexico, ALLDATA and E-Commerce businesses. We continue to be pleased with our performance in each of these sectors. Again, the credit for our success belongs to all AutoZoners across our great organization. Their continued focus on improving customer service is what's differentiating us on an ongoing basis. I know phrases like focusing on customer service can seem overused these days, but it's how we run our business. From our most senior leaders of the organization to each and every store, we talk about and develop strategies to improve our interactions with our…

Thanks, Bill. Good morning, everyone. To start this morning, let me take a few moments to talk more specifically about our Retail, Commercial and Mexico results for the quarter. For the quarter, Total Auto Parts sales increased 7.4% on top of last year's first quarter's growth of 12.8%. This segmentation includes our domestic Retail and Commercial businesses, and our Mexico stores. This quarter, we again completed merchandise line reviews with a goal of completing at least one review each year on every category. Regarding macro trends during the first quarter, unleaded gas prices started out at $3.67 a gallon, and declined steadily, finishing the quarter at $3.37 a gallon. Last year, gas prices increased $0.20 per gallon during the first quarter, albeit from a substantially lower beginning point starting at $2.68 and ending at $2.88 a gallon. We're hoping that declining trend continues as a reduction in prices at the pump can materially help our customers’ pocketbooks. And at the same time, with gas prices remaining high, there is an opportunity for us to communicate with our customers on steps they can take to improve their gas mileage. Miles driven remains less of a story to our near-term sales results than in previous years. Through September, 7 of the last 9 months have run negative to the previous year's miles driven. Year-to-date through September, miles driven are now down 1.3%. Unless trends change, this year will mark the first declining year since 2008. While recently, we have seen minimal correlation to our sales performance with miles driven, historically, it has been one of the key statistics which correlate to our sales results over the long term. The other is the number of 7-year-old and older vehicles on the road, which continues to trend in our industry's favor. We also recognize…

Thank you, Bill. Before we conclude, I want to reiterate that our industry's performance has been strong over the last 3 years, but I believe our team's commitment to our culture and our customers, combined with our initiatives, have contributed significantly to our success as evidenced by our sales and share growth in both Retail and Commercial. We remain committed to continuing to improve our business model and our operations; continual, steady refinements. We believe our business model is healthy and we have material opportunities for further improvements from this point. In fiscal 2012, we will continue to focus on our key priorities: Great people providing great service; profitably growing the Commercial business; leveraging the Internet; and our hub strategy, where we're really focused on relocations and expansions at this point. After the last 3 very impressive years of performance, our first quarter has again started out strong. As we entered the quarter, we had some concerns because we were comparing against our strongest quarter since quarter 2 of fiscal 2003, but with our AutoZoners’ continued intense focus on providing great service and trustworthy advice, we were able to deliver these impressive results. I want to again thank and congratulate our entire organization for their dedication to our customers, fellow AutoZoners, stockholders and the communities we serve. Our approach remains consistent. We're focused on succeeding in the second quarter of 2012, and we are quite optimistic and excited about the remainder of the year. Now we'd like to open up the call for questions.

[Operator Instructions] Our first question today is from John Lawrence with Morgan Keegan. John R. Lawrence - Morgan Keegan & Company, Inc., Research Division: Bill, would you comment just a little bit on the Commercial business and dig a little deeper there? When you talk about, not only can you see the growth from new stores but the existing. Would you just walk us through a little bit, I mean, you had to get the parts coverage over time. There were some processes in the sales force. Where do you think you need to go now? What would be the next steps to improve those early Commercial accounts to make that more productive?

Sure. I think a big part of it, John, is we have made significant improvements in our core execution in the Commercial business. And I think we’ve got to make sure we continue to get out there and tell our story. Our territory sales managers are out there today, telling our story and they're building deeper and deeper relationships with our customers. But building those relationships takes time. But at the end of the day, we've been very pleased with the old programs that have been out there and their growth. We've been very pleased with the programs we've opened over the last couple of years and their growth. We're also pleased with the programs that we're opening now. So across-the-board, we continue to be pretty bullish on it, and you can see that based on the fact that we're opening more and more programs over time. John R. Lawrence - Morgan Keegan & Company, Inc., Research Division: And second question, just on line reviews, when you look at your comments on widening the ages of those parts. Does this mean -- I know you've always been very disciplined on those line reviews. But does it change any processes as those ages get wider?

No, I don't think it changes the processes. Our team has really developed a very sophisticated inventory selection model on a per-store basis for hard parts. But as we continue to see the age of vehicles, that bell curve widen, it's just giving us more and more opportunities to put more products in the stores. And we have challenges with that; obviously, the financial challenges of additional inventory, but also space challenges. And so that's where this hub strategy is really so critical to our current success and really even more critical to the future success. John R. Lawrence - Morgan Keegan & Company, Inc., Research Division: All right. And last question, can you comment on the size of Duralast at this point?

Basically, we only say that our Duralast program continues to be strong. We don't actually quantify exactly what the overall percentage of penetration is. As you recall, we've talked about it over the last 4 quarters. As we've increased our Duralast penetration it's been a bit of a benefit for our gross margin. And we continue to find opportunities in certain categories for us to continue to expand that. So we're very bullish on Duralast and its opportunities for continued expansion.

Our next question is from Ivan Holman with Citigroup.

This is Ivan in for Kate. First question, maybe this is for Bill. Focusing on store economics, on a per-store basis, your Commercial sales are still running below competitors. Can you provide some type of timeline of when you think you can bridge that delta? And whether or not growing the Commercial programs will cannibalize the DIY side of the house?

Well, I'll go backwards. We certainly don't believe that growing the Commercial programs will cannibalize the DIY side of the house. In fact, one of the things that we have found is that we continue to expand our assortment and our coverage, continue to expand inventory coverage in our hub stores with a focus on improving our Commercial business, and have actually found as a byproduct that, that has actually helped our DIY business. So actually just the opposite, we find the businesses to be relatively complementary from an ability for us to add inventory into the marketplace, and frankly more labor into the stores, servicing both of those important customers. But from a productivity perspective, as you've seen, we've had great growth from our Commercial programs being up over 20% overall growth, and that's coming from both new programs that we've added. We've added almost 10% program growth in the last fiscal year and continue to feel very confident about our ability to continue to expand more programs. But we're getting good growth out of the existing stores and I think Bill highlighted a couple other important points, that when you think about the building blocks that we've put in place between the sales force, territory sales managers, the inventory coverage, some of the technology enhancements that we've made to the programs, we think that we've got a very good foundation to continue to improve the productivity of our existing stores. So we recognize there's a gap but we're really excited about our ability to continue to close that gap and improve the productivity.

Okay, great. And just a quick follow-up, the comp accelerated materially on a 2-year stat. Do you believe the current pace of improvement is sustainable? As we think of the cadence of sales for the year ahead, 2Q is typically the smallest quarter of the year. Do you anticipate more seasonality given the backdrop of a still constrained consumer?

Yes, we definitely believe that there's seasonality in Q2, and one of the things that we've always been very consistent about indicating is that Q2 always is one of the more choppier quarters. We've got a fair amount of holiday time during there so -- and it's certainly the lowest volume quarter. So we just take it one quarter at a time, and we feel encouraged about our initiatives, but we recognize that the consumer continues to be under a lot of economic pressure.

Our next question is from Sam Reid with Barclays Capital.

This is Sam Reid filling in for Alan Rifkin. One of your competitors discussed regional variations on the DIY side. I was wondering if you all had any comments on that, maybe if you're seeing any variations yourself.

Yes. I mean, obviously when you're a national operator like us, we have certain areas, over time, that are areas of strength and other areas that are more challenged. I think you're referring to some folks calling out that the Southeast has been a little bit more difficult and that's accurate. We're seeing the same, but it's still a very healthy market. One of the things, when you think about why it could be more difficult, it's the most competitive area in the country and it's also where a tremendous amount of new store openings are focused. So we don't think it's anything that drastic. We continue to be pleased with our performance there and hope to improve it over time. Our big thing is, as a national operator, weather effects and economic indicators are going to go region to region over time. We believe our game plan is the right game plan and we just need to execute it.

Our next question is from Dan Wewer with Raymond James.

It's Aziz in for Dan. Two quick questions. First, can you give us a breakdown of your mix on failure/maintenance and discretionary merchandise?

Yes. We talked about it a little bit in the prepared comments. Failure was roughly 45%.

What was that relative to last year on failure?

Not significantly different. We really didn't see much change during this quarter, between those 3 categories.

Okay. And then maintenance versus discretionary?

Maintenance is about 40%.

Great. And then sort of like a long-term question that we've been curious about. If you look at vehicle demographics, SARs are running about I think $13 million to $13.5 million a year. A little below scrappage. It's been like that on and off for the last couple years. It's good for the age of cars right now but you're actually seeing fewer cars on the road. Is there any worry that new car sales being so slow will impact future sales? I mean, is that a long-term negative? How -- what are you guys doing? Are you guys thinking about -- how are you guys thinking about that?

I think the first thing you think about when you get about 250 million vehicles on the road, the difference in one-year sales of $13 million or $14 million isn't going to make a big difference. And we have not seen a declining overall vehicle population at this rate. We do have some concerns of miles driven being down. This will now be the second -- likely the second year, over the course of the last few years, where miles driven has been down. And fewer miles, over the long term, is going to be less maintenance and less failure. It's less wear and tear on the vehicle so that has us mildly concerned, let me characterize it that way.

Our next question is from Scot Ciccarelli with RBC Capital.

This is Patrick Palfrey sitting in for Scot today. I just had a couple questions on margins, if I may. You called out higher self-insurance revenue -- I'm sorry, higher self-insurance costs as a contributor to higher expense in the past couple quarters. I was just sort of curious as what is driving the higher self-insurance expense?

On that one, we're seeing a bit of an increase in health medical. And so we've seen some increase just over this most recent quarter on health medical. So we continue to evaluate it and take steps to be able to curtail that to the extent that we can, but there's been some pressure on that. And then maybe a little bit of pressure on casualty, but not as significant.

Okay. And then I guess within gross margins, you also called out lower distribution expense on higher sales. I guess is the improvement directly attributable to the sales leverage or were you able to be more efficient in terms of the delivery of your product?

I think it's a combination of both. I think our supply chain distribution people have really done a very good job of being able to operate a very efficient organization, and we always find some opportunities to be even a little bit more efficient. But it's a combination of some of the efficiencies that they've put in place as well as just leveraging off of the sales volume.

Our next question is from Michael Montani with ISI Group.

This is Mike on for Greg Miller. I just had a question, first on SG&A dollar growth up about 6.8% this quarter, last year obviously up closer to 10%. If you think about moving forward, trying to do more work on Commercial, how should we think about that? Assuming comps are similar to where they are today, is 6% sustainable or does that perhaps increase a bit as we look to gain market share in Commercial?

Yes, I think that there's going to be some continued investments in Commercial as we continue to roll out new programs. If you recall, over probably the last 4 quarters, we've made investments in Commercial. We've also made some investments in our hub programs as well. So we think that the rate of growth will probably moderate relative to last year a little bit. But we're going to continue to invest back into the business to position ourselves for growth into the future.

Okay, great. And then just a follow-up on the CapEx side. Is $320 million still roughly the right run rate or is there any material changes to that? Again, given the acceleration we're seeing in Commercial.

It probably will be a little bit higher than that, not so much on the Commercial but also on expansion of hubs, et cetera. So I think it'll be a little bit greater than that. But again, most of our capital is devoted to new stores, and then obviously, maintenance on existing stores. And then there's some dollars put aside for other expansion as well.

Is maintenance still about 1/3 of that or how should we break that out?

It's not about way to think about it. It's probably about that.

Our next question is from Chris Horvers with JPMC. Mark A. Becks - JP Morgan Chase & Co, Research Division: It's actually Mark Becks on for Chris. First question I have is the acceleration of comps when looking at both sides of the business. Can you speak to where this is coming from? I know you highlighted in your prepared remarks that you're seeing customers trade up to higher price points.

Yes. Over time, we're -- really, what we're saying there is a lot of people anticipated that, in this economic cycle, we would see people trading down. And really, what we're saying is we're not seeing them trade down. When you talk about the overall increase in average ticket, there's several things that are driving it. Number one, our teams are doing a great job in the field of sharing the value propositions with the customers, and in many cases selling them up for the better or best products. Another thing that's going on underlying there is there's been some pretty significant increases in commodity prices over the last 12 months. And that's reflected in the retail prices of those products. The third thing, and we talked about it a little bit on the last quarter, is there's a technological enhancement that happen in this industry as parts and products are becoming more sophisticated and more complex. There's an underlying trend in the increase of those products, they also last a little bit longer, which puts some pressure on traffic count on that we've seen over the last -- more than the last decade. Mark A. Becks - JP Morgan Chase & Co, Research Division: Got you. And then Commercial, just trying to get a better grasp of the opportunity there. Can you speak to what volumes you're seeing in some of your more mature programs versus what you're seeing in the newer, immature programs there?

I think we see some stores with some very significant volumes. I really don't want to put out numbers from a competitive point of view. But we have a significant amount -- number of stores that are performing exceptionally well, and we're very pleased with those. I think the thing that we're more excited about is the newer programs that we're developing are continuing to ramp up faster than they have on a historical basis. And as that continues to happen, it gives us more confidence, it makes us more aggressive about opening more programs sooner rather than later. Mark A. Becks - JP Morgan Chase & Co, Research Division: And then last question here. On the hubs, originally I think you spoke to relocating or expanding 40. It looks like this number is creeping up a little bit. I guess is this indicative of results being stronger than you anticipated or maybe what may have changed?

Yes, I would say a combination of both. I think we're very encouraged with the performance that we've got out of the expansions that we've done up of this point. We've got about 145 hubs and we've always felt as though probably 2/3 of those required some level of expansion, and we recognize that it would take a few years to be able to accomplish that. So we would continue to expect to expand more hubs into the future.

Our next question is from Tony Cristello with BB&T Capital Markets. Anthony F. Cristello - BB&T Capital Markets, Research Division: I guess the first question I have is when you look at the Commercial rollout of the programs from a geographic standpoint, I believe you started that more focused on the hubs on the West Coast, if I'm not mistaken. Can you, if you look at now the 60% coverage and now the 60% program coverage that you have in Commercial, on a geographic basis, would you feel that it's now evenly dispersed? Or are you more concentrated in one region than the other and so the next wave or so of relocations and/or openings would be concentrated to one particular market?

Yes. I would say, on the hubs, that it is not geographically based at this point in time. Yes, we did have a slight slant when we started that program, the acceleration of the super hub program. We had some focus on the West Coast first. But at this point in time, I think it's more based upon the individual store locations that we have and do we have the right real estate there. On the Commercial programs, I think it too -- it does vary, frankly fairly significantly from region to region. But there's a lot of individual factors that are going to drive that and it's not really geographic. It's more where did we have the right footprint? Where were we closest to the significant Commercial business? And frankly, where did we have the leaders that were the more aggressive in those areas as well. Anthony F. Cristello - BB&T Capital Markets, Research Division: So do you think that what you've accomplished to date and sort of the strategy you've been using, have you gone after the easiest sort of opportunity and sort of going from the 60% to 65% or 70% will be that much harder? Or have what you learned through the process made your ability to go in and target a bit more easier and more efficient in how you roll them out?

Yes, it's a great question and I think it's a little bit of both. Clearly, we have opened the programs where they had the highest potential to do business. But the thing that's been interesting is, and I hit on it just a minute ago, although we're opening in the lower potential areas, they all still have significant potential, and as we're opening in these lower areas, we're actually outperforming and ramping up faster than we did over the last couple of years. I think that's due in part because our program continues to be refined. We continue to gain share in the marketplace, gain share of voice, our sales team continues to improve. And so we believe yes, it'll be comparatively more difficult to go from 60% to 65% to 70%. But we have a lot of confidence that we're going to be able to continue to make those increases. Anthony F. Cristello - BB&T Capital Markets, Research Division: And maybe just one last question. When you look at your answer to one of the prior questions that was asked, pertaining to the Southeast, you noted there have been more store openings in that region that could have potentially impacted sales. And then I guess from a bigger picture, at some point does the store opening growth from you and some of the larger peers at some point become counterproductive? And are there any areas outside of the south -- and I don't want to take out of context what you said, so maybe I'll let you answer that first. But you can kind of see where I'm trying to ask the question.

Yes. I mean, I think there's a lot of areas where all the major players are there. And frankly, look at everybody's results and everybody seems to do pretty well. So I think this business, we strive -- we don't have any areas where we're challenged significantly. Do we take a hit when somebody comes in? Absolutely, then we try to work ourselves out of it. But we're not running 32% return on invested capital because we're struggling in a bunch of markets. Anthony F. Cristello - BB&T Capital Markets, Research Division: Well, and I guess what I wanted to more get at is does there ever become a situation where there's too much or there's a market saturation in a particular region or are you so far away from that with fragmentation that it's not even an issue at this point?

I'd just say I haven't seen a market yet that was so saturated that we were challenged economically.

Our next question is from Matthew Fassler with Goldman Sachs.

It's actually Ryan Brinkman for Matt Fassler. You discussed this to some extent already, but can you elaborate any further upon the expected ramp in the number of Commercial programs, which obviously remains very rapid. How should we think about the cadence going forward? And is the F 1Q rate sustainable?

Here's the way we're looking at it. We have more and more aggressive plans that we're laying out. We certainly laid out more aggressive plans for the balance of this year than we had when we started this year, but we're going to pace them based upon how we continue to perform. We have gates along the way. You've heard us talk about it before, a pay-as-you-go mentality, where we're going to open a cluster of stores, and as long as they're tracking on path, then we'll go ahead and open the next ones. If for some reason, whatever the reason is, we get off of that projected path, then we're going to slow down, we're going to go back and put intense focus on the stores that aren't performing to our expectations, leverage our focus there. And then once we get them going again, we'll come back in with the next batch. So we don’t want to lay out here's what the number is because that's not the way we're going to run it. We opened 235 net new stores last year. I certainly hope we do more than that this year. But we'll have to see. We're going to make sure that we perform to our expectations.

And then I'm curious as to the increase in self-insurance costs. Do you regard that as a largely one-time item? Say the truing up reserve based upon estimates or might you need to recognize higher costs on a go-forward basis?

Well, we would expect that there's a little bit of a trend line there on some of them but we can't really know that for sure. So it certainly was a little bit of pressure for Q1, and we would anticipate it to be a little bit of pressure going forward, but probably not to that extent.

Okay. And then just last question, is there anything that you're able to surmise, thus far, about sales trends in the current quarter?

It's so early, it's very difficult to add any color on it. I mean, we're just a week or 2 into the quarter. And the other important point to mention is, is that it is our lowest volume quarter, so it has a lot of seasonality to it. So we'll see how the quarter shakes out.

And like everybody else, the holiday sales aren't very important to us.

Our next question is from Craig Kennison with Robert W. Baird. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: I wanted to follow up on the hub conversation that's been had so far. Is there a point at which your Commercial business outgrows that hub infrastructure and might require more of a warehouse infrastructure like some of your peers?

Yes. I think the answer is, over the long term, we don't believe that at all. But it actually has outgrown our infrastructure today, and that's why we're going through this expansion and relocation strategy. And we originally put these hubs in based upon where we have excess space. And so some of them might be 10,000 or 12,000 feet, and we crammed things in there. It has become such a strong and robust resource for us that we're having to move or relocate or expand about 75% of them over a long period of time. But we do think that the hub strategy versus the warehouse strategy is the right strategy for us. We don't see any change in our long-term view on how we're going to distribute products. Our supply chain team does a great job, and we think putting the additional coverage in the market for that day so that you can service a customer 3x a day, is much more important than having it come overnight.

Thank you. And this does conclude the question-and-answer session. I would like to turn the call back over to Mr. Rhodes for any closing comments.

Okay. Before we conclude the call, I'd like to take a moment to reiterate that our business model remains very solid. We remain excited about our growth prospects for the year. We can't take anything for granted. As we understand, our customers have alternatives. Our culture remains our key point of differentiation from our competition, and we must not lose sight of the importance of basic store execution in order to remain very successful. We have a solid plan for 2012, and our team is well positioned to succeed. But I want to stress, this is a marathon and not a sprint. As we will continue to focus on the basics and never take our eye off optimizing long-term shareholder value, we are confident AutoZone will continue to be incredibly successful. Lastly, I'd like to wish everyone a very happy and healthy holiday season and a prosperous new year. We thank you for participating in today's call.

Thank you. This does conclude today's conference. Thank you for participating. You may disconnect at this time.