Good morning and welcome to the AutoZone Conference Call. Your lines have been placed on listen-only until the question and answer session of the conference. 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 fourth quarter financial results. Bill Rhodes, the Company's Chairman, President and CEO will be making a short presentation on the highlights of the quarter. The conference call will end promptly at 10:00 am Central time, 11:00 am 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 presentation 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 31, 2013, 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 2014 Fourth Quarter conference call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer, IT and ALLDATA, and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax. Regarding the fourth 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 are available on our website, www.autozoneinc.com. Please click on Quarterly Earnings Conference Calls to see them. To begin this morning, I want to thank all AutoZoners' across the globe for another solid quarter and year. 2014 was a very busy and productive year for us. We’ve been growing our business on a variety of fronts. Our U.S. retail business expanded again in 2014 with the opening of another 148 new stores. Our commercial business continues to gain traction growing sales 12.8% on a 52-week basis with 424 net new programs opened. We now had a commercial program in 77% of our domestic stores, having opened 792 new programs in just the past two years alone, and we continued to expand our presence in Mexico. This quarter, we celebrated the opening of our 400th store in Mexico. We opened one additional store in Brazil and now have five stores in operation. We currently have approximately 8% of our total stores outside of U.S. and we believe we have growth opportunities in the United States and beyond for many years to come. We also expanded our online offerings in both our traditional autozone.com and autozonepro.com website as well as AutoAnything in fiscal 2014. ALLDATA introduced several new products and also continued its expansion in Europe this past year. Along with these strategic investments, we spent a lot…

Thanks Bill. Good morning everyone. To start this morning, let me take a few moments to talk more specifically about our retail, commercial and international results for the quarter. For the quarter, total auto parts sales, which includes our domestic retail and commercial businesses, our Mexico stores and our five stores in Brazil, increased 4.5% on 16 week per 16 week basis. Including last years extra week, our sales decreased 1.5%. Now regarding the macro trends during the quarter, nationally unleaded gas prices started out at $3.67 a gallon then ended the quarter at $3.46 a gallon a $0.21 decrease. Last year, gas prices decreased $0.07 per gallon during the fourth quarter, starting at $3.54 and ending at $3.61 a gallon. We continue to believe gas prices have a real impact on our customers’ abilities to maintain their vehicles and as cost reductions help all Americans, we hope to benefit from some increase and disposable income. We also recognize that the impact of miles driven on cars over 10 years old, the current average, is much different than on newer cars in terms of wear and tear. Miles driven increased in both May and June; July and August data is not available yet. The other statistic we highlight is the number of seven-year and older vehicles on the road, which continues to trend in our industry’s favor. For the trailing four quarters, total sales per auto parts store was $1,724,000. This statistic continues to set the pace for the rest of the industry. For the quarter, total commercial sales increased 5.3%. On a comparable basis, commercial sales increased 11.5%. For the fourth quarter commercial represented 18% of our total sales and grew $27 million over last years Q4. Last year’s commercial sales mix percent was 16%. This past quarter we…

Thank you, Bill. We are pleased to report our 32nd consecutive quarter of double-digit EPS growth and for the year to report an EPS growth rate of 16.3% on a comparable 52-week basis. Our company has continued to be successful over the long run. That success is attributable to our approach of leveraging our unique and powerful culture and focusing on the needs of our customers. To execute at a high level, we have to consistently adhere to living the pledge. We cannot and will not take our eye off the execution. While we study the external environment and react where appropriate, we must stay committed to executing day-in and day-out on our game plans. Success will be achieved with an intention to detail and exceptional execution. Before I conclude, I want to take this opportunity to reflect on fiscal 2014. We were able to build on past accomplishments and delivered some impressive results in recognition of the dedication, passion and commitment of our AutoZoners. I want to highlight that in 2014 we grew sales in all of our businesses. With this growth, we were able to achieve and comfortably surpass the $9 billion annual sales milestone for the first time on a 52-week basis. As previously mentioned, we opened our 400 stores in Mexico. We reached a definitive agreement to acquire IMC. We believe IMC is the right business at the right time for us. The management team at IMC is exceptional and we can’t wait to grow the business for many years to come. Our inventory availability testing and hub store remodels have been nothing short of incredible. We’ve learned a tremendous amount and believe our findings will lead us to more productive models. We are talking more than ever about innovation as the industry leader, it is…

(Operator Instructions) The first question is from Alan Rifkin with Barclays.

Thank you very much and congratulations on another nice year.

Thank you.

First question for Bill Rhodes, I mean, as you look longer term we suspect to IMC. How should we think of that company long-term as a proportion of your revenues and how will you integrate this at all in a little bit more detail with both your store base, as well as Auto Anything? Thank you.

Yes. Thank you, Alan. It’s a great question. First of all, I want to update everybody that as on last Friday we received HSR clearance. And so, we are working towards closing the deal and hopefully can do it in the next week or so. So, at this point in time our integration efforts as you would expect as we’re going to the regulatory approval process has been minimal. But we’ll start working that diligently as we go forward. With respect to our growth plans, they currently have 17 branches and there are considerable opportunities for growth. You can look at the other key player in the industry and they have over 100 branches. So we look to rollout additional branches. Three of their branches are new this year and are off to a great start. So we’re encouraged about the long term with them. Additionally, we think that they can be leverage particularly with our other stores AutoZone stores on both the retail and the commercial side. They have a product offering that we don’t have today. So, we are very excited about them joining the family and hopefully that’s going to happen in the next week or so.

Okay. Thank you. And one follow up if may for either of the Bills. Is there any structural reason why your less mature commercial stores which are doing 8500 a week cannot get to the level where some of your more mature units are doing which is over 10,000 a week?

Yeah. Let me clarify that. The 8500 was on average all of our stores, Alan. So, we got the more mature stores are averaging 10,000. The newer stores are even below the 8500 level. But we’ve been very pleased that we continue to grow at a very rapid pace opening almost 800 new programs in the last two years that those new programs are continuing to perform at or above where they start, where the older program started. So, we believe we have a long-term opportunity for them to be very productive. We also believe the stores that are doing over 10,000 are nowhere near where they need to be. We had continued growth opportunities with them.

Okay. But just to clarify, Bill, so even though some of the units which you’ve added most recently, you still that collectively over the longer term that can achieve revenue levels and profitability levels of some of your more mature ones?

Yes.

Yes. That’s absolutely fair.

Thank you very much.

And hopefully beyond that, Alan.

Yeah. Thank you.

Thank you. The next question is from John Lawrence with Stephens.

Good morning, guys.

Good morning.

Hi, John.

Yeah. Bill, would you comment to follow on Alan’s question just a little further. That gap of some of those clients or stores that where you don’t have that merchandise or that line card available. Can you just give us a sense of some of those stores and what you have available for those that you don’t have today and how big of any opportunity – how large of an opportunity is that?

The IMC product offering is vastly different than ours. It is a branded offering that is OE quality, OE manufactures that we don’t necessarily have in our product offering today. There are certain customers think about the high-end BMW or Mercedes shops that want to use those products and use them pretty much exclusively. We don’t do business with many of those shops today. However, we do have a lot of shops that are doing that kind of work and then in certain cases want those kinds of products. This will now allow us in our commercial program to sell those cases to our existing – those products to our existing customers as well.

Great. Thanks. And just a follow-up for Bill Giles. On the G&A as far as technology investments and incentive comp should those stay about the same level going forward?

Let’s say that obviously from a management team perspective, we hope the incentive comp continues to go up. But I would say that from an IT perspective, we will continue to expect to have some investments in IT over the next fiscal year or so. As Bill highlighted earlier, the several things that we’ve done from a store system structure perspective in order to enhance the information that we’ll provide in our AutoZoners which is ultimately providing to our customers. So we think there’s some real opportunity for that, as well as tying all of our customer information together, so we have a better visibility on the activities of our customers.

Thanks. Good luck and congrats.

Thanks.

Thank you. The next question is from Dan Wewer with Raymond James.

Thanks. Bill, we’ve had five consecutive quarters that inventory per square foot is grown between call it 4.5% to 8.5%. I would have thought by now that these initiatives would have had enough time to get some traction and generate better sales productivity. It sounds like you’re continuing to refine the test particularly regarding distribution frequency. Just curious as to why you think that the payoff hasn’t materialized by now and what kind of timeframe would you advice investors to take with a payback?

Yeah. It’s a good question, Dan and I think that’s you’re looking at the right way. I mean, we recognize the importance of hard parts coverage. And every time we add inventory we recognize that it benefits both the commercial side of business as well as the DIY side of the business. You know, and keep in mind to, we’re fortunate to be operating in an industry where there’s very low [ops] to lessen inventory and there’s very low financing cost at the moment. So, we think that this is a very good risk reward strategy that we’re taking and it’s an important one for us to continue to gain market share with our customers. And then other leg of the stool is really the delivery of frequency. So, we’ve added more inventory particularly at the store level. And then, we’re also testing our optimization of the frequency of delivery and the method of delivery to both our satellite stores as well as ultimately to our customers. And so, there’s more work to be done on there. I think that the test would show that we’ve gotten some good returns on the investments that we’ve made. They’ve been broad-based in some cases, but frankly not although across the chain. Many of the tests that we’re doing are very isolated. And in those cases we’re very encouraged with the results that we have. There’s more learning to be done. There’s more work to be done. But we think that adding inventory like I said before is a very good from a risk reward perspective. We don’t see a lot of exposure, but again, it’s not fast and its not technology based. So we think it’s a good way to continue to capture market share. And then, we got to continue to work with the delivery frequency to optimize our overall supply chain.

Just to clarify is there is bottleneck so we’ve added this -- we’ve added inventory either at a distribution center or at a hub, but there’s a bottleneck that’s preventing it from getting to the store and effectively sold to your commercial customer?

I think one thing to think about and we’ve always talked about this is that 70% of the SKUs that we carry one on hand, and so there’s an incredible randomness on the lot of sales of service inventory. So your ability to predict and to stay in stock is what’s really become challenging. So I wouldn’t consider it a bottleneck per say. I think we got distribution center, we’ve got hub stores and we’ve got our individual stores. And it’s really where we have the inventory versus safety and then the frequency of delivery and those of the things that we’re working on right now.

And just a follow-up question. You noted that the year-over-year comparisons become a lot more difficult in your second quarter of fiscal year ’15, but at the same time we do have some weaker markets that could recover. I’m assuming you’re talking about the West Coast given the drought conditions out there or can you expect it will continue next year. What makes you confident that those lagging markets would recovery this coming year?

Well, obviously we can’t predict the future. But we did have a lot of strength in the second quarter particularly in the Northeast and the Midwest. I would also say, it wasn’t just the geography issue. In the second quarter of last year we performed particularly well on the failure-related categories, but even at the time we spoke to the fact that the maintenance-related categories, think about all the under car things that could be differed had saw significant decreases. So, yeah, we have a strong quarter. We had strength in certain categories, in certain geographies at the same time. The West was weaker in certain categories or weaker.

Okay. Thank you.

All right. Thank you.

Thank you. The next question is from Seth Basham with Wedbush Securities.

Good morning.

Good morning.

The first question I had is just regarding some of your distribution plans. It seem to me you’re talking little bit more about testing more overnight, more frequent deliveries from the DCs to stores rather than focusing on utilization of the hub. Is that correct? And can you give us some more information on your thinking there?

Yes. That is correct. We have several different tests that are going on. Let me go back and remind you. We talked about something we called optimal hurdle which was refining the store SKU placement across the entire store network. We finish that testing last summer and it rolled that out. We’ve been very pleased with the results of that today. A couple of the other key tests are would – an increase in delivery frequency from our distribution centers to our stores, the productive use and we’ve been testing that for about eight or nine months now and so far we’re pretty pleased with the results. Now we’re taking it the next level and saying, okay, let’s vary the delivery frequency instead of five days a week what happens at two days a week, what happens at three days a week, so that we can find the optimal approach. We’re also testing something which is an expanded SKU coverage even beyond our hub stores in a select number of we call mega hub stores and those mega hubs are also servicing the other hubs stores in the area further extending our same day local market availability. So, we’re still very much in test phase. We hope to be bringing some of these tests to conclusion over the next several months and then once we make those decisions, we will be communicating with you.

Great. That’s helpful. And just thinking about some of the mature programs, you talked about the growth in these commercial programs, still improving but at a slower rate. What do you think is driving that slowdown especially given the fact that you’re having lot of inventory and what not? Is the cannibalization going on or is it more market dynamics, how do we think about that?

Yeah. I think a big part of it is the cannibalization. As we’ve open these new programs, remember several years ago we have 51% of our stores that were on the commercial program. We’re now at 77%. When we open a program in an existing market, we take the customers that are closer to the new program. We move into that program. So, there’s a fairly significantly amount of cannibalization that’s in there and that’s impacting those growth rate. But overall, we want to make it clear to you all. We’re making progress and have been over the last five years and are pleased with it, never going as fast as you want to.

Great. Thanks guys. Good luck.

All right. Thank you.

Thank you. The next question is from Simeon Gutman with Morgan Stanley.

Thanks. First on, what you mentioned on the prepared remarks that August was better but inconsistent. Can you touch on September as appropriate? And then looking at August, its maybe just the past few months whether it weather mix of business or some secular trends? Can you help sort of push that out and if there are markets that haven’t had any weather noise, can you tell us where the underlying run rate is?

Yeah. As far as August is concern, let me just this, every period for us in the quarter had a positive same-store sales growth. August was certainly better than July which was our weakness point. In September, we have a policy of really not talking about what’s going on in the current quarter because we release our earnings so early in the quarter. We’re just barely three weeks in and so we don’t think it’s prudent for us to share what’s going on in September so far. As far as what was driving the trajectory, you could very easily see it in the weather and the weather-related categories. So, things like A/C chemicals, A/C and heating, cooling systems, all of those categories were weak for the entire quarter and particularly weak in July and in certain select weeks in August. So, to us it was very much. When the weather cooperated our sales were strong. When it didn’t they didn’t.

Okay. And then second about next year, we’re mentioning those stuff compares. Can you talk about the comp that’s required to lever the expense line. I think the business right now is doing great on the gross margin. So that’s helping the gross profit dollars. So the composition had all change as the SG&A flex a little bit, I mean, what’s the right level for next year?

Yeah. It’s a good question. And you know, its one that I think varies a little bit, I mean, the reality of it is if you look over time, we’re going to adjust our expense structure based on the sales environment that we’re operating in. So, we’re ultimately focused on growing EBIT dollars, and so, we’ll have some opportunities in gross margin. We may make some investment in SG&A, but we’ll manage those over the long-term based on the sales environment that we operate on. So it’s hard to give you a static number per say, because at times we leverage on very low comps and times we deleverage on higher comps. And so, we’ll just continue to look at the strategies that we have in place and the investments that we think we’ll help us out on a long-term basis and will adjust based on the sales environment we plan.

Okay. The lower acquisition costs that were cited this quarter is that normal course of business or did something else change that triggered your ability to lower the COGs?

I would say that that’s probably more normal course of business. I think better work with the merchandizing organization and lower some of the acquisition cost either through sourcing. There’s probably some deflation in certain categories and that’s probably what’s drove it mostly.

Okay. Thanks and good luck.

Thanks.

Thank you. The next question is from Michael Lasser with UBS.

Good morning, guys. Thanks a lot for taking my question. I was hoping you could benchmark where you think you’re parts availability and your delivery frequency capabilities are relative to your peers? We know that you’ve made good strives in the last several quarters, but I think the challenges we don’t know really order of magnitude where you are today versus where you were and what you’re trying to get to?

Yeah. On the delivery frequency, we’ve had a long strategy of -- we deliver the vast majority of our stores once a week. We have competitors that are out there that deliver their stores on a daily basis. We are in the process of testing delivery frequency. And I want to emphasize the word “test”. We’re talking about a few hundreds stores that are on this delivery frequency test. So what’s going on in those stores is not shown up in our overall numbers in any material way. We’re going to go up and see what increase delivery frequency means as I mentioned earlier we’ve been please with what we’ve seen so far. And no surprise, as we get inventory closer and as Bill mentioned 70% of our SKUs have one piece on the shelf normally its in our current – we sell that piece. We’re out of it for up to eight days. This allows us to put it back on the shelf within 24 hours. So we’re encouraged, but we haven’t made any final decisions yet.

Okay. And in those stores where you have increased frequency, what has been the profitability impact, presumably it’s not more expensive to do that?

Yes. It is more expensive and we’ve got four or five different test in different markets throughout now and they have mixed results. The longest running test is showing that it’s EBIT positive and then it’s generating a 15% IRR or better. So, that’s the threshold that we’re going hold any investment too. What we’re trying to be careful of is these will be some decisions that have long-term ramifications. And so we are wanting to make sure that we prudently test them and we validate our test results. And then determine as what’s the right number. Whether it should be twice a week or five times a week, we don’t know that answer yet.

Okay. And just to tie all those things together. If you were to get to daily replenishment or multi-week, multi time per week replenishment would you have necessarily sacrifice your profitability rate in order to do that?

I wouldn’t say, well I cannot sacrifice our EBIT growth rate per se. But at the end of the day this is about driving EBIT dollars and driving unacceptable IRR which is up 15% for us. So that’s kind of the way we think about it. That’s the way we focus on. It’s going to generate more profit dollars. Are we going to get an adequate return on the investment that we make? And that’s kind of how we look at it. So we’re not getting hung up on absolute margin rate per se.

Okay. Thank you very much.

Thank you.

Thank you. The next question is from Aram Rubinson with Wolfe Research.

Hi, guys. Good morning. Thanks for taking the question. I understand that some of the commercial businesses is kind of cannibalizing from your mature stores, but you’re still at 18% of your mix is commercial, I’m not sure where they have a particular goal of where they would like to be but it seems from just reading and studying the industry it seems like that wants to go a lot higher. So my question is, is there’s a reason that you can think of why we’re cannibalizing from ourselves rather than taking business from others is seems to be growing there kind of constant at commercial program? And do you get a sense that we’re all kind of just piling into the same strategy at the same time and maybe that’s making it more difficult competitively?

Yes. I would say the cannibalization is just a natural effect. If we open a store that is closer to a customer than the existing store that servicing, its just makes all the sense in the world for us to move that customer over to the new store so we can service him better, delivery times will be shorter and so on and so forth. So I think it’s not that that’s the only way we can do, that’s just the natural course of business. Yes, we only have 18% of our sales – I think that’s up from 16 last year. It’s no where near where we want it to be. We believe that we have a long term opportunities continue to commercial in aggressive way. We have not set any specific number, because we don’t want to maximize or put a threshold on where we’re going. We want to be as big in both businesses as we can be. As far as the piece of that growing in this business. I think it just takes time. We’ve been in this business the shortest amount of time. We’ve really had a successful growth rate over the last six or seven years and we are very confident track that we’re on and with the strategies that we have.

Thanks. And on the DIY side, can you tell us a little bit about your market share whether you feel like you’re growing that market share or is that kind of stagnating or slipping. And then also where does ecommerce fit it into that market share equation on the DIY side, is that beginning to make any material inroads? Thank you.

I think on the ecommerce side, when we look at the industry broad-based, we think that there is some opportunity for online sales, although it is in the significant penetration like it is in other industries. We recognize that a lot of people are coming for information relative it’s to be a content of the product or repair information etcetera. So we think that’s an integrated approach overall and that’s how we’re approaching it. From a market share perspective I think we’re holding our own. And so our growth seems to be close what the overall industry is growing at, at the same time we’re growing square footage growth rate at about 3%. So overall I think we’re holding our own from a market share perspective.

Thanks, guys.

Thank you.

Thank you. The next question is from Matthew Fassler with Goldman Sachs.

Thank you so much and good morning. My first question relates to the IMC acquisition. If you could shed a little bit of light on the economics of the business revenue per store compared for (inaudible) store and the roll of online in that business and then also just give us a sense to the pace and the impact of the perspective rollout of their catalog to AutoZone stores?

I’m seeing overall revenue is around $10 million per location, is about what they average overall. And so as far as what the overall impact would be on us on an ongoing basis as Bill mentioned before and so trying to get through the close and get our implementation ran, integrated and started we’ll be able to give you a little bit more color. I think in terms of getting even to the catalog obviously we would expect that to transpire in fiscal ‘15. So expect that to happen some time in the fiscal year I will give you better idea of that in the next conference call. But overall its good productivity, it’s a great compliment from an inventory perspective and certainly from a customer perspective and it’s a great management team. So we think that was a combination of things, so I hope the integration go even quicker.

And Bill if you think about the role of ecommerce and your model compared to what you see for the core AutoZone stores as you discussed to the last question. Is it similar or greater, would you say vis-à-vis your core business today?

I would say it’s probably a little bit greater. I think that there’s an opportunity from an online ordering perspective with the commercial customers out. I think there’s probably a broader base from an ecommerce perspective for their product as well. So I think that that product probably has even more opportunities online. Matthew Fassler – Goldman Sachs: And then my second question relates to the pace of the buyback. In recent years, your buyback in the final quarter of the fiscal year has been the largest of the year, I guess some part till the length of the quarter and there might be other reasons associated with seasonality and as such this year that was not the case. How should we think about the way you managed the buyback in the quarter this year and will it tell us if there’s anything about the pace of buyback going forward?

Yes, that’s a good question. We purchased about $1.1 billion I think we just borrowed $1.3 billion last year as we mentioned the extra week, as the quarter of last year certainly helped a little bit last year so that’s some of the differential. If you think about it, we brought back about $1 billion over the past six years and so we think that that’s a cash flow number that we can maintain going forward if not better. And we’re also consciously trying to spread it out over the year as well and not make it as chunky as it has been. So those were some of the factors that go into that, but I wouldn’t think about the fourth quarter as being light in terms of being a trend, I would look at it as 1.1 versus 1.3 and the 1.3 reduced a little bit with the extra week last year. Matthew Fassler – Goldman Sachs: Got it. Thank you so much.

Thank you. And that concludes the question and answer session. I’d like to turn it back to Mr. Rhodes for closing comments.

Great, thank you. Before we conclude the call, I’d just like to take a moment to reiterate that our business model continues to be solid. We are excited about our growth prospects for the year. We will not take anything for granted as we understand our customers have alternatives. We have a solid plan to succeed this fiscal year but I want to stress that this is a marathon and not a sprint. As we continue to focus on the basics and focus on optimizing long term share holder value, we are confident AutoZone will continue to be very successful. We thank you for participating in today’s call.

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