Mr. Rhodes, you may begin.
William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning and thank you for joining us today for AutoZone's 2015 Second 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 second 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. To begin this morning, I want to thank all AutoZoners across the globe for delivering another solid quarter. We remain focused on several key initiatives and on growing our business on a variety of fronts. We've diversified our portfolio somewhat in recent years, with an emphasis on building additional legs of growth for the future. Our Retail domestic business, which generates approximately 70% of our revenues, performed well in Q2. And we continue to see opportunities for future growth in store count and same-store sales. Secondly, our Commercial domestic business, which has been growing sales by double digits for five years, accelerated its growth in Q2 and continues to be a tremendous growth opportunity. Regarding our international operations, we've been doing business in Mexico since late 1998 and our model has proven to work quite well. In Brazil, we are still in test phase, but our sales have continued to grow nicely. As with other international companies, the strengthening dollar has negatively impacted our U.S. dollar earnings from these operations recently. Our Internet businesses, AutoZone.com and AutoAnything, continue to grow nicely and generally consistent with our expectations. ALLDATA, which is the leading diagnostic and repair business in the United States, continues to perform well although our growth in that business has slowed as the market has become more competitive in recent years and as our market share has reached all-time highs. And finally, IMC, an imports parts specialist that we acquired in the fall, has begun the integration process where we are working to expand their footprint of branches and where we are working to leverage their inventory assortment across the AutoZone domestic store base. This past quarter, our U.S. Retail business expanded with the opening of 36 net new stores. We also opened 29 net new Commercial programs. Our Commercial business continued to grain traction, growing sales 14.5% for the quarter. We have the Commercial programs in 78% of our domestic stores, having opened approximately 800 new programs in just the past two years. Additionally, we opened five stores in Mexico during the quarter. In Brazil, we continue to operate five stores and expect to open a couple of new ones over the next few months. We currently have 8% of our total stores outside of the United States. Finally, we opened our first IMC branch since we acquired the company. And we are in the final stages of relocating their East Coast distribution center. We believe we have growth opportunities on a variety of fronts in the United States and outside the U.S. for many years to come. As mentioned on our last conference call, during our first fiscal quarter, our sales continued to gain momentum throughout the quarter. And in the last two weeks, due to the first significant cold weather, our sales grew significantly. Due to last year's very strong Q2 sales, up 4.3% on a same-store basis, the comparisons for this past quarter were challenging. We were quite pleased with our performance throughout the second quarter, especially in light of the difficult comparisons. And we ended the quarter with domestic same-store sales of 3.6%. This represents more than 200 basis points improvement on a two-year rolling same-store basis from last quarter. We were pleased to see we gained traction in sales categories where we've added merchandise, and our Commercial business benefited from both the inventory additions and the diligent focus on growing sales in our older programs, with particular emphasis on mature customers. Our results were strongest in the West, South and South Central states and were weakest in the Northeastern and Midwestern markets. These weaker markets performed quite well last year with the extremely cold winter. And we knew the comparison this year would be difficult. While our cold weather-related categories didn't perform as well as last year, they continued to perform well under the circumstances. And as anticipated, our maintenance-related categories performed quite well in the quarter. Our belief is the Improvement and Maintenance category sales was driven by more conducive weather patterns, improved merchandise assortments due to the products we have added over the last year, and lower gas prices, which we believe is relieving some pressure, particularly on our most economically challenged customers. In recent years, we have experienced a significant growth in our sales concurrent with the U.S. tax refund season. We believe our most economically challenged customers use their refunds to make repairs and enhancements to their vehicles that they have deferred for some time. Each year, the exact timing of tax refunds moves a bit and those moves occur at the very end of our second quarter or at the beginning of our third quarter. If you recall, in fiscal 2013, we cited the delays in tax refunds that caused a material reduction in our sales the last two weeks of the quarter, where we saw 8% decline in same-store sales for those two weeks. This year, refunds began earlier and helped our business, particularly in the second-to-last week of the quarter. This one week added about 100 basis points to our same-store sales for the quarter. Overall, we were quite pleased with our sales performance in Q2. Our inventory per location increased over our Q1 2015 levels. The primary driver of this increase was timing. We typically experience an increase in inventory as we prepare for the spring selling season. We anticipate that inventory levels will decline somewhat as this merchandise sells over the balance of the next two quarters. Additionally, the IMC acquisition has increased our inventory per store across the chain by $11,000 per store. IMC branches carry approximately 10 times the inventory per location that an average AutoZone store carries, but their volumes on a per-location basis are materially higher as well. As we mentioned during the last several quarterly calls, we've been testing different delivery frequencies from our distribution centers. Our ongoing tests show us that increased delivery frequency increases sales and improves inventory productivity by reducing safety stops. We've been running tests in just over 150 stores for approximately a year. And based on the success of our initial results, during the second quarter, we made the decision to expand the test to more than 300 additional stores. These stores were added to the test in the last couple of weeks of the second quarter and the first week of the third quarter. We now have the test in approximately 10% of our domestic chains, which we believe gives us a substantial base of stores to assess performance. The results to date show a nice low single-digit lift in sales, but we aren't prepared yet to determine our long-term strategy. We still have a significant amount to learn, including the optimal number of deliveries each store should receive weekly. It could be three, four, five times or more. Ultimately, assuming our current findings continue, we would expect to increase the delivery frequency to most of our stores. And we would expect to add two to three additional distribution centers to do this cost effectively and timely. If we ultimately elect to increase the delivery frequency to our stores, we will increase our capital expenditures primarily for the new distribution centers but we will also add annual operating expenses. Our modeling to date, based on our current results shows that while it is somewhat dilutive to gross and operating margins over the long term, it is sufficiently additive to operating profit dollars and provides us with returns above our internal hurdle rate. We've been pleased with our learnings to date. And we are excited to expand our test to hopefully improve on our results and confirm our expectations. Additionally, we have been testing what we call mega-hubs. Mega-hubs have substantially increased product assortments and they leverage those increased product assortments across other hub networks, providing stores across a large geography access to this expanded assortment. We have been testing two mega-hubs for about a year. Based on the encouraging results we've seen to date, we're expanding the mega-hub program by an additional three locations, which should open over the balance of our fiscal year. Once these three locations are opened, 35% of our domestic store base will have access to these expanded inventory assortments. If these three additional mega-hubs meet or exceed our expectations, we will develop a long-term strategy to roll out mega-hubs to provide service to the majority of our domestic stores. All of our inventory availability initiatives are designed to significantly increase our ability to meet our customers' needs. As our Commercial business has grown and our DIY customers' needs increase, our need for expanded parts assortments continues. This has been important and difficult work, and I'd like to thank everyone in the organization that has been involved with this initiative for their excellent work. Now I'll take a moment to discuss our recently completed acquisition of Interamerican Motor Corporation. IMC is the second largest distributor of OE quality import replacement parts in the United States. They specialize in parts coverage for European and Asian cars. While considerably smaller than the number one participant in the industry, IMC, now with 18 branches, offers an impressive growth opportunity for us, not just because of the parts coverage, but also because of the very strong management team. While it's premature, I will mention our plans include opening more IMC branches and incorporating their parts catalog into the AutoZone Z-Net parts catalog. We will continue to go to market as IMC and we expect to open a handful of new IMC locations over the next 12 months. This past January, we made the IMC catalog available to a small number of AutoZone stores near an IMC location. Thus far, while really early, we are pleased. We have seen a lift in those stores' Commercial sales that encourages us that our assumptions on the sales lift to AutoZone from cross-selling were correct. In fact, we're slightly ahead of our original sales assumptions, again, in a statistically insignificant number of AutoZone stores, but so far, so good. Let me stress. The IMC brand is very important to us. And we will grow the brand and its presence in the future in many more markets than it is in today. IMC has been in a growth mode recently and it's built an infrastructure to support a substantially larger footprint. It currently doesn't enjoy the operating margins that we experienced, so it will lower our overall EBIT margins by approximately 40 basis points on an annual basis. We are very excited to have the great IMC team as part of our organization and very optimistic about our future together. The IMC team has embraced the acquisition by AutoZone. And we all are very excited about the future of our two companies together as this acquisition makes both of us stronger. Now let's turn to our second quarter results. Our sales increased 7.7% and our domestic same-store sales were up 3.6%. Both Retail and Commercial experienced positive same-store sales growth. Our same-stores fluctuated from week to week due to the wild swings in weather patterns that occur this time of year. The overall trajectory of our business was quite consistent throughout most of the quarter. That consistency was across all regions of the country. We believe we benefited from macro tailwinds, our work on inventory availability and on solid execution. While our failure-related and maintenance merchandise categories performed well, we were especially happy to see the growth in our maintenance categories. Regarding traffic versus ticket in our DIY business, traffic was slightly negative, while ticket was positive. Interestingly, the Northeast and Midwest experienced declines in customer count around 5%, while the rest of the country was positive, together blending to be down slightly. The comparison to last year's extreme cold in the Northern markets was a big contributor to this year being a difficult comparison. Our average ticket grew generally consistent with the first quarter when it returned to more normalized levels after about a year of subdued growth. The hard parts additions we've added to our stores have helped drive ticket growth. While improvement in product quality has pressured traffic over the last couple of decades, the technology advancements have significantly increased the price of the products we sell. We've been managing through this phenomenon as mentioned for over two decades and expect to continue to do so. We opened 29 new Commercial programs in the quarter versus 49 programs in the comparable period last year. We now have a Commercial program in 78% of our domestic store base. Our Commercial sales, excluding IMC, were up 14.5% this quarter. Our productivity per program showed a nice uptick this past quarter. We have intensified our focus on mature program growth and specifically mature customer growth, and it was encouraging to see the improvements that began in Q1 further accelerate in Q2. Regarding Mexico, we opened five stores this quarter. Sales in our other businesses for the quarter were up 9.2% over last year's second quarter. As a reminder, ALLDATA and e-commerce, which includes AutoZone.com and AutoAnything make up this segment of sales. Regarding online sales, there continue to be great opportunities for growth on both a business-to-business basis and to the individual consumers or B2C. While these businesses are small for us at just 4% of our total sales mix on the quarter, we expect these businesses to grow at a faster rate than our brick-and-mortar business for the foreseeable future. With the continued aging of the car population and with gas prices on average down materially year-over-year for the second quarter, we are beginning to see miles driven increase. Declining prices at the pump has benefited our customers, especially those most financially strapped. The lower end consumer benefits the most from lower gas prices relative to income. This trend is encouraging, but we understand this is just one of the many factors that impact our business. Our operating theme for 2015 is Wow! Every Customer Everywhere. And our key priorities for the year are: one, great people providing great service; two, profitably growing our Commercial business; three, leveraging the Internet; four, leveraging technology to improve the customer experience while optimizing efficiencies; and five, improving inventory availability. On the Retail front last quarter, under the Great People Providing Great Service theme, we continued with our intense focus on improving execution. Along with improvements to our product assortment, we're incorporating more training tools to help our store AutoZoners provide trustworthy advice. Training will continue to be a large effort for us at the store level. Behind the scenes, we have increased our technology investment and challenged ourselves to make sure our offerings are relevant across all shopping platforms. We realize as customers have become much more tech and mobile savvy, we have to have a sales proposition that touches all the ways they desire to interact with us. It is imperative we continue to invest in both current and future technologies in order to drive sales growth across all businesses. Additionally, during the quarter, we completed our second ever company-wide engagement survey. We completed our first survey in the fall of 2012 and had terrific results. This year, our results were even better, which is a great testament to our culture and to the terrific leaders we have on our team. It is so encouraging that our AutoZoners not only know they work for a great organization, but they are highly engaged in that work and feel proud to work for this great company we call AutoZone. Our AutoZoners are the most valuable asset we have. In regards to Commercial, we opened 29 programs during the quarter and 90 year-to-date. We expect to open approximately 300 programs this year versus 424 last year. As we continue to improve our product assortment and availability and as we make other refinements to our offerings, we expect that the sales potential will continue to increase. Our results continue to provide us with confidence to be aggressive in adding additional resources and new programs to this important growth initiative. We should also highlight another strong performance in return on invested capital, as we were able to finish Q2 at 31.2%. We are very pleased with this metric as it is one of the best, if not the best, in all of hard lines retailing. However, our primary focus has been and continues to be that we ensure every incremental dollar of capital that we deploy in this business provides an acceptable return, well in excess of our cost of capital. It is important to reinforce that we will always maintain our diligence regarding capital stewardship as the capital we invest is our investors' capital. Before I pass the discussion over to Bill Giles to talk about our financial results, I'd like to recognize our entire organization for their incredible effort to deliver another strong quarter of solid financial results, while providing Wow! customer service to all of our customers. Now, here's Bill.
William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: 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, total auto parts sales, which includes our domestic Retail and Commercial businesses, IMC, our Mexico stores and our five stores in Brazil, increased 7.6%. Regarding macro trends during the quarter, nationally unleaded gas prices started out at $2.82 a gallon and ended the quarter at $2.27 a gallon, a $0.55 increase. Last year, gas prices increased $0.15 per gallon during the second quarter, starting out at $3.29 and ending at $3.44 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 in 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 1% in November. Data for December and January isn't currently available. The other statistically 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 AutoZone store were $1.753 million. This statistic continues to set the pace for the rest of the industry. For the quarter, total Commercial sales increased 14.5%. Commercial represented 17% of our total sales compared to 16% last year and grew $47 million over last year's second quarter. We opened 29 new programs during the quarter versus 49 programs opened in our second quarter of last fiscal year. We now have our Commercial program in 3,935 stores, supported by 171 hub stores. Approximately 1,100 of our programs are three years old or younger. As Bill had mentioned earlier, both our total Commercial sales and sales per program accelerated from the previous quarter's results. While our average sales per program is below some peers in our industry, we feel we are on the right track to methodically close that gap. It's important to highlight that we accelerated our new program growth over the last few years as approximately 30% of our programs are younger than three years old, these openings have impacted our average sales metric and cannibalized some of our older programs. However, our focus is on growing market share and improving our service levels by having more programs closer to our customers. Looking specifically at our mature programs, those at least five years old, they grew in the mid-single-digit range this past quarter. Additionally, we still have significant opportunities to open additional programs over the next several years. We feel good about the success we've had in profitably growing the Commercial business. In summary, we remain committed to our long-term growth strategy. We believe the improvements we have made and upcoming additional improvements from our inventory availability initiatives enhance our prospects, and we believe the addition of IMC will provide us with more avenues to service our Commercial customers very effectively. We believe we are well positioned to grow this business and capture increased market share. Our Mexico stores continued to perform well. We opened five new stores during the second quarter. We currently have 411 stores in Mexico. As the U.S. dollar strengthened this past quarter, we did have an FX conversion headwind. However, we still delivered a solid U.S. dollar equipment EBIT results and felt good about being able to handle the currency weakening in regard to the overall impact for the company's results. We expect to open a similar number of stores in Mexico this fiscal year that we opened last year. Our returns and profit growth continue to be in line with our expectations. Regarding Brazil, we are currently operating five stores. We expect to open a few more stores over the next several months and then refine our offerings and prove that our concept works for our customers and is financially viable. Once we refine our offerings and operations and evaluate the performance, we will provide you with an update on our long-term growth plans. Recapping this past quarter's performance for the company, in total, our sales were $2.144 billion, an increase of 7.7%. Domestic same-store sales or sales for stores opened more than one year were up 3.6% for the quarter. Gross margin for the quarter was 52.2% of sales, up 15 basis points. The improvement in gross margin was attributable to higher merchandise margins, partially offset by the impact from Interamerican Motor Corporation, which was acquired during September 2014. Looking forward, we continue to believe there remains opportunity for merchandise gross margin expansion within both the Retail and Commercial businesses. The pressure we will experience in the IMC business, along with the rollout of further stores on more frequent deliveries from our distribution centers, will continue to cause headwinds to our overall gross margin rate. However, our primary focus remains growing absolute gross profit dollars in our total auto parts segment. SG&A for the quarter was 35.4% of sales, 25 basis points higher than last year's second quarter. The increase in operating expenses as a percentage of sales was due to higher incentive compensation impact from the IMC acquisition and self-insured employee medical costs. Partially offsetting these items was a favorable credit card litigation settlement of $5.4 million recognized during the quarter. While we have invested in several key initiatives that are customer service-related, like training and systems upgrades, we believe we are well positioned to manage our cost structure in response to our sales environment. EBIT for the quarter was $361 million, up 7.1% over last year's second quarter. Our EBIT margin was down 10 basis points at 16.9%. Interest expense for the quarter was $34.5 million compared with $39.5 million in Q2 a year ago. Debt outstanding at the end of the quarter was $4.4 billion or approximately $125 million more than last year's balance of $4.3 billion. Our adjusted debt level metric finished the quarter at 2.5 times EBITDAR. While on any given quarter, we may increase or decrease our leverage metric based on management's opinion regarding debt and equity market conditions, we remain committed to both our investment grade rating and our capital allocation strategy and share repurchases are an important element of that strategy. For the quarter, our tax rate was approximately 35.2%, in line with last year's second quarter. We expect our annual rate to be closer to 36.5% on an ongoing basis as the deviation in results this quarter, like last year, was primarily driven by the government tax credits reinstituted in December of 2014. Net income for the quarter was $212 million, up 9.8%. Our diluted share count of 32.5 million shares was down 5% from last year's second quarter. The combination of these factors drove earnings per share for the quarter to $6.51, up 15.6% over the prior year's second quarter. Relating to the cash flow statement for the second fiscal quarter, our operating cash flow was $101 million. Net fixed assets were up 7.7% versus last year. Capital expenditures for the quarter totaled $93.8 million and reflected the additional expenditures required to open 44 new stores this quarter, capital expenditures on existing stores, hub store remodels, work on development of new stores for upcoming quarters and Information Technology investments. With the new stores open, we finished this past quarter with 5,042 stores in 49 states, the District of Columbia and Puerto Rico, 411 stores in Mexico, 18 IMC branches and five stores in Brazil for a total location count of 5,476. Depreciation totaled $59.9 million for the quarter versus last year's second quarter expense of $58 million. This is in line with recent quarter growth rates. With our excess cash flow, we repurchased $26 million of AutoZone stock in the second quarter. At the end of the quarter, we had $544 million remaining under our share buyback authorization and our leverage metric was 2.5 times. Again, I want to stress we manage to appropriate credit ratings and not any one metric. The metric we report is meant as a guide only, as each rating agency firm has its own criteria. We continue to view our share repurchase program as an attractive capital deployment strategy. Accounts payable, as a percent of gross inventory, finished the quarter at 107.5%. The inclusion of IMC reduced the AP ratio by 170 basis points. Next I'd like to update you on our inventory levels in total and on a per-store basis. We reported an inventory balance of $3.5 billion, up 12% versus the Q2 ending balance last year. Increased inventory reflects the recent IMC acquisition, new store growth and additional investments in coverage. Inventory per store was up 7.1% at $631,000 per store, reflecting our continued investments in hard parts coverage and the IMC acquisition. The increase in inventory per store this quarter due to the IMC acquisition was $11,000 per store. Finally, as Bill previously mentioned, our continued disciplined capital management approach resulted in return on invested capital for the trailing four quarters of 31.2%. We have and will continue to make investments that we believe will generate returns that significantly exceed our cost of capital. Now I'll turn it back to Bill Rhodes.
William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you, Bill. We are pleased this morning to report our 34th consecutive quarter of double-digit EPS growth, growing this quarter at a rate of 15.6%. Our company has continued to be successful over the long run. That success is attributable to our approach to leveraging our unique and powerful culture and focusing on the needs of our customers. At the end of the day, our customers have choices, and we must innovate to ensure they turn to us for their vehicle solution needs. As we continue to invest in our businesses and monitor the results from our ongoing inventory initiatives, we are optimistic about our future. We feel like we continue to be on the right track. Again, we are excited about our initiatives around inventory assortment, supply chain solutions, hub stores, commercial growth, Mexico, ALLDATA, e-commerce, Brazil and now IMC. Our long-term model is to grow new store square footage at a low-single-digit growth rate, and we expect to continue growing our Commercial business at an accelerated rate. Therefore, we routinely look to grow our EBIT dollars in the mid-single-digit range or better in times of strength. And we leverage our very strong and predictable cash flow to repurchase shares, enhancing our earnings per share growth in the double digits. We feel the track we are on will allow us to continue winning for the long run. We believe our steady, consistent strategy is correct. It is the attention to details and consistent execution that will matter. Our belief is solid consistent strategy combined with superior execution is a formula for success. Our charge remains to optimize our performance regardless of market conditions and to continue to ensure we are investing in the key initiatives that will drive our long-term performance. In the end, delivering strong EPS growth and ROIC each and every quarter is how we measure ourselves. We are pleased with our results this past quarter, but we must remain committed to delivering on our strategic and financial objectives. Now we'd like to open up the call for questions.
